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NRG Energy, Inc. Reports Full-Year and Fourth Quarter Results; Increases Merger Synergies; Increases Dividend and Announces Share Buyback Program
Full-Year 2012 Financial and Business Highlights1
-
$1,917 million of Adjusted EBITDA, including$656 million delivered by NRG’s retail businesses; -
$898 million of Free Cash Flow (FCF) before growth investments; -
$0.36 per share annualized dividend initiated in the third quarter of 2012; -
$310 million /year2 in total annual synergiesarising out of GenOn merger;-
Cost synergies increased to
$185 million from$175 million
-
Cost synergies increased to
-
142,000 increase in Retail customer count during 2012; 91,000 in the
East market and 51,000 in the
Texas market; and - 290 MW of solar generation came online during 2012
Reaffirming 2013 and 2014 Guidance
-
Reaffirming guidance for Adjusted EBITDA and FCF before growth
investments:
-
Adjusted EBITDA guidance:
$2,535-$2,735 million and$2,700 -$2,900 million , for 2013 and 2014 respectively -
FCF before growth investments of
$900-$1,100 million for each of 2013 and 2014
-
Adjusted EBITDA guidance:
Capital Allocation
-
Planning a 33% increase in annual common stock dividend (from
$0.36 to$0.48 per share) commencing with the next quarterly payment; and
-
$200 million share repurchase program authorized
Fourth quarter adjusted EBITDA was
“NRG withstood a weak commodity price environment in 2012 to achieve
solid financial results and robust free cash flow,” commented
Segment Results
Table 1: Adjusted EBITDA |
||||||||||||||||||||||||
($ in millions) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Segment | 12/31/12 | 12/31/11 | 12/31/12 | 12/31/11 | ||||||||||||||||||||
Retail | 152 | 160 | 656 | 664 | ||||||||||||||||||||
Wholesale | ||||||||||||||||||||||||
Gulf Coast | ||||||||||||||||||||||||
- Texas |
190 | 200 | 880 | 842 | ||||||||||||||||||||
- South Central |
16 | 19 | 99 | 125 | ||||||||||||||||||||
East | 34 | (6) | 117 | 88 | ||||||||||||||||||||
West | 18 | 14 | 87 | 73 | ||||||||||||||||||||
Other | 13 | 13 | 65 | 56 | ||||||||||||||||||||
Alternative Energy(1) | 17 | (6) | 52 | (15) | ||||||||||||||||||||
Corporate | (20) | (4) | (39) | (13) | ||||||||||||||||||||
Adjusted EBITDA(2) | 420 | 390 | 1,917 | 1,820 |
(1) Alternative Energy includes the results of the Company’s Solar
projects
(2) Detailed adjustments by region are shown in Appendix A
Table 2: Net Income/(Loss) |
||||||||||||||||||||||||
($ in millions) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Segment | 12/31/12 | 12/31/11 | 12/31/12 | 12/31/11 | ||||||||||||||||||||
Retail | 37 | 19 | 541 | 369 | ||||||||||||||||||||
Wholesale | ||||||||||||||||||||||||
Gulf Coast | ||||||||||||||||||||||||
- Texas |
108 | 123 | (94) | 316 | ||||||||||||||||||||
- South Central |
2 | (60) | 2 | (14) | ||||||||||||||||||||
East | (19) | (73) | (39) | (86) | ||||||||||||||||||||
West | 17 | 3 | 59 | 54 | ||||||||||||||||||||
Other | 8 | 5 | 33 | 19 | ||||||||||||||||||||
Alternative Energy(1) | (14) | (15) | (54) | (57) | ||||||||||||||||||||
Corporate | 377 | (111) | 111 | (404) | ||||||||||||||||||||
Net Income/(Loss) | 516 | (109) | 559 | 197 |
(1) Alternative Energy includes the results of the Company’s Solar projects
Retail: Full-year 2012 adjusted EBITDA totaled
Fourth-quarter adjusted EBITDA was
Fourth-quarter adjusted EBITDA was
Fourth-quarter adjusted EBITDA was
East: Full-year adjusted EBITDA totaled
Fourth-quarter adjusted EBITDA was
West: Full-year adjusted EBITDA totaled
Fourth-quarter adjusted EBITDA was
Alternative Energy: Full-year adjusted EBITDA totaled
Fourth-quarter adjusted EBITDA was
GenOn stand-alone results: Full-year adjusted EBITDA for GenOn
totaled
Liquidity and Capital Resources
Table 3: Corporate Liquidity |
||||||||||||||||||
($ in millions) | 12/31/12 | 9/30/12 | 12/31/11 | |||||||||||||||
Cash and Cash Equivalents | 2,087 | 1,610 | 1,105 | |||||||||||||||
Funds deposited by counterparties | 271 | 76 | 258 | |||||||||||||||
Restricted cash | 217 | 237 | 292 | |||||||||||||||
Total Cash and Funds Deposited | 2,575 | 1,923 | 1,655 | |||||||||||||||
Revolver Availability | 1,058 | 1,133 | 673 | |||||||||||||||
Total Liquidity | 3,633 | 3,056 | 2,328 | |||||||||||||||
Less: Funds deposited as collateral by hedge counterparties |
(271) |
(76) |
(258) |
|||||||||||||||
Total Current Liquidity | 3,362 | 2,980 | 2,070 | |||||||||||||||
Less: Reserve for 2017 bond redemption(1) | - | (270) | - | |||||||||||||||
Total Current Liquidity, adjusted | 3,362 | 2,710 | 2,070 |
(1) On
Total current liquidity, as of
-
$1,127 million of adjusted cash flow from operations; -
$983 million cash acquired in the GenOn transaction, net of$686 million used to retire the GenOn term loan at closing; -
$174 million in gross proceeds from the sale of Schkopau, partially offset by$42 million of cash remaining on Schkopau’s balance sheet on date of sale; -
$122 million in proceeds from the sell down of theAgua Caliente project; -
Partially offset by
$1,382 million of cash outflows consisting of the following items:-
$733 million for solar and conventional growth investments (net of debt and third party funding of$2,337 million ); -
$220 million of cash paid for maintenance and environmental capital expenditures (net of financing of$47 million ); -
$172 million net paydown of Senior Notes and$79 million of scheduled debt amortization; -
$50 million in payments of dividends to preferred and common shareholders; -
$46 million in merger related payments; and -
$82 million in other investing and financing activities
-
Growth Initiatives and Developments
NRG continued to advance its leadership position in sustainable energy including:
Solar
-
Agua Caliente – As ofDecember 31, 2012 , 253 MW of generation capacity have achieved commercial operation makingAgua Caliente the largest operating solar photovoltaic (PV) project inthe United States . Overall, construction atAgua Caliente is several months ahead of schedule and currently is expected to reach completion in early 2014. Power generated byAgua Caliente is being sold under a 25-year PPA withPacific Gas and Electric Co (PG&E ). -
CVSR – Construction of the
California Valley Solar Ranch project is ahead of schedule with 127 MW having achieved operation byDecember 31, 2012 , with the remaining 123 MW expected to come on line by the fourth quarter of 2013. Power from this project is being sold toPG&E under a 25-year PPA. -
Ivanpah – Unit 1 (124 MW) is expected to reach commercial
operations in
August 2013 . The remaining two units (each at 127 MW) currently are expected to be completed in the third and fourth quarter of 2013. Power from Units 1 and 3 will be sold toPacific Gas & Electric via two 25-year PPAs, and power from Unit 2 will be sold to Southern California Edison under a 20-year PPA. -
Other Solar –
Avra Valley (25 MW under a 20-year PPA withTucson Electric Power ) reached commercial operation inDecember 2012 . The Borrego project (26 MW under a 25-year PPA withSan Diego Gas & Electric) and Alpine (66 MW under a 20 year PPA withPacific Gas & Electric) reached commercial operation in the first quarter of 2013. Our Distributed Generation scale installations continued withGillette Stadium achieving commercial operation inDecember 2012 andLincoln Financial Field achieving commercial operation inFebruary 2013 .
Conventional
-
Marsh Landing –The Company is continuing construction of the
Marsh Landing project, a 720 MW natural gas-fueled peaking facility
adjacent to the Company's
Contra Costa generating facility nearAntioch, California . The facility is being constructed pursuant to a 10 year PPA withPG&E . The Company expects to achieve commercial operation in the second quarter of 2013. -
El Segundo –The Company is continuing construction, at itsEl Segundo Power Generating Station , of a 550 MW fast-start, combined-cycle plant. The plant is being constructed pursuant to a 10 year, 550 MW PPA with Southern California Edison. The Company expects a commercial operation date in the third quarter of 2013. -
Petra Nova –Petra Nova continues with the development of its peaking unit at NRG’sWA Parish Generating Station and onAugust 14, 2012 , signed a$24 million lump-sum, turnkey EPC contract.Petra Nova is targeting a second quarter 2013 commercial operation date and it is anticipated that the unit will eventually be used as a cogeneration facility dedicated to aCarbon Capture Utilization and Storage Project , funded in part by theU.S. Department of Energy , at the Parish facility. The peaking unit is being financed, largely with the proceeds of a$54 million tax-exempt bond financing that was completed onMay 3, 2012 , of which NRG has drawn$23 million throughDecember 31, 2012 .
Outlook for 2013 and 2014
NRG is reaffirming the guidance announced by the Company on
Table 4: 2013 and 2014 Adjusted EBITDA and Free Cash Flow before growth investment Guidance (Current) |
||||||||||||
|
2013 Guidance | 2014 Guidance | ||||||||||
(dollars in millions) | 2/27/2013 | 2/27/2013 | ||||||||||
Adjusted EBITDA | 2,535 – 2,735 | 2,700 – 2,900 | ||||||||||
Interest payments | (920) | (1,000) | ||||||||||
Income tax | (30) | 40 | ||||||||||
Collateral/working capital/other changes | (50) | (200) | ||||||||||
Cash flow from operations | 1,525 – 1,725 | 1,550 – 1,750 | ||||||||||
Maintenance capital expenditures, net | (420)-(440) | (390)-(410) | ||||||||||
Environmental capital expenditures, net | (175)-(195) | (230)-(250) | ||||||||||
Preferred dividends | (9) | (9) | ||||||||||
Free cash flow – before growth investments | 900 – 1,100 | 900 – 1,100 |
Notes:
-
Current guidance, including all components thereof, is identical to
the guidance provided on
January 22, 2013 . - Subtotals and totals are rounded
Change in Methodology for Adjusted EBITDA and Free Cash Flow before growth investments
Beginning in 2013, NRG will modify the calculation of both Adjusted
EBITDA and FCF before growth investments primarily to provide greater
clarity for partially owned investments, including solar projects such
as
-
Adjusted EBITDA (Revised)
- Increase adjusted EBITDA to reflect pro rata portion of Adjusted EBITDA from NRG’s equity investments in unconsolidated subsidiaries (previously adjusted EBITDA included only GAAP equity earnings attributed to such investments);
- Discontinue deduction of non-controlling interest (GAAP earnings) and disclose non-controlling pro rata EBITDA (and debt) for such investments separately;
- Exclude plant deactivation costs; and
- Exclude interest income (now included as a reduction to interest expense)
-
Free Cash Flow Before Growth (Revised)
- Reduce FCF Before Growth Investments by distributions to non-controlling interests
The following tables reflect the change in our guidance ranges as we implement our new methodology of calculating adjusted EBITDA (Revised) and FCF before growth investments (Revised):
Table 5: 2013 Adjusted EBITDA and Free Cash Flow before growth Guidance – Revised vs. Current |
||||||||
($ in millions) | Revised(1) | Current | ||||||
Adjusted EBITDA | 2,615– 2,815 | 2,535– 2,735 | ||||||
Free cash flow – before growth investments | 900 – 1,100 | 900 – 1,100 |
Table 6: 2014 Reconciliation of Adjusted EBITDA Guidance – Revised vs. Current |
||||||||||||
($ in millions) | Revised(1) | Current | ||||||||||
Adjusted EBITDA | 2,760– 2,960 | 2,700– 2,900 | ||||||||||
Free cash flow – before growth investments | 900 – 1,100 | 900 – 1,100 |
(1) The pro-rata amount of Adjusted EBITDA associated with
non-controlling interests is
A detailed reconciliation of adjusted EBITDA and FCF before Growth Investments from our current to revised methodology can be found in Appendix A.
2013 Capital Allocation Program
While NRG deployed a substantial amount of its excess capital in 2012 to
invest in new growth projects (
Having substantially completed its
Earnings Conference Call
On
About NRG
NRG is at the forefront of changing how people think about and use
energy. We deliver cleaner and smarter energy choices for our customers,
backed by the nation’s largest independent power generation portfolio of
fossil fuel, nuclear, solar and wind facilities. A Fortune 300 company,
NRG is challenging the U.S. energy industry by becoming the largest
developer of solar power, building the first privately funded electric
vehicle charging infrastructure, and providing customers with the most
advanced smart energy solutions to better manage their energy use. In
addition to 47,000 megawatts of generation capacity, enough to supply
nearly 40 million homes, our retail electricity providers – Reliant,
Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions and include our Adjusted EBITDA, free cash flow guidance, expected earnings, future growth, financial performance, capital allocation, environmental capital expenditures, expected benefits from the GenOn acquisition and development projects, and typically can be identified by the use of words such as “will,” “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “believe” and similar terms. Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, successful partnering relationships, government loan guarantees, competition in wholesale and retail 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, our ability to utilize tax incentives, 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, our inability to implement value enhancing improvements to plant operations and companywide processes, the ability to successfully integrate the businesses of NRG and GenOn, the ability to realize anticipated benefits of the transaction (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, our ability to maintain retail customers, and our ability to achieve the expected benefits and timing of development projects. Furthermore, any common stock dividend or share repurchases are subject to available capital, market conditions, and compliance with associated laws and regulations.
NRG undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. The Adjusted EBITDA guidance and free cash flows are
estimates as of today’s date,
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited) Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
(In millions, except for per share amounts) |
|||||||||||||||||
Operating Revenues | |||||||||||||||||
Total operating revenues | $2,063 | $2,132 | $8,422 | $9,079 | |||||||||||||
Operating Costs and Expenses | |||||||||||||||||
Cost of operations | 1,469 | 1,690 | 6,087 | 6,675 | |||||||||||||
Depreciation and amortization | 247 | 231 | 950 | 896 | |||||||||||||
Impairment charge on emissions allowance | — | — | — | 160 | |||||||||||||
Selling, general and administrative | 211 | 189 | 892 | 668 | |||||||||||||
Acquisition-related transaction and integration costs | 89 | — | 107 | — | |||||||||||||
Development costs | 10 | 13 | 36 | 45 | |||||||||||||
Total operating costs and expenses | 2,026 | 2,123 | 8,072 | 8,444 | |||||||||||||
Operating Income | 37 | 9 | 350 | 635 | |||||||||||||
Other Income/(Expense) | |||||||||||||||||
Equity in earnings of unconsolidated affiliates | 11 | 9 | 37 | 35 | |||||||||||||
Bargain purchase gain related to GenOn acquisition | 560 | — | 560 | — | |||||||||||||
Impairment charge on investment | — | — | (2) | (495) | |||||||||||||
Other income, net | 5 | 6 | 19 | 19 | |||||||||||||
Loss on debt extinguishment | (10) | — | (51) | (175) | |||||||||||||
Interest expense | (166) | (161) | (661) | (665) | |||||||||||||
Total other expense | 400 | (146) | (98) | (1,281) | |||||||||||||
Income/(Loss) Before Income Taxes | 437 | (137) | 252 | (646) | |||||||||||||
Income tax benefit | (81) | (28) | (327) | (843) | |||||||||||||
Net Income/(Loss) | 518 | (109) | 579 | 197 | |||||||||||||
Less: Net income attributable to non-controlling interest | 2 | — | 20 | — | |||||||||||||
Net Income /(Loss) Attributable to NRG Energy, Inc. | 516 | (109) | 559 | 197 | |||||||||||||
Dividends for preferred shares | 2 | 2 | 9 | 9 | |||||||||||||
Income/(Loss) Available for Common Stockholders | $514 | ($111) | $550 | $188 | |||||||||||||
Earnings/(Loss) Per Share Attributable to NRG Energy, Inc. Common Stockholders | |||||||||||||||||
Weighted average number of common shares outstanding — basic | 247 | 229 | 232 | 240 | |||||||||||||
Net Income/(Loss) per weighted average common share — basic | $2.08 | ($0.48) | $2.37 | $0.78 | |||||||||||||
Weighted average number of common shares outstanding —diluted | 249 | 229 | 234 | 241 | |||||||||||||
Net Income/(Loss) per weighted average common share —diluted | $2.06 | ($0.48) | $2.35 | $0.78 | |||||||||||||
Dividends Per Common Share | $0.18 | $— | $0.18 | $— | |||||||||||||
CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited) Three months ended December 31, |
Twelve months ended December 31, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Net Income/(Loss) | $518 | ($109) | $579 | $197 | ||||||||||
Other Comprehensive Income/(Loss) net of tax | ||||||||||||||
Unrealized loss on derivatives, net of income tax benefit of $18,
$50, $94 and
$181 |
(31) | (84) | (163) | (309) | ||||||||||
Foreign currency translation adjustments, net of income tax benefit (expense) of $0,( $3) $1 and $1 | — | 3 | (1) | (2) | ||||||||||
Reclassification adjustment for translation gain realized upon sale of Schkopau, net of income tax benefit of $0,$0,$6 and $0 | — | — | (11) | — | ||||||||||
Available – for-sale securities, net of income tax benefit of $2, ($1), $1 and $0 | 1 | 1 | 3 | (1) | ||||||||||
Defined benefit plan, net of income tax benefit of $22, $27, $21 and $27 |
(52) | (47) | (52) | (46) | ||||||||||
Other comprehensive loss | (82) | (127) | (224) | (358) | ||||||||||
Comprehensive Income/( Loss) | 436 | (236) | 355 | (161) | ||||||||||
Less: Comprehensive income attributable to non-controlling interest | 2 | — | 20 | — | ||||||||||
Comprehensive Income /(Loss) Attributable to NRG Energy, Inc. | 434 | (236) | 335 | (161) | ||||||||||
Dividends for preferred shares | 2 | 2 | 9 | 9 | ||||||||||
Comprehensive Income /(Loss) available for common stockholders | $432 | ($238) | $326 | ($170) | ||||||||||
CONDENSED CONSOLIDATED
BALANCE SHEETS
December 31, 2012 | December 31, 2011 | |||||||||
(In millions, except shares) |
||||||||||
ASSETS | ||||||||||
Current Assets | ||||||||||
Cash and cash equivalents | $ |
2,087 |
$ |
1,105 |
||||||
Funds deposited by counterparties | 271 | 258 | ||||||||
Restricted cash | 217 | 292 | ||||||||
Accounts receivable — trade, less allowance for doubtful accounts of $32 and $23 | 986 | 834 | ||||||||
Inventory | 931 | 308 | ||||||||
Derivative instruments | 2,644 | 4,427 | ||||||||
Cash collateral paid in support of energy risk management activities | 229 | 311 | ||||||||
Deferred income taxes | 56 | - | ||||||||
Prepayments and other current assets | 535 | 214 | ||||||||
Total current assets | 7,956 | 7,749 | ||||||||
Property, plant and equipment, net of accumulated depreciation of $5,417 and $4,570 | 20,268 | 13,621 | ||||||||
Other Assets | ||||||||||
Equity investments in affiliates | 676 | 640 | ||||||||
Note receivable — affiliate and capital leases, less current portion | 79 | 342 | ||||||||
Goodwill | 1,956 | 1,886 | ||||||||
Intangible assets, net of accumulated amortization of $1,706 and $1,452 | 1,200 | 1,419 | ||||||||
Nuclear decommissioning trust fund | 473 | 424 | ||||||||
Derivative instruments | 662 | 483 | ||||||||
Deferred income taxes | 1,261 | - | ||||||||
Other non-current assets | 597 | 336 | ||||||||
Total other assets | 6,904 | 5,530 | ||||||||
Total Assets | $ |
35,128 |
$ |
26,900 |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current Liabilities | ||||||||||
Current portion of long-term debt and capital leases | $ |
147 |
$ |
87 |
||||||
Accounts payable | 1,170 | 808 | ||||||||
Derivative instruments | 1,981 | 4,029 | ||||||||
Deferred income taxes | - | 127 | ||||||||
Cash collateral received in support of energy risk management activities | 271 | 258 | ||||||||
Accrued interest | 191 | 165 | ||||||||
Other accrued expense | 567 | 281 | ||||||||
Other current liabilities | 350 | 106 | ||||||||
Total current liabilities | 4,677 | 5,861 | ||||||||
Other Liabilities | ||||||||||
Long-term debt and capital leases | 15,733 | 9,745 | ||||||||
Nuclear decommissioning reserve | 354 | 335 | ||||||||
Nuclear decommissioning trust liability | 273 | 254 | ||||||||
Postretirement and other benefit obligations | 803 | 400 | ||||||||
Deferred income taxes | 55 | 1,389 | ||||||||
Derivative instruments | 500 | 459 | ||||||||
Out-of-market commodity contracts | 1,216 | 183 | ||||||||
Other non-current liabilities | 735 | 356 | ||||||||
Total non-current liabilities | 19,669 | 13,121 | ||||||||
Total Liabilities | 24,346 | 18,982 | ||||||||
3.625% convertible perpetual preferred stock; $0.01 par value; 250,000 shares issued and outstanding (at liquidation value of $250, net of issuance costs) | 249 | 249 | ||||||||
Commitments and Contingencies | ||||||||||
Stockholders’ Equity | ||||||||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 399,112,616 and 304,183,720 shares issued and 322,606,898 and 227,519,521 shares outstanding at December 31, 2012 and 2011 | 4 | 3 | ||||||||
Additional paid-in capital | 7,587 | 5,346 | ||||||||
Retained earnings | 4,494 | 3,987 | ||||||||
Less treasury stock, at cost — 76,505,718 and 76,664,199 shares at December 31, 2012 and 2011 |
(1,920 |
) |
(1,924 |
) | ||||||
Accumulated other comprehensive (loss) income |
(150 |
) |
74 | |||||||
Non-controlling interest | 518 | 183 | ||||||||
Total Stockholders’ Equity | 10,533 | 7,669 | ||||||||
Total Liabilities and Stockholders’ Equity | $ |
35,128 |
$ |
26,900 |
||||||
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Year Ended December 31, | |||||||||
2012 | 2011 | ||||||||
(In millions) | |||||||||
Cash Flows from Operating Activities | |||||||||
Net income | $ | 579 |
|
|
$ | 197 | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Distributions and equity in earnings of unconsolidated affiliates | 2 | 9 | |||||||
Gain on bargain purchase | (560) | — | |||||||
Depreciation and amortization | 950 | 896 | |||||||
Provision for bad debts | 45 | 59 | |||||||
Amortization of nuclear fuel | 39 | 39 | |||||||
Amortization of financing costs and debt discount/premiums | 31 | 32 | |||||||
Loss on debt extinguishment | 9 | 58 | |||||||
Amortization of intangibles and out-of-market commodity contracts | 146 | 167 | |||||||
Amortization of unearned equity compensation | 41 | 28 | |||||||
Loss on disposals and sale of assets | 11 | 14 | |||||||
Impairment charges and asset write downs | — | 657 | |||||||
Changes in derivative instruments | 124 | (138) | |||||||
Changes in deferred income taxes and liability for uncertain tax benefits | (353) |
|
(859) | ||||||
Changes in nuclear decommissioning trust liability | 37 | 20 | |||||||
Cash (used)/provided by changes in other working capital, net of acquisition and disposition effects: | |||||||||
Accounts receivable – trade | (131) |
|
(119) | ||||||
Inventory | (172) | 145 | |||||||
Prepayments and other current assets | (26) | 59 | |||||||
Accounts payable | (132) |
|
9) | ||||||
Accrued expenses and other current liabilities | 231 | (111) | |||||||
Other assets and liabilities | 278 | 4 | |||||||
Net Cash Provided by Operating Activities | 1,149 |
|
1,166 | ||||||
Cash Flows from Investing Activities | |||||||||
Acquisitions of business, net of cash acquired | (81) | (377) | |||||||
Cash acquired in GenOn acquisition | 983 | — | |||||||
Capital expenditures | (3,396) |
|
(2,310) | ||||||
Increase in restricted cash, net | (66) |
|
(35) | ||||||
Decrease /(increase) in restricted cash to support equity requirements for U.S. DOE funded projects | 164 | (215) | |||||||
(Increase)/Decrease in notes receivable | (24) |
|
12 | ||||||
Proceeds from renewable energy grants | 62 | — | |||||||
Purchases of emission allowances, net of proceeds |
(1) | (19) | |||||||
Investments in nuclear decommissioning trust fund securities | (436) | (406) | |||||||
Proceeds from sales of nuclear decommissioning trust fund securities | 399 |
|
385 | ||||||
Proceeds from sale of assets, net | 137 | 7 | |||||||
Investments in unconsolidated affiliates | (25) | (66) | |||||||
Other | 22 | (23) | |||||||
Net Cash Used by Investing Activities | (2,262) |
|
(3,047) | ||||||
Cash Flows from Financing Activities | |||||||||
Payment of dividends to preferred and common stockholders | (50) | ) | (9) | ||||||
(Payments for)/net receipts from settlement of acquired derivatives that include financing elements | (68) | (83) | |||||||
Payment for treasury stock | — |
|
(430) | ||||||
Sale proceeds and other contributions from non-controlling interests in subsidiaries | 347 | 29 | |||||||
Proceeds from issuance of common stock | — | 2 | |||||||
Proceeds from issuance of long-term debt | 3,165 | 6,224 | |||||||
Payments for term loan for funded letter of credit | — | (1,300) | |||||||
Decrease in restricted cash supporting funded letter of credit | — | 1,300 | |||||||
Payment of debt issuance and hedging costs | (35) |
|
(207) | ||||||
Payments for short and long-term debt | (1,260) |
|
(5,493) | ||||||
Net Cash Provided by Financing Activities | 2,099 | 33 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (4) | 2 | |||||||
Net Increase/( Decrease) in Cash and Cash Equivalents | 982 |
|
(1,846) | ||||||
Cash and Cash Equivalents at Beginning of Period | 1,105 | 2,951 | |||||||
Cash and Cash Equivalents at End of Period | $ | 2,087 | $ |
|
1,105 | ||||
Appendix Table A-1:
The following table summarizes the calculation
of Adjusted EBITDA and provides a reconciliation to net income/ (loss)
(dollars in millions) | Retail | Texas |
South |
East | West |
Other |
Alt. Energy | Corp. | Total | |||||||||||||||||||||||||||
Net Income/(Loss) | 37 | 108 | 2 | (19) | 17 | 8 | (12) | 377 | 518 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Net Income Attributable to Non-Controlling Interest | - | - | - | - | - | - | (2) | - | (2) | |||||||||||||||||||||||||||
Income Tax | - | - | - | - | - | (1) | - | (80) | (81) | |||||||||||||||||||||||||||
Interest Expense | 1 | - | 4 | 7 | 1 | 1 | 12 | 140 | 166 | |||||||||||||||||||||||||||
Depreciation, Amortization and ARO Expense | 36 | 116 | 24 | 43 | 5 | 5 | 18 | 4 | 251 | |||||||||||||||||||||||||||
Loss on Debt Extinguishment | - | - | - | - | - | - | - | 10 | 10 | |||||||||||||||||||||||||||
Amortization of Contracts | 32 | 9 | (5) | (1) | - | - | - | - | 35 | |||||||||||||||||||||||||||
EBITDA | 106 | 233 | 25 | 30 | 23 | 13 | 16 | 451 | 897 | |||||||||||||||||||||||||||
Merger & Transaction Costs | - | - | - | - | - | - | - | 89 | 89 | |||||||||||||||||||||||||||
Bargain Purchase Gain | - | - | - | - | - | - | - | (560) | (560) | |||||||||||||||||||||||||||
Asset and Investment Write-offs | - | - | 9 | - | - | - | - | - | 9 | |||||||||||||||||||||||||||
MtM losses/(gains) | 46 | (43) | (18) | 4 | (5) | - | 1 | - | (15) | |||||||||||||||||||||||||||
Adjusted EBITDA | 152 | 190 | 16 | 34 | 18 | 13 | 17 | (20) | 420 | |||||||||||||||||||||||||||
Appendix Table A-2:
The following table summarizes the calculation
of Adjusted EBITDA and provides a reconciliation to net income/ (loss)
(dollars in millions) | Retail | Texas |
South |
East | West |
Other |
Alt. Energy | Corp. | Total | |||||||||||||||||||||||||||
Net Income/(Loss) | 19 | 123 | (60) |
(73) |
3 | 5 | (15) | (111) | (109) | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Income Tax | - | - | - | - | - | 1 | - | (29) | (28) | |||||||||||||||||||||||||||
Interest Expense | 1 | - | 9 | 9 | 1 | 3 | 4 | 134 | 161 | |||||||||||||||||||||||||||
Depreciation, Amortization and ARO Expense | 45 | 117 | 24 | 30 | 4 | 3 | 9 | 2 | 234 | |||||||||||||||||||||||||||
Amortization of Contracts | 51 | 13 | (4) | 1 | - | 61 | ||||||||||||||||||||||||||||||
EBITDA | 116 | 253 | (31) | (34) | 8 | 13 | (2) | (4) | 319 | |||||||||||||||||||||||||||
Asset and Investment Write-offs | - | 2 | - | 12 | - | - | - | - | 14 | |||||||||||||||||||||||||||
MtM losses/(gains) | 44 | (55) | 50 | 16 | 6 | - | (4) | - | 57 | |||||||||||||||||||||||||||
Adjusted EBITDA | 160 | 200 | 19 | (6) | 14 | 13 | (6) | (4) | 390 | |||||||||||||||||||||||||||
Appendix Table A-3: YTD 2012 Regional Adjusted EBITDA Reconciliation
The
following table summarizes the calculation of Adjusted EBITDA and
provides a reconciliation to net income/(loss)
(dollars in millions) | Retail | Texas |
South |
East | West |
Other |
Alt. Energy | Corp. | Total | |||||||||||||||||||||||||||
Net Income/(Loss) | 541 | (94) | 2 | (39) | 59 | 33 | (34) | 111 | 579 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Net Income Attributable to Non-Controlling Interest | - | - | - | - | - | - | (20) | - | (20) | |||||||||||||||||||||||||||
Income Tax | - | - | - | - | - | 3 | - | (330) | (327) | |||||||||||||||||||||||||||
Interest Expense | 4 | - | 18 | 20 | 2 | 11 | 46 | 560 | 661 | |||||||||||||||||||||||||||
Depreciation, Amortization and ARO Expense | 162 | 461 | 93 | 140 | 16 | 17 | 59 | 12 | 960 | |||||||||||||||||||||||||||
Loss on Debt Extinguishment | - | - | - | - | - | - | 51 | 51 | ||||||||||||||||||||||||||||
Amortization of Contracts | 115 | 41 | (20) | (1) | - | 1 | - | - | 136 | |||||||||||||||||||||||||||
EBITDA | 822 | 408 | 93 | 120 | 77 | 65 | 51 | 404 | 2,040 | |||||||||||||||||||||||||||
Merger & Transaction Costs | - | - | - | - | - | - | - | 112 | 112 | |||||||||||||||||||||||||||
Bargain Purchase Gain | - | - | - | - | - | - | - | (560) | (560) | |||||||||||||||||||||||||||
Legal Settlement | - | - | 14 | - | 20 | - | - | - | 34 | |||||||||||||||||||||||||||
Asset and Investment Write-offs | - | 8 | 9 | - | - | - | - | 5 | 22 | |||||||||||||||||||||||||||
MtM losses/(gains) | (166) | 464 | (17) | (3) | (10) | - | 1 | - | 269 | |||||||||||||||||||||||||||
Adjusted EBITDA | 656 | 880 | 99 | 117 | 87 | 65 | 52 | (39) | 1,917 | |||||||||||||||||||||||||||
Appendix Table A-4: YTD 2011 Regional Adjusted EBITDA Reconciliation
The
following table summarizes the calculation of Adjusted EBITDA and
provides a reconciliation to net income/ (loss)
(dollars in millions) | Retail | Texas |
South |
East | West |
Other |
Alt. Energy | Corp. | Total | |||||||||||||||||||||||||||
Net Income/(Loss) | 369 | 316 | (14) | (86) | 54 | 19 | (57) | (404) | 197 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Income Tax | (3) | - | - | - | - | 7 | - | (847) | (843) | |||||||||||||||||||||||||||
Interest Expense | 4 | (16) | 41 | 47 | 2 | 15 | 16 | 556 | 665 | |||||||||||||||||||||||||||
Depreciation, Amortization and ARO Expense | 159 | 466 | 89 | 120 | 13 | 14 | 31 | 12 | 904 | |||||||||||||||||||||||||||
Loss on Debt Extinguishment | - | - | - | - | - | - | - | 175 | 175 | |||||||||||||||||||||||||||
Amortization of Contracts | 169 | 56 | (20) | - | - | 1 | - | - | 206 | |||||||||||||||||||||||||||
EBITDA | 698 | 822 | 96 | 81 | 69 | 56 | (10) | (508) | 1,304 | |||||||||||||||||||||||||||
Asset and Investment Write-offs | - | 170 | - | 12 | - | - | - | 495 | 677 | |||||||||||||||||||||||||||
MtM losses/(gains) | (34) | (150) | 29 | (5) | 4 | - | (5) | - | (161) | |||||||||||||||||||||||||||
Adjusted EBITDA | 664 | 842 | 125 | 88 | 73 | 56 | (15) | (13) | 1,820 | |||||||||||||||||||||||||||
Appendix Table A-5: 2012, 2013 and 2014 Adjusted EBITDA and FCF
before Growth Investments (Current) to Adjusted EBITDA and FCF before
Growth Investments (Revised)
The following table summarizes the
calculation of Adjusted EBITDA (Current) to Adjusted EBITDA (Revised)
and FCF before Growth Investments (Current) to FCF before Growth
Investments (Revised)
(dollars in millions) | 2012 | 2013 | 2014 | |||||||||||||||
Adjusted EBITDA (Current) | 1,917 | 2,535-2,735 | 2,700—2,900 | |||||||||||||||
+ GAAP Net income attributable to non-controlling interests e.g. Agua Caliente, Ivanpah | 19 | 10 | 15 | |||||||||||||||
+ Adjustment to reflect NRG Share of Adjusted EBITDA in unconsolidated affiliates, e.g. GenConn, Saguaro, Gladstone | 55 | 50 | 50 | |||||||||||||||
+ Deactivation costs | 3 | 30 | 5 | |||||||||||||||
— Interest income | (9) | (10) | (10) | |||||||||||||||
Adjusted EBITDA (Revised) | 1,985 | 2,615-2,815 | 2,760-2,960 | |||||||||||||||
Free Cash Flow Before Growth Investments (Current) | 898 | 900-1,100 | 900-1,100 | |||||||||||||||
— Distributions to non-controlling shareholders
e.g. Agua Caliente1, Ivanpah 1 |
— | — | — | |||||||||||||||
Free Cash Flow Before Growth Investments (Revised) | 898 | 900-1,100 | 900-1,100 | |||||||||||||||
1 Distributions to minority shareholders for Agua Caliente and Ivanpah will only begin in 2015 per terms of underlying credit agreements |
||||||||||||||||||
Appendix Table A-6: 2012, 2013 and 2014 Pro rata Adjusted EBITDA and
Pro-rata Debt apportioned to Non-controlling interests
The
following table summarizes the pro-rata Adjusted EBITDA and Debt
associated with the Non-controlling interests, as well as the addition
of NRG’s pro-rata debt in unconsolidated affiliates
(dollars in millions) | 2012 | 2013 | 2014 | |||||||||||||
Adjusted EBITDA (Revised) | 1,997 | 2,615—2,815 | 2,760—2,960 | |||||||||||||
—Pro-rata Adjusted EBITDA associated with non-controlling interests
e.g. Agua Caliente, Ivanpah |
(19) | (60) | (105) | |||||||||||||
NRG Adjusted EBITDA (Revised) | 1,978 | 2,555-2,755 | 2,655-2,855 | |||||||||||||
Consolidated Debt | 15,485 | 15,860 | 15,865 | |||||||||||||
Less Short-term debt to finance cash grant | (470) | (290) | — | |||||||||||||
Consolidated Debt net of short-term debt to finance cash grant | 15,015 | 15,570 | 15,865 | |||||||||||||
—Pro-rata Debt associated with non-controlling interests
e.g. Agua Caliente, Ivanpah |
(1,033) | (1,045) | (1,040) | |||||||||||||
+ Pro-rata Debt associated with unconsolidated affiliates | 233 | 225 | 210 | |||||||||||||
NRG associated Debt | 14,215 | 14,750 | 15,035 | |||||||||||||
Appendix Table A-7: 2012 Full-Year Adjusted Cash Flow from Operations
Reconciliation
The following table summarizes the calculation
of adjusted cash flow operating activities providing a reconciliation to
net cash provided by operating activities
(dollars in millions) |
Twelve months ended |
Twelve months ended December 31, 2011 |
|||
Net Cash Provided by Operating Activities | 1,149 | 1,166 | |||
Less: Reclassifying of net payments for settlement of acquired derivatives that include financing elements | (68) | (83) | |||
Add: Genon Merger and integration costs | 46 | — | |||
Adjusted Cash Flow from Operating Activities | 1,127 | 1,083 | |||
Appendix Table A-8: YTD 2012
The following table summarizes the calculation
of Adjusted EBITDA and provides a reconciliation to net loss
(dollars in millions) | GenOn Energy, Inc. | |||
Net Loss | (486) | |||
Plus: | ||||
Income Tax | 15 | |||
Interest Expense, net | 338 | |||
Depreciation, Amortization and ARO Expense | 349 | |||
EBITDA | 216 | |||
Asset and Investment Write-offs and impairments | 68 | |||
MtM losses | 180 | |||
Merger related costs | 71 | |||
Plant deactivation costs | 54 | |||
Legal settlements | (52) | |||
Other, net | 6 | |||
Adjusted EBITDA | 543 | |||
EBITDA, Adjusted EBITDA and Adjusted EBITDAR 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. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which we do not consider indicative of future operating performance. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger and integration related costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger and integration related costs as they are one time and unique in nature 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 financing and preferred stock dividends and is used by NRG predominantly as a forecasting tool to estimate cash available for debt reduction and other capital allocation alternatives. The reader is encouraged to evaluate each of these adjustments and the reasons NRG considers them appropriate for supplemental analysis. Because we have mandatory debt service requirements (and other non-discretionary expenditures) investors should not rely on free cash flow as a measure of cash available for discretionary expenditures.
1 Results include GenOn activity from
2 Projected for the full year of
operations in 2014
Source:
NRG Energy, Inc.
Media:
Lori Neuman, 609-524-4525
or
Karen
Cleeve, 609-524-4608
or
David Knox, 713-537-2130
or
Investors:
Chad
Plotkin, 609-524-4526
or
Stefan Kimball, 609-524-4527