10-QPeriod: Q3 FY2012

NEXTERA ENERGY INC Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 26, 2012For Securities:NEENEE-PNNEE-PSNEE-PTNEE-PWNEE-PVNEE-PU

Summary

NextEra Energy Inc. (NEE) reported its third-quarter 2012 financial results, demonstrating a slight increase in net income compared to the prior year, driven by strong performance at its regulated utility subsidiary, Florida Power & Light Company (FPL). FPL's net income rose due to investments in plant in service, higher cost recovery clause results, and increased AFUDC-equity. In contrast, NEE's competitive energy business, NextEra Energy Resources (NEER), experienced a decline in net income, primarily attributable to increased net unrealized mark-to-market losses from non-qualifying hedges and lower results from its existing asset portfolio. However, NEER's year-to-date performance was boosted by the absence of a significant loss recorded in the prior year related to the sale of natural gas-fired generating assets. Overall, NEE maintained a solid liquidity position, with substantial available credit facilities. The company is actively managing its capital expenditures, with significant investments planned in new generation capacity, including wind and solar projects for NEER, and modernization of FPL's existing infrastructure. Investors will be monitoring the upcoming regulatory decisions on FPL's base rate proceeding, which could impact future revenue streams and allowed returns. Additionally, NEE's continued reliance on tax credits for its renewable energy projects highlights the importance of future legislative actions in this area.

Financial Highlights

43 data points
Beta

Revenue

$3.84B

Net Income

$415.00M

10.8% Net Margin

EPS (Diluted)

$0.24

Total Assets

$62.05B

Cash & Equivalents

$246.00M

Free Cash Flow

$1.23B

Financial Statements
Beta
Revenue$3.84B
Operating Expenses$3.10B
Operating Income$742.00M
Net Income$415.00M
EPS (Basic)$0.25
EPS (Diluted)$0.24
Shares Outstanding (Basic)1.68B
Shares Outstanding (Diluted)1.69B

Key Highlights

  • 1Total net income for the three months ended September 30, 2012, was $415 million, a modest increase from $407 million in the prior year period.
  • 2Florida Power & Light Company (FPL) reported a significant increase in net income of $45 million for the quarter, driven by regulatory asset recovery and investments in plant in service.
  • 3NextEra Energy Resources (NEER) saw a decrease in net income of $23 million for the quarter, largely due to higher unrealized mark-to-market losses on non-qualifying hedges and weaker performance from existing assets.
  • 4For the nine months ended September 30, 2012, net income increased by $226 million to $1,482 million, significantly benefiting from the absence of a prior-year loss on asset sales within NEER.
  • 5The company maintained strong liquidity, with approximately $5.5 billion in total net available liquidity at the end of the quarter.
  • 6Capital expenditures remain a focus, with significant investments planned for both regulated (FPL) and competitive (NEER) energy generation and infrastructure.
  • 7The company continues to benefit from federal tax credits, such as Production Tax Credits (PTCs) for wind projects, which are crucial for its renewable energy segment's profitability.

Frequently Asked Questions

The significant increase in net income for the nine months ended September 30, 2012, was primarily driven by the absence of a substantial loss incurred in the prior year related to the sale of natural gas-fired generating assets within the NEER segment. Additionally, higher results from FPL and improved performance in certain NEER businesses contributed to the overall increase.

NEE utilizes derivative instruments for risk management. For NEER's non-regulated business, unrealized mark-to-market gains and losses on 'non-qualifying hedges' can create earnings volatility. In the third quarter of 2012, NEER experienced higher net unrealized mark-to-market losses from these hedges, negatively impacting its results for the quarter. However, for FPL, the regulated utility, changes in the fair value of derivative instruments used for fuel procurement are generally deferred and recovered through customer rates, mitigating the impact on net income.

NextEra Energy has substantial capital expenditure plans. FPL is focused on modernizing its electric system and generation facilities, including the development of new nuclear capacity and modernization of power plants like Port Everglades. NEER is heavily investing in new renewable energy projects, particularly wind and solar generation facilities, both domestically and internationally. These investments are crucial for meeting future energy demand and expanding its renewable energy portfolio.

FPL filed a petition for a base rate increase in March 2012, seeking an annualized increase of approximately $517 million, with further increases tied to new plant operations. A joint stipulation and settlement proposal has been submitted that, if approved by the Florida Public Service Commission (FPSC), would result in an annualized revenue increase of $378 million starting in January 2013, with an allowed regulatory Return on Equity (ROE) of 10.70%. The FPSC's decision on this proposed agreement is expected by the end of 2012 and will be a key factor influencing FPL's future profitability and customer rates.