NextEra Energy Partners, LP Common Units (NEP) Q2 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with increased EPS, ROE, and retail sales. The company is expanding its renewable and storage capacity and has a positive outlook on the renewables market. The Q&A session confirmed strong management strategies and effective risk management, despite some unclear responses. The dividend growth and positive guidance in wind resources further enhance the outlook. Considering the company's strategic expansion and financial health, I predict a positive stock movement of 2% to 8% over the next two weeks.
Key Financial Performance
Earnings Per Share (EPS) - FPL Increased by $0.03 year-over-year, driven by regulatory capital employed growth of approximately 10.7%.
Capital Expenditures - FPL Approximately $2.1 billion for the quarter; full year 2024 capital investments expected to be between $8 billion and $8.8 billion.
Retail Sales - FPL Increased by 3.7% year-over-year due to warmer weather, with a positive impact of approximately 2.6% on customer usage.
Return on Equity (ROE) - FPL Reported ROE for regulatory purposes approximately 11.8% for the 12 months ending June 2024.
Adjusted Earnings Per Share (EPS) - Energy Resources Increased by $0.03 year-over-year, with contributions from new investments increasing $0.12 per share.
Wind Resource Contribution - Energy Resources Wind resource for Q2 2024 was approximately 104% of the long-term average, compared to 88% in Q2 2023.
Gas Infrastructure Contribution - Energy Resources Decreased by $0.07 per share due to higher depletion expense and the sale of Texas pipelines.
Adjusted EBITDA - NextEra Energy Partners $560 million for Q2 2024, with a year-over-year increase driven by favorable wind resources.
Cash Available for Distribution - NextEra Energy Partners $220 million for Q2 2024, with contributions from new projects and existing projects.
Quarterly Distribution - NextEra Energy Partners Declared at $0.95 per common unit, up approximately 6% from a year earlier.
Liquidity - NextEra Energy Partners Approximately $2.7 billion after repayment of a $700 million HoldCo debt maturity.
Adjusted EBITDA Contribution from Existing Projects - NextEra Energy Partners Grew by approximately $62 million year-over-year, driven primarily by favorable wind resources.
Impact from Texas Pipeline Divestiture - NextEra Energy Partners Adjusted EBITDA and cash available for distribution declined by approximately $46 million and $43 million respectively.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Renewables and Storage Projects: Energy Resources added over 3,000 megawatts of new renewables and storage projects for the backlog this quarter, including 860 megawatts from agreements with Google.
Renewable Portfolio with Technology Customers: Total renewables portfolio with technology and data center customers, including assets in operation and in backlog, totals 7 gigawatts.
Market Demand for Renewables: Demand for new renewables is expected to triple over the next seven years to meet increasing power demand.
Growth in Florida: Florida is experiencing unprecedented growth, with approximately 1,000 people moving to the state daily, impacting energy demand.
Operational Efficiencies at FPL: FPL's non-fuel O&M is 70% better than the national average, saving customers $3 billion annually.
Cost Savings from Project Velocity: Project Velocity identified record $460 million of run rate cost savings opportunities through 2027.
Strategic Focus: NextEra Energy's strategic focus is on delivering low-cost clean energy and storage while building new transmission to support new generation.
Partnership with Google: Collaboration with Google to build renewable storage solutions to meet data center power demand.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Regulatory Risks: FPL's reserve amortization mechanism has been utilized faster than expected, which may impact future rate case filings and recovery of increased expenditures.
Competitive Pressures: The company faces competition in the renewable energy sector, particularly with the growing demand for low-cost generation and battery storage.
Supply Chain Challenges: The interconnection timelines for new sites stretch for three to seven years, which may delay project deployment and affect the ability to meet customer demand.
Economic Factors: Natural gas-fired generation is becoming more expensive and subject to fuel price volatility, which could impact overall energy costs and competitiveness.
Financial Performance Risks: The company expressed disappointment if it fails to deliver financial results at or near the top of adjusted earnings per share expectations, indicating pressure to meet financial targets.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Project Velocity: Annual companywide initiative to identify cost savings; this year identified $460 million of run rate cost savings opportunities through 2027.
Regulatory Capital Employed Growth: FPL's regulatory capital employed has grown at a 12% CAGR since 2022, exceeding the anticipated 9% CAGR.
Renewable Energy Pipeline: Energy Resources has a 300 gigawatt pipeline, with half in the interconnection queue or ready, supporting growth in renewables and storage.
Collaboration with Google: Added 860 megawatts of new renewables for Google to meet data center power demand.
Mountain Valley Pipeline: Now in service, contributing to the overall energy strategy.
Earnings Per Share (EPS) Impact: FPL's 11.4% regulatory ROE expected to have a $0.06 EPS impact in 2024 and 2025.
Capital Expenditures: FPL's full year 2024 capital investments expected to be between $8 billion and $8.8 billion.
Long-term Financial Expectations: Expectations for adjusted EPS growth at or near the top-end of the range for 2024-2027.
Dividend Growth: Expect to grow dividends per share at roughly 10% per year through at least 2026.
NextEra Energy Partners Distribution Growth: Targeting 6% growth in distributions per common unit through at least 2026.
Run Rate Projections: NextEra Energy Partners expects adjusted EBITDA contributions to be between $1.9 billion to $2.1 billion for 2024.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Quarterly Distribution: NextEra Energy Partners' board declared a quarterly distribution of $0.95 per common unit, which annualizes to $3.62 per common unit, reflecting an increase of approximately 6% from a year earlier.
Dividend Growth Target: NextEra Energy Partners expects to grow its dividends per share at roughly 6% per year through at least 2026.
Equity Units Issued: NextEra issued $2 billion of equity units during the quarter.
Cash Available for Distribution: NextEra Energy Partners reported cash available for distribution of $220 million for the second quarter.
Payout Ratio: NextEra Energy Partners expects the partner's payout ratio to be in the mid to high 90s through 2026.
Annualized Distribution Rate: The expected annualized rate of the fourth 2024 distribution, payable in February 2025, is projected to be $3.73 per common unit.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Could you just go back through that again, John, in terms of just the -- what's driven the increased usage?
A:We've had a lot of population growth in Florida, impacting our service territory. Our regulatory capital employed was around 9%, but it's been around 12% due to accommodating that growth. We have surplus around $586 million and expect an 11.4% ROE for 2024 and 2025.
Q:Any information on just the size of the portfolio that was sold and or the stake in that portfolio?
A:It was a 1.6 gigawatt portfolio of renewable assets. Blackstone has a partial interest in that portfolio.
Q:Can you just maybe talk to your turbine performance with GE and just are you seeing any issues?
A:We are recognized as a top operator of wind. We have a strong partnership with GE and have managed any issues well over the years.
Q:Could we get a sense on timing, what range of options you're thinking about for NEP?
A:We are exploring all alternatives to improve the cost of capital and are being thoughtful about our approach. We have time in 2024 and no immediate plans for drops.
Q:Do your existing contract protections and supply chain strategy navigate challenges as you expand development?
A:We have been able to transfer risks to our suppliers and have a strong position in the supply chain, allowing us to manage risks effectively.
Q:How do you think about asset recycling and monetization of renewable assets?
A:We feel confident about our options for capital recycling and are focused on our core business of wind, solar, and battery storage.
Q:Can you speak to how you're thinking about the renewables market and PPA pricing?
A:We see strong returns and a positive dynamic in the market, with stable pricing helping to decrease risk.
Q:Do you think the demand from data centers is already in your numbers?
A:We are seeing a lot of interest from data center customers, but it will take time to materialize.
Q:Can you just talk us through your latest expectations on potential implications on the IRA?
A:We expect the credits to remain in place as they create jobs and lower power prices, and we have a history of working with both sides of the aisle.
Q:How much is political instability impacting your ability to sign contracts?
A:Political instability is not curtailing demand at all; if anything, it may accelerate demand.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specifics of the NEP options and timing, stating they are exploring alternatives but not providing a firm deadline. Additionally, there was a lack of clarity on the potential impact of political instability on contract negotiations.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Blackstone
Durgesh
GE
Google
Hi
Investor Conference
aisle
amortization mechanism
capital recycling
center
contract
core
cost generation
cost renewables
cycle demand
deal
effort
fact
form
gas infrastructure
history
hyperscaler
hyperscalers
job
language
operator transmission
option
outlook
positioning
power demand
power price
product
quarter
regard
renewables portfolio
replacement cycle
sense
storage transmission
tariff
tax base
turbine
variety
wind battery
NEP Transcript
Earnings call transcript: XPLR Infrastructure misses Q4 2024 EPS, stock drops
Unknown2-1
The earnings call reveals several concerns: heavy reliance on equity markets, significant debt financing, and suspension of unitholder distributions. The Q&A section highlights management's evasiveness on key financial metrics, adding uncertainty. Despite stable EBITDA and free cash flow projections, the lack of clear growth guidance and operational risks from strategic shifts contribute to a negative outlook. The indefinite suspension of distributions and potential regulatory risks further exacerbate investor concerns, leading to a likely negative stock price movement.
NextEra Energy Partners, LP (NEP) Q3 2024 Earnings Call Transcript
Positive10-23
The earnings call summary shows strong financial performance with a 10% increase in adjusted EPS and positive growth in renewable energy projects. The Q&A section reveals management's strategic focus and flexibility in asset allocation, despite some uncertainties regarding specific projects. The positive elements, such as the collaboration with Google and dividend growth, outweigh the minor concerns, suggesting a positive stock price movement in the short term.
NextEra Energy Partners, LP Common Units (NEP) Q2 2024 Earnings Call Transcript
Positive7-25
The earnings call highlights strong financial performance with increased EPS, ROE, and retail sales. The company is expanding its renewable and storage capacity and has a positive outlook on the renewables market. The Q&A session confirmed strong management strategies and effective risk management, despite some unclear responses. The dividend growth and positive guidance in wind resources further enhance the outlook. Considering the company's strategic expansion and financial health, I predict a positive stock movement of 2% to 8% over the next two weeks.
NextEra Energy Partners, LP Common Units (NEP) Q1 2024 Earnings Call Transcript
Positive4-23
The earnings call reveals strong financial performance with a 9% EPS growth and positive future guidance, including a 10% dividend growth rate. The Q&A indicates confidence in managing potential risks and demand growth, with diversified strategies in renewables and data centers. Despite minor setbacks like decreased retail sales, the overall sentiment is positive, bolstered by strong earnings, optimistic guidance, and strategic investments in renewables. These factors suggest a positive stock price movement in the short term.
NEP Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
