Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8‑K 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 2019

NRG ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 
(State or other jurisdiction of incorporation)
001‑15891 
(Commission File Number)
41-1724239 
(IRS Employer Identification No.)
804 Carnegie Center, Princeton, New Jersey 08540 
(Address of principal executive offices, including zip code)
(609) 524‑4500 
(Registrant’s telephone number, including area code)
N/A 
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)
[ ] Pre‑commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))
[ ] Pre‑commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Exchange on Which Registered
Common Stock, par value $0.01
NRG
New York Stock Exchange





Item 2.02    Results of Operations and Financial Condition

On August 7, 2019, NRG Energy, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2019.  A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K and is hereby incorporated by reference.

Item 9.01     Financial Statements and Exhibits
Exhibits
Exhibit
Number
 

Document
99.1
 




2




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
NRG Energy, Inc.
 
(Registrant)
 
 
 
By:
/s/ Christine A. Zoino
 
 
Christine A. Zoino
 
 
Corporate Secretary
 
 
 
Dated: August 7, 2019
 
 



    


3

Document
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13046350&doc=3            

Exhibit 99.1



NRG Energy, Inc. Reports Second Quarter 2019 Results


Reaffirming 2019 guidance
Reduced debt by $600 million to achieve investment grade metrics
Announcing incremental $250 million share repurchase program
Closed Stream Energy acquisition
Executed approximately 1.3 GWs of solar power purchase agreements in ERCOT


PRINCETON, NJ - August 7, 2019 - NRG Energy, Inc. (NYSE: NRG) today reported second quarter 2019 income from continuing operations of $189 million, or $0.75 per diluted common share and Adjusted EBITDA for the second quarter of $469 million.

“Our platform performed well during both the quarter and first half of the year, demonstrating the stability of our integrated model,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. "I am also pleased to announce that we have completed our deleveraging program, aligning our credit profile with investment grade metrics and enhancing our financial flexibility to create significant and sustainable shareholder value.”


Consolidated Financial Results
NRG completed the sale of its Renewables Platform, and its interests in Clearway Energy, as well as the South Central Portfolio, on August 31, 2018, and February 4, 2019, respectively. As a result, 2018 financial information for the sales were recast to reflect the presentation of these entities as discontinued operations.


 
 
Three Months Ended

Six Months Ended
($ in millions)

 
6/30/19

6/30/18

6/30/19

6/30/18
Income from Continuing Operations
 
$
189

 
$
27

 
$
283

 
$
265

Cash provided by Continuing Operations
 
$
516

 
$
18

 
$
381

 
$
264

Adjusted EBITDA
 
$
469

 
$
517

 
$
801

 
$
853

Free Cash Flow Before Growth Investments (FCFbG)
 
$
230

 
$
174

 
$
204

 
$
216




























1



Segment Results

Table 1: Income/(Loss) from Continuing Operations
($ in millions)
 
Three Months Ended
 
Six Months Ended
Segment
 
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Retail
 
$
(280
)
 
$
(84
)
 
$
(170
)
 
$
860

Generation a 
 
618

 
252

 
731

 
(319
)
Corporate
 
(149
)
 
(141
)
 
(278
)
 
(276
)
Income from Continuing Operationsa
 
$
189

 
$
27

 
$
283

 
$
265

a. In accordance with GAAP, 2018 results have been recast to reflect the discontinued operations of the South Central Portfolio, Clearway Energy, the Renewables Platform and Carlsbad Energy Center.

Second quarter Income from Continuing Operations was $189 million, $162 million higher than second quarter 2018, driven by Generation gains on mark-to-market hedge positions in 2019 partially offset by Retail losses on mark-to-market hedge positions in 2019, both driven by large movements in gas prices and ERCOT heat rates.


Table 2: Adjusted EBITDA
($ in millions)

Three Months Ended
 
Six Months Ended
Segment

6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Retail

$
240

 
$
298

 
$
393

 
$
486

Generation a

230

 
231

 
414

 
385

Corporate

(1
)
 
(12
)
 
(6
)
 
(18
)
Adjusted EBITDA b

$
469

 
$
517

 
$
801

 
$
853

a. In accordance with GAAP, 2018 results have been recast to reflect the discontinued operations of the South Central Portfolio, Clearway Energy, the Renewables Platform and Carlsbad Energy Center.
b. See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations.

Retail: Second quarter Adjusted EBITDA was $240 million, $58 million lower than second quarter 2018, driven by higher supply costs, milder weather and capacity obligations, partially offset by the acquisition of XOOM.

Generation: Second quarter Adjusted EBITDA was $230 million, $1 million lower than second quarter 2018, driven by:
Texas Region: $85 million increase due to higher generation and higher realized power prices; and
East/West1: $86 million decrease due to 2018 asset sales and deconsolidations combined with lower insurance proceeds and lower generation.






 





















1 Includes International and Renewables

2



Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
 
6/30/19
 
12/31/18
Cash and Cash Equivalents
 
$
294

 
$
563

Restricted Cash
 
11

 
17

Total
 
$
305

 
$
580

Total credit facility availability
 
1,799

 
1,397

Total Liquidity, excluding collateral received
 
$
2,104

 
$
1,977


As of June 30, 2019, NRG cash was at $0.3 billion, and $1.8 billion was available under the Company’s credit facilities. Total liquidity was $2.1 billion, including restricted cash. Overall liquidity as of the end of the second quarter 2019 was $127 million higher than at the end of 2018 driven by asset sale proceeds, net of share repurchases and debt reductions executed during the period, and an increase in NRG's revolver capacity.

NRG Strategic Developments

Transformation Plan
Through the second quarter of 2019, NRG realized $261 million of its cost savings target as part of the previously announced Transformation Plan, and is on track to realize $590 million in savings in 2019. Margin Enhancement provided $30 million in uplift through the second quarter toward the $135 million 2019 target.

Retail Acquisition
On May 15, 2019, NRG entered into an agreement to acquire Stream Energy's retail electricity and natural gas business operating in 9 states and Washington, D.C. for $300 million and estimated transaction costs and working capital adjustments of approximately $25 million. The acquisition increased NRG's retail portfolio by approximately 600,000 Retail Customer Equivalents or 450,000 customers. The acquisition closed on August 1, 2019.

Renewable Power Purchase Agreements
During the first half of 2019, NRG began execution of its capital-light strategy to provide competitively priced renewable offerings to retail customers. NRG entered into power purchase agreements with third-party project developers and other counterparties, totaling approximately 1.3 GWs, with an average tenor of approximately ten years. NRG expects to continue evaluating and executing agreements such as these that support the needs of its platform.

Pre-Summer Maintenance and Gregory Natural Gas Plant
NRG expanded pre-summer maintenance of the Texas fleet by increasing spending by $21 million, including the return of its 385 MW Gregory natural gas plant in Corpus Christi, Texas to service in June 2019.

2019 Guidance
NRG is reaffirming its guidance range for 2019 with respect to Adjusted EBITDA, Cash From Operations and Free Cash Flow before Growth Investments (FCFbG) as set forth below.

Table 4: 2019 Adjusted EBITDA, Cash from Operations, and FCFbG Guidance
 
2019
($ in millions)
Guidance
Adjusted EBITDAa
$1,850-$2,050
Adjusted Cash From Operations
$1,405-$1,605
FCFbG
$1,250-$1,450
a. Non-GAAP financial measure; see Appendix Tables A-8 for GAAP Reconciliation to Net Income that excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year 










3



Capital Allocation Update

Through August 7, 2019, NRG completed $1.25 billion in share repurchases, including the $1 billion share repurchase program announced on the fourth quarter 2018 earnings call, at an average price of $38.80 per share2.
In addition, the Board of Directors of the Company has authorized an incremental $250 million share repurchase program, which is expected to be executed in 2019. In total, NRG has allocated $1.5 billion of capital available for allocation to share repurchases in 2019.
During the second quarter of 2019, NRG completed several debt transactions to extend maturities, reduce interest expense and further align its credit profile with investment grade:
Refinanced $733 million of 6.25% Senior Unsecured Notes due 2024 with new 5.25% Senior Unsecured Notes due 2029
Issued $1.1 billion of aggregate principal amount of Senior Secured First Lien Notes, consisting of $600 million 3.75% Senior Secured First Lien Notes due 2024 and $500 million 4.45% Senior Secured First Lien Notes due 2029. The proceeds from the issuance of the Senior Secured First Lien Notes, as well as $598 million3 of cash on hand, were used to repay the Company's $1.7 billion 2023 Term Loan facility
Amended its existing credit agreement, increasing the aggregate revolving commitments by $184 million to $2.6 billion, extending the maturity to 2024, and reducing the borrowing costs by 0.5%, among other modifications
Both the new secured notes and amended credit facility provide for a release of the collateral securing the debt if NRG obtains an investment grade rating from two out of the three rating agencies. In aggregate, these transactions will generate annual interest savings of approximately $25 million.
On July 19, 2019, NRG declared a quarterly dividend on the Company's common stock of $0.03 per share, payable August 15, 2019, to stockholders of record as of August 1, 2019, representing $0.12 on an annualized basis.
The Company’s common stock dividend, debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.




























2 As of August 7, 2019, 252,987,889 shares outstanding
3 Includes $4 million of term loan amortization

4




Earnings Conference Call
On August 7, 2019, NRG will host a conference call at 9:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG’s website at http://www.nrg.com and clicking on “Investors” then "Presentations & Webcasts." The webcast will be archived on the site for those unable to listen in real time.

About NRG
At NRG, we’re bringing the power of energy to people and organizations, putting customers at the center of everything we do. We generate electricity and provide energy solutions and natural gas to more than 3.5 million residential, small business, and commercial and industrial customers through our diverse portfolio of retail brands. A Fortune 500 company, operating in the United States and Canada, NRG delivers innovative solutions while advocating for competitive energy markets and customer choice, and by working towards a sustainable energy future. More information is available at www.nrg.com. Connect with NRG on Facebook, LinkedIn and follow us on Twitter @nrgenergy, @nrginsight.

Forward-Looking Statements
In addition to historical information, the information presented in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein 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 regulations, the condition of capital markets generally, our ability to access capital markets, cyberterrorism and inadequate cybersecurity, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions, repowerings or asset sales, our ability to implement value enhancing improvements to plant operations and companywide processes, our ability to implement and execute on our publicly announced transformation plan, including any cost savings and margin enhancement, our ability to achieve our net debt targets, our ability to achieve investment grade credit metrics, our ability to proceed with projects under development or the inability to complete the construction of such projects on schedule or within budget, the inability to maintain or create successful partnering relationships, our ability to operate our businesses efficiently, our ability to retain retail customers, our ability to realize value through our commercial operations strategy, the ability to successfully integrate businesses of acquired companies, our ability to realize anticipated benefits of transactions (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, and our ability to execute our Capital Allocation Plan. Achieving investment grade credit metrics is not a indication of or guarantee that the Company will receive investment grade credit ratings. Debt and share repurchases may be made from time to time subject to market conditions and other factors, including as permitted by United States securities laws. Furthermore, any common stock dividend is subject to available capital and market conditions.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The adjusted EBITDA, free cash flow guidance and excess cash guidance are estimates as of August 7, 2019. These estimates are based on assumptions the company believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at www.sec.gov.




5



Contacts:

Media:
 
Investors:
 
 
 
 
 
Candice Adams
 
Kevin L. Cole, CFA
 
609.524.5428
 
609.524.4526
 
 
 
 
 
 
 
 
 
 
 
 
 




6



NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
(In millions, except for per share amounts)
2019
 
2018
 
2019
 
2018
Operating Revenues
 
 
 
 
 
 
 
Total operating revenues
$
2,465

 
$
2,461

 
$
4,630

 
$
4,526

Operating Costs and Expenses
 
 
 
 
 
 
 
Cost of operations
1,845

 
1,889

 
3,496

 
3,274

Depreciation and amortization
85

 
112

 
170

 
232

Impairment losses
1

 
74

 
1

 
74

Selling, general and administrative
211

 
200

 
405

 
376

Reorganization costs
2

 
23

 
15

 
43

Development costs
2

 
3

 
4

 
8

Total operating costs and expenses
2,146

 
2,301

 
4,091

 
4,007

Gain on sale of assets
1

 
14

 
2

 
16

Operating Income
320

 
174

 
541

 
535

Other Income/(Expense)
 
 
 
 
 
 
 
Equity in earnings/(losses) of unconsolidated affiliates

 
5

 
(21
)
 
6

Other income/(expense), net
20

 
(23
)
 
32

 
(23
)
Loss on debt extinguishment, net
(47
)
 
(1
)
 
(47
)
 
(3
)
Interest expense
(105
)
 
(123
)
 
(219
)
 
(239
)
Total other expense
(132
)
 
(142
)
 
(255
)
 
(259
)
Income from Continuing Operations Before Income Taxes
188

 
32

 
286

 
276

Income tax (benefit)/expense
(1
)
 
5

 
3

 
11

Income from Continuing Operations
189

 
27

 
283

 
265

Income from discontinued operations, net of income tax
13

 
69

 
401

 
64

Net Income
202

 
96

 
684

 
329

Less: Net income/(loss) attributable to noncontrolling interest and redeemable interests
1

 
24

 
1

 
(22
)
Net Income Attributable to NRG Energy, Inc.
$
201

 
$
72

 
683

 
351

Earnings per Share Attributable to NRG Energy, Inc.
 
 
 
 
 
 
 
Weighted average number of common shares outstanding — basic
265

 
310

 
272

 
314

Income from continuing operations per weighted average common share — basic
$
0.71

 
$
0.01

 
$
1.04

 
$
0.92

Income from discontinued operations per weighted average common share — basic
$
0.05

 
$
0.22

 
$
1.47

 
$
0.20

Earnings per Weighted Average Common Share — Basic
$
0.76

 
$
0.23

 
$
2.51

 
$
1.12

Weighted average number of common shares outstanding — diluted
267

 
314

 
274

 
318

Income from continuing operations per weighted average common share — diluted
$
0.70

 
$
0.01

 
$
1.03

 
$
0.90

Income from discontinued operations per weighted average common share — diluted
$
0.05

 
$
0.22

 
$
1.46

 
$
0.20

Earnings per Weighted Average Common Share — Diluted
$
0.75

 
$
0.23

 
$
2.49

 
$
1.10

Dividends Per Common Share
$
0.03

 
$
0.03

 
$
0.06

 
$
0.06


7



NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
 
(In millions)
Net Income
$
202

 
$
96

 
$
684

 
$
329

Other Comprehensive (Loss)/Income
 
 
 
 
 
 
 
Unrealized gain on derivatives

 
5

 

 
19

Foreign currency translation adjustments
(1
)
 
(4
)
 

 
(6
)
Available-for-sale securities
1

 
1

 
1

 
1

Defined benefit plans
(3
)
 
(1
)
 
(6
)
 
(2
)
Other comprehensive (loss)/income
(3
)
 
1

 
(5
)
 
12

Comprehensive Income
199

 
97

 
679

 
341

Less: Comprehensive income/(loss) attributable to noncontrolling interest and redeemable noncontrolling interest
1

 
26

 
1

 
(12
)
Comprehensive Income Attributable to NRG Energy, Inc.
$
198

 
$
71

 
$
678

 
$
353





8



NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 30, 2019
 
December 31, 2018
(In millions, except share data)
(Unaudited)
 
 
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
294

 
$
563

Funds deposited by counterparties
31

 
33

Restricted cash
11

 
17

Accounts receivable, net
1,049

 
1,024

Inventory
370

 
412

Derivative instruments
850

 
764

Cash collateral paid in support of energy risk management activities
163

 
287

Prepayments and other current assets
277

 
302

Current assets - held-for-sale

 
1

Current assets - discontinued operations

 
197

Total current assets
3,045

 
3,600

Property, plant and equipment, net
2,610

 
3,048

Other Assets
 
 
 
Equity investments in affiliates
383

 
412

Operating lease right-of-use assets, net
499

 

Goodwill
573

 
573

Intangible assets, net
561

 
591

Nuclear decommissioning trust fund
748

 
663

Derivative instruments
426

 
317

Deferred income taxes
55

 
46

Other non-current assets
271

 
289

Non-current assets - held-for-sale

 
77

Non-current assets - discontinued operations

 
1,012

Total other assets
3,516

 
3,980

Total Assets
$
9,171

 
$
10,628

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current Liabilities
 
 
 
Current portion of long-term debt and capital leases
$
87

 
$
72

Current portion of operating lease liabilities
74

 

Accounts payable
723

 
863

Derivative instruments
778

 
673

Cash collateral received in support of energy risk management activities
31

 
33

Accrued expenses and other current liabilities
601

 
680

Current liabilities - held-for-sale

 
5

Current liabilities - discontinued operations

 
72

Total current liabilities
2,294

 
2,398

Other Liabilities
 
 
 
Long-term debt and capital leases
5,794

 
6,449

Non-current operating lease liabilities
513

 

Nuclear decommissioning reserve
290

 
282

Nuclear decommissioning trust liability
448

 
371

Derivative instruments
374

 
304

Deferred income taxes
71

 
65

Other non-current liabilities
1,016

 
1,274

Non-current liabilities - held-for-sale

 
65

Non-current liabilities - discontinued operations

 
635

Total other liabilities
8,506

 
9,445

Total Liabilities
10,800

 
11,843

Redeemable noncontrolling interest in subsidiaries
19

 
19

Commitments and Contingencies
 
 
 
Stockholders' Equity
 
 
 
Common stock; $0.01 par value; 500,000,000 shares authorized; 421,830,474 and 420,288,886 shares issued and 258,570,598 and 283,650,039 shares outstanding at June 30, 2019 and December 31, 2018, respectively
4

 
4

Additional paid-in-capital
8,488

 
8,510

Accumulated deficit
(5,355
)
 
(6,022
)
Less treasury stock, at cost - 163,259,876 and 136,638,847 shares at June 30, 2019 and December 31, 2018, respectively
(4,686
)
 
(3,632
)
Accumulated other comprehensive loss
(99
)
 
(94
)
Total Stockholders' Equity
(1,648
)
 
(1,234
)
Total Liabilities and Stockholders' Equity
$
9,171

 
$
10,628


9



NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six months ended June 30,
(In millions)
2019
 
2018
Cash Flows from Operating Activities
 
 
 
Net Income
$
684

 
$
329

Income from discontinued operations, net of income tax
401

 
64

Net income from continuing operations
283

 
265

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Distributions and equity earnings of unconsolidated affiliates
22

 
12

Depreciation, amortization and accretion
184

 
252

Provision for bad debts
52

 
30

Amortization of nuclear fuel
27

 
24

Amortization of financing costs and debt discount/premiums
13

 
13

Adjustment for debt extinguishment
47

 
3

Amortization of intangibles and out-of-market contracts
14

 
20

Amortization of unearned equity compensation
10

 
15

Loss/(gain) on sale and disposal of assets
1

 
(16
)
Impairment losses
1

 
88

Changes in derivative instruments
(22
)
 
(145
)
Changes in deferred income taxes and liability for uncertain tax benefits
(5
)
 
(2
)
Changes in collateral deposits in support of energy risk management activities
125

 
(9
)
Changes in nuclear decommissioning trust liability
17

 
41

Loss on deconsolidation of Ivanpah project

 
22

Changes in other working capital
(388
)
 
(349
)
Cash provided by continuing operations
381

 
264

Cash provided by discontinued operations
8

 
249

Net Cash Provided by Operating Activities
389

 
513

Cash Flows from Investing Activities
 
 
 
Payments for acquisitions of businesses
(21
)
 
(211
)
Capital expenditures
(107
)
 
(282
)
Net proceeds from sale of emission allowances
(1
)
 
3

Investments in nuclear decommissioning trust fund securities
(209
)
 
(346
)
Proceeds from the sale of nuclear decommissioning trust fund securities
191

 
303

Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees
1,289

 
146

Deconsolidation of Ivanpah project

 
(160
)
Changes in investments in unconsolidated affiliates
7

 
(15
)
Contributions to discontinued operations
(44
)
 
(16
)
Cash provided/(used) by continuing operations
1,105

 
(578
)
Cash used by discontinued operations
(2
)
 
(584
)
Net Cash Provided/(Used) by Investing Activities
1,103

 
(1,162
)
Cash Flows from Financing Activities
 
 
 
Payments of dividends to common stockholders
(16
)
 
(19
)
Payments for treasury stock
(1,039
)
 
(500
)
Payments for debt extinguishment costs
(24
)
 

Distributions to noncontrolling interests from subsidiaries
(1
)
 
(14
)
Proceeds from issuance of common stock
2

 
11

Proceeds from issuance of short and long-term debt
1,833

 
994

Payment of debt issuance costs
(33
)
 
(19
)
Payments for short and long-term debt
(2,485
)
 
(348
)
Cash (used)/provided by continuing operations
(1,763
)
 
105

Cash provided by discontinued operations
43

 
345

Net Cash (Used)/Provided by Financing Activities
(1,720
)
 
450

Change in Cash from discontinued operations
49

 
10

Net Decrease in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash
(277
)
 
(209
)
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period
613

 
1,086

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period
$
336

 
$
877



10



Appendix Table A-1: Second Quarter 2019 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adj. EBITDA and provides a reconciliation to income/(loss) from continuing operations:
    
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Income/(Loss) from Continuing Operations
539

79

618

(280
)
(149
)
189

Plus:
 


 
 
 
 
Interest expense, net

6

6

1

92

99

Income tax



1

(2
)
(1
)
Loss on debt extinguishment




47

47

Depreciation and amortization
22

23

45

32

8

85

ARO Expense
3

4

7



7

Contract amortization
6


6



6

EBITDA
570

112

682

(246
)
(4
)
432

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates
5

28

33



33

Acquisition-related transaction & integration costs




1

1

Reorganization costs



2


2

Legal Settlement
3

8

11



11

Deactivation costs

7

7


2

9

Other non recurring charges

2

2

(1
)

1

Impairments



1


1

Mark to market (MtM) (gains)/losses on economic hedges
(444
)
(61
)
(505
)
484


(21
)
Adjusted EBITDA
134

96

230

240

(1
)
469

1 Includes International, remaining renewables and Generation eliminations


Second Quarter 2019 condensed financial information by Operating Segment:
    
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Operating revenues
513

330

843

1,746

(365
)
2,224

Cost of sales
226

124

350

1,288

(365
)
1,273

Economic gross margin2
287

206

493

458


951

Operations & maintenance and other cost of operations3
130

125

255

83

(1
)
337

Selling, marketing, general and administrative4
29

31

60

135

5

200

Other expense/(income)5
(6
)
(46
)
(52
)

(3
)
(55
)
Adjusted EBITDA
134

96

230

240

(1
)
469

1 Includes International, remaining renewables and Generation eliminations
2 Excludes MtM gain of $21 million and contract amortization of $6 million
3 Excludes deactivation costs of $9 million
4 Excludes legal settlement of $11 million
5 Excludes acquisition-related transaction & integration costs of $1 million, reorganization costs of $2 million and loss on debt extinguishment of $47 million

11



The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)
Condensed financial information
Interest, tax, depr., amort.
MtM
Deactivation
Other adj.
Adjusted EBITDA 
Operating revenues
2,465


(241
)


2,224

Cost of operations
1,499

(6
)
(220
)


1,273

Gross margin
966

6

(21
)


951

Operations & maintenance and other cost of operations
346



(9
)

337

Selling, marketing, general & administrative1
211




(11
)
200

Other expense/(income)2
220

(190
)


(85
)
(55
)
Income/(Loss) from Continuing Operations
189

196

(21
)
9

96

469

1 Other adj. includes legal settlement of $11 million
2 Other adj. includes impairments of $1 million, acquisition-related transaction & integration costs of $1 million, reorganization costs of $2 million and loss on debt extinguishment of $47 million



12



Appendix Table A-2: Second Quarter 2018 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to income/(loss) from continuing operations:
    
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Income/(Loss) from Continuing Operations
286

(34
)
252

(84
)
(141
)
27

Plus:
 


 
 
 
 
Interest expense, net

15

15

1

105

121

Income tax

1

1


4

5

Loss on debt extinguishment




1

1

Depreciation and amortization
21

53

74

30

8

112

ARO Expense
4

4

8


1

9

Contract amortization
7


7



7

Lease amortization

(2
)
(2
)


(2
)
EBITDA
318

37

355

(53
)
(22
)
280

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates
3

15

18



18

Acquisition-related transaction & integration costs



1


1

Reorganization costs
1

2

3

1

19

23

Legal Settlement
13


13


6

19

Deactivation costs

7

7


3

10

Gain on sale of business




(16
)
(16
)
Other non recurring charges


4

4

3

(3
)
4

Impairments
6

95

101


1

102

Mark to market (MtM) (gains)/losses on economic hedges
(293
)
23

(270
)
346


76

Adjusted EBITDA
48

183

231

298

(12
)
517

1 Includes International, remaining renewables and Generation eliminations


Second Quarter 2018 condensed financial information by Operating Segment:
    
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Operating revenues
412

481

893

1,814

(256
)
2,451

Cost of sales
223

165

388

1,318

(254
)
1,452

Economic gross margin2
189

316

505

496

(2
)
999

Operations & maintenance and other cost of operations3
138

125

263

75

(5
)
333

Selling, marketing, general & administrative4
12

33

45

125

11

181

Other expense/(income)5
(9
)
(25
)
(34
)
(2
)
4

(32
)
Adjusted EBITDA

48

183

231

298

(12
)
517

1 Includes International, remaining renewables and Generation eliminations
2 Excludes MtM loss of $76 million and contract amortization of $7 million
3 Excludes deactivation costs of $10 million
4 Excludes legal settlement of $19 million
5 Excludes gain on sale of business of $16 million, acquisition-related transaction & integration costs of $1 million, reorganization costs of $23 million and loss on debt extinguishment of $1 million

13



The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)
Condensed financial information
Interest, tax, depr., amort.
MtM
Deactivation
Other adj.
Adjusted EBITDA
Operating revenues
2,461


(10
)


2,451

Cost of operations
1,545

(7
)
(86
)



1,452

Gross margin
916

7

76



999

Operations & maintenance and other cost of operations
343



(10
)

333

Selling, marketing, general & administrative1
200




(19
)
181

Other expense/(income)2
346

(245
)


(133
)
(32
)
Income/(Loss) from Continuing Operations
27

252

76

10

152

517

1 Other adj. includes legal settlement of $19 million
2 Other adj. includes impairments of $102 million, gain on sale of business of $16 million, acquisition-related transaction & integration costs of $1 million, reorganization costs of $23 million and loss on debt extinguishment of $1 million


14



Appendix Table A-3: YTD Second Quarter 2019 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adj. EBITDA and provides a reconciliation to income/(loss) from continuing operations:
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Income/(Loss) from Continuing Operations
582

149

731

(170
)
(278
)
283

Plus:
 
 
 
 
 
 
Interest expense, net

13

13

1

192

206

Income tax

1

1

1

1

3

Loss on debt extinguishment




47

47

Depreciation and amortization
43

48

91

63

16

170

ARO Expense
7

7

14



14

Contract Amortization
11


11



11

EBITDA
643

218

861

(105
)
(22
)
734

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates
8

57

65



65

Acquisition-related transaction & integration costs



1


1

Reorganization costs

1

1

3

11

15

Legal Settlement
3

8

11



11

Deactivation costs

8

8


5

13

Other non recurring charges

(1
)
2

1

1


2

Impairments



1


1

Market to market (MtM) (gains)/losses on economic hedges
(475
)
(58
)
(533
)
492


(41
)
Adjusted EBITDA
178

236

414

393

(6
)
801

1 Includes International, remaining renewables and Generation eliminations

YTD Second Quarter 2019 condensed financial information by Operating Segment:
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Operating revenues
900

761

1,661

3,353

(645
)
4,369

Cost of sales
421

313

734

2,523

(643
)
2,614

Economic gross margin2
479

448

927

830

(2
)
1,755

Operations & maintenance and other cost of operations3
260

217

477

163

(2
)
638

Selling, marketing, general & administrative4
52

54

106

277

11

394

Other expense/(income)5
(11
)
(59
)
(70
)
(3
)
(5
)
(78
)
Adjusted EBITDA
178

236

414

393

(6
)
801

1 Includes International, remaining renewables and Generation eliminations
2 Excludes MtM gain of $41 million and contract amortization of $11 million
3 Excludes deactivation costs of $13 million
4 Excludes legal settlement of $11 million
5 Excludes acquisition-related transaction & integration costs of $1 million, reorganization costs of $15 million and loss on debt extinguishment of $47 million

15



The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)
Condensed financial information
Interest, tax, depr., amort.
MtM
Deactivation
Other adj.
Adjusted EBITDA 
Operating revenues
4,630


(261
)


4,369

Cost of operations
2,845

(11
)
(220
)


2,614

Gross margin
1,785

11

(41
)


1,755

Operations & maintenance and other cost of operations
651



(13
)

638

Selling, marketing, general & administrative1
405




(11
)
394

Other expense/(income)2
446

(393
)


(131
)
(78
)
Income/(Loss) from Continuing Operations
283

404

(41
)
13

142

801

1 Other adj. includes legal settlement of $11 million
2 Other adj. includes impairments of $1 million, acquisition-related transaction & integration costs of $1 million, reorganization costs of $15 million and loss on debt extinguishment of $47 million


16



Appendix Table A-4: YTD Second Quarter 2018 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to income/(loss) from continuing operations:
    
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Income/(Loss) from Continuing Operations
(314
)
(5
)
(319
)
860

(276
)
265

Plus:
 
 
 
 
 
 
Interest expense, net

36

36

2

195

233

Income tax




11

11

Loss on debt extinguishment




3

3

Depreciation and amortization
42

118

160

56

16

232

ARO Expense
11

8

19


1

20

Contract Amortization
12

1

13



13

Lease amortization

(4
)
(4
)


(4
)
EBITDA
(249
)
154

(95
)
918

(50
)
773

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates
2

23

25


1

26

Acquisition-related transaction & integration costs



1

4

5

Reorganization costs
2

4

6

5

32

43

Legal Settlement
13


13


6

19

Deactivation costs

10

10


5

15

Gain on sale of business

1

1


(17
)
(16
)
Other non recurring charges


5

5

2


7

Impairments
15

95

110


1

111

MtM (gains)/losses on economic hedges
278

32

310

(440
)

(130
)
Adjusted EBITDA
61

324

385

486

(18
)
853

1 Includes International, remaining renewables and Generation eliminations


YTD Second Quarter 2018 condensed financial information by Operating Segment:
($ in millions)
Texas
East/West1
Generation
Retail
Corp/Elim
Total
Operating revenues
730

1,008

1,738

3,300

(426
)
4,612

Cost of sales
373

393

766

2,428

(419
)
2,775

Economic gross margin2
357

615

972

872

(7
)
1,837

Operations & maintenance and other cost of operations3
279

269

548

146

(7
)
687

Selling, marketing, general & administrative4
35

62

97

240

20

357

Other expense/(income)5
(18
)
(40
)
(58
)

(2
)
(60
)
Adjusted EBITDA
61

324

385

486

(18
)
853

1 Includes International, remaining renewables and Generation eliminations
2 Excludes MtM gain of $130 million and contract amortization of $13 million
3 Excludes deactivation costs of $15 million
4 Excludes legal settlement of $19 million
5 Excludes gain on sale of business of $16 million, acquisition-related transaction & integration costs of $5 million, reorganization costs of $43 million and loss on debt extinguishment of $3 million


17





The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions)
Condensed financial information
Interest, tax, depr., amort.
MtM
Deactivation
Other adj.
Adjusted EBITDA 
Operating revenues
4,526


86



4,612

Cost of operations
2,572

(13
)
216



2,775

Gross margin
1,954

13

(130
)


1,837

Operations & maintenance and other cost of operations
702



(15
)

687

Selling, marketing, general & administrative
376




(19
)
357

Other expense/(income) 1
611

(492
)


(179
)
(60
)
Income/(Loss) from Continuing Operations
265

505

(130
)
15

198

853

1 Other adj. includes legal settlement of $19 million
2 Other adj. includes impairments of $111 million, gain on sale of business of $16 million, acquisition-related transaction & integration costs of $5 million, reorganization costs of $43 million and loss on debt extinguishment of $3 million


18



Appendix Table A-5: 2019 and 2018 Three Months and Six Months Ended December 31 Adjusted Cash Flow from Operations Reconciliations

The following table summarizes the calculation of adjusted cash flow operating activities providing a reconciliation to net cash provided by operating activities:

 
 
Three Months Ended
($ in millions)
 
June 30, 2019
 
June 30, 2018
Net Cash Provided by Operating Activities
 
516

 
18

Merger, integration and cost-to-achieve expenses1
 
2

 
22

Adjustment for change in collateral
 
(246
)
 
182

Adjusted Cash Flow from Operating Activities
 
272

 
222

Maintenance CapEx, net
 
(41
)
 
(45
)
Environmental CapEx, net
 
$
(1
)
 

Distributions to non-controlling interests
 

 
(3
)
Free Cash Flow Before Growth Investments (FCFbG)
 
230

 
174


1 2019 and 2018 includes cost-to-achieve expenses associated with the Transformation Plan announced on July 2017 call


 
 
Six Months Ended
($ in millions)
 
June 30, 2019
 
June 30, 2018
Net Cash Provided by Operating Activities
 
381

 
264

Merger, integration and cost-to-achieve expenses1
 
18

 
44

Sale of Land
 

 
3

GenOn Settlement2
 
5

 

Adjustment for change in collateral
 
(123
)
 
18

Adjusted Cash Flow from Operating Activities
 
282

 
329

Maintenance CapEx, net
 
(76
)
 
(100
)
Environmental CapEx, net
 
(2
)
 

Distributions to non-controlling interests
 

 
(13
)
Free Cash Flow Before Growth Investments (FCFbG)
 
204

 
216


1 2019 and 2018 includes cost-to-achieve expenses associated with the Transformation Plan announced on July 2017 call
2 2019 includes final restructuring fee of $5 million



19



Appendix Table A-6: Second Quarter YTD 2019 Sources and Uses of Liquidity
The following table summarizes the sources and uses of liquidity through second quarter of 2019:
($ in millions)
Six Months Ended
June 30, 2019
Sources:
 
Adjusted cash flow from operations
282

Increase in credit facility
402

Collateral1
125

Asset sales
1,289

Uses:


Share repurchases
(1,039
)
Debt Repayment, net of proceeds
(652
)
Financing Fees - Debt issuance and Debt extinguishment costs
(57
)
Growth investments and acquisitions, net
(60
)
GenOn Settlement (Final Restructuring Fee)
(5
)
Maintenance and Environmental CapEx, net
(78
)
Cost-to-achieve expenses2
(45
)
Common Stock Dividends
(16
)
Other Investing and Financing
(19
)
 
 
Change in Total Liquidity
127

1 Excludes impact of Funds deposited by counterparties
2 Includes capital expenditures associated with the Transformation Plan







20



Appendix Table A-7: 2019 Adjusted EBITDA Guidance Reconciliation
The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to Income from Continuing Operations:

 
 
2019 Guidance
($ in millions)
 
Low
 
High
Income from Continuing Operations 1
 
940

 
 
1,140

 
Income Tax
 
15

 
 
15

 
Interest Expense
 
335

 
 
335

 
Depreciation, Amortization, Contract Amortization and ARO Expense
 
430

 
 
430

 
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates
 
80

 
 
80

 
Other Costs 2
 
50

 
 
50

 
Adjusted EBITDA
 
1,850

 
 
2,050

 

1 For purposes of guidance, discontinued operations are excluded and fair value adjustments related to derivatives are assumed to be zero
2 Includes deactivation costs and cost-to-achieve expenses









21




Appendix Table A-8: 2019 FCFbG Guidance Reconciliation
The following table summarizes the calculation of Free Cash Flow before Growth providing reconciliation to Cash from Operations:




 
2019
($ in millions)
 
Guidance
Adjusted EBITDA
 
$1,850 - $2,050

Interest payments
 
(335
)
Income tax
 
(15
)
Working capital / other assets and liabilities
 
(145
)
Cash From Operations
 
$1,355 - $1,555

Adjustments: Acquired Derivatives, Cost-to-Achieve, Return of Capital Dividends, Collateral and Other
 
50

Adjusted Cash flow from Operations
 
$1,405 - $1,605

Maintenance capital expenditures, net
 
(145) - (165)

Environmental capital expenditures, net
 
(0) - (5)

Free Cash Flow before Growth
 
$1,250 - $1,450


EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.
 
EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:
EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
EBITDA does not reflect changes in, or cash requirements for, working capital needs;
EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.
 
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG’s business. NRG compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.
 
Adjusted EBITDA is presented as a further supplemental measure of operating performance. As NRG defines it, Adjusted EBITDA represents EBITDA excluding impairment losses, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from accounting for derivatives, adjustments to exclude the Adjusted EBITDA related to the non-controlling interest, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments.  The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted

22



EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
 
Management believes Adjusted EBITDA is useful to investors and other users of NRG's financial statements in evaluating its operating performance because it provides an additional tool to compare business performance across companies and across periods and adjusts for items that we do not consider indicative of NRG’s future operating performance. This measure is widely used by debt-holders to analyze operating performance and debt service capacity and by equity investors to measure our operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.
 
Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration and related restructuring costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger, integration related restructuring costs as they are one time and unique in nature and do not reflect ongoing cash from operations and they are fully disclosed to investors.
 
Free cash flow (before Growth) is adjusted cash flow from operations less maintenance and environmental capital expenditures, net of funding, preferred stock dividends and distributions to non-controlling interests and is used by NRG predominantly as a forecasting tool to estimate cash available for debt reduction and other capital allocation alternatives. The reader is encouraged to evaluate each of these adjustments and the reasons NRG considers them appropriate for supplemental analysis. Because we have mandatory debt service requirements (and other non-discretionary expenditures) investors should not rely on free cash flow before Growth as a measure of cash available for discretionary expenditures.
 
Free Cash Flow before Growth is utilized by Management in making decisions regarding the allocation of capital. Free Cash Flow before Growth is presented because the Company believes it is a useful tool for assessing the financial performance in the current period. In addition, NRG’s peers evaluate cash available for allocation in a similar manner and accordingly, it is a meaningful indicator for investors to benchmark NRG's performance against its peers. Free Cash Flow before Growth is a performance measure and is not intended to represent net income (loss), cash from operations (the most directly comparable U.S. GAAP measure), or liquidity and is not necessarily comparable to similarly titled measures reported by other companies.


23