First Quarter 2015 Financial Highlights
- $840 million of Adjusted EBITDA1
- $364 million of Free Cash Flow (FCF)
before Growth investments
2015 Financial Guidance and Capital Allocation Update
- 2015 Guidance reaffirmed:
- Adjusted EBITDA of $3,200-$3,400
million2
- FCF before growth investments of
$1,100-$1,300 million
- Completed $112 million of share
repurchases, including $56 million of the authorized share
repurchases announced on March 16, 2015 (Phase II)
- Announcing $81 million increase to
Phase II program, bringing the total available share repurchase
authorization to $125 million
- Established capital allocation program
that will apportion cash in an amount equal to the approximately
$600 million of expected drop down proceeds from NRG Yield over the
balance of the year equally among share repurchases, corporate debt
reduction and future yield eligible projects
Business and Operational Highlights
- On April 9, 2015, NRG and NRG Yield
established a new residential solar partnership, enabling NRG to
bring the cost of capital benefit of NRG Yield to the NRG Home
Solar lease program
- On May 5, 2015, NRG Yield shareholders
approved creation of new share class, enabling ongoing capital
replenishment at NRG and providing NRG Yield access to growth
capital without the need for investment by NRG.
- On May 8, 2015, NRG and NRG Yield plan
to form a new partnership that will invest in and hold operating
portfolios of distributed generation assets owned or developed by
NRG
NRG Energy, Inc. (NYSE:NRG) today reported a record first
quarter Adjusted EBITDA of $840 million in its first quarter 2015
financial results, with $552 million from NRG Business and NRG
Renew combined3, $166 million from NRG Home, and $122 million from
NRG Yield. First quarter adjusted cash flow from operations totaled
$525 million. Net loss for first quarter 2015 was $120 million, or
$0.37 per diluted common share compared to net loss of $56 million,
or $0.18 per diluted common share for first quarter 2014.
“Outstanding execution across all businesses enabled NRG to
achieve record first quarter results, outpacing even the results of
last year’s polar vortex-assisted first quarter, with our
competitive retail business showing particular strength,” said
David Crane, NRG’s Chief Executive Officer. “With a strongly
hedged baseload position and the continuing implementation of our
fleet repowering program, we are well-positioned for the balance of
2015 and beyond.”
1 Excludes negative contribution of $40 million from NRG Home
Solar2 Excludes projected negative contribution of $100 million
from NRG Home Solar3 Includes Corporate Segment
Segment Results
Table 1: Adjusted EBITDA
($ in millions) Three Months Ended Segment
3/31/15 3/31/14 Business (1)(2) $535 $595 Home Retail
166 115 Renew (1) 32 12 NRG Yield (1) 122 92 Corporate
(15) 3 Adjusted EBITDA(3) $840 $817
(1) In accordance with GAAP, 2014 results have been restated to
include full impact of the assets in the NYLD drop down
transactions which closed on January 2, 2015 and June 30, 2014.(2)
See Appendices A-4 and A-5 for NRG Business regional Reg G
reconciliations.(3) See Appendices A-1 and A-2 for Operating
Segment Reg G reconciliations; excludes negative contribution of
$40 million and $1 million from Home Solar for first quarter 2015
and 2014, respectively.
Table 2: Net Income/(Loss)
($ in millions) Three Months Ended Segment
3/31/15 3/31/14 Business (1)(2) $29 $(6) Home
Retail(2) 104 185 Home Solar (45) (2) Renew (1)(2) (50) (48) NRG
Yield (1)(2) (11) 22 Corporate (147) (207) Net Loss
$(120) $(56)
(1) In accordance with GAAP, 2014 results have been restated to
include full impact of the assets in the NYLD drop down
transactions which closed on January 2, 2015 and June 30, 2014.(2)
Includes mark-to-market gains and losses of economic hedges.
NRG Business: First Quarter Adjusted EBITDA was $535
million; $60 million lower than in first quarter 2014. Drivers of
the $60 million decrease were as follows:
- East Region: ($158 million) due to
lower generation and lower average realized energy and capacity
prices, but partially offset by a $62 million contribution from the
EME coal assets acquired on April 1, 2014.
- West Region: ($27 million) due to a
change in contracted volumes and decreased pricing for certain
capacity contracts.
- Offset by Gulf Coast Region: $51
million increase due to higher realized energy margins.
NRG Home Retail: First quarter Adjusted EBITDA was $166
million, $51 million higher than first quarter 2014 driven
primarily by higher sales volume stemming from increased load from
weather, favorable supply costs, effective margin management and
higher customer counts. This includes the impact of year-over-year
customer count increases and product growth partially offset by
increased operating costs to support additional customers.
NRG Renew: First quarter Adjusted EBITDA was $32 million,
$20 million higher than in first quarter 2014 primarily due to
contributions from the wind assets acquired from the EME
acquisition and ramp up of Ivanpah.
NRG Yield: First quarter Adjusted EBITDA was $122
million, $30 million higher than in first quarter 2014 primarily
due to the Alta Wind acquisition and the drop down assets acquired
by NRG Yield in first quarter 2015.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
3/31/15 12/31/14 Cash at NRG-Level $786 $661
Revolver 1,424 1,367
NRG-Level
Liquidity $2,210 $2,028 Restricted cash 443 457
Cash at Non-Guarantor Subsidiaries 1,378 1,455
Total Liquidity $4,031 $3,940
NRG-Level cash as of March 31, 2015, was $786 million, an
increase of $125 million over the end of 2014, and $1,424 million
was available under the Company’s credit facilities at the end of
the current quarter. Total liquidity was $4,031 million including
restricted cash and cash at non-guarantor subsidiaries (primarily
GenOn and NRG Yield)4.
Residential Solar Partnership with NRG Yield
On April 9, 2015, NRG and NRG Yield formed a new partnership
that will invest in and hold operating portfolios of residential
solar assets developed by NRG Home Solar. The partnership is
structured to enable NRG Yield to realize increased cash dividends
from this new and growing asset class while providing NRG continued
access to the customer and the residual value following the
contract period. The partnership will invest in portfolios of
leases once they have reached operating status and
will initially include an existing, unlevered portfolio of
over 2,200 leases representing approximately 17MW, and an
in-development, tax equity financed portfolio of approximately
13,000 leases representing approximately 90MW, with an average
lease term for the existing and new leases of approximately 17 to
20 years.
Under the terms of the partnership agreement, NRG Yield will
receive 95% of the economics until achieving a targeted return,
expected to be achieved commensurate with the end of the lease
period, after which NRG will receive 95% of the economics. NRG
Yield has initially invested $26 million into the partnership which
covers the 2,200 existing, unlevered leases with the proceeds
already distributed to NRG.
NRG Yield has initially committed to invest up to $150 million
of additional cash equity into the partnership over time which is
expected to be fully invested in 2015 of which an additional $7
million has been invested to date. NRG intends to offer additional
opportunities in residential solar to NRG Yield over time through
this partnership.
4 See Appendix A-6 for First Quarter 2015 Sources and Uses of
Liquidity detail.
Distributed Generation Partnership
On May 8, 2015, NRG and NRG Yield plan to form a new partnership
that will invest in and hold operating portfolios of distributed
solar assets developed by NRG Renew, a subsidiary of NRG. The
partnership will be structured similarly to the above Residential
Solar Partnership allowing NRG to periodically monetize its
distributed solar investments and NRG Yield to invest in a growing
segment of the solar market.
Under the terms of the partnership agreement, NRG Yield will
receive 95% of the economics until achieving a targeted return,
expected to be achieved commensurate with the end of the customer
contract period, after which NRG will receive 95% of the
economics
NRG Yield has initially committed to invest up to $100 million
of cash equity into the partnership over time. None of which has
been utilized to date but the partnership is expected to be fully
invested over the next 18 months.
NRG Yield Recapitalization
On May 5, 2015, NRG Yield shareholders approved the creation of
two new classes of NRG Yield common stock. The equity
recapitalization is expected to provide NRG Yield the flexibility
to raise capital for future acquisitions while also maintaining the
strong strategic sponsorship of its parent, NRG Energy, Inc.
The recapitalization will be effectuated through a stock split
of each share class. Each share of the Class A stock will be split
into one Class A and one Class C share, and each share of Class B
stock held by NRG will be split into one Class B and one Class D
share. The Class C stock will have equal economic rights with Class
A stock and a 1/100th voting right. The Class D stock will not have
any economic rights (as NRG’s economic interest is held exclusively
through its ownership of NRG Yield LLC) and will have a 1/100th
voting right.
In connection with the recapitalization described above, the
Company amended the Right of First Offer Agreement between NRG and
NRG Yield to include approximately 800MW of new, long-term contract
natural gas assets in California5, approximately 900MW of wind
assets and up to $250 million of equity investments in residential
solar and distributed generation portfolios.
Outlook for 2015
Driven by robust first quarter results and a significantly
hedged baseload portfolio over the remainder of 2015, the Company
is reaffirming its guidance range for fiscal year 2015. As in
previous quarters, the Company’s guidance assumes normalized
weather in core markets.
Table 4: 2015 Adjusted EBITDA and FCF before Growth
Investments Guidance
5/8/15 2/27/15 ($ in millions) 2015
2015 Adjusted EBITDA (1) $3,200 –3,400 $3,200 – 3,400
Interest payments (1,160) (1,160) Income tax (40) (40) Adjusted
EBITDA from NRG Home Solar (100) (100) Working capital/other
changes 250 250 Adjusted Cash flow from operations $2,150 –
2,350 $2,150 – 2,350 Maintenance capital expenditures, net
(480)-(510) (480)-(510) Environmental capital expenditures, net
(305)-(335) (330)-(360) Preferred dividends (10) (10) Distributions
to non-controlling interests (190)-(210) (190)-(210) Free
cash flow – before Growth investments $1,100 – 1,300 $1,100
– 1,300
(1) 2015 guidance excludes expected negative contribution of
$100 million from NRG Home Solar.
5 Alternative proposal being considered by CPUC to reduce the
Carlsbad project by one unit or approximately 100MW.
2015 Capital Allocation Update
NRG has repurchased $56 million of its common stock at an
average cost of $24.65 per share as part of the $100 million Phase
II portion of the 2015 common stock repurchase program announced on
March 16, 2015. Together with the completion of Phase I of the
common stock purchase program during the first quarter, NRG has
purchased a total of $112 million of NRG common stock since
December 31, 2014.
The Company is announcing an $81 million increase to Phase II,
leaving a total of $125 million remaining under the Phase II
program.
On April 20, 2015, NRG declared a quarterly dividend on the
Company's common stock of $0.145 per share, payable May 15, 2015,
to stockholders of record as of May 1, 2015, representing $0.58 on
an annualized basis.
On an annualized basis, the common stock dividends represent
approximately 16% of free cash flow before growth, and when
combined with the Phase I and Phase II share repurchases, capital
returned to shareholders represents approximately 36% of NRG’s
mid-point 2015 free cash flow before growth.
As NRG continues the process of dropping down its contracted
assets into NRG Yield, with an estimated $600 million in equity
value of drop downs expected over the balance of 2015, the Company
is focused on right sizing the pro forma balance sheet to support
its merchant businesses, excluding the contracted assets sold to
NRG Yield, while providing greater clarity to shareholders of the
benefits of NRG Yield drop downs. To do this in a more orderly and
predictable fashion, the Company hereby announces its intention to
allocate cash, in an amount approximately equal to the proceeds
from the sale of assets to NRG Yield, equally among corporate debt
reduction, repurchase of NRG shares (in addition to its Phase I and
Phase II programs) and reinvestment in contracted assets that could
form the basis for subsequent drop downs and capital recycling.
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 8, 2015, NRG will host a conference call at 9:30 a.m.
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 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 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 with NRG Yield and other third
parties, 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, 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, the ability to
sell assets to NRG Yield, Inc., 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 8, 2015.
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) 2015
2014 Operating Revenues Total operating revenues $
3,826 $ 3,486
Operating Costs and Expenses
Cost of operations 3,062 2,737 Depreciation and amortization 395
335 Selling, general and administrative 263 222 Acquisition-related
transaction and integration costs 10 12 Development activity
expenses 34 19 Total operating costs and expenses
3,764 3,325 Gain on postretirement benefits curtailment and sale of
assets 14 19
Operating Income 76 180
Other Income/(Expense) Equity in (loss)/earnings of
unconsolidated affiliates (3 ) 7 Other income, net 19 11 Loss on
debt extinguishment — (41 ) Interest expense (301 ) (255 ) Total
other expense (285 ) (278 )
Loss Before Income Taxes (209 )
(98 ) Income tax benefit (73 ) (31 )
Net Loss (136 ) (67 )
Less: Net loss attributable to noncontrolling interest and
redeemable noncontrolling interests (16 ) (11 )
Net Loss Attributable to NRG Energy,
Inc.
(120 ) (56 ) Dividends for preferred shares 5 2
Loss Available for Common Stockholders $ (125 ) $ (58 )
Loss per Share Attributable to NRG Energy, Inc. Common
Stockholders Weighted average number of common shares
outstanding — basic and diluted 336 324
Loss per Weighted
Average Common Share — Basic and Diluted $ (0.37 ) $ (0.18 )
Dividends Per Common Share $ 0.15 $ 0.12
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE LOSS
(Unaudited)
Three months ended March 31, 2015
2014 (In millions) Net Loss $ (136 ) $ (67 )
Other Comprehensive (Loss)/Income, net of tax Unrealized
loss on derivatives, net of income tax benefit of $6 and $3 (12 )
(9 ) Foreign currency translation adjustments, net of income tax
(benefit)/expense of $(7) and $2 (11 ) 6 Available-for-sale
securities, net of income tax (benefit)/expense of $(4) and $2 (1 )
6 Defined benefit plans, net of tax expense of $4 and $0 7 2
Other comprehensive (loss)/income (17 ) 5
Comprehensive Loss (153 ) (62 ) Less: Comprehensive loss
attributable to noncontrolling interest and redeemable
noncontrolling interests (29 ) (15 )
Comprehensive Loss
Attributable to NRG Energy, Inc. (124 ) (47 ) Dividends for
preferred shares 5 2
Comprehensive Loss Available
for Common Stockholders $ (129 ) $ (49 )
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2015
December 31, 2014
(In millions, except shares) (unaudited)
ASSETS Current Assets Cash and cash
equivalents $ 2,164 $ 2,116
Funds deposited by counterparties
68 72 Restricted cash 443 457 Accounts receivable — trade, less
allowance for doubtful accounts of $21 and $23 1,179 1,322
Inventory 1,109 1,247 Derivative instruments 2,029 2,425 Cash
collateral paid in support of energy risk management activities 400
187 Deferred income taxes 188 174 Renewable energy grant
receivable, net 68 135 Prepayments and other current assets 474
447 Total current assets 8,122 8,582
Property, plant and equipment, net of accumulated depreciation
of $8,264 and $7,890 22,276 22,367
Other
Assets Equity investments in affiliates 772 771 Notes
receivable, less current portion 67 72 Goodwill 2,520 2,574
Intangible assets, net of accumulated amortization of $1,511 and
$1,402 2,491 2,567 Nuclear decommissioning trust fund 586 585
Derivative instruments 591 480 Deferred income taxes 1,484 1,406
Non-current assets held-for-sale 17 17 Other non-current assets
1,404 1,244
Total other assets
9,932 9,716
Total Assets $ 40,330 $
40,665
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities Current portion of long-term debt and
capital leases $ 465 $ 474 Accounts payable 1,045 1,060 Derivative
instruments 1,884 2,054 Cash collateral received in support of
energy risk management activities 68 72 Accrued expenses and other
current liabilities 1,047 1,199 Total current
liabilities 4,509 4,859
Other Liabilities
Long-term debt and capital leases 20,050 19,900 Nuclear
decommissioning reserve 314 310 Nuclear decommissioning trust
liability 328 333 Deferred income taxes 20 21 Derivative
instruments 650 438 Out-of-market contracts, net of accumulated
amortization of $585 and $562 1,221 1,244 Other non-current
liabilities 1,549 1,574 Total non-current liabilities
24,132 23,820
Total Liabilities 28,641
28,679 2.822% convertible perpetual preferred stock 293 291
Redeemable noncontrolling interest in subsidiaries 19 19
Commitments and Contingencies Stockholders’ Equity
Common stock
4 4 Additional paid-in capital 8,362 8,327 Retained earnings 3,413
3,588 Less treasury stock, at cost — 81,865,411 and 78,843,552
shares, respectively (2,059 ) (1,983 ) Accumulated other
comprehensive loss (191 ) (174 ) Noncontrolling interest 1,848
1,914
Total Stockholders’ Equity 11,377
11,676
Total Liabilities and Stockholders’ Equity $
40,330 $ 40,665
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three months ended March 31, 2015
2014 (In millions) Cash Flows from Operating
Activities Net loss $ (136 ) $ (67 ) Adjustments to reconcile
net income/(loss) to net cash provided by operating activities:
Distributions and equity in earnings of unconsolidated affiliates
32 (2 ) Depreciation and amortization 395 335 Provision for bad
debts 15 21 Amortization of nuclear fuel 13 11
Amortization of financing costs and debt
discount/premiums
(4 ) (5 ) Adjustment for debt extinguishment — 19 Amortization of
intangibles and out-of-market contracts 19 13 Amortization of
unearned equity compensation 11 8 Changes in deferred income taxes
and liability for uncertain tax benefits (83 ) (111 ) Changes in
nuclear decommissioning trust liability (3 ) 5 Changes in
derivative instruments 261 525 Changes in collateral deposits
supporting energy risk management activities (213 ) (407 )
Gain on postretirement benefits
curtailment and sale of assets
(14 ) (19 ) Cash used by changes in other working capital (33 ) 65
Net Cash Provided by Operating Activities 260
391
Cash Flows from Investing Activities Acquisitions
of businesses, net of cash acquired (1 ) (218 ) Capital
expenditures (252 ) (237 ) (Increase)/decrease in restricted cash,
net (11 ) 3 Decrease in restricted cash to support equity
requirements for U.S. DOE funded projects 25 56 Decrease in notes
receivable 5 1 Investments in nuclear decommissioning trust fund
securities (193 ) (188 ) Proceeds from the sale of nuclear
decommissioning trust fund securities 196 183 Proceeds from
renewable energy grants and state rebates 2 387 Proceeds from sale
of assets, net of cash disposed of — 77 Cash proceeds to fund cash
grant bridge loan payment — 57 Other (41 ) 3
Net Cash
(Used)/Provided by Investing Activities (270 ) 124
Cash Flows from Financing Activities Payment of dividends to
common and preferred stockholders (51 ) (41 ) Payment for treasury
stock (79 ) — Net receipts from/(payments for) settlement of
acquired derivatives that include financing elements 40 (223 )
Proceeds from issuance of long-term debt 248 1,564 Contributions
to, net of distributions from, noncontrolling interest in
subsidiaries (25 ) 9 Proceeds from issuance of common stock 1 3
Payment of debt issuance costs — (23 ) Payments for short and
long-term debt (94 ) (873 )
Net Cash Provided by Financing
Activities 40 416 Effect of exchange rate changes
on cash and cash equivalents 18 2
Net Increase in
Cash and Cash Equivalents 48 933
Cash and Cash Equivalents
at Beginning of Period 2,116 2,254
Cash and
Cash Equivalents at End of Period $ 2,164 $ 3,187
Appendix Table A-1: First Quarter 2015
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss)
($ in millions) Home Retail Home Solar Business Renew Yield
Corp Total
Net Income/(Loss) Attributable to NRG Energy, Inc
104 (45) 29 (50) (11)
(147) (120) Plus: Net Loss Attributable to
Non-Controlling Interest - - - (6) (5) (5) (16) Interest Expense,
net - - 18 31 70 179 298 Income Tax - - - (6) (4) (63) (73)
Depreciation, Amortization and ARO Expense 30 5 240 64 55 7 401
Amortization of Contracts - - (12) (1) 12 1 -
EBITDA
134 (40) 275 32 117 (28)
490 Adjustment to reflect NRG share of Adjusted EBITDA in
unconsolidated affiliates - - 4 - 12 3 19 Integration &
Transaction Costs - - - - - 10 10 Deactivation costs - - 3 - - - 3
NRG Home Solar EBITDA - 40 - - - - 40 Market to Market (MtM)
losses/(gains) on economic hedges 32 - 253 - (7) - 278
Adjusted
EBITDA 166 -
535 32 122 (15)
840
Appendix Table A-2: First Quarter 2014
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
($ in millions) Home Retail Home Solar Business Renew Yield
Corp Total
Net Income/(Loss) Attributable to NRG Energy, Inc
185 (2) (6) (48)
22 (207) (56) Plus: Net
(Loss)/Income Attributable to Non-Controlling Interest - - - (17) 4
2 (11) Interest Expense, net 1 - 17 26 26 182 252 Loss on Debt
Extinguishment - - - 1 - 40 41 Income Tax - - - - 3 (34) (31)
Depreciation Amortization and ARO Expense 30 1 230 49 24 6 340
Amortization of Contracts (1) - 1 - 1
- 1
EBITDA 215 (1) 242
11 80 (11) 536 Adjustment to reflect
NRG share of Adjusted EBITDA in unconsolidated affiliates - - (3) -
12 2 11 Integration & Transaction Costs, gain on sale - - (18)
- - 12 (6) Deactivation Costs - - 3 - - - 3 Legal Settlement 4 - -
- - - 4 NRG Home Solar EBITDA - 1 - - - - 1 MtM (gains)/losses on
economic hedges (104) - 371 1 - - 268
Adjusted EBITDA 115 -
595
12 92 3 817
Appendix Table A-3: 2015 and 2014 First
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
($ in millions)
Three months ended
March 31, 2015
Three months ended
March 31, 2014
Net Cash Provided by Operating Activities 260
391 Adjustment for change in collateral 213 407
Reclassifying of net receipts (payments) for settlement of acquired
derivatives that include financing elements 40 (223) Add: Merger
and integration expenses 12 33
Adjusted Cash Flow from Operating
Activities 525 608 Maintenance CapEx, net [1]
(85) (62) Environmental CapEx, net (49) (50) Preferred dividends
(2) (2) Distributions to non-controlling interests (25) (7) Free
Cash Flow – before Growth investments 364 487
(1) Excludes merger and integration CapEx of $3 million in Q1
2015 and $5 million in Q1 2014
Appendix Table A-4: First Quarter 2015
Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
($ in millions) East Gulf Coast West B2B Carbon 360 Total
Net Income/(Loss) Attributable to NRG Energy, Inc 88
35 (24) (64) (6) 29 Plus:
Interest Expense, net 18 - - - - 18 Depreciation, Amortization and
ARO Expense 77 145 16 2 - 240 Amortization of Contracts (14) 2 (1)
1 - (12)
EBITDA 169 182 (9) (61)
(6) 275 Adjustment to reflect NRG share of Adjusted
EBITDA in unconsolidated affiliates - (1) 1 1 3 4 Deactivation
costs 2 - 1 - - 3 Market to Market (MtM) losses/(gains) on economic
hedges 253 (65) (1) 66 - 253
Adjusted EBITDA 424 116 (8)
6 (3) 535
Appendix Table A-5: First Quarter 2014
Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss)
($ in millions) East Gulf Coast West B2B Carbon 360 Total
Net Income/(Loss) Attributable to NRG Energy, Inc 184
(300) 6 106 (2) (6) Plus:
Interest Expense, net 16 1 - - - 17 Depreciation Amortization and
ARO Expense 70 143 12 4 1 230 Amortization of Contracts (5) 6 (2) 2
- 1
EBITDA 265 (150) 16 112
(1) 242 Adjustment to reflect NRG share of Adjusted
EBITDA in unconsolidated affiliates (1) - - (3) 1 (3) Integration
& Transaction Costs, gain on sale 6 (24) - - - (18)
Deactivation Costs 2 - 1 - - 3 MtM losses/(gains) on economic
hedges 247 239 2 (117) - 371
Adjusted EBITDA 519 65 19
(8) -
595
Appendix Table A-6: First Quarter 2015
Sources and Uses of Liquidity
The following table summarizes the sources
and uses of liquidity in the first quarter of 2015.
($ in millions)
Three months ended
March 31, 2015
Sources: Adjusted Cash Flow from Operations $ 525 Debt
Proceeds, NRG Yield 210 Increase in Credit Facility 57 Debt
proceeds, other project debt financing 38
Uses: Collateral
Postings 213 Maintenance and Environmental Capex, net 134 Share
Repurchases, and Common and Preferred Stock Dividends 130 Growth
Investments and Acquisitions, net 122 Debt Repayments 94
Distributions to Non-Controlling Entities 25 Merger and
Integration-related payments and other investing and financing
activities 21
Change in Total Liquidity $
91
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, 609-524-4608orMarijke
Shugrue, 609-524-5262orInvestors:Matthew Orendorff,
609-524-4526orLindsey Puchyr, 609-524-4527
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