10-Q: NextEra Energy and Florida Power & Light Report Third Quarter 2024 Results

NextEra Energy and Florida Power & Light Company release their third quarter 2024 financial results, showing mixed performance across segments.

Summary

• NextEra Energy, Inc. (NEE) and Florida Power & Light Company (FPL) have released their financial results for the third quarter of 2024.
• NEE's net income attributable to NEE increased to $1.852 billion, or $0.90 per share, compared to $1.219 billion, or $0.60 per share, in the same quarter of the previous year.
• For the nine months ended September 30, 2024, NEE's net income attributable to NEE was $5.743 billion, or $2.79 per share, compared to $6.100 billion, or $3.02 per share, for the same period in 2023.
• FPL's net income for the third quarter of 2024 was $1.293 billion, up from $1.183 billion in the same quarter of 2023.
• FPL's net income for the nine months ended September 30, 2024 was $3.698 billion, compared to $3.406 billion for the same period in 2023.
• NEE's operating revenues for the third quarter were $7.567 billion, compared to $7.172 billion in the same quarter of 2023.
• NEE's operating revenues for the nine months ended September 30, 2024 were $19.368 billion, compared to $21.236 billion for the same period in 2023.
• FPL's operating revenues for the third quarter were $4.939 billion, compared to $5.475 billion in the same quarter of 2023.
• FPL's operating revenues for the nine months ended September 30, 2024 were $13.163 billion, compared to $14.169 billion for the same period in 2023.
• The results reflect the impact of new investments, changes in commodity prices, and the absence of certain charges recorded in the previous year.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there are some positive aspects such as increased net income for NEE in Q3 and FPL in both Q3 and the first nine months, there are also negative aspects such as decreased operating revenues for both NEE and FPL for the nine months ended September 30, 2024 and significant storm costs. The document also highlights various risks and uncertainties.

Positives

• NextEra Energy's net income attributable to NEE increased in the third quarter of 2024.
• Florida Power & Light's net income increased in both the third quarter and the first nine months of 2024.
• NextEra Energy Resources recorded gains from the sale of certain assets.
• FPL's license renewals for Turkey Point Unit No. 3 and Turkey Point Unit No. 4 were approved, extending the operating licenses to 2053 and 2054, respectively.

Negatives

• NEE's operating revenues decreased for the nine months ended September 30, 2024.
• FPL's operating revenues decreased in both the third quarter and the first nine months of 2024.
• Corporate and Other's results decreased for both the three and nine months ended September 30, 2024.
• FPL incurred significant storm restoration costs due to Hurricanes Debby, Helene and Milton.

Risks

• NEE and FPL's business, financial condition, results of operations and prospects may be materially adversely affected by the extensive regulation of their business.
• NEE and FPL's business, financial condition, results of operations and prospects could be materially adversely affected if they are unable to recover in a timely manner any significant amount of costs.
• Regulatory decisions that are important to NEE and FPL may be materially adversely affected by political, regulatory, operational and economic factors.
• Changes in tax laws, guidance or policies could materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects.
• NEE and FPL's business, financial condition, results of operations and prospects may be materially adversely affected due to adverse results of litigation.
• NEE and FPL's business, financial condition, results of operations and prospects could suffer if NEE and FPL do not proceed with projects under development or are unable to complete the construction of facilities on schedule or within budget.
• NEE and FPL's business, financial condition, results of operations and prospects can be materially adversely affected by weather conditions and related impacts, including, but not limited to, the impact of severe weather.
• Threats of terrorism and catastrophic events may materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects.
• NEE and FPL are highly dependent on sensitive and complex information technology systems, and any failure or breach of those systems could have a material adverse effect on their business, financial condition, results of operations and prospects.
• NEE and FPL could recognize financial losses as a result of volatility in the market values of derivative instruments and limited liquidity in OTC markets.
• NEE's and FPL's business, financial condition, results of operations and prospects may be adversely affected if FPL is unable to maintain, negotiate or renegotiate franchise agreements on acceptable terms with municipalities and counties in Florida.
• NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected by work strikes or stoppages and increasing personnel costs.
• The operation and maintenance of NEE's and FPL's nuclear generation facilities involve environmental, health and financial risks that could result in fines or the closure of the facilities and in increased costs and capital expenditures.
• Disruptions, uncertainty or volatility in the credit and capital markets may negatively affect NEE's and FPL's ability to fund their liquidity and capital needs and to meet their growth objectives.
• NEE's, NEECH's and FPL's inability to maintain their current credit ratings may materially adversely affect NEE's and FPL's liquidity and results of operations, limit the ability of NEE and FPL to grow their business, and increase interest costs.

Future Outlook

The document includes forward-looking statements and discusses future capital expenditures, but does not provide specific earnings guidance.

Management Comments

• Management uses adjusted earnings, a non-GAAP financial measure, internally for financial planning, analysis of performance, reporting of results to the Board of Directors and as an input in determining performance-based compensation under NEE's employee incentive compensation plans.
• NEE's management believes that adjusted earnings provide a more meaningful representation of NEE's fundamental earnings power.

Industry Context

The report reflects the ongoing trends in the energy industry, including the growth of renewable energy, the impact of weather events, and the complexities of regulatory environments. The company's focus on renewable energy and its investments in new technologies align with broader industry trends.

Comparison to Industry Standards

• The report does not provide specific comparisons to industry standards or competitors.
• However, the document does mention that NEER is the world's largest generator of renewable energy from the wind and sun based on 2023 MWh produced on a net generation basis, as well as a world leader in battery storage.
• FPL is described as one of the largest electric utilities in the U.S., serving approximately 5.9 million customer accounts in Florida.

Legal Proceedings

• FPL is the defendant in a purported class action lawsuit related to service interruptions from Hurricane Irma in 2017, which is currently stayed pending a decision from the FPSC.
• NEE, FPL, and certain current and former executives, are the named defendants in a purported shareholder securities class action lawsuit filed in the U.S. District Court for the Southern District of Florida in June 2023 and amended in December 2023 that seeks from the defendants unspecified damages allegedly resulting from alleged false or misleading statements regarding NEE's alleged campaign finance and other political activities. The class action lawsuit was dismissed with prejudice by the U.S. District Court for the Southern District of Florida in September 2024. On October 16, 2024, the lead plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the 11th Circuit.
• NEE, along with certain current and former executives and directors are the named defendants in purported shareholder derivative actions filed in the 15th Judicial Circuit in Palm Beach County, Florida in July 2023 and March 2024, in the U.S. District Court for the Southern District of Florida in October 2023 and November 2023 (which were consolidated in January 2024) and in the U.S. District Court for the Southern District of Florida in July 2024 seeking unspecified damages allegedly resulting from, among other things, breaches of fiduciary duties and, in the consolidated cases and the July 2024 case, violations of the federal securities laws, all purporting to relate to alleged campaign finance law violations and associated matters.
• In September 2023, a participant in the NEE Employee Retirement Savings Plan (Plan), purportedly on behalf of the Plan and all persons who were participants in or beneficiaries of the Plan at any time between September 25, 2016 and September 25, 2023 (Plan participants), filed a putative ERISA class action lawsuit in the U.S. District Court for the Southern District of Florida against NEE.

Related Party Transactions

• NextEra Energy Resources operates essentially all of the energy projects owned by NEP and provides services to NEP under various related party operations and maintenance, administrative and management services agreements.
• NextEra Energy Resources is also party to a CSCS agreement with a subsidiary of NEP.
• During 2024 and 2023, certain services, primarily engineering, construction, transportation, storage and maintenance services, were provided to subsidiaries of NEE by related parties that NEE accounts for under the equity method of accounting.

Stakeholder Impact

• Shareholders: The report provides information on the company's financial performance, which is relevant to shareholders.
• Employees: The report discusses employee retirement benefits and includes information about share-based payments.
• Customers: The report discusses FPL's customer base and the impact of weather events on service delivery.
• Suppliers: The report mentions contracts for the purchase of wind turbines, solar modules, and other equipment.
• Creditors: The report provides information on the company's debt and liquidity.

Next Steps

• FPL expects to file a petition in the fourth quarter of 2024 for a surcharge to be recovered over calendar year 2025 of approximately $1.2 billion related to storm restoration costs.
• NEE expects to receive a distribution of approximately $390 million upon the projects in the renewable assets joint venture obtaining financing in the fourth quarter of 2024.

Key Dates

Keywords

NextEra Energy, Florida Power & Light, Financial Results, Quarterly Report, Renewable Energy, Net Income, Operating Revenue, Earnings Per Share, Regulatory ROE, Storm Costs, Nuclear Energy, Debt, Capital Expenditures, Derivatives, Credit Risk