Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Q4 2021 Earnings Presentation
30 slides from Nrg Energy's earnings presentation, Feb 24, 2022
Slide 1: Fourth Quarter and Full Year 2021 Earnings Presentation
NRG Energy Inc. Fourth Quarter and Full Year 2021 Earnings Presentation February 24, 2022 1 | NRG 4Q21 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 Alberto Fornaro EVP & CFO Closing Remarks Mauricio Gutierrez President & CEO Q&A Management 3 | NRG 4Q21 Earnings
Slide 4: Key Messages
Key Messages Platform Delivers In-Line Results; Maintaining 2022 Guidance Successful Uri Mitigation Results; Increasing 2022 Capital Available for Allocation Advancing Customer-Focused Strategy; Executing Disciplined Capital Allocation 4 | NRG 4Q21 Earnings Business Review | Financial Review | Closi
Slide 5: Business Highlights & Results
Business Highlights & Results 2021 Scorecard Financial Update (excludes one-time impacts from Uri) ($ millions) Strong Financial and Operational Results • Top decile safety performance – best safety year in Adjusted EBITDA company history • Successful Winter Storm Uri mitigation results +21% Dir
Slide 6: Texas Market Update
Texas Market Update Accelerated Action to Improve Executed Winter Storm Market Design and Resilience Uri Financial Mitigation Plan Implemented and Executed Substantial Successful Mitigation Results Improvements • Disciplined liability management and • Implemented Power Plant Weatherization secur
Slide 7: Environmental, Social and Governance
Environmental, Social and Governance Culture of Sustainability with a Climate Change is a Priority; Comprehensive Framework On Path to Net-Zero Environmental U.S. CO2e Emission Goals1 • 1.5 Celsius-aligned climate goal validated by Science (MMtCO2e) Based Targets initiative NRG Targets 61 • 100%
Slide 8: 2022: A Staging Year for Growth
2022: A Staging Year for Growth Strong Company Foundation Positioned for Growth • Test & Learn approach in pilot programs 2021-2022 • Evaluate and develop strategic partnerships Setting the Stage for Growth • Data to enhance go-to-market strategies Solution Capability Status In Focus Energy Services
Slide 9: Track Record of Cycle Appropriate Capital Allocation
Track Record of Cycle Appropriate Capital Allocation Stabilize Right-Size Redefine Enhance Enhance Capital Allocation Principles $3.0 Bn $5.6 Bn1 $3.9 Bn1 $1.9 Bn Maintain top decile safety 6% 16% and operational excellence 20% 20% 29% 4% 9% Investment Grade metrics of 4% 2.50-2.75x Net Debt / Adj E
Slide 10: Financial Review
Financial Review 10 | NRG 4Q21 Earnings
Slide 11: 2021 Results & 2022 Guidance
2021 Results & 2022 Guidance1 ($ millions) 2021 Results 2022 Guidance Texas $1,166 Texas $1,300-$1,500 East/West/Other2 1,257 East/West/Other2 650-750 Adjusted EBITDA $2,423 Adjusted EBITDA $1,950-$2,250 Free Cash Flow before Growth Free Cash Flow before Growth $1,512 $1,140-$1,440 (“FCFbG”) (“FCFbG
Slide 12: 2021 Capital Allocation
2021 Capital Allocation ($ millions) No change from Prior Quarter Indicates change from Prior Quarter $2,347 $120 $41 Agua Sale Proceeds1 $518 $1,512 2021 FCFbG $979 $623 $847 $715 $319 2020 CAFA $218 $48 $0 2021 Increase in Direct Storm Uri Sale of 4.8 Debt Dividends Other Share Remaining Excess Ca
Slide 13: 2022 Capital Allocation
2022 Capital Allocation ($ millions) No change from Prior Quarter Indicates change from Prior Quarter $109 $599 $339 $1,290 $961 $1,290 FCFbG (mid-point) $170 $310 2022 Storm Uri Increase in Dividends3 Share Other 2022 Excess Cash Impact1 Min Cash2 Repurchases Investments Remaining CAFA DE Integrati
Slide 14: Corporate Credit Profile
Corporate Credit Profile ($ millions) 2022 Guidance Corporate Debt1 $8,100 Minimum Cash balance (650) 2022 Unallocated Capital 2 (310) Corporate Net Debt $7,140 Adjusted EBITDA3 $2,100 Other Adjustments4 175 Corporate Adjusted EBITDA $2,275 Long-Term Target Investment Grade Metrics Net Debt / Adjust
Slide 15: Closing Remarks
Closing Remarks 15 | NRG 4Q21 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 – On Track Optimize and Grow from Core Execu
Slide 17: Appendix
Appendix 17 | NRG 4Q21 Earnings
Slide 18: Committed to Sustainability
Committed to Sustainability NRG Sustainability Framework Sustainable Sustainable Sustainable Sustainable Sustainable Business Operations Customers Suppliers Workplace Industry-Leading Disclosure Environmental Leadership1 Diversity & Inclusion Focus U.S. CO2e Emissions (MMtCO2e2) 64% Board Diversity
Slide 19: Direct Energy Integration
Direct Energy Integration Advancing Customer Focused Strategy Direct Energy Integration Direct Energy Integration Scorecard 2021 Highlights Cost Savings Achieved 2021 cost savings and reaffirming full plan targets: $300 MM of recurring FCFbG-accretion by 2023 2022 2023 / As of 12/31/2021 2021 Or
Slide 20: Recourse Long-Term Debt Maturity Schedule
Recourse Long-Term Debt Maturity Schedule Balance as of 12/31/2021 ($ 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 $821 5.25% Senior
Slide 21: 2021 Business Metrics
2021 Business Metrics Home & Business Volumes1 Texas East / Other Electric Natural Gas 72% 59 28% 35% 98 65% 172 1,705 TWh TWh MMDth MMDth Home / Residential Business / C&I Home / Residential Business / C&I 157 TWh 1,877 MMDth Electricity Natural Gas Leading North American Integrated Energy Provider
Slide 22: Mature Risk Strategy
Mature Risk Strategy Managing Through-Cycle Stability 1 Forecast & Price 2 Retail Sale & Hedge 3 Optimize • Proprietary forecasting • Fully hedge priced load to firm • Perfect hedge profile to program models expected gross margin incorporate additional data load and variability (i.e. weather) • Part
Slide 23: Integrated Hedge Position
Integrated Hedge Position Retail Power & Retail Natural Gas 2022 Retail Power Hedge Position1,2,3,4 2022 Retail Gas Hedge Position1,2 Texas East North America 115% 100% 100% 100% 100% 91% Load Supply Load Supply Load Supply Fixed Price Retail Market Purchases Fixed Price Retail Market Purchases Mont
Slide 24: Appendix: Reg. G Schedules
Appendix: Reg. G Schedules 24 | NRG 4Q21 Earnings
Slide 25: Reg. G
Reg. G ($ millions) Appendix Table A-1: 2022 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 1 Net Income $480-$780 Interest expense, net 380 Income tax 210 Depreciation, Amortiz
Slide 26: Reg. G
Reg. G ($ millions) Appendix Table A-2: 3 months ended 12/31/21 and 12/31/20 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 12/31/21 Three Months ended 12/31/20 West
Slide 27: Reg. G
Reg. G ($ millions) Appendix Table A-3: 12 months ended 12/31/21 and 12/31/20 Adjusted EBITDA Reconciliation by Operating Segment The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income: Twelve Months ended 12/31/21 Twelve Months ended 12/31/20 W
Slide 28: Reg. G
Reg. G ($ millions) Appendix Table A-4: 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: 2021 Adjusted EBITDA $ 2,423 Winter Storm Uri loss (380) Interest payments
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 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