NextEra Energy, Inc. (NEE)

NextEra Energy, Inc. Q1 2025 Financial Analysis

Report Date: 2025-04-30
Period Covered: Q1 2025 (Three months ended March 31, 2025)

Overview

NextEra Energy delivered consolidated operating revenue of $6.247 billion and net income attributable to NEE shareholders of $833 million for Q1 2025, compared with $5.731 billion and $2.268 billion, respectively, in Q1 2024. Total debt rose to $87.7 billion (8.7% higher than December 2024) as the company continued to invest in growth.

Profit/Debt Analysis

• Revenue Growth: Consolidated revenue grew 9.0% YoY, driven by storm cost recovery surcharges and higher retail customer rates at FPL.
• Net Income Decline: Net attributable income fell 63.3% YoY, largely due to:
  • Nonrecurring after-tax impairment of $642 million on an equity investment (XPLR).
  • Unfavorable mark-to-market swings on non-qualifying hedges (~$119 million after tax).
  • Reduced equity earnings and lower unrealized gains in the nuclear decommissioning fund.
• Debt Financing: Long-term debt issuance of $9.84 billion financed capital projects; free cash flow partially funded $2.852 billion in debt retirements.

Segment Performance

• FPL (Rate-Regulated Utility):
  • Operating revenue: $3.997 billion (+4.2% YoY).
  • Net income: $1.316 billion (+12.4% YoY).
  • Drivers: higher customer base, storm recovery surcharge, reserve amortization, and strong rate base growth.
• Neer (Competitive Energy & Transmission):
  • Operating revenue: $2.163 billion (+15.9% YoY).
  • Net contribution: $172 million vs. $966 million prior year.
  • Drivers: new renewable capacity offset by impairment charges, hedging losses, higher interest expense.

Pros and Cons

Pros:

• Leading renewable footprint—expanding wind, solar, and storage.
• Strong regulated utility earnings with stable cash flows.
• Investment grade credit ratings support low-cost capital.

Cons:

• Earnings volatility from non-qualifying hedges and mark-to-market accounting.
• Large debt load—debt/EBITDA remains elevated.
• Regulatory uncertainty (FPL rate case pending, environmental/tax law changes).

Report prepared by Financial Analysis Team

Operating Revenue by Segment (Q1 2025):

• FPL (Residential, Commercial & Industrial Retail): $3.997 billion (64.0% of total)
• Neer (Wholesale Power & Transmission): $2.163 billion (34.6%)
• Corporate & Eliminations: $87 million (1.4%)

Revenue Streams:

• Retail electricity sales (FPL): ~$2.45 billion
• Storm cost recovery surcharges (FPL): ~$118 million
• Renewable energy output (Neer wind/solar): ~$1.2 billion
• Competitive natural gas/oil sales: ~$550 million

NextEra Energy is on a multi-year growth trajectory, underpinned by its regulated utility rate base expansion and best-in-class renewables pipeline. Financial health remains solid, with sustained operating cash flow covering capital expenditure and debt service, though leverage has ticked higher. Near-term challenges include managing commodity hedging volatility, navigating FPL’s upcoming base rate case, and potential regulatory or tax law shifts. Opportunities lie in continued deployment of solar and battery capacity, optimization of transmission assets, and potential M&A to bolster the renewables portfolio. The company’s disciplined capital allocation and investment grade ratings support sustainable dividend growth and value creation.