Earnings call: NextEra Energy reports robust growth and confident outlook

NextEra Energy, Inc. (NYSE:NEE) and its affiliate NextEra Energy Partners LP (NEP) have reported encouraging financial results for the second quarter of 2024, with NextEra Energy achieving a significant earnings growth of over 9% year-over-year. Adjusted earnings per share also rose by 9.4% in the first half of the year. T

he company's commitment to low-cost solar generation and battery storage through Florida Power & Light Company (FPL) has been fruitful, saving customers substantial amounts and contributing to its industry-leading reliability.

Energy Resources has seen a surge in demand, adding over 3,000 megawatts to its backlog this quarter, and is set to meet the growing needs for renewable energy. NextEra Energy's strategic investments and partnerships, such as with GE and Blackstone (NYSE:BX), position it well for sustained growth in the renewable sector.

Key Takeaways

• NextEra Energy experiences a 9% year-over-year earnings growth and a 9.4% increase in adjusted EPS for the first six months.
• FPL's investments in solar and storage have resulted in nearly $16 billion in customer savings since 2001.
• Energy Resources added 3,000+ megawatts of renewables and storage to its backlog this quarter.
• NextEra Energy Partners sold a wind and solar portfolio to Blackstone for $900 million.
• NextEra Energy anticipates an average annual growth of about 10% in regulatory capital employed through 2025.
• The company is exploring options to improve NextEra Energy Partners' cost of capital and is considering asset recycling.

Company Outlook

• NextEra Energy forecasts continued strong performance with a focus on low-cost clean energy and storage solutions.
• Capital investments are expected to surpass $3 billion-$4 billion over the next four years.
• FPL's capital expenditures for the quarter stood at $2.1 billion, with full-year investments projected between $8 billion and $8.8 billion.
• Energy Resources' adjusted earnings grew by 10.8% year-over-year, driven by new investments and the existing portfolio.

Bearish Highlights

• The company is cautious about the lumpiness in origination but maintains a positive long-term outlook.
• There is an acknowledgment of the potential risks associated with restarting the Duane Arnold nuclear plant.

Bullish Highlights

• Demand for new renewables is expected to triple in the next seven years.
• The partnership with GE strengthens the company's ability to address turbine performance issues.
• Strong demand from hyperscalers and data center customers is noted, with 7 gigawatts of projects in total, 3 gigawatts in service, and 4 gigawatts in the backlog.

Misses

• The company did not specify any misses in the earnings call.

Q&A Highlights

• NextEra Energy is evaluating measures to improve NEP's cost of capital and is open to asset recycling.
• Confidence in supply chain management and the ability to transfer risks to suppliers is expressed.
• The company has taken into account the potential impact of interest rate cuts on financial expectations.
• Political instability and potential repeal of renewable incentives are not seen as detriments to contract signing or demand.

NextEra Energy's solid earnings report and strategic initiatives reflect the company's adaptability and commitment to capitalizing on the growing demand for renewable energy. With a diverse portfolio and strategic partnerships, NextEra Energy is poised to continue its trajectory of growth and innovation in the renewable energy market.

InvestingPro Insights

NextEra Energy Partners LP (NEP) has demonstrated a strong dividend track record, increasing payouts to shareholders for 10 consecutive years, a testament to its commitment to return value to investors. This consistent dividend growth aligns with NEP's robust revenue growth, which was 25.73% over the last twelve months as of Q2 2024. Such performance underlines the company's ability to generate increasing income, likely contributing to its solid financial results and the positive outlook presented in the earnings report.

InvestingPro Tips indicate that NEP is expected to be profitable this year, with analysts predicting a turnaround from the previous twelve months. This anticipated profitability may be driven by the company's strategic investments and growing demand for renewables, as mentioned in the article. Additionally, NEP's liquid assets surpassing short-term obligations suggest a strong liquidity position, allowing the company to navigate financial commitments and invest in future growth opportunities effectively.

InvestingPro Data highlights a market cap of $2.57 billion USD and a high dividend yield of 12.99%, which is particularly attractive to income-focused investors. Despite trading at a negative P/E ratio as of the last twelve months ending Q2 2024, the company's strategic initiatives and market positioning may offer potential for future valuation improvements.

For readers interested in deeper analysis and additional insights, there are more InvestingPro Tips available that can provide a comprehensive understanding of NEP's financial health and market potential. With the use of coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking valuable information that can inform investment decisions.

Full transcript - Nextera Energy Partners LP (NYSE:NEP) Q2 2024:

Operator: Good day, and welcome to the NextEra Energy and NextEra Energy Partners LP Second Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Mark Edelman, Director of Investor Relations. Please go ahead.

Mark Edelman: Thank you, Danielle. Good morning, everyone, and thank you for joining our second quarter 2024 combined financial results conference call for NextEra Energy and NextEra Energy Partners. With me this morning are John Ketchum, Chairman, President and Chief Executive Officer of NextEra Energy; Brian Bolster, Executive Vice President and Chief Financial Officer of NextEra Energy; Rebecca Kujawa, 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 Armando Pimentel, President and Chief Executive Officer of Florida Power & Light Company. John will start with opening remarks and then Brian will provide a review of our 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 company presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.nexteraenergy.com and www.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'll turn the call over to John.

John Ketchum: Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong increasing more than 9% year-over-year. In addition, through the first six months of the year, our adjusted earnings per share has increased 9.4% year-over-year. The continued strong financial and operational performance at both FPL and Energy Resources position our company well to meet its overall objectives for the year. At FPL, we have continued to deliver for our customers on multiple fronts since the start of our most recent rate settlement in 2022. We are making smart capital investments in low cost solar generation and battery storage. We’re continuing to reduce our overall fuel cost and combined with generation modernizations have saved customers nearly $16 billion since 2001. We are delivering best in class non-fuel O&M where we're 70% better than the national average, saving our customers $3 billion every year compared to the average utility. A big driver of our outperformance has been our team and culture of continuous improvement and productivity. Nowhere is this better demonstrated than through our annual companywide initiative to reimagine everything that we do, which we call Project Velocity. This year, we identified record $460 million of run rate cost savings opportunities through 2027, part of which benefit FPL and its customers. By finding opportunities to take cost out of the business and making smart capital investments to reduce its fuel costs, FPL has kept residential bills nearly 40% below the national average and by far the lowest among all the Florida investor owned utilities. FPL’s reliability also ranks among the best in the industry, where we are 66% better than the national average in the number of minutes a customer's power is interrupted per year. I'm most proud of the fact we continue to deliver on our customer value proposition during a period of unprecedented growth in Florida. Florida continues to be one of the fastest growing states in the U. S. with roughly 1,000 people moving to Florida every day. And it's not just the residential sector. We're seeing the commercial and industrial sector growing too. As a result of this accelerated growth, FPL's regulatory capital employed has grown at a 12% compound annual growth rate since the beginning of 2022 compared against an estimated 9% comp in annual growth rate that was originally anticipated for the four year settlement period. We have shouldered this additional growth through our reserve amortization mechanism, which enables FPL to absorb the cost for these capital investments without increasing customer bills in the interim. While these efforts have helped us to meet customer growth and deliver for our Florida customers, our reserve amortization mechanism has been utilized faster than expected. FPL fully expects to seek recovery of these increased expenditures in its rate case filing next year. FPL ended the second quarter with a remaining reserve amortization balance of $586 million which is expected to be sufficient to support FPL's capital investment plan and its ability to earn an 11.4% regulatory ROE this year and next. An 11.4% percent regulatory ROE is expected to have a $0.06 EPS impact in each of 2024 and 2025, which has already been taken into account in our financial expectations, and we will be disappointed if we are unable to deliver financial results at or near the top of our adjusted earnings per share expectation ranges each year through 2027 at NextEra Energy. We expect to continue to demonstrate the benefits and protections that the reserve amortization mechanism provides customers when we file our rate case next year. Our vision is for FPL to be the best utility franchise in the country by doubling down on what we do best, delivering low bills and high reliability for our customers by making smart capital investments and being an industry leader on costs. These attributes are important to our customers and regulators, and they are important to us. We look forward to continuing to deliver on what we believe is an outstanding customer value proposition at FPL. Growth is not only occurring inside Florida, but outside Florida as well. At Energy Resources, we are benefiting from two types of demand, replacement cycle and gross cycle demand. With regard to the former, we have long been a beneficiary of a replacement cycle where higher cost, less efficient generation has been retired in favor of low cost renewables and battery storage. We expect this to continue and while replacement cycle demand has been around for a long time, growth cycle demand is new. With the exception of a few states such as Florida, power demand from new growth has been static in our industry for decades. That's changing as power demand is projected to grow 4x faster over the next 2 decades compared to the prior two. That growth is being driven by demand across multiple sectors, which is expected to create a long term opportunity for faster deploy low cost generation. As highlighted at our investor conference, we expect the demand for new renewables to triple over the next seven years versus the prior seven to help meet this increased power demand. Energy Resources couldn't be better positioned as it has a 300 gigawatt pipeline, half of which is in the interconnection queue process or is already interconnection ready. Our scaled experience and technology coupled with our ability to build new transmission where required enable us to meet the growing demands of our power and commercial and industrial customer base. Underpinning these competitive advantages are our decades of data, analytical capabilities and experience with system operators and relationships with utilities that position us well to get the power to where it needs to go. Our continued ability to drive origination results speaks for itself. Energy Resources added over 3,000 megawatts of new renewables and storage projects for the backlog this quarter, 860 megawatts of which come from agreements with Google (NASDAQ:GOOGL) to meet their data center power demand. This marks our second best origination quarter ever. These results support our belief that the bulk of the growth demand will be met by a combination of new renewables and battery storage. The importance of renewable and storage to help meet our economies growing demand for power has never been more evident. As data center growth accelerates to facilitate our economy shift to artificial intelligence, and as we continue to re-domesticate and electrify across multiple sectors, our nation must embrace an all of the above strategy to meet increasing electric demand. Renewables and storage are energy independent as they rely on American wind and sunshine. They also are extremely fast to deploy compared to alternative forms of generation making them vital to our country's success going forward. And importantly, the country has stood up a significant domestic industry to support their growth, which is driving investment in factories and is creating good paying jobs and a tax base that is revitalizing rural communities across America. As customers increasingly demand smart clean energy solutions, we are the company with experience in every part of the energy value chain and are uniquely positioned to help them make the right decisions for their business. As the owner and operator of a large natural gas-fired fleet in Florida, we are also conscious of the importance of natural gas-fired generation as a bridge fuel. Yet, we also are well aware of the realities of new build gas-fired generation. It's more expensive in most states, is subject to fuel price volatility and takes considerable time given the need to get gas delivered generating unit and the three to four year waiting period for gas turbines. Low cost, fast to deploy renewables help keep power prices down, making our economy more competitive globally. Ultimately, our country needs all forms of energy as we move forward and the future has never been brighter for the power generation sector as a whole and renewables in particular. As I've been saying, NextEra Energy was built for this moment and our future outlook has never been stronger. Our strategic focus is to deliver low cost clean energy and storage for customers both inside and outside Florida, while building new transmission where required to support new generation. We have the playbook and the platform to win in any environment and most importantly, we have the team. Our competitive advantages continue to grow every day, providing industry differentiation that is over two decades in the making and difficult to replicate. And I firmly believe, we will continue to expand that strategic distance, creating value for customers and shareholders. Nobody is better positioned to meet the demands of the energy customer of tomorrow than NextEra Energy. And I wouldn't trade our opportunity set with anyone. With that, I will turn the call over to Brian to cover the detailed results beginning with FPL.

Brian Bolster: Thank you, John. Good morning, everyone. For the second quarter of 2024, FPL increased earnings per share by $0.03 year-over-year. The principal driver of this performance was FPL's regulatory capital employed growth of approximately 10.7% year-over-year. We continue to expect FPL to realize roughly 10% average annual growth in regulatory capital employed over our current rate agreements four year term, which runs through 2025. FPL's capital expenditures were approximately $2.1 billion for the quarter, and we expect FPL's full year 2024 capital investments to be between $8 billion $8.8 billion. Over the current four year settlement agreement, we expect FPL's capital investments to exceed $3 billion, $4 billion. FPL's second quarter retail sales increased 3.7% from the prior year comparable period due to warmer weather, which had a positive year-over-year impact on usage for costumer of approximately 2.6%. As a result FPL grew retail sales in second quarter by roughly 1.1% on a weather normalized basis. For the 12 months ending June 2024, FPL's reported ROE for regulatory purposes will be approximately 11.8% and the 11.4% regulatory ROE mentioned previously is expected to be realized in the fourth quarter for the 12-months ending December 2024. Now let's turn to Energy Resources, which reported adjusted earnings growth of approximately 10.8% per year -- at 10.8% year-over-year and Energy Resources adjusted earnings per share increased by $0.03 year-over-year. Contributions from new investments increased $0.12 per share year-over-year, primarily driven by continued growth in our renewables portfolio. Our existing clean energy portfolio increased $0.06 per share, primarily reflecting an increase in wind resources during the quarter. Wind resource for the Q2 of 2024 was approximately 104% of the long term average versus 88% in the second quarter of 2023. The comparative contribution from our customer supply business, which you'll recall had strong earnings last year, decreased by $0.03 per share. Contributions from our gas infrastructure business decreased by $0.07 per share, due to a combination of higher depletion expense related to lower production estimates, certain non-recurring items and the sale of the Texas pipelines by NextEra Energy Partners. While we may see a few pennies impact again next quarter, we expect gas infrastructure's earnings growth to be effectively flat going forward as we continue to allocate more capital on a relative basis to renewables, storage and transmission. Similar to what we saw this quarter, the increased contributions from new investment driven by the strength of our renewable development program are expected to more than offset any slowing in gas infrastructure growth going forward. All other impacts reduced earnings by $0.05 per share. Energy resources had a strong quarter of new renewables and storage origination, adding 3,000 megawatts to the backlog. With these additions, our backlog now totals roughly 22.6 gigawatts after taking into account more than 1,600 megawatts of new projects placed in the service since our last earnings call, providing great visibility into energy resources ability to deliver on our development program expectations which we recently extended at our Investor Conference. We expect the backlog additions will go into service over the next few years and into 2028. Energy resources 300 gigawatt pipeline is years in the making and ready to respond to customer demand. We have competitive advantages understanding transmission and grid constraints. We have strong relationships with utilities serving the growing power grid. We can build system solutions across stakeholders and customer needs, and we can leverage our proprietary technology to site and deploy the best projects for our customers. A great example is our collaboration with Entergy (NYSE:ETR), where we are targeting to build 4.5 gigawatts of renewable storage solutions to help them meet both their new increased load demand and energy transition goals. And we couldn't be more excited to work with a long-term established customer in order to help them execute on these goals. Another example is our collaboration with Google. As John said earlier, this quarter's backlog addition include 860 megawatts signed with Google to support their data center needs. That brings our total renewables portfolio with technology and data center customers, including assets in operation and in backlog to 7 gigawatts. Our competitive position is even further advantaged by our existing portfolio, with interconnection timelines for new sites stretching for three to seven years or beyond. We can dramatically improve our speed to market by utilizing the existing interconnection from our operating footprint to deploy co-located solar and storage, as well as execute on wind and potentially solar repowers. This optionality provides a unique resource to meet our customer needs, while also capitalizing on the embedded option value from the existing portfolio. Beyond renewables and storage, we're excited to say that Mountain Valley Pipeline is now in service. Turning now to Q2 2024 consolidated results. Adjusted earnings from corporate and other increased by $0.02 per share year-over-year. During the quarter, NextEra issued $2 billion of equity units and recently Energy Resources entered into an agreement with Blackstone to sell a partial interest in a portfolio of wind and solar projects for approximately $900 million. Our long-term financial expectations, which we stated last month at our Investor Conference, remain unchanged. We will be disappointed if we're not able to deliver financial results at or near the top-end of our adjusted EPS expectations range in 2024, 2025, 2026 and 2027. From 2023 to 2027, we continue to expect that our average annual growth and operating cash flow will be at or above our adjusted EPS compound annual growth rate range. And we also continue to expect to grow our dividends per share at roughly 10% per year through at least ‘26 off of 2024 base. As always, our expectations assume our caveats. Turning next to NextEra Energy Partners. Yesterday, NextEra Energy Partners' board declared a quarterly distribution of $0.95 per common unit or $3.62 per common unit on an annualized basis, up approximately 6% from a year earlier. Turning to the balance sheet, since our last earnings call, the partnership completed the next net renewables to equity buyout of roughly $190 million in June 2024 and paid down our 2024 convertible maturity with cash on hand. After repayment of a $700 million HoldCo debt maturity earlier this month, the partnership now has approximately $2.7 billion of liquidity. Let me now turn to the detailed results. Second quarter adjusted EBITDA was $560 million and cash available for distribution was $220 million. New projects, which primarily reflect contributions from approximately 780 net megawatts of new assets that either closed in the Q2 of 2023 or achieved commercial operations in 2023 contributed approximately $39 million of adjusted EBITDA and $9 million of cash available for distribution. Second quarter adjusted EBITDA contribution from existing projects grew by approximately $62 million year-over-year, driven primarily by favorable wind resource during the quarter and partially offset by lower solar generation. Wind resources approximately 103% of the long term average versus 88% in the second of 2023. Finally, adjusted EBITDA and cash available for distribution declined by approximately $46 million and $43 million respectively, from the divestiture of the Texas pipeline portfolio, which is partially offset by the interest benefit of the remaining cash proceeds received from the sale of these assets. From a base of our fourth quarter 2023 distribution per common unit at an annualized rate of $3.52. The partnership continue to see 5% to 8% growth per year in LP distributions per unit with the current target of 6% growth per year as being a reasonable product range of expectations through at least 2026. NextEra Energy Partners expects the partner's payout ratio to be in the mid to high 90s through 2026. We expect the annualized rate of the fourth 2024 distribution that is payable in February 2025 to be $3.73 per common unit. In terms of next steps for NextEra Energy Partners, as we have discussed with you previously, the partnership is continuing to look at all options to secure a competitive cost of capital and to address the remaining convertible equity portfolio financing buyouts. At the same time, the partnership's 6% distribution growth target remains for now. NextEra Energy Partners does not need an acquisition related financing in 2024 to meet its 6% target and does not need gross equity until 2027. NextEra Energy Partners owns a large portfolio of high quality long term contracted clean energy assets and the partnership has attractive organic growth from the repowering of its existing portfolio. We expect to share more in the coming quarters as we address these objectives. NextEra Energy Partners expects run rate contributions for adjusted EBITDA and cash available for distribution from its forecasted portfolio at December 31, 2024 to be in the ranges of $1.9 billion to $2.1 billion and $730 million to $820 million respectively. As a reminder, year-end 2024 run rate projections reflect calendar year 2025 contributions from the forecasted portfolio at year-end 2024. As a further reminder, our expectations are subject to our caveats. That concludes our prepared remarks. And with that, we'll open the line for questions.

Operator: [Operator Instructions] The first question comes from Steve Fleishman from Wolfe Research.

Steve Fleishman: Just first on the comments on the kind of update on the reserve amortization and earned ROE. Could you just go back through that again, John, in terms of just the -- what's driven the increased usage? Is it just that you've ramped up capital a lot quicker than initially planned? Or just maybe give a little bit of color on -- a little more color on that comment?

John Ketchum: Yeah. No, absolutely, Steve. So we've had a lot of population growth in Florida, a lot of that has impacted our service territory. When we first entered in the settlement agreement, back in ’21, we’ve got our regulatory capital employed to be around 9%. It's actually been around 12% as we have accommodated that growth. And so we've got surplus that's right around $586 million today as we look forward for this year and next based on where we are, the capital plans that we have for the FPL business, which are still very strong to take into account the further growth that we see. We believe that with that amortization balance and those CapEx plans will probably be right around an 11.4% ROE for the full year '24 and for the full year ‘25. And that has about a $0.06 impact here this year and a $0.06 impact next year. It's already folded into our financial expectations and not a concern in terms of our ability to cover it. And a big plus from the Steve is, it really I think is a good fact heading into a refiling in 2025 because it demonstrates how the surplus mechanism can really help customers. And the last point that I'll make is don't forget these additional capital investments that we've made, we would expect to see full recovery of in our next filing. So this remember that the surplus mechanism is intended really just to deal with the regulatory lag as we make new investments at FPL to accommodate the additional growth. So we're not worried about this. This is something that is something that we feel very comfortable about addressing in our financial expectations and doesn't impact where we feel like we will end up this year and next.

Steve Fleishman: Okay, thanks. And then on the Blackstone financing that you mentioned, the $900 million any information on just the size of the portfolio that was sold and or the stake in that portfolio?

John Ketchum: Yeah, it was 1.6 gigawatt portfolio just a mix of renewable assets. And I think the real positive takeaway here for investors is there's a real demand for NextEra assets. I mean, we are recognized in the private equity market as being really the top developer. And given all the growth and this quarter is a great example of the 3 gigawatts that we were able to do. We have a strong trajectory going forward. And as private equity has opportunities to work with us and we have a long history of working with private equity going back the last five or six years. It really is a good potential win-win for us and for them. With the Blackstone organization, we really like the capability that they bring to the table and there's a lot of crossover between our two organizations in terms of what we do. And so this was a good fit for us.

Steve Fleishman: And just is what's the percent stake a piece of the 1.6% or their stake is 1.6%?

John Ketchum: They invested capital alongside us. And so they have a partial interest in that portfolio of 1.6 gigawatts.

Steve Fleishman: Got it. And then last question, just on the recent issue. I know you're not doing offshore wind, but just this recent issue with the GE turbines -- turbine at Vineyard Wind, and I know there was a lawsuit filed by AEP. Can you just maybe talk to your turbine performance with them and just are you seeing any issues and how you're feeling about that?

John Ketchum: Yes, for us, I mean, look, first I'll start with the fact that we are a top tensile operator of wind. I think really recognized as the best operator of wind in the business. And we have a real partnership with GE, and so, look, wind turbines have moving parts, they'll have issues from time to time. But our partnership with GE runs 20 years and so we've really never had issues in getting things and we're always able to structure win-win arrangements with them. So as any problems arise to the portfolio they've always been well managed and addressed in a conciliatory way with GE and future.

Operator: The next question comes from Shahriar Pourreza of Guggenheim Partners.

Shahriar Pourreza: So just real quick, I want to start on NEP. I mean, obviously, you guys have the standard language around continuing to evaluate all options. I mean, Brian obviously reiterated the current CAGR, but also used the word for now core-on-core which is somewhat new language, believe it or not. Could we get a sense on timing, what range of options you're thinking about? And I guess how confident are you we can get something done at favorable pricing before the dividend goes under some level of pressure in '27?

Brian Bolster: Hey, thanks, Shah. Obviously, NEP is getting a lot of our attention in terms of looking at what the alternatives are to both improve the cost of capital, which really requires us to be able to successfully address the back end [SEPFs]. And as we said in the prepared remarks, all options are on the table. And what we really are spending time on and we are looking at various solutions around this is how do you tackle those back end setups in a constructive way that makes sense in terms of the cost of capital that would be required to do that and then how do we put NEP in a better position for success going forward. So as part of that, we are obviously exploring all alternatives. We've mentioned private capital as one potential avenue there as well. The good thing is that we have time. We have time in 2024. We've said in the market, we don't have to do anything, we don't have a drops plan for '24, don't have growth equity needs until '27. And so we are being thoughtful about our approach around NEP.

Shahriar Pourreza: And I think Brian just to not to take words out of [indiscernible] mentioned in the next couple of quarters is that -- is this something maybe we'll get to some sort of a definitive direction this year?

Brian Bolster: Yes. Sure. I don't want to put a firm deadline on it. But I think the language we use is over the next few quarters and once we have identified a solution that we think makes sense then obviously we will share that but not until then.

Shahriar Pourreza: And then just on NEE obviously just congrats on a very strong origination quarter, it was definitely on the higher end, Google was a key contributor. I guess do your sort of existing contract protections and supply chain maybe strategy like to kind of navigate some of the challenges in this space as you're continuing to expand development to maybe much higher levels, right? So can supply chain kind of these bottlenecks that we've seen become a governor around backlog additions as we look through '25 and beyond, especially as you're trying to meet the needs of these large energy intensive customers like the hyperscalers?

Brian Bolster: So here's how I think about supply chain. These are number one, there is been some attention around AD/CVD filing and tariffs and those things. We're not impacted. And I made the comment and we spent a lot of time with this both in March and then at our Investor Conference in June still matters more than ever in this business. So the way I would think about it from an investor perspective is the bigger our program, the more leverage we have over our supplier. And in the last couple of years, we have really spent a lot of time and made investment around the data and analytical capability that we have around our supply chain. And we have also made a very conscientious effort around risk transfer and making sure that we have adequate securities to provide incentive to perform. So we are in a position where we have really been able to transfer any tariff for AD/CVD or related risks over to our suppliers. Why is that? The reason for that is when putting numbers up like 3 gigawatts a quarter and have the type of build that we have and expect to have going forward. The contractors and vendors want to work with us. And they've also seen a lot of small developers that ultimately haven't been able to arrange financing or for whatever reason haven't had terrific follow through on their projects. That's not the case with our company. And so there's been even a greater emphasis I would say by our suppliers who want to work with us more than ever. But what that means is making sure that we are always left in a position where we are not taking risks around the obvious things that you might put on your list. And so I really feel better than ever about where we stand from a supply chain perspective and I am very happy with the job that our team has done and the lessons that we've learned over the last couple of years have all been folded into how we contractually approach risk in our agreements going forward.

Operator: The next question comes from Julien Dumoulin-Smith from Jefferies.

Julien Dumoulin-Smith: Yeah, a pleasure. Yes, likewise. Can you speak to how you're thinking about asset recycling here? I mean, I'm curious specifically on the latest portfolio sell down right with Blackstone as mentioned earlier. But how do you think about other assets here? As you think about like for instance some of these headlines on transmission or gas infra is being in focus. It's notable after the FCG sale last year. How do you think about continued monetization of renewable assets or portfolios relative to sort of the ongoing streamlining and focusing back to the core renewables business, if you will? And then related, how do you think about that 70-30 mix, as you pair back, as you pair these different asset sales through the forecast period?

John Ketchum: Yes. No, good question, Julien. So from a recycling standpoint, feel better than I ever have in terms of the options that we have going forward for the portfolio. In terms of asset mix and how we think about that, obviously, we've always had a history of being able to recycle capital around renewables, which are terrific assets which I think we have a great reputation in the market around and our ability to attract capital on the renewable portfolio. But look, we are also making a conscientious effort and I think I made these comments at the Investor Conference that we're looking at our core business, right. Our core business is wind, it's solar, it's battery storage, it's transmission both inside Florida, outside of Florida. And so to the extent we can do some targeted capital recycling around our gas infrastructure business that will continue to be top of mind. Transmission, you raised as well. We are having a lot of success in transmission and the team has done a terrific job I think on the competitive transmission side of identifying new opportunities, and just based on the return structure that we could target, there's good sense to bring in a partner on some of those deals. And so those have been opportunities that we have been targeting as well as we think about the future. But obviously it puts us in a position where we continue to manage those assets and those opportunities as we think about how they contribute to the future. But those certainly are 2 things that we look at in addition to the renewable portfolio. And the numbers that we gave at the Investor Conference, I certainly don't lose any sleepover in terms of the ability to meet those capital recycling targets. From a business mix perspective, I think which is your last question, you know and I think most folks on the phone know that we are very rigorous about looking at our five year forecast and even go beyond that. And so we're constantly looking at our mix and what our obligations are and undertakings are with the agencies and we have a lot of headroom, a lot of headroom on our business mix. So that is not an issue, that is not a concern and the capital recycling plan I think fits well with what our undertakings are there, but plenty ahead of room on business mix.

Julien Dumoulin-Smith: And just clarification on the last question. Just with respect to getting that 3 gigawatt milestone for the quarter here in terms of bookings, is that kind of a good new run rate here or again given the size of these new counterparties is it going to be fairly lumpy moving up and down quarter to quarter here. Just trying to set, a little bit of an expectation there.

John Ketchum: Absolutely. I'm going to turn that one over to Rebecca.

Rebecca Kujawa: Good morning, Julian. We couldn't be more excited about the origination, not only that we've been able to produce over the last couple of years, each of them being a record in their own right and then the first two quarters being each of them, ironically, the second best quarter, obviously, this quarter topping last quarter that we've ever had. I'll caveat it that origination can be a little bit lumpy. I've consistently said that in quarters where it's a little bit lower than where we are today. And I think I even said it the day that we set the top quarterly additions a couple of quarters ago. So there's always a little bit of bumpiness in there, but what we continue to see is consistent with the comments that we all made at the Investor Conference just last month, that and John talked about in his opening remarks today that the combination of the replacement cycle and the growth cycle is a tremendously positive outlook for us over the very long-term. Some of this is going to take a little bit longer to materialize on the growth side, as we also highlighted last month. As you'll see some of those stronger additions of the 3 gigawatts that we added to our backlog, particularly notably strong in years '26 and '27, and even some megawatts added to '28 and beyond. But overall, what we see today and the execution of our team and the value proposition that we bring to our customers is a very bright outlook. Excellent.

Operator: The next question comes from Nick Campanella from Barclays.

Nick Campanella: Hey, good morning, team. Thanks for all the information today. I just wanted to follow-up on Shah's comments. You talked about being able to kind of pass through some of these higher tariff costs to the extent they kind of materialize. Just there's also a projection for two rate cuts this year and I'm just curious if you can kind of talk about how that changes the returns for near that you kind of communicated at the Analyst Day in previous quarters, if you could just update us on that?

John Ketchum: Sure. First of all, as you know, we are always looking to manage risk around our capital investment decisions. And one of those risks is it's not only locking in equipment cost, it's not only locking in labor, but it's also locking in our cost of capital. So as we approach our renewable portfolio, we've been very mindful of making sure that we are locking in our cost of capital through interest rate hedge products swaps in that regard. As I think about the future and the rate the one, the two rate cuts, who knows where we ultimately end up on those fronts. Obviously given the financing plans that we have moving forward, those would be tailwinds for the business. But at the same time, if those don't materialize, we have already taken those into account in our financial expectations and we're very prudent and on top of managing the risk the interest rate risk exposure that we have across the business.

Nick Campanella: Hey, that's helpful. Thanks a lot. And then, John, I think you've been pretty clear about the ability to supplement this power demand inflection with new renewables. And you also have this nuclear portfolio. I understand a lot of that's kind of contracted, but there were headlines about potential Duane Arnold restart. I guess how realistic is that? Is that something you'd even kind of consider at this juncture? And how do we kind of think about the strategic positioning of your nuclear portfolio?

John Ketchum: Sure. Thanks, Nick, for that question on nuclear. With regard to Duane Arnold, I think there would be opportunities and a lot of demand from the market if we were able to do something with Duane Arnold. Obviously bringing back a nuclear plant is into service is not something that you can do without a lot of thought. And it is something that we are looking at, but there is a lot of thought that has to go into it and obviously a real assessment around risks associated with that as well. And so sure, we're looking at it, but we would only do it if we could do it in a way that is essentially risk free with plenty of mitigants around the approach and there are a few things that we would have to work through. But yes, we are looking at it.

Operator: The next question comes from Jeremy Tonet from JPMorgan.

Jeremy Tonet: Just want to get a little bit more color on renewables market right now as you've discussed very strong demand in the market. And just wondering going back to some of the comments at the Analyst Day, what trends you see in PPA pricing at this point and how could that potentially benefit NextEra going forward?

Rebecca Kujawa: Thanks, Jeremy. Appreciate the conversation and question. We've continued to see very strong returns with respect to what we think we need in order to be highly confident that we're adding shareholder value, and I would think about the returns that we laid out at the Investor Conferences is almost minimum thresholds that we have at this point. And there are opportunities, where there's significant customer demand. We have unique positioning in the marketplace to make sure that we get even more attractive returns. I'd say it's a very positive dynamic. It was a very difficult market over the last couple of years when we were seeing the supply chain disruption and increasing pricing, both on the capital equipment side and the ROE side and our returns. And fortunately, we've either seen slightly declining or at a minimum stable backdrop, which is certainly helpful for decreasing our risk and also providing an attractive price and attractive product to our customers. So between the attractive price, the speed to market, the clean attribute of renewables and storage as well as the fact as we talked about last month in the queue across the United States today, all of the projects that are looking to be connected, 90% of those megawatts are renewables and storage, and we have a healthy portion of those. And I couldn't be more excited about our position. So I think we're in a great shape to continue to add a lot of shareholder value in the many years ahead.

Operator: The next question comes from David Arcaro from Morgan Stanley.

David Arcaro: We're hearing utilities around the country now with fast growing pipelines, thousands of megawatts of data center requests. It seems to be moving rapidly just month by month they seem to be learning more, getting more demand. I'm wondering just do you think that's already in your numbers, in your renewables targets here or could we potentially see another wave of demand as some of these utilities nail down just how much load is really coming into their service territories?

Rebecca Kujawa: Hi David, it's Rebecca, I'll chime in here. We certainly are hearing from our power sector customers a lot of interest, from various data center customers, whether the data center operators or the hyperscalers. It is a little bit challenging to see how much of that is potentially multiple requests for ultimately the same data center, but there is no escaping the fact that these are very large numbers and things that numbers that I don't think any utility across the industry has seen before. And so it's going to take some time not only to rationalize that and figure out how you address it, but also to procure and bring online the megawatts and the transmission over the long term that is going to be required to serve this demand if it ends up being as strong as we see it and we think it might be. From our perspective, consistent with our comments from last month, we are seeing a lot of interest both from the power sector customers as well as hyperscalers and data center customers. You're clearly seeing some of that show up in our origination, but you're also seeing some of that more of that show up in this '26 and '27 timeframe and now even '28 as we are lining up these projects to support when they will come online for our utility customers. So I think we all are very excited. It is very interesting for our sector to see this growth that we haven't seen in a couple of decades. But I do think from a practical standpoint, it's going to take a couple of years for this really to materialize and utilities to be able to absorb it and serve it. But that's a terrific backdrop for us. Some of these challenges are going to be difficult to solve, and I believe there's no better company to partner with our customers to help solve them.

David Arcaro: Yes, understood. Thanks for that color. And then I was curious on hyperscaler deals. Are there any other details you would be able to provide around the Google relationship here, just maybe the location or timing of when these projects are coming on? Is it a single location or multiple locations? Are you embedding wind, solar storage, multiple technologies in terms of what product maybe makes sense for these hyperscaler deals? And then just along those same lines, would you be interested in some kind of a multi-gigawatt, multi-year framework? Is that an idea that you're pursuing with these bigger hyperscaler customers?

Rebecca Kujawa: Sure. Well, David, I'll answer it more broadly than just specific to one certainly for a variety of reasons, including sensitivities. Some of these comments would otherwise be sent for them for their own competitive positioning. But those specifically were new contracts, and they were to support data center demand wind, solar and battery storage. And then more broadly speaking from a hyperscalars perspective, they are interested in a variety of technologies, wind solar and battery storage. And they I would say probably the biggest change for many of them is a shift or certainly an increasing percentage of these projects that are very specifically associated with the data centers that these hyperscalars are trying to build. So it's less interest in just a pure virtual power purchase agreement where the project could be anywhere in the U. S. to I want to make sure these resources are there to support my datacenters as they are getting connected to the utilities in those local jurisdictions and can come online at the same time. So very much becoming a more physical market, and one in which it's really important that their partners show up and perform and deliver as expected, because they are the load on the other side of that. So that's a very attractive proposition from our perspective. As it relates to the structured agreements, listen, we were most focused on making sure that we add value for these customers. That could come in a variety of different forms and factors, but our primary focus is being there and delivering for them when they need us. And we'll update you as those structures evolve, but it's really focused around creating value with and for them.

Operator: The next question comes from Carly Davenport from Goldman Sachs.

Carly Davenport: Maybe just to start, a lot has obviously changed in the U. S. Election landscape since your last earnings call. So can you just talk us through your latest expectations on potential implications on the IRA and what impact any modification to that legislation might have on your renewable development plans?

John Ketchum: Sure, Carly. I'll go ahead and take that. I start with we've always been able to work with both sides of the aisle in the 22 years that I've been at NextEra. And I don't think this time around is any different and I'm going to go through why. And let's not forget that in that time we've invested hundreds of billions of dollars in American Energy Infrastructure across almost every state in the country who are benefiting from those investments. And we invest in American Energy dominance every single day and are the quintessential all the above energy company. And that doesn't change from one election to the next. And I think really helps when we are working with both sides of the aisle. That said, let's look at where the incentive money is going. The incentives favor republican states, and we've seen an increase in the number of republican lawmakers that are embracing the clean energy credits within the IRA as they see the positive impact to their states and communities, which is hard to turn away from. And the tax laws are very difficult to overturn. And we're very likely to have thin margins in the House and the Senate particularly in light of some of the recent developments. And let's not forget the important role that renewables play and I made some remarks about that in my script today. But renewables create jobs, they create a property tax base that transforms rural communities. Renewables are energy independence, it's electricity generated from the sun and the wind, it's not subject to fuel price volatility. Low cost renewables are also bringing power bills down which attract new investment from data centers, semiconductor chip manufacturers and other sectors that are looking to invest in the U.S., and low power bills can really dictate which states they select to make those investments in. And tariffs are going to further drive investment in the U.S., and with industrial growth across sectors, some of that driven by tariffs, power demand is only going to go up from here. And our country is going to need low cost, fast deploy electricity more than ever. And renewables are the quickest to market and the lowest cost option in almost every state. Otherwise, we're going to slow down and curtail economic growth in our own country and the credits all flow directly to customers in the form of lower power prices. So when you look at all that, why would you cut credits that are creating jobs, create a much needed property tax base in rural America, that flow to customers that result in lower power prices, that attract new investments, and that provide much needed faster deploy resource at a time when demand is accelerated. It just wouldn't make sense. And for all these reasons, we expect the credits to remain in place, the wind, the solar, the battery storage. So all in all, while we would expect the heated rhetoric through the fall campaign, we feel good about where things stand. Again, we have a long history of constructive engagement with both sides of the aisle.

Carly Davenport: Awesome. Appreciate all of that color. It's really helpful. The follow-up was just on the backlog. Wind saw a bit of an acceleration this quarter from being a bit weaker in the last several. Anything in particular you'd point to in sort of driving that? And do you think that's a potential sign of an inflection on the wind demand side?

Rebecca Kujawa: Hi, Carly, it's Rebecca. We were very pleased to add these projects to the backlog and excited about the partnership with the customers with whom we're going to contract them. I wouldn't necessarily draw any additional lines as kind of consistent with the prior comments I made around backlog. Things are going to be lumpy over time. It's terrific that we were able to add some additional wind projects to the backlog. And right now, our expectations remain consistent with what we laid out last month and obviously have again in our presentation materials today in terms of the targets over the next four years. But I did say as part of our comments last month, I am optimistic, hopeful maybe, that as we look back after this four year period, that is potentially the area where we may have been too conservative and maybe on the lower side of it. It is early in the cycle to make that conclusion, but we strongly believe that wind, solar and battery storage as complementary technologies and low cost and fast to deploy, as John just highlighted, are immensely valuable to our customers. And so having the availability of all three, we think will continue to create value for our customer base over a long period of time.

Operator: The next question comes from Andrew Weisel from Deutsche Bank.

Andrew Weisel: Hi, good morning everyone. Just a quick one to clarify please. If I heard you right, I think you said you have 7 gigawatts in total with tech and data center customers. Can you just give us a sense of the pace maybe roughly round numbers how many megawatts per year you've been adding or expect to add? And then if you could also just clarify, is that purely in terms of wind solar storage or does that also include transmission?

Rebecca Kujawa: Hi, Andrew, it's Rebecca. So that is just projects with technology companies, Roughly 3 gigawatts of those are already in service and roughly 4 gigawatts now are the ones that are in the backlog that we plan to build over the coming years. It is a mix of technologies, probably trend wise, fairly consistent with what we have seen for overall trends for renewables development. So projects that are already in service are likely to be more heavily weighted towards wind as we've entered into those relationships over a longer period of time. And then in terms of the backlog, for now, they're more weighted towards solar and storage, but I expect that to even out over time, particularly as these products get more deliberately balanced with new data center demand as these hyperscalers and datacenter operators are starting to put projects in service. So broadly speaking, roughly consistent with overall development trends, And we certainly are seeing a lot of demand, both directly with them as well as in kind of these three way collaborations the utilities that ultimately will need to serve them as they are. And we'll continue to be adding these new data centers and bringing them on themselves.

Andrew Weisel: Do you see much of an opportunity on the transmission side working with data centers or is your focus more on what you were describing?

Rebecca Kujawa: I would say from a transmission perspective, all of this demand, whether it was the historical replacement cycle demand and now further accelerated by the growth demand, particularly as it gets served with renewables and storage, it is incredibly important that new transmission get built in order to be able to get the resources from which they're most optimally generated to where they're most optimally consumed, and that's changing a little bit. But what's not changing is the need to build transmission. We see interest from the hyperscalers and the datacenter operators to understand transmission and be supportive of it getting built. But it is a very technically complex and you need to understand transmission and how to interact with the system operators and the transmission owners and operators themselves. So I don't see them necessarily wanting to build transmission, but they are very interested in having us and others ensure that it gets built to support their own long term objective.

Operator: The next question comes from Durgesh Chopra from Evercore ISI.

Durgesh Chopra: Really, really appreciate you taking the time and answering my questions here. Just all my other questions have been answered. Just one quick follow-up on Carly's questions on election and potential repeal of either risks. How much of that you had a really strong quarter on renewable origination, but how much of that political instability is actually impacting your ability to sign contracts? Is that -- does that come up in your negotiations? Is that keeping your customers away from signing contracts into the future? Any color on that is appreciated.

John Ketchum: Yes, Durgesh, the short answer is absolutely not. If anything and if they really did believe that there were going to be modifications that only accelerate demand which is certainly not something that we believe for the reasons I went through but it's not curtailing demand at all.

Operator: This concludes our question-and-answer session and the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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