Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q2 2019 Earnings Presentation
45 slides from Nrg Energy's earnings presentation, Aug 7, 2019
Slide 1: Second Quarter 2019 Earnings Presentation
NRG Energy Inc. Second Quarter 2019 Earnings Presentation August 7, 2019 © [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 2Q19 Earnings Key Messages Business Review Financial Review Closing Remarks Appendix Platform Delivers Predictable Results; Reaffirming Guidance Perfecting Integrated Platform through Stream Energy Acquisition and Solar PPAs Achieved Investment Grade Metrics; Announcing Incremental $250 MM Share
Slide 5: Q2 Results and Highlights
NRG 2Q19 Earnings Q2 Results and Highlights Business Review Financial Review Closing Remarks Appendix Results and Highlights Matched Portfolio Provided Stable Results ($ millions) Adjusted EBITDA Deliver on Financial and Operational Objectives Top decile safety performance Second Quarter First H
Slide 6: Summer ERCOT Update
NRG 2Q19 Earnings Summer ERCOT Update Business Review Financial Review Closing Remarks Appendix Mild Weather Impacting Power Prices Platform Well-Positioned Through Summer 800 • Integrated Platform Well-Positioned for varying summer conditions Texas Degree Days 700 600 • Maintaining balanced hedging
Slide 7: Market Outlook - ERCOT
NRG 2Q19 Earnings Market Outlook - ERCOT Business Review Financial Review Closing Remarks Appendix ERCOT Requires Significant New Build Fundamentals Trending to Remain Tight for to Maintain Grid Reliability the Foreseeable Future (Nameplate Capacity; Cumulative GWs)1 2020 2021 2022 May ‘19 Capacity,
Slide 8: Platform Designed for Stability
NRG 2Q19 Earnings Platform Designed for Stability Business Review Financial Review Closing Remarks Appendix 2020 Balanced & Flexible 2020 Focus Minimized Market Exposure 1 Balanced Continue Perfecting GWs Integrated Platform 21 19 Integrated Model Generation Capacity Retail Peak Load 2 2.5x Streng
Slide 9: Financial Review
Financial Review © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 8
Slide 10: Financial Summary
NRG 2Q19 Earnings Financial Summary Business Review Financial Review Closing Remarks Appendix ($ millions) 6/30/2019 Reaffirming Full Three Months Six Months Year Guidance Ended Ended Retail $240 $393 $1,000 – $1,100 Generation1 229 408 850 – 950 Adjusted EBITDA $469 $801 $1,850 - $2,050 Consolidate
Slide 11: 2019 Capital Allocation
NRG 2Q19 Earnings 2019 Capital Allocation Business Review Financial Review Closing Remarks Appendix ($ millions) $2,983 $703 No change from Prior Quarter Indicates change from Prior Quarter Completed $1,2831 Sale of South $1,500 Central & Carlsbad $250 $1,250 Completed $1,350 2019 FCFbG (mid-point)
Slide 12: Corporate Credit Profile/New Targets
NRG 2Q19 Earnings Corporate Credit Profile/New Targets Business Review Financial Review Closing Remarks Appendix ($ millions) 2019 Guidance Illustrative NRG Credit Profile Corporate Debt1 $5,925 0.9999 Strong Cash & Cash Equivalents2 (500) Investment Rating Business Risk Corporate Net Debt ~$5,425 G
Slide 13: Closing Remarks
Closing Remarks © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 12
Slide 14: 2019 Priorities
NRG 2Q19 Earnings 2019 Priorities Business Review Financial Review Closing Remarks Appendix Deliver on Financial and Operational Objectives Strong year-to-date financial, operational and safety performance Execute on NRG Transformation Plan 2019 Objectives $590 MM cumulative EBITDA-accretive
Slide 15: Appendix
Appendix © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 14
Slide 16: Transformation Plan
Transformation Plan NRG 2Q19 Earnings Business Review Financial Review Scorecard Update Closing Remarks Appendix Scorecard as of 6/30/2019 Transformation Plan Progress 2019 2019 % 2019 2017 2018 2019 2020 / ($ millions) Realized Achieved Target ($ millions) Realized Realized Target Run Rate Accretiv
Slide 17: Committed to Sustainability
NRG 2Q19 Earnings Committed to Sustainability Business Review Financial Review Closing Remarks Appendix NRG Sustainability Framework Sustainable Sustainable Sustainable Sustainable Sustainable Business Operations Customers Suppliers Workplace Industry-Leading Disclosure Environmental Leadership1 U.S
Slide 18: Appendix: Operations
Appendix: Operations © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 17
Slide 19: Retail: Operational Metrics
NRG 2Q19 Earnings Retail: Operational Metrics Business Review Financial Review Closing Remarks Appendix Q2 Highlights Mass Supply Summer Customer Count Cost Increase Mass Recurring Customers1 (000s) • Delivered $240 MM in Adjusted EBITDA for the quarter, down from last year primarily driven by highe
Slide 20: Generation: Operational Metrics
NRG 2Q19 Earnings Generation: Operational Metrics Business Review Financial Review Closing Remarks Appendix Q2 Highlights Safety1 (TCIR)3 • Successful completion of Gregory return to service for summer operation • Delivered top decile safety performance • Delivered $229 MM1 in Adjusted EBITDA for th
Slide 21: Wholesale Total Gross Margin
NRG 2Q19 Earnings Wholesale Total Gross Margin Business Review Financial Review Closing Remarks Appendix Total Portfolio1 ERCOT East/West2 Bal 20191 2020 Bal 20191 2020 3 Total Capacity (MW) 10,042 10,042 11,417 11,417 Estimated Generation (GWh)4 20,982 41,366 9,889 16,458 5 Percentage Hedged 105% 7
Slide 22: Commodity Prices
NRG 2Q19 Earnings Commodity Prices Business Review Financial Review Closing Remarks Appendix Bal 20191 2020 Reference Market Reference Market Reference Prices 6/28/2019 Price Heat Rate1 Price Heat Rate1 Natural Gas Henry Hub ($/MMBtu) $2.36 -- $2.54 -- PRB 8800 Coal ($/Ton) $12.35 -- $12.40 -- $/MWh
Slide 23: Capacity Clears & Unsold
NRG 2Q19 Earnings Capacity Clears & Unsold Business Review Financial Review Closing Remarks Appendix Capacity Revenue by Calendar Year ($ MM) Market 2019 2020 PJM $317 $282 ISO-NE $149 $110 Illustrative: NYISO1 $107 $145 Assumes uncleared capacity clears at current CAISO1 $25 $32 market levels Estim
Slide 24: PJM Capacity Clears
NRG 2Q19 Earnings PJM Capacity Clears Business Review Financial Review Closing Remarks Appendix Capacity Revenue by Calendar Year ($ MM) Capacity Revenue by Delivery Year ($ MM) Market 2019 2020 2021 Market 18/19 19/20 20/21 21/22 PJM $317 $282 $299 PJM $334 $305 $265 $322 Base Product Capacity Perf
Slide 25: Q2 & YTD 2019 Generation & Operational Performance Metrics
Q2 & YTD 2019 Generation & NRG 2Q19 Earnings Business Review Operational Performance Metrics Financial Review Closing Remarks Appendix 2Q19 2Q19 2Q18 2Q19 2Q18 MWh (MWh 000’s) Generation1 Generation1 % Change EAF2 NCF3 EAF2 NCF3 Change Texas 10,645 9,848 796 8% 84% 48% 83% 46% East/West4 2,536 5,255
Slide 26: Asset List
NRG 2Q19 Earnings Asset List1 Business Review Financial Review Closing Remarks Appendix ERCOT PJM ISO-NE ERCOT (10,061 MW, Net) ComEd (4,319 MW, Net) Connecticut (1,528 MW, Net) Name Capacity Ownership Name Capacity Ownership Name Capacity Ownership Cedar Bayou 1,494 100% Fisk 171 100% CT Jets 142 1
Slide 27: Appendix: Finance
Appendix: Finance © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 26
Slide 28: Q2 2019 YTD Capital Expenditures
NRG 2Q19 Earnings Q2 2019 YTD Capital Expenditures Business Review Financial Review Closing Remarks Appendix ($ millions) Maintenance Environmental Growth1 Total Retail $9 $- $19 $28 Generation Texas 39 - - 39 East/West2 25 2 - 27 Corporate 3 - 10 13 Total Cash Capital Expenditures $76 $2 $29 $107 O
Slide 29: Recourse / Non-Recourse Debt
NRG 2Q19 Earnings Recourse / Non-Recourse Debt Business Review Financial Review Closing Remarks Appendix ($ millions) 6/30/2019 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 30: Announced Asset Sales
NRG 2Q19 Earnings Announced Asset Sales Business Review Financial Review Closing Remarks Appendix ($ millions) Status 2017 2018 2019 Total Transformation Plan Asset Sales1: Asset Sales in 2H172 Closed $150 $- $- $150 Renewables / NRG Yield Interest Closed - 1,348 - 1,348 Buckthorn Solar Closed - 42
Slide 31: Incremental Transformation Plan
NRG 2Q19 Earnings Incremental Transformation Plan Business Review Financial Review Closing Remarks Appendix ($ millions) 2017A 2018A 2019E 2020E Cost Savings $150 $532 $590 $590 Margin Enhancements - 32 135 215 EBITDA Impact $150 $564 $725 $805 Maintenance Capex - 47 50 50 Working Capital 221 112 37
Slide 32: Portfolio Changes
NRG 2Q19 Earnings Portfolio Changes Business Review Financial Review Closing Remarks Appendix As a result of the Transformation Plan, NRG monetized and deconsolidated numerous non-core businesses. The 2018 results were recast for the NRG Yield / Renewables and South Central asset sales but not for t
Slide 33: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules © [year] NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 32
Slide 34: Reg. G: 2019 Guidance
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-1: 2019 Guidance The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Adjusted EBITDA 2019 ($ millions) Guidance Total Adjusted EBITDA $1,850
Slide 35: Reg. G: Q2 2019 YTD Free Cash Flow before Growth
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-2: Q2 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 YTD (
Slide 36: Reg. G: Q2 2019 QTD Free Cash Flow before Growth
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-3: Q2 2019 QTD 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 QTD (
Slide 37: Reg. G: Q2 2019 Adjusted EBITDA Reconciliation
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-4: Second 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 38: Reg. G: Q2 YTD 2019 Adjusted EBITDA Reconciliation
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-5: Second Quarter YTD 2019 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Con
Slide 39: Reg. G: Q2 2018 Adjusted EBITDA Reconciliation
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-6: Second 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 40: Reg. G: Q2 YTD 2018 Adjusted EBITDA Reconciliation
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-7: Second Quarter YTD 2018 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Con
Slide 41: Reg. G: 2019 Adjusted EBITDA Guidance Reconciliation
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-8: 2019 Adjusted EBITDA Guidance Reconciliation: The following table summarizes the calculation of Adjusted EBITDA providing reconciliation to Income from Continuing Operations: 2019 Adjusted EBITDA G
Slide 42: Reg. G: Midwest Gen Adjusted EBITDA Reconciliation
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-9: Full Year 2019 Adjusted EBITDA Reconciliation for Midwest Gen The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continuing Operat
Slide 43: Reg. G: Stream Energy Run-Rate Adjusted EBITDA
NRG 2Q19 Earnings Reg. G Business Review Financial Review Closing Remarks Appendix Appendix Table A-10: Run-Rate Adjusted EBITDA Reconciliation for Stream Energy The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Income/(Loss) from Continuing Operation
Slide 44: Reg. G
NRG 2Q19 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 45: Reg. G
NRG 2Q19 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