Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q4 2022 Earnings Presentation
29 slides from Nrg Energy's earnings presentation, Feb 16, 2023
Slide 1: Fourth Quarter 2022 Earnings Presentation
NRG Energy Inc. Fourth Quarter 2022 Earnings Presentation February 16, 2023 1 | NRG 4Q22 Earnings
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements In addition to historical information, the information contained in this presentation 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, ex
Slide 3: Agenda
Agenda Business Review Mauricio Gutierrez President & CEO Financial Review Alberto Fornaro EVP & CFO Closing Remarks Mauricio Gutierrez President & CEO Q&A Management 3 | NRG 4Q22 Earnings
Slide 4: Key Messages
Key Messages Lower 2022 Results; Reaffirming 2023 Guidance Advancing Essential Consumer Services Strategy; Vivint Acquisition On-Track Strong Core + Vivint Enhances Path to 15-20% FCFbG per Share Growth through 2025 4 | NRG 4Q22 Earnings Business Review | Financial Review | Closing Remarks | Appendi
Slide 5: 2022 Business Highlights
2022 Business Highlights ($ millions) 2022 Scorecard 2022 Financial Results Financial and Operational Results Adjusted EBITDA ✓ Top decile safety performance ✓ Record customer retention • Results impacted primarily by Parish Unit 8 plant outage ~$200 MM Below Expectations Direct Energy Integration ✓
Slide 6: 2023 Outlook
2023 Outlook Well-Positioned for Strong Fundamentals Reaffirming 2023 Guidance Executing on Priorities (NRG Standalone) • Perfecting Integrated Energy Platform (millions) 2023E • Portfolio optimization: expect minimum $500 MM in net cash proceeds Adjusted EBITDA $2,270 – $2,470 • Advance hedging str
Slide 7: Smart Home Ecosystem
Smart Home Ecosystem Creates Leading Essential Home Services Platform Vivint Strengthens Core Home Services Value Flywheel (Combined 7.5 million customer network) Smart Home Platform Expand ✓ Connects currently isolated services / experiences Innovative ✓ Highly engaging ecosystem (~12x per day) Off
Slide 8: Vivint Smart Home Accelerates Value Creation
Vivint Smart Home Accelerates Value Creation Significant Near-Term Accretion 2025 Identified Opportunities National Home Platform (FCFbG) (Customer Footprint) Northeast/Other • NRG ~50% • $300 MM of Achievable Growth • Vivint~25% • Cross-sell to Tier 1 current network (5-10%) Non-Competitive • NRG ~
Slide 9: Pro Forma Financial Outlook
Pro Forma Financial Outlook Road Map to 2025 FCFbG/Share Expectations ($ millions) 2025 Free Cash Flow before Growth 2023-2025 Capital Allocation Pro Forma1,2,3 Pro Forma $2.0 – 2.2 Bn ~$6.5-7.0 Bn Growth Investments 10% -- ’23 Vivint Acquisition 20-25% -- Debt Reduction ~$300 3% -- Preferred Divide
Slide 10: Financial Review
Financial Review 10 | NRG 4Q22 Earnings
Slide 11: 2022 Financial Results
2022 Financial Results ($ millions) Fourth Quarter Reaffirming 2023 2022 Results Standalone 2022 2021 Guidance Texas $200 $161 $821 $1,645-$1,795 East/West/Services/Other1 235 272 933 625-675 Adjusted EBITDA $435 $433 $1,754 $2,270-2,470 Expectation: $1,950 Free Cash Flow before Growth $568 $274 $34
Slide 12: 2023 Capital Allocation
2023 Capital Allocation Pro Forma Full Year View1 ($ millions) No change from Previously Disclosed Indicates change from Previously Disclosed $100 $500 $2,279 $600 $300 Vivint Cash $145 $900 $1,730 Pro Forma Full Year FCFbG1 (mid-point) $417 $183 $175 Remaining ’22 W/C Uplift5 $249 $434 2022 CAFA/As
Slide 13: Corporate Credit Profile
Corporate Credit Profile ($ millions) 2023 NRG Acquisition Pro Forma Standalone 2023 Corporate Debt $8,1001 $4,385 $12,485 Debt Reduction 0 (900) (900) Minimum Cash Balance (650) (100) (750) Corporate Net Debt 7,450 3,385 10,835 Adjusted EBITDA $2,370 $7702 $3,140 Other Adjustments3 175 35 210 Corpo
Slide 14: Closing Remarks
Closing Remarks 14 | NRG 4Q22 Earnings
Slide 15: 2023 Priorities
2023 Priorities Deliver on Financial, Operational and ESG Objectives Execute on Acquisition Integration Objectives Direct Energy: $300 MM 2023 run-rate EBITDA-accretive synergies – in 2023 guidance Vivint: $100 MM cumulative 2025 run-rate EBITDA-accretive synergies – pending close Optimize
Slide 16: Appendix
Appendix 16 | NRG 4Q22 Earnings
Slide 17: Committed to Sustainability
Committed to Sustainability Environmental Leadership¹ NRG Sustainability U.S. CO2e Emissions (MMtCO2e2) Framework Carbon Reduction Target: 50% by 2025; net-zero by 2050 60 NRG Targets³ Goals certified as 1.5 degrees Celsius- 35 aligned by Science Based Targets initiative 30 Sustainable Climate L
Slide 18: Mature Risk Strategy
Mature Risk Strategy Managing Through-Cycle Stability 1 Forecast & Price 2 Retail Sale & Hedge 3 Optimize • Proprietary forecasting • Fully hedge priced load to firm • Perfect hedge profile to program models expected gross margin incorporate additional data load and variability (i.e. weather) • Part
Slide 19: Recourse Long-Term Debt Maturity Schedule
Recourse Long-Term Debt Maturity Schedule Balance as of 12/31/2022 ($ millions) $1,733 $1,275 $1,030 $1,100 $1,041 $821 $600 $500 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Therafter Recourse Debt Principal 6.625% Senior notes, due 2027 $375 5.75% Senior notes, due 2028 $821 5.25% Senior
Slide 20: Direct Energy Integration
Direct Energy Integration Advancing Customer Focused Strategy ($ millions) Direct Energy Integration Scorecard On Track 2021 2022 2023 / As of 12/31/2022 Realized Realized Run Rate Accretive & Recurring: Synergies 175 259 300 Total Recurring EBITDA & FCFbG $175 $259 $300 –Accretion Non-Recurring: In
Slide 21: 2022 Business Metrics
2022 Business Metrics Home & Business Volumes Texas East / Other Electric Natural Gas 74% 59 26% 40% 96 60% 145 1,773 TWh TWh MMDth MMDth Home / Residential Business / C&I Home / Residential Business / C&I 155 TWh 1,918 MMDth Electricity Natural Gas Strong Retail Performance – Ending Quarter at 5.4
Slide 22: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 22 | NRG 4Q22 Earnings
Slide 23: Reg. G: 2023 Guidance
Reg. G ($ millions) Appendix Table A-1: 2023 Guidance The following table summarizes the calculation of Adjusted EBITDA providing a reconciliation to Net Income, and the calculation of Free Cash Flow before Growth providing a reconciliation to Cash provided by Operating Activities 2023 NRG Guidance
Slide 24: Reg. G: Q4 Adjusted EBITDA by Segment
Reg. G ($ millions) Appendix Table A-2: Three months ended 12/31/22 and 12/31/21 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss): Three Months ended 12/31/22 Three Months ended 12
Slide 25: Reg. G: Full Year Adjusted EBITDA by Segment
Reg. G ($ millions) Appendix Table A-3: Twelve months ended 12/31/22 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss): Twelve Months ended 12/31/22 West/ Texas East Services/ Corp/
Slide 26: Reg. G: Q4 Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-4: Three months ended 12/31/2022 and 12/31/2021 Free Cash Flow before Growth The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Cash used by Operating Activities: Three Months Three Months Ended 12/31/2
Slide 27: Reg. G: Full Year Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-5: Twelve months ended 12/31/2022 Free Cash Flow before Growth The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Cash provided by Operating Activities: Twelve Months Ended 12/31/22 Adjusted EBITDA $ 1,
Slide 28: Reg. G
Reg. G 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 r
Slide 29: Reg. G
Reg. G 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, integratio