Exhibit 99.1
Introduction
The unaudited pro forma consolidated statements of income and balance sheet (pro forma financial statements) are derived from the historical consolidated financial statements of NextEra Energy Partners, LP (NEP) and NET Midstream, LLC and NEP DC Holdings, LLC, both NEP subsidiaries that indirectly own interests in natural gas pipeline assets located in Texas (Texas pipelines), to illustrate the potential effect of the November 6, 2023 agreement to sell the Texas pipelines entered into by a subsidiary of NEP. The pro forma financial statements are based on, and should be read in conjunction with, the consolidated financial statements of NEP included in NEP’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC). The pro forma financial statements are also based on, and should be read in conjunction with, the condensed consolidated financial statements of NEP included in NEP’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2023 filed with the SEC.
The historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to transaction accounting adjustments that reflect the disposal of the Texas pipelines. The pro forma financial statements have been derived by the application of transaction accounting adjustments to the historical consolidated financial statements of NEP. The unaudited pro forma consolidated statements of income for the years ended December 31, 2022, 2021 and 2020 and for the nine months ended September 30, 2023 give effect to the sale of the Texas pipelines, which will be accounted for as discontinued operations, as if it had occurred on January 1, 2020. Since the unaudited pro forma consolidated statements of income only include continuing operations, the estimated gain on sale is not included in any period presented. The unaudited pro forma consolidated balance sheet as of September 30, 2023 gives effect to the sale of the Texas pipelines as if it had occurred on September 30, 2023.
The sale of the Texas pipelines is subject to closing adjustments that have not yet been finalized. Accordingly, the transaction accounting adjustments are preliminary, and have been made solely for the purpose of providing pro forma financial statements as required by the SEC rules. Differences between these preliminary estimates and the final sale accounting may be material. The pro forma financial statements have been presented for informational purposes only and are not necessarily indicative of what the results of operations and financial position would have been had the sale of the Texas pipeline been completed on the dates indicated, nor are they necessarily indicative of future results of operations or financial position.
1
NEXTERA ENERGY PARTNERS, LP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(millions, except per unit amounts)
| Nine months ended September 30, 2023 | ||||||||||||||
| NEP Historical | Transaction Accounting Adjustments | NEP Pro Forma | ||||||||||||
OPERATING REVENUES | ||||||||||||||
Renewable energy sales | $ | 847 | $ | — | $ | 847 | ||||||||
Texas pipelines service revenues | 171 | (171 | ) | (a) | — | |||||||||
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Total operating revenues | 1,018 | (171 | ) | 847 | ||||||||||
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OPERATING EXPENSES | ||||||||||||||
Operations and maintenance | 412 | (22 | ) | (a) | 390 | |||||||||
Depreciation and amortization | 412 | (27 | ) | (a) | 385 | |||||||||
Taxes other than income taxes and other | 54 | (6 | ) | (a) | 48 | |||||||||
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Total operating expenses – net | 878 | (55 | ) | 823 | ||||||||||
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OPERATING INCOME | 140 | (116 | ) | 24 | ||||||||||
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OTHER INCOME (DEDUCTIONS) | ||||||||||||||
Interest expense | (207 | ) | 13 | (a) | (194 | ) | ||||||||
Equity in earnings of equity method investees | 131 | (2 | ) | (a) | 129 | |||||||||
Equity in earnings of non-economic ownership interests | 16 | — | 16 | |||||||||||
Other – net | 6 | 1 | (a) | 7 | ||||||||||
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Total other income (deductions) – net | (54 | ) | 12 | (42 | ) | |||||||||
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INCOME (LOSS) BEFORE INCOME TAXES | 86 | (104 | ) | (18 | ) | |||||||||
INCOME TAXES | 16 | (8 | ) | (b) | 8 | |||||||||
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NET INCOME (LOSS) | 70 | (96 | ) | (26 | ) | |||||||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 18 | 71 | (c) | 89 | ||||||||||
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NET INCOME ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP | $ | 88 | $ | (25 | ) | $ | 63 | |||||||
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Earnings per common unit attributable to NextEra Energy Partners, LP – basic | $ | 0.96 | $ | (0.26 | ) | $ | 0.70 | |||||||
Earnings per common unit attributable to NextEra Energy Partners, LP – assuming dilution | $ | 0.96 | $ | (0.26 | ) | $ | 0.70 | |||||||
Weighted-average number of common units outstanding – basic | 91.0 | — | 91.0 | |||||||||||
Weighted-average number of common units outstanding – assuming dilution | 91.0 | — | 91.0 | |||||||||||
2
NEXTERA ENERGY PARTNERS, LP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(millions, except per unit amounts)
| Year ended December 31, 2022 | ||||||||||||||
| NEP Historical | Transaction Accounting Adjustments | NEP Pro Forma | ||||||||||||
OPERATING REVENUES | ||||||||||||||
Renewable energy sales | $ | 966 | $ | — | $ | 966 | ||||||||
Texas pipelines service revenues | 245 | (242 | ) | (a) | 3 | |||||||||
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Total operating revenues | 1,211 | (242 | ) | 969 | ||||||||||
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OPERATING EXPENSES | ||||||||||||||
Operations and maintenance | 571 | (44 | ) | (a) | 527 | |||||||||
Depreciation and amortization | 430 | (36 | ) | (a) | 394 | |||||||||
Taxes other than income taxes and other | 49 | (9 | ) | (a) | 40 | |||||||||
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Total operating expenses – net | 1,050 | (89 | ) | 961 | ||||||||||
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GAINS ON DISPOSAL OF BUSINESSES/ASSETS – NET | 36 | — | 36 | |||||||||||
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OPERATING INCOME | 197 | (153 | ) | 44 | ||||||||||
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OTHER INCOME (DEDUCTIONS) | ||||||||||||||
Interest expense | 853 | (5 | ) | (a) | 848 | |||||||||
Equity in earnings of equity method investees | 183 | (6 | ) | (a) | 177 | |||||||||
Equity in earnings of non-economic ownership interests | 56 | — | 56 | |||||||||||
Other – net | 3 | 2 | (a) | 5 | ||||||||||
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Total other income (deductions) – net | 1,095 | (9 | ) | 1,086 | ||||||||||
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INCOME BEFORE INCOME TAXES | 1,292 | (162 | ) | 1,130 | ||||||||||
INCOME TAXES | 171 | (10 | ) | (b) | 161 | |||||||||
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NET INCOME | 1,121 | (152 | ) | 969 | ||||||||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (644 | ) | 120 | (c) | (524 | ) | ||||||||
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NET INCOME ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP | $ | 477 | $ | (32 | ) | $ | 445 | |||||||
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Earnings per common unit attributable to NextEra Energy Partners, LP – basic | $ | 5.62 | $ | (0.38 | ) | $ | 5.24 | |||||||
Earnings per common unit attributable to NextEra Energy Partners, LP – assuming dilution | $ | 5.62 | $ | (0.38 | ) | $ | 5.24 | |||||||
Weighted-average number of common units outstanding – basic | 84.9 | — | 84.9 | |||||||||||
Weighted-average number of common units outstanding – assuming dilution | 84.9 | — | 84.9 | |||||||||||
3
NEXTERA ENERGY PARTNERS, LP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(millions, except per unit amounts)
| Year ended December 31, 2021 | ||||||||||||||
| NEP Historical | Transaction Accounting Adjustments | NEP Pro Forma | ||||||||||||
OPERATING REVENUES | ||||||||||||||
Renewable energy sales | $ | 720 | $ | — | $ | 720 | ||||||||
Texas pipelines service revenues | 262 | (260 | ) | (a) | 2 | |||||||||
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Total operating revenues | 982 | (260 | ) | 722 | ||||||||||
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OPERATING EXPENSES | ||||||||||||||
Operations and maintenance | 419 | (45 | ) | (a) | 374 | |||||||||
Depreciation and amortization | 288 | (37 | ) | (a) | 251 | |||||||||
Taxes other than income taxes and other | 36 | (8 | ) | (a) | 28 | |||||||||
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Total operating expenses – net | 743 | (90 | ) | 653 | ||||||||||
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LOSSES ON DISPOSAL OF BUSINESSES/ASSETS – NET | (5 | ) | — | (5 | ) | |||||||||
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OPERATING INCOME | 234 | (170 | ) | 64 | ||||||||||
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OTHER INCOME (DEDUCTIONS) | ||||||||||||||
Interest expense | 47 | 3 | (a) | 50 | ||||||||||
Equity in earnings of equity method investees | 160 | (2 | ) | (a) | 158 | |||||||||
Equity in earnings of non-economic ownership interests | 27 | — | 27 | |||||||||||
Other – net | 4 | — | 4 | |||||||||||
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Total other income (deductions) – net | 238 | 1 | 239 | |||||||||||
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INCOME BEFORE INCOME TAXES | 472 | (169 | ) | 303 | ||||||||||
INCOME TAXES | 48 | (11 | ) | (b) | 37 | |||||||||
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NET INCOME | 424 | (158 | ) | 266 | ||||||||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (287 | ) | 125 | (c) | (162 | ) | ||||||||
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NET INCOME ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP | $ | 137 | $ | (33 | ) | $ | 104 | |||||||
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Earnings per common unit attributable to NextEra Energy Partners, LP – basic | $ | 1.77 | $ | (0.43 | ) | $ | 1.34 | |||||||
Earnings per common unit attributable to NextEra Energy Partners, LP – assuming dilution | $ | 1.77 | $ | (0.43 | ) | $ | 1.34 | |||||||
Weighted-average number of common units outstanding – basic | 77.2 | — | 77.2 | |||||||||||
Weighted-average number of common units outstanding – assuming dilution | 77.4 | — | 77.4 | |||||||||||
4
NEXTERA ENERGY PARTNERS, LP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(millions, except per unit amounts)
| Year ended December 31, 2020 | ||||||||||||||||
| NEP Historical | Transaction Accounting Adjustments | NEP Pro Forma | ||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Renewable energy sales | $ | 703 | $ | — | $ | 703 | ||||||||||
Texas pipelines service revenues | 214 | (206 | ) | (a) | 8 | |||||||||||
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Total operating revenues | 917 | (206 | ) | 711 | ||||||||||||
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OPERATING EXPENSES | ||||||||||||||||
Operations and maintenance | 363 | (37 | ) | (a) | 326 | |||||||||||
Depreciation and amortization | 271 | (35 | ) | (a) | 236 | |||||||||||
Taxes other than income taxes and other | 28 | (9 | ) | (a) | 19 | |||||||||||
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Total operating expenses – net | 662 | (81 | ) | 581 | ||||||||||||
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LOSSES ON DISPOSAL OF BUSINESSES/ASSETS – NET | (2 | ) | — | (2 | ) | |||||||||||
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OPERATING INCOME | 253 | (125 | ) | 128 | ||||||||||||
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OTHER INCOME (DEDUCTIONS) | ||||||||||||||||
Interest expense | (620 | ) | 15 | (a) | (605 | ) | ||||||||||
Equity in earnings of equity method investees | 108 | 2 | (a) | 110 | ||||||||||||
Equity in losses of non-economic ownership interests | (3 | ) | — | (3 | ) | |||||||||||
Other – net | 5 | (3 | ) | (a) | 2 | |||||||||||
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Total other income (deductions) – net | (510 | ) | 14 | (496 | ) | |||||||||||
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LOSS BEFORE INCOME TAXES | (257 | ) | (111 | ) | (368 | ) | ||||||||||
INCOME TAX BENEFIT | (19 | ) | (5 | ) | (b) | (24 | ) | |||||||||
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NET LOSS | (238 | ) | (106 | ) | (344 | ) | ||||||||||
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NET INCOME ATTRIBUTABLE TO PREFERRED DISTRIBUTIONS | (5 | ) | — | (5 | ) | |||||||||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 188 | 92 | (c) | 280 | ||||||||||||
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NET LOSS ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP | $ | (55 | ) | $ | (14 | ) | $ | (69 | ) | |||||||
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Loss per common unit attributable to NextEra Energy Partners, LP – basic | $ | (0.81 | ) | $ | (0.21 | ) | $ | (1.02 | ) | |||||||
Loss per common unit attributable to NextEra Energy Partners, LP – assuming dilution | $ | (0.81 | ) | $ | (0.21 | ) | $ | (1.02 | ) | |||||||
Weighted-average number of common units outstanding – basic | 68.4 | — | 68.4 | |||||||||||||
Weighted-average number of common units outstanding – assuming dilution | 68.4 | — | 68.4 | |||||||||||||
5
NEXTERA ENERGY PARTNERS, LP
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(millions)
| As of September 30, 2023 | ||||||||||||||||
| NEP Historical | Transaction Accounting Adjustments | NEP Pro Forma | ||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 332 | $ | 1,261 | (d | ) | $ | 1,593 | ||||||||
Accounts receivable | 139 | (17 | ) | (e | ) | 122 | ||||||||||
Other receivables | 62 | — | 62 | |||||||||||||
Due from related parties | 333 | (7 | ) | (e | ) | 326 | ||||||||||
Inventory | 78 | (2 | ) | (e | ) | 76 | ||||||||||
Derivatives | 82 | — | 82 | |||||||||||||
Other | 96 | (6 | ) | (e | ) | 90 | ||||||||||
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Total current assets | 1,122 | 1,229 | 2,351 | |||||||||||||
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Other assets: | ||||||||||||||||
Property, plant and equipment – net | 15,693 | (750 | ) | (e | ) | 14,943 | ||||||||||
Intangible assets – PPAs – net | 2,029 | — | 2,029 | |||||||||||||
Intangible assets – customer relationships – net | 514 | (514 | ) | (e | ) | — | ||||||||||
Derivatives | 220 | — | 220 | |||||||||||||
Goodwill | 913 | (83 | ) | (e | ) | 830 | ||||||||||
Investments in equity method investees | 2,038 | (148 | ) | (e | ) | 1,890 | ||||||||||
Deferred income taxes | 232 | (49 | ) | (f | ) | 183 | ||||||||||
Other | 452 | (3 | ) | (g | ) | 449 | ||||||||||
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Total other assets | 22,091 | (1,547 | ) | 20,544 | ||||||||||||
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TOTAL ASSETS | $ | 23,213 | $ | (318 | ) | $ | 22,895 | |||||||||
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LIABILITIES AND EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable and accrued expenses | $ | 280 | $ | (3 | ) | (e | ) | $ | 277 | |||||||
Due to related parties | 66 | (1 | ) | (e | ) | 65 | ||||||||||
Current portion of long-term debt | 1,342 | — | 1,342 | |||||||||||||
Accrued interest | 34 | — | 34 | |||||||||||||
Accrued property taxes | 45 | (6 | ) | (e | ) | 39 | ||||||||||
Other | 73 | (1 | ) | (e | ) | 72 | ||||||||||
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Total current liabilities | 1,840 | (11 | ) | 1,829 | ||||||||||||
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Other liabilities and deferred credits: | ||||||||||||||||
Long-term debt | 5,139 | (376 | ) | (g | ) | 4,763 | ||||||||||
Asset retirement obligations | 327 | — | 327 | |||||||||||||
Due to related parties | 54 | — | 54 | |||||||||||||
Intangible liabilities – PPAs – net | 1,232 | — | 1,232 | |||||||||||||
Other | 211 | (2 | ) | (e | ) | 209 | ||||||||||
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Total other liabilities and deferred credits | 6,963 | (378 | ) | 6,585 | ||||||||||||
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TOTAL LIABILITIES | 8,803 | (389 | ) | 8,414 | ||||||||||||
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EQUITY | ||||||||||||||||
Common units (93.4 units issued and outstanding) | 3,540 | 148 | (h | ) | 3,688 | |||||||||||
Accumulated other comprehensive loss | (7 | ) | — | (7 | ) | |||||||||||
Noncontrolling interests | 10,877 | (77 | ) | (i | ) | 10,800 | ||||||||||
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TOTAL EQUITY | 14,410 | 71 | 14,481 | |||||||||||||
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TOTAL LIABILITIES AND EQUITY | $ | 23,213 | $ | (318 | ) | $ | 22,895 | |||||||||
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6
Notes to Pro Forma Financial Statements
Transaction Accounting Adjustments and Assumptions
The adjustments are based on currently available information and certain estimates and assumptions, and therefore the actual effects of these transactions will differ from the transaction accounting adjustments. A general description of these transactions and adjustments is provided as follows:
(a) Reflects the removal of operating revenues, operations and maintenance expenses, depreciation and amortization, taxes other than income taxes and other, interest expense, equity in earnings of equity method investees and other income and deductions associated with the activities of the Texas pipelines.
(b) Reflects the removal of income taxes associated with the Texas pipelines based on the statutory rate.
(c) Reflects adjustments to net income attributable to noncontrolling interests based on the allocation of the transaction accounting adjustments.
(d) Reflects estimated net cash consideration from the sale of the Texas pipelines including $1,815 million of cash consideration less approximately $376 million to pay off project-related debt, offset by $3 million in associated interest rate swaps, and $201 million relating to the final buyout of the remaining membership interests in South Texas Midstream, LLC (STX Midstream), partly offset by $22 million of working capital adjustments, net of $2 million of cash at the Texas pipelines, based on balances as of September 30, 2023.
(e) Reflects the removal of assets and liabilities associated with the Texas pipelines.
(f) Reflects NEP’s share of income taxes related to the sale of the Texas pipelines based on the statutory rate.
(g) Reflects the payoff of outstanding borrowings at September 30, 2023 under the South Texas Midstream Holdings, LLC credit facility and associated interest rate swaps.
(h) Reflects NEP’s portion of the estimated after-tax gain that would have been recorded if the sale of the Texas pipelines closed on September 30, 2023.
(i) Reflects the noncontrolling interests of STX Midstream of approximately $207 million which NEP bought out in October 2023 for $201 million and noncontrolling interests relating to a 10% owner in one of the Texas pipelines of $78 million, partly offset by a noncontrolling interest’s portion of the gain that would have been recorded if the sale of the Texas pipelines closed on September 30, 2023 of $208 million.
7
