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Share Name | Share Symbol | Market | Type |
---|---|---|---|
NRG Energy Inc | NYSE:NRG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.87 | 2.49% | 77.00 | 77.68 | 74.95 | 75.50 | 4,253,129 | 01:00:00 |
Financial Highlights
Business and Operational Highlights
Financial Guidance and Capital Allocation Update
NRG Energy, Inc. (NYSE:NRG) today reported second quarter Adjusted EBITDA of $729 million1, with $338 million from NRG Business and NRG Renew combined5, $204 million from NRG Home Retail, and $187 million from NRG Yield. Year-to-date adjusted cash flow from operations totaled $678 million. Net loss for the first six months of 2015 was $145 million, or $0.43 per diluted common share compared to a net loss of $147 million, or $0.48 per diluted common share for the first six months of 2014.
“Our competitive retail business continues to lead the way, achieving record results in a low supply cost environment while our wholesale unit continues to deliver solid operational performance through a strongly hedged baseload position,” said David Crane, NRG’s Chief Executive Officer. “After a weather impeded start of the year, NRG Home Solar’s pace of customer bookings has us easily in the top four in the residential solar industry, with California still to come.”
Segment Results
Table 1: Adjusted EBITDA
($ in millions)
Three Months Ended
Six Months Ended Segment 6/30/15 6/30/14 6/30/15 6/30/14 Business (1)(2) $ 285 $ 301 $ 821 $ 896 Home Retail 204 157 370 272 Renew (1) 66 77 98 89 NRG Yield (1) 187 141 309 233 Corporate (13 ) 1 (29 ) 4 Adjusted EBITDA(3) $ 729 $ 677 $ 1,569 $ 1,494(1) In accordance with GAAP, 2014 results have been restated to include full impact of the assets inthe NRG Yield drop down transactions which closed on January 2, 2015 and June 30, 2014.
(2) See Appendices A-6 through A-9 for NRG Business regional details.
(3) See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations; excludes negativecontribution of $47 million and $87 million from Home Solar for the three and six months endedJune 30, 2015, respectively, and $6 million and $7 million for the three and six months endedJune 30, 2014, respectively.
Table 2: Net Income/(Loss)
($ in millions) Three Months Ended Six Months Ended Segment 6/30/15 6/30/14 6/30/15 6/30/14 Business (1) $ (1 ) $ 99 $ 28 $ 93 Home Retail 212 (50 ) 316 135 Home Solar (54 ) (7 ) (99 ) (9 ) Renew (1) (18 ) 2 (73 ) (63 ) NRG Yield (1) 41 42 25 68 Corporate (189 ) (166 ) (342 ) (371 ) Net Loss(2) $ (9 ) $ (80 ) $ (145 ) $ (147 )(1) In accordance with GAAP, 2014 results have been restated to include full impact of the assets inthe NRG Yield drop down transactions which closed on January 2, 2015 and June 30, 2014.
(2) Includes mark-to-market gains and losses of economic hedges.
NRG Business: Second quarter Adjusted EBITDA was $285 million; $16 million lower than in the second quarter 2014 primarily driven by:
NRG Home Retail: Second quarter Adjusted EBITDA was $204 million, $47 million higher than second quarter 2014 driven primarily by favorable supply costs, partially offset by an increase in operating costs associated with customer growth in Texas.
NRG Renew: Second quarter Adjusted EBITDA was $66 million, $11 million lower than in second quarter 2014 primarily due to lower generation by wind assets following the drop in wind resource availability in 2015 and increased distributed solar development costs, partially offset by the ramp up of Ivanpah as generation continues to increase year over year.
NRG Yield: Second quarter Adjusted EBITDA was $187 million, $46 million higher than in second quarter 2014 primarily due to the Alta Wind acquisition.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions) 6/30/15 3/31/15 12/31/14 Cash at NRG-Level $ 709 $ 786 $ 661 Revolver 1,409 1,424 1,367 NRG-Level Liquidity $ 2,118 $ 2,210 $ 2,028 Restricted cash 433 443 457 Cash at Non-Guarantor Subsidiaries 1,437 1,378 1,455 Total Liquidity $ 3,988 $ 4,031 $ 3,940NRG-level cash as of June 30, 2015, was $709 million, an increase of $48 million over the end of 2014, and $1,409 million was available under the Company’s credit facilities at the end of the current quarter. Total liquidity was $3,988 million including restricted cash and cash at non-guarantor subsidiaries (primarily GenOn and NRG Yield)6.
NRG Strategic Developments
Next Drop Down to NRG Yield
NRG Energy offered NRG Yield the opportunity to acquire a 75% stake in a portfolio of 12 wind projects totaling net 814 MW. The transaction is expected to result in approximately $35 million of Adjusted EBITDA and $20 million of CAFD on an annual run-rate basis7 to NRG Yield and is expected to close in the third quarter of 2015, subject to negotiation with, and approval by, NRG Yield Independent Directors.
Including this most recent offer and the residential and distributed generation solar partnerships with NRG Yield, NRG is targeting drop downs to NRG Yield over the second half of 2015 which are expected to result in an aggregate of $600 million in drop down proceeds, of which $200 million is expected to be available for incremental share repurchase capacity pursuant to the Company’s previously announced capital allocation program.
NRG Yield
On June 29, 2015, NRG Yield issued 28,198,000 shares of Class C common stock at $22.00 per share for net proceeds of $600 million. Additionally, NRG Yield issued $287.5 million of 3.25% convertible senior notes due 2020. The net proceeds of both of these issuances were used for the acquisition of a 25% interest in the Desert Sunlight Solar Farm for $2858 million, to repay a portion of the $491 million in debt associated with the Alta X and Alta XI wind facilities (in order to facilitate the tax equity financing transaction described below) and to repay outstanding indebtedness under NRG Yield’s revolving credit facility.
On June 30, 2015, NRG Yield closed a new tax equity facility in order to monetize production tax credits from the Alta Wind X and XI projects. This financing resulted in $119 million of cash proceeds after expenses and is expected to provide ongoing annual cash payments indexed to and limited by the projects’ wind production levels during the course of the tax equity investor’s investment holding period. Proceeds from this transaction and a portion of the proceeds from the recently completed equity and debt offerings were utilized to repay the entire $491 million of outstanding project debt associated with the Alta X and Alta XI wind facilities.
By 2016, the Desert Sunlight acquisition and the Alta X and Alta XI debt repayment and tax equity financing arrangement are expected to increase both the annual run-rate EBITDA by approximately $45 million and CAFD by approximately $50 million, including $9 million for debt service associated with the recently issued convertible senior notes.
NRG Home Solar
While the strong sales momentum positions the Company for robust growth over the balance of the year, NRG is revising its expectations for NRG Home Solar with a negative EBITDA contribution of $100 million to $175 million, due primarily to an increase in expenses associated with positioning NRG Home Solar in certain key residential solar markets, including a comprehensive sales and marketing push into the large and fast-growing California market set to start in August.
In advance of NRG Home Solar’s push into California, investments across the platform are yielding strong results. While overall bookings and deployments for the first half of 2015 lag original expectations, June sales exceeded March sales by nearly 90%.
Outlook for 2015
Driven by robust second quarter results and a significantly hedged baseload portfolio over the remainder of 2015, the Company is reaffirming its guidance range for fiscal year 2015. As in previous quarters, the Company’s guidance assumes normalized weather in its core merchant markets over the remainder of the year.
Table 4: 2015 Adjusted EBITDA and FCF before Growth Investments Guidance
8/4/15 5/8/15 ($ in millions) 2015 2015 Adjusted EBITDA (1) $3,200 –3,400 $3,200 –3,400 Interest payments (1,160) (1,160) Income tax (40) (40) Adjusted EBITDA from NRG Home Solar (175) (100) Working capital/other changes 250 250 Adjusted Cash Flow from Operations $2,075 – 2,275 $2,150 – 2,350 Maintenance capital expenditures, net (480)-(510) (480)-(510) Environmental capital expenditures, net (305)-(335) (305)-(335) Preferred dividends (10) (10) Distributions to non-controlling interests (160)-(170) (190)-(210) Free Cash Flow – before Growth Investments $1,100 – 1,300 $1,100 – 1,300(1) 2015 guidance excludes expected negative contribution of $175 million from NRG Home Solar.
2015 Capital Allocation Update
During the second quarter, NRG repurchased $107 million of its common stock at an average cost of $24.53 per share. Together with repurchases completed during the first quarter of 2015 under the December 2014 common stock repurchase program, NRG has purchased a total of $186 million of NRG common stock since December 31, 2014.
Consistent with the capital allocation policy announced last quarter, NRG intends to allocate cash in an amount equal to the expected $600 million of proceeds from NRG Yield equally towards the repurchase of NRG shares, the repayment of corporate debt and the reinvestment in NRG Yield eligible projects of which $200 million is expected to be available for share repurchases. NRG currently has $51 million in remaining authorized buyback capacity.
On July 15, 2015, NRG declared a quarterly dividend on the Company's common stock of $0.145 per share, payable August 17, 2015, to stockholders of record as of August 3, 2015, representing $0.58 on an annualized basis.
The Company's common stock dividend and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.
Earnings Conference Call
On August 4, 2015, NRG will host a conference call at 8:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG’s website at http://www.nrgenergy.com and clicking on “Investors.” The webcast will be archived on the site for those unable to listen in real time.
About NRG
NRG is leading a customer-driven change in the U.S. energy industry by delivering cleaner and smarter energy choices, while building on the strength of the nation’s largest and most diverse competitive power portfolio. A Fortune 200 company, we create value through reliable and efficient conventional generation while driving innovation in solar and renewable power, electric vehicle ecosystems, carbon capture technology and customer-centric energy solutions. Our retail electricity providers serve almost 3 million residential and commercial customers throughout the country. More information is available at www.nrgenergy.com. Connect with NRG Energy on Facebook and follow us on Twitter @nrgenergy.
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 have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above 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 regulation of markets and of environmental emissions, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify or successfully implement acquisitions and repowerings, our ability to implement value enhancing improvements to plant operations and companywide processes, our ability to obtain federal loan guarantees, the inability to maintain or create successful partnering relationships with NRG Yield and other third parties, our ability to operate our businesses efficiently including NRG Yield, our ability to retain retail customers, our ability to realize value through our commercial operations strategy and the creation of NRG Yield, the ability to successfully integrate the businesses of acquired companies, the ability to realize anticipated benefits of acquisitions (including expected cost savings and other synergies) and the ability to sell assets to NRG Yield, Inc. or the risk that anticipated benefits may take longer to realize than expected and our ability to pay dividends and initiate share repurchases under our capital allocation plan, which 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 and free cash flow guidance are estimates as of August 4, 2015. These estimates are based on assumptions 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 Earnings Presentation should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at www.sec.gov.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June 30, Six months ended June 30,
(In millions, except for per share amounts)
2015 2014 2015 2014 Operating Revenues Total operating revenues $ 3,397 $ 3,621 $ 7,223 $ 7,107 Operating Costs and Expenses Cost of operations 2,434 2,828 5,496 5,565 Depreciation and amortization 396 386 791 721 Selling, general and administrative 291 257 554 479 Acquisition-related transaction and integration costs 3 40 13 52 Development activity expenses 41 21 75 40 Total operating costs and expenses 3,165 3,532 6,929 6,857 Gain on postretirement benefits curtailment and sale of assets — — 14 19 Operating Income 232 89 308 269 Other Income/(Expense) Equity in earnings of unconsolidated affiliates 8 14 5 21 Other income, net 4 5 23 16 Loss on debt extinguishment (7 ) (40 ) (7 ) (81 ) Interest expense (263 ) (274 ) (564 ) (529 ) Total other expense (258 ) (295 ) (543 ) (573 ) Loss Before Income Taxes (26 ) (206 ) (235 ) (304 ) Income tax benefit (17 ) (126 ) (90 ) (157 ) Net Loss (9 ) (80 ) (145 ) (147 )Less: Net income/(loss) attributable to noncontrolling interest and redeemable noncontrolling interests
5 17 (11 ) 6 Net Loss Attributable to NRG Energy, Inc. (14 ) (97 ) (134 ) (153 ) Dividends for preferred shares 5 3 10 5 Loss Available for Common Stockholders $ (19 ) $ (100 ) $ (144 ) $ (158 )Loss per Share Attributable to NRG Energy, Inc. Common Stockholders
Weighted average number of common shares outstanding — basic and diluted
333 337 335 331 Loss per Weighted Average Common Share — Basic and Diluted $ (0.06 ) $ (0.30 ) $ (0.43 ) $ (0.48 ) Dividends Per Common Share $ 0.14 $ 0.14 $ 0.29 $ 0.26NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (In millions) Net Loss $ (9 ) $ (80 ) $ (145 ) $ (147 ) Other Comprehensive Income/(Loss), net of tax Unrealized gain/(loss) on derivatives, net of income tax expense/(benefit) of $12, $(3), $6 and $(6) 16 (19 ) 4 (28 )Foreign currency translation adjustments, net of income tax
expense/(benefit) of $6, $2, $(1) and $4 9 (3 ) (2 ) 3Available-for-sale securities, net of income tax benefit of $(3), $(6),
$(7) and $(4) (3 ) 7 (4 ) 13Defined benefit plans, net of tax expense/(benefit) of $0, $(7), $4 and $(7)
(1 ) 10 6 12 Other comprehensive income/(loss) 21 (5 ) 4 — Comprehensive Income/(loss) 12 (85 ) (141 ) (147 )Less: Comprehensive income/(loss) attributable to noncontrolling interest and redeemable noncontrolling interests
12 12 (17 ) (3 ) Comprehensive Loss Attributable to NRG Energy, Inc. — (97 ) (124 ) (144 ) Dividends for preferred shares 5 3 10 5 Comprehensive Loss Available for Common Stockholders $ (5 ) $ (100 ) $ (134 ) $ (149 )NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2015 December 31, 2014(In millions, except shares)
(unaudited) ASSETS Current Assets Cash and cash equivalents $ 2,146 $ 2,116 Funds deposited by counterparties 33 72 Restricted cash 433 457 Accounts receivable — trade, less allowance for doubtful accounts of $19 and $23 1,413 1,322 Inventory 1,153 1,247 Derivative instruments 1,805 2,425 Cash collateral paid in support of energy risk management activities 299 187 Deferred income taxes 193 174 Renewable energy grant receivable, net 19 135 Prepayments and other current assets 516 447 Total current assets 8,010 8,582 Property, plant and equipment, net of accumulated depreciation of $8,611 and $7,890 22,304 22,367 Other Assets Equity investments in affiliates 1,077 771 Notes receivable, less current portion 65 72 Goodwill 2,555 2,574 Intangible assets, net of accumulated amortization of $1,506 and $1,402 2,428 2,567 Nuclear decommissioning trust fund 576 585 Derivative instruments 491 480 Deferred income taxes 1,454 1,406 Other non-current assets 1,405 1,261 Total other assets 10,051 9,716 Total Assets $ 40,365 $ 40,665NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) June 30, 2015 December 31, 2014(In millions, except shares)
(unaudited) LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Current portion of long-term debt and capital leases $ 636 $ 474 Accounts payable 1,080 1,060 Derivative instruments 1,638 2,054 Cash collateral received in support of energy risk management activities 33 72 Accrued expenses and other current liabilities 1,082 1,199Total current liabilities
4,469 4,859 Other Liabilities Long-term debt and capital leases 19,661 19,900 Nuclear decommissioning reserve 318 310 Nuclear decommissioning trust liability 311 333 Deferred income taxes 18 21 Derivative instruments 522 438 Out-of-market contracts, net of accumulated amortization of $613 and $562 1,193 1,244 Other non-current liabilities 1,527 1,574 Total non-current liabilities 23,550 23,820 Total Liabilities 28,019 28,679 2.822% convertible perpetual preferred stock 296 291 Redeemable noncontrolling interest in subsidiaries 33 19 Commitments and Contingencies Stockholders’ Equity Common stock 4 4 Additional paid-in capital 8,365 8,327 Retained earnings 3,346 3,588 Less treasury stock, at cost — 86,245,318 and 78,843,552 shares, respectively (2,166 ) (1,983 ) Accumulated other comprehensive loss (170 ) (174 ) Noncontrolling interest 2,638 1,914 Total Stockholders’ Equity 12,017 11,676 Total Liabilities and Stockholders’ Equity $ 40,365 $ 40,665NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30, 2015 2014 (In millions) Cash Flows from Operating Activities Net loss $ (145 ) $ (147 ) Adjustments to reconcile net loss to net cash provided by operating activities: Distributions and equity in earnings of unconsolidated affiliates 40 39 Depreciation and amortization 791 721 Provision for bad debts 29 30 Amortization of nuclear fuel 23 20 Amortization of financing costs and debt discount/premiums (7 ) (9 ) Adjustment for debt extinguishment 7 21 Amortization of intangibles and out-of-market contracts 32 22 Amortization of unearned equity compensation 24 24 Changes in deferred income taxes and liability for uncertain tax benefits (98 ) (514 ) Changes in nuclear decommissioning trust liability (4 ) 6 Changes in derivative instruments 186 535 Changes in collateral deposits supporting energy risk management activities (112 ) (297 ) Loss on sale of emission allowances (6 ) 2 Gain on postretirement benefits curtailment and sale of assets (14 ) (19 ) Cash used by changes in other working capital (288 ) (64 ) Net Cash Provided by Operating Activities 458 370 Cash Flows from Investing Activities Acquisitions of businesses, net of cash acquired (30 ) (1,817 ) Capital expenditures (583 ) (507 ) Increase in restricted cash, net (3 ) (6 ) Decrease in restricted cash to support equity requirements for U.S. DOE funded projects 27 21 Decrease in notes receivable 7 2 Investments in nuclear decommissioning trust fund securities (354 ) (340 ) Proceeds from the sale of nuclear decommissioning trust fund securities 358 334 Proceeds from renewable energy grants and state rebates 61 429 Proceeds from sale of assets, net of cash disposed of 1 77 Cash proceeds to fund cash grant bridge loan payment — 57 Investments in unconsolidated affiliates (353 ) (22 ) Other 9 19 Net Cash Used by Investing Activities (860 ) (1,753 ) Cash Flows from Financing Activities Payment of dividends to common and preferred stockholders (102 ) (91 ) Payment for treasury stock (186 ) —Net receipts from/(payments for) settlement of acquired derivatives that include
financing elements 91 (167 ) Proceeds from issuance of long-term debt 629 3,886 Contributions to, net of distributions from, noncontrolling interest in subsidiaries 670 10 Proceeds from issuance of common stock 1 8 Payment of debt issuance costs (12 ) (43 ) Payments for short and long-term debt (662 ) (2,969 ) Net Cash Provided by Financing Activities 429 634 Effect of exchange rate changes on cash and cash equivalents 3 (24 ) Net Increase/(Decrease) in Cash and Cash Equivalents 30 (773 ) Cash and Cash Equivalents at Beginning of Period 2,116 2,254 Cash and Cash Equivalents at End of Period $ 2,146 $ 1,481Appendix Table A-1: Second Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss)
Home Home ($ in millions) Retail Solar Business Renew Yield Corp Total Net Income/(Loss) 212 (54) (1) (18) 41 (189) (9) Plus: Interest Expense, net - 1 17 23 44 175 260 Loss on Debt Extinguishment - - - - 7 - 7 Income Tax - - - (3) 4 (18) (17)Depreciation, Amortization and ARO Expense
32 6 235 64 58 8 403 Amortization of Contracts 1 - (19) 2 14 1 (1) EBITDA 245 (47) 232 68 168 (23) 643Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- - 11 (4) 14 9 30Integration & Transaction Costs
1 - - - 1 1 3 Deactivation costs - - 3 - - - 3 NRG Home Solar EBITDA - 47 - - - - 47Market to Market (MtM) (gains)/losses on economic hedges
(42) - 39 2 4 - 3 Adjusted EBITDA 204 - 285 66 187 (13) 729Appendix Table A-2: Second Quarter 2014 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net (loss)/income
Home Home ($ in millions) Retail Solar Business Renew Yield Corp Total Net (Loss)/Income (50) (7) 99 2 42 (166) (80) Plus: Interest Expense, net - - 16 30 35 187 268 Loss on Debt Extinguishment - - - - - 40 40 Income Tax - - - - 2 (128) (126) Depreciation Amortization and ARO Expense 32 1 239 51 54 11 388 Amortization of Contracts - - (8) - - - (8) EBITDA (18) (6) 346 83 133 (56) 482Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- - - (5) 8 1720
Integration & Transaction Costs, gain on sale
- - 2 - - 38 40 Deactivation Costs - - 3 - - - 3 Asset Write Offs and Impairments - - 5 - - 2 7 NRG Home Solar EBITDA - 6 - - - - 6MtM losses/(gains) on economic hedges
175 - (55) (1) - - 119 Adjusted EBITDA 157 - 301 77 141 1 677Appendix Table A-3: YTD Second Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss)
Home Home ($ in millions) Retail Solar Business Renew Yield Corp Total Net Income/(Loss) 316 (99 ) 28 (73 ) 25 (342 ) (145 ) Plus: Interest Expense, net - 1 35 54 114 354 558 Loss on Debt Extinguishment - - - - 7 - 7 Income Tax - - - (9 ) - (81 ) (90 ) Depreciation, Amortization and ARO Expense 63 11 475 128 113 15 805 Amortization of Contracts 1 - (31 ) - 26 1 (3 ) EBITDA 380 (87 ) 507 100 285 (53 ) 1,132Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- - 16 (4 ) 26 12 50Integration & Transaction Costs
- - - - 1 12 13 Deactivation costs - - 6 - - - 6 NRG Home Solar EBITDA - 87 - - - - 87Market to Market (MtM) (gains)/losses on economic hedges
(10 ) - 292 2 (3 ) - 281 Adjusted EBITDA 370 - 821 98 309 (29 ) 1,569Appendix Table A-4: YTD Second Quarter 2014 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss)
Home Home ($ in millions) Retail Solar Business Renew Yield Corp Total Net Income/(Loss) 135 (9 ) 93 (63 ) 68 (371 ) (147 ) Plus: Interest Expense, net 1 - 33 56 61 370 521 Loss on Debt Extinguishment - - - 1 - 80 81 Income Tax - - - - 5 (162 ) (157 ) Depreciation Amortization and ARO Expense 61 2 470 100 78 16 727 Amortization of Contracts - - (7 ) - 1 (1 ) (7 ) EBITDA 197 (7 ) 589 94 213 (68 ) 1,018Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- - (4 ) (5 ) 20 20 31Integration & Transaction Costs, gain on sale
- - (16 ) - - 50 34 Deactivation Costs - - 6 - - - 6 Asset Write Offs and Impairments - - 5 - - 2 7 Legal Settlement 4 - - - - - 4 NRG Home Solar EBITDA - 7 - - - - 7MtM losses on economic hedges
71 - 316 - - - 387 Adjusted EBITDA 272 - 896 89 233 4 1,494Appendix Table A-5: 2015 and 2014 YTD Second Quarter Adjusted Cash Flow from Operations Reconciliations
The following table summarizes the calculation of adjusted cash flow operating activities providing areconciliation to net cash provided by operating activities
Six months ended Six months ended ($ in millions) June 30, 2015 June 30, 2014 Net Cash Provided by Operating Activities 458 370 Adjustment for change in collateral 112 297Reclassifying of net receipts (payments) for settlement of acquired derivatives that include financing elements
91 (167 ) Add: Merger and integration expenses 17 64 Adjusted Cash Flow from Operating Activities 678 564 Maintenance CapEx, net* (189 ) (164 ) Environmental CapEx, net (127 ) (86 ) Preferred dividends (5 ) (5 ) Distributions to non-controlling interests (83 ) (23 ) Free Cash Flow – before Growth investments 274 286* Excludes merger and integration CapEx of $9 million in Q2 2015 and $11 million in Q2 2014
Appendix Table A-6: Second Quarter 2015 Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)
Gulf ($ in millions) East Coast West B2B Carbon 360 Total Net Income/(Loss) 98 (116 ) (11 ) 28 - (1 ) Plus: Interest Expense, net 17 - - - - 17 Depreciation, Amortization and ARO Expense 76 143 16 - - 235 Amortization of Contracts (18 ) - (2 ) 1 - (19 ) EBITDA 173 27 3 29 - 232Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- 12 2 - (3 ) 11 Deactivation costs 2 - 1 - - 3Market to Market (MtM) (gains)/losses on economic hedges
(31 ) 76 14 (20 ) - 39 Adjusted EBITDA 144 115 20 9 (3 ) 285Appendix Table A-7: Second Quarter 2014 Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net (loss)/income
($ in millions)
East Gulf Coast West B2B Carbon 360 Total Net (Loss)/Income (9 ) 144 32 (66 ) (2 ) 99 Plus: Interest Expense, net 16 - - - - 16 Depreciation Amortization and ARO Expense 72 143 21 2 1 239 Amortization of Contracts (10 ) 5 (3 ) - - (8 ) EBITDA 69 292 50 (64 ) (1 ) 346Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- 1 (5 ) 3 1 -Integration & Transaction Costs, gain on sale
2 - - - - 2 Deactivation Costs 1 - 2 - - 3 Asset Write Offs and Impairments - 5 - - - 5 MtM losses/(gains) on economic hedges 83 (210 ) (1 ) 73 - (55 ) Adjusted EBITDA 155 88 46 12 - 301Appendix Table A-8: YTD Second Quarter 2015 Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)
Gulf ($ in millions) East Coast West B2B Carbon 360 Total Net Income/(Loss) 186 (79 ) (35 ) (37 ) (7 ) 28 Plus: Interest Expense, net 35 - - - - 35 Depreciation, Amortization and ARO Expense 153 287 32 3 - 475 Amortization of Contracts (33 ) 2 (3 ) 3 - (31 ) EBITDA 341 210 (6 ) (31 ) (7 ) 507Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- 10 4 - 2 16 Deactivation costs 4 - 2 - - 6
Market to Market (MtM) losses on economic hedges
222 11 13 46 - 292 Adjusted EBITDA 567 231 13 15 (5 ) 821Appendix Table A-9: YTD Second Quarter 2014 Regional Adjusted EBITDA Reconciliation for NRG Business
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss)
($ in millions) EastGulf Coast
West B2B Carbon 360 Total Net Income/(Loss) 176 (156 ) 40 37 (4 ) 93 Plus: Interest Expense, net 33 - - - - 33 Depreciation Amortization and ARO Expense 142 287 33 7 1 470 Amortization of Contracts (16 ) 11 (5 ) 3 - (7 ) EBITDA 335 142 68 47 (3 ) 589Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates
- - (9 ) 2 3 (4 )Integration & Transaction Costs, gain on sale
7 (23 ) - - - (16 ) Deactivation Costs 2 - 4 - - 6 Asset Write Offs and Impairments - 5 - - - 5MtM losses/(gains) on economichedges
330 29 1 (44 ) - 316 Adjusted EBITDA 674 153 64 5 - 896Appendix Table A-10: Run-Rate 2015 Adjusted EBITDA and Cash Available for Distribution Reconciliation for NRG Yield
The following table summarizes the calculation of adjusted EBITDA and cash available for distribution to net income:
Alta X-XI Tax 75% interest of Desert Sunlight Equity, net of EME Wind Drop Run-Rate Corp Debt Down ($ in millions)Run-Rate9
Run-Rate10
Income/(Loss) before Tax 13 - (9 ) Plus: Interest Expense, net - - 10 Depreciation, Amortization, and ARO Expense - - 45Adjustments to reflect Yield’s pro-rata share of Adjusted
EBITDA from Unconsolidated Affiliates 32 - 1 Adjusted EBITDA 45 - 47 Pro-rata Adjusted EBITDA from unconsolidated affiliates (45 ) - (10 ) Cash distributions from unconsolidated affiliates 22 - 10 Tax Equity Proceeds - - 9 Distributions to non-controlling interest - (4 ) (7 ) Cash interest paid - 11 (11 ) Maintenance Capital expenditures - - (1 ) Principal amortization of indebtedness - 21 (17 ) Cash Available for Distribution 22 28 20Appendix Table A-11: YTD Second Quarter 2015 Sources and Uses of Liquidity
The following table summarizes the sources and uses of liquidity for YTD second quarter of 2015
($ in millions)Six months endedJune 30, 2015
Sources: Adjusted Cash Flow from Operations $ 678 Equity Proceeds, NRG Yield, net of fees 600 Debt Proceeds, NRG Yield Revolver 282 Debt Proceeds, NRG Yield Convertible Notes, net of fees 281 Tax Equity Financing, net of fees 119 Cash Grant Proceeds, growth projects 55 Increase in Credit Facility 42 Debt proceeds, other project debt financing 11 Cash Grant Proceeds, other solar 6 Uses: Debt Repayments 662 Maintenance and Environmental Capex, net 316 NYLD Investment in Desert Sunlight 285 Growth Investments and Acquisitions, net 211 Share Repurchases 186 Collateral Postings 112 Common and Preferred Stock Dividends 102 Distributions to Non-Controlling Entities 83 Other investing and financing activities 44 Merger and Integration-related payments 25 Change in Total Liquidity $ 48EBITDA 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:
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. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which we do not consider indicative of future operating performance. 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.
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 and integration related 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 and integration related 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 investments) is adjusted cash flow from operations less maintenance and environmental capital expenditures, net of funding, and preferred stock dividends 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.
Cash Available for Distribution (CAFD) is adjusted EBITDA plus cash dividends from unconsolidated affiliates, less maintenance capital expenditures, pro-rata adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in others assets. Management believes cash available for distribution is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors.
1 Excludes negative contribution from Home Solar of $47 million and $87 million for second quarter and first six months of 2015, respectively
2 Reflects NRG Yields pro-rata share of EBITDA and CAFD expected to be generated by the portfolio on an annual run-rate basis.
3 Excludes projected negative contribution of $175 million from NRG Home Solar
4 Based upon 1/3 of target of $600 million in 2015 drop down proceeds as part of previously announced capital allocation program
5 Includes Corporate segment
6 See Appendix A-11 for the YTD Second Quarter Sources and Uses of Liquidity detail.
7 Reflects NRG Yields pro-rata share of EBITDA and CAFD expected to be generated by the portfolio on an annual run-rate basis.
8 Subject to working capital adjustments.
9 Alta reflects interest and principal savings on debt extinguishment of $491 million of non-recourse debt a run rate basis
10 75% interest in 814 net MW of wind assets primarily acquired by NRG in the EME transaction, Adjusted EBITDA will be consolidated on NRG Yield, 75% pro-rata Adjusted EBITDA is approximately $35 million
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804005852/en/
NRG Energy, Inc.:Media:Karen Cleeve, 609-524-4608Marijke Shugrue, 609-524-5262orInvestors:Matthew Orendorff, 609-524-4526Lindsey Puchyr, 609-524-4527
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