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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 | |
---|---|---|---|---|---|---|---|---|
-1.10 | -1.32% | 82.55 | 84.44 | 81.44 | 84.09 | 3,775,635 | 01:00:00 |
Key Highlights
NRG Energy, Inc. (NYSE:NRG):
Financial Results
Three Months Ended Six Months Ended ($ in millions) 6/30/16 6/30/15 6/30/16 6/30/15 Net Loss (276 ) (9 ) (229 ) (145 ) Cash From Operations 319 198 873 458 Adjusted EBITDA2 779 681 1,592 1,482 Free Cash Flow (FCF) Before Growth Investments (29 ) (90 ) 220 274NRG Energy, Inc. (NYSE:NRG) today reported a second quarter net loss of $276 million. The net loss for the first six months of 2016 was $229 million, or $0.37 per diluted common share compared to a net loss of $145 million, or $0.43 per diluted common share for the first six months of 2015. Adjusted EBITDA for the three and six months ended June 30, 2016, was $779 million and $1,592 million, respectively. Year-to-date cash from operations totaled $873 million.
"During the second quarter, our integrated competitive power platform, unique in our sector, performed exceptionally well,” said Mauricio Gutierrez, NRG's President and Chief Executive Officer. “Our consistent performance continues to validate the strategic direction of our integrated approach, positioning us for market recovery while providing stability during periods of low commodity prices. While we execute our plan and simplify our value proposition, we remain focused on strengthening the balance sheet and increasing financial flexibility.”
1 Subject to working capital changes.2 For comparability, 2015 results have been restated to include the negative contribution from residential solar of $47 million and $87 million for the three and six months ended June 30, 2015.
Segment Results
Table 1: Net Loss
($ in millions) Three Months Ended Six Months Ended Segment 6/30/16 6/30/15 6/30/16 6/30/15 Generation (371 ) 3 (212 ) 32 Retail Mass 496 217 642 321 Renewables (1) (58 ) (6 ) (103 ) (57 ) NRG Yield (1) 58 38 60 18 Corporate (2) (401 ) (261 ) (616 ) (459 ) Net Loss (3) (276 ) (9 ) (229 ) (145 )(1) In accordance with GAAP, 2015 results have been restated to include full impact of the assets in the NYLD Drop Down transaction which closed on November 3, 2015.(2) Includes residential solar.(3) Includes mark-to-market gains and losses of economic hedges.
Table 2: Adjusted EBITDA
($ in millions) Three Months Ended Six Months Ended Segment 6/30/16 6/30/15 6/30/16 6/30/15 Generation (1) 302 293 735 834 Retail Mass 213 209 363 375 Renewables (2) 57 66 95 88 NRG Yield (2) 240 199 428 331 Corporate (3) (33 ) (86 ) (29 ) (146 ) Adjusted EBITDA (4) 779 681 1,592 1,482(1) See Appendices A-6 through A-9 for Generation regional Reg G reconciliations.(2) In accordance with GAAP, 2015 results have been restated to include full impact of the assets in the NYLD Drop Down transaction which closed on November 3, 2015.(3) 2016 includes residential solar, 2015 results have been restated to include negative contribution of $47 million and $87 million for the three and six months ended June 30, 2015, respectively.(4) See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations.
Generation: Second quarter Adjusted EBITDA was $302 million, $9 million higher than second quarter 2015 primarily driven by:
Retail Mass: Second quarter Adjusted EBITDA was $213 million, $4 million higher than second quarter 2015 driven by operating cost efficiencies and lower supply costs offset by lower rates to customers and the impact from milder weather.
Renewables: Second quarter Adjusted EBITDA was $57 million, $9 million lower than second quarter 2015 due primarily to unplanned outages at Ivanpah.
NRG Yield: Second quarter Adjusted EBITDA was $240 million, $41 million higher than second quarter 2015 due to increased wind production and the acquisitions of Desert Sunlight and Spring Canyon.
Corporate: Second quarter Adjusted EBITDA was $(33) million, $53 million better than second quarter 2015 due to reduced spend at residential solar, lower headcount and favorable trading results at BETM.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
6/30/16 12/31/15 Cash at NRG-Level (1) $600 $693 Revolver 1,329 1,373 NRG-Level Liquidity $1,929 $2,066 Restricted cash 413 414 Cash at Non-Guarantor Subsidiaries 789 825 Total Liquidity $3,131 $3,305(1)Includes $250 million of unrestricted cash held at Midwest Gen (a non-guarantor subsidiary) which can be distributed to NRG without limitation
NRG-Level cash as of June 30, 2016, was $600 million, a decrease of $93 million from the end of 2015, and $1.3 billion was available under the Company’s credit facilities at the end of the second quarter of 2016. Total liquidity was $3.1 billion, including restricted cash and cash at non-guarantor subsidiaries (primarily GenOn and NRG Yield).
NRG Strategic Developments
NRG entered into two transactions to realize the value of its remaining stake in CVSR for a total cash consideration of $180 million:
On July 12, 2016, GenOn completed the sale of Aurora for cash proceeds of $369 million, including $4 million in adjustments for the PJM base residual auction results and estimated working capital, which is subject to further adjustment, and NRG completed the sale of Rockford for cash proceeds of $56 million, including $1 million in adjustments for the PJM base residual auction results.
On May 26, 2016, the California Public Utilities Commission approved the resource adequacy purchase agreement between Southern California Edison and NRG for the construction of the 262 MW natural gas peaking Puente Power Project; the project has a targeted completion for the second quarter 2020.
3 Subject to working capital changes
2016 Guidance
NRG is reaffirming its guidance range for fiscal year 2016 with respect to Adjusted EBITDA and FCF before growth investments.
Table 4: 2016 Adjusted EBITDA and FCF before Growth Investments Guidance
($ in millions) 2016 Adjusted EBITDA $3,000 - 3,200 Cash Interest payments (1,090) Debt Extinguishment Cash Cost (100) Cash Income tax (40) Collateral / working capital / other 285 Cash From Operations $2,055 - 2,255 Adjustments: Acquired Derivatives, Cost-to-Achieve, Return of Capital Dividends, and Collateral (210) Adjusted Cash flow from operations $1,845 - 2,045 Maintenance capital expenditures, net (435) - (465) Environmental capital expenditures, net (285) - (315) Preferred dividends (2) Distributions to non-controlling interests (170) - (180) Free Cash Flow – before Growth Investments $1,000 – 1,200Capital Allocation Update
On June 13, 2016, NRG retired 100% of the outstanding shares of its $345 million 2.822% preferred stock for $226 million cash resulting in an annual dividend savings of $10 million.
Year to date, NRG has reduced its 2018 corporate debt maturities by 84% through a combination of debt reduction and maturity extensions. The company issued new Senior Notes due 2026 and 2027 totaling approximately $2.25 billion at an average coupon rate of 6.9% permitting it to seek to redeem all of its Senior Notes due 2020, and a portion of the notes due 2021 and to significantly reduce the outstanding balances of its remaining Senior Notes due 2018, 2022 and 2023. The company also extended the maturity of the $1.9 billion 2018 secured term loan facility to 2023 and extended the maturity of $2.2 billion of its secured revolving credit facility from 2018 to 2021.
Through June 30, 2016, NRG allocated $320 million of the $1.3 billion of 2016 NRG-level capital to debt repurchases, thereby reducing corporate debt by $337 million. Combined with the debt repurchases in 2015 and the planned redemption of a portion of 2020 and 2021 Senior Notes in September 2016, NRG will have retired $642 million4 of corporate debt resulting in an annual interest savings of $50 million. NRG expects to allocate approximately $439 million of 2016 capital toward further corporate debt reduction during the year and continues to maintain a reserve totaling $430 million which is expected to be used to retire a portion of its 2018 Senior Notes (currently $587 million outstanding).
On July 13, 2016, NRG declared a quarterly dividend on the company's common stock of $0.03 per share, payable August 15, 2016, to stockholders of record as of August 1, 2016, representing $0.12 on an annualized basis.
The company’s common stock dividend, debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.
4 Includes $246 million in 2015 at cash cost of $226 million, $337 million through June YTD 2016 at a cash cost of $375 million, and proforma for $59 million to be completed in September 2016 as part of the 2020/21 Senior Notes extension at a cash cost of $100 million following the issuance of the 2026/27 Senior Notes, extended revolver and 2023 term loan.
Earnings Conference Call
On August 9, 2016, NRG will host a conference call at 9:00 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.nrg.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 the leading integrated power company in the U.S., built on the strength of the nation’s largest and most diverse competitive electric generation portfolio and leading retail electricity platform. A Fortune 200 company, NRG creates value through best in class operations, reliable and efficient electric generation, and a retail platform serving residential and commercial customers. Working with electricity customers, large and small, we continually innovate, embrace and implement sustainable solutions for producing and managing energy. We aim to be pioneers in developing smarter energy choices and delivering exceptional service as our retail electricity providers serve almost 3 million residential and commercial customers throughout the country. More information is available at www.nrg.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 be 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, including wind and solar performance, 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, the ability for GenOn to continue as a going concern, 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 or debt 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 or debt repurchases are 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 9, 2016. These estimates are based on assumptions the company believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this Earnings press release should be considered in connection with information regarding risks and uncertainties that may affect NRG’s future results included in NRG’s filings with the Securities and Exchange Commission at www.sec.gov.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June 30, Six months ended June 30,(In millions, except for per share amounts)
2016 2015 2016 2015 Operating Revenues Total operating revenues $ 2,638 $ 3,400 $ 5,867 $ 7,229 Operating Costs and Expenses Cost of operations 1,756 2,436 3,945 5,509 Depreciation and amortization 309 396 622 791 Impairment losses 115 — 115 — Selling, general and administrative 265 296 520 551 Acquisition-related transaction and integration costs 5 3 7 13 Development activity expenses 18 37 44 71 Total operating costs and expenses 2,468 3,168 5,253 6,935 Gain on postretirement benefits curtailment — — — 14 Loss on sale of assets, net of gains (83 ) — (51 ) — Operating Income 87 232 563 308 Other Income/(Expense) Equity in earnings/(losses) of unconsolidated affiliates 4 8 (3 ) 5 Gain/(impairment loss) on investment 7 — (139 ) — Other income, net 8 4 26 23 Loss on debt extinguishment (80 ) (7 ) (69 ) (7 ) Interest expense (277 ) (263 ) (561 ) (564 ) Total other expense (338 ) (258 ) (746 ) (543 ) Loss Before Income Taxes (251 ) (26 ) (183 ) (235 ) Income tax expense/(benefit) 25 (17 ) 46 (90 ) Net Loss (276 ) (9 ) (229 ) (145 )Less: Net (loss)/income attributable to noncontrollinginterest and redeemable noncontrolling interests
(5 ) 5 (40 ) (11 ) Net Loss Attributable to NRG Energy, Inc. (271 ) (14 ) (189 ) (134 )Gain on redemption, net of dividends for preferredshares
(78 ) 5 (73 ) 10 Loss Available for Common Stockholders $ (193 ) $ (19 ) $ (116 ) $ (144 ) Loss per Share Attributable to NRG Energy, Inc. Common StockholdersWeighted average number of common sharesoutstanding — basic and diluted
315 333 315 335 Loss per Weighted Average Common Share — Basic and Diluted $ (0.61 ) $ (0.06 ) $ (0.37 ) $ (0.43 ) Dividends Per Common Share $ 0.03 $ 0.14 $ 0.18 $ 0.29NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 (In millions) Net Loss $ (276 ) $ (9 ) $ (229 ) $ (145 ) Other Comprehensive (Loss)/Income, net of tax Unrealized (loss)/gains on derivatives, net of income tax expense of $1, $12, $2 and $6 (3 ) 16 (35 ) 4 Foreign currency translation adjustments, net of income tax expense/(benefit) of $0 , $6, $0 and $(1) (3 ) 9 3 (2 ) Available-for-sale securities, net of income tax benefit of $0, $3, $0 and $7 (2 ) (3 ) 1 (4 ) Defined benefit plans, net of tax expense of $0, $0, $0 and $4 — (1 ) 1 6 Other comprehensive (loss)/income (8 ) 21 (30 ) 4 Comprehensive (Loss)/Income (284 ) 12 (259 ) (141 )Less: Comprehensive (loss)/income attributable tononcontrolling interest and redeemable noncontrollinginterests
(16 ) 12 (68 ) (17 ) Comprehensive Loss Attributable to NRG Energy, Inc. (268 ) — (191 ) (124 ) Gain on redemption, net of dividends for preferred shares (78 ) 5 (73 ) 10 Comprehensive Loss Available for Common Stockholders $ (190 ) $ (5 ) $ (118 ) $ (134 )NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2016 December 31, 2015(In millions, except shares)
(unaudited) ASSETS Current Assets Cash and cash equivalents $ 1,389 $ 1,518 Funds deposited by counterparties 44 106 Restricted cash 413 414 Accounts receivable — trade, less allowance for doubtful accounts of $20 and $21 1,251 1,157 Inventory 1,124 1,252 Derivative instruments 1,470 1,915 Cash collateral paid in support of energy risk management activities 218 568 Renewable energy grant receivable, net 36 13 Current assets held-for-sale 13 6 Prepayments and other current assets 406 442 Total current assets 6,364 7,391 Property, plant and equipment, net of accumulated depreciation of $6,107 and $5,761 18,382 18,732 Other Assets Equity investments in affiliates 882 1,045 Notes receivable, less current portion 25 53 Goodwill 999 999 Intangible assets, net of accumulated amortization of $1,650 and $1,525 2,180 2,310 Nuclear decommissioning trust fund 599 561 Derivative instruments 348 305 Deferred income taxes 175 167 Non-current assets held-for-sale 229 105 Other non-current assets 1,239 1,214 Total other assets 6,676 6,759 Total Assets $ 31,422 $ 32,882 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Current portion of long-term debt and capital leases $ 1,215 $ 481 Accounts payable 898 869 Derivative instruments 1,373 1,721 Cash collateral received in support of energy risk management activities 44 106 Current liabilities held-for-sale 2 2 Accrued expenses and other current liabilities 982 1,196 Total current liabilities 4,514 4,375 Other Liabilities Long-term debt and capital leases 17,893 18,983 Nuclear decommissioning reserve 334 326 Nuclear decommissioning trust liability 309 283 Deferred income taxes 42 19 Derivative instruments 539 493 Out-of-market contracts, net of accumulated amortization of $712 and $664 1,093 1,146 Non-current liabilities held-for-sale — 4 Other non-current liabilities 1,554 1,488 Total non-current liabilities 21,764 22,742 Total Liabilities 26,278 27,117 2.822% convertible perpetual preferred stock — 302Redeemable noncontrolling interest in subsidiaries
23 29 Commitments and Contingencies Stockholders’ Equity Common stock 4 4 Additional paid-in capital 8,306 8,296 Retained deficit (3,179 ) (3,007 ) Less treasury stock, at cost — 102,450,781 and 102,749,908 shares, respectively (2,406 ) (2,413 ) Accumulated other comprehensive loss (203 ) (173 ) Noncontrolling interest 2,599 2,727 Total Stockholders’ Equity 5,121 5,434 Total Liabilities and Stockholders’ Equity $ 31,422 $ 32,882NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30, 2016 2015 (In millions) Cash Flows from Operating Activities Net Loss $ (229 ) $ (145 ) Adjustments to reconcile net loss to net cash provided by operating activities: Distributions and equity in earnings of unconsolidated affiliates 32 40 Depreciation and amortization 622 791 Provision for bad debts 20 29 Amortization of nuclear fuel 26 23 Amortization of financing costs and debt discount/premiums 3 (7 ) Adjustment to loss on debt extinguishment 14 7 Amortization of intangibles and out-of-market contracts 41 32 Amortization of unearned equity compensation 16 24 Impairment losses 254 — Changes in deferred income taxes and liability for uncertain tax benefits 1 (98 ) Changes in nuclear decommissioning trust liability 13 (4 ) Changes in derivative instruments (25 ) 186 Changes in collateral deposits supporting energy risk management activities 350 (112 ) Proceeds from sale of emission allowances 47 — Loss/(gain) on sale of assets and postretirement benefits curtailment 43 (14 ) Cash used by changes in other working capital (355 ) (294 ) Net Cash Provided by Operating Activities 873 458 Cash Flows from Investing Activities Acquisitions of businesses, net of cash acquired (17 ) (30 ) Capital expenditures (622 ) (583 ) Decrease/(increase) in restricted cash, net 29 (3 ) (Increase)/decrease in restricted cash to support equity requirements for U.S. DOE funded projects (28 ) 27 (Increase)/decrease in notes receivable (3 ) 7 Purchases of emission allowances (27 ) — Proceeds from sale of emission allowances 25 — Investments in nuclear decommissioning trust fund securities (280 ) (354 ) Proceeds from the sale of nuclear decommissioning trust fund securities 267 358 Proceeds from renewable energy grants and state rebates 10 61 Proceeds from sale of assets, net of cash disposed of 145 1 Investments in unconsolidated affiliates — (353 ) Other 32 9 Net Cash Used by Investing Activities (469 ) (860 ) Cash Flows from Financing Activities Payment of dividends to common and preferred stockholders (57 ) (102 ) Payment for treasury stock — (186 ) Payment for preferred shares (226 ) — Net receipts from settlement of acquired derivatives that include financing elements 103 91 Proceeds from issuance of long-term debt 3,223 629 Distributions from, net of contributions to, noncontrolling interest in subsidiaries (21 ) 670 Proceeds from issuance of common stock — 1 Payment of debt issuance costs (35 ) (12 ) Payments for short and long-term debt (3,507 ) (662 ) Other - contingent consideration (10 ) — Net Cash (Used)/Provided by Financing Activities (530 ) 429 Effect of exchange rate changes on cash and cash equivalents (3 ) 3 Net (Decrease)/Increase in Cash and Cash Equivalents (129 ) 30 Cash and Cash Equivalents at Beginning of Period 1,518 2,116 Cash and Cash Equivalents at End of Period $ 1,389 $ 2,146Appendix Table A-1: Second Quarter 2016 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adj. EBITDA and provides a reconciliation to net income/(loss): ($ in millions)RetailMass
Generation Renewables Yield Corp/Elim Total Net income/(loss) 496 (371 ) (58 ) 58 (401 ) (276 ) Plus: Interest expense, net — 32 30 62 152 276 Income tax — — (5 ) 12 18 25 Loss on debt extinguishment — — — — 80 80 Depreciation, amortization and ARO expense 27 153 55 67 17 319 Amortization of contracts 2 (20 ) — 17 (2 ) (3 ) EBITDA 525 (206 ) 22 216 (136 ) 421 Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates — 8 (1 ) 21 4 32 Acquisition-related transaction & integration costs — — — — 5 5 Reorganization costs — — 1 — 9 10 Deactivation costs — 6 — — — 6 Loss on sale of business — — — — 83 83 Other non recurring charges — 8 6 3 (8 ) 9 Impairments — 78 27 — 10 115 Mark to market (MtM) (gains)/losses on economic hedges (312 ) 408 2 — — 98 Adjusted EBITDA 213 302 57 240 (33 ) 779Second Quarter 2016 Condensed Financial Information by Operating Segment:
($ in millions) Retail Mass Generation Renewables Yield Corp/Elim Total Operating revenues 1,202 1,912 127 275 (325 ) 3,191 Cost of sales 821 1,019 1 14 (338 ) 1,517 Economic gross margin 381 893 126 261 13 1,674 Operations & maintenance 60 434 49 47 (19 ) 571 Selling & marketing 56 11 2 — 17 86 General & administrative (a) 32 103 13 3 18 169 Other expense/(income) (b) 20 43 5 (29 ) 30 69 Adjusted EBITDA 213 302 57 240 (33 ) 779(a) Excludes reorganization costs of $10 million.(b) Excludes acquisition-related transaction & integration costs of $5 million.
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other adj.AdjustedEBITDA (a)
Operating revenues 2,638 14 539 — — 3,191 Cost of operations 1,073 3 441 — — 1,517 Gross Margin 1,565 11 98 — — 1,674 Operations & maintenance 577 — — (6 ) — 571 Selling & marketing 86 — — — — 86 General & administrative (b) 179 — — — (10 ) 169 Other expense/(income) (c) 999 (673 ) — — (257 ) 69 Net loss (276 ) 684 98 6 267 779(a) See Appendices A-10 through A-13 for condensed financial information by Operating Segment.(b) Other adj. includes reorganization costs of $10 million.(c) Other adj. includes impairments, loss on sale of business, and acquisition-related transaction & integration costs.
Appendix Table A-2: Second Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss): ($ in millions)RetailMass
Generation Renewables Yield Corp/Elim Total Net income/(loss) $ 217 $ 3 $ (6 ) $ 38 $ (261 ) $ (9 ) Plus: Interest expense, net — 17 22 45 176 260 Income tax — 1 (3 ) 4 (19 ) (17 ) Loss on debt extinguishment — — — 7 — 7 Depreciation amortization and ARO expense 33 236 53 70 13 405 Amortization of contracts 1 (18 ) (1 ) 15 2 (1 ) EBITDA 251 239 65 179 (89 ) 645Adjustment to reflect NRG share ofadjusted EBITDA in unconsolidatedaffiliates
— 4 (1 ) 15 1 19Acquisition-related transaction &integration costs
— — — 1 2 3 Deactivation costs — 3 — — — 3 Other non recurring charges — 8 — — — 8 MtM (gains)/losses on economic hedges (42 ) 39 2 4 — 3 Adjusted EBITDA 209 293 66 199 (86 ) 681Second Quarter 2015 Condensed Financial Information by Operating Segment:
($ in millions) Retail Mass Generation Renewables Yield Corp/Elim Total Operating revenues 1,298 2,151 131 254 (309 ) 3,525 Cost of sales 910 1,168 2 16 (305 ) 1,791 Economic gross margin 388 983 129 238 (4 ) 1,734 Operations & maintenance 56 513 27 42 3 641 Selling & marketing 64 15 3 — 41 123 General & administrative 42 118 9 3 1 173 Other expense/(income) (a) 17 44 24 (6 ) 37 116 Adjusted EBITDA 209 293 66 199 (86 ) 681(a) Excludes acquisition-related transaction & integration costs of $3 million.
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other adj.AdjustedEBITDA (a)
Operating revenues 3,400 12 113 — — 3,525 Cost of operations 1,681 — 110 — — 1,791 Gross Margin 1,719 12 3 — — 1,734 Operations & maintenance 644 — — (3 ) — 641 Selling & marketing 123 — — — — 123 General & administrative 173 — — — — 173 Other expense/(income) (b) 788 (663 ) — — (9 ) 116 Net loss (9 ) 675 3 3 9 681(a) See Appendices A-10 through A-13 for condensed financial information by Operating Segment.(b) Other adj. includes impairments and acquisition-related transaction & integration costs.
Appendix Table A-3: YTD Second Quarter 2016 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adj. EBITDA and provides a reconciliation to net income/(loss): ($ in millions)RetailMass
Generation Renewables Yield Corp/Elim Total Net income/(loss) 642 (212 ) (103 ) 60 (616 ) (229 ) Plus: Interest expense, net — 42 62 130 322 556 Income tax — 1 (11 ) 12 44 46 Loss on debt extinguishment — — — — 69 69 Depreciation, amortization and ARO expense 56 308 111 134 34 643 Amortization of contracts 1 (32 ) 1 40 (4 ) 6 EBITDA 699 107 60 376 (151 ) 1,091 Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates — 16 (5 ) 49 5 65 Acquisition-related transaction & integration costs — — — — 7 7 Reorganization costs 5 1 3 — 11 20 Deactivation costs — 13 — — — 13 Gain/(loss) on sale of business — (29 ) — — 83 54 Other non recurring charges — 11 10 3 1 25 Impairments — 213 26 — 15 254 Market to market (MtM) (gains)/losses on economic hedges (341 ) 403 1 — — 63 Adjusted EBITDA 363 735 95 428 (29 ) 1,592YTD Second Quarter 2016 Condensed Financial Information by Operating Segment:
($ in millions) Retail Mass Generation Renewables Yield Corp/Elim Total Operating revenues 2,251 4,026 235 512 (615 ) 6,409 Cost of sales 1,555 2,106 3 30 (672 ) 3,022 Economic gross margin 696 1,920 232 482 57 3,387 Operations & maintenance 110 881 82 90 (16 ) 1,147 Selling & marketing 123 21 3 — 39 186 General & administrative (a) 60 187 25 6 36 314 Other expense/(income) (b) 40 96 27 (42 ) 27 148 Adjusted EBITDA 363 735 95 428 (29 ) 1,592(a) Excludes reorganization costs of $20 million.(b) Excludes acquisition-related transaction & integration costs of $7 million.
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other adj.AdjustedEBITDA (a)
Operating revenues 5,867 29 513 — — 6,409 Cost of operations 2,575 (3 ) 450 — — 3,022 Gross margin 3,292 32 63 — — 3,387 Operations & maintenance 1,160 — — (13 ) — 1,147 Selling & marketing 186 — — — — 186 General & administrative (b) 334 — — — (20 ) 314 Other expense/(income) (c) 1,841 (1,246 ) — — (447 ) 148 Net loss (229 ) 1,278 63 13 467 1,592(a) See Appendices A-10 through A-13 for condensed financial information by Operating Segment.(b) Other adj. includes reorganization costs of $20 million.(c) Other adj. includes impairments, gain/(loss) on sale of business and acquisition-related transaction & integration costs.
Appendix Table A-4: YTD Second Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss): ($ in millions) Retail Mass Generation Renewables Yield Corp/Elim Total Net income/(loss) 321 32 (57 ) 18 (459 ) (145 ) Plus: Interest expense, net — 35 51 118 354 558 Income tax — 1 (9 ) — (82 ) (90 ) Loss on debt extinguishment — — — 7 — 7Depreciation amortization and AROexpense
63 475 105 137 25 805 Amortization of contracts 1 (30 ) — 26 — (3 ) EBITDA 385 513 90 306 (162 ) 1,132Adjustment to reflect NRG share ofadjusted EBITDA in unconsolidatedaffiliates
— 14 (4 ) 27 3 40 Acquisition-related transaction & integration costs — — — 1 12 13 Deactivation costs — 6 — — — 6 Other non recurring charges — 9 1 10MtM (gains)/losses on economichedges
(10 ) 292 2 (3 ) — 281 Adjusted EBITDA 375 834 88 331 (146 ) 1,482YTD Second Quarter 2015 Condensed Financial Information by Operating Segment:
($ in millions) Retail Mass Generation Renewables Yield Corp/Elim Total Operating revenues 2,610 4,739 222 458 (580 ) 7,449 Cost of sales 1,881 2,563 3 38 (563 ) 3,922 Economic gross margin 729 2,176 219 420 (17 ) 3,527 Operations & maintenance 113 1,009 63 87 (6 ) 1,266 Selling & marketing 123 23 3 — 79 228 General & administrative 72 210 20 6 15 323 Other expense/(income) (a) 46 100 45 (4 ) 41 228 Adjusted EBITDA 375 834 88 331 (146 ) 1,482(a) Excludes acquisition-related transaction & integration costs of $13 million.
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)Condensedfinancialinformation
Interest, tax,depr., amort.
MtM Deactivation Other adj.AdjustedEBITDA (a)
Operating revenues 7,229 20 200 — — 7,449 Cost of operations 4,007 (4 ) (81 ) — — 3,922 Gross margin 3,222 24 281 — — 3,527 Operations & maintenance 1,272 — — (6 ) — 1,266 Selling & marketing 228 — — — — 228 General & administrative 323 — — — — 323 Other expense/(income) (b) 1,544 (1,370 ) — — 54 228 Net loss (145 ) 1,394 281 6 (54 ) 1,482(a) See Appendices A-10 through A-13 for condensed financial information by Operating Segment.(b) Other adj. includes impairments and acquisition-related transaction & integration costs.
Appendix Table A-5: 2016 and 2015 QTD and YTD Second Quarter Adjusted Cash Flow from Operations Reconciliations
The following table summarizes the calculation of adjusted cash flow operating activities providing a reconciliation to net cash provided by operating activities: ($ in millions) Three months endedJune 30, 2016
Three months endedJune 30, 2015
Net Cash Provided by Operating Activities 319 198Reclassifying of net receipts for settlement of acquired derivativesthat include financing elements
64 51 Merger, integration and cost-to-achieve expenses [1] 6 5 Return of capital from equity investments 6 - Adjustment for change in collateral (194) (101) Adjusted Cash Flow from Operating Activities 201 153 Maintenance CapEx, net [2] (78 ) (104 ) Environmental CapEx, net (112 ) (78 ) Preferred dividends — (3 ) Distributions to non-controlling interests (40 ) (58 ) Free Cash Flow - before Growth Investments (29) (90 )(1) Cost-to-achieve expenses associated with the $150 million savings announced on September 2015 call.(2) Includes insurance proceeds of $30 million in 2016; excludes merger and integration capex of $6 million in 2015.
($ in millions) Six months endedJune 30, 2016
Six months endedJune 30, 2015
Net Cash Provided by Operating Activities 873 458Reclassifying of net receipts for settlement of acquired derivativesthat include financing elements
103 91 Merger, integration and cost-to-achieve expenses [1] 25 17 Return of capital from equity investments 11 - Adjustment for change in collateral (350 ) 112 Adjusted Cash Flow from Operating Activities 662 678 Maintenance CapEx, net [2] (169 ) (189 ) Environmental CapEx, net (189 ) (127 ) Preferred dividends (2 ) (5 ) Distributions to non-controlling interests (82 ) (83 ) Free Cash Flow - before Growth Investments 220 274(1) Cost-to-achieve expenses associated with the $150 million savings announced on September 2015 call.(2) Includes insurance proceeds of $30 million in 2016; excludes merger and integration capex of $9 million in 2015.
Appendix Table A-6: Second Quarter 2016 Regional Adjusted EBITDA Reconciliation for Generation
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net (loss)/income: ($ in millions) East Gulf Coast West Business Solutions Total Net (loss)/income (139 ) (336 ) (71 ) 175 (371 ) Plus: Interest expense, net 32 — — — 32 Depreciation, amortization and ARO expense 56 76 18 3 153 Amortization of contracts (18 ) 1 (4 ) 1 (20 ) EBITDA (69 ) (259 ) (57 ) 179 (206 )Adjustment to reflect NRG share ofadjusted EBITDA in unconsolidatedaffiliates
— 1 2 5 8 Deactivation costs 6 — — — 6 Other non recurring charges 2 6 — — 8 Impairments 17 2 59 — 78Market to market (MtM)losses/(gains) on economic hedges
167 389 15 (163 ) 408 Adjusted EBITDA 123 139 19 21 302Appendix Table A-7: Second Quarter 2015 Regional Adjusted EBITDA Reconciliation for Generation
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss): ($ in millions) East Gulf Coast West Business Solutions Total Net income/(loss) 97 (114 ) (12 ) 32 3 Plus: Interest expense, net 17 — — — 17 Income tax — — — 1 1Depreciation amortization andARO expense
75 143 16 2 236 Amortization of contracts (18 ) 2 (3 ) 1 (18 ) EBITDA 171 31 1 36 239Adjustment to reflect NRG share ofadjusted EBITDA in unconsolidatedaffiliates
— (2 ) 2 4 4 Deactivation costs 2 — 1 — 3 Other non recurring charges — 8 — — 8MtM (gains)/losses on economichedges
(31 ) 76 14 (20 ) 39 Adjusted EBITDA 142 113 18 20 293Appendix Table A-8: YTD Second Quarter 2016 Regional Adjusted EBITDA Reconciliation for Generation
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss): ($ in millions) East Gulf Coast West Business Solutions Total Net income/(loss) 106 (462 ) (39 ) 183 (212 ) Plus: Interest expense, net 42 — — — 42 Income tax — — — 1 1Depreciation, amortization andARO expense
113 155 35 5 308 Amortization of contracts (34 ) 2 (3 ) 3 (32 ) EBITDA 227 (305 ) (7 ) 192 107Adjustment to reflect NRG share ofadjusted EBITDA in unconsolidatedaffiliates
— 5 5 6 16 Reorganization costs — 1 — — 1 Deactivation costs 13 — — — 13 Gain on sale of assets (29 ) — — — (29 ) Other non recurring charges 3 7 1 — 11 Impairments 17 139 57 — 213Market to market (MtM)losses/(gains) on economic hedges
137 415 18 (167 ) 403 Adjusted EBITDA 368 262 74 31 735Appendix Table A-9: YTD Second Quarter 2015 Regional Adjusted EBITDA Reconciliation for Generation
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss): ($ in millions) East Gulf Coast West Business Solutions Total Net income/(loss) 186 (81 ) (35 ) (38 ) 32 Plus: Interest expense, net 35 — — — 35 Income tax — — — 1 1Depreciation amortization and AROexpense
152 287 31 5 475 Amortization of contracts (32 ) 3 (4 ) 3 (30 ) EBITDA 341 209 (8 ) (29 ) 513Adjustment to reflect NRG share ofadjusted EBITDA in unconsolidatedaffiliates
— 1 4 9 14 Deactivation costs 4 — 2 — 6 Other non recurring charges — 9 — — 9 MtM losses on economic hedges 222 11 13 46 292 Adjusted EBITDA 567 230 11 26 834Appendix Table A-10: YTD Second Quarter 2016 Sources and Uses of Liquidity
The following table summarizes the sources and uses of liquidity in the first six months of 2016: ($ in millions) Six months endedJune 30, 2016
Sources: Adjusted cash flow from operations 662 Collateral 350 Asset sales 145 Tax equity proceeds 11 Monetization of capacity revenues at Midwest Gen 253 Proceeds from NRG Yield revolver, net of payments 12 Uses: Debt repayments, discretionary, net of proceeds (corporate) (320 ) Debt repayments, non-discretionary (234 ) Decrease in credit facility (44 ) Debt Issuance Costs (35 ) Redemption of convertible preferred stock (226 ) Maintenance and environmental capex, net (1) (358 ) Growth investments and acquisitions, net (194 ) Common and preferred stock dividends (57 ) Distributions to non-controlling entities (82 ) Other investing and financing (32 ) Merger, integration and cost-to-achieve expenses (2) (25 ) Change in Total Liquidity (174 )(1) Includes insurance proceeds of $30 million.(2)Cost-to-achieve expenses associated with the $150 million savings announced on September 2015 call.
EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.
EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation andamortization. EBITDA is presented because NRG considers it an important supplemental measure of itsperformance and believes debt-holders frequently use EBITDA to analyze operating performance and debt servicecapacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitutefor 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 contractualcommitments;
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 serviceinterest or principal payments, on debt or cash income tax payments;
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortizedwill 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 usefulnessas a comparative measure.
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG’s business. NRG compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.
Adjusted EBITDA is presented as a further supplemental measure of operating performance. As NRG defines it, Adjusted EBITDA represents EBITDA excluding impairment losses, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from accounting for derivatives, adjustments to exclude the Adjusted EBITDA related to the non-controlling interest, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
Management believes Adjusted EBITDA is useful to investors and other users of NRG's financial statements in evaluating its operating performance because it provides an additional tool to compare business performance across companies and across periods and adjusts for items that we do not consider indicative of NRG’s future operating performance. This measure is widely used by debt-holders to analyze operating performance and debt service capacity and by equity investors to measure our operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.
Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration and related restructuring costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger, integration related restructuring costs as they are one time and unique in nature and do not reflect ongoing cash from operations and they are fully disclosed to investors.
Free cash flow (before Growth investments) is adjusted cash flow from operations less maintenance and environmental capital expenditures, net of funding, preferred stock dividends and distributions to non-controlling interests and is used by NRG predominantly as a forecasting tool to estimate cash available for debt reduction and other capital allocation alternatives. The reader is encouraged to evaluate each of these adjustments and the reasons NRG considers them appropriate for supplemental analysis. Because we have mandatory debt service requirements (and other non-discretionary expenditures) investors should not rely on free cash flow before Growth investments as a measure of cash available for discretionary expenditures.
Free Cash Flow before Growth Investment is utilized by Management in making decisions regarding the allocation of capital. Free Cash Flow before Growth Investment is presented because the Company believes it is a useful tool for assessing the financial performance in the current period. In addition, NRG’s peers evaluate cash available for allocation in a similar manner and accordingly, it is a meaningful indicator for investors to benchmark NRG's performance against its peers. Free Cash Flow before Growth Investment is a performance measure and is not intended to represent net income (loss), cash from operations (the most directly comparable U.S. GAAP measure), or liquidity and is not necessarily comparable to similarly titled measures reported by other companies.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160809005684/en/
NRG Energy, Inc.Media:Karen Cleeve, 609-524-4608orCandice Adams, 609-524-5428orInvestors:Kevin L. Cole, 609-524-4526CFAorLindsey Puchyr, 609-524-4527
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