NRG NRG Energy Inc

NRG Energy, Inc. (NRG) reported first-quarter 2014 loss of 18 cents per share, wider than the Zacks Consensus Estimate of a loss of 12 cents per share. The company posted a loss of $1.03 per share in the prior-year quarter.

Revenue

In first-quarter 2014, NRG Energy's total operating revenues were $3,486 million, surpassing the Zacks Consensus Estimate of $2,059 million by 69.3%. Reported revenues surged 67.5% from $2,081 million a year ago.

Highlights of the Release

In the quarter under review, NRG Energy's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $816 million, up 113.1% year over year on favorable performances from the Retail, Wholesale - Gulf Coast - South Central, Wholesale - Gulf Coast - East, Wholesale - Gulf Coast - West, NRG Yield and Corporate segments. These were partially offset by decreases in adjusted EBITDA from Wholesale - Gulf Coast - Texas, Other Conventional and Alternate Energy segments.

The company’s total operating expenses escalated 41.7% year over year to $3,325 million, primarily due to higher cost of operations and depreciation expenses.

Quarterly operating income was $180 million compared with an operating loss of $266 million a year ago.

NRG Energy's free cash flow (before growth investments) in first-quarter 2014 was $487 million, up substantially from $141 million in the prior-year quarter.

Interest expenses increased 30.1% year over year to $255 million primarily due to a higher debt level.

Financial Update

NRG Energy's cash and cash equivalents, as of Mar 31, 2014, were $3,187 million versus $2,254 million as of Dec 31, 2013.

As of Mar 31, 2014, long-term debt and capital leases was $16,803 million versus $15,767 million as of Dec 31, 2013.

Net cash provided from operating activities during the first three months of 2014 was $391 million versus net cash used by operating activities of $124 million in the year-ago comparable period.

In first-quarter 2014, the company’s capital expenditures were $237 million, down from $813 million in the prior-year comparable period.

Dividend Update

On Apr 21, 2014, NRG Energy announced that it will distribute quarterly dividend of 14 cents per share, up 16.7% from the previous pay out. The company will pay incremental dividend on May 15, 2014, to stockholders of record as of May 1. On an annualized basis, the dividend rate will increase to 56 cents from 48 cents.

Guidance

NRG Energy increased its 2014 adjusted EBITDA guidance to the range of $3,200 - $3,400 million from the previous projection of $2,700 - $2,900 million.

The company’s 2014 free cash flow (before growth investments) guidance is in the range of $1,200 - $1,400 million, up from the earlier estimate of $950 -$1,150 million.

Other Earnings Releases

Public Service Enterprise Group Inc. (PEG) reported first-quarter 2014 earnings of $1.01 per share, beating the Zacks Consensus Estimate of 97 cents by 4.1%.

Our View

Despite reporting strong top-line results, a rise in the number of shares outstanding and higher operating expenses led to unfavorable earnings performance in first-quarter 2014.

NRG Energy completed several significant deals in the first few months of 2014. The company acquired Edison International’s (EIX) subsidiary Edison Mission Energy, the competitive retail electricity business of Dominion Resources, Inc. (D) and a residential solar company Roof Diagnostics Solar. These transactions will enable the company to increase its scale of operations besides expanding renewable portfolio.

In addition to strengthening operations, the company is also pursuing a practice to pay regular dividends, thereby maximizing shareholder value.

NRG Energy currently has a Zacks Rank #1 (Strong Buy).

 
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