First Quarter 2016 Results and Financial Highlights
- $812 million of Adjusted EBITDA
- $249 million of Free Cash Flow (FCF)
before growth investments
Operational and Strategic Update
- Announcing the conclusion of the
GreenCo process:
- Restructuring and streamlining of
residential solar business; and
- Agreed to sell majority interest in
EVgo to Vision Ridge Partners
- NRG intends to offer the remaining
51.05% of CVSR it owns to NRG Yield in the second quarter
2016 Financial Guidance and Capital Allocation Update
- 2016 Guidance reaffirmed and now
includes the residential solar business and EVgo:
- Adjusted EBITDA of $3,000-$3,200
million
- Consolidated FCF before growth
investments of $1,000-$1,200 million
- NRG-Level FCF before growth investments
of $750-$950 million
- $229 million of NRG-Level corporate
debt retired year-to-date
- $253 million raised to supplement
NRG-Level capital through the non-recourse monetization of certain
capacity revenues at the Midwest Generation facilities
NRG Energy, Inc. (NYSE:NRG) today reported Adjusted EBITDA of
$812 million in its first quarter 2016 financial results. First
quarter cash flow from operations totaled $554 million. Net income
for first quarter 2016 was $47 million, or $0.24 per diluted common
share compared to net loss of $136 million, or $0.37 per diluted
common share for first quarter 2015.
“NRG’s strong financial and operational performance continued
despite a weak weather and commodity market environment, validating
our integrated competitive power platform,” said Mauricio
Gutierrez, NRG President and Chief Executive Officer. “Combining
renewable and fossil generation with an industry-leading retail
platform, along with our robust partnership with NRG Yield,
provides strength and stability while allowing us to maintain
upside to a market recovery. Today, we are also pleased to announce
the conclusion of the GreenCo process with the agreement to sell a
majority share of EVgo and the restructuring and simplification of
the residential solar business.”
Segment Results
Table 1: Adjusted EBITDA
($ in millions) Three Months Ended Segment
3/31/16 3/31/15 Generation/Business (1) $429
$535 Retail Mass 151 166 Renewables (2) 42 22 NRG Yield (2) 188 132
Corporate (3) 2 (15) Adjusted EBITDA (4)
$812 $840
(1) See Appendices A-6 and A-7 for Generation regional Reg G
reconciliations.(2) In accordance with GAAP, 2015 results have been
restated to include full impact of the assets in the NYLD drop down
transaction which closed on November 3, 2015.(3) 2016 includes
residential solar, which was excluded from Adjusted EBITDA
throughout 2015 (first quarter 2015 negative contribution of $40
million).(4) See Appendices A-1 through A-4 for NRG Energy, Inc.
and Operating Segment Reg G reconciliations.
Table 2: Net Income/(Loss)
($ in millions) Three Months Ended Segment
3/31/16 3/31/15 Generation/Business $159 $29
Retail Mass 146 104 Renewables (1) (45) (51) NRG Yield (1) 2 (20)
Corporate (2) (215) (198) Net Income/(Loss)
(3) $47 $(136)
(1) In accordance with GAAP, 2015 results have been restated to
include full impact of the assets in the NYLD drop down transaction
which closed on November 3, 2015.(2) Includes residential solar.(3)
Includes mark-to-market gains and losses of economic hedges.
Generation/Business (formerly NRG Business): First
Quarter Adjusted EBITDA was $429 million; $106 million lower than
first quarter 2015 primarily driven by:
- East Region: $179 million lower due to
declining energy margins from milder weather, declines in gas
prices and dark spreads, and lower capacity revenues due to
deactivations, partially offset by increased contract margins
attributable to new load contracts and lower supply costs;
- West Region: $63 million increase due
primarily to sale of $47 million in emission credits and lower
operating costs on timing of outages; and
- Gulf Coast Region: $7 million increase
due primarily to higher South Central capacity revenues and lower
supply costs to serve load contracts, and favorable operating costs
driven by reduced outages across the region, partially offset by
lower energy margins in Texas from the decline in power prices and
milder weather.
Retail Mass (formerly NRG Home Retail): First quarter
Adjusted EBITDA was $151 million, $15 million lower than first
quarter 2015 from milder weather, partially offset by lower supply
costs and operating cost efficiencies.
Renewables (formerly NRG Renew): First quarter Adjusted
EBITDA was $42 million, $20 million higher than first quarter 2015
due primarily to increased production at Ivanpah, higher generation
from wind assets and new solar projects achieving commercial
operations in late 2015.
NRG Yield: First quarter Adjusted EBITDA was $188
million, $56 million higher than first quarter 2015 due to
increased wind production and the acquisition of Desert
Sunlight.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
3/31/16 12/31/15
Cash at NRG-Level $589 $693 Revolver
1,337 1,373
NRG-Level Liquidity $1,926
$2,066 Restricted cash 387 414 Cash at Non-Guarantor
Subsidiaries 1,070 825
Total Liquidity
$3,383 $3,305
NRG-Level cash as of March 31, 2016 was $589 million, a decrease
of $104 million from the end of 2015, and $1,337 million was
available under the Company’s credit facilities at the end of the
current quarter. Total liquidity was $3,383 million, including
restricted cash and cash at non-guarantor subsidiaries (primarily
GenOn and NRG Yield)1.
1 See Appendix A-6 for First Quarter 2016 Sources and Uses of
Liquidity detail.
NRG Strategic Developments
Residential Solar
NRG today announces the conclusion of the strategic review
process for residential solar, integrating it into NRG and
streamlining both its model and market. The operation will
transition to an originate-and-monetize to third party model. As
part of this change, NRG has entered into agreements with both
Sunrun Inc. (Nasdaq: RUN) and Spruce Finance Inc., whereby both
parties will be able to purchase NRG originated residential solar
contracts and provide support over the life of the customer
contract. Additionally, as NRG streamlines its go-to-market
approach, residential solar will focus on three markets where it
already has a well-established foothold – New Jersey, New York and
Massachusetts – while maintaining a longer-term option to
participate in NRG Retail’s core Texas market as economics for
residential solar improve. NRG will incur one-time costs to achieve
of approximately $20 million in 2016.
EVgo
NRG has agreed to sell a majority stake in its EVgo business to
Vision Ridge Partners for total consideration of approximately $50
million, consisting of $19.5 million (subject to working capital
adjustments) payable to NRG and the remainder contributed as
capital to the business. NRG also has future earnout potential of
up to $70 million based on future adjusted EBITDA targets. NRG will
retain its obligations under the 2012 California Public Utilities
Commission settlement. The sale of a majority interest will result
in NRG reporting EVgo on an equity earnings basis.
Next Drop Down to NRG Yield
During the second quarter of 2016, NRG intends to offer the
remaining 51.05% of the California Valley Solar Ranch (CVSR)
facility, a 250 MW solar facility located in San Luis Obispo, CA,
to NRG Yield. NRG Yield currently owns 48.95% of the CVSR
facility.
2016 Guidance
NRG is reaffirming its guidance range for fiscal year 2016 with
respect to both Adjusted EBITDA and FCF before growth investments,
including the results of the residential solar business and
EVgo.
Table 4: 2016 Adjusted EBITDA and FCF before Growth
Investments Guidance
5/5/16 ($ in millions) 2016 Adjusted
EBITDA $3,000 –3,200 Interest payments (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 (285)-(315)
Preferred dividends (10) Distributions to non-controlling interests
(195)-(205) Free Cash Flow – before Growth Investments
$1,000 – 1,200
Capital Allocation Update
On April 7, 2016, Midwest Generation, LLC (MWG) entered into an
agreement to sell certain quantities of unforced capacity revenues
through the 2018/19 delivery year to a trading counterparty for net
proceeds of $253 million. MWG will continue to operate the
generation facilities and remains responsible for performance
penalties and eligible for performance bonus payments, if any. NRG
intends to allocate proceeds from this transaction toward
additional NRG level delevering or redemption of the Company’s
Convertible Preferred stock.
Year to date, through May 5, 2016 the Company utilized $214
million ($229 million par) of the $1.3 billion of 2016 NRG level
capital allocated to debt repurchases.
On April 18, 2016, NRG declared a quarterly dividend on the
Company's common stock of $0.03 per share, payable May 16, 2016 to
stockholders of record as of May 2, 2016 representing $0.12 on an
annualized 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 May 5, 2016, NRG will host a conference call at 9:00 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.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 the leading integrated power company in the U.S., built
on the strength of the nation’s largest and most diverse
competitive electric generation portfolio and leading retail
electricity platform. A Fortune 200 company, NRG creates value
through best in class operations, reliable and efficient electric
generation, and a retail platform serving residential and
commercial businesses. Working with electricity customers, large
and small, we continually innovate, embrace and implement
sustainable solutions for producing and managing energy. We aim to
be pioneers in developing smarter energy choices and delivering
exceptional service as 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, including wind
and solar performance, 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 May 5,
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
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three months ended March 31,
(In millions,
except for per share amounts)
2016 2015 Operating Revenues Total
operating revenues $ 3,229 $ 3,829
Operating Costs
and Expenses Cost of operations 2,189 3,063 Depreciation and
amortization 313 395 Selling, general and administrative 255 265
Acquisition-related transaction and integration costs 2 10
Development activity expenses 26 34 Total operating
costs and expenses 2,785 3,767 Gain on sale of assets and
postretirement benefits curtailment 32 14
Operating Income 476 76
Other
Income/(Expense) Equity in losses of unconsolidated affiliates
(7 ) (3 ) Impairment loss on investment (146 ) — Other income, net
18 19 Gain on debt extinguishment 11 — Interest expense (284 ) (301
) Total other expense (408 ) (285 )
Income/(Loss) Before Income
Taxes 68 (209 ) Income tax expense/(benefit) 21 (73 )
Net Income/(Loss) 47 (136 ) Less: Net loss attributable to
noncontrolling interest and redeemable noncontrolling interests (35
) (16 )
Net Income/(Loss) Attributable to NRG Energy, Inc.
82 (120 ) Dividends for preferred shares 5 5
Income/(Loss) Available for Common Stockholders $ 77
$ (125 )
Earnings/(Loss) per Share Attributable to NRG Energy,
Inc. Common Stockholders Weighted average number of common
shares outstanding — basic 315 336
Earnings/(Loss) per Weighted
Average Common Share — Basic $ 0.24 $ (0.37 ) Weighted
average number of common shares outstanding — diluted 315 336
Earnings/(Loss) per Weighted Average Common Share — Diluted
$ 0.24 $ (0.37 )
Dividends Per Common Share $ 0.15
$ 0.15
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended March 31, 2016
2015 (In millions) Net Income/(Loss) $
47 $ (136 )
Other Comprehensive Income/(Loss), net of tax
Unrealized loss on derivatives, net of income tax expense/(benefit)
of $1 and ($6) (32 ) (12 ) Foreign currency translation
adjustments, net of income tax benefit of $0 and $(7) 6 (11 )
Available-for-sale securities, net of income tax benefit of $0 and
$(4) 3 (1 ) Defined benefit plans, net of tax expense of $0 and $4
1 7 Other comprehensive loss (22 ) (17 )
Comprehensive Income/(Loss) 25 (153 ) Less: Comprehensive
loss attributable to noncontrolling interest and redeemable
noncontrolling interests (52 ) (29 )
Comprehensive Income/(Loss)
Attributable to NRG Energy, Inc. 77 (124 ) Dividends for
preferred shares 5 5
Comprehensive Income/(Loss)
Available for Common Stockholders $ 72 $ (129 )
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2016 December 31, 2015
(In millions,
except shares)
(unaudited) ASSETS Current Assets Cash
and cash equivalents $ 1,659 $ 1,518 Funds deposited by
counterparties 101 106 Restricted cash 387 414 Accounts receivable
— trade, less allowance for doubtful accounts of $19 and $21 1,018
1,157 Inventory 1,161 1,252 Derivative instruments 2,113 1,915 Cash
collateral paid in support of energy risk management activities 411
568 Renewable energy grant receivable, net 35 13 Current assets
held-for-sale — 6 Prepayments and other current assets 461
442 Total current assets 7,346 7,391
Property, plant and equipment, net of accumulated depreciation
of $7,093 and $6,804 18,763 18,732
Other
Assets Equity investments in affiliates 898 1,045 Notes
receivable, less current portion 40 53 Goodwill 999 999 Intangible
assets, net of accumulated amortization of $1,592 and $1,525 2,256
2,310 Nuclear decommissioning trust fund 577 561 Derivative
instruments 465 305 Deferred income taxes 185 167 Non-current
assets held-for-sale — 105 Other non-current assets 1,151
1,214 Total other assets 6,571 6,759
Total
Assets $ 32,680 $ 32,882
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities Current portion
of long-term debt and capital leases $ 465 $ 481 Accounts payable
845 869 Derivative instruments 1,947 1,721 Cash collateral received
in support of energy risk management activities 100 106 Current
liabilities held-for-sale — 2 Accrued expenses and other current
liabilities 981 1,196 Total current liabilities 4,338
4,375
Other Liabilities Long-term debt and
capital leases 18,677 18,983 Nuclear decommissioning reserve 330
326 Nuclear decommissioning trust liability 294 283 Deferred income
taxes 37 19 Derivative instruments 627 493 Out-of-market contracts,
net of accumulated amortization of $687 and $664 1,122 1,146
Non-current liabilities held-for-sale — 4 Other non-current
liabilities 1,547 1,488 Total non-current liabilities
22,634 22,742
Total Liabilities 26,972
27,117
2.822% convertible perpetual preferred stock
304 302
Redeemable noncontrolling interest in subsidiaries
23 29
Commitments and Contingencies Stockholders’
Equity Common stock 4 4 Additional paid-in capital 8,299 8,296
Retained deficit (2,977 ) (3,007 ) Less treasury stock, at cost —
102,450,781 and 102,749,908 shares, respectively (2,406 ) (2,413 )
Accumulated other comprehensive loss (195 ) (173 ) Noncontrolling
interest 2,656 2,727
Total Stockholders’
Equity 5,381 5,434
Total Liabilities and
Stockholders’ Equity $ 32,680 $ 32,882
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three months ended March 31, 2016
2015 (In millions) Cash Flows from
Operating Activities Net Income/(loss) $ 47 $ (136 )
Adjustments to reconcile net income/(loss) to net cash provided by
operating activities: Distributions and equity in earnings of
unconsolidated affiliates 17 32 Depreciation and amortization 313
395 Provision for bad debts 10 15 Amortization of nuclear fuel 13
13 Amortization of financing costs and debt discount/premiums 1 (4
) Adjustment for debt extinguishment (11 ) — Amortization of
intangibles and out-of-market contracts 26 19 Amortization of
unearned equity compensation 8 11 Impairment losses 146 — Changes
in deferred income taxes and liability for uncertain tax benefits
(25 ) (83 ) Changes in nuclear decommissioning trust liability 9 (3
) Changes in derivative instruments (50 ) 261 Proceeds from sale of
emission allowances 47 Changes in collateral deposits supporting
energy risk management activities 156 (213 ) Gain on sale of assets
and postretirement benefits curtailment (32 ) (14 ) Cash used by
changes in other working capital (121 ) (33 )
Net Cash Provided
by Operating Activities 554 260
Cash Flows
from Investing Activities Acquisitions of businesses, net of
cash acquired (6 ) (1 ) Capital expenditures (279 ) (252 ) Increase
in restricted cash, net (12 ) (11 ) Decrease in restricted cash to
support equity requirements for U.S. DOE funded projects 39 25
Decrease in notes receivable 1 5 Purchases of emission allowances
(12 ) — Proceeds from sale of emission allowances 7 — Investments
in nuclear decommissioning trust fund securities (200 ) (193 )
Proceeds from the sale of nuclear decommissioning trust fund
securities 191 196 Proceeds from renewable energy grants and state
rebates 8 2 Proceeds from sale of assets, net of cash disposed of
120 — Investments in unconsolidated affiliates (4 ) (44) Other 4
3
Net Cash Used by Investing Activities (143 )
(270 )
Cash Flows from Financing Activities Payment of
dividends to common and preferred stockholders (48 ) (51 ) Payment
for treasury stock — (79 ) Net receipts from settlement of acquired
derivatives that include financing elements 39 40 Proceeds from
issuance of long-term debt 61 248 Distributions from, net of
contributions to, noncontrolling interest in subsidiaries 10 (25 )
Proceeds from issuance of common stock — 1 Payments for short and
long-term debt (316 ) (94 ) Other - contingent consideration (10 )
—
Net Cash (Used)/Provided by Financing Activities
(264 ) 40 Effect of exchange rate changes on cash and cash
equivalents (6 ) 18
Net Increase in Cash and Cash
Equivalents 141 48
Cash and Cash Equivalents at Beginning of
Period 1,518 2,116
Cash and Cash Equivalents
at End of Period $ 1,659 $ 2,164
Appendix Table A-1: First Quarter 2016
Adjusted EBITDA Reconciliation for NRG Energy, Inc.
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income
Adjustments ($ in
millions) GAAP
Interest, tax, depreciation
& amortization
Mark-to-market
(gains)/losses
Deactivation Costs
Otheradjustments to
EBITDA
Adjusted EBITDA
Operating Revenues Energy revenue 1,151 - - - - 1,151
Capacity revenue 521 - - - - 521 Retail revenue 1,370 - - - - 1,370
Mark-to-market for economic hedging activities 26 - (26) - - -
Contract amortization (15) 15 - - - - Other revenues 176 - - - -
176 Total operating revenues 3,229 15 (26) - - 3,218
Operating
Costs and Expenses Cost of sales 1,505 - - 1 - 1,506
Mark-to-market for economic hedging activities (9) - 9 - - -
Contract and emissions credit amortization 6 (6) - - - Operations
and maintenance 583 - - (8) (6) 569 Other cost of operations 104 -
- - (10) 94 Total cost of operations 2,189 (6) 9 (7) (16) 2,169
Depreciation and amortization 313 (313) - - - - Selling &
marketing 100 - - - - 100 General & administrative 155 - - -
155 Acquisition related transaction & integration costs 2 - - -
(2) - Development activity expenses 26 - - - - 26 Total operating
costs and expenses 2,785 (319) 9 (7) (18) 2,450 Gain on sale of
assets 32 - - - (29) 3
Operating Income 476 334 (35) 7 (11)
771
Other Income/(Expenses) Equity in losses of
unconsolidated affiliates (7) - - - 33 26 Impairment loss on
investment (146) - - - 146 - Other income, net 18 (3) - - - 15 Gain
on debt extinguishment 11 (11) - - - - Interest expense (284) 284 -
- - - Total other expenses (408) 270 - - 179 41
Net income
before income taxes 68 604 (35) 7 168 812 Income tax expense 21
(21) - - - -
Net income 47 625 (35) 7 168 812
Appendix Table A-2: First Quarter 2015
Adjusted EBITDA Reconciliation for NRG Energy, Inc.
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
loss
Adjustments ($ in
millions) GAAP
Interest, tax, depreciation
& amortization
Mark-to-market
(gains)/losses
Deactivation Costs
Residential Solar
Otheradjustments to
EBITDA
Adjusted EBITDA
Operating Revenues Energy revenue 1,676 - - - - - 1,676
Capacity revenue 488 - - - - - 488 Retail revenue 1,663 - - - (3) -
1,660 Mark-to-market for economic hedging activities (87) - 87 - -
- Contract amortization (8) 8 - - - - Other revenues 97 - - - (2) -
95 Total operating revenues 3,829 8 87 - (5) - 3,919
Operating
Costs and Expenses Cost of sales 2,134 - - - (4) - 2,130
Mark-to-market for economic hedging activities 191 - (191) - - - -
Contract and emissions credit amortization 4 (4) - - - - -
Operations and maintenance 615 - - (3) (2) 12 622 Other cost of
operations 119 - - - - (6) 113 Total cost of operations 3,063 (4)
(191) (3) (6) 6 2,865 Depreciation and amortization 395 (395) - - -
- - Selling & marketing 108 - - - (20) - 88 General &
administrative 157 - - - (19) 138 Acquisition related transaction
& integration costs 10 - - - - (10) - Development activity
expenses 34 - - - - - 34 Total operating costs and expenses 3,767
(399) (191) (3) (45) (4) 3,125 Gain on postretirement benefits
curtailment 14 - - - - 14
Operating Income 76 407 278
3 40 4 808
Other Income/(Expenses) Equity in losses of
unconsolidated affiliates (3) - - - - 19 16 Other income, net 19
(3) - - - - 16 Interest expense (301) 301 - - - - - Total other
expenses (285) 298 - - - 19 32
Net loss before income taxes
(209) 705 278 3 40 23 840 Income tax benefit (73) 73 - - - - -
Net loss (136) 632 278 3 40 23 840
Appendix Table A-3: First Quarter 2016
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) Retail Mass
Generation/Business Renewables Yield Corp
Total
Net income/(loss) 146
159 (45) 2 (215)
47 Plus:
Interest expense, net - 10 33 68 170 281 Income tax - 1 (6) - 26 21
Gain on debt extinguishment - - - - (11) (11) Depreciation,
amortization and ARO expense 28 155 57 67 16 323 Amortization of
contracts 1 (15) - 23 (1)
8
EBITDA 175 310 39 160
(15) 669 Adjustment to reflect NRG share of adjusted
EBITDA in unconsolidated affiliates - 7 (3) 28 1 33 Integration
& transaction costs - - - - 2 2 Reorganization costs 5 1 2 - 2
10 Deactivation costs - 7 - - - 7 Gain on sale of business - (29) -
- - (29) Impairments - 138 5 - 12 155 Market to market (MtM) gains
on economic hedges (29) (5) (1) - - (35)
Adjusted EBITDA 151 429
42 188 2
812
Appendix Table A-4: 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) Retail Mass
Generation/Business Renewables Yield Corp
Total
Net income/(loss) 104
29 (51) (20) (198)
(136) Plus:
Interest expense, net - 18 28 73 179 298 Income tax - - (6) (4)
(63) (73) Depreciation amortization and ARO expense 30 240 52 67 12
401 Amortization of contracts - (12) (1)
11 2 -
EBITDA 134 275
22 127 (68) 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 Residential Solar EBITDA - - - - 40 40 MtM
losses/(gains) on economic hedges 32 253 - (7) - 278
Adjusted EBITDA 166
535 22 132 (15)
840
Appendix Table A-5: 2016 and 2015 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, 2016
Three months ended
March 31, 2015
Net Cash Provided by Operating Activities $554
$260 Reclassifying of net receipts (payments) for settlement
of acquired derivatives that include financing elements 39 40
Merger, integration and cost-to-achieve expenses [1] 19 12 Return
of capital from equity investments 5 - Adjustment for change in
collateral (156) 213
Adjusted Cash Flow from
Operating Activities $461 $525
Maintenance CapEx, net [2] (91) (85) Environmental CapEx, net (77)
(49) Preferred dividends (2) (2) Distributions to non-controlling
interests (42) (25)
Free Cash Flow – before Growth
Investments $249 $364
(1) Cost-to-achieve expenses associated
with the $150MM savings announced on September 2015 call
(2) Excludes merger and integration CapEx
of $0 million in Q1 2016 and $3 million in Q1 2015
Appendix Table A-6: First Quarter 2016
Regional Adjusted EBITDA Reconciliation for
Generation/Business
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
($ in millions) East Gulf Coast West
B2B Carbon 360 Total
Net income/(loss)
246 18 32 5
(142) 159 Plus:
Interest expense, net 10 - - - - 10 Income tax
- - - 1 - 1 Depreciation, amortization and ARO expense 57 78 16 4 -
155 Amortization of contracts (17) - 1
1 - (15)
EBITDA 296 96 49
11 (142) 310 Adjustment to reflect NRG share
of adjusted EBITDA in unconsolidated affiliates - - 3 - 4 7
Reorganization costs - 1 - - - 1 Deactivation costs 7 - - - - 7
Gain on sale of assets (29) - - - - (29) Impairments 1 - - - 137
138 Market to market (MtM) (gains)/losses on economic hedges (30)
26 3 (4) - (5)
Adjusted EBITDA
245 123 55 7
(1) 429
Appendix Table A-7: First Quarter 2015
Regional Adjusted EBITDA Reconciliation for
Generation/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)
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 MtM losses/(gains) on economic
hedges 253 (65) (1) 66 - 253
Adjusted EBITDA
424 116 (8)
6 (3) 535
Appendix Table A-8: First Quarter 2016
Sources and Uses of Liquidity
The following table summarizes the sources
and uses of liquidity in the first quarter of 2016.
($ in millions)
Three months ended
March 31, 2016
Sources: Adjusted cash flow from operations $ 461
Collateral 156 Asset sales 120 Tax equity proceeds 11 Proceeds from
NRG Yield revolver, net of payments 10
Uses: Debt
repayments, discretionary (NRG-level) 190 Maintenance and
environmental capex, net 168 Debt repayments, non-discretionary 87
Growth investments and acquisitions, net 62 Common and preferred
stock dividends 48 Distributions to non-controlling entities 42
Decrease in credit facility 36 Other investing and financing 28
Merger, integration and cost-to-achieve expenses [1] 19
Change in Total Liquidity $ 78
(1) Cost-to-achieve expenses associated with the $150MM savings
announced on September 2015 call
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160505005722/en/
NRG Energy, Inc.Media:Karen Cleeve,
609-524-4608orMarijke Shugrue, 609-524-5262orInvestors:Kevin
Cole, CFA, 609-524-4526orLindsey Puchyr, 609-524-4527
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