NextEra Energy - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 adjusted EPS was $1.05, up 9.4% YoY and above S&P Global consensus $1.01; GAAP EPS was $0.98. Operating revenue was $6.70B, up 10.4% YoY but below the $7.50B consensus. Management reiterated long-term EPS ranges and said they’d be “disappointed” not to deliver at or near the top end through 2027. EPS/Revenue consensus from S&P Global: $1.01 and $7.50B, respectively*.
• FPL delivered steady growth (net income $1.275B vs $1.232B YoY), with regulatory capital employed up ~8% YoY and Q2 capex of ~$2B; a Florida PSC technical hearing on its four‑year rate plan is scheduled next month and a final decision is expected in Q4.
• NextEra Energy Resources (NEER) had a strong origination quarter, adding 3.2 GW to backlog (now nearly 30 GW), including >1 GW for hyperscalers; ~6 GW of backlog is intended to serve technology/data center customers; combined with the operating fleet, >10.5 GW will serve tech/data center demand.
• Dividend: The board declared a regular quarterly dividend of $0.5665 per share payable Sept. 15, 2025; management continues to expect DPS growth of ~10% per year through at least 2026 off a 2024 base.

What Went Well and What Went Wrong

What Went Well

• Adjusted EPS advanced 9.4% YoY to $1.05; CEO: “We believe we are well positioned… and will be disappointed if we are not able to deliver financial results at or near the top of our adjusted earnings per share expectations ranges in each year through 2027”.
• Robust commercial momentum: NEER added 3.2 GW to backlog, including >1 GW tied to hyperscalers; backlog nearing 30 GW and 6 GW intended for technology/data center customers; total serving tech/data center >10.5 GW when including the operating portfolio.
• Florida regulatory backdrop firmed: Florida Supreme Court affirmed approval of FPL’s 2021 settlement; FPL continues to invest while keeping bills ~20% below the projected national average under the proposed plan; CEO highlighted storage as “a game changer… ready now”.

What Went Wrong

• Revenue and EBITDA came in below S&P Global consensus (Revenue $6.70B vs $7.50B; EBITDA $4.13B vs $4.66B) despite the EPS beat, suggesting mix/other items supported earnings while top-line and operating cash proxies lagged*. CFO cited weaker wind resource (97% of long-term average vs 104% last year) and higher interest costs (-$0.06/sh) at NEER.
• Corporate & Other adjusted EPS contribution fell $0.04 YoY in Q2; on GAAP and adjusted bases, Corporate & Other were down $0.04/sh vs prior year.
• FPL EPS growth (+$0.02 YoY) trailed cap employed growth; CFO noted regulatory ROE was ~11.6% vs 11.8% last year and other puts/takes compressed the uplift this quarter.

Transcript

Speaker 4

Good day and welcome to the NextEra Energy second quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Marcus Idleman, Director of Investor Relations. Please go ahead, sir.

Speaker 2

Thank you, Chuck. Good morning, everyone, and thank you for joining our second quarter 2025 financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President, and Chief Executive Officer of NextEra Energy; Mike Dunn, Executive Vice President and Chief Financial Officer of NextEra Energy; Armando Pimentel, President and Chief Executive Officer of Florida Power & Light Company; Brian Bolster, President and Chief Executive Officer of NextEra Energy Resources; and Mark Hickson, Executive Vice President of NextEra Energy. John will start with opening remarks, and then Mike will provide an overview of our second quarter results. Our executive team will then be available to answer your questions. We will be making forward-looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties.

Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call, in the risk factors section of the accompanying presentation, or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.NextEraEnergy.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to John.

Speaker 0

Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong second quarter results with adjusted earnings per share increasing 9.4% year over year. In addition, through the first six months of the year, our adjusted earnings per share has increased 9.1% year over year. The continued strong financial and operational performance at both FPL and Energy Resources positions our company well to meet its overall objectives for the year. America continues to be at a unique moment, and our industry remains front and center. After decades of stagnant electricity demand, we're now seeing growth across sectors of the U.S. economy. Artificial intelligence and reshoring of manufacturing grab most of the headlines, and for good reason. That does not tell the full story. Demand for more electricity is also coming from all sectors, including residential, commercial, industrial, and oil and gas, to name a few.

A new study from ICF released this month described demand growth as both sudden and sharp. The report says demand growth over the next decade is expected to exceed the last three decades combined, just the latest data point putting into perspective how unique this moment truly is. Bottom line, America needs more electricity, not less. Importantly, America needs it now, not just in the future. We are firmly aligned with the administration's goal to unleash American energy dominance, and to do so, we need all of the electrons we can get on the grid. There is truly no time to wait. We see this every day from our customers who are not just saying they need power; they are signing contracts with us to build energy infrastructure because we can do it quickly and at a low cost. Again, the need for more electricity is real.

We must do more than just plan for what is on our doorstep. We must act. As I have said many times, we are going to need all forms of energy to meet this moment. New gas and nuclear are on the way and will be critical to meeting demand over the long term. Renewables and storage can bridge the gap and will play an important role in an all-of-the-above future. Storage, in particular, is a game changer. It is low cost. All forms of energy can charge it. And the grid can rely on it for capacity. Storage is also flexible and can utilize excess transmission capacity. That means it can quickly be deployed to where customers need it most. Importantly, renewables and storage are ready now and can provide much-needed electricity and capacity.

In order to achieve our objectives, we will need to continue to navigate a challenging regulatory and policy environment. The one big beautiful act was tough but constructive, providing for a phase-out of wind and solar tax credits over time, together with a longer runway for nuclear and storage. Although there is more certainty with the passage of the bill, we will need to manage that against a backdrop of executive orders, agency rulemaking, tariffs, and trade actions. While there are risks to be managed, we believe there are also significant opportunities given the steps we've taken to prepare for this moment as we expect a natural pull forward of demand. We are in a constant state of construction.

Over the last few years prior to the enactment of the OBBB, we made substantial financial commitments to begin construction on renewable projects that we believe are sufficient to cover the projects we plan to place into service through 2029. We have a large pipeline of early and late-stage projects. We have a supply chain capability that I believe is the best in the sector, and we are leveraging artificial intelligence across our business, including in customer origination. We have the balance sheet, scale, experience, and technology. While no company is immune from all risk, we have proven time and again what I firmly believe: that there is no company in our sector better positioned to execute through the challenges and capitalize on the opportunities that lie ahead than NextEra. As the quintessential all-of-the-above energy company, we build more energy infrastructure than anyone in the United States.

From renewables and storage to gas and nuclear, we do it all. We will continue to build what customers need, including the critical transmission to bring power from plants to communities. At FPL, we are going to continue to do what we have done so well for customers over the past two decades. Florida's long-standing constructive regulatory and legislative environment enables infrastructure investment to serve Florida's growing population. In fact, just last week, the Florida Supreme Court concluded that state regulators properly approved our 2021 settlement agreement by affirming the Florida Public Service Commission's final and supplemental final orders.

FPL continues to invest in infrastructure to keep reliability high and bills low, and we continue to operate and invest in the nation's largest gas-fired fleet, along with four nuclear units in Florida, which provides us the flexibility to leverage cost-effective solar and storage to meet the significant demand from our state's growing population. FPL is doubling down on what we've proven benefits our customers, investing in generation to meet growing electricity demand while driving fuel costs out of the bill. FPL plans to add more than 8 gigawatts of reliable, cost-effective solar and battery storage by 2029. It's the perfect complement to our existing natural gas and nuclear fleet in Florida. Together, it's how we serve our customers with a diversified energy mix. This not only further secures Florida's energy independence, it also improves system reliability and resource adequacy by delivering energy when customers need it most.

FPL continues to be America's blueprint for utilizing all forms of energy to keep reliability high and electric bills low. Outside of Florida, Energy Resources continues to be the nation's leading energy infrastructure developer. The team originated 3.2 gigawatts of new projects since the last earnings call, including over 1 gigawatt serving hyperscalers to help enable their AI build-out and further drive America's leadership in the space. Our backlog alone now includes approximately 6 gigawatts of projects intended to serve technology and data center customers. If you include our operating portfolio together with the expected build-out of our backlog, we will have over 10.5 gigawatts serving technology and data center customers across the United States. We continue to make progress toward the potential restart of our Duane Arnold nuclear facility while also working to advance new gas-fired generation opportunities.

We continue to build what is essentially a stand-alone rate-regulated utility within Energy Resources through NextEra Energy Transmission. With our scale, experience, and technology, including our supply chain capability and balance sheet, we are positioned to meet the opportunities that increased power demand will provide. I firmly believe no one has a better team, a better culture, or a better track record of execution than NextEra Energy. With that, I'll turn the call over to Mike to walk you through detailed results from the quarter.

Speaker 1

Thank you, John, and good morning, everyone. For the second quarter of 2025, FPL's earnings per share increased by $0.02 year over year. The principal driver of this performance was FPL's regulatory capital employed growth of nearly 8% year over year. FPL's capital expenditures were approximately $2 billion for the quarter, and we expect FPL's full-year capital investments to be between $8 billion-$8.8 billion. For the 12 months ending June 2025, FPL's reported return on equity for regulatory purposes will be approximately 11.6%. During the second quarter, we utilized approximately $19 million of reserve amortization, leaving FPL with a balance of roughly $254 million. FPL's second quarter retail sales increased 1.7% from the prior year comparable period, driven primarily by continued strong customer growth. Overall usage per customer grew by 0.1% year over year, which includes a decline of 0.8% due to milder weather.

As a result, FPL grew retail sales in the second quarter by roughly 2.6% on a weather-normalized basis. On February 28, we initiated Florida Power & Light's 2025 base rate proceeding. The four-year base rate plan we have proposed has been designed to support continued investments in cost-effective generation, long-term infrastructure, and advanced technology, which improves reliability and helps keep customer bills low. Today, FPL's typical residential bill remains well below the national average and amongst the lowest of the top 20 investor-owned utilities in the nation. With the proposed base rate adjustments and current projections for fuel and other costs, FPL's typical residential bill is expected to be approximately 20% below the projected national average. A technical hearing at the Florida Public Service Commission is scheduled next month. We expect a final decision in the fourth quarter.

If state regulators approve our plan, a typical FPL residential bill will grow at an annual average rate of just 2.5% from 2025 through 2029. Now let's turn to Energy Resources, which reported an adjusted earnings per share increase of $0.11 year over year. As you'll recall, the prior comparable quarter reflected higher than expected in one-time expenses. Contributions from new investments increased $0.14 per share year over year, primarily driven by continued growth in our renewable and storage portfolios. Our existing clean energy portfolio decreased $0.02 per share, primarily reflecting weaker wind resource during the quarter. Wind resource for the second quarter of 2025 was approximately 97% of the long-term average versus 104% in the second quarter of 2024. Our customer supply business increased $0.06 per share compared to the second quarter last year, which was impacted by higher depletion expense and certain non-recurring items.

All other impacts decreased by $0.07 per share, driven by higher interest costs of $0.06 per share. Energy Resources had a strong quarter of newer renewables and storage origination, adding 3.2 gigawatts to the backlog. With these additions, our backlog now totals nearly 30 gigawatts after taking into account more than 1.1 gigawatts of new projects placed into service since our last earnings call. We expect the backlog additions will go into service over the next few years and into 2029. This marks the sixth time in the past eight quarters that Energy Resources has added more than 3 gigawatts to its backlog. We have now originated approximately 12.7 gigawatts of new renewables and battery storage projects over the last 12 months. Roughly 30% of our current backlog comes from storage, which demonstrates our customers' demand for a low-cost, ready-now solution to meet their capacity needs.

Turning now to our second quarter 2025 consolidated results. Adjusted earnings from corporate and other decreased by $0.04 per share. Our long-term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2025, 2026, and 2027. From 2023 to 2027, we continue to expect that our average annual growth in operating cash flow will be at or above our adjusted earnings per share compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026 off a 2024 base. As always, our expectations assume our caveats. That concludes our prepared remarks, and with that, we will open the line for questions.

Speaker 4

We will now begin the question and answer session. To ask a question, you may press Star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star, then 2. At this time, we'll pause momentarily to assemble our roster. The first question will come from Steve Fleischman with Wolfe Research. Please go ahead.

Yeah, hi. Good morning. Thanks. I guess first, just on the OBBB and then also the Trump executive orders, could you maybe talk to, I guess, the safe harbor, start of construction issue and how much OBBB has effectively maybe codified that, and what can really the administration change at this point? Also, just how to think about some of the recent permitting kind of updates that came out and just your exposure to federal lands in your backlog. Thanks.

Speaker 0

Yeah, thank you, Steve, for your question. This is John. Let me just start with your question around the tax provisions, the safe harbor, you know, in particular. I think as most folks know by now, the way the OBBA was drafted, it basically provides that wind and solar facilities have to be placed in service by December 31, 2027. However, there is a very important exception in that that says that, you know, projects that begin construction before July 4, 2026 are not subject to that placed-in-service requirement. The issue is, you know, what is meant by begin construction? Our view is, you know, pretty simple and pretty straightforward. You know, the begin construction term has been around for, you know, well over a decade. It has a settled, you know, meaning within the industry. That meaning is informed by longstanding Treasury Department guidance.

It's been, you know, relied upon not only by NextEra, but the, you know, the solar and wind industry for years. I start with the fact that as a plain meaning, it's also a term that's defined, you know, in the OBBA and the FEOC provisions, and that definition is consistent with, you know, the settled meaning and the longstanding Treasury guidance that I just spoke about. Importantly, the term, you know, beginning construction has certain safe harbors for what actually constitutes starting construction, and it also has a four-year continuity of service safe harbor.

When I look at, you know, the steps that we've been taking in reliance on the settled meaning and the longstanding guidelines around the term beginning construction, we've made significant financial commitments over the last few years, you know, including in the first half of 2025 to begin construction under these rules that were in effect at the time those commitments were made. In doing so, we believe that we've begun construction on a sufficient number of projects to cover our development expectations through 2029. Of course, you know, while we can't provide any guarantees, this is our interpretation, and this is our belief as to what the statute provides based on our experience in this industry over the last couple of decades.

Just on the siting permitting, issue in the federal lands, yeah.

Yeah, and on the permitting, you know, on federal lands, you know, first of all, I'll say, you know, there was an EO and I think a response made by the Department of Interior, you know, a couple of months ago, just, you know, articulating that, you know, solar and wind projects would not be prioritized. The executive order itself that came out on July 7 directed the Department of Interior to come up with new procedures on, you know, on how it would handle wind and solar permitting to not favor them. And so they instituted an additional layer that would require Secretary or Deputy Secretary review. It's new, obviously, we're working with the Department of Interior. Let's just see how it actually, you know, is applied, you know, in practice. But again, I think this letter is being responsive to the EO.

You know, when I look at it and I look at our backlog, most of our backlog already, you know, has secured federal permits. But let's, let's also just see how this gets applied. And, you know, I continue to feel, you know, comfortable with where we stand in terms of being able to navigate the federal permitting issue.

One other question. Just you mentioned natural pull forward, and maybe is, could you give any sense on just how, have you started seeing signs from customers? What have been the reaction of customers from the bill? Have you started seeing any kind of sense of natural pull forward and just your market share expectations and thoughts, given all the different things that have occurred?

Yeah, I think, Steve, you know, customers are still digesting it. They have different levels of understanding of what, what's come out. Obviously, you know, we spent a lot of time on it. I would expect to see a reaction from customers over time. Obviously, we'll inform them through our origination process. I see some natural, you know, breaking points that could create significant opportunities for us to ramp pull forward. I mean, one is, you know, if you break down the statute, certainly, you know, with the 2027, you know, placed-in-service requirement, you could, you could see, you know, projects that are accelerated into that year. It comes down to who safe harbored, right? Who safe harbored before the enactment date? It's hard to know with any precision who, who did.

We know we compete against a lot of really small developers who don't have the balance sheet, the construction financing to do things around safe harbor. You know, you could also look and say based on that, we would expect the pull forward naturally in the 2028 and 2029, you know, as well, where there might be less competition from folks that have not safe harbored that could create bigger opportunities for folks like NextEra that are in a perpetual state of construction and are safe harboring all the time based on the rules that were in effect that could create, you know, potentially, you know, bigger opportunities for us, you know, in those years.

Great. Thank you.

Thank you, Steve.

Speaker 4

The next question will come from Julian Smith with Jefferies. Please go ahead.

Hey, good morning, team. Thank you guys very much for the time. I appreciate it. Maybe to follow up on Steve's questions earlier, I mean, just to crystallize our understanding under the existing OBBB that was passed here, how do you think about your EPS growth and sort of the waterfall, if you will, of credits? Especially given the dynamics you talk about, whether it's the pull forward or otherwise having an opportunity to step in and enable other projects that you might not necessarily have envisioned today, how do you think about the ability to sustain your growth through the decade? As much as now you have visibility that's been effectively crystallized under this legislation, obviously barring changes with the EO, we're not ready to go there given this backdrop.

Speaker 0

Yeah. I mean, you know, first I'll start with that last piece, right, which is, you know, as I said in the prepared remarks, I think, you know, the one big beautiful, you know, bill act, what, you know, while tough, was constructive. I think it does create some opportunities, you know, for us going forward for some of the reasons that I laid out. You know, with Steve on the EPS, you know, growth point, you know, hold off on that until our, you know, next analyst day, which, you know, we'll hold, you know, sometime later this year, beginning of, beginning of next year.

But as I think about the waterfall opportunity and that pull forward, you know, that, again, Julian, you know, that you were hitting on, you know, again, you know, the uncertainty that could be created with the 2027 placed-in-service and then you come down to who safe harbored for 2028 and 2029, you know, obviously that favors large developers like NextEra that planned ahead, right? And if you're in a market where you have folks drop out, right, because they didn't plan ahead, they don't have the ability to get construction financing, they don't have the ability to safe harbor, it obviously, you know, creates bigger opportunities for us in these natural pull forward points. I'm gonna come back to, you know, a point that I think's important for you, you know, to make and for investors to understand.

I think if you look at our track record over time, not just the last three years, but, you know, going back over time, whenever there's a little bit of uncertainty, a little bit of risk, a little bit of complexity, that typically favors our business, right? Because, you know, I firmly believe that, you know, we have the capability to navigate and to plan the business, you know, in a way that, you know, helps mitigate, you know, these risks going forward. Look, I mean, no company's immune from everything, but, you know, I think we do, we do, if you look at the track record, have demonstrated an ability to, you know, really, you know, figure out how to mitigate these exposures, you know, on a go-forward basis.

The last piece I'll make is, you know, don't forget if we do see some small developers kind of fall away, there'll be more projects that could potentially, you know, hit the market and come up for sale, creating more, you know, not only on our organic greenfield opportunity set, but, you know, perhaps some opportunities to step into projects that other developers have tried to advance, but, you know, for whatever reason, might struggle, you know, to get it across the finish line, given some of the backdrop of some of the challenges that we're, we're addressing in the industry that I think we're, we're best equipped to address.

Excellent. Thanks, John. Just a quick follow-up if I can. Smaller detail here, but non-trivial at all. How is progress going on the nuclear contracting front? I mean, it is certainly the theme of the day. You guys have two different bites of the apple potentially, it seems. Duane, how is progress, just from an engineering perspective, just to kind of get a little bit of a sense on where that could land and when. Then separately here, Point Beach, obviously spoken for, but it seems like there could be some opportunity there. I mean, two different bites of the apple seem to be coming ripe here in the medium term.

Yeah. No, thanks for asking the question, Julian. You know, Duane Arnold just continues to advance. I mean, I think anytime you have a, you know, there's only three of them in the country, right? You know, between Palisades and the Crane facility, and Duane. I mean, these are unique opportunities because you do not face the new build costs associated with nuclear. And so these are really, you know, unicorn-type opportunities. And so we continue to advance Duane. I'm very pleased with the way things are going on the on-site reviews and some of the engineering analysis that we've done. But more importantly, you know, we continue to advance discussions with customers. So, you know, feel good, you know, where we sit now about, you know, how things are progressing on the Duane front.

You know, look, with Point Beach, it's not only the Point Beach facility, but also, you know, the opportunity to do some things around SMRs. We have the same opportunity set, you know, at Duane. You know, if we're successful in bringing Duane forward, that obviously creates a hotbed of data center activity, you know, around that facility, the same as what you've seen in Wisconsin with Clover Leaf and the Fox, you know, facility that, you know, Microsoft is behind as well. I like the potential, you know, longer-term options there in addition to just the recommissioning efforts that we potentially have at Duane.

Look, I do not want to lose sight of the fact that not only do we have an active gas-fired generation development effort at our company, you know, we are also, you know, very active in the development of small modular reactors and the potential that nuclear, you know, could provide going forward. Again, that goes back to my comments of being an all-of-the-above energy company. Our goal is to provide the customer with what it wants, when it needs it, at the right price to help address the power demand, you know, that we see in this country. You know, look no further than the PJM capacity auction yesterday. I mean, you know, there's a lot of demand out there, and there are very few companies that have the development capability that we do. A lot of companies have an existing asset position.

Very few companies can develop new generation assets or have the skill sets with, you know, on their teams to do it. That gives us a unique advantage in this market.

Awesome. Thank you. All the best, all right? Speak soon.

Hey, thanks, Julian.

Speaker 4

The next question will come from Nick Campanella with Barclays. Please go ahead.

Hey, good morning. Thanks for all the updates. Hey, I just wanted to ask maybe just for an update on FPL. You know, we've seen some testimonies in the rate case at this point. You kind of pointed to the fact that hearings will kick off in mid-August. Just, you know, is a settlement still on the table in any way, or are you expecting this to go right to hearings? If you can comment at all, thanks.

Speaker 0

That's a great question. We always prepare like we are going to hearings because we want to be as prepared as possible. They are about three weeks away at this point. It does not mean that there is not the opportunity for discussions that would lead to a settlement. I think the notion should be that those discussions probably can happen at any time. If it makes, you know, from our perspective, if it makes sense for our customers, that is something that we would obviously move on as we have for the last three rate cases. I am still confident that we have a great rate case to present to the Public Service Commission in the middle of August. That has been my focus really for the last six months.

If there is the opportunity, if the opportunity pops up, I am going to absolutely make myself available to make sure that we can put our best foot forward for our customers in a settlement.

Makes a lot of sense. Appreciate that. I just wanted to take one of Julian's questions a step further, just, on the, on the financing side and kind of thinking about the comments about the safe harbor visibility through 2029. You know, as I understand the current plan, 2024 through 2027, you know, roughly about half of the funding is tax equity and project finance. I'm just wondering, you know, because you have this commentary around safe harbor visibility through 2029, is that kind of the same mix that we should be expecting in financing the business through the late decade? Are there other sources of financing that you're thinking about leaning on? I guess maybe you can kind of talk about what's been contemplated at this point.

Sure. As we look at where we sit today and as we look at what our renewable build looks like, it is a lot more of what we've done over the course of the last 20 years. That has been building good projects that are very attractive to our tax equity providers, that are very attractive to our project finance providers. Those parties look at the quality of those projects and provide the financing for them. As we look today and as we look over the last two years, we have increased our tax equity providers by, you know, 50%. Just last week, I was talking to one of our long-term tax equity providers who was asking and mentioned they wanted to increase their exposure to us.

We feel very good about where we sit in terms of accessing both the tax equity and the project financing market as a, you know, attractive low-cost way for us to finance our renewable and storage facilities.

All right. Thank you.

Speaker 4

The next question will come from Anthony Crawdell with Mizuho. Please go ahead.

Hey, hey, good morning, team. I just have one quick one. You talked about maybe the company's gas strategy going forward. You talked about it on the development day. Just curious, you've seen some recent sales in the country at, you know, already in service. Gas assets at attractive multiples. Just is that an avenue the company would pursue or a bit more of with the GEV partnership in building, you know, new build gas?

Speaker 5

Sure. It's Brian. On the gas strategy front, listen, we're gonna look at new build. We'll look at opportunities in the market. I think what we need to do if we're gonna look at the market is obviously the value has to make sense. I think we have to feel very good that we're gonna be able to do something with that on the contracting front in the near term. I don't think we wanna just go spec long, merchant generation. We are, you know, we're turning over kind of every rock as we look at that, everything from are there assets that are gonna be interesting to fit nicely that we think we can offer back to the market, and we're gonna look at greenfield opportunities. You know, we're pursuing it on all fronts.

Great. Just a quick clarity. Did John say earlier that maybe an analyst day, end of the calendar year or beginning of next calendar year? I apologize if I did not hear that correctly.

Speaker 0

That's what I said.

Great. Thank you so much.

Speaker 4

The next question will come from Andrew Weisel with Scotia Bank. Please go ahead.

Hey, good morning, everybody. First question, I wanna follow up a little bit on the big, beautiful bill. How are you thinking about the foreign entities of concern, the fiat clause? Are you confident that you won't face exposure to that given your safe harbored equipment position?

Speaker 0

Feel very confident about the fiat provisions. Again, the way they work are, as long as you've begun construction by December 31, 2025, you're not subject, you know, to those. With the continuity safe harbor, add four years on, you get to the end of the taxable year of 2025. That takes you through, through 2029. And then when you start looking at compliance beyond, you know, 2029, we feel very comfortable with our ability to comply with those provisions.

Great. Thanks for clarifying. Next on Duane Arnold, I know there's a lot of ifs and nothing has been decided yet, but if you were to move forward with a potential restart, would I be correct in thinking the timing might be such that the earnings contribution would maybe mitigate or offset the loss of renewable tax credits as they're phased out? Could that be a way to smooth out the earnings and offset a potential cliff in five years or so? I know that's far off, but people are already thinking about it today.

Yeah. I mean, that's, you know, obviously pretty far off, but sure. I mean, that, you know, that is a, you know, you add Duane Arnold to the mix, and, you know, that's, that's one of, you know, many ways that, you know, we have to continue to grow the business in the future.

Speaker 5

Just the only thing I'd comment, 'cause this is the second question, it's kind of got this concept of a cliff. I just want to remind everyone, while the tax laws may be changing, the demand picture that we've been talking about now going on four or five quarters is not. The customer dialogue, whether it's in 2027, 2028, 2029, or 2030, is as robust as it's ever been. You know, while the framework may be changing for some of these projects, the overall demand picture is very important to remember. You know, our job at Energy Resources is to build energy infrastructure for our customers. There is an outrageous amount of need for energy infrastructure in this country that's going to go well past the end of this decade. We feel well-positioned. Duane would be an example of one of the things that we'll be looking at.

Duane is another example of one of the things that we can bring to bear. Storage is another element of something that we're seeing a lot of focus on. I just think there's this view that the one big, beautiful bill is creating a sunset and a cliff. I think the answer is it's just changing the rule set, and we'll continue to build the energy infrastructure that this country needs.

Agreed. Thank you for clarifying and framing that up. One last one.

Speaker 0

Yeah. I, I, one other point, one other point I wanna add on to that too is, you know, do not forget about storage too, right? I mean, storage is a massive opportunity, you know, for this company and for this country given the capacity, that, that it provides. So do not lose sight of storage in addition to all the other opportunities that we have around the demand picture, the ability to build gas, the ability to build nuclear, the contributions from Duane. There is a lot that goes into that.

Thank you very much. Just one last brief one on the quarter. At FPL, the earnings growth was pretty modest, only like less than 3.5% despite the capital employed growing at your typical 8-ish percent. Can you just talk to the delta there? What was weighing on the earnings growth, and how are you thinking about the rest of this year of the utility?

Yeah. If you look at the two cents that offset the four cents of regulatory capital growth, there's a variety of factors that can move that across. Recall that in 2024, the return on equity was at 11.8%, and, you know, for this year, it was at 11.6%. That is one factor, and there's other puts and takes that can, you know, drive that two-cent differential. However, as we look on a go-forward basis, I wouldn't expect that to, that differential to, to continue throughout the rest of the year.

Great. Thank you so much.

Speaker 4

The next question will come from Jeremy Tonnet with JPMorgan. Please go ahead.

Hi. Good morning.

Speaker 0

Morning.

Not to belabor the point here with the Outlook Post, OPO, one beautiful bill, and I guess, you know, tax credits transitioning towards the end of the decade here. Just wondering if you could talk a bit more about the dynamics in the power markets at that point in time, particularly renewable PPA pricing, and just see how you think that, you know, shifts at that point, and how that, you know, and any impacts on margins for participants across the value chain and maybe what sets me apart from others.

Yeah. I mean, you know, first of all, you know, we've got a large pricing, you know, advantage and, you know, two advantages on neutral, on, on renewables. You know, first of all, they're very fast to build, right? I mean, you can get a renewable project, you know, up and built 12-18 months. Don't forget about our early and late-stage inventory of projects. That's very important to keep in mind. And so when you think about all this demand for power that's here right now, we have a lot of pricing power, right, you know, in the market, and we have a significant, you know, cost advantage over other resources that will show up later, you know, and we, we need more capacity from nuclear and gas.

It's just given the development pipeline being, you know, timeline being, you know, a little bit longer than what you see on, on, on renewables. That's why, you know, you've seen so much demand for renewables, you know, today. And so, you know, and then don't forget too, we have a lot of renewable projects that, you know, continue to roll off of contract, right? And not a whole lot of attention gets paid to that. But when we're out in the market and able to recontract, you know, power purchase agreements that were entered into, you know, a, you know, a decade or more ago, into this new higher price, priced, you know, power market, there's a lot of embedded value in the existing portfolio.

And then you start thinking about layering in not only on top of renewables the ability, you know, to continue to develop around gas, fire generation, and then nuclear, you know, as it comes along, and our transmission business, right, where we, you know, made some comments today about how we're basically building a rate-regulated utility inside of, of NextEra. We've had an enormous amount of success around the competitive transmission business. So a lot of, a lot of, things to feel very good about as we look to the future.

Got it. That's helpful there. Just want to continue, I guess, with the PJM capacity auction results yesterday. How do you think about the current price backdrop now as enough to incent generators at this point? How do you think about NextEra's opportunity set with gas bills at that point given that data point?

Yeah. I mean, I think that data point, you know, suggests that, you know, first of all, you look at where new build gas prices are, you know, in order to build to make them economic. I think you see the PJM capacity market, you know, reacting to that because don't forget, right, and this is why I keep emphasizing development skills and capabilities and the ability to add new infrastructure to the system. Existing assets are already there to accommodate the demand that exists today, right? What you're trying to do with the capacity market is incent generation that does not exist today. Somebody's gotta go out and develop and build that.

No matter what you do with the existing generation today, it's gotta be, if that's going to be used to serve new demand, that generation has to be replaced by something, whether it's renewables, whether it's storage, whether it's gas-fired generation, whether it's new nuclear. What I would be focused on as well is, you know, who has the development skills and capabilities and who doesn't because we are going to have to build new generation. There's only so much you can do around existing assets. They already exist today to accommodate the power that exists, demand that exists today. You know, when you look to the future, you've gotta start adding incremental generation. We are uniquely advantaged and have a unique capability set in that regard because we're one of the very few companies in this country that have been building for the last two decades.

We have a, you know, a development, you know, team that is up and running in 49 states across this country. I'd put our development team up against anyone. We need new incremental generation. The existing stuff isn't, isn't gonna get us there.

Got it. That's helpful. Just one last quick one, if I could. You touched on SMRs briefly before. Just wondering any updated thoughts in terms of your assessment of SMRs at this point and timing for when this resource could be widely deployed.

We've been, you know, like I said, we have a whole development team on SMRs. We've been advising corporate clients. I think our knowledge curve is probably higher than most in the market today as a result of that. You know, we continue to evaluate. There's 95 OEMs in SMRs and, you know, really trying to focus on the technical reviews of who are gonna be the winners and losers and how we think about cost structures against, you know, competing generation types and then cost sharing, particularly on the first few out of the gate, how we will continue to work with this new administration around supporting nuclear. It's something that is a point of emphasis and focus for us.

You know, look for us to continue to advance those efforts, you know, in that regard on top of what we're doing on gas-fired generation development and all the opportunities that we have around renewables and storage, and storage being, you know, truly a terrific capacity resource for a long time to come given how quick it can be deployed and given that, you know, it doesn't need a gas connection to make it work.

Got it. I'll leave it there. Thank you.

Speaker 4

The next question will come from David Arcaro with Morgan Stanley. Please go ahead.

Speaker 5

Hey, thanks so much. Good morning. I was thinking or I was, I was wondering as you book out, well, I'm curious if you're booking 2029 volumes at this point. And if you are, do you have, you know, contingencies that you're incorporating into contracts for any potential tax credit risk that might arise just depending on the safe harbor provisions and the clarity from Treasury?

Speaker 0

Yeah. First of all, we feel good about, you know, our 2029, you know, build. In all of our contracts, we have, you know, some limited protections around tax and trade measures, you know, as well as we have talked about on some of our prior calls. You know, we feel very good about where we stand around our 2029 program.

Speaker 5

Okay. Great. I guess looking out even farther, I'm just curious if you're, you know, getting, having any discussions on 2030, kind of a no tax credit, you know, conversations around pricing, what does demand look like, just any early indications or feedback from your customer base, if they're looking out that far, and any feedback you're getting on what the reduction in tax credits on the, on the renewable side could be.

Speaker 0

Yeah. I think it's still a little too early on 2030. I mean, most of the focus from our customer base is, you know, 2029 and in, just given their need for power and electrons right now. That's where the demand is. And, you know, like, you know, you can see that just in our originations, you know, this quarter about, you know, 3.2 gigawatts. So, you know, I think we'll naturally see, you know, 2030 start to become more of a point of focus probably as we move forward over the next, you know, 12 to 24 months. Right now, it's been a lot of attention paid around, you know, 2027, but 2028 and 2029 in particular in terms of the need for new generation.

Speaker 5

Got it. Okay. Appreciate it. Thanks so much.

Speaker 4

The next question will come from Carly Davenport with Goldman Sachs. Please go ahead.

Hey, good morning. Thanks so much for taking the questions. Maybe just on the origination this quarter, you highlighted 1 gigawatt of backlog adds tied to the hyperscalers. Are you able to share any detail on those particular additions in terms of resource mix, timing, or, or geography just to get a sense of what's resonating with that customer base?

Speaker 5

Hey, Carly, it's Brian. Without going into details with regard to the specific customers or the timing, I mean, you literally kinda need to go customer by customer, region by region. They all have different needs depending on how they're looking at their demand when they're trying to bring that on. There is a lot of focus on the next couple of years, and then there are also folks who are looking to build out at the end. I'd hate to say it, but it's kind of a mixed bag of really depends by the customer and where they are. I guess that's why we're able to spend and do well with them 'cause we can meet the customers kinda with their need. We've got a broad pipeline and portfolio that allows us to give them a little bit of every flavor that they're interested in.

You know, there is no kinda common theme other than engaging in a dialogue and on a national basis over multiple years.

Got it. Okay. Great. Thank you for that. Then just back to the comments earlier on the natural pull forward in demand, I guess, are there practical limitations to the degree to which you could accelerate development plans, whether labor or supply chain or connection, that could be pain points on the kind of ability to get projects online by that 2029, 2030 timeframe?

Speaker 0

I think all those things you just listed are actually competitive advantages and why we would do really well in a pull forward market because we have each of the things that you listed, whether it's sites, interconnects, you know, engineering, construction, supply chain, balance sheet, all of those things are, you know, massive competitive advantages, you know, for us compared to the rest of the industry. You know, I think create substantial, you know, opportunities for us in a pull forward scenario.

Great. Thank you for the color.

Speaker 4

The next question will come from Ryan Levine with Citi. Please go ahead.

Speaker 5

Good morning and thanks for taking my question. Two questions. On the gas generation front, what regions of the United States are you seeing more traction? Does the FERC ERIS decision from yesterday impact your outlook and myself?

Speaker 0

Yeah. I mean, I think, you know, first of all, we're seeing, you know, gas generation demand, really across the country. So if you look at our gas development pipeline, you know, it's not focused, you know, in any one region. I mean, if you're looking at getting gas online quicker, you know, obviously there are states that are more accommodating to be able to do that. Texas, obviously, is a, is, you know, comes to mind, you know, in that regard. When I think about the ERAS decision, you know, yesterday, you know, by MISO, you know, sure, that could create some additional, you know, opportunities, but you're gonna have to be able to also monitor through. Where is there gas supply, you know, how long will it take to get the turbine?

And more importantly, aside from gas supply and the turbine, the labor, some of the skilled labor constraints that we've seen in that sector, what does that do to timing in terms of being able to bring those, you know, assets, in line? Certainly something that we are, we are focused on. That's why I think, you know, given the timing of some of those projects, we're gonna continue to need an all-of-the-above solution to accommodate the demand that we are seeing in those regions.

Speaker 5

Thanks. What are the key technical milestones remaining on Duane Arnold? Would you expect any ramp in the labor force in the coming months in order to hit the reiterated guidance around execution?

Speaker 0

Yeah. I mean, it is the typical work that you would expect on a recommissioning, right? You know, doing work across the site, looking at what the condition of the site is in, looking at, you know, containment, in particular, looking at the equipment, all those things we feel, we feel good about based on what we have seen so far. You know, things continue to progress well.

Speaker 5

Thank you.

Speaker 4

This will conclude our question and answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.