- Transformation Plan on track with
$80 million in cost savings realized in the first quarter of 2018,
and $3 billion in asset sales still expected to close in
2018
- Closed drop down of a 154 MW solar
utility-scale project to NRG Yield for $42 million and announced
the sale of the Canal 3 project
- Announced acquisition of XOOM
Energy, a retail business that expands NRG’s retail sales
capabilities and East presence
- Share repurchases underway with $93
million purchased through March 31, 2018
- Maintaining 2018 guidance
NRG Energy, Inc. (NYSE: NRG) today reported a first quarter 2018
net income of $233 million, or $0.88 per basic common share.
Adjusted EBITDA for the first quarter 2018 was $549 million and
cash from operations was $357 million.
“I am pleased with our strong first quarter results and good
execution against our Transformation Plan goals,” said Mauricio
Gutierrez, NRG President and Chief Executive Officer. “Asset sales
are underway and we expect to close them in the second half of this
year. Right-sizing our portfolio and transitioning our platform to
be more customer-driven leaves us well-positioned for market upside
this summer and beyond."
Consolidated Financial Results
Three Months Ended ($ in millions)
3/31/18 3/31/17 Income/(Loss) from
Continuing Operations $ 233 $ (169 ) Cash From Continuing
Operations $ 357 $ (82 ) Adjusted EBITDA $ 549 $ 385 Free Cash Flow
Before Growth Investments (FCFbG) $ 107
$ (32 )
Segment Results
Table 1: Income/(Loss) from Continuing Operations
($ in millions)
Three Months Ended
Segment
3/31/18 3/31/17 Retail $ 946 $
(34 ) Generation a (536 ) 37 Renewables b (34 ) (29 ) NRG Yield b —
(2 ) Corporate (143 ) (141 ) Income/(Loss) from Continuing
Operations $ 233 $ (169 )
a. In accordance with GAAP, 2017 results
have been restated to include full impact of the GenOn
deconsolidation
b. In accordance with GAAP, 2017 results
have been restated to include full impact of the assets in the NRG
Yield Drop Down transactions after Q1 of 2017
Table 2: Adjusted EBITDA
($ in millions)
Three Months Ended
Segment
3/31/18 3/31/17 Retail $ 188 $
133 Generation a 147 54 Renewables b 32 23 NRG Yield b 189 186
Corporate (7 ) (11 ) Adjusted EBITDA c $ 549 $ 385
a. In accordance with GAAP, 2017 results
have been restated to include full impact of the GenOn
deconsolidation
b. In accordance with GAAP, 2017 results
have been restated to include full impact of the assets in the NRG
Yield Drop Down transactions after Q1 of 2017
c. See Appendices A-1 through A-2 for
Operating Segment Reg G reconciliations
Retail: First quarter Adjusted EBITDA was $188 million,
$55 million higher than first quarter 2017 due to lower operating
costs and higher gross margin with increased customer count, higher
customer usage and favorable weather in 2018.
Generation: First quarter Adjusted EBITDA was $147
million, $93 million higher than first quarter 2017 driven by:
- Gulf Coast Region: $57 million increase
due to the sale of NOx emissions credits and higher realized energy
prices, partially offset by lower reliability-must-run
revenues
- East/West1: $36 million increase due to
higher capacity revenues, increased pricing in PJM and ISO-NE and
higher trading results at BETM, partially offset by lower
generation volumes
Renewables: First quarter Adjusted EBITDA was $32
million, $9 million higher than first quarter 2017 due to lower
customer acquisition costs, new maintenance service contracts and
higher availability of Agua Caliente.
NRG Yield: First quarter Adjusted EBITDA was $189
million, $3 million higher than first quarter 2017 due to growth in
distributed generation partnerships and higher availability at El
Segundo, partially offset by lower renewable production in 2018
driven by lower wind resources.
Corporate: First quarter Adjusted EBITDA was $(7)
million, $4 million better than the first quarter 2017 due to lower
G&A expenses and advisory fees, partially offset by the
reduction in shared services revenue from GenOn.
1 Includes International and BETM
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
3/31/18
12/31/17 Cash at NRG-Level a $ 467 $ 769 Revolver
Availability 1,614 1,711
NRG-Level Liquidity $
2,081 $ 2,480 Restricted Cash 407 508 Cash at
Non-Guarantor Subsidiaries 297
222
Total Liquidity $
2,785 $ 3,210
a. 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, 2018, was $467 million, a
decrease of $302 million from December 31, 2017, and $1.6 billion
was available under the Company’s credit facilities at the end of
the first quarter 2018. Total liquidity was $2.8 billion, including
restricted cash and cash at non-guarantor subsidiaries (primarily
NRG Yield).
NRG Strategic Developments
Transformation Plan
During the first quarter of 2018, NRG realized $80 million of
its 2018 cost savings target as part of the previously announced
Transformation Plan. With respect to the asset sales under the
Transformation Plan, NRG continues to expect up to $3.2 billion of
cash proceeds, with a majority of those proceeds coming from
transactions announced earlier this year and on track to close in
2018.
As part of the Transformation Plan asset sales, on March 30,
2018, NRG closed on the sale of the 154 MW Buckthorn Solar
utility-scale project to NRG Yield for cash consideration of $42
million, excluding working capital adjustments, plus assumed
non-recourse debt of approximately $131 million2.
Retail Acquisition
As previously announced at NRG's Analyst Day conference on March
27, 2018, NRG entered into an agreement to acquire retail provider
XOOM Energy, LLC for $210 million3, representing an incremental $45
million of Adjusted EBITDA on an annual basis. The acquisition is
expected to close in the second quarter of 2018.
Canal 3 Sale
On March 22, 2018, NRG agreed to sell Canal 3 to Stonepeak
Kestrel Holdings II LLC in conjunction with GenOn's sale of Canal
Units 1 and 2 to Stonepeak Kestrel Holdings LLC. The final purchase
price for the Canal 3 sale will be determined based on a formula
including capital reimbursement, return on capital and a
development fee. The Canal 3 sale is expected to enhance 2018
capital allocation by approximately $130 million early in the third
quarter of 2018.
2 Anticipated debt balance at conversion to a term loan when the
project achieves substantial completion in May 2018. 3 Includes
transaction costs; excluding working capital adjustments
2018 Guidance
NRG is maintaining its guidance for 2018 with respect to
Consolidated Adjusted EBITDA, Cash from Operations, and FCFbG as
set forth below.
Table 4: 2018 Adjusted EBITDA, Cash from Operations, and FCF
before Growth Investments Guidance
2018 ($ in millions)
Guidance Range Adjusted EBITDA a
$2,800 - $3,000 Cash From Operations $2,015 - $2,215 Free
Cash Flow Before Growth Investments (FCFbG)
$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
On April 19, 2018, NRG declared a quarterly dividend on the
company's common stock of $0.03 per share, payable May 15, 2018, to
stockholders of record as of May 1, 2018, representing $0.12 on an
annualized basis.
In the first quarter of 2018, NRG repurchased 3.1 million shares
of its common stock for $93 million at an average cost of $29.75
per share.
On March 21, 2018, NRG announced that it had repriced
its $1.872 billion Term Loan B due June 2023. The
transaction was leverage neutral and the Company expects interest
savings over the remaining life of the loan to total
approximately $47 million. Expected annualized interest
savings are estimated to be approximately $9 million.
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 3, 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” then "Presentations & Webcasts." The webcast will
be archived on the site for those unable to listen in real
time.
About NRG
At NRG, we’re redefining power by putting customers at the
center of everything we do. We create value by generating
electricity and serving nearly 3 million residential and commercial
customers through our portfolio of retail electricity brands. A
Fortune 500 company, NRG delivers customer-focused solutions for
managing electricity, while enhancing energy choice and working
towards a sustainable energy future. More information is available
at www.nrg.com. Connect with NRG on Facebook, LinkedIn and follow
us on Twitter @nrgenergy, @nrginsight.
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 May 3, 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
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three months ended March
31,
(In millions,
except for per share amounts)
2018 2017 Operating Revenues
Total operating revenues $ 2,421 $ 2,382
Operating
Costs and Expenses Cost of operations 1,558 1,862 Depreciation
and amortization 235 257 Selling, general and administrative 191
260 Reorganization costs 20 — Development costs 13 17
Total operating costs and expenses 2,017 2,396 Other income -
affiliate — 48 Gain on sale of assets 2 2
Operating Income 406 36
Other
Income/(Expense) Equity in (losses)/earnings of unconsolidated
affiliates (2 ) 5 Other (expense)/income, net (3 ) 13 Loss on debt
extinguishment, net (2 ) (2 ) Interest expense (167 ) (225 ) Total
other expense (174 ) (209 )
Income/(Loss) from Continuing
Operations Before Income Taxes 232 (173 ) Income tax benefit (1
) (4 )
Income/(Loss) from Continuing Operations 233 (169 )
Loss from discontinued operations, net of income tax — (34 )
Net Income/(Loss) 233 (203 ) Less: Net loss
attributable to noncontrolling interest and redeemable
noncontrolling interests (46 ) (40 )
Net Income/(Loss)
Attributable to NRG Energy, Inc. 279 (163 )
Earnings/(Loss) per Share Attributable to NRG Energy, Inc.
Common Stockholders Weighted average number of common shares
outstanding — basic 318 316 Income/(loss) from continuing
operations per weighted average common share — basic $ 0.88 $ (0.41
) Loss from discontinued operations per weighted average common
share — basic $ — $ (0.11 )
Earnings/(Loss) per Weighted
Average Common Share — Basic $ 0.88 $ (0.52 ) Weighted
average number of common shares outstanding — diluted 322 316
Income/(loss) from continuing operations per weighted average
common share — diluted $ 0.87 $ (0.41 ) Loss from discontinued
operations per weighted average common share — diluted $ — $
(0.11 )
Earnings/(Loss) per Weighted Average Common Share —
Diluted $ 0.87 $ (0.52 )
Dividends Per Common
Share $ 0.03 $ 0.03
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended March
31,
2018 2017 (In millions) Net
income/(loss) $ 233 $ (203 )
Other comprehensive
income/(loss), net of tax Unrealized gain on derivatives, net
of income tax expense of $0 and $1 14 4 Foreign currency
translation adjustments, net of income tax expense of $0 and $0 (2
) 7 Defined benefit plans, net of income tax expense of $0 and $0
(1 ) — Other comprehensive income 11 11
Comprehensive income/(loss) 244 (192 )
Less: Comprehensive loss attributable to
noncontrolling interest and redeemablenoncontrolling interest
(38 ) (39 )
Comprehensive income/(loss) attributable to NRG
Energy, Inc. 282 (153 )
Comprehensive income/(loss)
available for common stockholders $ 282 $ (153 )
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions,
except shares)
March 31, 2018
December 31, 2017 ASSETS Current Assets Cash
and cash equivalents $ 764 $ 991 Funds deposited by counterparties
241 37 Restricted cash 407 508 Accounts receivable, net 903 1,079
Inventory 528 532 Derivative instruments 1,015 626 Cash collateral
paid in support of energy risk management activities 211 171
Accounts receivable - affiliate 73 95 Current assets - held for
sale 89 115 Prepayments and other current assets 326 261
Total current assets 4,557 4,415
Property,
plant and equipment, net 13,911 13,908
Other
Assets Equity investments in affiliates 1,011 1,038 Goodwill
539 539 Intangible assets, net 1,726 1,746 Nuclear decommissioning
trust fund 680 692 Derivative instruments 354 172 Deferred income
taxes 136 134 Non-current assets held-for-sale 157 43 Other
non-current assets 681 631 Total other assets 5,284
4,995
Total Assets $ 23,752 $ 23,318
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities Current portion of long-term debt and capital
leases $ 956 $ 688 Accounts payable 787 881 Accounts payable -
affiliate 32 33 Derivative instruments 790 555 Cash collateral
received in support of energy risk management activities 240 37
Current liabilities held-for-sale 80 72 Accrued expenses and other
current liabilities 662 890 Accrued expenses and other current
liabilities - affiliate 161 161 Total current
liabilities 3,708 3,317
Other Liabilities
Long-term debt and capital leases 15,406 15,716 Nuclear
decommissioning reserve 272 269 Nuclear decommissioning trust
liability 400 415 Deferred income taxes 20 21 Derivative
instruments 264 197 Out-of-market contracts, net 201 207
Non-current liabilities held-for-sale 7 8 Other non-current
liabilities 1,136 1,122 Total non-current liabilities
17,706 17,955
Total Liabilities 21,414
21,272
Redeemable noncontrolling interest in
subsidiaries 80 78
Commitments and Contingencies
Stockholders’ Equity Common stock 4 4 Additional paid-in
capital 8,379 8,376 Accumulated deficit (5,982 ) (6,268 ) Less
treasury stock, at cost — 104,518,931 and 101,580,045 shares, at
March 31, 2018 and December 31, 2017, respectively (2,474 ) (2,386
) Accumulated other comprehensive loss (61 ) (72 ) Noncontrolling
interest 2,392 2,314
Total Stockholders’
Equity 2,258 1,968
Total Liabilities and
Stockholders’ Equity $ 23,752 $ 23,318
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three months ended March 31,
2018 2017 (In millions) Cash
Flows from Operating Activities Net income/(loss) $ 233 $ (203
) Loss from discontinued operations, net of income tax — (34
) Income/(loss) from continuing operations 233 (169 ) Adjustments
to reconcile net income to net cash provided/(used) by operating
activities: Distributions and equity in earnings of unconsolidated
affiliates 12 8 Depreciation and amortization 235 257 Provision for
bad debts 15 9 Amortization of nuclear fuel 13 12 Amortization of
financing costs and debt discount/premiums 14 15 Adjustment for
debt extinguishment 2 — Amortization of intangibles and
out-of-market contracts 22 30 Amortization of unearned equity
compensation 13 8 Changes in deferred income taxes and liability
for uncertain tax benefits (3 ) 1 Changes in nuclear
decommissioning trust liability 34 36 Changes in derivative
instruments (247 ) 38 Changes in collateral deposits in support of
energy risk management activities 163 (127 ) Gain on sale of
emission allowances (8 ) — Gain on sale of assets (2 ) (2 ) Changes
in other working capital (139 ) (198 )
Cash provided/(used) by
continuing operations 357 (82 )
Cash provided by
discontinued operations — 15
Net Cash
Provided/(Used) by Operating Activities 357 (67 )
Acquisitions of businesses, net of cash acquired (62 ) (3 ) Capital
expenditures (358 ) (236 ) Decrease in notes receivable 3 4
Purchases of emission allowances (17 ) (9 ) Proceeds from sale of
emission allowances 23 11 Investments in nuclear decommissioning
trust fund securities (216 ) (153 ) Proceeds from the sale of
nuclear decommissioning trust fund securities 182 117 Proceeds from
sale of assets, net of cash disposed of 11 14 Changes in
investments in unconsolidated affiliates 2 (12 ) Other — 18
Cash used by continuing operations (432 ) (249 )
Cash used by discontinued operations — (32 )
Net
Cash Used by Investing Activities (432 ) (281 )
Cash Flows
from Financing Activities Payment of dividends to common and
preferred stockholders (10 ) (9 ) Payment for treasury stock (93 )
— Net receipts from settlement of acquired derivatives that include
financing elements — 1 Proceeds from issuance of long-term debt 179
193 Payments for short and long-term debt (228 ) (177 ) Net
contributions from/(distributions to) noncontrolling interests in
subsidiaries 110 (5 ) Payment of debt issuance costs (7 ) (14 )
Other - contingent consideration — (10 )
Cash used by
continuing operations (49 ) (21 )
Cash used by discontinued
operations — (132 )
Net Cash Used by Financing
Activities (49 ) (153 ) Effect of exchange rate changes on cash
and cash equivalents — (7 )
Change in Cash from
discontinued operations — (149 )
Net Decrease in Cash and Cash
Equivalents, Funds Deposited by Counterparties and Restricted
Cash
(124 ) (359 )
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at Beginning
of Period
1,536 1,386
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at End of
Period
$ 1,412 $ 1,027
Appendix Table A-1: First Quarter 2018
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)
GulfCoast
East/
West1
Generation Retail
Renewables
NRGYield
Corp/
Elim
Total
Income/(Loss) from Continuing Operations
(566 ) 30
(536 ) 946
(34 ) —
(143 ) 233
Plus:
Interest expense, net — 2 2 1 14 54 92 163 Income tax — — —
— (6 ) (1 ) 6 (1 ) Loss on debt extinguishment — — — — — — 2 2
Depreciation and amortization 43 24 67 28 51 81 8 235 ARO Expense 7
4 11 — 1 1 — 13 Contract amortization 3 — 3 — — 17 — 20 Lease
amortization (1 ) (2 )
(3 ) — —
— 1 (2 )
EBITDA (514 ) 58 (456 )
975 26 152 (34 ) 663
Adjustment to reflect NRGshare of adjusted
EBITDA inunconsolidated affiliates
— 6 6 (6 ) 3 34 (2 ) 35
Acquisition-related transaction&
integration costs
— — — — — 1 3 4 Reorganization costs 2 2 4 3 — — 13 20 Deactivation
costs — 3 3 — — — 3 6 Loss on sale of assets — — — — 1 — — 1 Other
non recurring charges 6 4 10 2 (8 ) 2 10 16
Mark to market (MtM)(gains)/losses on
economichedges
567 13
580 (786 ) 10
— — (196 )
Adjusted EBITDA 61
86 147
188 32
189 (7 )
549 1 Includes International, BETM and
generation eliminations
First Quarter 2018 condensed financial
information by Operating Segment:
($ in millions)
GulfCoast
East/
West1
Generation Retail
Renewables
NRGYield
Corp/
Elim
Total Operating revenues 524
374 898 1,487
96 242 (182 )
2,541 Cost of sales 272
156 428 1,108
2 20 (167 )
1,391
Economic gross margin 252
218 470 379 94 222 (15
) 1,150
Operations & maintenance andother cost
of operations 2
177 127 304 71 34 69 (21 ) 457
Selling, marketing, generaland
administrative
29 21 50 115 10 6 10 191 Other expense/(income) 3
(15 ) (16 ) (31 )
5 18 (42 )
3 (47 )
Adjusted EBITDA
61 86
147 188
32 189
(7 ) 549 1
Includes International, BETM and generation eliminations 2 Excludes
deactivation costs of $6 million 3 Excludes loss on sale of
business of $1 million, acquisition-related transaction &
integration costs of $4 million, reorganization costs of $20
million and loss on debt extinguishment of $2 million
The following table reconciles the
condensed financial information to Adjusted EBITDA:
($ in millions)
Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other
adj.
AdjustedEBITDA
Operating revenues 2,421 14
106 — —
2,541 Cost of operations 1,095
(6 ) 302 —
— 1,391
Gross margin
1,326 20 (196 ) — —
1,150
Operations & maintenanceand other cost
of operations
463 — — (6 ) — 457
Selling, marketing, general&
administrative
191 — — — — 191 Other expense/(income) 1 439
(408 ) — —
(78 ) (47 )
Income/(Loss) from Continuing
Operations
233 428
(196 ) 6
78 549
1 Other adj. includes loss on sale of business of $1
million, acquisition-related transaction & integration costs of
$4 million, reorganization costs of $20 million and loss on debt
extinguishment of $2 million
Appendix Table A-2: First Quarter 2017
Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to
income/(loss) from continuing operations:
($ in millions)
GulfCoast
East/
West1
Generation Retail
Renewables
NRGYield
Corp/
Elim
Total
Income/(Loss) from Continuing Operations
43 (6
) 37 (34
) (29 ) (2
) (141 )
(169 ) Plus:
Interest expense, net — 9 9 1 22 75 115 222
Income tax — — — 3 (6 ) (1 ) — (4 ) Loss on debt extinguishment — —
— — — 2 — 2 Depreciation and amortization 69 28 97 28 47 77 8 257
ARO Expense 4 3 7 — — 1 1 9 Contract amortization 3 1 4 1 — 17 — 22
Lease amortization — (2 )
(2 ) — —
— — (2 )
EBITDA 119 33 152 (1 )
34 169 (17 ) 337
Adjustment to reflect NRGshare of adjusted
EBITDA inunconsolidated affiliates
7 6 13 (3 ) (4 ) 13 (1 ) 18
Acquisition-related transaction&
integration costs
— — — — — 1 — 1 Deactivation costs — 2 2 — — — — 2 Other non
recurring charges (1 ) — (1 ) — (1 ) 3 7 8
Mark to market (MtM)(gains)/losses on
economichedges
(121 ) 9
(112 ) 137 (6 ) —
— 19
Adjusted
EBITDA 4
50 54
133 23
186 (11 )
385 1 Includes International, BETM and generation
eliminations
First Quarter 2017 condensed financial
information by Operating Segment:
($ in millions)
GulfCoast
East/
West1
Generation Retail
Renewables
NRGYield
Corp/
Elim
Total Operating revenues 495
345 840 1,334
89 238 (222 )
2,279 Cost of sales 292
161 453 997
4 16 (211 )
1,259
Economic gross margin 203
184 387 337 85 222 (11
) 1,020
Operations & maintenance andother cost
of operations 2
168 109 277 80 33 69 (2 ) 457
Selling, marketing, general
&administrative
33 28 61 119 14 4 62 260 Other expense/(income) 3
(2 ) (3 ) (5 ) 5
15 (37 )
(60 ) (82 )
Adjusted EBITDA
4 50
54 133
23 186
(11 ) 385 1 Includes
International, BETM and generation eliminations 2 Excludes
deactivation costs of $2 million 3 Excludes acquisition-related
transaction & integration costs of $1 million and loss on debt
extinguishment of $2 million
The following table reconciles the
condensed financial information to Adjusted EBITDA:
($ in millions)
Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other
adj.
AdjustedEBITDA
Operating revenues 2,382 15
(118 ) — —
2,279 Cost of operations 1,403
(7 ) (137 ) —
— 1,259
Gross margin
979 22 19 — — 1,020
Operations & maintenanceand other cost
of operations
459 — — (2 ) — 457
Selling, marketing, general&
administrative
260 — — — — 260 Other expense/(income) 1 429
(482 ) — —
(29 ) (82 )
Income/(Loss) from Continuing
Operations
(169 ) 504
19 2
29 385 1
Other adj. includes acquisition-related transaction &
integration costs of $1 million and loss on debt extinguishment of
$2 million
Appendix Table A-3: 2018 and 2017 Three
Months Ended March 31 Adjusted Cash Flow from Operations
Reconciliations
The following table summarizes the
calculation of adjusted cash flow operating activities providing a
reconciliation to net cash provided by operating activities:
Three Months Ended ($ in
millions)
March 31, 2018
March 31, 2017 Net Cash Provided by Operating
Activities 357 (82 )
Reclassifying of net receipts for
settlement of acquired derivatives that includefinancing
elements
— 1 Sale of Land 3 8 Merger, integration and cost-to-achieve
expenses (1) 22 — Return of capital from equity investments 2 13
Adjustment for change in collateral (163 )
127
Adjusted Cash Flow from
Operating Activities 221
67 Maintenance CapEx, net (2)
(64 ) (35 ) Environmental CapEx, net — (18 ) Preferred dividends —
— Distributions to non-controlling interests
(50 ) (46 )
Free Cash Flow Before Growth
Investments (FCFbG) 107
(32 ) (1) 2018 includes
cost-to-achieve expenses associated with the Transformation Plan
announced on July 2017 call. (2) Includes insurance proceeds of $18
million in 2017.
Appendix Table A-4: First Quarter 2018
Sources and Uses of Liquidity
The following table summarizes the sources
and uses of liquidity through first quarter of 2018:
($ in millions)
Three Months Ended
March 31, 2018
Sources: Adjusted cash flow from
operations 221 NYLD revolver proceeds 20 Asset sales 8 NYLD equity
issuance 10
Uses: Growth
investments and acquisitions, net (170 ) Debt Repayment, net of
proceeds (108 ) Decrease in credit facility (97 ) Share repurchases
(93 ) Maintenance and environmental capex, net (64 ) Distributions
to non-controlling interests (50 ) Collateral (1) (40 )
Cost-to-achieve expenses(2) (39 ) Common Stock Dividends (10 )
Other Investing and Financing (13 )
Change
in Total Liquidity (425 )
(1) Excludes impact of Funds deposited by Counterparties (2)
Includes capital expenditures associated with the Transformation
Plan
Appendix Table A-5: 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-6: 2018 FCFbG Guidance
ReconciliationThe 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, Collateraland
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180503005701/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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