NextEra Energy, Inc. (NEE)

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NextEra Energy (NEE)

Q4 2011 Earnings Call

January 27, 2012 9:00 am ET

Executives

Rebecca Kujawa - Director of Investor Relations

Moray P. Dewhurst - Vice Chairman, Chief Financial Officer, Executive Vice President - Finance and Director

Armando Pimentel - Chief Executive Officer and President

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

Analysts

Dan Eggers - Crédit Suisse AG, Research Division

Unknown Analyst

Paul Patterson - Glenrock Associates LLC

Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division

James L. Dobson - Wunderlich Securities Inc., Research Division

Steven I. Fleishman - BofA Merrill Lynch, Research Division

Raymond M. Leung - Goldman Sachs Group Inc., Research Division

Presentation

Operator

Good day, everyone, and welcome to the NextEra Energy 2011 Fourth Quarter and Full-Year Earnings Release Conference Call. Today's conference is being recorded. At this time, for opening remarks, I would like to turn the call over to Ms. Rebecca Kujawa, Director of Investor Relations for NextEra Energy Inc. Please go ahead, ma'am.

Rebecca Kujawa

Thank you, Alicia. Good morning, everyone, and welcome to our fourth quarter and full-year 2011 earnings conference call. Joining us this morning are Lew Hay, NextEra Energy's Chairman and Chief Executive Officer; Jim Robo, President, Chief Operating Officer of NextEra Energy; Moray Dewhurst, Vice Chairman and Chief Financial Officer of NextEra Energy; Armando Olivera, Chief Executive Officer of Florida Power & Light Company; and Armando Pimentel, President and Chief Executive Officer of NextEra Energy Resources.

Moray will be providing an overview of our results, following which, 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 our 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 the accompanying presentation or in the latest reports and filings with the Securities and Exchange Commission, each of which can be found at the Investor Relations section of our website at 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.

NextEra Energy's management uses adjusted earnings internally for financial planning, for analysis of the performance, for reporting of results to the Board of Directors and its input in determining whether certain performance targets are met for performance-based compensation under the company's employee incentive compensation plan.

NextEra Energy also uses earnings expressed in this fashion by communicating its earnings outlook to investors and analysts. NextEra Energy management believes that adjusted earnings provide a more meaningful representation of NextEra Energy's fundamental earnings power.

With that, I will turn the call over to Moray Dewhurst. Moray?

Moray P. Dewhurst

Thank you, Rebecca, and good morning, everyone. 2011 was a mixed year for NextEra Energy. We had a number of disappointments, but we also had at least an equal number of successes. On balance we must consider it a good year, as our successes position us well to deliver on our longer-term value proposition in spite of a very challenging environment for Energy Resources. We have the building blocks of our growth plan in place. Our focus now is on execution.

Let me first say a few words about the disappointments. Although our final adjusted results were well within the range of expectations we originally set out for you in October 2010, they were not what we had hoped for, yet a couple of caveats are in order. Despite the challenging environment for Energy Resources, we set another all-time high for adjusted earnings per share, and the growth in adjusted earnings per share of 2.1% was roughly in line with the median 10-year earnings per share growth rate for our industry, while our profitability is reflected in adjusted ROE, continues to be better than the long-term industry median.

But industry average performance is not what we expect of ourselves, and we know you do not expect it of us either. There were 4 principle reasons why we fell short of our expectations in 2011, all associated with Energy Resources. First, our proprietary trading activities fell well short of our hopes. In retrospect, we were overly optimistic about the market environment for these activities and hence, about the results they could achieve. We chose not to increase our risk profile in these areas, but instead, to accept what the market was giving us. Looking forward, we have adjusted our expectations downward for these parts of the business, reflecting our expectation that market conditions will continue to be soft for some time.

Second, we encountered some challenging issues at our Seabrook nuclear facility, which led to unplanned and extended outages and less availability than we had anticipated. Historically, our Energy Resources nuclear assets have run very well, and we expect to revert historical performance over time. Although we had challenges within the nuclear fleet in 2011, our nonnuclear-generating facilities performed exceptionally well with one of the lowest forced outage rates on record.

Third, we had hoped to get a few more megawatts of new renewable projects in the ground by the end of 2011. 2 projects will push into the first quarter of this year. This has relatively minor financial impact on the projects' overall economics as the projects are still expected to qualify for the relevant tax incentives.

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