NextEra Energy, Inc. (NEE)

NEE 
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NextEra Energy (NEE)

Q4 2010 Earnings Call

January 25, 2011 9:00 am ET

Executives

Armando Pimentel - Chief Financial Officer and Executive Vice President of Finance

James Robo - President and Chief Operating Officer

Lewis Hay - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of FPL Energy LLC and Chairman of Florida Power & Light Company

Rebecca Kujawa -

Analysts

Michael Lapides - Goldman Sachs Group Inc.

Dan Eggers - Crédit Suisse AG

Jonathan Arnold - Deutsche Bank AG

Paul Patterson - Glenrock Associates LLC

Hasan Doza - Luminus Management

James Dobson - Wunderlich Securities Inc.

Steven Fleishman - BofA Merrill Lynch

Presentation

Operator

Good day, everyone, and welcome to the NextEra Energy, Incorporated Fourth Quarter and Full Year 2010 Earnings Release Conference. [Operator Instructions] At this time, I'd like to turn the conference over to Ms. Rebecca Kujawa. Please go ahead, ma'am.

Rebecca Kujawa

Thank you, April. Good morning, everyone, and welcomed to our fourth quarter and full year 2010 earnings conference call. Lew Hay, NextEra Energy's Chairman and Chief Executive Officer, will provide an overview of NextEra Energy's performance and recent accomplishments. Lew will be followed by Armando Pimentel, our Chief Financial Officer, who will discuss the specifics of our financial results. Also joining us this morning are Jim Robo, President and Chief Operating Officer of NextEra Energy; Armando Olivera, President and Chief Executive Officer of Florida Power & Light; and Mitch Davidson, President and Chief Executive Officer of NextEra Energy Resources, which we will refer to as Energy Resources in this presentation. Following our prepared remarks, our senior management team will be available to take your questions.

We will be making statements during this call that are forward looking. These statements are based on current expectations and assumptions that 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 our accompanying presentation or in the latest reports and filings with the Securities and Exchange Commission, each of which can be found on the Investors section of our website, www.nexteraenergy.com. We do not undertake any duty to update any forward-looking statements.

Please also note that today's presentation includes references to adjusted earnings, which is a non-GAAP financial measure. You should refer to the information contained in the slides accompanying this presentation for definitional information and reconciliations of the non-GAAP measure to the closest GAAP financial measure.

With that, I will turn the call over to Lew Hay. Lew?

Lewis Hay

Okay. Thanks, Rebecca. Good morning, everyone. In both the fourth quarter and for the full year of 2010, NextEra Energy achieved strong financial results. For the quarter, we earned adjusted earnings of $332 million or $0.80 per share. And for the full year, we earned record adjusted earnings of $1.8 billion or $4.30 per share.

Even though last year was one of the most challenging business environment we've ever faced, NextEra Energy was able to grow adjusted earnings per share by 6% right at the midpoint of our long-term adjusted EPS growth expectations of 5% to 7% per year on average through 2014, starting from a 2009 base. In addition, when measured over the long term, we continue to provide a strong track record of outperformance when compared with our peers in the overall market. For the five years ending on December 31, 2010, we delivered a total shareholder return of 48%, easily outpacing both the S&P 500's 12% and the S&P Electric Utilities' 20%.

Over 10 years, our performance is even more impressive with a total return of 107% compared to 15% for the S&P 500 and 57% for the S&P Electric Utilities.

Now one of the keys to our success over the long term has been our commitment to financial strength. This commitment allowed us to raise $3.7 billion in debt, of which $1.2 billion is project debt at attractive rates in 2010. We also issued $711 million in equity and equity units to support our strong credit position and to enable us to invest wisely in the future.

You've often heard me say that one of the features that sets NextEra Energy apart is the fact that we have two great businesses under one roof. The wisdom of the strategy was clearly evident last year. In 2010 as challenging market conditions limited the growth of Energy Resources' adjusted earnings, FPL once again became the largest driver of NextEra Energy's adjusted earnings growth, something that we expect to continue through at least 2014.

The rate settlement approved by the Florida Public Service Commission in December will effectively freeze base rates through 2012, provide cash recovery for our new combined-cycle natural gas unit at FPL's West County Energy Center and provide the company with an allowed retail regulatory return on equity or ROE of 9% to 11%. The settlement agreement provides financial certainty to customers and regulatory certainty to FPL. And we appreciate the willingness of those who represent Florida's electric consumers to work with us on a constructive outcome. We believe FPL's retail regulatory ROE will be at or near 11% in 2011 and 2012.

Over the four-year period from 2011 through 2014, FPL plans to bring into service major capital projects that cost approximately $6.4 billion from combined-cycle natural gas plants to nuclear upgrades to smart grid. Not only do we expect our overall retail base rate to expand at a compound annual growth rate of approximately 8.5% through 2014 from a 2009 base, but we also expect to earn an appropriate return on our investments over time while continuing to provide great value to our customers.

In December, we brought online a 75-megawatt solar thermal array that is fully integrated with and augments the steam produced by our combined-cycle gas unit in Martin County. This represents the last of the original 110 megawatts of solar projects approved for cost recovery in 2008 by the Florida Public Service Commission. As with all of the projects in our Florida pipeline over the past few years, we completed the Martin solar thermal array on schedule and under budget.

NextEra Energy's strong financial performance is matched by the company's ability to consistently achieve high levels of operational performance. In 2010, FPL's fossil fuel fleet set another record for its efficiency, bringing the system-wide heat rate down to 8,043 British thermal units per kilowatt hour. The average heat rate for the industry was 10,060 British thermal units per kilowatt hour for 2009, the most recent year for which data are available.

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