HOUSTON--(BUSINESS WIRE)--NRG Energy, Inc. (NYSE: NRG) today reports strong third quarter 2024 financial results and reaffirms its raised guidance ranges.
"We had another excellent quarter, posting strong performance across the company," said Larry Coben, NRG Chair, President and Chief Executive Officer. "NRG's financial position has never been stronger as evidenced by our raised 2024 guidance and the 2025 guidance we initiated today. We continue to look to add new capacity to our portfolio, and our exciting new partnership with Renew Home provides further validation of our customer-focused strategy."
Consolidated Financial Results
Table 1: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
($ in millions, except per share amounts) | 9/30/2024 | 9/30/2023 | 9/30/2024 | 9/30/2023 | ||||||||||
Net (Loss)/Income | $ | (767 | ) | $ | 343 | $ | 482 | $ | (684 | ) | ||||
(Loss)/Income per Weighted Average Common Share - Basic | $ | (3.79 | ) | $ | 1.42 | $ | 2.08 | $ | (3.14 | ) | ||||
Adjusted EBITDAa | $ | 1,055 | $ | 987 | $ | 2,887 | $ | 2,458 | ||||||
Adjusted Net Incomeb | $ | 393 | $ | 360 | $ | 1,066 | $ | 849 | ||||||
Adjusted EPSc | $ | 1.90 | $ | 1.57 | $ | 5.15 | $ | 3.69 | ||||||
Cash Provided/(Used) by Operating Activities | $ | 31 | $ | 566 | $ | 1,354 | $ | (462 | ) | |||||
Free Cash Flow Before Growth Investments (FCFbG) | $ | 815 | $ | 355 | $ | 1,438 | $ | 983 | ||||||
a Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization referenced below |
b Not previously provided, Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders'; see appendix tables A-1-A-6 |
c Not previously provided, Adjusted EPS calculated based on Adjusted Net Income divided by weighted average number of common shares outstanding - basic |
For the third quarter of 2024, GAAP Net Loss was $(767) million as a result of the impact of unrealized non-cash mark-to-market losses on commodity hedges, and GAAP Cash Provided by Operating Activities was $31 million. NRG produced Adjusted EBITDA of $1,055 million and Free Cash Flow before Growth Investments of $815 million in the quarter, an increase of $68 million and $460 million, respectively, over the same period in the prior year. Year-over-year improved financial performance was driven primarily by margin expansion across all NRG reporting segments.
Introduction of Adjusted Net Income and Adjusted EPS Metrics
NRG is introducing new metrics to enhance its financial reporting. Adjusted Net Income and Adjusted EPS offer additional insight into the performance of the Company, and highlight the maturity and predictability of NRG's integrated platform and robust capital return program. The Company will continue to report and provide guidance on Adjusted EBITDA and FCFbG alongside Adjusted Net Income and Adjusted EPS to ensure transparency and to allow for continuity of analysis.
Adjusted Net Income and Adjusted EPS are both non-GAAP measures. The Company defines Adjusted EPS as the Adjusted Net Income available to common shareholders, divided by the weighted average number of basic common shares outstanding. With the retirement of the callable and fully hedged Convertible Senior Notes scheduled to occur in 2025, the weighted average number of basic common shares outstanding will provide a more accurate view of recurring per-share earnings.
The Company calculates Adjusted Net Income and Adjusted EPS metrics using an adjusted effective tax rate. Actual cash taxes are materially lower than book income tax expense due to NRG's tax attributes, primarily comprised of sizable gross Net Operating Losses (NOL), which are forecasted to be $7.2 billion as of December 31, 2024.
The Company has also recast all amortization of capitalized customer acquisition costs from selling general & administrative expenses and cost of operations into the depreciation and amortization line item of the Company's financial statements. All reported figures have been updated to reflect this change, and historical periods have been recast to aid with comparison. This recast only affects Adjusted EBITDA and has no impact on Adjusted Net Income, Adjusted EPS, or FCFbG.
Raised 2024 Guidance
On September 25, 2024, NRG raised its 2024 Adjusted EBITDA guidance to $3,525 - $3,675 million from $3,300 - $3,550 million and FCFbG guidance to $1,975 - $2,125 million from $1,825 - $2,075 million. With the recasting of the amortization of capitalized customer acquisition costs described above, the 2024 Adjusted EBITDA guidance issued on September 25, 2024 is now $3,655 - $3,805 million, an increase of $130 million. 2024 FCFbG guidance is not changed by the recasting of capitalized contract costs which are non-cash items.
NRG is also providing 2024 ranges for Adjusted Net Income and Adjusted EPS of $1,235 - $1,385 and $5.95 - $6.75, respectively. In the third quarter 2024, the Company earned $393 million of Adjusted Net Income and $1.90 of Adjusted EPS.
Table 2: Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and FCFbG Guidance for 2024a | ||||
2024 | 2024 | |||
($ in millions, except per share amounts) | Original Guidance | Raised Guidance | ||
Adjusted EBITDAb | $3,430 - $3,680 | $3,655 - $3,805 | ||
Adjusted Net Incomec | $1,040 - $1,290 | $1,235 - $1,385 | ||
Adjusted EPSd | $5.00 - $6.30 | $5.95 - $6.75 | ||
FCFbG | $1,825 - $2,075 | $1,975 - $2,125 | ||
a Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and FCFbG are non-GAAP financial measures; see Appendix Tables A-10-A-12 for GAAP Reconciliation. Adjusted EBITDA, Adjusted Net Income and Adjusted EPS exclude fair value adjustments related to derivatives. The Company does not guide to GAAP Net Income due to the impact of such fair value adjustments related to derivatives in a given year |
b Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
c Not previously provided, Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders'; see appendix table A-10 and A-11 for GAAP Reconciliations |
d Not previously provided, Adjusted EPS calculated based on Adjusted Net Income divided by forecasted weighted average number of common shares outstanding - basic |
2024 Capital Allocation
NRG reaffirms its capital allocation policy targeting approximately 80% of recurring cash available for allocation after debt reduction to return of capital, and approximately 20% to strategic growth. The Company is increasing its share repurchase allocation for 2024 from $825 million to $925 million. Through the third quarter of 2024, the Company continued to repurchase shares in the open market, with $544 million completed as of October 31, 2024. The Company expects to complete the entire $925 million of 2024 repurchases near the end of the fourth quarter.
As of September 30, 2024, NRG has executed approximately $1.6 billion of debt reduction since the closing of the Vivint acquisition in March 2023. The Company had set a goal of achieving investment grade credit metrics by the end of 2025, and as a result of its strategic liability management plan and financial out-performance, NRG is on track to achieve its target by the end of 2024, a full year earlier than the original target.
On October 11, 2024, the Board of Directors declared a quarterly dividend on the Company's common stock of $0.4075 per share, or $1.63 per share on an annualized basis. The dividend is payable on November 15, 2024, to stockholders of record as of November 1, 2024.
Initiating 2025 Guidance and Capital Allocation Plan
NRG initiates 2025 guidance as follows:
Table 3: Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and FCFbG Guidance for 2025a | ||||||
2024 | 2025 | 2025 | ||||
($ in millions, except per share amounts) | Raised Guidance | Guidance | Guidance Midpoint | |||
Adjusted EBITDAb | $3,655 - $3,805 | $3,725 - $3,975 | $3,850 | |||
Adjusted Net Incomec | $1,235 - $1,385 | $1,330 - $1,530 | $1,430 | |||
Adjusted EPSd | $5.95 - $6.75 | $6.75 - $7.75 | $7.25 | |||
FCFbG | $1,975 - $2,125 | $1,975 - $2,225 | $2,100 | |||
a Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and FCFbG are non-GAAP financial measures; see Appendix Tables A-10-A-12 for GAAP Reconciliation. Adjusted EBITDA, Adjusted Net Income and Adjusted EPS exclude fair value adjustments related to derivatives. The Company does not guide to GAAP Net Income due to the impact of such fair value adjustments related to derivatives in a given year |
b Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
c Not previously provided, Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders'; see appendix table A-10 and A-11 for GAAP Reconciliation |
d Not previously provided, Adjusted EPS calculated based on Adjusted Net Income divided by forecasted weighted average number of common shares outstanding - basic |
The year-over-year increases in the guidance ranges reflect continued improved execution across all of NRG's businesses, and the expected achievement of NRG's previously announced revenue and cost synergy programs which more than offset the loss of Airtron's financial contribution due to the sale of the business. The guidance ranges reflect a flat power price environment and are not dependent on tightening power markets or price speculation, and do not include any potential contributions from sites, or other similar opportunities.
The Company is also announcing its 2025 capital allocation plan which adheres to its previously announced policy. The plan includes $1.3 billion in share repurchases and an 8% increase of the annual common dividend to $1.76 per share. NRG's Board of Directors has approved an increase of the Company's share repurchase authorization through 2025 to $3.7 billion from $2.7 billion.
NRG's share repurchase program and common stock dividend are subject to maintaining satisfactory credit metrics, available capital, market conditions, and compliance with associated laws and regulations. The timing and amount of any shares of NRG's common stock repurchased under the share repurchase authorization will be determined by NRG's management based on market conditions and other factors. NRG will only repurchase shares when management believes it would not jeopardize the Company's ability to maintain satisfactory credit ratings.
Long-Term Adjusted EPS Growth
NRG plans to deliver a long-term cumulative annual growth rate (CAGR) for Adjusted EPS of greater than 10% measured from the midpoint of its raised 2024 guidance. The Company projects this long-term growth rate utilizing a flat power price environment and is not dependent on tightening markets or power price speculation. This projected growth rate also excludes potential earnings uplift from the 21 sites and ERCOT natural gas new build projects not selected by the Texas Energy Fund (TEF). Rather, the CAGR is derived from the Company's organic growth plan comprised of identified initiatives resulting in an incremental $750 million of annual run-rate Adjusted EBITDA by 2029, and over $8 billion of cumulative return of capital from 2025 through 2029.
Strategic Developments
Partnering with Renew Home and Google Cloud to Develop Virtual Power Plant
NRG has entered into a definitive partnership agreement with Renew Home, a leading Virtual Power Plant platform (VPP) formed by the combination of Google's Nest Renew and OhmConnect. This first-of-its-kind commercial partnership reinforces NRG's customer focus and brings to market unique products and services which will help customers save money while enjoying the benefits of a seamless energy and smart home experience. Leveraging Google Cloud's AI and cloud platforms, NRG and Renew Home plan to develop a VPP portfolio of up to 1 GW of load management capacity, with instantaneous dispatch value during peak events and tight supply conditions. Participating customers will enroll in an NRG branded energy plan and will be eligible for favorable rates on Vivint Smart Home services and additional products. The partnership will initially focus in Texas, with Renew Home supporting upfront customer acquisition costs and Google Nest integration.
Texas Energy Fund
The Public Utilities Commission of Texas (PUCT) selected NRG's 415 MW new build of the T.H. Wharton peaking facility to move forward through its next phase of diligence.
Airtron HVAC Sale
On September 16, 2024, NRG closed the sale of its HVAC business unit Airtron for a purchase price of $500 million and net cash proceeds of $484 million, with approximately $425 million expected after taxes and fees. Airtron is a leading installer of HVAC systems for residential new construction homes and was acquired as part of the Direct Energy acquisition in 2021. The opportunistic divestiture was completed at an accretive 8.6x multiple on 2023 Adjusted EBITDA.
Segments Results
Table 4: Net (Loss)/Income | ||||||||||||||||
($ in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||
Segment | 9/30/2024 | 9/30/2023 | 9/30/2024 | 9/30/2023 | ||||||||||||
Texas | $ | (1,056 | ) | $ | 463 | $ | 259 | $ | 1,532 | |||||||
East | 88 | 316 | 1,116 | (1,187 | ) | |||||||||||
West/Services/Othera | 230 | (432 | ) | (842 | ) | (963 | ) | |||||||||
Vivint Smart Homeb | $ | (29 | ) | $ | (4 | ) | $ | (51 | ) | $ | (66 | ) | ||||
Net (Loss)/Income | $ | (767 | ) | $ | 343 | $ | 482 | $ | (684 | ) | ||||||
a Includes Corporate segment |
b Vivint Smart Home acquired in March 2023 |
Net Loss for the third quarter of 2024 was $(767) million, $1.1 billion lower than the third quarter of 2023. This was primarily driven by higher unrealized non-cash mark-to-market losses on economic hedges in Texas in 2024 impacted by a decrease in ERCOT forward power prices, partially offset by the gain on the sale of Airtron recorded in September of 2024. Certain hedge positions are required to be marked-to-market every period, while the customer contracts related to these items are not, resulting in temporary unrealized losses or gains on the economic hedges that are not reflective of the expected economics at future settlement.
Table 5: Adjusted EBITDA | ||||||||||||
($ in millions) | Three Months Ended | Nine Months Ended | ||||||||||
Segment | 9/30/2024 | 9/30/2023 | 9/30/2024 | 9/30/2023 | ||||||||
Texas | $ | 584 | $ | 552 | $ | 1,255 | $ | 1,310 | ||||
East | 164 | 171 | 724 | 562 | ||||||||
West/Services/Othera | 50 | 25 | 179 | 51 | ||||||||
Vivint Smart Homeb | $ | 257 | $ | 239 | $ | 729 | $ | 535 | ||||
Adjusted EBITDAc | $ | 1,055 | $ | 987 | $ | 2,887 | $ | 2,458 | ||||
a Includes Corporate segment |
b Vivint Smart Home acquired in March 2023 |
c Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
Texas: Third quarter Adjusted EBITDA was $584 million, $32 million higher than the third quarter of 2023. This increase was a result of higher gross margin including lower supply costs and higher revenue rates, partially offset by asset sales in 2023.
East: Third quarter Adjusted EBITDA was $164 million, $7 million lower than the third quarter of 2023. This decrease was driven by higher operating expenses, partially offset by increased retail natural gas margins and increased customer counts.
West/Services/Other: Third quarter Adjusted EBITDA was $50 million, $25 million higher than the third quarter of 2023. This increase was primarily driven by lower retail power supply costs, partially offset by timing of outages at Cottonwood.
Vivint Smart Home: Third quarter Adjusted EBITDA was $257 million, $18 million higher than the third quarter of 2023. The 8% increase was attributable to growth in subscriber count, an increase in monthly recurring revenue per subscriber, and a decrease in monthly recurring net service cost per subscriber.
Liquidity and Capital Resources
Table 6: Corporate Liquidity | ||||||
($ in millions) | 9/30/24 | 12/31/23 | ||||
Cash and Cash Equivalents | $ | 1,104 | $ | 541 | ||
Restricted Cash | 10 | 24 | ||||
Total | 1,114 | 565 | ||||
Total Revolving Credit Facility and collective collateral facilities | 5,330 | 4,278 | ||||
Total Liquidity, excluding collateral deposited by counterparties | $ | 6,444 | $ | 4,843 | ||
As of September 30, 2024, NRG's unrestricted cash was $1.1 billion and $5.3 billion was available under the Company's credit facilities. Total liquidity increased $1.6 billion from the end of 2023 to $6.4 billion, primarily due to an increase in availability of $1.1 billion in the Receivables Facility and proceeds on hand from the Airtron sale, partly offset by $210 million in other facilities.
Earnings Conference Call
On November 8, 2024, NRG will host a conference call at 9:00 a.m. Eastern (8:00 a.m. Central) to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials through the investor relations website under "presentations and webcasts" on investors.nrg.com. The webcast will be archived on the site for those unable to listen in real-time.
About NRG
NRG Energy is a leading energy and home services company powered by people and our passion for a smarter, cleaner, and more connected future. A Fortune 500 company operating in the United States and Canada, NRG delivers innovative solutions that help people, organizations, and businesses achieve their goals while also advocating for competitive energy markets and customer choice. More information is available at www.nrg.com. Connect with NRG on Facebook and LinkedIn, and follow us on X (formerly known as Twitter), @nrgenergy.
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 and extreme weather events, competition in wholesale power, gas and smart home markets, the volatility of energy and fuel prices, failure of customers or counterparties to perform under contracts, changes in the wholesale power and gas markets, changes in government or market regulations, the condition of capital markets generally and NRG's ability to access capital markets, NRG's ability to execute its supply strategy, risks related to data privacy, cyberterrorism and inadequate cybersecurity, the loss of data, unanticipated outages at NRG's generation facilities, NRG's ability to achieve its net debt targets, adverse results in current and future litigation, complaints, product liability claims and/or adverse publicity, failure to identify, execute or successfully implement acquisitions or asset sales, risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process, the impact of changes in consumer spending patterns, consumer preferences, geopolitical tensions, demographic trends, supply chain disruptions, NRG's ability to implement value enhancing improvements to plant operations and company wide processes, NRG's ability to achieve or maintain investment grade credit metrics, NRG's 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, NRG's ability to operate its business efficiently, NRG's ability to retain customers, the ability to successfully integrate businesses of acquired companies, including Vivint Smart Home, NRG's 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, NRG's ability to execute its capital allocation plan. Achieving investment grade credit metrics is not an 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, cash provided by operating activities and Free Cash Flow before Growth, Adjusted Net Income, and Adjusted EPS guidance are estimates as of November 8, 2024. These estimates are based on assumptions NRG 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. For a more detailed discussion of these factors, see the information under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in NRG's most recent Annual Report on Form 10-K, and in subsequent SEC filings. NRG's forward-looking statements speak only as of the date of this communication or as of the date they are made.
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(In millions, except for per share amounts) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Revenue | |||||||||||||||
Revenue | $ | 7,223 | $ | 7,946 | $ | 21,311 | $ | 22,016 | |||||||
Operating Costs and Expenses | |||||||||||||||
Cost of operations (excluding depreciation and amortization shown below) | 7,239 | 6,406 | 17,229 | 20,137 | |||||||||||
Depreciation and amortization | 352 | 359 | 1,045 | 921 | |||||||||||
Impairment losses | - | - | 15 | - | |||||||||||
Selling, general and administrative costs (excluding amortization of customer acquisition costs of $55, $36, $144 and $84, respectively, which are included in depreciation and amortization shown separately above) | 645 | 602 | 1,739 | 1,502 | |||||||||||
Acquisition-related transaction and integration costs | 7 | 18 | 22 | 111 | |||||||||||
Total operating costs and expenses | 8,243 | 7,385 | 20,050 | 22,671 | |||||||||||
Gain on sale of assets | 208 | - | 209 | 202 | |||||||||||
Operating (Loss)/Income | (812 | ) | 561 | 1,470 | (453 | ) | |||||||||
Other Income/(Expense) | |||||||||||||||
Equity in earnings of unconsolidated affiliates | 6 | 6 | 13 | 16 | |||||||||||
Other income, net | 5 | 14 | 38 | 43 | |||||||||||
Loss on debt extinguishment | - | - | (260 | ) | - | ||||||||||
Interest expense | (213 | ) | (173 | ) | (528 | ) | (472 | ) | |||||||
Total other expense | (202 | ) | (153 | ) | (737 | ) | (413 | ) | |||||||
(Loss)/Income Before Income Taxes | (1,014 | ) | 408 | 733 | (866 | ) | |||||||||
Income tax (benefit)/expense | (247 | ) | 65 | 251 | (182 | ) | |||||||||
Net (Loss)/Income | $ | (767 | ) | $ | 343 | $ | 482 | $ | (684 | ) | |||||
Less: Cumulative dividends attributable to Series A Preferred Stock | 17 | 17 | 51 | 38 | |||||||||||
Net (Loss)/Income Available for Common Stockholders | $ | (784 | ) | $ | 326 | $ | 431 | $ | (722 | ) | |||||
(Loss)/Income per Share | |||||||||||||||
Weighted average number of common shares outstanding - basic | 207 | 230 | 207 | 230 | |||||||||||
(Loss)/Income per Weighted Average Common Share - Basic | $ | (3.79 | ) | $ | 1.42 | $ | 2.08 | $ | (3.14 | ) | |||||
Weighted average number of common shares outstanding - diluted | 207 | 232 | 213 | 230 | |||||||||||
(Loss)/Income per Weighted Average Common Share -Diluted | $ | (3.79 | ) | $ | 1.41 | $ | 2.02 | $ | (3.14 | ) | |||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (Unaudited) | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(In millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Net (Loss)/Income | $ | (767 | ) | $ | 343 | $ | 482 | $ | (684 | ) | |||||
Other Comprehensive (Loss)/Income | |||||||||||||||
Foreign currency translation adjustments | 6 | (8 | ) | (4 | ) | - | |||||||||
Defined benefit plans | (8 | ) | 1 | (10 | ) | - | |||||||||
Other comprehensive (loss)/income | (2 | ) | (7 | ) | (14 | ) | - | ||||||||
Comprehensive (Loss)/Income | $ | (769 | ) | $ | 336 | $ | 468 | $ | (684 | ) | |||||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
September 30, 2024 | December 31, 2023 | ||||||
(In millions, except share data) | (Unaudited) | (Audited) | |||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 1,104 | $ | 541 | |||
Funds deposited by counterparties | 12 | 84 | |||||
Restricted cash | 10 | 24 | |||||
Accounts receivable, net | 3,258 | 3,542 | |||||
Inventory | 540 | 607 | |||||
Derivative instruments | 2,456 | 3,862 | |||||
Cash collateral paid in support of energy risk management activities | 449 | 441 | |||||
Prepayments and other current assets | 782 | 626 | |||||
Total current assets | 8,611 | 9,727 | |||||
Property, plant and equipment, net | 1,818 | 1,763 | |||||
Other Assets | |||||||
Equity investments in affiliates | 49 | 42 | |||||
Operating lease right-of-use assets, net | 172 | 179 | |||||
Goodwill | 5,018 | 5,079 | |||||
Customer relationships, net | 1,648 | 2,164 | |||||
Other intangible assets, net | 1,439 | 1,763 | |||||
Derivative instruments | 1,747 | 2,293 | |||||
Deferred income taxes | 2,098 | 2,251 | |||||
Other non-current assets | 1,124 | 777 | |||||
Total other assets | 13,295 | 14,548 | |||||
Total Assets | $ | 23,724 | $ | 26,038 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Current portion of long-term debt and finance leases | $ | 258 | $ | 620 | |||
Current portion of operating lease liabilities | 77 | 90 | |||||
Accounts payable | 1,994 | 2,325 | |||||
Derivative instruments | 2,351 | 4,019 | |||||
Cash collateral received in support of energy risk management activities | 12 | 84 | |||||
Deferred revenue current | 761 | 720 | |||||
Accrued expenses and other current liabilities | 1,895 | 1,642 | |||||
Total current liabilities | 7,348 | 9,500 | |||||
Other Liabilities | |||||||
Long-term debt and finance leases | 10,422 | 10,133 | |||||
Non-current operating lease liabilities | 125 | 128 | |||||
Derivative instruments | 1,469 | 1,488 | |||||
Deferred income taxes | 8 | 22 | |||||
Deferred revenue non-current | 919 | 914 | |||||
Other non-current liabilities | 913 | 947 | |||||
Total other liabilities | 13,856 | 13,632 | |||||
Total Liabilities | 21,204 | 23,132 | |||||
Commitments and Contingencies | |||||||
Stockholders' Equity | |||||||
Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at September 30, 2024 and December 31, 2023, aggregate liquidation preference of $650; at September 30, 2024 and December 31, 2023 | 650 | 650 | |||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 264,056,285 and 267,330,470 shares issued and 204,929,327 and 208,130,950 shares outstanding at September 30, 2024 and December 31, 2023, respectively | 3 | 3 | |||||
Additional paid-in-capital | 3,145 | 3,416 | |||||
Retained earnings | 977 | 820 | |||||
Treasury stock, at cost; 59,126,958 shares and 59,199,520 shares at September 30, 2024 and December 31, 2023, respectively | (2,150 | ) | (1,892 | ) | |||
Accumulated other comprehensive loss | (105 | ) | (91 | ) | |||
Total Stockholders' Equity | 2,520 | 2,906 | |||||
Total Liabilities and Stockholders' Equity | $ | 23,724 | $ | 26,038 | |||
NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
Nine months ended September 30, | |||||||
(In millions) | 2024 | 2023 | |||||
Cash Flows from Operating Activities | |||||||
Net Income/(Loss) | $ | 482 | $ | (684 | ) | ||
Adjustments to reconcile net income/(loss) to cash provided/(used) by operating activities: | |||||||
Equity in and distributions from earnings of unconsolidated affiliates | (6 | ) | (16 | ) | |||
Depreciation of property, plant and equipment and amortization of customer relationships and other intangible assets | 814 | 813 | |||||
Amortization of capitalized contract costs | 231 | 108 | |||||
Accretion of asset retirement obligations | 29 | 14 | |||||
Provision for credit losses | 228 | 165 | |||||
Amortization of nuclear fuel | - | 42 | |||||
Amortization of financing costs and debt discounts | 32 | 42 | |||||
Loss on debt extinguishment | 260 | - | |||||
Amortization of in-the-money contracts and emissions allowances | 83 | 111 | |||||
Amortization of unearned equity compensation | 82 | 87 | |||||
Net gain on sale of assets and disposal of assets | (197 | ) | (187 | ) | |||
Impairment losses | 15 | - | |||||
Changes in derivative instruments | 268 | 1,553 | |||||
Changes in current and deferred income taxes and liability for uncertain tax benefits | 134 | (225 | ) | ||||
Changes in collateral deposits in support of risk management activities | (80 | ) | (1,188 | ) | |||
Changes in nuclear decommissioning trust liability | - | (4 | ) | ||||
Changes in other working capital | (1,021 | ) | (1,093 | ) | |||
Cash provided/(used) by operating activities | $ | 1,354 | $ | (462 | ) | ||
Cash Flows from Investing Activities | |||||||
Payments for acquisitions of businesses and assets, net of cash acquired | $ | (33 | ) | $ | (2,502 | ) | |
Capital expenditures | (286 | ) | (493 | ) | |||
Net purchases of emissions allowances | (16 | ) | (25 | ) | |||
Investments in nuclear decommissioning trust fund securities | - | (293 | ) | ||||
Proceeds from the sale of nuclear decommissioning trust fund securities | - | 280 | |||||
Proceeds from sales of assets, net of cash disposed | 495 | 229 | |||||
Proceeds from insurance recoveries for property, plant and equipment, net | 3 | 173 | |||||
Cash provided/(used) by investing activities | $ | 163 | $ | (2,631 | ) | ||
Cash Flows from Financing Activities | |||||||
Proceeds from issuance of preferred stock, net of fees | $ | - | $ | 635 | |||
Payments of dividends to preferred and common stockholders | (322 | ) | (295 | ) | |||
Equivalent shares purchased in lieu of tax withholdings | (45 | ) | (19 | ) | |||
Payments for share repurchase activity | (316 | ) | (50 | ) | |||
Net (payments)/receipts from settlement of acquired derivatives that include financing elements | (2 | ) | 332 | ||||
Net proceeds of Revolving Credit Facility and Receivable Securitization Facilities | - | 300 | |||||
Proceeds from issuance of long-term debt | 875 | 731 | |||||
Payments of debt issuance costs | (13 | ) | (29 | ) | |||
Repayments of long-term debt and finance leases | (960 | ) | (15 | ) | |||
Payments for debt extinguishment costs | (258 | ) | - | ||||
Proceeds from credit facilities | 1,050 | 3,020 | |||||
Repayments to credit facilities | (1,050 | ) | (3,020 | ) | |||
Cash (used)/provided by financing activities | $ | (1,041 | ) | $ | 1,590 | ||
Effect of exchange rate changes on cash and cash equivalents | 1 | - | |||||
Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash | 477 | (1,503 | ) | ||||
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period | 649 | 2,178 | |||||
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period | $ | 1,126 | $ | 675 | |||
Appendix Table A-1: Third Quarter 2024 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS Reconciliation
The following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net (Loss)/Income1:
($ in millions, except per share amounts) | Texas | East | West/Services/ Other | Vivint Smart Home | Corp/Elim | Total | ||||||||||||
Net (Loss)/Income | $ | (1,056 | ) | $ | 88 | $ | 148 | $ | (29 | ) | $ | 82 | $ | (767 | ) | |||
Plus: | ||||||||||||||||||
Interest expense, net | 1 | 1 | 7 | 74 | 122 | 205 | ||||||||||||
Income tax | - | 1 | - | (8 | ) | (240 | ) | (247 | ) | |||||||||
Depreciation and amortization2 | 81 | 39 | 23 | 198 | 11 | 352 | ||||||||||||
ARO Expense | 11 | 14 | 1 | - | - | 26 | ||||||||||||
Contract and emission credit amortization, net | 5 | (4 | ) | 4 | - | - | 5 | |||||||||||
EBITDA | (958 | ) | 139 | 183 | 235 | (25 | ) | (426 | ) | |||||||||
Stock-based compensation | 6 | 2 | 2 | 15 | - | 25 | ||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | - | - | 2 | - | - | 2 | ||||||||||||
Acquisition and divestiture integration and transaction costs | - | - | - | 1 | 8 | 9 | ||||||||||||
Cost to achieve | - | - | - | - | 6 | 6 | ||||||||||||
Deactivation costs | - | 4 | - | - | - | 4 | ||||||||||||
(Gain) on sale of assets | - | - | (208 | ) | - | - | (208 | ) | ||||||||||
Other and non-recurring charges | (1 | ) | 10 | - | 6 | (2 | ) | 13 | ||||||||||
Mark to market (MtM) losses on economic hedges | 1,537 | 9 | 84 | - | - | 1,630 | ||||||||||||
Adjusted EBITDA | $ | 584 | $ | 164 | $ | 63 | $ | 257 | $ | (13 | ) | $ | 1,055 | |||||
Interest expense, net | (205 | ) | ||||||||||||||||
Depreciation and amortization | (352 | ) | ||||||||||||||||
Adjusted Income before income taxes | 498 | |||||||||||||||||
Adjusted income tax3 | (88 | ) | ||||||||||||||||
Adjusted Net Income before Preferred Stock dividends | 410 | |||||||||||||||||
Cumulative dividends attributable to Series A Preferred Stock | (17 | ) | ||||||||||||||||
Adjusted Net Income4 | 393 | |||||||||||||||||
Weighted average number of common shares outstanding - basic | 207 | |||||||||||||||||
Adjusted EPS | $ | 1.90 | ||||||||||||||||
1 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
2 Depreciation and amortization recast to include impact of amortization of capitalized contract costs |
3 Income tax calculated using Adjusted effective tax rate (ETR) on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods |
4 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
Third Quarter 2024 condensed financial information by Operating Segment:
($ in millions) | Texas | East | West/Services/ Other | Vivint Smart Home | Corp/Elim | Total | ||||||||||||
Revenue1 | $ | 3,301 | $ | 2,606 | $ | 828 | $ | 499 | $ | (11 | ) | $ | 7,223 | |||||
Cost of fuel, purchased power and other cost of sales2 | 2,222 | 2,166 | 651 | 37 | (5 | ) | 5,071 | |||||||||||
Economic gross margin | 1,079 | 440 | 177 | 462 | (6 | ) | 2,152 | |||||||||||
Operations & maintenance and other cost of operations3 | 240 | 119 | 64 | 66 | 2 | 491 | ||||||||||||
Selling, marketing, general and administrative4 | 255 | 154 | 64 | 138 | 3 | 614 | ||||||||||||
Other | - | 3 | (14 | ) | 1 | 2 | (8 | ) | ||||||||||
Adjusted EBITDA | $ | 584 | $ | 164 | $ | 63 | $ | 257 | $ | (13 | ) | $ | 1,055 | |||||
1 Excludes MtM gain of $(8) million and contract amortization of $8 million |
2 Includes TDSP expense, capacity and emission credits |
3 Excludes ARO expenses of $26 million, other and non-recurring charges of $10 million, deactivation costs of $4 million and stock-based compensation of $2 million |
4 Excludes stock-based compensation of $23 million, cost to achieve of $6 million, acquisition and divestiture integration and transaction costs of $3 million and other and non-recurring charges of $(1) million |
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) | Condensed Consolidated Results of Operations | Interest, tax, depr., amort. | MtM | Deactivation | Other adj.2 | Adjusted EBITDA | ||||||||||||
Revenue | $ | 7,223 | $ | 8 | $ | (8 | ) | $ | - | $ | - | $ | 7,223 | |||||
Cost of operations (excluding depreciation and amortization shown below)1 | 6,706 | 3 | (1,638 | ) | - | - | 5,071 | |||||||||||
Depreciation and Amortization | 352 | (352 | ) | - | - | - | - | |||||||||||
Gross margin | 165 | 357 | 1,630 | - | - | 2,152 | ||||||||||||
Operations & maintenance and other cost of operations | 533 | - | - | (4 | ) | (38 | ) | 491 | ||||||||||
Selling, marketing, general & administrative | 645 | - | - | - | (31 | ) | 614 | |||||||||||
Other | (246 | ) | 42 | - | - | 196 | (8 | ) | ||||||||||
Net (Loss)/Income | $ | (767 | ) | $ | 315 | $ | 1,630 | $ | 4 | $ | (127 | ) | $ | 1,055 | ||||
1 Excludes operations & maintenance and other cost of operations of $533 million |
2 Other adj. includes ARO expenses of $26 million, stock-based compensation of $25 million, other and non-recurring charges of $13 million, acquisition and divestiture integration and transaction costs of $9 million, cost to achieve of $6 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $2 million and gain on sale of assets of $(208) million |
Appendix Table A-2: Third Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS Reconciliation
The following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:
($ in millions, except per share amounts) | Texas | East | West/Services/ Other | Vivint Smart Home | Corp/Elim | Total | ||||||||||||
Net Income/(Loss) | $ | 463 | $ | 316 | $ | (168 | ) | $ | (4 | ) | $ | (264 | ) | $ | 343 | |||
Plus: | ||||||||||||||||||
Interest expense, net | (1 | ) | (2 | ) | 6 | 43 | 109 | 155 | ||||||||||
Income tax | - | (2 | ) | (37 | ) | (20 | ) | 124 | 65 | |||||||||
Depreciation and amortization2 | 84 | 39 | 24 | 203 | 9 | 359 | ||||||||||||
ARO Expense | 3 | 6 | - | - | - | 9 | ||||||||||||
Contract and emission credit amortization, net | 5 | (16 | ) | 4 | - | - | (7 | ) | ||||||||||
EBITDA | 554 | 341 | (171 | ) | 222 | (22 | ) | 924 | ||||||||||
Stock-based compensation | 4 | 2 | 1 | 19 | - | 26 | ||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | - | - | 3 | - | - | 3 | ||||||||||||
Acquisition and divestiture integration and transaction costs | - | - | - | 2 | 18 | 20 | ||||||||||||
Deactivation costs | - | 9 | 2 | - | - | 11 | ||||||||||||
Other and non-recurring charges3 | (48 | ) | 3 | (2 | ) | (4 | ) | 1 | (50 | ) | ||||||||
Mark to market (MtM) losses/(gains) on economic hedges | 42 | (184 | ) | 195 | - | - | 53 | |||||||||||
Adjusted EBITDA | $ | 552 | $ | 171 | $ | 28 | $ | 239 | $ | (3 | ) | $ | 987 | |||||
Interest expense, net | (155 | ) | ||||||||||||||||
Depreciation and amortization | (359 | ) | ||||||||||||||||
Adjusted Income before income taxes | 473 | |||||||||||||||||
Adjusted income tax4 | (96 | ) | ||||||||||||||||
Adjusted Net Income before Preferred Stock dividends | 377 | |||||||||||||||||
Cumulative dividends attributable to Series A Preferred Stock | (17 | ) | ||||||||||||||||
Adjusted Net Income5 | 360 | |||||||||||||||||
Weighted average number of common shares outstanding - basic | 230 | |||||||||||||||||
Adjusted EPS | $ | 1.57 | ||||||||||||||||
1 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
2 Depreciation and amortization recast to include impact of amortization of capitalized contract costs |
3 Other and non-recurring includes $(50) million of property insurance proceeds |
4 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods |
5 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
Third Quarter 2023 condensed financial information by Operating Segment:
($ in millions) | Texas | East | West/Services/ Other | Vivint Smart Home | Corp/Elim | Total | ||||||||||||
Revenue1 | $ | 3,686 | $ | 2,875 | $ | 987 | $ | 478 | $ | (5 | ) | $ | 8,021 | |||||
Cost of fuel, purchased power and other cost of sales2 | 2,659 | 2,449 | 844 | 36 | (3 | ) | 5,985 | |||||||||||
Economic gross margin | 1,027 | 426 | 143 | 442 | (2 | ) | 2,036 | |||||||||||
Operations & maintenance and other cost of operations3 | 256 | 110 | 58 | 56 | (1 | ) | 479 | |||||||||||
Selling, marketing, general & administrative4 | 221 | 143 | 64 | 146 | 3 | 577 | ||||||||||||
Other | (2 | ) | 2 | (7 | ) | 1 | (1 | ) | (7 | ) | ||||||||
Adjusted EBITDA | $ | 552 | $ | 171 | $ | 28 | $ | 239 | $ | (3 | ) | $ | 987 | |||||
1 Excludes MtM loss of $70 million and contract amortization of $5 million |
2 Includes TDSP expense, capacity and emission credits |
3 Excludes other and non-recurring charges of $(51) million, deactivation costs of $11 million, ARO expense of $9 million and stock-based compensation of $2 million |
4 Excludes stock-based compensation of $24 million, acquisition and divestiture integration and transaction costs of $2 million and other non-recurring charges of $(1) million |
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) | Condensed Consolidated Results of Operations | Interest, tax, depr., amort. | MtM | Deactivation | Other adj.2 | Adjusted EBITDA | ||||||||||||
Revenue | $ | 7,946 | $ | 5 | $ | 70 | $ | - | $ | - | $ | 8,021 | ||||||
Cost of operations (excluding depreciation and amortization shown below)1 | 5,956 | 12 | 17 | - | - | 5,985 | ||||||||||||
Depreciation and amortization | 359 | (359 | ) | - | - | - | - | |||||||||||
Gross margin | 1,631 | 352 | 53 | - | - | 2,036 | ||||||||||||
Operations & maintenance and other cost of operations | 450 | - | - | (11 | ) | 40 | 479 | |||||||||||
Selling, marketing, general & administrative | 602 | - | - | - | (25 | ) | 577 | |||||||||||
Other | 236 | (220 | ) | - | - | (23 | ) | (7 | ) | |||||||||
Net Income | $ | 343 | $ | 572 | $ | 53 | $ | 11 | $ | 8 | $ | 987 | ||||||
1 Excludes operations & maintenance and other cost of operations of $450 million |
2 Other adj. includes stock-based compensation of $26 million, acquisition and divestiture integration and transaction costs of $20 million, ARO expenses of $9 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $3 million and other and non-recurring charges of $(50) million |
Appendix Table A-3: Third Quarter 2024 and 2023 Adjusted Net Income and Adjusted EPS Reconciliations
The following table summarizes the calculation of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net (Loss)/Income1:
Three Months Ended | |||||||||||||||||||
($ in millions, except per share amounts) | September 30, 2024 | Earnings/(Loss) per Share, Basic2 | Earnings/(Loss) per Share, Diluted2 | September 30, 2023 | Earnings per Share, Basic2 | Earnings per Share, Diluted2 | |||||||||||||
Net (Loss)/Income Available for Common Stockholders | $ | (784 | ) | $ | (3.79 | ) | $ | (3.79 | ) | $ | 326 | $ | 1.42 | $ | 1.41 | ||||
Plus: | |||||||||||||||||||
Dilutive impact adjustment on Net (Loss) Available for Common Stockholders3 | 0.09 | ||||||||||||||||||
Cumulative dividends attributable to Series A Preferred Stock | 17 | 0.08 | 0.08 | 17 | 0.07 | 0.07 | |||||||||||||
ARO expense | 26 | 0.13 | 0.12 | 9 | 0.04 | 0.04 | |||||||||||||
Contract and emission credit amortization, net | 5 | 0.02 | 0.02 | (7 | ) | (0.03 | ) | (0.03 | ) | ||||||||||
Stock-based compensation | 25 | 0.12 | 0.12 | 26 | 0.11 | 0.11 | |||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | 2 | 0.01 | 0.01 | 3 | 0.01 | 0.01 | |||||||||||||
Acquisition and divestiture integration and transaction costs | 9 | 0.04 | 0.04 | 20 | 0.09 | 0.09 | |||||||||||||
Cost to achieve | 6 | 0.03 | 0.03 | - | - | - | |||||||||||||
Deactivation costs | 4 | 0.02 | 0.02 | 11 | 0.05 | 0.05 | |||||||||||||
(Gain) on sale of assets | (208 | ) | (1.00 | ) | (0.98 | ) | - | - | - | ||||||||||
Other and non-recurring charges4 | 13 | 0.06 | 0.06 | (50 | ) | (0.22 | ) | (0.22 | ) | ||||||||||
Mark to market (MtM) loss on economic hedges | 1,630 | 7.87 | 7.69 | 53 | 0.23 | 0.23 | |||||||||||||
Income Tax5 | (247 | ) | (1.19 | ) | (1.17 | ) | 65 | 0.28 | 0.28 | ||||||||||
Adjusted Income before income taxes | 498 | $ | 2.41 | $ | 2.35 | 473 | $ | 2.06 | $ | 2.04 | |||||||||
Adjusted income tax6 | (88 | ) | (0.43 | ) | (0.42 | ) | (96 | ) | (0.42 | ) | (0.41 | ) | |||||||
Adjusted Net Income before Preferred Stock dividends | 410 | $ | 1.98 | $ | 1.93 | 377 | $ | 1.64 | $ | 1.63 | |||||||||
Cumulative dividends attributable to Series A Preferred Stock | (17 | ) | (0.08 | ) | (0.08 | ) | (17 | ) | (0.07 | ) | (0.07 | ) | |||||||
Adjusted Net Income7 | $ | 393 | $ | 1.90 | $ | 1.85 | $ | 360 | $ | 1.57 | $ | 1.55 | |||||||
1 Items may not sum due to rounding |
2 Earnings per share amounts are based on weighted average number of common shares outstanding - basic of 207 million and 230 million for the three months ended September 30, 2024 and 2023, respectively, and on weighted average number of common shares outstanding - diluted of 212 million and 232 million for the three months ended September 30, 2024 and 2023, respectively |
3 Includes the potential dilutive impacts of the Convertible Senior Notes of 3 million shares and equity compensation of 2 million shares for the three months ended September 30, 2024. Under GAAP when there is a net loss, dilutive securities are not included in the diluted share count as they are anti-dilutive. As Adjusted Net Income is in an income position and not a loss position, this line item reflects the impact of the anti-dilutive securities as if they were dilutive |
4 2023 other and non-recurring includes $(50) million of property insurance proceeds |
5 Represents GAAP income tax |
6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis |
7 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
Appendix Table A-4: YTD Third Quarter 2024 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS Reconciliation
The following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:
($ in millions, except per share amounts) | Texas | East | West/ Services/ Other | Vivint Smart Home | Corp/Elim | Total | ||||||||||||
Net Income/(Loss) | $ | 259 | $ | 1,116 | $ | 90 | $ | (51 | ) | $ | (932 | ) | $ | 482 | ||||
Plus: | ||||||||||||||||||
Interest expense, net | 2 | 3 | 21 | 161 | 299 | 486 | ||||||||||||
Income tax | - | - | (21 | ) | (8 | ) | 280 | 251 | ||||||||||
Loss on debt extinguishment | - | - | - | - | 260 | 260 | ||||||||||||
Depreciation and amortization2 | 240 | 117 | 96 | 561 | 31 | 1,045 | ||||||||||||
ARO expense | 15 | 13 | 1 | - | - | 29 | ||||||||||||
Contract and emission credit amortization, net | 7 | 54 | 7 | - | - | 68 | ||||||||||||
EBITDA | 523 | 1,303 | 194 | 663 | (62 | ) | 2,621 | |||||||||||
Stock-based compensation3 | 20 | 9 | 4 | 46 | - | 79 | ||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | - | - | 3 | - | - | 3 | ||||||||||||
Acquisition and divestiture integration and transaction costs4 | - | - | - | 9 | 18 | 27 | ||||||||||||
Cost to achieve5 | - | - | - | - | 23 | 23 | ||||||||||||
Deactivation costs | - | 13 | 2 | - | - | 15 | ||||||||||||
Loss/(gain) on sale of assets | 4 | - | (208 | ) | - | - | (204 | ) | ||||||||||
Other and non-recurring charges | 1 | 9 | 12 | 11 | (8 | ) | 25 | |||||||||||
Impairments | - | - | 15 | - | - | 15 | ||||||||||||
Mark to market (MtM) losses/(gains) on economic hedges | 707 | (610 | ) | 186 | - | - | 283 | |||||||||||
Adjusted EBITDA | $ | 1,255 | $ | 724 | $ | 208 | $ | 729 | $ | (29 | ) | $ | 2,887 | |||||
Interest expense, net | (486 | ) | ||||||||||||||||
Depreciation and amortization | (1,045 | ) | ||||||||||||||||
Adjusted Income before income taxes | 1,356 | |||||||||||||||||
Adjusted income tax6 | (239 | ) | ||||||||||||||||
Adjusted Net Income before Preferred Stock dividends | 1,117 | |||||||||||||||||
Cumulative dividends attributable to Series A Preferred Stock | (51 | ) | ||||||||||||||||
Adjusted Net Income7 | 1,066 | |||||||||||||||||
Weighted average number of common shares outstanding - basic | 207 | |||||||||||||||||
Adjusted EPS | $ | 5.15 | ||||||||||||||||
1 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
2 Depreciation and amortization recast to include impact of amortization of capitalized contract costs |
3 Stock-based compensation excludes $2 million reflected in cost to achieve and $1 million reflected in acquisition and divestiture integration and transaction costs |
4 Includes stock-based compensation of $1 million |
5 Includes stock-based compensation of $2 million |
6Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods |
7Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
YTD Third Quarter 2024 condensed financial information by Operating Segment:
($ in millions) | Texas | East | West/ Services/ Other | Vivint Smart Home | Corp/Elim | Total | ||||||||||||
Revenue1 | $ | 8,297 | $ | 8,655 | $ | 2,950 | $ | 1,434 | $ | (32 | ) | $ | 21,304 | |||||
Cost of fuel, purchased power and other cost of sales2 | 5,683 | 7,176 | 2,421 | 108 | (17 | ) | 15,371 | |||||||||||
Economic gross margin | 2,614 | 1,479 | 529 | 1,326 | (15 | ) | 5,933 | |||||||||||
Operations & maintenance and other cost of operations3 | 754 | 327 | 177 | 178 | 3 | 1,439 | ||||||||||||
Selling, general and administrative costs4 | 604 | 426 | 182 | 419 | 6 | 1,637 | ||||||||||||
Other | 1 | 2 | (38 | ) | - | 5 | (30 | ) | ||||||||||
Adjusted EBITDA | $ | 1,255 | $ | 724 | $ | 208 | $ | 729 | $ | (29 | ) | $ | 2,887 | |||||
1 Excludes MtM gain of $(32) million and contract amortization of $25 million |
2 Includes TDSP expense, capacity and emission credits |
3 Excludes ARO expense of $29 million, deactivation costs of $15 million, other and non-recurring charges of $10 million and stock-based compensation of $7 million |
4 Excludes stock-based compensation of $72 million, cost to achieve of $23 million, acquisition and divestiture integration and transaction costs of $5 million and other and non-recurring charges of $2 million |
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) | Condensed Consolidated Results of Operations | Interest, tax, depr., amort. | MtM | Deactivation | Other adj.2 | Adjusted EBITDA | ||||||||||||
Revenue | $ | 21,311 | $ | 25 | $ | (32 | ) | $ | - | $ | - | $ | 21,304 | |||||
Cost of operations (excluding depreciation and amortization shown below)1 | 15,729 | (43 | ) | (315 | ) | - | - | 15,371 | ||||||||||
Depreciation and amortization | 1,045 | (1,045 | ) | - | - | - | - | |||||||||||
Gross margin | 4,537 | 1,113 | 283 | - | - | 5,933 | ||||||||||||
Operations & maintenance and other cost of operations | 1,500 | - | - | (15 | ) | (46 | ) | 1,439 | ||||||||||
Selling, general and administrative costs | 1,739 | - | - | - | (102 | ) | 1,637 | |||||||||||
Other | 816 | (737 | ) | - | - | (109 | ) | (30 | ) | |||||||||
Net Income | $ | 482 | $ | 1,850 | $ | 283 | $ | 15 | $ | 257 | $ | 2,887 | ||||||
1 Excludes operations & maintenance and other cost of operations of $1,500 million |
2 Other adj. includes loss on debt extinguishment of $260 million, stock-based compensation of $79 million, ARO expense of $29 million, acquisition and divestiture integration and transaction costs of $27 million, other and non-recurring charges of $25 million, cost to achieve of $23 million, impairments of $15 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $3 million and gain on sale of assets $(204) million |
Appendix Table A-5: YTD Third Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS Reconciliation
The following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:
($ in millions, except per share amounts) | Texas | East | West/ Services/ Other | Vivint Smart Home2 | Corp/Elim | Total | ||||||||||||
Net Income/(Loss) | $ | 1,532 | $ | (1,187 | ) | $ | (601 | ) | $ | (66 | ) | $ | (362 | ) | $ | (684 | ) | |
Plus: | ||||||||||||||||||
Interest expense, net | 2 | (12 | ) | 18 | 97 | 319 | 424 | |||||||||||
Income tax | - | (1 | ) | (83 | ) | (20 | ) | (78 | ) | (182 | ) | |||||||
Depreciation and amortization3 | 257 | 122 | 73 | 442 | 27 | 921 | ||||||||||||
ARO expense | 7 | 7 | - | - | - | 14 | ||||||||||||
Contract and emission credit amortization, net | 9 | 83 | 10 | - | - | 102 | ||||||||||||
EBITDA | 1,807 | (988 | ) | (583 | ) | 453 | (94 | ) | 595 | |||||||||
Stock-based compensation4 | 15 | 6 | 3 | 41 | - | 65 | ||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | - | - | 11 | - | - | 11 | ||||||||||||
Acquisition and divestiture integration and transaction costs5 | - | - | - | 39 | 76 | 115 | ||||||||||||
Deactivation costs | - | 19 | 8 | - | - | 27 | ||||||||||||
(Gain) on sale of assets | - | (202 | ) | - | - | - | (202 | ) | ||||||||||
Other and non-recurring charges6 | (91 | ) | 4 | (2 | ) | 2 | 1 | (86 | ) | |||||||||
Mark to market (MtM) (gains)/losses on economic hedges | (421 | ) | 1,723 | 631 | - | - | 1,933 | |||||||||||
Adjusted EBITDA | $ | 1,310 | $ | 562 | $ | 68 | $ | 535 | $ | (17 | ) | $ | 2,458 | |||||
Interest expense, net | (424 | ) | ||||||||||||||||
Depreciation and amortization | (921 | ) | ||||||||||||||||
Adjusted Income before income taxes | 1,113 | |||||||||||||||||
Adjusted income tax7 | (226 | ) | ||||||||||||||||
Adjusted Net Income before Preferred Stock dividends | 887 | |||||||||||||||||
Cumulative dividends attributable to Series A Preferred Stock | (38 | ) | ||||||||||||||||
Adjusted Net Income8 | 849 | |||||||||||||||||
Weighted average number of common shares outstanding - basic | 230 | |||||||||||||||||
Adjusted EPS | $ | 3.69 | ||||||||||||||||
1 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
2 Vivint Smart Home acquired in March 2023 |
3 Depreciation and amortization recast to include impact of amortization of capitalized contract costs |
4 Stock-based compensation excludes $23 million reflected in acquisition and divestiture integration and transaction costs |
5 Includes stock-based compensation of $23 million |
6 Other and non-recurring includes $(96) million of property insurance proceeds |
7 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods |
8 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
YTD Third Quarter 2023 condensed financial information by Operating Segment:
($ in millions) | Texas | East | West/ Services/ Other | Vivint Smart Home1 | Corp/Elim | Total | ||||||||||||
Revenue2 | $ | 8,235 | $ | 9,485 | $ | 3,164 | $ | 1,070 | $ | (10 | ) | $ | 21,944 | |||||
Cost of fuel, purchased power and other cost of sales3 | 5,613 | 8,193 | 2,771 | 82 | (6 | ) | 16,653 | |||||||||||
Economic gross margin | 2,622 | 1,292 | 393 | 988 | (4 | ) | 5,291 | |||||||||||
Operations & maintenance and other cost of operations4 | 785 | 330 | 185 | 127 | (3 | ) | 1,424 | |||||||||||
Selling, marketing, general & administrative5 | 530 | 401 | 165 | 326 | 15 | 1,437 | ||||||||||||
Other | (3 | ) | (1 | ) | (25 | ) | - | 1 | (28 | ) | ||||||||
Adjusted EBITDA | $ | 1,310 | $ | 562 | $ | 68 | $ | 535 | $ | (17 | ) | $ | 2,458 | |||||
1 Vivint Smart Home acquired in March 2023 |
2 Excludes MtM gain of $(96) million and contract amortization of $24 million |
3 Includes TDSP expense, capacity and emission credits |
4 Excludes other and non-recurring charges of $(93) million, deactivation costs of $27 million, ARO expense of $14 million and stock-based compensation of $5 million |
5 Excludes stock-based compensation of $60 million, acquisition and divestiture integration and transaction costs of $4 million and other and non-recurring charges of $1 million |
The following table reconciles the condensed financial information to Adjusted EBITDA:
($ in millions) | Condensed Consolidated Results of Operations | Interest, tax, depr., amort. | MtM | Deactivation | Other adj.2 | Adjusted EBITDA | ||||||||||||
Revenue | $ | 22,016 | $ | 24 | $ | (96 | ) | $ | - | $ | - | $ | 21,944 | |||||
Cost of operations (excluding depreciation and amortization shown below)1 | 18,760 | (78 | ) | (2,029 | ) | - | - | 16,653 | ||||||||||
Depreciation and amortization | 921 | (921 | ) | - | - | - | - | |||||||||||
Gross margin | 2,335 | 1,023 | 1,933 | - | - | 5,291 | ||||||||||||
Operations & maintenance and Other cost of operations | 1,377 | - | - | (27 | ) | 74 | 1,424 | |||||||||||
Selling, marketing, general & administrative | 1,502 | - | - | - | (65 | ) | 1,437 | |||||||||||
Other | 140 | (242 | ) | - | - | 74 | (28 | ) | ||||||||||
Net (Loss)/Income | $ | (684 | ) | $ | 1,265 | $ | 1,933 | $ | 27 | $ | (83 | ) | $ | 2,458 | ||||
1 Excludes operations & maintenance and other cost of operations of $1,377 million |
2 Other adj. includes acquisition and divestiture integration and transaction costs of $115 million, stock-based compensation costs of $65 million, ARO expense of $14 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $11 million, gain on sale of assets of $(202) million and other and non-recurring charges of $(86) million |
Appendix Table A-6: YTD Third Quarter 2024 and 2023 Adjusted Net Income and Adjusted EPS Reconciliations
The following table summarizes the calculation of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:
Nine Months Ended | |||||||||||||||||||
($ in millions, except per share amounts) | September 30, 2024 | Earnings per Share, Basic2 | Earnings per Share, Diluted2 | September 30, 2023 | Earnings/(Loss) per Share, Basic2 | Earnings/(Loss) per Share, Diluted2 | |||||||||||||
Net Income/(Loss) Available for Common Stockholders | $ | 431 | $ | 2.08 | $ | 2.02 | $ | (722 | ) | $ | (3.14 | ) | $ | (3.14 | ) | ||||
Plus: | |||||||||||||||||||
Dilutive impact adjustment on Net (Loss) Available for Common Stockholders3 | 0.01 | ||||||||||||||||||
Cumulative dividends attributable to Series A Preferred Stock | 51 | 0.25 | 0.24 | 38 | 0.17 | 0.16 | |||||||||||||
Loss on debt extinguishment | 260 | 1.26 | 1.22 | - | - | - | |||||||||||||
ARO expense | 29 | 0.14 | 0.14 | 14 | 0.06 | 0.06 | |||||||||||||
Contract and emission credit amortization, net | 68 | 0.33 | 0.32 | 102 | 0.44 | 0.44 | |||||||||||||
Stock-based compensation4 | 79 | 0.38 | 0.37 | 65 | 0.28 | 0.28 | |||||||||||||
Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates | 3 | 0.01 | 0.01 | 11 | 0.05 | 0.05 | |||||||||||||
Acquisition and divestiture integration and transaction costs5 | 27 | 0.13 | 0.13 | 115 | 0.50 | 0.50 | |||||||||||||
Cost to achieve6 | 23 | 0.11 | 0.11 | - | - | - | |||||||||||||
Deactivation costs | 15 | 0.07 | 0.07 | 27 | 0.12 | 0.12 | |||||||||||||
(Gain) on sale of assets | (204 | ) | (0.99 | ) | (0.96 | ) | (202 | ) | (0.88 | ) | (0.87 | ) | |||||||
Other and non-recurring charges7 | 25 | 0.12 | 0.12 | (86 | ) | (0.37 | ) | (0.37 | ) | ||||||||||
Impairments | 15 | 0.07 | 0.07 | - | - | - | |||||||||||||
Mark to market (MtM) loss on economic hedges | 283 | 1.37 | 1.33 | 1,933 | 8.40 | 8.37 | |||||||||||||
Income Tax8 | 251 | 1.21 | 1.18 | (182 | ) | (0.79 | ) | (0.79 | ) | ||||||||||
Adjusted Income before income taxes | 1,356 | $ | 6.55 | $ | 6.37 | 1,113 | $ | 4.84 | $ | 4.82 | |||||||||
Adjusted income tax9 | (239 | ) | (1.15 | ) | (1.12 | ) | (226 | ) | (0.98 | ) | (0.98 | ) | |||||||
Adjusted Net Income before Preferred Stock dividends | 1,117 | $ | 5.40 | $ | 5.24 | 887 | $ | 3.86 | $ | 3.84 | |||||||||
Cumulative dividends attributable to Series A Preferred Stock | (51 | ) | (0.25 | ) | (0.24 | ) | (38 | ) | (0.17 | ) | (0.16 | ) | |||||||
Adjusted Net Income10 | $ | 1,066 | $ | 5.15 | $ | 5.00 | $ | 849 | $ | 3.69 | $ | 3.68 | |||||||
1 Items may not sum due to rounding |
2 Earnings per share amounts are based on weighted average number of common shares outstanding - basic of 207 million and 230 million for the nine months ended September 30, 2024 and 2023, respectively, and on weighted average number of common shares outstanding - diluted of 213 million and 231 million for the nine months ended September 30, 2024 and 2023, respectively |
3 Includes the potential dilutive impact of equity compensation of 1 million shares for the nine months ended September 30, 2023. Per GAAP when there is a net loss, dilutive securities are not included in the diluted share count as they are anti-dilutive. As Adjusted Net Income is in an income position and not a loss position, this line item reflects the impact of the anti-dilutive securities as if they were dilutive |
4 2024 stock-based compensation excludes $2 million reflected in cost to achieve and $1 million reflected in acquisition and divestiture integration and transaction; 2023 stock-based compensation excludes $23 million reflected in acquisition and divestiture integration and transaction costs |
5 2024 includes stock-based compensation of $1 million; 2023 includes stock-based compensation of $23 million |
6 2024 includes stock-based compensation of $2 million |
7 2023 other and non-recurring includes $(96) million of property insurance proceeds |
8 Represents GAAP income tax |
9 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis |
10 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
Appendix Table A-7: Three Months Ended September 30, 2024 and 2023 Free Cash Flow before Growth Investments (FCFbG)
The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash provided by operating activities and Adjusted Net Income:
Three Months Ended | ||||||||
($ in millions) | 9/30/24 | 9/30/23 | ||||||
Adjusted Net Income | $ | 393 | $ | 360 | ||||
Cumulative dividends attributable to Series A Preferred Stock | 17 | 17 | ||||||
Interest payments (in excess of)/less than expense | 28 | (36 | ) | |||||
Depreciation and amortization | 352 | 359 | ||||||
Income tax payments less than expense | 82 | 88 | ||||||
Gross capitalized contract costs1 | (259 | ) | (265 | ) | ||||
Collateral / working capital / other assets and liabilities2 | (582 | ) | 43 | |||||
Cash provided by operating activities | 31 | 566 | ||||||
Net receipts from settlement of acquired derivatives that include financing elements | 10 | 14 | ||||||
Acquisition and divestiture integration and transaction costs3 | 28 | 20 | ||||||
GenOn pension | 18 | - | ||||||
Adjustment for change in collateral | 740 | (167 | ) | |||||
Nuclear decommissioning trust liability | - | (8 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 1 | (3 | ) | |||||
Adjusted cash provided by operating activities | 828 | 422 | ||||||
Maintenance capital expenditures, net4 | (55 | ) | (102 | ) | ||||
Environmental capital expenditures | (7 | ) | (1 | ) | ||||
Cost of acquisition | 49 | 36 | ||||||
Free Cash Flow before Growth Investments (FCFbG) | $ | 815 | $ | 355 | ||||
1 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit to depreciation and amortization |
2 Includes the cash impact of Net deferred revenue |
3 Three months ended 9/30/24 includes $6 million Cost to achieve payments |
4 Three months ended 9/30/23 includes W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment of $52 million |
Appendix Table A-8: Nine Months Ended September 30, 2024 and 2023 Free Cash Flow before Growth Investments (FCFbG)
The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash provided/(used) by operating activities and Adjusted Net Income:
Nine Months Ended | ||||||||
($ in millions) | 9/30/24 | 9/30/23 | ||||||
Adjusted Net Income | $ | 1,066 | $ | 849 | ||||
Cumulative dividends attributable to Series A Preferred Stock | 51 | 38 | ||||||
Interest payments less than expense | 34 | 28 | ||||||
Depreciation and amortization | 1,045 | 921 | ||||||
Income tax payments less than expense | 127 | 186 | ||||||
Gross capitalized contract costs1 | (698 | ) | (622 | ) | ||||
Collateral/working capital/other assets and liabilities2 | (271 | ) | (1,862 | ) | ||||
Cash provided by/(used by) operating activities | 1,354 | (462 | ) | |||||
Net (payments)/receipts from settlement of acquired derivatives that include financing elements | (2 | ) | 332 | |||||
Acquisition and divestiture integration and transaction costs3 | 63 | 95 | ||||||
Astoria fees | - | 3 | ||||||
Proceeds from sale of land | 9 | - | ||||||
GenOn pension | 18 | - | ||||||
Encina site improvement | - | 7 | ||||||
Adjustment for change in collateral | 80 | 1,188 | ||||||
Nuclear decommissioning trust liability | - | (13 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 1 | - | ||||||
Adjusted cash provided by operating activities | 1,523 | 1,150 | ||||||
Maintenance capital expenditures, net4 | (178 | ) | (256 | ) | ||||
Environmental capital expenditures | (15 | ) | (1 | ) | ||||
Cost of acquisition | 108 | 90 | ||||||
Free Cash Flow before Growth Investments (FCFbG) | $ | 1,438 | $ | 983 | ||||
1 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit to depreciation and amortization |
2 Includes the cash impact of Net deferred revenue |
3 Nine months ended 9/30/24 includes $23 million Cost to achieve payments and excludes $3 million non-cash stock-based compensation; nine months ended 9/30/23 excludes $23 million non-cash stock-based compensation |
4 Nine months ended 9/30/24 includes W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment of $3 million; nine months ended 9/30/23 includes W.A. Parish Unit 8 and Limestone Unit 1 insurance recoveries related to property, plant and equipment of $173 million |
Appendix Table A-9: Nine Months Ended September 30, 2024 Sources and Uses of Liquidity
The following table summarizes the sources and uses of liquidity for the nine months ended September 30, 2024:
($ in millions) | Nine months ended September 30, 2024 | ||
Sources: | |||
Adjusted cash provided by operating activities | $ | 1,523 | |
Change in availability under revolving credit facility and collective collateral facilities | 1,052 | ||
Proceeds from issuance of long-term debt | 875 | ||
Proceeds from sales of assets, net of cash disposed | 495 | ||
Uses: | |||
Repayments of long-term debt and finance leases | (960 | ) | |
Payments of dividends to preferred and common stockholders | (322 | ) | |
Payments for share repurchase activity | (316 | ) | |
Payments for debt extinguishment costs | (258 | ) | |
Maintenance and environmental capital expenditures, net1 | (192 | ) | |
Investments and integration capital expenditures | (91 | ) | |
Acquisition and divestiture integration and transaction costs | (58 | ) | |
Payments for shares repurchased in lieu of tax withholdings | (45 | ) | |
Payments for acquisitions of businesses and assets, net of cash acquired | (33 | ) | |
Net purchases of emission allowances | (16 | ) | |
Payments of debt issuance costs | (13 | ) | |
Cash collateral paid in support of energy risk management activities | (8 | ) | |
Other investing and financing | (32 | ) | |
Change in Total Liquidity | $ | 1,601 | |
1 Includes $3 million of W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment |
Appendix Table A-10: Guidance Reconciliations
The following table summarizes the 2024 Original and Raised Guidance calculations of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income1:
2024 Original | 2024 Raised | 2025 | ||||
($ in millions, except per share amounts) | Guidance | Guidance | Guidance | |||
Net Income2 | $750 - $1,000 | $925 - $1,075 | $1,025 - $1,225 | |||
Interest expense, net | 640 | 640 | 635 | |||
Income tax3 | 345 | 395 | 390 - 440 | |||
Depreciation and amortization4 | 1,420 | 1,420 | 1,400 | |||
ARO expense | 25 | 25 | 25 | |||
Stock-based compensation | 100 | 100 | 100 | |||
Acquisition and divestiture integration and transaction costs | 55 | 55 | 20 | |||
Other5 | 95 | 95 | 130 | |||
Adjusted EBITDA | $3,430 - $3,680 | $3,655 - $3,805 | $3,725 - $3,975 | |||
Interest expense, net | (640) | (640) | (635) | |||
Depreciation and amortization | (1,420) | (1,420) | (1,400) | |||
Adjusted Income before income taxes | $1,370 - $1,620 | $1,595 - $1,745 | $1,690 - $1,940 | |||
Adjusted income tax expense6 | (263) | (293) | (293) - (343) | |||
Adjusted Net Income before Preferred Stock dividends | $1,107 - $1,357 | $1,302 - $1,452 | $1,397 - 1,597 | |||
Cumulative dividends attributable to Series A Preferred Stock | (67) | (67) | (67) | |||
Adjusted Net Income7 | $1,040 - $1,290 | $1,235 - $1,385 | $1,330 - $1,530 | |||
Weighted average number of common shares outstanding - basic | 206 | 206 | 197 | |||
Adjusted EPS | $5.00 - $6.30 | $5.95 - $6.75 | $6.75 - $7.75 |
1 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization |
2 The Company does not guide to Net Income due to the impact of fair value adjustments related to derivatives in a given year. For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero |
3 Represents anticipated GAAP income tax |
4 Depreciation and amortization recast to include impact of amortization of capitalized contract costs |
5 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs, other non-recurring expenses, and does not include the adjustment for loss on debt extinguishment which was $260 million as of September 30, 2024 and does not include gain on sale of Airtron of $208 million |
6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis |
7 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders'; see appendix table A-11 for GAAP Reconciliation |
Appendix Table A-11: 2024 and 2025 Guidance Adjusted Net Income and Adjusted EPS Reconciliations
The following table summarizes the 2024 Guidance calculations of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income1:
2024 Original Guidance | 2024 Raised Guidance | |||||
($ in millions, except per share amounts) | Full Year 2024 | Earnings per Share, Basic2 | Full Year 2024 | Earnings per Share, Basic2 | ||
Net Income3 | $750 - $1,000 | N/A | $925 - $1,075 | N/A | ||
Cumulative dividends attributable to Series A Preferred Stock | (67) | N/A | (67) | N/A | ||
Net Income Available for Common Stockholders | $683 - $933 | $3.25 - $4.55 | $858 - $1,008 | $4.10 - $4.90 | ||
Plus: | ||||||
Cumulative dividends attributable to Series A Preferred Stock | 67 | 0.33 | 67 | 0.33 | ||
ARO Expense | 25 | 0.12 | 25 | 0.12 | ||
Stock-based compensation | 100 | 0.49 | 100 | 0.49 | ||
Acquisition and divestiture integration and transaction costs | 55 | 0.27 | 55 | 0.27 | ||
Other4 | 95 | 0.46 | 95 | 0.46 | ||
Income Tax5 | 345 | 1.67 | 395 | 1.92 | ||
Adjusted Income before income taxes | $1,370 - $1,620 | $6.60 - $7.90 | $1,595 - $1,745 | $7.70 - $8.50 | ||
Adjusted income tax6 | (263) | (1.28) | (293) | (1.42) | ||
Adjusted Net Income before Preferred Stock dividends | $1,107 - $1,357 | $5.35 - $6.65 | $1,302 - $1,452 | $6.30 - $7.10 | ||
Cumulative dividends attributable to Series A Preferred Stock | (67) | (0.33) | (67) | (0.33) | ||
Adjusted Net Income7 | $1,040 - $1,290 | $5.00 - $6.30 | $1,235 - $1,385 | $5.95 - $6.75 | ||
1 Items may not sum due to rounding |
2 Earnings per share amount is based on weighted average number of common shares outstanding - basic of 206 million for 2024 original and 2024 raised guidance |
3 The Company does not guide to Net Income due to the impact of fair value adjustments related to derivatives in a given year. For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero |
4 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs, other non-recurring expenses, and does not include the adjustment for loss on debt extinguishment which was $260 million as of September 30, 2024 and does not include gain on sale of Airtron of $208 million |
5 Represents anticipated GAAP income tax |
6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis |
7 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
The following table summarizes the 2025 Guidance calculations of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income1:
2025 Guidance | |||
($ in millions, except per share amounts) | Full Year 2025 | Earnings per Share, Basic2 | |
Net Income3 | $1,025 - $1,225 | N/A | |
Cumulative dividends attributable to Series A Preferred Stock | (67) | N/A | |
Net Income Available for Common Stockholders | $958 - $1,158 | $4.85 - $5.85 | |
Plus: | |||
Cumulative dividends attributable to Series A Preferred Stock | 67 | 0.34 | |
ARO Expense | 25 | 0.13 | |
Stock-based compensation | 100 | 0.51 | |
Acquisition and divestiture integration and transaction costs | 20 | 0.10 | |
Other4 | 130 | 0.66 | |
Income Tax5 | 390 - 440 | 1.98 - 2.23 | |
Adjusted Income before income taxes | $1,690 - $1,940 | $8.70 - $9.70 | |
Adjusted income tax6 | (293) - (343) | (1.49) - (1.74) | |
Adjusted Net Income before Preferred Stock dividends | $1,397 - $1,597 | $7.10 - $8.10 | |
Cumulative dividends attributable to Series A Preferred Stock | (67) | (0.34) | |
Adjusted Net Income7 | $1,330 - $1,530 | $6.75 - $7.75 | |
1 Items may not sum due to rounding |
2 Earnings per share amount is based on weighted average number of common shares outstanding - basic of 197 million for 2025 guidance |
3 For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero |
4 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs and other non-recurring expenses |
5 Represents anticipated GAAP income tax |
6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG's tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis |
7 Adjusted Net Income as shown here is 'Adjusted Net Income available for common stockholders' |
Appendix Table A-12: 2024 and 2025 Guidance Reconciliations
The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to Net Income, and the calculation of FCFbG providing a reconciliation to Cash provided by operating activities and Adjusted Net Income:
2024 Original | 2024 Raised | 2025 | ||||
($ in millions) | Guidance | Guidance | Guidance | |||
Adjusted Net Income | $1,040 - 1,290 | $1,235 - 1,385 | $1,330 - 1,530 | |||
Cumulative dividends attributable to Series A preferred stock | 67 | 67 | 67 | |||
Interest payments less than expense | 40 | 40 | 25 | |||
Depreciation and amortization | 1,420 | 1,420 | 1,400 | |||
Income tax (excess of)/less than expense | 103 | 133 | 168 - 218 | |||
Gross capitalized contract costs1 | (830) | (830) | (895) | |||
Working capital/other assets and liabilities2 | (15) | (90) | (10) | |||
Cash provided by operating activities3 | 1,825 - 2,075 | 1,975 - 2,125 | 2,085 - 2,335 | |||
Acquisition and other costs2 | 124 | 124 | 35 | |||
Adjusted cash provided by operating activities | 1,949 - 2,199 | 2.099 - 2,249 | 2,120 - 2,370 | |||
Maintenance capital expenditures, net4 | (240) - (260) | (240) - (260) | (240) - (260) | |||
Environmental capital expenditures | (20) - (30) | (20) - (30) | (20) - (30) | |||
Cost of acquisition | 145 | 145 | 130 | |||
Free Cash Flow before Growth Investments (FCFbG) | $1,825 - 2,075 | $1,975 - 2,125 | $1,975 - 2,225 |
1 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation, and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit to depreciation and amortization |
2 Working capital / other assets and liabilities include payments for Acquisition and divestiture integration and transaction costs which is adjusted in Acquisition and other costs and Net deferred revenues |
3 Excludes fair value adjustments related to derivatives and changes in collateral deposits in support of risk management activities |
4 Includes W.A. Parish Unit 8 expected insurance recoveries related to property, plant and equipment |
Appendix Table A-13: Actual Full Year 2023 Adjusted EBITDA Reconciliation for Airtron
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income:
($ in millions) | Airtron (Unaudited) | ||
Net Income | $ | 29 | |
Plus: | |||
Depreciation and amortization | 28 | ||
EBITDA | 57 | ||
Other costs | 1 | ||
Adjusted EBITDA | $ | 58 | |
Non-GAAP Financial Measures
NRG reports its financial results in accordance with the accounting principles generally accepted in the United States (GAAP) and supplements with certain non-GAAP financial measures. These measures are not recognized in accordance with GAAP and should not be viewed in isolation or as an alternative to GAAP measures of performance. In addition, other companies may calculate non-GAAP financial measures differently than NRG does, limiting their usefulness as a comparative measure.
NRG uses the following non-GAAP measures to provide additional insight into financial performance:
- Adjusted EBITDA: Defined as EBITDA (earnings before interest, taxes, depreciation, and amortization, impact of asset retirement obligation expenses and contract amortization consisting of amortization of power and fuel contracts and amortization of emission allowances) with further adjustments for stock-based compensation, impairment losses, deactivation costs, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from forward position of economic hedges, gains or losses on the repurchase, modification or extinguishment of debt, restructuring costs, and other non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments or non-controlling interests. Adjusted EBITDA is intended to facilitate period-to-period comparisons and is widely used by investors for performance assessment.
- Adjusted Net Income: Defined as net income available to common shareholders excluding the impact of asset retirement obligation expenses, contract amortization consisting of amortization of power and fuel contracts and amortization of emission allowances, stock-based compensation, impairment losses, deactivation costs, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from forward position of economic hedges, 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 and non-controlling interests.
- Adjusted Earnings per Share (EPS): Defined as Adjusted Net Income, divided by the average basic common shares outstanding. The Company believes that using average basic common shares outstanding offers a more accurate view of recurring per-share earnings, as it better reflects the impact of the fully hedged convertible note callable in mid-2025.
- Adjusted Cash provided/(used) by operating activities: Defined as Cash provided/(used) by operating activities 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, related restructuring costs, adjustment for change in collateral, and the impact of extraordinary, unusual or non-recurring items.
- Free Cash Flow before Growth Investments: Defined as Adjusted Cash provided/(used) by operating activities less maintenance and environmental capital expenditures, net of funding and insurance recoveries related to property, plant and equipment, and adjustments to exclude cost of acquisition related to growth.
Management believes these non-GAAP financial measures are useful to investors and other users of NRG's financial statements in evaluating the Company's operating performance and growth, as well as the impact of the Company's capital allocation program. They provide an additional tool to compare business performance across periods and adjust for items that management does not consider indicative of NRG's future operating performance. Management uses these non-GAAP financial measures to assist in comparing financial 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.
Contacts
Media
Chevalier Gray
832.763.3454
Investors
Brendan Mulhern
609.524.4767
