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NRG Energy, Inc. Reports Third Quarter Results and Initiates 2017 Financial Guidance
Key Highlights
- Increasing and narrowing 2016 Adjusted EBITDA guidance, and initiating 2017 Adjusted EBITDA and Free Cash Flow before Growth (FCFbG) guidance
-
Repurchased
$440 million 1 of corporate debt since second quarter 2016; total of$1.0 billion of corporate debt retired since third quarter 2015 generating approximately$78 million 2 of net annualized interest savings -
Acquisition of 1.5 GWac3
(2.1 GWdc) of utility-scale and 29 MWac
distributed renewable generation from
SunEdison
Financial Results
Three Months Ended | Nine Months Ended | ||||||||||||||||
($ in millions) | 9/30/16 | 9/30/15 | 9/30/16 | 9/30/15 | |||||||||||||
Net Income/(Loss) | $ | 393 | $ | 67 | $ | 164 | $ | (78 | ) | ||||||||
Cash From Operations | $ | 860 | $ | 934 | $ | 1,733 | $ | 1,392 | |||||||||
Adjusted EBITDA |
$ | 1,173 | $ | 1,103 | $ | 2,765 | $ | 2,585 | |||||||||
Free Cash Flow (FCF) Before Growth Investments | $ | 911 | $ | 861 | $ | 1,131 | $ | 1,135 | |||||||||
-
Net income of
$393 million in the third quarter 2016, compared with a net income of$67 million in the third quarter 2015. After adjusting for the$266 million gain on sale of assets in the third quarter 2016 and$263 million of impairments in the third quarter 2015, net income declined$203 million related to lower energy margins and increased debt extinguishment costs. -
Adjusted EBITDA of
$1,173 million for the third quarter 2016 represents a$70 million increase compared to the third quarter 2015.
“Our unique integrated platform delivered another strong quarter despite
a subdued price environment,” said Mauricio Gutierrez, NRG's President
and Chief Executive Officer. “We remain focused on capital discipline
with the retirement of
1 Represents $1.312 billion of corporate debt retired, net of $1.25 billion of 2027 Senior Notes issuance, in third quarter 2016, and completed repurchases of $186 million of Senior Notes due 2018 and $193 million of Senior Notes due 2021, on October 18, 2016 and November 3, 2016, respectively. |
2 Net of refinanced term loan interest cost of $16 million. |
3 1,384 MW acquired as of November 4, 2016; acquisition of 154 MW construction-ready solar facility in Texas expected to close in November 2016. |
4For comparability, 2015 results have been restated to include the negative contribution from residential solar of $42 million and $129 million for the three and nine months ended September 30, 2015. |
Segment Results |
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Table 1: Net Income/(Loss) |
||||||||||||||||||||
($ in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
Segment | 9/30/16 | 9/30/15 | 9/30/16 | 9/30/15 | ||||||||||||||||
Generation | $ | 630 | $ | 164 | $ | 418 | $ | 213 | ||||||||||||
Retail Mass | 2 | 197 | 644 | 523 | ||||||||||||||||
Renewables 1 | 11 | (16 | ) | (102 | ) | (74 | ) | |||||||||||||
NRG Yield 1 | 47 | 32 | 111 | 53 | ||||||||||||||||
Corporate 2 | (297 | ) | (310 | ) | (907 | ) | (793 | ) | ||||||||||||
Net Income/(Loss) 3 | $ | 393 | $ | 67 | $ | 164 | $ | (78 | ) | |||||||||||
1 In accordance with GAAP, 2015 results have been restated to include full impact of the assets in the NRG Yield Drop Down transactions which closed on November 3, 2015, and September 1, 2016. |
2 Includes residential solar. |
3 Includes mark-to-market gains and losses of economic hedges. |
Table 2: Adjusted EBITDA |
||||||||||||||||||||
($ in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
Segment | 9/30/16 | 9/30/15 | 9/30/16 | 9/30/15 | ||||||||||||||||
Generation 1 | $ | 605 | $ | 674 | $ | 1,340 | $ | 1,525 | ||||||||||||
Retail Mass | 266 | 225 | 629 | 606 | ||||||||||||||||
Renewables 2 | 84 | 60 | 161 | 132 | ||||||||||||||||
NRG Yield 2 | 246 | 221 | 692 | 569 | ||||||||||||||||
Corporate 3 | (28 | ) | (77 | ) | (57 | ) | (247 | ) | ||||||||||||
Adjusted EBITDA 4 | $ | 1,173 | $ | 1,103 | $ | 2,765 | $ | 2,585 | ||||||||||||
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 NRG Yield Drop Down transactions which closed on November 3, 2015, and September 1, 2016. |
3 2016 includes residential solar. 2015 results have been restated to include negative contribution of $42 million and $129 million for the three and nine months ended September 30, 2015, respectively. |
4 See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations. |
Generation: Third quarter Adjusted EBITDA was
-
Gulf Coast Region:
$94 million decrease due primarily to lower realized energy margins inTexas from the decline in power prices and lower South Central capacity revenues. -
East Region:
$26 million lower due to lower realized energy margins on lower dispatch and asset sales and lower capacity prices; partially offset by the partial monetization of$98 million in 2017-2019 hedges at GenOn and lower operating costs due to decreased dispatch, reduced outages, deactivations and plant sales. -
West Region:
$44 million increase due to gain from sale of real property at Potrero site partially offset by lower capacity prices. -
Business Solutions:
$7 million in lower costs primarily driven by favorable settlement of aTexas sales tax audit.
Retail Mass: Third quarter Adjusted EBITDA was
Renewables: Third quarter Adjusted EBITDA was
Corporate: Third quarter Adjusted EBITDA was
Liquidity and Capital Resources |
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Table 3: Corporate Liquidity |
|||||||||
|
|||||||||
($ in millions) | 9/30/16 | 12/31/15 | |||||||
Cash at NRG-Level 1 | $ | 941 | $ | 693 | |||||
Revolver | 1,374 | 1,373 | |||||||
NRG-Level Liquidity | $ | 2,315 | $ | 2,066 | |||||
Restricted cash | 480 | 414 | |||||||
Cash at Non-Guarantor Subsidiaries | 1,494 | 825 | |||||||
Total Liquidity | $ | 4,289 | $ | 3,305 | |||||
1 September 30, 2016, balance includes $250 million of unrestricted cash held at Midwest Generation (a non-guarantor subsidiary) which can be distributed to NRG without limitation. |
NRG-Level cash as of
NRG Strategic Developments
On
SunEdison Utility-Scale Solar and Wind Acquisition
On
SunEdison Solar Distributed Generation Acquisition
On
Drop Down to
On
Outlook for 2016 and Initiation of 2017 Guidance
NRG has increased and narrowed the range of its Adjusted EBITDA and narrowed FCF before growth investments guidance for 2016 and is also initiating guidance for fiscal year 2017 as set forth below.
Table 4: 2016 and 2017 Adjusted EBITDA and FCF before Growth Investments Guidance |
|||||||||
2016 | 2017 | ||||||||
($ in millions) | Prior Guidance |
Narrowed |
Guidance | ||||||
Adjusted EBITDA1 | $3,000 – 3,200 | $3,250 – 3,350 | $2,700 - $2,900 | ||||||
Cash From Operations | $2,055 – 2,255 | $1,975 – 2,075 | $1,355 - $1,555 | ||||||
Free Cash Flow – before Growth Investments | $1,000 – 1,200 | $1,100 – 1,200 | $800 - $1,000 | ||||||
1 Non-GAAP financial measure; see Appendix Table A-11 for GAAP Reconciliation to Net Income that excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year. |
Capital Allocation Update
In
Year-to-date through
On
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.
Earnings Conference Call
On
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
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 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 November 4, 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
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
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Three months ended |
Nine months ended |
|||||||||||||||||||
(In millions, except for per share amounts) |
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Operating Revenues | ||||||||||||||||||||
Total operating revenues | $ | 3,952 | $ | 4,434 | $ | 9,819 | $ | 11,663 | ||||||||||||
Operating Costs and Expenses | ||||||||||||||||||||
Cost of operations | 2,793 | 3,042 | 6,738 | 8,551 | ||||||||||||||||
Depreciation and amortization | 357 | 382 | 979 | 1,173 | ||||||||||||||||
Impairment losses | 8 | 263 | 123 | 263 | ||||||||||||||||
Selling, general and administrative | 282 | 327 | 802 | 878 | ||||||||||||||||
Acquisition-related transaction and integration costs | — | 3 | 7 | 16 | ||||||||||||||||
Development activity expenses | 23 | 38 | 67 | 109 | ||||||||||||||||
Total operating costs and expenses | 3,463 | 4,055 | 8,716 | 10,990 | ||||||||||||||||
Gain on sale of assets and postretirement benefits curtailment, net | 266 | — | 215 | 14 | ||||||||||||||||
Operating Income | 755 | 379 | 1,318 | 687 | ||||||||||||||||
Other Income/(Expense) | ||||||||||||||||||||
Equity in earnings of unconsolidated affiliates | 16 | 24 | 13 | 29 | ||||||||||||||||
Impairment loss on investment | (8 | ) | — | (147 | ) | — | ||||||||||||||
Other income, net | 9 | 4 | 35 | 27 | ||||||||||||||||
Loss on debt extinguishment, net | (50 | ) | (2 | ) | (119 | ) | (9 | ) | ||||||||||||
Interest expense | (280 | ) | (291 | ) | (841 | ) | (855 | ) | ||||||||||||
Total other expense | (313 | ) | (265 | ) | (1,059 | ) | (808 | ) | ||||||||||||
Income/(Loss) Before Income Taxes | 442 | 114 | 259 | (121 | ) | |||||||||||||||
Income tax expense/(benefit) | 49 | 47 | 95 | (43 | ) | |||||||||||||||
Net Income/(Loss) | 393 | 67 | 164 | (78 | ) | |||||||||||||||
Less: Net (loss)/income attributable to noncontrolling interest and redeemable noncontrolling interests | (9 | ) | 1 | (49 | ) | (10 | ) | |||||||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | 402 | 66 | 213 | (68 | ) | |||||||||||||||
Gain on redemption, net of dividends for preferred shares | — | 5 | (73 | ) | 15 | |||||||||||||||
Income/(Loss) Available for Common Stockholders | $ | 402 | $ | 61 | $ | 286 | $ | (83 | ) | |||||||||||
Earnings/(Loss) per Share Attributable to NRG Energy, Inc. Common Stockholders | ||||||||||||||||||||
Weighted average number of common shares outstanding — basic | 316 | 331 | 315 | 334 | ||||||||||||||||
Earnings/(Loss) per Weighted Average Common Share — Basic | $ | 1.27 | $ | 0.18 | $ | 0.91 | $ | (0.25 | ) | |||||||||||
Weighted average number of common shares outstanding — diluted | 317 | 332 | 316 | 334 | ||||||||||||||||
Earnings/(Loss) per Weighted Average Common Share — Diluted | $ | 1.27 | $ | 0.18 | $ | 0.91 | $ | (0.25 | ) | |||||||||||
Dividends Per Common Share | $ | 0.03 | $ | 0.15 | $ | 0.21 | $ | 0.44 | ||||||||||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited) |
||||||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(In millions) | ||||||||||||||||||||
Net Income/(Loss) | $ | 393 | $ | 67 | $ | 164 | $ | (78 | ) | |||||||||||
Other Comprehensive Income/(Loss), net of tax | ||||||||||||||||||||
Unrealized gains/(losses) on derivatives, net of income tax (benefit)/expense of $(1), $(12), $1 and $(6) | 27 | (6 | ) | (8 | ) | (2 | ) | |||||||||||||
Foreign currency translation adjustments, net of income tax benefit of $0 , $5, $0 and $6 | 3 | (8 | ) | 6 | (10 | ) | ||||||||||||||
Available-for-sale securities, net of income tax expense of $0, $6, $0 and $1 | — | (7 | ) | 1 | (11 | ) | ||||||||||||||
Defined benefit plans, net of tax expense of $0, $2, $0 and $6 | 31 | 3 | 32 | 9 | ||||||||||||||||
Other comprehensive income/(loss) | 61 | (18 | ) | 31 | (14 | ) | ||||||||||||||
Comprehensive Income/(Loss) | 454 | 49 | 195 | (92 | ) | |||||||||||||||
Less: Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests | (2 | ) | (17 | ) | (70 | ) | (34 | ) | ||||||||||||
Comprehensive Income/(Loss) Attributable to NRG Energy, Inc. | 456 | 66 | 265 | (58 | ) | |||||||||||||||
Gain on redemption, net of dividends for preferred shares | — | 5 | (73 | ) | 15 | |||||||||||||||
Comprehensive Income/(Loss) Available for Common Stockholders | $ | 456 | $ | 61 | $ | 338 | $ | (73 | ) | |||||||||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||||
September 30, |
December 31, |
|||||||||
(In millions, except shares) |
(unaudited) | |||||||||
ASSETS | ||||||||||
Current Assets | ||||||||||
Cash and cash equivalents | $ | 2,435 | $ | 1,518 | ||||||
Funds deposited by counterparties | 16 | 106 | ||||||||
Restricted cash | 480 | 414 | ||||||||
Accounts receivable, net | 1,362 | 1,157 | ||||||||
Inventory | 1,017 | 1,252 | ||||||||
Derivative instruments | 964 | 1,915 | ||||||||
Cash collateral paid in support of energy risk management activities | 337 | 568 | ||||||||
Renewable energy grant receivable, net | 34 | 13 | ||||||||
Current assets held-for-sale | — | 6 | ||||||||
Prepayments and other current assets | 369 | 442 | ||||||||
Total current assets | 7,014 | 7,391 | ||||||||
Property, plant and equipment, net | 18,203 | 18,732 | ||||||||
Other Assets | ||||||||||
Equity investments in affiliates | 900 | 1,045 | ||||||||
Notes receivable, less current portion | 21 | 53 | ||||||||
Goodwill | 999 | 999 | ||||||||
Intangible assets, net |
2,106 | 2,310 | ||||||||
Nuclear decommissioning trust fund | 605 | 561 | ||||||||
Derivative instruments | 256 | 305 | ||||||||
Deferred income taxes | 189 | 167 | ||||||||
Non-current assets held-for-sale | — | 105 | ||||||||
Other non-current assets | 1,198 | 1,214 | ||||||||
Total other assets | 6,274 | 6,759 | ||||||||
Total Assets | $ | 31,491 | $ | 32,882 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current Liabilities | ||||||||||
Current portion of long-term debt and capital leases | $ | 1,221 | $ | 481 | ||||||
Accounts payable | 945 | 869 | ||||||||
Derivative instruments | 969 | 1,721 | ||||||||
Cash collateral received in support of energy risk management activities | 16 | 106 | ||||||||
Current liabilities held-for-sale | — | 2 | ||||||||
Accrued expenses and other current liabilities | 1,150 | 1,196 | ||||||||
Total current liabilities | 4,301 | 4,375 | ||||||||
Other Liabilities | ||||||||||
Long-term debt and capital leases | 18,018 | 18,983 | ||||||||
Nuclear decommissioning reserve | 284 | 326 | ||||||||
Nuclear decommissioning trust liability | 309 | 283 | ||||||||
Deferred income taxes | 47 | 19 | ||||||||
Derivative instruments | 475 | 493 | ||||||||
Out-of-market contracts, net | 1,065 | 1,146 | ||||||||
Non-current liabilities held-for-sale | — | 4 | ||||||||
Other non-current liabilities | 1,480 | 1,488 | ||||||||
Total non-current liabilities | 21,678 | 22,742 | ||||||||
Total Liabilities | 25,979 | 27,117 | ||||||||
2.822% convertible perpetual preferred stock | — | 302 | ||||||||
Redeemable noncontrolling interest in subsidiaries | 19 | 29 | ||||||||
Commitments and Contingencies | ||||||||||
Stockholders’ Equity | ||||||||||
Common stock | 4 | 4 | ||||||||
Additional paid-in capital | 8,370 | 8,296 | ||||||||
Retained deficit | (2,791 | ) | (3,007 | ) | ||||||
Less treasury stock, at cost — 102,140,814 and 102,749,908 shares, respectively | (2,399 | ) | (2,413 | ) | ||||||
Accumulated other comprehensive loss | (142 | ) | (173 | ) | ||||||
Noncontrolling interest | 2,451 | 2,727 | ||||||||
Total Stockholders’ Equity | 5,493 | 5,434 | ||||||||
Total Liabilities and Stockholders’ Equity | $ | 31,491 | $ | 32,882 |
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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Nine months ended |
||||||||||
2016 | 2015 | |||||||||
(In millions) | ||||||||||
Cash Flows from Operating Activities | ||||||||||
Net Income/(Loss) | $ | 164 | $ | (78 | ) | |||||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||||
Distributions and equity in earnings of unconsolidated affiliates | 44 | 28 | ||||||||
Depreciation and amortization | 979 | 1,173 | ||||||||
Provision for bad debts | 36 | 49 | ||||||||
Amortization of nuclear fuel | 39 | 36 | ||||||||
Amortization of financing costs and debt discount/premiums | 3 | (9 | ) | |||||||
Adjustment to loss on debt extinguishment | 21 | 9 | ||||||||
Amortization of intangibles and out-of-market contracts | 73 | 68 | ||||||||
Amortization of unearned equity compensation | 23 | 37 | ||||||||
Impairment losses | 270 | 263 | ||||||||
Changes in deferred income taxes and liability for uncertain tax benefits | 29 | (72 | ) | |||||||
Changes in nuclear decommissioning trust liability | 24 | 1 | ||||||||
Changes in derivative instruments | 82 | 180 | ||||||||
Changes in collateral deposits supporting energy risk management activities | 231 | (180 | ) | |||||||
Proceeds from sale of emission allowances | 47 | (6 | ) | |||||||
Gain on sale of assets and equity method investments, net and postretirement benefits curtailment | (224 | ) | (14 | ) | ||||||
Cash used by changes in other working capital | (108 | ) | (93 | ) | ||||||
Net Cash Provided by Operating Activities | 1,733 | 1,392 | ||||||||
Cash Flows from Investing Activities | ||||||||||
Acquisitions of businesses, net of cash acquired | (18 | ) | (31 | ) | ||||||
Capital expenditures | (898 | ) | (889 | ) | ||||||
Increase in restricted cash, net | (30 | ) | (41 | ) | ||||||
(Increase)/decrease in restricted cash to support equity requirements for U.S. DOE funded projects | (36 | ) | 1 | |||||||
Decrease in notes receivable | 2 | 10 | ||||||||
Purchases of emission allowances | (32 | ) | (40 | ) | ||||||
Proceeds from sale of emission allowances | 47 | 45 | ||||||||
Investments in nuclear decommissioning trust fund securities | (378 | ) | (500 | ) | ||||||
Proceeds from the sale of nuclear decommissioning trust fund securities | 354 | 499 | ||||||||
Proceeds from renewable energy grants and state rebates | 11 | 62 | ||||||||
Proceeds from sale of assets, net of cash disposed of | 636 | 1 | ||||||||
Investments in unconsolidated affiliates | (23 | ) | (357 | ) | ||||||
Other | 44 | 8 | ||||||||
Net Cash Used by Investing Activities | (321 | ) | (1,232 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||
Payment of dividends to common and preferred stockholders | (66 | ) | (152 | ) | ||||||
Payment for treasury stock | — | (353 | ) | |||||||
Payment for preferred shares | (226 | ) | — | |||||||
Net receipts from settlement of acquired derivatives that include financing elements | 129 | 138 | ||||||||
Proceeds from issuance of long-term debt | 5,237 | 679 | ||||||||
Payments for short and long-term debt | (5,357 | ) | (954 | ) | ||||||
Distributions from, net of contributions to, noncontrolling interest in subsidiaries | (127 | ) | 651 | |||||||
Proceeds from issuance of common stock | 1 | 1 | ||||||||
Payment of debt issuance costs | (70 | ) | (14 | ) | ||||||
Other - contingent consideration | (10 | ) | (22 | ) | ||||||
Net Cash Used by Financing Activities | (489 | ) | (26 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (6 | ) | 15 | |||||||
Net Increase in Cash and Cash Equivalents | 917 | 149 | ||||||||
Cash and Cash Equivalents at Beginning of Period | 1,518 | 2,116 | ||||||||
Cash and Cash Equivalents at End of Period | $ | 2,435 | $ | 2,265 | ||||||
Appendix Table A-1: Third 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): |
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($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | |||||||||||||
Net income/(loss) | 2 | 630 | 11 | 47 | (297 | ) | 393 | ||||||||||||
Plus: | |||||||||||||||||||
Interest expense, net | — | 14 | 34 | 70 | 157 | 275 | |||||||||||||
Income tax | — | (2 | ) | (3 | ) | 13 | 41 | 49 | |||||||||||
Loss on debt extinguishment | — | — | — | — | 50 | 50 | |||||||||||||
Depreciation, amortization and ARO expense | 25 | 198 | 48 | 76 | 16 | 363 | |||||||||||||
Amortization of contracts | (1 | ) | (15 | ) | — | 17 | — | 1 | |||||||||||
EBITDA | 26 | 825 | 90 | 223 | (33 | ) | 1,131 | ||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 7 | 2 | 23 | (2 | ) | 30 | ||||||||||||
Reorganization costs | — | — | — | — | 6 | 6 | |||||||||||||
Deactivation costs | — | 3 | — | — | 1 | 4 | |||||||||||||
Gain on sale of business | — | (194 | ) | — | — | (4 | ) | (198 | ) | ||||||||||
Other non recurring charges | — | 6 | (6 | ) | — | — | — | ||||||||||||
Impairments | — | 13 | (1 | ) | — | 4 | 16 | ||||||||||||
Mark to market (MtM) (gains)/losses on economic hedges | 240 | (55 | ) | (1 | ) | — | — | 184 | |||||||||||
Adjusted EBITDA | 266 | 605 | 84 | 246 | (28 | ) | 1,173 | ||||||||||||
Third Quarter 2016 condensed financial information by Operating Segment: |
||||||||||||||||||
($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | ||||||||||||
Operating revenues | 1,618 | 2,322 | 139 | 289 | (325 | ) | 4,043 | |||||||||||
Cost of sales | 1,156 | 1,276 | 1 | 18 | (341 | ) | 2,110 | |||||||||||
Economic gross margin | 462 | 1,046 | 138 | 271 | 16 | 1,933 | ||||||||||||
Operations & maintenance (a) | 54 | 369 | 19 | 36 | 3 | 481 | ||||||||||||
Selling, marketing, general and administrative(b) | 118 | 101 | 12 | 4 | 41 | 276 | ||||||||||||
Other income/(expense) | 24 | (29 | ) | 23 | (15 | ) | — | 3 | ||||||||||
Adjusted EBITDA | 266 | 605 | 84 | 246 | (28 | ) | 1,173 | |||||||||||
(a) Excludes deactivation costs of $4 million. |
(b) Excludes reorganization costs of $6 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
||||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
||||||||||||
Operating revenues | 3,952 | 12 | 79 | — | — | 4,043 | ||||||||||||
Cost of operations | 2,218 | (3 | ) | (105 | ) | — | — | 2,110 | ||||||||||
Gross margin | 1,734 | 15 | 184 | — | — | 1,933 | ||||||||||||
Operations & maintenance | 485 | — | — | (4 | ) | — | 481 | |||||||||||
Selling, marketing, general & administrative (a) | 282 | — | — | — | (6 | ) | 276 | |||||||||||
Other expense/(income) (b) | 574 | (723 | ) | — | — | 152 | 3 | |||||||||||
Net income | 393 | 738 | 184 | 4 | (146 | ) | 1,173 | |||||||||||
(a) Other adj. includes reorganization costs of $6 million. |
(b) Other adj. includes impairments, loss on sale of business, and acquisition-related transaction & integration costs. |
Appendix Table A-2: Third Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss): |
||||||||||||||||||
($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | ||||||||||||
Net income/(loss) | 197 | 164 | (16 | ) | 32 | (310 | ) | 67 | ||||||||||
Plus: | ||||||||||||||||||
Interest expense, net | — | 17 | 22 | 70 | 177 | 286 | ||||||||||||
Income tax | — | 2 | (4 | ) | 8 | 41 | 47 | |||||||||||
Loss on debt extinguishment | — | — | — | 2 | — | 2 | ||||||||||||
Depreciation amortization and ARO expense | 30 | 231 | 46 | 71 | 17 | 395 | ||||||||||||
Amortization of contracts | (1 | ) | (11 | ) | — | 14 | — | 2 | ||||||||||
EBITDA | 226 | 403 | 48 | 197 | (75 | ) | 799 | |||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 10 | 3 | 20 | (4 | ) | 29 | |||||||||||
Acquisition-related transaction & integration costs | — | — | — | 1 | 2 | 3 | ||||||||||||
Deactivation costs | — | 2 | — | — | 2 | |||||||||||||
Gain on sale of business | — | — | (2 | ) | — | — | (2 | ) | ||||||||||
Other non recurring charges | (13 | ) | 8 | 6 | 1 | — | 2 | |||||||||||
Impairments | 36 | 222 | 5 | — | — | 263 | ||||||||||||
MtM (gains)/losses on economic hedges | (24 | ) | 29 | — | 2 | — | 7 | |||||||||||
Adjusted EBITDA | 225 | 674 | 60 | 221 | (77 | ) | 1,103 | |||||||||||
Third Quarter 2015 condensed financial information by Operating Segment: |
|||||||||||||||||
($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | |||||||||||
Operating revenues | 1,698 | 2,692 | 123 | 272 | (378 | ) | 4,407 | ||||||||||
Cost of sales | 1,255 | 1,449 | — | 20 | (364 | ) | 2,360 | ||||||||||
Economic gross margin | 443 | 1,243 | 123 | 252 | (14 | ) | 2,047 | ||||||||||
Operations & maintenance (a) | 50 | 384 | 39 | 38 | (3 | ) | 508 | ||||||||||
Selling, marketing, general & administrative | 116 | 127 | 16 | 3 | 65 | 327 | |||||||||||
Other income/(expense) (b) | 52 | 58 | 8 | (10 | ) | 1 | 109 | ||||||||||
Adjusted EBITDA | 225 | 674 | 60 | 221 | (77 | ) | 1,103 | ||||||||||
(a) Excludes deactivation costs of $2 million. |
(b) Excludes acquisition-related transaction & integration costs of $3 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
||||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
||||||||||||
Operating revenues | 4,434 | 8 | (35 | ) | — | — | 4,407 | |||||||||||
Cost of operations | 2,409 | (7 | ) | (42 | ) | — | — | 2,360 | ||||||||||
Gross margin | 2,025 | 15 | 7 | — | — | 2,047 | ||||||||||||
Operations & maintenance | 510 | — | — | (2 | ) | — | 508 | |||||||||||
Selling, marketing, general & administrative | 327 | — | — | — | — | 327 | ||||||||||||
Other expense/(income) (a) | 1,121 | (718 | ) | — | — | (294 | ) | 109 | ||||||||||
Net income | 67 | 733 | 7 | 2 | 294 | 1,103 |
(a) Other adj. includes impairments and acquisition-related transaction & integration costs. |
Appendix Table A-3: YTD Third 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) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | |||||||||||||
Net income/(loss) | 644 | 418 | (102 | ) | 111 | (907 | ) | 164 | |||||||||||
Plus: | |||||||||||||||||||
Interest expense, net | — | 56 | 84 | 212 | 478 | 830 | |||||||||||||
Income tax | — | (1 | ) | (14 | ) | 25 | 85 | 95 | |||||||||||
Loss on debt extinguishment | — | — | — | — | 119 | 119 | |||||||||||||
Depreciation, amortization and ARO expense | 80 | 506 | 144 | 226 | 50 | 1,006 | |||||||||||||
Amortization of contracts | — | (46 | ) | — | 57 | (3 | ) | 8 | |||||||||||
EBITDA | 724 | 933 | 112 | 631 | (178 | ) | 2,222 | ||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 23 | 16 | 58 | (4 | ) | 93 | ||||||||||||
Acquisition-related transaction & integration costs | — | — | — | — | 7 | 7 | |||||||||||||
Reorganization costs | 5 | 1 | 3 | — | 17 | 26 | |||||||||||||
Deactivation costs | — | 15 | — | — | 1 | 16 | |||||||||||||
(Gain)/loss on sale of business | — | (223 | ) | — | — | 79 | (144 | ) | |||||||||||
Other non recurring charges | — | 17 | 5 | 3 | 2 | 27 | |||||||||||||
Impairments | — | 226 | 25 | — | 19 | 270 | |||||||||||||
Market to market (MtM) (gains)/losses on economic hedges | (100 | ) | 348 | — | — | — | 248 | ||||||||||||
Adjusted EBITDA | 629 | 1,340 | 161 | 692 | (57 | ) | 2,765 | ||||||||||||
YTD Third Quarter 2016 condensed financial information by Operating Segment: |
||||||||||||||||||
($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | ||||||||||||
Operating revenues | 3,868 | 6,131 | 336 | 840 | (723 | ) | 10,452 | |||||||||||
Cost of sales | 2,711 | 3,166 | 3 | 48 | (796 | ) | 5,132 | |||||||||||
Economic gross margin | 1,157 | 2,965 | 333 | 792 | 73 | 5,320 | ||||||||||||
Operations & maintenance (a) | 164 | 1,239 | 96 | 118 | 9 | 1,626 | ||||||||||||
Selling, marketing, general & administrative (b) | 299 | 311 | 40 | 10 | 116 | 776 | ||||||||||||
Other expense/(income) (c) | 65 | 75 | 36 | (28 | ) | 5 | 153 | |||||||||||
Adjusted EBITDA | 629 | 1,340 | 161 | 692 | (57 | ) | 2,765 | |||||||||||
(a) Excludes deactivation costs of $16 million. |
(b) Excludes reorganization costs of $26 million. |
(c) Excludes acquisition-related transaction & integration costs of $7 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
||||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
||||||||||||
Operating revenues | 9,819 | 41 | 592 | — | — | 10,452 | ||||||||||||
Cost of operations | 4,794 | (6 | ) | 344 | — | — | 5,132 | |||||||||||
Gross margin | 5,025 | 47 | 248 | — | — | 5,320 | ||||||||||||
Operations & maintenance | 1,642 | — | — | (16 | ) | — | 1,626 | |||||||||||
Selling, marketing, general & administrative(a) | 802 | — | — | — | (26 | ) | 776 | |||||||||||
Other expense/(income) (b) | 2,417 | (2,011 | ) | — | — | (253 | ) | 153 | ||||||||||
Net income | 164 | 2,058 | 248 | 16 | 279 | 2,765 | ||||||||||||
(a) Other adj. includes reorganization costs of $26 million. |
(b) Other adj. includes impairments, gain/(loss) on sale of business and acquisition-related transaction & integration costs. |
Appendix Table A-4: YTD Third Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss): |
||||||||||||||||||
($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | ||||||||||||
Net income/(loss) | 523 | 213 | (74 | ) | 53 | (793 | ) | (78 | ) | |||||||||
Plus: | ||||||||||||||||||
Interest expense, net | — | 52 | 61 | 199 | 532 | 844 | ||||||||||||
Income tax | — | 3 | (13 | ) | 8 | (41 | ) | (43 | ) | |||||||||
Loss on debt extinguishment | — | — | — | 9 | — | 9 | ||||||||||||
Depreciation amortization and ARO expense | 94 | 706 | 134 | 224 | 43 | 1,201 | ||||||||||||
Amortization of contracts | — | (41 | ) | 1 | 40 | 1 | 1 | |||||||||||
EBITDA | 617 | 933 | 109 | 533 | (258 | ) | 1,934 | |||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 22 | 13 | 34 | (2 | ) | 67 | |||||||||||
Acquisition-related transaction & integration costs | 1 | — | — | 2 | 13 | 16 | ||||||||||||
Deactivation costs | — | 8 | — | — | — | 8 | ||||||||||||
Gain on sale of business | — | — | (2 | ) | — | — | (2 | ) | ||||||||||
Other non recurring charges | (14 | ) | 19 | 5 | 1 | — | 11 | |||||||||||
Impairments | 36 | 222 | 5 | — | — | 263 | ||||||||||||
MtM (gains)/losses on economic hedges | (34 | ) | 321 | 2 | (1 | ) | — | 288 | ||||||||||
Adjusted EBITDA | 606 | 1,525 | 132 | 569 | (247 | ) | 2,585 | |||||||||||
YTD Third Quarter 2015 condensed financial information by Operating Segment: |
||||||||||||||||||
($ in millions) | Retail Mass | Generation | Renewables | Yield | Corp/Elim | Total | ||||||||||||
Operating revenues | 4,308 | 7,442 | 307 | 768 | (969 | ) | 11,856 | |||||||||||
Cost of sales | 3,136 | 4,023 | 6 | 58 | (941 | ) | 6,282 | |||||||||||
Economic gross margin | 1,172 | 3,419 | 301 | 710 | (28 | ) | 5,574 | |||||||||||
Operations & maintenance (a) | 165 | 1,384 | 96 | 120 | 9 | 1,774 | ||||||||||||
Selling, marketing, general & administrative | 306 | 343 | 37 | 9 | 183 | 878 | ||||||||||||
Other expense/(income) (b) | 95 | 167 | 36 | 12 | 27 | 337 | ||||||||||||
Adjusted EBITDA | 606 | 1,525 | 132 | 569 | (247 | ) | 2,585 | |||||||||||
(a) Excludes deactivation costs of $8 million. |
(b) Excludes acquisition-related transaction & integration costs of $16 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
||||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
||||||||||||
Operating revenues | 11,663 | 28 | 165 | — | — | 11,856 | ||||||||||||
Cost of operations | 6,416 | (11 | ) | (123 | ) | — | — | 6,282 | ||||||||||
Gross margin | 5,247 | 39 | 288 | — | — | 5,574 | ||||||||||||
Operations & maintenance | 1,782 | — | — | (8 | ) | — | 1,774 | |||||||||||
Selling, marketing, general & administrative | 878 | — | — | — | — | 878 | ||||||||||||
Other expense/(income) (a) | 2,665 | (1,974 | ) | — | — | (354 | ) | 337 | ||||||||||
Net loss | (78 | ) | 2,013 | 288 | 8 | 354 | 2,585 | |||||||||||
(a) Other adj. includes impairments and acquisition-related transaction & integration costs. |
Appendix Table A-5: 2016 and 2015 QTD and YTD Third 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: |
||||||||
Three Months Ended | ||||||||
($ in millions) | September 30, 2016 | September 30, 2015 | ||||||
Net Cash Provided by Operating Activities | 860 | 934 | ||||||
Reclassifying of net receipts for settlement of acquired derivatives that include financing elements | 26 | 47 | ||||||
Sale of Potrero Land | 74 | — | ||||||
Merger, integration and cost-to-achieve expenses (1) | 22 | 1 | ||||||
Return of capital from equity investments | (5 | ) | — | |||||
Adjustment for change in collateral | 119 | 68 | ||||||
Adjusted Cash Flow from Operating Activities | 1,096 | 1,050 | ||||||
Maintenance CapEx, net (2) | (103 | ) | (125 | ) | ||||
Environmental CapEx, net | (48 | ) | (30 | ) | ||||
Preferred dividends | — | (2 | ) | |||||
Distributions to non-controlling interests | (34 | ) | (32 | ) | ||||
Free Cash Flow - before Growth Investments | 911 | 861 | ||||||
(1) Cost-to-achieve expenses associated with the $150 million savings announced on September 2015 call. |
(2) Includes insurance proceeds of $2 million in 2016; excludes merger and integration capex of $2 million in 2015. |
Nine Months Ended | ||||||||
($ in millions) | September 30, 2016 | September 30, 2015 | ||||||
Net Cash Provided by Operating Activities | 1,733 | 1,392 | ||||||
Reclassifying of net receipts for settlement of acquired derivatives that include financing elements | 129 | 138 | ||||||
Sale of Potrero Land | 74 | — | ||||||
Merger, integration and cost-to-achieve expenses (1) | 47 | 18 | ||||||
Return of capital from equity investments | 6 | — | ||||||
Adjustment for change in collateral | (231) | 180 | ||||||
Adjusted Cash Flow from Operating Activities | 1,758 | 1,728 | ||||||
Maintenance CapEx, net (2) | (272) | (314 | ) | |||||
Environmental CapEx, net | (237) | (157 | ) | |||||
Preferred dividends | (2) | (7 | ) | |||||
Distributions to non-controlling interests | (116) | (115 | ) | |||||
Free Cash Flow - before Growth Investments | 1,131 | 1,135 | ||||||
(1) Cost-to-achieve expenses associated with the $150 million savings announced on September 2015 call. |
(2) Includes insurance proceeds of $33 million in 2016; excludes merger and integration capex of $11 million in 2015. |
Appendix Table A-6: Third Quarter 2016 Regional Adjusted EBITDA Reconciliation for Generation The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net (loss)/income: |
|||||||||||||||
($ in millions) | East | Gulf Coast | West |
Business |
Total | ||||||||||
Net income/(loss) | 385 | 216 | 110 | (81 | ) | 630 | |||||||||
Plus: | |||||||||||||||
Interest expense, net | 14 | — | — | — | 14 | ||||||||||
Income tax | — | (2 | ) | — | — | (2 | ) | ||||||||
Depreciation, amortization and ARO expense | 50 | 127 | 20 | 1 | 198 | ||||||||||
Amortization of contracts | (17 | ) | 1 | — | 1 | (15 | ) | ||||||||
EBITDA | 432 | 342 | 130 | (79 | ) | 825 | |||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | — | 2 | 5 | 7 | ||||||||||
Deactivation costs | 2 | — | 1 | — | 3 | ||||||||||
Gain on sale of assets | (188 | ) | — | (6 | ) | — | (194 | ) | |||||||
Other non recurring charges | — | 6 | — | — | 6 | ||||||||||
Impairments | 1 | 13 | (1 | ) | — | 13 | |||||||||
Market to market (MtM) losses/(gains) on economic hedges | 38 | (207 | ) | (3 | ) | 117 | (55 | ) | |||||||
Adjusted EBITDA | 285 | 154 | 123 | 43 | 605 | ||||||||||
Third Quarter 2016 condensed financial information for Generation: |
||||||||||||||||||
($ in millions) | East | Gulf Coast | West |
Business |
Elims. | Total | ||||||||||||
Operating revenues | 1,002 | 804 | 147 | 394 | (25 | ) | 2,322 | |||||||||||
Cost of sales | 452 | 454 | 60 | 331 | (21 | ) | 1,276 | |||||||||||
Economic gross margin | 550 | 350 | 87 | 63 | (4 | ) | 1,046 | |||||||||||
Operations & maintenance (a) | 188 | 143 | 33 | 5 | — | 369 | ||||||||||||
Selling, marketing, general & administrative | 43 | 31 | 7 | 20 | — | 101 | ||||||||||||
Other expense/(income) | 34 | 22 | (76 | ) | (5 | ) | (4 | ) | (29 | ) | ||||||||
Adjusted EBITDA | 285 | 154 | 123 | 43 | — | 605 | ||||||||||||
(a) Excludes deactivation costs of $3 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
||||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
||||||||||||
Operating revenues | 2,390 | (4 | ) | (64 | ) | — | — | 2,322 | ||||||||||
Cost of operations | 1,287 | (2 | ) | (9 | ) | — | — | 1,276 | ||||||||||
Gross margin | 1,103 | (2 | ) | (55 | ) | — | — | 1,046 | ||||||||||
Operations & maintenance | 372 | — | — | (3 | ) | — | 369 | |||||||||||
Selling, marketing, general & administrative | 101 | — | — | — | — | 101 | ||||||||||||
Other expense/(income) (a) | - | (197 | ) | — | — | 168 | (29 | ) | ||||||||||
Net income | 630 | 195 | (55 | ) | 3 | (168 | ) | 605 | ||||||||||
(a) Other adj. includes impairments and acquisition-related transaction & integration costs. |
Appendix Table A-7: Third 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 |
Total | ||||||||||
Net (loss)/income | (12 | ) | 124 | 63 | (11 | ) | 164 | ||||||||
Plus: | |||||||||||||||
Interest expense, net | 17 | — | — | — | 17 | ||||||||||
Income tax | — | — | — | 2 | 2 | ||||||||||
Depreciation amortization and ARO expense | 68 | 143 | 17 | 3 | 231 | ||||||||||
Amortization of contracts | (18 | ) | 1 | 4 | 2 | (11 | ) | ||||||||
EBITDA | 55 | 268 | 84 | (4 | ) | 403 | |||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 4 | 3 | 3 | 10 | ||||||||||
Deactivation costs | 2 | — | — | — | 2 | ||||||||||
Other non recurring charges | 1 | 7 | — | — | 8 | ||||||||||
Impairments | 222 | — | — | — | 222 | ||||||||||
MtM (gains)/losses on economic hedges | 31 | (31 | ) | (8 | ) | 37 | 29 | ||||||||
Adjusted EBITDA | 311 | 248 | 79 | 36 | 674 | ||||||||||
Third Quarter 2015 condensed financial information for Generation: |
|||||||||||||||||
($ in millions) | East | Gulf Coast | West |
Business |
Elims. | Total | |||||||||||
Operating revenues | 1,143 | 905 | 201 | 446 | (3 | ) | 2,692 | ||||||||||
Cost of sales | 515 | 465 | 90 | 379 | — | 1,449 | |||||||||||
Economic gross margin | 628 | 440 | 111 | 67 | (3 | ) | 1,243 | ||||||||||
Operations & maintenance (a) | 221 | 128 | 29 | 6 | — | 384 | |||||||||||
Selling, marketing, general & administrative | 53 | 41 | 11 | 22 | — | 127 | |||||||||||
Other expense/(income) | 43 | 23 | (8 | ) | 3 | (3 | ) | 58 | |||||||||
Adjusted EBITDA | 311 | 248 | 79 | 36 | — | 674 | |||||||||||
(a) Excludes deactivation costs of $2 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
|||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
|||||||||||
Operating revenues | 2,695 | (4 | ) | 1 | — | — | 2,692 | ||||||||||
Cost of operations | 1,484 | (7 | ) | (28 | ) | — | — | 1,449 | |||||||||
Gross margin | 1,211 | 3 | 29 | — | — | 1,243 | |||||||||||
Operations & maintenance | 386 | — | — | (2 | ) | — | 384 | ||||||||||
Selling, marketing, general & administrative | 127 | — | — | — | — | 127 | |||||||||||
Other expense/(income) (a) | 534 | (236 | ) | — | — | (240 | ) | 58 | |||||||||
Net income | 164 | 239 | 29 | 2 | 240 | 674 | |||||||||||
(a) Other adj. includes impairments. |
Appendix Table A-8: YTD Third 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 |
Total | |||||||||||
Net income/(loss) | 493 | (246 | ) | 73 | 98 | 418 | ||||||||||
Plus: | ||||||||||||||||
Interest expense, net | 56 | 1 | — | (1 | ) | 56 | ||||||||||
Income tax | — | (2 | ) | — | 1 | (1 | ) | |||||||||
Depreciation, amortization and ARO expense | 162 | 281 | 55 | 8 | 506 | |||||||||||
Amortization of contracts | (52 | ) | 4 | (3 | ) | 5 | (46 | ) | ||||||||
EBITDA | 659 | 38 | 125 | 111 | 933 | |||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 5 | 7 | 11 | 23 | |||||||||||
Reorganization costs | — | — | — | 1 | 1 | |||||||||||
Deactivation costs | 15 | — | — | — | 15 | |||||||||||
Gain on sale of assets | (217 | ) | — | (6 | ) | — | (223 | ) | ||||||||
Other non recurring charges | 3 | 14 | — | — | 17 | |||||||||||
Impairments | 17 | 151 | 58 | — | 226 | |||||||||||
Market to market (MtM) losses/(gains) on economic hedges | 175 | 208 | 15 | (50 | ) | 348 | ||||||||||
Adjusted EBITDA | 652 | 416 | 199 | 73 | 1,340 | |||||||||||
Third YTD Quarter 2016 condensed financial information for Generation: |
|||||||||||||||||
($ in millions) | East | Gulf Coast | West |
Business |
Elims. | Total | |||||||||||
Operating revenues | 2,662 | 2,089 | 358 | 1,055 | (33 | ) | 6,131 | ||||||||||
Cost of sales | 1,070 | 1,082 | 111 | 924 | (21 | ) | 3,166 | ||||||||||
Economic gross margin | 1,592 | 1,007 | 247 | 131 | (12 | ) | 2,965 | ||||||||||
Operations & maintenance (a) | 698 | 429 | 95 | 17 | — | 1,239 | |||||||||||
Selling, marketing, general & administrative (b) | 133 | 98 | 24 | 56 | — | 311 | |||||||||||
Other expense/(income) | 109 | 64 | (71 | ) | (15 | ) | (12 | ) | 75 | ||||||||
Adjusted EBITDA | 652 | 416 | 199 | 73 | — | 1,340 | |||||||||||
(a) Excludes deactivation costs of $15 million. |
(b) Excludes reorganization costs of $1 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
||||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
||||||||||||
Operating revenues | 5,599 | (11 | ) | 543 | — | — | 6,131 | |||||||||||
Cost of operations | 2,973 | (2 | ) | 195 | — | — | 3,166 | |||||||||||
Gross Margin | 2,626 | (9 | ) | 348 | — | — | 2,965 | |||||||||||
Operations & maintenance | 1,254 | — | — | (15 | ) | — | 1,239 | |||||||||||
Selling, marketing, general & administrative | 312 | — | — | — | (1 | ) | 311 | |||||||||||
Other expense/(income) (a) | 642 | (524 | ) | — | — | (43 | ) | 75 | ||||||||||
Net loss | 418 | 515 | 348 | 15 | 44 | 1,340 | ||||||||||||
(a) Other adj. includes impairments and acquisition-related transaction & integration costs. |
Appendix Table A-9: YTD Third 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 |
Total | ||||||||||
Net income/(loss) | 181 | 49 | 30 | (47 | ) | 213 | |||||||||
Plus: | |||||||||||||||
Interest expense, net | 52 | — | — | — | 52 | ||||||||||
Income tax | — | — | — | 3 | 3 | ||||||||||
Depreciation amortization and ARO expense | 220 | 431 | 46 | 9 | 706 | ||||||||||
Amortization of contracts | (50 | ) | 3 | 1 | 5 | (41 | ) | ||||||||
EBITDA | 403 | 483 | 77 | (30 | ) | 933 | |||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | — | 5 | 6 | 11 | 22 | ||||||||||
Deactivation costs | 5 | — | 3 | — | 8 | ||||||||||
Other non recurring charges | 2 | 17 | — | — | 19 | ||||||||||
Impairments | 222 | — | — | — | 222 | ||||||||||
MtM losses on economic hedges | 253 | (20 | ) | 5 | 83 | 321 | |||||||||
Adjusted EBITDA | 885 | 485 | 91 | 64 | 1,525 | ||||||||||
Third YTD Quarter 2015 condensed financial information for Generation: |
||||||||||||||||||
($ in millions) | East | Gulf Coast | West |
Business |
Elims. | Total | ||||||||||||
Operating revenues | 3,518 | 2,386 | 366 | 1,182 | (10 | ) | 7,442 | |||||||||||
Cost of sales | 1,601 | 1,236 | 142 | 1,044 | — | 4,023 | ||||||||||||
Economic gross margin | 1,917 | 1,150 | 224 | 138 | (10 | ) | 3,419 | |||||||||||
Operations & maintenance (a) | 776 | 488 | 102 | 18 | — | 1,384 | ||||||||||||
Selling, marketing, general & administrative | 141 | 114 | 30 | 58 | — | 343 | ||||||||||||
Other expense/(income) | 115 | 63 | 1 | (2 | ) | (10 | ) | 167 | ||||||||||
Adjusted EBITDA | 885 | 485 | 91 | 64 | — | 1,525 | ||||||||||||
(a) Excludes deactivation costs of $8 million. |
The following table reconciles the condensed financial information to Adjusted EBITDA: |
|||||||||||||||||
($ in millions) |
Condensed |
Interest, tax, |
MtM | Deactivation | Other adj. |
Adjusted |
|||||||||||
Operating revenues | 7,325 | (12 | ) | 129 | — | — | 7,442 | ||||||||||
Cost of operations | 4,225 | (10 | ) | (192 | ) | — | — | 4,023 | |||||||||
Gross margin | 3,100 | (2 | ) | 321 | — | — | 3,419 | ||||||||||
Operations & maintenance | 1,392 | — | — | (8 | ) | — | 1,384 | ||||||||||
Selling, marketing, general & administrative | 343 | — | — | — | — | 343 | |||||||||||
Other expense/(income) (a) | 1,152 | (721 | ) | — | — | (264 | ) | 167 | |||||||||
Net income | 213 | 719 | 321 | 8 | 264 | 1,525 | |||||||||||
(a) Other adj. includes impairments and acquisition-related transaction & integration costs. |
Appendix Table A-10: YTD Third Quarter 2016 Sources and Uses of Liquidity The following table summarizes the sources and uses of liquidity in the first nine months of 2016: |
|||
($ in millions) |
Nine Months Ended
September 30, 2016 |
||
Sources: | |||
Adjusted cash flow from operations | 1,758 | ||
Asset sales | 562 | ||
Issuance of NRG Yield Senior Notes due 2026 | 350 | ||
Monetization of capacity revenues at Midwest Gen | 253 | ||
Collateral | 231 | ||
Issuance of CVSR HoldCo debt | 200 | ||
Capistrano debt proceeds, net of debt repayment | 108 | ||
Tax Equity Proceeds | 11 | ||
Increase in credit facility | 1 | ||
Uses: | |||
Maintenance and environmental capex, net (1) | (509 | ) | |
Debt repayments, discretionary, net of proceeds (corporate-level) | (380 | ) | |
Debt repayments, non-discretionary | (363 | ) | |
Growth investments and acquisitions, net | (312 | ) | |
Proceeds from NRG Yield revolver, net of payments | (306 | ) | |
Redemption of convertible preferred stock | (226 | ) | |
Distributions to non-controlling interests | (116 | ) | |
Capistrano distribution of debt proceeds to non-controlling interests | (87 | ) | |
Debt Issuance Costs | (70 | ) | |
Common and Preferred Stock Dividends | (66 | ) | |
Merger, integration and cost-to-achieve expenses (2) | (47 | ) | |
Other Investing and Financing | (8 | ) | |
Change in Total Liquidity | 984 | ||
(1) Includes insurance proceeds of $33 million. |
(2) Cost-to-achieve expenses associated with the $150 million savings announced on September 2015 call. |
Appendix Table A-11: 2016 and 2017 Adjusted EBITDA Guidance Reconciliation The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to net income: |
|||||||
2016 Adjusted EBITDA
Prior Guidance |
|||||||
($ in millions) | Low | High | |||||
GAAP Net Income 1 | 180 | 380 | |||||
Income Tax | 100 | 100 | |||||
Interest Expense & Debt Extinguishment Costs | 1,185 | 1,185 | |||||
Depreciation, Amortization, Contract Amortization and ARO Expense | 1,445 | 1,445 | |||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | 45 | 45 | |||||
Other Costs 2 | 45 | 45 | |||||
Adjusted EBITDA | 3,000 | 3,200 | |||||
2016 Adjusted EBITDA
Revised Guidance |
|||||||
($ in millions) | Low | High | |||||
GAAP Net Income 1 | 235 | 335 | |||||
Income Tax | 100 | 100 | |||||
Interest Expense & Debt Extinguishment Costs | 1,228 | 1,228 | |||||
Depreciation, Amortization, Contract Amortization and ARO Expense | 1,352 | 1,352 | |||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | 115 | 115 | |||||
Other Costs 2 | 220 | 220 | |||||
Adjusted EBITDA | 3,250 | 3,350 | |||||
2017 Adjusted EBITDA | |||||||
($ in millions) | Low | High | |||||
GAAP Net Income 1 | 60 | 260 | |||||
Income Tax | 80 | 80 | |||||
Interest Expense & Debt Extinguishment Costs | 1,155 | 1,155 | |||||
Depreciation, Amortization, Contract Amortization and ARO Expense | 1,235 | 1,235 | |||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | 110 | 110 | |||||
Other Costs 2 | 60 | 60 | |||||
Adjusted EBITDA | 2,700 | 2,900 | |||||
(1) For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero. |
(2) Includes deactivation costs, gain on sale of businesses, reorganization costs, asset write-offs, impairments and other non-recurring charges |
Appendix Table A-12: 2016 and 2017 FCFbG Guidance Reconciliation The following table summarizes the calculation of Free Cash Flow before Growth providing reconciliation to Cash from Operations: |
|||||||||
|
2016 | 2017 | |||||||
($ in millions) | Prior Guidance |
Narrowed |
Guidance | ||||||
Adjusted EBITDA | $3,000 – 3,200 | $3,250 – 3,350 | $2,700 - $2,900 | ||||||
Cash Interest payments | (1,090) | (1,115) | (1,065) | ||||||
Debt Extinguishment Cash Cost | (100) | (120) | 0 | ||||||
Cash Income tax | (40) | (40) | (40) | ||||||
Collateral / working capital / other | 285 | 0 | (240) | ||||||
Cash From Operations | $2,055 – 2,255 | $1,975 – 2,075 | $1,355 - $1,555 | ||||||
Adjustments: Acquired Derivatives, Cost-to-Achieve, Return of Capital Dividends, Collateral and Other | (210) | 25 | 0 | ||||||
Adjusted Cash flow from operations | $1,845 – 2,045 | $2,000 – 2,100 | $1,355 - $1,555 | ||||||
Maintenance capital expenditures, net | (435) – (465) | (435) – (450) | (310) - (340) | ||||||
Environmental capital expenditures, net | (285) – (315) | (280) – (290) | (10) - (30) | ||||||
Preferred dividends | (2) | (2) | 0 | ||||||
Distributions to non-controlling interests | (170) – (180) | (160) – (170) | (185) - (205) | ||||||
Free Cash Flow – before Growth Investments | $1,000 – 1,200 | $1,100 – 1,200 | $800 - $1,000 | ||||||
EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.
EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:
- EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
- EBITDA does not reflect changes in, or cash requirements for, working capital needs;
- EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
- Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG’s business. NRG compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.
Adjusted EBITDA is presented as a further supplemental measure of operating performance. As NRG defines it, Adjusted EBITDA represents EBITDA excluding impairment losses, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from accounting for derivatives, adjustments to exclude the Adjusted EBITDA related to the non-controlling interest, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
Management believes Adjusted EBITDA is useful to investors and other users of NRG's financial statements in evaluating its operating performance because it provides an additional tool to compare business performance across companies and across periods and adjusts for items that we do not consider indicative of NRG’s future operating performance. This measure is widely used by debt-holders to analyze operating performance and debt service capacity and by equity investors to measure our operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.
Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration and related restructuring costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger, integration related restructuring costs as they are one time and unique in nature and do not reflect ongoing cash from operations and they are fully disclosed to investors.
Free cash flow (before Growth 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/20161104005309/en/
Source:
NRG Energy, Inc.
Media:
Karen Cleeve, 609-524-4608
or
Marijke
Shugrue, 609-524-5262
or
Investors:
Kevin L. Cole,
, 609-524-4526
CFA
or
Lindsey Puchyr, 609-524-4527