Key Highlights
- Completed drop down to NRG Yield of
311 net MWs of utility-scale solar assets for total cash
consideration of $130 million1
- Reaffirming 2017 Adjusted EBITDA and
Free Cash Flow before Growth (FCFbG) guidance
- Established the Business Review
Committee to make recommendations to the full Board on its stated
initiatives
- Offered to NRG Yield remaining 25%
interest in NRG Wind TE Holdco, an 814 net MW portfolio of 12 wind
facilities
- Commenced construction at Carlsbad
Energy Center in the first quarter 2017; COD expected in the fourth
quarter of 2018
NRG Energy, Inc. (NYSE:NRG) today reported first quarter net
loss of $203 million, or $0.52 per diluted common share compared to
net income of $47 million, or $0.24 per diluted common share for
the first three months of 2016. Adjusted EBITDA for the three
months ended March 31, 2017 was $412 million and year-to-date cash
used by operations totaled $68 million.
“We are pleased to reaffirm our financial guidance amid
challenging market conditions this quarter,” said Mauricio
Gutierrez, NRG President and Chief Executive Officer. “We remain
focused on our strategic priorities of simplifying and streamlining
the business, optimizing our portfolio and strengthening the
balance sheet.”
Consolidated Financial Results
Three Months Ended ($ in millions)
3/31/17
3/31/16 Net (Loss)/Income $ (203 ) $ 47 Cash (Used
by)/From Operations $ (68 ) $ 554 Adjusted EBITDA $ 412 $ 812 Free
Cash Flow Before Growth Investments (FCFbG) $ (96 )
$ 249
1 Prior to working capital adjustments
Segment Results
Table 1: Net (Loss)/Income
($ in millions)
Three Months Ended Segment
3/31/17 3/31/16 Generation $ 67 $ 191
Retail (33 ) 150 Renewables 1 (31 ) (40 ) NRG Yield 1 (1 ) 2
Corporate (205 ) (256 ) Net (Loss)/Income 2 $ (203 ) $ 47
1. In accordance with GAAP, 2016 results have been restated to
include full impact of the assets in the NRG Yield Drop Down
transactions which closed on September 1, 2016, and March 27,
2017.2. Includes mark-to-market gains and losses of economic
hedges.
Table 2: Adjusted EBITDA
($ in millions)
Three Months Ended Segment
3/31/17 3/31/16 Generation 1 $ 111 $
466 Retail 133 156 Renewables 2 25 33 NRG Yield 2 184 198 Corporate
(41 ) (41 ) Adjusted EBITDA 3 $ 412 $ 812
1. See Appendices A-4 through A-5 for Generation regional Reg G
reconciliations.2. In accordance with GAAP, 2016 results have been
restated to include full impact of the assets in the NRG Yield Drop
Down transactions which closed on September 1, 2016, and March 27,
2017.3. See Appendices A-1 through A-2 for Operating Segment Reg G
reconciliations.
Generation: First quarter Adjusted EBITDA was $111
million, $355 million lower than first quarter 2016 primarily
driven by:
- Gulf Coast Region: $117 million
decrease due primarily to lower realized energy margins in Texas
from lower realized prices, including the impact of hedges, and
lower cleared auction prices in PJM resulting in lower capacity
revenues in South Central
- East Region: $136 million decrease due
to lower capacity prices, lower realized energy margins on lower
dispatch, monetization of hedges from 2017 in 2016, and assets sold
in 2016; partially offset by reduced operating costs from fewer
planned outages and plant deactivations
- West Region: $54 million decrease due
to the gain from sale of emissions credits in the first quarter of
2016 and the retirement of Pittsburg on January 1, 2017
- Other Generation: $48 million decrease
driven mainly by lower trading results at BETM
Retail: First quarter Adjusted EBITDA was $133 million,
$23 million lower than first quarter 2016 due primarily to lower
margin from mild weather and associated supply costs, which was
partially offset by customer growth.
Renewables: First quarter Adjusted EBITDA was $25
million, $8 million lower than first quarter 2016 due to a
transmission outage at Agua Caliente and lower solar insolation,
partially offset by higher generation at Ivanpah.
NRG Yield: First quarter Adjusted EBITDA was $184
million, $14 million lower than first quarter 2016 due to a forced
outage at El Segundo Energy Center, lower solar and wind resource
primarily in California, which led to decreased production,
partially offset by the acquisition of the Utah utility-scale solar
assets.
Corporate: First quarter Adjusted EBITDA was unchanged
from the first quarter 2016 as higher advisory spend incurred to
assist the Company in its strategic review as well as advisory
services associated with GenOn was offset by lower operating losses
at residential solar.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
3/31/17 12/31/16 Cash at
NRG-Level 1 $ 381 $ 570 Revolver Availability 1,364 1,217
NRG-Level Liquidity $ 1,745 $
1,787 Restricted cash 397 446 Cash at Non-Guarantor
Subsidiaries 1,132 1,403
Total Liquidity $ 3,274
$ 3,636
1 Includes unrestricted cash held at Midwest Generation (a
non-guarantor subsidiary), which can be distributed to NRG without
limitation.
NRG-Level cash as of March 31, 2017, was $381 million, a
decrease of $189 million from December 31, 2016, and $1.4 billion
was available under the Company’s credit facilities at the end of
the first quarter 2017. Total liquidity was $3.3 billion, including
restricted cash and cash at non-guarantor subsidiaries (primarily
GenOn and NRG Yield). On February 28, 2017, GenOn drew $125 million
on letters of credit under its intercompany revolver with NRG to
support the GenOn Mid-Atlantic operating leases; NRG subsequently
drew $125 million on its revolver facility to fund the GenOn
intercompany draw.
NRG Strategic Developments
On May 1, 2017, NRG offered its remaining 25% interest in NRG
Wind TE Holdco, an 814 net MW portfolio of twelve wind projects to
NRG Yield. NRG Yield currently owns a 75% interest in the
portfolio, which it acquired in 2015. The acquisition is subject to
negotiation and approval by NRG Yield's independent directors.
Drop Down to NRG Yield
On March 27, 2017, the Company sold to NRG Yield, Inc.: (i) a
16% interest in the Agua Caliente solar project, representing
ownership of approximately 46 net MW of capacity and (ii) NRG's
interests in seven utility-scale solar projects located in Utah
representing 265 net MW of capacity. NRG Yield Inc. paid cash
consideration of $130 million, plus $1 million in working capital
adjustments, and assumed non-recourse debt of approximately $463
million2.
Business Review Committee
During the quarter, the NRG Board of Directors established the
Business Review Committee (BRC). The BRC was established to
evaluate and make recommendations to the Board regarding the
Company’s (a) operational and cost excellence initiatives, (b)
potential portfolio and/or asset de-consolidations, dispositions
and optimization, (c) capital structure and allocation and (d)
broader strategic initiatives. NRG plans to update the market as
soon as practicable following a recommendation from the BRC.
2017 Guidance
NRG is reaffirming its guidance range for fiscal year 2017 with
respect to both Adjusted EBITDA and FCF before growth
investments.
2 Approximately $328 million on balance sheet and $135 million
pro-rata share of unconsolidated debt
Table 4: 2017 Adjusted EBITDA and FCF
before Growth Investments Guidance
2017 ($ in millions)
Guidance Adjusted EBITDA1
$2,700 - $2,900 Cash From Operations $1,355 - $1,555 Free Cash Flow
Before Growth Investments (FCFbG) $800 - $1,000
1. Non-GAAP financial measure; see Appendix Tables A-1 through
A-5 for GAAP Reconciliation to Net Income that excludes fair value
adjustments related to derivatives. The Company is unable to
provide guidance for Net Income due to the impact of such fair
value adjustments related to derivatives in a given year.
Capital Allocation Update
On April 7, 2017, NRG declared a quarterly dividend on the
company's common stock of $0.03 per share, payable May 15, 2017, to
stockholders of record as of May 1, 2017, 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 2, 2017 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.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 customers. 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
herein include, among others, GenOn’s and certain of its
subsidiaries’ ability to continue as a going concern, general
economic conditions, hazards customary in the power production
industry and power generation operations, weather conditions
(including wind and solar 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, the effectiveness of our risk management policies
and procedures, changes in government regulations, the condition of
capital markets generally, our ability to borrow funds and access
capital markets, unanticipated outages at our generation
facilities, adverse results in current and future litigation,
failure to identify, execute or successfully implement
acquisitions, repowerings or asset sales, our ability to implement
value enhancing improvements to plant operations and companywide
processes, our ability to proceed with projects under development
or the inability to complete the construction of such projects on
schedule or within budget, risks related to project siting,
financing, construction, permitting, government approvals and the
negotiation of project development agreements, our ability to
progress development pipeline projects, the inability to maintain
or create successful partnering relationships, our ability to
operate our businesses efficiently including NRG Yield, our ability
to retain retail customers, our ability to realize value through
our commercial operations strategy and the creation of NRG Yield,
the ability to successfully integrate businesses of acquired
companies, our ability to realize anticipated benefits of
transactions (including expected cost savings and other synergies)
or the risk that anticipated benefits may take longer to realize
than expected, our ability to close the drop down transactions with
NRG Yield, and our ability to execute our capital allocation plan.
Debt and share repurchases 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, cash from operations, and free cash flow guidance are
estimates as of May 2, 2017. 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 press release 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)
2017 2016 Operating Revenues
Total operating revenues $ 2,759 $ 3,229
Operating
Costs and Expenses Cost of operations 2,125 2,194 Depreciation
and amortization 300 313 Selling, general and administrative 272
252 Development activity expenses 17 26 Total
operating costs and expenses 2,714 2,785 Gain on sale of assets 2
32
Operating Income 47 476
Other Income/(Expense) Equity in earnings/(losses) of
unconsolidated affiliates 5 (7 ) Impairment loss on investment —
(146 ) Other income, net 12 18 (Loss)/gain on debt extinguishment,
net (2 ) 11 Interest expense (269 ) (284 ) Total other expense (254
) (408 )
(Loss)/Income Before Income Taxes (207 ) 68 Income
tax (benefit)/expense (4 ) 21
Net (Loss)/Income (203
) 47 Less: Net loss attributable to noncontrolling interest and
redeemable noncontrolling interests (40 ) (35 )
Net
(Loss)/Income Attributable to NRG Energy, Inc. (163 ) 82
Dividends for preferred shares — 5
(Loss)/Income
Available for Common Stockholders $ (163 ) $ 77
(Loss)/Earnings per Share Attributable to NRG Energy, Inc.
Common Stockholders Weighted average number of common shares
outstanding — basic 316 315
(Loss)/Earnings per Weighted Average
Common Share — Basic $ (0.52 ) $ 0.24 Weighted average
number of common shares outstanding — diluted 316 315
(Loss)/Earnings per Weighted Average Common Share — Diluted
$ (0.52 ) $ 0.24
Dividends Per Common Share $ 0.03
$ 0.15
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended March 31, 2017
2016 (In millions) Net (loss)/income $
(203 ) $ 47
Other comprehensive income/(loss), net of tax
Unrealized income/(loss) on derivatives, net of income tax expense
of $1, and $1 4 (32 ) Foreign currency translation adjustments, net
of income tax expense of $0, and $0 7 6 Available-for-sale
securities, net of income tax expense of $0, and $0 — 3 Defined
benefit plans, net of income tax expense of $0, and $0 — 1
Other comprehensive income/(loss) 11 (22 )
Comprehensive (loss)/income (192 ) 25 Less: Comprehensive
loss attributable to noncontrolling interest and redeemable
noncontrolling interests (39 ) (52 )
Comprehensive (loss)/income
attributable to NRG Energy, Inc. (153 ) 77 Dividends for
preferred shares — 5
Comprehensive (loss)/income
available for common stockholders $ (153 ) $ 72
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2017 December 31, 2016
(In millions,
except shares)
(unaudited) ASSETS Current Assets Cash
and cash equivalents $ 1,513 $ 1,973 Funds deposited by
counterparties 3 2 Restricted cash 397 446 Accounts receivable, net
974 1,166 Inventory 1,140 1,111 Derivative instruments 682 1,062
Cash collateral paid in support of energy risk management
activities 277 203 Current assets held-for-sale — 9 Prepayments and
other current assets 454 423 Total current assets
5,440 6,395
Property, plant and equipment, net
17,942 17,912
Other Assets Equity investments
in affiliates 1,148 1,120 Notes receivable, less current portion 13
17 Goodwill 662 662
Intangible assets, net
1,957 2,036 Nuclear decommissioning trust fund 627 610 Derivative
instruments 226 189 Deferred income taxes 223 225 Non-current
assets held-for-sale 10 10 Other non-current assets 1,172
1,179 Total other assets 6,038 6,048
Total
Assets $ 29,420 $ 30,355
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities Current portion
of long-term debt and capital leases $ 1,688 $ 1,220 Accounts
payable 872 895 Derivative instruments 747 1,084 Cash collateral
received in support of energy risk management activities 3 2
Accrued expenses and other current liabilities 887 1,181
Total current liabilities 4,197 4,382
Other
Liabilities Long-term debt and capital leases 17,672 18,006
Nuclear decommissioning reserve 291 287 Nuclear decommissioning
trust liability 352 339 Deferred income taxes 20 20 Derivative
instruments 315 294 Out-of-market contracts, net 1,017 1,040
Non-current liabilities held-for-sale 12 12 Other non-current
liabilities 1,487 1,483 Total non-current liabilities
21,166 21,481
Total Liabilities 25,363
25,863
Redeemable noncontrolling interest in
subsidiaries 44 46
Commitments and Contingencies
Stockholders’ Equity Common stock 4 4 Additional paid-in
capital 8,375 8,358 Retained deficit (4,238 ) (3,787 ) Less
treasury stock, at cost — 101,858,284 and 102,140,814 shares,
respectively (2,392 ) (2,399 ) Accumulated other comprehensive loss
(124 ) (135 ) Noncontrolling interest 2,388 2,405
Total Stockholders’ Equity 4,013 4,446
Total Liabilities and Stockholders’ Equity $ 29,420 $
30,355
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three months ended March 31, 2017
2016 (In millions) Cash Flows from
Operating Activities Net (loss)/income $ (203 ) $ 47
Adjustments to reconcile net (loss)/income to net cash provided by
operating activities: Distributions and equity in earnings of
unconsolidated affiliates 8 17 Depreciation and amortization 300
313 Provision for bad debts 9 10 Amortization of nuclear fuel 12 13
Amortization of financing costs and debt discount/premiums 1 1
Adjustment for debt extinguishment — (11 ) Amortization of
intangibles and out-of-market contracts 10 26 Amortization of
unearned equity compensation 8 8 Impairment losses — 146 Changes in
deferred income taxes and liability for uncertain tax benefits 1
(25 ) Changes in nuclear decommissioning trust liability 36 9
Changes in derivative instruments 25 (50 ) Changes in collateral
posted in support of risk management activities (74 ) 156 Proceeds
from sale of emission allowances — 47 Gain on sale of assets (2 )
(32 ) Cash used by changes in other working capital (199 ) (121 )
Net Cash (Used) Provided by Operating Activities (68 ) 554
Cash Flows from Investing Activities Acquisitions of
businesses, net of cash acquired (3 ) (6 ) Capital expenditures
(268 ) (279 ) Decrease/(increase)in restricted cash, net 13 (12 )
Decrease in restricted cash to support equity requirements for U.S.
DOE funded projects 36 39 Decrease in notes receivable 4 1
Purchases of emission allowances (9 ) (12 ) Proceeds from sale of
emission allowances 11 7 Investments in nuclear decommissioning
trust fund securities (153 ) (200 ) Proceeds from the sale of
nuclear decommissioning trust fund securities 117 191 Proceeds from
renewable energy grants and state rebates — 8 Proceeds from sale of
assets, net of cash disposed of 14 120 Investments in
unconsolidated affiliates (12 ) (4 ) Other 18 4
Net Cash Used by Investing Activities (232 ) (143 )
Cash
Flows from Financing Activities Payment of dividends to common
and preferred stockholders (9 ) (48 ) Net receipts from settlement
of acquired derivatives that include financing elements 1 39
Proceeds from issuance of long-term debt 192 61 Payments for short
and long-term debt (177 ) (316 ) Payment for credit support in
long-term deposits (130 ) — Proceeds from draw on revolving credit
facility for long-term deposits 125 — Increase in long-term
deposits (125 ) — Contributions to, net of distributions from,
noncontrolling interest in subsidiaries (5 ) 10 Payment of debt
issuance costs (15 ) — Other - contingent consideration (10 ) (10 )
Net Cash Used by Financing Activities (153 ) (264 ) Effect
of exchange rate changes on cash and cash equivalents (7 ) (6 )
Net (Decrease)/ Increase in Cash and Cash Equivalents (460 )
141
Cash and Cash Equivalents at Beginning of Period 1,973
1,518
Cash and Cash Equivalents at End of
Period $ 1,513 $ 1,659
Appendix Table A-1: First Quarter 2017
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the
calculation of Adj. EBITDA and provides a reconciliation to net
(loss)/income:
($ in millions) Generation Retail
Renewables NRG Yield Corp/Elim Total
Net (Loss)/Income 67
(33 ) (31 ) (1
) (205 ) (203 )
Plus: Interest expense, net 20 1 21 76 147 265 Income tax — 3 (6 )
(1 ) — (4 ) Loss on debt extinguishment — — 2 — — 2 Depreciation
and amortization 138 28 49 75 10 300 ARO Expense 13 — — 1 — 14
Amortization of contracts (5 ) 1 — 17 — 13 Amortization of leases
(12 ) — — —
— (12 )
EBITDA 221 —
35
167 (48 ) 375 Adjustment to reflect NRG
share of adjusted EBITDA in unconsolidated affiliates 13 (3 ) (4 )
13 — 19 Acquisition-related transaction & integration costs — —
— 1 — 1 Reorganization costs — — — — 8 8 Deactivation costs 3 — — —
1 4 Other non recurring charges (1 ) (1 ) — 3 (2 ) (1 ) Mark to
market (MtM) (gains)/losses on economic hedges (125 )
137 (6 ) — —
6
Adjusted EBITDA 111
133 25
184 (41 ) 412
First Quarter 2017 condensed financial
information by Operating Segment:
($ in millions) Generation Retail
Renewables NRG Yield Corp/Elim Total
Operating revenues 1,208 1,334 92 235 (223 ) 2,646 Cost of sales
600 997 4
16 (213 ) 1,404
Economic gross
margin 608 337 88 219 (10
) 1,242 Operations & maintenance and other cost
of operations (a) 414 80 34 67 (12 ) 583 Selling, marketing,
general and administrative(b) 82 119 15 4 43 263 Other
expense/(income) 1 5 14
(36 ) — (16 )
Adjusted
EBITDA 111 133
25 184 (41
) 412
(a) Excludes deactivation costs of $4 million.(b) Excludes
reorganization costs of $8 million and integration costs of $1
million.
The following table reconciles the
condensed financial information to Adjusted EBITDA:
($ in millions) Condensed financial
information Interest, tax, depr., amort. MtM
Deactivation Other adj. Adjusted EBITDA Operating
revenues 2,759 15 (128 ) — — 2,646 Cost of operations
1,536 2 (134 ) — —
1,404
Gross margin 1,223
13 6 — —
1,242 Operations & maintenance
and other cost of operations 589 (2 ) — (4 ) — 583 Selling,
marketing, general & administrative (a) 272 — — — (9 ) 263
Other expense/(income) 565 (582 )
— — 1 (16 )
Net
Loss (203 ) 597
6 4
8 412
(a) Other adj. includes reorganization costs of $8 million and
integration costs of $1 million.
Appendix Table A-2: First Quarter 2016
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss):
($ in millions) Generation Retail
Renewables NRG Yield Corp/Elim Total
Net Income/(Loss) 191
150 (40 ) 2
(256 ) 47 Plus: Interest
expense, net 10 — 27 74 170 281 Income tax — — (6 ) — 27 21 Gain on
debt extinguishment — — — — (11 ) (11 ) Depreciation and
amortization 144 30 48 74 17 313 ARO Expense 9 — — 1 — 10
Amortization of contracts (2 ) 3 — 23 (3 ) 21 Amortization of
leases (12 ) — — —
— (12 )
EBITDA 340
183 29 174 (56 ) 670
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 9 — — 24 1 34 Reorganization costs 1 5 2
— 2 10 Deactivation costs 7 — — — — 7 Gain on sale of business (29
) — — — — (29 ) Other non recurring charges 2 1 3 — 3 9 Impairments
137 — — — 9 146 Mark to market (MtM) (gains)/losses on economic
hedges (1 ) (33 ) (1 ) —
— (35 )
Adjusted EBITDA
466 156 33
198 (41 )
812
First Quarter 2016 condensed financial
information by Operating Segment:
($ in millions) Generation Retail
Renewables NRG Yield Corp/Elim Total
Operating revenues 1,702 1,371 95 251 (201 ) 3,218 Cost of sales
666 1,025 2
16 (204 ) 1,505
Economic gross
margin 1,036 346 93 235 3
1,713 Operations & maintenance and other cost of
operations (a) 501 84 38 61 3 687 Selling, marketing, general &
administrative (b) 85 106 12 3 36 242 Other expense/(income) (c)
(16 ) — 10 (27 )
5 (28 )
Adjusted EBITDA
466 156 33
198 (41 )
812
(a) Excludes deactivation costs of $7 million.(b) Excludes
reorganization costs of $10 million.(c) Excludes impairments of
$146 million, gain on sale of business of $29 million and gain on
debt extinguishment of $11 million.
The following table reconciles the
condensed financial information to Adjusted EBITDA:
($ in millions) Condensed financial
information Interest, tax, depr., amort. MtM
Deactivation Other adj. Adjusted EBITDA Operating
revenues 3,229 15 (26 ) — — 3,218 Cost of operations
1,502 (6 ) 9 — —
1,505
Gross margin 1,727
21 (35 ) — — 1,713
Operations & maintenance and other cost of operations 692 2 —
(7 ) — 687 Selling, marketing, general & administrative (a) 252
— — — (10 ) 242 Other expense/(income) (b) 736
(649 ) — — (115 )
(28 )
Net Income 47
668 (35 ) 7
125 812
(a) Other adj. includes reorganization costs of $10 million.(b)
Other adj. includes impairments of $146 million, gain on sale of
business of $29 million and gain on debt extinguishment of $11
million.
Appendix Table A-3: 2017 and 2016 First
Quarter Adjusted Cash Flow from Operations Reconciliations
The following table summarizes the
calculation of adjusted cash flow operating activities providing a
reconciliation to net cash provided by operating activities:
Three Months Ended ($ in millions)
March 31, 2017 March 31, 2016 Net
Cash Provided by Operating Activities (68 )
554 Reclassifying of net receipts for
settlement of acquired derivatives that include financing elements
1 39 Sale of Land 8 — Merger, integration and cost-to-achieve
expenses (1) — 19 Return of capital from equity investments 14 5
Adjustment for change in collateral 74
(156 )
Adjusted Cash Flow from Operating Activities
29 461
Maintenance CapEx, net (2) (54 ) (91 ) Environmental CapEx, net (25
) (77 ) Preferred dividends — (2 ) Distributions to non-controlling
interests (46 ) (42 )
Free Cash Flow
Before Growth Investments (FCFbG) (96
) 249
(1) 2016 includes cost-to-achieve expenses associated with the
$150 million savings announced on September 2015 call.(2) Includes
insurance proceeds of $18 million and $4 million in 2017 and 2016,
respectively
Appendix Table A-4: First Quarter 2017
Regional Adjusted EBITDA Reconciliation for Generation
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss):
($ in millions) Gulf Coast East
West Other Total
Net Income/(Loss)
39 36 (7
) (1 ) 67 Plus:
Interest expense, net 1 19 — — 20 Depreciation and amortization 73
59 6 — 138 ARO Expense 4 6 3 — 13 Amortization of contracts 2 (5 )
(2 ) — (5 ) Amortization of leases —
(12 ) — — (12 )
EBITDA
119 103 — (1 ) 221
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 7 — 3 3 13 Deactivation costs — 1 2 — 3
Other non recurring charges — (2 ) 1 — (1 ) Market to market (MtM)
losses/(gains) on economic hedges (121 ) 3
(7 ) — (125 )
Adjusted
EBITDA 5 105
(1 ) 2 111
First Quarter 2017 condensed financial
information for Generation:
($ in millions) Gulf Coast East
West Other Elims. Total Operating revenues 528
626 51 6 (3 ) 1,208 Cost of sales 318
264 18 — —
600
Economic gross margin 210 362 33
6 (3 ) 608 Operations & maintenance
and other cost of operations (a) 169 220 28 — (3 ) 414 Selling,
marketing, general & administrative 34 36 6 6 — 82 Other
expense/(income) 2 1 —
(2 ) — 1
Adjusted EBITDA
5 105
(1 ) 2 —
111
(a) Excludes deactivation costs of $3 million.
The following table reconciles the
condensed financial information to Adjusted EBITDA:
($ in millions) Condensed financial
information Interest, tax, depr., amort. MtM
Deactivation Other adj. Adjusted EBITDA Operating
revenues 1,343 (3 ) (132 ) — — 1,208 Cost of operations
605 2 (7 ) —
— 600
Gross margin 738 (5
) (125 ) — — 608
Operations & maintenance and other cost of operations 418 (1 )
— (3 ) — 414 Selling, marketing, general & administrative 82 —
— — — 82 Other expense/(income) 171
(171 ) — — 1 1
Net Income 67 167
(125 ) 3 (1
)
111
Appendix Table A-5: First Quarter 2016
Regional Adjusted EBITDA Reconciliation for Generation
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss):
($ in millions) Gulf Coast East
West Other Total
Net Income/(Loss)
(125 ) 242
30 44 191
Plus: Interest expense, net — 10 — — 10 Depreciation and
amortization 76 53 15 — 144 ARO Expense 3 4 2 — 9 Amortization of
contracts 2 (5 ) 1 — (2 ) Amortization of leases (1 )
(11 ) — — (12 )
EBITDA (45 ) 293 48 44
340 Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 3 — 2 4 9 Reorganization costs 1 — — — 1
Deactivation costs — 7 — — 7 Gain on sale of assets — (29 ) — — (29
) Other non recurring charges — — — 2 2 Impairments 137 — — — 137
Market to market (MtM) losses/(gains) on economic hedges
26 (30 ) 3 —
(1 )
Adjusted EBITDA 122
241 53 50
466
First Quarter 2016 condensed financial
information for Generation:
($ in millions) Gulf Coast East
West Other Elims. Total Operating revenues 602
946 117 41 (4 ) 1,702 Cost of sales 280
368 18 — —
666
Economic gross margin 322 578
99 41 (4 ) 1,036 Operations
& maintenance and other cost of operations (a) 170 295 40 — (4
) 501 Selling, marketing, general & administrative 30 41 7 7 —
85 Other expense/(income)(b) — 1
(1 ) (15 ) — (15 )
Adjusted
EBITDA 122 241
53 50 —
466
(a) Excludes deactivation costs of $7 million.(b) Excludes
impairments of $137 million.
The following table reconciles the
condensed financial information to Adjusted EBITDA:
($ in millions) Condensed financial
information Interest, tax, depr., amort. MtM
Deactivation Other adj. Adjusted EBITDA Operating
revenues 1,708 (3 ) (3 ) — — 1,702 Cost of operations
669 (1 ) (2 ) — —
666
Gross margin 1,039 (2
) (1 ) — — 1,036
Operations & maintenance and other cost of operations 505 3 —
(7 ) — 501 Selling, marketing, general & administrative 86 — —
— (1 ) 85 Other expense/(income) (a) 257
(163 ) — — (110 )
(16 )
Net Income 191
158 (1 ) 7
111 466
(a) Other adj. includes impairments of $137 million.
Appendix Table A-6: First Quarter 2017
Sources and Uses of Liquidity
The following table summarizes the sources
and uses of liquidity in the first quarter of 2017:
($ in millions)
Three Months Ended
March 31, 2017
Sources: Adjusted cash flow from operations 29 Asset sales 6
Issuance of Agua Caliente HoldCo debt 130 NYLD Equity Issuance 7
Tax Equity Proceeds 16 Increase in credit facility 147
Uses: Maintenance and environmental capex, net (1) (80 )
Debt Repayments, net of proceeds (146 ) Growth investments and
acquisitions, net (152 ) GENMA long-term deposit (130 ) Collateral
(74 ) Distributions to non-controlling interests (46 ) Nuclear
Decommissioning Trust (36 ) Common Stock Dividends (9 ) Other
Investing and Financing (24 )
Change in Total Liquidity
(362 )
(1) Includes insurance proceeds of $18 million.
Appendix Table A-7: 2017 Adjusted
EBITDA Guidance Reconciliation
The following table summarizes the
calculation of Adjusted EBITDA providing reconciliation to net
income:
2017 Adjusted EBITDA ($ in millions)
Low High GAAP Net Income 1 60
260 Income Tax 80 80 Interest Expense & Debt
Extinguishment Costs 1,155 1,155 Depreciation, Amortization,
Contract Amortization and ARO Expense 1,235 1,235 Adjustment to
reflect NRG share of adjusted EBITDA in unconsolidated affiliates
110 110 Other Costs 2 60 60
Adjusted EBITDA
2,700 2,900
(1) For purposes of guidance, fair value adjustments related to
derivatives are assumed to be zero.(2) Includes deactivation costs,
gain on sale of businesses, asset write-offs, impairments and other
non-recurring charges.
Appendix Table A-8: 2017 FCFbG Guidance
Reconciliation
The following table summarizes the
calculation of Free Cash Flow before Growth providing
reconciliation to Cash from Operations:
2017 ($ in millions)
Guidance Adjusted EBITDA $2,700
- $2,900 Cash Interest payments (1,065) Cash Income tax (40)
Collateral / working capital / other (240) Cash From Operations
$1,355 - $1,555 Adjustments: Acquired Derivatives, Cost-to-Achieve,
Return of Capital Dividends, Collateral and Other — Adjusted Cash
flow from operations $1,355 - $1,555 Maintenance capital
expenditures, net (280) - (310) Environmental capital expenditures,
net (40) - (60) Distributions to non-controlling interests (185) -
(205) Free Cash Flow - before Growth Investments $800 - $1,000
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. As NRG defines it, Adjusted EBITDA
represents EBITDA excluding impairment losses, gains or losses on
sales, dispositions or retirements of assets, any mark-to-market
gains or losses from accounting for derivatives, adjustments to
exclude the Adjusted EBITDA related to the non-controlling
interest, gains or losses on the repurchase, modification or
extinguishment of debt, the impact of restructuring and any
extraordinary, unusual or non-recurring items plus adjustments to
reflect the Adjusted EBITDA from our unconsolidated investments.
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.
Management believes Adjusted EBITDA is useful to investors and
other users of NRG's financial statements in evaluating its
operating performance because it provides an additional tool to
compare business performance across companies and across periods
and adjusts for items that we do not consider indicative of NRG’s
future operating performance. This measure is widely used by
debt-holders to analyze operating performance and debt service
capacity and by equity investors to measure our operating
performance without regard to items such as interest expense,
taxes, depreciation and amortization, which can vary substantially
from company to company depending upon accounting methods and book
value of assets, capital structure and the method by which assets
were acquired. Management uses Adjusted EBITDA as a measure of
operating performance to assist in comparing performance from
period to period on a consistent basis and to readily view
operating trends, as a measure for planning and forecasting overall
expectations, and for evaluating actual results against such
expectations, and in communications with NRG's Board of Directors,
shareholders, creditors, analysts and investors concerning its
financial performance.
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, integration and related
restructuring 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, integration
related restructuring 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, preferred stock dividends and
distributions to non-controlling interests 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.
Free Cash Flow before Growth Investments is utilized by
Management in making decisions regarding the allocation of capital.
Free Cash Flow before Growth Investment is presented because the
Company believes it is a useful tool for assessing the financial
performance in the current period. In addition, NRG’s peers
evaluate cash available for allocation in a similar manner and
accordingly, it is a meaningful indicator for investors to
benchmark NRG's performance against its peers. Free Cash Flow
before Growth Investment is a performance measure and is not
intended to represent net income (loss), cash from operations (the
most directly comparable U.S. GAAP measure), or liquidity and is
not necessarily comparable to similarly titled measures reported by
other companies.
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version on businesswire.com: http://www.businesswire.com/news/home/20170502005806/en/
NRG Energy, Inc.Media:Marijke Shugrue,
609-524-5262orInvestors:Kevin L. Cole, CFA,
609-524-4526orLindsey Puchyr, 609-524-4527
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