NRG Energy, Inc. Reports Full Year 2023 Financial Results

  • Exceeded revised guidance on Free Cash Flow before Growth and achieved high end of Adjusted EBITDA revised guidance
  • Delivered exceptional operational performance through volatile summer and winter conditions
  • Expanded margins and grew customer count in both the Energy and Smart Home portfolios
  • Completed $300 million Direct Energy synergy program and approximately $40 million toward current $250 million cost savings program
  • Ahead of pace on current $300 million growth program, with approximately $100 million realized to date
  • Returned $1.5 billion to shareholders or approximately 17% of 2023 average market capitalization
  • Paid down $1.52 billion of debt using $1.4 billion of cash
  • Increased annual common dividend by 8% for fifth consecutive year
  • Reaffirming 2024 Adjusted EBITDA and Free Cash Flow before Growth guidance ranges and capital allocation policy

HOUSTON--()--NRG Energy, Inc. (NYSE: NRG) today reported Net Income for the three months ended December 31, 2023 of $482 million and a full year Net Loss of $202 million. The Net Loss was driven by unrealized non-cash mark-to-market losses on economic hedges due to large movements in natural gas and power prices. Adjusted EBITDA for full year 2023 was $3.3 billion, Net Cash Used by Operating Activities was $221 million, and Free Cash Flow Before Growth (FCFbG) was $1.9 billion.

“We delivered very strong financial performance in 2023,” said Larry Coben, NRG Chair, Interim President and Chief Executive Officer. “The Company is well positioned for 2024 and ahead of pace against the plan we laid out at our June 2023 Investor Day. We remain focused on executing against our consumer and capital allocation strategy.”

NRG is reaffirming its 2024 guidance ranges of $3,300 to $3,550 million in Adjusted EBITDA and $1,825 to $2,075 million in Free Cash Flow before Growth. The Company returned approximately $1.5 billion in share repurchases and common stock dividends in 2023 and remains committed to a capital allocation framework that is expected to return almost $5.5 billion over the next four years.

Consolidated Financial Results

Table 1

 

 

 

Three Months Ended

 

Twelve Months Ended

($ in millions) 

 

12/31/23

 

12/31/22

 

12/31/23

 

12/31/22

Net Income/(Loss)

 

$

482

 

$

(1,095

)

 

$

(202

)

 

$

1,221

Cash Provided/(Used) by Operating Activities

 

$

241

 

$

(1,398

)

 

$

(221

)

 

$

360

Adjusted EBITDA

 

$

844

 

$

463

 

 

$

3,282

 

 

$

1,865

Free Cash Flow Before Growth Investments (FCFbG)

 

$

942

 

$

274

 

 

$

1,925

 

 

$

568

NRG’s full year 2023 Adjusted EBITDA and FCFbG grew significantly compared to 2022, due to strong consolidated financial and operational performance across the Company.

The energy platform performed above plan, delivering strong customer count and product margins. In addition, the diversified supply portfolio benefited from targeted reliability investments in the generation fleet, resulting in approximately 15% annualized improvement on In-the-Money Availability, stabilizing and reducing supply costs despite volatile load and power price conditions in Texas. Since joining the NRG platform in March 2023, Smart Home has exceeded performance targets with increased average monthly recurring revenue, products sold per subscriber, and subscriber count.

Reaffirming 2024 Guidance

NRG is reaffirming its Adjusted EBITDA and FCFbG guidance for 2024 as set forth below.

Table 2: Adjusted EBITDA, Cash Provided by Operating Activities, and FCFbG Guidancea

 

 

 

2024

($ in millions)

 

Guidance

Adjusted EBITDA

 

$3,300 - $3,550

Cash Provided by Operating Activities

 

$1,825 - $2,075

FCFbG

 

$1,825 - $2,075

a. Adjusted EBITDA and FCFbG are non-GAAP financial measures; see Appendix Table A-8 for GAAP Reconciliation. Adjusted EBITDA 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. Cash Provided by Operating Activities does not include changes in collateral deposits in support of risk management activities which are primarily associated with fair value adjustments related to derivatives.

Capital Allocation

The Company’s long-term capital allocation policy is to target approximately 80% of recurring cash available for allocation (CAFA), after debt reduction consistent with achieving targeted credit metrics by 2025, to return of capital, and approximately 20% to strategic growth investments. As part of this plan, the Company expects to increase its dividend per share by 7-9% annually, complete its $2.7 billion share repurchase authorization, and reduce debt by up to $2.55 billion by year-end 2025.

In 2023, the Company returned approximately $1.5 billion to shareholders and paid down debt by $1.52 billion. NRG exceeded its original share repurchase target by $150 million and debt reduction target by $120 million. The Company returned $1.15 billion through share repurchases and returned $347 million in common dividends representing $1.51 per share. The Company's $950 million accelerated share repurchase program executed in the fourth quarter of 2023 is planned to conclude by the end of the first quarter of 2024, at which time the Company expects to enter into a new share repurchase program.

For 2024, the Company reiterates its previously announced capital allocation plan that includes $500 million in debt paydown, $825 million in share repurchases, and an 8% increase of the annual common dividend.

On January 19, 2024, NRG declared a quarterly dividend on the Company's common stock of $0.4075 per share, or $1.63 per share on an annualized basis. This represents an increase of 8% to the annual common dividend for the fifth consecutive year.

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.

NRG Strategic Developments

$550 Million 2023 - 2025 Growth and Cost Initiatives

The Company has identified select growth and cost opportunities throughout the business totaling $550 million of accretive and recurring FCFbG through 2025. These opportunities are comprised of $300 million of planned growth leveraging the capabilities of the Energy and Smart Home platforms, and $250 million of cost efficiency initiatives. As of December 31, 2023, NRG achieved approximately $100 million of the $300 million growth plan and achieved approximately $40 million of the $250 million cost initiatives.

Brownfield Generation Development

NRG continues to evaluate brownfield development opportunities at three of its existing generation sites in Texas, totaling up to 1.5 GW of dispatchable, natural gas fired capacity. The Texas Energy Fund, a low-cost Texas loan program to facilitate dispatchable new build generation, was formally approved in November 2023. NRG is awaiting the issuance of the Texas Energy Fund's rules and regulations.

Virtual Power Plant Opportunity

NRG is uniquely positioned to leverage its customer portfolio, product ecosystem, and market expertise in expanding access to Virtual Power Plant (VPP) opportunities. Demand response and management will continue to be a strategic priority in 2024.

Segment Results

Table 3: Net Income/(Loss)

 

($ in millions)

 

Three Months Ended

 

Twelve Months Ended

Segment

 

12/31/23

 

12/31/22

 

12/31/23

 

12/31/22

Texas

 

$

1,559

 

 

$

213

 

 

$

3,091

 

 

$

1,265

 

East

 

 

(531

)

 

 

(1,757

)

 

 

(1,718

)

 

 

326

 

West/Services/Othera

 

 

(501

)

 

 

449

 

 

 

(1,464

)

 

 

(370

)

Vivint Smart Homeb

 

 

(45

)

 

 

 

 

 

(111

)

 

 

 

Net Income/(Loss)

 

$

482

 

 

$

(1,095

)

 

$

(202

)

 

$

1,221

 

a. Includes Corporate segment

b. Vivint Smart Home acquired in March 2023

Net Income/(Loss) for the full year 2023 was $1.4 billion lower than prior year primarily driven by a $4.1 billion negative impact from higher unrealized non-cash mark-to-market losses on economic hedges due to large movements in natural gas and power prices. Certain economic 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 non-cash losses or gains on the economic hedges that are not reflective of the expected economics at future settlement. Partially offsetting these losses were the gain on sale of the Company's 44% equity interest in STP and gross margin expansion in Texas.

Table 4: Adjusted EBITDA

 

($ in millions)

 

Three Months Ended

 

Twelve Months Ended

Segment

 

12/31/23

 

12/31/22

 

12/31/23

 

12/31/22

Texas

 

$

382

 

$

216

 

$

1,692

 

$

886

East

 

 

218

 

 

190

 

 

780

 

 

773

West/Services/Othera

 

 

6

 

 

57

 

 

57

 

 

206

Vivint Smart Homeb

 

 

238

 

 

 

 

753

 

 

Adjusted EBITDA

 

$

844

 

$

463

 

$

3,282

 

$

1,865

a. Includes Corporate Segment

b. Vivint Smart Home acquired in March 2023

Texas: Full year 2023 Adjusted EBITDA was $1,692 million, $806 million higher than prior year. This increase was primarily driven by lower retail supply costs as a result of solid execution of NRG's diversified supply strategy and improved plant performance, coupled with higher revenue rates.

East: Full year 2023 Adjusted EBITDA was $780 million, $7 million higher than prior year. This increase was primarily driven by higher retail power margins, partially offset by the impact of asset retirements and lower natural gas gross margin.

West/Services/Other: Full year 2023 Adjusted EBITDA was $57 million, $149 million lower than prior year. This decline was primarily driven by lower average realized pricing at Cottonwood, timing of planned outages, and lower contributions from the services business.

Vivint Smart Home: Adjusted EBITDA was $753 million, with subscriber growth of 6% over 2022 and expanded monthly recurring service margin.

Liquidity and Capital Resources

Table 5: Corporate Liquidity

 

(In millions)

 

12/31/23

 

12/31/22

Cash and Cash Equivalents

 

$

541

 

$

430

Restricted Cash

 

 

24

 

 

40

Total

 

$

565

 

$

470

Total credit facility availability

 

 

4,278

 

 

2,324

Total Liquidity, excluding collateral received

 

$

4,843

 

$

2,794

As of December 31, 2023, NRG's unrestricted cash was $541 million, and $4.3 billion was available under the Company’s credit facilities. Total liquidity was $4.8 billion, which was $2.0 billion higher than December 31, 2022. This increase was due to specific initiatives to optimize the amount of collateral supporting NRG's market operations activity and increases in credit facilities.

Earnings Conference Call

On February 28, 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.

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 market operations 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 retail customers, the ability to successfully integrate businesses of acquired companies, including Direct Energy and 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, and 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 guidance are estimates as of February 28, 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

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

For the Year Ended December 31,

(In millions, except per share amounts)

 

2023

 

 

 

2022

 

 

 

2021

 

Revenue

 

 

 

 

 

Revenue

$

28,823

 

 

$

31,543

 

 

$

26,989

 

Operating Costs and Expenses

 

 

 

 

 

Cost of operations (excluding depreciation and amortization shown below)

 

26,526

 

 

 

27,446

 

 

 

20,482

 

Depreciation and amortization

 

1,127

 

 

 

634

 

 

 

785

 

Impairment losses

 

26

 

 

 

206

 

 

 

544

 

Selling, general and administrative costs

 

1,968

 

 

 

1,228

 

 

 

1,293

 

Provision for credit losses

 

251

 

 

 

11

 

 

 

698

 

Acquisition-related transaction and integration costs

 

119

 

 

 

52

 

 

 

93

 

Total operating costs and expenses

 

30,017

 

 

 

29,577

 

 

 

23,895

 

Gain on sale of assets

 

1,578

 

 

 

52

 

 

 

247

 

Operating Income

 

384

 

 

 

2,018

 

 

 

3,341

 

Other Income/(Expense)

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

16

 

 

 

6

 

 

 

17

 

Impairment losses on investments

 

(102

)

 

 

 

 

 

 

Other income, net

 

47

 

 

 

56

 

 

 

63

 

Gain/(Loss) on debt extinguishment

 

109

 

 

 

 

 

 

(77

)

Interest expense

 

(667

)

 

 

(417

)

 

 

(485

)

Total other expense

 

(597

)

 

 

(355

)

 

 

(482

)

(Loss)/Income Before Income Taxes

 

(213

)

 

 

1,663

 

 

 

2,859

 

Income tax (benefit)/expense

 

(11

)

 

 

442

 

 

 

672

 

Net (Loss)/Income

 

(202

)

 

 

1,221

 

 

 

2,187

 

Less: Cumulative dividends attributable to Series A Preferred Stock

 

54

 

 

 

 

 

 

 

Net (Loss)/Income Available for Common Stockholders

$

(256

)

 

$

1,221

 

 

$

2,187

 

(Loss)/Income Per Share

 

 

 

 

 

Weighted average number of common shares outstanding — basic and diluted

 

228

 

 

 

236

 

 

 

245

 

(Loss)/Income per Weighted Average Common Share — Basic and Diluted

$

(1.12

)

 

$

5.17

 

 

$

8.93

 

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

 

 

For the Year Ended December 31,

(In millions)

 

2023

 

 

 

2022

 

 

 

2021

 

Net (Loss)/Income

$

(202

)

 

$

1,221

 

 

$

2,187

 

Other Comprehensive Income/(Loss), net of tax

 

 

 

 

 

Foreign currency translation adjustments

 

9

 

 

 

(35

)

 

 

(5

)

Defined benefit plans

 

30

 

 

 

(16

)

 

 

85

 

Other comprehensive income/(loss)

 

39

 

 

 

(51

)

 

 

80

 

Comprehensive (Loss)/Income

$

(163

)

 

$

1,170

 

 

$

2,267

 

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of December 31,

(In millions)

 

2023

 

 

2022

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

541

 

$

430

Funds deposited by counterparties

 

84

 

 

1,708

Restricted cash

 

24

 

 

40

Accounts receivable, net

 

3,542

 

 

4,773

Inventory

 

607

 

 

751

Derivative instruments

 

3,862

 

 

7,886

Cash collateral paid in support of energy risk management activities

 

441

 

 

260

Prepayments and other current assets

 

626

 

 

383

Total current assets

 

9,727

 

 

16,231

Property, plant and equipment, net

 

1,763

 

 

1,692

Other Assets

 

 

 

Equity investments in affiliates

 

42

 

 

133

Operating lease right-of-use assets, net

 

179

 

 

225

Goodwill

 

5,079

 

 

1,650

Customer relationships, net

 

2,164

 

 

943

Other intangible assets, net

 

1,763

 

 

1,189

Nuclear decommissioning trust fund

 

 

 

838

Derivative instruments

 

2,293

 

 

4,108

Deferred income taxes

 

2,251

 

 

1,881

Other non-current assets

 

777

 

 

256

Total other assets

 

14,548

 

 

11,223

Total Assets

$

26,038

 

$

29,146

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

 

 

As of December 31,

(In millions, except share data)

 

2023

 

 

 

2022

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities

 

 

 

Current portion of long-term debt and finance leases

$

620

 

 

$

63

 

Current portion of operating lease liabilities

 

90

 

 

 

83

 

Accounts payable

 

2,325

 

 

 

3,643

 

Derivative instruments

 

4,019

 

 

 

6,195

 

Cash collateral received in support of energy risk management activities

 

84

 

 

 

1,708

 

Deferred revenue current

 

720

 

 

 

176

 

Accrued expenses and other current liabilities

 

1,642

 

 

 

1,114

 

Total current liabilities

 

9,500

 

 

 

12,982

 

Other Liabilities

 

 

 

Long-term debt and finance leases

 

10,133

 

 

 

7,976

 

Non-current operating lease liabilities

 

128

 

 

 

180

 

Nuclear decommissioning reserve

 

 

 

 

340

 

Nuclear decommissioning trust liability

 

 

 

 

477

 

Derivative instruments

 

1,488

 

 

 

2,246

 

Deferred income taxes

 

22

 

 

 

134

 

Deferred revenue non-current

 

914

 

 

 

10

 

Other non-current liabilities

 

947

 

 

 

973

 

Total other liabilities

 

13,632

 

 

 

12,336

 

Total Liabilities

 

23,132

 

 

 

25,318

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at December 31, 2023 (aggregate liquidation preference $650); 0 shares issued and outstanding at December 31, 2022

 

650

 

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 267,330,470 and 423,897,001 shares issued; and 208,130,950 and 229,561,030 shares outstanding at December 31, 2023 and 2022, respectively

 

3

 

 

 

4

 

Additional paid-in capital

 

3,416

 

 

 

8,457

 

Retained earnings

 

820

 

 

 

1,408

 

Treasury stock, at cost; 59,199,520 and 194,335,971 shares at December 31, 2023 and 2022, respectively

 

(1,892

)

 

 

(5,864

)

Accumulated other comprehensive loss

 

(91

)

 

 

(177

)

Total Stockholders' Equity

 

2,906

 

 

 

3,828

 

Total Liabilities and Stockholders' Equity

$

26,038

 

 

$

29,146

 

 

NRG ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

For the Year Ended December 31,

(In millions)

 

2023

 

 

 

2022

 

 

 

2021

 

Cash Flows from Operating Activities

 

 

 

 

 

Net (loss)/income

$

(202

)

 

$

1,221

 

 

$

2,187

 

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

 

 

 

 

 

Equity in and distributions from (earnings)/losses of unconsolidated affiliates

 

(6

)

 

 

7

 

 

 

20

 

Depreciation and amortization

 

1,127

 

 

 

634

 

 

 

785

 

Accretion of asset retirement obligations

 

27

 

 

 

55

 

 

 

30

 

Provision for credit losses

 

251

 

 

 

11

 

 

 

698

 

Amortization of nuclear fuel

 

47

 

 

 

54

 

 

 

51

 

Amortization of financing costs and debt discounts

 

52

 

 

 

23

 

 

 

39

 

(Gain)/Loss on debt extinguishment

 

(109

)

 

 

 

 

 

77

 

Amortization of in-the-money contracts and emissions allowances

 

137

 

 

 

158

 

 

 

106

 

Amortization of unearned equity compensation

 

101

 

 

 

28

 

 

 

21

 

Net gain on sale of assets and disposal of assets

 

(1,559

)

 

 

(102

)

 

 

(261

)

Impairment losses

 

128

 

 

 

206

 

 

 

544

 

Changes in derivative instruments

 

2,455

 

 

 

(3,221

)

 

 

(3,626

)

Changes in deferred income taxes and liability for uncertain tax benefits

 

(92

)

 

 

382

 

 

 

604

 

Changes in collateral deposits in support of risk management activities

 

(1,806

)

 

 

896

 

 

 

797

 

Changes in nuclear decommissioning trust liability

 

 

 

 

9

 

 

 

40

 

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

 

840

 

 

 

(1,560

)

 

 

(1,232

)

Inventory

 

189

 

 

 

(252

)

 

 

(61

)

Prepayments and other current assets

 

(233

)

 

 

17

 

 

 

31

 

Accounts payable

 

(1,455

)

 

 

1,295

 

 

 

476

 

Accrued expenses and other current liabilities

 

360

 

 

 

(29

)

 

 

(55

)

Other assets and liabilities

 

(473

)

 

 

(161

)

 

 

(89

)

Cash (used)/provided by operating activities

$

(221

)

 

$

360

 

 

$

493

 

Cash Flows from Investing Activities

 

 

 

 

 

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

$

(2,523

)

 

$

(62

)

 

$

(3,559

)

Capital expenditures

 

(598

)

 

 

(367

)

 

 

(269

)

Net purchases of emissions allowances

 

(24

)

 

 

(6

)

 

 

 

Investments in nuclear decommissioning trust fund securities

 

(367

)

 

 

(454

)

 

 

(751

)

Proceeds from sales of nuclear decommissioning trust fund securities

 

355

 

 

 

448

 

 

 

710

 

Proceeds from sale of assets, net of cash disposed

 

2,007

 

 

 

109

 

 

 

830

 

Proceeds from insurance recoveries for property, plant and equipment, net

 

240

 

 

 

 

 

 

 

Cash used by investing activities

$

(910

)

 

$

(332

)

 

$

(3,039

)

 

For the Year Ended December 31,

(In millions)

 

2023

 

 

 

2022

 

 

 

2021

 

Cash Flows from Financing Activities

 

 

 

 

 

Proceeds from issuance of preferred stock, net of fees

$

635

 

 

$

 

 

$

 

Net receipts from settlement of acquired derivatives that include financing elements

 

342

 

 

 

1,995

 

 

 

938

 

Payments for share repurchase activity(a)

 

(1,172

)

 

 

(606

)

 

 

(48

)

Payments of dividends to preferred and common stockholders

 

(381

)

 

 

(332

)

 

 

(319

)

Proceeds from issuance of long-term debt

 

731

 

 

 

 

 

 

1,100

 

Payments for short and long-term debt

 

(523

)

 

 

(5

)

 

 

(1,861

)

Payments for debt extinguishment costs

 

 

 

 

 

 

 

(65

)

Payments of debt issuance costs

 

(32

)

 

 

(9

)

 

 

(18

)

Proceeds from issuance of common stock

 

 

 

 

 

 

 

1

 

Proceeds from credit facilities

 

3,020

 

 

 

 

 

 

1,415

 

Repayments to credit facilities

 

(3,020

)

 

 

 

 

 

(1,415

)

Cash (used)/provided by financing activities

$

(400

)

 

$

1,043

 

 

$

(272

)

Effect of exchange rate changes on cash and cash equivalents

 

2

 

 

 

(3

)

 

 

(2

)

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

 

(1,529

)

 

 

1,068

 

 

 

(2,820

)

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

 

2,178

 

 

 

1,110

 

 

 

3,930

 

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

$

649

 

 

$

2,178

 

 

$

1,110

 

  1. Includes $(22) million, $(6) million and $(9) million of equivalent shares purchased in lieu of tax withholdings on equity compensation issuances for the years ended December 31, 2023, 2022 and 2021, respectively

Appendix Table A-1: Fourth Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss)1:

($ in millions)

Texas

 

East

 

West/

Services/

Other

 

Vivint Smart Home

 

Corp/Elim

 

Total

Net Income/(Loss)

$

1,559

 

 

$

(531

)

 

$

(258

)

 

$

(45

)

 

$

(243

)

 

$

482

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

1

 

 

 

3

 

 

 

8

 

 

 

77

 

 

 

89

 

 

 

178

 

Income tax

 

 

 

 

1

 

 

 

(28

)

 

 

(12

)

 

 

210

 

 

 

171

 

(Gain) on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

(109

)

 

 

(109

)

Depreciation and amortization

 

75

 

 

 

29

 

 

 

25

 

 

 

176

 

 

 

9

 

 

 

314

 

ARO expense

 

8

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Contract and emission credit amortization, net

 

2

 

 

 

17

 

 

 

4

 

 

 

 

 

 

 

 

 

23

 

EBITDA

 

1,645

 

 

 

(476

)

 

 

(249

)

 

 

196

 

 

 

(44

)

 

 

1,072

 

Stock-based compensation

 

(2

)

 

 

(1

)

 

 

(1

)

 

 

17

 

 

 

 

 

 

13

 

Amortization of customer acquisition costs2

 

14

 

 

 

17

 

 

 

1

 

 

 

10

 

 

 

 

 

 

42

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Acquisition and divestiture integration and transaction costs

 

 

 

 

 

 

 

 

 

 

2

 

 

 

6

 

 

 

8

 

Cost to achieve

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

14

 

Deactivation costs

 

 

 

 

15

 

 

 

3

 

 

 

 

 

 

 

 

 

18

 

(Gain) on sale of assets

 

(1,319

)

 

 

(31

)

 

 

 

 

 

 

 

 

 

 

 

(1,350

)

Other and non-recurring charges3

 

(64

)

 

 

(1

)

 

 

1

 

 

 

13

 

 

 

16

 

 

 

(35

)

Impairments

 

2

 

 

 

4

 

 

 

122

 

 

 

 

 

 

 

 

 

128

 

Mark-to-market (MtM) loss on economic hedges

 

106

 

 

 

691

 

 

 

133

 

 

 

 

 

 

 

 

 

930

 

Adjusted EBITDA

$

382

 

 

$

218

 

 

$

14

 

 

$

238

 

 

$

(8

)

 

$

844

 

1 This schedule reflects 2023 results under the harmonization of the Adjusted EBITDA definition

2 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized contract costs related to commissions and other costs related to securing the new customer

3 Other and non-recurring charges include $(68) million of property insurance proceeds. For the three months ended December 31, 2023, cash proceeds were $67 million

Fourth Quarter 2023 condensed financial information by Operating Segment:

($ in millions)

Texas

 

East

 

West/

Services/

Other

 

Vivint Smart Home

 

Corp/Elim

 

Total

Revenue1

 

2,241

 

 

3,037

 

 

 

1,014

 

 

 

479

 

 

(4

)

 

 

6,767

 

Cost of fuel, purchased energy and other cost of sales2

 

1,435

 

 

2,602

 

 

 

881

 

 

 

51

 

 

(3

)

 

 

4,966

 

Economic gross margin

 

806

 

 

435

 

 

 

133

 

 

 

428

 

 

(1

)

 

 

1,801

 

Operations & maintenance and other cost of operations3

 

220

 

 

97

 

 

 

67

 

 

 

57

 

 

(2

)

 

 

439

 

Selling, marketing, general and administrative4

 

146

 

 

139

 

 

 

52

 

 

 

119

 

 

5

 

 

 

461

 

Provision for credit losses

 

58

 

 

6

 

 

 

8

 

 

 

13

 

 

 

 

 

85

 

Other

 

 

 

(25

)

 

 

(8

)

 

 

1

 

 

4

 

 

 

(28

)

Adjusted EBITDA

$

382

 

$

218

 

 

$

14

 

 

$

238

 

$

(8

)

 

$

844

 

1 Excludes MtM gain of $(48) million and contract amortization of $8 million

2 Includes TDSP expense, capacity and emission credits

3 Excludes deactivation costs of $18 million, ARO expense of $13 million, stock-based compensation of $2 million, amortization of customer acquisition costs of $2 million and other and non-recurring charges of $(68) million

4 Excludes amortization of customer acquisition costs of $40 million, other and non-recurring charges of $20 million, cost to achieve of $14 million, stock-based compensation of $11 million and acquisition and divestiture integration and transaction costs of $2 million

The following table reconciles the Fourth Quarter 2023 condensed financial information to Adjusted EBITDA:

($ in millions)

Condensed financial information

 

Interest, tax, depr., amort.

 

MtM

 

Deactivation

 

Other adj.2

 

Adjusted EBITDA

Revenue

$

6,807

 

 

$

8

 

 

$

(48

)

 

$

 

 

$

 

 

$

6,767

 

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

 

5,959

 

 

 

(15

)

 

 

(978

)

 

 

 

 

 

 

 

 

4,966

 

Depreciation and Amortization

 

314

 

 

 

(314

)

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

534

 

 

 

337

 

 

 

930

 

 

 

 

 

 

 

 

 

1,801

 

Operations & maintenance and other cost of operations

 

406

 

 

 

 

 

 

 

 

 

(18

)

 

 

51

 

 

 

439

 

Selling, marketing, general & administrative

 

548

 

 

 

 

 

 

 

 

 

 

 

 

(87

)

 

 

461

 

Provision for credit losses

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85

 

Other

 

(987

)

 

 

(349

)

 

 

 

 

 

 

 

 

1,308

 

 

 

(28

)

Net Income/(Loss)

$

482

 

 

$

686

 

 

$

930

 

 

$

18

 

 

$

(1,272

)

 

$

844

 

1 Excludes Operations & maintenance and other cost of operations of $406 million

2 Other adj. includes impairments of $128 million, amortization of customer acquisition costs of $42 million, cost to achieve of $14 million, stock-based compensation of $13 million, ARO expenses of $13 million, acquisition and divestiture integration and transaction costs of $8 million, adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates of $4 million, other and non-recurring charges of $(35) million, gain on debt extinguishment $(109) million and gain on sale of assets $(1,350) million

Appendix Table A-2: 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)1:

($ in millions)

Texas

 

East

 

West/

Services/

Other

 

Corp/Elim

 

Total

Net Income/(Loss)

$

213

 

 

$

(1,757

)

 

$

234

 

 

$

215

 

 

$

(1,095

)

Plus:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

 

(5

)

 

 

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

 

323

 

 

 

(1,686

)

 

 

298

 

 

 

(34

)

 

 

(1,099

)

Winter Storm URI

 

(135

)

 

 

 

 

 

 

 

 

 

 

 

(135

)

Stock-based compensation

 

3

 

 

 

2

 

 

 

1

 

 

 

 

 

 

6

 

Amortization of customer acquisition costs2

 

13

 

 

 

9

 

 

 

 

 

 

 

 

 

22

 

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)/loss on sale of assets

 

 

 

 

 

 

 

(2

)

 

 

1

 

 

 

(1

)

Other and non-recurring charges

 

(38

)

 

 

3

 

 

 

1

 

 

 

(3

)

 

 

(37

)

Impairments

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Mark-to-market (MtM) loss/(gain) on economic hedges

 

50

 

 

 

1,849

 

 

 

(240

)

 

 

 

 

 

1,659

 

Adjusted EBITDA

$

216

 

 

$

190

 

 

$

67

 

 

$

(10

)

 

$

463

 

1 In 2022, Stock-based compensation and Amortization of customer acquisition costs were not excluded from Adjusted EBITDA. This schedule reflects 2022 results under the harmonization of the Adjusted EBITDA definition

2 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized contract costs related to commissions and other costs related to securing the new customer

Fourth Quarter 2022 condensed financial information by Operating Segment:

($ in millions)

Texas

 

East

 

West/

Services/

Other

 

Corp/Elim

 

Total

Revenue1

 

2,199

 

 

 

4,192

 

 

 

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

 

604

 

 

 

389

 

 

 

166

 

 

 

(1

)

 

 

1,158

 

Operations & maintenance and other cost of operations3

 

246

 

 

 

115

 

 

 

67

 

 

 

(1

)

 

 

427

 

Selling, marketing, general & administrative4

 

96

 

 

 

88

 

 

 

38

 

 

 

6

 

 

 

228

 

Provision for credit losses

 

(93

)

 

 

(4

)

 

 

5

 

 

 

 

 

 

(92

)

Other

 

4

 

 

 

 

 

 

(11

)

 

 

4

 

 

 

(3

)

Winter Storm Uri impact

 

135

 

 

 

 

 

 

 

 

 

 

 

 

135

 

Adjusted EBITDA

$

216

 

 

$

190

 

 

$

67

 

 

$

(10

)

 

$

463

 

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

2 Includes TDSP expense, capacity and emission credits

3 Excludes other and non-recurring charges of $(36) million, ARO expenses of $35 million, deactivation costs of $9 million and amortization of customer acquisition costs of $1 million

4 Excludes amortization of customer acquisition costs of $21 million and stock-based compensation of $6 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

)

 

 

 

 

 

 

 

 

427

 

Selling, marketing, general & administrative

 

255

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

(27

)

 

 

237

 

Provision for credit losses

 

(92

)

 

 

 

 

 

 

 

 

 

 

 

126

 

 

 

 

 

 

34

 

Other

 

(189

)

 

 

223

 

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

(3

)

Net (Loss)/Income

$

(1,095

)

 

$

(39

)

 

$

1,659

 

 

$

9

 

 

$

(135

)

 

$

64

 

 

$

463

 

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, amortization of customer acquisition costs of $22 million, adjustment to reflect impairments of $8 million, stock-based compensation of $6 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $5 million, other and non-recurring charges of $(37) million and gain on sale of assets of $(1) million

Appendix Table A-3: Full Year 2023 Adjusted EBITDA Reconciliation by Operating Segment

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss)1:

($ in millions)

Texas

 

East

 

West/

Services/

Other

 

Vivint Smart Home2

 

Corp/Elim

 

Total

Net Income/(Loss)

$

3,091

 

 

$

(1,718

)

 

$

(859

)

 

$

(111

)

 

$

(605

)

 

$

(202

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

3

 

 

 

(9

)

 

 

26

 

 

 

174

 

 

 

408

 

 

 

602

 

Income tax

 

 

 

 

 

 

 

(111

)

 

 

(32

)

 

 

132

 

 

 

(11

)

(Gain) on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

 

 

(109

)

 

 

(109

)

Depreciation and amortization

 

294

 

 

 

116

 

 

 

95

 

 

 

586

 

 

 

36

 

 

 

1,127

 

ARO expense

 

15

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

27

 

Contract and emission credit amortization, net

 

11

 

 

 

100

 

 

 

14

 

 

 

 

 

 

 

 

 

125

 

EBITDA

 

3,414

 

 

 

(1,499

)

 

 

(835

)

 

 

617

 

 

 

(138

)

 

 

1,559

 

Stock-based compensation3

 

13

 

 

 

5

 

 

 

2

 

 

 

58

 

 

 

 

 

 

78

 

Amortization of customer acquisition costs4

 

53

 

 

 

51

 

 

 

4

 

 

 

23

 

 

 

 

 

 

131

 

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

15

 

Acquisition and divestiture integration and transaction costs5

 

 

 

 

 

 

 

 

 

 

41

 

 

 

82

 

 

 

123

 

Cost to achieve

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

14

 

Deactivation costs

 

 

 

 

34

 

 

 

11

 

 

 

 

 

 

 

 

 

45

 

(Gain) on sale of assets

 

(1,319

)

 

 

(233

)

 

 

 

 

 

 

 

 

 

 

 

(1,552

)

Other and non-recurring charges6

 

(156

)

 

 

4

 

 

 

(1

)

 

 

14

 

 

 

17

 

 

 

(122

)

Impairments

 

2

 

 

 

4

 

 

 

122

 

 

 

 

 

 

 

 

 

128

 

Mark-to-market (MtM) (gain)/loss on economic hedges

 

(315

)

 

 

2,414

 

 

 

764

 

 

 

 

 

 

 

 

 

2,863

 

Adjusted EBITDA

$

1,692

 

 

$

780

 

 

$

82

 

 

$

753

 

 

$

(25

)

 

$

3,282

 

1 This schedule reflects 2023 results under the harmonization of the Adjusted EBITDA definition

2 Vivint Smart Home acquired in March 2023

3 Stock-based compensation excludes $25 million reflected in acquisition and divestiture integration and transactions costs

4Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized contract costs related to commissions and other costs related to securing the new customer

5 Includes stock-based compensation of $25 million

6 Other and non-recurring charges include $(164) million of property insurance proceeds. For the year ended December 31, 2023, cash proceeds were $240 million

Full Year 2023 condensed financial information by Operating Segment:

($ in millions)

Texas

 

East

 

West/

Services/

Other

 

Vivint Smart Home1

 

Corp/Elim

 

Total

Revenue2

 

10,476

 

 

 

12,522

 

 

 

4,178

 

 

 

1,549

 

 

(14

)

 

 

28,711

 

Cost of fuel, purchased energy and other cost of sales3

 

7,048

 

 

 

10,795

 

 

 

3,652

 

 

 

153

 

 

(9

)

 

 

21,639

 

Economic gross margin

 

3,428

 

 

 

1,727

 

 

 

526

 

 

 

1,396

 

 

(5

)

 

 

7,072

 

Operations & maintenance and other cost of operations4

 

1,005

 

 

 

427

 

 

 

252

 

 

 

184

 

 

(5

)

 

 

1,863

 

Selling, marketing, general and administrative5

 

575

 

 

 

518

 

 

 

195

 

 

 

424

 

 

20

 

 

 

1,732

 

Provision for credit losses

 

159

 

 

 

28

 

 

 

30

 

 

 

34

 

 

 

 

 

251

 

Other

 

(3

)

 

 

(26

)

 

 

(33

)

 

 

1

 

 

5

 

 

 

(56

)

Adjusted EBITDA

$

1,692

 

 

$

780

 

 

$

82

 

 

$

753

 

$

(25

)

 

$

3,282

 

1 Vivint Smart Home acquired in March 2023

2 Excludes MtM gain of $(144) million and contract amortization of $32 million

3 Includes TDSP expense, capacity and emission credits

4 Excludes other and non-recurring charges of $(162) million, deactivation costs of $45 million, ARO expense of $27 million, stock-based compensation of

$8 million and amortization of customer acquisition costs of $6 million

5 Excludes amortization of customer acquisition costs of $125 million, stock-based compensation of $70 million, other and non-recurring charges of $22 million, cost to achieve of $14 million and acquisition and divestiture integration and transaction costs of $5 million

The following table reconciles the Full Year 2023 condensed financial information to Adjusted EBITDA:

($ in millions)

Condensed financial information

 

Interest, tax, depr., amort.

 

MtM

 

Deactivation

 

Other adj.2

 

Adjusted EBITDA

Revenue

$

28,823

 

 

$

32

 

 

$

(144

)

 

$

 

 

$

 

 

$

28,711

 

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

 

24,739

 

 

 

(93

)

 

 

(3,007

)

 

 

 

 

 

 

 

 

21,639

 

Depreciation and amortization

 

1,127

 

 

 

(1,127

)

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

2,957

 

 

 

1,252

 

 

 

2,863

 

 

 

 

 

 

 

 

 

7,072

 

Operations & maintenance and other cost of operations

 

1,787

 

 

 

 

 

 

 

 

 

(45

)

 

 

121

 

 

 

1,863

 

Selling, marketing, general & administrative

 

1,968

 

 

 

 

 

 

 

 

 

 

 

 

(236

)

 

 

1,732

 

Provision for credit losses

 

251

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

251

 

Other

 

(847

)

 

 

(591

)

 

 

 

 

 

 

 

 

1,382

 

 

 

(56

)

Net (Loss)/Income

$

(202

)

 

$

1,843

 

 

$

2,863

 

 

$

45

 

 

$

(1,267

)

 

$

3,282

 

1 Excludes Operations & maintenance and other cost of operations of $1,787 million

2 Other adj. includes amortization of customer acquisition costs of $131 million, impairments of $128 million, acquisition and divestiture integration and transaction costs of $123 million, stock-based compensation of $78 million, ARO expenses of $27 million, adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates of $15 million, cost to achieve of $14 million, gain on debt extinguishment $(109) million, other and non-recurring charges of $(122) million and gain on sale of assets $(1,552) million

Appendix Table A-4: 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)1:

($ 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

 

(135

)

 

 

 

 

 

 

 

 

 

 

 

(135

)

Stock-based compensation

 

14

 

 

 

6

 

 

 

7

 

 

 

 

 

 

27

 

Amortization of customer acquisition costs2

 

51

 

 

 

31

 

 

 

2

 

 

 

 

 

 

84

 

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)/loss on sale of assets

 

(10

)

 

 

 

 

 

(45

)

 

 

3

 

 

 

(52

)

Other and non-recurring charges

 

(37

)

 

 

29

 

 

 

(9

)

 

 

8

 

 

 

(9

)

Impairments

 

 

 

 

206

 

 

 

 

 

 

 

 

 

206

 

Mark to market (MtM) (gain) on economic hedges

 

(613

)

 

 

(188

)

 

 

(447

)

 

 

 

 

 

(1,248

)

Adjusted EBITDA

$

886

 

 

$

773

 

 

$

240

 

 

$

(34

)

 

$

1,865

 

1 In 2022, Stock-based compensation and Amortization of customer acquisition costs were not excluded from Adjusted EBITDA; this schedule reflects 2022 results under the harmonization of the Adjusted EBITDA definition

2 Amortization of customer acquisition costs, which are excluded from the calculation of Adjusted EBITDA, is the income statement recognition of capitalized contract costs related to commissions and other costs related to securing the new customer

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

 

983

 

 

 

484

 

 

 

233

 

 

 

(2

)

 

 

1,698

 

Selling, marketing, general & administrative4

 

501

 

 

 

392

 

 

 

193

 

 

 

31

 

 

 

1,117

 

Provision for credit losses

 

(40

)

 

 

28

 

 

 

23

 

 

 

 

 

 

11

 

Other

 

(2

)

 

 

(2

)

 

 

(62

)

 

 

2

 

 

 

(64

)

Winter Storm Uri

 

135

 

 

 

 

 

 

 

 

 

 

 

 

135

 

Adjusted EBITDA

$

886

 

 

$

773

 

 

$

240

 

 

$

(34

)

 

$

1,865

 

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 expense of $25 million, amortization of customer acquisition costs of $3 million, stock-based compensation of $2 million and other and non-recurring charges of $(20) million

4 Excludes amortization of customer acquisition costs of $81 million, stock-based compensation of $25 million, acquisition and divestiture integration and transaction costs of $6 million and other and non-recurring charges of $(1) 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

)

 

 

 

 

 

(39

)

 

 

1,698

 

Selling, marketing, general & administrative

 

1,228

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

(111

)

 

 

1,126

 

Provision for credit losses

 

11

 

 

 

 

 

 

 

 

 

 

 

126

 

 

 

 

 

 

137

 

Other

 

1,003

 

 

(795

)

 

 

 

 

 

 

 

 

 

 

 

(272

)

 

 

(64

)

Net Income/(Loss)

$

1,221

 

$

1,579

 

 

$

(1,248

)

 

$

26

 

 

$

(135

)

 

$

422

 

 

$

1,865

 

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

2 Other adj. includes adjustment to reflect impairments of $206 million, amortization of customer acquisition costs of $84 million, acquisition and divestiture integration and transaction costs of $58 million, ARO expense of $55 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $53 million, stock-based compensation $27 million, gain on sale of assets of $(52) million and other and non-recurring charges of $(9) million

Appendix Table A-5: Three Months Ended December 31, 2023 and 2022 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:

 

 

Three Months Ended

(In millions)

 

December 31, 2023

 

December 31, 2022

Adjusted EBITDA

 

$

844

 

 

$

463

 

Winter Storm Uri EBITDA

 

 

 

 

 

135

 

Interest payments, net

 

 

(86

)

 

 

(66

)

Income tax

 

 

(10

)

 

 

(20

)

Net deferred revenue1

 

 

(86

)

 

 

(27

)

Amortization of customer fulfillment costs2

 

 

18

 

 

 

 

Gross capitalized contract costs3

 

 

(127

)

 

 

(6

)

Collateral / working capital / other

 

 

(312

)

 

 

(1,877

)

Cash provided/(used) by operating activities

 

 

241

 

 

 

(1,398

)

Winter Storm Uri:

 

 

 

 

Winter Storm Uri EBITDA

 

 

 

 

 

(135

)

Securitization, C&I credits and remaining open accounts receivables

 

 

 

 

 

23

 

Net receipts from settlement of acquired derivatives that include

financing elements

 

 

10

 

 

 

399

 

Acquisition and divestiture integration and transaction costs4

 

 

36

 

 

 

26

 

Sale of land5

 

 

22

 

 

 

 

Encina site improvement

 

 

 

 

 

1

 

Adjustment for change in collateral

 

 

618

 

 

 

1,425

 

Nuclear decommissioning trust liability

 

 

1

 

 

 

(8

)

Effect of exchange rate changes on cash and cash equivalents

 

 

2

 

 

 

2

 

Adjusted cash provided by operating activities

 

 

930

 

 

 

335

 

Maintenance capital expenditures, net6

 

 

(20

)

 

 

(61

)

Environmental capital expenditures

 

 

(2

)

 

 

 

Cost of acquisition

 

 

34

 

 

 

 

Free Cash Flow before Growth Investments (FCFbG)

 

$

942

 

 

$

274

 

1 The cash impact of deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment sales and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit

2 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, is the income statement recognition of capitalized contract costs related to the sale and installation of equipment necessary for a customer to receive the Vivint Smart Home service

3 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

4 Three months ended 12/31/23 includes $14 million cost to achieve and $14 million of STP

5 Includes $16 million from land sales for Indian River and $6 million for Norwalk

6 Includes $67 million of W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment in 2023

Appendix Table A-6: Twelve Months Ended December 31, 2023 and 2022 Free Cash Flow before Growth Investments (FCFbG)

The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash (used)/provided by operating activities:

 

 

Twelve Months Ended

(In millions)

 

December 31, 2023

 

December 31, 2022

Adjusted EBITDA

 

$

3,282

 

 

$

1,865

 

Winter Storm Uri EBITDA

 

 

 

 

 

135

 

Interest payments, net

 

 

(482

)

 

 

(320

)

Income tax

 

 

(50

)

 

 

(67

)

Net deferred revenue1

 

 

92

 

 

 

(41

)

Amortization of customer fulfillment costs2

 

 

37

 

 

 

 

Gross capitalized contract costs3

 

 

(749

)

 

 

(16

)

Collateral / working capital / other

 

 

(2,351

)

 

 

(1,196

)

Cash (used)/provided by operating activities

 

 

(221

)

 

 

360

 

Winter Storm Uri:

 

 

 

 

Winter Storm Uri EBITDA

 

 

 

 

 

(135

)

Securitization, C&I credits and remaining open accounts receivables

 

 

 

 

 

(585

)

Net receipts from settlement of acquired derivatives that include

financing elements

 

 

342

 

 

 

1,995

 

Acquisition and divestiture transaction and integration costs4

 

 

134

 

 

 

58

 

Sale of land5

 

 

22

 

 

 

 

Encina site improvement

 

 

7

 

 

 

12

 

GenOn settlement

 

 

 

 

 

4

 

Adjustment for change in collateral

 

 

1,806

 

 

 

(896

)

Nuclear decommissioning trust liability

 

 

(12

)

 

 

(6

)

Effect of exchange rate changes on cash and cash equivalents

 

 

2

 

 

 

(3

)

Adjusted cash provided by operating activities

 

 

2,080

 

 

 

804

 

Maintenance capital expenditures, net6

 

 

(276

)

 

 

(235

)

Environmental capital expenditures

 

 

(3

)

 

 

(1

)

Cost of acquisition

 

 

124

 

 

 

 

Free Cash Flow before Growth Investments (FCFbG)

 

$

1,925

 

 

$

568

 

1 The cash impact of deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment sales and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit

2 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, are the income statement recognition of capitalized contract costs related to the sale and installation of equipment necessary for a customer to receive the Vivint Smart Home service

3 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

4 Twelve months ended 12/31/23 excludes $20 million non-cash stock-based compensation, includes $14 million cost to achieve, $14 million of STP, and $3 million of Astoria fees

5 Includes $16 million from land sales for Indian River and $6 million for Norwalk

6 Includes $240 million of W.A. Parish Unit 8 and Limestone Unit 1 insurance recoveries related to property, plant and equipment in 2023

Appendix Table A-7: Twelve Months Ended December 31, 2023 Sources and Uses of Liquidity

The following table summarizes the sources and uses of liquidity for the twelve months ending December 31, 2023:

($ in millions)

Twelve Months Ended December 31, 2023

Sources:

 

Adjusted cash provided by operating activities

$

2,080

 

Proceeds from sale of assets, net of cash disposed1

 

1,985

 

Increase and change in availability under revolving credit facility and collective collateral facilities

 

1,954

 

Proceeds from issuance of long-term debt

 

731

 

Proceeds from issuance of preferred stock, net of fees

 

635

 

 

 

Uses:

 

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

 

(2,523

)

Payments for share repurchase activity

 

(1,150

)

Payments for short and long-term debt

 

(523

)

Payments of dividends to preferred and common stockholders

 

(381

)

Maintenance and environmental capital expenditures, net2

 

(279

)

Cash collateral paid in support of energy risk management activities

 

(181

)

Acquisition and divestiture integration and transaction costs3

 

(134

)

Investment and integration capital expenditures

 

(79

)

Payment of debt issuance costs

 

(32

)

Net purchases of emission allowances

 

(24

)

Payments for shares repurchased in lieu of tax withholdings

 

(22

)

Encina site improvement

 

(7

)

Other investing and financing

 

(1

)

Change in Total Liquidity

$

2,049

 

1 Excludes $16 million from land sales for Indian River and $6 million for Norwalk

2 Includes $240 million of W.A. Parish Unit 8 and Limestone Unit 1 insurance recoveries related to property, plant and equipment

3 Twelve months ended 12/31/23 excludes $20 million non-cash stock-based compensation, includes $14 million cost to achieve, $14 million of STP, and $3 million of Astoria fees

Appendix Table A-8: 2024 Guidance Reconciliation

The following table summarizes the calculation of Adjusted EBITDA providing a reconciliation to Net Income, and the calculation of FCFbG providing a reconciliation to Cash provided by operating activities:

 

 

2024

($ in millions)

 

Guidance

Net Income1

$

750 - 1,000

Interest expense, net

 

640

 

Income tax

 

345

 

Depreciation and amortization

 

1,075

 

ARO expense

 

25

 

Amortization of customer acquisition costs2

 

215

 

Stock-based compensation3

 

100

 

Acquistion and divestiture integration and transaction costs

 

55

 

Other4

 

95

 

Adjusted EBITDA

 

3,300 - 3,550

Interest payments, net

 

(600

)

Income tax

 

(160

)

Net deferred revenue5

 

190

 

Amortization of customer fulfillment costs6

 

130

 

Gross capitalized contract costs7

 

(830

)

Working capital / other assets and liabilities8

 

(205

)

Cash provided by operating activities9

 

1,825 - 2,075

Acquisition and other costs8

 

124

 

Adjusted cash provided by operating activities

 

1,949 - 2,199

Maintenance capital expenditures, net10

 

(240) - (260

)

Environmental capital expenditures

 

(20) - (30

)

Cost of acquisition

 

145

 

Free Cash Flow before Growth

$

1,825 - 2,075

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

2 Amortization of customer acquisition costs is the income statement recognition of capitalized costs related to commissions and other costs related to securing new customers. NRG amortization of customer acquisition costs, excluding Vivint, is expected to be $135 million and Vivint is expected to be $80 million

3 NRG stock-based compensation, excluding Vivint, is expected to be $40 million and Vivint is expected to be $60 million

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 The cash impact of deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit

6 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, are the income statement recognition of capitalized contract costs related to the sale and installation of equipment necessary for a customer to receive the Vivint Smart Home service

7 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

8 Working capital / other assets and liabilities includes payments for acquisition and divestiture integration and transition costs, which is adjusted in Acquisition and other costs

9 Excludes fair value adjustments related to derivatives and changes in collateral deposits in support of risk management activities

10 Includes W.A. Parish Unit 8 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 gain/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 the impact of stock-based compensation, amortization of customer acquisition costs (primarily amortized commissions), 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, 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 provided by operating activities is a non-GAAP measure NRG provides to show 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, 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 Cash provided/(used) by operating activities 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 Flows from Operating Activities 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 Flows from Investing Activities.

Free Cash Flow before Growth Investments is Adjusted Cash provided by operating activities less maintenance and environmental capital expenditures, net of funding and insurance recoveries related to property, plant and equipment, 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 Investments is utilized by Management in making decisions regarding the allocation of capital. Free Cash Flow before Growth Investments 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 Investments is a performance measure and is not intended to represent Net Income/(Loss), Cash provided/(used) by operating activities (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:
Chevalier Gray
832.763.3454

Investors:
Brendan Mulhern
609.524.4767

Contacts

Media:
Chevalier Gray
832.763.3454

Investors:
Brendan Mulhern
609.524.4767