NextEra Energy's Q4 Earnings Are Right on Target

NextEra Energy (NEE 0.45%) put the wraps on another solid year, delivering strong results for the recently completed fourth quarter, which enabled the utility to hit the midpoint of its full-year earnings target. On top of that, the company made excellent progress on its strategic growth plan. That has the renewable energy giant on track to continue generating solid earnings growth over the next several years.

Check out the latest NextEra Energy earnings call transcript.

NextEra Energy results: The raw numbers

Data source: NextEra Energy.

What happened with NextEra Energy this quarter? 

Energy resources powered the quarter:

• NextEra Energy's Florida Power & Light (FPL) subsidiary generated $407 million, or $0.85 per share, of adjusted earnings during the fourth quarter, up 3% from the fourth quarter of 2017. Powering that segment's growth were the $5.1 billion of investments the company made over the past year to build clean, efficient, modernized power generation capacity as well as a stronger and smarter grid in Florida.
• For the full year, FPL generated $2.2 billion, or $4.55 per share, of adjusted earnings, an increase of more than 12% from the prior year, powered mainly by new investments during 2018.
• NextEra's energy resources segment, meanwhile, generated $317 million, or $0.66 per share, of adjusted earnings during the quarter, an increase of nearly 40% from 2017's fourth quarter. This segment benefited from higher profitability on its existing power generation assets, new gas pipelines placed into service during the year, and a lower income tax rate.
• Energy Resources' full-year adjusted earnings were $1.5 billion, or $3.05 per share, up about 19% from 2017's level due to those same growth drivers.
• Overall, NextEra Energy generated $3.7 billion, or $7.70 per share, of adjusted earnings for 2018, which was 15% higher than 2017 and right at the midpoint of the company's guidance range.

Image source: Getty Images.

What management had to say 

CEO Jim Robo commented on the company's results and what they meant for investors:

NextEra Energy successfully executed on its operational and financial plans in 2018, achieving approximately 15% growth in adjusted earnings per share for the year. Dating back to 2005, we have now delivered compound annual growth in adjusted earnings per share of more than 8.5%. In 2018, we delivered a total shareholder return of more than 14%, outperforming the S&P 500 index by nearly 19% and the S&P 500 Utilities Index by more than 10%.

2018 was another strong year for the company as its investments to build the cleanest utility in the country continue to pay off. NextEra has taken a dual approach to achieving this aim by making smart acquisitions as well as organic investments. The company made several deals over the past few months, including the purchase of the City of Vero Beach's municipal electric system, Trans Bay Cable -- a 53-mile underwater transmission cable system that supplies 40% of San Francisco's power needs -- and a three-part transaction with Southern Company (SO 2.24%) for Gulf Power, Florida City Gas, and two natural gas power plants in Florida. On top of that, the company added 6,500 megawatts of new renewable power projects to the backlog of its energy resources segment, which is enough clean energy to power more than 4 million homes.

Looking forward 

NextEra Energy's strategic progress last year has the company on track to generate $8.00 to $8.50 per share in adjusted earnings in 2019. Looking further ahead, the company expects to grow adjusted earnings per share at a 6% to 8% annual rate through 2021 from last year's base of $7.70 plus an additional $0.15 per share in 2020 and $0.20 per share in 2021 from its transactions with Southern Company. However, CEO Jim Robo stated that he would be "disappointed if we are not able to deliver financial results at or near the top end of our [range]." That forecast should support a fast-growing dividend from the renewable energy giant.