Slide 1: Third Quarter 2018 Results
November 2, 2018 Third 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 Q3 2018 Highlights Curt Morgan, President and Chief Executive Officer III Financial Highlights Bill Holden, Executive Vice President and Chief Financial Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q3 2018 4
Slide 5: Q3 2018 Highlights
Q3 2018 Highlights Curt Morgan Chief Executive Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q3 2018
Slide 6: Capital Allocation Announcement
CAPITAL ALLOCATION ANNOUNCEMENT Vistra’s capital allocation plan balances deleveraging and returning capital to shareholders through opportunistic share repurchases and a stable and predictable recurring dividend INCREASING SHARE REPURCHASE AUTHORIZATION ‒ Announcing incremental $1.25 billion share
Slide 7: Strong Capital Allocation Track Record
STRONG CAPITAL ALLOCATION TRACK RECORD RETURNING CAPITAL TO SHAREHOLDERS INVESTING IN GROWTH ✓ $1 billion special dividend paid in Dec. 2016 1. Investment threshold is 500-600 bps above → Recurring annual dividend program of cost of capital, generating mid-teens ~$0.50/share expected to begin 1Q19 u
Slide 8: Q3 2018 Financial Highlights
Q3 2018 FINANCIAL HIGHLIGHTS Q3 2018 and YTD 2018 Financial Results • Q3 2018 Ongoing Operations Adjusted EBITDA of $1,153 million • YTD 2018 Ongoing Operations Adjusted EBITDA of $2,069 million – Excluding partial buybacks of Odessa earnout in February and May, YTD 2018 Ongoing Operations Adjusted
Slide 9: Executing Incremental Hedges
EXECUTING INCREMENTAL HEDGES Recent improvement in forward curves, significantly “in the money” fleet, and Vistra’s commercial optimization and opportunistic hedging strategy expected to support stability of earnings and generation of $3+ billion in annual adjusted EBITDA Hedge percentage per market
Slide 10: ERCOT Forward Curves
ERCOT FORWARD CURVES ERCOT forward curves remain backwardated disincentivizing thermal new build, but near-term volatility provides opportunities for hedging Historical Forward North Hub Summer 5x16 Heat Rates1,2 55 50 Summer 2019 45 Summer 2020 Summer 2021 mmbtu/MWh 40 35 30 25 20 11/1/2017 12/1/20
Slide 11: Increasing Merger Value Lever Targets
INCREASING MERGER VALUE LEVER TARGETS Vistra is increasing its merger EBITDA value lever targets by $65 million to $565 million and expects ~$295 million 1 of additional after-tax free cash flow value levers SYNERGY ADJ. EBITDA OPI ADJ. EBITDA VALUE LEVERS ($mm) VALUE LEVERS ($mm) $290 $275 $275 $29
Slide 12: Q3 2018 Business Highlights
Q3 2018 BUSINESS HIGHLIGHTS Retail Execution Resulting in Stable Customer Counts • Vistra Energy ERCOT residential customer counts were flat for the quarter ended September 30, 2018 and up ~1.4% YTD – solely as a result of organic growth • Embarking on organic retail expansion in the Midwest and Nor
Slide 13: Financial Highlights
Financial Highlights Bill Holden Chief Financial Officer Vi s tra Energy Inv es t or Pres en t a ti o n / Q3 2018
Slide 14: Q3 2018 Financial Results
Q3 2018 FINANCIAL RESULTS Despite below-average August temperatures in ERCOT, Vistra expects it will deliver strong full year 2018 financial results ONGOING OPERATIONS ADJUSTED EBITDA1 HIGHLIGHTS ($ in millions) Q3 Ongoing Operations Adj. EBITDA of $1,153mm • Below average temperatures in ERCOT resu
Slide 15: Narrowing and Reaffirming 2018 Guidance
NARROWING AND REAFFIRMING 2018 GUIDANCE 2018E Guidance 2018E Guidance ($ in millions) (May 2018)2 (November 2018)2 Generation1 $1,885 - $2,035 $1,930 - $2,010 Retail 815 - 865 820 - 840 Asset Closure (65) - (55) (70) - (60) Consolidated Adjusted EBITDA $2,635 - $2,845 $2,680 - $2,790 (Asset Closure
Slide 16: Narrowing and Updating 2019 Guidance
NARROWING AND UPDATING 2019 GUIDANCE 2019E Guidance 2019E Guidance ($ in millions) (May 2018)2 (November 2018) Generation1 $2,410 - $2,640 $2,480 - $2,610 Retail 790 - 860 740 - 810 Asset Closure (70) - (60) (65) - (55) Consolidated Adjusted EBITDA $3,130 - $3,440 $3,155 - $3,3653 (Asset Closure Adj
Slide 17: 2019 Adjusted EBITDA Guidance Walk Forward
2019 ADJUSTED EBITDA GUIDANCE WALK FORWARD Adjusted EBITDA Ongoing Operations; $mm Guidance Range $3,200 – $3,500 $105 $(30) $(55) $(30) $3,240 – $3,440 $(20) $3,220 – $3,420 • $185 Price movement • $(25) Fuel Supply • $(80) Incremental Hedges • $(30) Outage Timing 2019E Wholesale Price MISO Capacit
Slide 18: Capital Structure
CAPITAL STRUCTURE Vistra has already begun to reduce leverage and optimize its capital structure ($ in millions) 9/30/18 2018E 2019E Term Loan B $5,828 $5,813 $5,754 1 Senior Notes 4,746 4,546 3,846 Other2 755 711 591 3 Total Long Term Debt $11,329 $11,070 $10,191 Less: cash and cash equivalents4 (8
Slide 19: Q&A
Q&A Vi s tra Energy Inv es t or Pres en t a ti o n / Q3 2018
Slide 20: Appendix
Appendix Vi s tra Energy Inv es t or Pres en t a ti o n / Q3 2018
Slide 21: Q3 2018 Results Comparison
Q3 2018 RESULTS COMPARISON ONGOING OPERATIONS ADJUSTED EBITDA1 ($ in millions) $1,153 $429 Q3 2017 Q3 2018 Adj. EBITDA by segment Q3 2017 Q3 2018 Variance Segment Drivers ($ in millions) Retail 176 141 (35) Lower margin driven by higher power costs; lower operating costs ERCOT 256 597 341 Unit perfo
Slide 22: Third Quarter Retail Metrics
THIRD QUARTER RETAIL METRICS Q3 2018 RETAIL HIGHLIGHTS RETAIL VOLUME (GWh) By Type 21,305 • Continued strong financial and operating 3,282 performance 12,205 13,263 10,886 • Residential customer counts in ERCOT grew 1% 5,257 6,126 year-over-year 6,948 7,137 7,137 • Exceptional sales performance acro
Slide 23: Third Quarter Generation Metrics
THIRD QUARTER GENERATION METRICS TOTAL GENERATION CAPACITY FACTOR (CCGT) TWhs Q3 2017 Q3 2018 YTD 2017 YTD 20181 % Q3 2017 Q3 2018 YTD 2017 YTD 20181 ERCOT 17.3 26.2 45.7 63.7 ERCOT 88% 68% 67% 60% PJM -- 15.4 -- 26.7 PJM -- 68% -- 67% NY/NE -- 6.0 -- 9.8 NY/NE -- 55% -- 48% MISO -- 8.3 -- 14.6 MISO
Slide 24: Capital Expenditures
CAPITAL EXPENDITURES CAPITAL EXPENDITURES1 2018E - 2019E ($ in millions) Illustrative 2018E 2018E Pro forma for 2019E 1-1-18 close Nuclear & Fossil Maintenance2 $264 $341 $432 Nuclear Fuel 109 109 74 Non-Recurring3 72 72 80 Growth -- -- 43 Total Capital Expenditures $445 $522 $629 Non-Recurring3 (72
Slide 25: Commercial Operations
COMMERCIAL OPERATIONS Hub ATC Price Forecasted Premium Forecasted Discount ($/MWh) ERCOT PJM $36.19 $33.33 ~86 TWhs $1.76 ~90 TWhs $33.68 $5.05 $34.43 $31.81 $34.40 $0.64 $28.28 $31.17 ~53 TWhs ~52 TWhs ($0.72) 2018 Estimated 2018 Estimated 2019 Estimated 2019 Estimated 2018 Estimated 2018 Estimated
Slide 26: Hedge Profile – ERCOT
HEDGE PROFILE – ERCOT NATURAL GAS HEDGE PROFILE HEAT RATE HEDGE PROFILE 94% 98% 93% 91% 89% 92% 78% 58% 12/29/17 3/30/18 11 3/30/18 6/29/18 3/30/18 12/29/17 11 6/29/18 3/30/18 6/29/18 9/30/18 12/29/17 3/30/18 6/29/18 9/30/18 6/29/18 6/29/18 3/30/18 9/30/18 3/30/18 12/29/17 6/29/18 6/29/18 3/30/18 9/
Slide 27: Hedge Profile – Other Markets
HEDGE PROFILE – OTHER MARKETS GENERATION VOLUMES HEDGED (2018) GENERATION VOLUMES HEDGED (2019) MISO/CAISO NE/NY PJM MISO/CAISO NE/NY PJM 82% 83% 77% 78% 77% 75% 74% 70% 63% 57% 58% 47% 6/29 9/30 6/29 9/30 6/29 9/30 6/29 9/30 6/29 9/30 6/29 9/30 NATURAL GAS MARGIN SENSITIVITY1 HEAT RATE MARGIN SENSI
Slide 28: Market Pricing – ERCOT
MARKET PRICING – ERCOT MONTHLY NORTH HUB ATC POWER PRICES¹ IMPLIED NORTH HUB ATC MARKET HEAT RATES 120 37 August 19 32.89 August 19 33 100 $89.89 August 18 August 18 29 11.53 $34.67 (mmBtu/MWh) 80 25 ($/MWh) 60 21 17 40 $28.06 $26.58 13 10.26 9.28 20 9 0 5 2016A 2017A 2018E 2019F 2016A 2017A 2018E 2
Slide 29: Market Pricing – Other Markets
MARKET PRICING – OTHER MARKETS MONTHLY AD HUB ATC POWER PRICES MONTHLY INDIANA HUB ATC POWER PRICES 60 60 50 50 40 40 ($/MWh) ($/MWh) 30 30 20 20 10 10 - - 2016A 2017A 2018A+F 2019F 2016A 2017A 2018A+F 2019F Settled 6/29/2018 Forward 9/30/2018 Forward Settled 6/29/2018 Forward 9/30/2018 Forward MONT
Slide 30: Capacity Position – MISO
CAPACITY POSITION – MISO MISO Capacity Position (excludes PJM exports) Price in $/kw-mo Total EBITDA Contribution PY 17/18 MWs 3,506 Average Price $4.07 $171 MM PY 18/19 MWs 2,489 Average Price $3.37 $101 MM PY 19/20 MWs 2,047 Average Price $3.86 $95 MM PY 20/21 MWs 1,616 Average Price $4.14 $80 MM
Slide 31: Capacity Positions – PJM
CAPACITY POSITIONS – PJM (excludes MISO Imports) PJM Region Planning Year Average Price MW Position Average Price MW Position ($/MW-day) ($/MW-day) Legacy/Base Product Capacity Performance Product 2017 – 2018 $125.92 2,051 $151.50 3,974 2018 – 2019 $199.39 948 $165.13 4,599 RTO 2019 – 2020 $169.50 5
Slide 32: Capacity Positions – ISO-NE / NYISO / CAISO
CAPACITY POSITIONS – ISO-NE / NYISO / CAISO ISO/Region Contract Type Average Price MW Position Tenor ($/MW-day) ISO-NE1 ISO-NE Capacity $9.94/kw-Mo 3,292 June 2018 to May 2019 $7.02/kw-Mo 3,236 June 2019 to May 2020 $5.40/kw-Mo 3,229 June 2020 to May 2021 $4.80/kw-Mo 2,762 June 2021 to May 2022 NYIS
Slide 33: 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 34: 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 35: Non-GAAP Reconciliations – Q3 2018 Adjusted EBITDA
NON-GAAP RECONCILIATIONS – Q3 2018 ADJUSTED EBITDA VISTRA ENERGY CORP. – NON-GAAP RECONCILIATIONS THREE MONTHS ENDED SEPTEMBER 30, 2018 (Unaudited) (Millions of Dollars) Eliminations/ Ongoing Vistra Energy Retail ERCOT PJM NY/NE MISO Corp and Operations Asset Closure Consolidated Other Consolidated
Slide 36: Non-GAAP Reconciliations – Q3 2017 Adjusted EBITDA
NON-GAAP RECONCILIATIONS – Q3 2017 ADJUSTED EBITDA VISTRA ENERGY CORP. – NON-GAAP RECONCILIATIONS THREE MONTHS ENDED SEPTEMBER 30, 2017 (Unaudited) (Millions of Dollars) Ongoing Eliminations / Vistra Energy Retail ERCOT Operations Asset Closure Corp and Other Consolidated Consolidated Net Income (lo
Slide 37: Non-GAAP Reconciliations – YTD 2018 Adjusted EBITDA
NON-GAAP RECONCILIATIONS – YTD 2018 ADJUSTED EBITDA VISTRA ENERGY CORP. – NON-GAAP RECONCILIATIONS NINE MONTHS ENDED SEPTEMBER 30, 2018 (Unaudited) (Millions of Dollars) Eliminations/ Ongoing Vistra Energy Retail ERCOT PJM NY/NE MISO Corp and Operations Asset Closure Consolidated Other Consolidated
Slide 38: Non-GAAP Reconciliations – YTD 2017 Adjusted EBITDA
NON-GAAP RECONCILIATIONS – YTD 2017 ADJUSTED EBITDA VISTRA ENERGY CORP. – NON-GAAP RECONCILIATIONS NINE MONTHS ENDED SEPTEMBER 30, 2017 (Unaudited) (Millions of Dollars) Ongoing Eliminations / Vistra Energy Retail ERCOT Operations Asset Closure Corp and Other Consolidated Consolidated Net Income (lo
Slide 39: Non-GAAP Reconciliations – 2018 Guidance
NON-GAAP RECONCILIATIONS – 2018 GUIDANCE VISTRA ENERGY CORP. – NON-GAAP RECONCILIATIONS 2018 GUIDANCE (Unaudited) (Millions of Dollars) Ongoing Operations Asset Closure Vistra Energy Consolidated Low High Low High Low High Net Income (loss) 103 180 (74) (64) 29 116 Income tax expense (benefit) 78 10
Slide 40: Non-GAAP Reconciliations – 2019 Guidance
NON-GAAP RECONCILIATIONS – 2019 GUIDANCE VISTRA ENERGY CORP. – NON-GAAP RECONCILIATIONS 2019 GUIDANCE (Unaudited) (Millions of Dollars) Ongoing Operations Asset Closure Vistra Energy Consolidated Low High Low High Low High Net Income (loss) 944 1,100 (66) (56) 878 1,044 Income tax expense (benefit)
Slide 41: End Slide
VICTDA owe = ENERGY END SLIDE