Vistra Corp. · NYSE:VST
Vistra — Vistra Energy — Q1 2018 Earnings Presentation
45 slides from Vistra's earnings presentation, May 4, 2018
Slide 1: First Quarter 2018 Results
May 4, 2018 First Quarter 2018 R E S U LT S
Slide 2: Safe Harbor Statements
SAFE HARBOR STATEMENTS Cautionary Note Regarding Forward-Looking Statements The information presented herein includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, esti
Slide 3: Safe Harbor Statements (Cont'd)
SAFE HARBOR STATEMENTS (CONT’D) Information About Non-GAAP Financial Measures and Items Affecting Comparability “Adjusted EBITDA” (EBITDA as adjusted for unrealized gains or losses from hedging activities, tax receivable agreement obligations, reorganization items, and certain other items described
Slide 4: Agenda
AGENDA I Welcome and Safe Harbor Molly Sorg, VP Investor Relations II Q1 2018 Results Bill Holden, Chief Financial Officer III Merger Highlights Curt Morgan, President and Chief Executive Officer IV Hot Topics Sara Graziano, SVP Corporate Development Jim Burke, Chief Operating Officer V Financial Hi
Slide 5: Introduction
Introduction Curt Morgan Chief Executive Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q1 2018
Slide 6: Introduction
INTRODUCTION Closed merger with Dynegy • Significant progress on merger transition and integration Confidence in capture of synergies and operational performance initiative value levers • Significant increase in total value levers Higher EBITDA and FCF estimates from value levers, market power price
Slide 7: Q1 2018 Results
Q1 2018 Results Bill Holden Chief Financial Officer
Slide 8: Q1 2018 Results – Vistra Standalone
Q1 2018 RESULTS – VISTRA STANDALONE Vistra Energy’s first quarter 2018 results exceeded expectations Highlights Q1 2018 Retail Adjusted EBITDA ONGOING OPERATIONS ADJUSTED EBITDA1 $194M ($ in millions) Retail Adjusted EBITDA increased $17 million vs. Q1 2017 primarily due to favorable weather and low
Slide 9: Merger Highlights
Merger Highlights Curt Morgan Chief Executive Officer
Slide 10: Vistra Energy Merger Highlights
VISTRA ENERGY MERGER HIGHLIGHTS INCREASING MERGER VALUE LEVER TARGETS CAPITAL Projected equity value creation:1 ALLOCATION ~$7.5B or ~$14/share2 Maximize FCF • Achieve or exceed value lever $500mm targets as quickly as possible Adjusted EBITDA benefits (target increased from $350mm) plus Achieve Lev
Slide 11: Diversified Operations and Earnings
DIVERSIFIED OPERATIONS AND EARNINGS ~45% Gross Margin from Retail and Capacity, ~60% Adj. EBITDA from ERCOT, and significant Energy Gross Margin from efficient, in -the-money fleet VISTRA ENERGY STAND-ALONE1 VISTRA ENERGY COMBINED COMPANY1 Gross Margin Contribution Adjusted EBITDA Gross Margin Contr
Slide 12: Increasing Value Lever Targets
INCREASING VALUE LEVER TARGETS ($ in millions) Adj. EBITDA Synergy Target Operational Improvement Target Target Adj. EBITDA Value Levers $150 $500 $50 $275 $225 $100 $225 $350 $125 Initial Target Target Run-Rate Initial Target Target Run-Rate Initial Target Target Run-Rate Increase Target Increase T
Slide 13: Significant FCF Benefits by YE 2019
SIGNIFICANT FCF BENEFITS BY YE 2019 ADDITIONAL AFTER-TAX FCF VALUE LEVERS ($ in millions) $135 $235 Vistra expects to realize $100 million in FCF Value Levers Identified or Achieved to Date $235mm of Run-Rate Free Cash Flow benefits by $80 $35 year-end 2019 while achieving its $20 $45 projected 2.5x
Slide 14: Hot Topics
Hot Topics Sara Graziano Jim Burke SVP Corporate Development Chief Operating Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q1 2018
Slide 15: Merger Synergy Opportunities
MERGER SYNERGY OPPORTUNITIES Merger synergy opportunities have been clearly identified and are already being achieved Target Adj. EBITDA Synergies: $275mm Merger Synergies Identified Retail Costs eliminated Day One Facilities • $100mm headcount and executive team Insurance • $15mm non-labor associat
Slide 16: Operations Performance Initiative (OPI)
OPERATIONS PERFORMANCE INITIATIVE (OPI) Executing on delivering long-term value across the fleet Projected OPI Value: $225mm OPI Progress Running Luminant and legacy Dynegy Min/Max/Ramp plants as one fleet Legacy DYN - Coal Improved Generation OPI efforts are underway across the coal and Outage Redu
Slide 17: Financial Highlights
Financial Highlights Bill Holden Chief Financial Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q1 2018
Slide 18: Initiating 2018 and 2019 Guidance
INITIATING 2018 AND 2019 GUIDANCE Vistra’s 2019E estimates reflect full-year earnings potential of combined company Vistra Energy Corp. Illustrative 2018E4, 5 Illustrative 20195 ($ in millions) 2018E Guidance3 2019E Guidance Pro forma for Pro forma for run-rate 1-1-18 close value levers Generation1
Slide 19: 2018 and 2019 Illustrative Guidance
2018 AND 2019 ILLUSTRATIVE GUIDANCE Vistra Ongoing Operations Illustrative Guidance Walk-forward ($ in millions) 2018 Illustrative Ongoing Operations Adj. EBITDA 2019 Illustrative Ongoing Operations Adj. EBITDA $3,150−$3,350 95 40 315 801 $3,200−$3,500 $3,275−$3,575 $2,700−$2,900 2018 DYN to 12 mos.
Slide 20: Capital Structure
CAPITAL STRUCTURE Vistra believes it will achieve its 2.5x net debt / EBITDA target before year -end 2019 3/31/18 ($ in millions) (pro forma for merger and 2018E 2019E redemption of 2019 senior notes) Term Loan C – Vistra Energy $2,018 $2,018 $2,018 Term Loan B – Vistra Operations 3,802 $3,773 $3,73
Slide 21: Summary
Summary Curt Morgan Chief Executive Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q1 2018
Slide 22: Leading Integrated Power Company
LEADING INTEGRATED POWER COMPANY Committed to capital discipline and creating value for our shareholders SIGNIFICANT PROJECTED VALUE CREATION INTEGRATION, DIVERSIFICATION, AND SCALE $500mm EBITDA value levers Leading retail platform Higher integrated margins $235mm additional after-tax Free Cash Flo
Slide 23: Analyst Day Preview
ANALYST DAY PREVIEW Showcasing line of sight to projected ~$7.5B in equity value creation Details Vistra Energy’s 2018 Analyst Day will be held on Tuesday, June 12th, 2018 Anticipated Topics: • Location: Vistra Headquarters in Irving, Texas • Capital Allocation • Time: 8:30 a.m. to 1:30 p.m. CST (pr
Slide 24: Appendix
Appendix Vi s tra Energy Inv es t or Pres en t a ti o n / Q1 2018
Slide 25: Dynegy Q1 2018 Results
DYNEGY Q1 2018 RESULTS DYNEGY STAND-ALONE DYNEGY STAND-ALONE ADJUSTED EBITDA NET INCOME ($ in millions) ($ in millions) $292 $592 $230 Q1 2018 Q1 2017 $(215) Q1 2017 Q1 2018 ADJUSTED EBITDA VARIANCES BY SEGMENT ($ in millions) Q1 2017 Q1 2018 Variance1 Segment Drivers PJM $191 $167 $(24) Increased R
Slide 26: First Quarter Operational Metrics
FIRST QUARTER OPERATIONAL METRICS RESIDENTIAL CUSTOMER COUNTS1 Q1 2018 GENERATION HIGHLIGHTS • Fossil Fleet Commercial Availability2: 97% for 1,478 1,477 1,476 1,476 Q1 2018 1,472 • Safety: Only 1 recordable injury during Q1 2018 (vs. 13 recordable injuries in Q1 2017) Q1 2017 Q2 2017 Q3 2017 Q4 201
Slide 27: Capital Structure (Cont'd)
CAPITAL STRUCTURE1 (CONT’D) Vistra Energy Corp. $2.018bn Term Loan Vistra Tax Receivables Agreement $1.475bn Revolver Residual value from the $5.288bn Senior Notes Dynegy Sr. Sec. Credit Facility Vistra “silo” accrues for the Dynegy Senior Notes benefit of Vistra Energy Corp debt / equity investors
Slide 28: Capital Expenditures
CAPITAL EXPENDITURES Capital Expenditures1 2018E - 2019E ($ in millions) Illustrative 2018E 2018E Pro forma for 2019E 1-1-18 close Nuclear Fuel $118 $118 $67 Nuclear & Fossil Maintenance 300 372 398 Environmental 23 28 73 IT, Corporate, and Other 59 59 60 Total Capital Expenditures $500 $577 $598 No
Slide 29: Commercial Operations
COMMERCIAL OPERATIONS Hub ATC Price Forecasted Premium Forecasted Discount ERCOT ($/MWh) PJM ~89 TWhs ~96 TWhs $34.13 $34.35 50 98 $1.98 40 $32.02 $31.37 78 30 ~54 TWhs ~54 TWhs $36.95 $32.38 58 20 $33.70 $32.20 38 10 18 ($2.82) - $(1.68) $(0.82) (2) 2018 2018 2019 2019 2018 2018 2019 2019 Estimated
Slide 30: Hedge Profile – ERCOT
HEDGE PROFILE – ERCOT NATURAL GAS HEDGE PROFILE HEAT RATE HEDGE PROFILE 90% 83% 82% 86% 42% 42% 22% 23% 12/29/17 3/30/181 12/29/17 3/30/18 12/29/17 3/30/181 12/29/17 3/30/18 2018 2019 2018 2019 NATURAL GAS MARGIN SENSITIVITY2 HEAT RATE MARGIN SENSITIVITY2 ($ in millions) Gas ± $0.5/mmbtu ($ in milli
Slide 31: Hedge Profile – Other Markets
HEDGE PROFILE – OTHER MARKETS GENERATION VOLUMES HEDGED (2018) GENERATION VOLUMES HEDGED (2019) MISO/CAISO NENY PJM MISO/CAISO NENY PJM 79% 72% 71% 72% 74% 62% 47% 41% 31% 34% 28% 18% 1 1 1 1 1 1 12/29 3/30 12/29 3/30 12/29 3/30 12/29 3/30 12/29 3/30 12/29 3/30 NATURAL GAS MARGIN SENSITIVITY2 HEAT R
Slide 32: Market Pricing – ERCOT
MARKET PRICING – ERCOT MONTHLY NORTH HUB ATC POWER PRICES¹ IMPLIED NORTH HUB ATC MARKET HEAT RATES 39.7216 August 18 37 120 $114.71 August 18 33 August 19 30.53 100 29 (mmBtu/MWh) $83.116 August 19 80 25 ($/MWh) 60 21 17 40 $28.116 $26.6 13 10.2616 9.2816 20 9 0 5 2016A 2017A 2018E 2019F 2016A 2017A
Slide 33: Market Pricing – Other Markets
MARKET PRICING – OTHER MARKETS MONTHLY AD HUB ATC POWER PRICES MONTHLY INDIANA HUB ATC POWER PRICES 60 60 50 50 40 40 ($/MWh) ($/MWh) 30 30 20 20 10 10 - - 2016A 2017A 2018A+F 2019F 2016A 2017A 2018A+F 2019F Settled 12/29/2017 Forward 3/31/2018 Forward Settled 12/29/2017 Forward 3/31/2018 Forward MO
Slide 34: Capacity Position – MISO
CAPACITY POSITION – MISO MISO Capacity Position (excludes PJM exports) Price in $/kw-mo MISO MISO – IPH Total EBITDA Contribution PY 17/18 MWs 1,075 2,431 3,506 Average Price $3.39 $4.37 $4.07 $171 MM PY 18/19 MWs 356 1,960 2,316 Average Price $2.61 $3.81 $3.63 $101 MM PY 19/20 MWs 300 1,737 2,037 A
Slide 35: Capacity Positions – PJM
CAPACITY POSITIONS – PJM (excludes MISO Imports) PJM Region Planning Year Average Price MW Position Average Price MW Position ($/MW-day) ($/MW-day) Legacy/Base Product Capacity Performance Product 2017 – 2018 $125.92 2,051 $151.50 3,974 2018 – 2019 $197.22 959 $164.77 4,610 RTO 2019 – 2020 $94.04 1,
Slide 36: Capacity Positions – ISO-NE / NYISO / CAISO
CAPACITY POSITIONS – ISO-NE / NYISO / CAISO ISO/Region Contract Type Average Price MW Position Tenor ($/MW-day) ISO-NE1 ISO-NE Capacity $6.91/kw-Mo 3,303 June 2017 to May 2018 $9.93/kw-Mo 3,254 June 2018 to May 2019 $7.02/kw-Mo 3,233 June 2019 to May 2020 $5.40/kw-Mo 3,229 June 2020 to May 2021 $4.8
Slide 37: Asset Fleet Details
ASSET FLEET DETAILS Asset Location ISO Technology Primary Fuel Net Capacity Ownership Interest Moss Landing 1 & 2 Moss Landing, CA CAISO CCGT Gas 1,020 100% Oakland Oakland, CA CAISO CT Oil 165 100 Total CAISO 1,185 Forney Forney, TX ERCOT CCGT Gas 1,912 100% Lamar Paris, TX ERCOT CCGT Gas 1,076 100
Slide 38: Asset Fleet Details (Cont'd)
ASSET FLEET DETAILS (CONT’D) Asset Location ISO Technology Primary Fuel Net Capacity Ownership Interest Independence Oswego, NY NYISO CCGT Gas 1,212 100% Total NYISO 1,212 Bellingham Bellingham, MA ISO-NE CCGT Gas 566 100% Bellingham NEA Bellingham, MA ISO-NE CCGT Gas 157 50 Blackstone Blackstone, M
Slide 39: Reg G Tables – Q1 2018 Adjusted EBITDA
REG G TABLES – Q1 2018 ADJUSTED EBITDA VISTRA ENERGY CORP. – REG G RECONCILIATIONS THREE MONTHS ENDED MARCH 31, 2018 (Unaudited) (Millions of Dollars) Wholesale Retail Eliminations / Ongoing Operations Vistra Energy Asset Closure Generation Electricity Corp & Other Consolidated Consolidated Net Inco
Slide 40: Reg G Tables – Q1 2017 Adjusted EBITDA
REG G TABLES – Q1 2017 ADJUSTED EBITDA VISTRA ENERGY CORP. – REG G RECONCILIATIONS THREE MONTHS ENDED MARCH 31, 2017 (Unaudited) (Millions of Dollars) Wholesale Retail Eliminations / Ongoing Operations Vistra Energy Asset Closure Generation Electricity Corp & Other Consolidated Consolidated Net Inco
Slide 41: Reg G Tables – 2018 Guidance
REG G TABLES – 2018 GUIDANCE VISTRA ENERGY CORP. – REG G RECONCILIATIONS 2018 GUIDANCE (Unaudited) (Millions of Dollars) Ongoing Operations Asset Closure Vistra Energy Consolidated Low High Low High Low High Net Income (loss) 549 705 (94) (84) 455 621 Income tax expense (benefit) 139 183 - - 139 183
Slide 42: Reg G Tables – 2018 Illustrative Guidance
REG G TABLES – 2018 ILLUSTRATIVE GUIDANCE VISTRA ENERGY CORP. – REG G RECONCILIATIONS 2018 GUIDANCE (ILLUSTRATIVE) (Unaudited) (Millions of Dollars) Ongoing Operations Asset Closure Vistra Energy Consolidated Low High Low High Low High Net Income (loss) 695 851 (94) (84) 601 767 Income tax expense (
Slide 43: Reg G Tables – 2019 Guidance
REG G TABLES – 2019 GUIDANCE VISTRA ENERGY CORP. – REG G RECONCILIATIONS 2019 GUIDANCE (Unaudited) (Millions of Dollars) Ongoing Operations Asset Closure Vistra Energy Consolidated Low High Low High Low High Net Income (loss) 1,029 1,264 (70) (60) 959 1,204 Income tax expense (benefit) 248 313 - - 2
Slide 44: Reg G Tables – 2019 Illustrative Guidance
REG G TABLES – 2019 ILLUSTRATIVE GUIDANCE VISTRA ENERGY CORP. – REG G RECONCILIATIONS 2019 GUIDANCE (ILLUSTRATIVE) (Unaudited) (Millions of Dollars) Ongoing Operations Asset Closure Vistra Energy Consolidated Low High Low High Low High Net Income (loss) 1,088 1,323 (70) (60) 1,018 1,263 Income tax e
Slide 45: End Slide
VICTDA owe = ENERGY END SLIDE