10-QPeriod: Q2 FY2021

NEXTERA ENERGY INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 26, 2021For Securities:NEENEE-PNNEE-PSNEE-PTNEE-PWNEE-PVNEE-PU

Summary

NextEra Energy, Inc. (NEE) reported mixed financial results for the three and six months ended June 30, 2021. While the FPL segment showed improved net income due to continued investments in infrastructure, the NEER segment experienced a significant decrease in net income, largely driven by unfavorable non-qualifying hedge activities and the absence of prior year gains on asset disposals. For the three months, net income attributable to NEE decreased year-over-year, primarily due to NEER's performance. However, for the six months, net income attributable to NEE increased, primarily due to improved results from Corporate and Other, and the FPL segment, partially offset by NEER's weaker performance. Operationally, NEE continues to invest heavily in its FPL segment, with significant capital expenditures planned for transmission and distribution. NEER is also actively developing new wind and solar projects. The company maintains a strong liquidity position with substantial revolving credit facilities. However, investors should note the significant impact of derivative instruments, particularly non-qualifying hedges, on NEER's earnings volatility. Additionally, FPL has filed a petition for a new four-year rate plan, with a decision expected in Q4 2021, which could impact future revenue requirements.

Financial Highlights

46 data points
Beta

Revenue

$4.70B

Net Income

$256.00M

5.4% Net Margin

EPS (Diluted)

$0.13

Total Assets

$135.01B

Cash & Equivalents

$884.00M

Free Cash Flow

$2.20B

Financial Statements
Beta
Revenue$4.70B
Operating Expenses$3.41B
Operating Income$510.00M
Net Income$256.00M
EPS (Basic)$0.13
EPS (Diluted)$0.13
Shares Outstanding (Basic)1.96B
Shares Outstanding (Diluted)1.97B

Key Highlights

  • 1Net income attributable to NEE decreased by $1,019 million for the three months ended June 30, 2021, primarily due to lower results at NEER, partially offset by higher results at FPL and Gulf Power.
  • 2For the six months ended June 30, 2021, net income attributable to NEE increased by $227 million, driven by higher results at Corporate and Other, FPL segment, and Gulf Power, partially offset by lower results at NEER.
  • 3The FPL segment's net income increased by $79 million for the three months and $174 million for the six months ended June 30, 2021, primarily due to continued investments in plant in service and other property.
  • 4NEER's net income decreased significantly in both periods, mainly attributable to unfavorable non-qualifying hedge activity and the absence of gains from asset disposals in the prior year.
  • 5NEE's total capital expenditures for the six months ended June 30, 2021, were $8.3 billion, a substantial increase from $6.3 billion in the prior year, reflecting investments in both FPL and NEER segments, including the acquisition of GridLiance.
  • 6The company maintained a strong liquidity position, with total net available liquidity of approximately $11.6 billion at June 30, 2021.
  • 7FPL has filed a petition for a four-year rate plan with the FPSC, expected to be decided in Q4 2021, which could impact future revenue requirements.

Frequently Asked Questions

The significant decrease in NEER's net income is primarily attributed to unfavorable non-qualifying hedge activities, which experienced losses due to changes in energy prices, and the absence of gains from asset disposals recognized in the prior year's comparable periods. These factors heavily impacted NEER's reported earnings.

FPL's net income has shown improvement, driven by continued investments in its infrastructure, including solar generation and transmission/distribution additions. The company has filed for a new four-year rate plan with the FPSC, aiming for increases in revenue requirements starting in January 2022. A decision on this plan is anticipated in the fourth quarter of 2021, which will provide clarity on future rate structures.

Derivative instruments, particularly those classified as 'non-qualifying hedges,' have a significant impact on NEE's earnings volatility. These derivatives, used for economic hedging but not meeting hedge accounting requirements, can lead to mark-to-market gains or losses that are recognized in earnings, even if the economic offset is not marked to market. This is a key factor contributing to NEER's fluctuating results. For FPL, most derivative impacts are deferred and passed through the fuel clause.

NextEra Energy significantly increased its capital expenditures in the first six months of 2021 compared to the prior year, reaching $8.3 billion. The primary investment areas are the FPL segment, focusing on generation, transmission, and distribution infrastructure, and NEER, which is investing in new wind, solar, and battery storage projects, as well as natural gas pipelines and transmission facilities. The acquisition of GridLiance also contributed to the higher capital expenditure.