NEXTERA ENERGY INC Q4 2025 earnings call

Good morning, everyone, and thank you for joining our fourth quarter and full year 2025 financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President, and Chief Executive Officer of NextEra Energy, Mike Dunne, Executive Vice President and Chief Financial Officer of NextEra Energy, Armando Pimentel, Chief Executive Officer of Florida Power & Light Company, Scott Bores, President of Florida Power & Light Company, Brian Bolster, President and Chief Executive Officer of NextEra Energy Resources, and Mark Hickson, Executive Vice President of NextEra Energy. John will start with opening remarks, and then Mike will provide an overview 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, including if any of our key assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call, and the risk factors section of the accompanying 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. 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.

Thanks, Mark, and good morning, everyone. NextEra Energy had strong operational and financial performance in 2025, delivering full-year adjusted earnings per share of $3.71, up over 8% from 2024, and slightly better than what we communicated as the top end of our range at our investor conference in December. Our expectations are to grow adjusted earnings per share at a compound annual growth rate of 8%+ through 2032, and we are targeting the same from 2032 through 2035, all off the 2025 base. As we enter a new year, we're focused on the opportunity in front of us. America needs more electrons on the grid, and America needs a proven energy infrastructure builder to get the job done. That's who we are, and that's what we do.

NextEra Energy develops, builds, and operates energy infrastructure across the energy value chain, whether it's power generation, storage, or linear, electric, and gas infrastructure. It's why I believe we are well-positioned for the future as we execute against our strategic plan with the over 12 ways to grow that we presented in December. Importantly, our forecast to growth is visible and balanced between our regulated and long-term contracted businesses. Last year was about laying the groundwork for the future of our business. This year is about execution, which is our strong suit. Let's start with FPL, which begins the year with a new 4-year rate agreement that runs through the remainder of the decade. The Florida Public Service Commission unanimously approved the agreement in November and issued its final order last week.

The agreement allows us to make smart, long-term infrastructure investments on behalf of our customers while keeping bills well below the national average. FPL expects to invest between $90 billion and $100 billion through 2032, primarily to support Florida's growth, while continuing its track record of keeping customer bills low and reliability high. While customer affordability is a major concern throughout many parts of the US, FPL's typical retail bill today is more than 30% lower than the national average. FPL expects typical residential customer bills to increase only about 2% annually between 2025 and 2029, which is lower than the current inflation rate of about 3%. Keeping customer bills low is our number one priority, and we do that by continuously investing in and executing against the best-in-class operating model. That discipline delivers real results.

FPL's non-fuel O&M is more than 71% lower than the industry average, reinforcing our position as the lowest cost electric utility operator in the country. The four-year rate agreement also provides an allowed midpoint regulatory return on equity of 10.95%, with a range of 9.95% to 11.95%. FPL's equity ratio remains at 59.6%, and the agreement includes a rate stabilization mechanism. FPL's agreement also includes a large load tariff. We believe the tariff strikes the right balance by providing hyperscalers with speed to market at a competitive price.... while just as importantly, protecting our existing customers from bearing infrastructure build-out costs needed to support hyperscalers. FPL's speed-to-market advantages, combined with its best-in-class service, is creating significant large load interest to the tune of over 20 GW to date.

Of that, we are in advanced discussions on about 9 GW, a portion of which we now believe we could begin serving as soon as 2028. For context, every gigawatt is equivalent to roughly $2 billion of CapEx and earns the same return on equity as other FPL investments. Florida's growth requires continued investment in energy infrastructure. The state is expected to surpass 26 million residents by 2040, but it's more than just people moving into the state. Today, Florida is a $1.8 trillion dollar economy, the 15th largest economy in the world if the state were a standalone country. Florida leads the nation in key economic indicators like income migration, manufacturing, job growth, and corporate headquarter relocations. And that's what makes Florida's growth different than in the past.

A diverse set of high-growth industries is bringing new businesses to the state, from the Space Coast to Miami and all across Florida. It's why Florida expects to add 1.5 million new jobs by 2034. This is high-quality economic development with high-wage jobs and innovative industries. FPL's continued infrastructure investments help make this economic transformation possible. Energy Resources also continues to grow its regulated portfolio, electric and gas transmission. NextEra Energy Transmission is one of America's leading independent electric transmission companies, with total regulated and secure capital of $8 billion. In fact, it's almost twice the rate base size of Gulf Power when we bought the company in 2019. Our scale and experience position us well as we execute on new transmission opportunities across America. NextEra Energy Transmission has secured roughly $5 billion in new projects since 2023.

This includes PJM's recommendation in December that NextEra Energy Transmission and Exelon be selected to develop a new $1.7 billion high-voltage transmission line, which is expected to enhance the flow of more than 7 GW of power across the region. We expect PJM to make the decision on this project next month. We also continue to execute against our plan to grow our gas transmission business. Energy Resources has ownership interests in more than 1,000 miles of FERC-regulated pipelines, a portfolio with organic expansion opportunities. For example, Mountain Valley Pipeline has multiple ways to grow and is ideally positioned to bring gas from the Marcellus Shale even further into the Southeast, where gas demand is already high.

It's why we acquired a portion of Con Ed's interest in MVP earlier this month, and we'll continue to look for opportunities to optimize and expand our regulated gas pipeline portfolio as we provide energy infrastructure solutions to enable large loads across the country. Putting it all together, we expect our combined electric and gas transmission business and energy resources to grow to $20 billion of total regulated and invested capital by 2032, a 20% compound annual growth rate off a 2025 base. Energy Resources had another record year originating new long-term contracted generation and storage projects. We added approximately 13.5 GW to our backlog, which includes a record quarter of origination of 3.6 GW since our last call. We have now originated approximately 35 GW over the last three years.

To put that into context, 35 GW of power generation would rank as the 4th largest public utility in the U.S. What's also important is adding electrons to the grid. Again, that's what America needs right now, and that's what Energy Resources did, putting 7.2 GW of projects into commercial operations since last year, an Energy Resources record for a single year. Together, FPL and Energy Resources placed into service approximately 8.7 GW of new generation and storage projects in 2025. We continue to be well-positioned to build more renewables, which remain the lowest cost and fastest solution to meet our customers' immediate needs. We've secured solar panels to meet our development expectations through 2029. We've begun construction on those projects, too. We've also secured 1.5 times our project inventory against our forecast, providing us permitting protection.

Few companies in our industry are positioned like us. We've taken the same approach for battery storage, securing a domestic battery supply through 2029. That's important because battery storage now represents almost one-third of our 30-GW backlog, with nearly 5 GW originated over the past 12 months. We don't see this demand slowing. Nearly every region in the country needs capacity, and battery storage is the only new capacity resource available at scale. With a national footprint and large land position, we can work with customers across the country on standalone storage, but that's just the beginning. We can also take advantage of our existing footprint by co-locating storage where we already have connections to the grid, effectively doubling down or doubling capacity at a site. While it's the early innings, we're looking at long duration opportunities in two.

In all, if you just look at standalone and co-located battery storage assets, we have a 95 GW pipeline. If you assume we can ultimately expand each of these sites, we could potentially double our total backlog. It's a huge competitive advantage and positions us well in a market that's showing strong demand. We also continue to advance our potential gas-fired generation build with a pipeline that's now topped 20 GW. To get us started, we've secured gas turbine slots with GE Vernova to support 4 GW of gas-fired generation projects. We have a lot of experience building gas-fired generation, as no one has built more over the last 20 years than NextEra Energy. Energy Resources remains focused on both optimizing and adding generating capacity to its nuclear fleet.

We continue to advance the recommissioning of our Duane Arnold nuclear plant in Iowa, made possible by the 25-year power purchase agreement with Google we announced last year. Our nuclear fleet outside Florida is also ripe for advanced nuclear development. That's why we are spending time closely evaluating the capabilities of various SMR OEMs. All told, we have 6 GW of SMR co-location opportunities at our nuclear sites and are working to develop new greenfield sites. Of course, any nuclear new build would have to include the right commercial terms, conditions, with appropriate risk-sharing mechanisms that limit our ultimate exposure. In addition to Duane Arnold, we have capacity available at our nuclear plants in New Hampshire and Wisconsin.

Thanks, John. Let's begin with FPL's detailed results. For the full year 2025, FPL's earnings per share increased $0.21 versus 2024. The principal driver of FPL's 2025 full year performance was regulatory capital employed growth of approximately 8.1%. FPL's capital expenditures were approximately $2.1 billion in the fourth quarter, bringing its full year capital investments to a total of roughly $8.9 billion. FPL's reported return on equity for regulatory purposes is expected to be approximately 11.7% for the twelve months ending December 31, 2025. During the fourth quarter, FPL utilized approximately $170 million of reserve amortization, resulting in a remaining pre-tax balance of approximately $300 million at year-end 2025.

Consistent with prior rate agreements, the Florida Public Service Commission approved a rate stabilization mechanism that allows us flexible amortization over the four-year period. Under FPL's new rate agreement, this $300 million will be available for future amortization through the approved rate stabilization mechanism. When combined with the other components of the rate stabilization mechanism, which are maintained on an after-tax basis, FPL will have an aggregate after-tax balance of approximately $1.5 billion available over the term of the agreement.... This compares to the pre-tax balance of $1.45 billion that was approved in our prior four-year settlement in 2021. Key indicators show that the Florida economy remains strong, and Florida's population continues to be one of the fastest-growing in the country.

Its annual gross domestic product is now roughly $1.8 trillion, or the 15th largest economy in the world, if Florida were its own country. For the fourth quarter of 2025, FPL's retail sales increased 1.7% from the prior year on a weather-normalized basis, driven primarily by continued strong customer growth. In the fourth quarter of 2025, we added over 90,000 customers as compared to the prior year comparable quarter. For the full year 2025, FPL's retail sales increased 1.7% from the prior year on a weather-normalized basis, also driven primarily by the strong customer growth in our service territory. Now let's turn to energy resources, which reported full-year adjusted earnings growth of approximately 13% year-over-year.

For the full year, contributions from new investments increased by $0.47 per share, reflecting continued demand growth for our generation and storage portfolio. Contributions from our existing clean energy assets decreased $0.04 per share. Increased contributions from our nuclear fleet were more than offset by the absence of earnings due to the minority sale of certain pipeline assets in 2024 and other headwinds, including wind resource. Our customer supply and trading business increased results by $0.04 per share, driven by increased origination activity and higher margins. Other impacts decreased results by $0.30 per share year-over-year. This decline reflects higher financing costs of $0.17 per share, mostly related to borrowing costs to support our new investments, as well as increased development activity to support business growth and higher state taxes.

For the fourth year in a row, energy resources again delivered our best year ever for origination, adding nearly 13.5 GW of new generation and battery storage projects to our backlog. This includes approximately 3.6 GW since our last call. 1.7 GW, or almost 50% of our fourth quarter additions, were solar projects. Our 2025 origination performance reflects growing demand, including from hyperscalers that are looking for speed-to-market power solutions. Our backlog now stands at approximately 30 GW after taking into account roughly 3.6 GW of new projects placed into service since our third quarter call. In 2025, we placed over 2 GW of battery storage into service, increasing our annual battery storage build from 2024 by roughly 220%.

We believe our 30-gigawatt backlog provides terrific visibility into energy resources' ability to deliver attractive growth in the years ahead. Turning now to the consolidated results for NextEra Energy. For the full year, adjusted earnings per share from our corporate and other segment decreased by $0.12 per share year-over-year, primarily driven by higher interest costs. NextEra Energy delivered 3- and 5-year compound annual growth rates in operating cash flow of over 14% and over 9%, respectively. Our 2026 adjusted earnings per share expectation ranges of $3.92 to $4.02 per share remain unchanged, and as we said in December, we are targeting the high end of that range. NextEra Energy has met or exceeded its annual financial expectations since 2010, which is a record we are proud of.

This provides us confidence in our 10 years of financial visibility that we shared with you at last month's investor conference. We expect to grow adjusted earnings per share at a compound annual growth rate of 8%+ through 2032 and are targeting the same from 2032 through 2035, all off the 2025 base of $3.71 of adjusted earnings per share. From 2025 to 2032, we expect that our average growth in operating cash flow will be at or above our adjusted earnings per share compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through 2026, off of 2024 base, and 6% per year from year-end 2026 through 2028. As always, our expectations assume our caveats.

That concludes our prepared remarks, and with that, we will open the line for questions.