- Received $689 million Winter Storm Uri
Securitization
- Published 12th annual Sustainability Report
- Executing $1 billion share repurchase program; $595 million
remaining to be completed
- Maintaining 2022 Adjusted EBITDA and FCFbG guidance
NRG Energy, Inc. (NYSE: NRG) today reported a second quarter
2022 Net Income of $513 million, or $2.16 per diluted common share,
and Adjusted EBITDA for the second quarter of $358 million.
“During the second quarter, we made good progress on our growth
priorities while navigating volatile market conditions," said
Mauricio Gutierrez, NRG President and Chief Executive Officer. “I
am confident in the ability of our customer-focused strategy to
deliver significant value to both consumers and shareholders.”
Consolidated Financial Results
Three Months Ended
Six Months Ended
($ in millions)
6/30/2022
6/30/2021
6/30/2022
6/30/2021
Net Income
$
513
$
1,078
$
2,249
$
996
Cash provided by Operating Activities
$
1,513
$
1,294
$
3,189
$
377
Adjusted EBITDAa
$
358
$
656
$
867
$
1,223
a. Three and six months ended 6/30/21
excludes the loss due to Winter Storm Uri of $82 million and $1,049
million, respectively
Segments Results
Table 1: Net Income
($ in millions)
Three Months Ended
Six Months Ended
Segment
6/30/2022
6/30/2021
6/30/2022
6/30/2021
Texas
$
766
$
783
$
1,539
$
350
East
(10
)
783
1,531
1,139
West/Services/Othera
(243
)
(488
)
(821
)
(493
)
Net Income
$
513
$
1,078
$
2,249
$
996
a. Includes Corporate segment
Second quarter net income was $513 million, $565 million lower
than second quarter 2021, primarily driven by lower mark-to-market
gains on economic hedge positions. This was partially offset by
lower impairment losses in the second quarter of 2022 compared to
the second quarter of 2021.
Table 2: Adjusted EBITDA
($ in millions)
Three Months Ended
Six Months Ended
Segment
6/30/2022
6/30/2021
6/30/2022
6/30/2021
Texas
$
251
$
312
$
449
$
558
East
61
281
386
541
West/Services/Other a
46
63
32
124
Adjusted EBITDAb
$
358
$
656
$
867
$
1,223
a. Includes Corporate segment
b. Three and six months ended 6/30/21
excludes the loss due to Winter Storm Uri of $82 million and $1,049
million, respectively
Texas: Second quarter Adjusted EBITDA was $251 million,
$61 million lower than the second quarter of 2021. This decrease
was driven primarily by the extended outage at W.A. Parish Unit 8
that began in the second quarter of 2022. Favorable weather-driven
retail load was offset by higher supply costs.
East: Second quarter Adjusted EBITDA was $61 million,
$220 million lower than the second quarter of 2021. This decrease
was driven primarily by the December 2021 sale of the 4.8 GW fossil
generation assets, higher supply costs, and lower demand response
revenues associated with an early settlement in 2021.
West/Services/Other: Second quarter Adjusted EBITDA was
$46 million, $17 million lower than the second quarter of 2021.
This decrease was driven primarily by the December 2021 sale of the
4.8 GW fossil generation assets and higher natural gas supply
costs.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
06/30/22
12/31/21
Cash and Cash Equivalents
$
580
$
250
Restricted Cash
44
15
Total
624
265
Total Revolving Credit Facility and
collective collateral facilities
2,460
2,421
Total Liquidity, excluding collateral
received
$
3,084
$
2,686
As of June 30, 2022, NRG's cash was at $580 million, and $2.5
billion was available under the Company’s credit facilities. Total
liquidity was $3.1 billion, which was approximately $398 million
higher than at the end of 2021.
NRG Strategic Developments
ERCOT Securitization Proceeds
In 2021, the Texas Legislature passed HB 4492 for ERCOT to
mitigate exceptionally high price adders and ancillary service
costs incurred by Load Serving Entities (LSEs) during Winter Storm
Uri. HB 4492 authorized ERCOT to raise $2.1 billion of financing to
distribute to LSEs that were charged and paid to ERCOT those highly
priced ancillary service and ORDPA during Winter Storm Uri. The
Company accounted for the expected proceeds as a reduction to cost
of operations during December 2021 and received the proceeds of
$689 million from ERCOT in June 2022.
W.A. Parish Unit 8 Extended Outage
In May 2022, W.A. Parish Unit 8 came offline as a result of
damage to certain components of the steam turbine/generator. Based
on management's current assessment of necessary restoration
efforts, the Company is targeting to return the unit to service by
the end of the second quarter of 2023.
Sale of Watson
On June 1, 2022, the Company closed on the sale of its 49%
ownership in the Watson natural gas generating facility to Tesoro
Refining & Marketing Company LLC for $59 million. NRG
recognized a gain on the sale of $46 million.
Sustainability Update
NRG released its 2021 sustainability report, providing an update
on the Company’s comprehensive sustainability strategy. As of
December 31, 2021, NRG recorded an approximately 44% reduction in
total greenhouse gas emissions, from the 2014 baseline, and a 64%
decrease in revenue carbon intensity since 2019. The report also
highlights the Company’s commitments to safety and well-being,
community, and builds on more than a decade of leadership across
business, customers, workplace, operations, and supply chain.
2022 Guidance
NRG is maintaining its Adjusted EBITDA and FCFbG guidance for
2022 as set forth below.
Table 4: 2022 Adjusted EBITDA, Adjusted Cash from Operations,
and FCFbG Guidance
2022
(In millions)
Guidance
Adjusted EBITDAa
$1,950 - $2,250
Adjusted Cash Flow from Operations
$1,470 - $1,770
FCFbG
$1,140 - $ 1,440
a. Non-GAAP financial measure; see
Appendix Table A-7 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 of that year, and an incremental $366 million completed
through July 31, 2022; the balance of $595 million under the
current program is expected to be executed by the end of 2022.
On July 20, 2022, NRG announced that its Board of Directors
declared a quarterly dividend on the Company's common stock of
$0.35 per share, or $1.40 per share on an annualized basis. The
dividend is payable on August 15, 2022, to stockholders of record
as of August 1, 2022.
The Company remains committed to maintaining a strong balance
sheet, continues to work to achieve investment-grade credit
metrics, and expects to grow into its target investment grade
metrics, 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 August 4, 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 execute 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 August 4, 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 June
30,
Six months ended June
30,
(In millions, except for per share
amounts)
2022
2021
2022
2021
Revenue
Revenue
$
7,282
$
5,243
$
15,178
$
13,334
Operating Costs and Expenses
Cost of operations (excluding depreciation
and amortization shown below)
5,887
2,948
10,817
9,805
Depreciation and amortization
157
53
340
370
Impairment losses
155
306
155
306
Selling, general and administrative
costs
325
317
647
654
Provision for credit losses
26
40
51
651
Acquisition-related transaction and
integration costs
10
22
18
64
Total operating costs and expenses
6,560
3,686
12,028
11,850
Gain on sale of assets
32
—
29
17
Operating Income
754
1,557
3,179
1,501
Other Income/(Expense)
Equity in earnings/(losses) of
unconsolidated affiliates
4
14
(11
)
8
Other income, net
12
12
12
34
Interest expense
(105
)
(125
)
(208
)
(252
)
Total other expense
(89
)
(99
)
(207
)
(210
)
Income Before Income Taxes
665
1,458
2,972
1,291
Income tax expense
152
380
723
295
Net Income
$
513
$
1,078
$
2,249
$
996
Income per Share
Weighted average number of common shares
outstanding — basic and diluted
237
245
240
245
Income per Weighted Average Common
Share —Basic and Diluted
$
2.16
$
4.40
$
9.37
$
4.07
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three months ended June
30,
Six months ended June
30,
(In millions)
2022
2021
2022
2021
Net Income
$
513
$
1,078
$
2,249
$
996
Other Comprehensive
(Loss)/Income
Foreign currency translation
adjustments
(22
)
2
(13
)
5
Defined benefit plans
20
19
19
19
Other comprehensive (loss)/income
(2
)
21
6
24
Comprehensive Income
$
511
$
1,099
$
2,255
$
1,020
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30, 2022
December 31, 2021
(In millions, except share
data)
(Unaudited)
(Audited)
ASSETS
Current Assets
Cash and cash equivalents
$
580
$
250
Funds deposited by counterparties
3,970
845
Restricted cash
44
15
Accounts receivable, net
3,862
3,245
Uplift securitization proceeds receivable
from ERCOT
—
689
Inventory
604
498
Derivative instruments
11,323
4,613
Cash collateral paid in support of energy
risk management activities
295
291
Prepayments and other current assets
470
395
Total current assets
21,148
10,841
Property, plant and equipment,
net
1,598
1,688
Other Assets
Equity investments in affiliates
127
157
Operating lease right-of-use assets,
net
237
271
Goodwill
1,657
1,795
Intangible assets, net
2,450
2,511
Nuclear decommissioning trust fund
836
1,008
Derivative instruments
4,548
2,527
Deferred income taxes
1,501
2,155
Other non-current assets
233
229
Total other assets
11,589
10,653
Total Assets
$
34,335
$
23,182
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Current portion of long-term debt and
finance leases
$
62
$
4
Current portion of operating lease
liabilities
82
81
Accounts payable
2,933
2,274
Derivative instruments
8,000
3,387
Cash collateral received in support of
energy risk management activities
3,970
845
Accrued expenses and other current
liabilities
1,390
1,324
Total current liabilities
16,437
7,915
Other Liabilities
Long-term debt and finance leases
7,970
7,966
Non-current operating lease
liabilities
201
236
Nuclear decommissioning reserve
330
321
Nuclear decommissioning trust
liability
485
666
Derivative instruments
2,565
1,412
Deferred income taxes
71
73
Other non-current liabilities
976
993
Total other liabilities
12,598
11,667
Total Liabilities
29,035
19,582
Commitments and Contingencies
Stockholders' Equity
Common stock; $0.01 par value; 500,000,000
shares authorized; 423,868,387 and 423,547,174 shares issued and
235,146,021, and 243,753,899 shares outstanding at June 30, 2022
and December 31, 2021, respectively
4
4
Additional paid-in-capital
8,442
8,531
Retained earnings
2,600
464
Treasury stock, at cost 188,722,366, and
179,793,275 shares at June 30, 2022 and December 31, 2021,
respectively
(5,626
)
(5,273
)
Accumulated other comprehensive loss
(120
)
(126
)
Total Stockholders' Equity
5,300
3,600
Total Liabilities and Stockholders'
Equity
$
34,335
$
23,182
NRG ENERGY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June
30,
(In millions)
2022
2021
Cash Flows from Operating
Activities
Net Income
$
2,249
$
996
Adjustments to reconcile net income to
cash provided by operating activities:
Distributions from and equity in
(losses)/earnings of unconsolidated affiliates
16
14
Depreciation and amortization
340
370
Accretion of asset retirement
obligations
16
14
Provision for credit losses
51
651
Amortization of nuclear fuel
28
25
Amortization of financing costs and debt
discounts
11
20
Amortization of in-the-money contracts and
emissions allowances
128
108
Amortization of unearned equity
compensation
14
10
Net gain on sale and disposal of
assets
(46
)
(25
)
Impairment losses
155
306
Changes in derivative instruments
(3,918
)
(2,430
)
Changes in deferred income taxes and
liability for uncertain tax benefits
672
257
Changes in collateral deposits in support
of energy risk management activities
3,121
696
Changes in nuclear decommissioning trust
liability
(5
)
30
Uplift securitization proceeds received
from ERCOT
689
—
Changes in other working capital
(332
)
(665
)
Cash provided by operating
activities
3,189
377
Cash Flows from Investing
Activities
Payments for acquisitions of businesses
and assets, net of cash acquired
(53
)
(3,521
)
Capital expenditures
(150
)
(143
)
Net (purchases)/sales of emission
allowances
(19
)
1
Investments in nuclear decommissioning
trust fund securities
(271
)
(253
)
Proceeds from the sale of nuclear
decommissioning trust fund securities
278
226
Proceeds from sales of assets, net of cash
disposed
96
198
Cash used by investing
activities
(119
)
(3,492
)
Cash Flows from Financing
Activities
Payments of dividends to common
stockholders
(168
)
(159
)
Payments for share repurchase activity
(366
)
(9
)
Net receipts from settlement of acquired
derivatives that include financing elements
950
191
Net proceeds of Revolving Credit Facility
and Receivables Securitization Facilities
—
75
Repayments of long-term debt and finance
leases
(2
)
(4
)
Payments of debt issuance costs
—
(2
)
Proceeds from issuance of common stock
—
1
Cash provided by financing
activities
414
93
Effect of exchange rate changes on cash
and cash equivalents
—
1
Net Increase/(Decrease) in Cash and
Cash Equivalents, Funds Deposited by Counterparties and Restricted
Cash
3,484
(3,021
)
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
$
4,594
$
909
Appendix Table A-1: Second 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)
$
766
$
(10
)
$
18
$
(261
)
$
513
Plus:
Interest expense, net
—
(2
)
8
88
94
Income tax
—
(1
)
11
142
152
Depreciation and amortization
77
50
22
8
157
ARO Expense
3
5
1
—
9
Contract amortization
(2
)
(25
)
5
—
(22
)
EBITDA
844
17
65
(23
)
903
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
17
—
17
Acquisition and divestiture integration
and transaction costs
—
—
—
14
14
Deactivation costs
—
5
—
—
5
Loss/(gain) on sale of assets
12
—
(44
)
—
(32
)
Other non recurring charges
1
20
(5
)
(1
)
15
Impairments
—
155
—
—
155
Mark to market (MtM) (gains)/losses on
economic hedges
(606
)
(136
)
23
—
(719
)
Adjusted EBITDA
$
251
$
61
$
56
$
(10
)
$
358
Second Quarter 2022 condensed financial information by Operating
Segment:
($ in millions)
Texas
East
West/Services/ Other
Corp/Elim
Total
Revenue1
$
2,697
$
3,633
$
1,110
$
3
$
7,443
Cost of fuel, purchased power and other
cost of sales2
2,039
3,339
961
4
6,343
Economic gross margin
658
294
149
(1
)
1,100
Operations & maintenance and other
cost of operations3
243
122
54
(1
)
418
Selling, marketing, general and
administrative4
155
105
53
10
323
Provision for credit losses
9
11
6
—
26
Other
—
(5
)
(20
)
—
(25
)
Adjusted EBITDA
$
251
$
61
$
56
$
(10
)
$
358
1 Excludes MtM loss of $148 million and
contract amortization of $13 million
2 Includes TDSP expense, capacity and
emission credits
3 Excludes other non recurring of $15
million, ARO expense of $9 million and deactivation costs of $5
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
$
7,282
$
13
$
148
$
—
$
—
$
7,443
Cost of operations (excluding depreciation
and amortization shown below)1
5,441
35
867
—
—
6,343
Depreciation and Amortization
157
(157
)
—
—
—
—
Gross margin
1,684
135
(719
)
—
0
1,100
Operations & maintenance and other
cost of operations
446
—
—
(5
)
(23
)
418
Selling, marketing, general &
administrative
325
—
—
—
(2
)
323
Provision for credit losses
26
—
—
—
—
26
Other
374
(246
)
—
—
(153
)
(25
)
Net Income/(Loss)
$
513
$
381
$
(719
)
$
5
$
178
$
358
1 Excludes Operations & maintenance
and other cost of operations of $446 million
2 Other adj. includes impairments of $155
million, adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates of $17 million, other non recurring
charges of $15 million, acquisition and divestiture integration and
transaction costs of $14 million, ARO expenses of $9 million and
gain on sale of assets ($32) million
Appendix Table A-2: Second Quarter 2021 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted
EBITDA and provides a reconciliation to Net Income/(Loss):
($ in millions)
Texas
East
West/Services/ Other
Corp/Elim
Total
Net Income/(Loss)
$
783
$
783
$
38
$
(526
)
$
1,078
Plus:
Interest expense, net
—
(2
)
3
124
125
Income tax
—
—
13
367
380
Depreciation and amortization
84
(56
)
18
7
53
ARO Expense
5
3
4
—
12
Contract amortization
(8
)
77
10
—
79
EBITDA
864
805
86
(28
)
1,727
Winter Storm URI
71
5
2
4
82
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
18
—
18
Acquisition and divestiture integration
and transaction costs
—
—
—
22
22
Legal Settlement
—
—
—
2
2
Deactivation costs
—
15
—
—
15
Other non recurring charges
2
1
—
(2
)
1
Impairments
—
306
—
—
306
Mark to market (MtM) (gains)/losses on
economic hedges
(625
)
(851
)
(41
)
—
(1,517
)
Adjusted EBITDA
$
312
$
281
$
65
$
(2
)
$
656
Second Quarter 2021 condensed financial information by Operating
Segment:
($ in millions)
Texas
East
West/Services/ Other
Corp/Elim
Total
Revenue1
$
2,028
$
2,484
$
820
$
(3
)
$
5,329
Cost of fuel, purchased power and other
cost of sales2
1,388
1,951
676
(1
)
4,014
Economic gross margin
640
533
144
(2
)
1,315
Operations & maintenance and other
cost of operations3
225
139
66
(1
)
429
Selling, marketing, general &
administrative4
140
121
46
9
316
Provision for credit losses
40
(2
)
2
—
40
Other
(6
)
(1
)
(33
)
(4
)
(44
)
Winter Storm Uri impact
(71
)
(5
)
(2
)
(4
)
(82
)
Adjusted EBITDA
$
312
$
281
$
65
$
(2
)
$
656
1 Excludes MtM loss of $70 million and
contract amortization of $16 million
2 Includes TDSP expense, capacity and
emission credits
3 Excludes ARO expense of $12 million and
deactivation costs of $15 million
4 Excludes acquisition and divestiture
integration and transaction costs of $22 million
The following table reconciles the condensed financial
information to Adjusted EBITDA:
($ in millions)
Condensed Consolidated Results
of Operations
Interest, tax, depr.,
amort.
MtM
Deactivation
Winter Storm Uri
Other adj.2
Adjusted EBITDA
Revenue
$
5,243
$
16
$
70
$
—
$
(5
)
$
1
$
5,325
Cost of operations (excluding depreciation
and amortization shown below)1
2,490
(63
)
1,587
—
(58
)
(1
)
3,955
Depreciation and amortization
53
(53
)
—
—
—
—
Gross margin
2,700
132
(1,517
)
—
53
2
1,370
Operations & maintenance and other
cost of operations
458
—
—
(15
)
(2
)
(14
)
427
Selling, marketing, general &
administrative
317
—
—
—
(6
)
(1
)
310
Provision for credit losses
40
—
—
—
(21
)
—
19
Other
807
(505
)
—
—
(344
)
(42
)
Net Income/(Loss)
$
1,078
$
637
$
(1,517
)
$
15
$
82
$
361
$
656
1 Excludes Operations & maintenance
and other cost of operations of $458 million
2 Other adj. includes adjustment to
reflect Impairments of $306 million, acquisition and divestiture
integration and transaction costs of $22 million and NRG share of
adjusted EBITDA in unconsolidated affiliates of $18 million and ARO
expenses of $12 million
Appendix Table A-3: YTD Second Quarter 2022 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted
EBITDA and provides a reconciliation to Net Income/(Loss):
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Net Income/(Loss)
$
1,539
$
1,531
$
143
$
(964
)
$
2,249
Plus:
Interest expense, net
—
(3
)
15
182
194
Income tax
—
(1
)
10
714
723
Depreciation and amortization
153
128
43
16
340
ARO expense
6
7
3
—
16
Contract and emission credit amortization,
net
(4
)
122
7
—
125
EBITDA
1,694
1,784
221
(52
)
3,647
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
35
—
35
Acquisition and divestiture integration
and transaction costs
—
—
—
24
24
Deactivation costs
—
9
—
—
9
Loss/(gain) on sale of assets
12
—
(43
)
2
(29
)
Other non-recurring charges
2
20
(11
)
11
22
Impairments
—
155
—
—
155
Mark-to-market (MtM) for economic hedging
activities, net
(1,259
)
(1,582
)
(155
)
—
(2,996
)
Adjusted EBITDA
$
449
$
386
$
47
$
(15
)
$
867
YTD Second Quarter 2022 condensed financial information by
Operating Segment:
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Revenue1
$
4,722
$
8,490
$
2,266
$
3
$
15,481
Cost of fuel, purchased power and other
cost of sales2
3,497
7,606
2,016
5
13,124
Economic gross margin
1,225
884
250
(2
)
2,357
Operations & maintenance and other
cost of operations3
471
254
110
(2
)
833
Selling, general and administrative
costs4
302
222
102
17
643
Provision for credit losses
12
25
14
—
51
Other
(9
)
(3
)
(23
)
(2
)
(37
)
Adjusted EBITDA
$
449
$
386
$
47
$
(15
)
$
867
1 Excludes MtM loss of $281 million and
contract amortization of $22 million
2 Includes TDSP expenses, capacity and
emissions credits
3 Excludes ARO expense of $16 million,
deactivation costs of $9 million and other-non recurring charges of
$9 million
4 Excludes acquisition and divestiture
integration and transaction costs of $4 million
The following table reconciles the condensed financial
information to Adjusted EBITDA:
($ in millions)
Condensed Consolidated Results
of Operations
Interest, tax, depr.,
amort.
MtM
Deactivation
Other adj.2
Adjusted EBITDA
Revenue
$
15,178
$
22
$
281
$
—
$
—
$
15,481
Cost of operations (excluding depreciation
and amortization shown below)1
9,950
(103
)
3,277
—
—
13,124
Depreciation and amortization
340
(340
)
—
Gross margin
4,888
465
(2,996
)
—
—
2,357
Operations & maintenance and other
cost of operations
867
—
—
(9
)
(25
)
833
Selling, general and administrative
costs
647
—
—
—
(4
)
643
Provision for credit losses
51
—
—
—
—
51
Other
1,074
(917
)
—
—
(194
)
(37
)
Net Income/(Loss)
$
2,249
$
1,382
$
(2,996
)
$
9
$
223
$
867
1 Excludes Operations & maintenance
and other cost of operations of $867 million
2 Includes adjustment to reflect
impairments of $155 million, NRG share of Adj EBITDA of $35
million, acquisition and divestiture integration and transaction
costs of $24 million, other non-recurring charges of $22 million,
ARO expense $16 million and gain on sale of assets ($29)
million
Appendix Table A-4: YTD Second Quarter 2021 Adjusted EBITDA
Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted
EBITDA and provides a reconciliation to Net (Loss)/Income:
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Net (Loss)/Income
$
350
$
1,139
$
112
$
(605
)
$
996
Plus:
Interest expense, net
1
(2
)
6
246
251
Income tax
—
—
18
277
295
Depreciation and amortization
161
150
45
14
370
ARO expense
7
5
2
—
14
Contract and emission credit amortization,
net
(7
)
77
10
—
80
EBITDA
512
1,369
193
(68
)
2,006
Winter Storm Uri impact
1,193
(138
)
(10
)
4
1,049
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
—
—
37
1
38
Acquisition and divestiture integration
and transaction costs
—
—
—
66
66
Legal settlements
—
—
—
9
9
Deactivation costs
—
16
—
—
16
Loss/(gain) on sale of assets
—
—
(17
)
—
(17
)
Other non recurring charges
2
1
1
(16
)
(12
)
Impairments
—
306
—
—
306
Mark-to-market (MtM) for economic hedging
activities, net
(1,149
)
(1,013
)
(76
)
—
(2,238
)
Adjusted EBITDA
$
558
$
541
$
128
$
(4
)
$
1,223
YTD Second Quarter 2021 condensed financial information by
Operating Segment:
($ in millions)
Texas
East
West/ Services/ Other
Corp/Elim
Total
Revenue1
$
5,731
$
5,983
$
1,743
$
(5
)
$
13,452
Cost of fuel, purchased power and other
cost of sales2
4,994
4,768
1,436
(1
)
11,197
Economic gross margin
737
1,215
307
(4
)
2,255
Operations & maintenance and other
cost of operations3
453
275
125
(2
)
851
Selling, marketing, general &
administrative4
285
261
87
18
651
Provision for credit losses
642
4
5
—
651
Other
(8
)
(4
)
(48
)
(12
)
(72
)
Winter Storm Uri impact
(1,193
)
138
10
(4
)
(1,049
)
Adjusted EBITDA
$
558
$
541
$
128
$
(4
)
$
1,223
1 Excludes MtM loss of $102 million and
contract amortization of $16 million
2 Includes TDSP expenses, capacity and
emissions credits
3 Excludes deactivation expense of $16M
and ARO expense of $14 million
4 Excludes acquisition and divestiture
integration and transaction costs of $66 million and other
non-recurring charges of ($12) million
The following table reconciles the condensed financial
information to Adjusted EBITDA:
($ in millions)
Condensed Consolidated Results
of Operations
Interest, tax, depr.,
amort.
MtM
Deactivation
Winter Storm Uri
Other adj.2
Adjusted EBITDA
Revenue
$
13,334
$
16
$
102
$
—
$
(2,665
)
$
3
$
10,790
Cost of operations (excluding depreciation
and amortization shown below)1
8,921
(64
)
2,340
—
(3,079
)
2
8,120
Depreciation and amortization
370
(370
)
—
—
—
—
Gross margin
4,043
450
(2,238
)
—
414
1
2,670
Operations & maintenance and Other
cost of operations
884
—
—
(16
)
(2
)
(17
)
849
Selling, marketing, general &
administrative
654
—
—
—
(27
)
(3
)
624
Provision for credit losses
651
—
—
—
(606
)
—
45
Other
858
(546
)
—
—
—
(383
)
(71
)
Net (Loss)/Income
$
996
$
996
$
(2,238
)
$
16
$
1,049
$
404
$
1,223
1 Excludes Operations & maintenance
and other cost of operations of $884 million
2 Other adj. includes adjustment to
reflect impairments of $306 million, acquisition and divestiture
integration and transaction costs of $66 million and NRG share of
adjusted EBITDA in unconsolidated affiliates of $38 million, ARO
expense of $14 million, deactivation costs of $9 million, other non
recurring charges of ($12) million and gain on sale of assets of
($17) million
Appendix Table A-5: 2022 and 2021 Six Months Ended June 30
Adjusted Cash Flow From Operations Reconciliations
The following table summarizes the calculation of adjusted cash
flow from operating activities providing a reconciliation to net
cash provided by operating activities:
Six Months Ended
($ in millions)
June 30, 2022
June 30, 2021
Adjusted EBITDA
$
867
$
1,223
Winter Storm Uri loss
—
(1,049
)
Interest payments, net
(178
)
(191
)
Income tax
(36
)
12
Collateral / working capital / other
2,536
382
Cash Provided by Operating
Activities
3,189
377
Winter Storm Uri:
Loss
—
1,049
Securitization, C&I credits, and
remaining open accounts receivables
(624
)
(111
)
Net receipts from settlement of acquired
derivatives that include
financing elements
950
191
Acquisition and divestiture transaction
and integration costs
24
66
Encina site improvement
9
14
GenOn Settlement
4
—
Adjustment for change in collateral
(3,121
)
(696
)
Nuclear decommissioning trust
liability
7
(27
)
Adjusted Cash Flow from Operating
Activities
438
863
Maintenance Capital Expenditures
(101
)
(94
)
Environmental Capital Expenditures
(1
)
(1
)
Free Cash Flow Before Growth
Investments (FCFbG)
$
336
$
768
Appendix Table A-6: Six Months Ended June 30, 2022 Sources
and Uses of Liquidity
The following table summarizes the sources and uses of liquidity
through second quarter of 2022:
Six months ended
($ in millions)
June 30, 2022
Sources:
Adjusted Cash Flow from Operating
Activities
$
438
Uplift securitization proceeds received
from ERCOT
689
Increase in availability of collective
collateral facilities
39
Proceeds from sale of assets
96
Uses:
Payments for share repurchase activity
(366
)
Payments of dividends to common
stockholders
(168
)
Maintenance and Environmental capital
expenditures, net
(102
)
Winter Storm Uri
(65
)
Payments for acquisitions of businesses
and assets, net of cash acquired
(53
)
Growth Investment capital expenditures
(48
)
Acquisition and divestiture integration
and transaction costs
(24
)
Net (purchases)/sales of emission
allowances
(19
)
Encina site improvement
(5
)
GenOn Settlement
(4
)
Other investing and financing
(10
)
Change in Total Liquidity
$
398
Appendix Table A-7: 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
$
350 - 650
Interest expense, net
380
Income tax
165
Depreciation, amortization, contract
amortization, and ARO expense
760
Adjustment to reflect NRG share of
adjusted EBITDA in unconsolidated affiliates
70
Impairments2
155
Other costs3
70
Adjusted EBITDA
1,950 - 2,250
Interest payments, net
(360
)
Income tax
(50
)
Working capital / other assets and
liabilities4
(80
)
Cash provided by Operating
Activities
1,460 - 1,760
Adjustments: proceeds from investment and
asset sales, collateral, nuclear decommissioning trust
liability
10
Adjusted Cash flow from
Operations
1,470 - 1,770
Maintenance capital expenditures4
(310) - (330
)
Environmental capital expenditures
(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 Represents impairments of Midwest
Generation goodwill and PJM generating assets
3 Includes deactivation costs and
integration expenses
4 Maintenance capital expenditures
excludes W.A. Parish expected insurance recoveries classified in
Working capital / other assets and liabilities
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 acquisition and divestiture
transaction and integration 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
acquisition and divestiture transaction and integration 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/20220803006092/en/
Media: Laura Avant 713.537.5437
Investors: Kevin L. Cole, CFA 609.524.4526
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