Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — FY2019 Earnings Presentation
44 slides from Nrg Energy's earnings presentation, Feb 27, 2020
Slide 1: Fourth Quarter and Full Year 2019 Earnings Presentation
NRG Energy Inc. Fourth Quarter and Full Year 2019 Earnings Presentation February 27, 2020 © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements In addition to historical information, the information presented 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 and CEO Financial Review Kirk Andrews, EVP and CFO Closing Remarks Mauricio Gutierrez, President and CEO Q&A © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 2
Slide 4: Key Messages
NRG 4Q19 Earnings Key Messages Business Review Financial Review Closing Remarks Appendix Integrated Platform Delivers Predictable Results in 2019 through Volatile Market Conditions; Reaffirming 2020 Guidance Advanced Sustainability Program with Industry Leading Environmental Targets Executing Discip
Slide 5: Business Highlights
NRG 4Q19 Earnings Business Highlights Business Review Financial Review Closing Remarks Appendix 2019 Scorecard Financial Update ($ millions) Deliver on Financial and Operational Objectives 2019 Adjusted EBITDA Top decile safety performance, best year on record Resilient financial results throu
Slide 6: Sustainability Principles
NRG 4Q19 Earnings Sustainability Principles Business Review Financial Review Closing Remarks Appendix Accountability Transparency Engagement • Safety: • Top decile; best year on record • Environmental: • Carbon Reduction Goals: 50% by 2025, net-zero by 20501 • Annual Sustainability Report – • Active
Slide 7: Carbon Reduction Progress
NRG 4Q19 Earnings Carbon Reduction Progress Business Review Financial Review Closing Remarks Appendix Greenhouse Gas Emission-Reduction Rapidly Transitioning to Cleaner and More Target of 50% by 2025, net-zero by 2050 Sustainable Sources of Revenues Science Based Targets % Revenues from Coal U.S. C
Slide 8: Market Outlook
NRG 4Q19 Earnings Market Outlook Business Review Financial Review Closing Remarks Appendix Strong ERCOT Demand Growth Supports Regulatory Changes Aimed Compelling Fundamentals to Improve Competitive Markets Annual Demand Growth (TWh)1 Description • ORDC Reform – improves path to scarcity 450 pricing
Slide 9: 2020 Capital Allocation Plan
NRG 4Q19 Earnings 2020 Capital Allocation Plan Business Review Financial Review Closing Remarks Appendix Stabilize Right-Size Redefine Capital Allocation Priorities $3.0 Bn $5.6 Bn1 ~$1.4 Bn Maintain top decile safety 6% and operational excellence 20% 20% $614 MM Uncommitted 4% 44% Maintain Investme
Slide 10: Financial Review
Financial Review © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 9
Slide 11: 2019 Financial Summary
NRG 4Q19 Earnings 2019 Financial Summary Business Review Financial Review Closing Remarks Appendix ($ millions) 2019 Full Year Results Retail $920 Generation1 1,057 Adjusted EBITDA $1,977 Free Cash Flow before Growth (“FCFbG”) $1,212 2019 Highlights: • Completed $250 MM share repurchase program; tot
Slide 12: 2019 Capital Allocation
NRG 4Q19 Earnings 2019 Capital Allocation Business Review Financial Review Closing Remarks Appendix ($ millions) $2,845 $703 No change from Prior Quarter Indicates change from Prior Quarter ($88) $1,212 $1,440 2019 FCFbG ($60) in 1Q20 $1,2831 Sale of South Central & Carlsbad $32 $551 +$32 $84 $350 (
Slide 13: 2020 Capital Allocation
NRG 4Q19 Earnings 2020 Capital Allocation Business Review Financial Review Closing Remarks Appendix ($ millions) No change from Prior Quarter Indicates change from Prior Quarter Return to Shareholders: $675 $1,410 $60 $1,350 2019 Share Repurchase Program completed in 1Q20 $295 $1,375 Investments: $6
Slide 14: Corporate Credit Profile/New Targets
NRG 4Q19 Earnings Corporate Credit Profile/New Targets Business Review Financial Review Closing Remarks Appendix ($ millions) 2019 2020 Guidance Illustrative NRG Credit Profile Corporate Debt1 $5,925 $5,925 0.9999 Strong Investment Grade Cash & Cash Equivalents2 (535) (500) Rating Corporate Net Debt
Slide 15: Closing Remarks
Closing Remarks © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 14
Slide 16: 2020 Priorities
NRG 4Q19 Earnings 2020 Priorities Business Review Financial Review Closing Remarks Appendix Deliver on Financial and Operational Objectives Complete 3-Year Transformation Plan $215 MM cumulative EBITDA-accretive margin enhancement ($80 MM in 2020) Perfect and Grow Integrated Platform Grow
Slide 17: Appendix
Appendix © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 16
Slide 18: Transformation Plan
Transformation Plan NRG 4Q19 Earnings Business Review Financial Review Scorecard Update Closing Remarks Appendix Transformation Plan Progress 2017 2018 2019 2020 / Run ($ millions) Realized Realized Realized Rate Accretive & Recurring: Cost Savings 150 532 590 590 Margin Enhancement - 32 135 215 Tot
Slide 19: Committed to Sustainability
NRG 4Q19 Earnings Committed to Sustainability Business Review Financial Review Closing Remarks Appendix NRG Sustainability Framework Sustainable Sustainable Sustainable Sustainable Sustainable Business Operations Customers Suppliers Workplace Sept 24, 2019: NRG announced accelerated emissions-reduct
Slide 20: Appendix: Operations
Appendix: Operations © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 19
Slide 21: Retail: Operational Metrics
NRG 4Q19 Earnings Retail: Operational Metrics Business Review Financial Review Closing Remarks Appendix Growing Mass Customer Count & 2019 Highlights Summer Supply Cost Increase Stable Unit Margins • Delivered $920 MM in Adjusted EBITDA Customer Count1 (millions) Mass Unit Margins (Economic GM $/MWh
Slide 22: Generation: Operational Metrics
NRG 4Q19 Earnings Generation: Operational Metrics Business Review Financial Review Closing Remarks Appendix 2019 Highlights Safety1 (TCIR)2 • Top decile safety performance; best year in company history • Best environmental performance on record • Delivered $1.0571 Bn in Adjusted EBITDA; 0.56 0.51 0.
Slide 23: Wholesale Total Gross Margin
NRG 4Q19 Earnings Wholesale Total Gross Margin Business Review Financial Review Closing Remarks Appendix Total Portfolio1 ERCOT East/West2 2020 2021 2020 2021 3 Total Capacity (MW) 10,042 10,042 11,417 11,417 Estimated Generation (GWh)4 40,101 40,049 14,660 13,795 Percentage Hedged5 100% 27% 110% 29
Slide 24: Commodity Prices
NRG 4Q19 Earnings Commodity Prices Business Review Financial Review Closing Remarks Appendix 2020 2021 Reference Market Reference Market Reference Prices 12/31/2019 Price Heat Rate Price Heat Rate Natural Gas Henry Hub ($/MMBtu) $2.28 -- $2.42 -- PRB 8800 Coal ($/Ton) $12.33 -- $12.40 -- $/MWh MMBtu
Slide 25: Capacity Clears & Unsold
NRG 4Q19 Earnings Capacity Clears & Unsold Business Review Financial Review Closing Remarks Appendix Capacity Revenue by Calendar Year ($ MM) Market 2020 2021 PJM $282 $299 ISO-NE $110 $90 Illustrative: NYISO1 $150 $202 Assumes uncleared capacity clears at current CAISO1 $58 $54 market levels Estima
Slide 26: PJM Capacity Clears
NRG 4Q19 Earnings PJM Capacity Clears Business Review Financial Review Closing Remarks Appendix Capacity Revenue by Calendar Year ($ MM) Capacity Revenue by Delivery Year ($ MM) Market 2020 2021 Market 19/20 20/21 21/22 PJM $282 $299 PJM $305 $265 $322 Base Product Capacity Performance Product Plann
Slide 27: 4Q & 2019 Generation Performance
NRG 4Q19 Earnings 4Q & 2019 Generation Performance Business Review Financial Review Closing Remarks Appendix 4Q19 4Q19 4Q18 2019 2019 2018 1 1 (MWh 000’s) Generation Generation (MWh 000’s) Generation1 Generation1 Texas 7,923 9,119 Texas 37,994 38,214 East/West2 3,769 3,860 East/West2 16,375 21,089 T
Slide 28: Asset List
NRG 4Q19 Earnings Asset List1 Business Review Financial Review Closing Remarks Appendix ERCOT PJM ISO-NE ERCOT (10,061 MW, Net) ComEd (4,319 MW, Net) Connecticut (1,528 MW, Net) Name Capacity Ownership Name Capacity Ownership Name Capacity Ownership Cedar Bayou 1,494 100% Fisk 171 100% CT Jets 142 1
Slide 29: Appendix: Finance
Appendix: Finance © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 28
Slide 30: Q4 2019 YTD Net Capital Expenditures
NRG 4Q19 Earnings Q4 2019 YTD Net Capital Expenditures Business Review Financial Review Closing Remarks Appendix ($ millions) Maintenance Environmental Growth1 Total Retail $13 $- $47 $60 Generation Texas 91 1 - 92 East/West2 40 2 - 42 Corporate 12 - 22 34 Total Cash Capital Expenditures $156 $3 $69
Slide 31: Recourse / Non-Recourse Debt
NRG 4Q19 Earnings Recourse / Non-Recourse Debt Business Review Financial Review Closing Remarks Appendix ($ millions) 12/31/2019 12/31/2018 Recourse Debt Term Loan Facility $ - $ 1,698 Senior Notes 3,784 3,784 Convertible Notes 575 575 Senior Secured First Lien Notes 1,100 - Tax Exempt Bonds 466 466
Slide 32: Portfolio Changes
NRG 4Q19 Earnings Portfolio Changes Business Review Financial Review Closing Remarks Appendix ($ millions) • As a result of the Transformation Plan, NRG monetized and deconsolidated numerous non-core businesses. The 2018 results were recast for the NRG Yield / Renewables and South Central asset sale
Slide 33: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 32
Slide 34: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-1: 2019 and 2020 Guidance The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Adjusted EBITDA 2019 2020 ($ millions) Prior Guidance Guidance
Slide 35: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-2: 2019 YTD 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 continuing operations Full Yea
Slide 36: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-3: Fourth Quarter 2019 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continu
Slide 37: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-4: Full Year 2019 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continuing O
Slide 38: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-5: Fourth Quarter 2018 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continu
Slide 39: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-6: Full Year 2018 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continuing O
Slide 40: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-7: Adjusted EBITDA Guidance Reconciliation: The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to Income from Continuing Operations: 2019 2020 Adjusted EBITDA A
Slide 41: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-8: 2019 and 2020 Adjusted EBITDA Reconciliation for Midwest Gen The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income from Continuing Operations ($
Slide 42: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-9: Retail 2017 Adjusted EBITDA Reconciliation The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continuing Operations 2017 ($ millio
Slide 43: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix 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
Slide 44: Reg. G
NRG 4Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix 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 fin