NextEra Energy (NEE +0.02%) got off to a fast start in 2021. The leading utility generated $1.33 billion of adjusted earnings, or $0.67 on a per-share basis, in the first quarter. That's up nearly 14% from the year-ago period, keeping the company on track to achieve its full-year and long-term forecast.
Here's a closer look at the quarter and what's ahead for the leading renewable energy producer.
Analyzing NextEra Energy's first-quarter earnings
NextEra Energy reported strong earnings growth across all three of its business units:
Data source: NextEra Energy. Chart by author.
NextEra's Florida Power & Light (FPL) subsidiary, which is the largest rate-regulated utility in the country, grew its earnings by 12% during the quarter. The primary power source was new investments in its business as it spent $1.4 billion during the quarter to expand and modernize its operations. The company finished 300 megawatts (MW) of cost-effective solar projects during the quarter as part of its ambitious SolarTogether program, the largest community solar program in the country. It now owns and operates more solar energy capacity than any utility in the country. The utility also made progress on its Manatee Energy Storage Center, the world's largest integrated solar-powered battery system, and its Dania Beach Clean Energy Center, both of which are on schedule and on budget.
Earnings at Gulf Power surged 42.5% during the quarter, driven mainly by cost savings initiatives as that entity merges into FPL. The company also benefited from recent investments to reduce costs, improve its reliability, and switch to cleaner and cheaper power sources.
Finally, earnings at NextEra's energy resources segment jumped 13% in the first quarter. The primary fuel source was new investments to expand its world-leading wind and solar energy portfolio. The company also closed its acquisition of GridLiance, adding 700 miles of transmission lines to its portfolio. Meanwhile, NextEra secured an additional 1.75 gigawatts (GW) of renewable projects for its backlog during the quarter, including 190 MW of solar paired with 100 MW of battery storage.
Image source: Getty Images.
A look at what's ahead for NextEra Energy
NextEra Energy reaffirmed its long-term financial expectations. The company expects to generate $2.40 to $2.54 per share of adjusted earnings in 2021. That's about 7% higher than last year's level at the midpoint. Meanwhile, it anticipates that number rising to a range of $2.55 to $2.75 per share next year and $2.77 to $2.97 per share in 2023. That's 6% to 8% annual growth, with the company noting that it would be disappointed if it doesn't deliver earnings at or near the top end of its guidance range through 2023. This outlook supports the company's view that it can grow its dividend by around a 10% annual rate through at least 2022.
The primary source powering this forecast is the company's extensive renewable energy project backlog. After adding 1.75 GW during the quarter, which includes a recent third-party acquisition by affiliate NextEra Energy Partners (NEP 2.23%), the company now has 15.25 GW of signed contracts in its backlog. To put that into perspective, NextEra's energy resource segment currently operates 22 GW of wind and solar assets, one of the world's largest renewable energy portfolios. Those future additions support its industry-leading long-term growth expectations. The company has a balanced portfolio of projects, including new wind developments, wind repowering projects, solar energy, and energy storage.
This utility has a bright future
NextEra Energy's renewable investment strategy continues to pay big dividends for shareholders. The utility is growing its earnings at an above-average rate for the sector, which should continue through at least 2023. That should give the company the power to continue increasing its dividend and generating market-beating total returns. That makes it one of the best ways to invest in the energy transition toward a lower-carbon future.
