NextEra Energy Inc. and NextEra Energy Partners LP have announced strong third-quarter 2024 results, with NextEra Energy reporting a 10% increase in adjusted earnings per share and adding 3 gigawatts to its backlog. The company has secured framework agreements with two Fortune 50 companies and Entergy for potential projects totaling up to 15 gigawatts by 2030. Florida Power & Light, a subsidiary of NextEra Energy, showcased the resilience of its grid during Hurricanes Helene and Milton, restoring power to customers quickly. NextEra Energy Partners announced a quarterly distribution increase and is targeting a wind repowering expansion. The company’s growth strategy focuses on meeting growing power demand through renewables, storage, and gas generation.
Key takeaways include NextEra Energy’s plans to potentially double its renewable generation portfolio by 2027 and NextEra Energy Partners projecting adjusted EBITDA contributions between $1.9 billion and $2.1 billion by the end of 2024. The company is exploring options to address convertible equity financing obligations and enhance organic cash flow growth.
Despite a negative impact on customer supply results due to decreased gas prices, NextEra’s renewable portfolio has significantly grown, creating jobs and boosting local economies. The company is well-positioned to capitalize on the demand for renewables and has secured critical electrical infrastructure to mitigate project delays.
In conclusion, NextEra Energy and NextEra Energy Partners are poised for continued growth in the renewable energy sector, driven by strategic investments and a resilient infrastructure. Investors can find valuable insights into NextEra Energy Partners’ financial health and growth prospects through InvestingPro’s tips and analysis. The company’s commitment to shareholder returns, significant dividend yield, and potential turnaround in financial performance make it an attractive option for income-focused investors. During today’s presentation, we will also be discussing non-GAAP financial measures. Please refer to the accompanying slides for definitions and reconciliations of these measures to GAAP financial measures. Now, I will hand over the call to John.
John Ketchum: Thank you, Mark, and good morning, everyone. NextEra Energy had a strong third quarter, with a 10% increase in adjusted earnings per share year-over-year. We are pleased to announce that we have added 3 gigawatts to our backlog for the second quarter in a row, bringing the total to 11 gigawatts over the past four quarters. Additionally, we have entered into framework agreements with two Fortune 50 customers for up to 10.5 gigawatts of renewables and storage projects by 2030. Combined with our previous agreements, we now have potential projects totaling up to 15 gigawatts, showcasing our market position and customer confidence. Before Brian discusses the detailed results, I want to address the impact of Hurricanes Helene and Milton on FPL and our industry’s response.
Hurricane Helene and Milton caused significant damage and power outages in Florida, affecting over 2.5 million FPL customers. Our dedicated workforce of over 30,000 employees and contractors worked tirelessly to restore power quickly, with 95% of customers restored within four days after Hurricane Milton. Our investments in a resilient grid, smart technology, and underground distribution lines have proven effective in minimizing outages and damage. These storms highlight the importance of a reliable and resilient power grid as we anticipate unprecedented demand growth in the coming years. The industry is facing a period of rapid growth driven by data centers, manufacturing, and electrification, which will require significant investment in renewables and storage to meet demand. The demand for power is at a critical level, and it is essential to consider how to meet this demand in a smart and efficient way. Failure to do so could lead to escalating power prices, inflation, and decreased competitiveness on a global scale. Fortunately, at FPL, we have a proven strategy in place to address this challenge. By investing in low-cost solar generation and battery storage, we have been able to save our customers billions of dollars while maintaining top reliability. We understand the importance of providing affordable and reliable energy to our customers, and we are committed to meeting their power demands.
Renewables and storage are the most cost-effective and quickest to deploy solutions for meeting power demand. Wind, solar, and storage technologies are already in the interconnection queue and have proven to be more economical than traditional gas power generation. At FPL, we have seen the benefits of incorporating renewables and storage into our energy portfolio, leading to significant cost savings for our customers.
While nuclear and gas power generation will still play a role in meeting capacity needs, renewables and storage offer a more efficient and cost-effective solution. As the demand for power continues to grow, it is crucial to prioritize the development of renewable energy sources to ensure a sustainable and affordable energy future. With the potential for significant growth in renewables over the next decade, we are confident that we can meet the power demands of the future while maintaining affordability and reliability for our customers. We are well positioned to take advantage of the increasing demand for renewable energy at NextEra Energy. Our track record speaks for itself, with over 33 gigawatts of renewables and storage originated and nearly 18 gigawatts placed into operation since 2021. We have increased our origination rate from 8 gigawatts per year to 11 gigawatts over the last four quarters, and if we meet our development expectations, our renewable generation portfolio could more than double to 81 gigawatts by the end of 2027. This growth would also create a storage opportunity of over 50 gigawatts by that time, providing us with a significant advantage in the market.
Our partnerships with Fortune 50 companies and the Entergy joint development agreement showcase our leadership in power generation. The economic impact of our investments in renewables has been significant, creating jobs, increasing tax revenues, and stimulating the economy in the communities we operate in. We are proud to power millions of homes and businesses with clean, reliable, and affordable electricity.
Renewables are a critical part of the energy infrastructure in the US, providing cost-effective solutions to meet our energy needs. The growth in renewable energy has already created tens of thousands of jobs, with more to come in the future, benefiting manufacturing and revitalizing rural communities across the country. With our experience, technology, and ready-to-develop sites, NextEra Energy is poised for success in this moment.
In the third quarter of 2024, FPL saw an increase in earnings per share driven by regulatory capital growth. We expect FPL to continue to grow its regulatory capital employed by roughly 10% annually through 2025. Retail sales increased by 1% and storm recovery costs are being managed through a surcharge mechanism. Energy Resources reported an 11% increase in adjusted earnings, with strong contributions from new investments in the renewables portfolio. Our backlog now exceeds 24 gigawatts, providing visibility into our development program.
Overall, our consolidated results for the third quarter of 2024 were strong, with adjusted EPS at $1.03 per share. Our long-term financial expectations remain unchanged, and we are committed to delivering top-tier financial results in the coming years. In the coming years, we anticipate continued growth in our operating cash flow and adjusted EPS compound annual growth rate range. Additionally, we project a 10% annual increase in dividends per share through at least 2026, based on a 2024 base. Our expectations are subject to caveats.
NextEra Energy Partners recently announced a quarterly distribution increase and plans for wind repowering projects, expanding its portfolio. The partnership aims to increase its wind repowering target to 1.9 gigawatts by 2026.
The third-quarter results showed a decline in adjusted EBITDA and cash available for distribution compared to the previous year, mainly due to divestitures and debt service payments. NextEra Energy Partners expects to reach a run rate contribution of $1.9 billion to $2.1 billion by the end of 2024.
The partnership is evaluating options to address financing obligations and improve its capital structure. It plans to provide distribution and cash available for distribution expectations by the fourth quarter of 2024.
The framework agreements with Entergy and other Fortune 50 companies provide flexibility and partnership opportunities for future projects. These agreements align with the changing energy demand and allow for collaboration in meeting customers’ energy needs. John Ketchum: Yes, on the NEP side, we are working diligently to conclude the financial review by the year-end call. We are focused on ensuring transparency and accuracy in our financial reporting for NEP, and we are making progress towards that goal. Thank you for your question. So, as we have been evaluating different options for addressing our cost of capital and strategic allocation of capital, we are considering deploying more capital towards growing the underlying cash flow of the business rather than focusing solely on distributions. We are also reviewing the YieldCo model and contemplating a shift in how we allocate capital. While we are considering all available options and alternatives, our preference would be to remain the owner of NextEra Energy Partners in the future.
We believe that there are potential growth opportunities in the industry, especially in data centers, that could benefit both NextEra Energy and NextEra Energy Partners. We have fully derisked our safe harbor program through 2029 and have taken steps to secure critical electric infrastructure to ensure timely project completion. We are open to exploring various technologies, including small modular reactors, as part of our energy mix, and are focused on providing comprehensive clean energy solutions to our customers.
Overall, we are constantly looking ahead and planning for the future to stay ahead of industry trends and provide value to our investors and customers. We have a small SMR team within the company that has been closely following the SMR market for a long time. We have advised Fortune 100 companies on SMRs and have conducted technology and financial reviews on various OEMs in the SMR space. However, we see challenges in the SMR market, with only a few companies having strong financial backing to sustain them. The technology is unproven and comes with high risks and costs. As renewables become cheaper, it becomes harder for SMRs to compete economically. The nuclear fuel supply chain also poses challenges, particularly with the need to establish enrichment and conversion industries in the U.S. Given these factors, we are not bullish on SMRs as a viable option in the near future, and we are prioritizing other generation resources.
In contrast, we are seeing positive trends in renewables returns, with strong demand leading to increased margin opportunities. We are disciplined in capital allocation and mindful of changes in cost of capital, responding appropriately to market dynamics. Our unique position in the industry is a positive tailwind for us.
In terms of backlog additions, while 3 gigawatts may not be the new normal, we have seen a significant increase in demand for renewables and expect this trend to continue. Our greenfield development program has been successful in bringing high-quality projects to market, and we are on track with our development expectations through 2027 as outlined at the investor conference in June. In terms of forgetting the second part of your question, Jeremy, did that cover the checking part as well? Just market share going forward, we have had a consistent 20% market share across technologies over time, with potential for higher. We will continue to balance higher market share and higher margin, optimizing both to create value for shareholders and our platform. We focus on building projects with great returns that add incremental value over time, rather than building every possible project.
Regarding solar versus wind and battery storage, solar and storage have seen a tailwind in recent years, with solar becoming more attractive due to the addition of the PTC. Storage is crucial for capacity value, meeting increasing demand from utilities. Wind has been relatively weaker, but still of interest to customers. We see a mix of all three technologies as complementary for 24/7 solutions. Our pipeline includes all three technologies to meet various needs.
Regarding Duane Arnold and transmission constraints, our large pipeline allows us to convert queue positions to different technologies without needing to expand transmission. The framework agreement with Entergy will contribute to our development expectations, potentially exceeding the midpoint. Customer supply has been impacted by lower gas prices, leading to less volatility and normalized margins.
Thank you for attending today’s presentation.