Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — IPO Roadshow (November 2013)
46 slides from Nrg Energy's IPO roadshow presentation, Nov 12, 2013
Slide 1: Results Presentation November 12, 2013
Results Presentation November 12, 2013
Slide 2: Forward Looking Statements
1 Forward Looking Statements In addition to historical information, the information presented in this communication 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, expectation
Slide 3: Agenda
2 Agenda Overview D. Crane Operations and Commercial Review M. Gutierrez Financial Results K. Andrews Closing Remarks and Q&A D. Crane
Slide 4: Financial and Business Update
3 Financial and Business Update Financial Performance Within Current Guidance Range $1,000 MM Q3 2013 Adjusted EBITDA, including $176 MM from Retail $1,967 MM YTD 2013 Adjusted EBITDA, including $423 MM from Retail Bearish Forward Wholesale Market Conditions ERCOT-H1: Jun-peak power prices down near
Slide 5: GenOn Acquisition: Synergy Report Card
4 Annual Run Rate (by 2014) Revised Executed1 % Total Cost $215 $189 88% Operational $125 $105 84% Adjusted EBITDA $340 $294 86% Balance Sheet Efficiencies $142 $142 100% Total Cash Flow Benefits $482 $436 90% GenOn Acquisition: Synergy Report Card 1 As of 11/1/2013 ($ millions) Estimated 2013 Contr
Slide 6: Edison Mission Energy: Strategic Rationale
5 Edison Mission Energy: Strategic Rationale Wind Coal Gas Edison Mission Marketing & Trading Grows clean energy platform by over 1.7 GW, making NRG the 3rd largest US-based renewable energy generator within the US Adds approximately 1.6 GW of assets eligible for drop-down to NRG Yield, including ~1
Slide 7: Value Creation Time Frame and Process Update
6 Value Creation Time Frame Process Update Process Remains On Track; Value Creation Framework Established Cost / SG&A Synergies Collateral Efficiencies at EMMT Plant O&M Savings Drop downs to NRG Yield Environmental Capex Optimization Near to Medium Term Financing optimization of nonrecourse entitie
Slide 8: Focused Near-Term Implementation for Long-Term Performance
7 Focused Near-Term Implementation for Long-Term Performance Looking Forward Focus on closing Edison Mission Energy (EME) Execute drop- eligible assets into drop-down schedule Implement the asset management component of GenOn acquisition in order to capture operational improvement synergies Position
Slide 9: Operations and Commercial Review
Operations and Commercial Review
Slide 10: Q3 2013 Operations Highlights
9 Continued strong safety and plant operations performance Top quartile safety performance with an OSHA recordable rate of 0.80 Strong gas unit availability and reliability metrics Robust operational performance despite weak prices Increased customer count and delivered strong margins in Texas Opera
Slide 11: Q3 2013 Plant Operations
10 5,005 4,153 98.4 98.4 0 1,000 2,000 3,000 4,000 5,000 6,000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Q3 '12 Q3 '13 9,307 8,565 98.0 98.2 0 2,000 4,000 6,000 8,000 10,000 12,000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 YTD '12 YTD '13 Safety: Top Quartile OSHA Recordable Ra
Slide 12: Q3 2013 Retail Operations
11 Adjusted EBITDA: Delivered $176 MM for the quarter; $423 MM YTD Mass market margins remain steady in Texas; continued pressure in the Northeast and C&I segments Achieved cost efficiencies and delivered innovative solutions for mass customers Introduced NRG Residential Solutions and integrated Ene
Slide 13: Market Update
12 $1 $2 $3 $4 $5 $6 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Henry Hub ($/MMBtu) Prompt Dec '12 Forwards Oct '13 Forwards NAPP Switch PRB Switch 16 Market Update ERCOT Fundamentals Remain Strong; Natural Gas Firming Up Despite Lower Gas Basis in the Northeast 1 NRG estimates. 2014 implied h
Slide 14: Managing Commodity Price Risk
13 117 288 283 (41) (234) (227) 120 211 233 (58) (157) (172) Gas Up by $0.5/mmBtu Gas Down by $0.5/mmBtu HR Up by 1 mmBtu/MWh HR Down by 1 mmBtu/MWh 94% 34% 25% 84% 44% 30% 63% 25% 14% Hedged Gas (NGE) Open Gas (NGE) Hedged Heat Rate Open Heat Rate Priced Load Un-priced Load 2014 2015 2016 95% 57% 2
Slide 15: Financial Results
Financial Results nrg.
Slide 16: Financial Summary
15 ($ millions) Three Months Ended Sep 30, 2013 Nine Months Ended Sep 30, 2013 Wholesale $ 741 $ 1,366 Retail 176 423 NRG Yield 83 178 Adjusted EBITDA $ 1,000 $ 1,967 Free Cash Flow before Growth $ 773 $ 896 Highlights: Strong third quarter Adjusted Cash from Operations of $844 MM and $1,175 MM YTD,
Slide 17: Guidance Overview
16 ($ millions) 2013 2014 Wholesale (Previous) $1,735-$1,760 ($1,735-$1,810) $1,815-$1,940 ($1,965-$2,090) Retail (Previous) $575-$600 ($575-$650) $600-$675 (Unchanged) NRG Yield (Previous) $240 (Unchanged) $285 (Unchanged) Adjusted EBITDA (Previous) $2,550-$2,600 ($2,550-$2,700) $2,700-$2,900 ($2,8
Slide 18: Expanded Corporate Liquidity
17 Dec 31, Sep 30, $ millions 2012 2013 Cash and Cash Equivalents 2,087 $ 2,129 $ Restricted Cash 217 307 Total Cash 2,304 $ 2,436 $ Total Credit Facility Availability 1,058 1,235 Total Current Liquidity 3,362 $ 3,671 $ YTD Sources/Uses of Liquidity: YTD Sources $1,175 Adjusted cash flow from operat
Slide 19: Edison Mission Energy: Transaction Summary
18 Sources Uses NRG Cash on hand $800 Purchase Price $2,635 NRG Corporate Bonds to be issued $700 EME Unrestricted Cash Available2 ($800) NRG Equity issued to seller1 (12.7 million shares @ $27.58) $350 Purchase price adjustment3 $306 NRG Revolver $306 Transaction costs $15 Total $2,156 Total $2,156
Slide 20: 2013 Excess Cash: Pro Forma EME Acquisition
19 1,105 1,107 557 200 250 198 800 - 200 400 600 800 1,000 1,200 1,400 2013 Excess Cash as of June 30, 2013 Update Q3 Increases Q3 Decreases 2013 Excess Cash Pre-EME Acquisition NRG Excess Cash Reserve for EME Acquisition Estimated Release of EME Cash (Post Closing) Pro Forma 2013 Excess Cash $ in m
Slide 21: NRG Yield Drop-Down Projects
20 Project Technology Net MW COD Off-take Intend To Offer through 2014 Run Rate Adjusted EBITDA $150 MM Run Rate CAFD $55 MM TA High Desert PV 20 March 2013 20-year PPA with Southern RE Kansas South PV 20 June 2013 20-year PPA with Pacific Gas El Segundo CCGT 550 August 2013 10-year tolling agreemen
Slide 22: Closing Remarks and Q&A
Closing Remarks and Q&A nrg.
Slide 23: 2013 Report Card: Through the 3rd Quarter
22 2013 Report Card: Through the 3rd Quarter Enhance Core Generation Portfolio Deliver the GenOn acquisition synergy commitment Manage ~47 GW fleet to perform reliably; win the Texas summer Bring El Segundo, Marsh Landing, and the Parish Peaker to COD on-time and on-budget Increased annual FCF syner
Slide 24: Appendix
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Slide 25: Debt Structure as of September 30, 2013
24 GenOn Marsh Landing Term Loans, due 2017 & 2023 $500 NRG Energy, Inc. Revolver $2.5B, due 20181 $ - Senior notes, due 2018-20232 5,718 Term loan, due 20183 2,011 Tax exempt bonds, due 2038-2045 373 Total $8,102 $ millions As of September 30, 2013 GenOn Americas Generation Senior Unsecured Notes,
Slide 26: Recourse / Non-Recourse Debt
25 Recourse / Non-Recourse Debt 9/30/2013 6/30/2013 3/31/2013 12/31/2012 COD Date $ millions Recourse debt: Term Loan Facility 2,011 2,017 1,572 1,576 Senior Notes 5,718 5,718 5,718 5,918 Tax Exempt Bonds 373 363 341 334 Recourse subtotal 1 8,102 8,098 7,631 7,828 Non-Recourse debt: NRG Yield - Rene
Slide 27: Proportionate Adjusted EBITDA and Debt
26 Proportionate Adjusted EBITDA and Debt Year End ($ millions) 9/30/2013 2013 2014 Adjusted EBITDA Guidance $2,550-$2,600 $2,700-$2,900 - Pro-rata Adjusted EBITDA associated with project non-controlling interests (i.e., Agua Caliente, Ivanpah) (50) (90) NRG Proportionate Adjusted EBITDA $2,500-$2,5
Slide 28: 2013 YTD Capital Expenditures and Growth Investments
27 2013 YTD Capital Expenditures and Growth Investments $ in millions Maintenance Environmental Conventional investments, net Operational Improvement Investments Solar investments, net Total Capital Expenditures Retail 20 $ - - $ - $ - $ 20 $ NRG Yield 5 - 89 - 351 445 Wholesale Gulf Coast Texas 71
Slide 29: 2013 and 2014 Capital Expenditures and Growth Investments Guidance
28 2013 and 2014 Capital Expenditures and Growth Investments Guidance 2014 Guidance $ in millions Maintenance Environmental Conventional investments, net Operational Improvement Investments Solar investments, net Total Capital Expenditures Retail 13 $ - $ - $ - $ - $ 13 $ NRG Yield 12 - 2 - - 14 Who
Slide 30: Committed Growth Investments
29 Committed Growth Investments ($ millions) 2013 2014 Conventional Investments, net 90 164 Solar Investments, net 280 (80) Operational Improvements Investments 35 80 Total Growth Investments 405 164 2013-2014 August 9, 2013 $155 Net change 45 November 12, 2013 $200 Change in Solar Investments, net:
Slide 31: Q3 2013 Generation & Operational Performance Metrics
30 1 Excludes line losses, station service and other items; 2012 performance shown is for combined company 2 Equivalent Availability Factor 3 Net Capacity Factor 4 Does not include MWhT (thermal heating & chilled water generation) Q3 2013 Generation & Operational Performance Metrics (MWh in thousand
Slide 32: YTD 2013 Generation & Operational Performance Metrics
31 YTD 2013 Generation & Operational Performance Metrics (MWh in thousands) 20131 20121 Change % EAF2 NCF3 EAF2 NCF3 Gulf Coast - Texas 30,747 28,934 1,813 6 84% 44% 82% 41% Gulf Coast - South Central 12,926 13,484 (558) (4) 83 39 83 40 East 26,541 26,401 140 1 80 18 86 18 West 2,422 2,972 (550) (19
Slide 33: ERCOT: Load and Demand Dynamics
32 ERCOT: Load and Demand Dynamics 1 Chart represents ERCOT Coastal Weather Zone average peak load for days having high temps in the specified temperature ranges; ERCOT Coastal Weather Zone is inclusive of the Houston Area. Source: ERCOT, NOAA. 2 Load duration curve represents top 300 hours of ERCOT
Slide 34: Fuel Statistics
33 Fuel Statistics Domestic 2013 2012 2013 2012 Cost of Gas ($/mmBTU) 3.75 $ 3.07 $ 4.10 $ 2.79 $ Coal Consumed (mm Tons) 9.4 10.1 26.9 23.5 PRB Blend 61% 59% 61% 62% East 10% 11% 10% 10% Gulf Coast - Texas 75% 75% 74% 77% Gulf Coast - South Central 100% 100% 100% 100% Bituminous Coal 20% 24% 20% 20
Slide 35: Fixed Contracted and Capacity Revenue
34 Fixed Contracted and Capacity Revenue Notes: - East includes cleared capacity auction results for PJM and New England through May 2017 - West includes committed Resource Adequacy contracts and tolling agreements for El Segundo $ millions 1,076 959 805 641 224 261 316 219 150 152 192 348 415 429 4
Slide 36: Non-Cash Contract Amortization Schedules
35 Increase/ (Decreases) Revenue Forecast Non-Cash Contract Amortization Schedules: 2012-2015 Reduce Cost Increase Cost Increase Cost Reduce Cost Increase Cost Increase Cost Increase/ (Decreases) Revenue ($ millions) 2012 2013 Revenues Q1A Q2A Q3A Q4A Year Q1A Q2A Q3A Q4E Year Power contracts/gas sw
Slide 37: Reg. G: QTD Q3 2013 Free Cash Flow Before Growth Investments
37 Sep 30, Sep 30, $ millions 2013 2012 Variance Adjusted EBITDAR 1,018 $ 678 $ 340 $ Less: GenOn operating lease expense (18) - (18) Adjusted EBITDA1 1,000 $ 678 $ 322 $ Interest payments (152) (205) 53 Income tax (3) 2 (5) Collateral/working capital/other 56 (2) 58 Cash flow from operations 901 $
Slide 38: Reg. G: YTD Q3 2013 Free Cash Flow Before Growth Investments
38 Sep 30, Sep 30, $ millions 2013 2012 Variance Adjusted EBITDAR 2,024 $ 1,549 $ 475 $ Less: GenOn operating lease expense (57) - (57) Adjusted EBITDA1 1,967 $ 1,549 $ 418 $ Interest payments (644) (498) (146) Income tax 59 (19) 78 Collateral/working capital/other (559) 26 (585) Cash flow from oper
Slide 39: Free Cash Flow Before Growth Investments Guidance Reconciliation
39 $ millions 2013 Guidance 2014 Guidance 2013 Guidance 2014 Guidance Adjusted EBITDAR $2,630-$2,680 $2,780-$2,980 $2,630-$2,780 $2,930-$3,130 Less: GenOn operating lease expense (80) (80) (80) (80) Adjusted EBITDA $2,550-$2,600 $2,700-$2,900 $2,550-$2,700 $2,850-$3,050 Interest Payments (945) (950)
Slide 40: Table A-1: Third Quarter 2013 Regional Adjusted EBITDA Reconciliation
40 Reg. G Appendix Table A-1: Third Quarter 2013 Regional Adjusted EBITDA Reconciliation The following table summarizes the calculation of adjusted EBITDA and provides a reconciliation to net income ($ millions) Retail Texas South Central East West Other Conventional NRG Yield Alt. Energy Corp. Tota
Slide 41: Table A-2: Third Quarter 2012 Regional Adjusted EBITDA Reconciliation
41 Reg. G Appendix Table A-2: Third Quarter 2012 Regional Adjusted EBITDA Reconciliation The following table summarizes the calculation of adjusted EBITDA and provides a reconciliation to net income ($ millions) Retail Texas South Central East West Other Conventional NRG Yield Alt. Energy Corp. Tota
Slide 42: Table A-3: YTD Third Quarter 2013 Regional Adjusted EBITDA Reconciliation
42 Reg. G Appendix Table A-3: YTD Third Quarter 2013 Regional Adjusted EBITDA Reconciliation The following table summarizes the calculation of adjusted EBITDA and provides a reconciliation to net income ($ millions) Retail Texas South Central East West Other Conventional NRG Yield Alt. Energy Corp.
Slide 43: Table A-4: YTD Third Quarter 2012 Regional Adjusted EBITDA Reconciliation
43 Appendix Table A-4: YTD Third Quarter 2012 Regional Adjusted EBITDA Reconciliation The following table summarizes the calculation of adjusted EBITDA and provides a reconciliation to net income ($ millions) Retail Texas South Central East West Other Conventional NRG Yield Alt. Energy Corp. Total N
Slide 44: Table A-5: NRG ROFO Assets Run-Rate Adjusted EBITDA and CAFD
44 Appendix Table A-5: NRG ROFO Assets Run-Rate Adjusted EBITDA and CAFD Reconciliation to Estimated Income Before Taxes The following table summarizes the comparative Income before taxes to Adjusted EBITDA and CAFD 2014 ROFO Post 2014 $ millions Assets ROFO Assets Income Before Taxes $ 67 $ 38 Inte
Slide 45: Table A-6: 2014 Adjusted EBITDA Reconciliation for EME Assets
45 Appendix Table A-6: 2014 Adjusted EBITDA reconciliation for EME assets to Estimated Income Before Taxes The following table summarizes the comparative Income before taxes to Adjusted EBITDA Reg. G 2014 2014 $ millions EME Assets EME NYLD Eligible Assets Income Before Taxes $ 140 $ 51 Interest Exp
Slide 46: EBITDA and Adjusted EBITDA Non-GAAP Definitions
46 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 NR by unusual or n