- Significant progress on Asset
Sales:
- Announcing sale of Boston Energy
Trading and Marketing LLC (BETM)
- Announced sale of NRG's interest in
NRG Yield, Renewables platform, ROFO assets and South Central
business for $2.8 billion1 on February 7,
2018
- Exceeded Transformation Plan targets
for cost reductions and working capital improvement in
2017
- Reduced corporate debt by $604
million in 2017 and refinanced senior notes, resulting in
approximately $55 million of recurring interest savings
- Authorized $1 billion in share
repurchases; first $500 million program to be launched
immediately
- Recorded $1.8 billion non-cash asset
and goodwill impairment charge
NRG Energy, Inc. (NYSE: NRG) today reported a full year 2017 net
loss of $1,548 million, or $6.79 per diluted common share. Adjusted
EBITDA for the full year 2017 was $2.4 billion, cash from
operations was $1.4 billion and FCFbG was $1.3 billion. The net
loss and loss per share were driven by a $1.8 billion impairment of
fixed assets, goodwill, and investments of which $1.2 billion was
related to the South Texas Project (STP) nuclear generation
facility, primarily due to the revised outlook of future commodity
prices.
“Our business continued its strong performance in a year when we
announced our Transformation Plan aimed at simplifying and
enhancing the business to deliver increased shareholder value,”
said Mauricio Gutierrez, NRG President and Chief Executive Officer.
“With this announcement, we are demonstrating measurable success
towards achieving the goals of cost excellence, portfolio
optimization and capital structure enhancements. I’m also proud to
report that we did this while realizing our second best safety year
in company history.”
Consolidated Financial Results
Three Months Ended
Twelve Months Ended ($ in millions)
12/31/17
12/31/16 12/31/17
12/31/16 Income/(Loss) from Continuing Operations $
(1,667 ) $ (891 ) $ (1,548 ) $ (983 ) Cash
From Continuing Operations $ 581 $ 533 $ 1,425 $ 2,207 Adjusted
EBITDA $ 497 $ 471 $ 2,373 $ 2,706 Free Cash Flow Before Growth
Investments (FCFbG) $ 497 $ 270 $
1,304 $ 1,255
Segment Results
Table 1: Income/(Loss) from Continuing
Operations
($ in millions)
Three Months
Ended Twelve Months Ended Segment
12/31/17
12/31/16 12/31/17
12/31/16 Generation $ (1,700) $ (774) $ (1,498) $ (824)
Retail 506 317
886
1,053 Renewables a. (207) (223) (266) (330) NRG Yield a. (98) (115)
(23) 2 Corporate (168) (96) (647) (884) Income/(Loss) from
Continuing Operations $ (1,667) $ (891) $ (1,548) $ (983)
a. In accordance with GAAP, 2016 and 2017 results have been
restated to include full impact of the assets in the NRG Yield Drop
Down transactions which closed on September 1, 2016, March 27,
2017, and August 1, 2017
The net loss from continuing operations for the 12 months of
2017 was driven by a $1.8 billion impairment of fixed assets,
goodwill, and investments of which $1.2 billion was related to the
South Texas Project (STP) nuclear generation facility, primarily
due to the revised outlook of future commodity prices. The net loss
from continuing operations for the 12 months of 2016 includes a
$970 million impairment of fixed assets and goodwill.
Table 2: Adjusted EBITDA
($ in millions)
Three Months
Ended Twelve Months Ended Segment
12/31/17
12/31/16 12/31/17 12/31/16
Generation $ 104 $ 117 $ 535 $ 869 Retail 214 134 825 811
Renewables a. 14 19 153 151 NRG Yield a. 204 214 933 932 Corporate
(39) (13) (73) (57) Adjusted EBITDA b. $ 497 $ 471 $ 2,373 $ 2,706
a. 2016 and 2017 results have been restated to include full
impact of the assets in the NRG Yield Drop Down transactions, which
closed on September 1, 2016, March 27, 2017, and August 1, 2017
b. See Appendices A-1 through A-4 for Operating Segment Reg G
reconciliations
Generation: Full year 2017 Adjusted EBITDA was $535
million, $334 million lower than 2016 driven by:
- Gulf Coast: $276 million decrease due
to lower realized energy prices despite slightly higher generation,
partially offset by lower operating expenses, net of outages due to
flooding
- East/West2: $58 million decrease due to
lower dispatch, realized energy prices and capacity revenues,
partially offset by lower operating costs, property tax and
overhead expenses
Fourth quarter Adjusted EBITDA was $104 million, $13 million
lower than the fourth quarter 2016 driven by:
- Gulf Coast: $51 million decrease due to
lower realized energy prices, partially offset by lower operating
expenses
- East/West2: $38 million increase due to
higher capacity revenues, higher trading results at BETM and lower
operating expenses
Retail: Full year 2017 Adjusted EBITDA was $825 million,
$14 million higher than 2016 due to lower operating costs,
partially offset by lower unit margins due to customer mix, milder
weather and the impact of Hurricane Harvey.
Fourth quarter Adjusted EBITDA was $214 million, $80 million
higher than the fourth quarter 2016 due to improved performance,
customer growth and lower operating costs.
Renewables: Full year 2017 Adjusted EBITDA was $153
million, $2 million higher than 2016 due to increased generation
and insurance recovery at Ivanpah, partially offset by lost margin
from the sale of assets, a transmission outage at Agua Caliente,
and increased development expenditures.
Fourth quarter Adjusted EBITDA was $14 million, $5 million lower
than the fourth quarter 2016 due to lost margin from certain asset
sales and plant outages, partially offset by lower operating and
overhead expenses.
NRG Yield: Full year 2017 Adjusted EBITDA was $933
million, $1 million higher than 2016 due to contribution from Utah
Solar assets acquired by NRG in the fourth quarter of 2016 and
growth in distributed generation partnerships, partially offset by
lower renewable production in 2017 driven by lower wind
resources.
Fourth quarter Adjusted EBITDA was $204 million, $10 million
lower than the fourth quarter 2016 due to lower wind production
driven by lower wind resources, partially offset by growth in
distributed generation partnerships.
Corporate: Full year 2017 Adjusted EBITDA was $(73)
million, $16 million lower than 2016 due to the reduction in shared
services income from GenOn, higher advisory fees, partially offset
by lower corporate marketing expenses and the elimination of
operating losses at Residential Solar and eVgo following their wind
down of operations.
Fourth quarter Adjusted EBITDA was $(39) million, $26 million
lower than the fourth quarter 2016 due to the reduction in shared
services income from GenOn, partially offset by lower corporate
marketing expenses and the elimination of operating losses at
Residential Solar following its wind down of operations.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
12/31/17
12/31/16 Cash at NRG-Level a. $ 769 $ 570 Revolver 1,711 989
NRG-Level Liquidity $ 2,480 $
1,559 Restricted cash 508 446 Cash at Non-Guarantor
Subsidiaries 222 368
Total Liquidity $
3,210 $ 2,373
a. December 31, 2017 balance includes unrestricted cash held at
Midwest Generation (a non-guarantor subsidiary) which can be
distributed to NRG without limitation
NRG-Level cash as of December 31, 2017, was $769 million, an
increase of $199 million from the end of 2016, and $1.7 billion was
available under the Company’s credit facilities at the end of 2017.
Total liquidity was $3.2 billion, including restricted cash and
cash at non-guarantor subsidiaries (primarily NRG Yield).
NRG Transformation Plan Update
Cost Reductions
As of the end of the fourth quarter of 2017, NRG realized $150
million, or 231%, of its 2017 cost savings target as part of the
previously announced Transformation Plan.
Asset Sales Program
To date, NRG has announced or closed approximately $3 billion in
asset sales towards its revised Transformation Plan target of $3.2
billion.
Sale of BETM
Announced today, a subsidiary of NRG has
entered into a purchase and sale agreement with a subsidiary of
Diamond Generating Corporation, a subsidiary of Mitsubishi
Corporation, to sell Boston Energy Trading and Marketing LLC
(BETM). The transaction is expected to close in the second half of
2018 and is subject to closing conditions, approvals and consents
including Federal Energy Regulatory Commission (FERC) and the
Committee on Foreign Investment in the United States (CFIUS).
Sale of NRG Yield and Renewables
Platform
On February 6, 2018, NRG and Global
Infrastructure Partners, or GIP, entered into a purchase and sale
agreement to sell NRG's ownership in NRG Yield, Inc. and NRG's
renewable energy development and operations platform for cash of
$1.375 billion, subject to certain adjustments, and upon closing,
removal of approximately $6.7 billion of consolidated debt as of
12/31/2017. The transaction is expected to close in the second half
of 2018 and is subject to various customary closing conditions,
approvals and consents.
Sale of South Central Business
On February 7, 2018, NRG and Cleco Corporate
Holdings LLC, or Cleco, entered into a purchase and sale agreement
to sell NRG's South Central business for a total cash purchase
price of $1.0 billion, subject to certain adjustments. The
transaction is expected to close in the second half of 2018 and is
subject to various customary closing conditions, approvals and
consents. Also, as part of the transaction, NRG will enter into a
sale leaseback agreement for the Cottonwood plant through May of
2025.
Accelerated Drop Down Agreements
On January 24, 2018, the Company entered into
an agreement with NRG Yield, Inc. to sell 100% of its ownership
interest in Buckthorn Solar for cash consideration of $42 million,
subject to other adjustments.
On February 6, 2018, the Company entered into
an agreement with NRG Yield, Inc. to sell 100% of the membership
interests in Carlsbad Energy Holdings LLC, which indirectly owns
the Carlsbad project, a 527 MW natural gas fired project in
Carlsbad, CA, pursuant to the ROFO Agreement. The purchase price
for the transaction is $365 million in cash consideration, subject
to customary working capital and other adjustments.
2018 Guidance
NRG is reaffirming its guidance range for 2018 with respect to
Consolidated Adjusted EBITDA, Cash From Operations and FCFbG as set
forth below.
Table 4: 2018 Adjusted EBITDA and FCF before
Growth Guidance
2018 ($ in millions)
Guidance Adjusted EBITDA a. $2,800 - $3,000 Cash From
Operations $2,015 - $2,215 Free Cash Flow before Growth $1,550 -
$1,750
a. 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
In 2017, NRG reduced corporate debt by $604 million3 and
refinanced and extended its 2023 senior notes realizing annual
interest savings of approximately $55 million. Following the
announced sale of NRG Yield and Renewables and the South Central
businesses, NRG is also announcing corporate debt reduction of $640
million in 2018 and is temporarily reserving $1,200 million of
additional cash to achieve it's 3.0x corporate net debt to Adjusted
EBITDA ratio as part of the previously announced capital allocation
guidance under the Transformation Plan.
The NRG Board of Directors has authorized $1 billion for share
repurchases, with the first $500 million program to begin
immediately. Following the completion of the initial program, and
as NRG progress towards the closing of the announced asset sales,
NRG expects to execute the remaining $500 million of the $1 billion
share repurchase program.
On January 18, 2018, NRG declared a quarterly dividend on the
Company's common stock of $0.03 per share, payable February 15,
2018, to stockholders of record as of February 1, 2018,
representing $0.12 on an annualized basis.
The Company’s common stock dividend, corporate level debt
reduction and share repurchases are subject to available capital,
market conditions and compliance with associated laws and
regulations.
Earnings Conference Call
On March 1, 2018, 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 a leading integrated power company built on the strength
of a diverse competitive electric generation portfolio and leading
retail electricity platform. NRG aims to create a sustainable
energy future by producing, selling and delivering electricity and
related products and services in major competitive power markets in
the U.S. in a manner that delivers value to all of NRG's
stakeholders. The Company owns and operates approximately 30,000 MW
of generation; engages in the trading of wholesale energy, capacity
and related products; transacts in and trades fuel and
transportation services; and directly sells energy, services, and
innovative, sustainable products and services to retail customers
under the names “NRG”, "Reliant" and other retail brand names owned
by NRG. 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, 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 regulations, 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, 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 implement and execute on our publicly
announced transformation plan, including any cost savings, margin
enhancement, asset sale, and net debt targets, 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 timing or completion of GenOn's emergence
from bankruptcy, the inability to maintain or create successful
partnering relationships, our ability to operate our businesses
efficiently, our ability to retain retail customers, our ability to
realize value through our commercial operations strategy, 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 and free cash flow guidance are estimates as of
March 1, 2018. 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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31,
(In millions,
except per share amounts)
2017 2016 2015
Operating Revenues Total operating revenues $ 10,629
$ 10,512 $ 12,328
Operating Costs and Expenses
Cost of operations 7,536 7,301 9,000 Depreciation and amortization
1,056 1,172 1,351 Impairment losses 1,709 702 4,860 Selling,
general and administrative 907 1,095 1,228 Reorganization costs 44
— — Development costs 67 89 154 Total
operating costs and expenses 11,319 10,359 16,593
Other income - affiliate 87 193 193 Gain/(loss) on sale of
assets 16 (80 ) — Gain on postretirement benefits curtailment —
— 21
Operating (Loss)/Income (587 ) 266
(4,051 )
Other Income/(Expense) Equity in earnings of
unconsolidated affiliates 31 27 36 Impairment losses on investments
(79 ) (268 ) (56 ) Other income, net 38 34 26 Loss on sale of
equity method investment — — (14 ) Net (loss)/gain on debt
extinguishment (53 ) (142 ) 10 Interest expense (890 ) (895 ) (937
) Total other expense (953 ) (1,244 ) (935 )
Loss from
Continuing Operations Before Income Taxes (1,540 ) (978 )
(4,986 ) Income tax expense 8 5 1,345
Net Loss from Continuing Operations (1,548 ) (983 )
(6,331 ) (Loss)/income from discontinued operations, net of income
tax (789 ) 92 (105 )
Net Loss (2,337 ) (891 ) (6,436
) Less: Net loss attributable to noncontrolling interests and
redeemable noncontrolling interests (184 ) (117 ) (54 )
Net Loss
Attributable to NRG Energy, Inc. (2,153 ) (774 ) (6,382 )
Dividends for preferred shares — 5 20 Gain on redemption of
preferred shares — (78 ) —
Loss Available for
Common Stockholders $ (2,153 ) $ (701 ) $ (6,402 )
Loss Per
Share Attributable to NRG Energy, Inc. Common Stockholders
Weighted average number of common shares outstanding — basic and
diluted 317 316 329 Loss from continuing operations per weighted
average common share — basic and diluted $ (4.30 ) $ (2.51 ) $
(19.14 ) (Loss)/Income from discontinued operations per weighted
average common share — basic and diluted $ (2.49 ) $ 0.29 $
(0.32 )
Net Loss per Weighted Average Common Share — Basic and
Diluted $ (6.79 ) $ (2.22 ) $ (19.46 )
Dividends Per Common
Share $ 0.12 $ 0.24 $ 0.58
NRG ENERGY, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE
(LOSS)/INCOME
For the Year Ended December 31,
2017 2016 2015
(In millions) Net Loss $ (2,337 ) $ (891 ) $ (6,436 )
Other Comprehensive Income, net of tax Unrealized
gain/(loss) on derivatives, net of income tax expense of $1, $1,
and $19 13 35 (15 ) Foreign currency translation adjustments, net
of income tax benefit of $(2), $0, and $0 12 (1 ) (11 )
Available-for-sale securities, net of income tax expense/(benefit)
of $10, $0, and $(3) (8 ) 1 17 Defined benefit plan, net of income
tax (benefit)/expense of $(21), $0 and $69 46 3 10
Other comprehensive income 63 38 1
Comprehensive Loss (2,274 ) (853 ) (6,435 ) Less:
Comprehensive loss attributable to noncontrolling interests and
redeemable noncontrolling interests (179 ) (117 ) (73 )
Comprehensive Loss Attributable to NRG Energy, Inc. (2,095 )
(736 ) (6,362 ) Dividends for preferred shares — 5 20 Gain on
redemption of preferred shares — (78 ) —
Comprehensive Loss Available for Common Stockholders $
(2,095 ) $ (663 ) $ (6,382 )
NRG ENERGY, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
As of December 31, 2017
2016 (In millions) ASSETS Current
Assets Cash and cash equivalents $ 991 $ 938 Funds deposited by
counterparties 37 2 Restricted cash 508 446 Accounts receivable —
trade 1,079 1,058 Inventory 532 721 Derivative instruments 626
1,067 Cash collateral posted in support of energy risk management
activities 171 150 Accounts receivable — affiliate 95 — Current
assets held-for-sale 115 9 Prepayments and other current assets 261
404 Current assets - discontinued operations — 1,919 Total
current assets 4,415 6,714
Property, plant and equipment,
net 13,908 15,369
Other Assets Equity investments
in affiliates 1,038 1,120 Notes receivable, less current portion 2
16 Goodwill 539 662 Intangible assets, net 1,746 1,973 Nuclear
decommissioning trust fund 692 610 Derivative instruments 172 181
Deferred income taxes 134 225 Non-current assets held-for-sale 43
10 Other non-current assets 629 841 Non-current assets -
discontinued operations — 2,961 Total other assets 4,995
8,599
Total Assets $ 23,318 $ 30,682
NRG ENERGY, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Continued)
As of December 31, 2017
2016 (In millions, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Current portion of long-term debt and capital
leases $ 688 $ 516 Accounts payable 881 782 Accounts payable -
affiliate 33 31 Derivative instruments 555 1,092 Cash collateral
received in support of energy risk management activities 37 81
Accrued interest expense 156 180 Current liabilities - held for
sale 72 — Other accrued expenses and other current liabilities 734
810 Other accrued expenses and other current liabilities -
affiliate 161 — Current liabilities - discontinued operations —
1,210 Total current liabilities 3,317 4,702
Other Liabilities Long-term debt and capital leases
15,716 15,957 Nuclear decommissioning reserve 269 287 Nuclear
decommissioning trust liability 415 339 Postretirement and other
benefit obligations 458 510 Deferred income taxes 21 20 Derivative
instruments 197 284 Out-of-market contracts, net 207 230
Non-current liabilities held-for-sale 8 11 Other non-current
liabilities 664 666 Non-current liabilities - discontinued
operations — 3,184 Total non-current liabilities
17,955 21,488
Total Liabilities 21,272
26,190 Redeemable noncontrolling interest in subsidiaries 78
46
Commitments and Contingencies Stockholders' Equity
Common stock; $0.01 par value; 500,000,000 shares authorized;
418,323,134 and 417,583,825 shares issued; and 316,743,089 and
315,443,011 shares outstanding at December 31, 2017 and 2016 4 4
Additional paid-in capital 8,376 8,358 Accumulated deficit (6,268 )
(3,787 ) Treasury stock, at cost; 101,580,045 and 102,140,814
shares at December 31, 2017 and 2016 (2,386 ) (2,399 ) Accumulated
other comprehensive loss (72 ) (135 ) Noncontrolling interest 2,314
2,405
Total Stockholders' Equity
1,968 4,446
Total Liabilities and Stockholders'
Equity $ 23,318 $ 30,682
NRG ENERGY, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW
For the Year Ended December 31, 2017
2016 2015 (In
millions) Cash Flows from Operating Activities Net loss
(2,337 ) (891 ) (6,436 ) (Loss)/income from discontinued
operations, net of income tax (789 ) 92 (105 ) Loss from continuing
operations $ (1,548 ) $ (983 ) $ (6,331 ) Adjustments to reconcile
net income/(loss) to net cash provided by operating activities:
Equity in earnings and distribution of unconsolidated affiliates 55
54 37 Depreciation and amortization 1,056 1,172 1,351 Provision for
bad debts 68 48 64 Amortization of nuclear fuel 51 49 45
Amortization of financing costs and debt discount/premiums 60 55 47
Adjustment for debt extinguishment 53 142 (10 ) Amortization of
intangibles and out-of-market contracts 108 167 151 Amortization of
unearned equity compensation 35 10 39 Net (gain)/loss on sale of
assets and equity method investments (34 ) 70 14 Gain on post
retirement benefits curtailment — — (21 ) Impairment losses 1,788
972 4,916 Changes in derivative instruments (171 ) 32 235 Changes
in deferred income taxes and liability for uncertain tax benefits
91 (43 ) 1,326 Changes in collateral deposits in support of risk
management activities (80 ) 398 (334 ) Proceeds from sale of
emission allowances 25 34 (24 ) Changes in nuclear decommissioning
trust liability 11 41 (2 ) Cash provided/(used) by changes in other
working capital, net of acquisition and disposition effects:
Accounts receivable - trade (99 ) (7 ) 113 Inventory 143 71 (59 )
Prepayments and other current assets 12 (44 ) (21 ) Accounts
payable 77 (39 ) (180 ) Accrued expenses and other current
liabilities (60 ) (35 ) (29 ) Other assets and liabilities (216 )
43 (40 )
Cash provided by continuing operations 1,425
2,207 1,287
Cash (used)/provided by discontinued operations
(38 ) (119 ) 62
Net Cash Provided by Operating
Activities 1,387 2,088 1,349
Cash Flows
from Investing Activities Acquisition of businesses, net of
cash acquired (41 ) (209 ) (31 ) Capital expenditures (1,111 ) (976
) (1,029 ) Net cash proceeds from notes receivable 17 17 18
Proceeds from renewable energy grants 8 36 82 Proceeds
from/(purchases) of emission allowances, net of purchases 66 (1 )
41 Investments in nuclear decommissioning trust fund securities
(512 ) (551 ) (629 ) Proceeds from sales of nuclear decommissioning
trust fund securities 501 510 631 Proceeds from sale of assets, net
87 73 27 Investments in unconsolidated affiliates (40 ) (23 ) (395
) Other 12 35 16
Cash used by continuing
operations (1,013 ) (1,089 ) (1,269 )
Cash (used)/provided
by discontinued operations (53 ) 297 (259 )
Net Cash
Used by Investing Activities (1,066 ) (792 ) (1,528 )
Cash
Flows from Financing Activities Payments of dividends to
preferred and common stockholders (38 ) (76 ) (201 ) Net receipts
from settlement of acquired derivatives that include financing
elements 2 6 14 Payments for treasury stock — — (437 ) Payments for
preferred shares — (226 ) — Payments for debt extinguishment costs
(42 ) (121 ) — Distributions to, net of contributions from,
noncontrolling interests in subsidiaries 95 (156 ) 47 Proceeds from
sale of noncontrolling interests in subsidiaries — — 600
(Payments)/Proceeds from issuance of common stock (2 ) 1 1 Proceeds
from issuance of long-term debt 2,270 5,527 1,004 Payments of debt
issuance and hedging costs (63 ) (89 ) (21 ) Payments for short and
long-term debt (2,348 ) (5,908 ) (1,362 ) Receivable from affiliate
(125 ) — — Other (10 ) (13 ) (22 )
Cash used by continuing
operations (261 ) (1,055 ) (377 )
Cash (used)/provided by
discontinued operations (224 ) 140 (55 )
Net Cash
Used by Financing Activities (485 ) (915 ) (432 ) Effect of
exchange rate changes on cash and cash equivalents (1 ) 1 10
Change in Cash from discontinued operations (315 )
318 (252 )
Net Increase/(Decrease) in Cash and Cash
Equivalents, Funds Deposited by Counterparties and Restricted
Cash 150 64 (349 )
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at Beginning of
Period 1,386 1,322 1,671
Cash and Cash
Equivalents, Funds Deposited by Counterparties and Restricted Cash
at End of Period $ 1,536 $ 1,386 $ 1,322
Appendix Table A-1: Fourth Quarter 2017
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation
of Adj. EBITDA and provides a reconciliation to income/(loss) from
continuing operations:
($ in
millions) Gulf Coast East/
West 1
Generation Retail
Renewables NRG Yield Corp/
Elim
Total
Income/(Loss) from Continuing Operations
(1,486 )
(214 ) (1,700 )
506 (207 )
(98 ) (168 )
(1,667 ) Plus: Interest expense, net —
5 5 2 22 68 96 193 Income tax — — — — (7 ) 57 (47 ) 3 Loss on debt
extinguishment — — — — — 1 49 50 Depreciation and amortization 63
27 90 31 51 88 7 267 ARO expense 11 13 24 — 1 1 — 26 Contract
amortization 6 1 7 — — 17 1 25 Lease amortization
— (2 ) (2 )
— — —
— (2 )
EBITDA (1,406
) (170 ) (1,576 ) 539
(140 ) 134 (62 ) (1,105
) Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 2 6 8 (7 ) 2 27 2 32 Acquisition-related
transaction & integration costs — — — — — 1 1 2 Reorganization
costs 6 1 7 6 1 — 12 26 Legal Settlement — — — (1 ) — — — (1 )
Deactivation costs 3 6 9 — — — 2 11 Gain on sale of business — (13
) (13 ) — 5 — (8 ) (16 ) Other non recurring charges 4 (7 ) (3 ) —
(4 ) 10 10 13 Impairments 1,267 196 1,463 8 130 32 (1 ) 1,632
Impairment losses on investments 69 5 74 — 1 — 4 79 Mark to market
(MtM) (gains)/losses on economic hedges 100
35 135
(331 ) 19 —
1 (176 )
Adjusted EBITDA
45 59
104 214
14 204
(39 ) 497
1 Includes International, BETM and generation eliminations
Fourth Quarter 2017 condensed financial
information by Operating Segment:
($ in
millions) Gulf Coast East/
West 1
Generation Retail
Renewables NRG Yield Corp/
Elim
Total Operating revenues 506 333 839 1,508 90 248
(227 ) 2,458 Cost of sales 289
139 428 1,099
4 17
(212 ) 1,336
Economic gross margin
217 194 411 409 86 231
(15 ) 1,122 Operations & maintenance and
other cost of operations 2 143 115 258 77 36 57 21 449 Selling,
marketing, general and administrative 3 27 22 49 114 13 5 30 211
Other expense/(income) 4 2
(2 ) — 4
23 (35 ) (27 )
(35 )
Adjusted EBITDA 45
59 104
214 14
204 (39
) 497
1 Includes International, BETM and generation eliminations
2 Excludes deactivation costs of $11 million
3 Excludes a legal settlement of $(1) million
4 Excludes impairments of $1,711 million, gain on sale of
business of $16 million, acquisition-related transaction &
integration costs of $2 million, reorganization costs of $26
million and loss on debt extinguishment of $50 million
The following table reconciles the condensed
financial information to Adjusted EBITDA:
($ in millions)
Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other
adj. Adjusted EBITDA Operating revenues 2,497 15 (54
) — — 2,458 Cost of operations 1,224
(10 ) 122 —
— 1,336
Gross
margin 1,273 25 (176 ) — —
1,122 Operations & maintenance and other cost of
operations 460 — — (11 ) — 449 Selling, marketing, general &
administrative 1 210 — — — 1 211 Other expense/(income) 2
2,270 (487 ) —
— (1,818 )
(35 )
Income/(Loss) from Continuing Operations
(1,667 ) 512
(176 ) 11
1,817 497
1 Other adj. includes a legal settlement of $(1) million
2 Other adj, includes impairments of $1,711 million, gain on
sale of business of $16 million, acquisition-related transaction
& integration costs of $2 million, reorganization costs of $26
million and loss on debt extinguishment of $50 million
Appendix Table A-2: Fourth Quarter 2016 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation
of Adjusted EBITDA and provides a reconciliation to income/(loss)
from continuing operations:
($ in millions) Gulf
Coast East/
West 1
Generation Retail Renewables NRG Yield Corp/
Elim
Total
Income/(Loss) from Continuing Operations
(671 ) (103 ) (774
) 317 (223 ) (115
) (96 ) (891 ) Plus: Interest
expense, net — 1 1 — 17 67 91 176 Income tax — 1 1 — (6 ) (26 ) (39
) (70 ) Loss on debt extinguishment — — — — — — 23 23 Depreciation
and amortization 155 29 184 28 45 75 14 346 ARO Expense 3 2 5 — 1 1
1 8 Contract amortization 4 — 4 1 — 17 2 24 Lease amortization
— (2 ) (2 ) — — —
— (2 )
EBITDA (509 ) (72
) (581 ) 346 (166 )
19 (4 ) (386 ) Adjustment to
reflect NRG share of adjusted EBITDA in unconsolidated affiliates
(2 ) 8 6 — 44 7 (43 ) 14 Acquisition-related transaction &
integration costs — — — — — 1 — 1 Deactivation costs — 2 2 — — — 1
3 Gain on sale of business — — — — — — 1 1 Other non recurring
charges — 3 3 1 1 2 (2 ) 5 Impairments 368 36 404 1 28 185 19 637
Impairment loss on investment — — — — 106 — 15 121 Mark to market
(MtM) (gains)/losses on economic hedges 239
44 283 (214 ) 6 — — 75
Adjusted EBITDA 96
21 117 134 19
214 (13 ) 471
1 Includes International, BETM and generation eliminations
Fourth Quarter 2016 condensed financial
information by Operating Segment:
($ in millions) Gulf
Coast East/
West 1
Generation Retail Renewables NRG Yield Corp/
Elim
Total Operating revenues 607 336 943 1,418 86 252 (218 ) 2,481 Cost
of sales 299 151 450
1,053 3 13 (218 ) 1,301
Economic
gross margin 308 185 493 365
83 239 —
1,180 Operations & maintenance
and other cost of operations 2 174 132 306 91 31 52 4 484 Selling,
marketing, general and administrative 36 34 70 136 17 6 65 294
Other expense/(income) 3 2 (2 ) —
4 16 (33 ) (56 ) (69 )
Adjusted EBITDA
96 21 117
134 19 214
(13 ) 471
1 Includes International, BETM and generation eliminations
2 Excludes deactivation costs of $3 million
3 Excludes impairments of $758 million, acquisition-related
transaction & integration costs of $1 million and loss on debt
extinguishment of $23 million
The following table reconciles the condensed
financial information to Adjusted EBITDA:
($ in millions) Condensed
financial information Interest, tax, depr., amort. MtM Deactivation
Other adj. Adjusted EBITDA Operating revenues 2,184 15 282 — —
2,481 Cost of operations 1,103 (9 ) 207
— — 1,301
Gross margin
1,081 24 75 — — 1,180
Operations & maintenance and other cost of operations 487 — —
(3 ) — 484 Selling, marketing, general & administrative 294 — —
— — 294 Other expense/(income) 1 1,191
(458 ) — — (802 ) (69 )
Income/(Loss) from
Continuing Operations (891 )
482 75 3 802
471
1 Other adj. includes impairments of $758 million,
acquisition-related transaction & integration costs of $1
million and loss on debt extinguishment of $23 million
Appendix Table A-3: Full Year 2017 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation
of Adj. EBITDA and provides a reconciliation to income/(loss) from
continuing operations:
($ in millions) Gulf Coast East/
West 1
Generation Retail Renewables NRG Yield Corp/
Elim
Total
Income/(Loss) from Continuing Operations
(1,427 ) (71 ) (1,498
) 886 (266 ) (23 )
(647 ) (1,548 ) Plus:
Interest expense, net 1 26 27 5 97 303 445 877 Income tax —
2 2 (9 ) (20 ) 72 (37 ) 8 Loss on debt extinguishment — — — — 1 3
49 53 Depreciation and amortization 270 107 377 117 196 334 32
1,056 ARO expense 22 22 44 1 2 4 (1 ) 50 Contract amortization 16 4
20 1 — 69 — 90 Lease amortization — (8
) (8 ) — — — — (8 )
EBITDA
(1,118 ) 82 (1,036 )
1,001 10 762 (159 ) 578
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 17 25 42 (17 ) (12 ) 106 6 125
Acquisition-related transaction & integration costs — — — — — 3
1 4 Reorganization costs 9 1 10 11 1 — 22 44 Legal Settlement — — —
(1 ) — — — (1 ) Deactivation costs 4 8 12 — — — 9 21 Gain on sale
of assets — (20 ) (20 ) — 5 — (1 ) (16 ) Other non recurring
charges (21 ) (2 ) (23 ) 1 (17 ) 18 44 23 Impairments 1,309 195
1,504 7 154 44 — 1,709 Impairment losses on investments 69 5 74 — —
— 5 79 Mark to market (MtM) (gains)/losses on economic hedges
(52 ) 24 (28 ) (177 ) 12 —
— (193 )
Adjusted EBITDA
217 318 535 825
153 933 (73 )
2,373
1 Includes International, BETM and generation eliminations
Full Year 2017 condensed financial information
by Operating Segment:
($ in millions) Gulf Coast East/
West 1
Generation Retail Renewables NRG Yield Corp/
Elim
Total Operating revenues 2,258 1,464 3,722 6,385 436 1,078 (1,175 )
10,446 Cost of sales 1,338 639 1,977 4,768
15 63 (1,125 ) 5,698
Economic gross
margin 920 825 1,745 1,617
421 1,015 (50 ) 4,748 Operations
& maintenance and other cost of operations 2 612 439 1,051 322
139 263 (38 ) 1,737 Selling, marketing, general and administrative
3 123 84 207 453 56 22 170 908 Other expense/(income) 4 (32 ) (16 )
(48 ) 17 73 (203 ) (109 ) (270 )
Adjusted
EBITDA 217 318 535
825 153 933 (73
) 2,373
1 Includes International, BETM and generation eliminations
2 Excludes deactivation costs of $21 million
3 Excludes a legal settlement of $(1) million
4 Excludes impairments of $1,788 million, gain on sale of assets
of $16 million, reorganization costs of $44 million,
acquisition-related transaction & integration costs of $4
million, and loss on debt extinguishment of $53 million
The following table reconciles the condensed
financial information to Adjusted EBITDA:
($ in millions) Condensed
financial information Interest, tax, depr., amort. MtM Deactivation
Other adj. Adjusted EBITDA Operating revenues 10,629 56 (239 ) — —
10,446 Cost of operations 5,778 (34 )
(46 ) — — 5,698
Gross margin
4,851 90 (193 ) — —
4,748
Operations & maintenance and other cost of operations 1,758 — —
(21 ) — 1,737 Selling, marketing, general & administrative 1
907 — — — 1 908 Other expense/(income) 2 3,734
(1,983 ) — — (2,021 ) (270 )
Income/(Loss)
from Continuing Operations (1,548
) 2,073 (193 ) 21
2,020 2,373
1 Other adj. includes a legal settlement of $(1) million
2 Other adj. includes impairments of $1,788 million, gain on
sale of assets of $16 million, reorganization costs of $44 million,
acquisition-related transaction & integration costs of $4
million, and loss on debt extinguishment of $53 million
Appendix Table A-4: Full Year 2016 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation
of Adjusted EBITDA and provides a reconciliation to income/(loss)
from continuing operations:
($ in millions) Gulf Coast East/
West 1
Generation Retail Renewables NRG Yield
Corp/
Elim
Total
Income/(Loss) from Continuing Operations
(920 ) 96 (824 )
1,053 (330 ) 2
(884 ) (983 ) Plus: Interest expense,
net 1 24 25 — 97 283 481 886 Income tax (2 ) 1 (1 ) 1 (20 ) (1 ) 26
5 Loss on debt extinguishment — — — — — — 142 142 Depreciation and
amortization 406 110 516 111 185 303 57 1,172 ARO Expense 11 4 15 —
2 3 1 21 Contract amortization 14 5 19 7 1 75 (3 ) 99 Lease
amortization — (8 )
(8 ) — — —
— (8 )
EBITDA (490
) 232 (258 ) 1,172 (65
) 665 (180 ) 1,334 Adjustment to
reflect NRG share of adjusted EBITDA in unconsolidated affiliates 3
27 30 — 42 75 (41 ) 106 Acquisition-related transaction &
integration costs — — — — — 1 7 8 Deactivation costs — 15 15 — — —
2 17 Loss on sale of assets — — — 1 — — 79 80 Other non recurring
charges 19 (2 ) 17 2 9 6 23 57 Impairments 377 53 430 1 54 185 32
702 Impairment losses on investments 137 5 142 — 105 — 21 268 Mark
to market (MtM) (gains)/losses on economic hedges
447 46 493
(365 ) 6 — —
134
Adjusted EBITDA
493 376
869 811 151
932 (57 )
2,706
1 Includes International, BETM and generation eliminations
Full Year 2016 condensed financial information
by Operating Segment:
($ in millions) Gulf
Coast East/
West 1
Generation Retail Renewables NRG Yield Corp/
Elim
Total Operating revenues 2,603 1,781 4,384 6,336 413 1,104 (1,027 )
11,210 Cost of sales 1,325 768
2,093 4,687 14 61 (1,028 ) 5,827
Economic gross margin 1,278 1,013 2,291
1,649 399 1,043 1 5,383
Operations & maintenance and other cost of operations 2 672 539
1,211 338 142 241 (10 ) 1,922 Selling, marketing, general and
administrative 132 133 265 498 61 17 254 1,095 Other
expense/(income) 3 (19 ) (35 ) (54 ) 2
45 (147 ) (186 ) (340 )
Adjusted EBITDA
493 376 869
811 151 932 (57
) 2,706
1 Includes International, BETM and generation eliminations
2 Excludes deactivation costs of $17 million
3 Excludes impairments of $970 million, loss on sale of assets
of $80 million, acquisition-related transaction & integration
costs of $8 million, and loss on debt extinguishment of $142
million
The following table reconciles the condensed
financial information to Adjusted EBITDA:
($ in millions) Condensed
financial information Interest, tax, depr., amort. MtM Deactivation
Other adj. Adjusted EBITDA Operating revenues 10,512 56 642 — —
11,210 Cost of operations 5,362 (43 )
508 — — 5,827
Gross margin
5,150 99 134 — —
5,383 Operations &
maintenance and other cost of operations 1,939 — — (17 ) — 1,922
Selling, marketing, general & administrative 1,095 — — — —
1,095 Other expense/(income) 1 3,099
(2,076 ) — — (1,363 ) (340 )
Income/(Loss) from
Continuing Operations (983 )
2,175 134 17 1,363
2,706
1 Other adj. includes impairments of $970 million, loss on sale
of assets of $80 million, acquisition-related transaction &
integration costs of $8 million, and loss on debt extinguishment of
$142 million
Appendix Table A-5: 2017 and 2016 Three Months Ended December
31 and Full Year Adjusted Cash Flow from Operations
Reconciliations
The following table summarizes the calculation
of adjusted cash flow operating activities providing a
reconciliation to net cash provided by operating activities:
Three Months Ended ($ in millions)
December 31, 2017
December 31, 2016 Net Cash Provided by Operating
Activities 581 533 Sale of Land and
other assets (3) — Merger, integration and cost-to-achieve expenses
1 23 (7) Return of capital from equity investments 4 11 Adjustment
for change in collateral 2 (23)
(137)
Adjusted Cash Flow from Operating Activities
582 400 Maintenance
CapEx, net 3 (39) (41) Environmental CapEx, net 1 (42)
Distributions to non-controlling interests
(47) (47)
Free Cash Flow - before Growth
497 270
1. 2017 includes cost-to-achieve expenses associated with the
Transformation Plan announced on July 2017 call; 2016 includes
cost-to achieve expenses associated with the $150 million savings
announced on September 2015 call.
2. Reflects change in NRG’s cash collateral balance as of 4Q2017
including $79 million of collateral postings from our
deconsolidated affiliate (GenOn)
3. Includes insurance proceeds of $7 million
and $4 million in 2017 and 2016, respectively
Twelve Months Ended ($ in millions)
December 31, 2017
December 31, 2016 Net Cash Provided by Operating
Activities 1,425 2,207
Reclassifying of net receipts for settlement of acquired
derivatives that include financing elements 2 6 Sale of Land and
other assets 5 — Merger, integration and cost-to-achieve expenses 1
37 40 Cash Contribution to GenOn pension plan 2 13 — Return of
capital from equity investments 26 17 Adjustment for change in
collateral 3 159 (398)
Adjusted Cash Flow from Operating Activities
1,667 1,872 Maintenance CapEx,
net 4 (164) (212) Environmental CapEx, net (24) (240) Preferred
dividends — (2) Distributions to non-controlling interests
(175) (163)
Free Cash Flow - before
Growth 1,304
1,255
1. 2017 includes cost-to-achieve expenses associated with the
Transformation Plan announced on July 2017 call; 2016 includes
cost-to achieve expenses associated with the $150 million savings
announced on September 2015 call.
2. Reflects cash contribution related to Legacy GenOn pension
liability retained by NRG
3. Reflects change in NRG’s cash collateral balance as of 4Q2017
including $79 million of collateral postings from our
deconsolidated affiliate (GenOn)
4. Includes insurance proceeds of $29 million and $35 million in
2017 and 2016, respectively
Appendix Table A-6: Full Year 2017 Sources and Uses of
Liquidity
The following table summarizes the sources and
uses of liquidity for the full year 2017:
($ in millions)
Twelve Months
Ended
December 31, 2017
Sources: Adjusted cash flow from operations 1,667 Increase
in credit facility 722 Issuance of Agua Caliente HoldCo debt 130
Divestitures 81 NYLD Equity Issuance 34
Uses:
Debt repayments, net of proceeds (1,207) Collateral 1 (159)
Maintenance and environmental capex, net 2 (188) Distributions to
non-controlling interests (175) Common Stock Dividends (38)
Cost-to-achieve3 (43) Growth investments and acquisitions, net (9)
Other Investing and Financing 22
Change in Total
Liquidity 837
1. Reflects change in NRG’s cash collateral balance as of 4Q2017
including $79MM of collateral postings from our deconsolidated
affiliate (GenOn)
2. Includes insurance proceeds of $29 million
3. 2017 includes cost-to-achieve expenses associated with the
Transformation Plan announced on July 2017 call
Appendix Table A-7: 2018 Adjusted EBITDA
Guidance Reconciliation
The following table summarizes the calculation
of Adjusted EBITDA providing reconciliation to net income:
2018 Adjusted EBITDA ($ in millions)
Low High Income from Continuing
Operations 1 410 610 Income Tax 20 20 Interest Expense
785 785 Depreciation, Amortization, Contract Amortization and ARO
Expense 1,180 1,180 Adjustment to reflect NRG share of adjusted
EBITDA in unconsolidated affiliates 135 135 Other Costs 2 270 270
Adjusted EBITDA 2,800 3,000
1. For purposes of guidance, discontinued operations are
excluded and fair value adjustments related to derivatives are
assumed to be zero.
2. Includes deactivation costs and cost-to-achieve expenses
Appendix Table A-8: 2018 FCFbG Guidance
Reconciliation
The following table summarizes the calculation
of Free Cash Flow before Growth providing reconciliation to Cash
from Operations:
2018 ($ in millions)
Guidance Adjusted EBITDA $2,800
- $3,000 Cash Interest payments (785 ) Cash Income tax (40 )
Collateral / working capital / other 40 Cash From Operations
$2,015 - $2,215 Adjustments: Acquired Derivatives, Cost-to-Achieve,
Return of Capital Dividends, Collateral and Other — Adjusted
Cash flow from operations $2,015 - $2,215 Maintenance capital
expenditures, net (210) - (240) Environmental capital expenditures,
net (0) - (5) Distributions to non-controlling interests (220) -
(250) Free Cash Flow - before Growth $1,550 - $1,750
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) 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 as a measure of cash available for discretionary
expenditures.
Free Cash Flow before Growth is utilized by Management in making
decisions regarding the allocation of capital. Free Cash Flow
before Growth 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 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.
1 Excluding transaction costs, working capital, and other
purchase price adjustments
2 Includes International and BETM
3 Cash cost of $646 million, including $42 million of debt
extinguishment fees
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180301005719/en/
Media:Marijke Shugrue,
609-524-5262orInvestors:Kevin L. Cole, CFA,
609-524-4526orLindsey Puchyr, 609-524-4527
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