Why are GAAP and adjusted EPS different, and which should investors focus on?

GAAP EPS of $1.10 includes mark-to-market effects from non-qualifying hedges (a $0.22 benefit), unrealized gains on nuclear decommissioning fund equity securities, and NEP investment gains. Management says adjusted EPS of $0.91 better reflects fundamental earnings power, and it is the metric used for company guidance, though it is a non-GAAP measure.

Is NextEra on track to meet its 2024 earnings guidance?

The company kept its 2024 adjusted EPS range of $3.23 to $3.43 unchanged. Q1 adjusted EPS of $0.91 is a solid start, and management said it expects results at or near the top of its expectation ranges, but the filing does not provide quarterly phasing, so the full-year outcome depends on later quarters and the assumptions noted in the release.

What is driving growth at FPL and NEER?

FPL growth comes mainly from continued capital investment, with regulatory capital employed up about 11.5% year over year and strong customer growth. NEER growth reflects new investments (about $0.15 per share of EPS contribution) and a higher customer supply contribution, partly offset by lower existing clean energy earnings and other items.

What are the main risks highlighted in the release?

The release cites regulatory outcomes and cost recovery, changes to government incentives and tariffs for renewables, commodity and hedging risk, credit and capital market access, project execution and supply chain disruption, and nuclear operations. It also notes that adjusted EPS expectations assume normal weather, supportive commodity markets, and continued public policy support for wind and solar.

What is the outlook for capital spending and dividends?

FPL expects full-year 2024 capital investment of $7.8 to $8.8 billion and projects its solar share rising from about 6% of generation in 2023 to 38% by 2033, with roughly 21 GW of solar and over 4 GW of storage in its Ten-Year Site Plan. NextEra expects to grow its dividend per share at roughly 10% annually through at least 2026, off a 2024 base.

NEXTERA ENERGY INC 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.

NextEra Energy (NEE) reported first-quarter 2024 results on April 23, 2024, with GAAP net income attributable to NextEra Energy of $2.268 billion^a, or $1.10 per share, up from $2.086 billion, or $1.04 per share, a year earlier.

Adjusted earnings were $1.873 billion^b, or $0.91 per share, versus $1.678 billion, or $0.84 per share, a year-over-year increase of roughly 8.3%. The GAAP increase was driven largely by non-qualifying hedge gains at Corporate and Other and NEER, which are excluded from adjusted results, so investors should focus on the adjusted figures for underlying earnings power. Management reiterated its long-term outlook without change: 2024 adjusted EPS of $3.23 to $3.43, 6% to 8% annual adjusted EPS growth for 2025 and 2026 (implying $3.45 to $3.70 and $3.63 to $4.00), and roughly 10% annual dividend per share growth through at least 2026.

By segment, Florida Power & Light (FPL) grew adjusted earnings to $1.172 billion^c ($0.57 per share) from $1.070 billion ($0.53 per share), supported by continued capital investment. FPL spent about $2.3 billion of capex in the quarter, with full-year 2024 capex guided to $7.8 billion to $8.8 billion, and regulatory capital employed rose about 11.5%. NextEra Energy Resources (NEER) adjusted earnings were $828 million ($0.40 per share), up from $732 million ($0.36 per share), and it added roughly 2,765 MW of renewables and storage to its backlog, bringing the total to about 21.5 GW.

Operating revenues were $5.73 billion^d, down from $6.72 billion, largely reflecting lower NEER revenues. The filing is a furnished (not filed) Item 2.02 8-K attaching the earnings press release as Exhibit 99.

Investors should note that the release labels the statements as preliminary and unaudited, and that the outlook depends on assumptions such as normal weather, supportive commodity markets, and continued public policy support for wind and solar. The company also flagged risks including regulatory outcomes, interest rate and credit market conditions, and changes to renewable energy incentives.

02—Key points

Key Highlights

GAAP net income attributable to NEE was $2.268 billion ($1.10/share) vs. $2.086 billion ($1.04/share) in Q1 2023; adjusted earnings were $1.873 billion ($0.91/share), up about 8.3% from $0.84/share.
FPL adjusted earnings rose to $1.172 billion ($0.57/share) from $1.070 billion ($0.53/share), driven by continued capital investment and its strongest customer growth quarter in over 15 years (100,000+ net customer additions).
NEER adjusted earnings increased to $828 million ($0.40/share) from $732 million ($0.36/share), while GAAP NEER earnings fell to $966 million ($0.47/share) from $1.440 billion ($0.72/share) due to non-qualifying hedge and other adjustments.
NEER added roughly 2,765 MW to its backlog, its second-best origination quarter ever and its best for both solar and storage, bringing total backlog to about 21.5 GW.
Management reaffirmed 2024 adjusted EPS guidance of $3.23 to $3.43 and expects 6% to 8% annual adjusted EPS growth in 2025 and 2026, plus roughly 10% annual dividend growth through at least 2026.
FPL placed about 1,640 MW of solar into service in Q1, bringing its owned solar portfolio above 6,400 MW, and full-year 2024 capex is guided to $7.8 to $8.8 billion.
Consolidated operating revenues declined to $5.73 billion from $6.72 billion, and the balance sheet shows total debt rising, with long-term debt at $65.9 billion versus $61.4 billion at year-end 2023.

03—Questions

Frequently Asked Questions

Why are GAAP and adjusted EPS different, and which should investors focus on?
GAAP EPS of $1.10 includes mark-to-market effects from non-qualifying hedges (a $0.22 benefit), unrealized gains on nuclear decommissioning fund equity securities, and NEP investment gains. Management says adjusted EPS of $0.91 better reflects fundamental earnings power, and it is the metric used for company guidance, though it is a non-GAAP measure.
Is NextEra on track to meet its 2024 earnings guidance?
The company kept its 2024 adjusted EPS range of $3.23 to $3.43 unchanged. Q1 adjusted EPS of $0.91 is a solid start, and management said it expects results at or near the top of its expectation ranges, but the filing does not provide quarterly phasing, so the full-year outcome depends on later quarters and the assumptions noted in the release.
What is driving growth at FPL and NEER?
FPL growth comes mainly from continued capital investment, with regulatory capital employed up about 11.5% year over year and strong customer growth. NEER growth reflects new investments (about $0.15 per share of EPS contribution) and a higher customer supply contribution, partly offset by lower existing clean energy earnings and other items.
What are the main risks highlighted in the release?
The release cites regulatory outcomes and cost recovery, changes to government incentives and tariffs for renewables, commodity and hedging risk, credit and capital market access, project execution and supply chain disruption, and nuclear operations. It also notes that adjusted EPS expectations assume normal weather, supportive commodity markets, and continued public policy support for wind and solar.
What is the outlook for capital spending and dividends?
FPL expects full-year 2024 capital investment of $7.8 to $8.8 billion and projects its solar share rising from about 6% of generation in 2023 to 38% by 2033, with roughly 21 GW of solar and over 4 GW of storage in its Ten-Year Site Plan. NextEra expects to grow its dividend per share at roughly 10% annually through at least 2026, off a 2024 base.

04—Continue

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