Why is there a large gap between GAAP EPS ($0.90) and adjusted EPS ($1.03) in Q3 2024?

The gap comes from adjustments that management excludes from adjusted earnings. The largest is $0.19 per share of net losses on non-qualifying hedges, mostly at Corporate and Other. Smaller items include a $0.05 per share gain on unrealized changes in nuclear decommissioning fund equities and a $0.02 per share NEP investment gain. Related tax effects offset part of these adjustments. Management says adjusted earnings better reflect fundamental earnings power, but these hedge and mark-to-market items can swing GAAP results materially from quarter to quarter.

How strong is FPL's growth outlook?

FPL's regulatory capital employed grew about 9.5% year over year, and Q3 capex was roughly $2 billion. Full-year 2024 capital investment is expected at $8.0 billion to $8.8 billion, and FPL's Q3 earnings rose to $0.63 per share from $0.58. Growth is tied to continued investment in the regulated asset base, which typically supports earnings growth as long as regulators allow timely recovery and a reasonable return.

What does the 10.5 GW of framework agreements mean for NEER's backlog?

The framework agreements with two Fortune 50 customers cover potential renewables and storage development of up to 10.5 GW through 2030. None of this capacity is in NEER's backlog yet, so it is an opportunity rather than contracted revenue. Investors should watch for these agreements converting into specific projects that are added to backlog, since that conversion is what would translate into future earnings.

What are the main risks to the reaffirmed guidance?

The guidance assumes normal weather and operating conditions, supportive commodity markets, access to capital at reasonable cost, continued public policy support for wind and solar, and no adverse changes in government incentives or litigation outcomes. The filing also cites risks from regulatory decisions, storm damage and cost recovery, rising interest and financing costs, and possible changes to tax credits or tariffs on renewable equipment. Management did not provide a GAAP reconciliation of its forward-looking adjusted EPS because of forecasting uncertainty around hedges and investment marks.

Did the hurricanes materially affect NextEra's financial results?

The release does not quantify storm costs or any earnings impact, and Q3 results were reported as strong. Management said FPL's hardening and smart-grid investments prevented hundreds of thousands of outages and that its generation fleet sustained no significant damage. Investors should still monitor storm-related costs, since the nine-month cash flow statement shows $139 million of recoverable storm-related costs at FPL, and the timing and extent of regulatory recovery will determine the eventual financial impact.

NEXTERA ENERGY INC 8-K: Earnings & Results

01—Abstract

Summary

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

NextEra Energy (NEE) reported third-quarter 2024 results on October 23, 2024 that beat the prior year on both GAAP and adjusted bases.

GAAP net income attributable to NextEra Energy was $1.852 billion^a, or $0.90 per share, versus $1.219 billion, or $0.60 per share, a year earlier. Adjusted earnings were $2.127 billion, or $1.03 per share, up from $0.94 per share, roughly a 10% increase. The gap between GAAP and adjusted results was driven mainly by non-qualifying hedge losses at Corporate and Other, which are excluded from adjusted earnings.

Management reaffirmed its long-term outlook, with 2024 adjusted EPS guided to $3.23 to $3.43^b and 2025 through 2027 ranges of $3.45 to $3.70, $3.63 to $4.00, and $3.85 to $4.32. The company also expects dividend growth of roughly 10% per year through at least 2026. The two business units performed well.

FPL, the regulated Florida utility, earned $1.293 billion^c ($0.63 per share) and grew regulatory capital employed about 9.5% year over year, with full-year 2024 capex guided to $8.0 billion to $8.8 billion. NextEra Energy Resources (NEER) added roughly 3 GW of renewables and storage to its backlog for the second straight quarter, bringing its four-quarter total to about 11 GW and its total backlog to over 24 GW. It also signed incremental framework agreements with two Fortune 50 customers for up to 10.5 GW through 2030, none of which is yet in backlog.

Management said FPL's grid hardening performed well during Hurricanes Helene and Milton, though the storms caused outages for roughly 680,000 and 2 million FPL customers, respectively. For investors, the key takeaways are the solid adjusted EPS growth, a large contracted pipeline supporting long-term growth, and a reaffirmed guidance framework.

The main watch items are the volatility of GAAP earnings from hedge and investment marks, storm-related costs and regulatory recovery, and the execution required to convert framework agreements into backlog. The filing was furnished under Item 2.02 and contains preliminary, unaudited figures.

02—Key points

Key Highlights

Q3 2024 adjusted EPS of $1.03, up about 10% from $0.94 in Q3 2023; GAAP EPS of $0.90 versus $0.60 a year earlier.
FPL Q3 net income of $1.293 billion ($0.63 per share), up from $1.183 billion, with regulatory capital employed up about 9.5% year over year.
NEER added approximately 3 GW of renewables and storage to backlog in Q3, the second consecutive quarter at that level; four-quarter origination totals about 11 GW and total backlog exceeds 24 GW.
Incremental framework agreements with two Fortune 50 customers cover up to 10.5 GW of potential renewables and storage projects through 2030, none yet in backlog.
Long-term adjusted EPS guidance was reaffirmed: $3.23–$3.43 for 2024, $3.45–$3.70 for 2025, $3.63–$4.00 for 2026, and $3.85–$4.32 for 2027, with dividend growth of about 10% per year through at least 2026.
Hurricanes Helene and Milton caused outages for roughly 680,000 and 2 million FPL customers; FPL restored about 95% of affected customers within days and reported no significant damage to its generation fleet.
Nine-month 2024 adjusted EPS was $2.90, versus $2.66 in the prior year period, and nine-month GAAP EPS was $2.79 versus $3.02, with the GAAP decline driven by non-qualifying hedge and other items.

03—Questions

Frequently Asked Questions

Why is there a large gap between GAAP EPS ($0.90) and adjusted EPS ($1.03) in Q3 2024?
The gap comes from adjustments that management excludes from adjusted earnings. The largest is $0.19 per share of net losses on non-qualifying hedges, mostly at Corporate and Other. Smaller items include a $0.05 per share gain on unrealized changes in nuclear decommissioning fund equities and a $0.02 per share NEP investment gain. Related tax effects offset part of these adjustments. Management says adjusted earnings better reflect fundamental earnings power, but these hedge and mark-to-market items can swing GAAP results materially from quarter to quarter.
How strong is FPL's growth outlook?
FPL's regulatory capital employed grew about 9.5% year over year, and Q3 capex was roughly $2 billion. Full-year 2024 capital investment is expected at $8.0 billion to $8.8 billion, and FPL's Q3 earnings rose to $0.63 per share from $0.58. Growth is tied to continued investment in the regulated asset base, which typically supports earnings growth as long as regulators allow timely recovery and a reasonable return.
What does the 10.5 GW of framework agreements mean for NEER's backlog?
The framework agreements with two Fortune 50 customers cover potential renewables and storage development of up to 10.5 GW through 2030. None of this capacity is in NEER's backlog yet, so it is an opportunity rather than contracted revenue. Investors should watch for these agreements converting into specific projects that are added to backlog, since that conversion is what would translate into future earnings.
What are the main risks to the reaffirmed guidance?
The guidance assumes normal weather and operating conditions, supportive commodity markets, access to capital at reasonable cost, continued public policy support for wind and solar, and no adverse changes in government incentives or litigation outcomes. The filing also cites risks from regulatory decisions, storm damage and cost recovery, rising interest and financing costs, and possible changes to tax credits or tariffs on renewable equipment. Management did not provide a GAAP reconciliation of its forward-looking adjusted EPS because of forecasting uncertainty around hedges and investment marks.
Did the hurricanes materially affect NextEra's financial results?
The release does not quantify storm costs or any earnings impact, and Q3 results were reported as strong. Management said FPL's hardening and smart-grid investments prevented hundreds of thousands of outages and that its generation fleet sustained no significant damage. Investors should still monitor storm-related costs, since the nine-month cash flow statement shows $139 million of recoverable storm-related costs at FPL, and the timing and extent of regulatory recovery will determine the eventual financial impact.

04—Continue

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