NextEra Energy(NEE) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Adjusted earnings per share for Q3 2024 increased approximately 10% year-over-year, driven by strong performance at FPL and Energy Resources [6] - FPL's regulatory capital employed grew by approximately 9.5% year-over-year, with expected average annual growth of 10% through 2025 [26] - FPL's Q3 2024 capital expenditures were approximately $2 billion, with full-year 2024 capital investment expected between$ 8 billion and $8.8 billion [27] - Energy Resources reported adjusted earnings growth of approximately 11% year-over-year, with adjusted EPS increasing by$ 0.04 [30] - Consolidated adjusted EPS for Q3 2024 was $1.03 per share, with long-term financial expectations remaining unchanged [32] Business Line Performance - FPL's retail sales increased 1% year-over-year, with weather-normalized growth of 1.6% [27] - Energy Resources added approximately 3 gigawatts to its backlog, bringing the total backlog to over 24 gigawatts [31] - FPL's solar portfolio sustained no significant damage during Hurricanes Helene and Milton, with less than 0.05% of solar panels affected [12] - FPL's smart grid technology investments avoided 185,000 outages during Hurricane Helene and 554,000 outages during Hurricane Milton [11] Market Performance - FPL restored power to 95% of affected customers within four days after Hurricane Milton's landfall [8] - FPL's underground distribution power lines performed more than 6x better in terms of outage rates compared to overhead lines [12] - U.S. data center power demand is expected to increase by approximately 460 terawatt hours from 2023 to 2030, driving significant renewables and storage demand [14] Strategic Direction and Industry Competition - The company added approximately 3 gigawatts to its backlog for the second consecutive quarter, bringing the four-quarter total to approximately 11 gigawatts [6] - Incremental framework agreements with two Fortune 50 customers could potentially add up to 10.5 gigawatts of renewables and storage projects by 2030 [6] - The company expects to more than double its renewable generation portfolio from 38 gigawatts to potentially 81 gigawatts by the end of 2027 [22] - Renewables and storage are seen as the lowest-cost generation and capacity resources, with new wind up to 60% cheaper and new solar up to 40% cheaper than new gas power generation [17] Management Commentary on Operating Environment and Future Outlook - The company highlighted the importance of a reliable and resilient power grid, especially with forecasts of a 6x increase in power demand growth over the next 20 years [13] - Management emphasized the need for low-cost, reliable energy to meet growing demand, with a focus on renewables, storage, and gas generation [16] - The company expects to deliver financial results at or near the top end of its adjusted EPS expectation ranges through 2027 [32] Other Important Information - FPL's preliminary estimate of restoration costs from Hurricanes Helene and Milton is approximately$ 1.2 billion, to be recovered through a surcharge in 2025 [28] - NextEra Energy Partners declared a quarterly distribution of $0.9175 per common unit, up nearly 6% from a year earlier [33] - The partnership increased its wind repowering target to approximately 1.9 gigawatts through 2026, up from the previous target of 1.3 gigawatts [34] Q&A Session Summary Question: Framework Agreements and Market Dynamics - The company explained that the framework agreements provide flexibility in allocating assets and create close partnerships with customers, enabling incremental business opportunities [38][39] - Management highlighted the significant demand for renewables and storage, driven by industries outside of technology, such as manufacturing and electrification [42][44] Question: Duane Arnold Nuclear Plant - The company is evaluating the recommissioning of the Duane Arnold nuclear plant, with strong interest from data center customers [45][47] - Management noted that the plant's simpler design (BWR) makes it more attractive for recommissioning compared to PWR designs [47] Question: NextEra Energy Partners (NEP) Strategy - The company is reviewing its capital allocation strategy for NEP, with a focus on growing underlying cash flow and addressing convertible equity portfolio financing obligations [49][50] - Management expressed a preference to remain the owner of NEP, given the significant growth opportunities in the power demand landscape [51][52] Question: Safe Harboring and Supply Chain - The company has fully derisked its safe harbor program through 2029 and has secured critical electrical equipment to avoid delays [54][55] - Management emphasized the importance of working with established developers to ensure timely project delivery [55] Question: Renewable Returns and Market Share - The company sees an upward trajectory in renewable returns, driven by strong demand and disciplined capital allocation [61] - Management expects to maintain or potentially increase its market share, balancing higher market share with higher margins [64] Question: Solar, Wind, and Storage Trends - Solar and storage are seeing strong tailwinds, while wind remains relatively weaker but still relevant in the mix of resources [65][66][67] - The company continues to pursue a balanced pipeline of solar, wind, and storage projects to meet customer needs [67] Question: Transmission Constraints and Framework Agreements - The company is not concerned about transmission constraints for Duane Arnold, given its large pipeline and ability to convert queue positions [69] - The framework agreements are expected to contribute to the midpoint of the company's development expectations, with potential for further growth [70][72] Question: Customer Supply Business - The customer supply business has normalized after high volatility in 2022, with margins and origination activity stabilizing [73][74]