Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q1 2023 Earnings Presentation
27 slides from Nrg Energy's earnings presentation, May 4, 2023
Slide 1: First Quarter 2023 Earnings Presentation
NRG Energy Inc. First Quarter 2023 Earnings Presentation May 04, 2023 1 | NRG 1Q23 Earnings
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 & CEO Financial Review Alberto Fornaro EVP & CFO Closing Remarks Mauricio Gutierrez President & CEO Q&A Management 3 | NRG 1Q23 Earnings
Slide 4: Key Messages
Key Messages Delivered Strong 1Q Results; Updating 2023 Guidance for Vivint Smart Home Well-Positioned for Current Power Market Fundamentals Advancing Consumer Services Strategy; Closed Vivint Smart Home Acquisition 4 | NRG 1Q23 Earnings Business Review | Financial Review | Closing Remarks | Appendi
Slide 5: Business Highlights & Results
Business Highlights & Results ($ millions) 1Q Business Highlights Financial Update Financial and Operational Results Adjusted EBITDA • Top decile safety performance • Strong operational performance across all $646 businesses; 28%1 increase in Adjusted EBITDA $536 Drivers: +28% $30 Retail margins
Slide 6: Power Market Review - Texas
Power Market Review - Texas Mild 1Q Weather Drove Lower Integrated Portfolio Strategy Load Offset by Lower Supply Costs Supports Predictable Earnings Mild Texas Weather through 1Q… 800 Weather vs Normal1 • Platform Well-Positioned for Summer Jan (-22%) 700 Feb (-4%) • Expanded spring maintenance out
Slide 7: Advancing Consumer Services Strategy
Advancing Consumer Services Strategy Strong Performance (YoY) Synergy Scorecard ($ millions) 2023-2025 2023-2025 Home Retail Energy As of 3/31/2023 2023 Target Total Plan Revenue/Growth: • ~7% increase in margins1 and stable customer count $30 $300 FCFbG Growth $80 MM Annualized ’25 Run-Rate • Stron
Slide 8: Financial Review
Financial Review 8 | NRG 1Q23 Earnings
Slide 9: 1Q23 Financial Update
1Q23 Financial Update ($ millions) 1Q23 Highlights Three Months Ended • NRG standalone results increased by $67 MM YoY, 2023 2022 excluding asset sales and retirements; additionally, Vivint Smart Home contributed $73 MM in March Texas $254 $211 East/West/Services/Other1 319 325 • Texas and East/West
Slide 10: 2023 Guidance
2023 Guidance ($ millions) Highlights: Updating 2023 Previous 2023 Guidance Guidance • Updating NRG Adjusted EBITDA for EBITDA harmonization Texas $1,730-$1,880 $1,645-$1,795 • Adding Vivint pro-rated for 10 months to 2023 East/West/Services/Other1 660-710 625-675 guidance Vivint (March-December) 62
Slide 11: 2023 Capital Allocation
2023 Capital Allocation ($ millions) No change from Previously Disclosed Indicates change from Previously Disclosed $100 $500 $273 $1,989 $145 $900 $1,740 FCFbG1 (mid-point) $380 $175 Remaining $185 ’22 W/C Uplift6 $249 $506 2022 CAFA/Astoria2 2023 Targeted Increase in Vivint Vivint Vivint Dividends
Slide 12: Corporate Credit Profile
Corporate Credit Profile ($ millions) 2023 NRG Vivint Pro Forma Standalone Acquisition 2023 Corporate Debt $8,1001 $4,370 $12,470 Debt Reduction 0 (900) (900) Minimum Cash Balance (650) (100) (750) Corporate Net Debt 7,450 3,370 10,820 Adjusted EBITDA $2,4902 $7703 $3,260 Other Adjustments4 140 35 1
Slide 13: Closing Remarks
Closing Remarks 13 | NRG 1Q23 Earnings
Slide 14: 2023 Priorities
2023 Priorities Deliver Financial, Operational and ESG Objectives Execute Acquisition Integration Objectives – FCFbG Synergies Direct Energy: $300 MM 2023 run-rate synergies – On Track Vivint Smart Home: $35 MM 2023 cost synergies ($100 MM by 2025) – On Track Optimize and Grow from Core
Slide 15: Appendix
Appendix 15 | NRG 1Q23 Earnings
Slide 16: Committed to Sustainability
Committed to Sustainability Environmental Leadership¹ NRG Sustainability U.S. CO2e Emissions (MMtCO2e2) Framework Carbon Reduction Target: 50% by 2025; net-zero by 2050 60 NRG Targets³ Goals certified as 1.5 degrees Celsius- 35 aligned by Science Based Targets initiative3 30 Sustainable Climate
Slide 17: Mature Risk Strategy
Mature Risk Strategy Managing Through-Cycle Stability 1 Forecast & Price 2 Retail Sale & Hedge 3 Optimize • Proprietary forecasting • Fully hedge priced load to firm • Perfect hedge profile to program models expected gross margin incorporate additional data load and variability (i.e. weather) • Part
Slide 18: Debt Maturity Schedule
Debt Maturity Schedule Balance as of 03/31/2023 ($ millions) $2,876 $2,533 $1,875 $1,030 $1,100 $1,041 $600 740 $500 $225 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Therafter Recourse Debt Principal Non-recourse Debt Principal 6.625% Senior Notes, due 2027 $375 6.75% Vivint Senior Secure
Slide 19: Business Metrics
Business Metrics 1Q23 Home & Business Volumes Vivint Smart Home Modeling Metrics1 Texas East / Other Avg. $ per Key Subscriber Metrics Electric Customer Monthly Service Revenue ~$46 67% 11 33% 33 TWh 40% 21 60% Net Monthly Service Cost ~($10) TWh Electricity TWh Net Monthly Service Margin ~$36 Net S
Slide 20: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 20 | NRG 1Q23 Earnings
Slide 21: Reg. G: Table A-1 2023 Guidance
Reg. G ($ millions) Appendix Table A-1: 2023 Guidance The following table summarizes the calculation of Adjusted EBITDA providing a reconciliation to Net Income 2023 Guidance Net Income1 $805 - $1,045 Interest expense, net 680 Income tax 310 Depreciation and amortization 1,010 ARO expense 20 Amortiz
Slide 22: Reg. G: Table A-2 2023 Guidance
Reg. G ($ millions) Appendix Table A-2: 2023 Guidance The following table summarizes the calculation of Free Cash Flow before Growth providing a reconciliation to Cash provided by Operating Activities 2023 Guidance Adjusted EBITDA $3,010 - $3,250 Interest payments, net (590) Income tax (95) 1 215 Ne
Slide 23: Reg. G: Table A-3 Adjusted EBITDA by Segment
Reg. G ($ millions) Appendix Table A-3: Three months ended 3/31/23 and 3/31/22 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss): 1 In 2022, Stock-based compensation and Amortizatio
Slide 24: Reg. G: Table A-4 Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-4: Three months ended 3/31/23 and 3/31/22 Free Cash Flow before Growth The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Cash (used)/provided by Operating Activities Three Months ended Three Months end
Slide 25: Reg. G: Table A-5 Prior 2023 Guidance
Reg. G ($ millions) Appendix Table A-5: Prior 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 Prior 2023 N
Slide 26: 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 27: Reg. G
Reg. G Adjusted cash flow from operating activities is a non-GAAP measure NRG provides to show cash flow 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, integ