2014 Results and Financial Highlights
- $3,128 million of Adjusted EBITDA,
including $2,134 million delivered by NRG Business and NRG Renew,
$604 million by NRG Home Retail, $455 million by NRG Yield, and $65
million of negative contribution from investment in NRG Home
Solar
- $951 million of Free Cash Flow (FCF)
before growth investments for full-year 2014
- $830 million of capital replenished at
NRG following dropdowns to NRG Yield announced in 2014
Business and Operational Highlights
- $3.5 billion Edison Mission Energy
(EME) acquisition now fully integrated
- Over 1 GW of new long-term contracts
awarded in California
- 1.6 million tons/year carbon expected
to be captured from Petra Nova WA Parish CCS-EOR project now under
construction
- 627,000 increase in NRG Home Retail
recurring customer count
- 13,390 aggregate new NRG Home Solar
lease customers at year end (projecting 35,000-40,000 aggregate by
year end 2015)
- 947 MW Alta Wind facility acquired by
NRG Yield for $870 million1
- PH Robinson (360 MW2) peaking plant
under construction in Houston (approximately $400/kw installed
cost)
- Up to 70 MW of distributed generation
to be installed at up to 170 sites through a recently announced
deal with Kaiser Permanente
2015 Financial Guidance and Capital Allocation
- 2015 Guidance is reaffirmed as follows:
- Adjusted EBITDA of $3,200-$3,400
million3
- FCF before growth investments of
$1,100-$1,300 million3
- 2015 Capital Allocation:
- 4% increase in NRG common stock
dividend to $0.58 per share annually
- Proposed recapitalization of NRG Yield
through the creation of new classes of stock permitting more
efficient means to raise capital to fund growth
NRG Energy, Inc. (NYSE:NRG) today reported 2014 full-year
Adjusted EBITDA of $3,128 million with $2,134 million from NRG
Business and NRG Renew combined, $539 million from NRG Home
(including a $65 million negative contribution from investment in
NRG Home Solar) and $455 million from NRG Yield. Adjusted Cash Flow
from Operations totaled $1,525 million for 2014. Net income for the
12 months of 2014 was $134 million, or $0.23 per diluted common
share, compared to a net loss of ($386) million, or ($1.22) per
diluted common share in 2013.
“Through outstanding execution across all our businesses, NRG
withstood the headwinds of a mild summer and declining commodity
price environment to post strong financial results in 2014 and
positioned ourselves well for growth in 2015,” said David Crane,
NRG President and Chief Executive Officer.
Segment Results
The results of the company have been restated in order to
reflect the reorganization of NRG’s existing businesses on the
basis of their key target customer segments. NRG reorganized in
2014 to better serve energy consumers with the choice of energy
solutions and services that each segment demands: NRG Business, NRG
Home (including NRG Home Retail and NRG Home Solar), NRG Renew, and
NRG Yield.
Table 1: Adjusted EBITDA
($ millions)
Three Months Ended Twelve
Months Ended Segment 12/31/14
12/31/13 12/31/14 12/31/13
Business (1)(2) 323 386 1,898 1,758 Home Retail 165
180 604 528 Home Solar (34) (2) (65) (5) Renew (1) 55 18 237 101
NRG Yield (1) 114 93 455 293 Corporate 4 (6)
(1) (39)
Adjusted EBITDA (3)
627 669 3,128
2,636
(1) In accordance with GAAP, 2014 and 2013 results have been
restated to include full impact of the assets in the ROFO dropdown
transaction which closed on June 30, 2014
(2) See Appendices A-9 thru A-10 for Business regional segments
Reg G reconciliations
(3) Detailed adjustments by business segment are shown in
Appendix A
Table 2: Net Income / (Loss)
($ millions)
Three Months Ended Twelve
Months Ended Segment 12/31/14
12/31/13 12/31/14 12/31/13
Business (1)(2) 575 (452) 1,094 (51) Home Retail (3)
(99) 225 138 349 Home Solar (18) (4) (53) (9) Renew (1) (64) (16)
(163) (71) NRG Yield (1) (10) 33 65 119 Corporate (265)
(83) (947) (723)
Net Income/ (Loss)
119 (297) 134
(386)
(1) In accordance with GAAP, 2014 and 2013 results have been
restated to include full impact of the assets in the ROFO drop-down
transaction which closed on June 30, 2014
(2) See Appendices A-9 thru A-12 for Business regional segments
net income/(loss)
(3) Includes mark-to-market gains and losses of economic
hedges
NRG Business: Full Year 2014 Adjusted EBITDA was $1,898
million, $140 million higher than 2013 primarily driven by
favorable gross margin of $202 million in the East due to the
extreme winter weather in the first quarter of 2014. After closing
the transaction on April 1st, the coal assets acquired from EME
also contributed $46 million of Adjusted EBITDA in the East during
the year. The West region contributed an increase of $105 million
in Adjusted EBITDA compared to 2013 mainly due to the addition of
the EME gas fleet. This was partially offset by lower Adjusted
EBITDA of $179 million compared to 2013 in the Gulf Coast region as
milder weather and relative lack of scarcity pricing negatively
impacted ERCOT heat rates resulting in lower wholesale margins in
Texas. The impact of the transition of NRG’s Louisiana assets into
MISO in late 2013 helped partially offset lower margins in Texas,
reducing the year on year decline in the Gulf Coast region.
Fourth quarter Adjusted EBITDA was $323 million, $63 million
lower than the fourth quarter 2013 primarily due to milder weather.
These declines were partially offset by contributions from the EME
acquisition and lower operating costs across our fleet.
NRG Home Retail: Full Year 2014 Adjusted EBITDA was $604
million, $76 million higher than 2013 driven by higher energy
margins and higher customer counts. This includes the impact of the
acquisition of the retail portfolio from Dominion Resources, which
closed on March 31st, and expansion in customer and product growth.
This was partially offset by increased operating and marketing
costs to support incremental customer count and the Dominion
acquisition.
Fourth quarter Adjusted EBITDA was $165 million, $15 million
lower than fourth quarter 2013, primarily driven by lower volume
due to milder weather, which was partially offset by gross margin
associated with increased customer count.
NRG Home Solar: Full Year 2014 Adjusted EBITDA was ($65)
million, $60 million lower than 2013 primarily driven by higher
expenses to support expansion plans.
Fourth quarter Adjusted EBITDA was ($34) million, $32 million
lower as a result of higher selling, marketing and administrative
expenses to support expansion plans.
NRG Renew: Full Year Adjusted EBITDA was $237 million,
$136 million higher than in 2013 due to the addition of the wind
assets acquired from EME, and full year operation of Ivanpah and
CVSR. This was partially offset by higher operating costs to bring
these assets online.
Fourth quarter Adjusted EBITDA was $55 million, $37 million
higher than the fourth quarter 2013 due to assets acquired from EME
and favorable margins from existing assets. This was partially
offset by additional costs from Ivanpah and CVSR commencing
operations, and additional development expenses to support
distributed generation expansion plans.
NRG Yield: Full Year 2014 Adjusted EBITDA was $455
million, $162 million higher than in 2013 as a result of additional
generating capacity, higher sales volumes in the thermal business,
and the Alta Wind acquisition which closed in August 2014.
Fourth quarter Adjusted EBITDA was $114 million, $21 million
higher than the fourth quarter 2013 primarily due to the Alta Wind
acquisition, partially offset by higher O&M spending.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
12/31/14
12/31/13 Cash and Cash Equivalents 2,116
2,254 Restricted cash 457 268
Total
2,573 2,522 NRG Corporate Credit Facility
Availability 1,367 1,173
Total Liquidity
3,940 3,695
Total liquidity as of December 31, 2014, was $3,940 million, an
increase of $245 million from December 31, 2013, driven by an
increase of $194 million in letter-of-credit availability and an
increase in cash of $51 million, consisting of the following:
- $4,765 million of cash outflows through
December 2014, consisting of:
- $2,944 million for acquisitions and
growth projects, net, including $1,596 million net cash used in the
EME transaction on April 1, 2014 and $901 million net cash used to
acquire Alta Wind on August 12, 2014;
- $853 million of cash grant bridge loan
payments;
- $508 million of maintenance and
environmental capital expenditures, net;
- $190 million common and preferred stock
dividends;
- $124 million of merger and integration
expenses and capital costs;
- $102 million of other investing and
financing activities; and
- $44 million of stock repurchases.
- Offset by $4,816 million of cash
inflows through December 2014, consisting of:
- $1,838 million of net financing
activities consisting of: $2,100 million of proceeds from senior
note debt issuance; $337 million of proceeds from NRG Yield
convertible note issuance; $492 million of proceeds from NRG Yield
“Green Bond” issuance; $630 million of proceeds from NRG Yield
Class A equity issuance, partially offset by $1,721 million of debt
payments;
- $1,525 million of Adjusted Cash Flow
from Operations;
- $916 million of cash grant
proceeds;
- $190 million of net proceeds from
tax-equity financing of NRG Yield-eligible wind assets acquired as
a part of the EME transaction;
- $131 million of net proceeds from sale
of assets;
- $127 million of other project debt;
and
- $89 million of collateral
received.
Completed Sale of Second Set of Assets to NRG Yield
On January 2, 2015, NRG completed the sale of the following
assets to NRG Yield: Walnut Creek, Tapestry and Laredo Ridge for
$489 million in total cash consideration, plus assumed project debt
of $737 million (as of December 31, 2014) including adjustments for
working capital. These assets augment NRG Yield’s portfolio with an
additional 284 MW of wind generation and 485 MW of natural gas
generation.
This transaction represents a projected $120 million of Adjusted
EBITDA and $35 million of CAFD on an annualized basis.
NRG Strategic Developments
NRG Business
NRG continued its strong track record of safety performance with
a top quartile recordable rate of 0.73 for the full year 2014.
Overall generation was up 4% over 2013, including the delivery
of exceptional operating performance during the extreme cold
weather in the first quarter of 2014, with fleet peak availability
of 90.7%.
NRG Business’s multi-year capital investment program includes
both generation additions and fuel conversions of approximately
4,400 MWs of generation capacity across our geographic footprint.
This provides the company with the ability to bid generation assets
in regional forward capacity markets while also meeting key
environmental compliance goals. Assets undergoing planned fuel
conversions or additions include Avon Lake 7 and 9, Big Cajun II
Unit 2, Dunkirk Units 2-4, Joliet Units 6-8, New Castle Units 3-5,
Portland Units 1-2, and Shawville 1-4. Additionally, and as part of
the acquisition of Midwest Generation, NRG has elected to install
DSI and ESP upgrades at both its 1,538 MW Powerton and 689 MW
Waukegan coal facilities which, when combined with the fuel
conversion at Joliet and the planned retirement of the 761 MW Will
County 3 coal facility, will provide significant emissions
improvement in Illinois.
NRG was selected by Southern California Edison (SCE) to repower
the Company’s Mandalay facility in Oxnard with 262 MW of new simple
cycle generation and to install 178 MW of “Preferred Resources,”
including both demand response and energy efficiency products at
sites across southern California. When coupled with the previously
announced Carlsbad repowering, total long term contracts awarded to
NRG, pending CPUC approval, amount to over 1 GW in California. The
Company plans to add the Mandalay and Carlsbad facilities to the
Right of First Offer Agreement for dropdown to NRG Yield.
NRG has begun construction of a 360 MW4, natural gas-fired
peaking plant at our PH Robinson site near Houston. The project
will be partially financed through $43 million of Ike tax-exempt
bonds.
NRG Home
As a result of organic growth and acquisitions completed in
2014, NRG Home Solar now has the capabilities it needs to compete
at the national level in 2015. By the end of 2015, NRG Home Solar
expects to have 35,000-40,000 lease customers totaling
approximately 245–280 MW, of which 25,000-30,000 are expected to be
added during the year 2015.
NRG acquired Goal Zero, a leader in portable solar and energy
storage products, which the Company expects to enable it to meet
its retail customer’s growing demand for power “on the go.”
NRG Yield
In the first quarter 2015, NRG offered NRG Yield the opportunity
to invest in a portfolio of approximately 2,300 existing
residential solar leases with an average tenor of 17 years
currently held by a partnership owned solely by NRG. Subject to the
approval of NRG Yield’s independent directors, NRG Yield would
invest cash in exchange for an ownership stake in the partnership
with the cash proceeds distributed to NRG. Under the proposed
partnership agreement, NRG Yield will receive approximately 95% of
the tax and cash distributions during the contracted lease term and
5% of the economics thereafter.
NRG also expects to propose a similar partnership with NRG Yield
to invest in additional residential solar leases to be financed
with tax equity and funded by NRG Yield equity to be invested over
time as individual leases are placed in service by NRG.
NRG Yield also announced it is seeking stockholder approval
(including the approval of a majority of the Class A stock) to
amend its governing documents to authorize a Class C and Class D
stock. Shares of Class C and Class D stock will be issued through a
recapitalization of the Company’s equity. The proposed
recapitalization will be effectuated through a stock split of each
share of the Class A stock into one Class A and one Class C
share. In addition, each share of Class B stock held by NRG
will be split into one Class B and one Class D share. The
Class C stock will have equal economic rights with Class A stock
and a 1/100th voting right. The Class D stock will not have any
economic rights (as NRG’s economic interest is held exclusively
through its ownership of NRG Yield LLC) and a 1/100th voting
right.
In connection with the recapitalization, the operating agreement
of NRG Yield LLC will also be amended and restated to provide for
the recapitalization of the outstanding units of NRG Yield
LLC. The recapitalization will result in the creation of Class
C units (to be owned by NRG Yield) and Class D units (to be owned
by NRG) in each case in amounts equal to the number of Class C
shares and Class D shares issued in connection with the
recapitalization of NRG Yield.
The recapitalization is intended to provide NRG Yield the
flexibility to raise capital for future acquisitions while also
maintaining the strong strategic sponsorship of its parent, NRG
Energy, Inc. NYLD intends to use the new Class C common stock
for, among other things, issuance in public offerings to raise
capital to finance future acquisitions, as well as in stock-based
acquisitions and for equity-based compensation.
NRG Renew
NRG Renew entered into an agreement with Kaiser Permanente, one
of the nation’s largest not-for-profit healthcare providers, to
help Kaiser Permanente achieve its goal to reduce greenhouse gas
emissions by 30% by 2020. Utilizing as much as 70 MW of on-site
solar, NRG Renew expects to implement a single-brand, multi-site
distributed solar program at as many as 170 locations, which will
include medical offices, hospitals, clinics, data centers and other
Kaiser Permanente facilities.
Outlook for 2015
The Company is reaffirming its guidance range for fiscal year
2015 with respect to both Adjusted EBITDA and FCF before growth
investments. As always, the Company’s annual guidance assumes
normalized weather.
Table 4: 2015 Adjusted EBITDA and FCF before Growth
investments Guidance
2015 ($ in millions)
Guidance
Adjusted EBITDA1 $3,200–3,400 Interest
payments (1,160) Income tax (40) Working capital/other changes
250
Adjusted Cash flow from operations
$2,250–2,450 Maintenance capital expenditures, net
(480)–(510) Environmental capital expenditures, net (330)–(360)
Adjusted EBITDA from NRG Home Solar (100) Preferred dividends (10)
Distributions to non-controlling interests (190)–(210)
Free cash flow – before Growth investments
$1,100–1,300
1 2015 guidance excludes expected negative contribution of $100
MM from NRG Home Solar
2015 Capital Allocation Update
On January 20, 2015, NRG declared a quarterly dividend on the
Company's common stock of $0.145 per share, payable February 17,
2015 to stockholders of record as of February 2, 2015. On an annual
basis, the increase to $0.58 per share represents a 4% increase
year-over-year and a total increase of 61% from $0.36 per share in
2012.
NRG has also completed the $100 million share buyback program
announced on December 9, 2014 at an average price of $25.96 per
share.
The Company's common stock dividend and share buyback program
are subject to available capital, market conditions and compliance
with associated laws and regulations.
Announcing Transition in NRG’s Investor Relations
Department
NRG is announcing that Matt Orendorff, previously in the
Strategy and M&A Group at NRG, has been named Managing Director
of Investor Relations replacing Chad Plotkin who has assumed the
role of Senior Vice President, Finance and Strategy, for NRG Home
Solar.
Earnings Conference Call
NRG will host a conference call at 9:00 am Eastern today 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 “Presentations and Webcasts”
under the “Investors” section at the bottom of the home page. The
webcast will be archived on the site for those unable to listen in
real time.
About NRG
NRG is leading a customer-driven change in the U.S. energy
industry by delivering cleaner and smarter energy choices, while
building on the strength of the nation’s largest and most diverse
competitive power portfolio. A Fortune 250 company, we create value
through reliable and efficient conventional generation while
driving innovation in solar and renewable power, electric vehicle
ecosystems, carbon capture technology and customer-centric energy
solutions. Our retail electricity providers serve almost 3 million
residential and commercial customers throughout the country. More
information is available at www.nrg.com. Connect with NRG Energy on
Facebook and follow us on Twitter @nrgenergy.
Safe Harbor Disclosure
In addition to historical information, the information presented
in this communication includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Exchange Act. These statements involve
estimates, expectations, projections, goals, assumptions, known and
unknown risks and uncertainties and can typically be identified by
terminology such as “may,” “should,” “could,” “objective,”
“projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,”
“intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,”
“predict,” “target,” “potential” or “continue” or the negative of
these terms or other comparable terminology. Such forward-looking
statements include, but are not limited to, statements about the
Company’s future revenues, income, indebtedness, capital structure,
plans, expectations, objectives, projected financial performance
and/or business results and other future events, and views of
economic and market conditions.
Although NRG believes that its expectations are reasonable, it
can give no assurance that these expectations will prove to have
been correct, and actual results may vary materially. Factors that
could cause actual results to differ materially from those
contemplated above include, among others, general economic
conditions, hazards customary in the power industry, weather
conditions, competition in wholesale power markets, the volatility
of energy and fuel prices, failure of customers to perform under
contracts, changes in the wholesale power markets, changes in
government regulation, 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 and repowerings, our ability to implement value
enhancing improvements to plant operations and companywide
processes, our ability to obtain federal loan guarantees, the
inability to maintain or create successful partnering
relationships, our ability to operate our businesses efficiently
including NRG Yield, our ability to retain retail customers and to
grow our NRG Home Solar business, our ability to realize value
through our commercial operations strategy and the creation of NRG
Yield, the ability to successfully integrate the businesses of
acquired companies, the ability to realize anticipated benefits of
acquisitions (including expected cost savings and other synergies)
or the risk that anticipated benefits may take longer to realize
than expected, our ability to close the drop-down transactions to
NRG Yield and our ability to pay dividends and initiate share
repurchases under our Capital Allocation Plan, which may be made
from time to time subject to market conditions and other factors,
including as permitted by United States securities laws.
Furthermore, any common stock dividend 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 February 27,
2015. These estimates are based on assumptions believed to be
reasonable as of that date. NRG disclaims any current intention to
update such guidance, except as required by law. The foregoing
review of factors that could cause NRG’s actual results to differ
materially from those contemplated in the forward-looking
statements included in this Earnings Presentation should be
considered in connection with information regarding risks and
uncertainties that may affect NRG's future results included in
NRG's filings with the Securities and Exchange Commission at
www.sec.gov.
1 Excludes $53 million of payments for working capital
2 Represents average annual peaking capacity
3 Excludes projected negative contribution of $100 million from
NRG Home Solar
4 Represents average annual peaking capacity
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS For the Year
Ended December 31, (In millions, except per share
amounts) 2014 2013
2012 Operating Revenues Total operating
revenues $ 15,868 $ 11,295 $ 8,422 Cost of operations 11,779
8,121 6,140 Depreciation and amortization 1,523 1,256 950
Impairment losses 97 459
-
Selling, general and administrative 1,042 904 807
Acquisition-related transaction and integration costs 84 128 107
Development activity expenses 91 84 68 Total
operating costs and expenses 14,616 10,952 8,072
Gain on sale of assets 19
-
-
Operating Income 1,271 343 350
Other Income/(Expense) Equity in earnings of unconsolidated
affiliates 38 7 37 Bargain purchase gain related to GenOn
acquisition
-
-
296 Impairment losses on investments
-
(99 ) (2 ) Other income, net 22 13 19 Gain on sale of equity-method
investment 18
-
-
Loss on debt extinguishment (95 ) (50 ) (51 ) Interest expense
(1,119 ) (848 ) (661 ) Total other expense (1,136 ) (977 ) (362 )
Income/(Loss)Before Income Taxes 135 (634 ) (12 ) Income tax
expense/(benefit) 3 (282 ) (327 )
Net
Income/(Loss) 132 (352 ) 315 Less: Net (loss)/income
attributable to noncontrolling interests and redeemable
noncontrolling interests (2 ) 34 20
Net
Income/(Loss) Attributable to NRG Energy, Inc. 134 (386 ) 295
Dividends for preferred shares 56 9 9
Income/(Loss) Available for Common Stockholders $ 78
$ (395 ) $ 286
Earnings/(Loss) Per Share Attributable to
NRG Energy, Inc. Common Stockholders
Weighted average number of common shares
outstanding - basic
334 323 232
Net Income/(Loss) per Weighted Average
Common Share - Basic
$ 0.23 $ (1.22 ) $ 1.23
Weighted average number of common shares
outstanding - diluted
339 323 234
Net Income/(Loss) per Weighted Average
Common Share - Diluted
$ 0.23 $ (1.22 ) $ 1.22
Dividends Per Common
Share $ 0.54 $ 0.45 $ 0.18
NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME For the
Year Ended December 31, 2014 2013
2012 (In millions) Net
Income/(Loss) $ 132 $ (352 ) $ 315
Other Comprehensive
(Loss)/Income, net of tax Unrealized (loss)/gain on
derivatives, net of income tax benefit of $21, $6, and $94 (45 ) 8
(163 ) Foreign currency translation adjustments, net of income tax
benefit of $5, $14, and $1 (8 ) (24 ) (1 ) Reclassification
adjustment for translation gain realized upon sale of Schkopau, net
of income tax benefit of $0, $0, and $6
-
-
(11 ) Available-for-sale securities, net of income tax
benefit/(expense) of $2, $(2), and $(1) (7 ) 3 3 Defined benefit
plan, net of income tax benefit/(expense) of $88, $(100), and $21
(129 ) 168 (52 ) Other comprehensive (loss)/income (189 )
155 (224 )
Comprehensive (Loss)/Income (57 ) (197 )
91 Less: Comprehensive income attributable to noncontrolling
interests and redeemable noncontrolling interests 8 34
20
Comprehensive (Loss)/Income Attributable to NRG
Energy, Inc. (65 ) (231 ) 71 Dividends for preferred shares 56
9 9
Comprehensive (Loss)/Income Available
for Common Stockholders $ (121 ) $ (240 ) $ 62
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS As of December 31,
2014 2013 (In millions) ASSETS
Current Assets Cash and cash equivalents $ 2,116 $ 2,254
Funds deposited by counterparties 72 63 Restricted cash 457 268
Accounts receivable - trade, less
allowance for doubtful accounts of $23 and $40
1,322 1,214 Inventory 1,247 898 Derivative instruments 2,425 1,328
Cash collateral paid in support of energy risk management
activities 187 276 Deferred income taxes 174 258 Renewable energy
grant receivable 135 539 Current assets held-for-sale
-
19 Prepayments and other current assets 447 479 Total
current assets 8,582 7,596
Property, Plant and
Equipment In service 29,487 23,649 Under construction 770
2,775 Total property, plant and equipment 30,257
26,424 Less accumulated depreciation (7,890 ) (6,573 ) Net
property, plant and equipment 22,367 19,851
Other
Assets Equity investments in affiliates 771 453 Notes
receivable, less current portion 72 73 Goodwill 2,574 1,985
Intangible assets, net of accumulated amortization of $1,402 and
$1,977 2,567 1,140 Nuclear decommissioning trust fund 585 551
Derivative instruments 480 311 Deferred income taxes 1,406 1,202
Non-current assets held-for-sale 17
-
Other non-current assets 1,244 740 Total other assets
9,716 6,455
Total Assets $ 40,665 $
33,902
NRG ENERGY, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Continued) As of December 31, 2014
2013 (In millions, except share data) LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities Current
portion of long-term debt and capital leases $ 474 $ 1,050 Accounts
payable 1,060 1,038 Derivative instruments 2,054 1,055 Cash
collateral received in support of energy risk management activities
72 63 Accrued interest expense 252 185 Other accrued expenses 553
480 Other current liabilities 394 333 Total current
liabilities 4,859 4,204
Other Liabilities
Long-term debt and capital leases 19,900 15,767 Nuclear
decommissioning reserve 310 294 Nuclear decommissioning trust
liability 333 324 Postretirement and other benefit obligations 727
506 Deferred income taxes 21 22 Derivative instruments 438 195
Out-of-market contracts, net of accumulated amortization of $562
and $484 1,244 1,177 Other non-current liabilities 847 695
Total non-current liabilities 23,820 18,980
Total Liabilities 28,679 23,184 2.822% and
3.625%, respectively, convertible perpetual preferred stock; $0.01
par value; 250,000 shares issued and outstanding 291 249 Redeemable
noncontrolling interest in subsidiaries 19 2
Commitments and
Contingencies Stockholders' Equity Common stock; $0.01
par value; 500,000,000 shares authorized; 415,506,176 and
401,126,780 shares issued and 336,662,624 and 323,779,252 shares
outstanding at December 31, 2014 and 2013 4 4 Additional paid-in
capital 8,327 7,840 Retained earnings 3,588 3,695 Less treasury
stock, at cost; 78,843,552 and 77,347,528 shares at December 31,
2014 and 2013 (1,983 ) (1,942 ) Accumulated other comprehensive
(loss)/income (174 ) 5 Noncontrolling interest 1,914 865
Total Stockholders' Equity 11,676 10,467
Total Liabilities and Stockholders' Equity $ 40,665
$ 33,902
NRG ENERGY, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS For the Year Ended December 31, 2014
2013 2012 (In
millions) Cash Flows from Operating Activities Net
income/(loss) $ 132 $ (352 ) $ 315 Adjustments to reconcile net
income/(loss) to net cash provided by operating activities:
Distributions and equity in earnings of unconsolidated affiliates
49 84 2 Bargain purchase gain related to GenOn acquisition
-
-
(296 ) Depreciation and amortization 1,523 1,256 950 Provision for
bad debts 64 67 45 Amortization of nuclear fuel 46 36 39
Amortization of financing costs and debt discount/premiums (12 )
(33 ) 31 Adjustment to loss on debt extinguishment 25 (15 ) 9
Amortization of intangibles and out-of-market contracts 64 49 146
Amortization of unearned equity compensation 42 38 41 (Gain)/loss
on disposals and sales of assets, net (4 ) (3 ) 11 Impairment
losses 97 558
-
Changes in derivative instruments (61 ) 164 124 Changes in deferred
income taxes and liability for uncertain tax benefits (154 ) (67 )
(353 ) Changes in nuclear decommissioning trust liability 19 15 37
Cash (used)/provided by changes in other working capital, net of
acquisition and disposition effects: Accounts receivable - trade (2
) (224 ) (131 ) Inventory (245 ) 11 (172 ) Prepayments and other
current assets 182 (22 ) (26 ) Accounts payable (12 ) 275 (132 )
Accrued expenses and other current liabilities (26 ) (114 ) 231
Other assets and liabilities (217 ) (453 ) 278
Net Cash
Provided by Operating Activities 1,510 1,270
1,149
Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired (2,936 ) (494 ) (81
) Cash acquired in GenOn acquisition
-
-
983 Capital expenditures (909 ) (1,987 ) (3,396 )
Decrease/(increase) in restricted cash, net 57 (22 ) (66 )
(Increase)/decrease in restricted cash to support equity
requirements for U.S. DOE funded projects (206 ) (26 ) 164
Decrease/(increase) in notes receivable 25 (11 ) (24 ) Proceeds
from renewable energy grants 916 55 62 Purchases of emission
allowances, net of proceeds (16 ) 5 (1 ) Investments in nuclear
decommissioning trust fund securities (619 ) (514 ) (436 ) Proceeds
from sales of nuclear decommissioning trust fund securities 600 488
399 Proceeds from sale of assets, net 203 13 137 Investments in
unconsolidated affiliates (103 )
-
(25 ) Other 85 (35 ) 22
Net Cash Used by Investing
Activities (2,903 ) (2,528 ) (2,262 )
Cash Flows from
Financing Activities Payment of dividends to preferred and
common stockholders (196 ) (154 ) (50 ) Net receipts/(payments for)
from settlement of acquired derivatives that include financing
elements 9 267 (68 ) Payment for treasury stock (39 ) (25 )
-
Sales proceeds and other contributions from noncontrolling
interests in subsidiaries 819 531 347 Proceeds from issuance of
common stock 21 16
-
Proceeds from issuance of long-term debt 4,563 1,777 3,165 Payment
of debt issuance and hedging costs (67 ) (50 ) (35 ) Payments for
short and long-term debt (3,827 ) (935 ) (1,260 ) Other (18 )
-
-
Net Cash Provided by Financing Activities 1,265 1,427
2,099 Effect of exchange rate changes on cash and cash equivalents
(10 ) (2 ) (4 )
Net (Decrease)/Increase in Cash and Cash
Equivalents (138 ) 167 982
Cash and Cash Equivalents at
Beginning of Period 2,254 2,087 1,105
Cash and Cash Equivalents at End of Period $ 2,116 $
2,254 $ 2,087
Appendix Table A-1: Fourth
Quarter 2014 Regional Adjusted EBITDA Reconciliation
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
Home Home
($ in millions)
Retail Solar
Business Renew Yield
Corp Total Net Income/(Loss)
Attributable to NRG Energy, Inc. (99) (18) 575
(64) (10) (265) 119 Plus:
Net Income Attributable to Non-Controlling
Interest
- (19) (1) (14) - 12 (22) Interest Expense, net - 1 18 42 69 176
306 Income Tax - - - - (11) 82 71
Depreciation, Amortization and ARO
Expense
12 2 297 76 42 6 435 Amortization of Contracts 1 -
(19) 4 10 1 (3)
EBITDA
(86) (34) 870 44 100 12
906
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - 6 (1) 12 3 20
Integration and Transaction Costs
1 - - - 2 12 15 Legal Settlements 1 - - - - - 1 Deactivation Costs
- - 27 - - - 27 Sale of Businesses - - (18) - - - (18)
Asset Write Offs and Impairments
- - 7 18 - (23) 2
Market to Market (MtM) Losses/(Gains) on
economic hedges
249 - (569) (6) - -
(326)
Adjusted EBITDA 165
(34) 323 55 114
4 627 Appendix Table
A-2: Fourth Quarter 2013 Regional Adjusted EBITDA
Reconciliation
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
Home
Home ($ in millions)
Retail
Solar Business Renew
Yield Corp Total
Net Income/(Loss) Attributable to NRG
Energy, Inc.
225 (4) (452) (16) 33
(83) (297) Plus: .
Net Income Attributable to Non-Controlling
Interest
- - - (5) 4 8 7 Interest Expense, net 1 1 27 15 18 154 216 Income
Tax - - - - 3 (230) (227)
Depreciation, Amortization and ARO
Expense
47 1 212 26 22 8 316 Amortization of Contracts 5 -
(37) - 1 - (31)
EBITDA
277 (2) (250) 20 81 (143)
(17) Adjustment to reflect NRG share of Adjusted EBITDA in
unconsolidated affiliates - - 5 (3) 12 4 18 Integration and
Transaction
Costs
1 - - - - 33 34 Legal Settlements 3 - - - - - 3 Deactivation Costs
- - 6 - - - 6
Asset Write Offs and Impairments
- - 459 - - 99 558
Market to Market (MtM) Losses/(Gains) on
economic hedges
(101) - 166 1 - -
66
Adjusted EBITDA 180 (2)
386 18 93
(6) 669 Appendix Table A-3:
Full Year 2014 Regional Adjusted EBITDA Reconciliation
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
Home
Home ($ in millions)
Retail
Solar Business Renew
Yield Corp Total Net
Income/(Loss) Attributable to NRG Energy, Inc. 138
(53) 1,094 (163) 65 (947) 134
Plus:
Net Income Attributable to Non-Controlling
Interest
- (19) (1) 1 16 1 (2) Interest Expense, net 1 1 75 133 165 823
1,198 Income Tax - - 1 - 4 (2) 3
Depreciation, Amortization and ARO
Expense
123 6 1,002 247 136 32 1,546 Amortization of Contracts (2)
- (29) 8 18 1 (4)
EBITDA 260 (65) 2,142 226
404 (92) 2,874
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- - 11 (12) 47 27 73
Integration and Transaction Costs
3 - 1 - 4 76 84 Legal Settlements 5 - - - - - 5 Deactivation Costs
- - 41 - - 1 42 Sale of Businesses - - (35) - - - (35)
Asset Write Offs and Impairments
- - 81 29 - (13) 97
Market to Market (MtM) Losses/(Gains) on
economic hedges
337 - (343) (6) - (1)
(13)
Adjusted EBITDA 604
(65) 1,898 237 455
(1) 3,128 Appendix
Table A-4: Full Year 2013 Regional Adjusted EBITDA
Reconciliation
The following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/ (loss)
Home Home
($ in millions)
Retail Solar
Business Renew Yield
Corp Total Net Income/(Loss)
Attributable to NRG Energy, Inc. 349 (9) (51)
(71) 119 (723) (386) Plus:
Net Income Attributable to Non-Controlling
Interest
- - - 22 13 (1) 34 Interest Expense, net 3 - 79 50 50 654 836 Loss
on Debt Extinguishment - - - - - 50 50 Income Tax - - - - 8 (290)
(282)
Depreciation, Amortization and ARO
Expense
175 4 915 99 61 22 1,276 Amortization of Contracts 51
- (29) - 2 - 24
EBITDA
578 (5) 914 100 253 (287)
1,552 Adjustment to reflect NRG share of Adjusted EBITDA in
unconsolidated affiliates - - 23 (4) 40 20 79
Integration and Transaction Costs
- - - - - 128 128 Legal Settlements 3 - - - - - 3 Deactivation
Costs - - 23 - - - 23
Asset Write Offs and Impairments
- - 462 4 - 100 566
Market to Market (MtM) Losses/(Gains) on
economic hedges
(53) - 334 1 - 2
285
Adjusted EBITDA 528 (5)
1,758 101 293
(39) 2,636 Appendix Table A-5: 2014
and 2013 Fourth 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 Three months ended
($ in millions)
December 31, 2014 December 31, 2013
((1)) Net Cash Provided by Operating Activities
396 447 Adjustment for change in collateral (189)
(12) Reclassifying of net receipts (payments) for settlement of
acquired derivatives that include financing elements 73 90 Add:
Merger and integration expenses 19 25
Adjusted
Cash Flow from Operating Activities 299
550 Maintenance CapEx, net2 (63) (103) Environmental CapEx,
net (76) (54) Preferred dividends (2) (2) Distributions to
non-controlling interests (19) (5) Free cash flow –
before Growth investments 139 386
(1) Revised to reflect new Adjusted Cash Flow from Operating
Activities methodology
(2) Excludes merger and integration CapEx of $9 million and $10
million in 2014 and 2013, respectively
Appendix Table A-6: 2014 and 2013 Full Year Adjusted Cash Flow
from Operations Reconciliations
The following table summarizes the
calculation of Adjusted cash flow operating activities providing a
reconciliation to net cash provided by operating activities
($ in millions)
12 months ended
December 31, 2014
12 months ended
December 31, 2013 (1)
Net Cash Provided by Operating Activities 1,510
1,270 Adjustment for change in collateral (89) 47
Reclassifying of net receipts (payments) for settlement of acquired
derivatives that include financing elements 9 267 Add: Merger and
integration expenses 95 141
Adjusted Cash Flow
from Operating Activities 1,525
1,725 Maintenance CapEx, net2 (254) (325) Environmental
CapEx, net (254) (104) Preferred dividends (9) (9) Distributions to
non-controlling interests (57) (5) Free cash flow –
before Growth investments 951 1,282
(1) Revised to reflect new Adjusted Cash Flow from Operating
Activities methodology
(2) Excludes merger and integration CapEx of $28 million and $31
million in 2014 and 2013, respectively
Appendix Table A-8: Adjusted NRG Yield Drop Down Assets
Projected Reg G.The following table summarizes the calculation
of Adjusted EBITDA and CAFD and provides a reconciliation to income
before taxes:
2014 Q4 Drop Downs (dollars in millions)
Income Before Taxes 3 Adjustments to
net income to arrive at Adjusted EBITDA: Depreciation and
amortization 81 Interest expense, net 36
Adjusted
EBITDA 120 Cash Interest Paid (33) Working Capital /
Other 1 Maintenance capital expenditures ‒ Principal amortization
of indebtedness (53)
Cash Available for Distribution
35
Table A-9: Adjusted EBITDA, Full Year 2014 NRG Business
SegmentsThe following table summarizes the calculation of
Adjusted EBITDA and provides a reconciliation to net income/
(loss)
Gulf Carbon
($ in millions)
East Coast
West B2B 360 Total
Net Income/(Loss) Attributable to NRG Energy, Inc. 948
221 90 (155) (10) 1,094 Plus:
Net Income Attributable to Non-Controlling
Interest
(1) - - - - (1) Interest Expense, net 64 (1) 11 1 - 75 Income Tax -
- - 1 - 1
Depreciation, Amortization and ARO
Expense
303 592 93 13 1 1,002 Amortization of Contracts (53)
22 (4) 6 - (29)
EBITDA
1,261 834 190 (134) (9)
2,142
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 2 2 - 7 11 Integration and Transaction
Costs
1 - - - - 1 Deactivation Costs 13 - 28 - - 41 Sale of Businesses 6
(41) - - - (35) Asset Write Offs
and Impairments
6 72 3 - - 81
Market to Market (MtM) Losses/(Gains) on
economic hedges
(43) (480) 10 170 - (343)
Adjusted EBITDA 1,244 387
233 35 (2) 1,898
Table A-10: Adjusted EBITDA, Full Year 2013 NRG Business
Segments Adjusted EBITDA Reconciliation The following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to net income/ (loss)
Gulf Carbon
($ in millions)
East Coast
West B2B 360 Total
Net Income/(Loss) Attributable to NRG Energy, Inc. (147)
(129) 56 172 (3) (51) Plus:
Interest Expense, net 68 8 2 1 - 79
Depreciation, Amortization and ARO
Expense
305 551 53 5 1 915 Amortization of Contracts (48) 20
(4) 3 - (29)
EBITDA 178
450 107 181 (2) 914
Adjustment to reflect NRG share of
Adjusted EBITDA in unconsolidated affiliates
- 2 18 - 3 23 Deactivation Costs 19 - 4 - - 23
Asset Write Offs and Impairments
460 2 - - - 462
Market to Market (MtM) Losses/(Gains) on
economic hedges
325 109 (2) (98) - 335
Adjusted EBITDA 983 563
127 84 1 1,758
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 as supplemental. See the statements of cash flow
included in the financial statements that are a part of this news
release.
Adjusted EBITDA is presented as a further supplemental measure
of operating performance. Adjusted EBITDA represents EBITDA
Adjusted for mark-to-market gains or losses, asset write offs and
impairments; and factors which we do not consider indicative of
future operating performance. The reader is encouraged to evaluate
each adjustment and the reasons NRG considers it appropriate for
supplemental analysis. As an analytical tool, Adjusted EBITDA is
subject to all of the limitations applicable to EBITDA. In
addition, in evaluating Adjusted EBITDA, the reader should be aware
that in the future NRG may incur expenses similar to the
adjustments in this news release.
Adjusted cash flow from operating activities is a non-GAAP
measure NRG provides to show cash from operations with the
reclassification of net payments of derivative contracts acquired
in business combinations from financing to operating cash flow, as
well as the add back of merger and integration related costs. The
Company provides the reader with this alternative view of operating
cash flow because the cash settlement of these derivative contracts
materially impact operating revenues and cost of sales, while GAAP
requires NRG to treat them as if there was a financing activity
associated with the contracts as of the acquisition dates. The
Company adds back merger and integration related costs as they are
one time and unique in nature and do not reflect ongoing cash from
operations and they are fully disclosed to investors.
Free cash flow (before Growth investments) is Adjusted cash flow
from operations less maintenance and environmental capital
expenditures, net of funding, and preferred stock dividends and is
used by NRG predominantly as a forecasting tool to estimate cash
available for debt reduction and other capital allocation
alternatives. The reader is encouraged to evaluate each of these
adjustments and the reasons NRG considers them appropriate for
supplemental analysis. Because we have mandatory debt service
requirements (and other non-discretionary expenditures) investors
should not rely on free cash flow before Growth investments as a
measure of cash available for discretionary expenditures.
Cash Available for Distribution (CAFD) is adjusted EBITDA plus
cash dividends from unconsolidated affiliates, less maintenance
capital expenditures, pro-rata adjusted EBITDA from unconsolidated
affiliates, cash interest paid, income taxes paid, principal
amortization of indebtedness and changes in others assets.
Management believes cash available for distribution is a relevant
supplemental measure of the Company’s ability to earn and
distribute cash returns to investors.
NRG Energy, Inc.Media:Karen Cleeve,
609.524.4608David Knox, 832.357.5730orInvestors:Chad
Plotkin, 609.524.4526Lindsey Puchyr, 609.524.4527
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