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NextEra Energy Generates Strong Earnings Growth in Q2

By Matthew DiLallo - Jul 24, 2019 at 12:06PM

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The utility continues to expect that its full-year results will come in at the high end of its forecast.

NextEra Energy's ( NEE 1.22% ) clean energy-focused growth plan continues to drive results. The utility's strategic success was once again evident during the second quarter as earnings surged by double digits. That strong showing kept the company on track to deliver full-year results toward the high end of its guidance range.

NextEra Energy results: The raw numbers

Metric

Q2 2019

Q2 2018

Year-Over-Year Change

Adjusted earnings

$1.13 billion

$989 million

14.6%

Adjusted earnings per share

$2.35

$2.08

13%

Data source: NextEra Energy.

What happened with NextEra Energy this quarter? 

NextEra delivered solid results across the board:

  • NextEra Energy's Florida Power & Light (FPL) subsidiary generated $663 million, or $1.37 per share, of net income during the second quarter. That's an increase of 4% from the prior-year period, mainly due to its investments to expand the business. Overall, the company added about 100,000 new customers compared to last year's second quarter.
  • Gulf Power Company, which NextEra acquired last year, contributed $58 million, or $0.12 per share, of net income during the quarter. The company's efforts to integrate the business are progressing as planned.
  • NextEra's energy resources segment produced $448 million, or $0.93 per share, of adjusted earnings during the quarter, up 12% year over year. New investments added $0.09 per share to the bottom line during the quarter, which more than offset lower results at its existing assets. The company's wind operations continued facing headwinds from weaker wind resources, which were at 93% of their historical average during the quarter. 
Several wind turbines in a field with a bright sun in the background.

Image source: Getty Images.

What management had to say 

CEO Jim Robo commented on the company's performance by saying that: "NextEra Energy delivered strong second-quarter results and is well-positioned to meet our overall objectives for the year. We grew adjusted earnings per share by approximately 13% year-over-year, reflecting successful performance across all of the businesses."

One of the highlights of the quarter was the continued growth of its energy resources segment. Not only is that business completing projects that are boosting results but also adding new ones to the backlog. The company "continues to capitalize on one of the best environments for renewables development in our history," according to Robo, which enabled it to secure more than 1,850 MW of new projects during the quarter. That brought its total backlog up to more than 11,700 MW, which includes 4,100 MW that will drive growth after next year. One of the more noteworthy additions was a 250 MW solar project that the company is pairing with a 200-MW, four-hour battery storage system. By combining storage with renewables, NextEra can provide steady power even when the sun or wind aren't generating electricity.

Looking forward 

NextEra Energy's excellent performance through the first half of the year has it on track to produce adjusted earnings at or near the top of its $8 to $8.50-per-share guidance range. That implies that profits will increase by around 8% from last year's level. Meanwhile, the company expects its earnings to grow at a 6% to 8% annual pace through 2022. That growth rate supports the company's view that it can increase its dividend by 12% to 14% per year through at least 2020.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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