Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q2 2023 Earnings Presentation
31 slides from Nrg Energy's earnings presentation, Aug 8, 2023
Slide 1: Second Quarter 2023 Earnings Presentation
NRG Energy Inc. Second Quarter 2023 Earnings Presentation August 08, 2023 1 | NRG 2Q23 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 2Q23 Earnings
Slide 4: Key Messages
Key Messages Strong Q2 Results & Reaffirming 2023 Financial Guidance Ranges Smart Home Integration On Track with Early Wins Executing on Strategic Plan to Deliver Compelling Shareholder Returns 4 | NRG 2Q23 Earnings Business Review | Financial Review | Closing Remarks | Appendix
Slide 5: Business Highlights & Results
Business Highlights & Results ($ millions) Q2 Business Highlights Year-over-Year Results Financial and Operational Results Adjusted EBITDA • Top decile safety performance • Q2 Adjusted EBITDA of $819 MM Second Quarter First Half of Year • Published 13th annual Sustainability Update +59% Execute Inte
Slide 6: Energy Business Performance
Energy Business Performance ERCOT Experienced Multiple Integrated Portfolio Strategy Record Peak Load Events Supports Predictable Earnings Strong Load Growth Continues in Texas.. • Strong Platform Performance through Q2 Weather vs Normal1 April (-23%) • Strong retail demand: ERCOT surpassed record p
Slide 7: Integration & Growth Update
Integration & Growth Update Integration Progress Scorecard ($ millions) Growth Plan YTD % 2023 2025 ▪ $300 MM FCFbG by 2025, on-track; increased As of 6/30/2023 Realized Achieved Target Run-Rate 2023 target to $60 MM Growth Plan: ▪ 100k organic customer growth in Q2 ▪ Early pilots showing conversion
Slide 8: Smart Home Performance Metrics – 2Q23
Smart Home Performance Metrics – 2Q23 Key Metrics1 2Q22 2Q23 Change Pro Forma Smart Home FCFbG ($ millions) Subscribers (MM) 1.9 2.0 +7% Monthly Recurring Revenue $68.04 $72.01 +6% per Subscriber Monthly Recurring Service $35.61 $38.69 +9% Margin per Subscriber Net Subscriber Acquisition $661 $753 +
Slide 9: Investor Day 2023
Investor Day 2023 Operating Excellence, Disciplined Growth and Maximizing Shareholder Returns Strategic Plan Defined Path to Success 1 • Portfolio Optimization: ~$2 Bn asset sale proceeds Target Per Share Growth2 Optimize from Astoria & South Texas Project (FCFbG) $18.0 Integrated • Enhanced diversi
Slide 10: Financial Review
Financial Review 10 | NRG 2Q23 Earnings
Slide 11: 2Q23 Financial Update
2Q23 Financial Update ($ millions) Three Months Ended Six Months Ended Reaffirming 6/30/23 6/30/22 6/30/23 6/30/22 2023 Guidance Texas $504 $263 $758 $474 $1,730–$1,880 East/West/Services/Other1 98 123 417 448 660–710 Vivint Smart Home2 217 - 290 - 620–660 Adjusted EBITDA3 $819 $386 $1,465 $922 $3,0
Slide 12: 2023 Capital Allocation
2023 Capital Allocation ($ millions) No change from Previously Disclosed Key highlights as of 7/31/2023 $3,619 $100 $273 $145 $1,400 $200 $1,630 STP Sale $500 Net Proceeds STP Sale $700 $380 $1,740 $185 $997 FCFbG1 $50 (mid-point) $947 $249 2022 CAFA/ Astoria2 $139 2023 Increase in Vivint Vivint Deb
Slide 13: Corporate Credit Profile
Corporate Credit Profile ($ 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 $3,130 Amortization of customer fulfillment costs2 35 Other Adjustments3 1
Slide 14: Closing Remarks
Closing Remarks 14 | NRG 2Q23 Earnings
Slide 15: 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) – On Track Cost Initiatives: $35 MM 2023 ($250 MM by 2025) – On Track Optimize and Grow from Core Close Vivint a
Slide 16: Appendix
Appendix 16 | NRG 2Q23 Earnings
Slide 17: Smart Home KPIs and Modeling Data
Smart Home KPIs and Modeling Data Key Metrics 2Q22 2Q23 Change Portfolio Subscribers (MM) 1.9 2.0 +7% Customer Lifetime (years) 9 9 -- Retention (%) 89% 89% -- Bad Debt as % of revenue ~2% ~2% -- Per Subscriber1 Monthly Recurring Revenue per Subscriber $68.04 $72.01 +6% Monthly Recurring Service Rev
Slide 18: Committed to Sustainability
Committed to Sustainability Environmental Leadership¹ U.S. CO2e Emissions NRG Sustainability (MMtCO2e2) Framework Carbon Reduction Target: 50% by 2025; net-zero by 2050 60 NRG Targets³ Goals certified as 1.5 degrees Celsius- 35 aligned by Science Based Targets initiative3 30 Climate Leadership H
Slide 19: Debt Maturity Schedule
Debt Maturity Schedule Balance as of 06/30/2023 ($ millions) $2,847 $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 $375 6.75% Vivint Senior Secured Not
Slide 20: Business Metrics
Business Metrics 2Q23 Home & Business Volumes Texas East / Other Electric Natural Gas 75% 13 25% 42% 24 58% 19 394 TWh TWh MMDth MMDth Home / Residential Business / C&I Home / Residential Business / C&I 413 MMDth 37 TWh Natural Electricity Gas Strong Retail Performance – Ending Quarter at 7.5 MM Cus
Slide 21: Mature Risk Strategy
Mature Risk Strategy Managing Through-Cycle Stability 1 Forecast & Price 2 Retail Sale & Hedge 3 Optimize • Proprietary forecasting • Fully hedge priced load to firm • Perfect hedge profile to program models expected gross margin incorporate additional data load and variability (i.e. weather) • Part
Slide 22: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 22 | NRG 2Q23 Earnings
Slide 23: Reg. G: 2023 Guidance Adjusted EBITDA
Reg. G ($ 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 - $1,045 Interest expense, net 580 Income tax 310 Depreciation and amortization 1,110 ARO expense 20 2 Amort
Slide 24: Reg. G: 2023 Guidance FCFbG
Reg. G ($ millions) Appendix Table A-2: 2023 Guidance The following table summarizes the calculation of FCFbG providing a reconciliation to Cash provided by operating activities 2023 Guidance Adjusted EBITDA $3,010 - $3,250 Interest payments, net (560) Income tax (95) 1 215 Net deferred revenue 2 35
Slide 25: Reg. G: Q2 Adjusted EBITDA by Segment
Reg. G ($ millions) Appendix Table A-3: Three months ended 6/30/23 and 6/30/22 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 6/30/231 Three Months ended 6/30/221 We
Slide 26: Reg. G: Six Months Adjusted EBITDA by Segment
Reg. G ($ millions) Appendix Table A-4: Six months ended 6/30/23 and 6/30/22 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income: Six Months ended 6/30/231 Six Months ended 6/30/221 West/ Vi
Slide 27: Reg. G: Q2 Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-5: Three months ended 6/30/23 and 6/30/22 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 Ended Three Months Ended 6/30/23 6/30/22 Adjusted EB
Slide 28: Reg. G: Six Months Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-6: Six months ended 6/30/23 and 6/30/22 Free Cash Flow before Growth The following table summarizes the calculation of FCFbG and provides a reconciliation to Cash (used)/provided by operating activities Six Months Ended Six Months Ended 6/30/23 6/30/22 Adjusted E
Slide 29: 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 30: 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 31: Smart Home Performance Metrics Definitions
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