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8-K - 8-K - NRG ENERGY, INC.a15-16897_18k.htm

Exhibit 99.1

 

PRESS

RELEASE

 

NRG Energy, Inc. Reports Second Quarter 2015 Results,
 Reaffirms 2015 Full Year Guidance and Offers Next Drop Down to NRG Yield

 

Financial Highlights

 

·                  $729 million of Adjusted EBITDA(1) in the second quarter and $1,569 million(1) in the first six months of 2015

·                  $274 million of Free Cash Flow (FCF) before growth investments in the first six months of 2015

·                  Achieved record second quarter and first six months results at NRG Home Retail with over $200 million and $370 million of Adjusted EBITDA, respectively

·                  Offered next set of drop down assets to NRG Yield, consisting of wind facilities acquired in the EME transaction representing $35 million of Adjusted EBITDA and $20 million in Cash Available for Distribution (CAFD) on an annual run-rate basis(2)

 

Business and Operational Highlights

 

·                  Completed the 575 MW gas conversion at Big Cajun Unit 2 and environmental compliance controls at various coal units within the fleet

·                  Announced plans to develop a 20 MW solar energy facility for Cisco’s San Jose headquarters, scheduled to begin commercial operation by the end of 2016

 

Financial Guidance and Capital Allocation Update

 

·                  Reaffirming full year 2015 Guidance:

·                  Adjusted EBITDA of $3,200-$3,400 million(3)

·                  FCF before growth investments of $1,100-$1,300 million

·                  Executed $107 million of share repurchases in second quarter for a total of $186 million repurchased year-to-date with $51 million in remaining authorized capacity and $200 million in expected capacity(4)

 

PRINCETON, NJ; August 4, 2015 — NRG Energy, Inc. (NYSE: NRG) today reported second quarter Adjusted EBITDA of $729 million(1), with $338 million from NRG Business and NRG Renew combined(5), $204 million from NRG Home Retail, and $187 million from NRG Yield. Year-to-date adjusted cash flow from operations totaled $678 million. Net loss for the first six months of 2015 was $145 million, or $0.43 per diluted common share compared to a net loss of $147 million, or $0.48 per diluted common share for the first six months of 2014.

 

“Our competitive retail business continues to lead the way, achieving record results in a low supply cost environment while our wholesale unit continues to deliver solid operational

 


(1) Excludes negative contribution from Home Solar of $47 million and $87 million for second quarter and first six months of 2015, respectively

(2) Reflects NRG Yields pro-rata share of EBITDA and CAFD expected to be generated by the portfolio on an annual run-rate basis.

(3) Excludes projected negative contribution of $175 million from NRG Home Solar

(4) Based upon 1/3 of target of $600 million in 2015 drop down proceeds as part of previously announced capital allocation program

(5) Includes Corporate segment

 



 

performance through a strongly hedged baseload position,” said David Crane, NRG’s Chief Executive Officer.  “After a weather impeded start of the year, NRG Home Solar’s pace of customer bookings has us easily in the top four in the residential solar industry, with California still to come.”

 

Segment Results

 

Table 1: Adjusted EBITDA

 

($ in millions)

 

Three Months Ended

 

Six Months Ended

 

Segment

 

6/30/15

 

6/30/14

 

6/30/15

 

6/30/14

 

Business (1)(2)

 

$

285

 

$

301

 

$

821

 

$

896

 

Home Retail

 

204

 

157

 

370

 

272

 

Renew (1)

 

66

 

77

 

98

 

89

 

NRG Yield (1)

 

187

 

141

 

309

 

233

 

Corporate

 

(13

)

1

 

(29

)

4

 

Adjusted EBITDA(3)

 

$

729

 

$

677

 

$

1,569

 

$

1,494

 

 


(1)         In accordance with GAAP, 2014 results have been restated to include full impact of the assets in the NRG Yield drop down transactions which closed on January 2, 2015 and June 30, 2014.

(2)         See Appendices A-6 through A-9 for NRG Business regional details.

(3)         See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations; excludes negative contribution of $47 million and $87 million from Home Solar for the three and six months ended June 30, 2015, respectively, and $6 million and $7 million for the three and six months ended June 30, 2014, respectively.

 

Table 2: Net Income/(Loss)

 

($ in millions)

 

Three Months Ended

 

Six Months Ended

 

Segment

 

6/30/15

 

6/30/14

 

6/30/15

 

6/30/14

 

Business (1)

 

$

(1

)

$

99

 

$

28

 

$

93

 

Home Retail

 

212

 

(50

)

316

 

135

 

Home Solar

 

(54

)

(7

)

(99

)

(9

)

Renew (1)

 

(18

)

2

 

(73

)

(63

)

NRG Yield (1)

 

41

 

42

 

25

 

68

 

Corporate

 

(189

)

(166

)

(342

)

(371

)

Net Loss(2)

 

$

(9

)

$

(80

)

$

(145

)

$

(147

)

 


(1)         In accordance with GAAP, 2014 results have been restated to include full impact of the assets in the NRG Yield drop down transactions which closed on January 2, 2015 and June 30, 2014.

(2)         Includes mark-to-market gains and losses of economic hedges.

 

NRG Business: Second quarter Adjusted EBITDA was $285 million; $16 million lower than in the second quarter 2014 primarily driven by:

 

·                  East Region: $11 million lower due to lower energy margins caused by milder weather and lower capacity revenues due to lower base residual auction prices and less capacity following plant deactivations, partially offset by lower operating costs due to fewer outages and decreased run time

·                  West Region: $26 million lower due to decreased pricing and a decline in contracted volumes from certain capacity contracts including the retirement of Coolwater

·                  Gulf Coast Region: $27 million increase due to higher realized energy margins, partially offset by increased outage costs during planned outages for fuel conversion and back-end control installations.

 

NRG Home Retail: Second quarter Adjusted EBITDA was $204 million, $47 million higher than second quarter 2014 driven primarily by favorable supply costs, partially offset by an increase in operating costs associated with customer growth in Texas.

 

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NRG Renew: Second quarter Adjusted EBITDA was $66 million, $11 million lower than in second quarter 2014 primarily due to lower generation by wind assets following the drop in wind resource availability in 2015 and increased distributed solar development costs, partially offset by the ramp up of Ivanpah as generation continues to increase year over year.

 

NRG Yield: Second quarter Adjusted EBITDA was $187 million, $46 million higher than in second quarter 2014 primarily due to the Alta Wind acquisition.

 

Liquidity and Capital Resources

 

Table 3: Corporate Liquidity

 

($ in millions)

 

6/30/15

 

3/31/15

 

12/31/14

 

Cash at NRG-Level

 

$

709

 

$

786

 

$

661

 

Revolver

 

1,409

 

1,424

 

1,367

 

NRG-Level Liquidity

 

$

2,118

 

$

2,210

 

$

2,028

 

Restricted cash

 

433

 

443

 

457

 

Cash at Non-Guarantor Subsidiaries

 

1,437

 

1,378

 

1,455

 

Total Liquidity

 

$

3,988

 

$

4,031

 

$

3,940

 

 

NRG-level cash as of June 30, 2015, was $709 million, an increase of $48 million over the end of 2014, and $1,409 million was available under the Company’s credit facilities at the end of the current quarter. Total liquidity was $3,988 million including restricted cash and cash at non-guarantor subsidiaries (primarily GenOn and NRG Yield)(6).

 

NRG Strategic Developments

 

Next Drop Down to NRG Yield

 

NRG Energy offered NRG Yield the opportunity to acquire a 75% stake in a portfolio of 12 wind projects totaling net 814 MW. The transaction is expected to result in approximately $35 million of Adjusted EBITDA and $20 million of CAFD on an annual run-rate basis(7) to NRG Yield and is expected to close in the third quarter of 2015, subject to negotiation with, and approval by, NRG Yield Independent Directors.

 

Including this most recent offer and the residential and distributed generation solar partnerships with NRG Yield, NRG is targeting drop downs to NRG Yield over the second half of 2015 which are expected to result in an aggregate of $600 million in drop down proceeds, of which $200 million is expected to be available for incremental share repurchase capacity pursuant to the Company’s previously announced capital allocation program.

 

NRG Yield

 

On June 29, 2015, NRG Yield issued 28,198,000 shares of Class C common stock at $22.00 per share for net proceeds of $600 million. Additionally, NRG Yield issued $287.5 million of 3.25% convertible senior notes due 2020. The net proceeds of both of these issuances were used for the acquisition of a 25% interest in the Desert Sunlight Solar Farm for $285(8) million, to repay a portion of the $491 million in debt associated with the Alta X and Alta XI

 


(6) See Appendix A-11 for the YTD Second Quarter Sources and Uses of Liquidity detail.

(7) Reflects NRG Yields pro-rata share of EBITDA and CAFD expected to be generated by the portfolio on an annual run-rate basis.

(8) Subject to working capital adjustments.

 

3



 

wind facilities (in order to facilitate the tax equity financing transaction described below) and to repay outstanding indebtedness under NRG Yield’s revolving credit facility.

 

On June 30, 2015, NRG Yield closed a new tax equity facility in order to monetize production tax credits from the Alta Wind X and XI projects. This financing resulted in $119 million of cash proceeds after expenses and is expected to provide ongoing annual cash payments indexed to and limited by the projects’ wind production levels during the course of the tax equity investor’s investment holding period. Proceeds from this transaction and a portion of the proceeds from the recently completed equity and debt offerings were utilized to repay the entire $491 million of outstanding project debt associated with the Alta X and Alta XI wind facilities.

 

By 2016, the Desert Sunlight acquisition and the Alta X and Alta XI debt repayment and tax equity financing arrangement are expected to increase both the annual run-rate EBITDA by approximately $45 million and CAFD by approximately $50 million, including $9 million for debt service associated with the recently issued convertible senior notes.

 

NRG Home Solar

 

While the strong sales momentum positions the Company for robust growth over the balance of the year, NRG is revising its expectations for NRG Home Solar with a negative EBITDA contribution of $100 million to $175 million, due primarily to an increase in expenses associated with positioning NRG Home Solar in certain key residential solar markets, including a comprehensive sales and marketing push into the large and fast-growing California market set to start in August.

 

In advance of NRG Home Solar’s push into California, investments across the platform are yielding strong results. While overall bookings and deployments for the first half of 2015 lag original expectations, June sales exceeded March sales by nearly 90%.

 

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Outlook for 2015

 

Driven by robust second quarter results and a significantly hedged baseload portfolio over the remainder of 2015, the Company is reaffirming its guidance range for fiscal year 2015. As in previous quarters, the Company’s guidance assumes normalized weather in its core merchant markets over the remainder of the year.

 

Table 4: 2015 Adjusted EBITDA and FCF before Growth Investments Guidance

 

 

 

8/4/15

 

5/8/15

 

($ in millions)

 

2015

 

2015

 

Adjusted EBITDA (1)

 

$3,200 –3,400

 

$3,200 –3,400

 

Interest payments

 

(1,160)

 

(1,160)

 

Income tax

 

(40)

 

(40)

 

Adjusted EBITDA from NRG Home Solar

 

(175)

 

(100)

 

Working capital/other changes

 

250

 

250

 

Adjusted Cash Flow from Operations

 

$2,075 – 2,275

 

$2,150 – 2,350

 

Maintenance capital expenditures, net

 

(480)-(510)

 

(480)-(510)

 

Environmental capital expenditures, net

 

(305)-(335)

 

(305)-(335)

 

Preferred dividends

 

(10)

 

(10)

 

Distributions to non-controlling interests

 

(160)-(170)

 

(190)-(210)

 

Free Cash Flow — before Growth Investments

 

$1,100 – 1,300

 

$1,100 – 1,300

 

 


(1) 2015 guidance excludes expected negative contribution of $175 million from NRG Home Solar.

 

2015 Capital Allocation Update

 

During the second quarter, NRG repurchased $107 million of its common stock at an average cost of $24.53 per share. Together with repurchases completed during the first quarter of 2015 under the December 2014 common stock repurchase program, NRG has purchased a total of $186 million of NRG common stock since December 31, 2014.

 

Consistent with the capital allocation policy announced last quarter, NRG intends to allocate cash in an amount equal to the expected $600 million of proceeds from NRG Yield equally towards the repurchase of NRG shares, the repayment of corporate debt and the reinvestment in NRG Yield eligible projects of which $200 million is expected to be available for share repurchases. NRG currently has $51 million in remaining authorized buyback capacity.

 

On July 15, 2015, NRG declared a quarterly dividend on the Company’s common stock of $0.145 per share, payable August 17, 2015, to stockholders of record as of August 3, 2015, representing $0.58 on an annualized basis.

 

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

 

Earnings Conference Call

 

On August 4, 2015, NRG will host a conference call at 8:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG’s website at http://www.nrgenergy.com and clicking on “Investors.” The webcast will be archived on the site for those unable to listen in real time.

 

5



 

About NRG

 

NRG is leading a customer-driven change in the U.S. energy industry by delivering cleaner and smarter energy choices, while building on the strength of the nation’s largest and most diverse competitive power portfolio. A Fortune 200 company, we create value through reliable and efficient conventional generation while driving innovation in solar and renewable power, electric vehicle ecosystems, carbon capture technology and customer-centric energy solutions. Our retail electricity providers serve almost 3 million residential and commercial customers throughout the country. More information is available at www.nrgenergy.com. Connect with NRG Energy on Facebook and follow us on Twitter @nrgenergy.

 

Safe Harbor Disclosure

 

In addition to historical information, the information presented in this communication 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 have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulation of markets and of environmental emissions, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify or successfully implement acquisitions and repowerings, our ability to implement value enhancing improvements to plant operations and companywide processes, our ability to obtain federal loan guarantees, the inability to maintain or create successful partnering relationships with NRG Yield and other third parties, our ability to operate our businesses efficiently including NRG Yield, our ability to retain retail customers, our ability to realize value through our commercial operations strategy and the creation of NRG Yield, the ability to successfully integrate the businesses of acquired companies, the ability to realize anticipated benefits of acquisitions (including expected cost savings and other synergies) and the ability to sell assets to NRG Yield, Inc. or the risk that anticipated benefits may take longer to realize than expected and our ability to pay dividends and initiate share repurchases under our capital allocation plan, which 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 and free cash flow guidance are estimates as of August 4, 2015. These estimates are based on assumptions 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 Earnings Presentation should

 

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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.

 

Contacts:

 

Media:

Investors:

 

 

Karen Cleeve

Matthew Orendorff

609.524.4608

609.524.4526

 

 

Marijke Shugrue

Lindsey Puchyr

609.524.5262

609.524.4527

 

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NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

(In millions, except for per share amounts)

 

2015

 

2014

 

2015

 

2014

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Total operating revenues

 

$

3,397

 

$

3,621

 

$

7,223

 

$

7,107

 

Operating Costs and Expenses

 

 

 

 

 

 

 

 

 

Cost of operations

 

2,434

 

2,828

 

5,496

 

5,565

 

Depreciation and amortization

 

396

 

386

 

791

 

721

 

Selling, general and administrative

 

291

 

257

 

554

 

479

 

Acquisition-related transaction and integration costs

 

3

 

40

 

13

 

52

 

Development activity expenses

 

41

 

21

 

75

 

40

 

Total operating costs and expenses

 

3,165

 

3,532

 

6,929

 

6,857

 

Gain on postretirement benefits curtailment and sale of assets

 

 

 

14

 

19

 

Operating Income

 

232

 

89

 

308

 

269

 

Other Income/(Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

8

 

14

 

5

 

21

 

Other income, net

 

4

 

5

 

23

 

16

 

Loss on debt extinguishment

 

(7

)

(40

)

(7

)

(81

)

Interest expense

 

(263

)

(274

)

(564

)

(529

)

Total other expense

 

(258

)

(295

)

(543

)

(573

)

Loss Before Income Taxes

 

(26

)

(206

)

(235

)

(304

)

Income tax benefit

 

(17

)

(126

)

(90

)

(157

)

Net Loss

 

(9

)

(80

)

(145

)

(147

)

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

 

5

 

17

 

(11

)

6

 

Net Loss Attributable to NRG Energy, Inc.

 

(14

)

(97

)

(134

)

(153

)

Dividends for preferred shares

 

5

 

3

 

10

 

5

 

Loss Available for Common Stockholders

 

$

(19

)

$

(100

)

$

(144

)

$

(158

)

Loss per Share Attributable to NRG Energy, Inc. Common Stockholders

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding — basic and diluted

 

333

 

337

 

335

 

331

 

Loss per Weighted Average Common Share — Basic and Diluted

 

$

(0.06

)

$

(0.30

)

$

(0.43

)

$

(0.48

)

Dividends Per Common Share

 

$

0.14

 

$

0.14

 

$

0.29

 

$

0.26

 

 

8



 

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

 

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(In millions)

 

Net Loss

 

$

(9

)

$

(80

)

$

(145

)

$

(147

)

Other Comprehensive Income/(Loss), net of tax

 

 

 

 

 

 

 

 

 

Unrealized gain/(loss) on derivatives, net of income tax expense/(benefit) of $12, $(3), $6 and $(6)

 

16

 

(19

)

4

 

(28

)

Foreign currency translation adjustments, net of income tax expense/(benefit) of $6, $2, $(1) and $4

 

9

 

(3

)

(2

)

3

 

Available-for-sale securities, net of income tax benefit of $(3), $(6), $(7) and $(4)

 

(3

)

7

 

(4

)

13

 

Defined benefit plans, net of tax expense/(benefit) of $0, $(7), $4 and $(7)

 

(1

)

10

 

6

 

12

 

Other comprehensive income/(loss)

 

21

 

(5

)

4

 

 

Comprehensive Income/(loss)

 

12

 

(85

)

(141

)

(147

)

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

 

12

 

12

 

(17

)

(3

)

Comprehensive Loss Attributable to NRG Energy, Inc.

 

 

(97

)

(124

)

(144

)

Dividends for preferred shares

 

5

 

3

 

10

 

5

 

Comprehensive Loss Available for Common Stockholders

 

$

(5

)

$

(100

)

$

(134

)

$

(149

)

 

9



 

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In millions, except shares)

 

June 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

2,146

 

$

2,116

 

Funds deposited by counterparties

 

33

 

72

 

Restricted cash

 

433

 

457

 

Accounts receivable — trade, less allowance for doubtful accounts of $19 and $23

 

1,413

 

1,322

 

Inventory

 

1,153

 

1,247

 

Derivative instruments

 

1,805

 

2,425

 

Cash collateral paid in support of energy risk management activities

 

299

 

187

 

Deferred income taxes

 

193

 

174

 

Renewable energy grant receivable, net

 

19

 

135

 

Prepayments and other current assets

 

516

 

447

 

Total current assets

 

8,010

 

8,582

 

Property, plant and equipment, net of accumulated depreciation of $8,611 and $7,890

 

22,304

 

22,367

 

Other Assets

 

 

 

 

 

Equity investments in affiliates

 

1,077

 

771

 

Notes receivable, less current portion

 

65

 

72

 

Goodwill

 

2,555

 

2,574

 

Intangible assets, net of accumulated amortization of $1,506 and $1,402

 

2,428

 

2,567

 

Nuclear decommissioning trust fund

 

576

 

585

 

Derivative instruments

 

491

 

480

 

Deferred income taxes

 

1,454

 

1,406

 

Other non-current assets

 

1,405

 

1,261

 

Total other assets

 

10,051

 

9,716

 

Total Assets

 

$

40,365

 

$

40,665

 

 

10



 

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

 

(In millions, except shares)

 

June 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Current portion of long-term debt and capital leases

 

$

636

 

$

474

 

Accounts payable

 

1,080

 

1,060

 

Derivative instruments

 

1,638

 

2,054

 

Cash collateral received in support of energy risk management activities

 

33

 

72

 

Accrued expenses and other current liabilities

 

1,082

 

1,199

 

Total current liabilities

 

4,469

 

4,859

 

Other Liabilities

 

 

 

 

 

Long-term debt and capital leases

 

19,661

 

19,900

 

Nuclear decommissioning reserve

 

318

 

310

 

Nuclear decommissioning trust liability

 

311

 

333

 

Deferred income taxes

 

18

 

21

 

Derivative instruments

 

522

 

438

 

Out-of-market contracts, net of accumulated amortization of $613 and $562

 

1,193

 

1,244

 

Other non-current liabilities

 

1,527

 

1,574

 

Total non-current liabilities

 

23,550

 

23,820

 

Total Liabilities

 

28,019

 

28,679

 

2.822% convertible perpetual preferred stock

 

296

 

291

 

Redeemable noncontrolling interest in subsidiaries

 

33

 

19

 

Commitments and Contingencies

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Common stock

 

4

 

4

 

Additional paid-in capital

 

8,365

 

8,327

 

Retained earnings

 

3,346

 

3,588

 

Less treasury stock, at cost — 86,245,318 and 78,843,552 shares, respectively

 

(2,166

)

(1,983

)

Accumulated other comprehensive loss

 

(170

)

(174

)

Noncontrolling interest

 

2,638

 

1,914

 

Total Stockholders’ Equity

 

12,017

 

11,676

 

Total Liabilities and Stockholders’ Equity

 

$

40,365

 

$

40,665

 

 

11



 

NRG ENERGY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

Six months ended June 30,

 

 

 

2015

 

2014

 

 

 

(In millions)

 

Cash Flows from Operating Activities

 

 

 

 

 

Net loss

 

$

(145

)

$

(147

)

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

 

 

 

 

 

Distributions and equity in earnings of unconsolidated affiliates

 

40

 

39

 

Depreciation and amortization

 

791

 

721

 

Provision for bad debts

 

29

 

30

 

Amortization of nuclear fuel

 

23

 

20

 

Amortization of financing costs and debt discount/premiums

 

(7

)

(9

)

Adjustment for debt extinguishment

 

7

 

21

 

Amortization of intangibles and out-of-market contracts

 

32

 

22

 

Amortization of unearned equity compensation

 

24

 

24

 

Changes in deferred income taxes and liability for uncertain tax benefits

 

(98

)

(514

)

Changes in nuclear decommissioning trust liability

 

(4

)

6

 

Changes in derivative instruments

 

186

 

535

 

Changes in collateral deposits supporting energy risk management activities

 

(112

)

(297

)

Loss on sale of emission allowances

 

(6

)

2

 

Gain on postretirement benefits curtailment and sale of assets

 

(14

)

(19

)

Cash used by changes in other working capital

 

(288

)

(64

)

Net Cash Provided by Operating Activities

 

458

 

370

 

Cash Flows from Investing Activities

 

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

(30

)

(1,817

)

Capital expenditures

 

(583

)

(507

)

Increase in restricted cash, net

 

(3

)

(6

)

Decrease in restricted cash to support equity requirements for U.S. DOE funded projects

 

27

 

21

 

Decrease in notes receivable

 

7

 

2

 

Investments in nuclear decommissioning trust fund securities

 

(354

)

(340

)

Proceeds from the sale of nuclear decommissioning trust fund securities

 

358

 

334

 

Proceeds from renewable energy grants and state rebates

 

61

 

429

 

Proceeds from sale of assets, net of cash disposed of

 

1

 

77

 

Cash proceeds to fund cash grant bridge loan payment

 

 

57

 

Investments in unconsolidated affiliates

 

(353

)

(22

)

Other

 

9

 

19

 

Net Cash Used by Investing Activities

 

(860

)

(1,753

)

Cash Flows from Financing Activities

 

 

 

 

 

Payment of dividends to common and preferred stockholders

 

(102

)

(91

)

Payment for treasury stock

 

(186

)

 

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

 

91

 

(167

)

Proceeds from issuance of long-term debt

 

629

 

3,886

 

Contributions to, net of distributions from, noncontrolling interest in subsidiaries

 

670

 

10

 

Proceeds from issuance of common stock

 

1

 

8

 

Payment of debt issuance costs

 

(12

)

(43

)

Payments for short and long-term debt

 

(662

)

(2,969

)

Net Cash Provided by Financing Activities

 

429

 

634

 

Effect of exchange rate changes on cash and cash equivalents

 

3

 

(24

)

Net Increase/(Decrease) in Cash and Cash Equivalents

 

30

 

(773

)

Cash and Cash Equivalents at Beginning of Period

 

2,116

 

2,254

 

Cash and Cash Equivalents at End of Period

 

$

2,146

 

$

1,481

 

 

12



 

Appendix Table A-1: Second Quarter 2015 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)

 

Home
Retail

 

Home
Solar

 

Business

 

Renew

 

Yield

 

Corp

 

Total

 

Net Income/(Loss)

 

212

 

(54

)

(1

)

(18

)

41

 

(189

)

(9

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

 

1

 

17

 

23

 

44

 

175

 

260

 

Loss on Debt Extinguishment

 

 

 

 

 

7

 

 

7

 

Income Tax

 

 

 

 

(3

)

4

 

(18

)

(17

)

Depreciation, Amortization and ARO Expense

 

32

 

6

 

235

 

64

 

58

 

8

 

403

 

Amortization of Contracts

 

1

 

 

(19

)

2

 

14

 

1

 

(1

)

EBITDA

 

245

 

(47

)

232

 

68

 

168

 

(23

)

643

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

 

11

 

(4

)

14

 

9

 

30

 

Integration & Transaction Costs

 

1

 

 

 

 

1

 

1

 

3

 

Deactivation costs

 

 

 

3

 

 

 

 

3

 

NRG Home Solar EBITDA

 

 

47

 

 

 

 

 

47

 

Market to Market (MtM) (gains)/losses on economic hedges

 

(42

)

 

39

 

2

 

4

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

204

 

 

285

 

66

 

187

 

(13

)

729

 

 

Appendix Table A-2: Second Quarter 2014 Adjusted EBITDA Reconciliation by Operating Segment

 

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net (loss)/income

 

($ in millions)

 

Home
Retail

 

Home
Solar

 

Business

 

Renew

 

Yield

 

Corp

 

Total

 

Net (Loss)/Income

 

(50

)

(7

)

99

 

2

 

42

 

(166

)

(80

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

 

 

16

 

30

 

35

 

187

 

268

 

Loss on Debt Extinguishment

 

 

 

 

 

 

40

 

40

 

Income Tax

 

 

 

 

 

2

 

(128

)

(126

)

Depreciation Amortization and ARO Expense

 

32

 

1

 

239

 

51

 

54

 

11

 

388

 

Amortization of Contracts

 

 

 

(8

)

 

 

 

(8

)

EBITDA

 

(18

)

(6

)

346

 

83

 

133

 

(56

)

482

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

 

 

(5

)

8

 

17

 

20

 

Integration & Transaction Costs, gain on sale

 

 

 

2

 

 

 

38

 

40

 

Deactivation Costs

 

 

 

3

 

 

 

 

3

 

Asset Write Offs and Impairments

 

 

 

5

 

 

 

2

 

7

 

NRG Home Solar EBITDA

 

 

6

 

 

 

 

 

6

 

MtM losses/(gains) on economic hedges

 

175

 

 

(55

)

(1

)

 

 

119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

157

 

 

301

 

77

 

141

 

1

 

677

 

 

13



 

Appendix Table A-3: YTD Second Quarter 2015 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)

 

Home
Retail

 

Home
Solar

 

Business

 

Renew

 

Yield

 

Corp

 

Total

 

Net Income/(Loss)

 

316

 

(99

)

28

 

(73

)

25

 

(342

)

(145

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

 

1

 

35

 

54

 

114

 

354

 

558

 

Loss on Debt Extinguishment

 

 

 

 

 

7

 

 

7

 

Income Tax

 

 

 

 

(9

)

 

(81

)

(90

)

Depreciation, Amortization and ARO Expense

 

63

 

11

 

475

 

128

 

113

 

15

 

805

 

Amortization of Contracts

 

1

 

 

(31

)

 

26

 

1

 

(3

)

EBITDA

 

380

 

(87

)

507

 

100

 

285

 

(53

)

1,132

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

 

16

 

(4

)

26

 

12

 

50

 

Integration & Transaction Costs

 

 

 

 

 

1

 

12

 

13

 

Deactivation costs

 

 

 

6

 

 

 

 

6

 

NRG Home Solar EBITDA

 

 

87

 

 

 

 

 

87

 

Market to Market (MtM) (gains)/losses on economic hedges

 

(10

)

 

292

 

2

 

(3

)

 

281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

370

 

 

821

 

98

 

309

 

(29

)

1,569

 

 

Appendix Table A-4: YTD Second Quarter 2014 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)

 

Home
Retail

 

Home
Solar

 

Business

 

Renew

 

Yield

 

Corp

 

Total

 

Net Income/(Loss)

 

135

 

(9

)

93

 

(63

)

68

 

(371

)

(147

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

1

 

 

33

 

56

 

61

 

370

 

521

 

Loss on Debt Extinguishment

 

 

 

 

1

 

 

80

 

81

 

Income Tax

 

 

 

 

 

5

 

(162

)

(157

)

Depreciation Amortization and ARO Expense

 

61

 

2

 

470

 

100

 

78

 

16

 

727

 

Amortization of Contracts

 

 

 

(7

)

 

1

 

(1

)

(7

)

EBITDA

 

197

 

(7

)

589

 

94

 

213

 

(68

)

1,018

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

 

(4

)

(5

)

20

 

20

 

31

 

Integration & Transaction Costs, gain on sale

 

 

 

(16

)

 

 

50

 

34

 

Deactivation Costs

 

 

 

6

 

 

 

 

6

 

Asset Write Offs and Impairments

 

 

 

5

 

 

 

2

 

7

 

Legal Settlement

 

4

 

 

 

 

 

 

4

 

NRG Home Solar EBITDA

 

 

7

 

 

 

 

 

7

 

MtM losses on economic hedges

 

71

 

 

316

 

 

 

 

387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

272

 

 

896

 

89

 

233

 

4

 

1,494

 

 

14



 

Appendix Table A-5: 2015 and 2014 YTD Second Quarter Adjusted Cash Flow from Operations Reconciliations

 

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

 

($ in millions)

 

Six months ended
June 30, 2015

 

Six months ended
June 30, 2014

 

Net Cash Provided by Operating Activities

 

458

 

370

 

Adjustment for change in collateral

 

112

 

297

 

Reclassifying of net receipts (payments) for settlement of acquired derivatives that include financing elements

 

91

 

(167

)

Add: Merger and integration expenses

 

17

 

64

 

Adjusted Cash Flow from Operating Activities

 

678

 

564

 

Maintenance CapEx, net*

 

(189

)

(164

)

Environmental CapEx, net

 

(127

)

(86

)

Preferred dividends

 

(5

)

(5

)

Distributions to non-controlling interests

 

(83

)

(23

)

Free Cash Flow — before Growth investments

 

274

 

286

 

 


* Excludes merger and integration CapEx of $9 million in Q2 2015 and $11 million in Q2 2014

 

15



 

Appendix Table A-6: Second Quarter 2015 Regional Adjusted EBITDA Reconciliation for NRG Business

 

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)

 

($ in millions)

 

East

 

Gulf
Coast

 

West

 

B2B

 

Carbon 360

 

Total

 

Net Income/(Loss)

 

98

 

(116

)

(11

)

28

 

 

(1

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

17

 

 

 

 

 

17

 

Depreciation, Amortization and ARO Expense

 

76

 

143

 

16

 

 

 

235

 

Amortization of Contracts

 

(18

)

 

(2

)

1

 

 

(19

)

EBITDA

 

173

 

27

 

3

 

29

 

 

232

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

12

 

2

 

 

(3

)

11

 

Deactivation costs

 

2

 

 

1

 

 

 

3

 

Market to Market (MtM) (gains)/losses on economic hedges

 

(31

)

76

 

14

 

(20

)

 

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

144

 

115

 

20

 

9

 

(3

)

285

 

 

Appendix Table A-7: Second Quarter 2014 Regional Adjusted EBITDA Reconciliation for NRG Business

 

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net (loss)/income

 

($ in millions)

 

East

 

Gulf Coast

 

West

 

B2B

 

Carbon 360

 

Total

 

Net (Loss)/Income

 

(9

)

144

 

32

 

(66

)

(2

)

99

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

16

 

 

 

 

 

16

 

Depreciation Amortization and ARO Expense

 

72

 

143

 

21

 

2

 

1

 

239

 

Amortization of Contracts

 

(10

)

5

 

(3

)

 

 

(8

)

EBITDA

 

69

 

292

 

50

 

(64

)

(1

)

346

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

1

 

(5

)

3

 

1

 

 

Integration & Transaction Costs, gain on sale

 

2

 

 

 

 

 

2

 

Deactivation Costs

 

1

 

 

2

 

 

 

3

 

Asset Write Offs and Impairments

 

 

5

 

 

 

 

5

 

MtM losses/(gains) on economic hedges

 

83

 

(210

)

(1

)

73

 

 

(55

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

155

 

88

 

46

 

12

 

 

301

 

 

16



 

Appendix Table A-8: YTD Second Quarter 2015 Regional Adjusted EBITDA Reconciliation for NRG Business

 

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)

 

($ in millions)

 

East

 

Gulf
Coast

 

West

 

B2B

 

Carbon 360

 

Total

 

Net Income/(Loss)

 

186

 

(79

)

(35

)

(37

)

(7

)

28

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

35

 

 

 

 

 

35

 

Depreciation, Amortization and ARO Expense

 

153

 

287

 

32

 

3

 

 

475

 

Amortization of Contracts

 

(33

)

2

 

(3

)

3

 

 

(31

)

EBITDA

 

341

 

210

 

(6

)

(31

)

(7

)

507

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

10

 

4

 

 

2

 

16

 

Deactivation costs

 

4

 

 

2

 

 

 

6

 

Market to Market (MtM) losses on economic hedges

 

222

 

11

 

13

 

46

 

 

292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

567

 

231

 

13

 

15

 

(5

)

821

 

 

Appendix Table A-9: YTD Second Quarter 2014 Regional Adjusted EBITDA Reconciliation for NRG Business

 

The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss)

 

($ in millions)

 

East

 

Gulf Coast

 

West

 

B2B

 

Carbon 360

 

Total

 

Net Income/(Loss)

 

176

 

(156

)

40

 

37

 

(4

)

93

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, net

 

33

 

 

 

 

 

33

 

Depreciation Amortization and ARO Expense

 

142

 

287

 

33

 

7

 

1

 

470

 

Amortization of Contracts

 

(16

)

11

 

(5

)

3

 

 

(7

)

EBITDA

 

335

 

142

 

68

 

47

 

(3

)

589

 

Adjustment to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates

 

 

 

(9

)

2

 

3

 

(4

)

Integration & Transaction Costs, gain on sale

 

7

 

(23

)

 

 

 

(16

)

Deactivation Costs

 

2

 

 

4

 

 

 

6

 

Asset Write Offs and Impairments

 

 

5

 

 

 

 

5

 

MtM losses/(gains) on economic hedges

 

330

 

29

 

1

 

(44

)

 

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

674

 

153

 

64

 

5

 

 

896

 

 

17



 

Appendix Table A-10: Run-Rate 2015 Adjusted EBITDA and Cash Available for Distribution Reconciliation for NRG Yield

 

The following table summarizes the calculation of adjusted EBITDA and cash available for distribution to net income:

 

($ in millions)

 

Desert Sunlight
Run-Rate

 

Alta X-XI Tax
Equity, net of
Corp Debt
Run-Rate(9)

 

75% interest of
EME Wind Drop
Down
Run-Rate(10)

 

Income/(Loss) before Tax

 

13

 

 

(9

)

Plus:

 

 

 

 

 

 

 

Interest Expense, net

 

 

 

10

 

Depreciation, Amortization, and ARO Expense

 

 

 

45

 

Adjustments to reflect Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates

 

32

 

 

1

 

Adjusted EBITDA

 

45

 

 

47

 

Pro-rata Adjusted EBITDA from unconsolidated affiliates

 

(45

)

 

(10

)

Cash distributions from unconsolidated affiliates

 

22

 

 

10

 

Tax Equity Proceeds

 

 

 

9

 

Distributions to non-controlling interest

 

 

(4

)

(7

)

Cash interest paid

 

 

11

 

(11

)

Maintenance Capital expenditures

 

 

 

(1

)

Principal amortization of indebtedness

 

 

21

 

(17

)

Cash Available for Distribution

 

22

 

28

 

20

 

 


(9)  Alta reflects interest and principal savings on debt extinguishment of $491 million of non-recourse debt a run rate basis

(10)  75% interest in 814 net MW of wind assets primarily acquired by NRG in the EME transaction, Adjusted EBITDA will be consolidated on NRG Yield, 75% pro-rata Adjusted EBITDA is approximately $35 million

 

18



 

Appendix Table A-11: YTD Second Quarter 2015 Sources and Uses of Liquidity

 

The following table summarizes the sources and uses of liquidity for YTD second quarter of 2015

 

($ in millions)

 

Six months ended
June 30, 2015

 

Sources:

 

 

 

Adjusted Cash Flow from Operations

 

$

678

 

Equity Proceeds, NRG Yield, net of fees

 

600

 

Debt Proceeds, NRG Yield Revolver

 

282

 

Debt Proceeds, NRG Yield Convertible Notes, net of fees

 

281

 

Tax Equity Financing, net of fees

 

119

 

Cash Grant Proceeds, growth projects

 

55

 

Increase in Credit Facility

 

42

 

Debt proceeds, other project debt financing

 

11

 

Cash Grant Proceeds, other solar

 

6

 

Uses:

 

 

 

Debt Repayments

 

662

 

Maintenance and Environmental Capex, net

 

316

 

NYLD Investment in Desert Sunlight

 

285

 

Growth Investments and Acquisitions, net

 

211

 

Share Repurchases

 

186

 

Collateral Postings

 

112

 

Common and Preferred Stock Dividends

 

102

 

Distributions to Non-Controlling Entities

 

83

 

Other investing and financing activities

 

44

 

Merger and Integration-related payments

 

25

 

 

 

 

 

Change in Total Liquidity

 

$

48

 

 

EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.

 

EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:

 

·                  EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;

·                  EBITDA does not reflect changes in, or cash requirements for, working capital needs;

·                  EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;

·                  Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and

·                  Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.

 

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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. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which we do not consider indicative of future operating performance. 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.

 

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

 

Free cash flow (before Growth investments) is adjusted cash flow from operations less maintenance and environmental capital expenditures, net of funding, and preferred stock dividends 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.

 

Cash Available for Distribution (CAFD) is adjusted EBITDA plus cash dividends from unconsolidated affiliates, less maintenance capital expenditures, pro-rata adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in others assets. Management believes cash available for distribution is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors.

 

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