NRG NRG Energy Inc

• Strong second quarter financial and operating performance resulting in GAAP Net Income of $738 million and Adjusted EBITDA of $935 million
• Completed comprehensive preventative maintenance program for ERCOT fleet, well-prepared going into summer season and beyond
• Announcing agreement to sell Airtron HVAC business at an accretive multiple
• Submitted applications to Texas Energy Fund for 1.5 GW of shovel-ready generation capacity
• Continued to execute on liability management and capital allocation priorities, including open market share repurchases of $176 million year to date

NRG Energy, Inc. (NYSE: NRG) today reported second quarter 2024 Net Income of $738 million. Adjusted EBITDA for the second quarter was $935 million, Cash Provided by Operating Activities was $1,056 million, and Free Cash Flow Before Growth Investments (FCFbG) was $663 million.

“NRG's business and financial outlook has never been stronger,” said Larry Coben, NRG Chair, President and Chief Executive Officer. “Our relentless focus on safe and reliable operations especially during peak summer and winter months, dedication to exceptional customer experiences, and disciplined execution of our strategy and capital allocation plans continue to position NRG for success.”

Consolidated Financial Results

Table 1:

 

 

Three Months Ended

 

Six Months Ended

($ in millions)

 

6/30/2024

 

6/30/2023

 

6/30/2024

 

6/30/2023

Net Income/(Loss)

 

$

738

 

$

308

 

$

1,249

 

$

(1,027

)

Cash Provided/(Used) by Operating Activities

 

$

1,056

 

$

570

 

 

1,323

 

 

(1,028

)

Adjusted EBITDA

 

$

935

 

$

819

 

$

1,784

 

$

1,465

 

Free Cash Flow Before Growth Investments (FCFbG)

 

$

663

 

$

425

 

$

623

 

$

628

 

NRG’s second quarter 2024 Adjusted EBITDA increased by $116 million year-over-year. The East and West segments experienced margin growth from both power and natural gas as well as improvements in customer counts. This was partially offset by lower Texas results, primarily a result of asset sales in 2023 and comprehensive preventative maintenance outages undertaken in the quarter to prepare the fleet for extensive summer operations.

With the completion of a comprehensive outage and preventative maintenance program, NRG's portfolio is well-positioned for the summer months, and the company is focused on delivering top-tier energy and smart home services for its customers.

2024 Capital Allocation

NRG is committed to its disciplined capital allocation principles and maintaining a strong balance sheet. In the second quarter of 2024, the Company continued to opportunistically repurchase shares in the open market as part of its $2.7 billion authorization to be executed through 2025. Through July 31, 2024, NRG has completed $176 million of its $825 million share repurchase target for 2024.

During the first quarter, NRG began repurchases of its 2.75% Convertible Senior Notes due 2048 as part of its overall objective of prudent and proactive liability management. In the second quarter, NRG repurchased an additional $251 million in principal of these notes, bringing the aggregate repurchase amount to $343 million or approximately 60% of the original issuance. For the remainder of the Convertible Senior Notes outstanding, NRG has purchased capped call options to fully hedge the settlement price. Finally, in the second quarter NRG also repaid $600 million in aggregate principal amount of its 3.75% Senior Secured First Lien Notes due 2024.

On July 19, 2024, NRG announced its Board of Directors declared a quarterly dividend on the Company's common stock of $0.4075 per share, or $1.63 per share on an annualized basis. The dividend is payable on August 15, 2024, to stockholders of record as of August 1, 2024.

NRG's share repurchase program and common stock dividend are subject to maintaining satisfactory credit metrics, available capital, market conditions, and compliance with associated laws and regulations. The timing and amount of any shares of NRG’s common stock repurchased under the share repurchase authorization will be determined by NRG’s management based on market conditions and other factors. NRG will only repurchase shares when management believes it would not jeopardize the Company’s ability to maintain satisfactory credit ratings.

Strategic Developments

Airtron HVAC Sale

On August 3, 2024 the Company entered into a definitive agreement to sell its Airtron HVAC business unit for $500 million, subject to standard purchase price adjustments. Airtron is a leading installer of HVAC systems for residential new construction homes and was acquired as part of the Direct Energy acquisition in 2021. The opportunistic divestiture at an accretive 8.6x multiple on 2023 Adjusted EBITDA will provide additional capital available for allocation in 2024. The transaction is subject to regulatory approval under the Hart Scott Rodino Act and is expected to close by the end of 2024.

Texas Energy Fund

NRG has submitted applications to the Texas Energy Fund to request funding for three prospective brownfield development opportunities, totaling 1.5 GW of flexible, natural-gas generation in ERCOT. NRG's projects are shovel-ready, and assuming timely TEF approval, are expected to be completed for commercial operations between 2026 and 2028.

14th Annual Sustainability Report

NRG released its 2023 Sustainability Report, its 14th year of reporting, providing an update on the its commitment to people, environmental stewardship, and governance.

Segments Results

Table 2: Net Income/(Loss)

($ in millions)

 

Three Months Ended

 

Six Months Ended

Segment

 

6/30/2024

 

6/30/2023

 

6/30/2024

 

6/30/2023

Texas

 

$

966

 

 

$

785

 

 

$

1,315

 

 

$

1,069

 

East

 

 

447

 

 

 

(101

)

 

 

1,028

 

 

 

(1,503

)

West/Services/Othera

 

 

(646

)

 

 

(353

)

 

 

(1,072

)

 

 

(531

)

Vivint Smart Homeb

 

$

(29

)

 

$

(23

)

 

$

(22

)

 

$

(62

)

Net Income/(Loss)

 

$

738

 

 

$

308

 

 

$

1,249

 

 

$

(1,027

)

a Includes Corporate segment

b Vivint Smart Home acquired in March 2023

Net Income for the second quarter of 2024 was $738 million, $430 million higher than the second quarter of 2023. This was primarily driven by higher unrealized non-cash mark-to-market gains on economic hedges in Texas in 2024 due to heat rate expansion in ERCOT, and losses in 2023 in the East due to declines in natural gas and power prices. This increase was partially offset by loss on debt extinguishment from the repurchase of the Company’s 2.75% Convertible Senior Notes and higher income tax expense. Certain hedge positions are required to be marked-to-market every period, while the customer contracts related to these items are not, resulting in temporary unrealized losses or gains on the economic hedges that are not reflective of the expected economics at future settlement.

Table 3: Adjusted EBITDA

($ in millions)

 

Three Months Ended

 

Six Months Ended

Segment

 

6/30/2024

 

6/30/2023

 

6/30/2024

 

6/30/2023

Texas

 

$

452

 

$

504

 

$

671

 

$

758

East

 

 

209

 

 

77

 

 

560

 

 

391

West/Services/Othera

 

 

73

 

 

21

 

 

129

 

 

26

Vivint Smart Homeb

 

$

201

 

$

217

 

$

424

 

$

290

Adjusted EBITDA

 

$

935

 

$

819

 

$

1,784

 

$

1,465

a Includes Corporate segment

b Vivint Smart Home acquired in March 2023

Texas: Second quarter Adjusted EBITDA was $452 million, $52 million lower than the second quarter of 2023. This decrease was a result of asset sales in 2023 and the impact of an extended planned preventative maintenance program to ensure summer reliability, partially offset by gains in customer volumes from increased customer counts and favorable impact from weather.

East: Second quarter Adjusted EBITDA was $209 million, $132 million higher than the second quarter of 2023. This increase was driven by lower retail supply costs for power and natural gas and increased customer counts.

West/Services/Other: Second quarter Adjusted EBITDA was $73 million, $52 million higher than the second quarter of 2023. This increase was primarily driven by lower retail power supply costs and margin expansion at Cottonwood.

Vivint Smart Home: Second quarter Adjusted EBITDA was $201 million, $16 million lower than the second quarter of 2023. The decrease is attributable to guided increases in amortization of fulfillment expenses relating to the acquisition of Vivint by NRG. Absent this change, Adjusted EBITDA would have shown an increase year-over-year, supported by 5% growth in subscriber count and 4% growth in service margin.

Liquidity and Capital Resources

Table 4: Corporate Liquidity

($ in millions)

 

6/30/24

 

12/31/23

Cash and Cash Equivalents

 

$

376

 

$

541

Restricted Cash

 

 

16

 

 

24

Total

 

 

392

 

 

565

Total Revolving Credit Facility and collective collateral facilities

 

 

4,950

 

 

4,278

Total Liquidity, excluding collateral deposited by counterparties

 

$

5,342

 

$

4,843

As of June 30, 2024, NRG's unrestricted cash was $376 million and $5.0 billion was available under the Company’s credit facilities. Total liquidity increased to $5.3 billion, increasing $499 million from the end of 2023, largely due to the $900 million increase in the Receivables Facility in the second quarter of 2024 and partly offset by the expiry of the $150 million Repurchase Facility.

Reaffirming 2024 Guidance

NRG is reaffirming its Adjusted EBITDA and FCFbG guidance for 2024 as set forth below.

Table 5: Adjusted EBITDA, Cash Provided by Operating Activities, and FCFbG Guidancea

 

 

2024

($ in millions)

 

Guidance

Adjusted EBITDA

 

$3,300 - $3,550

Cash Provided by Operating Activities

 

$1,825 - $2,075

FCFbG

 

$1,825 - $2,075

a Adjusted EBITDA and FCFbG are non-GAAP financial measures; see Appendix Table A-8 for GAAP Reconciliation. Adjusted EBITDA excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year. Cash Provided by Operating Activities does not include changes in collateral deposits in support of risk management activities which are primarily associated with fair value adjustments related to derivatives

Earnings Conference Call

On August 8, 2024, NRG will host a conference call at 9:00 a.m. Eastern (8:00 a.m. Central) to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials through the investor relations website under “presentations and webcasts” on investors.nrg.com. The webcast will be archived on the site for those unable to listen in real-time.

About NRG

NRG Energy is a leading energy and home services company powered by people and our passion for a smarter, cleaner, and more connected future. A Fortune 500 company operating in the United States and Canada, NRG delivers innovative solutions that help people, organizations, and businesses achieve their goals while also advocating for competitive energy markets and customer choice. More information is available at www.nrg.com. Connect with NRG on Facebook and LinkedIn, and follow us on X (formerly known as Twitter), @nrgenergy.

Forward-Looking Statements

In addition to historical information, the information presented in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, general economic conditions, hazards customary in the power industry, weather conditions and extreme weather events, competition in wholesale power, gas and smart home markets, the volatility of energy and fuel prices, failure of customers or counterparties to perform under contracts, changes in the wholesale power and gas markets, changes in government or market regulations, the condition of capital markets generally and NRG’s ability to access capital markets, NRG’s ability to execute its supply strategy, risks related to data privacy, cyberterrorism and inadequate cybersecurity, the loss of data, unanticipated outages at NRG’s generation facilities, NRG’s ability to achieve its net debt targets, adverse results in current and future litigation, complaints, product liability claims and/or adverse publicity, failure to identify, execute or successfully implement acquisitions or asset sales, risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process, the impact of changes in consumer spending patterns, consumer preferences, geopolitical tensions, demographic trends, supply chain disruptions, NRG’s ability to implement value enhancing improvements to plant operations and company wide processes, NRG’s ability to achieve or maintain investment grade credit metrics, NRG’s ability to proceed with projects under development or the inability to complete the construction of such projects on schedule or within budget, the inability to maintain or create successful partnering relationships, NRG’s ability to operate its business efficiently, NRG’s ability to retain customers, the ability to successfully integrate businesses of acquired companies, including Vivint Smart Home, NRG’s ability to realize anticipated benefits of transactions (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, NRG’s ability to execute its capital allocation plan. Achieving investment grade credit metrics is not an indication of or guarantee that the Company will receive investment grade credit ratings. Debt and share repurchases may be made from time to time subject to market conditions and other factors, including as permitted by United States securities laws. Furthermore, any common stock dividend is subject to available capital and market conditions.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The Adjusted EBITDA, cash provided by operating activities and Free Cash Flow before Growth guidance are estimates as of August 8, 2024. These estimates are based on assumptions NRG believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at www.sec.gov. For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in NRG’s most recent Annual Report on Form 10-K, and in subsequent SEC filings. NRG’s forward-looking statements speak only as of the date of this communication or as of the date they are made.

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three months ended June 30,

 

Six months ended June 30,

(In millions, except for per share amounts)

2024

 

2023

 

2024

 

2023

Revenue

 

 

 

 

 

 

 

Revenue

$

6,659

 

 

$

6,348

 

 

$

14,088

 

 

$

14,070

 

Operating Costs and Expenses

 

 

 

 

 

 

 

Cost of operations (excluding depreciation and amortization shown below)

 

4,356

 

 

 

4,962

 

 

 

10,041

 

 

 

13,740

 

Depreciation and amortization

 

285

 

 

 

315

 

 

 

553

 

 

 

505

 

Impairment losses

 

15

 

 

 

—

 

 

 

15

 

 

 

—

 

Selling, general and administrative costs

 

592

 

 

 

522

 

 

 

1,183

 

 

 

948

 

Acquisition-related transaction and integration costs

 

6

 

 

 

22

 

 

 

15

 

 

 

93

 

Total operating costs and expenses

 

5,254

 

 

 

5,821

 

 

 

11,807

 

 

 

15,286

 

Gain on sale of assets

 

5

 

 

 

3

 

 

 

1

 

 

 

202

 

Operating Income/(Loss)

 

1,410

 

 

 

530

 

 

 

2,282

 

 

 

(1,014

)

Other Income/(Expense)

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

4

 

 

 

5

 

 

 

7

 

 

 

10

 

Other income, net

 

3

 

 

 

13

 

 

 

33

 

 

 

29

 

Loss on debt extinguishment

 

(202

)

 

 

—

 

 

 

(260

)

 

 

—

 

Interest expense

 

(163

)

 

 

(151

)

 

 

(315

)

 

 

(299

)

Total other expense

 

(358

)

 

 

(133

)

 

 

(535

)

 

 

(260

)

Income/(Loss) Before Income Taxes

 

1,052

 

 

 

397

 

 

 

1,747

 

 

 

(1,274

)

Income tax expense/(benefit)

 

314

 

 

 

89

 

 

 

498

 

 

 

(247

)

Net Income/(Loss)

$

738

 

 

$

308

 

 

$

1,249

 

 

$

(1,027

)

Less: Cumulative dividends attributable to Series A Preferred Stock

 

17

 

 

 

17

 

 

 

34

 

 

 

21

 

Net Income/(Loss) Available for Common Stockholders

$

721

 

 

$

291

 

 

$

1,215

 

 

$

(1,048

)

Income/(Loss) per Share

 

 

 

 

 

 

 

Weighted average number of common shares outstanding — basic

 

208

 

 

 

231

 

 

 

209

 

 

 

230

 

Income/(Loss) per Weighted Average Common Share — Basic

$

3.47

 

 

$

1.26

 

 

$

5.81

 

 

$

(4.56

)

Weighted average number of common shares outstanding — diluted

 

214

 

 

 

232

 

 

 

214

 

 

 

230

 

Income/(Loss) per Weighted Average Common Share —Diluted

$

3.37

 

 

$

1.25

 

 

$

5.68

 

 

$

(4.56

)

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

 

 

Three months ended June 30,

 

Six months ended June 30,

(In millions)

2024

 

2023

 

2024

 

2023

Net Income/(Loss)

$

738

 

 

$

308

 

$

1,249

 

 

$

(1,027

)

Other Comprehensive (Loss)/Income

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(2

)

 

 

6

 

 

(10

)

 

 

8

 

Defined benefit plans

 

(1

)

 

 

—

 

 

(2

)

 

 

(1

)

Other comprehensive (loss)/income

 

(3

)

 

 

6

 

 

(12

)

 

 

7

 

Comprehensive Income/(Loss)

$

735

 

 

$

314

 

$

1,237

 

 

$

(1,020

)

 

 

 

 

 

 

 

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

June 30, 2024

 

December 31, 2023

(In millions, except share data)

(Unaudited)

 

(Audited)

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

376

 

 

$

541

 

Funds deposited by counterparties

 

688

 

 

 

84

 

Restricted cash

 

16

 

 

 

24

 

Accounts receivable, net

 

3,402

 

 

 

3,542

 

Inventory

 

623

 

 

 

607

 

Derivative instruments

 

3,520

 

 

 

3,862

 

Cash collateral paid in support of energy risk management activities

 

384

 

 

 

441

 

Prepayments and other current assets

 

797

 

 

 

626

 

Total current assets

 

9,806

 

 

 

9,727

 

Property, plant and equipment, net

 

1,790

 

 

 

1,763

 

Other Assets

 

 

 

Equity investments in affiliates

 

45

 

 

 

42

 

Operating lease right-of-use assets, net

 

201

 

 

 

179

 

Goodwill

 

5,060

 

 

 

5,079

 

Customer relationships, net

 

1,946

 

 

 

2,164

 

Other intangible assets, net

 

1,467

 

 

 

1,763

 

Derivative instruments

 

2,625

 

 

 

2,293

 

Deferred income taxes

 

1,841

 

 

 

2,251

 

Other non-current assets

 

981

 

 

 

777

 

Total other assets

 

14,166

 

 

 

14,548

 

Total Assets

$

25,762

 

 

$

26,038

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities

 

 

 

Current portion of long-term debt and finance leases

$

262

 

 

$

620

 

Current portion of operating lease liabilities

 

91

 

 

 

90

 

Accounts payable

 

2,109

 

 

 

2,325

 

Derivative instruments

 

2,664

 

 

 

4,019

 

Cash collateral received in support of energy risk management activities

 

688

 

 

 

84

 

Deferred revenue current

 

779

 

 

 

720

 

Accrued expenses and other current liabilities

 

1,709

 

 

 

1,642

 

Total current liabilities

 

8,302

 

 

 

9,500

 

Other Liabilities

 

 

 

Long-term debt and finance leases

 

10,425

 

 

 

10,133

 

Non-current operating lease liabilities

 

144

 

 

 

128

 

Derivative instruments

 

1,435

 

 

 

1,488

 

Deferred income taxes

 

8

 

 

 

22

 

Deferred revenue non-current

 

906

 

 

 

914

 

Other non-current liabilities

 

919

 

 

 

947

 

Total other liabilities

 

13,837

 

 

 

13,632

 

Total Liabilities

 

22,139

 

 

 

23,132

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at June 30, 2024 and December 31, 2023, aggregate liquidation preference of $650; at June 30, 2024 and December 31, 2023

 

650

 

 

 

650

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 266,552,386 and 267,330,470 shares issued and 207,498,428 and 208,130,950 shares outstanding at June 30, 2024 and December 31, 2023, respectively

 

3

 

 

 

3

 

Additional paid-in-capital

 

3,229

 

 

 

3,416

 

Retained earnings

 

1,863

 

 

 

820

 

Treasury stock, at cost; 59,053,958 shares and 59,199,520 shares at June 30, 2024 and December 31, 2023, respectively

 

(2,019

)

 

 

(1,892

)

Accumulated other comprehensive loss

 

(103

)

 

 

(91

)

Total Stockholders' Equity

 

3,623

 

 

 

2,906

 

Total Liabilities and Stockholders' Equity

$

25,762

 

 

$

26,038

 

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six months ended June 30,

(In millions)

2024

 

2023

Cash Flows from Operating Activities

 

 

 

Net Income/(Loss)

$

1,249

 

 

$

(1,027

)

Adjustments to reconcile net income/(loss) to cash provided/(used) by operating activities:

 

 

 

Equity in and distributions from earnings of unconsolidated affiliates

 

(4

)

 

 

(9

)

Depreciation and amortization

 

553

 

 

 

505

 

Accretion of asset retirement obligations

 

3

 

 

 

5

 

Provision for credit losses

 

133

 

 

 

80

 

Amortization of nuclear fuel

 

—

 

 

 

26

 

Amortization of financing costs and debt discounts

 

21

 

 

 

31

 

Loss on debt extinguishment

 

260

 

 

 

—

 

Amortization of in-the-money contracts and emissions allowances

 

73

 

 

 

112

 

Amortization of unearned equity compensation

 

57

 

 

 

61

 

Net loss/(gain) on sale of assets and disposal of assets

 

8

 

 

 

(187

)

Impairment losses

 

15

 

 

 

—

 

Changes in derivative instruments

 

(1,384

)

 

 

1,515

 

Changes in current and deferred income taxes and liability for uncertain tax benefits

 

390

 

 

 

(282

)

Changes in collateral deposits in support of risk management activities

 

660

 

 

 

(1,355

)

Changes in nuclear decommissioning trust liability

 

—

 

 

 

2

 

Changes in other working capital

 

(711

)

 

 

(505

)

Cash provided/(used) by operating activities

$

1,323

 

 

$

(1,028

)

Cash Flows from Investing Activities

 

 

 

Payments for acquisitions of businesses and assets, net of cash acquired

 

(32

)

 

 

(2,498

)

Capital expenditures

 

(172

)

 

 

(324

)

Net purchases of emissions allowances

 

(11

)

 

 

(25

)

Investments in nuclear decommissioning trust fund securities

 

—

 

 

 

(185

)

Proceeds from the sale of nuclear decommissioning trust fund securities

 

—

 

 

 

180

 

Proceeds from sales of assets, net of cash disposed

 

11

 

 

 

229

 

Proceeds from insurance recoveries for property, plant and equipment, net

 

3

 

 

 

121

 

Cash used by investing activities

$

(201

)

 

$

(2,502

)

Cash Flows from Financing Activities

 

 

 

Proceeds from issuance of preferred stock, net of fees

 

—

 

 

 

635

 

Payments of dividends to preferred and common stockholders

 

(204

)

 

 

(174

)

Equivalent shares purchased in lieu of tax withholdings

 

(35

)

 

 

(16

)

Payments for share repurchase activity

 

(90

)

 

 

—

 

Net (payments)/receipts from settlement of acquired derivatives that include financing elements

 

(12

)

 

 

318

 

Net proceeds of Revolving Credit Facility and Receivable Securitization Facilities

 

—

 

 

 

500

 

Proceeds from issuance of long-term debt

 

875

 

 

 

731

 

Payments of debt issuance costs

 

(12

)

 

 

(22

)

Repayments of long-term debt and finance leases

 

(956

)

 

 

(10

)

Payments for debt extinguishment costs

 

(257

)

 

 

—

 

Proceeds from credit facilities

 

625

 

 

 

1,870

 

Repayments to credit facilities

 

(625

)

 

 

(1,670

)

Cash (used)/provided by financing activities

$

(691

)

 

$

2,162

 

Effect of exchange rate changes on cash and cash equivalents

 

—

 

 

 

3

 

Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash

 

431

 

 

 

(1,365

)

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period

 

649

 

 

 

2,178

 

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period

$

1,080

 

 

$

813

 

 

Appendix Table A-1: Second Quarter 2024 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income/(Loss):

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home

Corp/Elim

Total

Net Income/(Loss)

$

966

 

$

447

 

$

2

 

$

(29

)

$

(648

)

$

738

 

Plus:

 

 

 

 

 

 

Interest expense, net

 

1

 

 

2

 

 

9

 

 

49

 

 

86

 

 

147

 

Income tax

 

—

 

 

—

 

 

(6

)

 

(2

)

 

322

 

 

314

 

Loss on debt extinguishment

 

—

 

 

—

 

 

—

 

 

—

 

 

202

 

 

202

 

Depreciation and amortization

 

63

 

 

22

 

 

46

 

 

144

 

 

10

 

 

285

 

ARO Expense

 

3

 

 

(4

)

 

—

 

 

—

 

 

—

 

 

(1

)

Contract and emission credit amortization, net

 

2

 

 

(14

)

 

2

 

 

—

 

 

—

 

 

(10

)

EBITDA

 

1,035

 

 

453

 

 

53

 

 

162

 

 

(28

)

 

1,675

 

Stock-based compensation

 

7

 

 

3

 

 

1

 

 

16

 

 

—

 

 

27

 

Amortization of customer acquisition costs1

 

15

 

 

17

 

 

2

 

 

12

 

 

—

 

 

46

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

—

 

 

—

 

 

1

 

 

—

 

 

—

 

 

1

 

Acquisition and divestiture integration and transaction costs

 

—

 

 

—

 

 

—

 

 

2

 

 

6

 

 

8

 

Cost to achieve

 

—

 

 

—

 

 

—

 

 

—

 

 

8

 

 

8

 

Deactivation costs

 

—

 

 

4

 

 

1

 

 

—

 

 

—

 

 

5

 

Other and non-recurring charges

 

—

 

 

—

 

 

11

 

 

9

 

 

5

 

 

25

 

Impairments

 

—

 

 

—

 

 

15

 

 

—

 

 

—

 

 

15

 

Mark to market (MtM) (gains) on economic hedges

 

(605

)

 

(268

)

 

(2

)

 

—

 

 

—

 

 

(875

)

Adjusted EBITDA

$

452

 

$

209

 

$

82

 

$

201

 

$

(9

)

$

935

 

1 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized costs related to commissions and other costs related to securing the new customer

 

Second Quarter 2024 condensed financial information by Operating Segment:

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home

Corp/Elim

Total

Revenue1

$

2,763

$

2,473

$

894

 

$

467

$

(15

)

$

6,582

 

Cost of fuel, purchased power and other cost of sales2

 

1,853

 

2,029

 

709

 

 

66

 

(6

)

 

4,651

 

Economic gross margin

 

910

 

444

 

185

 

 

401

 

(9

)

 

1,931

 

Operations & maintenance and other cost of operations3

 

282

 

105

 

59

 

 

58

 

1

 

 

505

 

Selling, marketing, general and administrative4

 

176

 

130

 

66

 

 

142

 

(2

)

 

512

 

Other

 

—

 

—

 

(22

)

 

—

 

1

 

 

(21

)

Adjusted EBITDA

$

452

$

209

$

82

 

$

201

$

(9

)

$

935

 

1 Excludes MtM gain of $(84) million and contract amortization of $7 million

2 Includes TDSP expense, capacity and emission credits

3 Excludes deactivation costs of $5 million, stock-based compensation of $2 million, amortization of customer acquisition costs of $2 million and ARO expenses of $(1) million

4 Excludes amortization of customer acquisition costs of $44 million, stock-based compensation of $25 million, cost to achieve of $8 million, other and non-recurring charges of $2 million and acquisition and divestiture integration and transaction costs of $1 million

 

The following table reconciles the condensed financial information to Adjusted EBITDA:

 

($ in millions)

Condensed

Consolidated

Results of

Operations

Interest, tax,

depr.,

amort.

MtM

Deactivation

Other adj.2

Adjusted

EBITDA

Revenue

$

6,659

$

7

 

$

(84

)

$

—

 

$

—

 

$

6,582

 

Cost of operations (excluding depreciation and amortization shown below)1

 

3,843

 

17

 

 

791

 

 

—

 

 

—

 

 

4,651

 

Depreciation and Amortization

 

285

 

(285

)

 

—

 

 

—

 

 

—

 

 

—

 

Gross margin

 

2,531

 

275

 

 

(875

)

 

—

 

 

—

 

 

1,931

 

Operations & maintenance and other cost of operations

 

513

 

—

 

 

—

 

 

(5

)

 

(3

)

 

505

 

Selling, marketing, general & administrative

 

592

 

—

 

 

—

 

 

—

 

 

(80

)

 

512

 

Other

 

688

 

(461

)

 

—

 

 

—

 

 

(248

)

 

(21

)

Net Income/(Loss)

$

738

$

736

 

$

(875

)

$

5

 

$

331

 

$

935

 

1 Excludes operations & maintenance and other cost of operations of $513 million

2 Other adj. includes loss on debt extinguishment of $202 million, amortization of customer acquisition costs of $46 million, stock-based compensation of $27 million, other and non-recurring charges of $25 million, impairments of $15 million, acquisition and divestiture integration and transaction costs of $8 million, cost to achieve of $8 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $1 million and ARO expenses of $(1) million

 

Appendix Table A-2: Second Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income/(Loss):

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home

Corp/Elim

Total

Net Income/(Loss)

$

785

 

$

(101

)

$

(129

)

$

(23

)

$

(224

)

$

308

 

Plus:

 

 

 

 

 

 

Interest expense, net

 

3

 

 

(4

)

 

6

 

 

28

 

 

104

 

 

137

 

Income tax

 

—

 

 

1

 

 

1

 

 

—

 

 

87

 

 

89

 

Depreciation and amortization

 

73

 

 

30

 

 

23

 

 

180

 

 

9

 

 

315

 

ARO Expense

 

2

 

 

(2

)

 

(1

)

 

—

 

 

—

 

 

(1

)

Contract and emission credit amortization, net

 

3

 

 

(16

)

 

3

 

 

—

 

 

—

 

 

(10

)

EBITDA

 

866

 

 

(92

)

 

(97

)

 

185

 

 

(24

)

 

838

 

Stock-based compensation1

 

5

 

 

2

 

 

1

 

 

18

 

 

—

 

 

26

 

Amortization of customer acquisition costs2

 

12

 

 

11

 

 

1

 

 

4

 

 

—

 

 

28

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

—

 

 

—

 

 

4

 

 

—

 

 

—

 

 

4

 

Acquisition and divestiture integration and transaction costs3

 

—

 

 

—

 

 

—

 

 

7

 

 

16

 

 

23

 

Deactivation costs

 

—

 

 

6

 

 

3

 

 

—

 

 

—

 

 

9

 

(Gain) on sale of assets

 

—

 

 

(3

)

 

—

 

 

—

 

 

—

 

 

(3

)

Other and non-recurring charges

 

(45

)

 

1

 

 

(2

)

 

3

 

 

1

 

 

(42

)

Mark to market (MtM) (gains)/losses on economic hedges

 

(334

)

 

152

 

 

118

 

 

—

 

 

—

 

 

(64

)

Adjusted EBITDA

$

504

 

$

77

 

$

28

 

$

217

 

$

(7

)

$

819

 

1 Stock-based compensation excludes $3 million reflected in acquisition and divestiture integration and transaction costs

2 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized costs related to commissions and other costs related to securing the new customer

3 Includes stock-based compensation of $3 million

 

Second Quarter 2023 condensed financial information by Operating Segment:

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home

Corp/Elim

Total

Revenue1

$

2,515

$

2,458

 

$

870

 

$

444

 

$

(6

)

$

6,281

 

Cost of fuel, purchased power and other cost of sales2

 

1,587

 

2,144

 

 

742

 

 

41

 

 

(5

)

 

4,509

 

Economic gross margin

 

928

 

314

 

 

128

 

 

403

 

 

(1

)

 

1,772

 

Operations & maintenance and other cost of operations3

 

267

 

117

 

 

58

 

 

53

 

 

(1

)

 

494

 

Selling, marketing, general & administrative4

 

157

 

123

 

 

52

 

 

134

 

 

5

 

 

471

 

Other

 

—

 

(3

)

 

(10

)

 

(1

)

 

2

 

 

(12

)

Adjusted EBITDA

$

504

$

77

 

$

28

 

$

217

 

$

(7

)

$

819

 

1 Excludes MtM gain of $(75) million and contract amortization of $8 million

2 Includes TDSP expense, capacity and emission credits

3 Excludes other and non-recurring charges of $(45) million, ARO expense of $(1) million, deactivation costs of $9 million, stock-based compensation of $2 million and amortization of customer acquisition costs of $1 million

4 Excludes amortization of customer acquisition costs of $27 million and stock-based compensation of $24 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

$

6,348

$

8

 

$

(75

)

$

—

 

$

—

 

$

6,281

 

Cost of operations (excluding depreciation and amortization shown below)1

 

4,502

 

18

 

 

(11

)

 

—

 

 

—

 

 

4,509

 

Depreciation and amortization

 

315

 

(315

)

 

—

 

 

—

 

 

—

 

 

—

 

Gross margin

 

1,531

 

305

 

 

(64

)

 

—

 

 

—

 

 

1,772

 

Operations & maintenance and other cost of operations

 

460

 

—

 

 

—

 

 

(9

)

 

43

 

 

494

 

Selling, marketing, general & administrative

 

522

 

—

 

 

—

 

 

—

 

 

(51

)

 

471

 

Other

 

241

 

(226

)

 

—

 

 

—

 

 

(27

)

 

(12

)

Net Income/(Loss)

$

308

$

531

 

$

(64

)

$

9

 

$

35

 

$

819

 

1 Excludes operations & maintenance and other cost of operations of $460 million

2 Other adj. includes amortization of customer acquisition costs of $28 million, stock-based compensation of $26 million, acquisition and divestiture integration and transaction costs of $23 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $4 million, other and non-recurring charges of $(42) million, gain on sale of assets $(3) million and ARO expenses of $(1) million

 

Appendix Table A-3: YTD Second Quarter 2024 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income/(Loss):

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home

Corp/Elim

Total

Net Income/(Loss)

$

1,315

 

$

1,028

 

$

(58

)

$

(22

)

$

(1,014

)

$

1,249

 

Plus:

 

 

 

 

 

 

Interest expense, net

 

1

 

 

2

 

 

14

 

 

87

 

 

177

 

 

281

 

Income tax

 

—

 

 

(1

)

 

(21

)

 

—

 

 

520

 

 

498

 

Loss on debt extinguishment

 

—

 

 

—

 

 

—

 

 

—

 

 

260

 

 

260

 

Depreciation and amortization

 

130

 

 

45

 

 

70

 

 

288

 

 

20

 

 

553

 

ARO expense

 

4

 

 

(1

)

 

—

 

 

—

 

 

—

 

 

3

 

Contract and emission credit amortization, net

 

2

 

 

58

 

 

3

 

 

—

 

 

—

 

 

63

 

EBITDA

 

1,452

 

 

1,131

 

 

8

 

 

353

 

 

(37

)

 

2,907

 

Stock-based compensation1

 

14

 

 

7

 

 

2

 

 

31

 

 

—

 

 

54

 

Amortization of customer acquisition costs2

 

30

 

 

33

 

 

3

 

 

27

 

 

—

 

 

93

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

—

 

 

—

 

 

1

 

 

—

 

 

—

 

 

1

 

Acquisition and divestiture integration and transaction costs3

 

—

 

 

—

 

 

—

 

 

8

 

 

10

 

 

18

 

Cost to achieve4

 

—

 

 

—

 

 

—

 

 

—

 

 

17

 

 

17

 

Deactivation costs

 

—

 

 

9

 

 

2

 

 

—

 

 

—

 

 

11

 

Loss on sale of assets

 

4

 

 

—

 

 

—

 

 

—

 

 

—

 

 

4

 

Other and non-recurring charges

 

1

 

 

(1

)

 

12

 

 

5

 

 

(6

)

 

11

 

Impairments

 

—

 

 

—

 

 

15

 

 

—

 

 

—

 

 

15

 

Mark to market (MtM) (gains)/losses on economic hedges

 

(830

)

 

(619

)

 

102

 

 

—

 

 

—

 

 

(1,347

)

Adjusted EBITDA

$

671

 

$

560

 

$

145

 

$

424

 

$

(16

)

$

1,784

 

1 Stock-based compensation excludes $2 million reflected in cost to achieve and $1 million reflected in acquisition and divestiture integration and transaction costs

2 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized costs related to commissions and other costs related to securing the new customer

3 Includes stock-based compensation of $1 million

4 Includes stock-based compensation of $2 million

 

YTD Second Quarter 2024 condensed financial information by Operating Segment:

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home

Corp/Elim

Total

Revenue1

$

4,996

$

6,049

 

$

2,122

 

$

935

 

$

(21

)

$

14,081

 

Cost of fuel, purchased power and other cost of sales2

 

3,461

 

5,010

 

 

1,770

 

 

119

 

 

(12

)

 

10,348

 

Economic gross margin

 

1,535

 

1,039

 

 

352

 

 

816

 

 

(9

)

 

3,733

 

Operations & maintenance and other cost of operations3

 

514

 

208

 

 

113

 

 

112

 

 

1

 

 

948

 

Selling, general and administrative costs4

 

349

 

272

 

 

118

 

 

281

 

 

3

 

 

1,023

 

Other

 

1

 

(1

)

 

(24

)

 

(1

)

 

3

 

 

(22

)

Adjusted EBITDA

$

671

$

560

 

$

145

 

$

424

 

$

(16

)

$

1,784

 

1 Excludes MtM gain of $(24) million and contract amortization of $17 million

2 Includes TDSP expense, capacity and emission credits

3 Excludes deactivation costs of $11 million, stock-based compensation of $5 million, amortization of customer acquisition costs of $4 million, ARO expense of $3 million and other and non-recurring charges of $(1) million,

4 Excludes amortization of customer acquisition costs of $89 million, stock-based compensation of $49 million, cost to achieve of $17 million, other and non-recurring charges of $3 million and 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

$

14,088

$

17

 

$

(24

)

$

—

 

$

—

 

$

14,081

 

Cost of operations (excluding depreciation and amortization shown below)1

 

9,071

 

(46

)

 

1,323

 

 

—

 

 

—

 

 

10,348

 

Depreciation and amortization

 

553

 

(553

)

 

—

 

 

—

 

 

—

 

 

—

 

Gross margin

 

4,464

 

616

 

 

(1,347

)

 

—

 

 

—

 

 

3,733

 

Operations & maintenance and other cost of operations

 

970

 

—

 

 

—

 

 

(11

)

 

(11

)

 

948

 

Selling, general and administrative costs

 

1,183

 

—

 

 

—

 

 

—

 

 

(160

)

 

1,023

 

Other

 

1,062

 

(779

)

 

—

 

 

—

 

 

(305

)

 

(22

)

Net Income/(Loss)

$

1,249

$

1,395

 

$

(1,347

)

$

11

 

$

476

 

$

1,784

 

1 Excludes operations & maintenance and other cost of operations of $970 million

2 Other adj. includes loss on debt extinguishment of $260 million, amortization of customer acquisition costs of $93 million, stock-based compensation of $54 million, acquisition and divestiture integration and transaction costs of $18 million, cost to achieve of $17 million, impairments of $15 million, other and non-recurring charges of $11 million, loss on sale of assets $4 million, ARO expense of $3 million and NRG share of adjusted EBITDA in unconsolidated affiliates of $1 million

 

Appendix Table A-4: YTD Second Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income/(Loss):

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home1

Corp/Elim

Total

Net Income/(Loss)

$

1,069

 

$

(1,503

)

$

(433

)

$

(62

)

$

(98

)

$

(1,027

)

Plus:

 

 

 

 

 

 

Interest expense, net

 

3

 

 

(10

)

 

12

 

 

54

 

 

210

 

 

269

 

Income tax

 

—

 

 

1

 

 

(46

)

 

—

 

 

(202

)

 

(247

)

Depreciation and amortization

 

148

 

 

60

 

 

47

 

 

232

 

 

18

 

 

505

 

ARO expense

 

4

 

 

1

 

 

—

 

 

—

 

 

—

 

 

5

 

Contract and emission credit amortization, net

 

4

 

 

99

 

 

6

 

 

—

 

 

—

 

 

109

 

EBITDA

 

1,228

 

 

(1,352

)

 

(414

)

 

224

 

 

(72

)

 

(386

)

Stock-based compensation2

 

11

 

 

4

 

 

2

 

 

22

 

 

—

 

 

39

 

Amortization of customer acquisition costs3

 

26

 

 

22

 

 

2

 

 

4

 

 

—

 

 

54

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

—

 

 

—

 

 

8

 

 

—

 

 

—

 

 

8

 

Acquisition and divestiture integration and transaction costs4

 

—

 

 

—

 

 

—

 

 

37

 

 

58

 

 

95

 

Deactivation costs

 

—

 

 

10

 

 

6

 

 

—

 

 

—

 

 

16

 

(Gain) on sale of assets

 

—

 

 

(202

)

 

—

 

 

—

 

 

—

 

 

(202

)

Other and non-recurring charges

 

(44

)

 

2

 

 

—

 

 

3

 

 

—

 

 

(39

)

Mark to market (MtM) (gains)/losses on economic hedges

 

(463

)

 

1,907

 

 

436

 

 

—

 

 

—

 

 

1,880

 

Adjusted EBITDA

$

758

 

$

391

 

$

40

 

$

290

 

$

(14

)

$

1,465

 

1 Vivint Smart Home acquired in March 2023

2 Stock-based compensation excludes $23 million reflected in acquisition and divestiture integration and transaction costs

3 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized costs related to commissions and other costs related to securing the new customer

4 Includes stock-based compensation of $23 million

 

YTD Second Quarter 2023 condensed financial information by Operating Segment:

 

($ in millions)

Texas

East

West/Services/

Other

Vivint

Smart Home1

Corp/Elim

Total

Revenue2

$

4,549

 

$

6,610

 

$

2,177

 

$

592

 

$

(5

)

$

13,923

 

Cost of fuel, purchased power and other cost of sales3

 

2,954

 

 

5,744

 

 

1,927

 

 

52

 

 

(3

)

 

10,674

 

Economic gross margin

 

1,595

 

 

866

 

 

250

 

 

540

 

 

(2

)

 

3,249

 

Operations & maintenance and other cost of operations4

 

529

 

 

220

 

 

127

 

 

71

 

 

(2

)

 

945

 

Selling, marketing, general & administrative5

 

309

 

 

258

 

 

101

 

 

180

 

 

12

 

 

860

 

Other

 

(1

)

 

(3

)

 

(18

)

 

(1

)

 

2

 

 

(21

)

Adjusted EBITDA

$

758

 

$

391

 

$

40

 

$

290

 

$

(14

)

$

1,465

 

1 Vivint Smart Home acquired in March 2023

2 Excludes MtM gain of $(166) million and contract amortization of $19 million

3 Includes TDSP expense, capacity and emission credits

4 Excludes other and non-recurring charges of $(42) million, deactivation costs of $16 million, ARO expense of $5 million, amortization of customer acquisition costs of $3 million and stock-based compensation of $3 million

5 Excludes amortization of customer acquisition costs of $51 million, stock-based compensation of $36 million and acquisition and divestiture integration and

transaction costs of $1 million

 

The following table reconciles the condensed financial information to Adjusted EBITDA:

 

($ in millions)

Condensed

Consolidated

Results of

Operations

Interest, tax,

depr.,

amort.

MtM

Deactivation

Other adj.2

Adjusted

EBITDA

Revenue

$

14,070

 

$

19

 

$

(166

)

$

—

 

$

—

 

$

13,923

 

Cost of operations (excluding depreciation and amortization shown below)1

 

12,810

 

 

(90

)

 

(2,046

)

 

—

 

 

—

 

 

10,674

 

Depreciation and amortization

 

505

 

 

(505

)

 

—

 

 

—

 

 

—

 

 

—

 

Gross margin

 

755

 

 

614

 

 

1,880

 

 

—

 

 

—

 

 

3,249

 

Operations & maintenance and Other cost of operations

 

930

 

 

—

 

 

—

 

 

(16

)

 

31

 

 

945

 

Selling, marketing, general & administrative

 

948

 

 

—

 

 

—

 

 

—

 

 

(88

)

 

860

 

Other

 

(96

)

 

(22

)

 

—

 

 

—

 

 

97

 

 

(21

)

Net (Loss)/Income

$

(1,027

)

$

636

 

$

1,880

 

$

16

 

$

(40

)

$

1,465

 

1 Excludes operations & maintenance and other cost of operations of $930 million

2 Other adj. includes acquisition and divestiture integration and transaction costs of $95 million, amortization of customer acquisition costs of $54 million, stock-based compensation costs of $39 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $8 million, ARO expense of $5 million, gain on sale of assets of $(202) million and other and non-recurring charges of $(39) million

 

Appendix Table A-5: Three Months Ended June 30, 2024 and June 30, 2023 Free Cash Flow before Growth Investments (FCFbG)

 

The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash provided by operating activities:

 

 

 

Three Months Ended

($ in millions)

 

6/30/24

 

6/30/23

Adjusted EBITDA

 

$

935

 

 

$

819

 

Interest payments, net

 

 

(84

)

 

 

(114

)

Income tax

 

 

(98

)

 

 

(36

)

Net deferred revenue1

 

 

115

 

 

 

121

 

Amortization of customer fulfillment costs2

 

 

27

 

 

 

6

 

Gross capitalized contract costs3

 

 

(270

)

 

 

(302

)

Collateral / working capital / other assets and liabilities

 

 

431

 

 

 

76

 

Cash provided by operating activities

 

 

1,056

 

 

 

570

 

Net payments from settlement of acquired derivatives that include financing elements

 

 

(20

)

 

 

(18

)

Acquisition and divestiture integration and transaction costs4

 

 

18

 

 

 

19

 

Proceeds from sale of land

 

 

8

 

 

 

—

 

Encina site improvement

 

 

—

 

 

 

4

 

Adjustment for change in collateral

 

 

(371

)

 

 

(57

)

Nuclear decommissioning trust liability

 

 

—

 

 

 

(17

)

Effect of exchange rate changes on cash and cash equivalents

 

 

2

 

 

 

—

 

Adjusted cash provided by operating activities

 

 

693

 

 

 

501

 

Maintenance capital expenditures, net5

 

 

(71

)

 

 

(113

)

Environmental capital expenditures

 

 

(6

)

 

 

—

 

Cost of acquisition

 

 

47

 

 

 

37

 

Free Cash Flow before Growth Investments (FCFbG)

 

$

663

 

 

$

425

 

1 The cash impact of Net deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment sales and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit

2 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, are the income statement recognition of capitalized contract costs related to the sale and installation of equipment necessary for a customer to receive the Vivint Smart Home service

3 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit

4 Three months ended 6/30/24 includes $10 million Cost to achieve payments; three months ended 6/30/23 excludes $3 million non-cash stock-based compensation

5 Three months ended 6/30/23 includes W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment of $50 million

 

Appendix Table A-6: Six Months Ended June 30, 2024 and 2023 Free Cash Flow before Growth Investments (FCFbG)

 

The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash (used)/provided by operating activities:

 

 

 

Six Months Ended

($ in millions)

 

6/30/24

 

6/30/23

Adjusted EBITDA

 

$

1,784

 

 

$

1,465

 

Interest payments, net

 

 

(275

)

 

 

(205

)

Income tax

 

 

(106

)

 

 

(32

)

Net deferred revenue1

 

 

51

 

 

 

119

 

Amortization of customer fulfillment costs2

 

 

48

 

 

 

6

 

Gross capitalized contract costs3

 

 

(439

)

 

 

(357

)

Collateral/working capital/other assets and liabilities

 

 

260

 

 

 

(2,024

)

Cash provided by/(used by) operating activities

 

 

1,323

 

 

 

(1,028

)

Net (payments)/receipts from settlement of acquired derivatives that include financing elements

 

 

(12

)

 

 

318

 

Acquisition and divestiture integration and transaction costs4

 

 

35

 

 

 

75

 

Astoria fees

 

 

—

 

 

 

3

 

Proceeds from sale of land

 

 

8

 

 

 

—

 

Encina site improvement

 

 

—

 

 

 

7

 

Adjustment for change in collateral

 

 

(660

)

 

 

1,355

 

Nuclear decommissioning trust liability

 

 

—

 

 

 

(5

)

Effect of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

3

 

Adjusted cash provided by operating activities

 

 

694

 

 

 

728

 

Maintenance capital expenditures, net5

 

 

(123

)

 

 

(154

)

Environmental capital expenditures

 

 

(8

)

 

 

—

 

Cost of acquisition

 

 

60

 

 

 

54

 

Free Cash Flow before Growth Investments (FCFbG)

 

$

623

 

 

$

628

 

1 The cash impact of Net deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment sales and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit

2 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, are the income statement recognition of capitalized contract costs related to the sale and installation of equipment necessary for a customer to receive the Vivint Smart Home service

3 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit

4 Six months ended 6/30/24 includes $19 million Cost to achieve payments and excludes $2 million non-cash stock-based compensation; six months ended 6/30/23 excludes $20 million non-cash stock-based compensation

5 Six months ended 6/30/24 includes W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment of $3 million; six months ended 6/30/23 includes W.A. Parish Unit 8 and Limestone Unit 1 insurance recoveries related to property, plant and equipment of $121 million

 

Appendix Table A-7: Six Months Ended June 30, 2024 Sources and Uses of Liquidity

 

The following table summarizes the sources and uses of liquidity for the six months ended June 30, 2024:

 

($ in millions)

Six months ended

June 30, 2024

Sources:

 

Adjusted cash provided by operating activities

 

694

 

Proceeds from issuance of long-term debt

 

875

 

Change in availability under revolving credit facility and collective collateral facilities

 

672

 

Return of cash collateral paid in support of energy risk management activities

 

57

 

Proceeds from sales of assets, net of cash disposed

 

11

 

Uses:

 

Repayments of long-term debt and finance leases

 

(956

)

Payments for debt extinguishment costs

 

(257

)

Payments of dividends to preferred and common stockholders

 

(204

)

Maintenance capital expenditures, net1

 

(131

)

Payments for share repurchase activity

 

(90

)

Investments and integration capital expenditures

 

(38

)

Payments for shares repurchased in lieu of tax withholdings

 

(35

)

Acquisition and divestiture integration and transaction costs

 

(35

)

Payments for acquisitions of businesses and assets, net of cash acquired

 

(32

)

Payments of debt issuance costs

 

(12

)

Net purchases of emission allowances

 

(11

)

Other investing and financing

 

(9

)

Change in Total Liquidity

$

499

 

1 Includes $3 million of W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment

 

Appendix Table A-8: 2024 Guidance Reconciliations

 

The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to Net Income, and the calculation of FCFbG providing a reconciliation to Cash provided by operating activities:

 

 

2024

($ in millions)

 

Guidance

Net Income1

 

$

750 - 1,000

Interest expense, net

 

640

Income tax

 

345

Depreciation and amortization

 

1,075

ARO expense

 

25

Amortization of customer acquisition costs2

 

215

Stock-based compensation3

 

100

Acquisition and divestiture integration and transaction costs

 

55

Other4

 

95

Adjusted EBITDA

 

3,300 - 3,550

Interest payments, net

 

(600)

Income tax

 

(160)

Net deferred revenue5

 

190

Amortization of customer fulfillment costs6

 

130

Gross capitalized contract costs7

 

(830)

Working capital/other assets and liabilities8

 

(205)

Cash provided by operating activities9

 

1,825 - 2,075

Acquisition and other costs8

 

124

Adjusted cash provided by operating activities

 

1,949 - 2,199

Maintenance capital expenditures, net10

 

(240) - (260)

Environmental capital expenditures

 

(20) - (30)

Cost of acquisition

 

145

Free Cash Flow before Growth Investments (FCFbG)

 

$

1,825 - 2,075

1 For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero

2 Amortization of customer acquisition costs is the income statement recognition of capitalized costs related to commissions and other costs related to securing new customers. NRG amortization of customer acquisition costs, excluding Vivint, is expected to be $135 million and Vivint is expected to be $80 million

3 NRG stock-based compensation, excluding Vivint, is expected to be $40 million and Vivint is expected to be $60 million

4 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs, other non-recurring expenses, and does not include the adjustment for Loss on debt extinguishment which was $260 million as of June 30, 2024

5 The cash impact of Net deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit

6 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, are the income statement recognition of capitalized contract costs related to the sale and installation of equipment necessary for a customer to receive the Vivint Smart Home service

7 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation, and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit

8 Working capital / other assets and liabilities include payments for Acquisition and divestiture integration and transaction costs, which is adjusted in Acquisition and other costs

9 Excludes fair value adjustments related to derivatives and changes in collateral deposits in support of risk management activities

10 Includes W.A. Parish Unit 8 expected insurance recoveries related to property, plant and equipment

 

Appendix Table A-9: Actual Full Year 2023 Adjusted EBITDA Reconciliation for Airtron

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income:

 

($ in millions)

 

Airtron

(Unaudited)

Net Income

 

$

29

Plus:

 

 

Depreciation and amortization

 

 

28

EBITDA

 

 

57

Other costs

 

 

1

Adjusted EBITDA

 

$

58

 

EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.

EBITDA represents net income before interest expense (including loss on debt extinguishment), income taxes, depreciation and amortization, asset retirement obligation expenses, contract amortization consisting of amortization of power and fuel contracts and amortization of emission allowances. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:

• EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
• EBITDA does not reflect changes in, or cash requirements for, working capital needs;
• EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
• Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG’s business. NRG compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.

Adjusted EBITDA is presented as a further supplemental measure of operating performance. As NRG defines it, Adjusted EBITDA represents EBITDA excluding the impact of stock-based compensation, amortization of customer acquisition costs (primarily amortized commissions), impairment losses, deactivation costs, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from forward position of economic hedges, adjustments to exclude the Adjusted EBITDA related to the non-controlling interest, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items, plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.

Management believes Adjusted EBITDA is useful to investors and other users of NRG's financial statements in evaluating its operating performance because it provides an additional tool to compare business performance across companies and across periods and adjusts for items that we do not consider indicative of NRG’s future operating performance. This measure is widely used by debt-holders to analyze operating performance and debt service capacity and by equity investors to measure our operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.

Adjusted Cash provided by operating activities is a non-GAAP measure NRG provides to show Cash provided/(used) by operating activities with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration, related restructuring costs, changes in the nuclear decommissioning trust liability, and the impact of extraordinary, unusual or non-recurring items. The Company provides the reader with this alternative view of Cash provided/(used) by operating activities because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger, integration related restructuring costs as they are one time and unique in nature and do not reflect ongoing Cash Flows from Operating Activities and they are fully disclosed to investors. The company excludes changes in the nuclear decommissioning trust liability as these amounts are offset by changes in the decommissioning fund shown in Cash Flows from Investing Activities.

Free Cash Flow before Growth Investments is Adjusted Cash provided by operating activities less maintenance and environmental capital expenditures, net of funding and insurance recoveries related to property, plant and equipment, dividends from preferred instruments treated as debt by ratings agencies, and distributions to non-controlling interests and is used by NRG predominantly as a forecasting tool to estimate cash available for debt reduction and other capital allocation alternatives. The reader is encouraged to evaluate each of these adjustments and the reasons NRG considers them appropriate for supplemental analysis. Because we have mandatory debt service requirements (and other non-discretionary expenditures) investors should not rely on Free Cash Flow before Growth Investments as a measure of cash available for discretionary expenditures.

Free Cash Flow before Growth Investments is utilized by Management in making decisions regarding the allocation of capital. Free Cash Flow before Growth Investments is presented because the Company believes it is a useful tool for assessing the financial performance in the current period. In addition, NRG’s peers evaluate cash available for allocation in a similar manner and accordingly, it is a meaningful indicator for investors to benchmark NRG's performance against its peers. Free Cash Flow before Growth Investments is a performance measure and is not intended to represent Net Income/(Loss), Cash provided/(used) by operating activities (the most directly comparable U.S. GAAP measure), or liquidity and is not necessarily comparable to similarly titled measures reported by other companies.

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