10-QPeriod: Q2 FY2014

NEXTERA ENERGY INC Quarterly Report for Q2 Ended Jun 30, 2014

Filed July 31, 2014For Securities:NEENEE-PNNEE-PSNEE-PTNEE-PWNEE-PVNEE-PU

Summary

NextEra Energy, Inc. (NEE) reported solid financial results for the second quarter and first six months of 2014. The company's net income for the three months ended June 30, 2014, was $492 million, or $1.12 per diluted share, compared to $610 million, or $1.44 per diluted share, in the prior year period. For the six months ended June 30, 2014, net income was $921 million, or $2.10 per diluted share, an increase from $883 million, or $2.08 per diluted share, in the same period of 2013. Florida Power & Light (FPL) showed strong performance, with net income increasing due to ongoing investments in its infrastructure and a favorable regulatory return on equity. NextEra Energy Resources (NEER), the competitive energy segment, experienced a decrease in net income for the quarter primarily due to higher unrealized mark-to-market losses from non-qualifying hedges. However, for the year-to-date period, FPL's higher results, combined with the absence of significant one-time charges seen in the prior year (like the Spain solar project impairment), led to overall net income growth for NEE. The company maintains a strong liquidity position with approximately $6.2 billion in net available liquidity at June 30, 2014. Capital expenditures remain significant, focused on generation, transmission, and distribution projects, reflecting a commitment to growth and infrastructure improvement across both regulated and competitive segments. The company also announced the initial public offering of NextEra Energy Partners, LP (NEP) on July 1, 2014, which is expected to provide a platform for future growth in contracted clean energy projects.

Financial Highlights

43 data points
Beta

Net Income

$492.00M

EPS (Diluted)

$0.28

Total Assets

$71.59B

Cash & Equivalents

$622.00M

Free Cash Flow

$1.43B

Financial Statements
Beta
Operating Expenses$3.08B
Operating Income$951.00M
Net Income$492.00M
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)1.74B
Shares Outstanding (Diluted)1.76B

Key Highlights

  • 1NextEra Energy reported a net income of $492 million for Q2 2014, down from $610 million in Q2 2013, primarily due to non-qualifying hedge accounting impacts in NEER.
  • 2Year-to-date net income increased to $921 million for the six months ended June 30, 2014, from $883 million in the prior year, driven by FPL's performance and the absence of prior year impairment charges.
  • 3Florida Power & Light (FPL) demonstrated strong operational performance, with net income rising to $423 million in Q2 2014 and $770 million year-to-date, supported by investments in plant in service and a regulatory ROE of 11.28%.
  • 4NextEra Energy Resources (NEER) experienced a net income decrease to $81 million in Q2 2014, largely impacted by $132 million in after-tax unrealized mark-to-market losses from non-qualifying hedges.
  • 5Total assets grew to $71.59 billion as of June 30, 2014, from $69.31 billion at the end of 2013, reflecting continued investment in property, plant, and equipment.
  • 6The company maintained strong liquidity, with $6.19 billion in net available liquidity at June 30, 2014.
  • 7NextEra Energy Partners, LP (NEP) completed its initial public offering on July 1, 2014, establishing a new entity to own contracted clean energy projects.

Frequently Asked Questions

The primary driver for the decrease in net income for the second quarter of 2014 was a significant increase in unrealized mark-to-market losses from non-qualifying hedge activity within NextEra Energy Resources (NEER). These losses amounted to $146 million after-tax for the quarter, compared to only $9 million in the prior year period. This impact was partially offset by higher earnings at Florida Power & Light (FPL).

The initial public offering (IPO) of NextEra Energy Partners, LP (NEP) closed on July 1, 2014. While the IPO occurred just after the end of the reporting period, the formation of NEP and the associated transactions are noted in the Basis of Presentation (Note 1). NEE retained a majority interest in NEP OpCo and will consolidate NEP, presenting NEP's limited partner interest as a non-controlling interest. The IPO is expected to provide a platform for growth in contracted clean energy projects.

NextEra Energy has significant capital expenditure plans. For the remainder of 2014 through 2018, FPL has estimated capital expenditures of approximately $10.16 billion, primarily for transmission and distribution, and generation projects. NEER has estimated capital expenditures of approximately $5.26 billion for the same period, focused on wind, solar, and nuclear projects. These investments are aimed at meeting customer demand, improving infrastructure, and expanding its renewable energy portfolio.

The filing mentions several ongoing legal and regulatory matters. Notably, a potential EPA action regarding clean air act violations at the Scherer Unit No. 4 (in which FPL has an interest) is pending. Additionally, an Adelphia bankruptcy court case concerning a share repurchase is in its final stages, with a decision pending from the U.S. District Court. The company also notes potential impacts from new EPA rules on greenhouse gas emissions and Clean Water Act regulations, though the full financial impact is uncertain at this time. Management believes that the ultimate resolution of these matters, individually or collectively, will not have a material adverse effect on the financial statements.