XPLR Infrastructure, LP

Previous wording

This discussion should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2024 Form 10-K. The results of operations for an interim period generally will not give a true indication of results for the year. In the following discussions, all comparisons are with the corresponding items in the prior year period. XPLR is evaluating options relating to its ownership interest in Meade, including a potential sale. XPLR accounts for the investment under the equity method of accounting and the investment has a carrying value of approximately $1.13 billion as of March 31, 2025. XPLR is monitoring the carrying value of its investment in relation to a potential sale price.

Current wording

This discussion should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2024 Form 10-K. The results of operations for an interim period generally will not give a true indication of results for the year. In the following discussions, all comparisons are with the corresponding items in the prior year period. In August 2025, certain indirect subsidiaries of XPLR entered into an agreement to sell their ownership interests in Meade. See Note 9 - Disposal of Investment in Pipeline Assets.

Previous wording

Operating revenues primarily consist of income from the sale of energy under XPLR's PPAs, partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs. Operating revenues increased $25 million for the three months ended March 31, 2025. The increase primarily reflects higher revenues of approximately $16 million due to favorable wind resource (103% of long-term average wind speeds in 2025 compared to 97% in 2024) and $7 million due to solar generation which had a planned outage in 2024.

Current wording

Operating revenues primarily consist of income from the sale of energy under XPLR's PPAs, partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs. Operating revenues decreased $18 million for the three months ended June 30, 2025. The decrease primarily reflects lower revenues of approximately $11 million due to unfavorable wind resource (97% of long-term average wind speeds in 2025 compared to 103% in 2024) and $12 million relating to the absence of prior year impacts from an amendment to a derivative contract, partly offset by additional revenue of $4 million due to higher prices for wind and higher revenues for battery storage.

Previous wording

The increase in interest expense of $146 million during the three months ended March 31, 2025 primarily reflects approximately $159 million of unfavorable mark-to-market activity ($90 million of losses recorded in 2025 compared to $69 million of gains in 2024), partly offset by $13 million of lower interest expense due to decreased average debt outstanding.

Current wording

The increase in interest expense of $77 million during the three months ended June 30, 2025 primarily reflects approximately $55 million of unfavorable mark-to-market activity ($27 million of losses recorded in 2025 compared to $28 million of gains in 2024) and $22 million of higher interest expense due to higher average debt outstanding.

Previous wording

For the three months ended March 31, 2025, the change in other – net primarily reflects the absence of the interest income from NEER for cash sweep amounts held relating to proceeds from the December 2023 sale of the Texas pipelines.

Current wording

For the three months ended June 30, 2025, the change in other – net primarily reflects the absence of the interest income from NEER for cash sweep amounts held relating to proceeds from the December 2023 sale of the Texas pipelines, partly offset by interest income earned on cash on hand during the quarter.

Previous wording

For the three months ended March 31, 2024, XPLR recorded income tax benefit of $13 million on income before income taxes of $22 million, resulting in an effective tax rate of approximately (59)%. The tax benefit is primarily comprised of tax benefits of approximately $11 million related to taxes attributable to noncontrolling interests and $8 million attributable to renewable energy tax credits, partly offset by tax expense of $5 million at the U.S. federal statutory rate of 21%. See Note 4.

Current wording

For the three months ended June 30, 2025, XPLR recorded income tax benefit of $41 million on loss before income taxes of $5 million, resulting in an effective tax rate of approximately 822%. The tax benefit is primarily comprised of tax benefits of approximately $23 million related to taxes attributable to noncontrolling interests, $9 million attributable to clean energy tax credits and $7 million of state taxes. See Note 4.

Previous wording

The $253 million goodwill impairment charge recognized during the three months ended March 31, 2025 reflects the non-cash goodwill impairment charge recognized in March 2025. See Note 3 – Nonrecurring Fair Value Measurements.

Current wording

The $253 million goodwill impairment charge recognized during the six months ended June 30, 2025 reflects the non-cash goodwill impairment charge recognized in March 2025. See Note 3 – Nonrecurring Fair Value Measurements.

Previous wording

For the three months ended March 31, 2025, XPLR recorded income tax benefit of $45 million on loss before income taxes of $373 million, resulting in an effective tax rate of approximately 12%. The tax benefit is primarily comprised of tax benefits of approximately $78 million at the U.S. federal statutory rate of 21%, $9 million of state taxes and $5 million attributable to renewable energy tax credits, partly offset by tax expense of $47 million related to taxes attributable to noncontrolling interests. See Note 4.

Current wording

For the six months ended June 30, 2025, XPLR recorded income tax benefit of $86 million on loss before income taxes of $378 million, resulting in an effective tax rate of approximately 23%. The tax benefit is primarily comprised of tax benefits of approximately $79 million at the U.S. federal statutory rate of 21%, $16 million of state taxes and $14 million attributable to clean energy tax credits, partly offset by tax expense of $24 million related to taxes attributable to noncontrolling interests. See Note 4.

Previous wording

For the three months ended March 31, 2025, the change in net loss attributable to noncontrolling interests primarily reflects the change in the net income or loss attributable to NEE Equity's noncontrolling interest of approximately $205 million ($132 million of net loss in 2025 compared to $73 million of net income in 2024), partly offset by lower net loss allocated to differential membership interest investors of $10 million ($193 million in 2025 compared to $203 million in 2024). See Note 9 – Noncontrolling Interests.

Current wording

For the six months ended June 30, 2025, the change in net loss attributable to noncontrolling interests primarily reflects the change in the net income or loss attributable to NEE Equity's noncontrolling interest of approximately $252 million ($66 million of net loss in 2025 compared to $186 million of net income in 2024) and lower net income attributable to Class B noncontrolling membership interests of $21 million, primarily due to the buyout of the Class B membership interests in XPLR Renewables II in April 2025 (see Note 7 – Class B Noncontrolling Interests), partly offset by lower net loss allocated to differential membership interest investors of $36 million ($388 million in 2025 compared to $424 million in 2024). See Note 9 – Noncontrolling Interests.

Previous wording

XPLR’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 8, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 6 and Note 2) and distributions to the holders of noncontrolling interests. XPLR expects to satisfy these requirements primarily with cash on hand and cash generated from operations. In addition, XPLR expects to consider additional repowering opportunities at its existing projects and other investment opportunities, and to exercise buyout rights relating to noncontrolling Class B members' interests under certain limited liability company agreements to which XPLR and certain of its subsidiaries is a party (see Note 9 – Noncontrolling Interests and Note 7 – Class B Noncontrolling Interests). The investment, development and buyout opportunities are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness or capital raised pursuant to other financing structures, cash on hand and cash generated from operations and divestitures, and may be funded with issuances of additional XPLR common units, including under its ATM program. XPLR may also utilize non-voting common units (convertible into common units) to fund the payment of specified portions of the purchase price payable in connection with the exercise of certain buyout rights (see Note 9 – Noncontrolling Interests and Note 7 – Class B Noncontrolling Interests). In addition, XPLR expects to fund debt maturities through refinancing. XPLR may, but does not expect to, issue common units to satisfy XPLR's conversion obligation in excess of the aggregate principal amount of the convertible notes upon conversion (see Note 6).

Current wording

XPLR’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 8, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 6 and Note 2) and distributions to the holders of noncontrolling interests. XPLR expects to satisfy these requirements primarily with cash on hand and cash generated from operations. In addition, XPLR expects to consider additional repowering opportunities at its existing projects and other investment opportunities, and to exercise buyout rights relating to noncontrolling Class B members' interests under certain limited liability company agreements to which XPLR and certain of its subsidiaries are a party (see Note 9 – Noncontrolling Interests and Note 7 – Class B Noncontrolling Interests). The investment, development and buyout opportunities are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness or capital raised pursuant to other financing structures, cash on hand and cash generated from operations and divestitures, and may be funded with issuances of additional XPLR common units, including under its at-the-market equity issuance program. XPLR may also utilize non-voting common units (convertible into common units) to fund the payment of specified portions of the purchase price payable in connection with the exercise of certain buyout rights (see Note 9 – Noncontrolling Interests and Note 7 – Class B Noncontrolling Interests). In addition, XPLR expects to fund debt maturities through refinancing. XPLR may, but does not expect to, issue common units to satisfy XPLR's conversion obligation in excess of the aggregate principal amount of the convertible notes upon conversion (see Note 6).

Previous wording

At March 31, 2025, XPLR's liquidity position was approximately $4,023 million. The table below provides the components of XPLR’s liquidity position:

Current wording

At June 30, 2025, XPLR's liquidity position was approximately $3,296 million. The table below provides the components of XPLR’s liquidity position:

Previous wording

XPLR OpCo and its direct subsidiary are parties to the $2,450 million XPLR OpCo credit facility. During the three months ended March 31, 2025, approximately $330 million of borrowings outstanding under the XPLR OpCo credit facility were repaid. In order to borrow or to have letters of credit issued under the XPLR OpCo credit facility as well as to avoid default and related acceleration provisions, XPLR OpCo and its direct subsidiary are required to, among other things, be in compliance with financial covenants of a maximum leverage ratio and a minimum interest coverage ratio, as defined in the XPLR OpCo credit facility. At March 31, 2025, XPLR and its direct subsidiary were in compliance with these required ratios. Under the XPLR OpCo credit facility, XPLR OpCo's ability to pay cash distributions is subject to certain other restrictions. See Note 6.

Current wording

XPLR OpCo and its direct subsidiary are parties to the $2,450 million XPLR OpCo credit facility. During the six months ended June 30, 2025, approximately $330 million of borrowings outstanding under the XPLR OpCo credit facility were repaid. In order to borrow or to have letters of credit issued under the XPLR OpCo credit facility as well as to avoid default and related acceleration provisions, XPLR OpCo and its direct subsidiary are required to, among other things, be in compliance with financial covenants of a maximum leverage ratio and a minimum interest coverage ratio, as defined in the XPLR OpCo credit facility. At June 30, 2025, XPLR and its direct subsidiary were in compliance with these required ratios. Under the XPLR OpCo credit facility, XPLR OpCo's ability to pay cash distributions is subject to certain other restrictions. See Note 6.

Previous wording

During the three months ended March 31, 2025, XPLR OpCo issued $825 million of 8.375% senior unsecured notes due 2031 and $925 million of 8.625% senior unsecured notes due 2033, and approximately $182 million principal amount of the 2020 convertible notes were repurchased for $177 million. See Note 6.

Current wording

During the six months ended June 30, 2025, XPLR OpCo issued $825 million of 8.375% senior unsecured notes due 2031 and $925 million of 8.625% senior unsecured notes due 2033 and approximately $182 million principal amount of the 2020 convertible notes were repurchased for $177 million. Also during the six months ended June 30, 2025, certain indirect subsidiaries of XPLR entered into limited-recourse senior secured variable rate term loan facilities (term loan facilities) totaling approximately $426 million which mature in 2030 and under which $338 million was borrowed. At June 30, 2025, approximately $88 million was available under one of the term loan agreements, subject to specified conditions. In August 2025, the XPLR subsidiaries amended the term loan facilities and the combined facilities provide up to $1,047 million to finance certain wind repowering projects. As of August 7, 2025, approximately $709 million was available under the combined facilities, subject to specified conditions. See Note 6 and Part II, Item 5(a).

Previous wording

Annual capital spending plans are developed based on projected requirements for the projects. Capital expenditures primarily represent the estimated cost of capital improvements, including development and construction expenditures that are expected to increase XPLR OpCo’s operating income or operating capacity over the long term. Capital expenditures for projects that have already commenced commercial operations are generally not significant because most expenditures relate to repairs and maintenance and are expensed when incurred. For the three months ended March 31, 2025 and 2024, XPLR had capital expenditures of approximately $89 million and $64 million, respectively.

Current wording

Annual capital spending plans are developed based on projected requirements for the projects. Capital expenditures primarily represent the estimated cost of capital improvements, including development and construction expenditures that are expected to increase XPLR OpCo’s operating income or operating capacity over the long term. Capital expenditures for projects that have already commenced commercial operations are generally not significant because most expenditures relate to repairs and maintenance and are expensed when incurred. For the six months ended June 30, 2025 and 2024, XPLR had capital expenditures of approximately $170 million and $133 million, respectively, primarily relating to repowering of wind facilities.

Previous wording

The increase in net cash provided by operating activities was primarily driven by higher resource, lower O&M expenses and the timing of transactions impacting working capital.

Current wording

The increase in net cash provided by operating activities was primarily driven by lower O&M expenses, higher solar resource and the timing of transactions impacting working capital.

Previous wording

The change in net cash provided by (used in) investing activities was primarily driven by higher capital expenditures and other investments, net of reimbursements, and lower payments received from NEER subsidiaries (net of amounts paid) under the CSCS agreement.

Current wording

The change in net cash provided by investing activities was primarily driven by lower payments received from NEER subsidiaries (net of amounts paid) under the CSCS agreement and higher capital expenditures and other investments, net of reimbursements, partly offset by higher distributions from non-economic ownership interests (see Note 5 for discussion regarding non-economic ownership interests).

Previous wording

The change in net cash provided by (used in) financing activities primarily reflects issuances of long-term debt in 2025 and lower partner distributions.

Current wording

The change in net cash provided by (used in) financing activities primarily reflects issuances of long-term debt in 2025 compared to retirements in 2024 and larger buyout of Class B noncontrolling interest investors in 2025.

Previous wording

See Note 3 – Nonrecurring Fair Value Measurements for a discussion of goodwill impairment and Management’s Discussion – Overview for a discussion regarding a potential sale of XPLR’s ownership interest in Meade.

Current wording

See Note 3 – Nonrecurring Fair Value Measurements for a discussion of goodwill impairment.

Previous wording

XPLR has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. At March 31, 2025, approximately 99% of the long-term debt, including current maturities, was not exposed to fluctuations in interest expense as it was either fixed rate debt or financially hedged. At March 31, 2025, the estimated fair value of XPLR's long-term debt was approximately $6.4 billion and the carrying value of the long-term debt was $6.5 billion. See Note 3 – Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, the fair value of XPLR's long-term debt would increase by approximately $118 million at March 31, 2025.

Current wording

XPLR has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. At June 30, 2025, approximately 99% of the long-term debt, including current maturities, was not exposed to fluctuations in interest expense as it was either fixed rate debt or financially hedged. At June 30, 2025, the estimated fair value of XPLR's long-term debt was approximately $6.5 billion and the carrying value of the long-term debt was $6.6 billion. See Note 3 – Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, the fair value of XPLR's long-term debt would increase by approximately $40 million at June 30, 2025.

Previous wording

At March 31, 2025, XPLR had interest rate contracts with a net notional amount of approximately $4.0 billion related to managing exposure to the variability of cash flows associated with outstanding and expected future debt issuances and borrowings. Based upon a hypothetical 10% decrease in rates, XPLR’s net derivative assets at March 31, 2025 would decrease by approximately $63 million.

Current wording

At June 30, 2025, XPLR had interest rate contracts with a net notional amount of approximately $3.8 billion related to managing exposure to the variability of cash flows associated with outstanding and expected future debt issuances and borrowings. Based upon a hypothetical 10% decrease in rates, XPLR’s net derivative assets at June 30, 2025 would decrease by approximately $60 million.