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NRG Energy, Inc. Reports Third Quarter Results; Announces Second Drop Down to NRG Yield, Revises 2014 and Initiates 2015 Financial Guidance
Financial Highlights
-
$1,014 million of Adjusted EBITDA in the third quarter and$2,501 million in the first nine months of 2014 -
$526 million of Free Cash Flow (FCF) before growth investments in the third quarter and$812 million in the first nine months of 2014 -
$3,594 million of total liquidity as ofSeptember 30, 2014 -
$830 million in cumulative proceeds to NRG from drop-downs during 2014, including$480 million from second drop-down toNRG Yield expected to close in fourth quarter -
$190 million in tax-equity financing proceeds primarily from EME wind assets
Financial Guidance
-
Revising 2014 Guidance as follows:
-
Adjusted EBITDA from
$3,200-$3,400 to$3,100-$3,200 million , which incorporates a projected negative contribution of$50 million from NRG Home Solar -
FCF before Growth investments from
$1,200-$1,400 to$950-$1,050 million
-
Adjusted EBITDA from
-
Initiating 2015 Financial Guidance
-
Adjusted EBITDA of
$3,200-$3,400 million , which excludes a projected negative contribution of$100 million from our growing NRG Home Solar business -
FCF before Growth Investments of
$1,100-$1,300 million
-
Adjusted EBITDA of
Business and Operational Highlights
-
Acquired Pure Energies Group, Inc. (Pure Energies), adding a leading web- and telephonic-based customer acquisition platform to NRG Home Solar’s capabilities - Acquired Goal Zero, extending NRG’s retail brand and offerings into personal solar devices
-
Acquired, through
NRG Yield , North America’s largest wind farm, the 947 megawatt (MW) Alta Wind facility located inTehachapi, California , for $870 million1 -
Began construction of a brownfield 360 MW2 natural gas
peaking plant in
Houston (approximately$400 /kw installed cost) - Received SCE contracts for 440 MW of new gas generation and “Preferred Resources”
“While NRG's financial performance was constrained in the third quarter
by an absence of summer weather events, NRG's underlying performance
across our wholesale and retail operations was quite strong,” said NRG’s
President and Chief Executive Officer
Segment Results |
|||||||||
Table 1: Adjusted EBITDA |
|||||||||
($ in millions) | Three Months Ended | Nine Months Ended | |||||||
Segment | 9/30/14 | 9/30/13 | 9/30/14 | 9/30/13 | |||||
Retail | 196 | 180 | 477 | 423 | |||||
Wholesale | |||||||||
Gulf Coast | 181 | 248 | 326 | 454 | |||||
East | 342 | 415 | 1,023 | 742 | |||||
West | 113 | 47 | 199 | 106 | |||||
NRG Yield (1) | 140 | 103 | 341 | 200 | |||||
Renewables | 88 | 40 | 192 | 92 | |||||
Corporate (2) | (46) | (33) | (57) | (50) | |||||
Adjusted EBITDA (3) | 1,014 | 1,000 | 2,501 | 1,967 |
(1) |
In accordance with GAAP, 2014 and 2013 results restated to include full impact of the assets in the ROFO dropdown transaction which closed on June 30, 2014 | |
(2) |
Includes $25 million and $31 million of negative contribution from NRG Home Solar for three and nine months ended September 30, 2014, respectively | |
(3) |
Detailed adjustments by region are shown in Appendix A |
Table 2: Net Income / (Loss) |
|||||||||
($ in millions) | Three Months Ended | Nine Months Ended | |||||||
Segment | 9/30/14 | 9/30/13 | 9/30/14 | 9/30/13 | |||||
Retail | 88 | (56) | 267 | 231 | |||||
Wholesale | |||||||||
Gulf Coast | 147 | 282 | (56) | 31 | |||||
East | 223 | 241 | 448 | 216 | |||||
West | 76 | 22 | 117 | 54 | |||||
NRG Yield(1) | 25 | 40 | 75 | 86 | |||||
Renewables | (34) | (7) | (101) | (45) | |||||
Corporate | (357) | (403) | (735) | (662) | |||||
Net Income/ (Loss) | 168 | 119 | 15 | (89) |
(1) | In accordance with GAAP, 2014 and 2013 results restated to include full impact of the assets in the ROFO drop-down transaction which closed on June 30, 2014 |
Retail: Third quarter Adjusted EBITDA was
Wholesale
East: Third quarter Adjusted EBITDA was
West: Third quarter Adjusted EBITDA was
Renewables: Third quarter Adjusted EBITDA was
Liquidity and Capital Resources |
|||||||
Table 3: Corporate Liquidity |
|||||||
($ in millions) | 9/30/14 | 6/30/14 | 12/31/13 | ||||
Cash and Cash Equivalents | 1,953 | 1,481 | 2,254 | ||||
Restricted cash | 339 | 286 | 268 | ||||
Total | 2,292 | 1,767 | 2,522 | ||||
NRG Corporate Credit Facility Availability | 1,302 | 1,243 | 1,173 | ||||
Total Liquidity | 3,594 | 3,010 | 3,695 | ||||
Total liquidity as of
-
$3,573 million of cash outflows throughSeptember 2014 , consisting of:-
$2,869 million for acquisitions and growth projects, net, including$1,596 million net cash used in the EME transaction onApril 1, 2014 and$901 million net cash used to acquire Alta Wind onAugust 12, 2014 ; -
$100 million of collateral; -
$369 million of maintenance and environmental capital expenditures, net; -
$140 million common and preferred stock dividends; and -
$95 million of merger and integration expenses and capital costs.
-
-
Partially offset by
$3,343 million of cash inflows throughSeptember 2014 , consisting of:-
$1,944 million of net financing activities consisting of:$2,100 million of proceeds from senior note debt issuance;$337 million of proceeds fromNRG Yield convertible note issuance, net of fees;$492 million of proceeds fromNRG Yield “Green Bond” issuance, net of fees;$630 million of proceeds from NRG Yield Class A equity issuance, net of fees; partially offset by$1,615 million of debt payments; -
$1,226 million of adjusted cash flow from operations; -
$81 million of net proceeds from sale of assets; and -
$92 million of other net investing and financing activities.
-
Drop-Down of Assets to
On
-
Walnut Creek – 500 MW natural gas facility located in City ofIndustry, CA -
Tapestry – three wind facilities totaling 204 MW, including Buffalo
Bear 19 MW in Oklahoma, Taloga 130 MW in Oklahoma, and Pinnacle 55 MW
in
West Virginia -
Laredo Ridge – 81 MW wind facility located in
Petersburg, NE
The assets represent
Tax-Equity Financing of Wind Assets
On
NRG Strategic Developments
NRG Home Solar
NRG continues to enhance its competitiveness and
strategic positioning of NRG Home Solar through the acquisition of Pure
Energies, which is expected to significantly enhance our customer
acquisition platform by offering full service, point-to-point,
customizable rooftop solutions through our proprietary web- and
telephonic-based system.
Combined with NRG’s prior acquisition of Roof Diagnostics Solar, a leader in home solar direct sales and installation, and NRG’s own Residential Solar Solutions, which has focused on the financing and contract management associated with solar leasing, NRG Home Solar is now a vertically integrated branded provider of residential solar solutions nationwide and, as such, is well positioned to be an industry leader in the rapidly growing distributed generation industry.
By year end 2015, NRG Home Solar expects to have 35,000-40,000 installed
leases, of which 25,000-30,000 are expected to be installed in 2015,
totaling approximately 245 MW-280 MW while driving cost per watt down to
a range of
Retail
The acquisition of Goal Zero, a leader in the
portable solar energy market, is expected to enhance our ability to
offer the benefits of solar energy to all consumers, regardless of
whether they are homeowners with a roof suitable for solar installation,
while enabling us to emphasize the key convenience benefit of
portability, which is a distinct advantage of solar power compared to
other forms of power generation.
Wholesale
NRG has begun construction of a 360 MW4,
natural gas-fired peaking plant at our PH Robinson site near
NRG was selected by Southern California Edison (SCE) to repower the
Company’s Mandalay facility in
Outlook for 2014 and Initiation of 2015 Guidance
The Company is reducing its guidance range for fiscal year 2014 with
respect to both Adjusted EBITDA and FCF before Growth investments as
detailed below as a result of less-than-expected market opportunity
arising out of subdued summer pricing and volume as well as fuel
inventory build ahead of winter, interest payments associated with
The Company is also initiating guidance for fiscal year 2015 as set forth below. NRG’s Adjusted EBITDA guidance excludes the impact from NRG Home Solar activities.
Table 4: 2014 Adjusted EBITDA and FCF before Growth investments Guidance(1) |
||||||
2014 | 2015 | |||||
Prior | Revised | Guidance | ||||
($ in millions) | Guidance | Guidance | ||||
Adjusted EBITDA2 | 3,200 –3,400 | 3,100 –3,200 | 3,200 – 3,400 | |||
Interest payments | (1,061) | (1,114) | (1,160) | |||
Income tax | (40) | (40) | (40) | |||
Working capital/other changes | (70) | (215) | 250 | |||
Adjusted Cash flow from operations | 2,029 – 2,229 | 1,731 – 1,831 | 2,250 – 2,450 | |||
Maintenance capital expenditures, net | (375)-(395) | (375)-(395) | (540)-(570) | |||
Environmental capital expenditures, net | (340)-(360) | (290)-(310) | (300)-(320) | |||
Adjusted EBITDA from NRG Home Solar |
- |
- |
(100) | |||
Preferred dividends | (9) | (9) | (7) | |||
Distributions to non-controlling interests | (100) | (100) | (220)-(230) | |||
Free cash flow – before Growth investments | 1,200 – 1,400 | 950 – 1,050 | 1,100 – 1,300 |
1 | Subtotals and totals are rounded | |
2 | 2014 guidance includes negative contribution of $50 million from NRG Home Solar; 2015 guidance excludes negative contribution of $100 million from NRG Home Solar |
2014 Dividend Program
On
The Company's common stock dividend is subject to available capital, market conditions and compliance with associated laws and regulations.
Earnings Conference Call
NRG will host a conference call at
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, our ability to operate our businesses efficiently
including
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
1 Excludes
2 Represents average annual peaking capacity
3 Prior to the closing of the transaction, debt associated
with Laredo Ridge will be refinanced. As of
4 Represents average annual peaking capacity
NRG ENERGY, INC. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(In millions, except for per share amounts) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Revenues | ||||||||||||||||
Total operating revenues | $ | 4,569 | $ | 3,490 | $ | 11,676 | $ | 8,500 | ||||||||
Operating Costs and Expenses | ||||||||||||||||
Cost of operations | 3,278 | 2,373 | 8,828 | 6,177 | ||||||||||||
Depreciation and amortization | 375 | 327 | 1,096 | 947 | ||||||||||||
Impairment losses | 70 |
- |
70 |
- |
||||||||||||
Selling, general and administrative | 258 | 213 | 752 | 670 | ||||||||||||
Acquisition-related transaction and integration costs | 17 | 26 | 69 | 95 | ||||||||||||
Development activity expenses | 22 | 24 | 62 | 63 | ||||||||||||
Total operating costs and expenses | 4,020 | 2,963 | 10,877 | 7,952 | ||||||||||||
Gain on sale of assets |
- |
- |
19 |
- |
||||||||||||
Operating Income | 549 | 527 | 818 | 548 | ||||||||||||
Other Income/(Expense) | ||||||||||||||||
Equity in earnings/(loss) of unconsolidated affiliates | 18 | (5 | ) | 39 | 6 | |||||||||||
Other (expense)/income, net | (3 | ) | 5 | 13 | 9 | |||||||||||
Loss on debt extinguishment | (13 | ) | (1 | ) | (94 | ) | (50 | ) | ||||||||
Interest expense | (280 | ) | (228 | ) | (809 | ) | (630 | ) | ||||||||
Total other expense | (278 | ) | (229 | ) | (851 | ) | (665 | ) | ||||||||
Income/(Loss) Before Income Taxes | 271 | 298 | (33 | ) | (117 | ) | ||||||||||
Income tax expense/(benefit) | 89 | 160 | (68 | ) | (55 | ) | ||||||||||
Net Income/(Loss) | 182 | 138 | 35 | (62 | ) | |||||||||||
Less: Net income attributable to noncontrolling interest | 14 | 19 | 20 | 27 | ||||||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | 168 | 119 | 15 | (89 | ) | |||||||||||
Dividends for preferred shares | 2 | 2 | 7 | 7 | ||||||||||||
Income/(Loss) Available for Common Stockholders | $ | 166 | $ | 117 | $ | 8 | $ | (96 | ) | |||||||
Earnings/(Loss) Per Share Attributable to NRG Energy, Inc. Common Stockholders | ||||||||||||||||
Weighted average number of common shares outstanding - basic |
338 | 323 | 333 | 323 | ||||||||||||
Earnings/(Loss) per Weighted Average Common Share - Basic |
$ | 0.49 | $ | 0.36 | $ | 0.02 | $ | (0.30 | ) | |||||||
Weighted average number of common shares outstanding - diluted |
343 | 327 | 338 | 323 | ||||||||||||
Earnings/(Loss) per Weighted Average Common Share - Diluted |
$ | 0.48 | $ | 0.36 | $ | 0.02 | $ | (0.30 | ) | |||||||
Dividends Per Common Share | $ | 0.14 | $ | 0.12 | $ | 0.40 | $ | 0.33 | ||||||||
NRG ENERGY, INC. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In millions) | ||||||||||||||||
Net Income/(Loss) | $ | 182 | $ | 138 | $ | 35 | $ | (62 | ) | |||||||
Other Comprehensive (Loss)/Income, net of tax | ||||||||||||||||
Unrealized gain/(loss) on derivatives, net of income tax expense/(benefit) of $4, $(5), $(11), and $(2) | 4 | (16 | ) | (24 | ) | 8 | ||||||||||
Foreign currency translation adjustments, net of income tax (benefit)/expense of $(6), $(1), $(2), and $(13) | (6 | ) | 5 | (3 | ) | (14 | ) | |||||||||
Available-for-sale securities, net of income tax (benefit)/expense of $(1), $0, $0, and $1 | (2 | ) |
- |
2 | 2 | |||||||||||
Defined benefit plans, net of tax expense/(benefit) of $0, $0, $(7), and $4 | (3 | ) |
- |
9 | 25 | |||||||||||
Other comprehensive (loss)/income | (7 | ) | (11 | ) | (16 | ) | 21 | |||||||||
Comprehensive Income/(Loss) | 175 | 127 | 19 | (41 | ) | |||||||||||
Less: Comprehensive income attributable to noncontrolling interest | 17 | 18 | 14 | 26 | ||||||||||||
Comprehensive Income/(Loss) Attributable to NRG Energy, Inc. | 158 | 109 | 5 | (67 | ) | |||||||||||
Dividends for preferred shares | 2 | 2 | 7 | 7 | ||||||||||||
Comprehensive Income/(Loss) Available for Common Stockholders | $ | 156 | $ | 107 | $ | (2 | ) | $ | (74 | ) | ||||||
NRG ENERGY, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
(In millions, except shares) |
(unaudited) | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 1,953 | $ | 2,254 | ||||
Funds deposited by counterparties | 3 | 63 | ||||||
Restricted cash | 339 | 268 | ||||||
Accounts receivable — trade, less allowance for doubtful accounts of $27 and $40 | 1,554 | 1,214 | ||||||
Inventory | 1,051 | 898 | ||||||
Derivative instruments | 1,397 | 1,328 | ||||||
Cash collateral paid in support of energy risk management activities | 375 | 276 | ||||||
Deferred income taxes | 79 | 258 | ||||||
Renewable energy grant receivable, net | 614 | 539 | ||||||
Current assets held-for-sale | 32 | 19 | ||||||
Prepayments and other current assets | 475 | 479 | ||||||
Total current assets | 7,872 | 7,596 | ||||||
Property, plant and equipment, net of accumulated depreciation of $7,584 and $6,573 | 22,181 | 19,851 | ||||||
Other Assets | ||||||||
Equity investments in affiliates | 797 | 453 | ||||||
Notes receivable, less current portion | 80 | 73 | ||||||
Goodwill | 2,452 | 1,985 | ||||||
Intangible assets, net of accumulated amortization of $1,333 and $1,977 | 2,880 | 1,140 | ||||||
Nuclear decommissioning trust fund | 569 | 551 | ||||||
Derivative instruments | 427 | 311 | ||||||
Deferred income taxes | 1,476 | 1,202 | ||||||
Non-current assets held-for-sale | 54 | — | ||||||
Other non-current assets | 1,281 | 740 | ||||||
Total other assets | 10,016 | 6,455 | ||||||
Total Assets | $ | 40,069 | $ | 33,902 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Current portion of long-term debt and capital leases | $ | 854 | $ | 1,050 | ||||
Accounts payable | 1,098 | 1,038 | ||||||
Derivative instruments | 1,365 | 1,055 | ||||||
Cash collateral received in support of energy risk management activities | 3 | 63 | ||||||
Current liabilities held-for-sale | 23 | — | ||||||
Accrued expenses and other current liabilities | 1,200 | 998 | ||||||
Total current liabilities | 4,543 | 4,204 | ||||||
Other Liabilities | ||||||||
Long-term debt and capital leases | 19,919 | 15,767 | ||||||
Nuclear decommissioning reserve | 306 | 294 | ||||||
Nuclear decommissioning trust liability | 323 | 324 | ||||||
Deferred income taxes | 24 | 22 | ||||||
Derivative instruments | 326 | 195 | ||||||
Out-of-market contracts | 1,245 | 1,177 | ||||||
Non-current liabilities held-for-sale | 31 | — | ||||||
Other non-current liabilities | 1,385 | 1,201 | ||||||
Total non-current liabilities | 23,559 | 18,980 | ||||||
Total Liabilities | 28,102 | 23,184 | ||||||
3.625% convertible perpetual preferred stock (at liquidation value, net of issuance costs) | 249 | 249 | ||||||
Redeemable noncontrolling interest in subsidiaries | 28 | 2 | ||||||
Commitments and Contingencies | ||||||||
Stockholders’ Equity | ||||||||
Common stock | 4 | 4 | ||||||
Additional paid-in capital | 8,314 | 7,840 | ||||||
Retained earnings | 3,564 | 3,695 | ||||||
Less treasury stock, at cost — 77,219,145 and 77,347,528 shares, respectively | (1,939 | ) | (1,942 | ) | ||||
Accumulated other comprehensive (loss)/income | (5 | ) | 5 | |||||
Noncontrolling interest | 1,752 | 865 | ||||||
Total Stockholders’ Equity | 11,690 | 10,467 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 40,069 | $ | 33,902 | ||||
NRG ENERGY, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Nine months ended September 30, | ||||||||
2014 | 2013 | |||||||
(In millions) | ||||||||
Cash Flows from Operating Activities | ||||||||
Net Income/(loss) | $ | 35 | $ | (62 | ) | |||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||
Distributions and equity in earnings of unconsolidated affiliates | 32 | 23 | ||||||
Depreciation and amortization | 1,096 | 947 | ||||||
Provision for bad debts | 49 | 49 | ||||||
Amortization of nuclear fuel | 33 | 27 | ||||||
Amortization of financing costs and debt discount/premiums | (9 | ) | (22 | ) | ||||
Adjustment for debt extinguishment | 24 | (15 | ) | |||||
Amortization of intangibles and out-of-market contracts | 52 | 75 | ||||||
Amortization of unearned equity compensation | 32 | 32 | ||||||
Changes in deferred income taxes and liability for uncertain tax benefits | (75 | ) | 39 | |||||
Changes in nuclear decommissioning trust liability | 12 | 25 | ||||||
Changes in derivative instruments | 248 | 189 | ||||||
Changes in collateral deposits supporting energy risk management activities | (100 | ) | (59 | ) | ||||
Loss/(gain) on sale of emission allowances | 2 | (8 | ) | |||||
Gain on sale of assets | (26 | ) | — | |||||
Impairment losses | 70 | — | ||||||
Cash used by changes in other working capital | (361 | ) | (417 | ) | ||||
Net Cash Provided by Operating Activities | 1,114 | 823 | ||||||
Cash Flows from Investing Activities | ||||||||
Acquisitions of businesses, net of cash acquired | (2,832 | ) | (374 | ) | ||||
Capital expenditures | (675 | ) | (1,581 | ) | ||||
Increase in restricted cash, net | (52 | ) | (67 | ) | ||||
Decrease/(increase) in restricted cash to support equity requirements for U.S. DOE funded projects | 21 | (20 | ) | |||||
Decrease/(increase) in notes receivable | 21 | (22 | ) | |||||
Investments in nuclear decommissioning trust fund securities | (475 | ) | (369 | ) | ||||
Proceeds from sales of nuclear decommissioning trust fund securities | 463 | 344 | ||||||
Proceeds from renewable energy grants | 431 | 52 | ||||||
Proceeds from sale of assets, net of cash disposed of | 153 | 13 | ||||||
Cash proceeds to fund cash grant bridge loan payment | 57 | — | ||||||
Other | (70 | ) | (7 | ) | ||||
Net Cash Used by Investing Activities | (2,958 | ) | (2,031 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Payment of dividends to common and preferred stockholders | (140 | ) | (113 | ) | ||||
Payment for treasury stock | — | (25 | ) | |||||
Net (payments for)/receipts from settlement of acquired derivatives that include financing elements | (64 | ) | 177 | |||||
Proceeds from issuance of long-term debt | 4,456 | 1,605 | ||||||
Contributions and sale proceeds from noncontrolling interest in subsidiaries | 639 | 504 | ||||||
Proceeds from issuance of common stock | 15 | 14 | ||||||
Payment of debt issuance costs | (57 | ) | (43 | ) | ||||
Payments for short and long-term debt | (3,308 | ) | (868 | ) | ||||
Net Cash Provided by Financing Activities | 1,541 | 1,251 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 2 | (1 | ) | |||||
Net (Decrease)/Increase in Cash and Cash Equivalents | (301 | ) | 42 | |||||
Cash and Cash Equivalents at Beginning of Period | 2,254 | 2,087 | ||||||
Cash and Cash Equivalents at End of Period | $ | 1,953 | $ | 2,129 | ||||
Appendix Table A-1: Third Quarter 2014 Regional Adjusted EBITDA Reconciliation |
|||||||||||||||||
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss) | |||||||||||||||||
Gulf | NRG | ||||||||||||||||
($ in millions) | Retail | Coast | East | West | Yield | Renewables | Corp | Total | |||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | 88 | 147 | 223 | 76 | 25 | (34) | (357) | 168 | |||||||||
Plus: | |||||||||||||||||
Net Income Attributable to Non-Controlling Interest |
- | - | - | - | 6 | 12 | (4) | 14 | |||||||||
Interest Expense, net | - | 4 | 13 | 4 | 40 | 34 | 182 | 277 | |||||||||
Loss on Debt Extinguishment | - | - | - | - | - | - | 13 | 13 | |||||||||
Income Tax | - | - | - | - | 10 | - | 79 | 89 | |||||||||
Depreciation, Amortization and ARO Expense |
32 | 153 | 68 | 20 | 34 | 64 | 13 | 384 | |||||||||
Amortization of Contracts | - | 5 | (17) | 7 | 8 | 4 | (1) | 6 | |||||||||
EBITDA | 120 | 309 | 287 | 107 | 123 | 80 | (75) | 951 | |||||||||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates |
- | - | - | 2 | 15 | (4) | 8 | 21 | |||||||||
Integration and Transaction Costs | 1 | - | 1 | - | 2 | - | 14 | 18 | |||||||||
Deactivation Costs | - | - | 8 | 1 | - | - | - | 9 | |||||||||
Sale of Businesses | - | - | - | - | - | - | - | - | |||||||||
Asset Write Offs and Impairments | - | 10 | 60 | - | - | 12 | 7 | 89 | |||||||||
Market to Market (MtM) Losses/(Gains) on economic hedges |
75 | (138) | (14) | 3 | - | - | - | (74) | |||||||||
Adjusted EBITDA | 196 | 181 | 342 | 113 | 140 | 88 | (46) | 1,014 | |||||||||
Appendix Table A-2: Third Quarter 2013 Regional Adjusted EBITDA Reconciliation |
|||||||||||||||||
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss) | |||||||||||||||||
Gulf | NRG | ||||||||||||||||
($ in millions) | Retail | Coast | East | West | Yield | Renewables | Corp | Total | |||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | (56) | 282 | 241 | 22 | 40 | (7) | (403) | 119 | |||||||||
Plus: | |||||||||||||||||
Net Income Attributable to Non-Controlling Interest |
- |
- |
- | - |
9 |
17 |
(7) |
19 | |||||||||
Interest Expense, net | 1 | 4 | 12 | 1 | 20 | 12 |
174 |
224 | |||||||||
Loss on Debt Extinguishment | - |
- |
- | - |
- |
- |
1 |
1 | |||||||||
Income Tax | - |
- |
- | - |
5 |
- |
155 |
160 | |||||||||
Depreciation, Amortization and ARO Expense |
37 | 142 | 89 | 13 | 19 | 26 |
3 |
329 | |||||||||
Amortization of Contracts | 10 | 3 | 17 | (2) |
1 |
- |
2 |
31 | |||||||||
EBITDA | (8) | 431 | 359 | 34 | 94 | 48 | (75) | 883 | |||||||||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates |
- | 1 | - | 13 |
8 |
(12) |
17 |
27 | |||||||||
Integration and Transaction Costs | - |
- |
- | - |
- |
- |
26 |
26 | |||||||||
Deactivation Costs | - |
- |
5 | 2 |
- |
- |
- |
7 | |||||||||
Asset Write Offs and Impairments | - |
- |
1 | - |
1 |
3 |
(1) |
4 | |||||||||
Market to Market (MtM) Losses/(Gains) on economic hedges |
188 | (184) | 50 | (2) |
- |
1 |
- |
53 | |||||||||
Adjusted EBITDA | 180 | 248 | 415 | 47 |
103 |
40 | (33) | 1,000 | |||||||||
Appendix Table A-3: YTD Third Quarter 2014 Regional Adjusted EBITDA Reconciliation |
|||||||||||||||||
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss) | |||||||||||||||||
Gulf | NRG | ||||||||||||||||
($ in millions) | Retail | Coast | East | West | Yield | Renewables | Corp | Total | |||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | 267 | (56) | 448 | 117 | 75 |
(101) |
(735) | 15 | |||||||||
Plus: | |||||||||||||||||
Net Income Attributable to Non-Controlling Interest |
- | - | - | - | 16 | 15 | (11) | 20 | |||||||||
Interest Expense, net | 1 | 39 | 10 | 8 | 96 | 92 | 552 | 798 | |||||||||
Loss on Debt Extinguishment | - | - | - | - | - | - | 94 | 94 | |||||||||
Income Tax | 1 | - | - | - | 15 | - | (84) | (68) | |||||||||
Depreciation, Amortization and ARO Expense |
98 | 442 | 208 | 63 | 94 | 171 | 35 | 1,111 | |||||||||
Amortization of Contracts | 3 | 17 | (36) | 4 | 8 | 4 | (1) | (1) | |||||||||
EBITDA | 370 | 442 | 630 | 192 | 304 | 181 | (150) | 1,969 | |||||||||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates |
- | 1 | - | (2) | 35 | (1) | 19 | 52 | |||||||||
Integration and Transaction Costs | 1 | - | 2 | - | 2 | - | 65 | 70 | |||||||||
Deactivation Costs | - | - | 10 | 5 | - | - | - | 15 | |||||||||
Legal Settlement | 4 | - | - | - | - | - | - | 4 | |||||||||
Sale of Businesses | - | (23) | 5 | - | - | - | - | (18) | |||||||||
Asset Write Offs and Impairments | - | 15 | 60 | - | - | 12 | 9 | 96 | |||||||||
Market to Market (MtM) Losses/(Gains) on economic hedges |
102 | (109) | 316 | 4 | - | - | - | 313 | |||||||||
Adjusted EBITDA | 477 | 326 | 1,023 | 199 | 341 | 192 | (57) | 2,501 | |||||||||
Appendix Table A-4: YTD Third Quarter 2013 Regional Adjusted EBITDA Reconciliation |
|||||||||||||||||
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss) | |||||||||||||||||
Gulf | NRG | ||||||||||||||||
($ in millions) | Retail | Coast | East | West | Yield | Renewables | Corp | Total | |||||||||
Net Income/(Loss) Attributable to NRG Energy, Inc. | 231 | 31 | 216 | 54 |
86 |
(45) | (662) | (89) | |||||||||
Plus: | |||||||||||||||||
Net Income Attributable to Non-Controlling Interest |
- |
- |
- | - | 9 | 27 | (9) | 27 | |||||||||
Interest Expense, net | 2 | 12 | 39 | 1 | 31 | 34 | 502 | 621 | |||||||||
Loss on Debt Extinguishment | - |
- |
- | - |
- |
- | 50 | 50 | |||||||||
Income Tax | - |
- |
- | - |
5 |
- | (60) | (55) | |||||||||
Depreciation, Amortization and ARO Expense |
105 | 416 | 267 | 41 | 39 | 73 | 18 | 959 | |||||||||
Amortization of Contracts | 49 | 14 | (4) | (5) |
1 |
- | - | 55 | |||||||||
EBITDA | 387 | 473 | 518 | 91 |
171 |
89 | (161) | 1,568 | |||||||||
Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates |
- | 2 | - | 14 | 28 | - |
16 |
60 | |||||||||
Integration and Transaction Costs | - |
- |
- | - |
- |
- |
95 |
95 | |||||||||
Deactivation Costs | - |
- |
14 | 4 |
- |
- |
- |
18 | |||||||||
Asset Write Offs and Impairments | - | 3 | 1 | - |
1 |
3 |
- |
8 | |||||||||
Market to Market (MtM) Losses/(Gains) on economic hedges |
36 | (24) | 209 | (3) |
- |
- |
- |
218 | |||||||||
Adjusted EBITDA | 423 | 454 | 742 | 106 |
200 |
92 | (50) | 1,967 |
Appendix Table A-5: 2014 and 2013 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 | Three months ended | ||||
($ in millions) | September 30, 2014 |
September 30, 2013 (1) |
|||
Net Cash Provided by Operating Activities | 744 | 901 | |||
Adjustment for change in collateral | (197) | (99) | |||
Reclassifying of net receipts (payments) for settlement of acquired derivatives that include financing elements | 103 | 6 | |||
Add: Merger and integration expenses | 12 | 36 | |||
Adjusted Cash Flow from Operating Activities | 662 | 844 | |||
Maintenance CapEx, net2 | (27) | (52) | |||
Environmental CapEx, net | (92) | (17) | |||
Preferred dividends | (2) | (2) | |||
Distributions to non-controlling interests | (15) | _ | |||
Free cash flow – before Growth investments | 526 | 773 |
(1) | Revised to reflect new Adjusted Cash Flow from Operating Activities methodology | |
(2) | Excludes merger and integration CapEx of $7 million and $11 million in 2014 and 2013, respectively |
Appendix Table A-6: 2014 and 2013 YTD Third Quarter Adjusted Cash Flow from Operations Reconciliations | |||||
The following table summarizes the calculation of adjusted cash flow operating activities providing a reconciliation to net cash provided by operating activities |
|||||
Nine months ended | Nine months ended | ||||
($ in millions) | September 30, 2014 |
September 30, 2013 (1) |
|||
Net Cash Provided by Operating Activities | 1,114 | 823 | |||
Adjustment for change in collateral | 100 | 59 | |||
Reclassifying of net receipts (payments) for settlement of acquired derivatives that include financing elements | (64) | 177 | |||
Add: Merger and integration expenses | 76 | 116 | |||
Adjusted Cash Flow from Operating Activities | 1,226 | 1,175 | |||
Maintenance CapEx, net2 | (191) | (222) | |||
Environmental CapEx, net | (178) | (50) | |||
Preferred dividends | (7) | (7) | |||
Distributions to non-controlling interests | (38) | _ | |||
Free cash flow – before Growth investments | 812 | 896 | |||
(1) | Revised to reflect new Adjusted Cash Flow from Operating Activities methodology | |
(2) | Excludes merger and integration CapEx of $20 million and $21 million in 2014 and 2013, respectively |
Appendix Table A-8: Adjusted NRG Yield Drop Down Assets Projected
Reg G.
The following table summarizes the calculation of
Adjusted EBITDA and CAFD and provides a reconciliation to income before
taxes:
2014 Q4 Drop Downs | ||
(dollars in millions) | ||
Income Before Taxes | 3 | |
Adjustments to net income to arrive at Adjusted EBITDA: | ||
Depreciation and amortization | 81 | |
Interest expense, net | 36 | |
Adjusted EBITDA | 120 | |
Cash Interest Paid | (33) | |
Working Capital / Other | 1 | |
Maintenance capital expenditures | ‒ | |
Principal amortization of indebtedness | (53) | |
Cash Available for Distribution | 35 | |
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
David
Knox, 832-357-5730
or
Investors:
Chad Plotkin,
609-524-4526