- NextEra Energy achieves strong 2017 results; increases financial expectations and extends outlook by an additional year through 2021
- FPL will reduce customer bills by using federal tax savings to forgo recovery of the approximately
$1.3 billion Hurricane Irma restoration cost – saving each of FPL's nearly 5 million customers an average of $250 and potentially avoiding a base rate increase for up to two years
- NextEra Energy Resources executes record year for wind and solar origination, adding approximately 2,700 megawatts to its contracted renewables backlog and 700 megawatts to its repowering backlog
JUNO BEACH, Fla. - NextEra Energy, Inc. (NYSE: NEE) today reported 2017 fourth-quarter net income attributable to NextEra Energy on a GAAP basis of $2.155 billion, or $4.55 per share, compared to $966 million, or $2.06 per share, for the fourth quarter of 2016. On an adjusted basis, NextEra Energy's 2017 fourth-quarter earnings were $590 million, or $1.25 per share, compared to $566 million, or $1.21 per share, in the fourth quarter of 2016.
For the full year 2017, NextEra Energy reported net income attributable to NextEra Energy on a GAAP basis of $5.378 billion, or $11.38 per share, compared to $2.912 billion, or $6.25 per share, in 2016. On an adjusted basis, NextEra Energy's full-year 2017 earnings were $3.165 billion, or $6.70 per share, compared to $2.884 billion, or $6.19 per share, in 2016, which represents year-over-year growth in adjusted earnings per share of 8.2 percent.
Adjusted earnings for these periods exclude the effects of non-qualifying hedges, the impacts of tax reform, an impairment charge, gains on disposal of a business/assets, the net effect of other than temporary impairments (OTTI) on certain investments, operating results from the Spain solar projects and merger-related expenses.
NextEra Energy's management uses adjusted earnings, which is a non-GAAP financial measure, internally for financial planning, analysis of performance, reporting of results to the board of directors and as an input in determining performance-based compensation under the company's employee incentive compensation plans. NextEra Energy also uses earnings expressed in this fashion when communicating its financial results and earnings outlook to analysts and investors. NextEra Energy's management believes that adjusted earnings provide a more meaningful representation of NextEra Energy's fundamental earnings power. A reconciliation of historical adjusted earnings to net income attributable to NextEra Energy, which is the most directly comparable GAAP measure, is included in the attachments to this news release.
"Our performance during 2017 was strong both financially and operationally with outstanding execution on our initiatives across the board," said Jim Robo, chairman and chief executive officer of NextEra Energy. "We grew 2017 adjusted earnings per share by 8.2 percent and delivered a total shareholder return of more than 34 percent, outperforming both the S&P 500 and the S&P 500 Utilities Index by a wide margin. Last week, NextEra Energy was ranked No. 1 overall among electric and gas utilities on Fortune's 2018 list of the 'Most Admired Companies' for the 11th time in
12 years. This is a testament to our employees’ passion, hard work and relentless commitment to excellence each and every day. At FPL, we grew regulatory capital employed approximately 10.3 percent by making significant progress on our major initiatives, including advancing one of the largest solar expansions ever in the eastern U.S., while keeping electric bills low, maintaining high reliability and delivering superior customer service. NextEra Energy Resources had a record year, adding approximately 2,700 megawatts to its contracted renewables backlog and 700 megawatts to its repowering backlog, while commissioning roughly 2,150 megawatts of wind and solar projects, including repowering. Additionally, the federal tax reform outcome is positive and will
immediately benefit FPL customers while being accretive to NextEra Energy shareholders. Overall, NextEra Energy is as well-positioned as it's ever been with excellent prospects for growth and one of the strongest balance sheets in the sector. We are extremely proud of our long-term track record of providing value creation for our shareholders and are poised to continue that track record going forward. With this in mind, we are increasing our financial expectations to reflect the approximately
45 cents per share 2018 benefit from tax reform and extending them by an additional year through
2021."
Florida Power & Light Company
NextEra Energy's principal rate-regulated electric utility subsidiary, Florida Power & Light Company (FPL), reported fourth-quarter 2017 net income on a GAAP basis of $344 million, or $0.73 per share, compared to $371 million, or $0.79 per share, for the prior-year quarter. For the fourth quarter and full year 2017, FPL is excluding as a tax reform-related item from adjusted earnings the $50 million after-tax net impact that results primarily from the shortfall of available reserve amortization to offset the Hurricane Irma cost recovery expense. On an adjusted basis, FPL's earnings for the fourth quarter of 2017 were
$394 million, or $0.84 per share, compared to $371 million, or $0.79 per share, for the fourth quarter of
2016. For the full year 2017, FPL reported net income on a GAAP basis of $1.880 billion, or $3.98 per share, compared to $1.727 billion, or $3.71 per share, in 2016. On an adjusted basis, FPL's earnings for the full year 2017 were $1.930 billion, or $4.09 per share, compared to $1.727 billion, or $3.71 per share in 2016.
FPL's growth was driven by continued investments in clean, efficient, modernized generation, as well as a stronger and smarter grid, to further improve the already outstanding efficiency and reliability of its system. FPL's capital expenditures were approximately $1.5 billion in the fourth quarter of 2017, bringing full-year capital investments to approximately $5.3 billion. Regulatory capital employed in 2017 grew approximately 10.3 percent, compared to the prior year. During the fourth quarter, FPL's average number of customers increased by approximately 55,300 from the prior-year comparable quarter.
FPL continued to deliver a customer value proposition that includes high reliability, award-winning customer service, a clean emissions profile and a typical residential customer bill that is among the lowest in Florida and the nation. In 2017, FPL achieved its best-ever service reliability performance, and was named the winner of the 2017 ReliabilityOneTM Award for Outstanding Reliability Performance in the Southeast U.S. by PA Consulting Group, Inc. for the fourth consecutive year.
In 2017, FPL responded to Hurricane Irma – one of the largest, most powerful storms to ever hit Florida – and the company's response was unprecedented both in scale and the speed of power restoration. FPL had previously announced its intention to begin recovering the approximately $1.3 billion restoration cost by implementing a surcharge on customer bills through 2020. Instead, FPL plans to reduce customer bills by using federal tax savings to forgo recovery of the Hurricane Irma restoration cost, which will save each of FPL's nearly 5 million customers an average of approximately $250. In addition, FPL may be able to use future federal tax savings to continue operating under the current base rate agreement beyond the initial term, which covers through 2020, for up to two additional years, potentially avoiding base rate increases to customer bills in 2021 and 2022. FPL believes this is the fastest way to begin passing tax savings along to customers and the most appropriate approach to keeping rates low and stable for years to come.
FPL continued to make significant progress on its major initiatives in 2017, including advancing one of the largest solar expansions ever in the eastern U.S. Construction on four solar energy centers, totaling approximately 300 MW, was completed on schedule and under budget. An additional four 74.5-MW solar energy centers are being built across FPL's service territory and are all on track to begin providing cost- effective energy to FPL customers this quarter. Development continues on an additional 1,600 MW of solar projects planned for beyond 2018, and FPL has secured potential sites that could support more
than 5 gigawatts of FPL's ongoing solar expansion.
Construction on the state-of-the-art, natural-gas fueled FPL Okeechobee Clean Energy Center remains on schedule and on budget. The approximately 1,750-MW project, expected to begin operation in
mid-2019, will be one of the cleanest, most efficient plants of its kind in the world. Additionally, progress continues to advance on the 1,200-MW FPL Dania Beach Clean Energy Center. The facility, which will be highly efficient and fueled by clean-burning natural gas, is expected to begin operation by mid-2022 and produce more than $335 million in projected net savings for FPL customers over its operational life.
This month, FPL retired the St. Johns River Power Park in Jacksonville, Florida, an approximately 1,300- MW coal-fired power plant co-owned with JEA. Closure of the plant is projected to prevent more than 5.6 million tons of carbon dioxide emissions annually and save FPL customers an estimated $183 million.
NextEra Energy Resources
NextEra Energy Resources, the competitive energy business of NextEra Energy, reported a fourth- quarter 2017 contribution to net income attributable to NextEra Energy on a GAAP basis of $1.894 billion, or $4.00 per share, compared to $360 million, or $0.77 per share, in the prior-year quarter. On an
adjusted basis, NextEra Energy Resources' earnings for the fourth quarter of 2017 were $230 million, or
$0.49 per share, compared to $191 million, or $0.41 per share, for the fourth quarter of 2016. For the full year 2017, NextEra Energy Resources reported net income attributable to NextEra Energy on a GAAP basis of $2.963 billion, or $6.27 per share, compared to $1.125 billion, or $2.41 per share, in 2016. On an adjusted basis, NextEra Energy Resources' earnings for the full year 2017 were $1.230 billion, or $2.61 per share, compared to $1.090 billion, or $2.33 per share, for the full year 2016.
This quarter's adjusted results exclude a $1.925 billion gain related to a reduction in deferred tax liabilities resulting from tax reform and a charge associated with the Duane Arnold Energy Center. In late 2017, the company concluded that it is unlikely that the facility's primary customer will extend the current contract after it expires in 2025. Without a contract extension, the facility would likely close at the end of 2025 despite being licensed to operate until 2034. As a result, during the fourth quarter, Duane Arnold Energy Center's book value and asset retirement obligation were reviewed and an after-tax impairment of $258 million was recorded, reflecting the company's belief that it is unlikely the project will operate after 2025. NextEra Energy Resources continues to pursue a contract extension that would enable Duane Arnold Energy Center to continue operations.
NextEra Energy Resources' contribution to adjusted earnings per share in the fourth quarter of 2017 increased by $0.08 against the prior-year comparable period. The business' results were primarily driven by contributions from new investments and increased contributions from existing generation assets as a result of repowering, partially offset by lower contributions from the gas infrastructure business.
For the full year 2017, NextEra Energy Resources' contribution to adjusted earnings per share increased
$0.28 from the prior-year comparable period. Growth was driven by continued new additions to its renewables portfolio, including the roughly 2,500 MW of new wind and solar projects commissioned in 2016, which are included in new investments during the first 12 months of operation, as well as contributions from new natural gas pipeline investments.
NextEra Energy Resources achieved another record year of origination with approximately 1,700 MW of new wind projects and more than 1,000 MW of new solar projects, including the largest combined solar and storage facility in the U.S. announced to date, and added roughly 700 MW of wind repowering to its backlog. In addition, the company commissioned approximately 2,150 MW of wind and solar in the U.S., including the first approximately 1,600 MW of its repowering program.
Both the Sabal Trail and Florida Southeast Connection natural gas pipeline projects successfully achieved commercial operation on budget and on schedule. Additionally, the Mountain Valley Pipeline made excellent progress over the year, receiving its first limited notice to proceed from the Federal Energy Regulatory Commission this week, and it remains on track to achieve a year-end 2018 commercial operation date.
Corporate and Other
In the fourth quarter of 2017 on a GAAP basis, Corporate and Other earnings decreased $0.68 per share, compared to the prior-year quarter. On an adjusted basis, Corporate and Other earnings for the fourth quarter of 2017 decreased $0.09 per share, compared to the prior-year quarter. During the fourth quarter of 2017, the company capitalized on the ongoing favorable financing market conditions and completed several refinancing initiatives. The combined financings, which have roughly a $165 million after-tax net present value benefit on a cash basis, resulted in a net income reduction of approximately $33 million, or
$0.07 per share. For full year 2017, Corporate and Other earnings increased $1.00 per share on a GAAP basis, compared to 2016, due to a gain on the sale of FiberNet in early 2017. On an adjusted basis, full- year 2017 Corporate and Other earnings decreased $0.15 per share year-over-year, primarily reflecting the costs related to fourth quarter 2017 refinancing initiatives.
Outlook
Based on the tax reform benefit, which is expected to be approximately 45 cents in 2018, NextEra
Energy is increasing its financial expectations ranges and now expects adjusted earnings per share to be in the range of $7.45 to $7.95 for 2018. With the certainty provided by the new tax reform legislation and the anticipated continued strength of the investment opportunities at both FPL and NextEra Energy Resources, NextEra Energy is also extending its longer-term growth outlook to 2021. The company expects a compound annual growth rate in adjusted earnings per share to be in a range of 6 to 8 percent through 2021, off a revised base at the midpoint of the new 2018 range, or $7.70 per share. In 2019, the company now expects adjusted earnings per share to be in the range of $8.00 to $8.50. For 2020 and
2021, the company now expects adjusted earnings per share to be in the range of $8.55 to $9.05 and
$9.20 to $9.75, respectively.
NextEra Energy's adjusted earnings expectations exclude the cumulative effect of adopting new accounting standards, the effect of non-qualifying hedges, the effects of tax reform, the net gains related to the investment in NextEra Energy Partners, LP, as well as unrealized gains and losses on equity securities and net OTTI losses on debt securities held in NextEra Energy Resources' nuclear decommissioning funds, none of which can be determined at this time. Adjusted earnings expectations also exclude the operating results from the Spain solar projects and merger-related expenses. In addition, adjusted earnings expectations assume, among other things: normal weather and operating conditions; continued recovery of the national and the Florida economy; supportive commodity markets; current forward curves; public policy support for wind and solar development and construction; market
demand and transmission expansion to support wind and solar development; market demand for pipeline capacity; access to capital at reasonable cost and terms; no divestitures other than to NextEra Energy Partners, LP or acquisitions; no adverse litigation decisions; and no changes to governmental tax policy
or incentives. Please see the accompanying cautionary statements for a list of the risk factors that may affect future results.
