Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q3 2023 Earnings Presentation
36 slides from Nrg Energy's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
NRG Energy Inc. Third Quarter 2023 Earnings Presentation November 02, 2023 1 | NRG 3Q23 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 Bruce Chung EVP & CFO Closing Remarks Mauricio Gutierrez President & CEO Q&A Management 3 | NRG 3Q23 Earnings
Slide 4: Value Proposition
Value Proposition Leading Consumer Platform Serving 7.6 Million Customers Uniquely Positioned to 1 Capitalize on the Convergence of Electricity and Smart Technologies Strong Core Energy Business with Diversified Supply and Leading Retail Energy 2 Brands for Homes and Businesses Complementary Smart H
Slide 5: Quarterly Key Messages
Quarterly Key Messages Strong Year-to-Date Performance & Execution; Raising 2023 Financial Guidance Initiating 2024 Financial Guidance, Above Investor Day Plan Unlocking Near & Long-Term Value through Behind-the-Meter Energy Optimization 5 | NRG 3Q23 Earnings Business Review | Financial Review | Clo
Slide 6: Q3 Business Highlights & Results
Q3 Business Highlights & Results ($ millions) Raising 2023 Guidance Initiating 2024 Guidance Adjusted EBITDA +74% 2024 Guidance +103% $2,438 Smart Home Adjusted EBITDA $3,300 – $3,550 $1,402 $973 $480 Free Cash Flow before Growth $1,825 – $2,075 3Q22 3Q23 YTD ‘22 YTD ‘23 Financial and Operational Hi
Slide 7: Integrated Energy Performance
Integrated Energy Performance Summer Review Texas Experienced Volatile Load Integrated Platform Delivered & Pricing through Summer Strong Results ERCOT Peak Demand Record Broken 10x • Healthy Customer Operations Weather vs Normal1 • Retention exceeded target; Grew Home customers 90,000 July +13% +2%
Slide 8: Smart Home Performance
Smart Home Performance Summer Review Strong Performance & Key Metrics Adding Innovative Products Key Metrics1 3Q23 3Q22 Change ▪ Successful summer selling season with +7% customer growth YoY Subscribers (MM) 2.1 1.9 +7% Monthly Recurring Revenue ▪ Increasing products per home while decreasing $73.55
Slide 9: Value Today, Value Tomorrow
Value Today, Value Tomorrow Virtual Power Plant (VPP) Opportunity Virtual Power Plant (VPP) Overview Uniquely Positioned to ‘Win’ VPP Space Connected Home End-to-End proprietary technology platform to optimize consumer demand Energy Solar HVAC EV Battery Commercial capabilities to realize VPP va
Slide 10: Integration & Growth Update
Integration & Growth Update Integration Plan Successfully Increasing Increasing 2023 Growth Target Cross-Sell Capabilities Growth Plan ▪ $300 MM FCFbG by 2025, on-track NRG Households with 2 or More Products2 ▪ Increasing 2023 growth target to $75 MM1 (original (millions) $30 MM); Integration yieldi
Slide 11: Financial Review
Financial Review 11 | NRG 3Q23 Earnings
Slide 12: 3Q23 Financial Update
3Q23 Financial Update ($ millions) Three Months Ended Nine Months Ended Raising 9/30/23 9/30/22 9/30/23 9/30/22 2023 Guidance Texas $552 $196 $1,310 $670 $1,735–$1,805 (Original $1,730-$1,880) East/West/Services/Other1 196 284 613 732 700–750 (Original $660-$710) Vivint Smart Home2 225 - 515 - 715–7
Slide 13: 2023 Capital Allocation
2023 Capital Allocation ($ millions) No change from Previously Disclosed Indicates change from Previously Disclosed Highlights: $3,751 $100 • Increased mid-point of 2023 $273 FCFbG guidance ~$1,600 $50 • Closed STP transaction STP Sale $1,430 Net Proceeds • $800 MM of debt reduction ($95) $600 compl
Slide 14: Introducing 2024 Guidance
Introducing 2024 Guidance ($ millions) 2024 Guidance Texas $1,665-$1,785 East/West/Services/Other1 810-890 Vivint Smart Home 825-875 Adjusted EBITDA $3,300-$3,550 Free Cash Flow before $1,825-$2,075 Growth Investments (“FCFbG”) $3,425 $160 $70 $95 $3,265 $150 $160 $170 $3,130 Original 2023 Full Year
Slide 15: 2024 Capital Allocation
2024 Capital Allocation ($ millions) $2,109 ~80% Return of Capital ~20% Growth Investments 612 $1,950 FCFbG (mid-point) 825 330 145 $159 2023 Remaining CAFA 197 2024 Debt Share Common Growth Plan Other Excess Cash Reduction Repurchases Dividends Investments & Pref. Divs. Integration 110 Debt Reducti
Slide 16: Closing Remarks
Closing Remarks 16 | NRG 3Q23 Earnings
Slide 17: 2023 Priorities
2023 Priorities Deliver Financial, Operational and ESG Objectives Execute Integration Objectives – FCFbG Synergies Direct Energy Synergies: $41 MM 2023 ($300 MM 2023 run-rate) Cost Initiatives: $35 MM 2023 ($250 MM by 2025) – On Track Optimize and Grow from Core Close Vivint acquisition
Slide 18: Appendix
Appendix 18 | NRG 3Q23 Earnings
Slide 19: Smart Home KPIs and Modeling Data
Smart Home KPIs and Modeling Data Key Metrics 3Q23 3Q22 Change Portfolio Subscribers (MM) 2.1 1.9 +7% Customer Lifetime (years) ~9 ~9 -- Retention (%) 89% 89% -- Bad Debt as % of revenue ~2% ~2% -- Per Subscriber1 Monthly Recurring Revenue per Subscriber $73.55 $69.76 +5% Monthly Recurring Service R
Slide 20: Committed to Sustainability
Committed to Sustainability Environmental Leadership¹ NRG Sustainability U.S. CO2e Emissions (MMtCO2e2) Framework Carbon Reduction Target: 50% by 2025; net-zero by 2050 60 NRG Targets³ Goals certified as 1.5 degrees Celsius- 35 aligned by Science Based Targets initiative3 30 Sustainable Climate
Slide 21: Debt Maturity Schedule
Debt Maturity Schedule Balance as of 10/31/2023 ($ millions) $2,444 $2,533 $1,875 $1,030 $1,100 $1,041 $600 740 $500 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 $375 6.75% Vivint Senior Secured Not
Slide 22: Corporate Credit Profile
Corporate Credit Profile ($ millions) 2023 Guidance Corporate Debt1 $12,470 Debt Reduction (incl. $500 MM associated with leverage-neutral STP sale) (1,400) Minimum Cash Balance (750) Corporate Net Debt 10,320 Adjusted EBITDA $3,225 Amortization of customer fulfillment costs2 35 Other Adjustments3 1
Slide 23: 3Q23 Business Metrics
3Q23 Business Metrics Home & Business Volumes Texas East / Other Electric Natural Gas 78% 19 22% 43% 28 57% 9 391 TWh TWh MMDth MMDth Home / Residential Business / C&I Home / Residential Business / C&I 47 TWh 400 MMDth Electricity Natural Gas Strong Retail Performance – Ending Quarter at 7.6 MM Home
Slide 24: Mature Risk Strategy
Mature Risk Strategy Managing Through-Cycle Stability 1 Forecast & Price 2 Retail Sale & Hedge 3 Optimize • Proprietary forecasting • Fully hedge priced load to firm • Perfect hedge profile to program models expected gross margin incorporate additional data load and variability (i.e. weather) • Part
Slide 25: Growth & Cost Initiative Scorecard
Growth & Cost Initiative Scorecard As of 9/30/2023 ($ millions) Scorecard YTD % 2023 2024 2025 As of 9/30/2023 Realized Achieved Target Target Run-Rate Growth Plan: FCFbG Growth $751 $61 81% $200 $300 (recurring) Orig. $30 Cost-to-Achieve $90 86% $105 $145 $475 (one-time) Cumulative Cost Initiatives
Slide 26: Retail Supply Procurement
Retail Supply Procurement Net Home Position1 Supply Position Highlights (Avg. On-Peak MWh) ERCOT East ✓ Balance net generation and market purchases against priced load Total Expected Load2 (normal weather) 80% 86% ✓ Manage current financial exposure while planning for physical delivery Load Supply3
Slide 27: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 27 | NRG 3Q23 Earnings
Slide 28: Reg. G
Reg. G ($ millions) Appendix Table A-1: 2023 and 2024 Guidance The following table summarizes the calculation of Adjusted EBITDA providing a reconciliation to Net Income 2023 Guidance 2023 Guidance 2024 (Original) (Raised & Narrowed) Guidance Net Income1,5 $805 - $1,045 $1,900 - $2,050 $750 - $1,000
Slide 29: Reg. G
Reg. G ($ millions) Appendix Table A-2: 2023 and 2024 Guidance The following table summarizes the calculation of FCFbG providing a reconciliation to Cash provided by operating activities 2023 Guidance 2023 Guidance 2024 (Original) (Raised & Narrowed) Guidance Adjusted EBITDA $3,010 - $3,250 $3,150 -
Slide 30: Reg. G
Reg. G ($ millions) Appendix Table A-3: Three months ended 9/30/23 and 9/30/22 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income: Three Months ended 9/30/231 Three Months ended 9/30/221 We
Slide 31: Reg. G
Reg. G ($ millions) Appendix Table A-4: Nine months ended 9/30/23 and 9/30/22 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income: Nine Months ended 9/30/231 Nine Months ended 9/30/221 West/
Slide 32: Reg. G
Reg. G ($ millions) Appendix Table A-5: Three months ended 9/30/23 and 9/30/22 Free Cash Flow before Growth The following table summarizes the calculation of FCFbG and provides a reconciliation to Cash provided by operating activities Three Months Three Months Ended 9/30/23 Ended 9/30/22 Adjusted EB
Slide 33: Reg. G
Reg. G ($ millions) Appendix Table A-6: Nine months ended 9/30/23 and 9/30/22 Free Cash Flow before Growth The following table summarizes the calculation of FCFbG and provides a reconciliation to Cash (used)/provided by operating activities Nine Months Nine Months Ended 9/30/23 Ended 9/30/22 Adjuste
Slide 34: 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 35: Reg. G
Reg. G Adjusted Cash provided by operating activities is a non-GAAP measure NRG provides to show Cash provided / (used) by operating activities with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the ad
Slide 36: Smart Home Performance Metrics
Smart Home Performance Metrics Definitions • New Subscribers is the aggregate number of net new smart home and security subscribers originated during a given period. This metric excludes new subscribers acquired by a transfer of a service contract from one subscriber to another. • Average Monthly Su