Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q3 2022 Earnings Presentation
31 slides from Nrg Energy's earnings presentation, Nov 7, 2022
Slide 1: Third Quarter 2022 Earnings Presentation
NRG Energy Inc. Third Quarter 2022 Earnings Presentation November 07, 2022 1 | NRG 3Q22 Earnings
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements In addition to historical information, the information contained 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 Alberto Fornaro EVP & CFO Closing Remarks Mauricio Gutierrez President & CEO Q&A Management 3 | NRG 3Q22 Earnings
Slide 4: Key Messages
Key Messages Narrowing 2022 and Initiating 2023 Financial Guidance Advancing Consumer Strategy; Expanding Customer Value through Bundled Essential Services Announcing 2023 Capital Allocation; New $600 MM Share Repurchase Program 4 | NRG 3Q22 Earnings Business Review | Financial Review | Closing Rema
Slide 5: Business Highlights & Results
Business Highlights & Results 2022 Financial Update Initiating 2023 Guidance ($ millions) Adj. EBITDA $767 Included in Guidance2: (millions) 2023E4 60% • Asset Sales & Retirements • ’22 Transitory Items Adjusted EBITDA $2,270 – $2,470 40% $452 Variance to Guidance2: • Parish U8 Extended Outage Free
Slide 6: Summer Review
Summer Review Platform Continues to Deliver through Volatility Realized Volatility on Both Resilient Platform Performance Load and Pricing Through Adversity Texas Degree Days1 Weather vs Normal1 800 July +20% 700 August +1% Strong Retail Performance September +1% 600 • Healthy consumer trends and
Slide 7: Advancing Consumer Strategy
Advancing Consumer Strategy Successful Test & Learn program Test & Learn approach in pilot programs 2021-2022 Optimize business model Staging Year for Growth Data to enhance go-to-market strategies Solution Capability Status In Focus Energy Services Grow from Core Power Operational Natural G
Slide 8: Advancing Consumer Strategy
Advancing Consumer Strategy Creating the Leading Essential Services Provider Test & Learn Program Validates Ecosystem that Drives Value Unmet Customer Needs To and From the Core Expand Service Offerings ‘Smart Home’ is here • Devices & appliances go underutilized without connection to single home
Slide 9: Advancing Consumer Strategy: Grow from Core & Return of Capital
Advancing Consumer Strategy Next Phase: Grow from Core & Return of Capital Continue growth in core energy offerings 2023+ Execute integrated home plan (vertical integration/partnerships) Grow from Core Maintain disciplined capital allocation (millions) Announcing 2023 Capital Allocation1 (20
Slide 10: Financial Review
Financial Review 10 | NRG 3Q22 Earnings
Slide 11: 3Q22 Financial Update
3Q22 Financial Update ($ millions) 9/30/2022 Narrowing 2022 Three Months Nine Months Guidance Ended Ended Texas $183 $632 $1,100-$1,150 East/West/Services/Other1 269 687 $850-$900 Adjusted EBITDA $452 $1,319 $1,950-2,050 Original $1,950-2,250 Free Cash Flow before Growth (“FCFbG”) ($42) $294 $950-1,
Slide 12: 2022 Capital Allocation Update
2022 Capital Allocation Update ($ millions) No change from Prior Quarter Indicates change from Prior Quarter $685 $109 $331 $961 $1,290 $290 $212 $100 EBITDA $190 W/C Shift to ‘23 $564 completed through 10/31/22 $210 $190 W/C Shift to ‘23 $286 Original Current Astoria Sale Storm Uri Increase in Divi
Slide 13: Introducing 2023 Adjusted EBITDA Guidance
Introducing 2023 Adjusted EBITDA Guidance ($ millions) 2023 Guidance Texas $1,645-$1,795 East/West/Services/Other1 $625-$675 Adjusted EBITDA $2,270-$2,470 Free Cash Flow before Growth (“FCFbG”) $1,520-$1,720 $110 $2,370 $220 $2,320 $40 $20 $2,100 2022 Original Full reversal of 2022 Direct Energy2 PJ
Slide 14: Introducing 2023 Capital Allocation
Introducing 2023 Capital Allocation ($ millions) No change from Prior Quarter Indicates change from Prior Quarter $1,906 $220 $111 $347 $1,620 FCFbG (mid-point) $600 Incl. $50 MM 2022 W/C Shift $140 Remaining ’22 W/C Uplift $628 $286 Unallocated 2022 CAFA 2023 Growth Plan Other Dividends1 Share 2023
Slide 15: Closing Remarks
Closing Remarks 15 | NRG 3Q22 Earnings
Slide 16: 2022 Priorities
2022 Priorities Deliver on Financial, Operational and ESG Objectives Execute on Direct Energy Objectives $50 MM incremental 2022 EBITDA-accretive synergies (cumulative $225 MM in ‘22) $300 MM cumulative 2023 run-rate EBITDA-accretive synergies – in 2023 guidance Optimize and Grow from Core
Slide 17: Appendix
Appendix 17 | NRG 3Q22 Earnings
Slide 18: Committed to Sustainability
Committed to Sustainability NRG Sustainability Framework Sustainable Sustainable Sustainable Sustainable Sustainable Business Customers Workplace Operations Suppliers Industry-Leading Disclosure Environmental Leadership1 Diversity & Inclusion Focus U.S. CO2e Emissions (MMtCO2e2) 64% Board Diversity
Slide 19: Mature Risk Strategy
Mature Risk Strategy Managing Through-Cycle Stability 1 Forecast & Price 2 Retail Sale & Hedge 3 Optimize • Proprietary forecasting • Fully hedge priced load to firm • Perfect hedge profile to program models expected gross margin incorporate additional data load and variability (i.e. weather) • Part
Slide 20: Corporate Credit Profile
Corporate Credit Profile ($ millions) 2022 2023 Guidance Guidance Corporate Debt1 $8,100 $8,100 Minimum Cash balance (650) (650) Corporate Net Debt $7,450 $7,450 Adjusted EBITDA2 $2,000 $2,370 Other Adjustments3 175 175 Corporate Adjusted EBITDA $2,175 $2,545 Long-Term Target Investment Grade Metric
Slide 21: Recourse Long-Term Debt Maturity Schedule
Recourse Long-Term Debt Maturity Schedule Balance as of 09/30/2022 ($ millions) $1,733 $1,275 $1,030 $1,100 $1,041 $821 $600 $500 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Therafter Recourse Debt Principal 6.625% Senior notes, due 2027 $375 5.75% Senior notes, due 2028 $821 5.25% Senior
Slide 22: Direct Energy Integration
Direct Energy Integration Advancing Customer Focused Strategy ($ millions) Direct Energy Integration Scorecard On Track 2021 2022 2023 / As of 09/30/2022 Realized Target Run Rate Accretive & Recurring: Synergies 175 225 300 Total Recurring EBITDA & FCFbG $175 $225 $300 –Accretion Non-Recurring: Inte
Slide 23: 3Q22 Business Metrics
3Q22 Business Metrics Home & Business Volumes Texas East / Other Electric Natural Gas 76% 18 24% 41% 27 59% 11 345 TWh TWh MMDth MMDth Home / Residential Business / C&I Home / Residential Business / C&I 45 TWh 356 MMDth Electricity Natural Gas Strong Retail Performance – Ending Quarter at 5.5 MM Hom
Slide 24: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 24 | NRG 3Q22 Earnings
Slide 25: Reg. G: 2022 and 2023 Guidance
Reg. G ($ millions) Appendix Table A-1: 2022 and 2023 Guidance The following table summarizes the calculation of Free Cash Flow before Growth and provides a reconciliation to Adjusted EBITDA and to Net Income: 2022 Guidance 2022 Guidance 2023 Original Narrowed Guidance Net Income1 $350 - $650 $345 -
Slide 26: Reg. G: Three Months Adjusted EBITDA Reconciliation
Reg. G ($ millions) Appendix Table A-2: Three months ended 9/30/22 and 9/30/21 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/(Loss): Three Months ended 9/30/22 Three Months ended 9/30/
Slide 27: Reg. G: Nine Months Adjusted EBITDA Reconciliation
Reg. G ($ millions) Appendix Table A-3: Nine months ended 9/30/22 and 9/30/21 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 9/30/22 Nine Months ended 9/30/21 West/ W
Slide 28: Reg. G: Three Months Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-4: Three months ended 9/30/2022 and 9/30/2021 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 Operating Activities: Three Months Three Months Ended 9/30/
Slide 29: Reg. G: Nine Months Free Cash Flow before Growth
Reg. G ($ millions) Appendix Table A-5: Nine months ended 9/30/2022 and 9/30/2021 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 Operating Activities: Nine Months Nine Months Ended 9/30/22
Slide 30: 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 31: Reg. G
Reg. G 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 financing to operating cash flow, as well as the add back of merger, integratio