Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

NRG Energy, Inc. Reports Full Year Results and Reaffirms Guidance


NRG Energy, Inc. (NYSE: NRG) today reported full year 2019 income from continuing operations of $4.1 billion, or $16.81 per diluted common share. This increase in income from continuing operations is driven by the release of a $3.5 billion tax valuation allowance due to continuing evidence of historical and forecasted positive earnings. Adjusted EBITDA for the full year 2019 was $2.0 billion, cash from continuing operations was $1.4 billion and FCFbG was $1.2 billion. Cash from continuing operations and FCFbG were impacted by certain cash receipts previously expected in 2019, which are now expected to be received in 2020.

"Our integrated platform delivered another year of stable financial and operational results," said Mauricio Gutierrez, NRG President and Chief Executive Officer. "The strength of our business model provides the financial flexibility to continue perfecting our platform while consistently returning significant capital to our shareholders."

Consolidated Financial Results a

 

 

Three Months Ended

 

Twelve Months Ended

($ in millions)

 

12/31/19

 

12/31/18

 

12/31/19

 

12/31/18

Income/(Loss) from Continuing Operations

 

$

 

3,463

 

 

$

 

(92

)

 

 

$

 

4,120

 

 

$

 

460

 

Cash From Continuing Operations

 

$

 

552

 

 

$

 

332

 

 

 

$

 

1,405

 

 

$

 

1,003

 

Adjusted EBITDA

 

$

 

384

 

 

$

 

273

 

 

 

$

 

1,977

 

 

$

 

1,777

 

Free Cash Flow Before Growth Investments (FCFbG)

 

$

 

575

 

 

$

 

351

 

 

 

$

 

1,212

 

 

$

 

1,120

 

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

Segment Results

Table 1: Income/(Loss) from Continuing Operations

($ in millions)

 

Three Months Ended

 

Twelve Months Ended

Segment

 

12/31/19

 

12/31/18

 

12/31/19

 

12/31/18

Retail

 

$

 

233

 

 

 

$

 

331

 

 

 

$

 

487

 

 

$

 

1,062

 

 

Generation a

 

 

(15

)

 

 

 

(256

)

 

 

 

780

 

 

 

2

 

 

Corporate

 

 

3,245

 

 

 

 

(167

)

 

 

 

2,853

 

 

 

(604

)

 

Income/(Loss) from Continuing Operations

 

$

 

3,463

 

 

 

$

 

(92

)

 

 

 

4,120

 

 

$

 

460

 

 

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

Table 2: Adjusted EBITDA

($ in millions)

 

Three Months Ended

 

Twelve Months Ended

Segment

 

12/31/19

 

12/31/18

 

12/31/19

 

12/31/18

Retail

 

$

 

258

 

 

 

$

 

197

 

 

 

$

 

920

 

 

 

$

 

952

 

 

Generation a

 

 

130

 

 

 

 

84

 

 

 

 

1,069

 

 

 

 

864

 

 

Corporate

 

 

(4

)

 

 

 

(8

)

 

 

 

(12

)

 

 

 

(39

)

 

Adjusted EBITDA b

 

$

 

384

 

 

 

$

 

273

 

 

 

 

1,977

 

 

 

$

 

1,777

 

 

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

Full year 2019 Adjusted EBITDA was $920 million, $32 million lower than 2018, driven by higher supply costs, capacity obligations and weather, partially offset by margin enhancement initiatives and growth related to M&A activity.

Fourth quarter Adjusted EBITDA was $258 million, $61 million higher than the fourth quarter of 2018, driven by margin enhancement initiatives and the acquisition of Stream Energy.

Generation

Full year 2019 Adjusted EBITDA was $1,069 million, $205 million higher than 2018, driven by:

Fourth quarter Adjusted EBITDA was $130 million, $46 million higher than the fourth quarter 2018, driven by:

1 Includes International and Renewables

Liquidity and Capital Resources

Table 3: Corporate Liquidity

($ in millions)

 

12/31/19

 

12/31/18

Cash and Cash Equivalents

 

$

345

 

 

$

563

 

Restricted Cash

 

8

 

17

Total

 

$

353

 

 

$

580

 

Total credit facility availability

 

1,794

 

1,397

Total Liquidity, excluding collateral received

 

$

2,147

 

 

$

1,977

 

As of December 31, 2019, NRG cash was $0.4 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 fourth quarter 2019 was $170 million higher than at the end of 2018.

NRG Strategic Developments

Transformation Plan

NRG realized the targeted $590 million operating expense cost savings and $135 million margin enhancement, as part of the previously announced Transformation Plan. Working capital three year target of $370 million was also achieved.

Renewable Power Purchase Agreements

During 2019, NRG continued execution of its capital-light strategy to provide competitively priced renewable offerings to customers. NRG entered into power purchase agreements with third-party project developers and other counterparties, totaling approximately 1.6 GWs for the year, 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 customers.

Retail Growth

In 2019, NRG continued efforts to perfect its integrated platform through the acquisition of Stream Energy's retail electricity and natural gas business operating in 9 states and Washington, D.C., as well as other small electricity retailers. NRG's brands now serve more than 1 million customers outside of the state of Texas.

2020 Guidance

NRG is reaffirming its guidance range for 2020 with respect to Adjusted EBITDA, Adjusted Cash From Operations and Free Cash Flow before Growth Investments (FCFbG) as set forth below.

Table 4: 2020 Adjusted EBITDA, Adjusted Cash from Operations, and FCFbG Guidance

 

 

2020

($ in millions)

 

Guidance

Adjusted EBITDA a

 

$1,900-$2,100

Adjusted Cash From Operations

 

$1,450-$1,650

FCFbG

 

$1,275-$1,475

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

Capital Allocation Update

Through February 27, 2020, NRG completed $1.6 billion in share repurchases at an average price of $38.72 per share2.

On January 21, 2020, NRG declared a quarterly dividend on the Company's common stock of $0.30 per share, which was paid on February 18, 2020, to stockholders of record as of February 3, 2020, representing $1.20 on an annualized basis.

The Company's common stock dividend and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.

2 As of February 27, 2020, 247,656,747 shares outstanding

Earnings Conference Call

On February 27, 2020, 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 by putting customers at the center of everything we do. We generate electricity and provide energy solutions and natural gas to more than 3.7 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.

Forward-Looking Statements

In addition to historical information, the information presented in this presentation 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 achieve margin enhancement under our publicly announced transformation plan, our ability to achieve our net debt targets, our ability to maintain 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 business 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 February 27, 2020. 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 presentation 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.

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

For the Year Ended December 31,

(In millions, except per share amounts)

2019

 

2018

 

2017

Operating Revenues

 

 

 

 

 

Total operating revenues

$

 

9,821

 

 

 

$

 

9,478

 

 

 

$

 

9,074

 

 

Operating Costs and Expenses

 

 

 

 

 

Cost of operations

 

7,303

 

 

 

 

7,108

 

 

 

 

6,886

 

 

Depreciation and amortization

 

373

 

 

 

 

421

 

 

 

 

596

 

 

Impairment losses

 

5

 

 

 

 

99

 

 

 

 

1,534

 

 

Selling, general and administrative

 

827

 

 

 

 

799

 

 

 

 

836

 

 

Reorganization costs

 

23

 

 

 

 

90

 

 

 

 

44

 

 

Development costs

 

7

 

 

 

 

11

 

 

 

 

22

 

 

Total operating costs and expenses

 

8,538

 

 

 

 

8,528

 

 

 

 

9,918

 

 

Other income - affiliate

?

 

 

?

 

 

 

87

 

 

Gain on sale of assets

 

7

 

 

 

 

32

 

 

 

 

16

 

 

Operating Income/(Loss)

 

1,290

 

 

 

 

982

 

 

 

 

(741

)

 

Other Income/(Expense)

 

 

 

 

 

Equity in earnings/(losses) of unconsolidated affiliates

 

2

 

 

 

 

9

 

 

 

 

(14

)

 

Impairment losses on investments

 

(108

)

 

 

 

(15

)

 

 

 

(79

)

 

Other income, net

 

66

 

 

 

 

18

 

 

 

 

51

 

 

Loss on debt extinguishment, net

 

(51

)

 

 

 

(44

)

 

 

 

(49

)

 

Interest expense

 

(413

)

 

 

 

(483

)

 

 

 

(557

)

 

Total other expense

 

(504

)

 

 

 

(515

)

 

 

 

(648

)

 

Income/(Loss) from Continuing Operations Before Income Taxes

 

786

 

 

 

 

467

 

 

 

 

(1,389

)

 

Income tax (benefit)/expense

 

(3,334

)

 

 

 

7

 

 

 

 

(44

)

 

Income/(Loss) from Continuing Operations

 

4,120

 

 

 

 

460

 

 

 

 

(1,345

)

 

Income/(loss) from discontinued operations, net of income tax

 

321

 

 

 

 

(192

)

 

 

 

(992

)

 

Net Income/(Loss)

 

4,441

 

 

 

 

268

 

 

 

 

(2,337

)

 

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

 

3

 

 

 

?

 

 

 

(184

)

 

Net Income/(Loss) Attributable to NRG Energy, Inc.

$

 

4,438

 

 

 

$

 

268

 

 

 

$

 

(2,153

)

 

Earnings/(Loss) Per Share Attributable to NRG Energy, Inc. Common Stockholders

 

 

 

 

 

Weighted average number of common shares outstanding ? basic

 

262

 

 

 

 

304

 

 

 

 

317

 

 

Income/(loss) from continuing operations per weighted average common share ? basic

$

 

15.71

 

 

 

$

 

1.51

 

 

 

$

 

(3.66

)

 

Income/(loss) from discontinued operations per weighted average common share ? basic

$

 

1.23

 

 

 

$

 

(0.63

)

 

 

$

 

(3.13

)

 

Net Income/(Loss) per Weighted Average Common Share ? Basic

$

 

16.94

 

 

 

$

 

0.88

 

 

 

$

 

(6.79

)

 

Weighted average number of common shares outstanding ? diluted

 

264

 

 

 

 

308

 

 

 

 

317

 

 

Income/(loss) from continuing operations per weighted average common share ? diluted

$

 

15.59

 

 

 

$

 

1.49

 

 

 

$

 

(3.66

)

 

Income/(loss) from discontinued operations per weighted average common share ? diluted

$

 

1.22

 

 

 

$

 

(0.62

)

 

 

$

 

(3.13

)

 

Net Income/(Loss) per Weighted Average Common Share ? Diluted

$

 

16.81

 

 

 

$

 

0.87

 

 

 

$

 

(6.79

)

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

 

For the Year Ended December 31,

(In millions)

2019

 

2018

 

2017

Net Income/(Loss)

$

 

4,441

 

 

 

$

 

268

 

 

 

$

 

(2,337

)

 

Other Comprehensive (Loss)/Income, net of tax

 

 

 

 

 

Unrealized gain on derivatives, net of income tax

?

 

 

 

23

 

 

 

 

13

 

 

Foreign currency translation adjustments, net of income tax

 

(1

)

 

 

 

(11

)

 

 

 

12

 

`

Available-for-sale securities, net of income tax

 

(19

)

 

 

 

1

 

 

 

 

(8

)

 

Defined benefit plans, net of income tax

 

(78

)

 

 

 

(35

)

 

 

 

46

 

 

Other comprehensive (loss)/income

 

(98

)

 

 

 

(22

)

 

 

 

63

 

 

Comprehensive Income/(Loss)

 

4,343

 

 

 

 

246

 

 

 

 

(2,274

)

 

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

 

3

 

 

 

 

14

 

 

 

 

(179

)

 

Comprehensive Income/(Loss) Attributable to NRG Energy, Inc.

$

 

4,340

 

 

 

$

 

232

 

 

 

$

 

(2,095

)

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of December 31,

(In millions)

2019

 

2018

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

 

345

 

 

$

 

563

 

Funds deposited by counterparties

 

32

 

 

 

33

 

Restricted cash

 

8

 

 

 

17

 

Accounts receivable, net

 

1,025

 

 

 

1,024

 

Inventory

 

383

 

 

 

412

 

Derivative instruments

 

860

 

 

 

764

 

Cash collateral posted in support of energy risk management activities

 

190

 

 

 

287

 

Prepayments and other current assets

 

245

 

 

 

302

 

Current assets - held-for-sale

?

 

 

 

1

 

Current assets - discontinued operations

?

 

 

 

197

 

Total current assets

 

3,088

 

 

 

3,600

 

Property, plant and equipment, net

 

2,593

 

 

 

3,048

 

Other Assets

 

 

 

Equity investments in affiliates

 

388

 

 

 

412

 

Operating lease right-of-use assets, net

 

464

 

 

?

 

Goodwill

 

579

 

 

 

573

 

Intangible assets, net

 

789

 

 

 

591

 

Nuclear decommissioning trust fund

 

794

 

 

 

663

 

Derivative instruments

 

310

 

 

 

317

 

Deferred income taxes

 

3,286

 

 

 

46

 

Other non-current assets

 

240

 

 

 

289

 

Non-current assets - held-for-sale

?

 

 

 

77

 

Non-current assets - discontinued operations

?

 

 

 

1,012

 

Total other assets

 

6,850

 

 

 

3,980

 

Total Assets

$

 

12,531

 

 

$

 

10,628

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

 

 

As of December 31,

(In millions, except share data)

2019

 

2018

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities

 

 

 

Current portion of long-term debt and finance leases

$

 

88

 

 

 

$

 

72

 

 

Current portion of operating lease liabilities

 

73

 

 

 

?

 

Accounts payable

 

722

 

 

 

 

863

 

 

Derivative instruments

 

781

 

 

 

 

673

 

 

Cash collateral received in support of energy risk management activities

 

32

 

 

 

 

33

 

 

Accrued expenses and other current liabilities

 

663

 

 

 

 

680

 

 

Current liabilities - held for sale

?

 

 

 

5

 

 

Current liabilities - discontinued operations

?

 

 

 

72

 

 

Total current liabilities

 

2,359

 

 

 

 

2,398

 

 

Other Liabilities

 

 

 

Long-term debt and finance leases

$

 

5,803

 

 

 

$

 

6,449

 

 

Non-current operating lease liabilities

 

483

 

 

 

?

 

Nuclear decommissioning reserve

 

298

 

 

 

 

282

 

 

Nuclear decommissioning trust liability

 

487

 

 

 

 

371

 

 

Derivative instruments

 

322

 

 

 

 

304

 

 

Deferred income taxes

 

17

 

 

 

 

65

 

 

Other non-current liabilities

 

1,084

 

 

 

 

1,274

 

 

Non-current liabilities - held-for-sale

?

 

 

 

65

 

 

Non-current liabilities - discontinued operations

?

 

 

 

635

 

 

Total other liabilities

 

8,494

 

 

 

 

9,445

 

 

Total Liabilities

 

10,853

 

 

 

 

11,843

 

 

Redeemable noncontrolling interest in subsidiaries

 

20

 

 

 

 

19

 

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 421,890,790 and 420,288,886 shares issued; and 248,996,189 and 283,650,039 shares outstanding at December 31, 2019 and 2018

 

4

 

 

 

 

4

 

 

Additional paid-in capital

 

8,501

 

 

 

 

8,510

 

 

Accumulated deficit

 

(1,616

)

 

 

 

(6,022

)

 

Treasury stock, at cost; 172,894,601 and 136,638,847 shares at December 31, 2019 and 2018

 

(5,039

)

 

 

 

(3,632

)

 

Accumulated other comprehensive loss

 

(192

)

 

 

 

(94

)

 

Total Stockholders' Equity

 

1,658

 

 

 

 

(1,234

)

 

Total Liabilities and Stockholders' Equity

$

 

12,531

 

 

 

$

 

10,628

 

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

For the Year Ended December 31,

(In millions)

2019

 

2018

 

2017

Cash Flows from Operating Activities

 

 

 

 

 

Net income/(loss)

$

 

4,441

 

 

 

$

 

268

 

 

 

$

 

(2,337

)

 

Income/(loss) from discontinued operations, net of income tax

 

321

 

 

 

 

(192

)

 

 

 

(992

)

 

Income/(loss) from continuing operations

 

4,120

 

 

 

 

460

 

 

 

 

(1,345

)

 

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

 

 

 

 

 

Distributions and equity in earnings of unconsolidated affiliates

 

14

 

 

 

 

46

 

 

 

 

102

 

 

Depreciation and amortization

 

373

 

 

 

 

421

 

 

 

 

596

 

 

Accretion of asset retirement obligations

 

51

 

 

 

 

38

 

 

 

 

44

 

 

Provision for bad debts

 

95

 

 

 

 

85

 

 

 

 

68

 

 

Amortization of nuclear fuel

 

52

 

 

 

 

48

 

 

 

 

51

 

 

Amortization of financing costs and debt discount/premiums

 

26

 

 

 

 

29

 

 

 

 

29

 

 

Loss on debt extinguishment, net

 

51

 

 

 

 

44

 

 

 

 

49

 

 

Amortization of emission allowances and out-of-market contracts

 

38

 

 

 

 

45

 

 

 

 

54

 

 

Amortization of unearned equity compensation

 

20

 

 

 

 

25

 

 

 

 

35

 

 

Net gain on sale of assets and disposal of assets

 

(23

)

 

 

 

(49

)

 

 

 

(9

)

 

Impairment losses

 

113

 

 

 

 

114

 

 

 

 

1,614

 

 

Changes in derivative instruments

 

34

 

 

 

 

37

 

 

 

 

(170

)

 

Changes in deferred income taxes and liability for uncertain tax benefits

 

(3,353

)

 

 

 

5

 

 

 

 

13

 

 

Changes in collateral deposits in support of risk management activities

 

105

 

 

 

 

(105

)

 

 

 

(80

)

 

Changes in nuclear decommissioning trust liability

 

37

 

 

 

 

60

 

 

 

 

11

 

 

GenOn settlement, net of insurance proceeds

?

 

 

 

(63

)

 

 

?

 

Net loss on deconsolidation of Agua Caliente and Ivanpah projects

?

 

 

 

13

 

 

 

?

 

Cash provided/(used) by changes in other working capital, net of acquisition and disposition effects:

 

 

 

 

 

Accounts receivable - trade

 

5

 

 

 

 

(83

)

 

 

 

(83

)

 

Inventory

 

22

 

 

 

 

31

 

 

 

 

143

 

 

Prepayments and other current assets

 

29

 

 

 

 

(41

)

 

 

 

(187

)

 

Accounts payable

 

(177

)

 

 

 

113

 

 

 

 

44

 

 

Accrued expenses and other current liabilities

 

(41

)

 

 

 

(166

)

 

 

 

(88

)

 

Other assets and liabilities

 

(186

)

 

 

 

(104

)

 

 

 

(35

)

 

Cash provided by continuing operations

 

1,405

 

 

 

 

1,003

 

 

 

 

856

 

 

Cash provided by discontinued operations

 

8

 

 

 

 

374

 

 

 

 

754

 

 

Net Cash Provided by Operating Activities

 

1,413

 

 

 

 

1,377

 

 

 

 

1,610

 

 

Cash Flows from Investing Activities

 

 

 

 

 

Payments for acquisitions of businesses

 

(355

)

 

 

 

(243

)

 

 

 

(14

)

 

Capital expenditures

 

(228

)

 

 

 

(388

)

 

 

 

(254

)

 

Net proceeds from sale of emission allowances

 

11

 

 

 

 

19

 

 

 

 

66

 

 

Investments in nuclear decommissioning trust fund securities

 

(416

)

 

 

 

(572

)

 

 

 

(512

)

 

Proceeds from sales of nuclear decommissioning trust fund securities

 

381

 

 

 

 

513

 

 

 

 

501

 

 

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

 

1,294

 

 

 

 

1,564

 

 

 

 

430

 

 

Deconsolidations of Agua Caliente and Ivanpah projects

?

 

 

 

(268

)

 

 

?

 

Net contributions to investments in unconsolidated affiliates

 

(91

)

 

 

 

(39

)

 

 

 

(57

)

 

Net (contributions to)/distributions from discontinued operations

 

(44

)

 

 

 

(60

)

 

 

 

150

 

 

Other

 

6

 

 

 

 

(6

)

 

 

 

30

 

 

Cash provided by continuing operations

 

558

 

 

 

 

520

 

 

 

 

340

 

 

Cash used by discontinued operations

 

(2

)

 

 

 

(725

)

 

 

 

(979

)

 

Net Cash Provided/(Used) by Investing Activities

 

556

 

 

 

 

(205

)

 

 

 

(639

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

(In millions)

2019

 

2018

 

2017

Cash Flows from Financing Activities

 

 

 

 

 

Payments of dividends to common stockholders

 

(32

)

 

 

 

(37

)

 

 

 

(38

)

 

Payments for share repurchase activity

 

(1,440

)

 

 

 

(1,250

)

 

 

?

 

Payments for debt extinguishment costs

 

(26

)

 

 

 

(32

)

 

 

 

(42

)

 

Net distributions to noncontrolling interest from subsidiaries

 

(2

)

 

 

 

(16

)

 

 

 

(30

)

 

Proceeds/(payments) from issuance of common stock

 

3

 

 

 

 

21

 

 

 

 

(2

)

 

Proceeds from issuance of short and long-term debt

 

1,916

 

 

 

 

1,100

 

 

 

 

1,178

 

 

Payments of debt issuance costs

 

(35

)

 

 

 

(19

)

 

 

 

(18

)

 

Payments for short and long-term debt

 

(2,571

)

 

 

 

(1,734

)

 

 

 

(1,884

)

 

Receivable from affiliate

?

 

 

 

(26

)

 

 

 

(125

)

 

Other

 

(4

)

 

 

 

(4

)

 

 

 

(8

)

 

Cash used by continuing operations

 

(2,191

)

 

 

 

(1,997

)

 

 

 

(969

)

 

Cash provided/(used) by discontinued operations

 

43

 

 

 

 

471

 

 

 

 

(169

)

 

Net Cash Used by Financing Activities.

 

(2,148

)

 

 

 

(1,526

)

 

 

 

(1,138

)

 

Effect of exchange rate changes on cash and cash equivalents

?

 

 

 

1

 

 

 

 

(1

)

 

Change in Cash from discontinued operations

 

49

 

 

 

 

120

 

 

 

 

(394

)

 

Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash

 

(228

)

 

 

 

(473

)

 

 

 

226

 

 

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period

 

613

 

 

 

 

1,086

 

 

 

 

860

 

 

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

$

 

385

 

 

 

$

 

613

 

 

 

$

 

1,086

 

 

Appendix Table A-1: Fourth 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/
West 1

Generation

Retail

Corp/Elim

Total

Income/(Loss) from Continuing Operations

(19

)

 

4

 

 

(15

)

 

233

 

 

3,245

 

 

3,463

 

 

Plus:

 

 

 

 

 

 

Interest expense, net

?

 

4

 

 

4

 

 

?

 

88

 

 

92

 

 

Income tax

?

 

1

 

 

1

 

 

1

 

 

(3,344

)

 

(3,342

)

 

Loss on debt extinguishment

?

 

3

 

 

3

 

 

?

 

?

 

3

 

 

Depreciation and amortization

22

 

 

24

 

 

46

 

 

57

 

 

8

 

 

111

 

 

ARO expense

17

 

 

4

 

 

21

 

 

?

 

?

 

21

 

 

Contract amortization

3

 

 

?

 

3

 

 

?

 

?

 

3

 

 

EBITDA

23

 

 

40

 

 

63

 

 

291

 

 

(3

)

 

351

 

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

?

 

25

 

 

25

 

 

?

 

?

 

25

 

 

Acquisition-related transaction & integration costs

?

 

?

 

?

 

?

 

1

 

 

1

 

 

Reorganization costs

?

 

?

 

?

 

1

 

 

6

 

 

7

 

 

Deactivation costs

(1

)

 

8

 

 

7

 

 

?

 

3

 

 

10

 

 

Gain on sale of assets

?

 

?

 

?

 

?

 

(5

)

 

(5

)

 

Other non recurring charges

?

 

(1

)

 

(1

)

 

(1

)

 

(5

)

 

(7

)

 

Impairments

?

 

4

 

 

4

 

 

?

 

?

 

4

 

 

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

29

 

 

3

 

 

32

 

 

(33

)

 

(1

)

 

(2

)

 

Adjusted EBITDA

51

 

 

79

 

 

130

 

 

258

 

 

(4

)

 

384

 

 

1 Includes International, remaining renewables and Generation eliminations

Fourth Quarter 2019 condensed financial information by Operating Segment:

($ in millions)

Texas

East/
West 1

Generation

Retail

Corp/Elim

Total

Operating revenues

372

 

 

350

 

 

722

 

 

1,782

 

(290

)

 

2,214

 

 

Cost of sales

168

 

 

150

 

 

318

 

 

1,287

 

(288

)

 

1,317

 

 

Economic gross margin2

204

 

 

200

 

 

404

 

 

495

 

(2

)

 

897

 

 

Operations & maintenance and other cost of operations3

123

 

 

105

 

 

228

 

 

100

 

(1

)

 

327

 

 

Selling, marketing, general & administrative4

33

 

 

34

 

 

67

 

 

137

 

6

 

 

210

 

 

Other expense/(income)5

(3

)

 

(18

)

 

(21

)

 

0

 

(3

)

 

(24

)

 

Adjusted EBITDA

51

 

 

79

 

 

130

 

 

258

 

(4

)

 

384

 

 

1 Includes International, remaining renewables and Generation eliminations

2 Excludes MtM gains of $2 million and contract amortization of $3 million

3 Excludes $31 million of deactivation costs, ARO expense and other non recurring charges

4 Excludes $3 million of other non recurring charges

5 Includes development costs. Excludes $3,114 million of interest expense, income tax, depreciation and amortization, gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

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

2,195

 

 

?

 

19

 

 

?

 

?

 

2,214

 

 

Cost of operations

1,299

 

 

(3

)

 

21

 

 

?

 

?

 

1,317

 

 

Gross margin

896

 

 

3

 

 

(2

)

 

?

 

?

 

897

 

 

Operations & maintenance and other cost of operations1

358

 

 

?

 

?

 

(10

)

 

(21

)

 

327

 

 

Selling, marketing, general & administrative2

213

 

 

?

 

?

 

?

 

(3

)

 

210

 

 

Other expense/(income)3

(3,138

)

 

3,118

 

 

?

 

?

 

(4

)

 

(24

)

 

Income/(Loss) from Continuing Operations

3,463

 

 

(3,115

)

 

(2

)

 

10

 

 

28

 

 

384

 

 

1 Other adj. includes ARO expense

2 Other adj. includes other non recurring charges

3 Other adj. includes gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

Appendix Table A-2: Fourth 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/
West 1

Generation

Retail

Corp/Elim

Total

Income/(Loss) from Continuing Operations

(174

)

 

(82

)

 

(256

)

 

331

 

 

(167

)

 

(92

)

 

Plus:

 

 

 

 

 

 

Interest expense, net

?

 

9

 

 

9

 

 

1

 

 

107

 

117

 

Income tax

?

 

?

 

?

 

?

 

(12

)

 

(12

)

 

Loss on debt extinguishment

?

 

?

 

?

 

?

 

21

 

 

21

 

 

Depreciation and amortization

21

 

 

31

 

 

52

 

 

30

 

 

9

 

 

91

 

 

ARO Expense

1

 

 

3

 

 

4

 

 

?

 

?

 

4

 

 

Contract amortization

7

 

 

?

 

7

 

 

?

 

?

 

7

 

Lease amortization

?

 

(2

)

 

(2

)

 

?

 

?

 

(2

)

 

EBITDA

(145

)

 

(41

)

 

(186

)

 

362

 

 

(42

)

 

134

 

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

4

 

 

26

 

 

30

 

 

?

 

?

 

30

 

 

Acquisition-related transaction & integration costs

?

 

?

 

?

 

1

 

 

1

 

 

2

 

 

Reorganization costs2

1

 

 

?

 

1

 

 

5

 

 

31

 

 

37

 

 

Legal Settlement

?

 

10

 

 

10

 

 

?

 

?

 

10

 

 

Deactivation costs

?

 

?

 

?

 

?

 

4

 

 

4

 

 

Gain on sale of assets

?

 

?

 

?

 

?

 

(1

)

 

(1

)

 

Other non recurring charges

(1

)

 

?

 

(1

)

 

1

 

 

(1

)

 

(1

)

 

Impairments

5

 

 

4

 

 

9

 

 

1

 

 

?

 

10

 

 

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

153

 

 

68

 

 

221

 

 

(173

)

 

?

 

48

 

 

Adjusted EBITDA

17

 

 

67

 

 

84

 

 

197

 

 

(8

)

 

273

 

 

1 Includes International, remaining renewables and Generation eliminations

2 Includes $17 million of non-recurring pension expense

Fourth Quarter 2018 condensed financial information by Operating Segment:

($ in millions)

Texas

East/
West 1

Generation

Retail

Corp/Elim

Total

Operating revenues

345

 

 

377

 

 

722

 

 

1,608

 

 

(239

)

 

2,091

 

 

Cost of sales2

198

 

 

178

 

 

376

 

 

1,178

 

 

(239

)

 

1,315

 

 

Economic gross margin3

147

 

 

199

 

 

346

 

 

430

 

 

?

 

776

 

 

Operations & maintenance and other cost of operations4

114

 

 

123

 

 

237

 

 

81

 

 

(1

)

 

317

 

 

Selling, marketing, general & administrative5

20

 

 

20

 

 

40

 

 

153

 

 

8

 

 

201

 

 

Other expense/(income)6

(4

)

 

(11

)

 

(15

)

 

(1

)

 

1

 

 

(15

)

 

Adjusted EBITDA

17

 

 

67

 

 

84

 

 

197

 

 

(8

)

 

273

 

 

1 Includes International, remaining renewables and Generation eliminations

2 Excludes deactivation costs of $4 million

3 Excludes MtM gains of $48 million and contract amortization of $7 million

4 Excludes $2 million of ARO expense and lease amortization

5 Excludes $11 million of legal settlements and other non recurring charges

6 Includes development costs. Excludes $293 million of interest expense, income tax, depreciation and amortization, gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

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

1,992

 

?

 

99

 

?

 

?

 

2,091

 

Cost of operations

1,275

 

(7)

 

51

 

(4)

 

?

 

1,315

 

Gross margin

717

 

7

 

48

 

4

 

?

 

776

 

Operations & maintenance and other cost of operations1

319

 

?

 

?

 

?

 

(2)

 

317

 

Selling, marketing, general & administrative2

212

 

?

 

?

 

?

 

(11)

 

201

 

Other expense/(income)3

278

 

(198)

 

?

 

?

 

(95)

 

(15)

 

Income/(Loss) from Continuing Operations

(92)

 

205

 

48

 

4

 

108

 

273

 

1 Other adj. includes ARO expense and lease amortization

2 Other adj. includes legal settlement and other non recurring charges

3 Other adj. includes gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

Appendix Table A-3: Full Year 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/
West 1

Generation

Retail

Corp/Elim

Total

Income/(Loss) from Continuing Operations

570

 

 

210

 

 

780

 

 

487

 

 

2,853

 

 

4,120

 

 

Plus:

 

 

 

 

 

 

Interest expense, net

?

 

23

 

 

23

 

 

3

 

 

368

 

 

394

 

 

Income tax

?

 

2

 

 

2

 

 

2

 

 

(3,338

)

 

(3,334

)

 

Loss on debt extinguishment

?

 

3

 

 

3

 

 

?

 

48

 

 

51

 

 

Depreciation and amortization

88

 

 

97

 

 

185

 

 

157

 

 

31

 

 

373

 

 

ARO expense

27

 

 

24

 

 

51

 

 

1

 

 

(1

)

 

51

 

 

Contract amortization

19

 

 

?

 

19

 

 

?

 

?

 

19

 

 

EBITDA

704

 

 

359

 

 

1,063

 

 

650

 

 

(39

)

 

1,674

 

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

12

 

 

103

 

 

115

 

 

?

 

?

 

115

 

 

Acquisition-related transaction & integration costs

?

 

?

 

?

 

2

 

 

1

 

 

3

 

 

Reorganization costs

?

 

1

 

 

1

 

 

5

 

 

17

 

 

23

 

 

Legal Settlement

3

 

 

8

 

 

11

 

 

?

 

2

 

 

13

 

 

Deactivation costs

(1

)

 

19

 

 

18

 

 

?

 

9

 

 

27

 

 

Gain on sale of assets

?

 

?

 

?

 

?

 

(6

)

 

(6

)

 

Other non recurring charges

(1

)

 

4

 

 

3

 

 

(5

)

 

(3

)

 

(5

)

 

Impairments

101

 

 

4

 

 

105

 

 

1

 

 

7

 

 

113

 

 

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

(208

)

 

(39

)

 

(247

)

 

267

 

 

?

 

20

 

 

Adjusted EBITDA

610

 

 

459

 

 

1,069

 

 

920

 

 

(12

)

 

1,977

 

 

1 Includes International, remaining renewables and Generation eliminations

Full Year 2019 condensed financial information by Operating Segment:

($ in millions)

Texas

East/
West 1

Generation

Retail

Corp/Elim

Total

Operating revenues

2,077

 

 

1,536

 

 

3,613

 

 

7,680

 

(1,505

)

 

9,788

 

 

Cost of sales

891

 

 

667

 

 

1,558

 

 

5,821

 

(1,501

)

 

5,878

 

 

Economic gross margin2

1,186

 

 

869

 

 

2,055

 

 

1,859

 

(4

)

 

3,910

 

 

Operations & maintenance and other cost of operations3

488

 

 

421

 

 

909

 

 

364

 

(3

)

 

1,270

 

 

Selling, marketing, general & administrative4

110

 

 

110

 

 

220

 

 

574

 

21

 

 

815

 

 

Other expense/(income)5

(22

)

 

(121

)

 

(143

)

 

1

 

(10

)

 

(152

)

 

Adjusted EBITDA

610

 

 

459

 

 

1,069

 

 

920

 

(12

)

 

1,977

 

 

1 Includes International, remaining renewables and Generation eliminations

2 Excludes MtM loss of $20 million and contract amortization of $19 million

3 Excludes $83 million of deactivation costs, ARO expense and other non recurring charges

4 Excludes $12 million of legal settlement and other non recurring charges

5 Includes development costs. Excludes $2,277 million of interest expense, income tax, depreciation and amortization, gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

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

9,821

 

 

?

 

(33

)

 

?

 

?

 

9,788

 

 

Cost of operations

5,950

 

 

(19

)

 

(53

)

 

?

 

?

 

5,878

 

 

Gross margin

3,871

 

 

19

 

 

20

 

 

?

 

?

 

3,910

 

 

Operations & maintenance and other cost of operations1

1,353

 

 

?

 

?

 

(27

)

 

(56

)

 

1,270

 

 

Selling, marketing, general & administrative2

827

 

 

?

 

?

 

?

 

(12

)

 

815

 

 

Other expense/(income)3

(2,429

)

 

2,516

 

 

?

 

?

 

(239

)

 

(152

)

 

Income/(Loss) from Continuing Operations

4,120

 

 

(2,497

)

 

20

 

 

27

 

 

307

 

 

1,977

 

 

1 Other adj. includes ARO expense and other non recurring charges

2 Other adj. includes legal settlement and other non recurring charges

3 Other adj. includes gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

Appendix Table A-4: Full Year 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/
West 1

Generation

Retail

Corp/Elim

Total

Income/(Loss) from Continuing Operations

(102

)

 

104

 

 

2

 

 

1,062

 

 

(604

)

 

460

 

 

Plus:

 

 

 

 

 

 

Interest expense, net

?

 

55

 

 

55

 

 

3

 

 

408

 

466

 

Income tax

?

 

?

 

?

 

1

 

 

6

 

 

7

 

 

Loss on debt extinguishment

?

 

?

 

?

 

?

 

44

 

 

44

 

 

Depreciation and amortization

85

 

 

187

 

 

272

 

 

116

 

 

33

 

 

421

 

 

ARO Expense

21

 

 

15

 

 

36

 

 

1

 

 

?

 

37

 

 

Contract amortization

26

 

 

1

 

 

27

 

 

?

 

?

 

27

 

Lease amortization

?

 

(8

)

 

(8

)

 

?

 

?

 

(8

)

 

EBITDA

30

 

 

354

 

 

384

 

 

1,183

 

 

(113

)

 

1,454

 

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

9

 

 

73

 

 

82

 

 

?

 

1

 

 

83

 

 

Acquisition-related transaction & integration costs

?

 

?

 

?

 

5

 

 

4

 

 

9

 

 

Reorganization costs2

3

 

 

8

 

 

11

 

 

15

 

 

81

 

 

107

 

 

Legal Settlement

13

 

 

10

 

 

23

 

 

?

 

6

 

 

29

 

 

Deactivation costs

?

 

10

 

 

10

 

 

?

 

12

 

 

22

 

 

Gain on sale of assets

?

 

2

 

 

2

 

 

?

 

(30

)

 

(28

)

 

Other non recurring charges

(1

)

 

1

 

 

?

 

1

 

 

?

 

1

 

 

Impairments

20

 

 

93

 

 

113

 

 

1

 

 

?

 

114

 

 

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

172

 

 

67

 

 

239

 

 

(253

)

 

?

 

(14

)

 

Adjusted EBITDA

246

 

 

618

 

 

864

 

 

952

 

 

(39

)

 

1,777

 

 

1 Includes International, remaining renewables and Generation eliminations

2 Includes $17 million of non-recurring pension expense

Full Year 2018 condensed financial information by Operating Segment:

($ in millions)

Texas

East/
West 1

Generation

Retail

Corp/Elim

Total

Operating revenues

1,670

 

 

1,975

 

 

3,645

 

 

7,110

 

(1,147

)

 

9,608

 

 

Cost of sales2

867

 

 

832

 

 

1,699

 

 

5,308

 

(1,140

)

 

5,867

 

 

Economic gross margin3

803

 

 

1,143

 

 

1,946

 

 

1,802

 

(7

)

 

3,741

 

 

Operations & maintenance and other cost of operations4

479

 

 

497

 

 

976

 

 

314

 

(1

)

 

1,289

 

 

Selling, marketing, general & administrative5

95

 

 

110

 

 

205

 

 

535

 

37

 

 

777

 

 

Other expense/(income)6

(17

)

 

(82

)

 

(99

)

 

1

 

(4

)

 

(102

)

 

Adjusted EBITDA

246

 

 

618

 

 

864

 

 

952

 

(39

)

 

1,777

 

 

1 Includes International, remaining renewables and Generation eliminations

2 Excludes deactivation costs of $11 million

3 Excludes MtM gain of $14 million and contract amortization of $27 million

4 Excludes $58 million of deactivation costs, ARO expense and other non recurring charges

5 Excludes $22 million of legal settlements, acquisition-related transaction & integration costs and other non recurring charges

6 Includes development costs. Excludes $1,213 million of interest expense, income tax, depreciation and amortization, gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

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

9,478

 

 

130

 

 

?

 

?

 

9,608

 

 

Cost of operations

5,761

 

(27

)

 

144

 

 

(11

)

 

?

 

5,867

 

 

Gross margin

3,717

 

27

 

 

(14

)

 

11

 

 

?

 

3,741

 

 

Operations & maintenance and other cost of operations1

1,347

 

?

 

?

 

(11

)

 

(47

)

 

1,289

 

 

Selling, marketing, general & administrative2

799

 

?

 

?

 

?

 

(22

)

 

777

 

 

Other expense/(income)3

1,111

 

(923

)

 

?

 

?

 

(290

)

 

(102

)

 

Income/(Loss) from Continuing Operations

460

 

950

 

 

(14

)

 

22

 

 

359

 

 

1,777

 

 

1 Other adj. includes ARO expense and lease amortization

2 Other adj. includes legal settlement, acquisition-related transaction & integration costs and other non recurring charges

3 Other adj. includes gain on sale of assets, acquisition-related transaction & integration costs, reorganization costs, other non recurring charges, impairments and loss on debt extinguishment

Appendix Table A-5: 2019 and 2018 Three Months Ended December 31 and Full Year 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)

 

December 31, 2019

 

December 31, 2018

Net Cash Provided by Operating Activities

 

552

 

 

 

332

 

 

Merger, integration and cost-to-achieve expenses1

 

20

 

 

 

26

 

 

GenOn Settlement2

 

?

 

 

(57

)

 

Note Repayment

 

5

 

 

 

?

 

Gain on Sale of Land

 

2

 

 

 

1

 

 

Encina Site Improvement

 

1

 

 

 

?

 

Adjustment for change in collateral

 

23

 

 

 

72

 

 

Adjusted Cash Flow from Operating Activities

 

603

 

 

 

374

 

 

Maintenance CapEx, net

 

(27

)

 

 

(23

)

 

Environmental CapEx, net

 

(1

)

 

 

?

 

Distributions to non-controlling interests

 

?

 

 

?

 

Free Cash Flow before Growth

 

575

 

 

 

351

 

 

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

2 2018 includes insurance proceeds and legal fees

 

 

Twelve Months Ended

($ in millions)

 

December 31, 2019

 

December 31, 2018

 

Net Cash Provided by Operating Activities

 

1,405

 

 

 

1,003

 

 

 

Merger, integration and cost-to-achieve expenses1

 

39

 

 

 

97

 

 

 

GenOn Settlement2

 

18

 

 

 

75

 

 

 

Note Repayment

 

5

 

 

 

?

 

 

Gain on Sale of Land

 

2

 

 

 

4

 

 

 

Encina Site Improvement

 

1

 

 

 

?

 

 

Adjustment for change in collateral

 

(97

)

 

 

117

 

 

 

Adjusted Cash Flow from Operating Activities

 

1,373

 

 

 

1,296

 

 

 

Maintenance CapEx, net

 

(156

)

 

 

(159

)

 

 

Environmental CapEx, net

 

(3

)

 

 

(1

)

 

 

Distributions to non-controlling interests

 

(2

)

 

 

(16

)

 

 

Free Cash Flow before Growth

 

1,212

 

 

 

1,120

 

 

 

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 and pension contribution of $13 million; 2018 includes settlement consideration of $261 million, transition services credit of $28 million, and pension contribution of $13 million, less $151 million repayment of intercompany revolver loan, accrued interest and fees of $12 million, certain other balances due to NRG of $6 million, and insurance proceeds, net of legal fees, of $58 million

Appendix Table A-6: Full Year 2019 Sources and Uses of Liquidity

The following table summarizes the sources and uses of liquidity for the full year 2019:

($ in millions)

Twelve Months Ended
December 31, 2019

Sources:

 

Adjusted cash flow from operations

1,373

 

 

Asset Sales

1,283

 

 

Collateral

97

 

 

Increase in credit facility/revolver

397

 

 

Uses:

 

Share repurchases

(1,440

)

 

Corporate Debt payments and Financing fees

(655

)

 

Midwest Gen Debt amortization

(48

)

 

Growth investments and acquisitions, net

(551

)

 

Maintenance and Environmental CapEx, net

(159

)

 

GenOn Settlement

(18

)

 

Cost-to-achieve expenses1

(84

)

 

Common Stock Dividends

(32

)

 

Distributions to non-controlling interests

(2

)

 

Other Investing and Financing

9

 

 

Change in Total Liquidity

170

 

 

1 Includes capital expenditures associated with the Transformation Plan

Appendix Table A-7: 2020 Adjusted EBITDA Guidance Reconciliation

The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to net income:

 

 

2020 Adjusted EBITDA

($ in millions)

 

Low

 

High

Income from Continuing Operations 1

 

980

 

 

 

1,180

 

 

Income Tax

 

20

 

 

 

20

 

 

Interest Expense

 

335

 

 

 

335

 

 

Depreciation, Amortization, Contract Amortization and ARO Expense

 

480

 

 

 

480

 

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

65

 

 

 

65

 

 

Other Costs 2

 

20

 

 

 

20

 

 

Adjusted EBITDA

 

1,900

 

 

 

2,100

 

 

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

Appendix Table A-8: 2020 FCFbG Guidance Reconciliation

The following table summarizes the calculation of Free Cash Flow before Growth providing reconciliation to Cash from Operations:

 

 

 

2020

($ in millions)

 

 

Guidance

Adjusted EBITDA

 

 

$1,900 - $2,100

Interest payments

 

 

(335)

 

Income tax

 

 

(20)

 

Working capital / other assets and liabilities

 

 

(105)

 

Cash From Operations

 

 

$1,440 - $1,640

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

 

 

10

 

Adjusted Cash flow from Operations

 

 

$1,450 - $1,650

Maintenance capital expenditures, net

 

 

(165) - (185)

Environmental capital expenditures, net

 

 

(0) - (5)

Free Cash Flow before Growth

 

 

$1,275 - $1,475

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:

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG's business. NRG compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.

Adjusted EBITDA is presented as a further supplemental measure of operating performance. As NRG defines it, Adjusted EBITDA represents EBITDA excluding impairment losses, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from accounting for derivatives, adjustments to exclude the Adjusted EBITDA related to the non-controlling interest, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this news release.

Management believes Adjusted EBITDA is useful to investors and other users of NRG's financial statements in evaluating its operating performance because it provides an additional tool to compare business performance across companies and across periods and adjusts for items that we do not consider indicative of NRG's future operating performance. This measure is widely used by debt-holders to analyze operating performance and debt service capacity and by equity investors to measure our operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.

Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash from operations with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration and related restructuring costs. The Company provides the reader with this alternative view of operating cash flow because the cash settlement of these derivative contracts materially impact operating revenues and cost of sales, while GAAP requires NRG to treat them as if there was a financing activity associated with the contracts as of the acquisition dates. The Company adds back merger, integration related restructuring costs as they are one time and unique in nature and do not reflect ongoing cash from operations and they are fully disclosed to investors.

Free cash flow (before Growth) 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.


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