• 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.

Media: Laura Avant 713.537.5437

Investors: Kevin L. Cole, CFA 609.524.4526

NRG Energy (NYSE:NRG)
Historical Stock Chart
From Jul 2022 to Aug 2022 Click Here for more NRG Energy Charts.
NRG Energy (NYSE:NRG)
Historical Stock Chart
From Aug 2021 to Aug 2022 Click Here for more NRG Energy Charts.