10-QPeriod: Q1 FY2012

NEXTERA ENERGY INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 27, 2012For Securities:NEENEE-PNNEE-PSNEE-PTNEE-PWNEE-PVNEE-PU

Summary

NextEra Energy, Inc. (NEE) reported a significant increase in net income for the first quarter of 2012 compared to the prior year, driven by strong performance at its regulated utility subsidiary, Florida Power & Light (FPL), and its competitive energy business, NextEra Energy Resources (NEER). FPL demonstrated robust earnings growth, benefiting from investments in plant in service and favorable cost recovery clause results. NEER also saw substantial improvement, largely due to unrealized mark-to-market gains on non-qualifying hedges, which offset prior-year losses in this area. Despite macroeconomic uncertainties and a challenging regulatory environment, NEE's diversified business model and strategic investments have positioned it for continued financial strength. Investors should note the ongoing capital expenditure plans, particularly in renewable energy projects, and the company's proactive approach to managing market risks through hedging strategies.

Financial Highlights

43 data points
Beta

Revenue

$3.37B

Net Income

$461.00M

13.7% Net Margin

EPS (Diluted)

$0.28

Total Assets

$59.21B

Cash & Equivalents

$275.00M

Free Cash Flow

$835.00M

Financial Statements
Beta
Revenue$3.37B
Operating Expenses$2.57B
Operating Income$803.00M
Net Income$461.00M
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)1.65B
Shares Outstanding (Diluted)1.66B

Key Highlights

  • 1Net income increased significantly to $461 million in Q1 2012 from $268 million in Q1 2011, a 72% year-over-year improvement.
  • 2Earnings per share (EPS) on a diluted basis rose to $1.11 from $0.64 in the same period, indicating strong profitability growth on a per-share basis.
  • 3FPL's net income increased by $34 million to $239 million, driven by investments and favorable cost recovery clause results.
  • 4NEER's net income saw a substantial jump of $156 million to $221 million, primarily due to positive mark-to-market gains on non-qualifying hedges, offsetting prior-year losses.
  • 5The company reported significant capital expenditure plans, with an estimated $11.2 billion for FPL and $5.9 billion for NEER through 2016, focusing on generation, transmission, distribution, and renewable energy projects.
  • 6NEE ended the quarter with a strong liquidity position, reporting approximately $4.7 billion in total net available liquidity, with FPL contributing approximately $2.4 billion.
  • 7The company continues to utilize and manage derivative instruments effectively to hedge commodity price, interest rate, and foreign currency risks, with a substantial portion of these instruments being over-the-counter.

Frequently Asked Questions

The significant increase in net income to $461 million was driven by a combination of improved performance at both FPL ($34 million increase) and NEER ($156 million increase). NEER's performance was particularly boosted by a substantial swing from unrealized mark-to-market losses in the prior year to gains on non-qualifying hedges in the current period.

NEE has outlined substantial capital expenditure plans through 2016. FPL plans to invest approximately $11.2 billion primarily in generation, transmission, and distribution, including nuclear fuel. NEER plans to invest approximately $5.9 billion, heavily focused on wind ($1.85 billion) and solar ($1.985 billion) projects, alongside nuclear and other infrastructure.

NextEra Energy utilizes derivative instruments, such as swaps, options, futures, and forwards, to manage commodity price risk for fuel and electricity, as well as interest rate and foreign currency risks. For NEER, these derivatives are also used to optimize power generation assets and for trading activities. FPL's derivatives, particularly for energy, are largely deferred as regulatory assets or liabilities and passed through to customers via cost recovery clauses.

In March 2012, FPL filed a petition for a base rate increase expected to be effective January 2013, with an additional increase in mid-2013. The company is requesting an increase of approximately $517 million annually, based on a requested regulatory return on equity (ROE) of 11.50%. The outcome of this rate case, with hearings expected in Q3 2012, will be crucial for FPL's future earnings and customer rates.