Q4 2024 Earnings Summary
- NEE anticipates continued strong customer growth in its service territory, leading to expected growth and significant capital investments in the coming years. The company is positive about upcoming regulatory outcomes due to its focus on delivering value to customers.
- NEE has effectively managed its interest rate risk by implementing $32 billion of interest rate swaps at an average coupon of 3.9%, which minimizes the impact of interest rate fluctuations on its earnings.
- NEE is exploring opportunities to recommission the Duane Arnold nuclear plant, which is in good condition. This could add valuable nuclear capacity to NEE's portfolio and demonstrates its leadership in nuclear operations.
- NextEra Energy expects growth in their service territory to slow down over the next four years compared to post-pandemic levels, which could impact revenue growth.
- The company had to tap into its reserve mechanism due to higher inflation and interest rates, leading to higher capital expenditures than expected, potentially putting pressure on margins.
- Rising costs and delays in gas-fired generation projects, with costs tripling in price, may make these projects less economically viable and impact future growth plans.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +58% YoY | The Q4 2024 total revenue of $10,848 million, up from $6,878 million in Q4 2023 , reflects robust growth driven by strong customer expansion and new investments. This improvement builds on prior-period trends where fluctuations in elements such as storm cost recovery and fuel revenues had significantly affected revenue performance. |
Operating Income | +254% YoY | An increase to $941 million in Q4 2024 from $266 million in Q4 2023 was achieved by sharply reducing operating expenses (for example, prior quarters saw notable reductions in depreciation and amortization expenses) and realizing higher gains on asset disposals. This improvement follows earlier periods where cost control measures and asset sales began to positively impact margins. |
Interest Expense | –93% YoY | The drastic drop in interest expense to $13 million from $198 million in Q4 2023 indicates effective debt management and refinancing, as well as lower derivative-related charges. This contrasts with previous periods where rising borrowing costs and unfavorable derivative instrument changes increased interest expenses. |
Net Income | Minor decline (<5%) | Q4 2024 net income was $873 million versus $915 million in Q4 2023. Despite strong revenue and operating income gains, factors such as increased corporate costs or offsetting non-operational challenges—similar to previous period impacts like NEER impairments and hedge losses observed in Q3 2023—kept net income relatively steady. |
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Partnership with GE Renova
Q: Will you co-own projects with GE Renova?
A: Yes, we will co-own gas-fired generation projects with GE Renova in a 50-50 joint venture, focusing on long-term contracted assets and targeting large load customers by combining gas-fired generation with renewables and battery storage. -
Administration Policies Impact
Q: Any concerns about wind lease limits and IRA risks?
A: We support the new administration's mandates and believe in the need for all energy solutions, including gas, nuclear, renewables, and storage. Our onshore wind projects are mostly on private land, and we remain optimistic about working through any issues. Regarding the IRA, we emphasize that renewables are critical for meeting current power demand and create jobs, with 80% of our investments occurring in Republican states. We plan to invest $120 billion over the next four years. -
Duane Arnold Nuclear Recommissioning
Q: What's the status and condition of Duane Arnold?
A: We've filed with the NRC to recommission Duane Arnold and are in active discussions with customers. The plant is in good shape; the only issue was damage to the cooling tower, which is conventional to rebuild. We see nuclear, including recommissioning existing plants, as contributing to meeting power demand over the next 3–5 years. -
Gas-Fired Generation Timing
Q: When will gas projects contribute to growth?
A: Given the time needed for site development, permitting, obtaining turbines, and construction, we expect gas-fired generation to contribute to growth around 2030 and beyond. Costs have increased significantly, with gas turbine prices more than doubling and EPC labor costs tripling since our last gas plant. Some regions like ERCOT may see earlier development, but overall, we are being practical about timelines and costs. -
FPL Growth and ROE Expectations
Q: What's the outlook for FPL growth and ROE?
A: We continue to see strong growth in our service territory and expect to invest above the roughly $36 billion planned over the next four years. Our surplus reserve mechanism sits at around $800 million after using $400 million in 2024. We anticipate our ROE to be slightly above 11.4% in 2025. -
Renewables Policy Impact on Customers
Q: Are policies affecting customer conversations?
A: No, customers are primarily concerned about getting projects built to meet their power needs. They need resources now and focus on solutions available today at the lowest cost with high confidence. Time and money are top of mind for them. -
Interest Rate Hedging
Q: How are you managing interest rate exposure?
A: We've put $32 billion of interest rate swaps in place with an average coupon of around 3.9%. Our sensitivities are about $0.01 to $0.03 on EPS for 2025 and 2026, and $0.03 to $0.05 for 2027, which we consider very manageable. -
Customer Demand for Gas
Q: Are customers more open to gas now?
A: Yes, there's increased interest in natural gas to enable capacity value, especially as customers focus on speed to market and reliable resources. Discussions include pairing gas with renewables, and some interest in behind-the-meter gas solutions, though we don't see that becoming the prevalent way to meet demand.
Research analysts covering NEXTERA ENERGY.