Financial Highlights
- $729 million of Adjusted EBITDA1 in the
second quarter and $1,569 million1 in the first six months of
2015
- $274 million of Free Cash Flow (FCF)
before growth investments in the first six months of 2015
- Achieved record second quarter and
first six months results at NRG Home Retail with over $200 million
and $370 million of Adjusted EBITDA, respectively
- Offered next set of drop down assets to
NRG Yield, consisting of wind facilities acquired in the EME
transaction representing $35 million of Adjusted EBITDA and $20
million in Cash Available for Distribution (CAFD) on an annual
run-rate basis2
Business and Operational Highlights
- Completed the 575 MW gas conversion at
Big Cajun Unit 2 and environmental compliance controls at various
coal units within the fleet
- Announced plans to develop a 20 MW
solar energy facility for Cisco’s San Jose headquarters, scheduled
to begin commercial operation by the end of 2016
Financial Guidance and Capital Allocation Update
- Reaffirming full year 2015 Guidance:
- Adjusted EBITDA of $3,200-$3,400
million3
- FCF before growth investments of
$1,100-$1,300 million
- Executed $107 million of share
repurchases in second quarter for a total of $186 million
repurchased year-to-date with $51 million in remaining authorized
capacity and $200 million in expected capacity4
NRG Energy, Inc. (NYSE:NRG) today reported second quarter
Adjusted EBITDA of $729 million1, with $338 million from NRG
Business and NRG Renew combined5, $204 million from NRG Home
Retail, and $187 million from NRG Yield. Year-to-date adjusted cash
flow from operations totaled $678 million. Net loss for the first
six months of 2015 was $145 million, or $0.43 per diluted common
share compared to a net loss of $147 million, or $0.48 per diluted
common share for the first six months of 2014.
“Our competitive retail business continues to lead the way,
achieving record results in a low supply cost environment while our
wholesale unit continues to deliver solid operational performance
through a strongly hedged baseload position,” said David
Crane, NRG’s Chief Executive Officer. “After a weather impeded
start of the year, NRG Home Solar’s pace of customer bookings has
us easily in the top four in the residential solar industry, with
California still to come.”
Segment Results
Table 1: Adjusted EBITDA
($ in millions)
Three Months Ended
Six Months Ended Segment 6/30/15
6/30/14 6/30/15 6/30/14
Business (1)(2) $ 285 $ 301 $ 821 $ 896
Home Retail 204 157 370 272 Renew (1) 66 77 98 89 NRG Yield (1) 187
141 309 233 Corporate (13 )
1 (29 ) 4
Adjusted EBITDA(3) $ 729
$ 677 $ 1,569 $ 1,494
(1) In accordance with GAAP, 2014 results
have been restated to include full impact of the assets inthe NRG
Yield drop down transactions which closed on January 2, 2015 and
June 30, 2014.
(2) See Appendices A-6 through A-9 for NRG
Business regional details.
(3) See Appendices A-1 through A-4 for
Operating Segment Reg G reconciliations; excludes
negativecontribution of $47 million and $87 million from Home Solar
for the three and six months endedJune 30, 2015, respectively, and
$6 million and $7 million for the three and six months endedJune
30, 2014, respectively.
Table 2: Net Income/(Loss)
($ in millions) Three Months Ended Six Months Ended Segment
6/30/15 6/30/14
6/30/15
6/30/14 Business (1) $ (1 ) $ 99 $ 28
$ 93 Home Retail 212 (50 ) 316 135 Home Solar (54 ) (7 ) (99
) (9 ) Renew (1) (18 ) 2 (73 ) (63 ) NRG Yield (1) 41 42 25 68
Corporate (189 )
(166 ) (342 ) (371 ) Net
Loss(2) $ (9 ) $ (80 )
$ (145 ) $ (147 )
(1) In accordance with GAAP, 2014 results
have been restated to include full impact of the assets inthe NRG
Yield 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: Second quarter Adjusted EBITDA was $285
million; $16 million lower than in the second quarter 2014
primarily driven by:
- East Region: $11 million lower due to
lower energy margins caused by milder weather and lower capacity
revenues due to lower base residual auction prices and less
capacity following plant deactivations, partially offset by lower
operating costs due to fewer outages and decreased run time
- West Region: $26 million lower due to
decreased pricing and a decline in contracted volumes from certain
capacity contracts including the retirement of Coolwater
- Gulf Coast Region: $27 million increase
due to higher realized energy margins, partially offset by
increased outage costs during planned outages for fuel conversion
and back-end control installations.
NRG Home Retail: Second quarter Adjusted EBITDA was $204
million, $47 million higher than second quarter 2014 driven
primarily by favorable supply costs, partially offset by an
increase in operating costs associated with customer growth in
Texas.
NRG Renew: Second quarter Adjusted EBITDA was $66
million, $11 million lower than in second quarter 2014 primarily
due to lower generation by wind assets following the drop in wind
resource availability in 2015 and increased distributed solar
development costs, partially offset by the ramp up of Ivanpah as
generation continues to increase year over year.
NRG Yield: Second quarter Adjusted EBITDA was $187
million, $46 million higher than in second quarter 2014 primarily
due to the Alta Wind acquisition.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
6/30/15
3/31/15 12/31/14 Cash at NRG-Level $
709 $ 786 $ 661 Revolver 1,409
1,424 1,367
NRG-Level
Liquidity $ 2,118 $ 2,210 $
2,028 Restricted cash 433 443 457 Cash at Non-Guarantor
Subsidiaries 1,437
1,378 1,455
Total Liquidity $
3,988 $ 4,031 $ 3,940
NRG-level cash as of June 30, 2015, was $709 million, an
increase of $48 million over the end of 2014, and $1,409 million
was available under the Company’s credit facilities at the end of
the current quarter. Total liquidity was $3,988 million including
restricted cash and cash at non-guarantor subsidiaries (primarily
GenOn and NRG Yield)6.
NRG Strategic Developments
Next Drop Down to NRG Yield
NRG Energy offered NRG Yield the opportunity to acquire a 75%
stake in a portfolio of 12 wind projects totaling net 814 MW. The
transaction is expected to result in approximately $35 million of
Adjusted EBITDA and $20 million of CAFD on an annual run-rate
basis7 to NRG Yield and is expected to close in the third quarter
of 2015, subject to negotiation with, and approval by, NRG Yield
Independent Directors.
Including this most recent offer and the residential and
distributed generation solar partnerships with NRG Yield, NRG is
targeting drop downs to NRG Yield over the second half of 2015
which are expected to result in an aggregate of $600 million in
drop down proceeds, of which $200 million is expected to be
available for incremental share repurchase capacity pursuant to the
Company’s previously announced capital allocation program.
NRG Yield
On June 29, 2015, NRG Yield issued 28,198,000 shares of Class C
common stock at $22.00 per share for net proceeds of $600
million. Additionally, NRG Yield issued $287.5 million of
3.25% convertible senior notes due 2020. The net proceeds of both
of these issuances were used for the acquisition of a 25% interest
in the Desert Sunlight Solar Farm for $2858 million, to repay a
portion of the $491 million in debt associated with the Alta X and
Alta XI wind facilities (in order to facilitate the tax equity
financing transaction described below) and to repay outstanding
indebtedness under NRG Yield’s revolving credit facility.
On June 30, 2015, NRG Yield closed a new tax equity facility in
order to monetize production tax credits from the Alta Wind X and
XI projects. This financing resulted in $119 million of cash
proceeds after expenses and is expected to provide ongoing annual
cash payments indexed to and limited by the projects’ wind
production levels during the course of the tax equity investor’s
investment holding period. Proceeds from this transaction and a
portion of the proceeds from the recently completed equity and debt
offerings were utilized to repay the entire $491 million of
outstanding project debt associated with the Alta X and Alta XI
wind facilities.
By 2016, the Desert Sunlight acquisition and the Alta X and Alta
XI debt repayment and tax equity financing arrangement are expected
to increase both the annual run-rate EBITDA by approximately $45
million and CAFD by approximately $50 million, including $9 million
for debt service associated with the recently issued convertible
senior notes.
NRG Home Solar
While the strong sales momentum positions the Company for robust
growth over the balance of the year, NRG is revising its
expectations for NRG Home Solar with a negative EBITDA contribution
of $100 million to $175 million, due primarily to an increase in
expenses associated with positioning NRG Home Solar in certain key
residential solar markets, including a comprehensive sales and
marketing push into the large and fast-growing California market
set to start in August.
In advance of NRG Home Solar’s push into California, investments
across the platform are yielding strong results. While overall
bookings and deployments for the first half of 2015 lag original
expectations, June sales exceeded March sales by nearly 90%.
Outlook for 2015
Driven by robust second quarter results and a significantly
hedged baseload portfolio over the remainder of 2015, the Company
is reaffirming its guidance range for fiscal year 2015. As in
previous quarters, the Company’s guidance assumes normalized
weather in its core merchant markets over the remainder of the
year.
Table 4: 2015 Adjusted EBITDA and FCF
before Growth Investments Guidance
8/4/15 5/8/15 ($
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
(175) (100) Working capital/other changes 250
250 Adjusted Cash Flow from Operations $2,075 – 2,275
$2,150 – 2,350 Maintenance capital expenditures, net (480)-(510)
(480)-(510) Environmental capital expenditures, net (305)-(335)
(305)-(335) Preferred dividends (10) (10) Distributions to
non-controlling interests (160)-(170)
(190)-(210) Free Cash Flow – before Growth Investments
$1,100 – 1,300 $1,100 – 1,300
(1) 2015 guidance excludes expected
negative contribution of $175 million from NRG Home Solar.
2015 Capital Allocation Update
During the second quarter, NRG repurchased $107 million of its
common stock at an average cost of $24.53 per share. Together with
repurchases completed during the first quarter of 2015 under the
December 2014 common stock repurchase program, NRG has purchased a
total of $186 million of NRG common stock since December 31,
2014.
Consistent with the capital allocation policy announced last
quarter, NRG intends to allocate cash in an amount equal to the
expected $600 million of proceeds from NRG Yield equally towards
the repurchase of NRG shares, the repayment of corporate debt and
the reinvestment in NRG Yield eligible projects of which $200
million is expected to be available for share repurchases. NRG
currently has $51 million in remaining authorized buyback
capacity.
On July 15, 2015, NRG declared a quarterly dividend on the
Company's common stock of $0.145 per share, payable August 17,
2015, to stockholders of record as of August 3, 2015, representing
$0.58 on an annualized basis.
The Company's common stock dividend and share repurchases are
subject to available capital, market conditions and compliance with
associated laws and regulations.
Earnings Conference Call
On August 4, 2015, NRG will host a conference call at 8:00 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 200 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) and the ability to sell assets to
NRG Yield, Inc. 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 August 4,
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 June 30, Six months ended June 30,
(In millions,
except for per share amounts)
2015 2014 2015
2014 Operating Revenues Total operating revenues $
3,397 $ 3,621 $ 7,223 $ 7,107
Operating Costs and Expenses Cost of operations 2,434 2,828
5,496 5,565 Depreciation and amortization 396 386 791 721 Selling,
general and administrative 291 257 554 479 Acquisition-related
transaction and integration costs 3 40 13 52 Development activity
expenses 41 21 75 40 Total operating
costs and expenses 3,165 3,532 6,929 6,857 Gain on postretirement
benefits curtailment and sale of assets — — 14
19
Operating Income 232 89 308
269
Other Income/(Expense) Equity in earnings of
unconsolidated affiliates 8 14 5 21 Other income, net 4 5 23 16
Loss on debt extinguishment (7 ) (40 ) (7 ) (81 ) Interest expense
(263 ) (274 ) (564 ) (529 ) Total other expense (258 ) (295 ) (543
) (573 )
Loss Before Income Taxes (26 ) (206 ) (235 ) (304 )
Income tax benefit (17 ) (126 ) (90 ) (157 )
Net Loss (9 )
(80 ) (145 ) (147 )
Less: Net income/(loss) attributable to
noncontrolling interest and redeemable noncontrolling interests
5 17 (11 ) 6
Net Loss Attributable to NRG
Energy, Inc. (14 ) (97 ) (134 ) (153 ) Dividends for preferred
shares 5 3 10 5
Loss Available for
Common Stockholders $ (19 ) $ (100 ) $ (144 ) $ (158 )
Loss per Share Attributable to NRG
Energy, Inc. Common Stockholders
Weighted average number of common shares
outstanding — basic and diluted
333 337 335 331
Loss per Weighted Average Common Share — Basic
and Diluted $ (0.06 ) $ (0.30 ) $ (0.43 ) $ (0.48 )
Dividends Per Common Share $ 0.14 $ 0.14 $
0.29 $ 0.26
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended June 30, Six months ended June
30, 2015 2014 2015 2014 (In
millions) Net Loss $ (9 ) $ (80 ) $ (145 ) $ (147 )
Other Comprehensive Income/(Loss), net of tax Unrealized
gain/(loss) on derivatives, net of income tax expense/(benefit) of
$12, $(3), $6 and $(6) 16 (19 ) 4 (28 )
Foreign currency translation adjustments,
net of income tax
expense/(benefit) of $6, $2, $(1) and $4 9 (3 ) (2 ) 3
Available-for-sale securities, net of
income tax benefit of $(3), $(6),
$(7) and $(4) (3 ) 7 (4 ) 13
Defined benefit plans, net of tax
expense/(benefit) of $0, $(7), $4 and $(7)
(1 ) 10 6 12 Other comprehensive income/(loss)
21 (5 ) 4 —
Comprehensive Income/(loss)
12 (85 ) (141 ) (147 )
Less: Comprehensive income/(loss)
attributable to noncontrolling interest and redeemable
noncontrolling interests
12 12 (17 ) (3 )
Comprehensive Loss Attributable
to NRG Energy, Inc. — (97 ) (124 ) (144 ) Dividends for
preferred shares 5 3 10 5
Comprehensive Loss Available for Common Stockholders $ (5 )
$ (100 ) $ (134 ) $ (149 )
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30, 2015 December 31, 2014
(In millions,
except shares)
(unaudited) ASSETS Current Assets Cash
and cash equivalents $ 2,146 $ 2,116 Funds deposited by
counterparties 33 72 Restricted cash 433 457 Accounts receivable —
trade, less allowance for doubtful accounts of $19 and $23 1,413
1,322 Inventory 1,153 1,247 Derivative instruments 1,805 2,425 Cash
collateral paid in support of energy risk management activities 299
187 Deferred income taxes 193 174 Renewable energy grant
receivable, net 19 135 Prepayments and other current assets 516
447 Total current assets 8,010 8,582
Property,
plant and equipment, net of accumulated depreciation of $8,611 and
$7,890 22,304 22,367
Other Assets Equity
investments in affiliates 1,077 771 Notes receivable, less current
portion 65 72 Goodwill 2,555 2,574 Intangible assets, net of
accumulated amortization of $1,506 and $1,402 2,428 2,567 Nuclear
decommissioning trust fund 576 585 Derivative instruments 491 480
Deferred income taxes 1,454 1,406 Other non-current assets 1,405
1,261 Total other assets 10,051 9,716
Total
Assets $ 40,365 $ 40,665
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) June
30, 2015 December 31, 2014
(In millions,
except shares)
(unaudited) LIABILITIES AND STOCKHOLDERS’
EQUITY Current Liabilities Current portion
of long-term debt and capital leases $ 636 $ 474 Accounts payable
1,080 1,060 Derivative instruments 1,638 2,054 Cash collateral
received in support of energy risk management activities 33 72
Accrued expenses and other current liabilities 1,082 1,199
Total current liabilities
4,469 4,859
Other Liabilities Long-term debt
and capital leases 19,661 19,900 Nuclear decommissioning reserve
318 310 Nuclear decommissioning trust liability 311 333 Deferred
income taxes 18 21 Derivative instruments 522 438 Out-of-market
contracts, net of accumulated amortization of $613 and $562 1,193
1,244 Other non-current liabilities 1,527 1,574 Total
non-current liabilities 23,550 23,820
Total
Liabilities 28,019 28,679
2.822% convertible
perpetual preferred stock 296 291
Redeemable noncontrolling
interest in subsidiaries 33 19
Commitments and
Contingencies Stockholders’ Equity Common stock 4 4
Additional paid-in capital 8,365 8,327 Retained earnings 3,346
3,588 Less treasury stock, at cost — 86,245,318 and 78,843,552
shares, respectively (2,166 ) (1,983 ) Accumulated other
comprehensive loss (170 ) (174 ) Noncontrolling interest 2,638
1,914
Total Stockholders’ Equity 12,017
11,676
Total Liabilities and Stockholders’ Equity $
40,365 $ 40,665
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Six months ended June 30, 2015
2014 (In millions) Cash Flows from Operating
Activities Net loss $ (145 ) $ (147 ) Adjustments to reconcile
net loss to net cash provided by operating activities:
Distributions and equity in earnings of unconsolidated affiliates
40 39 Depreciation and amortization 791 721 Provision for bad debts
29 30 Amortization of nuclear fuel 23 20 Amortization of financing
costs and debt discount/premiums (7 ) (9 ) Adjustment for debt
extinguishment 7 21 Amortization of intangibles and out-of-market
contracts 32 22 Amortization of unearned equity compensation 24 24
Changes in deferred income taxes and liability for uncertain tax
benefits (98 ) (514 ) Changes in nuclear decommissioning trust
liability (4 ) 6 Changes in derivative instruments 186 535 Changes
in collateral deposits supporting energy risk management activities
(112 ) (297 ) Loss on sale of emission allowances (6 ) 2 Gain on
postretirement benefits curtailment and sale of assets (14 ) (19 )
Cash used by changes in other working capital (288 ) (64 )
Net Cash Provided by Operating Activities 458 370
Cash Flows from Investing Activities
Acquisitions of businesses, net of cash acquired (30 ) (1,817 )
Capital expenditures (583 ) (507 ) Increase in restricted cash, net
(3 ) (6 ) Decrease in restricted cash to support equity
requirements for U.S. DOE funded projects 27 21 Decrease in notes
receivable 7 2 Investments in nuclear decommissioning trust fund
securities (354 ) (340 ) Proceeds from the sale of nuclear
decommissioning trust fund securities 358 334 Proceeds from
renewable energy grants and state rebates 61 429 Proceeds from sale
of assets, net of cash disposed of 1 77 Cash proceeds to fund cash
grant bridge loan payment — 57 Investments in unconsolidated
affiliates (353 ) (22 ) Other 9 19
Net Cash
Used by Investing Activities (860 ) (1,753 )
Cash
Flows from Financing Activities Payment of dividends to common
and preferred stockholders (102 ) (91 ) Payment for treasury stock
(186 ) —
Net receipts from/(payments for)
settlement of acquired derivatives that include
financing elements 91 (167 ) Proceeds from issuance of long-term
debt 629 3,886 Contributions to, net of distributions from,
noncontrolling interest in subsidiaries 670 10 Proceeds from
issuance of common stock 1 8 Payment of debt issuance costs (12 )
(43 ) Payments for short and long-term debt (662 ) (2,969 )
Net Cash Provided by Financing Activities 429 634
Effect of exchange rate changes on cash and cash
equivalents 3 (24 )
Net Increase/(Decrease) in
Cash and Cash Equivalents 30 (773 )
Cash and Cash
Equivalents at Beginning of Period 2,116 2,254
Cash and Cash Equivalents at End of Period $ 2,146
$ 1,481
Appendix Table A-1: Second 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)
Home Home ($ in millions) Retail
Solar Business Renew
Yield Corp Total
Net
Income/(Loss) 212
(54) (1) (18)
41 (189)
(9) Plus: Interest Expense, net - 1 17 23 44 175 260 Loss on
Debt Extinguishment - - - - 7 - 7 Income Tax - - - (3) 4 (18) (17)
Depreciation, Amortization and ARO
Expense
32 6 235 64 58 8 403 Amortization of Contracts
1 - (19) 2
14 1 (1)
EBITDA 245
(47) 232 68 168 (23) 643
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - 11 (4) 14 9 30
Integration & Transaction Costs
1 - - - 1 1 3 Deactivation costs - - 3 - - - 3 NRG Home Solar
EBITDA - 47 - - - - 47
Market to Market (MtM) (gains)/losses on
economic hedges
(42) - 39
2 4 - 3
Adjusted EBITDA 204
-
285 66
187 (13)
729
Appendix Table A-2: Second Quarter 2014
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
(loss)/income
Home Home ($ in millions) Retail
Solar Business Renew
Yield Corp Total
Net
(Loss)/Income (50)
(7) 99 2
42 (166)
(80) Plus: Interest Expense, net - - 16 30 35 187 268 Loss
on Debt Extinguishment - - - - - 40 40 Income Tax - - - - 2 (128)
(126) Depreciation Amortization and ARO Expense 32 1 239 51 54 11
388 Amortization of Contracts -
- (8) - - -
(8)
EBITDA (18) (6) 346
83 133 (56) 482
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - - (5) 8 17
20
Integration & Transaction Costs, gain
on sale
- - 2 - - 38 40 Deactivation Costs - - 3 - - - 3 Asset Write Offs
and Impairments - - 5 - - 2 7 NRG Home Solar EBITDA - 6 - - - - 6
MtM losses/(gains) on economic hedges
175 - (55)
(1) - - 119
Adjusted EBITDA 157
-
301 77
141 1 677
Appendix Table A-3: YTD Second 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)
Home Home ($ in millions) Retail
Solar Business Renew
Yield Corp Total
Net
Income/(Loss) 316
(99 ) 28
(73 ) 25
(342 ) (145 )
Plus: Interest Expense, net - 1 35 54 114 354 558 Loss on Debt
Extinguishment - - - - 7 - 7 Income Tax - - - (9 ) - (81 ) (90 )
Depreciation, Amortization and ARO Expense 63 11 475 128 113 15 805
Amortization of Contracts 1
- (31 ) -
26 1 (3 )
EBITDA 380 (87 ) 507 100
285 (53 ) 1,132
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - 16 (4 ) 26 12 50
Integration & Transaction Costs
- - - - 1 12 13 Deactivation costs - - 6 - - - 6 NRG Home Solar
EBITDA - 87 - - - - 87
Market to Market (MtM) (gains)/losses on
economic hedges
(10 ) - 292
2 (3 ) -
281
Adjusted EBITDA
370 -
821 98
309 (29 )
1,569
Appendix Table A-4: YTD Second 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)
Home Home ($ in millions) Retail
Solar Business Renew
Yield Corp Total
Net
Income/(Loss) 135
(9 ) 93
(63 ) 68
(371 ) (147 ) Plus:
Interest Expense, net 1 - 33 56 61 370 521 Loss on Debt
Extinguishment - - - 1 - 80 81 Income Tax - - - - 5 (162 ) (157 )
Depreciation Amortization and ARO Expense 61 2 470 100 78 16 727
Amortization of Contracts - -
(7 ) - 1
(1 ) (7 )
EBITDA 197
(7 ) 589 94 213 (68
) 1,018
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - (4 ) (5 ) 20 20 31
Integration & Transaction Costs, gain
on sale
- - (16 ) - - 50 34 Deactivation Costs - - 6 - - - 6 Asset Write
Offs and Impairments - - 5 - - 2 7 Legal Settlement 4 - - - - - 4
NRG Home Solar EBITDA - 7 - - - - 7
MtM losses on economic hedges
71 - 316
- - -
387
Adjusted EBITDA
272 -
896 89
233 4 1,494
Appendix Table A-5: 2015 and 2014 YTD
Second Quarter Adjusted Cash Flow from Operations
Reconciliations
The following table summarizes the
calculation of adjusted cash flow operating activities providing
areconciliation to net cash provided by operating activities
Six months ended Six months ended ($ in
millions)
June 30, 2015 June 30, 2014 Net Cash
Provided by Operating Activities 458 370
Adjustment for change in collateral 112 297
Reclassifying of net receipts (payments)
for settlement of acquired derivatives that include financing
elements
91 (167 ) Add: Merger and integration expenses
17 64
Adjusted Cash Flow from
Operating Activities 678
564 Maintenance CapEx, net* (189 ) (164
) Environmental CapEx, net (127 ) (86 ) Preferred dividends (5 ) (5
) Distributions to non-controlling interests
(83 ) (23 )
Free Cash Flow – before Growth
investments 274
286
* Excludes merger and integration CapEx of
$9 million in Q2 2015 and $11 million in Q2 2014
Appendix Table A-6: Second Quarter 2015
Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
Gulf ($ in millions) East
Coast West B2B Carbon 360
Total
Net Income/(Loss)
98 (116 )
(11 ) 28
- (1 ) Plus: Interest
Expense, net 17 - - - - 17 Depreciation, Amortization and ARO
Expense 76 143 16 - - 235 Amortization of Contracts
(18 ) - (2 )
1 - (19 )
EBITDA 173 27 3 29 -
232
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 12 2 - (3 ) 11 Deactivation costs 2 - 1 - - 3
Market to Market (MtM) (gains)/losses on
economic hedges
(31 ) 76 14
(20 ) - 39
Adjusted EBITDA 144
115 20
9 (3
) 285
Appendix Table A-7: Second Quarter 2014
Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
(loss)/income
($ in millions)
East Gulf Coast
West B2B Carbon 360 Total
Net (Loss)/Income (9 )
144 32
(66 ) (2 )
99 Plus: Interest Expense, net 16 - - -
- 16 Depreciation Amortization and ARO Expense 72 143 21 2 1 239
Amortization of Contracts (10 )
5 (3 ) - -
(8 )
EBITDA 69 292
50 (64 ) (1 ) 346
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 1 (5 ) 3 1 -
Integration & Transaction Costs, gain
on sale
2 - - - - 2 Deactivation Costs 1 - 2 - - 3 Asset Write Offs and
Impairments - 5 - - - 5 MtM losses/(gains) on economic hedges
83 (210 )
(1 ) 73 -
(55 )
Adjusted EBITDA 155
88 46
12 -
301
Appendix Table A-8: YTD Second 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)
Gulf ($ in millions) East
Coast West B2B Carbon 360
Total
Net Income/(Loss)
186 (79 )
(35 ) (37 )
(7 ) 28 Plus: Interest
Expense, net 35 - - - - 35 Depreciation, Amortization and ARO
Expense 153 287 32 3 - 475 Amortization of Contracts
(33 ) 2 (3 )
3 - (31 )
EBITDA 341 210 (6 ) (31
) (7 ) 507
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 10 4 - 2 16 Deactivation costs 4 - 2 - - 6
Market to Market (MtM) losses on economic
hedges
222 11
13 46 -
292
Adjusted EBITDA
567 231
13 15
(5 ) 821
Appendix Table A-9: YTD Second 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)
176 (156 )
40 37
(4 ) 93 Plus: Interest
Expense, net 33 - - - - 33 Depreciation Amortization and ARO
Expense 142 287 33 7 1 470 Amortization of Contracts
(16 ) 11 (5 )
3 - (7 )
EBITDA 335 142 68 47 (3
) 589
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - (9 ) 2 3 (4 )
Integration & Transaction Costs, gain
on sale
7 (23 ) - - - (16 ) Deactivation Costs 2 - 4 - - 6 Asset Write Offs
and Impairments - 5 - - - 5
MtM losses/(gains) on economichedges
330 29
1 (44 ) -
316
Adjusted EBITDA
674 153
64 5 -
896
Appendix Table A-10: Run-Rate 2015
Adjusted EBITDA and Cash Available for Distribution Reconciliation
for NRG Yield
The following table summarizes the
calculation of adjusted EBITDA and cash available for distribution
to net income:
Alta X-XI Tax 75% interest of Desert Sunlight Equity, net of
EME Wind Drop Run-Rate Corp Debt Down ($ in millions)
Run-Rate9
Run-Rate10
Income/(Loss) before Tax 13
- (9
) Plus: Interest Expense, net - - 10 Depreciation,
Amortization, and ARO Expense - - 45
Adjustments to reflect Yield’s pro-rata
share of Adjusted
EBITDA from Unconsolidated Affiliates 32
- 1
Adjusted
EBITDA 45
- 47 Pro-rata Adjusted
EBITDA from unconsolidated affiliates (45 ) - (10 ) Cash
distributions from unconsolidated affiliates 22 - 10 Tax Equity
Proceeds - - 9 Distributions to non-controlling interest - (4 ) (7
) Cash interest paid - 11 (11 ) Maintenance Capital expenditures -
- (1 ) Principal amortization of indebtedness
- 21 (17 )
Cash
Available for Distribution 22
28 20
Appendix Table A-11: YTD Second Quarter
2015 Sources and Uses of Liquidity
The following table summarizes the sources
and uses of liquidity for YTD second quarter of 2015
($ in millions)
Six months endedJune 30,
2015
Sources: Adjusted Cash Flow from Operations $ 678 Equity
Proceeds, NRG Yield, net of fees 600 Debt Proceeds, NRG Yield
Revolver 282 Debt Proceeds, NRG Yield Convertible Notes, net of
fees 281 Tax Equity Financing, net of fees 119 Cash Grant Proceeds,
growth projects 55 Increase in Credit Facility 42 Debt proceeds,
other project debt financing 11 Cash Grant Proceeds, other solar
6
Uses: Debt Repayments 662 Maintenance
and Environmental Capex, net 316 NYLD Investment in Desert Sunlight
285 Growth Investments and Acquisitions, net 211 Share Repurchases
186 Collateral Postings 112 Common and Preferred Stock Dividends
102 Distributions to Non-Controlling Entities 83 Other investing
and financing activities 44 Merger and Integration-related payments
25
Change in Total Liquidity
$ 48
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.
Cash Available for Distribution (CAFD) is adjusted EBITDA plus
cash dividends from unconsolidated affiliates, less maintenance
capital expenditures, pro-rata adjusted EBITDA from unconsolidated
affiliates, cash interest paid, income taxes paid, principal
amortization of indebtedness and changes in others assets.
Management believes cash available for distribution is a relevant
supplemental measure of the Company’s ability to earn and
distribute cash returns to investors.
1 Excludes negative contribution from Home Solar of $47 million
and $87 million for second quarter and first six months of 2015,
respectively
2 Reflects NRG Yields pro-rata share of EBITDA and CAFD expected
to be generated by the portfolio on an annual run-rate basis.
3 Excludes projected negative contribution of $175 million from
NRG Home Solar
4 Based upon 1/3 of target of $600 million in 2015 drop down
proceeds as part of previously announced capital allocation
program
5 Includes Corporate segment
6 See Appendix A-11 for the YTD Second Quarter Sources and Uses
of Liquidity detail.
7 Reflects NRG Yields pro-rata share of EBITDA and CAFD expected
to be generated by the portfolio on an annual run-rate basis.
8 Subject to working capital adjustments.
9 Alta reflects interest and principal savings on debt
extinguishment of $491 million of non-recourse debt a run rate
basis
10 75% interest in 814 net MW of wind assets primarily acquired
by NRG in the EME transaction, Adjusted EBITDA will be consolidated
on NRG Yield, 75% pro-rata Adjusted EBITDA is approximately $35
million
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804005852/en/
NRG Energy, Inc.:Media:Karen Cleeve,
609-524-4608Marijke Shugrue, 609-524-5262orInvestors:Matthew
Orendorff, 609-524-4526Lindsey Puchyr, 609-524-4527
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