NEXTERA ENERGY INC Q2 2026 earnings call

Good morning, everyone, thank you for joining our second quarter 2026 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, Vice Chairman of NextEra Energy; Scott Bores, President and Chief Executive Officer 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 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 will turn the call over to John.

Thanks, Michael, good morning, everyone. NextEra Energy delivered a strong second quarter with adjusted earnings per share of $1.15, reflecting continued operational and financial execution across both FPL and Energy Resources. Through the first six months of the year, our adjusted earnings per share increased 9.8% year-over-year. NextEra Energy continues to be well-positioned to deliver on its growth opportunities and its regulated and long-term contracted businesses in 2026 and beyond. Power demand continues to accelerate. NextEra Energy is uniquely positioned to meet the power demand needs of our customers because we have the scale, financial strength, supply chain, development expertise, and technology to build all forms of energy. Customers can't afford to wait for an energy partner to secure equipment, land, or financing. States shouldn't have to choose between economic growth and affordable electric bills. Today, energy partners must deliver both.

This is exactly what FPL and Energy Resources consistently do as we execute against our 12 ways to grow. Our deeply experienced teams are focused on serving our customers and delivering them the solutions they need when and where they need it. We believe FPL continues to be one of the best examples of how to serve rapid growth while keeping customer bills low and reliability high. The state remains one of the fastest-growing in the nation, supported by a large and increasingly diverse economy, continued net in-migration, job creation, and business investment. In fact, Florida's $1.8 trillion annual economy is now the 14th largest in the world, recently surpassing Australia and Mexico. That growth translates directly into electricity demand across our service area, including the Space Coast, and FPL is uniquely positioned to meet it.

FPL added more than 90,000 customers in the second quarter compared to the prior year comparable quarter. What differentiates FPL is that we don't choose between affordability, reliability, and serving growth. We consistently deliver all three at the same time. Today, FPL's typical residential bill remains approximately 30% below the national average and is only projected to increase 2% annually on average through the end of the decade. We drive consistently low bills through exceptional operational efficiency. FPL's non-fuel O&M is more than 70% better than the industry average on a dollar per megawatt-hour basis. Customers also continue to benefit from top decile reliability that's more than 60% better than the national average. This performance is a direct result of a proven long-term strategy centered on sustained, disciplined capital investment, scale, a strong balance sheet and credit rating, a highly efficient operating model, and a diverse generation fleet.

In fact, during the quarter, FPL placed into service four new cost-effective solar sites to support Florida's growth. We remain on track to meet our full-year expectations to install approximately 900 MW of solar and over 1.4 GW of battery storage. It's why FPL continues to own and operate more solar and storage than any utility in America. Importantly, FPL is positioned to develop new cost-effective solar and storage for the benefit of its customers, because approximately 90% of our generation mix is anchored in baseload gas-fired and nuclear generation, the result of sustained investments over the last 25 years to modernize our power plant fleet while meeting power demand from significant population growth. We continue to see very strong interest from hyperscalers and other large load customers that value speed to market, reliability, and competitive power pricing.

That is why in May, we updated our expectations from 6 GW to 8 GW of large load by 2032. As part of FPL's new four-year rate agreement, we designed our large load tariff to protect our existing customers. We believe our large load tariff is industry-leading. In fact, in May, Florida's governor signed a bill that codified many aspects of FPL's large load tariff into law. Yesterday, along with Dominion Energy and certain other utilities, we announced our support for the White House's Ratepayer Protection Pledge, which reinforces this principle of large load customers paying their fair share. Importantly, it's aligned with how we already approach our infrastructure projects to serve large load customers. We have roughly 21 GW of large load interest at FPL.

Of that, we are in advanced discussions on 12 GW, a portion of which we believe we could begin serving as soon as 2028. FPL is advancing negotiations with large load customers and continues to expect to announce at least one large load transaction 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. Bottom line, we believe FPL's opportunity set has never been clearer. A rapidly growing service area, a disciplined and constructive regulatory framework, scale complemented by a best-in-class operating model, a long runway of investment opportunities, all while continuing to do what matters most, which is delivering reliable, affordable electricity for our customers every single day. Turning to NextEra Energy Transmission.

During the quarter, it energized a new transmission line in New Mexico to strengthen the grid in a growing part of the state, demonstrating why it is one of America's leading independent electric transmission companies. The team delivered the 137-mile, 345 kV line ahead of schedule and on budget. This project is projected to reduce typical residential electric bills in 2031 by approximately $13 per month based on an independent study performed by the Southwest Power Pool, providing a clear and tangible example of how smart transmission investments can directly improve affordability for customers. The project took just 31 months from being awarded to being placed in service, one of the fastest transmission development and construction projects anywhere in the industry.

This reinforces what we believe is a core differentiator for Energy Resources, our ability to consistently execute and bring critical infrastructure online at a time when speed matters most for customers. NextEra Energy Transmission also continues to win new competitive transmission projects across the U.S. During the quarter, MISO selected NextEra Energy Transmission as part of a consortium to develop two large-scale 765 kV transmission projects in Illinois. NextEra Energy Transmission would have 43% ownership of the approximately $1.6 billion project, which aims to serve as a backbone system to deliver reliable, cost-competitive energy across the Midwest. As I've said many times, power generation alone can't and won't meet this unique moment. This country also needs new transmission infrastructure to reliably deliver electricity to our communities. It's why NextEra Energy Transmission is focused on delivering the solutions for customers.

Including both transmission and generation, Energy Resources has one of the strongest and differentiated energy infrastructure platforms in the country. At a time when customers need tailored solutions, more capacity, and speed to market, Energy Resources is uniquely positioned to deliver. For the quarter, Energy Resources added 3.6 GW of renewables and storage projects to its backlog, its second-largest quarter of additions coming on the heels of last quarter's record 4 GW. Battery storage represented 2 GW of additions this quarter. Battery storage remains an important growth driver, and we believe we are exceptionally well-positioned to deliver this capacity solution for customers. That's because we have several ways to develop storage. We can build it as a standalone project. We can co-locate storage across our existing renewable sites. We can develop batteries as grid solutions, and we could expand four-hour batteries to eight hours at our existing storage sites.

Put simply, the opportunity set for battery storage is significant. Because of the size and diversity of our asset portfolio, co-located storage is a meaningful differentiator for us. Our standalone and co-located battery storage pipeline sits at over 110 GW without including our expansion opportunities. Broadly, our backlog provides meaningful visibility into future growth and underscores the value of our long-term contracted business. We also continue to execute on recontracting projects within our operating portfolio that are coming off contract. Since the last earnings call, we recontracted over 500 MW of existing projects. This brings our year-to-date recontracting total to over 1,100 MW of renewables.

This quarter's recontractings have been priced on average at a premium of roughly $20 per megawatt-hour above recent realized pricing for these projects. We have also locked in contracts for approximately 15 years on average, reflecting the strong electricity demand environment we're seeing today. As a reminder, NextEra Energy Resources has up to 6 GW of renewables and 1.5 GW of nuclear recontracting opportunities through 2032. Major area of opportunity is large load demand and our data center hub strategy. Hyperscalers and other large load customers are increasingly focused on speed, certainty, and scalability. That plays directly to our strengths. We believe Energy Resources is one of the few companies in the country that can support these customers with a full suite of solutions, from renewables and battery storage in the near term, to gas-fired generation and potentially nuclear over time.

In fact, we now have 30 potential hubs we are discussing with the market. We continue to expect that number to rise to 40 by year-end. We also have four origination channels feeding into our base case goal of securing 15 GW of new generation to serve large load by 2035. These four origination channels won't just help us achieve our base case of 15 GW, they can also help us achieve our upside case of 30 GW or more by 2035. Our channels include working directly with hyperscalers, with investor-owned utilities, with cooperative and municipal utilities, and with federal partners. Importantly, we continue to position NextEra Energy Resources to where the market is moving. Our bring-your-own generation approach with hyperscalers resonates because it provides a way to meet incremental demand either in front of the meter or behind the meter, while helping protect affordability for existing retail customers.

Thanks, John. Let's begin with FPL's detailed results. For the second quarter of 2026, FPL's earnings per share increased $0.05 year-over-year. Regulatory capital employed growth of approximately 9.3% was a significant driver of FPL's earnings per share growth versus the prior year comparable quarter. FPL's capital expenditures were approximately $2.8 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 June 2026, FPL's reported return on equity for regulatory purposes will be approximately 11.7%. During the second quarter, we reversed approximately $110 million of the rate stabilization mechanism, leaving FPL with an after-tax balance of approximately $1.3 billion. Key indicators show that Florida's economy remains healthy.

Florida continues to be one of the fastest-growing states in the nation and is currently ranked number one in GDP growth and number one in net migration by U.S. News. As John mentioned, FPL had a strong quarter of customer growth, with the average number of customers increasing by over 90,000 from the comparable prior year period. FPL's second quarter retail sales increased by approximately 0.4% year-over-year. After taking weather into account, second quarter retail sales increased by roughly 0.6% 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 18% year-over-year. Contributions from new investments increased $0.09 per share year-over-year, primarily reflecting continued growth in our power generation portfolio.

On a net basis, the remaining drivers for Energy Resources were roughly flat as various one-time items and timing impacts offset each other. We remain well-positioned to navigate the current interest rate environment through our over $46 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 and Energy Resources development plans, including the development of our national data center hub footprint. For solar, we've secured panels through 2029. We're also well-protected for battery storage, with competitively priced domestic supply also secured through 2029. We have sufficient wind sites with expected federal permits to meet development expectations through 2029, and we have sufficient transformer capacity to support our build forecast through the end of the decade.

Energy Resources had a strong quarter of new renewables and storage origination, with 3.6 GW added to the backlog. With these additions, our backlog now totals approximately 35.1 GW after taking into account 1.1 GW of new projects placed into service since our last earnings call. This highlights the continued strong demand for renewables and storage. Energy Resources 2026 to 2029 backlog represents approximately two-thirds of its development expectations midpoint through 2029. Overall, we are well-positioned with approximately two years to add 18.6 GW to our backlog to be at the midpoint of those expectations. Turning now to our second quarter 2026 consolidated results. Adjusted earnings from corporate and other decreased by $0.04 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 off the 2025 base of $3.71 of 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. That concludes our prepared remarks. With that, we will open the line for questions.