NRG Energy, Inc. Reports Full Year Results and Reaffirms 2023 Guidance

  • Reaffirming 2023 Adjusted EBITDA and FCFbG NRG standalone guidance
  • Reported 2022 Full Year Net Income of $1.2 billion; lower than expected Adjusted EBITDA and FCFbG
  • Closed Astoria land sale
  • Vivint acquisition on track to close in the first quarter of 2023
  • Providing enhanced disclosure on growth targets

HOUSTON--()--NRG Energy, Inc. (NYSE: NRG) today reported full year 2022 Net Income of $1.2 billion, or $5.17 per diluted common share. Adjusted EBITDA for the full year 2022 was $1.8 billion, Net Cash Provided by Operating Activities was $0.4 billion, and Free Cash Flow Before Growth (FCFbG) was $0.6 billion.

In 2022, NRG advanced many of our strategic priorities while also navigating a challenging business environment,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. “Our core business is well-positioned for 2023, and I am confident in the value opportunity that essential home services represent for NRG and our customers.”

Consolidated Financial Results

 

 

Three Months Ended

 

Twelve Months Ended

(In millions)

 

12/31/22

 

12/31/21

 

12/31/22

 

12/31/21

Net (Loss)/Income

 

$

(1,095

)

 

$

(427

)

 

$

1,221

 

$

2,187

Cash (Used)/Provided by Operating Activities

 

$

(1,398

)

 

$

(1,362

)

 

$

360

 

$

493

Adjusted EBITDAa

 

$

435

 

 

$

433

 

 

$

1,754

 

$

2,423

Free Cash Flow Before Growth Investments (FCFbG)

 

$

274

 

 

$

349

 

 

$

568

 

$

1,512

a Three and twelve months ended 12/31/2021 excludes Winter Storm Uri income/(loss) of $690 million and ($380) million, respectively. Three and twelve months ended 12/31/2022 excludes Winter Storm Uri income of $135 million.

Fourth quarter Net Loss was $1.1 billion, $668 million lower than the fourth quarter of 2021. This was driven by the higher recovery of Winter Storm Uri mitigants in the fourth quarter of 2021, higher unrealized mark-to-market losses on economic hedges in the fourth quarter of 2022 primarily in the East, due to large movements in natural gas and power prices, and the gain on 4.8 GW of fossil generation asset sales in December 2021. This was partially offset by lower impairment losses in the fourth quarter of 2022 and higher income tax benefits.

Fourth quarter 2022 and 2021 Cash Used by Operating Activities were ($1.4) billion, primarily driven by decreases in collateral deposits received in support of risk management activities as a result of large movements in natural gas and power prices.

Segment Results

Table 1: Net (Loss)/Income
(In millions) Three Months Ended Twelve Months Ended
Segment 12/31/2022 12/31/2021 12/31/2022 12/31/2021
Texas

$

215

 

 

$

693

 

$

1,265

 

$

1,290

 

East

 

(1,759

)

 

 

(1,213

 

326

 

 

1,907

 

West/Services/Othera

 

449

 

 

 

93

 

 

(370

)

 

(1,010

)

Net (Loss)/Income

($

1,095

) 

($

427

)

 

1,221

 

$

2,187

 

a. Includes Corporate segment

Fourth quarter Net Loss in the East of ($1.8) billion in 2022 and ($1.2) billion in 2021 were primarily driven by unrealized mark-to-market losses on economic hedges due to large movements in natural gas and power prices.

Table 2: Adjusted EBITDA
(In millions) Three Months Ended Twelve Months Ended
Segment 12/31/2022 12/31/2021 12/31/2022 12/31/2021
Texas

$

200

$

161

$

821

$

1,167

East

 

180

 

227

 

737

 

982

West/Services/Othera

 

55

 

45

 

196

 

274

Adjusted EBITDAb

$

435

$

433

 

1,754

$

2,423

a. Includes Corporate Segment

b. Three and twelve months ended 12/31/2021 excludes Winter Storm Uri income/(loss) of $690 million and ($380) million, respectively. Three and twelve months ended 12/31/2022 excludes Winter Storm Uri income of $135 million.

Texas: Fourth quarter Adjusted EBITDA was $200 million, $39 million higher than the fourth quarter of 2021. This increase was primarily driven by partial settlements of insurance claims related to the W.A. Parish and Limestone extended outages and increased margin rates. This was partially offset by higher supply costs as a result of Winter Storm Elliott in December 2022, and higher ancillary charges.

East: Fourth quarter Adjusted EBITDA was $180 million, $47 million lower than the fourth quarter of 2021. This decrease was driven by the December 2021 4.8 GW asset sales, PJM asset retirements, and estimated capacity performance net impact resulting from Winter Storm Elliott.

West/Services/Other: Fourth quarter Adjusted EBITDA was $55 million, $10 million higher than the fourth quarter of 2021. This increase was driven by higher gross margin from Cottonwood, including a positive impact from capacity performance, and was partially offset by the 4.8 GW asset sales.

Liquidity and Capital Resources

Table 3: Corporate Liquidity
(In millions) 12/31/2022 12/31/2021
Cash and Cash Equivalents

$

430

$

250

Restricted Cash

 

40

 

15

Total

$

470

$

265

Total credit facility availability

 

2,324

 

2,421

Total Liquidity, excluding collateral received

$

2,794

$

2,686

As of December 31, 2022, NRG's cash was $430 million, and $2.3 billion was available under the Company’s credit facilities. Total liquidity was $2.8 billion, which was $108 million higher than December 31, 2021.

NRG Strategic Developments

Vivint Smart Home Acquisition

On December 6, 2022, NRG and Vivint Smart Home, Inc. (Vivint) announced the entry into a definitive agreement under which the Company will acquire Vivint, a smart home platform company, in an all-cash transaction. The acquisition accelerates the realization of NRG’s consumer-focused growth strategy and creates a leading essential home services platform fueled by market-leading brands, unparalleled insights, proprietary technologies, and complementary sales channels. The Company expects to achieve $100 million in cost synergies and $300 million in revenue synergies/growth through cross-selling, channel optimization, and continued base business growth by 2025.

The Company will pay $12 per share, or approximately $2.8 billion in cash, and expects to fund the acquisition using proceeds from newly issued debt and preferred equity, drawing on its Revolving Credit Facility and Receivables Securitization Facilities, and through cash on hand. Additionally, NRG increased its Revolving Credit Facility by $600 million in February 2023 to meet the additional liquidity requirements related to the acquisition. Close of the acquisition is targeted for the first quarter of 2023 and is subject to customary closing conditions.

In connection with the merger agreement, NRG entered into a commitment letter for a senior secured 364-day bridge term loan facility in a principal amount not to exceed $2.1 billion for the purposes of financing the Vivint acquisition, paying fees and expenses in connection with the acquisition, and certain other third-party payments in respect of arrangements of Vivint.

Sale of Astoria

On January 6, 2023, NRG closed on the sale of land and related assets from the Astoria site, within the East region of operations, for net proceeds of $209 million. As part of the transaction, NRG entered into an agreement to lease the land back for the purpose of operating the Astoria gas turbines through the planned April 30, 2023 retirement date. The operating lease agreement is expected to end six months after the facility's actual retirement date.

W.A. Parish Extended Outage

In May 2022, W.A. Parish Unit 8 came offline as a result of damage to the steam turbine/generator. Based on work completed to date, NRG is targeting to return the unit to service by the end of the second quarter of 2023. The Company is working with its insurers related to claims surrounding the outage and has received partial settlements in the fourth quarter of 2022.

Reaffirming 2023 Guidance

NRG is reaffirming its standalone Adjusted EBITDA and FCFbG guidance for 2023 as set forth below.

Table 4: 2023 Adjusted EBITDA, Cash Provided by Operating Activities, and FCFbG Guidance

2023

(In millions) Guidance
Adjusted EBITDAa $2,270 - $2,470
Cash Provided by Operating Activities $1,780 - $1,980
FCFbG $1,520 - $1,720

a. Non-GAAP financial measure; see Appendix Table 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

As part of NRG’s long-term capital allocation plan, the return of capital to shareholders during the twelve months ending December 31, 2022 was comprised of the annual dividend of $1.40 per share, or $332 million, and share repurchases of $606 million at an average price of $40.50 per share, for a total amount of capital returned to shareholders of $938 million in 2022. The Company’s $1 billion share repurchase program began with $39 million of shares repurchased in December of 2021, resulting in $645 million of shares repurchased under that program to date. The program is expected to be completed in 2023, subject to availability of cash and full visibility of the achievement of the Company’s 2023 targeted credit metrics.

In 2023, the Company expects to use its excess free cash flow to fund the Vivint acquisition, reduce acquisition-related debt, and maintain its common stock dividend. In addition, NRG is targeting additional asset sales with projected proceeds, net of any required deleveraging, of $500 million during 2023. Following the completion of the Vivint acquisition, the Company plans to update 2023 capital allocation.

NRG is committed to maintaining a strong balance sheet and credit ratings, and remains focused on achieving investment grade credit metrics. The Company expects to achieve 2.50x to 2.75x corporate net debt to adjusted EBITDA by late 2025 or 2026, which will be primarily achieved through debt reduction and the realization of growth initiatives.

On January 20, 2023, NRG declared a quarterly dividend on the Company's common stock of $0.3775 per share, or $1.51 per share on an annualized basis. This dividend represents an 8% increase from the prior year, which is in line with the Company’s previously announced dividend growth rate target of 7% to 9% per year.

Earnings Conference Call

On February 16, 2023, 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 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

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 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 and gas 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, our ability to execute our market operations strategy, unanticipated outages at our generation facilities, changes in government or market regulations, the condition of capital markets generally, our ability to access capital markets, failure to identify, execute or successfully implement acquisitions or asset sales, our ability to achieve our net debt targets, our ability to achieve or maintain investment grade credit metrics, the potential impact of COVID-19 or any other pandemic on the Company’s operations, financial position, risk exposure and liquidity, data privacy, cyberterrorism and inadequate cybersecurity, adverse results in current and future litigation, our ability to implement value enhancing improvements to plant operations and companywide processes, 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, the ability to successfully integrate businesses of acquired companies, including Direct Energy, 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 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, adjusted cash flow from operations and free cash flow guidance are estimates as of February 16, 2023. These estimates are based on assumptions the company believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at www.sec.gov.

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

For the Year Ended December 31,

(In millions, except per share amounts)

2022

2021

2020

Revenues

 

 

 

Total revenues

$

31,543

 

$

26,989

 

$

9,093

 

Operating Costs and Expenses

 

 

 

Cost of operations (excluding depreciation and amortization shown below)

 

27,446

 

 

20,482

 

 

6,540

 

Depreciation and amortization

 

634

 

 

785

 

 

435

 

Impairment losses

 

206

 

 

544

 

 

75

 

Selling, general and administrative costs

 

1,228

 

 

1,293

 

 

810

 

Provision for credit losses

 

11

 

 

698

 

 

108

 

Acquisition-related transaction and integration costs

 

52

 

 

93

 

 

23

 

Total operating costs and expenses

 

29,577

 

 

23,895

 

 

7,991

 

Gain on sale of assets

 

52

 

 

247

 

 

3

 

Operating Income

 

2,018

 

 

3,341

 

 

1,105

 

Other Income/(Expense)

 

 

 

Equity in earnings of unconsolidated affiliates

 

6

 

 

17

 

 

17

 

Impairment losses on investments

 

 

 

 

 

(18

)

Other income, net

 

56

 

 

63

 

 

67

 

Loss on debt extinguishment

 

 

 

(77

)

 

(9

)

Interest expense

 

(417

)

 

(485

)

 

(401

)

Total other expense

 

(355

)

 

(482

)

 

(344

)

Income Before Income Taxes

 

1,663

 

 

2,859

 

 

761

 

Income tax expense

 

442

 

 

672

 

 

251

 

Net Income

$

1,221

 

$

2,187

 

$

510

 

Income Per Share

 

 

 

Weighted average number of common shares outstanding — basic

 

236

 

 

245

 

 

245

 

Income per Weighted Average Common Share — Basic

$

5.17

 

$

8.93

 

$

2.08

 

Weighted average number of common shares outstanding — diluted

 

236

 

 

245

 

 

246

 

Income per Weighted Average Common Share — Diluted

$

5.17

 

$

8.93

 

$

2.07

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

For the Year Ended December 31,

(In millions)

2022

 

2021

 

2020

Net Income

$

1,221

 

 

$

2,187

 

 

$

510

 

Other Comprehensive (Loss)/Income, net of tax

 

 

 

 

 

Foreign currency translation adjustments

 

(35

)

 

 

(5

)

 

 

8

 

Defined benefit plans

 

(16

)

 

 

85

 

 

 

(22

)

Other comprehensive (loss)/income

 

(51

)

 

 

80

 

 

 

(14

)

Comprehensive Income

$

1,170

 

 

$

2,267

 

 

$

496

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

As of December 31,

(In millions)

2022

 

2021

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

430

 

$

250

Funds deposited by counterparties

 

1,708

 

 

845

Restricted cash

 

40

 

 

15

Accounts receivable, net

 

4,773

 

 

3,245

Uplift securitization proceeds receivable from ERCOT

 

 

 

689

Inventory

 

751

 

 

498

Derivative instruments

 

7,886

 

 

4,613

Cash collateral paid in support of energy risk management activities

 

260

 

 

291

Prepayments and other current assets

 

383

 

 

395

Total current assets

 

16,231

 

 

10,841

Property, plant and equipment, net

 

1,692

 

 

1,688

Other Assets

 

 

 

Equity investments in affiliates

 

133

 

 

157

Operating lease right-of-use assets, net

 

225

 

 

271

Goodwill

 

1,650

 

 

1,795

Intangible assets, net

 

2,132

 

 

2,511

Nuclear decommissioning trust fund

 

838

 

 

1,008

Derivative instruments

 

4,108

 

 

2,527

Deferred income taxes

 

1,881

 

 

2,155

Other non-current assets

 

256

 

 

229

Total other assets

 

11,223

 

 

10,653

Total Assets

$

29,146

 

$

23,182

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

 

As of December 31,

(In millions, except share data)

2022

 

2021

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities

 

 

 

Current portion of long-term debt and finance leases

$

63

 

 

$

4

 

Current portion of operating lease liabilities

 

83

 

 

 

81

 

Accounts payable

 

3,643

 

 

 

2,274

 

Derivative instruments

 

6,195

 

 

 

3,387

 

Cash collateral received in support of energy risk management activities

 

1,708

 

 

 

845

 

Accrued expenses and other current liabilities

 

1,290

 

 

 

1,324

 

Total current liabilities

 

12,982

 

 

 

7,915

 

Other Liabilities

 

 

 

Long-term debt and finance leases

 

7,976

 

 

 

7,966

 

Non-current operating lease liabilities

 

180

 

 

 

236

 

Nuclear decommissioning reserve

 

340

 

 

 

321

 

Nuclear decommissioning trust liability

 

477

 

 

 

666

 

Derivative instruments

 

2,246

 

 

 

1,412

 

Deferred income taxes

 

134

 

 

 

73

 

Other non-current liabilities

 

983

 

 

 

993

 

Total other liabilities

 

12,336

 

 

 

11,667

 

Total Liabilities

 

25,318

 

 

 

19,582

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 423,897,001 and 423,547,174 shares issued; and 229,561,030 and 243,753,899 shares outstanding at December 31, 2022 and 2021, respectively

 

4

 

 

 

4

 

Additional paid-in capital

 

8,457

 

 

 

8,531

 

Retained earnings

 

1,408

 

 

 

464

 

Treasury stock, at cost; 194,335,971 and 179,793,275 shares at December 31, 2022 and 2021, respectively

 

(5,864

)

 

 

(5,273

)

Accumulated other comprehensive loss

 

(177

)

 

 

(126

)

Total Stockholders' Equity

 

3,828

 

 

 

3,600

 

Total Liabilities and Stockholders' Equity

$

29,146

 

 

$

23,182

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

For the Year Ended December 31,

(In millions)

2022

 

2021

 

2020

Cash Flows from Operating Activities

 

 

 

 

 

Net income

$

1,221

 

 

$

2,187

 

 

$

510

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Distributions from and equity in earnings of unconsolidated affiliates

 

7

 

 

 

20

 

 

 

45

 

Depreciation and amortization

 

634

 

 

 

785

 

 

 

435

 

Accretion of asset retirement obligations

 

55

 

 

 

30

 

 

 

45

 

Provision for credit losses

 

11

 

 

 

698

 

 

 

108

 

Amortization of nuclear fuel

 

54

 

 

 

51

 

 

 

54

 

Amortization of financing costs and debt discounts

 

23

 

 

 

39

 

 

 

48

 

Loss on debt extinguishment

 

 

 

 

77

 

 

 

9

 

Amortization of in-the-money contracts and emission allowances

 

158

 

 

 

106

 

 

 

70

 

Amortization of unearned equity compensation

 

28

 

 

 

21

 

 

 

22

 

Net gain on sale of assets and disposal of assets

 

(102

)

 

 

(261

)

 

 

(23

)

Impairment losses

 

206

 

 

 

544

 

 

 

93

 

Changes in derivative instruments

 

(3,221

)

 

 

(3,626

)

 

 

137

 

Changes in deferred income taxes and liability for uncertain tax benefits

 

382

 

 

 

604

 

 

 

228

 

Changes in collateral deposits in support of risk management activities

 

896

 

 

 

797

 

 

 

127

 

Changes in nuclear decommissioning trust liability

 

9

 

 

 

40

 

 

 

51

 

Oil lower of cost or market adjustment

 

 

 

 

 

 

 

29

 

Uplift securitization proceeds received/(receivable) from ERCOT

 

689

 

 

 

(689

)

 

 

 

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

 

 

 

 

 

Accounts receivable - trade

 

(1,560

)

 

 

(1,232

)

 

 

 

Inventory

 

(252

)

 

 

(61

)

 

 

27

 

Prepayments and other current assets

 

17

 

 

 

31

 

 

 

4

 

Accounts payable

 

1,295

 

 

 

476

 

 

 

(56

)

Accrued expenses and other current liabilities

 

(29

)

 

 

(55

)

 

 

(42

)

Other assets and liabilities

 

(161

)

 

 

(89

)

 

 

(84

)

Cash provided by operating activities

$

360

 

 

$

493

 

 

$

1,837

 

Cash Flows from Investing Activities

 

 

 

 

 

Payments for acquisitions of assets, businesses and leases

$

(62

)

 

$

(3,559

)

 

$

(284

)

Capital expenditures

 

(367

)

 

 

(269

)

 

 

(230

)

Net purchases of emissions allowances

 

(6

)

 

 

 

 

 

(10

)

Investments in nuclear decommissioning trust fund securities

 

(454

)

 

 

(751

)

 

 

(492

)

Proceeds from sales of nuclear decommissioning trust fund securities

 

448

 

 

 

710

 

 

 

439

 

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

 

109

 

 

 

830

 

 

 

81

 

Changes in investments in unconsolidated affiliates

 

 

 

 

 

 

 

2

 

Cash used by investing activities

$

(332

)

 

$

(3,039

)

 

$

(494

)

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

Net receipts/(payments) from settlement of acquired derivatives that include financing

elements

$

1,995

 

 

$

938

 

 

$

(7

)

Payments for share repurchase activity

 

(606

)

 

 

(48

)

 

 

(229

)

Payments of dividends to common stockholders

 

(332

)

 

 

(319

)

 

 

(295

)

Proceeds from issuance of long-term debt

 

 

 

 

1,100

 

 

 

3,234

 

Payments for short and long-term debt

 

(5

)

 

 

(1,861

)

 

 

(335

)

Payments for debt extinguishment costs

 

 

 

 

(65

)

 

 

(5

)

Payments of debt issuance costs

 

(9

)

 

 

(18

)

 

 

(75

)

Repayments of Revolving Credit Facility

 

 

 

 

 

 

 

(83

)

Proceeds from issuance of common stock

 

 

 

 

1

 

 

 

1

 

Purchase of and distributions to noncontrolling interests from subsidiaries

 

 

 

 

 

 

 

(2

)

Cash provided/(used) by financing activities

$

1,043

 

 

$

(272

)

 

$

2,204

 

Effect of exchange rate changes on cash and cash equivalents

 

(3

)

 

 

(2

)

 

 

(2

)

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

Counterparties and Restricted Cash

 

1,068

 

 

 

(2,820

)

 

 

3,545

 

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at

Beginning of Period

 

1,110

 

 

 

3,930

 

 

 

385

 

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at

End of Period

$

2,178

 

 

$

1,110

 

 

$

3,930

Appendix Table A-1: Fourth Quarter 2022 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

($ in millions)

Texas

East

West/
Services/
Other

Corp/Elim

Total

Net Income/(Loss)

$

215

 

$

(1,759

)

$

234

 

$

215

 

$

(1,095

)

Plus:

 

 

 

 

 

Interest expense, net

 

(1

)

 

(4

)

 

8

 

 

71

 

 

74

 

Income tax

 

 

 

2

 

 

29

 

 

(328

)

 

(297

)

Depreciation and amortization

 

77

 

 

44

 

 

20

 

 

8

 

 

149

 

ARO Expense

 

33

 

 

2

 

 

 

 

 

 

35

 

Contract and emission credit amortization, net

 

 

 

28

 

 

7

 

 

 

 

35

 

EBITDA

 

324

 

 

(1,687

)

 

298

 

 

(34

)

 

(1,099

)

Winter Storm Uri impact

 

(135

)

 

 

 

 

 

 

 

(135

)

Adjustment to reflect NRG share of adjusted EBITDA in

unconsolidated affiliates

 

 

 

 

 

5

 

 

 

 

5

 

Acquisition and divestiture integration and transaction costs

 

 

 

 

 

 

 

26

 

 

26

 

Deactivation costs

 

 

 

5

 

 

4

 

 

 

 

9

 

Gain on sale of assets

 

 

 

 

 

(2

)

 

1

 

 

(1

)

Other non recurring charges

 

(39

)

 

5

 

 

 

 

(3

)

 

(37

)

Impairments

 

 

 

8

 

 

 

 

 

 

8

 

Mark-to-market for economic hedging activities, net

 

50

 

 

1,849

 

 

(240

)

 

 

 

1,659

 

Adjusted EBITDA

$

200

 

$

180

 

$

65

 

$

(10

)

$

435

 

Fourth Quarter 2022 condensed financial information by Operating Segment:

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Revenue1

 

2,200

 

 

4,191

 

 

1,305

 

 

5

 

 

7,701

 

Cost of fuel, purchased energy and other cost of sales2

 

1,595

 

 

3,803

 

 

1,139

 

 

6

 

 

6,543

 

Economic gross margin

 

605

 

 

388

 

 

166

 

 

(1

)

 

1,158

 

Operations & maintenance and other cost of operations3

 

247

 

 

116

 

 

67

 

 

(1

)

 

429

 

Selling, marketing, general and administrative

 

112

 

 

97

 

 

39

 

 

8

 

 

256

 

Provision for credit losses

 

(93

)

 

(4

)

 

5

 

 

 

 

(92

)

Other

 

4

 

 

(1

)

 

(10

)

 

2

 

 

(5

)

Winter Storm Uri impact

 

135

 

 

 

 

 

 

 

 

135

 

Adjusted EBITDA

$

200

 

$

180

 

$

65

 

$

(10

)

$

435

 

1 Excludes MtM gain of $165 million and contract amortization of $11 million

2 Includes TDSP expense, capacity and emission credits

3 Excludes other non recurring charges of ($37) million, deactivation costs of $9 million and ARO expense of $35 million

The following table reconciles the Fourth Quarter 2022 condensed financial information to Adjusted EBITDA:

($ in millions)

Condensed

financial

information

Interest, tax,

depr.,

amort.

MtM

Deactivation

Winter

Storm Uri

Other adj.2

Adjusted

EBITDA

Revenue

$

7,855

 

$

11

 

$

(165

)

$

 

$

 

$

 

$

7,701

 

Cost of operations (excluding depreciation and amortization shown below)1

 

8,391

 

 

(24

)

 

(1,824

)

 

 

 

 

 

 

 

6,543

 

Depreciation and Amortization

 

149

 

 

(149

)

 

 

 

 

 

 

 

 

 

 

Gross margin

 

(685

)

 

184

 

 

1,659

 

 

 

 

 

 

 

 

1,158

 

Operations & maintenance and other cost of operations

 

436

 

 

 

 

 

 

(9

)

 

 

 

2

 

 

429

 

Selling, marketing, general & administrative

 

255

 

 

 

 

 

 

 

 

9

 

 

1

 

 

265

 

Provision for credit losses

 

(92

)

 

 

 

 

 

 

 

126

 

 

 

 

34

 

Other

 

(189

)

 

223

 

 

 

 

 

 

 

 

(39

)

 

(5

)

Net (Loss)/Income

$

(1,095

)

$

(39

)

$

1,659

 

$

9

 

$

(135

)

$

36

 

$

435

 

1 Excludes Operations & maintenance and other cost of operations of $436 million

2 Other adj. includes ARO expenses of $35 million, acquisition and divestiture integration and transaction costs of $26 million, impairments of $8 million, adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates of $5 million, other non recurring charges of ($37) million, and gain on sale of assets ($1) million

Appendix Table A-2: Fourth Quarter 2021 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Net Income/(Loss)

$

693

 

$

(1,213

)

$

(152

)

$

245

 

$

(427

)

Plus:

 

 

 

 

 

Interest expense, net

 

 

 

1

 

 

19

 

 

87

 

 

107

 

Income tax

 

 

 

1

 

 

(13

)

 

(156

)

 

(168

)

Loss on debt extinguishment

 

 

 

 

 

 

 

20

 

 

20

 

Depreciation and amortization

 

87

 

 

99

 

 

22

 

 

8

 

 

216

 

ARO Expense

 

7

 

 

2

 

 

 

 

 

 

9

 

Contract and emission credit amortization, net

 

(2

)

 

31

 

 

6

 

 

 

 

35

 

EBITDA

 

785

 

 

(1,079

)

 

(118

)

 

204

 

 

(208

)

Winter Storm URI

 

(692

)

 

 

 

 

 

2

 

 

(690

)

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

 

 

 

 

17

 

 

 

 

17

 

Acquisition and divestiture integration and transaction costs

 

 

 

 

 

 

 

14

 

 

14

 

Deactivation costs

 

 

 

(6

)

 

 

 

 

 

(6

)

Gain on sale of assets

 

(19

)

 

 

 

 

 

(211

)

 

(230

)

Other non recurring charges

 

5

 

 

1

 

 

(4

)

 

(11

)

 

(9

)

Impairments

 

 

 

230

 

 

9

 

 

(1

)

 

238

 

Mark-to-market for economic hedging activities, net

 

82

 

 

1,081

 

 

144

 

 

 

 

1,307

 

Adjusted EBITDA

$

161

 

$

227

 

$

48

 

$

(3

)

$

433

Fourth Quarter 2021 condensed financial information by Operating Segment:

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Revenue1

 

1,930

 

 

4,076

 

 

1,117

 

 

(1

)

 

7,122

 

Cost of fuel, purchased energy and other cost of sales2

 

739

 

 

3,610

 

 

956

 

 

1

 

 

5,306

 

Economic gross margin

 

1,191

 

 

466

 

 

161

 

 

(2

)

 

1,816

 

Operations & maintenance and other cost of operations3

 

226

 

 

137

 

 

55

 

 

 

 

418

 

Selling, marketing, general & administrative4

 

138

 

 

102

 

 

67

 

 

13

 

 

320

 

Provision for credit losses

 

(22

)

 

1

 

 

4

 

 

 

 

(17

)

Other

 

(4

)

 

(1

)

 

(13

)

 

(10

)

 

(28

)

Winter Storm Uri impact

 

692

 

 

 

 

 

 

(2

)

 

690

 

Adjusted EBITDA

$

161

 

$

227

 

$

48

 

$

(3

)

$

433

 

1 Excludes MtM loss of $65 million and contract amortization of $11 million

2 Includes TDSP expense, capacity and emission credits

3 Excludes ARO expense of $9 million, other non recurring charges of ($7) million and deactivation costs of ($6) million

4 Excludes acquisition and divestiture integration and transaction costs of $1 million

The following table reconciles the Fourth Quarter 2021 condensed financial information to Adjusted EBITDA:

($ in millions)

Condensed

financial

information

Interest, tax,

depr.,

amort.

MtM

Deactivation

Winter Storm

Uri

Other adj.2

Adjusted

EBITDA

Revenue

$

7,046

 

$

11

 

$

65

 

$

 

$

40

 

$

 

$

7,162

 

Cost of operations (excluding depreciation and amortization shown below)1

 

6,572

 

 

(24

)

 

(1,242

)

 

 

 

689

 

 

 

 

5,995

 

Depreciation and amortization

 

216

 

 

(216

)

 

 

 

 

 

 

 

 

 

 

Gross margin

 

258

 

 

251

 

 

1,307

 

 

 

 

(649

)

 

 

 

1,167

 

Operations & maintenance and other cost of operations

 

414

 

 

 

 

 

 

6

 

 

 

 

(2

)

 

418

 

Selling, marketing, general & administrative

 

320

 

 

 

 

 

 

 

 

 

 

 

 

320

 

Provision for credit losses

 

(17

)

 

 

 

 

 

 

 

41

 

 

 

 

24

 

Other

 

(32

)

 

61

 

 

 

 

 

 

 

 

(57

)

 

(28

)

Net Income/(Loss)

$

(427

)

$

190

 

$

1,307

 

$

(6

)

$

(690

)

$

59

 

$

433

 

1 Excludes Operations & maintenance and other cost of operations of $414 million

2 Other adj. includes adjustment to reflect impairments of $238 million, loss on debt extinguishment $20 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $17 million, acquisition and divestiture integration and transaction costs of $14 million, ARO expense of $9 million, gain on sale of assets of ($230) million and other non recurring charges of ($9) million

Appendix Table A-3: Full Year 2022 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Net Income/(Loss)

$

1,265

 

$

326

 

$

480

 

$

(850

)

$

1,221

 

Plus:

 

 

 

 

 

Interest expense, net

 

 

 

(9

)

 

30

 

 

332

 

 

353

 

Income tax

 

 

 

1

 

 

57

 

 

384

 

 

442

 

Depreciation and amortization

 

310

 

 

208

 

 

85

 

 

31

 

 

634

 

ARO Expense

 

41

 

 

11

 

 

3

 

 

 

 

55

 

Contract and emission credit amortization, net

 

 

 

131

 

 

19

 

 

 

 

150

 

EBITDA

 

1,616

 

 

668

 

 

674

 

 

(103

)

 

2,855

 

Winter Storm Uri impact

 

(135

)

 

 

 

 

 

 

 

(135

)

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

 

 

 

 

53

 

 

 

 

53

 

Acquisition and divestiture integration and transaction costs

 

 

 

 

 

 

 

58

 

 

58

 

Deactivation costs

 

 

 

21

 

 

5

 

 

 

 

26

 

Gain on sale of assets

 

(10

)

 

 

 

(45

)

 

3

 

 

(52

)

Other non recurring charges

 

(37

)

 

30

 

 

(11

)

 

9

 

 

(9

)

Impairments

 

 

 

206

 

 

 

 

 

 

206

 

Mark-to-market for economic hedging activities, net

 

(613

)

 

(188

)

 

(447

)

 

 

 

(1,248

)

Adjusted EBITDA

$

821

 

$

737

 

$

229

 

$

(33

)

$

1,754

Full Year 2022 condensed financial information by Operating Segment:

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Revenue1

 

10,055

 

 

16,833

 

 

4,761

 

 

16

 

 

31,665

 

Cost of fuel, purchased energy and other cost of sales2

 

7,592

 

 

15,158

 

 

4,134

 

 

19

 

 

26,903

 

Economic gross margin

 

2,463

 

 

1,675

 

 

627

 

 

(3

)

 

4,762

 

Operations & maintenance and other cost of operations3

 

987

 

 

485

 

 

233

 

 

(2

)

 

1,703

 

Selling, marketing, general and administrative4

 

562

 

 

427

 

 

202

 

 

31

 

 

1,222

 

Provision for credit losses

 

(40

)

 

28

 

 

23

 

 

 

 

11

 

Other

 

(2

)

 

(2

)

 

(60

)

 

1

 

 

(63

)

Winter Storm Uri impact

 

135

 

 

 

 

 

 

 

 

135

 

Adjusted EBITDA

$

821

 

$

737

 

$

229

 

$

(33

)

$

1,754

 

1 Excludes MtM loss of $83 million and contract amortization of $39 million

2 Includes TDSP expenses, capacity and emissions credits

3 Excludes ARO expense of $55 million, deactivation costs of $26 million, gain on sale of business of ($9) million and other non recurring charges of ($12) million

4 Excludes acquisition and divestiture integration and transaction costs of $6 million

The following table reconciles the Full Year 2022 condensed financial information to Adjusted EBITDA:

($ in millions)

Condensed

financial

information

Interest, tax,

depr.,

amort.

MtM

Deactivation

Winter

Storm Uri

Other adj.2

Adjusted EBITDA

Revenue

$

31,543

$

39

 

$

83

 

$

 

$

 

$

 

$

31,665

 

Cost of operations (excluding depreciation and amortization shown below)1

 

25,683

 

(111

)

 

1,331

 

 

 

 

 

 

 

 

26,903

 

Depreciation and amortization

 

634

 

(634

)

 

 

 

 

 

 

 

 

 

 

Gross margin

 

5,226

 

784

 

 

(1,248

)

 

 

 

 

 

 

 

4,762

 

Operations & maintenance and other cost of operations

 

1,763

 

 

 

 

 

(26

)

 

 

 

(34

)

 

1,703

 

Selling, marketing, general & administrative

 

1,228

 

 

 

 

 

 

 

9

 

 

(6

)

 

1,231

 

Provision for credit losses

 

11

 

 

 

 

 

 

 

126

 

 

 

 

137

 

Other

 

1,003

 

(795

)

 

 

 

 

 

 

 

(271

)

 

(63

)

Net Income/(Loss)

$

1,221

$

1,579

 

$

(1,248

)

$

26

 

$

(135

)

$

311

 

$

1,754

 

1 Excludes Operations & maintenance and other cost of operations of $1,763 million

2 Includes adjustment to reflect impairments of $206 million, acquisition and divestiture integration and transaction costs of $58 million, ARO expense $55 million, NRG share of Adj EBITDA of $53 million, gain on sale of assets ($52) million and other non recurring charges of ($9) million

Appendix Table A-4: Full Year 2021 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss):

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Net Income/(Loss)

$

1,290

 

$

1,907

 

$

88

 

$

(1,098

)

$

2,187

 

Plus:

 

 

 

 

 

Interest expense, net

 

1

 

 

(1

)

 

28

 

 

452

 

 

480

 

Income tax

 

 

 

 

 

19

 

 

653

 

 

672

 

Loss on debt extinguishment

 

 

 

 

 

 

 

77

 

 

77

 

Depreciation and amortization

 

336

 

 

333

 

 

88

 

 

28

 

 

785

 

ARO Expense

 

16

 

 

11

 

 

3

 

 

 

 

30

 

Contract and emission credit amortization, net

 

(2

)

 

54

 

 

21

 

 

 

 

73

 

EBITDA

 

1,641

 

 

2,304

 

 

247

 

 

112

 

 

4,304

 

Winter Storm URI

 

520

 

 

(138

)

 

(10

)

 

8

 

 

380

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

1

 

 

 

 

72

 

 

 

 

73

 

Acquisition and divestiture integration and transaction costs

 

 

 

 

 

 

 

97

 

 

97

 

Legal Settlements

 

 

 

(15

)

 

 

 

11

 

 

(4

)

Deactivation costs

 

 

 

10

 

 

1

 

 

 

 

11

 

Gain on sale of assets

 

(19

)

 

 

 

(17

)

 

(211

)

 

(247

)

Other non recurring charges

 

9

 

 

1

 

 

(3

)

 

(26

)

 

(19

)

Impairments

 

 

 

535

 

 

9

 

 

 

 

544

 

Mark-to-market for economic hedging activities, net

 

(985

)

 

(1,715

)

 

(16

)

 

 

 

(2,716

)

Adjusted EBITDA

$

1,167

 

$

982

 

$

283

 

$

(9

)

$

2,423

Full Year 2021 condensed financial information by Operating Segment:

($ in millions)

Texas

East

West/

Services/

Other

Corp/Elim

Total

Revenue1

$

10,298

 

$

13,139

 

$

3,749

 

$

(3

)

$

27,183

 

Cost of fuel, purchased energy and other cost of sales2

 

7,531

 

 

10,970

 

 

3,107

 

 

2

 

 

21,610

 

Economic gross margin

 

2,767

 

 

2,169

 

 

642

 

 

(5

)

 

5,573

 

Operations & maintenance and other cost of operations3

 

882

 

 

559

 

 

233

 

 

(5

)

 

1,669

 

Selling, marketing, general & administrative4

 

573

 

 

487

 

 

199

 

 

43

 

 

1,302

 

Provision for credit losses

 

678

 

 

8

 

 

12

 

 

 

 

698

 

Other

 

(13

)

 

(5

)

 

(95

)

 

(26

)

 

(139

)

Winter Storm Uri

 

(520

)

 

138

 

 

10

 

 

(8

)

 

(380

)

Adjusted EBITDA

$

1,167

 

$

982

 

$

283

 

$

(9

)

$

2,423

 

1 Excludes MtM loss of $164 million and contract amortization of $30 million

2 Includes TDSP expenses, capacity and emissions credits

3 Excludes ARO expense of $30 million, deactivation expense of $11 million, other non recurring charges of ($3) million and legal settlements of $2 million

4 Excludes acquisition and divestiture integration and transaction costs of $4 million, legal settlement of $2 million and other non recurring charges of ($14) million

The following table reconciles the Full Year 2021 condensed financial information to Adjusted EBITDA:

($ in millions)

Condensed

financial

information

Interest, tax,

depr.,

amort.

MtM

Deactivation

Winter

Storm Uri

Other adj.2

Adjusted EBITDA

Revenue

$

26,989

$

30

 

$

164

 

$

 

$

(2,610

)

$

 

$

24,573

 

Cost of operations (excluding depreciation and amortization shown below)1

 

18,773

 

(43

)

 

2,880

 

 

 

 

(2,363

)

 

 

 

19,247

 

Depreciation and amortization

 

785

 

(785

)

 

 

 

 

 

 

 

 

 

 

Gross margin

 

7,431

 

858

 

 

(2,716

)

 

 

 

(247

)

 

 

 

5,326

 

Operations & maintenance and other cost of operations

 

1,709

 

 

 

 

 

(11

)

 

(2

)

 

(29

)

 

1,667

 

Selling, marketing, general & administrative

 

1,293

 

 

 

 

 

 

 

(29

)

 

9

 

 

1,273

 

Provision for credit losses

 

698

 

 

 

 

 

 

 

(596

)

 

 

 

102

 

Other

 

1,544

 

(1,152

)

 

 

 

 

 

 

 

(531

)

 

(139

)

Net Income/(Loss)

$

2,187

$

2,010

 

$

(2,716

)

$

11

 

$

380

 

$

551

 

$

2,423

 

1 Excludes Operations & maintenance and other cost of operations of $1,709 million

2 Other adj. includes adjustment to reflect impairments of $544 million, acquisition and divestiture integration and transaction costs of $97 million, loss on debt extinguishment $77 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $73 million, ARO expense of $30 million, legal settlement of ($4) million, gain on sale of assets of ($247) million and other non recurring charges of ($19) million

Appendix Table A-5: 2022 and 2021 Three Months Ended December 31 Free Cash Flow before Growth Investments (FCFbG)

The following table summarizes the calculation of Free Cash Flow before Growth providing a reconciliation to Cash used by Operating Activities:

 

 

Three Months Ended

(In millions)

 

December 31, 2022

 

December 31, 2021

Adjusted EBITDA

 

$

435

 

 

$

433

 

Winter Storm Uri EBITDA

 

 

135

 

 

 

690

 

Interest payments

 

 

(66

)

 

 

(95

)

Income tax

 

 

(20

)

 

 

(14

)

Collateral / working capital / other

 

 

(1,882

)

 

 

(2,376

)

Cash used by Operating Activities

 

 

(1,398

)

 

 

(1,362

)

Winter Storm Uri:

 

 

 

 

Winter Storm Uri EBITDA

 

 

(135

)

 

 

(690

)

Securitization, C&I credits and remaining open accounts receivables

 

 

23

 

 

 

706

 

Net receipts from settlement of acquired derivatives that include

financing elements

 

 

399

 

 

 

542

 

Acquisition and divestiture integration and transaction costs

 

 

26

 

 

 

14

 

Encina site improvement

 

 

1

 

 

 

5

 

Adjustment for change in collateral

 

 

1,425

 

 

 

1,173

 

Nuclear decommissioning trust liability

 

 

(8

)

 

 

(5

)

Effect of exchange rate changes on cash and cash equivalents

 

 

2

 

 

 

 

Adjusted Cash Flow from Operations

 

 

335

 

 

 

383

 

Maintenance Capital Expenditures, net

 

 

(61

)

 

 

(34

)

Free Cash Flow before Growth Investments (FCFbG)

 

$

274

 

 

$

349

 

Appendix Table A-6: 2022 and 2021 Twelve Months Ended December 31 Free Cash Flow before Growth Investments (FCFbG)

The following table summarizes the calculation of Free Cash Flow before Growth Investments providing a reconciliation to Cash Provided by Operating Activities:

 

 

Twelve Months Ended

(In millions)

 

December 31, 2022

 

December 31, 2021

Adjusted EBITDA

 

$

1,754

 

 

$

2,423

 

Winter Storm Uri EBITDA

 

 

135

 

 

 

(380

)

Interest payments, net

 

 

(320

)

 

 

(428

)

Income tax

 

 

(67

)

 

 

(32

)

Collateral / working capital / other

 

 

(1,142

)

 

 

(1,090

)

Cash Provided by Operating Activities

 

 

360

 

 

 

493

 

Winter Storm Uri:

 

 

 

 

Winter Storm Uri EBITDA

 

 

(135

)

 

 

380

 

Securitization, C&I credits and remaining open accounts receivables

 

 

(585

)

 

 

599

 

Net receipts from settlement of acquired derivatives that include

financing elements

 

 

1,995

 

 

 

938

 

Acquisition and divestiture transaction and integration costs

 

 

58

 

 

 

97

 

Encina site improvement

 

 

12

 

 

 

21

 

GenOn Settlement

 

 

4

 

 

 

 

Adjustment for change in collateral

 

 

(896

)

 

 

(797

)

Nuclear decommissioning trust liability

 

 

(6

)

 

 

(41

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(3

)

 

 

 

Adjusted Cash Flow from Operations

 

 

804

 

 

 

1,690

 

Maintenance Capital Expenditures, net

 

 

(235

)

 

 

(176

)

Environmental Capital Expenditures

 

 

(1

)

 

 

(2

)

Free Cash Flow before Growth Investments (FCFbG)

 

$

568

 

 

$

1,512

 

Appendix Table A-7: Twelve Months Ended December 31, 2022 Sources and Uses of Liquidity

The following table summarizes the sources and uses of liquidity for the twelve months ending December 31, 2022:

($ in millions)

Twelve Months Ended

December 31, 2022

Sources:

 

Adjusted Cash Flow from Operating Activities

$

804

 

Uplift securitization proceeds received from ERCOT

 

689

 

Winter Storm Uri

 

31

 

Proceeds from sale of assets

 

109

 

Return of cash collateral paid

 

31

 

Uses:

 

Payments for share repurchase activity

 

(606

)

Payments of dividends to common stockholders

 

(332

)

Maintenance and Environmental capital expenditures, net

 

(236

)

Growth Investment capital expenditures

 

(131

)

Payments for acquisitions of businesses and assets, net of cash acquired

 

(62

)

Decrease in availability of collective collateral facilities

 

(97

)

Acquisition and divestiture integration and transaction costs

 

(58

)

Encina site improvement

 

(12

)

Debt issuance costs

 

(9

)

GenOn Settlement

 

(4

)

Net purchases of emission allowances

 

(6

)

Other investing and financing

 

(3

)

Change in Total Liquidity

$

108

 

Appendix Table A-8: 2023 Adjusted EBITDA, Cash Provided by Operating Activities, and FCFbG Guidance

The following table summarizes the calculation of Adjusted EBITDA providing a reconciliation to Net Income, and the calculation of Free Cash Flow before Growth providing a reconciliation to Cash Provided by Operating Activities:

 

 

2023

Guidance

($ in millions)

 

Net Income1

 

$

735 - 935

 

Interest expense, net

 

 

430

 

Income tax

 

 

310

 

Depreciation, amortization, contract amortization, and ARO Expense

 

 

700

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

 

15

 

Other costs2

 

 

80

 

Adjusted EBITDA

 

2,270 - 2,470

Interest payments, net

 

 

(375

)

Income tax

 

 

(95

)

Working capital / other assets and liabilities3

 

 

(20

)

Cash Provided by Operating Activities

 

1,780 - 1,980

Adjustments: proceeds from investment and asset sales, collateral, GenOn pension, nuclear decommissioning trust liability

 

 

10

 

Adjusted Cash Flow from Operations

 

1,790 - 1,990

Maintenance capital expenditures, net4

 

 

(250) - (270

)

Environmental capital expenditures

 

 

(10) - (15

)

Free Cash Flow before Growth

 

$ 1,520 - 1,720

1 For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero

2 Includes deactivation costs and integration expenses

3 Insurance proceeds related to property damage claims previously included in Working capital / other assets and liabilities, currently included in Maintenance capital expenditures, net

4 Maintenance capital expenditures, net includes W.A. Parish Unit 8 and Limestone Unit 1 expected insurance recoveries related to property, plant and equipment

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 expense (including loss on debt extinguishment), income taxes, depreciation and amortization, asset retirement obligation expenses, contract amortization consisting of amortization of power and fuel contracts and amortization of emission allowances. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:

  • EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
  • EBITDA does not reflect changes in, or cash requirements for, working capital needs;
  • EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
  • Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.

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

Adjusted EBITDA is presented as a further supplemental measure of operating performance. As NRG defines it, Adjusted EBITDA represents EBITDA excluding impairment losses, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from forward position of economic hedges, 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, related restructuring costs, changes in the nuclear decommissioning trust liability, and the impact of extraordinary, unusual or non-recurring items. 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. The company excludes changes in the nuclear decommissioning trust liability as these amounts are offset by changes in the decommissioning fund shown in cash from investing.

Free Cash Flow before Growth Investments is adjusted cash flow from operations less maintenance and environmental capital expenditures, net of funding, dividends from preferred instruments treated as debt by ratings agencies, 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 Investments as a measure of cash available for discretionary expenditures.

Free Cash Flow before Growth Investment is utilized by Management in making decisions regarding the allocation of capital. Free Cash Flow before Growth Investment 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 Investment 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.

Contacts

Media:
Laura Avant
713.537.5437

Investors:
Brendan Mulhern
609.524.4767

Contacts

Media:
Laura Avant
713.537.5437

Investors:
Brendan Mulhern
609.524.4767