Financial Highlights
- $1,014 million of Adjusted EBITDA in
the third quarter and $2,501 million in the first nine months of
2014
- $526 million of Free Cash Flow (FCF)
before growth investments in the third quarter and $812 million in
the first nine months of 2014
- $3,594 million of total liquidity as of
September 30, 2014
- $830 million in cumulative proceeds to
NRG from drop-downs during 2014, including $480 million from second
drop-down to NRG Yield expected to close in fourth quarter
- $190 million in tax-equity financing
proceeds primarily from EME wind assets
Financial Guidance
- Revising 2014 Guidance as follows:
- Adjusted EBITDA from $3,200-$3,400 to
$3,100-$3,200 million, which incorporates a projected negative
contribution of $50 million from NRG Home Solar
- FCF before Growth investments from
$1,200-$1,400 to $950-$1,050 million
- Initiating 2015 Financial Guidance
- Adjusted EBITDA of $3,200-$3,400
million, which excludes a projected negative contribution of $100
million from our growing NRG Home Solar business
- FCF before Growth Investments of
$1,100-$1,300 million
Business and Operational Highlights
- Acquired Pure Energies Group, Inc.
(Pure Energies), adding a leading web- and telephonic-based
customer acquisition platform to NRG Home Solar’s capabilities
- Acquired Goal Zero, extending NRG’s
retail brand and offerings into personal solar devices
- Acquired, through NRG Yield, North
America’s largest wind farm, the 947 megawatt (MW) Alta Wind
facility located in Tehachapi, California, for
$870 million1
- Began construction of a brownfield 360
MW2 natural gas peaking plant in Houston (approximately $400/kw
installed cost)
- Received SCE contracts for 440 MW of
new gas generation and “Preferred Resources”
NRG Energy, Inc. (NYSE:NRG) today reported third quarter 2014
Adjusted EBITDA of $1,014 million with Wholesale contributing $678
million, Retail contributing $196 million and NRG Yield
contributing $140 million. Year-to-date adjusted cash flow from
operations totaled $1,226 million. Net income for the first nine
months of 2014 was $15 million, or $0.02 per diluted common share
compared to net loss of ($89) million, or ($0.30) per diluted
common share for the first nine months of 2013.
“While NRG's financial performance was constrained in the third
quarter by an absence of summer weather events, NRG's underlying
performance across our wholesale and retail operations was quite
strong,” said NRG’s President and Chief Executive Officer David
Crane. "I am confident that we are well positioned for a more
robust financial outcome in 2015."
Segment Results
Table 1: Adjusted EBITDA
($ in millions) Three Months Ended Nine Months Ended
Segment 9/30/14 9/30/13 9/30/14 9/30/13
Retail 196 180 477 423 Wholesale Gulf Coast 181 248
326 454 East 342 415 1,023 742 West 113 47 199 106 NRG Yield (1)
140 103 341 200 Renewables 88 40 192 92 Corporate (2) (46)
(33) (57) (50) Adjusted EBITDA (3)
1,014 1,000 2,501 1,967
(1)
In accordance with GAAP, 2014 and 2013 results restated to
include full impact of the assets in the ROFO dropdown transaction
which closed on June 30, 2014
(2)
Includes $25 million and $31 million of negative contribution from
NRG Home Solar for three and nine months ended September 30, 2014,
respectively
(3)
Detailed adjustments by region are shown in Appendix A
Table 2: Net Income / (Loss)
($ in millions) Three Months Ended Nine Months Ended Segment
9/30/14 9/30/13 9/30/14 9/30/13 Retail 88
(56) 267 231 Wholesale Gulf Coast 147 282 (56) 31
East 223 241 448 216 West 76 22 117 54 NRG Yield(1) 25 40 75 86
Renewables (34) (7) (101) (45) Corporate (357) (403)
(735) (662) Net Income/ (Loss) 168 119
15 (89) (1) In accordance with GAAP, 2014 and
2013 results restated to include full impact of the assets in the
ROFO drop-down transaction which closed on June 30, 2014
Retail: Third quarter Adjusted EBITDA was $196 million; $16
million higher than in third quarter 2013 primarily driven by
increased margin from the Dominion acquisition, continued
advancement in customer and product growth, and a focus on
maintaining unit margins, partially offset by lower C&I
volumes.
Wholesale
Gulf Coast: Third quarter Adjusted EBITDA was $181 million; $67
million lower than in third quarter 2013. Gross margin declined by
$43 million primarily due to decrease in average realized prices
and decrease in coal generation from lower economic dispatch due to
higher outage hours, partially offset by gains in South Central due
to higher energy prices in MISO which also resulted in higher
generation. The balance of the decline was due to higher
maintenance and operating expenses at South Texas Project and gain
on sale of land recorded in 2013.
East: Third quarter Adjusted EBITDA was $342 million; $73
million lower than in third quarter 2013. The lower results were
primarily driven by 67% lower capacity pricing in PJM and lower
gross margin due to lower generation and realized energy prices
partially offset by the favorable impact of the Midwest Generation
assets from the acquisition of substantially all of the assets of
Edison Mission Energy (EME).
West: Third quarter Adjusted EBITDA was $113 million; $66
million higher than in third quarter 2013. Increases were primarily
driven by the addition of the EME gas fleet of $43 million and
higher priced resource adequacy contracts.
NRG Yield: Third quarter Adjusted EBITDA was $140 million; $37
million higher than in third quarter 2013. The improved performance
was the result of additional generating capacity, higher sales
volumes in the Thermal business, and the Alta Wind acquisition in
August 2014.
Renewables: Third quarter Adjusted EBITDA was $88 million; $48
million higher than in third quarter 2013. The improved performance
was driven by the addition of the EME wind assets that contributed
$23 million, as well as the CVSR and Ivanpah solar plants that
achieved commercial operations in late 2013 and early 2014.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions) 9/30/14 6/30/14 12/31/13 Cash
and Cash Equivalents 1,953 1,481 2,254
Restricted cash 339 286 268 Total 2,292 1,767
2,522 NRG Corporate Credit Facility Availability 1,302
1,243 1,173 Total Liquidity 3,594 3,010 3,695
Total liquidity as of September 30, 2014, was $3,594 million, a
decrease of $101 million from December 31, 2013. The increase of
$129 million in available credit facilities was more than offset by
the decrease in cash of $230 million, consisting of the
following:
- $3,573 million of cash outflows through
September 2014, consisting of:
- $2,869 million for acquisitions and
growth projects, net, including $1,596 million net cash used in the
EME transaction on April 1, 2014 and $901 million net cash used to
acquire Alta Wind on August 12, 2014;
- $100 million of collateral;
- $369 million of maintenance and
environmental capital expenditures, net;
- $140 million common and preferred stock
dividends; and
- $95 million of merger and integration
expenses and capital costs.
- Partially offset by $3,343 million of
cash inflows through September 2014, consisting of:
- $1,944 million of net financing
activities consisting of: $2,100 million of proceeds from senior
note debt issuance; $337 million of proceeds from NRG Yield
convertible note issuance, net of fees; $492 million of proceeds
from NRG Yield “Green Bond” issuance, net of fees; $630 million of
proceeds from NRG Yield Class A equity issuance, net of fees;
partially offset by $1,615 million of debt payments;
- $1,226 million of adjusted cash flow
from operations;
- $81 million of net proceeds from sale
of assets; and
- $92 million of other net investing and
financing activities.
Drop-Down of Assets to NRG Yield
On November 4, 2014, NRG entered into a definitive agreement
with NRG Yield, Inc. to sell the following facilities for total
cash consideration of $480 million, subject to customary working
capital adjustments, plus the assumption of $746 million3 in
project debt:
- Walnut Creek – 500 MW natural gas
facility located in City of Industry, CA
- Tapestry – three wind facilities
totaling 204 MW, including Buffalo Bear 19 MW in Oklahoma, Taloga
130 MW in Oklahoma, and Pinnacle 55 MW in West Virginia
- Laredo Ridge – 81 MW wind facility
located in Petersburg, NE
The assets represent $120 million of Adjusted EBITDA and $35
million of CAFD on an annualized basis. The transaction is expected
to close in the fourth quarter of 2014 and will result in
$480 million of net cash to NRG, bringing the cumulative
amount raised from dropdowns during 2014 to $830 million.
Tax-Equity Financing of Wind Assets
On November 3, 2014, NRG closed on a tax-equity financing,
receiving approximately $190 million in net cash proceeds from
a new facility which monetizes future tax attributes (including
Production Tax Credits) to be generated primarily by the NRG
Yield-eligible wind assets acquired earlier this year as part of
the EME transaction. The tax equity facility is structured to
maintain the levelized cash available for distribution from the
wind assets, preserving the ability to monetize the cash flows from
these assets through drop downs to NRG Yield beyond 2014.
NRG Strategic Developments
NRG Home SolarNRG continues to enhance its competitiveness and
strategic positioning of NRG Home Solar through the acquisition of
Pure Energies, which is expected to significantly enhance our
customer acquisition platform by offering full service,
point-to-point, customizable rooftop solutions through our
proprietary web- and telephonic-based system.
Combined with NRG’s prior acquisition of Roof Diagnostics Solar,
a leader in home solar direct sales and installation, and NRG’s own
Residential Solar Solutions, which has focused on the financing and
contract management associated with solar leasing, NRG Home Solar
is now a vertically integrated branded provider of residential
solar solutions nationwide and, as such, is well positioned to be
an industry leader in the rapidly growing distributed generation
industry.
By year end 2015, NRG Home Solar expects to have 35,000-40,000
installed leases, of which 25,000-30,000 are expected to be
installed in 2015, totaling approximately 245 MW-280 MW while
driving cost per watt down to a range of $3.20-$3.30/per watt
(including overhead allocations).
RetailThe acquisition of Goal Zero, a leader in the
portable solar energy market, is expected to enhance our ability to
offer the benefits of solar energy to all consumers, regardless of
whether they are homeowners with a roof suitable for solar
installation, while enabling us to emphasize the key convenience
benefit of portability, which is a distinct advantage of solar
power compared to other forms of power generation.
WholesaleNRG has begun construction of a 360 MW4, natural
gas-fired peaking plant at our PH Robinson site near Houston at a
cost of approximately $400 per kilowatt, a significant discount to
typical new build costs. The cost savings are primarily driven by
the repurposing of six GE 7E, economical, fast-start combustion
turbines acquired in the secondary market. The units require no
water for cooling, making them well-suited to operate in
water-constrained Texas. With their fast-start capability, the
peaking units have the potential to help integrate renewable power
from intermittent wind and solar generation into the ERCOT grid.
The project will be partially financed through $43 million of Ike
bonds.
NRG was selected by Southern California Edison (SCE) to repower
the Company’s Mandalay facility in Oxnard with 262 MW of new simple
cycle generation and to install 178 MW of “Preferred Resources,”
including both demand response and energy efficiency products at
sites across southern California.
NRG YieldNRG Yield closed the acquisition of Alta Wind, the
largest wind farm in North America, on August 12, 2014, for $870
million, as well as a payment for working capital of $53 million,
plus the assumption of $1.6 billion of non-recourse project
financings. By 2016, this transaction is expected to increase both
the annual run-rate EBITDA by approximately $220 million and CAFD
by approximately $70 million before debt service associated with
acquisition financing. The facilities are contracted with SCE under
long-term power purchase agreements (PPAs) with an average 21 years
of remaining contract life.
Outlook for 2014 and Initiation of 2015 Guidance
The Company is reducing its guidance range for fiscal year 2014
with respect to both Adjusted EBITDA and FCF before Growth
investments as detailed below as a result of less-than-expected
market opportunity arising out of subdued summer pricing and volume
as well as fuel inventory build ahead of winter, interest payments
associated with Alta Wind project debt, and timing of working
capital and environmental capex. NRG's 2014 Adjusted EBITDA
guidance also includes a projected negative $50 million
contribution from NRG Home Solar business.
The Company is also initiating guidance for fiscal year 2015 as
set forth below. NRG’s Adjusted EBITDA guidance excludes the impact
from NRG Home Solar activities.
Table 4: 2014 Adjusted EBITDA and FCF
before Growth investments Guidance(1)
2014 2015 Prior Revised Guidance
($ in millions) Guidance Guidance
Adjusted EBITDA2 3,200 –3,400 3,100 –3,200 3,200 – 3,400 Interest
payments (1,061) (1,114) (1,160) Income tax (40) (40) (40) Working
capital/other changes (70) (215) 250 Adjusted
Cash flow from operations 2,029 – 2,229 1,731 – 1,831 2,250 – 2,450
Maintenance capital expenditures, net (375)-(395) (375)-(395)
(540)-(570) Environmental capital expenditures, net (340)-(360)
(290)-(310) (300)-(320) Adjusted EBITDA from NRG Home Solar
-
-
(100) Preferred dividends (9) (9) (7) Distributions to
non-controlling interests (100) (100)
(220)-(230) Free cash flow – before Growth investments 1,200 –
1,400 950 – 1,050 1,100 – 1,300 1 Subtotals and totals are
rounded 2 2014 guidance includes negative contribution of $50
million from NRG Home Solar; 2015 guidance excludes negative
contribution of $100 million from NRG Home Solar
2014 Dividend ProgramOn October 14, 2014, NRG declared a
quarterly dividend on the Company's common stock of $0.14 per
share, payable November 17, 2014, to stockholders of record as of
November 3, 2014.
The Company's common stock dividend is subject to available
capital, market conditions and compliance with associated laws and
regulations.
Earnings Conference CallNRG will host a conference call at 9:00
am Eastern today 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.nrg.com and clicking on “Presentations and
Webcasts” under the “Investors” section at the bottom of the home
page. The webcast will be archived on the site for those unable to
listen in real time.
About NRGNRG 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 250 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 DisclosureIn 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 and to grow our NRG Home Solar business, 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, 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, our ability to
close the drop-down transactions to NRG Yield 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 November 5,
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.
1 Excludes $53 million of payments for working capital
2 Represents average annual peaking capacity
3 Prior to the closing of the transaction, debt associated with
Laredo Ridge will be refinanced. As of September 30, 2014 project
debt was $705 million.
4 Represents average annual peaking capacity
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended Nine months ended
September 30, September 30,
(In millions,
except for per share amounts)
2014 2013 2014 2013
Operating Revenues Total operating revenues $ 4,569 $
3,490 $ 11,676 $ 8,500
Operating Costs and
Expenses Cost of operations 3,278 2,373 8,828 6,177
Depreciation and amortization 375 327 1,096 947 Impairment losses
70
-
70
-
Selling, general and administrative 258 213 752 670
Acquisition-related transaction and integration costs 17 26 69 95
Development activity expenses 22 24 62 63
Total operating costs and expenses 4,020 2,963 10,877 7,952
Gain on sale of assets
-
-
19
-
Operating Income 549 527 818 548
Other Income/(Expense) Equity in earnings/(loss) of
unconsolidated affiliates 18 (5 ) 39 6 Other (expense)/income, net
(3 ) 5 13 9 Loss on debt extinguishment (13 ) (1 ) (94 ) (50 )
Interest expense (280 ) (228 ) (809 ) (630 ) Total other expense
(278 ) (229 ) (851 ) (665 )
Income/(Loss) Before Income
Taxes 271 298 (33 ) (117 ) Income tax expense/(benefit) 89
160 (68 ) (55 )
Net Income/(Loss) 182 138 35
(62 ) Less: Net income attributable to noncontrolling interest 14
19 20 27
Net Income/(Loss)
Attributable to NRG Energy, Inc. 168 119 15 (89 ) Dividends for
preferred shares 2 2 7 7
Income/(Loss) Available for Common Stockholders $ 166
$ 117 $ 8 $ (96 )
Earnings/(Loss) Per Share
Attributable to NRG Energy, Inc. Common Stockholders
Weighted average number of common shares
outstanding - basic
338 323 333 323
Earnings/(Loss) per Weighted Average
Common Share - Basic
$ 0.49 $ 0.36 $ 0.02 $ (0.30 )
Weighted average number of common shares
outstanding - diluted
343 327 338 323
Earnings/(Loss) per Weighted Average
Common Share - Diluted
$ 0.48 $ 0.36 $ 0.02 $ (0.30 )
Dividends
Per Common Share $ 0.14 $ 0.12 $ 0.40 $
0.33
NRG ENERGY, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS)/INCOME (Unaudited) Three
months ended Nine months ended September 30,
September 30, 2014 2013 2014
2013 (In millions) Net Income/(Loss) $
182 $ 138 $ 35 $ (62 )
Other Comprehensive (Loss)/Income, net of
tax Unrealized gain/(loss) on derivatives, net of income tax
expense/(benefit) of $4, $(5), $(11), and $(2) 4 (16 ) (24 ) 8
Foreign currency translation adjustments, net of income tax
(benefit)/expense of $(6), $(1), $(2), and $(13) (6 ) 5 (3 ) (14 )
Available-for-sale securities, net of income tax (benefit)/expense
of $(1), $0, $0, and $1 (2 )
-
2 2 Defined benefit plans, net of tax expense/(benefit) of $0, $0,
$(7), and $4 (3 )
-
9 25 Other comprehensive (loss)/income (7 )
(11 ) (16 ) 21
Comprehensive Income/(Loss) 175 127 19
(41 ) Less: Comprehensive income attributable to noncontrolling
interest 17 18 14 26
Comprehensive
Income/(Loss) Attributable to NRG Energy, Inc. 158 109 5 (67 )
Dividends for preferred shares 2 2 7 7
Comprehensive Income/(Loss) Available for Common
Stockholders $ 156 $ 107 $ (2 ) $ (74 )
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, 2014 December 31, 2013
(In millions,
except shares)
(unaudited) ASSETS Current
Assets Cash and cash equivalents $ 1,953 $ 2,254 Funds
deposited by counterparties 3 63 Restricted cash 339 268 Accounts
receivable — trade, less allowance for doubtful accounts of $27 and
$40 1,554 1,214 Inventory 1,051 898 Derivative instruments 1,397
1,328 Cash collateral paid in support of energy risk management
activities 375 276 Deferred income taxes 79 258 Renewable energy
grant receivable, net 614 539 Current assets held-for-sale 32 19
Prepayments and other current assets 475 479 Total
current assets 7,872 7,596
Property, plant and
equipment, net of accumulated depreciation of $7,584 and $6,573
22,181 19,851
Other Assets Equity investments
in affiliates 797 453 Notes receivable, less current portion 80 73
Goodwill 2,452 1,985 Intangible assets, net of accumulated
amortization of $1,333 and $1,977 2,880 1,140 Nuclear
decommissioning trust fund 569 551 Derivative instruments 427 311
Deferred income taxes 1,476 1,202 Non-current assets held-for-sale
54 — Other non-current assets 1,281 740 Total other
assets 10,016 6,455
Total Assets $ 40,069
$ 33,902
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities Current portion of long-term debt and
capital leases $ 854 $ 1,050 Accounts payable 1,098 1,038
Derivative instruments 1,365 1,055 Cash collateral received in
support of energy risk management activities 3 63 Current
liabilities held-for-sale 23 — Accrued expenses and other current
liabilities 1,200 998 Total current liabilities 4,543
4,204
Other Liabilities Long-term debt and
capital leases 19,919 15,767 Nuclear decommissioning reserve 306
294 Nuclear decommissioning trust liability 323 324 Deferred income
taxes 24 22 Derivative instruments 326 195 Out-of-market contracts
1,245 1,177 Non-current liabilities held-for-sale 31 — Other
non-current liabilities 1,385 1,201 Total non-current
liabilities 23,559 18,980
Total Liabilities
28,102 23,184 3.625% convertible perpetual preferred
stock (at liquidation value, net of issuance costs) 249 249
Redeemable noncontrolling interest in subsidiaries 28 2
Commitments and Contingencies Stockholders’ Equity
Common stock 4 4 Additional paid-in capital 8,314 7,840 Retained
earnings 3,564 3,695 Less treasury stock, at cost — 77,219,145 and
77,347,528 shares, respectively (1,939 ) (1,942 ) Accumulated other
comprehensive (loss)/income (5 ) 5 Noncontrolling interest 1,752
865
Total Stockholders’ Equity 11,690
10,467
Total Liabilities and Stockholders’ Equity $
40,069 $ 33,902
NRG ENERGY, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) Nine months ended September
30, 2014 2013 (In millions) Cash
Flows from Operating Activities Net Income/(loss) $ 35 $ (62 )
Adjustments to reconcile net income/(loss) to net cash provided by
operating activities: Distributions and equity in earnings of
unconsolidated affiliates 32 23 Depreciation and amortization 1,096
947 Provision for bad debts 49 49 Amortization of nuclear fuel 33
27 Amortization of financing costs and debt discount/premiums (9 )
(22 ) Adjustment for debt extinguishment 24 (15 ) Amortization of
intangibles and out-of-market contracts 52 75 Amortization of
unearned equity compensation 32 32 Changes in deferred income taxes
and liability for uncertain tax benefits (75 ) 39 Changes in
nuclear decommissioning trust liability 12 25 Changes in derivative
instruments 248 189 Changes in collateral deposits supporting
energy risk management activities (100 ) (59 ) Loss/(gain) on sale
of emission allowances 2 (8 ) Gain on sale of assets (26 ) —
Impairment losses 70 — Cash used by changes in other working
capital (361 ) (417 )
Net Cash Provided by Operating
Activities 1,114 823
Cash Flows from Investing
Activities Acquisitions of businesses, net of cash acquired
(2,832 ) (374 ) Capital expenditures (675 ) (1,581 ) Increase in
restricted cash, net (52 ) (67 ) Decrease/(increase) in restricted
cash to support equity requirements for U.S. DOE funded projects 21
(20 ) Decrease/(increase) in notes receivable 21 (22 ) Investments
in nuclear decommissioning trust fund securities (475 ) (369 )
Proceeds from sales of nuclear decommissioning trust fund
securities 463 344 Proceeds from renewable energy grants 431 52
Proceeds from sale of assets, net of cash disposed of 153 13 Cash
proceeds to fund cash grant bridge loan payment 57 — Other (70 ) (7
)
Net Cash Used by Investing Activities (2,958 ) (2,031 )
Cash Flows from Financing Activities Payment of dividends to
common and preferred stockholders (140 ) (113 ) Payment for
treasury stock — (25 ) Net (payments for)/receipts from settlement
of acquired derivatives that include financing elements (64 ) 177
Proceeds from issuance of long-term debt 4,456 1,605 Contributions
and sale proceeds from noncontrolling interest in subsidiaries 639
504 Proceeds from issuance of common stock 15 14 Payment of debt
issuance costs (57 ) (43 ) Payments for short and long-term debt
(3,308 ) (868 )
Net Cash Provided by Financing Activities
1,541 1,251 Effect of exchange rate changes on cash
and cash equivalents 2 (1 )
Net (Decrease)/Increase in
Cash and Cash Equivalents (301 ) 42
Cash and Cash
Equivalents at Beginning of Period 2,254 2,087
Cash and Cash Equivalents at End of Period $ 1,953 $
2,129
Appendix Table A-1: Third Quarter 2014
Regional Adjusted EBITDA Reconciliation
The following table summarizes the calculation of Adjusted EBITDA
and provides a reconciliation to net income/ (loss)
Gulf NRG ($
in millions)
Retail Coast
East West Yield
Renewables Corp Total Net
Income/(Loss) Attributable to NRG Energy, Inc. 88 147
223 76 25 (34) (357) 168
Plus:
Net Income Attributable to Non-Controlling
Interest
- - - - 6 12 (4) 14 Interest Expense, net - 4 13 4 40 34 182 277
Loss on Debt Extinguishment - - - - - - 13 13 Income Tax - - - - 10
- 79 89
Depreciation, Amortization and ARO
Expense
32 153 68 20 34 64 13 384 Amortization of Contracts -
5 (17) 7 8 4 (1) 6
EBITDA 120 309 287 107
123 80 (75) 951
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - - 2 15 (4) 8 21 Integration and Transaction Costs 1 - 1 - 2 -
14 18 Deactivation Costs - - 8 1 - - - 9 Sale of Businesses - - - -
- - - - Asset Write Offs and Impairments - 10 60 - - 12 7 89
Market to Market (MtM) Losses/(Gains) on
economic hedges
75 (138) (14) 3 - -
- (74)
Adjusted EBITDA 196
181 342 113
140 88 (46) 1,014
Appendix Table A-2: Third Quarter 2013
Regional Adjusted EBITDA Reconciliation
The following table summarizes the calculation of Adjusted EBITDA
and provides a reconciliation to net income/ (loss)
Gulf
NRG ($ in millions)
Retail Coast
East West Yield
Renewables Corp Total Net
Income/(Loss) Attributable to NRG Energy, Inc. (56)
282 241 22 40 (7) (403)
119 Plus:
Net Income Attributable to Non-Controlling
Interest
-
-
- -
9
17
(7)
19 Interest Expense, net 1 4 12 1 20 12
174
224 Loss on Debt Extinguishment -
-
- -
-
-
1
1 Income Tax -
-
- -
5
-
155
160
Depreciation, Amortization and ARO
Expense
37 142 89 13 19 26
3
329 Amortization of Contracts 10 3 17
(2)
1
-
2
31
EBITDA (8) 431 359 34
94 48 (75) 883
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 1 - 13
8
(12)
17
27 Integration and Transaction Costs -
-
- -
-
-
26
26 Deactivation Costs -
-
5 2
-
-
-
7 Asset Write Offs and Impairments -
-
1 -
1
3
(1)
4
Market to Market (MtM) Losses/(Gains) on
economic hedges
188 (184) 50 (2)
-
1
-
53
Adjusted EBITDA 180
248 415 47
103
40 (33) 1,000
Appendix Table A-3: YTD Third Quarter
2014 Regional Adjusted EBITDA Reconciliation
The following table summarizes the calculation of Adjusted EBITDA
and provides a reconciliation to net income/ (loss)
Gulf NRG ($
in millions)
Retail Coast
East West Yield
Renewables Corp Total Net
Income/(Loss) Attributable to NRG Energy, Inc. 267
(56) 448 117 75
(101)
(735) 15 Plus:
Net Income Attributable to Non-Controlling
Interest
- - - - 16 15 (11) 20 Interest Expense, net 1 39 10 8 96 92 552 798
Loss on Debt Extinguishment - - - - - - 94 94 Income Tax 1 - - - 15
- (84) (68)
Depreciation, Amortization and ARO
Expense
98 442 208 63 94 171 35 1,111 Amortization of Contracts 3
17 (36) 4 8 4 (1)
(1)
EBITDA 370 442 630 192
304 181 (150) 1,969
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 1 - (2) 35 (1) 19 52 Integration and Transaction Costs 1 - 2 - 2
- 65 70 Deactivation Costs - - 10 5 - - - 15 Legal Settlement 4 - -
- - - - 4 Sale of Businesses - (23) 5 - - - - (18) Asset Write Offs
and Impairments - 15 60 - - 12 9 96
Market to Market (MtM) Losses/(Gains) on
economic hedges
102 (109) 316 4 - -
- 313
Adjusted EBITDA 477
326 1,023 199 341
192 (57) 2,501
Appendix Table A-4: YTD Third Quarter
2013 Regional Adjusted EBITDA Reconciliation
The following table summarizes the calculation of Adjusted EBITDA
and provides a reconciliation to net income/ (loss)
Gulf NRG ($
in millions)
Retail Coast
East West Yield
Renewables Corp Total Net
Income/(Loss) Attributable to NRG Energy, Inc. 231 31
216 54
86
(45) (662) (89) Plus:
Net Income Attributable to Non-Controlling
Interest
-
-
- - 9 27 (9) 27 Interest Expense, net 2 12 39 1 31 34 502 621 Loss
on Debt Extinguishment -
-
- -
-
- 50 50 Income Tax -
-
- -
5
- (60) (55)
Depreciation, Amortization and ARO
Expense
105 416 267 41 39 73 18 959 Amortization of Contracts 49
14 (4) (5)
1
- - 55
EBITDA 387 473
518 91
171
89 (161) 1,568
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 2 - 14 28 -
16
60 Integration and Transaction Costs -
-
- -
-
-
95
95 Deactivation Costs -
-
14 4
-
-
-
18 Asset Write Offs and Impairments - 3 1 -
1
3
-
8
Market to Market (MtM) Losses/(Gains) on
economic hedges
36 (24) 209 (3)
-
-
-
218
Adjusted EBITDA 423
454 742 106
200
92 (50) 1,967
Appendix Table A-5: 2014 and 2013 Third
Quarter Adjusted Cash Flow from Operations Reconciliations
The 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)
September 30,
2014
September 30, 2013 (1)
Net Cash Provided by Operating Activities 744
901 Adjustment for change in collateral (197) (99)
Reclassifying of net receipts (payments) for settlement of acquired
derivatives that include financing elements 103 6 Add: Merger and
integration expenses 12 36
Adjusted Cash Flow from
Operating Activities 662 844
Maintenance CapEx, net2 (27) (52) Environmental CapEx, net (92)
(17) Preferred dividends (2) (2) Distributions to non-controlling
interests (15) _ Free cash flow – before Growth
investments 526 773 (1) Revised to reflect new
Adjusted Cash Flow from Operating Activities methodology (2)
Excludes merger and integration CapEx of $7 million and $11 million
in 2014 and 2013, respectively
Appendix Table A-6: 2014
and 2013 YTD Third Quarter Adjusted Cash Flow from Operations
Reconciliations
The following table summarizes the
calculation of adjusted cash flow operating activities providing a
reconciliation to net cash provided by operating activities
Nine months ended Nine months ended ($
in millions)
September 30, 2014
September 30, 2013 (1)
Net Cash Provided by Operating Activities 1,114
823 Adjustment for change in collateral 100 59 Reclassifying
of net receipts (payments) for settlement of acquired derivatives
that include financing elements (64) 177 Add: Merger and
integration expenses 76 116
Adjusted Cash Flow
from Operating Activities 1,226
1,175 Maintenance CapEx, net2 (191) (222) Environmental
CapEx, net (178) (50) Preferred dividends (7) (7) Distributions to
non-controlling interests (38) _ Free cash flow –
before Growth investments 812 896 (1)
Revised to reflect new Adjusted Cash Flow from Operating Activities
methodology (2) Excludes merger and integration CapEx of $20
million and $21 million in 2014 and 2013, respectively
Appendix Table A-8: Adjusted NRG Yield Drop Down Assets
Projected Reg G.The following table summarizes the
calculation of Adjusted EBITDA and CAFD and provides a
reconciliation to income before taxes:
2014 Q4 Drop Downs (dollars in millions)
Income Before Taxes 3 Adjustments to
net income to arrive at Adjusted EBITDA: Depreciation and
amortization 81 Interest expense, net 36
Adjusted
EBITDA 120 Cash Interest Paid (33) Working Capital /
Other 1 Maintenance capital expenditures ‒ Principal amortization
of indebtedness (53)
Cash Available for Distribution
35
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, 609-524-4526
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