- Strong financial and operational performance in the first
quarter of 2024 with GAAP Net Income of $511 million and Adjusted
EBITDA of $849 million
- Diversified supply strategy performed well across all
segments resulting in margin expansion in the East and West while
mitigating the impacts of mild winter weather conditions in
Texas
- Consumer Energy and Smart Home platforms increased customer
counts year over year by 8% and 6%, respectively
- Concluded previously announced $950 million accelerated
share repurchase program at an average price of $50.43 per share,
and reaffirming 2024 capital allocation commitment of $825 million
in additional share repurchases
- Advanced site preparations for generation development
opportunities at three existing sites in ERCOT, representing
approximately 1.5 GW of new, dispatchable generation
capacity
NRG Energy, Inc. (NYSE: NRG) today reported first quarter 2024
Net Income of $511 million. Adjusted EBITDA for the first quarter
was $849 million, Cash Provided by Operating Activities was $267
million, and Free Cash Flow Before Growth Investments (FCFbG) was
$(40) million. Cash Provided by Operating Activities and FCFbG for
the first quarter were primarily impacted by annual incentive
payments, in addition to payment of Vivint Smart Home interest and
seasonal inventory buildup in anticipation of the summer selling
season.
“NRG continued to deliver exceptional operating and financial
results during the first quarter of 2024,” said Larry Coben, NRG
Chair, Interim President and Chief Executive Officer. “We are even
more optimistic about the competitive energy market outlook and
Smart Home adoption, and remain committed to executing our
long-term strategy and capital allocation program.”
Consolidated Financial
Results
Table 1:
Three Months Ended
($ in millions)
3/31/2024
3/31/2023
Net Income/(Loss)
$
511
$
(1,335
)
Cash Provided/(Used) by Operating
Activities
$
267
$
(1,598
)
Adjusted EBITDA
$
849
$
646
Free Cash Flow Before Growth Investments
(FCFbG)
$
(40
)
$
203
NRG’s first quarter 2024 Adjusted EBITDA grew by $203 million
year-over-year as the Company continued its strong consolidated
financial performance. The home and business integrated retail
platforms delivered reliable customer counts and stable margins
during the period. The East and West segments contributed higher
gross margins due to favorable supply costs, partially offset by
lower Texas results due primarily to mild winter weather driving
lower gross margin on hedges procured as part of the Company's
diversified supply strategy. NRG notably continues to excel in
consumer markets where full competitive choice is available, most
recently adding approximately 35 thousand customers in Lubbock,
Texas, as former customers of Lubbock Power & Light fully
transitioned to competitively selected retail energy providers.
The electric industry is anticipating enhanced demand in future
years driven by new manufacturing, industrial, and data center
facilities. As a result, NRG's extensive track record and expertise
— across the Texas power market, in particular — is expected to
provide significant growth opportunities across the Company's
integrated operating platform, including generation, load
management, and consumer product development.
2024 Capital Allocation
NRG remains committed to a disciplined capital allocation policy
and strong balance sheet. In the first quarter of 2024, the Company
concluded the previously announced $950 million accelerated share
repurchase program, with nearly 19 million shares repurchased at an
average price of $50.43 per share. NRG intends to repurchase $825
million of additional shares throughout 2024 and is currently in
the market repurchasing shares through a 10b5-1 plan.
In addition, the capital allocation plan for 2024 includes
approximately $500 million for liability management. On April 16,
2024, the Company amended its Credit Agreement to establish a new
leverage-neutral $875 million Term Loan B facility (Term Loan). A
portion of the proceeds from the Term Loan were used to repay a
portion of the Company's 2.750% Convertible Senior Notes due
2048.
Through April 30, 2024, the Company repurchased $343 million in
principal plus $257 million in associated in-the-money premium of
the Convertible Senior Notes. The remaining portion of the proceeds
from the Term Loan, together with cash on hand, are expected to be
used to repay the Company's 3.75% senior secured first lien notes
due 2024.
On April 10, 2024, Vivint Smart Home amended its Credit
Agreement to reprice its Term Loan B facility, among other certain
changes, securing more favorable pricing and repayment terms.
The annual dividend was increased in January 2024 to $1.63 from
$1.51 per common share, representing an 8% increase from 2023.
NRG's share repurchase program and common stock dividend are
subject to maintaining satisfactory credit metrics, available
capital, market conditions, and compliance with associated laws and
regulations. The timing and amount of any shares of NRG’s common
stock repurchased under the share repurchase authorization will be
determined by NRG’s management based on market conditions and other
factors. NRG will only repurchase shares when management believes
it would not jeopardize the Company’s ability to maintain
satisfactory credit ratings.
Segments Results
Table 2: Net Income/(Loss)
($ in millions)
Three Months Ended
Segment
3/31/2024
3/31/2023
Texas
$
349
$
284
East
581
(1,402
)
West/Services/Othera
(426
)
(178
)
Vivint Smart Homeb
$
7
$
(39
)
Net Income/(Loss)
$
511
$
(1,335
)
a
Includes Corporate segment
b
Vivint Smart Home acquired in March
2023
Net Income for the first quarter of 2024 was $511 million,
$1,846 million higher than the first quarter of 2023. This was
primarily driven by unrealized non-cash mark-to-market gains on
economic hedges in 2024 as compared to losses in 2023 in the East,
due to large movements in natural gas and power prices. Certain
hedge positions are required to be marked-to-market every period,
while the customer contracts related to these items are not,
resulting in temporary unrealized losses or gains on the economic
hedges that are not reflective of the expected economics at future
settlement.
Table 3: Adjusted EBITDA
($ in millions)
Three Months Ended
Segment
3/31/2024
3/31/2023
Texas
$
219
$
254
East
351
314
West/Services/Othera
56
5
Vivint Smart Homeb
$
223
$
73
Adjusted EBITDA
$
849
$
646
a
Includes Corporate segment
b
Vivint Smart Home acquired in March
2023
Texas: First quarter Adjusted EBITDA was $219 million,
$35 million lower than the first quarter of 2023. This decrease was
primarily due to mild winter weather driving lower gross margin on
hedges procured as part of the Company's diversified supply
strategy, partially offset by lower plant operating expenses due to
asset sales in 2023.
East: First quarter Adjusted EBITDA was $351 million, $37
million higher than the first quarter of 2023. This increase was
driven by lower retail power supply costs and increased customer
counts, partially offset by lower natural gas gross margin.
West/Services/Other: First quarter Adjusted EBITDA was
$56 million, $51 million higher than the first quarter of 2023.
This increase was primarily driven by lower retail power supply
costs, higher natural gas gross margin, and the timing of planned
outages at Cottonwood.
Vivint Smart Home: First quarter Adjusted EBITDA was $223
million, $150 million higher than the first quarter 2023 based on
three months of results in 2024 as compared to one month in 2023.
Results include growth in subscriber count of 6% and an increase in
monthly recurring service margin per customer of 5% vs the
prior-year period.
Liquidity and Capital
Resources
Table 4: Corporate Liquidity
($ in millions)
3/31/24
12/31/23
Cash and Cash Equivalents
$
278
$
541
Restricted Cash
15
24
Total
293
565
Total Revolving Credit Facility and
collective collateral facilities
4,501
4,278
Total Liquidity, excluding collateral
deposited by counterparties
$
4,794
$
4,843
As of March 31, 2024, NRG's unrestricted cash was $278 million
and $4.5 billion was available under the Company’s credit
facilities. Total liquidity remained relatively unchanged from
year-end at $4.8 billion.
Reaffirming 2024
Guidance
NRG is reaffirming its Adjusted EBITDA and FCFbG guidance for
2024 as set forth below.
Table 5: Adjusted EBITDA, Cash Provided
by Operating Activities, and FCFbG Guidancea
2024
(In millions)
Guidance
Adjusted EBITDA
$3,300 - $3,550
Cash Provided by Operating Activities
$1,825 - $2,075
FCFbG
$1,825 - $2,075
a
Adjusted EBITDA and FCFbG are non-GAAP
financial measures; see Appendix Table A-5 for GAAP Reconciliation.
Adjusted EBITDA 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. Cash Provided by Operating Activities
does not include changes in collateral deposits in support of risk
management activities which are primarily associated with fair
value adjustments related to derivatives
Earnings Conference Call
On May 7, 2024, NRG will host a conference call at 9:00 a.m.
Eastern (8:00 a.m. Central) to discuss these results. Investors,
the news media and others may access the live webcast of the
conference call and accompanying presentation materials through the
investor relations website under “presentations and webcasts” on
investors.nrg.com. The webcast will be archived on the site for
those unable to listen in real-time.
About NRG
NRG Energy is a leading energy and home services company powered
by people and our passion for a smarter, cleaner, and more
connected future. A Fortune 500 company operating in the United
States and Canada, NRG delivers innovative solutions that help
people, organizations, and businesses achieve their goals while
also advocating for competitive energy markets and customer choice.
More information is available at www.nrg.com. Connect with NRG on
Facebook and LinkedIn, and follow us on X (formerly known as
Twitter), @nrgenergy.
Forward-Looking Statements
In addition to historical information, the information presented
in this press release 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 and extreme
weather events, competition in wholesale power, gas and smart home
markets, the volatility of energy and fuel prices, failure of
customers or counterparties to perform under contracts, changes in
the wholesale power and gas markets, changes in government or
market regulations, the condition of capital markets generally and
NRG’s ability to access capital markets, NRG’s ability to execute
its market operations strategy, risks related to data privacy,
cyberterrorism and inadequate cybersecurity, the loss of data,
unanticipated outages at NRG’s generation facilities, NRG’s ability
to achieve its net debt targets, adverse results in current and
future litigation, complaints, product liability claims and/or
adverse publicity, failure to identify, execute or successfully
implement acquisitions or asset sales, risks of the smart home and
security industry, including risks of and publicity surrounding the
sales, subscriber origination and retention process, the impact of
changes in consumer spending patterns, consumer preferences,
geopolitical tensions, demographic trends, supply chain
disruptions, NRG’s ability to implement value enhancing
improvements to plant operations and company-wide processes, NRG’s
ability to achieve or maintain investment grade credit metrics,
NRG’s ability to proceed with projects under development or the
inability to complete the construction of such projects on schedule
or within budget, the inability to maintain or create successful
partnering relationships, NRG’s ability to operate its business
efficiently, NRG’s ability to retain retail customers, the ability
to successfully integrate businesses of acquired companies,
including Direct Energy and Vivint Smart Home, NRG’s 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, and NRG’s
ability to execute its capital allocation plan. Achieving
investment grade credit metrics is not an indication of or
guarantee that the Company will receive investment grade credit
ratings. Debt and share repurchases may be made from time to time
subject to market conditions and other factors, including as
permitted by United States securities laws. Furthermore, any common
stock dividend is subject to available capital and market
conditions.
NRG undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. The Adjusted
EBITDA, cash provided by operating activities and Free Cash Flow
before Growth guidance are estimates as of May 7, 2024. These
estimates are based on assumptions NRG 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 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. For a more detailed discussion
of these factors, see the information under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in NRG’s most recent Annual
Report on Form 10-K, and in subsequent SEC filings. NRG’s
forward-looking statements speak only as of the date of this
communication or as of the date they are made.
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March
31,
(In millions, except for per share
amounts)
2024
2023
Revenue
Revenue
$
7,429
$
7,722
Operating Costs and Expenses
Cost of operations (excluding depreciation
and amortization shown below)
5,685
8,778
Depreciation and amortization
268
190
Selling, general and administrative
costs
591
426
Acquisition-related transaction and
integration costs
9
71
Total operating costs and expenses
6,553
9,465
(Loss)/gain on sale of assets
(4
)
199
Operating Income/(Loss)
872
(1,544
)
Other Income/(Expense)
Equity in earnings of unconsolidated
affiliates
3
5
Other income, net
30
16
Loss on debt extinguishment
(58
)
—
Interest expense
(152
)
(148
)
Total other expense
(177
)
(127
)
Income/(Loss) Before Income
Taxes
695
(1,671
)
Income tax expense/(benefit)
184
(336
)
Net Income/(Loss)
$
511
$
(1,335
)
Less: Cumulative dividends attributable to
Series A Preferred Stock
17
4
Net Income/(Loss) Available for Common
Stockholders
$
494
$
(1,339
)
Income/(Loss) per Share
Weighted average number of common shares
outstanding — basic
209
230
Income/(Loss) per Weighted Average
Common Share — Basic
$
2.36
$
(5.82
)
Weighted average number of common shares
outstanding — diluted
214
230
Income/(Loss) per Weighted Average
Common Share —Diluted
$
2.31
$
(5.82
)
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended March
31,
(In millions)
2024
2023
Net Income/(Loss)
$
511
$
(1,335
)
Other Comprehensive
(Loss)/Income
Foreign currency translation
adjustments
(8
)
1
Defined benefit plans
(1
)
—
Other comprehensive (loss)/income
(9
)
1
Comprehensive Income/(Loss)
$
502
$
(1,334
)
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2024
December 31, 2023
(In millions, except share
data)
(Unaudited)
(Audited)
ASSETS
Current Assets
Cash and cash equivalents
$
278
$
541
Funds deposited by counterparties
241
84
Restricted cash
15
24
Accounts receivable, net
3,325
3,542
Inventory
581
607
Derivative instruments
3,807
3,862
Cash collateral paid in support of energy
risk management activities
309
441
Prepayments and other current assets
712
626
Total current assets
9,268
9,727
Property, plant and equipment,
net
1,768
1,763
Other Assets
Equity investments in affiliates
43
42
Operating lease right-of-use assets,
net
179
179
Goodwill
5,076
5,079
Customer relationships, net
2,064
2,164
Other intangible assets, net
1,662
1,763
Derivative instruments
2,399
2,293
Deferred income taxes
2,100
2,251
Other non-current assets
842
777
Total other assets
14,365
14,548
Total Assets
$
25,401
$
26,038
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Current portion of long-term debt and
finance leases
$
1,101
$
620
Current portion of operating lease
liabilities
94
90
Accounts payable
2,027
2,325
Derivative instruments
3,591
4,019
Cash collateral received in support of
energy risk management activities
241
84
Deferred revenue current
710
720
Accrued expenses and other current
liabilities
1,412
1,642
Total current liabilities
9,176
9,500
Other Liabilities
Long-term debt and finance leases
9,559
10,133
Non-current operating lease
liabilities
124
128
Derivative instruments
1,439
1,488
Deferred income taxes
8
22
Deferred revenue non-current
859
914
Other non-current liabilities
939
947
Total other liabilities
12,928
13,632
Total Liabilities
22,104
23,132
Commitments and Contingencies
Stockholders' Equity
Preferred stock; 10,000,000 shares
authorized; 650,000 Series A shares issued and outstanding at March
31, 2024 and December 31, 2023, aggregate liquidation preference of
$650; at March 31, 2024 and December 31, 2023
650
650
Common stock; $0.01 par value; 500,000,000
shares authorized; 267,365,782 and 267,330,470 shares issued and
208,166,262 and 208,130,950 shares outstanding at March 31, 2024
and December 31, 2023, respectively
3
3
Additional paid-in-capital
3,503
3,416
Retained earnings
1,212
820
Treasury stock, at cost 59,199,520 shares
at March 31, 2024 and December 31, 2023
(1,971
)
(1,892
)
Accumulated other comprehensive loss
(100
)
(91
)
Total Stockholders' Equity
3,297
2,906
Total Liabilities and Stockholders'
Equity
$
25,401
$
26,038
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March
31,
(In millions)
2024
2023
Cash Flows from Operating
Activities
Net Income/(Loss)
$
511
$
(1,335
)
Adjustments to reconcile net income/(loss)
to cash provided/(used) by operating activities:
Equity in and distributions from earnings
of unconsolidated affiliates
(2
)
(5
)
Depreciation and amortization
268
190
Accretion of asset retirement
obligations
4
6
Provision for credit losses
75
35
Amortization of nuclear fuel
—
13
Amortization of financing costs and debt
discounts
11
20
Loss on debt extinguishment
58
—
Amortization of in-the-money contracts and
emissions allowances
78
119
Amortization of unearned equity
compensation
30
30
Net loss/(gain) on sale of assets and
disposal of assets
9
(187
)
Changes in derivative instruments
(535
)
1,599
Changes in current and deferred income
taxes and liability for uncertain tax benefits
139
(338
)
Changes in collateral deposits in support
of risk management activities
289
(1,412
)
Changes in nuclear decommissioning trust
liability
—
(16
)
Changes in other working capital
(668
)
(317
)
Cash provided/(used) by operating
activities
267
(1,598
)
Cash Flows from Investing
Activities
Payments for acquisitions of businesses
and assets, net of cash acquired
(22
)
(2,492
)
Capital expenditures
(69
)
(142
)
Net purchases of emissions allowances
(7
)
(18
)
Investments in nuclear decommissioning
trust fund securities
—
(87
)
Proceeds from the sale of nuclear
decommissioning trust fund securities
—
99
Proceeds from sales of assets, net of cash
disposed
3
219
Proceeds from insurance recoveries for
property, plant and equipment, net
3
71
Cash used by investing
activities
(92
)
(2,350
)
Cash Flows from Financing
Activities
Proceeds from issuance of preferred stock,
net of fees
—
636
Payments of dividends to preferred and
common stockholders
(118
)
(87
)
Equivalent shares purchased in lieu of tax
withholdings
(23
)
(8
)
Net receipts from settlement of acquired
derivatives that include financing elements
8
336
Net proceeds of Revolving Credit Facility
and Receivable Securitization Facilities
—
725
Proceeds from issuance of long-term
debt
—
731
Payments of debt issuance costs
—
(18
)
Repayments of long-term debt and finance
leases
(97
)
(4
)
Payments for debt extinguishment costs
(58
)
—
Proceeds from credit facilities
525
1,050
Repayments to credit facilities
(525
)
(825
)
Cash (used)/provided by financing
activities
(288
)
2,536
Effect of exchange rate changes on cash
and cash equivalents
(2
)
3
Net Decrease in Cash and Cash
Equivalents, Funds Deposited by Counterparties and Restricted
Cash
(115
)
(1,409
)
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at Beginning of
Period
649
2,178
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at End of
Period
$
534
$
769
Appendix Table A-1: First Quarter 2024 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted
EBITDA and provides a reconciliation to Net Income/(Loss):
($ in millions)
Texas
East
West/Services/ Other
Vivint Smart Home
Corp/Elim
Total
Net Income/(Loss)
$
349
$
581
$
(60
)
$
7
$
(366
)
$
511
Plus:
Interest expense, net
—
—
5
38
91
134
Income tax
—
(1
)
(15
)
2
198
184
Loss on debt extinguishment
—
—
—
—
58
58
Depreciation and amortization
67
23
24
144
10
268
ARO Expense
1
3
—
—
—
4
Contract and emission credit amortization,
net
—
72
1
—
—
73
EBITDA
417
678
(45
)
191
(9
)
1,232
Stock-based compensation1
7
4
1
15
—
27
Amortization of customer acquisition
costs2
15
16
1
15
—
47
Acquisition and divestiture integration
and transaction costs3
—
—
—
6
4
10
Cost to achieve4
—
—
—
—
9
9
Deactivation costs
—
5
1
—
—
6
Loss on sale of assets
4
—
—
—
—
4
Other and non-recurring charges
1
(1
)
1
(4
)
(11
)
(14
)
Mark to market (MtM) (gains)/losses on
economic hedges
(225
)
(351
)
104
—
—
(472
)
Adjusted EBITDA
$
219
$
351
$
63
$
223
$
(7
)
$
849
1
Stock-based compensation excludes $2
million reflected in cost to achieve and $1 million reflected in
acquisition and divestiture integration and transaction costs
2
Amortization of customer acquisition
costs, which are excluded from the calculation of Adjusted EBITDA,
is the income statement recognition of capitalized costs related to
commissions and other costs related to securing the new
customer
3
Includes stock-based compensation of $1
million
4
Includes stock-based compensation of $2
million
First Quarter 2024 condensed financial information by Operating
Segment:
($ in millions)
Texas
East
West/Services/ Other
Vivint Smart Home
Corp/Elim
Total
Revenue1
$
2,233
$
3,576
$
1,228
$
468
$
(6
)
$
7,499
Cost of fuel, purchased power and other
cost of sales2
1,608
2,981
1,061
53
(6
)
5,697
Economic gross margin
625
595
167
415
—
1,802
Operations & maintenance and other
cost of operations3
232
103
54
54
—
443
Selling, marketing, general and
administrative4
173
142
52
139
5
511
Other
1
(1
)
(2
)
(1
)
2
(1
)
Adjusted EBITDA
$
219
$
351
$
63
$
223
$
(7
)
$
849
1
Excludes MtM loss of $60 million and
contract amortization of $10 million
2
Includes TDSP expense, capacity and
emission credits
3
Excludes deactivation costs of $6 million,
ARO expenses of $4 million, stock-based compensation of $3 million,
amortization of customer acquisition costs of $2 million and other
and non-recurring charges of $(1) million
4
Excludes amortization of customer
acquisition costs of $45 million, stock-based compensation of $24
million, cost to achieve of $9 million, acquisition and divestiture
integration and transaction costs of $1 million and other and
non-recurring charges of $1 million
The following table reconciles the condensed financial
information to Adjusted EBITDA:
($ in millions)
Condensed Consolidated Results
of Operations
Interest, tax, depr.,
amort.
MtM
Deactivation
Other adj.2
Adjusted EBITDA
Revenue
$
7,429
$
10
$
60
$
—
$
—
$
7,499
Cost of operations (excluding depreciation
and amortization shown below)1
5,228
(63
)
532
—
—
5,697
Depreciation and Amortization
268
(268
)
—
—
—
—
Gross margin
1,933
341
(472
)
—
—
1,802
Operations & maintenance and other
cost of operations
457
—
—
(6
)
(8
)
443
Selling, marketing, general &
administrative
591
—
—
—
(80
)
511
Other
374
(318
)
—
—
(57
)
(1
)
Net Income/(Loss)
$
511
$
659
$
(472
)
$
6
$
145
$
849
1
Excludes operations & maintenance and
other cost of operations of $457 million
2
Other adj. includes loss on debt
extinguishment of $58 million, amortization of customer acquisition
costs of $47 million, stock-based compensation of $27 million,
acquisition and divestiture integration and transaction costs of
$10 million, cost to achieve of $9 million, ARO expenses of $4
million, loss on sale of assets of $4 million and other and
non-recurring charges of $(14) million
Appendix Table A-2: First Quarter 2023 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted
EBITDA and provides a reconciliation to Net Income/(Loss):
($ in millions)
Texas
East
West/Services/ Other
Vivint Smart Home1
Corp/Elim
Total
Net Income/(Loss)
$
284
$
(1,402
)
$
(304
)
$
(39
)
$
126
$
(1,335
)
Plus:
Interest expense, net
—
(6
)
6
26
106
132
Income tax
—
—
(47
)
—
(289
)
(336
)
Depreciation and amortization
75
30
24
52
9
190
ARO Expense
2
3
1
—
—
6
Contract and emission credit amortization,
net
1
115
3
—
—
119
EBITDA
362
(1,260
)
(317
)
39
(48
)
(1,224
)
Stock-based compensation2
6
2
1
4
—
13
Amortization of customer acquisition
costs3
14
11
1
—
—
26
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
4
—
—
4
Acquisition and divestiture integration
and transaction costs4
—
—
—
30
42
72
Deactivation costs
—
4
3
—
—
7
(Gain) on sale of assets
—
(199
)
—
—
—
(199
)
Other and non-recurring charges
1
1
2
—
(1
)
3
Mark to market (MtM) (gains)/losses on
economic hedges
(129
)
1,755
318
—
—
1,944
Adjusted EBITDA
$
254
$
314
$
12
$
73
$
(7
)
$
646
1
Vivint Smart Home acquired in March
2023
2
Stock-based compensation excludes $20
million reflected in acquisition and divestiture integration and
transaction costs
3
Amortization of customer acquisition
costs, which are excluded from the calculation of Adjusted EBITDA,
is the income statement recognition of capitalized costs related to
commissions and other costs related to securing the new
customer
4
Includes stock-based compensation of $20
million
First Quarter 2023 condensed financial information by Operating
Segment:
($ in millions)
Texas
East
West/Services/ Other
Vivint Smart Home1
Corp/Elim
Total
Revenue2
$
2,034
$
4,152
$
1,307
$
148
$
1
$
7,642
Cost of fuel, purchased power and other
cost of sales3
1,367
3,600
1,185
11
2
6,165
Economic gross margin
667
552
122
137
(1
)
1,477
Operations & maintenance and other
cost of operations4
262
103
69
18
(1
)
451
Selling, marketing, general &
administrative5
152
135
49
46
7
389
Other
(1
)
—
(8
)
—
—
(9
)
Adjusted EBITDA
$
254
$
314
$
12
$
73
$
(7
)
$
646
1
Vivint Smart Home acquired in March
2023
2
Excludes MtM gain of $(91) million and
contract amortization of $11 million
3
Includes TDSP expense, capacity and
emission credits
4
Excludes deactivation costs of $7 million,
ARO expense of $6 million, other and non-recurring charges of $3
million, amortization of customer acquisition costs of $2 million
and stock-based compensation of $1 million
5
Excludes amortization of customer
acquisition costs of $24 million, stock-based compensation of $12
million and divestiture costs of $1 million
The following table reconciles the condensed financial
information to Adjusted EBITDA:
($ in millions)
Condensed Consolidated Results
of Operations
Interest, tax, depr.,
amort.
MtM
Deactivation
Other adj.2
Adjusted EBITDA
Revenue
$
7,722
$
11
$
(91
)
$
—
$
—
$
7,642
Cost of operations (excluding depreciation
and amortization shown below)1
8,308
(108
)
(2,035
)
—
—
6,165
Depreciation and amortization
190
(190
)
—
—
—
—
Gross margin
(776
)
309
1,944
—
—
1,477
Operations & maintenance and other
cost of operations
470
—
—
(7
)
(12
)
451
Selling, marketing, general &
administrative
426
—
—
—
(37
)
389
Other
(337
)
204
—
—
124
(9
)
Net (Loss)/Income
$
(1,335
)
$
105
$
1,944
$
7
$
(75
)
$
646
1
Excludes operations & maintenance and
other cost of operations of $470 million
2
Other adj. includes gain on sale of assets
$(199) million, acquisition and divestiture integration and
transaction costs of $72 million, amortization of customer
acquisition costs of $26 million, stock-based compensation of $13
million, ARO expenses of $6 million, NRG share of adjusted EBITDA
in unconsolidated affiliates of $4 million, other and non-recurring
charges of $3 million
Appendix Table A-3: Three Months Ended March 31, 2024 and
March 31, 2023 Free Cash Flow before Growth Investments
(FCFbG)
The following table summarizes the calculation of FCFbG,
providing a reconciliation to Cash provided by operating
activities:
Three Months Ended
($ in millions)
March 31, 2024
March 31, 2023
Adjusted EBITDA
$
849
$
646
Interest payments, net
(191
)
(91
)
Income tax
(8
)
4
Net deferred revenue1
(64
)
(2
)
Amortization of customer fulfillment
costs2
21
—
Gross capitalized contract costs3
(169
)
(56
)
Collateral / working capital / other
assets and liabilities
(171
)
(2,099
)
Cash provided/(used) by operating
activities
267
(1,598
)
Net receipts from settlement of acquired
derivatives that include
financing elements
8
336
Acquisition and divestiture integration
and transaction costs4
17
56
Encina site improvement
—
3
Astoria fees
—
3
Adjustment for change in collateral
(289
)
1,412
Nuclear decommissioning trust
liability
—
12
Effect of exchange rate changes on cash
and cash equivalents
(2
)
3
Adjusted cash provided by operating
activities
1
227
Maintenance capital expenditures, net5
(52
)
(41
)
Environmental capital expenditures
(2
)
—
Cost of acquisition
13
17
Free Cash Flow before Growth
Investments (FCFbG)
$
(40
)
$
203
1
The cash impact of Net deferred revenue is
the net change in the balance sheet from capitalizing proceeds
received from installation and equipment sales and then recognizing
those proceeds as revenue on a straight-line basis over the
expected period of benefit
2
Amortization of customer fulfillment
costs, which are included in the calculation of Adjusted EBITDA,
are the income statement recognition of capitalized contract costs
related to the sale and installation of equipment necessary for a
customer to receive the Vivint Smart Home service
3
Gross capitalized contract costs represent
the costs directly related and incremental to the origination of
new contracts, modification of existing contracts or to the
fulfillment of the related subscriber contracts; these costs
include installed products, commissions, other compensation and
cost of installation of new or upgraded customer contracts; these
costs are amortized on a straight-line basis over the expected
period of benefit
4
Three months ended March 31,2024 includes
$8 million Cost to achieve expenses, excludes $2 million and $16
million of non-cash stock-based compensation for three months ended
March 31, 2024 and three months ended March 31, 2023,
respectively
5
Three months ended March 31, 2024 includes
W.A. Parish Unit 8 insurance recoveries related to property, plant
and equipment of $3 million; three months ended March 31, 2023
includes W.A. Parish Unit 8 and Limestone Unit 1 insurance
recoveries related to property, plant and equipment of $71
million
Appendix Table A-4: Three Months Ended March 31, 2024 Sources
and Uses of Liquidity
The following table summarizes the sources and uses of liquidity
for the three months ended March 31, 2024:
($ in millions)
Three months ended March 31,
2024
Sources:
Adjusted cash provided by operating
activities
1
Change in availability under revolving
credit facility and collective collateral facilities
223
Return of cash collateral paid in support
of energy risk management activities
132
Proceeds from sale of assets
3
Uses:
Payments of dividends to preferred and
common stockholders
(118
)
Repayments of long-term debt and finance
leases
(97
)
Payments for debt extinguishment costs
(58
)
Maintenance capital expenditures, net
(52
)
Payments for shares repurchased in lieu of
tax withholdings
(23
)
Payments for acquisitions of businesses
and assets, net of cash acquired
(22
)
Acquisition and divestiture integration
and transaction costs
(17
)
Investments and integration capital
expenditures
(12
)
Net purchases of emission allowances
(7
)
Other investing and financing
(2
)
Change in Total Liquidity
$
(49
)
Appendix Table A-5: 2024 Guidance Reconciliations
The following table summarizes the calculation of Adjusted
EBITDA providing reconciliation to Net Income, and the calculation
of FCFbG providing a reconciliation to Cash provided by operating
activities:
2024
($ in millions)
Guidance
Net Income1
$
750 - 1,000
Interest expense, net
640
Income tax
345
Depreciation and amortization
1,075
ARO expense
25
Amortization of customer acquisition
costs2
215
Stock-based compensation3
100
Acquisition and divestiture integration
and transaction costs
55
Other costs4
95
Adjusted EBITDA
3,300 - 3,550
Interest payments, net
(600
)
Income tax
(160
)
Net deferred revenue5
190
Amortization of customer fulfillment
costs6
130
Capitalized contract costs7
(830
)
Working capital / other assets and
liabilities8
(205
)
Cash provided by operating
activities9
1,825 - 2,075
Acquisition and other costs8
124
Adjusted cash provided by operating
activities
1,949 - 2,199
Maintenance capital expenditures,
net10
(240) - (260
)
Environmental capital expenditures
(20) - (30
)
Cost of acquisition
145
Free Cash Flow before Growth
Investments (FCFbG)
$
1,825 - 2,075
1
For purposes of guidance, fair value
adjustments related to derivatives are assumed to be zero
2
Amortization of customer acquisition costs
is the income statement recognition of capitalized costs related to
commissions and other costs related to securing new customers. NRG
amortization of customer acquisition costs, excluding Vivint, is
expected to be $135 million and Vivint is expected to be $80
million
3
NRG stock-based compensation, excluding
Vivint, is expected to be $40 million and Vivint is expected to be
$60 million
4
Includes adjustments for sale of assets,
adjustments to reflect NRG share of Adjusted EBITDA in
unconsolidated affiliates, deactivation costs, other non-recurring
expenses, and does not include the adjustment for Loss on debt
extinguishment which was $58 million as of March 31, 2024
5
The cash impact of Net deferred revenue is
the net change in the balance sheet from capitalizing proceeds
received from installation and equipment and then recognizing those
proceeds as revenue on a straight-line basis over the expected
period of benefit
6
Amortization of customer fulfillment
costs, which are included in the calculation of Adjusted EBITDA,
are the income statement recognition of capitalized contract costs
related to the sale and installation of equipment necessary for a
customer to receive the Vivint Smart Home service
7
Gross Capitalized contract costs represent
the costs directly related and incremental to the origination of
new contracts, modification of existing contracts or to the
fulfillment of the related subscriber contracts; these costs
include installed products, commissions, other compensation, and
cost of installation of new or upgraded customer contracts; these
costs are amortized on a straight-line basis over the expected
period of benefit
8
Working capital / other assets and
liabilities include payments for Acquisition and divestiture
integration and transaction costs, which is adjusted in Acquisition
and other costs
9
Excludes fair value adjustments related to
derivatives and changes in collateral deposits in support of risk
management activities
10
Includes W.A. Parish Unit 8 expected
insurance recoveries related to property, plant and equipment
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 expense (including
loss on debt extinguishment), income taxes, depreciation and
amortization, asset retirement obligation expenses, contract
amortization consisting of amortization of power and fuel contracts
and amortization of emission allowances. 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 the impact of stock-based compensation,
amortization of customer acquisition costs (primarily amortized
commissions), impairment losses, deactivation costs, gains or
losses on sales, dispositions or retirements of assets, any
mark-to-market gains or losses from forward position of economic
hedges, 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 provided by operating activities is a non-GAAP
measure NRG provides to show Cash provided/(used) by operating
activities 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, related restructuring costs, changes in the nuclear
decommissioning trust liability, and the impact of extraordinary,
unusual or non-recurring items. The Company provides the reader
with this alternative view of Cash provided/(used) by operating
activities 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 Flows from Operating Activities and they are fully
disclosed to investors. The company excludes changes in the nuclear
decommissioning trust liability as these amounts are offset by
changes in the decommissioning fund shown in Cash Flows from
Investing Activities.
Free Cash Flow before Growth Investments is Adjusted Cash
provided by operating activities less maintenance and environmental
capital expenditures, net of funding and insurance recoveries
related to property, plant and equipment, dividends from preferred
instruments treated as debt by ratings agencies, and distributions
to non-controlling interests and is used by NRG predominantly as a
forecasting tool to estimate cash available for debt reduction and
other capital allocation alternatives. The reader is encouraged to
evaluate each of these adjustments and the reasons NRG considers
them appropriate for supplemental analysis. Because we have
mandatory debt service requirements (and other non-discretionary
expenditures) investors should not rely on Free Cash Flow before
Growth Investments as a measure of cash available for discretionary
expenditures.
Free Cash Flow before Growth Investments is utilized by
Management in making decisions regarding the allocation of capital.
Free Cash Flow before Growth Investments 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 Investments is a performance measure and is not
intended to represent Net Income/(Loss), Cash provided/(used) by
operating activities (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/20240506592101/en/
Media Chevalier Gray 832.763.3454
Investors Brendan Mulhern 609.524.4767
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