Landon BadgettPolitical Analyst

Nina HayesChief Operating Officer

Victor JimenezEmerging Markets Economist

Linde & NextEraEnergy & MaterialsNovember 10th, 2020

Sector OverviewEnergy & Materials

YTD S&P 500 vs XLB vs XLE

No Current Holdings

Energy

Materials

▪ Exploration & Development

▪ Drilling

▪ Refining

▪ Coal

▪ Renewable Energy

▪ Chemical Products

▪ Forestry

▪ Mining

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LindeInvestment Thesis

Market Leader in Production & Development of Products

Sustainable Investing Exposure

Stable and Diversified Portfolio

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LindeCompany Overview

Products and Services

Atmospheric & Process Gases

Equipment & Engineering

• Oxygen, Nitrogen, Carbon Dioxide, Helium, Hydrogen

• Develop and Commercialize New Separation Technology

• Proprietary and Patented Applications

• Service a wide range of gas production and processing services

• Supplies plant components or services to customers

Customers

Manufacturing, Chemicals & Energy, Healthcare, Metals,

Electronics, Food & Beverage, Fiber-optics, Aerospace,

Petroleum Refining and Water Treatment

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LindeCompany Strategy

“Making Our World More Productive”

Sustainability Efforts Efficient Operating Model

● Increased Investment in

Decarburization Projects, Green

Technology & Renewable Power

● Air Quality, Emission, Renewable

Fuel, Water Quality in EM, Droughts

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LindeRevenue Breakdown

+2.2% CAGR

Revenue Growth

Segmented Revenue

Geographic Revenue Breakdown

39 %

24 %

10 %

6 %

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LindeKey Financial Highlights

ROE

EBITDA Gross Margin

ROC

26.1%

9.49%18.2%

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LindePrice Performance

Key Stats

YTD

LTM

6M

1M

+ 40.37 %

+ 30.29 %

+ 11.17 %

+ 24.13 %

Beat 1Q2020 Estimates

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LindeCompetitive Landscape

• HQ: Allentown, PA• Market Cap: 69.1M• P/E: 36.6%• ROE: 16.1%• Dividend: 2.1%

• Producer of industrial atmospheric and specialty gases and performance materials and equipment.

• HQ: Paris, France• Market Cap: 67.3M• P/E: 31.2%• ROE: 12.2%• Dividend: 1.9%

• Through subsidiaries, produces, markets, and sells industrial and healthcare gases, including nitrogen, argon, carbon dioxide, and oxygen worldwide. Europe, U.S., Canada, Africa, and Asia

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LindeComps Analysis

LIN across their competitors is the largest by market share and revenue

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LindeDCF Valuation

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LindeValuation & Sensitivity Analysis

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LindePrice Targets

$274.76

• Exit Multiple – 16.2x

• Base case consistent with historical data

Base Case

$283.18

• Exit Multiple – 16.2x

• Exceeding 2021/2022 sales growth

• Keeping assumptions modest with analyst and management

Upside Case 1

$264.06

• Exit Multiple – 16.2x

• Assuming worst case scenario and they do not meet growth expectations with same exit multiple

Downside Case

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LindeAnalyst Recommendations

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LindeTechnical Analysis

LindeRecommendation

Buy*

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NextEraSector Overview

Energy

▪ Exploration & Development

▪ Drilling

▪ Refining

▪ Coal

▪ Renewable Energy

YTD S&P 500 vs XLB vs XLE

Catalysts

Biden Administration

Sustainability

OPEC and Big Oil struggles

COVID-19

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NextEraInvestment Thesis

Sustainable Investing

Low Costs

Diverse Portfolio of Services

Industry Innovators

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NextEraCompany Overview

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NextEraCompany Strategy

Expansion through Acquisitions Low CostsEmphasis on Renewable Energy

● Announced plans to acquire GridLiance in Q3 2020

● Feb. 2020: Santee Cooper announced NEE as favored bidder

● Gulf Power Acquisition in 2019● Trans Bay Cable in 2018● Oleander Power project in 2018

● Added 580 MW of wind, 911 MW of solar, and 594 MW of battery in Q3

● The final 600 MW of a 1500 MW community service project to be in service later this year

● Largest stand alone-alone battery storage project in the world expected 2023

● Gulf power coal phase-out

● FPL bills are 30% lower than national average

● Renewable energy costs decreasing

2% 2%

22%

74%

2019 Net Generation by Fuel Type MWh Net Generating Capacity MW

9.5% CAGR

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NextEraRevenue Breakdown

● Average number of customers increased 80,000 YoY

● Increase in Net Income of 10.83% YoY● Offering payment extensions and waive

late fees

FPL

● Earnings Increase ~24% YoY● Increase in Net Income of 10.83% YoY

NEER

● Net Income Increase ~16% YoY● Earnings Increase ~12% YoY

Gulf Power

2019 Revenue by Business Segment

63%

29%

8%

Earnings and Estimates

5.3% CAGR

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NextEraFinancial Highlights

CapEx spending Adjusted EPS growth

7.5% CAGR

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NextEraPrice Performance

Key Stats

YTD

LTM

6M

1M

+24.71

+ 28.01 %

-0.50%

+22.24 %

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NextEraCompetitive Landscape

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NextEraComps Analysis

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NextEraDCF Valuation

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NextEraValuation & Sensitivity Analysis

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NextEraPrice Targets

Downside Case● -14.04% downside

potential● 20X Exit Multiple● Extremely low Sales

Assumptions● Increased COGS,

SG&A expenses● More CapEx than

projected

Upside Case● 25.44% upside

potential● 21.2X Exit Multiple● Fairly Aggressive

Sales Assumptions● CapEx in line with

projections

Base Case● 8.45% upside

potential● 21.2X Exit Multiple● Sales Assumptions on

line with Bloomberg● More CapEx than

projected

$81.89$64.91 $94.72

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NextEraAnalyst Recommendations

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NextEraTechnical Analysis

Buy

NextEraRecommendation

Appendix

LindeCustomer breakdown

Americas

APAC EMEA

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NextEraDebt Structure

FPL Customers

FPL Geography

NEER