Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q1 2015 Earnings Presentation
42 slides from Nrg Energy's earnings presentation, May 8, 2015
Slide 1: First Quarter 2015 Results Presentation
NRG Energy, Inc. First Quarter 2015 Results Presentation May 8, 2015
Slide 2: Safe Harbor
Safe Harbor 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, e
Slide 3: Agenda
Agenda Strategic Update David Crane NRG Operations Mauricio Gutierrez Financial Results Kirk Andrews Q&A 2
Slide 4: Q1 2015 Review & Highlights
Q1 2015 Review & Highlights ($ millions) Adjusted EBITDA1 1Q 2015 2015 Guidance Business & Renew $552 $1,935 - $2,060 Outstanding Q1 Financial Results… Home Retail 166 575 – 650 NRG Yield 122 690 Total $840 $3,200 – $3,400 Wholesale Portfolio Delivers…Again Generation portfolio proves reliable t
Slide 5: Bringing 2016 Into Focus
Bringing 2016 Into Focus …and Conventional Capital Programs Will Largely Current Hedging Activities Preserving Value… Be Complete by YE’16 Significant progress on opportunistic Significant capital program currently hedging of NRG conventional fleet underway focuses on rebalancing and life extend
Slide 6: Framework for Allocating Capital
Framework for Allocating Capital Capital allocation focus remains in-line with current sources of cash flow while earmarking a modest portion for long-term growth opportunities Conventional Proven Growth High Growth Total NRG 70% 20% 10% Capital Expenditures Share Appreciation by “Expanding the Pie”
Slide 7: NRG Operations
nrg. NRG Operations
Slide 8: NRG Business - Metrics
NRG Business - Metrics Safety: Top Quartile OSHA Recordable Rate1 Production (TWh)2 37.5 32.9 0.83 0.77 0.77 0.73 0.52 18.7 14.4 14.8 14.2 0.9 0.6 1.5 1.3 2.2 1.8 2011 2012 2013 2014 YTD Gulf Coast East West Renew NRG Yield NRG Total 2015 NRG Business Renew NRG Yield NRG Total Top Quartile = 1.01 To
Slide 9: NRG Home - Metrics
NRG Home - Metrics Q1 NRG Home Highlights Home Retail Adjusted EBITDA1 ($ millions) Delivered $166 MM Home Retail Adjusted EBITDA, exceeding Q1 2014 by $51 MM Achieved retail unit margins that were consistent with Q1 2014 levels and customer count that $166 was in-line with expectations given Domini
Slide 10: Market Outlook
Market Outlook East: Robust Energy Market Benefits Existing ERCOT: Integrated Platform Performs Well Under Portfolio Multiple Market Scenarios 30 Historical Forecast ($ millions) ($/MWh) 28 PJM East May-Sep Dark Spreads1 +54% 26 24 22 $166 -50% ($/MWh) 20 $58 18 $115 16 $26 14 $74 $40 12 Q1 2014 Q1
Slide 11: Managing Commodity Price Risk
Managing Commodity Price Risk Coal and Nuclear Generation and Coal and Transport Hedge Position1,4 Retail Hedge Position1,2 109% 97% 100% 100% 95% 100% 84% 76% 58% 43% 40% 33% 31% 21% 20% Bal-2015 2016 2017 Bal-2015 2016 2017 Hedged Gas (PWE) Open Gas (PWE) Hedged Coal Open Coal Hedged Heat Rate Ope
Slide 12: Strengthening the Portfolio
Strengthening the Portfolio …to Benefit from Capacity and Contracts at Repositioning Wholesale Portfolio… Attractive Economics Project Estimated ~$1.2 Billion Investment Plan MW Description COD New Generation: 1,100 MW of capital Robinson Peakers 360 1 Natural Gas Spring'16 replenishment at a premiu
Slide 13: Financial Results
Financial Results 12
Slide 14: Financial Summary
Financial Summary Results 2015 2015 Q1 Year-Over-Year Change ($ millions) 1st Quarter Guidance $817 MM $840 MM Business & Renew1 $552 $1,935-$2,060 $134 MM Home Retail 166 575-650 ($250 MM) $139 MM NRG Yield 122 690 Adjusted EBITDA2 $840 $3,200-$3,400 Free Cash Flow $364 $1,100-$1,300 Q12014 2014 1Q
Slide 15: New NRG Yield Share Class Approval
New NRG Yield Share Class Approval Enables efficient NRG capital replenishment and continued robust NRG Yield growth while preserving critical strategic partnership between NRG and NYLD New 1/100th vote class C shares approved on May 5 o Primary source of future NYLD equity o $20+ billion in equity
Slide 16: Residential Solar Monetization for NRG through NYLD Partnership
Residential Solar Monetization for NRG through NYLD Partnership Illustrative Impact of Monetization through NYLD Partnership Total CAPEX: ~$220 MM1 Tax Equity Proceeds: ~$170 MM Value to NRG: ~$100 MM NYLD Proceeds: $150 MM Monetization of leases at a value to NRG today Improves NRG Home Solar compe
Slide 17: NRG Capital Expenditures
NRG Capital Expenditures1 $2.0B $1.7B $1.6B 9% 10% > $500 million 19% decline in $1.2B 18% Committed Capex Beyond 20165 <$1.0B − NRG eVgo 72% 72% − Replenished via NYLD − Minimal environmental capex under current regulations 2013 2014 2015 2016 Beyond 2016 Conventional 2 Proven Growth 3 High Growth
Slide 18: Allocation of Expected $600 million 2015 Dropdowns
Allocation of Expected $600 million 2015 Dropdowns1 Estimated Proceeds2 from Yield Dropdowns Through End of 2015 2Q15 4Q15 Total 2015 ~$300 MM ~$300 MM ~$600 MM (EME Wind/ (CVSR/ Home-Solar/DG)2,3 Home-Solar/DG)2,3 “1/3” Allocation Guideline1 ~$200 MM ~$200 MM ~$200 MM Future Yield Eligible Sharehol
Slide 19: 2015 Capital Allocation Update
2015 Capital Allocation Update ($ millions) Cash for Allocation Comprised of: • 2014 Excess Cash1: $1,260 2015 TOTAL CASH FOR ALLOCATION: $3,060 • 2015 Free Cash Flow: $1,200 • Expected 2015 Dropdowns2: $600 – Currently Committed: $2.2B Debt Repayment Dividends / Share Buybacks Committed Growth $600
Slide 20: Conclusion
Conclusion Modest delevering with dropdown proceeds to maintain strong credit metrics and necessary capital flexibility Expanded buybacks benefit equity stakeholders New tax equity and NYLD partnership provide NRG Home Solar competitive capital and near term value realization Recapitalization enable
Slide 21: Q&A
Q&A 20
Slide 22: Appendix
ate = nrg. Appendix
Slide 23: Commodity Prices
Commodity Prices Annual Average for Forward Prices1 Bal Yr 20152 2016 2017 2015-2017 NG Henry Hub $2.83 $3.13 $3.38 $3.12 ERCOT Houston Onpeak $36.67 $38.22 $41.50 $38.80 ERCOT Houston Offpeak $23.34 $25.46 $27.54 $25.45 PJM West Onpeak $45.30 $46.77 $45.61 $45.89 PJM West Offpeak $29.28 $32.66 $32.
Slide 24: Generation Organizational Structure
Generation Organizational Structure NRG Energy, Inc. (50,8301 MW) Renew NRG Yield Gulf Coast West East (1,899 MW) (2,075 MW) (14,949) (6,496 MW) (24,607 MW) Agua Caliente Alta Wind Bayou Cove El Segundo Arthur Kill Hunterstown CC Community Solar Big Cajun I4 Ellwood Astoria Huntley Solar Alpine
Slide 25: Consolidated Debt Structure
Consolidated Debt Structure ($ millions) NRG Energy, Inc. As of 03/31/2015 LEGEND Revolver $2.5 BN due 20181 $ – Recourse Debt Senior notes due 2018-2024 6,411 Non-Recourse Debt Term loan due 2018 1,982 SEC Filer Tax exempt bonds due 2038-2045 434 Total $ 8,827 GenOn Energy, Inc. Conventional Financ
Slide 26: Recourse / Non-Recourse Debt
Recourse / Non-Recourse Debt ($ millions) 03/31/2015 12/31/20141 9/30/2014 6/30/2014 Recourse Debt Term Loan Facility $ 1,982 $ 1,987 $ 1,992 $ 1,996 Senior Notes 6,411 6,411 6,411 6,636 Tax Exempt Bonds 434 406 373 373 Recourse Debt Subtotal $ 8,827 $ 8,804 $ 8,776 $ 9,005 Non-Recourse Debt Total N
Slide 27: NRG Residual Adjusted EBITDA and Debt
NRG Residual Adjusted EBITDA and Debt ($ millions) 2015 Guidance1 Adjusted EBITDA $3,200 - $3,400 Less: Partner’s share of Adjusted EBITDA in consolidated projects (non- (95) controlling interests; i.e. Agua Caliente, Ivanpah) NRG Proportionate Adjusted EBITDA $3,105 - $3,305 Less: NRG Yield Adjuste
Slide 28: Liquidity Update
Liquidity Update Sources & Uses of Liquidity Sources ($ millions) ($ millions) 3/31/2015 12/31/2014 $ 525 Adjusted cash flow from operations Cash at NRG-Level $ 786 $ 661 210 Debt Proceeds, NRG Yield, net of fees Restricted cash 1,424 1,367 57 Increase in credit facility availability 38 Debt proceed
Slide 29: 2015 Q1 Capital Expenditures and Growth Investments
2015 Q1 Capital Expenditures and Growth Investments Growth ($ millions) Maintenance Environmental Total Investments Capital Expenditures NRG Business Gulf Coast $ 55 22 5 $ 82 East 27 52 7 86 West 1 - - 1 - B2B 1 - 1 NRG Home Retail 6 - - 6 NRG Home Solar - - 32 32 NRG Renew - - 30 30 - NRG Yield 3
Slide 30: Fixed Contracted and Capacity Revenue
Fixed Contracted and Capacity Revenue ($ millions) $844 $954 $960 $501 $964 $194 $968 $139 $548 $548 $545 $89 $136 $74 $141 $183 $548 $1,318 $147 $926 $849 $156 $595 $153 $154 2015E 2016E 2017E 2018E 2019E East Gulf Coast West Renewables (Non- NRG Yield) NRG Yield Notes: East includes cleared capaci
Slide 31: 1Q 2015 Generation & Operational Performance Metrics
1Q 2015 Generation & Operational Performance Metrics 2015 2014 2015 2014 1 MWh (MWh 000’s) Generation Generation1 % Change 2 EAF NCF3 EAF2 NCF3 Change Gulf Coast – Texas 9,622 9,855 (233) (2%) 88% 42% 80% 43% Gulf Coast – South Central 4,762 4,392 370 8% 85% 52% 83% 42% East 14,818 18,658 (3,840) (2
Slide 32: Hedge Disclosure: Coal and Nuclear Operations
Hedge Disclosure: Coal and Nuclear Operations Texas and South Central1 East1 GenOn1 Bal-2015 2016 2017 Bal-2015 2016 2017 Bal-2015 2016 2017 Net Coal and Nuclear Capacity (MW)2 6,290 6,290 6,290 10,197 8,732 7,280 5,054 4,526 4,086 Forecasted Coal and Nuclear Capacity (MW)3 5,131 5,155 5,206 6,472 4
Slide 33: Fuel Statistics
Fuel Statistics 1st Quarter Domestic2 2015 20141 Coal Consumed (mm Tons) 11.5 10.1 PRB Blend 72% 52% East 61% 11% Gulf Coast – Texas 78% 71% Gulf Coast – South Central 100% 100% Bituminous 16% 27% East 31% 67% Lignite & Other 12% 21% East 8% 22% Gulf Coast – Texas 22% 29% Cost of Coal ($/Ton) $ 43.0
Slide 34: New NRG Yield Share Class Approval
New NRG Yield Share Class1 Approval New Class-C shares with 1/100th vote attribute approved on May 5th o Primary source of future NYLD equity o $20+ billion in equity funding capacity without reliance on NRG capital1 o Preserves critical strategic partnership / NRG control After stock split implemen
Slide 35: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 34
Slide 36: Reg. G: 1Q 2015 Free Cash Flow before Growth
Reg. G: 1Q 2015 Free Cash Flow before Growth ($ millions) 3/31/2015 3/31/2014 Variance Adjusted EBITDAR $ 873 $ 845 $ 28 Less: GenOn & EME operating lease expense (33) (28) (5) Adjusted EBITDA $ 840 $ 817 $ 23 Interest payments (258) (208) (50) Income tax (1) - (1) Collateral / working capital / oth
Slide 37: Reg. G: 2015 Guidance
Reg. G: 2015 Guidance Appendix Table A-1: 2015 Guidance The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Adjusted EBITDA ($ millions) 2015 Guidance Business and Renew $1,935 - 2,060 Home – Retail 575 - 650 NRG Yield 690 Adjusted EBITDA1
Slide 38: Reg. G
Reg. G Appendix Table A-1: First Quarter 2015 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income Home Home ($ millions) Business Renew NRG Yield Corporate Total Retail Solar Net Income / (L
Slide 39: Reg. G
Reg. G Appendix Table A-2: First Quarter 2014 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income Home Home ($ millions) Business Renew NRG Yield Corporate Total Retail Solar Net Income / (L
Slide 40: Reg. G
Reg. G Appendix Table A-4: First Quarter 2015 Regional Adjusted EBITDA Reconciliation for NRG Business The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income ($ millions) East Gulf Coast West B2B Carbon 360 Total Net Income / (Loss) Attributable
Slide 41: Reg. G
Reg. G Appendix Table A-5: First Quarter 2014 Regional Adjusted EBITDA Reconciliation for NRG Business The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income ($ millions) East Gulf Coast West B2B Carbon 360 Total Net Income / (Loss) Attributable
Slide 42: 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