Energy utility NextEra Energy (NEE -1.60%) reported its third-quarter earnings on Wednesday, Oct. 23, noting that net income of $1.85 billion was up 52% year over year. On a per-share basis, earnings were $0.90 compared to $0.60 per share the prior year. Adjusted earnings per share for the quarter rose by nearly 10% to $1.03, surpassing last year’s figure of $0.94. Revenue for the quarter increased to $7.57 billion from $7.17 billion a year ago.
Despite some regulatory and infrastructure challenges, the quarter was marked by strong strategic and financial achievements.
| Metric | Q3 2024 | Q3 2023 | Change (YOY) |
|---|---|---|---|
| Net income | $1.85 billion | $1.22 billion | 51.9% |
| Adjusted earnings | $2.13 billion | $1.92 billion | 10.8% |
| Revenue | $7.57 billion | $7.17 billion | 5.5% |
| Adjusted EPS | $1.03 | $0.94 | 9.6% |
Source: NextEra Energy. YOY = Year over year.
Business Overview and Recent Focus
NextEra Energy is known for its robust commitment to renewable energy, primarily through its subsidiaries Florida Power & Light Company (FPL) and NextEra Energy Resources (NEER). FPL is a rate-regulated utility, while NEER is the leading generator of solar and wind energy globally. The company's focus includes expanding its renewable energy footprint and maintaining cost efficiency to keep utility bills below the national average. Regulatory compliance and strategic investments play crucial roles in navigating the competitive energy market.
Key focuses for NextEra Energy include enhancing renewable energy capacities, ensuring regulatory compliance, and maintaining operational excellence. This involves substantial capital investment in solar and battery storage, strategic partnerships for expansion, and cost efficiency in operations to retain a competitive edge in providing economical energy solutions.
Third-Quarter Highlights
Net income in Q3 increased markedly due to robust earnings management and strategic advancements in renewables. NextEra's subsidiary, FPL, reported net income of $1.29 billion (up from $1.18 billion in Q3 2023), which was spurred by investments nearing $2 billion in business growth. NEER contributed a net income of $1.22 billion, driven by a continued strong contribution from renewable energy storage.
NextEra Energy Resources fortified its leadership in renewables by adding about 3 gigawatts (GW) worth of projects to its backlog once again, raising the total project backlog to over 24GW. These projects align with agreements for up to 10.5GW with Fortune 50 companies, promising significant growth potential through 2030.
Challenges arose in the form of regulatory pressure, especially concerning capital growth and storm-related amortization at FPL. Regulatory capital employed grew faster than anticipated by about 9.5%, causing concerns over cost recovery. Additionally, the Corporate and Other segment saw losses that impacted shareholder value by $0.45 per share under GAAP measures.
The quarter saw robust revenue expansion, with total operating revenue increasing 5.5% year over year. This growth underscores the successful execution of its strategic focus on renewables and efficiency improvements.
Looking Ahead
NextEra Energy management maintains a positive outlook, reiterating its projection for adjusted earnings per share to grow consistently through 2027. Dividend projections remain strong, with expectations for roughly 10% annual growth through 2026.
Management aims to achieve high-end performance within its forecasted ranges, supported by strong balance sheet management. Anticipated expansions in renewable energy projects are set to leverage a pipeline that could fuel a significant cycle of growth. Investors should keep an eye on regulatory developments and the execution of renewable energy developments as potential influences on future performance.
