NextEra Energy Partners(NEP) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NextEra Energy reported a strong third-quarter performance with adjusted earnings per share growth of approximately 10.6% year-over-year [1] - Energy Resources achieved adjusted earnings growth of approximately 21% year-over-year, with contributions from new investments increasing by $0.11 per share, while existing clean energy portfolio declined by $0.02 per share due to weaker wind resources [9][30] - FPL's earnings per share increased by $0.04 year-over-year, driven by a regulatory capital employed growth of approximately 13.6% [47] Business Line Data and Key Metrics Changes - FPL's capital expenditures for the quarter were approximately $2.6 billion, with full-year 2023 capital investments expected to be between $9 billion and $9.5 billion [47] - Energy Resources had a record quarter with new renewables and storage origination of approximately 3,245 megawatts, marking the first time exceeding three gigawatts in a single quarter [49] - NextEra Energy Partners' third-quarter adjusted EBITDA was $488 million, and cash available for distribution was $247 million [58] Market Data and Key Metrics Changes - FPL's retail sales increased by 3% year-over-year, attributed to warmer weather, with a solid underlying growth of roughly 1% on a weather-normalized basis [48] - The backlog for Energy Resources now totals over 21 gigawatts after accounting for new projects placed into service [49] - The expected returns on equity for the backlog are mid-teens for solar and over 20% for wind and storage [36] Company Strategy and Development Direction - NextEra Energy Partners is focused on executing its growth plan, which includes repowering approximately 1.3 gigawatts of wind projects and acquiring assets at favorable yields [17] - The company aims to achieve LP distribution growth of 6% through at least 2026, with repowerings contributing to this objective [4][57] - NextEra Energy is committed to maintaining a strong balance sheet and cost-of-capital advantages to support long-term value delivery for shareholders [28][90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding resilient demand for renewable energy, supported by strong additions to the backlog [3] - The company anticipates continued average annual growth in operating cash flow at or above the adjusted EPS compound annual growth rate range from 2021 to 2026 [16] - Management highlighted the importance of a strong balance sheet in navigating the current higher cost of capital environment, which provides a competitive advantage over smaller developers [19][68] Other Important Information - FPL's reported ROE for regulatory purposes is approximately 11.8%, with expectations for capital investments of $32 billion to $34 billion over the current four-year settlement agreement [29] - The company plans to transfer approximately $400 million in tax credits in 2023, growing to approximately $1.6 billion to $1.8 billion by 2026 [34] - NextEra Energy has executed roughly $1.9 billion to hedge refinancing costs for 2024 and 2025 maturities [85] Q&A Session Summary Question: Update on the Texas pipeline sale process - Management is diligently working on the sales process and aims to maximize value for unit holders despite a challenging macroeconomic environment [97] Question: Impact of higher PPA pricing on demand in the renewables market - Management noted strong signings in the quarter, indicating robust demand and a good mix of technologies and customer types [69] Question: Composition of the $25 billion to $35 billion project tax equity and tax credit transferability - Management indicated a potential 50-50 split between tax equity and project finance, expressing confidence in accessing tax equity despite regulatory challenges [133]