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 2025 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.

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 2025 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. Further, in March 2026, an XPLR subsidiary exercised its option to invest a 49% equity interest in each of four to-be-built battery storage projects. In July 2026, XPLR subsidiaries entered into joint venture agreements with subsidiaries of NEER to develop and own two of the battery storage projects. See Note 10 – Sale and Co-Investment Agreement.

Previous wording

The decrease in interest expense of $33 million during the three months ended March 31, 2026 primarily reflects approximately $89 million of favorable mark-to-market activity ($9 million of gains recorded in 2026 compared to $80 million of losses in 2025), partly offset by $56 million of higher interest expense due to higher average debt outstanding with higher interest rates.

Current wording

The decrease in interest expense of $22 million during the three months ended June 30, 2026 primarily reflects approximately $45 million of favorable mark-to-market activity ($21 million of gains recorded in 2026 compared to $24 million of losses in 2025), partly offset by $22 million of higher interest expense due to higher average debt outstanding with higher interest rates.

Previous wording

For the three months ended March 31, 2025, XPLR recorded income tax benefit of $42 million on loss from continuing operations before income taxes of $349 million, resulting in an effective tax rate of approximately 12%. The tax benefit is primarily comprised of income tax benefits of approximately $73 million at the federal statutory rate of 21%, $8 million of state income taxes and $5 million attributable to clean energy tax credits, partly offset by tax expense of $44 million related to taxes attributable to noncontrolling interests. See Note 5.

Current wording

For the three months ended June 30, 2025, XPLR recorded income tax benefit of $38 million on income from continuing operations before income taxes of $12 million, resulting in an effective tax rate of approximately (317)%. The tax benefit is primarily comprised of $24 million related to taxes attributable to noncontrolling interests, $9 million attributable to clean energy tax credits and $7 million of state income taxes, partly offset by income tax expense of approximately $3 million at the federal statutory rate of 21%. See Note 5.

Previous wording

O&M expenses increased $24 million during the three months ended March 31, 2026 primarily reflecting higher net operating expenses at the existing XPLR projects of approximately $13 million, which primarily reflects $17 million relating to higher outside services and rent expense associated with major component repairs, partly offset by $7 million of lower materials and supplies costs. The increase in O&M expenses also reflects the absence of a true-up of CSCS fees which occurred in 2025 of approximately $11 million.

Current wording

O&M expenses increased $65 million during the six months ended June 30, 2026 primarily reflecting higher net operating expenses at the existing XPLR projects primarily due to approximately $51 million higher benefit in 2025 relating to certain vendor credits for unplanned O&M expenses. The increase in O&M expenses also reflects the absence of a true-up of CSCS fees which occurred in 2025 of approximately $11 million.

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 4 – 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, 2026, XPLR recorded income tax benefit of $51 million on loss from continuing operations before income taxes of $99 million, resulting in an effective tax rate of approximately 52%. The tax benefit is primarily comprised of income tax benefits of approximately $50 million attributable to clean energy tax credits and $21 million at the federal statutory rate of 21%, partly offset by tax expense of $18 million related to taxes attributable to noncontrolling interests. See Note 5.

Current wording

For the six months ended June 30, 2026, XPLR recorded income tax benefit of $62 million on loss before income taxes of $97 million, resulting in an effective tax rate of approximately 64%. The tax benefit is primarily comprised of tax benefits of approximately $55 million attributable to clean energy tax credits and $20 million at the U.S. federal statutory rate of 21%, partly offset by tax expense of $10 million related to taxes attributable to noncontrolling interests. See Note 5.

Previous wording

For the three months ended March 31, 2026, 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 $134 million ($2 million of net income in 2026 compared to $132 million of net loss in 2025) and lower net loss allocated to differential membership interest investors of $36 million ($157 million in 2026 compared to $193 million in 2025), partly offset by lower net income attributable to Class B noncontrolling membership interests of $21 million, primarily due to the buyout of the Class B noncontrolling membership interests in XPLR Renewables II in April 2025 and XPLR Pipelines in September 2025. See Note 10 – Noncontrolling Interests.

Current wording

For the six months ended June 30, 2026, 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 $123 million ($57 million of net income in 2026 compared to $66 million of net loss in 2025) and lower net loss allocated to differential membership investors of $74 million ($314 million in 2026 compared to $388 million in 2025), partly offset by lower net income attributable to Class B noncontrolling membership interests of $27 million, primarily due to the buyout of the Class B membership interests in XPLR Renewables II in April 2025 and XPLR Pipelines in September 2025. See Note 10 – Noncontrolling Interests.

Previous wording

XPLR’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 9, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 7 and Note 3) 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 Class B noncontrolling members' interests under certain limited liability company agreements to which XPLR and certain of its subsidiaries are parties (see Note 10 – 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 sales of clean energy tax credits (see Note 10 – Income Taxes), and may be funded with divestitures or issuances of additional XPLR common units, including under its ATM program (see Note 8 – 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 10 – 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.

Current wording

XPLR’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 9, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 7 and Note 3) 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 Class B noncontrolling members' interests under certain limited liability company agreements to which XPLR and certain of its subsidiaries are parties (see Note 8 – Class B Noncontrolling Interests and Note 10 – 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 sales of clean energy tax credits (see Note 10 – Income Taxes), and may be funded with divestitures or issuances of additional XPLR common units, including under its ATM program (see Note 8 – 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 8 – Class B Noncontrolling Interests and Note 10 – Noncontrolling Interests). In addition, XPLR expects to fund debt maturities through refinancing.

Previous wording

At March 31, 2026, XPLR's liquidity position was approximately $2,199 million. The table below provides the components of XPLR’s liquidity position:

Current wording

At June 30, 2026, XPLR's liquidity position was approximately $1,633 million. The table below provides the components of XPLR’s liquidity position:

Previous wording

During the three months ended March 31, 2026, indirect subsidiaries of XPLR borrowed approximately $291 million under one limited-recourse senior secured variable rate term loan facility and at March 31, 2026, $259 million was available under the facility, subject to specified conditions. In April 2026, indirect subsidiaries of XPLR borrowed approximately $232 million under the term loan facility. As of May 7, 2026, approximately $27 million was available under the facility, subject to specified conditions. See Note 7.

Current wording

During the six months ended June 30, 2026, indirect subsidiaries of XPLR borrowed approximately $523 million under one limited-recourse senior secured variable rate term loan facility and as of July 28, 2026, $27 million was available under the facility, subject to specified conditions. In June 2026, XPLR repaid the $500 million principal amount of its 2022 convertible notes at maturity. See Note 7.

Previous wording

XPLR's ATM program expired in late March 2026. In order to renew the ATM program, in March 2026, XPLR filed a registration statement with the SEC, which became effective in April 2026, for up to $300 million of common units which may be sold under a renewed ATM program, depending on market conditions and other considerations, to support XPLR's liquidity and capital needs.

Current wording

XPLR's ATM program expired in late March 2026. In order to renew the ATM program, in March 2026, XPLR filed a registration statement with the SEC, which became effective in April 2026, for up to $300 million of common units which may be sold under the renewed ATM program, depending on market conditions and other considerations, to support XPLR's liquidity and capital needs.

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, 2026 and 2025, XPLR had capital expenditures of approximately $25 million and $89 million, respectively, primarily relating to repowering of wind facilities. XPLR expects to have capital expenditures totaling approximately $315 million related to investments in four joint ventures which will each develop, construct and operate a separate battery storage project which are expected to be completed in 2027 (see Note 11 – Commitments). These estimates are subject to continuing review and adjustments and actual capital expenditures may vary significantly from these estimates.

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, 2026 and 2025, XPLR had capital expenditures of approximately $266 million and $170 million, respectively, primarily relating to repowering of wind facilities. XPLR expects to have capital expenditures totaling approximately $315 million related to investments in four joint ventures which will each develop, construct and operate a separate battery storage project which are expected to be completed in 2027 (see Note 11 – Commitments). These estimates are subject to continuing review and adjustments and actual capital expenditures may vary significantly from these estimates.

Previous wording

The change in net cash provided by (used in) operating activities was primarily driven by higher O&M and interest expenses and the timing of transactions impacting working capital.

Current wording

The decrease in net cash provided by operating activities was primarily driven by lower distributions from equity method investments and the timing of transactions impacting working capital.

Previous wording

Net Cash Used in Investing Activities

Current wording

Net Cash Provided by (Used in) Investing Activities

Previous wording

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

Current wording

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

Previous wording

The decrease in net cash provided by financing activities primarily reflects lower issuances of long-term debt, net of retirements and buyout of differential membership investors in 2026.

Current wording

The change in net cash provided by (used in) financing activities primarily reflects lower issuances of long-term debt, net of retirements and higher buyouts of differential membership investors in 2026, partly offset by lower buyouts of Class B noncontrolling interest investors, lower partner distributions, net of contributions and lower debt issuance costs.

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, 2026, approximately 98% 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, 2026, 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 $6.3 billion. See Note 4 – 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 $115 million at March 31, 2026.

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, 2026, approximately 97% 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, 2026, the estimated fair value of XPLR's long-term debt was approximately $6.2 billion and the carrying value of the long-term debt was $6.0 billion. See Note 4 – 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 $106 million at June 30, 2026.

Previous wording

At March 31, 2026, XPLR had interest rate contracts with a net notional amount of approximately $2.2 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, 2026 would decrease by approximately $40 million.

Current wording

At June 30, 2026, XPLR had interest rate contracts with a net notional amount of approximately $2.0 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 June 30, 2026 would decrease by approximately $47 million.