Energy, Automobile, EV, Renewable News | NRG Energy, Inc. Reports Second Quarter Results and Reaffirms 2024 Financial Guidance

NRG Energy, Inc. Reports Second Quarter Results and Reaffirms 2024 Financial Guidance

August 8, 2024

Strong second quarter financial and operating performance resulting in GAAP Net Income of $738 million and Adjusted EBITDA of $935 million
Completed comprehensive preventative maintenance program for ERCOT fleet, well-prepared going into summer season and beyond
Announcing agreement to sell Airtron HVAC business at an accretive multiple
Submitted applications to Texas Energy Fund for 1.5 GW of shovel-ready generation capacity
Continued to execute on liability management and capital allocation priorities, including open market share repurchases of $176 million year to date

HOUSTON–(BUSINESS WIRE)–NRG Energy, Inc. (NYSE: NRG) today reported second quarter 2024 Net Income of $738 million. Adjusted EBITDA for the second quarter was $935 million, Cash Provided by Operating Activities was $1,056 million, and Free Cash Flow Before Growth Investments (FCFbG) was $663 million.

“NRG’s business and financial outlook has never been stronger,” said Larry Coben, NRG Chair, President and Chief Executive Officer. “Our relentless focus on safe and reliable operations especially during peak summer and winter months, dedication to exceptional customer experiences, and disciplined execution of our strategy and capital allocation plans continue to position NRG for success.”

Consolidated Financial Results

Table 1:
	Three Months Ended				Six Months Ended
($ in millions)	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Net Income/(Loss)	$	738	$	308	$	1,249	$	(1,027	)
Cash Provided/(Used) by Operating Activities	$	1,056	$	570		1,323		(1,028	)
Adjusted EBITDA	$	935	$	819	$	1,784	$	1,465
Free Cash Flow Before Growth Investments (FCFbG)	$	663	$	425	$	623	$	628

NRG’s second quarter 2024 Adjusted EBITDA increased by $116 million year-over-year. The East and West segments experienced margin growth from both power and natural gas as well as improvements in customer counts. This was partially offset by lower Texas results, primarily a result of asset sales in 2023 and comprehensive preventative maintenance outages undertaken in the quarter to prepare the fleet for extensive summer operations.

With the completion of a comprehensive outage and preventative maintenance program, NRG’s portfolio is well-positioned for the summer months, and the company is focused on delivering top-tier energy and smart home services for its customers.

2024 Capital Allocation

NRG is committed to its disciplined capital allocation principles and maintaining a strong balance sheet. In the second quarter of 2024, the Company continued to opportunistically repurchase shares in the open market as part of its $2.7 billion authorization to be executed through 2025. Through July 31, 2024, NRG has completed $176 million of its $825 million share repurchase target for 2024.

During the first quarter, NRG began repurchases of its 2.75% Convertible Senior Notes due 2048 as part of its overall objective of prudent and proactive liability management. In the second quarter, NRG repurchased an additional $251 million in principal of these notes, bringing the aggregate repurchase amount to $343 million or approximately 60% of the original issuance. For the remainder of the Convertible Senior Notes outstanding, NRG has purchased capped call options to fully hedge the settlement price. Finally, in the second quarter NRG also repaid $600 million in aggregate principal amount of its 3.75% Senior Secured First Lien Notes due 2024.

On July 19, 2024, NRG announced its Board of Directors declared a quarterly dividend on the Company’s common stock of $0.4075 per share, or $1.63 per share on an annualized basis. The dividend is payable on August 15, 2024, to stockholders of record as of August 1, 2024.

NRG’s share repurchase program and common stock dividend are subject to maintaining satisfactory credit metrics, available capital, market conditions, and compliance with associated laws and regulations. The timing and amount of any shares of NRG’s common stock repurchased under the share repurchase authorization will be determined by NRG’s management based on market conditions and other factors. NRG will only repurchase shares when management believes it would not jeopardize the Company’s ability to maintain satisfactory credit ratings.

Strategic Developments

Airtron HVAC Sale

On August 3, 2024 the Company entered into a definitive agreement to sell its Airtron HVAC business unit for $500 million, subject to standard purchase price adjustments. Airtron is a leading installer of HVAC systems for residential new construction homes and was acquired as part of the Direct Energy acquisition in 2021. The opportunistic divestiture at an accretive 8.6x multiple on 2023 Adjusted EBITDA will provide additional capital available for allocation in 2024. The transaction is subject to regulatory approval under the Hart Scott Rodino Act and is expected to close by the end of 2024.

Texas Energy Fund

NRG has submitted applications to the Texas Energy Fund to request funding for three prospective brownfield development opportunities, totaling 1.5 GW of flexible, natural-gas generation in ERCOT. NRG’s projects are shovel-ready, and assuming timely TEF approval, are expected to be completed for commercial operations between 2026 and 2028.

14^th Annual Sustainability Report

NRG released its 2023 Sustainability Report, its 14^th year of reporting, providing an update on the its commitment to people, environmental stewardship, and governance.

Segments Results

Table 2: Net Income/(Loss)
($ in millions)	Three Months Ended						Six Months Ended
Segment	6/30/2024			6/30/2023			6/30/2024			6/30/2023
Texas	$	966		$	785		$	1,315		$	1,069
East		447			(101	)		1,028			(1,503	)
West/Services/Other^a		(646	)		(353	)		(1,072	)		(531	)
Vivint Smart Home^b	$	(29	)	$	(23	)	$	(22	)	$	(62	)
Net Income/(Loss)	$	738		$	308		$	1,249		$	(1,027	)
^a Includes Corporate segment
^b Vivint Smart Home acquired in March 2023

Net Income for the second quarter of 2024 was $738 million, $430 million higher than the second quarter of 2023. This was primarily driven by higher unrealized non-cash mark-to-market gains on economic hedges in Texas in 2024 due to heat rate expansion in ERCOT, and losses in 2023 in the East due to declines in natural gas and power prices. This increase was partially offset by loss on debt extinguishment from the repurchase of the Company’s 2.75% Convertible Senior Notes and higher income tax expense. Certain hedge positions are required to be marked-to-market every period, while the customer contracts related to these items are not, resulting in temporary unrealized losses or gains on the economic hedges that are not reflective of the expected economics at future settlement.

Table 3: Adjusted EBITDA
($ in millions)	Three Months Ended				Six Months Ended
Segment	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Texas	$	452	$	504	$	671	$	758
East		209		77		560		391
West/Services/Other^a		73		21		129		26
Vivint Smart Home^b	$	201	$	217	$	424	$	290
Adjusted EBITDA	$	935	$	819	$	1,784	$	1,465
^a Includes Corporate segment
^b Vivint Smart Home acquired in March 2023

Texas: Second quarter Adjusted EBITDA was $452 million, $52 million lower than the second quarter of 2023. This decrease was a result of asset sales in 2023 and the impact of an extended planned preventative maintenance program to ensure summer reliability, partially offset by gains in customer volumes from increased customer counts and favorable impact from weather.

East: Second quarter Adjusted EBITDA was $209 million, $132 million higher than the second quarter of 2023. This increase was driven by lower retail supply costs for power and natural gas and increased customer counts.

West/Services/Other: Second quarter Adjusted EBITDA was $73 million, $52 million higher than the second quarter of 2023. This increase was primarily driven by lower retail power supply costs and margin expansion at Cottonwood.

Vivint Smart Home: Second quarter Adjusted EBITDA was $201 million, $16 million lower than the second quarter of 2023. The decrease is attributable to guided increases in amortization of fulfillment expenses relating to the acquisition of Vivint by NRG. Absent this change, Adjusted EBITDA would have shown an increase year-over-year, supported by 5% growth in subscriber count and 4% growth in service margin.

Liquidity and Capital Resources

Table 4: Corporate Liquidity
($ in millions)	6/30/24		12/31/23
Cash and Cash Equivalents	$	376	$	541
Restricted Cash		16		24
Total		392		565
Total Revolving Credit Facility and collective collateral facilities		4,950		4,278
Total Liquidity, excluding collateral deposited by counterparties	$	5,342	$	4,843

As of June 30, 2024, NRG’s unrestricted cash was $376 million and $5.0 billion was available under the Company’s credit facilities. Total liquidity increased to $5.3 billion, increasing $499 million from the end of 2023, largely due to the $900 million increase in the Receivables Facility in the second quarter of 2024 and partly offset by the expiry of the $150 million Repurchase Facility.

Reaffirming 2024 Guidance

NRG is reaffirming its Adjusted EBITDA and FCFbG guidance for 2024 as set forth below.

Table 5: Adjusted EBITDA, Cash Provided by Operating Activities, and FCFbG Guidance^a
		2024
($ in millions)		Guidance
Adjusted EBITDA		$3,300 – $3,550
Cash Provided by Operating Activities		$1,825 – $2,075
FCFbG		$1,825 – $2,075
^a Adjusted EBITDA and FCFbG are non-GAAP financial measures; see Appendix Table A-8 for GAAP Reconciliation. Adjusted EBITDA excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year. Cash Provided by Operating Activities does not include changes in collateral deposits in support of risk management activities which are primarily associated with fair value adjustments related to derivatives

Earnings Conference Call

On August 8, 2024, NRG will host a conference call at 9:00 a.m. Eastern (8:00 a.m. Central) to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials through the investor relations website under “presentations and webcasts” on investors.nrg.com. The webcast will be archived on the site for those unable to listen in real-time.

About NRG

NRG Energy is a leading energy and home services company powered by people and our passion for a smarter, cleaner, and more connected future. A Fortune 500 company operating in the United States and Canada, NRG delivers innovative solutions that help people, organizations, and businesses achieve their goals while also advocating for competitive energy markets and customer choice. More information is available at www.nrg.com. Connect with NRG on Facebook and LinkedIn, and follow us on X (formerly known as Twitter), @nrgenergy.

Forward-Looking Statements

In addition to historical information, the information presented in this press release 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, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, general economic conditions, hazards customary in the power industry, weather conditions and extreme weather events, competition in wholesale power, gas and smart home markets, the volatility of energy and fuel prices, failure of customers or counterparties to perform under contracts, changes in the wholesale power and gas markets, changes in government or market regulations, the condition of capital markets generally and NRG’s ability to access capital markets, NRG’s ability to execute its supply strategy, risks related to data privacy, cyberterrorism and inadequate cybersecurity, the loss of data, unanticipated outages at NRG’s generation facilities, NRG’s ability to achieve its net debt targets, adverse results in current and future litigation, complaints, product liability claims and/or adverse publicity, failure to identify, execute or successfully implement acquisitions or asset sales, risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process, the impact of changes in consumer spending patterns, consumer preferences, geopolitical tensions, demographic trends, supply chain disruptions, NRG’s ability to implement value enhancing improvements to plant operations and company wide processes, NRG’s ability to achieve or maintain investment grade credit metrics, NRG’s ability to proceed with projects under development or the inability to complete the construction of such projects on schedule or within budget, the inability to maintain or create successful partnering relationships, NRG’s ability to operate its business efficiently, NRG’s ability to retain customers, the ability to successfully integrate businesses of acquired companies, including Vivint Smart Home, NRG’s ability to realize anticipated benefits of transactions (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, NRG’s ability to execute its capital allocation plan. Achieving investment grade credit metrics is not an indication of or guarantee that the Company will receive investment grade credit ratings. Debt and share repurchases may be made from time to time subject to market conditions and other factors, including as permitted by United States securities laws. Furthermore, any common stock dividend is subject to available capital and market conditions.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The Adjusted EBITDA, cash provided by operating activities and Free Cash Flow before Growth guidance are estimates as of August 8, 2024. These estimates are based on assumptions NRG believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect NRG’s future results included in NRG’s filings with the Securities and Exchange Commission at www.sec.gov. For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in NRG’s most recent Annual Report on Form 10-K, and in subsequent SEC filings. NRG’s forward-looking statements speak only as of the date of this communication or as of the date they are made.

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three months ended June 30,						Six months ended June 30,
(In millions, except for per share amounts)	2024			2023			2024			2023
Revenue
Revenue	$	6,659		$	6,348		$	14,088		$	14,070
Operating Costs and Expenses
Cost of operations (excluding depreciation and amortization shown below)		4,356			4,962			10,041			13,740
Depreciation and amortization		285			315			553			505
Impairment losses		15			—			15			—
Selling, general and administrative costs		592			522			1,183			948
Acquisition-related transaction and integration costs		6			22			15			93
Total operating costs and expenses		5,254			5,821			11,807			15,286
Gain on sale of assets		5			3			1			202
Operating Income/(Loss)		1,410			530			2,282			(1,014	)
Other Income/(Expense)
Equity in earnings of unconsolidated affiliates		4			5			7			10
Other income, net		3			13			33			29
Loss on debt extinguishment		(202	)		—			(260	)		—
Interest expense		(163	)		(151	)		(315	)		(299	)
Total other expense		(358	)		(133	)		(535	)		(260	)
Income/(Loss) Before Income Taxes		1,052			397			1,747			(1,274	)
Income tax expense/(benefit)		314			89			498			(247	)
Net Income/(Loss)	$	738		$	308		$	1,249		$	(1,027	)
Less: Cumulative dividends attributable to Series A Preferred Stock		17			17			34			21
Net Income/(Loss) Available for Common Stockholders	$	721		$	291		$	1,215		$	(1,048	)
Income/(Loss) per Share
Weighted average number of common shares outstanding — basic		208			231			209			230
Income/(Loss) per Weighted Average Common Share — Basic	$	3.47		$	1.26		$	5.81		$	(4.56	)
Weighted average number of common shares outstanding — diluted		214			232			214			230
Income/(Loss) per Weighted Average Common Share —Diluted	$	3.37		$	1.25		$	5.68		$	(4.56	)

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited)

	Three months ended June 30,					Six months ended June 30,
(In millions)	2024			2023		2024			2023
Net Income/(Loss)	$	738		$	308	$	1,249		$	(1,027	)
Other Comprehensive (Loss)/Income
Foreign currency translation adjustments		(2	)		6		(10	)		8
Defined benefit plans		(1	)		—		(2	)		(1	)
Other comprehensive (loss)/income		(3	)		6		(12	)		7
Comprehensive Income/(Loss)	$	735		$	314	$	1,237		$	(1,020	)

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2024			December 31, 2023
(In millions, except share data)	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash and cash equivalents	$	376		$	541
Funds deposited by counterparties		688			84
Restricted cash		16			24
Accounts receivable, net		3,402			3,542
Inventory		623			607
Derivative instruments		3,520			3,862
Cash collateral paid in support of energy risk management activities		384			441
Prepayments and other current assets		797			626
Total current assets		9,806			9,727
Property, plant and equipment, net		1,790			1,763
Other Assets
Equity investments in affiliates		45			42
Operating lease right-of-use assets, net		201			179
Goodwill		5,060			5,079
Customer relationships, net		1,946			2,164
Other intangible assets, net		1,467			1,763
Derivative instruments		2,625			2,293
Deferred income taxes		1,841			2,251
Other non-current assets		981			777
Total other assets		14,166			14,548
Total Assets	$	25,762		$	26,038

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt and finance leases	$	262		$	620
Current portion of operating lease liabilities		91			90
Accounts payable		2,109			2,325
Derivative instruments		2,664			4,019
Cash collateral received in support of energy risk management activities		688			84
Deferred revenue current		779			720
Accrued expenses and other current liabilities		1,709			1,642
Total current liabilities		8,302			9,500
Other Liabilities
Long-term debt and finance leases		10,425			10,133
Non-current operating lease liabilities		144			128
Derivative instruments		1,435			1,488
Deferred income taxes		8			22
Deferred revenue non-current		906			914
Other non-current liabilities		919			947
Total other liabilities		13,837			13,632
Total Liabilities		22,139			23,132
Commitments and Contingencies
Stockholders’ Equity
Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at June 30, 2024 and December 31, 2023, aggregate liquidation preference of $650; at June 30, 2024 and December 31, 2023		650			650
Common stock; $0.01 par value; 500,000,000 shares authorized; 266,552,386 and 267,330,470 shares issued and 207,498,428 and 208,130,950 shares outstanding at June 30, 2024 and December 31, 2023, respectively		3			3
Additional paid-in-capital		3,229			3,416
Retained earnings		1,863			820
Treasury stock, at cost; 59,053,958 shares and 59,199,520 shares at June 30, 2024 and December 31, 2023, respectively		(2,019	)		(1,892	)
Accumulated other comprehensive loss		(103	)		(91	)
Total Stockholders’ Equity		3,623			2,906
Total Liabilities and Stockholders’ Equity	$	25,762		$	26,038

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six months ended June 30,
(In millions)	2024			2023
Cash Flows from Operating Activities
Net Income/(Loss)	$	1,249		$	(1,027	)
Adjustments to reconcile net income/(loss) to cash provided/(used) by operating activities:
Equity in and distributions from earnings of unconsolidated affiliates		(4	)		(9	)
Depreciation and amortization		553			505
Accretion of asset retirement obligations		3			5
Provision for credit losses		133			80
Amortization of nuclear fuel		—			26
Amortization of financing costs and debt discounts		21			31
Loss on debt extinguishment		260			—
Amortization of in-the-money contracts and emissions allowances		73			112
Amortization of unearned equity compensation		57			61
Net loss/(gain) on sale of assets and disposal of assets		8			(187	)
Impairment losses		15			—
Changes in derivative instruments		(1,384	)		1,515
Changes in current and deferred income taxes and liability for uncertain tax benefits		390			(282	)
Changes in collateral deposits in support of risk management activities		660			(1,355	)
Changes in nuclear decommissioning trust liability		—			2
Changes in other working capital		(711	)		(505	)
Cash provided/(used) by operating activities	$	1,323		$	(1,028	)
Cash Flows from Investing Activities
Payments for acquisitions of businesses and assets, net of cash acquired		(32	)		(2,498	)
Capital expenditures		(172	)		(324	)
Net purchases of emissions allowances		(11	)		(25	)
Investments in nuclear decommissioning trust fund securities		—			(185	)
Proceeds from the sale of nuclear decommissioning trust fund securities		—			180
Proceeds from sales of assets, net of cash disposed		11			229
Proceeds from insurance recoveries for property, plant and equipment, net		3			121
Cash used by investing activities	$	(201	)	$	(2,502	)
Cash Flows from Financing Activities
Proceeds from issuance of preferred stock, net of fees		—			635
Payments of dividends to preferred and common stockholders		(204	)		(174	)
Equivalent shares purchased in lieu of tax withholdings		(35	)		(16	)
Payments for share repurchase activity		(90	)		—
Net (payments)/receipts from settlement of acquired derivatives that include financing elements		(12	)		318
Net proceeds of Revolving Credit Facility and Receivable Securitization Facilities		—			500
Proceeds from issuance of long-term debt		875			731
Payments of debt issuance costs		(12	)		(22	)
Repayments of long-term debt and finance leases		(956	)		(10	)
Payments for debt extinguishment costs		(257	)		—
Proceeds from credit facilities		625			1,870
Repayments to credit facilities		(625	)		(1,670	)
Cash (used)/provided by financing activities	$	(691	)	$	2,162
Effect of exchange rate changes on cash and cash equivalents		—			3
Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash		431			(1,365	)
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period		649			2,178
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period	$	1,080		$	813