Key Points
- Adjusted EPS of $0.96 beat analysts' consensus estimate of $0.95 by a penny.
- Operating revenue was wide of the mark, missing the estimate by $1.2 billion.
- On the bright side, NextEra saw substantial growth in renewable energy projects.
NextEra Energy (NEE -6.39%), a leading clean energy company, released its financial results for the second quarter of 2024 on July 24. The report showcased mixed outcomes.
The company reported adjusted earnings per share (EPS) of $0.96, just slightly above analysts' consensus estimate of $0.95. However, operating revenue for the quarter fell significantly short of expectations, amounting to $6.069 billion against the anticipated $7.273 billion.
Overall, the quarter highlighted strong progress in renewable energy ventures despite a shortfall in revenue.
| METRIC | Q2 2024 | ANALYST ESTIMATE | Q2 2023 | PERCENTAGE CHANGE (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.96 | $0.95 | $0.88 | +9.09% |
| Operating Revenue (in billions) | $6.069 | $7.273 | $7.349 | -17.42% |
| Net Income (GAAP, in billions) | $1.622 | — | $2.795 | -41.97% |
| Operating Expenses (in billions) | $4.428 | — | $4.556 | -2.81% |
| Source: Analyst estimates for the quarter provided by FactSet. |
Understanding NextEra Energy
NextEra Energy is a major player in the energy sector, particularly known for its commitment to renewable energy through its subsidiary, NextEra Energy Resources (NEER). The business operates under two main segments: Florida Power & Light (FPL), which is a regulated utility, and NEER, which focuses on renewable energy projects. Recent initiatives have heavily tilted towards expanding solar, wind, and battery storage capabilities.
The core of NextEra's strategy lies in leveraging its leadership in renewable energy, implementing cost-management practices, and securing regulatory approvals to maintain competitive rates. Some key factors for success include continued investment in clean energy projects, efficient resource utilization, and adherence to regulatory requirements.
Quarterly Highlights
Renewable Energy Expansion: One of the standout elements of the quarter was NEER's addition of over 3,000 megawatts (MW) of new renewable and storage projects to its backlog. This included significant agreements, such as an 860 MW partnership with Google, contributing to an overall backlog of 22.6 gigawatts. This activity underscores the company's focus on long-term growth driven by renewable energy assets.
Cost Management: Effective cost management remains a critical facet of NextEra's operations. For instance, operational expenses for FPL were $2.649 billion in Q2 2024, down from $3.123 billion in Q2 2023. The company’s efficiency measures and fuel procurement strategies have kept operating costs lower, sustaining competitive pricing.
Regulatory Capital: The regulatory environment also played a pivotal role this quarter. FPL managed to get regulatory capital employed to grow by approximately 10.7% year-over-year, supported by competitive rates nearly 40% below the national average. New rate agreements, effective through December 2025, have bolstered this performance.
Income and Dividends: FPL's net income rose to $1.232 billion from $1.152 billion in the prior year, driven by customer growth and efficiency. However, NEER's net income on a GAAP basis fell due to non-qualifying hedge impacts. Adjusted earnings saw a rise to $865 million from $781 million in Q2 2023.
Looking Ahead
NextEra's management maintains an optimistic outlook for the remainder of 2024 and beyond. They project adjusted earnings per share for the year to fall within the range of $3.23 to $3.43. The company is also confident of maintaining a dividend growth rate of approximately 10% per year through 2026.
Investors should watch for the company's ongoing renewable energy projects and any changes in the regulatory landscape. The significant backlog of renewable projects and strategic cost management practices are likely to sustain growth. Nevertheless, market conditions and policy updates will be key areas to monitor for potential impacts on future performance.
