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NRG Energy, Inc. Reports Second Quarter 2018 Results
-
Transformation Plan on track with
$225 million in cost savings realized through second quarter of 2018, and up to$3 billion in asset sales on track to close in 2018 -
Completed
$500 million of the previously announced 2018$1 billion share buyback program - Consummated settlement and obtained releases from GenOn
“Our business performed exceptionally well during the second quarter,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. “These results demonstrate the strength of our integrated retail-generation platform. We also remain on track with our Transformation Plan objectives and continue to expect our announced asset sales to close during the second half of the year.”
Consolidated Financial Results
Three Months Ended | Six Months Ended | |||||||||||||||||||||
($ in millions) | 6/30/18 | 6/30/17 | 6/30/18 | 6/30/17 | ||||||||||||||||||
Income/(Loss) from Continuing Operations | $ | 121 | $ | 99 | $ | 354 | $ | (70 | ) | |||||||||||||
Cash From Continuing Operations | $ | 167 | $ | 194 | $ | 524 | $ | 112 | ||||||||||||||
Adjusted EBITDA | $ | 843 | $ | 686 | $ | 1,392 | $ | 1,070 | ||||||||||||||
Free Cash Flow Before Growth Investments (FCFbG) | $ | 259 | $ | 240 | $ | 366 | $ | 208 | ||||||||||||||
Segment Results
Table 1: Income/(Loss) from Continuing Operations
($ in millions) | Three Months Ended | Six Months Ended | ||||||||||||||||||||
Segment | 6/30/18 | 6/30/17 | 6/30/18 | 6/30/17 | ||||||||||||||||||
Retail | $ | (84 | ) | $ | 341 | $ | 861 | $ | 311 | |||||||||||||
Generation a | 272 | (90 | ) | (265 | ) | (54 | ) | |||||||||||||||
Renewables b | (12 | ) | (46 | ) | (45 | ) | (77 | ) | ||||||||||||||
NRG Yield b | 96 | 44 | 96 | 42 | ||||||||||||||||||
Corporate | (151 | ) | (150 | ) | (293 | ) | (292 | ) | ||||||||||||||
Income/(Loss) from Continuing Operations | $ | 121 | $ | 99 | $ | 354 | $ | (70 | ) | |||||||||||||
a. In accordance with GAAP, 2017 results have been restated to include
full impact of the GenOn deconsolidation
b. In accordance with
GAAP, 2017 results have been restated to include full impact of the
assets in the NRG Yield Drop Down transactions
Table 2: Adjusted EBITDA
($ in millions) | Three Months Ended | Six Months Ended | ||||||||||||||||||||
Segment | 6/30/18 | 6/30/17 | 6/30/18 | 6/30/17 | ||||||||||||||||||
Retail | $ | 298 | $ | 204 | $ | 486 | $ | 337 | ||||||||||||||
Generation a | 197 | 152 | 344 | 206 | ||||||||||||||||||
Renewables b | 50 | 52 | 81 | 75 | ||||||||||||||||||
NRG Yield b | 303 | 274 | 492 | 460 | ||||||||||||||||||
Corporate | (5 | ) | 4 | (11 | ) | (8 | ) | |||||||||||||||
Adjusted EBITDA c | $ | 843 | $ | 686 | $ | 1,392 | $ | 1,070 | ||||||||||||||
a. In accordance with GAAP, 2017 results have been restated to include
full impact of the GenOn deconsolidation
b. In accordance with
GAAP, 2017 results have been restated to include full impact of the
assets in the NRG Yield Drop Down transactions
c. See Appendices
A-1 through A-2 for Operating Segment Reg G reconciliations
Retail: Second quarter Adjusted EBITDA was
Generation: Second quarter Adjusted EBITDA was
-
Gulf Coast Region:
$29 million increase due to higher realized energy prices, partially offset by higher operating costs due to timing and scope of outages; and -
East/West1:
$16 million increase due to higher capacity revenues and lower operating costs.
Renewables: Second quarter Adjusted EBITDA was
Corporate: Second quarter Adjusted EBITDA was
1
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions) | 6/30/18 | 12/31/17 | |||||||||
Cash at NRG-Level a | $ | 632 | $ | 769 | |||||||
Revolver Availability | 1,222 | 1,711 | |||||||||
NRG-Level Liquidity | $ | 1,854 | $ | 2,480 | |||||||
Restricted Cash | 286 | 508 | |||||||||
Cash at Non-Guarantor Subsidiaries | 348 | 222 | |||||||||
Total Liquidity | $ | 2,488 | $ | 3,210 | |||||||
a. Includes unrestricted cash held at Midwest Generation (a non-guarantor subsidiary), which can be distributed to NRG without limitation
As of
NRG Strategic Developments
Transformation Plan
Through the second quarter of 2018, NRG realized
Retail Acquisition
On
Canal 3 Sale
On
BETM Sale
On
GenOn Update
In
2 Includes transaction costs and working capital adjustments
of
3 Represents
4
Excludes working capital adjustments
Ivanpah Deconsolidation
The Company owns a 54.6% interest in the Ivanpah project, consisting of
three solar electric generating projects with a total capacity of 392
MW. As the majority shareholder, NRG consolidated 100% of Ivanpah. On
2018 Guidance
NRG is maintaining its guidance for 2018 with respect to Consolidated Adjusted EBITDA, Cash from Operations, and FCFbG as set forth below.
Table 4: 2018 Adjusted EBITDA, Cash from Operations, and FCF before Growth Investments Guidance
2018 | ||||
($ in millions) | Guidance Range | |||
Adjusted EBITDA a | $2,800 - $3,000 | |||
Cash From Operations | $2,015 - $2,215 | |||
Free Cash Flow Before Growth Investments (FCFbG) | $1,550 - $1,750 | |||
a. Non-GAAP financial measure; see Appendix Tables A-1 through 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
On
In connection with the
During the second quarter of 2018, NRG issued
Also, as previously announced, NRG intends to reduce corporate debt by
an additional
The Company’s common stock dividend, debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.
5 Interest savings assumes average 6.2% interest rate on
Earnings Conference Call
On
About NRG
At NRG, we’re redefining power by putting customers at the center of
everything we do. We create value by generating electricity and serving
nearly 3 million residential and commercial customers through our
portfolio of retail electricity brands. A Fortune 500 company, NRG
delivers customer-focused solutions for managing electricity, while
enhancing energy choice and working towards a sustainable energy future.
More information is available at www.nrg.com.
Connect with NRG on
Safe Harbor Disclosure
In addition to historical information, the information presented in this communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue,” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.
Although NRG believes that its expectations are reasonable, it can give
no assurance that these expectations will prove to 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, competition in wholesale power
markets, the volatility of energy and fuel prices, failure of customers
to perform under contracts, changes in the wholesale power markets,
changes in government regulations, the condition of capital markets
generally, our ability to access capital markets, cyber terrorism and
inadequate cyber security, unanticipated outages at our generation
facilities, adverse results in current and future litigation, failure to
identify, execute or successfully implement acquisitions, repowerings or
asset sales, our ability to implement value enhancing improvements to
plant operations and companywide processes, our ability to implement and
execute on our publicly announced transformation plan, including any
cost savings, margin enhancement, asset sale, and net debt targets, our
ability to proceed with projects under development or the inability to
complete the construction of such projects on schedule or within budget,
risks related to project siting, financing, construction, permitting,
government approvals and the negotiation of project development
agreements, our ability to progress development pipeline projects, the
timing or completion of GenOn's emergence from bankruptcy, the inability
to maintain or create successful partnering relationships, our ability
to operate our businesses efficiently, our ability to retain retail
customers, our ability to realize value through our commercial
operations strategy, the ability to successfully integrate businesses of
acquired companies, 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, our ability to close the Drop Down transactions with
NRG undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. The adjusted EBITDA and free cash
flow guidance are estimates as of
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June 30, |
Six months ended June 30, |
||||||||||||||||||||
(In millions, except for per share amounts) |
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||
Total operating revenues | $ | 2,922 | $ | 2,701 | $ | 5,343 | $ | 5,083 | |||||||||||||
Operating Costs and Expenses | |||||||||||||||||||||
Cost of operations | 2,051 | 1,841 | 3,609 | 3,704 | |||||||||||||||||
Depreciation and amortization | 227 | 260 | 462 | 517 | |||||||||||||||||
Impairment losses | 74 | 63 | 74 | 63 | |||||||||||||||||
Selling, general and administrative | 211 | 221 | 402 | 481 | |||||||||||||||||
Reorganization costs | 23 | — | 43 | — | |||||||||||||||||
Development costs | 16 | 18 | 29 | 35 | |||||||||||||||||
Total operating costs and expenses | 2,602 | 2,403 | 4,619 | 4,800 | |||||||||||||||||
Other income - affiliate | — | 39 | — | 87 | |||||||||||||||||
Gain on sale of assets | 14 | 2 | 16 | 4 | |||||||||||||||||
Operating Income | 334 | 339 | 740 | 374 | |||||||||||||||||
Other Income/(Expense) | |||||||||||||||||||||
Equity in earnings/(losses) of unconsolidated affiliates | 18 | (3 | ) | 16 | 2 | ||||||||||||||||
Other income/(expense), net | (20 | ) | 14 | (23 | ) | 26 | |||||||||||||||
Loss on debt extinguishment, net | (1 | ) | — | (3 | ) | (2 | ) | ||||||||||||||
Interest expense | (202 | ) | (247 | ) | (369 | ) | (471 | ) | |||||||||||||
Total other expense | (205 | ) | (236 | ) | (379 | ) | (445 | ) | |||||||||||||
Income/(Loss) from Continuing Operations Before Income Taxes | 129 | 103 | 361 | (71 | ) | ||||||||||||||||
Income tax expense/(benefit) | 8 | 4 | 7 | (1 | ) | ||||||||||||||||
Income/(Loss) from Continuing Operations | 121 | 99 | 354 | (70 | ) | ||||||||||||||||
Loss from discontinued operations, net of income tax | (25 | ) | (741 | ) | (25 | ) | (775 | ) | |||||||||||||
Net Income/(Loss) | 96 | (642 | ) | 329 | (845 | ) | |||||||||||||||
Less: Net income/(loss) attributable to noncontrolling interest and redeemable noncontrolling interests | 24 | (16 | ) | (22 | ) | (55 | ) | ||||||||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | $ | 72 | $ | (626 | ) | $ | 351 | $ | (790 | ) | |||||||||||
Earnings/(Loss) per Share Attributable to NRG Energy, Inc. Common Stockholders | |||||||||||||||||||||
Weighted average number of common shares outstanding — basic | 310 | 316 | 314 | 316 | |||||||||||||||||
Income/(loss) from continuing operations per weighted average common share — basic | $ | 0.31 | $ | 0.36 | $ | 1.20 | $ | (0.05 | ) | ||||||||||||
Income/(loss) from discontinued operations per weighted average common share — basic | $ | (0.08 | ) | $ | (2.34 | ) | $ | (0.08 | ) | $ | (2.45 | ) | |||||||||
Earnings/(Loss) per Weighted Average Common Share — Basic | $ | 0.23 | $ | (1.98 | ) | $ | 1.12 | $ | (2.50 | ) | |||||||||||
Weighted average number of common shares outstanding — diluted | 314 | 316 | 318 | 316 | |||||||||||||||||
Income/(loss) from continuing operations per weighted average common share — diluted | $ | 0.31 | $ | 0.36 | $ | 1.18 | $ | (0.05 | ) | ||||||||||||
Income/(loss) from discontinued operations per weighted average common share — diluted | $ | (0.08 | ) | $ | (2.34 | ) | $ | (0.08 | ) | $ | (2.45 | ) | |||||||||
Earnings/(Loss) per Weighted Average Common Share — Diluted | $ | 0.23 | $ | (1.98 | ) | $ | 1.10 | $ | (2.50 | ) | |||||||||||
Dividends Per Common Share | $ | 0.03 | $ | 0.03 | $ | 0.06 | $ | 0.06 | |||||||||||||
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
(In millions) | |||||||||||||||||||||
Net income/(loss) | $ | 96 | $ | (642 | ) | $ | 329 | $ | (845 | ) | |||||||||||
Other comprehensive income/(loss), net of tax | |||||||||||||||||||||
Unrealized gain/(loss) on derivatives, net of income tax expense of $0, $0, $0, and $1 | 5 | (5 | ) | 19 | (1 | ) | |||||||||||||||
Foreign currency translation adjustments, net of income tax expense of $0, $0, $0, and $0 | (4 | ) | 1 | (6 | ) | 8 | |||||||||||||||
Available-for-sale securities, net of income tax expense of $0, $0, $0, and $0 | 1 | 1 | 1 | 1 | |||||||||||||||||
Defined benefit plans, net of income tax expense of $0, $0, $0, and $0 | (1 | ) | 27 | (2 | ) | 27 | |||||||||||||||
Other comprehensive income | 1 | 24 | 12 | 35 | |||||||||||||||||
Comprehensive income/(loss) | 97 | (618 | ) | 341 | (810 | ) | |||||||||||||||
Less: Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interest | 26 | (17 | ) | (12 | ) | (56 | ) | ||||||||||||||
Comprehensive income/(loss) attributable to NRG Energy, Inc. | 71 | (601 | ) | 353 | (754 | ) | |||||||||||||||
Comprehensive income/(loss) available for common stockholders | $ | 71 | $ | (601 | ) | $ | 353 | $ | (754 | ) | |||||||||||
CONDENSED CONSOLIDATED
BALANCE SHEETS
June 30, 2018 | December 31, 2017 | ||||||||||
(In millions, except shares) |
(Unaudited) | ||||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 980 | $ | 991 | |||||||
Funds deposited by counterparties | 71 | 37 | |||||||||
Restricted cash | 286 | 508 | |||||||||
Accounts receivable, net | 1,371 | 1,079 | |||||||||
Inventory | 485 | 532 | |||||||||
Derivative instruments | 851 | 626 | |||||||||
Cash collateral paid in support of energy risk management activities | 224 | 171 | |||||||||
Accounts receivable - affiliate | 57 | 95 | |||||||||
Current assets - held for sale | 100 | 115 | |||||||||
Prepayments and other current assets | 328 | 261 | |||||||||
Total current assets | 4,753 | 4,415 | |||||||||
Property, plant and equipment, net | 12,774 | 13,908 | |||||||||
Other Assets | |||||||||||
Equity investments in affiliates | 1,055 | 1,038 | |||||||||
Notes receivable, less current portion | 15 | 2 | |||||||||
Goodwill | 539 | 539 | |||||||||
Intangible assets, net | 1,860 | 1,746 | |||||||||
Nuclear decommissioning trust fund | 694 | 692 | |||||||||
Derivative instruments | 426 | 172 | |||||||||
Deferred income taxes | 126 | 134 | |||||||||
Non-current assets held-for-sale | 50 | 43 | |||||||||
Other non-current assets | 655 | 629 | |||||||||
Total other assets | 5,420 | 4,995 | |||||||||
Total Assets | $ | 22,947 | $ | 23,318 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Current portion of long-term debt and capital leases | $ | 952 | $ | 688 | |||||||
Accounts payable | 975 | 881 | |||||||||
Accounts payable - affiliate | 29 | 33 | |||||||||
Derivative instruments | 709 | 555 | |||||||||
Cash collateral received in support of energy risk management activities | 72 | 37 | |||||||||
Current liabilities held-for-sale | 74 | 72 | |||||||||
Accrued expenses and other current liabilities | 719 | 890 | |||||||||
Accrued expenses and other current liabilities - affiliate | 133 | 161 | |||||||||
Total current liabilities | 3,663 | 3,317 | |||||||||
Other Liabilities | |||||||||||
Long-term debt and capital leases | 14,821 | 15,716 | |||||||||
Nuclear decommissioning reserve | 274 | 269 | |||||||||
Nuclear decommissioning trust liability | 410 | 415 | |||||||||
Deferred income taxes | 17 | 21 | |||||||||
Derivative instruments | 285 | 197 | |||||||||
Out-of-market contracts, net | 195 | 207 | |||||||||
Non-current liabilities held-for-sale | 12 | 8 | |||||||||
Other non-current liabilities | 1,130 | 1,122 | |||||||||
Total non-current liabilities | 17,144 | 17,955 | |||||||||
Total Liabilities | 20,807 | 21,272 | |||||||||
Redeemable noncontrolling interest in subsidiaries | 69 | 78 | |||||||||
Commitments and Contingencies | |||||||||||
Stockholders’ Equity | |||||||||||
Common stock | 4 | 4 | |||||||||
Additional paid-in capital | 8,481 | 8,376 | |||||||||
Accumulated deficit | (5,920 | ) | (6,268 | ) | |||||||
Less treasury stock, at cost — 116,267,484 and 101,580,045 shares, at June 30, 2018 and December 31, 2017, respectively | (2,871 | ) | (2,386 | ) | |||||||
Accumulated other comprehensive loss | (60 | ) | (72 | ) | |||||||
Noncontrolling interest | 2,437 | 2,314 | |||||||||
Total Stockholders’ Equity | 2,071 | 1,968 | |||||||||
Total Liabilities and Stockholders’ Equity | $ | 22,947 | $ | 23,318 | |||||||
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30, | |||||||||||
(In millions) | 2018 | 2017 | |||||||||
Cash Flows from Operating Activities | |||||||||||
Net income/(loss) | $ | 329 | $ | (845 | ) | ||||||
Loss from discontinued operations, net of income tax | (25 | ) | (775 | ) | |||||||
Income/(loss) from continuing operations | 354 | (70 | ) | ||||||||
Adjustments to reconcile net income to net cash provided/(used) by operating activities: | |||||||||||
Distributions and equity in earnings of unconsolidated affiliates | 27 | 26 | |||||||||
Depreciation, amortization and accretion | 485 | 517 | |||||||||
Provision for bad debts | 31 | 18 | |||||||||
Amortization of nuclear fuel | 24 | 24 | |||||||||
Amortization of financing costs and debt discount/premiums | 27 | 29 | |||||||||
Adjustment for debt extinguishment | 3 | — | |||||||||
Amortization of intangibles and out-of-market contracts | 48 | 51 | |||||||||
Amortization of unearned equity compensation | 26 | 16 | |||||||||
Impairment losses | 89 | 63 | |||||||||
Changes in deferred income taxes and liability for uncertain tax benefits | 4 | 8 | |||||||||
Changes in nuclear decommissioning trust liability | 41 | 2 | |||||||||
Changes in derivative instruments | (211 | ) | 7 | ||||||||
Changes in collateral deposits in support of energy risk management activities | (18 | ) | (189 | ) | |||||||
Gain on sale of emission allowances | (11 | ) | 11 | ||||||||
Gain on sale of assets | (16 | ) | (22 | ) | |||||||
Loss on deconsolidation of business | 22 | — | |||||||||
Changes in other working capital | (401 | ) | (379 | ) | |||||||
Cash provided by continuing operations | 524 | 112 | |||||||||
Cash used by discontinued operations | — | (38 | ) | ||||||||
Net Cash Provided by Operating Activities | 524 | 74 | |||||||||
Cash Flows from Investing Activities | |||||||||||
Acquisitions of businesses, net of cash acquired | (284 | ) | (16 | ) | |||||||
Capital expenditures | (691 | ) | (542 | ) | |||||||
Decrease in notes receivable | 4 | 8 | |||||||||
Purchases of emission allowances | (22 | ) | (30 | ) | |||||||
Proceeds from sale of emission allowances | 34 | 59 | |||||||||
Investments in nuclear decommissioning trust fund securities | (346 | ) | (279 | ) | |||||||
Proceeds from the sale of nuclear decommissioning trust fund securities | 303 | 277 | |||||||||
Proceeds from renewable energy grants and state rebates | — | 8 | |||||||||
Proceeds from sale of assets, net of cash disposed of | 18 | 35 | |||||||||
Deconsolidation of business | (160 | ) | — | ||||||||
Changes in investments in unconsolidated affiliates | (2 | ) | (30 | ) | |||||||
Other | — | 18 | |||||||||
Cash used by continuing operations | (1,146 | ) | (492 | ) | |||||||
Cash used by discontinued operations | — | (53 | ) | ||||||||
Net Cash Used by Investing Activities | (1,146 | ) | (545 | ) | |||||||
Cash Flows from Financing Activities | |||||||||||
Payment of dividends to common and preferred stockholders | (19 | ) | (19 | ) | |||||||
Payment for treasury stock | (500 | ) | — | ||||||||
Net receipts from settlement of acquired derivatives that include financing elements | — | 2 | |||||||||
Proceeds from issuance of stock | — | — | |||||||||
Proceeds from issuance of long-term debt | 1,605 | 946 | |||||||||
Payments for short and long-term debt | (848 | ) | (530 | ) | |||||||
Increase in notes receivable from affiliate | — | (125 | ) | ||||||||
Net contributions from noncontrolling interests in subsidiaries | 222 | 14 | |||||||||
Payment of debt issuance costs | (37 | ) | (36 | ) | |||||||
Other - contingent consideration | — | (10 | ) | ||||||||
Cash provided by continuing operations | 423 | 242 | |||||||||
Cash used by discontinued operations | — | (224 | ) | ||||||||
Net Cash Provided by Financing Activities | 423 | 18 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | — | (8 | ) | ||||||||
Change in Cash from discontinued operations | — | (315 | ) | ||||||||
Net Decrease in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash | (199 | ) | (146 | ) | |||||||
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period | 1,536 | 1,386 | |||||||||
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period | $ | 1,337 | $ | 1,240 | |||||||
Appendix Table A-1: Second Quarter 2018 Adjusted EBITDA
Reconciliation by Operating Segment
The following table
summarizes the calculation of Adj. EBITDA and provides a reconciliation
to income/(loss) from continuing operations:
($ in millions) |
Gulf |
East/ |
Generation |
Retail | Renewables |
NRG |
Corp/ |
Total | ||||||||||||||||||||||||||
Income/(Loss) from |
305 | (33 | ) | 272 | (84 | ) | (12 | ) | 96 | (151 | ) | 121 | ||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||
Interest expense, net | — | 7 | 7 | 1 | 14 | 70 | 105 | 197 | ||||||||||||||||||||||||||
Income tax | — | — | — | — | (5 | ) | 7 | 6 | 8 | |||||||||||||||||||||||||
Loss on debt extinguishment | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||
Depreciation and amortization | 43 | 23 | 66 | 31 | 40 | 82 | 8 | 227 | ||||||||||||||||||||||||||
ARO Expense | 4 | 4 | 8 | — | 1 | 1 | 1 | 11 | ||||||||||||||||||||||||||
Contract amortization | 3 | — | 3 | — | — | 18 | — | 21 | ||||||||||||||||||||||||||
Lease amortization | — | (2 | ) | (2 | ) | — | — | — | — | (2 | ) | |||||||||||||||||||||||
EBITDA | 355 | (1 | ) | 354 | (52 | ) | 38 | 274 | (30 | ) | 584 | |||||||||||||||||||||||
Adjustment to reflect NRG |
3 | 5 | 8 | (6 | ) | 4 | 33 | 2 | 41 | |||||||||||||||||||||||||
Acquisition-related transaction |
— | — | — | 1 | — | 1 | — | 2 | ||||||||||||||||||||||||||
Reorganization costs | 2 | 1 | 3 | 1 | 3 | — | 16 | 23 | ||||||||||||||||||||||||||
Deactivation costs | — | 7 | 7 | — | — | — | 3 | 10 | ||||||||||||||||||||||||||
Gain on sale of assets | — | — | — | — | — | — | (14 | ) | (14 | ) | ||||||||||||||||||||||||
Other non recurring charges | 19 | 2 | 21 | 8 | 10 | (5 | ) | 18 | 52 | |||||||||||||||||||||||||
Impairments | — | 74 | 74 | — | — | — | — | 74 | ||||||||||||||||||||||||||
Mark to market (MtM) |
(285 | ) | 15 | (270 | ) | 346 | (5 | ) | — | — | 71 | |||||||||||||||||||||||
Adjusted EBITDA | 94 | 103 | 197 | 298 | 50 | 303 | (5 | ) | 843 | |||||||||||||||||||||||||
1
Second Quarter 2018 condensed financial information by Operating Segment:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | ||||||||||||||||||||||||||
Operating revenues | 618 | 322 | 940 | 1,817 | 108 | 325 | (269 | ) | 2,921 | |||||||||||||||||||||||||
Cost of sales | 341 | 91 | 432 | 1,319 | 2 | 17 | (255 | ) | 1,515 | |||||||||||||||||||||||||
Economic gross margin | 277 | 231 | 508 | 498 | 106 | 308 | (14 | ) | 1,406 | |||||||||||||||||||||||||
Operations & maintenance and |
176 | 110 | 286 | 75 | 29 | 58 | (14 | ) | 434 | |||||||||||||||||||||||||
Selling, marketing, general |
30 | 25 | 55 | 126 | 12 | 7 | 11 | 211 | ||||||||||||||||||||||||||
Other expense/(income) 3 | (23 | ) | (7 | ) | (30 | ) | (1 | ) | 15 | (60 | ) | (6 | ) | (82 | ) | |||||||||||||||||||
Adjusted EBITDA | 94 | 103 | 197 | 298 | 50 | 303 | (5 | ) | 843 | |||||||||||||||||||||||||
1
2
Excludes deactivation costs of
3 Excludes
gain on sale of assets of
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
|||||||||||||||||||
Operating revenues | 2,922 | 14 | (15 | ) | — | — | 2,921 | ||||||||||||||||||
Cost of operations | 1,608 | (7 | ) | (86 | ) | — | — | 1,515 | |||||||||||||||||
Gross margin | 1,314 | 21 | 71 | — | — | 1,406 | |||||||||||||||||||
Operations & maintenance |
444 | — | — | (10 | ) | — | 434 | ||||||||||||||||||
Selling, marketing, general |
211 | — | — | — | — | 211 | |||||||||||||||||||
Other expense/(income) 1 | 538 | (441 | ) | — | — | (179 | ) | (82 | ) | ||||||||||||||||
Income/(Loss) from |
121 | 462 | 71 | 10 | 179 | 843 | |||||||||||||||||||
1 Other adj. includes gain on sale of assets of
Appendix Table A-2: Second Quarter 2017 Adjusted EBITDA
Reconciliation by Operating Segment
The following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to income/(loss) from continuing operations:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | |||||||||||||||||||||||||
Income/(Loss) from |
(148 | ) | 58 | (90 | ) | 341 | (46 | ) | 44 | (150 | ) | 99 | |||||||||||||||||||||
Plus: | |||||||||||||||||||||||||||||||||
Interest expense, net | — | 8 | 8 | 1 | 25 | 88 | 123 | 245 | |||||||||||||||||||||||||
Income tax | — | 2 | 2 | (12 | ) | (5 | ) | 8 | 11 | 4 | |||||||||||||||||||||||
Depreciation and amortization | 68 | 27 | 95 | 29 | 49 | 79 | 8 | 260 | |||||||||||||||||||||||||
ARO Expense | 4 | 2 | 6 | — | — | 1 | — | 7 | |||||||||||||||||||||||||
Contract amortization | 4 | 1 | 5 | — | — | 17 | — | 22 | |||||||||||||||||||||||||
Lease amortization | — | (2 | ) | (2 | ) | — | — | — | — | (2 | ) | ||||||||||||||||||||||
EBITDA | (72 | ) | 96 | 24 | 359 | 23 | 237 | (8 | ) | 635 | |||||||||||||||||||||||
Adjustment to reflect NRG |
15 | 5 | 20 | (3 | ) | (5 | ) | 34 | 1 | 47 | |||||||||||||||||||||||
Acquisition-related transaction |
— | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||||||
Deactivation costs | — | (1 | ) | (1 | ) | — | — | — | 4 | 3 | |||||||||||||||||||||||
Other non recurring charges | (25 | ) | (1 | ) | (26 | ) | 4 | 9 | 2 | 7 | (4 | ) | |||||||||||||||||||||
Impairments | 42 | (1 | ) | 41 | — | 22 | — | — | 63 | ||||||||||||||||||||||||
Mark to market (MtM) |
105 | (11 | ) | 94 | (156 | ) | 3 | — | — | (59 | ) | ||||||||||||||||||||||
Adjusted EBITDA | 65 | 87 | 152 | 204 | 52 | 274 | 4 | 686 | |||||||||||||||||||||||||
1
Second Quarter 2017 condensed financial information by Operating Segment:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | ||||||||||||||||||||||||
Operating revenues | 607 | 349 | 956 | 1,605 | 122 | 305 | (314 | ) | 2,674 | |||||||||||||||||||||||
Cost of sales | 363 | 134 | 497 | 1,213 | 3 | 14 | (305 | ) | 1,422 | |||||||||||||||||||||||
Economic gross margin | 244 | 215 | 459 | 392 | 119 | 291 | (9 | ) | 1,252 | |||||||||||||||||||||||
Operations & maintenance and |
128 | 121 | 249 | 81 | 39 | 63 | (6 | ) | 426 | |||||||||||||||||||||||
Selling, marketing, general & |
28 | 24 | 52 | 106 | 14 | 7 | 42 | 221 | ||||||||||||||||||||||||
Other expense/(income) 3 | 23 | (17 | ) | 6 | 1 | 14 | (53 | ) | (49 | ) | (81 | ) | ||||||||||||||||||||
Adjusted EBITDA | 65 | 87 | 152 | 204 | 52 | 274 | 4 | 686 | ||||||||||||||||||||||||
1
2
Excludes deactivation costs of
3 Excludes
acquisition-related transaction & integration costs of
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
|||||||||||||||||||
Operating revenues | 2,701 | 14 | (41 | ) | — | — | 2,674 | ||||||||||||||||||
Cost of operations | 1,412 | (8 | ) | 18 | — | — | 1,422 | ||||||||||||||||||
Gross margin | 1,289 | 22 | (59 | ) | — | — | 1,252 | ||||||||||||||||||
Operations & maintenance |
429 | — | — | (3 | ) | — | 426 | ||||||||||||||||||
Selling, marketing, general |
221 | — | — | — | — | 221 | |||||||||||||||||||
Other expense/(income) 1 | 540 | (514 | ) | — | — | (107 | ) | (81 | ) | ||||||||||||||||
Income/(Loss) from |
99 | 536 | (59 | ) | 3 | 107 | 686 | ||||||||||||||||||
1 Other adj. includes acquisition-related transaction &
integration costs of
Appendix Table A-3: YTD Second Quarter 2018 Adjusted EBITDA
Reconciliation by Operating Segment
The following table
summarizes the calculation of Adj. EBITDA and provides a reconciliation
to income/(loss) from continuing operations:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | |||||||||||||||||||||||||
Income/(Loss) from |
(261 | ) | (4 | ) | (265 | ) | 861 | (45 | ) | 96 | (293 | ) | 354 | ||||||||||||||||||||
Plus: | |||||||||||||||||||||||||||||||||
Interest expense, net | — | 10 | 10 | 2 | 28 | 124 | 196 | 360 | |||||||||||||||||||||||||
Income tax | — | — | — | — | (11 | ) | 6 | 12 | 7 | ||||||||||||||||||||||||
Loss on debt extinguishment | — | — | — | — | — | — | 3 | 3 | |||||||||||||||||||||||||
Depreciation and |
86 | 47 | 133 | 59 | 90 | 163 | 17 | 462 | |||||||||||||||||||||||||
ARO Expense | 11 | 8 | 19 | 2 | 2 | 2 | (2 | ) | 23 | ||||||||||||||||||||||||
Contract Amortization | 5 | 1 | 6 | — | — | 35 | — | 41 | |||||||||||||||||||||||||
Lease amortization | — | (5 | ) | (5 | ) | — | — | — | 1 | (4 | ) | ||||||||||||||||||||||
EBITDA | (159 | ) | 57 | (102 | ) | 924 | 64 | 426 | (66 | ) | 1,246 | ||||||||||||||||||||||
Adjustment to reflect NRG |
2 | 12 | 14 | (12 | ) | 7 | 67 | — | 76 | ||||||||||||||||||||||||
Acquisition-related |
— | — | — | 3 | — | 2 | 1 | 6 | |||||||||||||||||||||||||
Reorganization costs | 4 | 3 | 7 | 4 | 3 | — | 29 | 43 | |||||||||||||||||||||||||
Deactivation costs | — | 10 | 10 | — | — | — | 6 | 16 | |||||||||||||||||||||||||
Gain on sale of business | — | — | — | — | 1 | — | (14 | ) | (13 | ) | |||||||||||||||||||||||
Other non recurring charges | 26 | 5 | 31 | 7 | 1 | (3 | ) | 33 | 69 | ||||||||||||||||||||||||
Impairments | — | 74 | 74 | — | — | — | — | 74 | |||||||||||||||||||||||||
Market to market (MtM) |
282 | 28 | 310 | (440 | ) | 5 | — | — | (125 | ) | |||||||||||||||||||||||
Adjusted EBITDA | 155 | 189 | 344 | 486 | 81 | 492 | (11 | ) | 1,392 | ||||||||||||||||||||||||
1
YTD Second Quarter 2018 condensed financial information by Operating Segment:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | |||||||||||||||||||||||||
Operating revenues | 1,142 | 696 | 1,838 | 3,304 | 204 | 567 | (451 | ) | 5,462 | ||||||||||||||||||||||||
Cost of sales | 618 | 242 | 860 | 2,427 | 5 | 37 | (421 | ) | 2,908 | ||||||||||||||||||||||||
Economic gross margin | 524 | 454 | 978 | 877 | 199 | 530 | (30 | ) | 2,554 | ||||||||||||||||||||||||
Operations & maintenance and |
353 | 227 | 580 | 147 | 64 | 127 | (30 | ) | 888 | ||||||||||||||||||||||||
Selling, marketing, general & |
59 | 47 | 106 | 241 | 22 | 13 | 20 | 402 | |||||||||||||||||||||||||
Other expense/(income) 3 | (43 | ) | (9 | ) | (52 | ) | 3 | 32 | (102 | ) | (9 | ) | (128 | ) | |||||||||||||||||||
Adjusted EBITDA | 155 | 189 | 344 | 486 | 81 | 492 | (11 | ) | 1,392 | ||||||||||||||||||||||||
1
2
Excludes deactivation costs of
3 Excludes
gain on sale of assets of
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
|||||||||||||||||||
Operating revenues | 5,343 | 28 | 91 | — | — | 5,462 | |||||||||||||||||||
Cost of operations | 2,705 | (13 | ) | 216 | — | — | 2,908 | ||||||||||||||||||
Gross margin | 2,638 | 41 | (125 | ) | — | — | 2,554 | ||||||||||||||||||
Operations & maintenance |
904 | — | — | (16 | ) | — | 888 | ||||||||||||||||||
Selling, marketing, general |
402 | — | — | — | — | 402 | |||||||||||||||||||
Other expense/(income) 1 | 978 | (848 | ) | — | — | (258 | ) | (128 | ) | ||||||||||||||||
Income/(Loss) from |
354 | 889 | (125 | ) | 16 | 258 | 1,392 | ||||||||||||||||||
1 Other adj. includes gain on sale of assets of
Appendix Table A-4: YTD Second Quarter 2017 Adjusted EBITDA
Reconciliation by Operating Segment
The following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to income/(loss) from continuing operations:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | |||||||||||||||||||||||||
Income/(Loss) from |
(105 | ) | 51 | (54 | ) | 311 | (77 | ) | 42 | (292 | ) | (70 | ) | ||||||||||||||||||||
Plus: | |||||||||||||||||||||||||||||||||
Interest expense, net | — | 17 | 17 | 3 | 48 | 163 | 235 | 466 | |||||||||||||||||||||||||
Income tax | — | 2 | 2 | (9 | ) | (10 | ) | 7 | 9 | (1 | ) | ||||||||||||||||||||||
Loss on debt extinguishment | — | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||||
Depreciation and amortization | 138 | 54 | 192 | 57 | 96 | 156 | 16 | 517 | |||||||||||||||||||||||||
ARO Expense | 7 | 6 | 13 | — | 1 | 2 | — | 16 | |||||||||||||||||||||||||
Contract Amortization | 8 | 2 | 10 | 1 | — | 34 | — | 45 | |||||||||||||||||||||||||
Lease amortization | (1 | ) | (4 | ) | (5 | ) | — | — | — | 1 | (4 | ) | |||||||||||||||||||||
EBITDA | 47 | 128 | 175 | 363 | 58 | 406 | (31 | ) | 971 | ||||||||||||||||||||||||
Adjustment to reflect NRG |
21 | 12 | 33 | (6 | ) | (10 | ) | 47 | 1 | 65 | |||||||||||||||||||||||
Acquisition-related |
— | — | — | — | — | 2 | (1 | ) | 1 | ||||||||||||||||||||||||
Deactivation costs | — | 1 | 1 | — | — | — | 4 | 5 | |||||||||||||||||||||||||
Other non recurring charges | (23 | ) | (3 | ) | (26 | ) | — | 8 | 5 | 19 | 6 | ||||||||||||||||||||||
Impairments | 42 | (1 | ) | 41 | — | 22 | — | — | 63 | ||||||||||||||||||||||||
MtM (gains)/losses on |
(17 | ) | (1 | ) | (18 | ) | (20 | ) | (3 | ) | — | — | (41 | ) | |||||||||||||||||||
Adjusted EBITDA | 70 | 136 | 206 | 337 | 75 | 460 | (8 | ) | 1,070 | ||||||||||||||||||||||||
1
YTD Second Quarter 2017 condensed financial information by Operating Segment:
($ in millions) |
Gulf |
East/ |
Generation | Retail | Renewables |
NRG |
Corp/ |
Total | ||||||||||||||||||||||||
Operating revenues | 1,103 | 694 |
1,797 |
2,939 | 210 | 543 | (536 | ) | 4,953 | |||||||||||||||||||||||
Cost of sales | 655 | 294 | 949 | 2,211 | 7 | 30 | (514 | ) | 2,683 | |||||||||||||||||||||||
Economic gross margin | 448 | 400 | 848 | 728 | 203 | 513 | (22 | ) | 2,270 | |||||||||||||||||||||||
Operations & maintenance |
298 | 229 | 527 | 159 | 73 | 132 | (9 | ) | 882 | |||||||||||||||||||||||
Selling, marketing, general |
61 | 50 | 111 | 225 | 27 | 12 | 106 | 481 | ||||||||||||||||||||||||
Other expense/(income) 3 | 19 | (15 | ) | 4 | 7 | 28 | (91 | ) | (111 | ) | (163 | ) | ||||||||||||||||||||
Adjusted EBITDA | 70 | 136 | 206 | 337 | 75 | 460 | (8 | ) | 1,070 | |||||||||||||||||||||||
1
2
Excludes deactivation costs of
3 Excludes
acquisition-related transaction & integration costs of
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
|||||||||||||||||||
Operating revenues | 5,083 | 29 | (159 | ) | — | — | 4,953 | ||||||||||||||||||
Cost of operations | 2,817 | (16 | ) | (118 | ) | — | — | 2,683 | |||||||||||||||||
Gross margin | 2,266 | 45 | (41 | ) | — | — | 2,270 | ||||||||||||||||||
Operations & maintenance |
887 | — | — | (5 | ) | — | 882 | ||||||||||||||||||
Selling, marketing, general |
481 | — | — | — | — | 481 | |||||||||||||||||||
Other expense/(income) 1 | 968 | (994 | ) | — | — | (137 | ) | (163 | ) | ||||||||||||||||
Income/(Loss) from |
(70 | ) | 1,039 | (41 | ) | 5 | 137 | 1,070 | |||||||||||||||||
1 Other adj. includes acquisition-related transaction &
integration costs of
Appendix Table A-5: 2018 and 2017 Three and Six Months Ended
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) | June 30, 2018 | June 30, 2017 | |||||||
Net Cash Provided by Operating Activities | 167 | 194 | |||||||
Reclassifying of net receipts for settlement of acquired
derivatives that include |
— | 1 | |||||||
Merger, integration and cost-to-achieve expenses (1) | 22 | — | |||||||
Return of capital from equity investments | (4 | ) | 5 | ||||||
Adjustment for change in collateral | 181 | 141 | |||||||
Adjusted Cash Flow from Operating Activities | 366 | 341 | |||||||
Maintenance CapEx, net | (59 | ) | (49 | ) | |||||
Environmental CapEx, net | — | (7 | ) | ||||||
Distributions to non-controlling interests | (48 | ) | (45 | ) | |||||
Free Cash Flow Before Growth Investments (FCFbG) | 259 | 240 | |||||||
(1) 2018 includes cost-to-achieve expenses associated with
the Transformation Plan announced on
Six Months Ended | |||||||||
($ in millions) | June 30, 2018 | June 30, 2017 | |||||||
Net Cash Provided by Operating Activities | 524 | 112 | |||||||
Reclassifying of net receipts for settlement of acquired
derivatives that include |
— | 2 | |||||||
Sale of Land | 3 | 8 | |||||||
Merger, integration and cost-to-achieve expenses (1) | 44 | — | |||||||
Return of capital from equity investments | (2 | ) | 18 | ||||||
Adjustment for change in collateral (2) | 18 | 268 | |||||||
Adjusted Cash Flow from Operating Activities | 587 | 408 | |||||||
Maintenance CapEx, net (3) | (123 | ) | (84 | ) | |||||
Environmental CapEx, net | — | (25 | ) | ||||||
Distributions to non-controlling interests | (98 | ) | (91 | ) | |||||
Free Cash Flow Before Growth Investments (FCFbG) | 366 | 208 | |||||||
(1) 2018 includes cost-to-achieve expenses associated with
the Transformation Plan announced on
(2) 2017
reflects change in NRG’s cash collateral balance as of 2Q2017 including
$79MM of collateral postings from deconsolidated affiliate (GenOn).
(3)
Includes insurance proceeds of
Appendix Table A-6: Second Quarter YTD 2018 Sources and Uses of
Liquidity
The following table summarizes the sources and uses
of liquidity through first quarter of 2018:
($ in millions) |
Six Months Ended |
||||
Sources: | |||||
Adjusted cash flow from operations | 587 | ||||
Convertible Note Issuance | 575 | ||||
NYLD revolver proceeds | 35 | ||||
Asset sales | 15 | ||||
NYLD equity issuance | 75 | ||||
Uses: | |||||
Growth investments and acquisitions, net | (210 | ) | |||
Debt Repayment, net of proceeds | (250 | ) | |||
Decrease in credit facility | (489 | ) | |||
Share repurchases | (500 | ) | |||
Deconsolidation of Ivanpah | (160 | ) | |||
Maintenance and environmental capex, net | (123 | ) | |||
Distributions to non-controlling interests | (98 | ) | |||
Collateral (1) | (53 | ) | |||
Cost-to-achieve expenses(2) | (69 | ) | |||
Common Stock Dividends | (19 | ) | |||
Other Investing and Financing | (38 | ) | |||
Change in Total Liquidity | (722 | ) | |||
(1) Excludes impact of Funds deposited by Counterparties
(2)
Includes capital expenditures associated with the Transformation
Plan
Appendix Table A-7: 2018 Adjusted EBITDA Guidance Reconciliation
The
following table summarizes the calculation of Adjusted EBITDA providing
reconciliation to net income:
2018 Adjusted EBITDA | |||||||||
($ in millions) | Low | High | |||||||
Income from Continuing Operations 1 | 410 | 610 | |||||||
Income Tax | 20 | 20 | |||||||
Interest Expense | 785 | 785 | |||||||
Depreciation, Amortization, Contract Amortization and ARO Expense | 1,180 | 1,180 | |||||||
Adjustment to reflect NRG share of adjusted EBITDA in |
135 | 135 | |||||||
Other Costs 2 | 270 | 270 | |||||||
Adjusted EBITDA | 2,800 | 3,000 | |||||||
1. For purposes of guidance, discontinued operations are excluded and
fair value adjustments related to derivatives are assumed to be zero.
2.
Includes deactivation costs and cost-to-achieve expenses
Appendix Table A-8: XOOM Annualized Adjusted EBITDA
The
following table summarizes the calculation of Adjusted EBITDA providing
reconciliation to net income:
($ in millions) | ||||
Income from Continuing Operations | 44 | |||
Income Tax | — | |||
Interest Expense | — | |||
Depreciation, Amortization, Contract Amortization and ARO Expense | 1 | |||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates |
— | |||
Other Costs | — | |||
Adjusted EBITDA | 45 | |||
Appendix Table A-9: 2018 FCFbG Guidance Reconciliation
The
following table summarizes the calculation of Free Cash Flow before
Growth providing reconciliation to Cash from Operations:
|
2018 | ||||
($ in millions) | Guidance | ||||
Adjusted EBITDA | $2,800 - $3,000 | ||||
Cash Interest payments | (785 | ) | |||
Cash Income tax | (40 | ) | |||
Collateral / working capital / other | 40 | ||||
Cash From Operations | $2,015 - $2,215 | ||||
Adjustments: Acquired Derivatives, Cost-to-Achieve, |
— | ||||
Adjusted Cash flow from operations | $2,015 - $2,215 | ||||
Maintenance capital expenditures, net | (210) - (240) | ||||
Environmental capital expenditures, net | (0) - (5) | ||||
Distributions to non-controlling interests | (220) - (250) | ||||
Free Cash Flow - before Growth | $1,550 - $1,750 | ||||
EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.
EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:
- EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
- EBITDA does not reflect changes in, or cash requirements for, working capital needs;
- EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
- Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG’s business. NRG compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only 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 accounting for derivatives, adjustments to exclude the Adjusted EBITDA related to the non-controlling interest, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
Management believes Adjusted EBITDA is useful to investors and other users of NRG's financial statements in evaluating its operating performance because it provides an additional tool to compare business performance across companies and across periods and adjusts for items that we do not consider indicative of NRG’s future operating performance. This measure is widely used by debt-holders to analyze operating performance and debt service capacity and by equity investors to measure our operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.
Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration and related restructuring costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger, 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.
Free cash flow (before Growth) 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 as a measure of cash available for discretionary expenditures.
Free Cash Flow before Growth is utilized by Management in making decisions regarding the allocation of capital. Free Cash Flow before Growth 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 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.
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Source:
NRG Energy, Inc.
Media:
Marijke Shugrue, 609-524-5262
or
Investors:
Kevin
L. Cole, CFA, 609-524-4526