NEXTERA ENERGY INC Q1 2026 earnings call

Good morning, everyone, and thank you for joining our Q1 2026 financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President, and Chief Executive Officer of NextEra Energy; Michael Dunne, Executive Vice President and Chief Financial Officer of NextEra Energy; Armando Pimentel, Chief Executive Officer of Florida Power & Light Company; Scott Voorhees, 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 if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release, in 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. 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 is off to a terrific start to the year, delivering strong Q1 results. Adjusted earnings per share increased by 10% year-over-year, reflecting strong financial and operational performance at both FPL and Energy Resources. Over the past several months, I've been working closely with our customers, policymakers, and stakeholders. Two things could not be clearer to me. First, demand for electricity in this country is not slowing down. In fact, it's accelerating. Our customers need power now, and speed to power is essential. Second, building new power infrastructure must be done in a way that addresses affordability challenges and keeps bills low for existing customers. NextEra Energy is doing both.

We're able to meet this increased power demand while keeping power prices low, and we're doing it by leveraging our common platform. We build all forms of energy infrastructure.

We have experience across the entire energy value chain at massive scale with a balance sheet to back it up, and we continuously drive operational efficiency across our portfolio to deliver value and affordability to customers. At FPL, our value proposition is clear: leverage a diverse generation mix and a resilient grid to provide low-cost, highly reliable electricity to our customers every single day. At Energy Resources, customers choose us because they know we have an unmatched, decades-long track record of building energy infrastructure that delivers cost-effective solutions tailored to their needs. NextEra Energy was built for this moment of extraordinary growth. With a service area that spans 49 states and with more than 12 ways to grow, I couldn't be more excited about our ability to deliver for our customers, our shareholders, and our country.

Importantly, our forecasted growth is visible and balanced between our regulated and long-term contracted businesses. Florida is a prime example of how we reliably serve growth while keeping bills low. The Sunshine State has been one of the fastest-growing states for decades and continues its rapid expansion today. Florida is already a $1.8 trillion economy, the 15th largest in the world, and the growth isn't slowing down. Florida's GDP is forecasted to grow 4.7% annually through 2040. In fact, in the Q1, FPL added nearly 100,000 customers compared to the prior year comparable period. For perspective, roughly 90% of utilities nationwide serve less than that day to day. FPL added these customers to our system in just the last 12 months.

FPL supports this growth by building the right new power generation and the right new transmission infrastructure across the state. In fact, FPL expects to invest between $90 billion and $100 billion through 2032, primarily to support Florida's growing economy. Earlier this month, FPL filed its annual 10-year site plan, detailing its approach to reliably and cost-effectively meet the growing need for electricity in Florida. The plan shows roughly 4 GW of new gas-fired generation, complementing over 12 GW of solar and over 7 GW of storage solutions over the next 10 years, which would further diversify FPL's generation fleet.

Yet, even with significant capital investment, bills have actually gone down over time. When you adjust for inflation, the typical FPL residential customer bill is 20% lower today than it was 20 years ago. In nominal terms, FPL's bills are approximately 30% below the national average and only projected to grow on average about 2% annually through the end of the decade.

On top of that, FPL delivers customers top decile reliability that's approximately 68% better than the national average. Low bills and high reliability don't happen by accident. Instead, this performance is a direct result of smart, disciplined capital investments, coupled with a relentless focus on operating efficiently. This is a value proposition that not only best serves our existing customers, but also works really well for new large load customers like hyperscalers who value reliability, cost, and speed to market, all things we can deliver. As part of FPL's approved four-year rate settlement agreement that went into effect in January, we proactively developed a large load tariff to provide the necessary certainty for both customers and regulators, balancing consumer protections with a competitive rate. Again, both things are possible with the right structure and a smart approach.

FPL's speed to market advantages, combined with its best-in-class service, is creating significant large load interest. We have about 21 GW of large load interest at FPL. Of that, we are in advanced discussions on about 12 GW, a portion of which we believe we could begin serving as soon as 2028. We are making good progress on this front, and we continue to expect at least one large load customer to sign up for capacity under FPL's tariff by the end of the year. Initially, we expect every gigawatt of large load under FPL's approved tariff to be equivalent to roughly $2 billion of CapEx, and to earn the same return on equity as other FPL investments. Energy Resources continues to grow its regulated electric and gas transmission portfolio. It can't be stressed enough.

Linear infrastructure is absolutely vital to meeting America's electricity demand. Pipelines fuel power plants, and transmission lines deliver electricity into communities. NextEra Energy Transmission is one of America's leading independent electric transmission companies. Our scale and experience position us well as we execute on new transmission opportunities across America. In fact, just this week, one of NextEra Energy Transmission subsidiaries, Lone Star Transmission, received ERCOT approval to build portions of two new transmission lines in North Central Texas to improve reliability in the region. Lone Star's investment share of approximately $300 million represents a roughly 40% increase in Lone Star's rate base. NextEra Energy Transmission has now secured more than $5 billion in new projects since 2023.

In total, NextEra Energy Transmission has regulated and secured capital of $8 billion, almost twice the rate base size of Gulf Power when we bought the company in 2019. We also continue to execute against our plan to grow our gas transmission business.

Energy Resources now has ownership interest in more than 1,000 miles of FERC-regulated pipelines. Importantly, it's a portfolio with a number of organic expansion opportunities. All told, we expect our combined electric and gas transmission business at Energy Resources to grow to $20 billion of total regulated and investment capital by 2032, a 20% compound annual growth rate off a 2025 base. We recently added new senior leadership to our pipeline business to focus on growth opportunities, demonstrating our commitment to expanding our gas transmission business. Turning to Energy Resources' long-term contracted business, as I said at the outset, it simply can't be overstated. Our customers need a lot of power and they need it now. Renewables and storage continue to be the fastest way to get new electrons on the grid until additional gas power generation can be built.

This is why we had a record quarter at Energy Resources, adding to backlog 4 GW of new long-term contracted renewables and storage projects. This includes another strong quarter of battery storage origination at 1.3 GW. Importantly, we have four growth avenues for battery storage. We build standalone battery storage, co-locate storage at existing sites, develop storage as a grid solution, and expand batteries from four hours to eight hours at existing storage projects. Our standalone and co-located battery storage pipeline sits at over 110 GW, excluding expansion opportunities. Bottom line, in a market driven by a significant need for quick capacity solutions, Energy Resources remains well-positioned to serve customers with battery storage. We're also off to a terrific start executing against our data center hub strategy, which is built on the power of scale.

Thanks, John. Let's begin with FPL's detailed results. For the Q1 of 2026, FPL's earnings per share increased $0.06 year-over-year. Regulatory capital and growth of approximately 8.8% was a significant driver of FPL's earnings per share growth versus the prior year comparable quarter. FPL's capital expenditures were approximately $3.2 billion for the quarter, and we expect FPL's full year capital investments to be between $12 billion and $13 billion. For the 12 months ending March 2026, FPL's reported return on equity for regulatory purposes will be approximately 11.7%. During the Q1, we utilized approximately $306 million of the rate stabilization mechanism, leaving FPL with an after-tax balance of approximately $1.2 billion.

This quarter, FPL placed into service approximately 600 MW of new cost-effective solar, putting FPL's owned and operated solar portfolio at over 8.5 GW. The indicators show Florida's economy remains healthy. Florida continues to be one of the fastest-growing states in the nation and has three of the five fastest-growing U.S. metro areas between 2024 and 2025. As John mentioned, FPL had a strong quarter of customer growth, with the average number of customers increasing by nearly 100,000 from the comparable prior year period. FPL's Q1 retail sales increased by approximately 3.4% year-over-year. After taking weather into account, Q1 retail sales increased by roughly 0.3% on a weather normalized basis from the comparable prior year period, driven primarily by continued favorable underlying population growth.

Now let's turn to Energy Resources, which reported adjusted earnings growth of approximately 14% year-over-year. Contributions from new investments increased $0.04 per share year-over-year, primarily reflecting continued growth in our power generation portfolio. Our existing clean energy portfolio increased $0.01 per share during the quarter. The comparative contribution from our customer supply business decreased by $0.04 per share, primarily driven by lower production volume in our upstream operations and continued normalization of margins in our full requirements business. Contributions from NextEra Energy Transmission increased $0.05 per share year-over-year, net of financing costs, driven by the sale of a 50% equity interest in a transmission asset located in California. We had no change from other impacts as lower tax costs were largely offset by higher financing costs, which are primarily related to new borrowings to support our new investments.

We remain well-positioned to navigate the current interest rate environment through our over $43 billion interest rate hedging program. We have also planned for potential trade impacts and positioned ourselves to deliver and execute for our customers. That's why we've proactively secured supply to support both FPL's and Energy Resources development plans, including the development of our national data center hub footprint. For solar, we have secured panels through 2029. We're also well-protected for battery storage, with competitively priced domestic supply also secured through 2029. We've secured key wind components domestically for our new build expectations through 2027, and we have sufficient transformer capacity to support our build forecast through the end of the decade. Energy Resources had a record quarter of new renewables and storage origination, with 4 GW added to the backlog.

With these additions, our backlog now totals approximately 33 GW after taking into account 0.3 GW of new projects placed into service since our last earnings call. This highlights the continued strong demand for renewables and storage. Our backlog additions reflect the diverse power demand we're seeing across our customers. Roughly 30% of our backlog additions are driven by hyperscalers, while the remaining 70% comes from power utility customers, including cooperatives and municipalities. Turning now to our Q1 2026 consolidated results. Adjusted earnings from corporate and other decreased by $0.02 per share year-over-year. Our 2026 adjusted earnings per share expectations range of $3.92-$4.02 remains unchanged, and we are targeting the high end of that range.

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 of the 2025 base of $3.71 adjusted earnings per share. From 2025 to 2032, we expect that our average annual 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 a 2024 base, and 6% per year from year-end 2026 through 2028. As always, our expectations assume our caveats. This concludes our prepared remarks, and with that, we will open the line for questions.