- Reported $1.7 billion of net income
- Delivered $509 million of Adjusted EBITDA; in line with
prior year adjusted for divestitures
- Executing $1 billion share repurchase program; $301 million
completed through April 30, 2022
- Maintaining 2022 Adjusted EBITDA and FCFbG guidance
NRG Energy, Inc. (NYSE: NRG) today reported a first quarter 2022
Net Income of $1,736 million, or $7.17 per diluted common share,
Adjusted EBITDA for the first quarter of $509 million, and Free
Cash Flow before Growth (FCFbG) of $239 million.
"I am pleased by the strong performance of our platform during
the first quarter of 2022,” said Mauricio Gutierrez, NRG President
and Chief Executive Officer. “Heading into summer, we are
well-prepared to serve our customers, the grid, and our
shareholders while continuing to advance our strategic growth
priorities."
Consolidated Financial Results
Three Months Ended
($ in millions)
3/31/2022
3/31/2021
Net Income
$
1,736
$
(82
)
Cash provided by Operating Activities
$
1,676
$
(917
)
Adjusted EBITDAa
$
509
$
567
a. Excludes the loss due to Winter Storm Uri of $967 million in
2021
Segments Results
Table 1: Net Income/(Loss)
($ in millions)
Three Months Ended
Segment
3/31/2022
3/31/2021
Texas
$
773
$
(433
)
East
1,541
356
West/Services/Othera
(578
)
(5
)
Net Income
$
1,736
$
(82
)
a. Includes Corporate segment
First quarter net income was $1.7 billion, $1.8 billion higher
than first quarter 2021, primarily driven by increased
mark-to-market gains on economic hedge positions in 2022 due to
significant increases in natural gas prices and power prices as
compared to the prior year losses related to Winter Storm Uri.
Table 2: Adjusted EBITDA
($ in millions)
Three Months Ended
Segment
3/31/2022
3/31/2021
Texas
$
198
$
246
East
325
261
West/Services/Other a
(14
)
60
Adjusted EBITDAb
$
509
$
567
a. Includes Corporate segment b. Excludes the loss due to Winter
Storm Uri of $967 million in 2021
Texas: First quarter Adjusted EBITDA was $198 million,
$48 million lower than first quarter of 2021. This decrease was
driven by increased supply costs primarily due to the extended
forced outage at Limestone Unit 1 and the Company's more
conservative winter hedge profile in the first quarter of 2022
after Winter Storm Uri in 2021, partially offset by increased
retail load from favorable weather.
East: First quarter Adjusted EBITDA was $325 million, $64
million higher than first quarter of 2021. This increase was
primarily driven by higher natural gas economic gross margin
including the impact of transportation and storage contract
optimization, partially offset the sale of 4.8 GW fossil generation
assets in December 2021.
West/Services/Other: First quarter Adjusted EBITDA was
$(14) million, $74 million lower than first quarter of 2021. This
decrease was primarily driven by the sale of 4.8 GW fossil
generation assets in December 2021, the sale of the whole home
warranty business in January 2022 and increased retail natural gas
supply costs, partially offset by increased retail natural gas
revenue rates and load.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
03/31/22
12/31/21
Cash and Cash Equivalents
$
387
$
250
Restricted Cash
39
15
Total
426
265
Total Revolving Credit Facility and
collective collateral facilities
2,491
2,421
Total Liquidity, excluding collateral
received
$
2,917
$
2,686
As of March 31, 2022, NRG's cash was at $0.4 billion, and $2.5
billion was available under the Company’s credit facilities. Total
liquidity was $2.9 billion, which was approximately $0.2 billion
higher than at the end of 2021.
NRG Strategic Developments
Expected Uplift Securitization Proceeds
The Texas Legislature passed House Bill 4492 in May of 2021,
which among other things, authorized ERCOT to obtain $2.1 billion
of securitization financing to distribute to LSEs that were charged
and paid to ERCOT exceptionally highly priced real-time Online
Reliability Deployment Price Adder and ancillary service costs
during Winter Storm Uri (the "Uplift Securitization"). The Company
expects to receive proceeds of $689 million from ERCOT in the
second quarter of 2022. As previously disclosed, the total Winter
Storm Uri impact on capital available for allocation in 2022 is
$599 million, net of bill credits owed to large Commercial and
Industrial ("C&I") customers.
Limestone Unit 1 Return to Service
In early July 2021, Limestone Unit 1 came offline as a result of
damage to the duct work associated with the flue gas
desulfurization system. The extended forced outage ended in April
of 2022 and the unit has returned to service.
Maintaining 2022 Guidance
NRG is maintaining its Adjusted EBITDA, Adjusted Cash from
Operations, and FCFbG guidance for 2022 as set forth below.
Table 4: 2022 Adjusted EBITDA, Adjusted Cash from Operations,
and FCFbG Guidance
2022
(In millions)
Maintaining Guidance
Adjusted EBITDAa
$1,950 - $2,250
Adjusted Cash Flow from Operations
$1,380 - $1,680
FCFbG
$1,140 - $ 1,440
a. Non-GAAP financial measure; see Appendix Table 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
As announced on December 6, 2021, the Company's Board of
Directors authorized $1 billion for share repurchases. The program
began in 2021 with $39 million in share repurchases completed in
December 2021, and an incremental $262 million completed through
April 30, 2022; the balance of $699 million under the program is
expected to be executed by the end of 2022.
NRG declared its first quarter of 2022 dividend on the Company’s
common stock on January 21, 2022 of $0.35 per share, or $1.40 per
share on an annualized basis. The dividend represented an 8%
increase from the prior year, in line with the Company’s previously
announced annual dividend growth rate target of 7-9% per share.
On April 20, 2022, NRG declared a quarterly dividend on the
Company's common stock of $0.35 per share, payable on May 16, 2022
to stockholders of record as of May 2, 2022.
The Company remains committed to maintaining a strong balance
sheet and continues to work to achieve investment grade credit
metrics. The Company expects to grow into its target investment
grade metrics of 2.50x-2.75x corporate net debt to adjusted EBITDA
primarily through the realization of Direct Energy run-rate
earnings and other growth initiatives.
The Company'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 that are 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.
Earnings Conference Call
On May 6, 2022, 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 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 bringing the power of energy to people and
organizations by putting customers at the center of everything we
do. We generate electricity and provide energy solutions and
natural gas to millions of customers through our diverse portfolio
of retail brands. A Fortune 500 company, operating in the United
States and Canada, NRG delivers innovative solutions while
advocating for competitive energy markets and customer choice,
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.
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 and gas 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, our ability to access
capital markets, the potential impact of COVID-19 or any other
pandemic on the Company’s operations, financial position, risk
exposure and liquidity, data privacy, cyberterrorism and inadequate
cybersecurity, unanticipated outages at our generation facilities,
adverse results in current and future litigation, failure to
identify, execute or successfully implement acquisitions or asset
sales, our ability to implement value enhancing improvements to
plant operations and companywide processes, our ability to achieve
our net debt targets, our ability to achieve or maintain investment
grade credit metrics, our 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, our ability to operate
our business efficiently, our ability to retain retail customers,
our ability to realize value through our market operations
strategy, the ability to successfully integrate businesses of
acquired companies, including Direct Energy, 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, and our ability to
execute our 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, adjusted cash flow from operations and free cash flow
guidance are estimates as of May 6, 2022. 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
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)
2022
2021
Revenue
Revenue
$
7,896
$
8,091
Operating Costs and Expenses
Cost of operations (excluding depreciation
and amortization shown below)
4,930
6,857
Depreciation and amortization
183
317
Selling, general and administrative
costs
322
337
Provision for credit losses
25
611
Acquisition-related transaction and
integration costs
8
42
Total operating costs and expenses
5,468
8,164
(Loss)/Gain on sale of assets
(3
)
17
Operating Income/(Loss)
2,425
(56
)
Other Income/(Expense)
Equity in (losses) of unconsolidated
affiliates
(15
)
(6
)
Other income, net
—
22
Interest expense
(103
)
(127
)
Total other expense
(118
)
(111
)
Income/(Loss) Before Income
Taxes
2,307
(167
)
Income tax expense/(benefit)
571
(85
)
Net Income/(Loss)
$
1,736
$
(82
)
Income/(loss) per Share
Weighted average number of common shares
outstanding — basic and diluted
242
245
Income/(loss) per Weighted Average
Common Share —Basic and Diluted
$
7.17
$
(0.33
)
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended March
31,
(In millions)
2022
2021
Net Income/(Loss)
$
1,736
$
(82
)
Other Comprehensive Income
Foreign currency translation
adjustments
9
3
Defined benefit plans
(1
)
—
Other comprehensive income
8
3
Comprehensive Income/(Loss)
$
1,744
$
(79
)
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2022
December 31, 2021
(In millions, except share
data)
(Unaudited)
(Audited)
ASSETS
Current Assets
Cash and cash equivalents
$
387
$
250
Funds deposited by counterparties
2,570
845
Restricted cash
39
15
Accounts receivable, net
3,291
3,245
Uplift securitization proceeds receivable
from ERCOT
689
689
Inventory
354
498
Derivative instruments
9,089
4,613
Cash collateral paid in support of energy
risk management activities
9
291
Prepayments and other current assets
409
395
Total current assets
16,837
10,841
Property, plant and equipment,
net
1,643
1,688
Other Assets
Equity investments in affiliates
151
157
Operating lease right-of-use assets,
net
256
271
Goodwill
1,796
1,795
Intangible assets, net
2,391
2,511
Nuclear decommissioning trust fund
949
1,008
Derivative instruments
3,561
2,527
Deferred income taxes
1,638
2,155
Other non-current assets
255
229
Total other assets
10,997
10,653
Total Assets
$
29,477
$
23,182
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Current portion of long-term debt and
finance leases
4
4
Current portion of operating lease
liabilities
82
81
Accounts payable
2,216
2,274
Derivative instruments
6,076
3,387
Cash collateral received in support of
energy risk management activities
2,570
845
Accrued expenses and other current
liabilities
1,285
1,324
Total current liabilities
12,233
7,915
Other Liabilities
Long-term debt and finance leases
8,026
7,966
Non-current operating lease
liabilities
220
236
Nuclear decommissioning reserve
325
321
Nuclear decommissioning trust
liability
602
666
Derivative instruments
1,977
1,412
Deferred income taxes
68
73
Other non-current liabilities
996
993
Total other liabilities
12,214
11,667
Total Liabilities
24,447
19,582
Commitments and Contingencies
Stockholders' Equity
Common stock; $0.01 par value; 500,000,000
shares authorized; 423,839,804 and 423,547,174 shares issued and
239,216,140, and 243,753,899 shares outstanding at March 31, 2022
and December 31, 2021, respectively
4
4
Additional paid-in-capital
8,433
8,531
Retained earnings
2,171
464
Treasury stock, at cost 184,623,664, and
179,793,275 shares at March 31, 2022 and December 31, 2021,
respectively
(5,460
)
(5,273
)
Accumulated other comprehensive loss
(118
)
(126
)
Total Stockholders' Equity
5,030
3,600
Total Liabilities and Stockholders'
Equity
$
29,477
$
23,182
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March
31,
(In millions)
2022
2021
Cash Flows from Operating
Activities
Net Income/(Loss)
$
1,736
$
(82
)
Adjustments to reconcile net income/(loss)
to cash provided by operating activities:
Distributions from and equity in losses of
unconsolidated affiliates
18
17
Depreciation and amortization
183
317
Accretion of asset retirement
obligations
7
3
Provision for credit losses
25
611
Amortization of nuclear fuel
14
13
Amortization of financing costs and debt
discounts
6
11
Amortization of in-the-money contracts and
emissions allowances
147
7
Amortization of unearned equity
compensation
6
4
Net gain on sale and disposal of
assets
(6
)
(18
)
Changes in derivative instruments
(2,816
)
(902
)
Changes in deferred income taxes and
liability for uncertain tax benefits
527
(71
)
Changes in collateral deposits in support
of energy risk management activities
2,007
1
Changes in nuclear decommissioning trust
liability
(7
)
15
Changes in other working capital
(171
)
(843
)
Cash provided/(used) by operating
activities
1,676
(917
)
Cash Flows from Investing
Activities
Payments for acquisitions of businesses
and assets, net of cash acquired
(26
)
(3,482
)
Capital expenditures
(60
)
(63
)
Net purchases of emission allowances
(18
)
(5
)
Investments in nuclear decommissioning
trust fund securities
(151
)
(129
)
Proceeds from the sale of nuclear
decommissioning trust fund securities
161
118
Proceeds from sale of assets, net of cash
disposed
14
197
Cash used by investing
activities
(80
)
(3,364
)
Cash Flows from Financing
Activities
Payments of dividends to common
stockholders
(85
)
(80
)
Payments for share repurchase activity
(188
)
(9
)
Net receipts from settlement of acquired
derivatives that include financing elements
561
190
Net proceeds of Revolving Credit Facility
and Receivables Securitization Facilities
—
825
Repayments of long-term debt and finance
leases
(1
)
(1
)
Payments of debt issuance costs
—
(2
)
Proceeds from issuance of common stock
—
1
Cash provided by financing
activities
287
924
Effect of exchange rate changes on cash
and cash equivalents
3
1
Net Increase/(Decrease) in Cash and
Cash Equivalents, Funds Deposited by Counterparties and Restricted
Cash
1,886
(3,356
)
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at Beginning of
Period
1,110
3,930
Cash and Cash Equivalents, Funds
Deposited by Counterparties and Restricted Cash at End of
Period
$
2,996
$
574
Appendix Table A-1: First Quarter 2022 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
Corp/Elim
Total
Net Income/(Loss)
$
773
$
1,541
$
125
$
(703
)
$
1,736
Plus:
Interest expense, net
—
(1
)
7
94
100
Income tax
—
—
(1
)
572
571
Depreciation and amortization
76
78
21
8
183
ARO expense
3
2
2
—
7
Contract and emission credit amortization,
net
(2
)
147
2
—
147
EBITDA
850
1,767
156
(29
)
2,744
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
18
—
18
Acquisition and divestiture integration
and transaction costs
—
—
—
10
10
Deactivation costs
—
4
—
—
4
Loss on sale of assets
—
—
1
2
3
Other non-recurring charges
1
—
(6
)
12
7
Mark-to-market (MtM) for economic hedging
activities, net
(653
)
(1,446
)
(178
)
—
(2,277
)
Adjusted EBITDA
$
198
$
325
$
(9
)
$
(5
)
$
509
First Quarter 2022 condensed financial information by Operating
Segment:
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Revenue1
$
2,025
$
4,857
$
1,156
$
—
$
8,038
Cost of fuel, purchased power and other
cost of sales2
1,458
4,267
1,055
1
6,781
Economic gross margin
567
590
101
(1
)
1,257
Operations & maintenance and other
cost of operations3
228
132
56
—
416
Selling, general and administrative
costs4
144
117
49
10
320
Provision for credit losses
3
14
8
—
25
Other
(6
)
2
(3
)
(6
)
(13
)
Adjusted EBITDA
$
198
$
325
$
(9
)
$
(5
)
$
509
1 Excludes MtM loss of $133 million and contract amortization of
$9 million 2 Includes TDSP expenses, capacity and emissions credits
3 Excludes ARO expense of $7 million, deactivation costs of $4
million and other-non recurring charges of ($6 million) 4 Excludes
acquisition and divestiture integration and transaction costs of $2
million
The following table reconciles the condensed financial
information to Adjusted EBITDA:
($ in millions)
Condensed Consolidated Results
of Operations
Interest, tax, depr.,
amort.
MtM
Deactivation
Other adj.2
Adjusted EBITDA
Revenue
$
7,896
$
9
$
133
$
—
$
—
$
8,038
Cost of operations (excluding depreciation
and amortization shown below)1
4,509
(138
)
2,410
—
—
6,781
Depreciation and amortization
183
(183
)
—
—
—
—
Gross margin
3,204
330
(2,277
)
—
—
1,257
Operations & maintenance and other
cost of operations
421
—
—
(4
)
(1
)
416
Selling, general and administrative
costs
322
—
—
—
(2
)
320
Provision for credit losses
25
—
—
—
—
25
Other
700
(671
)
—
—
(42
)
(13
)
Net Income/(Loss)
$
1,736
$
1,001
$
(2,277
)
$
4
$
45
$
509
1 Excludes Operations & maintenance and other cost of
operations of $421 million 2 Includes adjustment to reflect NRG
share of Adj EBITDA of $18 million, acquisition and divestiture
integration and transaction costs of $10 million, ARO expense $7
million, and other non-recurring charges of $7 million
Appendix Table A-2: First Quarter 2021 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted
EBITDA and provides a reconciliation to Net (Loss)/Income:
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Net (Loss)/Income
$
(433
)
$
356
$
74
$
(79
)
$
(82
)
Plus:
Interest expense, net
—
—
3
123
126
Income tax
—
—
5
(90
)
(85
)
Depreciation and amortization
77
206
27
7
317
ARO expense
2
3
(2
)
—
3
Contract and emission credit amortization,
net
1
—
—
—
1
EBITDA
(353
)
565
107
(39
)
280
Winter Storm Uri impact
1,121
(142
)
(13
)
1
967
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
20
—
20
Acquisition and divestiture integration
and transaction costs
—
—
—
44
44
Legal settlements
—
—
—
6
6
Gain on sale of assets
—
—
(17
)
—
(17
)
Other non recurring charges
2
—
1
(15
)
(12
)
Mark-to-market (MtM) for economic hedging
activities, net
(524
)
(162
)
(35
)
—
(721
)
Adjusted EBITDA
$
246
$
261
$
63
$
(3
)
$
567
First Quarter 2021 condensed financial information by Operating
Segment:
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Revenue1
$
3,703
$
3,499
$
923
$
(2
)
$
8,123
Cost of fuel, purchased power and other
cost of sales2
3,606
2,817
760
—
7,183
Economic gross margin
97
682
163
(2
)
940
Operations & maintenance and other
cost of operations3
229
135
60
(1
)
423
Selling, marketing, general &
administrative4
145
140
41
8
334
Provision for credit losses
602
6
3
—
611
Other
(4
)
(2
)
(17
)
(5
)
(28
)
Winter Storm Uri impact
(1,121
)
142
13
(1
)
(967
)
Adjusted EBITDA
$
246
$
261
$
63
$
(3
)
$
567
1 Excludes MtM loss of $32 million 2 Includes TDSP expenses,
capacity and emissions credits 3 Excludes ARO expense of $3 million
4 Excludes acquisition and divestiture integration and transaction
costs of $2 million and other 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
Winter Storm Uri
Other adj.2
Adjusted EBITDA
Revenue
$
8,091
$
—
$
32
$
(2,647
)
$
—
$
5,476
Cost of operations (excluding depreciation
and amortization shown below)1
6,431
(1
)
753
(3,008
)
—
4,175
Depreciation and amortization
317
(317
)
—
—
—
Gross margin
1,343
318
(721
)
361
—
1,301
Operations & maintenance and Other
cost of operations
426
—
—
—
(3
)
423
Selling, marketing, general &
administrative
337
—
—
(21
)
(3
)
313
Provision for credit losses
611
—
—
(585
)
—
26
Other
51
(40
)
—
—
(39
)
(28
)
Net (Loss)/Income
$
(82
)
$
358
$
(721
)
$
967
$
45
$
567
1 Excludes Operations & maintenance and other cost of
operations of $426 million 2 Includes adjustment to reflect
acquisition and divestiture integration and transaction costs of
$44 million, NRG share of Adj EBITDA of $20 million, gain on sale
of business $17 million
Appendix Table A-3: 2022 Three Months Ended March 31, 2022
Adjusted Cash Flow from Operations Reconciliations
The following table summarizes the calculation of adjusted cash
flow operating activities providing a reconciliation to net cash
provided by operating activities:
Three Months Ended
($ in millions)
March 31, 2022
Adjusted EBITDA
$
509
Interest payments, net
(95
)
Income tax
18
Collateral / working capital / other
1,244
Cash Provided by Operating
Activities
1,676
Winter Storm Uri C&I credits and
remaining open accounts receivables
25
Net receipts from settlement of acquired
derivatives that include financing elements
561
Acquisition and divestiture transaction
and integration costs
10
Encina site improvement
5
Adjustment for change in collateral
(2,007
)
Nuclear decommissioning trust
liability
10
Effect of exchange rate changes on cash
and cash equivalents
3
Adjusted Cash Flow from Operating
Activities
283
Maintenance Capital Expenditures, net
(43
)
Environmental Capital Expenditures,
net
(1
)
Free Cash Flow Before Growth
Investments (FCFbG)
$
239
Appendix Table A-4: Three Months Ended March 31, 2022 Sources
and Uses of Liquidity
The following table summarizes the sources and uses of liquidity
through first quarter of 2022:
($ in millions)
Three months ended March 31,
2022
Sources:
Adjusted Cash Flow from Operating
Activities
$
283
Return of cash collateral paid
282
Increase in availability of collective
collateral facilities
70
Proceeds from sale of assets
14
Uses:
Payments for share repurchase activity
(188
)
Payments of dividends to common
stockholders
(85
)
Maintenance and Environmental capital
expenditures, net
(44
)
Payments for acquisitions of businesses
and assets, net of cash acquired
(26
)
Winter Storm Uri
(25
)
Growth Investment capital expenditures
(16
)
Acquisition and divestiture integration
and transaction costs
(10
)
Other investing and financing
(24
)
Change in Total Liquidity
$
231
Appendix Table A-5: 2022 Guidance Reconciliation
The following table summarizes the calculation of Adjusted
EBITDA providing reconciliation to Net Income/(Loss), and the
calculation of Free Cash Flow before Growth providing
reconciliation to Cash from Operations:
2022
($ in millions)
Guidance
Net Income1
$
480 - 780
Interest expense, net
380
Income tax
210
Depreciation, amortization, contract
amortization, and ARO expense
760
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
70
Other costs2
50
Adjusted EBITDA
1,950 - 2,250
Interest payments, net
(395
)
Income tax
(20
)
Working capital / other assets and
liabilities
(165
)
Cash provided by Operating
Activities
1,370 - 1,670
Adjustments: proceeds from investment and
asset sales, collateral, nuclear decommissioning trust
liability
10
Adjusted Cash flow from
Operations
1,380 - 1,680
Maintenance capital expenditures, net
(220) - (240
)
Environmental capital expenditures,
net
(5) - (10
)
Free Cash Flow before Growth
$ 1,140 - 1,440
1 For purposes of guidance fair value adjustments related to
derivatives are assumed to be zero 2 Includes deactivation costs
and integration expenses
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 impairment losses, 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.
Economic gross margin is a non-GAAP financial measure NRG
provides to show gross margin excluding the impact of unrealized
mark-to-market gains and losses on economic hedge positions as they
relate to hedges that will settle in future periods, and contract
and emission credit amortization as it is based on the valuation of
acquired intangible assets as of the date of acquisition and is not
reflective of current economic conditions or Company performance.
Management believes economic gross margin is useful to investors
and other users of NRG's financial statements in evaluating its
current period operating performance.
Adjusted cash flow from operating activities is a non-GAAP
financial 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, 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 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. The company excludes changes in the
nuclear decommissioning trust liability as these amounts are offset
by changes in the decommissioning fund shown in cash from
investing.
Free cash flow (before Growth investments) is adjusted cash flow
from operations less maintenance and environmental capital
expenditures, net of funding, preferred stock dividends and
distributions to non-controlling interests and is used by NRG
predominantly as a forecasting tool to estimate cash available for
debt reduction and other capital allocation alternatives. The
reader is encouraged to evaluate each of these adjustments and the
reasons NRG considers them appropriate for supplemental analysis.
Because we have mandatory debt service requirements (and other
non-discretionary expenditures) investors should not rely on free
cash flow before Growth investments as a measure of cash available
for discretionary expenditures.
Free Cash Flow before Growth Investment is utilized by
Management in making decisions regarding the allocation of capital.
Free Cash Flow before Growth Investment is presented because the
Company believes it is a useful tool for assessing the financial
performance in the current period. In addition, NRG’s peers
evaluate cash available for allocation in a similar manner and
accordingly, it is a meaningful indicator for investors to
benchmark NRG's performance against its peers. Free Cash Flow
before Growth Investment is a performance measure and is not
intended to represent net income (loss), cash from operations (the
most directly comparable U.S. GAAP measure), or liquidity and is
not necessarily comparable to similarly titled measures reported by
other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220505006265/en/
Media: Laura Avant 713.537.5437
Investors: Kevin L. Cole, CFA 609.524.4526
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