- 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
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
- 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240227811641/en/
Media: Chevalier Gray 832.763.3454
Investors: Brendan Mulhern 609.524.4767
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