NextEra Energy, Inc. and Florida Power & Light Company — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. The combined filing covers NextEra Energy, Inc. (NEE), primarily consisting of Florida Power & Light Company (FPL) and NextEra Energy Resources (NEER), and FPL as a separate registrant. Results are unaudited.
Business context
- FPL serves approximately 5.9 million customer accounts in Florida and operates as a rate-regulated electric utility.
- NEER comprises competitive energy and rate-regulated transmission businesses, including wind, solar, battery storage, nuclear, gas infrastructure and customer supply activities.
- Management stated that interim results may not be indicative of full-year performance.
Key financial metrics
| Metric | NEE Q1 2024 | NEE Q1 2023 | Change |
|---|
| Operating revenues | $5.731 billion | $6.716 billion | Down $985 million |
| Operating income | $2.013 billion | $2.942 billion | Down $929 million |
| Net income attributable to NEE | $2.268 billion | $2.086 billion | Up $182 million |
| Diluted EPS | $1.10 | $1.04 | Up $0.06 |
| Operating margin | 35.1% | 43.8% | Down 8.7 percentage points |
| Cash flow from operations | $3.077 billion | $1.673 billion | Up $1.404 billion |
| Capital expenditures and investments | $9.711 billion | $7.245 billion | Up $2.466 billion |
| FPL metric | Q1 2024 | Q1 2023 | Change |
|---|
| Operating revenues | $3.834 billion | $3.919 billion | Down $85 million |
| Operating income | $1.676 billion | $1.546 billion | Up $130 million |
| Net income | $1.172 billion | $1.070 billion | Up $102 million |
| Operating margin | 43.7% | 39.4% | Up 4.3 percentage points |
| Cash flow from operations | $2.265 billion | $1.679 billion | Up $586 million |
- NEE’s effective tax rate declined to 10.5% from 17.8%, primarily reflecting higher renewable energy tax credits and other tax effects. FPL’s effective tax rate was 19.2%, compared with 19.7%.
- NEE ended the quarter with $2.213 billion of cash, cash equivalents and restricted cash, down from $4.189 billion at March 31, 2023 and down $1.207 billion during the quarter on a consolidated cash-flow basis.
- NEE reported total debt, including current and long-term portions, of approximately $72.1 billion at March 31, 2024, compared with $68.3 billion at December 31, 2023. FPL debt was approximately $24.1 billion, down from $25.3 billion.
- NEE reported approximately $10.8 billion of net available liquidity at March 31, 2024, including $3.969 billion for FPL and $6.781 billion for NEECH.
- NEE paid $1.058 billion of common-stock dividends, or $0.515 per share, during the quarter, compared with $930 million, or $0.4675 per share, in the prior-year quarter.
Material changes versus the prior comparable period
- FPL: Earnings increased primarily because continued investment increased average rate base by approximately $6.8 billion. Lower fuel and energy prices reduced revenue and fuel expense; unfavorable weather reduced average usage per retail customer by approximately 3.2%, partly offset by 1.7% customer-account growth.
- FPL recorded approximately $572 million of reserve amortization in Q1 2024, compared with $373 million in Q1 2023, while earning an approximately 11.80% regulatory ROE in both periods.
- NEER: Net income declined $474 million to $966 million. New investments contributed $299 million of incremental after-tax earnings, but non-qualifying hedge activity was $608 million less favorable than in the prior year. Higher new-investment earnings and customer supply results partly offset the hedge impact.
- Corporate and Other: Results improved by $554 million, primarily from more favorable interest-rate derivative mark-to-market effects.
- NEE operating revenues declined largely because prior-year non-qualifying commodity hedge gains were substantially higher. Q1 2024 included approximately $51 million of such gains versus $1.095 billion in Q1 2023.
- Operating cash flow improved substantially, but investing cash use increased to $9.321 billion from $7.817 billion, primarily reflecting higher NEER independent-power investments.
- NEE issued $7.811 billion of long-term debt during the quarter and issued $1.0 billion of exchangeable senior notes due 2027, with an initial exchange price of approximately $68.06 per NEE share.
Guidance, outlook, risks and unusual items
- The filing does not provide a clear new full-year earnings guidance figure. Management describes continued investment in FPL infrastructure and NEER renewable, storage and other clean-energy projects.
- Estimated capital expenditures for the remainder of 2024 through 2028 total $41.605 billion for FPL and $20.250 billion for NEER. These estimates are subject to continuing review and may vary significantly.
- In April 2024, the Florida Public Service Commission approved FPL’s request to reduce 2024 fuel-recovery factors and refund customers approximately $662 million over eight months beginning in May 2024.
- FPL’s 2021 rate agreement was reaffirmed in a March 2024 supplemental final order. Certain parties appealed the order to the Florida Supreme Court; briefing was expected to conclude by July 1, 2024.
- NEE’s results remain exposed to commodity-price, interest-rate, equity-market, counterparty, credit-rating and derivative-mark-to-market volatility. At March 31, 2024, NEE’s derivative instruments with credit-related contingent features had approximately $4.1 billion of liability fair value; specified credit-rating or financial triggers could require substantial additional collateral.
- NEE had approximately $2.0 billion of guarantees and indemnifications primarily related to NEP subsidiaries, approximately $5.7 billion of other guarantees, approximately $5.2 billion of standby letters of credit and approximately $1.7 billion of surety bonds.
- Legal matters include a purported class action relating to Hurricane Irma service interruptions, shareholder securities and derivative actions concerning alleged political-activity disclosures, and an ERISA plan-fee action. The filing does not provide a clear quantified loss exposure for these matters.
- No material changes to the risk factors in the 2023 Form 10-K were reported. Disclosure controls and procedures were assessed as effective, with no material change in internal control over financial reporting.
Most important facts for investors to verify
- Whether FPL’s rate-agreement appeal and the $662 million customer fuel refund affect future earnings, cash flow or regulatory assets.
- The sustainability of FPL’s earnings growth as reserve amortization availability declines; approximately $651 million remained available at March 31, 2024.
- NEER’s underlying operating growth excluding volatile non-qualifying hedge gains and losses, including the contribution and funding needs of new wind, solar and storage projects.
- NEE’s debt refinancing requirements, credit ratings, collateral exposure and approximately $10.8 billion of net available liquidity.
- Whether projected 2024–2028 capital expenditures, commitments and guarantees remain consistent with operating cash flow and financing capacity.
- The outcome and potential financial impact of the disclosed litigation, regulatory proceedings, nuclear insurance exposures and other contingencies.
