NextEra Energy reports fourth quarter and full-year 2012 earnings
January 29, 2013
Q4 2012 Earnings Release
Q4 2012 Earnings Presentation
Q4 2012 Financial Tables
• NextEra Energy generated strong results in the fourth quarter and the full year 2012
•Florida Power & Light Company's customers will benefit from a four-year base rate settlement agreement approved by the Florida Public Service Commission
•NextEra Energy Resources commissioned approximately 1,500 megawatts of U.S. wind in 2012, setting an industry record
JUNO BEACH, Fla. - NextEra Energy, Inc. (NYSE: NEE) today reported 2012 fourth-quarter net income on a GAAP basis of $429 million, or $1.02 per share, compared with $667 million, or $1.59 per share, in the fourth quarter of 2011. On an adjusted basis, NextEra Energy's earnings were $433 million, or $1.03 per share, for the fourth quarter of 2012 compared with $395 million, or $0.93 per share, in the fourth quarter of 2011. Adjusted earnings exclude the mark-to-market effects of non-qualifying hedges, the net effect of other than temporary impairments (OTTI) on certain investments, and for 2011, the after tax loss on the sale of natural gas-fired generating assets, all of which primarily relate to the business of NextEra Energy Resources, LLC and its affiliated entities.
For the full-year 2012, NextEra Energy reported net income on a GAAP basis of $1.911 billion, or $4.56 per share, compared with $1.92 billion, or $4.59 per share, in 2011. On an adjusted basis, NextEra Energy's 2012 earnings were $1.914 billion, or $4.57 per share, for the full year, compared with $1.84 billion, or $4.39 per share, in 2011.
NextEra Energy's management uses adjusted earnings, which is a non-GAAP financial measure, internally for financial planning, for analysis of performance, for reporting of results to the Board of Directors, and as an input in determining whether performance goals are met for performance-based compensation under the company's employee incentive compensation plans. NextEra Energy also uses earnings expressed in this fashion when communicating its earnings outlook to analysts and investors. NextEra Energy management believes that adjusted earnings provide a more meaningful representation of NextEra Energy's fundamental earnings power. The attachments to this news release include a reconciliation of historical adjusted earnings to net income, which is the most directly comparable GAAP measure.
"NextEra Energy delivered a very strong quarter to finish the year as we executed on the largest capital investment program in the company's history," said NextEra Energy President and CEO Jim Robo. "At FPL, customers will benefit from a four-year base rate settlement agreement that is designed to help FPL continue to provide customers with exceptional reliability, award-winning customer service and the lowest electric bills in the state. And NextEra Energy Resources added more megawatts of U.S. wind in 2012 than any other company ever has in a single year, including more than 1,200 megawatts in the fourth quarter."
Florida Power & Light Company
Fourth-quarter 2012 net income for FPL, NextEra Energy's principal rate-regulated utility subsidiary, was $256 million, or $0.61 per share, compared with $216 million, or $0.51 per share, in the prior-year quarter. For the full year, net income was $1.24 billion, or $2.96 per share, compared with $1.07 billion, or $2.55 per share, in 2011.
For the fourth quarter of 2012, FPL's earnings increased over the prior-year comparable quarter primarily as a result of investments in the business that benefit customers. Over the course of 2012, the company invested more than $4 billion to continue to strengthen a customer value proposition that includes high reliability, award-winning customer service, a clean emissions profile and the lowest typical residential customer bill in Florida. FPL's fourth-quarter 2012 retail sales of electricity increased by 0.7 percent from the prior-year comparable quarter, due primarily to customer growth. FPL had approximately 34,000 more customers than during the prior-year comparable period of 2011. Excluding the impact of weather, underlying usage fell 0.5 percent during the fourth quarter of 2012.
In the fourth quarter, the Florida Public Service Commission approved a base rate settlement agreement that the company believes is fair and equitable to both customers and shareholders. The approved settlement agreement includes an allowed regulatory return on equity midpoint of 10.5 percent and a general retail base rate increase of $350 million that was implemented on Jan. 2 in conjunction with other annual rate adjustments, including a substantial reduction in the customer fuel charge. In addition, the agreement provides for base rate increases covering the capital and operating costs of new fuel-efficient power plants at Cape Canaveral, Riviera Beach and Port Everglades when they enter service, which is expected in 2013, 2014 and 2016, respectively. At the same time these new plants go into service, decreases in the fuel portion of customer bills are expected to significantly offset these base rate increases. During the operating lifetimes of these three new, efficient power plants, customers will save more than $1 billion combined in fuel and other costs, relative to avoided higher-cost generation or purchased power.
Also in the fourth quarter, the company issued a request for proposals to build a third major natural gas pipeline to serve Florida's growing need for natural gas power. The two major pipelines now serving the state are near capacity, and a third pipeline would help secure the continued reliability and security of this fuel source. Proposals will be evaluated in the second quarter of 2013, with construction expected to be completed in 2017, subject to relevant regulatory approvals.
The main drivers of FPL's full-year 2012 earnings growth were the investments in clean and efficient power generation. During the year, FPL completed extended power uprates on three of its four nuclear units. For the full year, weather normalized sales rose 1.8 percent and underlying usage was up 1.2 percent compared to 2011.
Operationally, FPL's fossil fuel fleet set a new record for its fuel efficiency in 2012, bringing its systemwide heat rate down to 7,669 British thermal units (BTU) per kilowatt hour, which is 24 percent better than the average heat rate for the industry of 10,040 BTUs per kilowatt hour for 2011, the most recent year for which data are available. Since 2001, FPL's heat rate has improved by 20 percent, resulting in more than $400 million in savings for customers in 2012 as a result of increased fuel efficiency. FPL continues to rank in the top quartile nationally for reliability, and the company's five-year average for the System Average Interruption Duration Index (SAIDI) was the lowest among all Florida investor-owned utilities for the period 2007 to 2011. In 2012 the company continued to improve the electric grid through its Energy Smart Florida program, including the installation of another 1.5 million smart meters throughout the state, bringing the cumulative total to 4.3 million.
NextEra Energy Resources
NextEra Energy Resources, the competitive energy business of NextEra Energy, reported fourth-quarter 2012 net income on a GAAP basis of $171 million, or $0.41 per share, compared with $402 million, or $0.96 per share, in the prior-year quarter. On an adjusted basis, NextEra Energy Resources' earnings were $175 million, or $0.42 per share, compared with $128 million, or $0.30 per share, in the fourth quarter of 2011. For the full-year 2012, NextEra Energy Resources reported net income on a GAAP basis of $687 million, or $1.64 per share, compared with $774 million, or $1.85 per share, in 2011. On an adjusted basis, NextEra Energy Resources' earnings were $693 million, or $1.66 per share, compared with $679 million, or $1.62 per share, for the full-year 2011.
NextEra Energy Resources' contribution to adjusted earnings in the fourth quarter improved 12 cents from last year, primarily due to contributions from new investments of 6 cents. Gas infrastructure contributed 4 cents from increased investment, and asset sales and restructurings contributed 3 cents over the same period last year.
In the fourth quarter, the company celebrated the commissioning of its 10,000th megawatt (MW) of wind energy. In total, NextEra Energy Resources added roughly 1,500 MW of new U.S. wind projects to its portfolio in 2012, marking the largest wind program ever completed in this country in a single year. The company's wind portfolio operates in 19 states and four Canadian provinces, representing a total capital investment of more than $15 billion.
The main driver of the increase in NextEra Energy Resources' full-year 2012 adjusted earnings over the previous year was growth in the business, which added 22 cents, including 4 cents from an increase in Convertible Investment Tax Credit elections. The contribution from the Customer Supply and Trading businesses increased 11 cents over the prior year, as those businesses recovered from a difficult 2011. The gas infrastructure business added 6 cents, primarily due to increased investment. In addition, the absence of impairment charges that negatively affected 2011 results added 8 cents to the full-year comparisons.
These positives were largely offset by a year-over-year decrease in contributions from existing investment. More than half of these lower contributions are related to above-market hedge roll-offs and Production Tax Credit roll-offs. Wind resource was also well below the long-term average and negatively affected the comparison to the previous year. Additionally, foregone operating earnings from gas assets sold in 2011 negatively affected results when compared to the prior year. However, the full effect of these asset sales, which also includes some indirect adjustment to the company's capital structure, is a net positive impact to adjusted earnings in 2012 and going forward.
Corporate and Other
Corporate and Other's fourth-quarter 2012 contribution to earnings per share on a GAAP basis was 0 cents, compared with 12 cents per share in the comparable quarter of the prior year. For the full year, Corporate and Other reduced earnings by 4 cents per share in 2012, compared with a contribution of 19 cents per share in 2011.
For the full-year 2012 on an adjusted basis, Corporate and Other reduced results by 5 cents per share, compared with a contribution of 22 cents per share for the prior year.
NextEra Energy expects adjusted earnings per share in 2013 to be in the range of $4.70 to $5.00 per share. The company also continues to expect that adjusted earnings per share in 2014 will be in the range of $5.05 to $5.65.
NextEra Energy's adjusted earnings expectations exclude the cumulative effect of adopting new accounting standards, the unrealized mark-to-market effect of non-qualifying hedges and net other than temporary impairment losses on securities held in NextEra Energy Resources' nuclear decommissioning funds, none of which can be determined at this time. In addition, NextEra Energy's adjusted earnings expectations assume, among other things: normal weather and operating conditions; no further significant decline in the national or the Florida economy; supportive commodity markets; public policy support for wind and solar development and construction; market demand and transmission expansion to support wind and solar development; access to capital at reasonable cost and terms; no acquisitions or divestitures; 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.
As previously announced, NextEra Energy's fourth-quarter and full-year earnings conference call is scheduled for 9 a.m. ET today