NextEra Energy, Inc.

Good morning and welcome to the NextEra Energy Inc. and NextEra Energy Partners LP earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Roscott, Director of Investor Relations. Please go ahead.

Thank you, Grant. Good morning, everyone, and thank you for joining our first quarter 2020 Combined Earnings Conference call for NextEra Energy and NextEra Energy partners. With me this morning are Jim Robo, Chairman and Chief Executive Officer of NextEra Energy, Rebecca Chiava, Executive Vice President and Chief Financial Officer of NextEra Energy, John Ketchum, President and Chief Executive Officer of NextEra Energy Resources, and Mark Hickson, Executive Vice President of NextEra Energy, all of whom are also officers of NextEra Energy Partners, as well as Eric Szilagyi, President and Chief Executive Officer of Florida Power & Light Company. Jim will provide some opening remarks and we'll then turn the call over to Rebecca for a review of our first quarter results. Our executive team will then be available to answer your questions. We will be making forward-looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call. In the risk factors section of the accompanying presentation are our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our websites, NextEraEnergy.com and NextEraEnergyPartners.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I will turn the call over to Jim.

Thanks, Matt, and good morning, everyone. Before I begin, I want to take a moment to extend our deepest sympathies to all those who've been personally affected by the COVID-19 pandemic. The country and the world are facing devastating impacts from the spread of the virus, and we remain resolutely focused on doing our part by continuing to deliver affordable and reliable power. Never before has it been more clear how critical electricity is to the world, and our team is laser-focused on ensuring its uninterrupted delivery so first responders can help those in need, businesses can continue to operate where possible, Governments can continue to function and our customers can go about their daily lives to the greatest extent possible during these challenging times. As part of NextEra Energy's core commitment to do the right thing, at both FPL and Gulf Power, we have taken steps to help customers face the challenges that the pandemic has created. Both utilities have suspended electric disconnections during the state of emergency to ensure our customers have continued access to power regardless of their economic circumstances. Additionally, next month, the typical FPL and Gulf Power residential customers will receive a one-time bill decrease of approximately 25% and 40% respectively as an accelerated flowback of lower fuel costs. The NextEra Energy companies and employees have also committed more than $4 million in emergency assistance funds to provide critical support to the most vulnerable members of the community. Our hope is that these steps will help customers navigate this difficult and unsettling time and support a more rapid recovery for them and the Florida economy generally. We remain deeply engaged in helping Florida return from this pandemic stronger than ever, and we'll continue to do our part to support that outcome. It is during challenging times like these that the culture of NextEra Energy shines through. A culture focused on leadership, accountability, a passion to be the best, and a focus on flawless execution. NextEra Energy's employees have exemplified these characteristics over the past several weeks. I am very proud of how they've stepped up, once again confirming my belief that we have the best team in the industry and that our culture and our people are our most important assets. Despite their daily lives being disrupted by the ongoing effects of the pandemic, our employees' focus on continuing to do their jobs and deliver an essential resource for customers in our economy has been unwavering. I'd like to take a moment to thank all NextEra Energy employees for their continued focus, hard work, and execution during these challenging times. It is because of them that I've never been more confident in our ability to deliver on all our expectations to our customers, shareholders, and other stakeholders. As we focus on execution, the safety of our employees in the community is always our number one priority. To ensure that our critical operations, including the grid within Florida and our generating facilities, particularly our nuclear sites, continue to operate safely and remain available to serve our customers, we have instituted our pandemic plan, which was most recently updated last year, and have taken aggressive measures to protect our employees. We understand the critical role that electricity plays in the economy and the daily lives of Floridians, and FPL and Gulf Power remain steadfastly focused on meeting their commitments. As we face the challenges created by the pandemic, we are fortunate that preparedness and crisis planning are in our DNA. For nearly 70 years, we've had annual drills to prepare for disruptions to our business. And while the circumstances of this situation are unique, It is that preparation to deal with the unexpected that is allowing our company to continue to deliver for our customers through this challenging time. Over the past several months, NextEra Energy has continued to execute across the board. Our transmission and distribution systems continue to perform in line with the typical high reliability standards. The more than $5 billion that FPL has invested since 2006 to build a stronger and smarter grid allow us to leverage automation and manage the T&D system remotely. That automation and its ability to limit human intervention has never been more important than today. Operations at all our generating facilities at FPL, Gulf Power, and Energy Resources have been modified to protect the health and safety of our employees, and the pandemic has not caused any meaningful impacts at this time. In addition to ensuring continued safety In addition to ensuring continued safe and reliable operations at our plants, our nuclear team also delivered outstanding performance during the recent refueling outages at St. Lucie and Point Beach. In fact, the Point Beach refueling outage was one of the shortest outages in our entire nuclear fleet in the past 20 years. The ongoing outages at Turkey Point and Seabrook also continue to progress well. One of our most important core values is our commitment to excellence in all that we do. Over a long period of time, we've invested significant time and effort in developing key strategic partnerships, particularly related to our supply chain, to help support our ability to execute during challenging times like these. Over the past several months, our key strategic partners have continued to deliver, highlighting the value of deep, long-lasting relationships with best-in-class companies. These deep relationships and our position as the industry leader give us confidence that our equipment deliveries should remain on track, even if others face supply issues over the coming months. Our engineering and construction team also continues to perform exceptionally well, keeping the largest construction program in NextEra Energy's history on schedule and on budget. NextEra Energy's financial performance for the first quarter reflects this strong operating performance across all our businesses, with adjusted EPS increasing more than 8% year-over-year. Let me now turn to our strategic focus, which remains unchanged. At FPL and Gulf Power, our focus has been and will continue to be on delivering an outstanding value proposition of low bills, high reliability, outstanding customer service, and clean energy solutions for our customers. The value of FPL's smart capital investments that we've made over the past several decades has never been more clear. These investments, including FPL's highly efficient generation portfolio, and a stronger and smarter grid are allowing FPL to continue efficiently delivering affordable, reliable, and clean energy to our customers. While we continue to monitor the situation, our capital investment program remains on track at FPL and Gulf Power. The investments that we are making today, including one of the world's largest solar expansions, are expected to provide meaningful customer benefits over the coming years. As we move toward the current challenges, it will be important that we continue to provide low-cost, reliable service to our customers to support their recovery. The flexibility provided by FPL's reserve immunization mechanism, combined with our best-in-class operational cost effectiveness, help position FPL to meet its financial commitments while making smart, long-term investments during this uncertain time. At Gulf Power, we remain committed to delivering on the objectives that we have previously outlined and continue to expect to generate significant customer and shareholder value over the coming years. Similar to FPL and Gulf Power, our strategic vision at Energy Resources remains unchanged, and we believe the market opportunity for low-cost renewables has never been greater. In times when consumers and businesses are dealing with the challenges of economic uncertainty, we expect our customers will help ease these impacts by lowering the cost of power for their customers through new renewable generation. Reflecting this strong customer demand for renewables, the Energy Resources team had another terrific quarter of origination, adding approximately 1,600 megawatts to our backlog since the last earnings call, including our first 600 megawatts of wind projects for 2022 and beyond. Most of this quarter's backlog additions were negotiated remotely, while employees operated under stay-at-home orders. The ability to add nearly 1600 megawatts despite these conditions is a testament to our strong customer relationships, pipeline, and development skills. Also included in these backlog additions are approximately 460 megawatts of battery storage projects, almost all of which will be added to existing solar sites to take advantage of the ITC and enhance the value of our existing projects for customers. With the significant recent growth in our battery storage backlog, we increasingly see storage as an important standalone business in its own right. NextEra Energy's battery storage investments in 2021 are now expected to exceed $1 billion, which we believe would be the largest ever annual battery storage investment by any power company in the world, and have a total gigawatt-hour capacity that discharges enough electricity to power the entire state of Rhode Island for four hours. This highlights the rapid transition to the next phase of renewables development that pairs low-cost wind and solar energy with a low-cost battery storage solution. We continue to expect that by the middle of this decade, without incentives, new near-firm wind and new near-firm solar will be cheaper than the operating costs of most existing coal, nuclear, and less efficient oil and gas fire generation units. As a result, we expect that the long-term projections for wind and solar that we have previously shared will be achieved or exceeded over the coming decade, representing a tremendous growth opportunity for energy resources. As we celebrate the 50th anniversary of Earth Day today, we are proud of our track record of improving the environment, particularly through the CO2 reductions that we've delivered as a result of our clean energy efforts across the country. We are at the vanguard of building a sustainable energy era that is both clean and affordable, and we are driving very hard to continue to be at the forefront of disruption that is occurring within the energy sector. To capitalize on this significant growth opportunity, Energy Resources expects to extend its long track record of excellence and execution. By leveraging our strong relationships with our equipment suppliers and contractors that I previously mentioned, and using the significant experience that we've developed over our more than 20 years in the renewable business. We've been able to keep our construction program on track despite the significant disruptions that are occurring both globally and locally. Energy Resources 2020 wind turbine deliveries remain ahead of schedule, and we're not currently experiencing any significant equipment or labor issues at any of the more than 5,000 megawatts of wind and solar projects that we expect to complete this year. While we continue to monitor this situation closely, we expect that all of our planned 2020 renewable construction projects will achieve their in-service dates this year and believe that we will extend our track record of having never missed a PTC deadline on one of our wind projects. Energy Resources' track record of execution has been a key competitive advantage over time. In periods of uncertainty like we are currently experiencing, we expect customers will increasingly want confidence in a company's ability to deliver on its commitments. Energy Resources' extensive experience, combined with our customer, supplier, contractor, and financing relationships, all separate us from other developers during these challenging times. In addition, we expect that some of our competitors may falter as a result of these challenges, and we will look to leverage any opportunities that this may present. To support the execution of FPL, Gulf Power, and Energy Resources' strategic objectives, Over the past several months, we've focused on ensuring NextEra Energy's continued strong access to capital. The strength of NextEra Energy's balance sheet and access to ample liquidity have always been and will always continue to be a core strategic focus for us. In times of financial market disruption like we've recently experienced, the value of balance sheet strength and access to liquidity have become even more apparent. We entered the year with meaningful cushion against our credit metrics and access to significant liquidity through the largest and most diversified bank group in our sector and maintenance of the industry's largest credit facilities. In the middle of February, we issued $2.5 billion in equity units to add additional cushion against our credit metrics and further supplement our liquidity. Additionally, since the market disruption began, we further improved our liquidity position with an additional roughly $4 billion in longer-term financings including 1.1 billion FPL first mortgage bonds, 1.25 billion of capital holdings debentures, and an additional 1.8 billion in capital holdings term loans. Following these issuances, NextEra Energy now has approximately $12 billion in liquidity to help support the largest capital investment program in our history, and we plan to continue to be prudent in our financing plan going forward. In summary, NextEra Energy remains well-positioned to continue to execute over both the near and long-term horizons. Over a long period of time, we have focused on building a business that is resilient and able to deliver for our customers and shareholders, regardless of the economic and market conditions, and we remain laser-focused on extending that track record today. Even throughout the greatest market dislocations last month, NextEra Energy maintained ongoing access to capital, which is a reflection of the strength of its balance sheet, as well as the overall resilience of NextEra Energy's underlying businesses. FPL and GulfPower operate in what we believe is one of the most constructive regulatory environments in the country. The strength of FPL and GulfPower's balance sheets and capital structures, combined with the constructive, stable, and forward-thinking approach of Florida's regulatory environment and our long track record of execution should provide investors confidence that both companies will continue to be able to deliver for customers and perform well in a variety of economic environments. At Energy Resources, the portfolio is focused on long-term contracted clean energy projects with high credit quality customers, which we expect will be largely insulated from changes in the underlying economy. Despite the current economic challenges and as a result of the strength and diversity of NextEra Energy's underlying businesses, I will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2020, 2021, and 2022, while at the same time maintaining our strong credit ratings and, most importantly, continuing to reliably deliver for our customers. While our expectations always assume normal weather and operating conditions, I have confidence in our ability to meet these expectations, even when accounting for a reasonable range of impacts and outcomes that may result from the current pandemic. Let me now turn to NextEra Energy Partners. While the COVID-19 pandemic has created significant uncertainty throughout the economy, NextEra Energy Partners remains well positioned to continue to deliver on its objectives and its commitments. We do not currently expect any material, financial, or operational impacts as a result of the pandemic. Additionally, as a result of the actions that we took last year, including two significant acquisitions, the organic growth investments that are being executed, and the steps taken to reduce its overall cost of capital, NextEra Energy Partners entered 2020 particularly well positioned. This favorable positioning is even more valuable during times of uncertainty like we are experiencing today. The benefit of last year's execution is apparent in our first quarter results, with adjusted EBITDA and cash available for distribution increasing roughly 30% and 200% respectively year-over-year. We expect to achieve NextEra Energy Partners' 2020 distribution growth objectives while maintaining a trailing 12-month payout ratio in the mid-70% range even after excluding cash distributions from our desert sunlight projects, highlighting the significant flexibility NEP has going forward. While we will continue to be opportunistic, the favorable position with which NextEra Energy Partners entered the year gives it the flexibility to achieve its long-term distribution growth objectives without the need to make any acquisitions until 2022, one year later than we have previously disclosed. NextEra Energy Partners' liquidity position also supports its flexibility in achieving its long-term growth objectives. At the end of the first quarter, NextEra Energy Partners maintain a net liquidity position, including cash on hand, of approximately $650 million. NextEra Energy Partners' only near-term debt maturity is a $300 million convertible debt issuance that matures in September of this year, which may be converted to NEP units if the conversion price is achieved. Without any near-term acquisition needs and no other corporate-level debt maturities until 2024, NextEra Energy Partners maintains significant liquidity to help achieve its objectives. The steps that NextEra Energy Partners has executed in the past year, such as the upsize and extension of its revolving credit facility, as well as the project recapitalizations that create significant project finance debt capacity within the NEP portfolio, give us confidence that sufficient liquidity will be maintained. We also expect that the diversification of financing alternatives that NEP has pursued since its IPO will provide flexibility and continued access to capital regardless of potential disruption in the capital markets. By leveraging the significant private infrastructure capital that has a strong demand for high-quality long-term contracted clean energy assets, NextEra Energy Partners maintains an attractive additional financing source. In summary, we believe NEP is well positioned to execute on accretive acquisitions for LP unit holders going forward. With the tremendous expected long-term renewables growth, combined with the strength of NextEra Energy Partners' existing portfolio and continued access to low-cost sources of capital, we believe NEP is uniquely positioned to take advantage of the disruptive factors reshaping the energy industry. With access to energy resources unparalleled portfolio of renewables projects that now totals roughly 25 gigawatts, including the signed backlog, as well as the ability to execute on third-party acquisitions and organic growth opportunities, we have as much confidence in NextEra Energy Partners' long-term future as we ever have had. We look forward to delivering on that potential over the coming years. In closing, while the COVID-19 pandemic has created significant uncertainty throughout the economy, it has not changed the fundamental value proposition of NextEra Energy or NextEra Energy Partners. Over a long period of time, we've focused on building resilient companies that are able to deliver on all their commitments throughout market and economic cycles. And we entered the current period of disruption uniquely well positioned. Despite the ongoing challenges, the core strategic focus across all of our businesses remains unchanged. And we believe we are well positioned to deliver on our objectives going forward. I'll now turn the call over to Rebecca to review the first quarter results.