Economic growth, capital spending boost NextEra Energy fourth-quarter earnings

NextEra Energy's adjusted earnings grew 3.7% year over year to $814 million or 41 cents a share in the fourth quarter, as growth driven by recovery from the novel coronavirus pandemic and new electric utility and merchant renewable investments outweighed lighter power usage due to milder weather.

During a Jan. 25 Q4 and full-year earnings conference call, NextEra Energy chairman and CEO James Robo described 2021 as "an outstanding year," in which "we executed the largest capital program in our history, investing approximately $16 billion in American energy infrastructure in 2021."

For the year, adjusted earnings totaled more than $5 billion or $2.55 a share. For GAAP earnings, NextEra reported net income of $1.2 billion or 61 cents a share in the fourth quarter and $3.57 billion, or $1.81/share in all of 2021. The call also announced increased earnings guidance for 2022 and 2023 and continued earnings growth in 2024 and 2025.

NextEra Energy owns Florida Power & Light, in which Gulf Power was merged in January 2021, but the company reported the two utilities' earnings separately. NextEra also owns NextEra Energy Resources and NextEra Energy Partners, which collectively develop and operate renewable generation in the US and Canada, including about 18.2 GW of wind capacity.

In early 2020 pandemic recession, Florida's unemployment rate topped 14%, but it was below 4.4% in December. The Sunshine state's gross domestic in 2021 was about $1.2 trillion, up about 8% from pre-pandemic levels, said Rebecca Kujawa, NextEra chief financial officer and director.

"At the same time, Florida's population continues to grow at one of the fastest rates in the nation," Kujawa said. Florida added more people from other states than any other in 2021, she said.. " We believe this is a reflection of Florida's unique proposition in terms of great weather, low taxes and a pro-business economy, all of which should support ongoing customer growth at Florida Power & Light."

Executive suite shuffle

Robo also discussed top-level executive changes, in which he will transition to executive chairman March 1, while John Ketchum will serve as NextEra Energy's president and CEO, Kujawa becomes NextEra Energy Resources president and CEO, and Kirk Cruise becomes NextEra Energy's executive vice president and CFO. Eric Silagy, FPL president and CEO, becomes FPL chairman and CEO.

FPL's average customer numbers increased in Q4 by almost 82,000 from Q4 2020, Kujawa said, but FPL's Q4 retail sales, excluding Gulf Power, were down 1.5% on the year due to "an unfavorable weather comparison." Gulf Power retail sales were down 4.8% in Q4 on the year, despite a customer count increase of 8.400.

"For 2021, FPL's retail sales increased 1.7% from the prior year on a weather-normalized basis, driven primarily by ongoing strong customer growth and a 1.5% year-over-year increase in underlying usage per customer," Kujawa said.

Robo listed the following renewable investments in 2021:

• Florida Power & Light: 1.5 GW of community solar and a 409-MW Manatee Energy Storage Center
• NextEra Energy Resources: 3.8 GW of renewables and energy storage
• NextEra Energy Partners: about 1.9 GW of long-term contracted renewables and storage from NextEra Energy Resources and about 500 MW of wind assets from third parties

NextEra Energy Resources added 7.2 GW to its renewables and storage backlog in 2021, Robo said, which has grown at more than a 20% compound annual rate since 2017.

"With the significant additions to our backlog of signed contracts over the last year, we've now signed nearly 80% of the megawatts needed to realize in the midpoint of our 2021 to 2024 development expectations range, with significant time remaining to sign additional power purchase agreements," Robo said.

Build Back Better

During the call, one analyst asked what role the Biden administration's Build Back Better renewable energy infrastructure plan, currently stalled in Congress, might play in NextEra's renewable projections. Robo said his company's plans do not depend on Build Back Better.

"I think about BBB as an accelerator, not as ... something that we would need in order to deliver on what we just laid out," Robo said, adding that he is "optimistic" that such a bill might pass in 2022, but perhaps not until after the midterm elections.

NextEra increased its projected adjusted earnings for 2022 and 2023 and initiated guidance for 2024 and 2025 along the following lines:

• 2022: $2.75/share to $2.85/share, up from prior range of $2.55/share to $2.75/share
• 2023: $2.93/share to $3.08/share, up from prior range of $2.77/share to $2.97/share
• 2024: $3.13/share to $3.33/share
• 2025: $3.35/share to $3.60/share

"And we will be disappointed if we are not able to deliver financial results at or near the top end of these ranges for each year," Kujawa said.