2015 Results and Financial Highlights
- Record Adjusted EBITDA1 of $3,340
million, including best ever results from NRG Home Retail since
2009 acquisition – a validation of NRG’s leading integrated
competitive power platform
- $1,127 million of Free Cash Flow (FCF)
before growth investments
- Over $1.3 billion of capital returned
to stakeholders
- $691 million of debt retired2;
approximately $54 million in annual interest savings
- $628 million returned to shareholders
in 2015
- $786 million of NRG Yield dropdown
proceeds in 2015
- $5.1 billion and $3.0 billion non-cash
one-time charges for impairments and income tax valuation allowance
expense, respectively, primarily driven by the extended low
commodity price cycle for the Texas wholesale generation
Operational and Strategic Update
- Allocating $925 million of additional
2016 capital to incremental NRG-level debt reduction
- GreenCo strategic process:
Reintegrating NRG Renew into the NRG platform; expect resolution
for NRG Home Solar and EVgo in the second quarter 2016
- Asset sales completed or pending
represent 877 MWs and $138 million of $500 million 2016 asset sales
target
- Reducing annual dividend to $0.12 per
share to enhance flexibility on capital allocation, reallocating
approximately $145 million annually
2016 Financial Guidance
- 2016 Guidance is reaffirmed, and now
includes GreenCo’s NRG Renew
- Adjusted EBITDA of $3,000-$3,200
million
- FCF before growth investments of
$1,000-$1,200 million
NRG Energy, Inc. (NYSE: NRG) today reported record full-year
Adjusted EBITDA of $3,340 million. Adjusted cash flow from
operations totaled $1,945 million for 2015. Net loss for the twelve
months of 2015 was $6,436 million, including non-cash charges of
$3,306 million3 and $3,039 million for asset impairments net of
taxes and income tax valuation allowance expense, respectively.
These non-cash charges were primarily driven by the low commodity
cycle and its impact on the Texas wholesale business. This resulted
in a $19.46 loss per diluted common share in 2015 compared to net
income of $132 million, or $0.23 per diluted common share in 2014.
Excluding the impact of the impairments and tax valuation
allowance, the Company’s net loss would have been $91 million or
$0.34 loss per diluted common share for the twelve months of
2015.
“Amid a continued weak commodity price environment, NRG’s
integrated competitive power platform once again delivered strong
financial results, demonstrating that we have the right portfolio
and the right platform to succeed,” said Mauricio Gutierrez, NRG
President and Chief Executive Officer. “Today we are reintegrating
our successful business renewables solutions back into NRG as an
important part of our diversified platform. With the further
strengthening of our balance sheet and increased flexibility from
recalibrating our dividend, we will be in a stronger position to
benefit from market opportunities.”
NRG continued its strong track record of safety performance with
a top quartile recordable rate of 0.71 for the full year 20154.
Overall generation was down 3% from 2014, with coal and nuclear
availability at 83.8% improving 2.4% over 2014.
Today, NRG also announces the reintegration of business
renewables (formerly GreenCo’s NRG Renew) back into NRG. This move
supports NRG’s advantaged position to participate in the changing
landscape of the power industry and serve customers, especially
with on- and offsite solar and distributed generation in the
commercial and industrial space.
Segment Results
Table 1: Adjusted EBITDA
($ in millions)
Three Months Ended
Twelve Months Ended
Segment 12/31/15 12/31/14
12/31/15 12/31/14 Business (a)(b) $308 $302 $1,798
$1,836 Home Retail 144 165 739 604 Renew (a) 22 31 171 172
NRG Yield (a) 183 159 720 582 Corporate (32)
4 (88) (1) Adjusted EBITDA(c)
$625 $661 $3,340 $3,193
a) In accordance with GAAP, 2015 and 2014 results have been
restated to include the full impact of the NRG Yield drop down
transactions which closed on November 3, 2015, January 2, 2015 and
June 30, 2014. b) See Appendices A-6 through A-9 for NRG Business
regional details. c) See Appendices A-1 through A-4 for Operating
Segment Reg G reconciliations; excludes negative Adjusted EBITDA
from NRG Home Solar
Table 2: Net (Loss)/Income
($ in millions)
Three Months Ended Twelve Months Ended Segment
12/31/15 12/31/14 12/31/15 12/31/14
Business (a)(b) $(4,664) $577 $(4,472) $1,062 Home
Retail 140 (119) 652 137 Home Solar (175) (37) (324) (73) Renew (a)
(58) (73) (124) (147) NRG Yield (a) 13 4 55 99 Corporate(c)
(1,614) (255) (2,223)
(946) Net (Loss)/Income(b)(c)(d) $(6,358)
$97 $(6,436) $132 a) In
accordance with GAAP, 2014 results have been restated to include
full impact of the assets in the NRG Yield drop down transactions
which closed on November 3, 2015, January 2, 2015 and June 30, 2014
b) Includes non-cash impairment charges of $4,823 million and
$5,086 million for the three and twelve months ended December 31,
2015, respectively c) Includes non-cash income tax expense of
$1,385 million and $1,342 million for the three and twelve months
ended December 31, 2015, respectively d) Includes mark-to-market
gains and losses of economic hedges
NRG Business: Full year 2015 Adjusted EBITDA was $1,798
million; $38 million lower than 2014 primarily driven by:
- Gulf Coast Region: $201 million
increase due to higher average realized prices in Texas reflecting
ERCOT hedge gains plus higher realized energy margins and capacity
revenues in South Central offsetting lower coal generation across
the region
- East Region: $187 million lower due to
declining energy margins from the absence of extreme weather which
benefited first quarter 2014, lower capacity volumes following
plant deactivations in PJM, partially offset by lower operating
costs from reduced outages and decreased run times across the
fleet, and the benefit of the full year impact of the coal assets
acquired on April 1, 2014 from Edison Mission Energy
Fourth quarter Adjusted EBITDA was $308 million, $6 million
higher than the fourth quarter 2014 primarily driven by:
- Gulf Coast Region: $54 million increase
due to higher average realized prices in Texas reflecting ERCOT
hedge gains plus higher realized energy margins and capacity
revenues in South Central, all offsetting lower coal and nuclear
generation in Texas driven by outages and lower market prices
- East Region: $45 million lower due to
lower energy margins from milder weather, declines in gas prices
and dark spreads, partially offset by increased contract margins
attributable to new load contracts and lower supply costs, and
lower operating costs from reduced outages, plant deactivations,
and decreased run times across the fleet
NRG Home Retail: Full year 2015 Adjusted EBITDA was $739
million, $135 million higher than 2014 driven primarily by
favorable supply costs and weather as well as continued effective
customer operations and margin management across the portfolio.
Fourth quarter Adjusted EBITDA was $144 million, $21 million
lower than the fourth quarter 2014 primarily due to lower volume
driven by milder weather.
NRG Renew: Full year 2015 Adjusted EBITDA was $171
million, $1 million lower than 2014 primarily due to higher
development costs, offset by increased production at Ivanpah.
Fourth quarter Adjusted EBITDA was $22 million, $9 million lower
than the fourth quarter 2014 primarily due to higher development
costs.
NRG Yield: Full year 2015 Adjusted EBITDA was $720
million, $138 million higher than 2014 primarily due to the Desert
Sunlight and Alta Wind acquisitions.
Fourth quarter Adjusted EBITDA was $183 million, $24 million
higher than the fourth quarter 2014 primarily due to the Desert
Sunlight acquisition.
Asset Impairments and Valuation Allowance Tax Expense
NRG recorded total non-cash impairment charges of $5,086 million
for the full year 2015; $3,549 million related to asset impairments
and $1,537 million related to goodwill impairments. The majority of
the asset impairment charges were related to the Company’s
Limestone and W.A. Parish coal fired facilities located in Texas,
and for three coal fired facilities in the Company’s East region.
The annual goodwill impairment assessment resulted in non-cash
charges to write down the Company’s investments in Texas Genco
(acquired 2006) and the NRG Home Solar reporting units. The asset
and goodwill impairments were primarily driven by the extended low
commodity price environment, while the NRG Home Solar goodwill
impairment was due to the lower than expected performance of the
business.
The low commodity price environment and resulting impairments
also lead to $3.0 billion in non-cash income tax expense related to
a valuation allowance offsetting the Company’s net deferred tax
assets. This allowance was necessary as the impairments impacted
the Company’s cumulative and forecasted book earnings; however, the
valuation allowance does not affect the Company’s ability to
utilize its NOLs against future taxable income.
Dividend Reduction – Alignment
NRG’s Board of Directors has approved a reduction in the annual
dividend to $0.12 per share from $0.58 per share. The reduction
will allow NRG to reallocate approximately $145 million annually
and provides additional flexibility to create shareholder value
through all commodity, credit, and development cycles and seize
market opportunities.
Liquidity and Capital Resources
Table 3: Corporate Liquidity ($ in millions)
12/31/15 12/31/14 Cash at
NRG-Level $693 $661 Revolver 1,373
1,367
NRG-Level Liquidity $2,066 $2,028
Restricted cash 414 457 Cash at Non-Guarantor Subsidiaries
825 1,455
Total Liquidity $3,305
$3,940
NRG-level cash as of December 31, 2015, was $693 million, an
increase of $32 million over the end of 2014, and $1,373 million
was available under the Company’s credit facilities at the end of
2015. Total liquidity was $3,305 million including restricted cash
and cash at non-guarantor subsidiaries (primarily GenOn and NRG
Yield)5.
NRG Strategic Developments
NRG Yield
The Company has amended its partnership agreements with NRG
Yield in order to reallocate $50 million of NRG Yield’s previously
committed cash equity from the residential solar partnership to the
business renewables partnership. This amendment reinforces NRG
Energy’s relationship with NRG Yield by ensuring NRG Yield’s
investment capital is more closely aligned with NRG Energy’s focus
on renewable energy.
This amendment does not impact the existing ROFO agreement.
NRG Business
NRG Business’s multi-year capital investment program includes
both generation additions and fuel conversions totaling
approximately 4,659 MWs of generation capacity across the Company’s
geographic footprint. This enables the Company to bid generation
assets in regional forward capacity markets while also meeting key
environmental compliance goals. Assets that completed or are
undergoing planned fuel conversions or additions include Bowline 2
(COD second quarter 2015), Joliet Units 6-8 (expected COD second
quarter 2016), New Castle Units 3-5 (expected COD second quarter
2016), and Shawville 1-4 (expected COD third quarter 2016). In
Illinois, NRG completed the installation of environmental control
upgrades at its 689 MW Waukegan coal facility (COD second quarter
2015) and environmental control upgrades continue at its 1,538 MW
Powerton coal facility. When combined with the fuel conversion at
Joliet and the retirement of the 251 MW Will County Unit 3 in
second quarter 2015, these actions are expected to result in
significant emissions improvement in Illinois.
In 2015, NRG completed a gas conversion at the Big Cajun II Unit
2, enhanced environmental controls at Sayreville, Gilbert and W.A.
Parish facilities. NRG is on track to successfully complete Avon
Lake Unit 9 environmental enhancements by the middle of 2016.
Construction of the 360 MW Cielo Lindo peaker facility (formerly
P.H. Robinson facility), preparations for the Company’s 527 MW
Carlsbad peaker project, and the 262 MW Puente simple-cycle
generation facility in Oxnard, CA remain on track.
2016 Guidance
NRG is reaffirming its guidance range for 2016 with respect to
both Adjusted EBITDA and FCF before growth investments. The
Company’s 2016 guidance now includes GreenCo’s NRG Renew.
Table 4: 2016 Adjusted EBITDA and FCF before Growth
Investments Guidance
2016
($ in millions)
Guidance Adjusted EBITDA
$3,000 –$3,200 Interest payments(a) (1,090) Income tax (40)
Working capital/other changes 75
Adjusted
Cash Flow from Operations $1,945 –$2,145 Maintenance
capital expenditures, net (435)-(465) Environmental capital
expenditures, net(b) (285)-(315) Preferred dividends (10)
Distributions to non-controlling interests
(195)-(205)
Free Cash Flow–before Growth Investments
$1,000 – $1,200 (a)
Reduced by $50 million versus prior guidance to reflect $691
million of debt retirement completed since third quarter 2015
earnings conference call (b) Increase of $50 million versus prior
guidance to reflect timing of spend between 2015 into 2016
Capital Allocation Update
Through February 29, 2016, the Company utilized $385 million
($417 million par) of the $500 million of capital allocated to debt
reduction at the NRG Corporate-level announced on its third quarter
2015 earnings conference call. NRG intends to complete the
remaining debt repurchases under the previously announced program
and is allocating an additional $925 million towards additional NRG
debt repurchases in 2016 for a total of $1.3 billion of incremental
debt reduction.
When combined with 2016 repurchases already completed and
approximately $370 million in non-discretionary amortization
primarily associated with project financings, debt reduction
represents nearly 75% of total NRG capital allocated in 2016.
In 2015, NRG’s GenOn subsidiaries retired $119 million of GenOn
Energy, Inc. Senior Notes and $155 million of GenOn Americas
Generation, LLC Senior Notes through open market purchases.
On January 18, 2016, NRG declared a quarterly dividend on the
Company's common stock of $0.145 per share, payable February 16,
2016, to stockholders of record as of February 1, 2016. Going
forward and in line with today’s announcement, NRG’s dividend will
be $0.03 per share, on a quarterly basis.
The Company's common stock dividend, debt reduction and share
repurchases are subject to available capital, market conditions and
compliance with associated laws and regulations.
Earnings Conference Call
On February 29, 2016, NRG will host a conference call at 7:30
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.nrg.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.nrg.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 be
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 or debt 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 or
debt repurchases are 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 February 29,
2016. These estimates are based on assumptions the company 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
CONSOLIDATED STATEMENTS OF OPERATIONS For the Year
Ended December 31,
(In millions,
except per share amounts)
2015 2014 2013 Operating
Revenues Total operating revenues $ 14,674 $ 15,868
$ 11,295 Cost of operations 10,755 11,794
8,130 Depreciation and amortization 1,566 1,523 1,256 Impairment
losses 5,030 97 459 Selling, general and administrative 1,220 1,027
895 Acquisition-related transaction and integration costs 10 84 128
Development activity expenses 154 91 84 Total
operating costs and expenses 18,735 14,616 10,952
Gain on postretirement benefits curtailment and sale of
assets 21 19 —
Operating(Loss)/Income
(4,040 ) 1,271 343
Other Income/(Expense)
Equity in earnings of unconsolidated affiliates 36 38 7 Impairment
losses on investments (56 ) — (99 ) Other income, net 33 22 13
(Loss)/gain on sale of equity-method investment (14 ) 18 — Net
gain/(loss) on debt extinguishment 75 (95 ) (50 ) Interest expense
(1,128 ) (1,119 ) (848 ) Total other expense (1,054 ) (1,136 ) (977
)
(Loss)/Income Before Income Taxes (5,094 ) 135 (634 )
Income tax expense/(benefit) 1,342 3
(282 )
Net (Loss)/Income (6,436 ) 132 (352 )
Less: Net (loss)/income attributable to
noncontrolling interests and redeemable
noncontrolling interests
(54 ) (2 ) 34
Net (Loss)/Income Attributable to NRG
Energy, Inc. (6,382 ) 134 (386 ) Dividends for preferred shares
20 56 9
(Loss)/Income Available for Common
Stockholders $ (6,402 ) $ 78 $ (395 )
(Loss)/Earnings
Per Share Attributable to NRG Energy, Inc. Common Stockholders
Weighted average number of common shares outstanding — basic 329
334 323
Net (Loss)/Income per Weighted Average Common Share —
Basic $ (19.46 ) $ 0.23 $ (1.22 ) Weighted average
number of common shares outstanding — diluted 329 339 323
Net
(Loss)/Income per Weighted Average Common Share — Diluted $
(19.46 ) $ 0.23 $ (1.22 )
Dividends Per Common Share
$ 0.58 $ 0.54 $ 0.45
NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
For the Year Ended December 31, 2015
2014 2013 (In millions) Net
(Loss)/Income $ (6,436 ) $ 132 $ (352 )
Other Comprehensive
(Loss)/Income, net of tax Unrealized (loss)/gain on
derivatives, net of income tax expense/(benefit) of $19, $(21), and
$(6) (15 ) (45 ) 8 Foreign currency translation adjustments, net of
income tax benefit of $0, $5, and $14 (11 ) (8 ) (24 )
Available-for-sale securities, net of income tax (benefit)/expense
of $(3), $(2), and $2 17 (7 ) 3 Defined benefit plan, net of income
tax expense/(benefit) of $69, $(88), and $100 10 (129 ) 168
Other comprehensive income/(loss) 1 (189 ) 155
Comprehensive Loss (6,435 ) (57 ) (197 )
Less: Comprehensive (loss)/income
attributable to noncontrolling interests and
redeemable noncontrolling interests
(73 ) 8 34
Comprehensive Loss Attributable to NRG
Energy, Inc. (6,362 ) (65 ) (231 ) Dividends for preferred
shares 20 56 9
Comprehensive Loss Available
for Common Stockholders $ (6,382 ) $ (121 ) $ (240 )
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS As of December 31,
2015 2014 (In millions) ASSETS
Current Assets Cash and cash equivalents $ 1,518 $ 2,116
Funds deposited by counterparties 106 72 Restricted cash 414 457
Accounts receivable — trade, less allowance for doubtful accounts
of $21 and $23 1,157 1,322 Inventory 1,252 1,247 Derivative
instruments 1,915 2,425 Cash collateral paid in support of energy
risk management activities 568 187 Renewable energy grant
receivable 13 135 Current assets held-for-sale 6 — Prepayments and
other current assets 442 447 Total current assets
7,391 8,408
Property, Plant and Equipment In
service 24,909 29,487 Under construction 627 770
Total property, plant and equipment 25,536 30,257 Less accumulated
depreciation (6,804 ) (7,890 ) Net property, plant and equipment
18,732 22,367
Other Assets Equity investments
in affiliates 1,045 771 Notes receivable, less current portion 53
72 Goodwill 999 2,574 Intangible assets, net of accumulated
amortization of $1,525 and $1,402 2,310 2,567 Nuclear
decommissioning trust fund 561 585 Derivative instruments 305 480
Deferred income taxes 167 1,580 Non-current assets held-for-sale
105 17 Other non-current assets 1,214 1,045 Total
other assets 6,759 9,691
Total Assets $ 32,882
$ 40,466
NRG ENERGY, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Continued)
As of December 31, 2015 2014
(In millions, except share
data)
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Current portion of long-term debt and capital
leases $ 481 $ 474 Accounts payable 869 1,060 Derivative
instruments 1,721 2,054 Cash collateral received in support of
energy risk management activities 106 72 Accrued interest expense
242 252 Other accrued expenses 568 553 Current liabilities
held-for-sale 2 — Other current liabilities 386 394
Total current liabilities 4,375 4,859
Other
Liabilities Long-term debt and capital leases 18,983 19,701
Nuclear decommissioning reserve 326 310 Nuclear decommissioning
trust liability 283 333 Postretirement and other benefit
obligations 588 727 Deferred income taxes 19 21 Derivative
instruments 493 438 Out-of-market contracts, net of accumulated
amortization of $664 and $562 1,146 1,244 Non-current liabilities
held-for-sale 4 — Other non-current liabilities 900 847
Total non-current liabilities 22,742 23,621
Total Liabilities 27,117 28,480 2.822%
convertible perpetual preferred stock; $0.01 par value; 250,000
shares issued and outstanding 302 291 Redeemable noncontrolling
interest in subsidiaries 29 19
Commitments and Contingencies
Stockholders' Equity
Common stock; $0.01 par value; 500,000,000
shares authorized; 416,939,950 and
415,506,176 shares issued; and 314,190,042
and 336,662,624 shares outstanding at
December 31, 2015 and 2014
4 4 Additional paid-in capital 8,296 8,327 Retained
(deficit)/earnings (3,007 ) 3,588
Less treasury stock, at cost; 102,749,908
and 78,843,552 shares at December 31, 2015
and 2014
(2,413 ) (1,983 ) Accumulated other comprehensive loss (173 ) (174
) Noncontrolling interest 2,727 1,914
Total
Stockholders' Equity 5,434 11,676
Total
Liabilities and Stockholders' Equity $ 32,882 $ 40,466
NRG ENERGY, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31,
2015 2014 2013 (In
millions) Cash Flows from Operating Activities Net
(loss)/income $ (6,436 ) $ 132 $ (352 ) Adjustments to reconcile
net income/(loss) to net cash provided by operating activities:
Distributions and equity in earnings of unconsolidated affiliates
37 49 84 Depreciation and amortization 1,566 1,523 1,256 Provision
for bad debts 64 64 67 Amortization of nuclear fuel 45 46 36
Amortization of financing costs and debt discount/premiums (11 )
(12 ) (33 ) Adjustment to (gain)/loss on debt extinguishment (75 )
25 (15 ) Amortization of intangibles and out-of-market contracts 81
64 49 Amortization of unearned equity compensation 41 42 38 Gain on
post retirement benefits curtailment and sales of assets (7 ) (4 )
(3 ) Impairment losses 5,086 97 558 Changes in derivative
instruments 233 (61 ) 164 Changes in deferred income taxes and
liability for uncertain tax benefits 1,326 (154 ) (67 ) Changes in
collateral deposits in support of risk management activities (381 )
146 (47 ) Changes in nuclear decommissioning trust liability (2 )
19 15 Cash provided/(used) by changes in other working capital, net
of acquisition and disposition effects: Accounts receivable - trade
136 (2 ) (224 ) Inventory (26 ) (245 ) 11 Prepayments and other
current assets 8 36 25 Accounts payable (218 ) (12 ) 275 Accrued
expenses and other current liabilities (9 ) (26 ) (114 ) Other
assets and liabilities (149 ) (217 ) (453 )
Net Cash Provided by
Operating Activities 1,309 1,510 1,270
Cash Flows from Investing Activities Acquisition of
businesses, net of cash acquired (31 ) (2,936 ) (494 ) Capital
expenditures (1,283 ) (909 ) (1,987 ) Decrease/(increase) in
restricted cash, net 8 57 (22 ) Decrease/(increase) in restricted
cash to support equity requirements for U.S. DOE funded projects 35
(206 ) (26 ) Decrease/(increase) in notes receivable 18 25 (11 )
Proceeds from renewable energy grants 82 916 55 Purchases of
emission allowances, net of proceeds 41 (16 ) 5 Investments in
nuclear decommissioning trust fund securities (629 ) (619 ) (514 )
Proceeds from sales of nuclear decommissioning trust fund
securities 631 600 488 Proceeds from sale of assets, net 27 203 13
Investments in unconsolidated affiliates (395 ) (103 ) — Other 11
85 (35 )
Net Cash Used by Investing Activities
(1,485 ) (2,903 ) (2,528 )
Cash Flows from Financing
Activities Payment of dividends to preferred and common
stockholders (201 ) (196 ) (154 ) Net receipts from settlement of
acquired derivatives that include financing elements 196 9 267
Payment for treasury stock (437 ) (39 ) (25 ) Sales proceeds and
other contributions from noncontrolling interests in subsidiaries
647 819 531 Proceeds from issuance of common stock 1 21 16 Proceeds
from issuance of long-term debt 1,004 4,563 1,777 Payment of debt
issuance and hedging costs (21 ) (67 ) (50 ) Payments for short and
long-term debt (1,599 ) (3,827 ) (935 ) Other (22 ) (18 ) —
Net Cash (Used)/Provided by Financing Activities (432 )
1,265 1,427 Effect of exchange rate changes on cash and cash
equivalents 10 (10 ) (2 )
Net (Decrease)/Increase in Cash
and Cash Equivalents (598 ) (138 ) 167
Cash and Cash
Equivalents at Beginning of Period 2,116 2,254
2,087
Cash and Cash Equivalents at End of Period $
1,518 $ 2,116 $ 2,254
Appendix Table A-1: Fourth Quarter 2015 Adjusted EBITDA
Reconciliation by Operating SegmentThe 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) 140 (175)
(4,664) (58) 13
(1,614) (6,358) Plus: Interest expense, net -
1 17 25 56 171 270 Loss on debt extinguishment - - - - - (84) (84)
Income tax - - - (5) 4 1,386 1,385 Depreciation, amortization and
ARO expense 29 7 232 55 67 10 400 Amortization of contracts
1 - (16) (1) 14 -
(2)
EBITDA 170 (167) (4,431) 16
154 (131) (4,389) Adjustment to reflect NRG
share of adjusted EBITDA in unconsolidated affiliates - - 4 (29) 23
43 41 Integration & transaction costs 1 (8) 11 - 1 2 7
Deactivation costs - - 3 - - - 3 Asset write-offs and impairments -
132 4,613 32 2 54 4,833 NRG Home Solar EBITDA - 43 - - - - 43
Market to market (MtM) (gains)/losses on economic hedges
(27) - 108 3 3 -
87
Adjusted EBITDA 144 -
308 22 183 (32)
625
Appendix Table A-2: Fourth Quarter 2014 Adjusted EBITDA
Reconciliation by Operating SegmentThe 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 (119) (37)
577 (73) 4
(255) 97 Plus: Interest expense, net - - 16 35
77 178 306 Income tax 1 - - - (11) 81 71 Depreciation amortization
and ARO expense 29 3 269 59 65 10 435 Amortization of contracts
1 - (13) 1 8 -
(3)
EBITDA (88) (34) 849
22 143 14 906 Adjustment to reflect NRG
share of adjusted EBITDA in unconsolidated affiliates - - 4 17 16
(17) 20 Integration & transaction costs, gain on sale 3 - (21)
(4) 2 17 (3) Deactivation costs - - 27 - - - 27 Asset write-offs
and impairments - - 11 - - (9) 2 Legal settlements 1 - - - - - 1
NRG Home Solar EBITDA - 34 - - - - 34 MtM losses/(gains) on
economic hedges 249 - (568) (4)
(2) (1) (326)
Adjusted EBITDA
165 -
302 31
159 4 661
Appendix Table A-3: Full Year 2015 Adjusted EBITDA
Reconciliation by Operating SegmentThe 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) 652 (324)
(4,472) (124) 55
(2,223) (6,436) Plus: Interest expense, net -
3 69 104 238 702 1,116 Loss on debt extinguishment - - - - 9 (84)
(75) Income tax - - 1 (18) 12 1,347 1,342 Depreciation,
amortization and ARO expense 123 24 939 213 267 34 1,600
Amortization of contracts 1 - (57)
1 54 1 -
EBITDA 776
(297) (3,520) 176 635 (223)
(2,453) Adjustment to reflect NRG share of adjusted EBITDA
in unconsolidated affiliates - - 14 (47) 77 65 109 Integration
& transaction costs and other non recurring costs (12) (8) 11
(3) 3 15 6 Deactivation costs - - 11 - - - 11 Asset write-offs and
impairments 36 132 4,854 42 3 55 5,122 NRG Home Solar EBITDA - 173
- - - - 173 Market to market (MtM) (gains)/losses on economic
hedges (61) - 428 3 2
- 372
Adjusted EBITDA
739 -
1,798
171 720 (88) 3,340
Appendix Table A-4: Full Year 2014 Adjusted EBITDA
Reconciliation by Operating SegmentThe 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) 137 (73)
1,062 (147) 99
(946) 132 Plus: Interest expense, net 1 1 65
119 189 729 1,104 Loss on debt extinguishment - - - 1 - 94 95
Income tax 1 - - - 4 (2) 3 Depreciation amortization and ARO
expense 121 7 986 196 204 32 1,546 Amortization of contracts
(2) - (32) 1 29 -
(4)
EBITDA 258 (65) 2,081 170
525 (93) 2,876 Adjustment to reflect NRG share
of adjusted EBITDA in unconsolidated affiliates - - 8 (2) 55 11 72
Integration & transaction costs, gain on sale 4 - (37) (4) 4 82
49 Deactivation costs - - 42 - - - 42 Asset write-offs and
impairments - - 85 12 - - 97 Legal settlement 5 - - - - - 5 NRG
Home Solar EBITDA - 65 - - - - 65 MtM losses/(gains) on economic
hedges 337 - (343) (4)
(2) (1) (13)
Adjusted EBITDA
604 -
1,836 172
582 (1) 3,193
Appendix Table A-5: Full Year 2015 and Full Year 2014
Adjusted Cash Flow from Operations ReconciliationsThe following
table summarizes the calculation of adjusted cash flow operating
activities providing a reconciliation to net cash provided by
operating activities
Twelve months ended Twelve
months ended ($ in millions)
December 31,
2015 December 31, 2014 Net Cash
Provided by Operating Activities $1,309 $1,510
Reclassifying of net receipts (payments)
for settlement of
acquired derivatives that include
financing elements
196 9 Merger and integration expenses 21 95 Return of
capital from equity investments 38 - Adjustment for change
in collateral 381 (89)
Adjusted Cash
Flow from Operating Activities $1,945
$1,525
Maintenance CapEx, net*
(413) (254) Environmental CapEx, net (237) (254)
Preferred dividends (10) (9) Distributions to
non-controlling interests (158) (57)
Free Cash Flow – before Growth investments
$1,127 951
* Excludes merger and integration CapEx of
$15 million in 2015 and $27 million in 2014
Appendix Table A-6: Fourth Quarter 2015 Regional Adjusted
EBITDA Reconciliation for NRG BusinessThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to net (loss)/income
Gulf ($ in
millions) East Coast West B2B
Carbon 360 Total
Net (loss)/income
(170) (4,495) (19)
22 (2) (4,664) Plus: Interest
expense, net 16 - 1 - - 17 Depreciation, amortization and ARO
expense 94 120 13 5 - 232 Amortization of contracts
(19) (1) 3 1 - (16)
EBITDA (79) (4,376) (2) 28
(2) (4,431) Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates - 3 (1) 1 1 4 Non
recurring costs 11 - - - - 11 Deactivation costs 3 - - - - 3 Asset
write-offs and impairments 224 4,380 9 - - 4,613 Market to market
(MtM) losses/(gains) on economic hedges 23 103
3 (21) - 108
Adjusted EBITDA
182 110 9
8 (1) 308
Appendix Table A-7: Fourth Quarter 2014 Regional Adjusted
EBITDA Reconciliation for NRG BusinessThe 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)
467 290 (26) (151)
(3) 577 Plus: Interest expense, net 16
- - - - 16 Depreciation amortization and ARO expense 92 151 23 3 -
269 Amortization of contracts (16) 5
(3) 1 - (13)
EBITDA 559
446 (6) (147) (3) 849 Adjustment
to reflect NRG share of adjusted EBITDA in unconsolidated
affiliates 17 - (13) (1) 1 4 Integration & transaction costs,
gain on sale 1 (22) - - - (21) Deactivation costs 4 - 23 - - 27
Asset write-offs and impairments 5 3 3 - - 11 MtM (gains)/losses on
economic hedges (359) (371) 6
156 - (568)
Adjusted EBITDA
227 56 13 8
(2) 302
Appendix Table A-8: Full Year 2015 Regional Adjusted EBITDA
Reconciliation for NRG BusinessThe following table summarizes
the calculation of Adjusted EBITDA and provides a reconciliation to
net (loss)/income
Gulf ($ in
millions) East Coast West B2B
Carbon 360 Total
Net (loss)/income
(1) (4,448) 11
(21) (13) (4,472) Plus: Interest
expense, net 68 - 1 - - 69 Income tax expense - - - 1 - 1
Depreciation, amortization and ARO expense 314 551 62 12 - 939
Amortization of contracts (68) 2 3
6 - (57)
EBITDA 313
(3,895) 77 (2) (13) (3,520)
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates - 3 6 1 4 14 Non recurring costs 11 - - -
- 11 Deactivation costs 9 - 2 - - 11 Asset write-offs and
impairments 448 4,397 9 - - 4,854 Market to market (MtM) losses on
economic hedges 276 83 8 61
- 428
Adjusted EBITDA
1,057 588 102 60
(9) 1,798
Appendix Table A-9: Full Year 2014 Regional Adjusted EBITDA
Reconciliation for NRG BusinessThe 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)
916 223 89 (156)
(10) 1,062 Plus: Interest expense, net
64 (1) 1 1 - 65 Depreciation amortization and ARO expense 303 592
77 13 1 986 Amortization of contracts (50) 21
(9) 6 - (32)
EBITDA 1,233
835 158 (136) (9) 2,081
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 26 1 (28) 2 7 8 Integration &
transaction costs, gain on sale 8 (45) - - - (37) Deactivation
costs 14 - 28 - - 42 Asset write-offs and impairments 6 76 3 - - 85
MtM (gains)/losses on economic hedges (43)
(480) 10 170 - (343)
Adjusted
EBITDA 1,244 387
171 36 (2) 1,836
Appendix Table A-10: Full Year 2015 Sources and Uses of
LiquidityThe following table summarizes the sources and uses of
liquidity for full year 2015
Twelve months ended ($ in millions)
December 31, 2015 Sources: Adjusted Cash Flow
from Operations $1,945 Equity Proceeds, NRG Yield, net of fees 599
Debt Proceeds, NRG Yield Revolver 551 Debt Proceeds, NRG Yield
Convertible Notes, net of fees 288 Tax Equity Financing, net of
fees 119 Other investing and financing activities 76 Debt proceeds,
other project debt financing 15
Uses: Debt
Repayments 1,195 Maintenance and Environmental Capex, net 650
Growth Investments and Acquisitions, net 457 Share Repurchases 437
Debt Repayments, non-discretionary 405 Collateral Postings 381 NYLD
Investment in Desert Sunlight 311 Common and Preferred Stock
Dividends 200 Distributions to Non-Controlling Entities 158 Merger
and Integration-related payments 34
Change in Total Liquidity $(635)
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.
1 Excludes negative contribution from NRG Home Solar of $173
million.
2 Represents total discretionary debt retirements from November
2015 through February 2016 (excludes $405 million of
non-discretionary debt amortization in 2015)
3 Total impairments of $5,086 million net of taxes of $1,780
million.
4 Excludes Goal Zero, NRG Home Services and NRG Home Solar
5 See Appendix A-10 for the Full Year 2015 Sources and Uses of
Liquidity detail.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160229005864/en/
NRG Energy, Inc.Media:Karen Cleeve, 609-524-4608orMarijke
Shugrue, 609-524-5262orInvestors:Kevin Cole,
609-524-4526CFAorLindsey Puchyr, 609-524-4527
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