- Extends Financial Outlook Through 2027
- $8.3 Billion of Excess Cash After Debt Reduction Expected
Through 2027 – Exceeding Current Market Capitalization
- Committed to Returning 80% of Excess Cash to Shareholders,
$6.9 Billion of Expected Capital to be Returned Through
2027
- Increased Share Repurchase Authorization to $2.7 Billion
Through 2025
- $150 Million of Additional Cost Savings Through New
Efficiency Initiatives
- Enhanced Consumer Services Platform Creating New, High
Margin Recurring Revenue Streams and Extending Customer Tenure and
Reach
- Board Refreshment Process Underway
- Company to Host Investor Day Today at 9:00 a.m. Eastern
Time
NRG Energy Inc. (NYSE: NRG) (“NRG” or the “Company”) today will
host a virtual Investor Day during which management will provide an
update on its consumer services strategy, as well as the Company’s
new capital allocation framework and operating efficiency
initiatives.
“We have strengthened our core energy business with a leading
smart home technology platform, positioning NRG to capitalize on
the convergence of electricity and smart technologies inside the
home,” said Mauricio Gutierrez, NRG President and Chief Executive
Officer. “In the next five years, our plan will generate excess
cash that will exceed our current market capitalization and deliver
tremendous value for our shareholders.”
“We are better positioned than ever before to capitalize on
NRG’s market leadership in energy and the relationships we have
built with millions of customers,” said Lawrence Coben, Chair of
the NRG Board of Directors. “We fully support Mauricio and the
management team and are confident in our strategy and ability to
deliver superior, sustainable shareholder value.”
Highlights from today’s presentation include:
- Expanding outlook of robust and sustainable cash flows:
NRG expects free cash flow before growth (FCFbG) per share to
increase approximately 15% to 20% on a compounded annual basis
between 2023 and 2027. This equates to $8.3 billion of cumulative
excess cash after deleveraging – exceeding NRG’s current market
cap.
- Greater capital return to shareholders: With the
acquisition of Vivint Smart Home complete, NRG now has line of
sight into the investment needs of the Company going forward.
Accordingly, NRG has updated its capital allocation framework and
plans to, after deleveraging, return 80% of excess cash to
shareholders and invest 20% in growth initiatives; this compares to
the Company’s prior 50% / 50% allocation. As a result of the
expected cash flow generation, the Company expects $6.9 billion of
cumulative capital returns to shareholders through share
repurchases and dividends through 2027. The Company’s Board of
Directors has increased the share repurchase authorization from
$1.0 billion to $2.7 billion through 2025. NRG expects 7% to 9%
long-term annual dividend per share growth.
- Strengthening the Company’s balance sheet: In addition
to significant capital returns to shareholders, NRG expects to
complete up to $2.55 billion of debt reduction to enable NRG to
achieve its target investment grade credit metrics of 2.5x to 2.75x
net debt / adjusted corporate EBITDA by 2025, aligning with rating
agency and counterparty expectations.
- Enhanced efficiency through cost savings: Reflecting
management’s ongoing focus on cost discipline and operational
excellence, the Company is announcing a new $150 million cost
reduction initiative that is expected to be completed by 2025,
derived from operations and maintenance efficiencies, sourcing
optimization, automation, service levels, spans of control and
other redundancies. These savings are in addition to $300 million
in Direct Energy cost synergies that are expected to be completed
by the end of 2023 and $100 million in cost synergies related to
the Vivint acquisition that are expected to be completed by
2025.
- Consumer services model enhanced by leading smart home
platform: NRG has grown to become the largest retail power
provider and the second largest retail natural gas provider in the
United States. With the recently completed acquisition of Vivint
Smart Home, NRG has positioned itself to fully capitalize on its
market leadership and approximately 7.5 million residential
customer base. The enhanced consumer services platform is creating
new, high margin recurring revenue streams and extending customer
tenure and reach. Through a combination of cross-selling, bundling
and organic growth, NRG expects to achieve $300 million of
incremental free cash flow before growth by 2025.
Governance Update
NRG is working with an independent search firm and evaluating
feedback from NRG shareholders to bring additional expertise to the
Board. This is part of an ongoing, deliberate process to evolve
board composition with a focus on diverse skills and experiences in
alignment with the Company’s strategy.
Investor Day Webcast Details
As previously announced, NRG’s Investor Day begins at 9:00 am
Eastern Time. A live webcast of the event, including presentation
materials, will be available on NRG’s website at www.NRG.com under
the “investors” section. The event will be archived on the site for
those unable to listen in real-time.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. 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,” “objective,”
“projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,”
“intend,” “seek,” “plan,” “think,” “anticipate,” estimate,”
“predict,” “target,” “potential” or “outcome” or the negative of
these terms or other comparable terminology. Such forward-looking
statements include, but are not limited to, statements about the
future revenues, income, indebtedness, capital structure, plans,
expectations, objectives, projected financial performance and/or
business results of NRG and other future events, and views of
economic and market conditions.
Although NRG believes that the 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,
including increasing interest rates and rising inflation, 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 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 companywide 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, 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 NRG 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. Financial
guidance, including with respect to free cash flow before growth,
contained in this news release are estimates as of June 22, 2023.
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 news 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 Conditions and Results of Operations” in NRG’s most
recent Annual Report on Form 10-K, and in subsequent filings with
the Securities and Exchange Commission. NRG’s forward-looking
statements contained in this news release speak only as of the date
of this news release or as of the date they are made.
About NRG
NRG Energy, Inc. is a leading energy and home services company
powered by people and our passion for a smarter, cleaner, and more
connected future. A Fortune 500 company operating in the United
States and Canada, NRG delivers innovative solutions that help
people, organizations, and businesses achieve their goals while
also advocating for competitive energy markets and customer choice.
More information is available at www.NRG.com. Connect with NRG on
Facebook and LinkedIn, and follow us on Twitter, @NRGenergy.
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version on businesswire.com: https://www.businesswire.com/news/home/20230621052079/en/
Media: Laura Avant 713.537.5437 Laura.avant@NRG.com
Investors: Brendan Mulhern 609.524.4767
Investor.relations@NRG.com
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