First Quarter 2014 Financial Highlights
- $816 million of Adjusted EBITDA; with
$639 million from wholesale execution, $108 million from retail and
$69 million from NRG Yield;
- $487 million of Free Cash Flow (FCF)
before Growth investments;
- $3,159 million of total pro-forma
liquidity following the Edison Mission Energy (EME)
acquisition
2014 Guidance Increases
- Updating full year 2014 Guidance as
follows:
- Increasing Adjusted EBITDA to
$3,200-$3,400 million from $2,700-$2,900 million
- Increasing FCF before Growth
investments to $1,200-$1,400 million from $950-$1,150 million
Business and Operational Highlights
- On April 1, 2014, closed the
acquisition of EME, bringing NRG’s total fleet to approximately
53,000 MW of generating capacity – the second largest in the
US;
- On March 31, 2014, acquired the
competitive retail electricity business of Dominion Resources,
Inc., (NYSE: D) – adding approximately 500,000 customers,
significantly expanding NRG’s Northeast retail footprint and adding
the Cirro Energy brand in Texas;
- Acquired Roof Diagnostics Solar (RDS),
one of the nation’s leading residential solar companies, focused on
customer acquisition and superior installation;
- On May 5, 2014, executed definitive
agreement for the first ever drop-down transaction with NRG Yield
for the 550 MW El Segundo Energy Center, the 20 MW TA High Desert
solar facility and the 20 MW RE Kansas South solar facility for
$349 million in cash. Transaction is expected to close this
quarter.
NRG Energy, Inc. (NYSE:NRG) today reported record first quarter
2014 Adjusted EBITDA of $816 million with Wholesale contributing
$639 million, Retail contributing $108 million and NRG Yield
contributing $69 million. First quarter adjusted cash flow from
operations totaled $608 million. Net loss for first quarter 2014
was ($56) million, or ($0.18) per diluted common share compared to
net loss of ($332) million, or ($1.03) per diluted common share for
first quarter 2013.
“Outstanding execution led to unprecedented quarterly financial
performance driven by our core wholesale business. The quarter is
also noteworthy in that we successfully closed three acquisitions
which will materially advance each of our generation, retail and
clean energy business lines,” said David Crane, NRG President and
Chief Executive Officer. “The polar vortex, yet again, vividly
demonstrated the critical importance both to NRG and to the
American people of maintaining a robust multi-fuel electric
system.”
Segment Results
Table 1: Adjusted EBITDA
($ in millions) Three Months Ended Segment 3/31/14
3/31/13 Retail 108 103 Wholesale Gulf Coast
- Texas
40 72
- South Central
17 (8) East 525 158 West 40 4 Other 8 9 NRG Yield 69 32 Alternative
Energy 4 19 Corporate 5 (6) Adjusted EBITDA(1)
816 383
(1) Detailed adjustments by region are shown in Appendix A
Table 2: Net Income/(Loss)
($ in millions) Three Months Ended Segment 3/31/14
3/31/13 Retail 291 369 Wholesale Gulf Coast
- Texas
(324) (426)
- South Central
(13) (7) East 219 (159) West 16 (7) Other 1 4 NRG Yield 14 11
Alternative Energy (59) (25) Corporate (201) (92) Net
Loss (56) (332)
Retail: First Quarter Adjusted EBITDA was $108 million; $5
million higher than in first quarter 2013 driven by improved
operating efficiencies and focus on sustained mass margin which
were offset by lower C&I volumes, unfavorable intra-month
supply costs, and increased bad debt expense resulting from higher
revenues.
Wholesale
Gulf Coast - Texas: First Quarter Adjusted EBITDA was $40
million; $32 million lower than in first quarter 2013. Gross margin
declined by $8 million, driven by lower economic hedges, partially
offset by higher generation and higher sales volumes as the region
experienced less outage hours in 2014. Also offsetting the
reduction is the acquisition of the Gregory Cogeneration facility
(Gregory) in August 2013, increased revenue from bilateral
agreements and improved fleet availability. The balance was due to
higher operating costs driven by the STP outage as well as the
timing and scope of major maintenance expense at WA Parish and
Limestone.
Gulf Coast - South Central: First Quarter Adjusted EBITDA
was $17 million; $25 million higher than in first quarter 2013. The
higher results were driven by a $33 million increase in gross
margin due to higher realized energy margins, driven by weather and
favorable MISO pricing, partially offset by increased costs related
to the timing and scope of outage work at gas facilities.
East: First Quarter Adjusted EBITDA was $525 million; $367
million higher than in first quarter 2013, primarily driven by $336
million favorable gross margin as cold weather coupled with strong
plant operational performance resulted in both higher volumes and
realized energy prices in the first quarter 2014. The balance of
the increase came from both reduced O&M costs driven by
operational improvements and property tax settlements.
West: First Quarter Adjusted EBITDA was $40 million; $36 million
higher than in first quarter 2013. Increases were primarily driven
by favorable gross margin of $30 million due to revenues from
Resource Adequacy contracts and capacity revenues from El Segundo
Energy Center which started operations in the latter half of 2013,
partially offset by reductions from the shutdown and
decommissioning of retired facilities. The balance was due to lower
O&M costs driven by timing of maintenance work.
NRG Yield: First Quarter Adjusted EBITDA was $69 million; $37
million higher than in first quarter 2013. The performance was the
result of new assets achieving commercial operations (both
conventional and renewable assets), as well as higher sales volumes
due to colder than expected weather benefiting the Thermal
business.
Alternative Energy: First Quarter Adjusted EBITDA was $4
million; $15 million lower than in first quarter 2013. This change
is in part due to the sale of the equity interest in CVSR and
Avenal to NRG Yield, as well as ongoing development efforts at both
the solar and new businesses that accounted for the balance of the
change as NRG continues to expand into new markets.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions) 3/31/14 12/31/13 Cash
and Cash Equivalents 3,187 2,254 Restricted cash 209
268 Total 3,396 2,522 Total Credit Facility Availability
1,303 1,173 Total Liquidity 4,699 3,695 EME Acquisition on
April 1, 2014 (1,540) - Pro Forma Liquidity 3,159
3,695
Total liquidity as of March 31, 2014, adjusted for the April 1,
2014 EME acquisition, was $3,159 million, a decrease of $536
million from December 31, 2013. Credit facility availability
increased by $130 million but was more than offset by the decrease
in cash of $666 million consisting of the following items:
- $1,652 million of cash inflows through
March 2014, consisting of the following items:
- $967 million net financing activities
consisting of: $1,100 million senior note debt proceeds; $337
million NRG Yield debt proceeds, net of fees; partially offset by
$470 million debt payments (excluding cash grant debt repayments
which are included in growth projects)
- $608 million of adjusted cash flow from
operations; and
- $77 million of proceeds from sale of
assets, net.
- Partially offset by $2,318 million of
cash outflows through March 2014, consisting of the following
items:
- $1,716 million for acquisitions and
growth projects, net, including $1,540 million net cash used to
acquire EME on April 1, 2014;
- $407 million of collateral;
- $112 million of maintenance and
environmental capital expenditures, net;
- $41 million common and preferred stock
dividends;
- $37 million of merger and integration
expenses; and
- $5 million of other investing and
financing activities, net.
Drop-Down of Assets to NRG Yield
On May 5, 2014, NRG Energy, Inc. entered into a definitive
agreement for the first drop-down of assets to NRG Yield, Inc. for
$349 million in total cash consideration, including the assumption
of $657 million in project debt, consisting of the following assets
(pursuant to the Right of First Offer Agreement with NRG
Yield):
- TA High Desert – 20 MW solar facility
located in Los Angeles County, CA
- RE Kansas South – 20 MW solar facility
located in Kings County, CA
- El Segundo Energy Center – 550 MW
fast-start, gas-fired facility located in Los Angeles County,
CA
The cash proceeds of $349 million from these drop-downs
represent a 1.6X return on cash equity invested in the projects and
increase NRG’s capital available for allocation. NRG expects to
close the transaction this quarter.
Growth Initiatives and Strategic Developments
NRG continued to enhance its competitiveness and strategic
positioning through a wide range of growth initiatives,
including:
Acquisition of Edison Mission Energy
On April 1, 2014, the Company closed the acquisition of EME,
excluding transaction adjustments for cash, reduced debt balances
assumed and working capital. This transaction adds approximately
7,700 MW of generation assets, including 1,600 MW of long-term,
fully-contracted assets eligible for future drop-down to NRG Yield
and brings NRG’s total fleet to approximately 53,000 MW of
generating capacity – the second largest in the US.
Acquisition of Dominion’s Competitive Retail Electricity
Business
On March 31, 2014, the Company closed the acquisition of
competitive retail electricity business of Dominion Resources, Inc.
for $165 million, excluding transaction adjustments for cash and
working capital. This acquisition will add, after customary
transitions, approximately 500,000 customer accounts to NRG’s
retail footprint by the end of 2014, doubling NRG’s northeast
retail presence across eight states and enhancing its leading
position in the ERCOT market through the acquisition of Dominion’s
Cirro Energy franchise.
Residential Solar Developments
On March 27, 2014, the Company acquired Roof Diagnostics Solar
(RDS), one of the nation’s leading residential solar companies,
enhancing substantially our customer acquisition and installation
capability.
Outlook for 2014
With record first quarter results and taking into account the
expected contribution of the strategic acquisitions previously
described, NRG is raising and updating its Adjusted EBITDA and FCF
before Growth investments guidance for 2014.
Table 4: 2014 Adjusted EBITDA and FCF before Growth investments
Guidance
5/6/2014 2/28/2014 ($ in millions) 2014
2014 Adjusted EBITDA 3,200 –3,400 2,700 –
2,900
Interest payments1
(1,065) (950) Income tax (40) (40) Working capital/other changes
(70) (105) Adjusted Cash flow from operations 2,025 –
2,225 1,605 – 1,805 Maintenance capital expenditures, net
(375)-(395) (335)-(355) Environmental capital expenditures, net
(320)-(340) (230)-(250) Preferred dividends (9) (9) Distributions
to noncontrolling interests (100) (60) Free cash flow
– before Growth investments 1,200 – 1,400 950 – 1,150
Notes - subtotals and totals are rounded
1 Includes debt extinguishment costs associated with
refinancing’s of $73 MM and $28 MM for May 6, 2014 and February 28,
2014 Guidance, respectively
2014 Dividend Program
On April 21, 2014, NRG declared a quarterly dividend on the
Company's common stock of $0.14 per share, payable May 15, 2014, to
stockholders of record as of May 1, 2014, representing $0.56 on an
annualized basis, a 17% increase from $0.48 per share.
The Company's common stock dividend is subject to available
capital, market conditions and compliance with associated laws and
regulations.
Earnings Conference Call
On May 6, 2014, NRG will host a conference call at 8:00 am
Eastern to discuss these results. Investors, the news media and
others may access the live webcast of the conference call and
accompanying presentation materials by logging on to NRG’s website
at http://www.nrgenergy.com and clicking on “Investors.” The
webcast will be archived on the site for those unable to listen in
real time.
About NRG
NRG is leading a customer-driven change in the U.S. energy
industry by delivering cleaner and smarter energy choices, while
building on the strength of the nation’s largest and most diverse
competitive power portfolio. A Fortune 500 company, we create value
through reliable and efficient conventional generation while
driving innovation in solar and renewable power, electric vehicle
ecosystems, carbon capture technology and customer-centric energy
solutions. Our retail electricity providers serve almost 3 million
residential and commercial customers throughout the country. More
information is available at www.nrgenergy.com. Connect with NRG
Energy on Facebook and follow us on Twitter @nrgenergy.
Safe Harbor Disclosure
In addition to historical information, the information presented
in this communication includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Exchange Act. These statements involve
estimates, expectations, projections, goals, assumptions, known and
unknown risks and uncertainties and can typically be identified by
terminology such as “may,” “should,” “could,” “objective,”
“projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,”
“intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,”
“predict,” “target,” “potential” or “continue” or the negative of
these terms or other comparable terminology. Such forward-looking
statements include, but are not limited to, statements about the
Company’s future revenues, income, indebtedness, capital structure,
plans, expectations, objectives, projected financial performance
and/or business results and other future events, and views of
economic and market conditions.
Although NRG believes that its expectations are reasonable, it
can give no assurance that these expectations will prove to have
been correct, and actual results may vary materially. Factors that
could cause actual results to differ materially from those
contemplated above include, among others, general economic
conditions, hazards customary in the power industry, weather
conditions, competition in wholesale power markets, the volatility
of energy and fuel prices, failure of customers to perform under
contracts, changes in the wholesale power markets, changes in
government regulation of markets and of environmental emissions,
the condition of capital markets generally, our ability to access
capital markets, unanticipated outages at our generation
facilities, adverse results in current and future litigation,
failure to identify or successfully implement acquisitions and
repowerings, our ability to implement value enhancing improvements
to plant operations and companywide processes, our ability to
obtain federal loan guarantees, the inability to maintain or create
successful partnering relationships, our ability to operate our
businesses efficiently including NRG Yield, our ability to retain
retail customers, our ability to realize value through our
commercial operations strategy and the creation of NRG Yield, the
ability to successfully integrate the businesses of acquired
companies, including the assets of Edison Mission Energy, the
ability to realize anticipated benefits of acquisitions (including
expected cost savings and other synergies) or the risk that
anticipated benefits may take longer to realize than expected, and
our ability to pay dividends and initiate share repurchases under
our Capital Allocation Plan, which may be made from time to time
subject to market conditions and other factors, including as
permitted by United States securities laws. Furthermore, any common
stock dividend is subject to available capital and market
conditions.
NRG undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. The adjusted
EBITDA and free cash flow guidance are estimates as of May 6, 2014.
These estimates are based on assumptions believed to be reasonable
as of that date. NRG disclaims any current intention to update such
guidance, except as required by law. The foregoing review of
factors that could cause NRG’s actual results to differ materially
from those contemplated in the forward-looking statements included
in this Earnings Presentation should be considered in connection
with information regarding risks and uncertainties that may affect
NRG's future results included in NRG's filings with the Securities
and Exchange Commission at www.sec.gov.
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended March 31,
(In millions,
except for per share amounts)
2014 2013 Operating Revenues Total
operating revenues $ 3,486 $ 2,081
Operating Costs
and Expenses Cost of operations 2,733 1,753 Depreciation and
amortization 335 307 Selling, general and administrative 226 227
Acquisition-related transaction and integration costs 12 42
Development activity expenses 19 18 Total operating
costs and expenses 3,325 2,347 Gain on sale of assets 19 —
Operating Income/(Loss) 180 (266 )
Other
Income/(Expense) Equity in earnings of unconsolidated
affiliates 7 3 Other income, net 11 4 Loss on debt extinguishment
(41 ) (28 ) Interest expense (255 ) (196 ) Total other expense (278
) (217 )
Loss Before Income Taxes (98 ) (483 ) Income tax
benefit (31 ) (152 )
Net Loss (67 ) (331 ) Less: Net
(loss)/income attributable to noncontrolling interest (11 ) 1
Net Loss Attributable to NRG Energy, Inc. (56 ) (332
) Dividends for preferred shares 2 2
Loss
Available for Common Stockholders $ (58 ) $ (334 )
Loss Per
Share Attributable to NRG Energy, Inc. Common Stockholders
Weighted average number of common shares outstanding — basic and
diluted 324 323 Net loss per weighted average common share — basic
and diluted $ (0.18 ) $ (1.03 )
Dividends Per Common Share $
0.12 $ 0.09
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited)
Three months ended March 31, 2014
2013 (In millions) Net Loss $ (67 ) $ (331 )
Other Comprehensive Income, net of tax Unrealized
(loss)/gain on derivatives, net of income tax (benefit)/expense of
$(3) and $9 (9 ) 7 Foreign currency translation adjustments, net of
income tax expense of $2 and $0 6 — Available-for-sale securities,
net of income tax expense of $2 and $1 6 2 Defined benefit plans,
net of tax expense of $0 and $5 2 5 Other
comprehensive income 5 14
Comprehensive Loss
(62 ) (317 ) Less: Comprehensive (loss)/income attributable to
noncontrolling interest (15 ) 1
Comprehensive Loss
Attributable to NRG Energy, Inc. (47 ) (318 ) Dividends for
preferred shares 2 2
Comprehensive Loss Available
for Common Stockholders $ (49 ) $ (320 )
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS March 31, 2014
December 31, 2013
(In millions,
except shares)
(unaudited) ASSETS Current Assets Cash
and cash equivalents $ 3,187 $ 2,254 Funds deposited by
counterparties 4 63 Restricted cash 209 268 Accounts receivable —
trade, less allowance for doubtful accounts of $32 and $40 1,149
1,214 Inventory 781 898 Derivative instruments 1,573 1,328 Cash
collateral paid in support of energy risk management activities 687
276 Deferred income taxes 78 258 Renewable energy grant receivable
116 539 Prepayments and other current assets 599 498
Total current assets 8,383 7,596
Property, plant
and equipment, net of accumulated depreciation of $6,885 and
$6,573 19,644 19,851
Other Assets Equity
investments in affiliates 462 453 Notes receivable, less current
portion 69 73 Goodwill 2,038 1,985 Intangible assets, net of
accumulated amortization of $1,248 and $1,977 1,300 1,140 Nuclear
decommissioning trust fund 557 551 Derivative instruments 333 311
Deferred income taxes 1,416 1,202 Other non-current assets 759
740 Total other assets 6,934 6,455
Total Assets $ 34,961 $ 33,902
LIABILITIES
AND STOCKHOLDERS’ EQUITY Current Liabilities Current
portion of long-term debt and capital leases $ 685 $ 1,050 Accounts
payable 1,082 1,038 Derivative instruments 1,504 1,055 Cash
collateral received in support of energy risk management activities
4 63 Accrued expenses and other current liabilities 950 998
Total current liabilities 4,225 4,204
Other
Liabilities Long-term debt and capital leases 16,803 15,767
Nuclear decommissioning reserve 298 294 Nuclear decommissioning
trust liability 324 324 Deferred income taxes 24 22 Derivative
instruments 257 195 Out-of-market contracts 1,157 1,177 Other
non-current liabilities 1,230 1,201 Total non-current
liabilities 20,093 18,980
Total Liabilities
24,318 23,184 3.625% convertible perpetual preferred
stock (at liquidation value, net of issuance costs) 249 249
Commitments and Contingencies Stockholders’ Equity
Common stock 4 4 Additional paid-in capital 7,842 7,840 Retained
earnings 3,594 3,695 Less treasury stock, at cost — 77,275,933 and
77,347,528 shares, respectively (1,940 ) (1,942 ) Accumulated other
comprehensive income 10 5 Noncontrolling interest 884 867
Total Stockholders’ Equity 10,394 10,469
Total Liabilities and Stockholders’ Equity $ 34,961
$ 33,902
NRG ENERGY, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) Three months ended March
31, 2014 2013 (In millions) Cash
Flows from Operating Activities Net loss $ (67 ) (331 )
Adjustments to reconcile net loss to net cash provided/(used) by
operating activities: Distributions and equity in earnings of
unconsolidated affiliates (2 ) — Depreciation and amortization 335
307 Provision for bad debts 21 9 Amortization of nuclear fuel 11 6
Amortization of financing costs and debt discount/premiums (5 ) (13
) Loss on debt extinguishment 19 2 Amortization of intangibles and
out-of-market contracts 13 31 Amortization of unearned equity
compensation 8 18 Changes in deferred income taxes and liability
for uncertain tax benefits (111 ) (215 ) Changes in nuclear
decommissioning trust liability 5 10 Changes in derivative
instruments 525 317 Changes in collateral deposits supporting
energy risk management activities (407 ) (226 ) Gain on sale of
assets (19 ) — Cash used by changes in other working capital 65
(39 )
Net Cash Provided/(Used) by Operating
Activities 391 (124 )
Cash Flows from Investing
Activities Acquisitions of businesses, net of cash acquired
(218 ) (18 ) Capital expenditures (237 ) (813 ) Decrease/(Increase)
in restricted cash, net 3 (13 ) Decrease in restricted cash to
support equity requirements for U.S. DOE funded projects 56 12
Decrease/(Increase) in notes receivable 1 (9 ) Investments in
nuclear decommissioning trust fund securities (188 ) (95 ) Proceeds
from sales of nuclear decommissioning trust fund securities 183 85
Proceeds from renewable energy grants 387 16 Proceeds from sale of
assets, net of cash disposed of 77 — Cash proceeds to fund cash
grant bridge loan payment 57 — Other 3 (1 )
Net Cash
Provided/(Used) by Investing Activities 124 (836 )
Cash Flows from Financing Activities Payment of dividends to
common and preferred stockholders (41 ) (31 ) Payment for treasury
stock — (20 ) Net (payments for)/receipts from settlement of
acquired derivatives that include financing elements (223 ) 98
Proceeds from issuance of long-term debt 1,564 736 Contributions
and sale proceeds from noncontrolling interest in subsidiaries 9 20
Proceeds from issuance of common stock 3 1 Payment of debt issuance
costs (23 ) (5 ) Payments for short and long-term debt (873 ) (219
)
Net Cash Provided by Financing Activities 416 580
Effect of exchange rate changes on cash and cash equivalents
2 —
Net Increase/(Decrease) in Cash and Cash
Equivalents 933 (380 )
Cash and Cash Equivalents at
Beginning of Period 2,254 2,087
Cash and Cash
Equivalents at End of Period $ 3,187 $ 1,707
Appendix Table A-1: First Quarter 2014 Regional Adjusted
EBITDA ReconciliationThe following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
South Other NRG
Alt. ($ in millions) Retail
Texas Central East West Conventional
Yield Energy Corp. Total
Net
Income/(Loss) Attributable to NRG Energy, Inc 291
(324) (13) 219
16 1 14 (59)
(201) (56) Plus: Net Income
Attributable to Non-Controlling Interest - - - - - - 4 (17) 2 (11)
Interest Expense, net - - 30 (14) 7 - 19 28 182 252 Loss on Debt
Extinguishment - - - - - - - 1 40 41 Income Tax - - - - - 2 3 -
(36) (31) Depreciation, Amortization and ARO Expense 33 118 25 69
19 1 17 52 6 340 Amortization of Contracts 1 10
(4) (4) (2) - - -
- 1
EBITDA 325 (196) 38
270 40 4 57 5 (7)
536 Adjustment to reflect NRG share of Adjusted EBITDA in
unconsolidated affiliates - - - - (3) 4 12 (2) - 11 Integration
& Transaction Costs, gain on sale - - (24) 6 - - - - 12 (6)
Deactivation costs - - - 2 1 - - - - 3 Legal Settlement 4 - - - - -
- - - 4 Market to Market (MtM) losses/(gains) on economic hedges
(221) 236 3 247 2 - - 1 - 268
Adjusted
EBITDA 108 40 17
525 40 8 69
4 5 816
Appendix Table A-2: First Quarter 2013 Regional Adjusted
EBITDA ReconciliationThe following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
South Other NRG
Alt. ($ in millions) Retail
Texas Central East West Conventional
Yield Energy Corp. Total
Net
Income/(Loss) Attributable to NRG Energy, Inc 369
(426) (7) (159)
(7)
4
11 (25) (92)
(332) Plus: Net Income Attributable to Non-Controlling
Interest - - - - - - - (1) - (1) Interest Expense, net 1 - 4 13 (1)
- 5 8 163 193 Loss on Debt Extinguishment - - - - - - - - 28 28
Income Tax - - - - - - - - (152) (152) Depreciation Amortization
and ARO Expense 32 113 24 80 14 1 10 30 4 308 Amortization of
Contracts 21 9 (5) (11) (2)
- 1 - - 13
EBITDA
423 (304) 16 (77) 4 5
27 12 (49) 57 Adjustment to reflect NRG
share of Adjusted EBITDA in unconsolidated affiliates - - 1 - 1 4 5
6 - 17 Integration & Transaction Costs - - - - - - - - 42 42
Deactivation Costs - - - 3 - - - - - 3 Asset Write Off and
Impairment - - - - - - - - 1 1 MtM losses/(gains) on economic
hedges (320) 376 (25) 232 (1) - - 1 - 263
Adjusted EBITDA 103 72
(8) 158 4 9
32 19 (6) 383
Appendix Table A-3: 2014 and 2013 First Quarter Adjusted Cash
Flow from Operations ReconciliationsThe following table
summarizes the calculation of adjusted cash flow operating
activities providing a reconciliation to net cash provided by
operating activities
Three months ended Three months ended
($ in millions)
March 31, 2014 March 31, 2013 ((1))
Net Cash Provided by Operating Activities 391
(124) Adjustment for change in collateral 407 226
Reclassifying of net receipts (payments) for settlement of acquired
derivatives that include financing elements (223) 98 Add: Merger
and integration expenses 33 47
Adjusted Cash Flow
from Operating Activities 608 247
Maintenance CapEx, net[2] (62) (90) Environmental CapEx, net (50)
(14) Preferred dividends (2) (2) Distributions to non-controlling
interests (7) _ Free cash flow – before Growth
investments 487 141
(1) Revised to reflect new Adjusted Cash Flow from Operating
Activities methodology
(2) Excludes merger and integration CapEx of $5 million in each
year
EBITDA and Adjusted EBITDA are non-GAAP financial measures.
These measurements are not recognized in accordance with GAAP and
should not be viewed as an alternative to GAAP measures of
performance. The presentation of Adjusted EBITDA should not be
construed as an inference that NRG’s future results will be
unaffected by unusual or non-recurring items.
EBITDA represents net income before interest (including loss on
debt extinguishment), taxes, depreciation and amortization. EBITDA
is presented because NRG considers it an important supplemental
measure of its performance and believes debt-holders frequently use
EBITDA to analyze operating performance and debt service capacity.
EBITDA has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for analysis of our
operating results as reported under GAAP. Some of these limitations
are:
- EBITDA does not reflect cash
expenditures, or future requirements for capital expenditures, or
contractual commitments;
- EBITDA does not reflect changes in, or
cash requirements for, working capital needs;
- EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on debt or cash income tax
payments;
- Although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and EBITDA does not
reflect any cash requirements for such replacements; and
- Other companies in this industry may
calculate EBITDA differently than NRG does, limiting its usefulness
as a comparative measure.
Because of these limitations, EBITDA should not be considered as
a measure of discretionary cash available to use to invest in the
growth of NRG’s business. NRG compensates for these limitations by
relying primarily on our GAAP results and using EBITDA and Adjusted
EBITDA only supplementally. See the statements of cash flow
included in the financial statements that are a part of this news
release.
Adjusted EBITDA is presented as a further supplemental measure
of operating performance. Adjusted EBITDA represents EBITDA
adjusted for mark-to-market gains or losses, asset write offs and
impairments; and factors which we do not consider indicative of
future operating performance. The reader is encouraged to evaluate
each adjustment and the reasons NRG considers it appropriate for
supplemental analysis. As an analytical tool, Adjusted EBITDA is
subject to all of the limitations applicable to EBITDA. In
addition, in evaluating Adjusted EBITDA, the reader should be aware
that in the future NRG may incur expenses similar to the
adjustments in this news release.
Adjusted cash flow from operating activities is a non-GAAP
measure NRG provides to show cash from operations with the
reclassification of net payments of derivative contracts acquired
in business combinations from financing to operating cash flow, as
well as the add back of merger and integration related costs. The
Company provides the reader with this alternative view of operating
cash flow because the cash settlement of these derivative contracts
materially impact operating revenues and cost of sales, while GAAP
requires NRG to treat them as if there was a financing activity
associated with the contracts as of the acquisition dates. The
Company adds back merger and integration related costs as they are
one time and unique in nature and do not reflect ongoing cash from
operations and they are fully disclosed to investors.
Free cash flow (before Growth investments) is adjusted cash flow
from operations less maintenance and environmental capital
expenditures, net of funding, and preferred stock dividends and is
used by NRG predominantly as a forecasting tool to estimate cash
available for debt reduction and other capital allocation
alternatives. The reader is encouraged to evaluate each of these
adjustments and the reasons NRG considers them appropriate for
supplemental analysis. Because we have mandatory debt service
requirements (and other non-discretionary expenditures) investors
should not rely on free cash flow before Growth investments as a
measure of cash available for discretionary expenditures.
NRG Energy, Inc.Media:Karen Cleeve, 609-524-4608David Knox,
832-357-5730orInvestors:Chad Plotkin, 609-524-4526Daniel Keyes,
609-524-4527
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