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NRG Energy, Inc. Reports Record First Quarter Results, Refills the Authorization Buyback Bucket and Connects Drop Down Proceeds to Future Capital Allocation
First Quarter 2015 Financial Highlights
-
$840 million of Adjusted EBITDA1 -
$364 million of Free Cash Flow (FCF) before Growth investments
2015 Financial Guidance and Capital Allocation Update
-
2015 Guidance reaffirmed:
-
Adjusted EBITDA of
$3,200-$3,400 million 2 -
FCF before growth investments of
$1,100-$1,300 million
-
Adjusted EBITDA of
-
Completed
$112 million of share repurchases, including$56 million of the authorized share repurchases announced onMarch 16, 2015 (Phase II) -
Announcing
$81 million increase to Phase II program, bringing the total available share repurchase authorization to$125 million -
Established capital allocation program that will apportion cash in an
amount equal to the approximately
$600 million of expected drop down proceeds fromNRG Yield over the balance of the year equally among share repurchases, corporate debt reduction and future yield eligible projects
Business and Operational Highlights
-
On
April 9, 2015 , NRG andNRG Yield established a new residential solar partnership, enabling NRG to bring the cost of capital benefit ofNRG Yield to the NRG Home Solar lease program -
On
May 5, 2015 ,NRG Yield shareholders approved creation of new share class, enabling ongoing capital replenishment at NRG and providingNRG Yield access to growth capital without the need for investment by NRG. -
On
May 8, 2015 , NRG andNRG Yield plan to form a new partnership that will invest in and hold operating portfolios of distributed generation assets owned or developed by NRG
“Outstanding execution across all businesses enabled NRG to achieve record first quarter results, outpacing even the results of last year’s polar vortex-assisted first quarter, with our competitive retail business showing particular strength,” said David Crane, NRG’s Chief Executive Officer. “With a strongly hedged baseload position and the continuing implementation of our fleet repowering program, we are well-positioned for the balance of 2015 and beyond.”
1 Excludes negative contribution of
2 Excludes projected negative contribution of
3 Includes Corporate Segment
Segment Results
Table 1: Adjusted EBITDA
($ in millions) | Three Months Ended | |||||
Segment | 3/31/15 | 3/31/14 | ||||
Business (1)(2) | $535 | $595 | ||||
Home Retail | 166 | 115 | ||||
Renew (1) | 32 | 12 | ||||
NRG Yield (1) | 122 | 92 | ||||
Corporate | (15) | 3 | ||||
Adjusted EBITDA(3) | $840 | $817 | ||||
(1) In accordance with GAAP, 2014 results have been restated to include
full impact of the assets in the NYLD drop down transactions which
closed on
(2) See Appendices A-4
and A-5 for NRG Business regional Reg G reconciliations.
(3) See
Appendices A-1 and A-2 for Operating Segment Reg G reconciliations;
excludes negative contribution of
Table 2: Net Income/(Loss)
($ in millions) | Three Months Ended | |||||
Segment | 3/31/15 | 3/31/14 | ||||
Business (1)(2) | $29 | $(6) | ||||
Home Retail(2) | 104 | 185 | ||||
Home Solar | (45) | (2) | ||||
Renew (1)(2) | (50) | (48) | ||||
NRG Yield (1)(2) | (11) | 22 | ||||
Corporate | (147) | (207) | ||||
Net Loss | $(120) | $(56) | ||||
(1) In accordance with GAAP, 2014 results have been restated to include
full impact of the assets in the NYLD drop down transactions which
closed on
(2) Includes
mark-to-market gains and losses of economic hedges.
NRG Business: First Quarter Adjusted EBITDA was
-
East Region: (
$158 million ) due to lower generation and lower average realized energy and capacity prices, but partially offset by a$62 million contribution from the EME coal assets acquired onApril 1, 2014 . -
West Region: (
$27 million ) due to a change in contracted volumes and decreased pricing for certain capacity contracts. -
Offset by Gulf Coast Region:
$51 million increase due to higher realized energy margins.
NRG Home Retail: First quarter Adjusted EBITDA was
NRG Renew: First quarter Adjusted EBITDA was
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions) | 3/31/15 | 12/31/14 | |||||
Cash at NRG-Level | $786 | $661 | |||||
Revolver | 1,424 | 1,367 | |||||
NRG-Level Liquidity | $2,210 | $2,028 | |||||
Restricted cash | 443 | 457 | |||||
Cash at Non-Guarantor Subsidiaries | 1,378 | 1,455 | |||||
Total Liquidity | $4,031 | $3,940 | |||||
NRG-Level cash as of
On
Under the terms of the partnership agreement,
4 See Appendix A-6 for First Quarter 2015 Sources and Uses of Liquidity detail.
On
Under the terms of the partnership agreement,
NRG Yield Recapitalization
On
The recapitalization will be effectuated through a stock split of each
share class. Each share of the Class A stock will be split into one
Class A and one Class C share, and each share of Class B stock held by
NRG will be split into one Class B and one Class D share. The Class C
stock will have equal economic rights with Class A stock and a 1/100th
voting right. The Class D stock will not have any economic rights (as
NRG’s economic interest is held exclusively through its ownership of
In connection with the recapitalization described above, the Company
amended the Right of First Offer Agreement between NRG and
Outlook for 2015
Driven by robust first quarter results and a significantly hedged baseload portfolio over the remainder of 2015, the Company is reaffirming its guidance range for fiscal year 2015. As in previous quarters, the Company’s guidance assumes normalized weather in core markets.
Table 4: 2015 Adjusted EBITDA and FCF before Growth Investments Guidance
5/8/15 | 2/27/15 | ||||
($ in millions) | 2015 | 2015 | |||
Adjusted EBITDA (1) | $3,200 –3,400 | $3,200 – 3,400 | |||
Interest payments | (1,160) | (1,160) | |||
Income tax | (40) | (40) | |||
Adjusted EBITDA from NRG Home Solar | (100) | (100) | |||
Working capital/other changes | 250 | 250 | |||
Adjusted Cash flow from operations | $2,150 – 2,350 | $2,150 – 2,350 | |||
Maintenance capital expenditures, net | (480)-(510) | (480)-(510) | |||
Environmental capital expenditures, net | (305)-(335) | (330)-(360) | |||
Preferred dividends | (10) | (10) | |||
Distributions to non-controlling interests | (190)-(210) | (190)-(210) | |||
Free cash flow – before Growth investments | $1,100 – 1,300 | $1,100 – 1,300 | |||
(1) 2015 guidance excludes expected negative contribution of
5 Alternative proposal being considered by CPUC to reduce the
2015 Capital Allocation Update
NRG has repurchased
The Company is announcing an
On
On an annualized basis, the common stock dividends represent approximately 16% of free cash flow before growth, and when combined with the Phase I and Phase II share repurchases, capital returned to shareholders represents approximately 36% of NRG’s mid-point 2015 free cash flow before growth.
As NRG continues the process of dropping down its contracted assets into
The Company's common stock dividend is subject to available capital, market conditions and compliance with associated laws and regulations.
Earnings Conference Call
On
About NRG
NRG is leading a customer-driven change in the U.S. energy industry by
delivering cleaner and smarter energy choices, while building on the
strength of the nation’s largest and most diverse competitive power
portfolio. A Fortune 250 company, we create value through reliable and
efficient conventional generation while driving innovation in solar and
renewable power, electric vehicle ecosystems, carbon capture technology
and customer-centric energy solutions. Our retail electricity providers
serve almost 3 million residential and commercial customers throughout
the country. More information is available at www.nrgenergy.com.
Connect with
Safe Harbor Disclosure
In addition to historical information, the information presented in this communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue,” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.
Although NRG believes that its expectations are reasonable, it can give
no assurance that these expectations will prove to have been correct,
and actual results may vary materially. Factors that could cause actual
results to differ materially from those contemplated above include,
among others, general economic conditions, hazards customary in the
power industry, weather conditions, competition in wholesale power
markets, the volatility of energy and fuel prices, failure of customers
to perform under contracts, changes in the wholesale power markets,
changes in government regulation of markets and of environmental
emissions, the condition of capital markets generally, our ability to
access capital markets, unanticipated outages at our generation
facilities, adverse results in current and future litigation, failure to
identify or successfully implement acquisitions and repowerings, our
ability to implement value enhancing improvements to plant operations
and companywide processes, our ability to obtain federal loan
guarantees, the inability to maintain or create successful partnering
relationships with
NRG 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
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||
Three months ended March 31, | |||||||||
(In millions, except for per share amounts) | 2015 | 2014 | |||||||
Operating Revenues | |||||||||
Total operating revenues | $ | 3,826 | $ | 3,486 | |||||
Operating Costs and Expenses | |||||||||
Cost of operations | 3,062 | 2,737 | |||||||
Depreciation and amortization | 395 | 335 | |||||||
Selling, general and administrative | 263 | 222 | |||||||
Acquisition-related transaction and integration costs | 10 | 12 | |||||||
Development activity expenses | 34 | 19 | |||||||
Total operating costs and expenses | 3,764 | 3,325 | |||||||
Gain on postretirement benefits curtailment and sale of assets | 14 | 19 | |||||||
Operating Income | 76 | 180 | |||||||
Other Income/(Expense) | |||||||||
Equity in (loss)/earnings of unconsolidated affiliates | (3 | ) | 7 | ||||||
Other income, net | 19 | 11 | |||||||
Loss on debt extinguishment | — | (41 | ) | ||||||
Interest expense | (301 | ) | (255 | ) | |||||
Total other expense | (285 | ) | (278 | ) | |||||
Loss Before Income Taxes | (209 | ) | (98 | ) | |||||
Income tax benefit | (73 | ) | (31 | ) | |||||
Net Loss | (136 | ) | (67 | ) | |||||
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interests | (16 | ) | (11 | ) | |||||
Net Loss Attributable to NRG Energy, Inc. |
(120 | ) | (56 | ) | |||||
Dividends for preferred shares | 5 | 2 | |||||||
Loss Available for Common Stockholders | $ | (125 | ) | $ | (58 | ) | |||
Loss per Share Attributable to NRG Energy, Inc. Common Stockholders | |||||||||
Weighted average number of common shares outstanding — basic and diluted | 336 | 324 | |||||||
Loss per Weighted Average Common Share — Basic and Diluted | $ | (0.37 | ) | $ | (0.18 | ) | |||
Dividends Per Common Share | $ | 0.15 | $ | 0.12 | |||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) |
||||||||||
Three months ended March 31, | ||||||||||
2015 | 2014 | |||||||||
(In millions) | ||||||||||
Net Loss | $ | (136 | ) | $ | (67 | ) | ||||
Other Comprehensive (Loss)/Income, net of tax | ||||||||||
Unrealized loss on derivatives, net of income tax benefit of $6 and $3 | (12 | ) | (9 | ) | ||||||
Foreign currency translation adjustments, net of income tax (benefit)/expense of $(7) and $2 | (11 | ) | 6 | |||||||
Available-for-sale securities, net of income tax (benefit)/expense of $(4) and $2 | (1 | ) | 6 | |||||||
Defined benefit plans, net of tax expense of $4 and $0 | 7 | 2 | ||||||||
Other comprehensive (loss)/income | (17 | ) | 5 | |||||||
Comprehensive Loss | (153 | ) | (62 | ) | ||||||
Less: Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests | (29 | ) | (15 | ) | ||||||
Comprehensive Loss Attributable to NRG Energy, Inc. | (124 | ) | (47 | ) | ||||||
Dividends for preferred shares | 5 | 2 | ||||||||
Comprehensive Loss Available for Common Stockholders | $ | (129 | ) | $ | (49 | ) | ||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||||
March 31, |
December 31, |
|||||||||
(In millions, except shares) | (unaudited) | |||||||||
ASSETS | ||||||||||
Current Assets | ||||||||||
Cash and cash equivalents | $ | 2,164 | $ | 2,116 | ||||||
Funds deposited by counterparties |
68 | 72 | ||||||||
Restricted cash | 443 | 457 | ||||||||
Accounts receivable — trade, less allowance for doubtful accounts of $21 and $23 | 1,179 | 1,322 | ||||||||
Inventory | 1,109 | 1,247 | ||||||||
Derivative instruments | 2,029 | 2,425 | ||||||||
Cash collateral paid in support of energy risk management activities | 400 | 187 | ||||||||
Deferred income taxes | 188 | 174 | ||||||||
Renewable energy grant receivable, net | 68 | 135 | ||||||||
Prepayments and other current assets | 474 | 447 | ||||||||
Total current assets | 8,122 | 8,582 | ||||||||
Property, plant and equipment, net of accumulated depreciation of $8,264 and $7,890 | 22,276 | 22,367 | ||||||||
Other Assets | ||||||||||
Equity investments in affiliates | 772 | 771 | ||||||||
Notes receivable, less current portion | 67 | 72 | ||||||||
Goodwill | 2,520 | 2,574 | ||||||||
Intangible assets, net of accumulated amortization of $1,511 and $1,402 | 2,491 | 2,567 | ||||||||
Nuclear decommissioning trust fund | 586 | 585 | ||||||||
Derivative instruments | 591 | 480 | ||||||||
Deferred income taxes | 1,484 | 1,406 | ||||||||
Non-current assets held-for-sale | 17 | 17 | ||||||||
Other non-current assets | 1,404 | 1,244 | ||||||||
Total other assets |
9,932 | 9,716 | ||||||||
Total Assets | $ | 40,330 | $ | 40,665 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current Liabilities | ||||||||||
Current portion of long-term debt and capital leases | $ | 465 | $ | 474 | ||||||
Accounts payable | 1,045 | 1,060 | ||||||||
Derivative instruments | 1,884 | 2,054 | ||||||||
Cash collateral received in support of energy risk management activities | 68 | 72 | ||||||||
Accrued expenses and other current liabilities | 1,047 | 1,199 | ||||||||
Total current liabilities | 4,509 | 4,859 | ||||||||
Other Liabilities | ||||||||||
Long-term debt and capital leases | 20,050 | 19,900 | ||||||||
Nuclear decommissioning reserve | 314 | 310 | ||||||||
Nuclear decommissioning trust liability | 328 | 333 | ||||||||
Deferred income taxes | 20 | 21 | ||||||||
Derivative instruments | 650 | 438 | ||||||||
Out-of-market contracts, net of accumulated amortization of $585 and $562 | 1,221 | 1,244 | ||||||||
Other non-current liabilities | 1,549 | 1,574 | ||||||||
Total non-current liabilities | 24,132 | 23,820 | ||||||||
Total Liabilities | 28,641 | 28,679 | ||||||||
2.822% convertible perpetual preferred stock | 293 | 291 | ||||||||
Redeemable noncontrolling interest in subsidiaries | 19 | 19 | ||||||||
Commitments and Contingencies | ||||||||||
Stockholders’ Equity | ||||||||||
Common stock |
4 | 4 | ||||||||
Additional paid-in capital | 8,362 | 8,327 | ||||||||
Retained earnings | 3,413 | 3,588 | ||||||||
Less treasury stock, at cost — 81,865,411 and 78,843,552 shares, respectively | (2,059 | ) | (1,983 | ) | ||||||
Accumulated other comprehensive loss | (191 | ) | (174 | ) | ||||||
Noncontrolling interest | 1,848 | 1,914 | ||||||||
Total Stockholders’ Equity | 11,377 | 11,676 | ||||||||
Total Liabilities and Stockholders’ Equity | $ | 40,330 | $ | 40,665 | ||||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||||
Three months ended March 31, | ||||||||||
2015 | 2014 | |||||||||
(In millions) | ||||||||||
Cash Flows from Operating Activities | ||||||||||
Net loss | $ | (136 | ) | $ | (67 | ) | ||||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||||
Distributions and equity in earnings of unconsolidated affiliates | 32 | (2 | ) | |||||||
Depreciation and amortization | 395 | 335 | ||||||||
Provision for bad debts | 15 | 21 | ||||||||
Amortization of nuclear fuel | 13 | 11 | ||||||||
Amortization of financing costs and debt discount/premiums |
(4 | ) | (5 | ) | ||||||
Adjustment for debt extinguishment | — | 19 | ||||||||
Amortization of intangibles and out-of-market contracts | 19 | 13 | ||||||||
Amortization of unearned equity compensation | 11 | 8 | ||||||||
Changes in deferred income taxes and liability for uncertain tax benefits | (83 | ) | (111 | ) | ||||||
Changes in nuclear decommissioning trust liability | (3 | ) | 5 | |||||||
Changes in derivative instruments | 261 | 525 | ||||||||
Changes in collateral deposits supporting energy risk management activities | (213 | ) | (407 | ) | ||||||
Gain on postretirement benefits curtailment and sale of assets |
(14 | ) | (19 | ) | ||||||
Cash used by changes in other working capital | (33 | ) | 65 | |||||||
Net Cash Provided by Operating Activities | 260 | 391 | ||||||||
Cash Flows from Investing Activities | ||||||||||
Acquisitions of businesses, net of cash acquired | (1 | ) | (218 | ) | ||||||
Capital expenditures | (252 | ) | (237 | ) | ||||||
(Increase)/decrease in restricted cash, net | (11 | ) | 3 | |||||||
Decrease in restricted cash to support equity requirements for U.S. DOE funded projects | 25 | 56 | ||||||||
Decrease in notes receivable | 5 | 1 | ||||||||
Investments in nuclear decommissioning trust fund securities | (193 | ) | (188 | ) | ||||||
Proceeds from the sale of nuclear decommissioning trust fund securities | 196 | 183 | ||||||||
Proceeds from renewable energy grants and state rebates | 2 | 387 | ||||||||
Proceeds from sale of assets, net of cash disposed of | — | 77 | ||||||||
Cash proceeds to fund cash grant bridge loan payment | — | 57 | ||||||||
Other | (41 | ) | 3 | |||||||
Net Cash (Used)/Provided by Investing Activities | (270 | ) | 124 | |||||||
Cash Flows from Financing Activities | ||||||||||
Payment of dividends to common and preferred stockholders | (51 | ) | (41 | ) | ||||||
Payment for treasury stock | (79 | ) | — | |||||||
Net receipts from/(payments for) settlement of acquired derivatives that include financing elements | 40 | (223 | ) | |||||||
Proceeds from issuance of long-term debt | 248 | 1,564 | ||||||||
Contributions to, net of distributions from, noncontrolling interest in subsidiaries | (25 | ) | 9 | |||||||
Proceeds from issuance of common stock | 1 | 3 | ||||||||
Payment of debt issuance costs | — | (23 | ) | |||||||
Payments for short and long-term debt | (94 | ) | (873 | ) | ||||||
Net Cash Provided by Financing Activities | 40 | 416 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 18 | 2 | ||||||||
Net Increase in Cash and Cash Equivalents | 48 | 933 | ||||||||
Cash and Cash Equivalents at Beginning of Period | 2,116 | 2,254 | ||||||||
Cash and Cash Equivalents at End of Period | $ | 2,164 | $ | 3,187 | ||||||
Appendix Table A-1: First 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) | Home Retail | Home Solar | Business | Renew | Yield | Corp | Total | |
Net Income/(Loss) Attributable to NRG Energy, Inc | 104 | (45) | 29 | (50) | (11) | (147) | (120) | |
Plus: | ||||||||
Net Loss Attributable to Non-Controlling Interest | - | - | - | (6) | (5) | (5) | (16) | |
Interest Expense, net | - | - | 18 | 31 | 70 | 179 | 298 | |
Income Tax | - | - | - | (6) | (4) | (63) | (73) | |
Depreciation, Amortization and ARO Expense | 30 | 5 | 240 | 64 | 55 | 7 | 401 | |
Amortization of Contracts | - | - | (12) | (1) | 12 | 1 | - | |
EBITDA | 134 | (40) | 275 | 32 | 117 | (28) | 490 | |
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates | - | - | 4 | - | 12 | 3 | 19 | |
Integration & Transaction Costs | - | - | - | - | - | 10 | 10 | |
Deactivation costs | - | - | 3 | - | - | - | 3 | |
NRG Home Solar EBITDA | - | 40 | - | - | - | - | 40 | |
Market to Market (MtM) losses/(gains) on economic hedges | 32 | - | 253 | - | (7) | - | 278 | |
Adjusted EBITDA | 166 | - | 535 | 32 | 122 | (15) | 840 |
Appendix Table A-2: First Quarter 2014 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss) |
|||||||||||||||
($ in millions) | Home Retail | Home Solar | Business | Renew | Yield | Corp | Total | ||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc | 185 | (2) | (6) | (48) | 22 | (207) | (56) | ||||||||
Plus: | |||||||||||||||
Net (Loss)/Income Attributable to Non-Controlling Interest | - | - | - | (17) | 4 | 2 | (11) | ||||||||
Interest Expense, net | 1 | - | 17 | 26 | 26 | 182 | 252 | ||||||||
Loss on Debt Extinguishment | - | - | - | 1 | - | 40 | 41 | ||||||||
Income Tax | - | - | - | - | 3 | (34) | (31) | ||||||||
Depreciation Amortization and ARO Expense | 30 | 1 | 230 | 49 | 24 | 6 | 340 | ||||||||
Amortization of Contracts | (1) | - | 1 | - | 1 | - | 1 | ||||||||
EBITDA | 215 | (1) | 242 | 11 | 80 | (11) | 536 | ||||||||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates | - | - | (3) | - | 12 | 2 | 11 | ||||||||
Integration & Transaction Costs, gain on sale | - | - | (18) | - | - | 12 | (6) | ||||||||
Deactivation Costs | - | - | 3 | - | - | - | 3 | ||||||||
Legal Settlement | 4 | - | - | - | - | - | 4 | ||||||||
NRG Home Solar EBITDA | - | 1 | - | - | - | - | 1 | ||||||||
MtM (gains)/losses on economic hedges | (104) | - | 371 | 1 | - | - | 268 | ||||||||
Adjusted EBITDA | 115 | - | 595 | 12 | 92 | 3 | 817 | ||||||||
Appendix Table A-3: 2015 and 2014 First Quarter Adjusted Cash Flow from Operations Reconciliations The following table summarizes the calculation of adjusted cash flow operating activities providing a reconciliation to net cash provided by operating activities |
||||
($ in millions) |
Three months ended
March 31, 2015 |
Three months ended
March 31, 2014 |
||
Net Cash Provided by Operating Activities | 260 | 391 | ||
Adjustment for change in collateral | 213 | 407 | ||
Reclassifying of net receipts (payments) for settlement of acquired derivatives that include financing elements | 40 | (223) | ||
Add: Merger and integration expenses | 12 | 33 | ||
Adjusted Cash Flow from Operating Activities | 525 | 608 | ||
Maintenance CapEx, net [1] | (85) | (62) | ||
Environmental CapEx, net | (49) | (50) | ||
Preferred dividends | (2) | (2) | ||
Distributions to non-controlling interests | (25) | (7) | ||
Free Cash Flow – before Growth investments | 364 | 487 | ||
(1) Excludes merger and integration
Appendix Table A-4: First Quarter 2015 Regional Adjusted EBITDA Reconciliation for NRG Business The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss) |
||||||||
($ in millions) | East | Gulf Coast | West | B2B | Carbon 360 | Total | ||
Net Income/(Loss) Attributable to NRG Energy, Inc | 88 | 35 | (24) | (64) | (6) | 29 | ||
Plus: | ||||||||
Interest Expense, net | 18 | - | - | - | - | 18 | ||
Depreciation, Amortization and ARO Expense | 77 | 145 | 16 | 2 | - | 240 | ||
Amortization of Contracts | (14) | 2 | (1) | 1 | - | (12) | ||
EBITDA | 169 | 182 | (9) | (61) | (6) | 275 | ||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates | - | (1) | 1 | 1 | 3 | 4 | ||
Deactivation costs | 2 | - | 1 | - | - | 3 | ||
Market to Market (MtM) losses/(gains) on economic hedges | 253 | (65) | (1) | 66 | - | 253 | ||
Adjusted EBITDA | 424 | 116 | (8) | 6 | (3) | 535 | ||
Appendix Table A-5: First Quarter 2014 Regional Adjusted EBITDA Reconciliation for NRG Business The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss) |
||||||||
($ in millions) | East | Gulf Coast | West | B2B | Carbon 360 | Total | ||
Net Income/(Loss) Attributable to NRG Energy, Inc | 184 | (300) | 6 | 106 | (2) | (6) | ||
Plus: | ||||||||
Interest Expense, net | 16 | 1 | - | - | - | 17 | ||
Depreciation Amortization and ARO Expense | 70 | 143 | 12 | 4 | 1 | 230 | ||
Amortization of Contracts | (5) | 6 | (2) | 2 | - | 1 | ||
EBITDA | 265 | (150) | 16 | 112 | (1) | 242 | ||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates | (1) | - | - | (3) | 1 | (3) | ||
Integration & Transaction Costs, gain on sale | 6 | (24) | - | - | - | (18) | ||
Deactivation Costs | 2 | - | 1 | - | - | 3 | ||
MtM losses/(gains) on economic hedges | 247 | 239 | 2 | (117) | - | 371 | ||
Adjusted EBITDA | 519 | 65 | 19 | (8) | - | 595 | ||
Appendix Table A-6: First Quarter 2015 Sources and Uses of Liquidity The following table summarizes the sources and uses of liquidity in the first quarter of 2015. |
|||
($ in millions) |
Three months ended
March 31, 2015 |
||
Sources: | |||
Adjusted Cash Flow from Operations | $ 525 | ||
Debt Proceeds, NRG Yield | 210 | ||
Increase in Credit Facility | 57 | ||
Debt proceeds, other project debt financing | 38 | ||
Uses: | |||
Collateral Postings | 213 | ||
Maintenance and Environmental Capex, net | 134 | ||
Share Repurchases, and Common and Preferred Stock Dividends | 130 | ||
Growth Investments and Acquisitions, net | 122 | ||
Debt Repayments | 94 | ||
Distributions to Non-Controlling Entities | 25 | ||
Merger and Integration-related payments and other investing and financing activities | 21 | ||
Change in Total Liquidity | $ 91 | ||
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. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which we do not consider indicative of future operating performance. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger and integration related costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger and integration related costs as they are one time and unique in nature and do not reflect ongoing cash from operations and they are fully disclosed to investors.
Free cash flow (before Growth investments) is adjusted cash flow from operations less maintenance and environmental capital expenditures, net of funding, and preferred stock dividends and is used by NRG predominantly as a forecasting tool to estimate cash available for debt reduction and other capital allocation alternatives. The reader is encouraged to evaluate each of these adjustments and the reasons NRG considers them appropriate for supplemental analysis. Because we have mandatory debt service requirements (and other non-discretionary expenditures) investors should not rely on free cash flow before Growth investments as a measure of cash available for discretionary expenditures.
Source:
NRG Energy, Inc.
Media:
Karen Cleeve, 609-524-4608
or
Marijke
Shugrue, 609-524-5262
or
Investors:
Matthew
Orendorff, 609-524-4526
or
Lindsey Puchyr, 609-524-4527