- Delivered strong 2016 Adjusted
EBITDA, cash from operations and Free Cash Flow before Growth
(FCFbG)
- Reaffirming 2017 Adjusted EBITDA,
Cash From Operations and FCFbG guidance
- Corporate debt reduction and
preferred stock redemption throughout 2016 under the current
program totaled $1.0 billion; approximately $100
million1 of recurring FCFbG
- Exceeded the targeted $400 million
in cost reductions by over $100 million, ahead of the anticipated
2017 time frame
- Executed agreements with NRG Yield
to drop down 311 net MWs of utility-scale solar assets for total
cash consideration of $130 million2 and expanded
Right of First Offer (ROFO) pipeline by 234 net MW; raised another
$128 million3 through non-recourse financing at Agua
Caliente
- 2.2 GW of coal-to-gas conversions
and Petra Nova Project completed on time and on budget
- Recorded $1.2 billion non-cash asset
and goodwill impairment charge
NRG Energy, Inc. (NYSE:NRG) today reported full year 2016 net
loss of $891 million, or $2.22 per diluted common share. The loss
and resulting loss per share were driven by a $1.2 billion
impairment of goodwill and fixed assets as forecasted gas and power
prices continue to decline. Adjusted EBITDA for the full year 2016
was $3.3 billion, cash from operations was $2.1 billion and FCFbG
was $1.2 billion. Additionally, NRG realized its second best safety
year in company history with a full year top decile recordable rate
of 0.624.
“Our business delivered a year of strong results, both EBITDA
and Free Cash Flow, driven by Retail, which had a record 2016
adjusted EBITDA and its third consecutive year of EBITDA growth,”
said Mauricio Gutierrez, NRG President and Chief Executive Officer.
“Our focus on strategic priorities and strong execution in 2016
sets the foundation for 2017, allowing us to seize market
opportunities while continuing to streamline the business,
strengthen the balance sheet and deliver value to
shareholders.”
Consolidated Financial Results
Three Months Ended Twelve Months Ended ($ in
millions)
12/31/16 12/31/15 12/31/16
12/31/15 Net Loss $ (1,055 ) $ (6,358 ) $ (891 ) $
(6,436 ) Cash From Operations $ 339 $ (83 ) $ 2,072 $ 1,309
Adjusted EBITDAa $ 492 $ 582 $ 3,257 $ 3,166 Free Cash Flow Before
Growth (FCFbG) $ 78 $ (8 ) $ 1,209
$ 1,127 a. For comparability, 2015
results have been restated to include the negative contribution
from Residential Solar of $43 million and $173 million for the
three and twelve months ended December 31, 2015.
Segment Results
As part of its streamlining strategy, NRG has realigned its
reporting segments to more clearly report Generation and Retail
activities. Accordingly, customer-facing businesses will now reside
in the Retail segment. The Company's Retail segment will now
include Business Solutions which includes Commercial &
Industrial (C&I) previously in Generation, and the Generation
segment now includes BETM. The results of the Company have been
recast to reflect these changes.
Table 1: Net (Loss)/Income
($ in millions)
Three Months Ended Twelve Months
Ended Segment
12/31/16 12/31/15
12/31/16 12/31/15 Generation $ (889 ) $ (4,690
) $ (507 ) $ (4,446 ) Retail 316 161 1,045 624 Renewables a (204 )
(18 ) (306 ) (92 ) NRG Yield a (126 ) 12 (15 ) 65 Corporate b (152
) (1,823 ) (1,108 ) (2,587 ) Net Loss c $ (1,055 ) $ (6,358 ) $
(891 ) $ (6,436 ) a. In accordance with GAAP, 2015 results
have been restated to include full impact of the assets in the NRG
Yield Drop Down transactions which closed on November 3, 2015, and
September 1, 2016. b. Includes Residential Solar. c. Includes
mark-to-market gains and losses of economic hedges.
The net loss for the twelve months of 2016 was driven by a $1.2
billion impairment of goodwill and fixed assets as forecasted gas
and power prices continue to decline. The net loss for the twelve
months of 2015 includes non-cash charges of $3.3 billion5 and $3.0
billion for asset impairments net of taxes and income tax valuation
allowance expense, respectively.
Table 2: Adjusted EBITDA
($ in millions)
Three Months Ended Twelve Months
Ended Segment
12/31/16 12/31/15
12/31/16 12/31/15 Generation a $ 160 $ 300 $
1,505 $ 1,759 Retail 134 149 811 793 Renewables b 26 27 187 158 NRG
Yield b 207 189 899 758 Corporate c (35 ) (83 ) (145 ) (302 )
Adjusted EBITDA d $ 492 $ 582 $ 3,257 $ 3,166
a. See Appendices A-6 through A-9 for Generation
regional Reg G results. b. In accordance with GAAP, 2015 results
have been restated to include full impact of the assets in the NRG
Yield Drop Down transactions which closed on November 3, 2015, and
September 1, 2016. c. 2016 includes Residential Solar. 2015 results
have been restated to include negative contribution of $43 million
and $173 million for the three and twelve months ended December 31,
2015, respectively. d. See Appendices A-1 through A-4 for Operating
Segment Reg G results.
Generation: Full year 2016 Adjusted EBITDA was $1.5
billion, $254 million lower than 2015 primarily driven by:
- Gulf Coast Region: $93 million decrease
due to lower average realized energy margins in Texas from the
decline in power prices, offset by lower operating costs.
- East Region: $365 million decrease from
lower dispatch and capacity prices, partially offset by the
monetization of forward hedges and lower operating costs on
decreased run times, deactivations and plant sales.
- West Region: $122 million increase due
to gains from sale of real property at Potrero site, emission
credit sales and lower operating costs, partially offset by lower
capacity revenues.
- Other Generation: $82 million increase
driven by favorable trading results at BETM.
Fourth quarter Adjusted EBITDA was $160 million, $140 million
lower than the fourth quarter 2015 primarily driven by:
- Gulf Coast Region: $22 million decrease
due to lower realized energy margins in Texas.
- East Region: $128 million lower due to
lower realized energy margins and lower capacity prices.
- West Region: $11 million increase due
to higher capacity revenues and lower operating costs.
Retail: Full year 2016 Adjusted EBITDA was $811 million,
$18 million higher than 2015 driven by lower costs, increased
retail margins and favorable settlement of a Texas sales tax audit,
partially offset by unfavorable impacts from selling back excess
supply due to milder weather conditions in 2016 as compared to 2015
and lower volumes driven by lower average customer usage.
Fourth quarter Adjusted EBITDA was $134 million, $15 million
lower than the fourth quarter 2015 due primarily to an increase in
spend associated with customer growth initiatives.
Renewables: Full year 2016 Adjusted EBITDA was $187
million, $29 million higher than 2015 due mainly to increased
generation at Ivanpah and Mountain Wind and lower operating
expenses while fourth quarter Adjusted EBITDA was $1 million higher
than the prior year due primarily to increased generation at
Ivanpah.
NRG Yield: Full year 2016 Adjusted EBITDA was $899
million, $141 million higher than 2015 due primarily to increased
wind production from Renewables, full year contributions from the
acquisitions of Desert Sunlight and Spring Canyon which closed in
2015, and a receipt of insurance proceeds from a 2014 wind outage
claim.
Fourth quarter Adjusted EBITDA was $207 million, $18 million
higher than the fourth quarter 2015 due primarily to increased
production in the Renewables segment and a receipt of insurance
proceeds from a 2014 wind outage claim.
Corporate: Full year 2016 Adjusted EBITDA was $(145)
million, $157 million better than 2015 due to reduced operating
expenses at Residential Solar and other expense reductions, also
driving the fourth quarter Adjusted EBITDA which was $48 million
favorable to 2015.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions)
12/31/16
12/31/15 Cash at NRG-Level a $ 570 $ 693 Revolver 1,217
1,373
NRG-Level Liquidity $ 1,787 $
2,066 Restricted cash 446 414 Cash at Non-Guarantor
Subsidiaries 1,403 825
Total Liquidity
$ 3,636 $ 3,305 a.
December 31, 2016, balance includes $247 million of unrestricted
cash held at Midwest Generation (a non-guarantor subsidiary) which
can be distributed to NRG without limitation.
NRG-Level cash as of December 31, 2016, was $570 million, a
decrease of $123 million from the end of 2015, and $1.2 billion was
available under the Company’s credit facilities at the end of 2016.
Total liquidity was $3.6 billion, including restricted cash and
cash at non-guarantor subsidiaries (primarily GenOn and NRG
Yield).
NRG Strategic Developments
Drop Down Assets and Expanded ROFO Pipeline
In December 2016, NRG offered NRG Yield the opportunity to
purchase the following assets: (i) the Minnesota Portfolio, a 40 MW
portfolio of wind projects; (ii) the 30 MW Community wind projects;
(iii) the 50 MW Jeffers wind projects; and (iv) a 16% interest in
the 290 MW Agua Caliente solar facility, pursuant to the ROFO
Agreement. In addition to these ROFO Assets, NRG also offered NRG
Yield the opportunity to purchase NRG's 50% interests in seven
utility-scale solar projects located in Utah, representing 265 net
MW of capacity6.
On February 24, 2017, NRG entered into a definitive agreement
with NRG Yield to drop down the Agua Caliente and Utah
utility-scale solar projects (311 net MW) for cash consideration of
$130 million, plus assumed non-recourse project debt of
approximately $464 million7, excluding working capital and other
adjustments. Details of the projects, which are expected to close
in the second quarter of 2017, include:
- A 16% interest (approximately 31% of
NRG's 51% interest) in the Agua Caliente solar project, one of the
ROFO Assets, representing ownership of approximately 46 net MW of
capacity. Prior to the agreement, on February 17, 2017, NRG
decreased its equity investment through an incremental $128 million
non-recourse project-level note, after fees, all of which was
distributed to NRG.
- NRG's 50% interest in seven
utility-scale solar projects located in Utah representing 265 net
MW of capacity. NRG acquired the Utah assets in November 2016 for
upfront cash consideration of $111 million and subsequent to
closing reduced the effective cash consideration paid to $63
million as a result of additional non-recourse project-level
financings of $48 million8 during the fourth quarter of 2016.
NRG Yield elected not to pursue the acquisition of the
Minnesota, Community and Jeffers wind projects at this time, but
may continue its evaluation of the projects. NRG Yield has retained
the right with NRG, pursuant to the ROFO Agreement, to participate
in any third party process to the extent NRG elected to pursue a
third party sale of these assets.
In connection with the execution of the definitive agreement,
NRG and NRG Yield entered into an amendment to the ROFO Agreement
to expand the ROFO Assets pipeline with the addition of 234 net MW
of utility-scale solar projects. These assets include:
- Buckthorn Solar, a 154 net MW facility
located in Texas with a 25-year PPA with City of Georgetown
- The Hawaii Solar projects, which have a
combined capacity of 80 net MW with an average PPA of 22 years with
the Hawaiian Electric Company9
Fleet Optimizations
NRG achieved a significant milestone in its fleet optimization
strategy, completing coal-to-gas projects at three generation
facilities across its fleet. The modified units can generate
approximately 2.2 GW. The three plants include the Joliet
Generating Station (three units converted by fourth quarter 2016
for a total of 1,326 MW), the Shawville Generating Station (all
four units are currently in final commissioning following
modification for a total of 597 MW) and the New Castle Generating
Station, (all three units have been modified by second quarter 2016
for a total of 325 MW).
Over 2016, NRG continued to grow renewables development
opportunities with acquisitions of 1.7GW of wind and solar assets.
As of December 2016, NRG held 543 MW of backlog in execution across
the utility wind and solar, community solar and DG solar
businesses. Over the fourth quarter 2016, NRG accelerated utility
project origination across CAISO, ERCOT and ISO-NE, growing the
project pipeline to approximately 3.3 GW, a 25% increase over the
previous quarter. NRG successfully transitioned 2.7 GW of the
combined NRG and NYLD fleet (approximately 26 wind and 7 solar
projects) to self-perform operations in 2016, including Alta and
CVSR.
On December 29, 2016, NRG completed, on time and on budget,
construction and final acceptance of performance testing at the
Petra Nova project, the world's largest post-combustion carbon
capture system. During performance testing, the facility captured
more than 90% of CO2 from a 240 MW equivalent slipstream of flue
gas off an existing coal-fueled electrical generating unit at the
WA Parish power plant in Fort Bend County, southwest of Houston. At
this level of operation, Petra Nova can capture more than 5,000
tons of CO2 per day, which is the equivalent of taking more than
350,000 cars off the road.
In 2016, NRG completed the installation of environmental control
upgrades at its 638 MW Avon Lake Unit 9 facility (COD June 2016)
and its 1,538 MW Powerton coal facility (COD December 2016).
2017 Guidance
NRG is reaffirming its guidance range for 2017 with respect to
Adjusted EBITDA, cash from operations and FCFbG as set forth
below.
Table 4: 2017 Adjusted EBITDA and FCF
before Growth Guidance
2017 ($ in millions)
Guidance Adjusted EBITDAa
$2,700 - $2,900 Cash From Operations $1,355 - $1,555 Free Cash Flow
- before Growth $800 - $1,000 a. Non-GAAP financial measure;
see Appendix Table A-11 for GAAP Reconciliation to Net Income that
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.
Capital Allocation Update
On January 24, 2017, NRG repriced the 2023 Term Loan Facility,
reducing the interest rate margin by 50 basis points to LIBOR plus
2.25%. In 2016, NRG reduced corporate debt by $792 million10.
Combined with the debt repurchases in 2015 and the extension of
debt maturities at a lower average coupon rate, NRG has realized
annual interest savings of approximately $87 million, plus an
additional $10 million in dividend savings from the repurchase of
100% of its outstanding $345 million, 2.822% convertible perpetual
preferred stock. NRG is also announcing $200 million of additional
capital reserved for debt reduction bringing total 2017 allocation
to discretionary debt reduction to $600 million.
On January 18, 2017, NRG declared a quarterly dividend on the
Company's common stock of $0.03 per share, payable February 15,
2017, to stockholders of record as of February 1, 2017,
representing $0.12 on an annualized basis.
The Company’s common stock dividend, corporate level debt
reduction and share repurchases are subject to available capital,
market conditions and compliance with associated laws and
regulations.
Earnings Conference Call
On February 28, 2017, NRG will host a conference call at 8:00
a.m. Eastern to discuss these results. Investors, the news media
and others may access the live webcast of the conference call and
accompanying presentation materials by logging on to NRG’s website
at http://www.nrg.com and clicking on
“Investors.” The webcast will be archived on the site for those
unable to listen in real time.
About NRG
NRG is the leading integrated power company in the U.S., built
on the strength of the nation’s largest and most diverse
competitive electric generation portfolio and leading retail
electricity platform. A Fortune 200 company, NRG creates value
through best in class operations, reliable and efficient electric
generation, and a retail platform serving residential and
commercial customers. Working with electricity customers, large and
small, we continually innovate, embrace and implement sustainable
solutions for producing and managing energy. We aim to be pioneers
in developing smarter energy choices and delivering exceptional
service as our retail electricity providers serve almost 3 million
residential and commercial customers throughout the country. More
information is available at www.nrg.com. Connect with NRG Energy on
Facebook and follow us on Twitter @nrgenergy.
Safe Harbor Disclosure
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, 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, including wind
and solar performance, competition in wholesale power markets, the
volatility of energy and fuel prices, failure of customers to
perform under contracts, changes in the wholesale power markets,
changes in government regulations, the condition of capital markets
generally, our ability to access capital markets, unanticipated
outages at our generation facilities, adverse results in current
and future litigation, failure to identify, execute or successfully
implement acquisitions, repowerings or asset sales, our ability to
implement value enhancing improvements to plant operations and
companywide processes, our ability to proceed with projects under
development or the inability to complete the construction of such
projects on schedule or within budget, risks related to project
siting, financing, construction, permitting, government approvals
and the negotiation of project development agreements, our ability
to progress development pipeline projects, GenOn’s ability to
continue as a going concern, our ability to obtain federal loan
guarantees, the inability to maintain or create successful
partnering relationships, our ability to operate our businesses
efficiently including NRG Yield, our ability to retain retail
customers, our ability to realize value through our commercial
operations strategy and the creation of NRG Yield, the ability to
successfully integrate businesses of acquired companies, our
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, our
ability to close the Drop Down transactions with NRG Yield, and our
ability to execute our Capital Allocation Plan. 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 and free cash flow guidance are estimates as of
February 28, 2017. These estimates are based on assumptions
the company 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 Earnings 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.
1 $100 million savings driven by reduction of debt since 3rd
quarter of 2015, preferred stock redemption and extension of
maturities at lower interest rates
2 Subject to working capital and other adjustments
3 Net of financing fees
4 Excludes Goal Zero, NRG Home Services and Residential
Solar
5 Total impairments of $5.1 billion net of taxes of $1.8
billion
6 Reflects NRG's net interest based on cash to be distributed in
tax equity partnership with Dominion
7 Approximately $328 million on balance sheet and $136 million
pro-rata share of unconsolidated debt
8 Net of final construction costs and financing fees
9 61 of the 80 MWs have been contracted as of February 28,
2017
10 Cash cost of $874 million, including $120 million of debt
extinguishment fees; Additional 2015 corporate debt reduction of
$246 MM (cash cost of $226 MM) completed in 2015 bringing total
debt reduction under program to $1 billion
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS For the Year
Ended December 31,
(In millions,
except per share amounts)
2016 2015 2014 Operating
Revenues Total operating revenues $ 12,351 $ 14,674
$ 15,868
Operating Costs and Expenses Cost of
operations 8,555 10,784 11,808 Depreciation and amortization 1,367
1,566 1,523 Impairment losses 918 5,030 97 Selling, general and
administrative 1,101 1,199 1,016 Acquisition-related transaction
and integration costs 8 10 84 Development costs 90 146
88 Total operating costs and expenses 12,039
18,735 14,616 Gain on sale of assets 215 — 19 Gain on
postretirement benefits curtailment — 21 —
Operating Income/(Loss) 527 (4,040 ) 1,271
Other Income/(Expense) Equity in earnings of unconsolidated
affiliates 27 36 38 Impairment losses on investments (268 ) (56 ) —
Other income, net 42 33 22 (Loss)/gain on sale of equity method
investment — (14 ) 18 Net (loss)/gain on debt extinguishment (142 )
75 (95 ) Interest expense (1,061 ) (1,128 ) (1,119 ) Total other
expense (1,402 ) (1,054 ) (1,136 )
(Loss)/Income Before Income
Taxes (875 ) (5,094 ) 135 Income tax expense 16
1,342 3
Net (Loss)/Income (891 ) (6,436
) 132
Less: Net loss attributable to
noncontrolling interests and redeemable
noncontrolling interests
(117 ) (54 ) (2 )
Net (Loss)/Income Attributable to NRG Energy,
Inc. (774 ) (6,382 ) 134 Dividends for preferred shares 5 20 56
Gain on redemption of preferred shares (78 ) — —
(Loss)/Income Available for Common Stockholders $ (701 ) $
(6,402 ) $ 78
(Loss)/Earnings Per Share Attributable to
NRG Energy, Inc. Common Stockholders Weighted average number of
common shares outstanding — basic 316 329 334
Net (Loss)/Income
per Weighted Average Common Share — Basic $ (2.22 ) $ (19.46 )
$ 0.23 Weighted average number of common shares outstanding
— diluted 316 329 339
Net (Loss)/Income per Weighted Average
Common Share — Diluted $ (2.22 ) $ (19.46 ) $ 0.23
Dividends Per Common Share $ 0.24 $ 0.58 $
0.54
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
(LOSS)/INCOME For the Year Ended December 31,
2016 2015 2014 (In
millions) Net (Loss)/Income $ (891 ) $ (6,436 ) $ 132
Other Comprehensive Income/(Loss), net of tax
Unrealized gain/(loss) on derivatives, net
of income tax expense/(benefit)
of $1, $19, and $(21)
35 (15 ) (45 )
Foreign currency translation adjustments,
net of income tax benefit of $0,
$0, and $5
(1 ) (11 ) (8 ) Available-for-sale securities, net of income tax
benefit of $0, $3, and $2 1 17 (7 ) Defined benefit plan, net of
income tax expense/(benefit) of $0, $69, and $(88) 3 10
(129 ) Other comprehensive income/(loss) 38 1
(189 )
Comprehensive Loss (853 ) (6,435 ) (57 )
Less: Comprehensive (loss)/income
attributable to noncontrolling interests
and redeemable noncontrolling
interests
(117 ) (73 ) 8
Comprehensive Loss Attributable to NRG
Energy, Inc. (736 ) (6,362 ) (65 ) Dividends for preferred
shares 5 20 56 Gain on redemption of preferred shares (78 ) —
—
Comprehensive Loss Available for Common
Stockholders $ (663 ) $ (6,382 ) $ (121 )
NRG
ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS As of December 31, 2016
2015 (In millions) ASSETS Current
Assets Cash and cash equivalents $ 1,973 $ 1,518 Funds
deposited by counterparties 2 106 Restricted cash 446 414 Accounts
receivable — trade 1,166 1,157 Inventory 1,111 1,252 Derivative
instruments 1,062 1,915 Cash collateral posted in support of energy
risk management activities 203 568 Current assets held-for-sale 9 6
Prepayments and other current assets 423 455 Total current
assets 6,395 7,391
Property, plant and equipment, net
17,912 18,732
Other Assets Equity investments in
affiliates 1,120 1,045 Notes receivable, less current portion 17 53
Goodwill 662 999 Intangible assets, net 2,036 2,310 Nuclear
decommissioning trust fund 610 561 Derivative instruments 189 305
Deferred income taxes 225 167 Non-current assets held-for-sale 10
105 Other non-current assets 1,179 1,214 Total other assets
6,048 6,759
Total Assets $ 30,355 $ 32,882
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued) As of
December 31, 2016 2015 (In millions,
except share data) LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities Current portion of long-term debt and
capital leases $ 1,220 $ 481 Accounts payable 895 869 Derivative
instruments 1,084 1,721 Cash collateral received in support of
energy risk management activities 2 106 Accrued interest expense
220 242 Other accrued expenses 543 568 Current liabilities
held-for-sale — 2 Other current liabilities 418 386
Total current liabilities 4,382 4,375
Other
Liabilities Long-term debt and capital leases 18,006 18,983
Nuclear decommissioning reserve 287 326 Nuclear decommissioning
trust liability 339 283 Postretirement and other benefit
obligations 553 588 Deferred income taxes 20 19 Derivative
instruments 294 493 Out-of-market contracts, net 1,040 1,146
Non-current liabilities held-for-sale 12 4 Other non-current
liabilities 930 900 Total non-current liabilities
21,481 22,742
Total Liabilities 25,863
27,117
2.822% convertible perpetual preferred
stock; $0.01 par value; 250,000 shares
issued and outstanding at December 31,
2015
— 302 Redeemable noncontrolling interest in subsidiaries 46 29
Commitments and Contingencies Stockholders' Equity
Common stock; $0.01 par value; 500,000,000
shares authorized; 417,583,825
and 416,939,950 shares issued; and
315,443,011 and 314,190,042 shares
outstanding at December 31, 2016 and
2015
4 4 Additional paid-in capital 8,358 8,296 Accumulated deficit
(3,787 ) (3,007 )
Treasury stock, at cost; 102,140,814 and
102,749,908 shares at December 31,
2016 and 2015
(2,399 ) (2,413 ) Accumulated other comprehensive loss (135 ) (173
) Noncontrolling interest 2,405 2,727
Total
Stockholders' Equity 4,446 5,434
Total
Liabilities and Stockholders' Equity $ 30,355 $ 32,882
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year
Ended December 31, 2016 2015
2014 (In millions) Cash Flows from Operating
Activities Net (loss)/income $ (891 ) $ (6,436 ) 132
Adjustments to reconcile net income/(loss) to net cash provided by
operating activities: Equity in earnings and distribution of
unconsolidated affiliates 54 37 49 Depreciation and amortization
1,367 1,566 1,523 Provision for bad debts 48 64 64 Amortization of
nuclear fuel 49 45 46 Amortization of financing costs and debt
discount/premiums 3 (11 ) (12 ) Adjustment to loss/(gain) on debt
extinguishment 21 (75 ) 25 Amortization of intangibles and
out-of-market contracts 91 81 64 Amortization of unearned equity
compensation 10 41 42 Net (gain)/loss on sale of assets and equity
method investments (224 ) 14 (4 ) Gain on post retirement benefits
curtailment — (21 ) — Impairment losses 1,186 5,086 97 Changes in
derivative instruments 23 233 (61 ) Changes in deferred income
taxes and liability for uncertain tax benefits (43 ) 1,326 (154 )
Changes in collateral deposits in support of risk management
activities 365 (381 ) 146 Proceeds from sale of emission allowances
47 — — Changes in nuclear decommissioning trust liability 41 (2 )
19 Cash provided/(used) by changes in other working capital, net of
acquisition and disposition effects: Accounts receivable - trade
(12 ) 136 (2 ) Inventory 134 (26 ) (245 ) Prepayments and other
current assets (39 ) 8 36 Accounts payable (27 ) (218 ) (12 )
Accrued expenses and other current liabilities (39 ) (9 ) (26 )
Other assets and liabilities (92 ) (149 ) (217 )
Net Cash
Provided by Operating Activities 2,072 1,309
1,510
Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired (209 ) (31 ) (2,936
) Capital expenditures (1,244 ) (1,283 ) (909 ) (Increase)/decrease
in restricted cash, net (29 ) 8 57 (Increase)/decrease in
restricted cash to support equity requirements for U.S. DOE funded
projects (3 ) 35 (206 ) Net cash proceeds from notes receivable 17
18 25 Proceeds from renewable energy grants 36 82 916 Purchases of
emission allowances, net of proceeds (1 ) 41 (16 ) Investments in
nuclear decommissioning trust fund securities (551 ) (629 ) (619 )
Proceeds from sales of nuclear decommissioning trust fund
securities 510 631 600 Proceeds from sale of assets, net 636 27 203
Investments in unconsolidated affiliates (34 ) (395 ) (103 ) Other
48 11 85
Net Cash Used by Investing
Activities (824 ) (1,485 ) (2,903 )
Cash Flows from
Financing Activities Payments of dividends to preferred and
common stockholders (76 ) (201 ) (196 ) Net receipts from
settlement of acquired derivatives that include financing elements
151 196 9 Payments for treasury stock — (437 ) (39 ) Payments for
preferred shares (226 ) — — Distributions from, net of
contributions to, noncontrolling interests in subsidiaries (156 )
47 189 Proceeds from sale of noncontrolling interests in
subsidiaries — 600 630 Proceeds from issuance of common stock 1 1
21 Proceeds from issuance of long-term debt 5,527 1,004 4,563
Payments of debt issuance and hedging costs (89 ) (21 ) (67 )
Payments for short and long-term debt (5,913 ) (1,599 ) (3,827 )
Other (13 ) (22 ) (18 )
Net Cash (Used)/Provided by Financing
Activities (794 ) (432 ) 1,265 Effect of exchange rate changes
on cash and cash equivalents 1 10 (10 )
Net
Increase/(Decrease) in Cash and Cash Equivalents 455 (598 )
(138 )
Cash and Cash Equivalents at Beginning of Period
1,518 2,116 2,254
Cash and Cash Equivalents
at End of Period $ 1,973 $ 1,518 $ 2,116
Appendix Table A-1: Fourth Quarter 2016 Adjusted EBITDA
Reconciliation by Operating SegmentThe following table
summarizes the calculation of Adj. EBITDA and provides a
reconciliation to net (loss)/income:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total
Net (loss)/income
(889 ) 316 (204
) (126 ) (152 )
(1,055 ) Plus:
Interest expense, net 9 — 22 61 124 216 Income tax 1 — (6 )
(26 ) (48 ) (79 ) Loss on debt extinguishment — — — — 23 23
Depreciation and amortization 224 28 47 73 16 388 ARO expense 13 —
1 1 1 16 Amortization of contracts (4 ) 1 — 17 — 14 Amortization of
leases (12 ) — — —
— (12 )
EBITDA (658 ) 345
(140 ) — (36 ) (489
) Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 6 — 23 21 (36 ) 14 Reorganization costs —
— — — 3 3 Deactivation costs 4 — — — 1 5 Other non recurring
charges 1 2 1 3 (1 ) 6 Impairment losses 561 1 30 183 20 795
Impairment losses on investments — — 106 — 15 121 Mark-to-market
(MtM) losses/(gains) on economic hedges 246 (214 )
6 — (1 ) 37
Adjusted EBITDA 160 134
26 207 (35
) 492
Fourth Quarter 2016 condensed financial information by Operating
Segment:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total Operating revenues 1,304
1,417 88 249 (239 ) 2,819 Cost
of sales 593 1,053 11 13
(238 ) 1,432
Economic gross
margin 711 364 77 236 (1
) 1,387 Operations & maintenance and other cost
of operationsa 450 91 30 70 (28 ) 613 Selling, marketing, general
and administrativeb 100 135 17 6 38 296 Development costs 5 2 15 —
1 23 Other (income)/expense (4 ) 2 (11 )
(47 ) 23 (37 )
Adjusted EBITDA
160 134 26
207 (35 )
492 a. Excludes deactivation costs of
$5 million, ARO expense of $16 million and lease amortization of
$12 million. b. Excludes reorganization costs of $3 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 2,532 14 273 — — 2,819 Cost of
operations 1,195 1 236
— — 1,432
Gross
margin 1,337 13 37 — —
1,387
Operations & maintenance and other cost of operations 622 (4 )
— (5 ) — 613 Selling, marketing, general & administrative a 299
— — — (3 ) 296 Development costs 23 — — — — 23 Other
expense/(income) b 1,448 (161 ) —
— (1,324 ) (37 )
Net loss
(1,055 ) 178
37 5 1,327
492 a. Other adj. includes
reorganization costs of $3 million. b. Other adj. includes
impairments.
Appendix Table A-2: Fourth Quarter 2015 Adjusted EBITDA
Reconciliation by Operating SegmentThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to net (loss)/income:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total
Net
(loss)/income (4,690 ) 161
(18 ) 12
(1,823 ) (6,358 ) Plus:
Interest expense, net 17 — 19 63
171 270 Income tax (3 ) — (5 ) 4 1,389 1,385 Loss on debt
extinguishment — — — — (84 ) (84 ) Depreciation and amortization
223 33 46 75 16 393 ARO expense 7 — — — 1 8 Amortization of
contracts (4 ) 2 — 14 — 12 Amortization of leases (12 )
— — — —
(12 )
EBITDA (4,462 ) 196
42 168 (330 ) (4,386 )
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 4 — (32 ) 15 38 25 Acquisition-related
transaction & integration costs — — — — 2 2 Reorganization
costs 3 3 6 — 6 18 Deactivation costs 3 — — — — 3 Other non
recurring charges 4 (1 ) 2 3 5 13 Impairment losses 4,605 — 8 — 154
4,767 Impairment losses on investments 14 — — — 42 56 MtM
losses/(gains) on economic hedges 129 (49 )
1 3 — 84
Adjusted EBITDA 300 149
27 189
(83 ) 582
Fourth Quarter 2015 condensed financial information by Operating
Segment:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total Operating revenues
1,538 1,423 89 241 (189 )
3,102 Cost of sales 670 1,064 10
13 (193 ) 1,564
Economic gross margin 868 359 79
228 4 1,538 Operations & maintenance and
other cost of operations a 483 95 3 77 7 665 Selling, marketing,
general & administrative b 93 127 10 3 70 303 Development costs
6 — 17 — 14 37 Other expense/(income) c (14 ) (12 )
22 (41 ) (4 ) (49 )
Adjusted
EBITDA 300 149
27 189 (83
) 582 a. Excludes
deactivation costs of $3 million, ARO expense of $8 million and
lease amortization of $12 million. b. Excludes reorganization costs
of $18 million. c. Excludes acquisition-related transaction &
integration costs of $2 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 3,011 12 79 — — 3,102 Cost of
operations 1,569 — (5 ) —
— 1,564
Gross margin
1,442 12 84 — — 1,538
Operations & maintenance and other cost of operations 664 4 —
(3 ) — 665 Selling, marketing, general & administrative a 321 —
— — (18 ) 303 Development costs 37 — — — — 37 Other
expense/(income) b 6,778 (436 ) —
— (6,391 ) (49 )
Net loss
(6,358 ) 444
84 3 6,409
582 a. Other adj. includes
reorganization costs of $18 million. b. Other adj. includes
impairments and acquisition-related transaction & integration
costs.
Appendix Table A-3: Full Year 2016 Adjusted EBITDA
Reconciliation by Operating SegmentThe following table
summarizes the calculation of Adj. EBITDA and provides a
reconciliation to net (loss)/income:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total
Net
(loss)/income (507 ) 1,045
(306 ) (15 )
(1,108 ) (891 ) Plus:
Interest expense, net 65
— 107 273 601 1,046 Income tax (1 ) 1 (20 ) (1 ) 37 16 Loss on debt
extinguishment — — — — 142 142 Depreciation and amortization 702
115 190 297 63 1,367 ARO expense 35 — 2 3 2 42 Amortization of
contracts (18 ) 7 1 74 (4 ) 60 Amortization of leases (49 )
— — — —
(49 )
EBITDA 227 1,168 (26
) 631 (267 ) 1,733 Adjustment to
reflect NRG share of adjusted EBITDA in unconsolidated affiliates
30 — 42 79 (45 ) 106 Acquisition-related transaction &
integration costs — — — — 7 7 Reorganization costs — 5 3 — 21 29
Deactivation costs 19 — — — 2 21 (Gain)/loss on sale of business
(223 ) — — — 79 (144 ) Other non recurring charges 21 1 1 6 5 34
Impairment losses 645 1 56 183 33 918 Impairment losses on
investments 142 — 105 — 21 268 Mark-to-market (MtM) losses/(gains)
on economic hedges 644 (364 ) 6
— (1 ) 285
Adjusted
EBITDA 1,505 811
187 899
(145 ) 3,257
Full Year 2016 condensed financial information by Operating
Segment:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total Operating revenues
6,451 6,338 424 1,089 (1,031 )
13,271 Cost of sales 2,835 4,688
14 61 (1,034 ) 6,564
Economic gross margin 3,616 1,650
410 1,028 3 6,707 Operations &
maintenance and other cost of operations a 1,856 341 139 236 (20 )
2,552 Selling, marketing, general & administrative b 372 492 57
16 135 1,072 Development costs 21 4 40 — 21 86 Other
(income)/expense c (138 ) 2 (13 )
(123 ) 12 (260 )
Adjusted EBITDA
1,505 811
187 899 (145
) 3,257 a. Excludes
deactivation costs of $21 million, ARO expense of $42 million and
lease amortization of $49 million. b. Excludes reorganization costs
of $29 million. c. Excludes acquisition-related transaction &
integration costs of $7 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 12,351 55 865 — — 13,271 Cost of
operations 5,989 (5 ) 580
— — 6,564
Gross margin
6,362 60 285 — —
6,707 Operations &
maintenance and other cost of operations 2,566 7 — (21 ) — 2,552
Selling, marketing, general & administrative a 1,101 — — — (29
) 1,072 Development costs 90 — — — (4 ) 86 Other expense/(income) b
3,496 (1,205 ) — —
(2,551 ) (260 )
Net loss (891
) 1,258 285
21 2,584 3,257
a. Other adj. includes reorganization costs of
$29 million. b. Other adj. includes impairments, gain/(loss) on
sale of business and acquisition-related transaction &
integration costs.
Appendix Table A-4: Full Year 2015 Adjusted EBITDA
Reconciliation by Operating SegmentThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to net (loss)/income:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total
Net
(loss)/income (4,446 ) 624
(92 ) 65
(2,587 ) (6,436 ) Plus:
Interest expense, net 68 1 80
262 704 1,115 Income tax — 1 (18 ) 12 1,347 1,342 Loss/(gain) on
debt extinguishment — — — 9 (84 ) (75 ) Depreciation and
amortization 896 133 181 297 59 1,566 ARO expense 32 — — 2 1 35
Amortization of contracts (10 ) 6 1 54 — 51 Amortization of leases
(50 ) — — —
— (50 )
EBITDA (3,510 )
765 152 701 (560 ) (2,452
) Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 27 — (20 ) 49 34 90 Acquisition-related
transaction & integration costs — 1 — 3 6 10 Reorganization
costs 3 3 6 — 6 18 Deactivation costs 11 — — — — 11 Gain on sale of
business — — (3 ) — — (3 ) Other non recurring charges 20 (12 ) 7 3
16 34 Impairment losses 4,827 36 13 — 154 5,030 Impairment losses
on investments 14 — — — 42 56 MtM losses on economic hedges
367 — 3 2 —
372
Adjusted EBITDA 1,759
793 158
758 (302 ) 3,166
Full Year 2015 condensed financial information by Operating
Segment:
($ in millions) Generation Retail Renewables
NRG Yield Corp/Elim Total Operating revenues
7,785 6,910 396 1,009 (1,142 )
14,958 Cost of sales 3,649 5,244
16 71 (1,134 ) 7,846
Economic gross margin 4,136 1,666
380 938 (8 ) 7,112 Operations
& maintenance and other cost of operations a 2,058 366 115 248
16 2,803 Selling, marketing, general & administrative b 390 491
47 12 241 1,181 Development costs 20 4 61 — 61 146 Other
(income)/expense c (91 ) 12 (1 )
(80 ) (24 ) (184 )
Adjusted EBITDA
1,759 793 158
758 (302 )
3,166 a. Excludes deactivation costs of
$11 million, ARO expense of $35 million and lease amortization of
$50 million. b. Excludes reorganization costs of $18 million. c.
Excludes acquisition-related transaction & integration costs of
$10 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 14,674 40 244 — — 14,958 Cost of
operations 7,985 (11 ) (128 ) — — 7,846
Gross margin 6,689 51 372 — —
7,112 Operations & maintenance and other cost of
operations 2,799 15 — (11 ) — 2,803 Selling, marketing, general
& administrative 1,199 — — — (18 ) 1,181 Development costs 146
— — — — 146 Other expense/(income) a 8,981 (2,382 ) —
— (6,783 ) (184 )
Net loss (6,436 )
2,418 372 11 6,801
3,166 a. Other adj. includes
impairments and acquisition-related transaction & integration
costs.
Appendix Table A-5: 2016 and 2015 Three Months Ended December
31 and Full Year Adjusted Cash Flow from Operations
ReconciliationsThe following table summarizes the calculation
of adjusted cash flow operating activities providing a
reconciliation to net cash provided by operating activities:
Three Months Ended ($ in millions)
December
31, 2016 December 31, 2015 Net Cash Provided
by Operating Activities 339 (83 )
Reclassifying of net receipts for settlement of acquired
derivatives that include financing elements 22 58 Sale of Potrero
Land — — Merger, integration and cost-to-achieve expenses a (7 ) 3
Return of capital from equity investments 11 38 Adjustment for
change in collateral (134 ) 201
Adjusted
Cash Flow from Operating Activities 231
217 Maintenance CapEx, net b (58 ) (99 )
Environmental CapEx, net (48 ) (80 ) Preferred dividends — (3 )
Distributions to non-controlling interests (47 ) (43
)
Free Cash Flow - before Growth 78
(8 ) a. Cost-to-achieve expenses
associated with the $150 million savings announced on September
2015 call. b. Includes insurance proceeds of $4 million in 2016;
excludes merger and integration capex of $2 million in 2015.
Twelve Months Ended ($ in millions)
December 31, 2016 December 31, 2015 Net
Cash Provided by Operating Activities 2,072
1,309 Reclassifying of net receipts for settlement of
acquired derivatives that include financing elements 151 196 Sale
of Potrero Land 74 — Merger, integration and cost-to-achieve
expenses a 40 21 Return of capital from equity investments 17 38
Adjustment for change in collateral (365 ) 381
Adjusted Cash Flow from Operating Activities
1,989 1,945 Maintenance CapEx,
net b (330 ) (413 ) Environmental CapEx, net (285 ) (237 )
Preferred dividends (2 ) (10 ) Distributions to non-controlling
interests (163 ) (158 )
Free Cash Flow - before
Growth 1,209 1,127
a. Cost-to-achieve expenses associated with the $150
million savings announced on September 2015 call. b. Includes
insurance proceeds of $37 million in 2016; excludes merger and
integration capex of $11 million in 2015.
Appendix Table A-6: Fourth Quarter 2016 Regional Adjusted
EBITDA Reconciliation for GenerationThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to net loss:
($ in millions) East Gulf Coast West
Other Total
Net loss (123 )
(662 ) (92 )
(12 ) (889 ) Plus:
Interest expense, net 9 — — — 9 Income tax — —
— 1 1 Depreciation and amortization 56 157 11 — 224 ARO expense 2 3
8 — 13 Amortization of contracts (5 ) 2 (1 ) — (4 ) Amortization of
leases (11 ) (1 ) — —
(12 )
EBITDA (72 ) (501 )
(74 ) (11 ) (658 )
Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates — (2 ) 4 4 6 Deactivation costs 3 — 1 — 4
Other non recurring charges 3 1 (1 ) (2 ) 1 Impairment losses 118
358 85 — 561 Mark-to-market (MtM) losses on economic hedges
5 236 5 —
246
Adjusted EBITDA 57
92 20 (9 )
160
Fourth Quarter 2016 condensed financial information for
Generation:
($ in millions) East Gulf Coast West
Other Elims. Total Operating revenues 579
616 100 (9 ) 18 1,304 Cost of
sales 230 304 38 —
21 593
Economic gross
margin 349 312 62 (9 )
(3 ) 711 Operations & maintenance and
other cost of operationsa 249 185 32 (1 ) (15 ) 450 Selling,
marketing, general & administrative 50 37 7 6 — 100 Development
costs 1 1 3 — — 5 Other (income)/expense (8 ) (3 )
— (5 ) 12 (4 )
Adjusted EBITDA 57 92
20 (9 ) —
160 a. Excludes
deactivation costs of $4 million, ARO expense of $13 million and
lease amortization of $12 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 1,064 (4 ) 244 — — 1,304 Cost of
operations 593 2 (2 ) —
— 593
Gross margin
471 (6 ) 246 — —
711 Operations
& maintenance and other cost of operations 455 (1 ) — (4 ) —
450 Selling, marketing, general & administrative 100 — — — —
100 Development costs 5 — — — — 5 Other expense/(income) a
800 (12 ) — — (792
) (4 )
Net loss (889 )
7 246 4
792 160 a.
Other adj. includes impairments.
Appendix Table A-7: Fourth Quarter 2015 Regional Adjusted
EBITDA Reconciliation for GenerationThe following table
summarizes the calculation of Adjusted EBITDA and provides a
reconciliation to net loss:
($ in millions) East Gulf Coast West
Other Total
Net loss (164 )
(4,488 ) (25 )
(13 ) (4,690 ) Plus:
Interest expense, net 16 — — 1 17
Income tax — — — (3 ) (3 ) Depreciation and amortization 92 119 11
1 223 ARO expense 4 1 2 — 7 Amortization of contracts (6 ) — 2 — (4
) Amortization of leases (12 ) (1 ) —
1 (12 )
EBITDA (70 )
(4,369 ) (10 ) (13 )
(4,462 ) Adjustment to reflect NRG share of adjusted
EBITDA in unconsolidated affiliates — (1 ) 2 3 4 Reorganization
costs — 3 — — 3 Deactivation costs 3 — — — 3 Other non recurring
charges 15 (19 ) 6 2 4 Impairment losses 214 4,383 8 — 4,605
Impairment losses on investments — 14 — — 14 MtM losses on economic
hedges 23 103 3 —
129
Adjusted EBITDA 185
114 9
(8 ) 300
Fourth Quarter 2015 condensed financial information for
Generation:
($ in millions) East Gulf Coast West
Other Elims. Total Operating revenues 773
668 109 (8 ) (4 ) 1,538 Cost of
sales 290 330 50 —
— 670
Economic gross
margin 483 338 59 (8 )
(4 ) 868 Operations & maintenance and
other cost of operationsa 263 197 38 (1 ) (14 ) 483
Selling, marketing, general &
administrativeb
29 33 14 17 — 93 Development costs 2 1 3 — — 6 Other
expense/(income) 4 (7 ) (5 ) (16
) 10 (14 )
Adjusted EBITDA
185 114 9
(8 ) — 300
a. Excludes deactivation costs of $3 million.
ARO expense of $7 million and lease amortization of $12 million. b.
Excludes reorganization costs of $3 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 1,404 (3 ) 137 — — 1,538 Cost of
operations 661 (1 ) 10 —
— 670
Gross margin
743 (2 ) 127 — —
868 Operations
& maintenance and other cost of operations 481 5 — (3 ) — 483
Selling, marketing, general & administrative a 96 — — — (3 ) 93
Development costs 6 — — — — 6 Other expense/(income) b 4,850
(12 ) — — (4,852 )
(14 )
Net loss (4,690 )
5 127 3
4,855 300 a.
Other adj. includes reorganization costs of $3 million. b.
Other adj. includes impairments.
Appendix Table A-8: Full Year 2016 Regional Adjusted EBITDA
Reconciliation for GenerationThe following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss)
($ in millions) East Gulf Coast West
Other Total
Net income/(loss) 373
(911 ) (19 )
50 (507 ) Plus:
Interest expense, net 65 1 — (1 ) 65
Income tax — (2 ) — 1 (1 ) Depreciation and amortization 212 432 57
1 702 ARO expense 7 11 17 — 35 Amortization of contracts (22 ) 6 (4
) 2 (18 ) Amortization of leases (47 ) (2 ) —
— (49 )
EBITDA 588
(465 ) 51 53 227 Adjustment to
reflect NRG share of adjusted EBITDA in unconsolidated affiliates —
3 11 16 30 Deactivation costs 18 — 1 — 19 Gain on sale of assets
(217 ) — (6 ) — (223 ) Other non recurring charges 7 16 (1 ) (1 )
21 Impairments 135 367 143 — 645 Impairment losses on investments —
142 — — 142 Mark-to-market (MtM) losses on economic hedges
180 444 20 —
644
Adjusted EBITDA 711
507 219 68
1,505
Full Year 2016 condensed financial information for
Generation:
($ in millions) East Gulf Coast West
Other Elims. Total Operating revenues 3,241
2,705 458 62 (15 ) 6,451 Cost of
sales 1,300 1,386 149
— — 2,835
Economic
gross margin 1,941 1,319 309 62
(15 ) 3,616 Operations & maintenance and
other cost of operations a 1,048 684 138 1 (15 ) 1,856 Selling,
marketing, general & administrative 183 135 31 23 — 372
Development costs 4 3 14 — — 21 Other (income)/expense (5 )
(10 ) (93 ) (30 ) — (138
)
Adjusted EBITDA 711 507
219 68
— 1,505 a.
Excludes deactivation costs of $19 million, ARO expense of $35
million and lease amortization of $49 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 5,679 (15 ) 787 — — 6,451 Cost of
operations 2,689 3 143
— — 2,835
Gross
Margin 2,990 (18 ) 644 —
— 3,616 Operations & maintenance and other cost
of operations 1,861 14 — (19 ) — 1,856 Selling, marketing, general
& administrative 372 — — — — 372 Development costs 22 — — — (1
) 21 Other expense/(income) a 1,242 (64 )
— — (1,316 ) (138 )
Net loss (507 ) 32
644 19
1,317 1,505 a.
Other adj. includes impairments.
Appendix Table A-9: Full Year 2015 Regional Adjusted EBITDA
Reconciliation for GenerationThe following table summarizes the
calculation of Adjusted EBITDA and provides a reconciliation to net
income/(loss)
($ in millions) East Gulf Coast West Other Total
Net
income/(loss) 17 (4,439 ) 5
(29 ) (4,446 ) Plus: Interest
expense, net 68 — 1 (1 ) 68 Depreciation and amortization 299 546
51 — 896 ARO expense 14 6 12 — 32 Amortization of contracts (19 ) 5
2 2 (10 ) Amortization of leases (47 ) (3 ) — — (50 )
EBITDA 332 (3,885 ) 71
(28 ) (3,510 ) Adjustment to reflect
NRG share of adjusted EBITDA in unconsolidated affiliates — 3 8 16
27 Reorganization costs — 3 — — 3 Deactivation costs 8 — 3 — 11
Other non recurring charges 24 (1 ) (1 ) (2 ) 20 Impairment losses
436 4,383 8 — 4,827 Impairment losses on investments — 14 — — 14
MtM losses on economic hedges 276 83 8 —
367
Adjusted EBITDA 1,076
600 97 (14 ) 1,759
Full Year 2015 condensed financial information for
Generation:
($ in millions) East Gulf Coast West Other Elims. Total Operating
revenues 4,291 3,054 475 (21 ) (14 ) 7,785 Cost of sales 1,891
1,566 192 — — 3,649
Economic gross margin 2,400 1,488 283
(21 ) (14 ) 4,136 Operations
& maintenance and other cost of operations a 1,162 756 153 1
(14 ) 2,058 Selling, marketing, general & administrative b 170
147 44 29 — 390 Development costs 3 9 8 — — 20 Other
(income)/expense (11 ) (24 ) (19 ) (37 ) — (91 )
Adjusted
EBITDA 1,076 600 97
(14 ) — 1,759 a.
Excludes deactivation costs of $11 million, ARO expense of
$32 million and lease amortization of $50 million. b. Excludes
reorganization cost of $3 million.
The following table reconciles the condensed financial
information to Adjusted EBITDA:
Condensed
financial
Interest, tax,
Adjusted ($ in millions) information
depr., amort.
MtM Deactivation
Other adj.
EBITDA Operating revenues 7,546 (15 ) 254 — — 7,785 Cost of
operations 3,767 (5 ) (113 ) —
— 3,649
Gross margin
3,779 (10 ) 367 — —
4,136 Operations & maintenance and other cost of
operations 2,051 18 — (11 ) — 2,058 Selling, marketing, general
& administrative 393 — — — (3 ) 390 Development costs 20 — — —
— 20 Other expense/(income) a 5,761 (68 )
— — (5,784 ) (91 )
Net
loss (4,446 ) 40
367 11
5,787 1,759 a.
Other adj. includes impairments and acquisition-related transaction
& integration costs.
Appendix Table A-10: Full Year 2016 Sources and Uses of
LiquidityThe following table summarizes the sources and uses of
liquidity for the full year 2016:
Twelve Months Ended ($ in millions)
December 31, 2016 Sources: Adjusted cash flow from
operations 1,989 Asset sales 562 Issuance of NRG Yield Senior Notes
due 2026 350 Monetization of capacity revenues at Midwest Gen, net
of payments 253 Collateral 365 Issuance of CVSR HoldCo debt 200
Issuance of NYLD 3.55% Series D notes (NRG Energy Center
Minneapolis) 125 Capistrano debt proceeds, net of debt repayment
108 Tax Equity Proceeds 11
Uses: Debt
repayments, net of proceeds (corporate-level) (774 ) Maintenance
and environmental capex, net a (615 ) Growth investments and
acquisitions, net (564 ) Debt repayments, non-discretionary (399 )
Proceeds from NRG Yield revolver, net of payments (306 ) Redemption
of convertible preferred stock (226 ) Distributions to
non-controlling interests (163 ) Decrease in credit facility
availability (156 ) Capistrano distribution of debt proceeds to
non-controlling interests (87 ) Debt Issuance Costs (89 ) Debt
Repayment, Peaker Finco (76 ) Common and Preferred Stock Dividends
(76 ) Merger, integration and cost-to-achieve expenses b (40 )
Other Investing and Financing (61 )
Change in Total
Liquidity 331 a. Includes
insurance proceeds of $37 million. b. Cost-to-achieve expenses
associated with the $150 million savings announced on September
2015 call.
Appendix Table A-11: 2017 Adjusted EBITDA Guidance
ReconciliationThe following table summarizes the calculation of
Adjusted EBITDA providing reconciliation to net income:
2017 Adjusted EBITDA ($ in millions)
Low
High GAAP Net Income a 60 260 Income Tax 80 80
Interest Expense & Debt Extinguishment Costs 1,155 1,155
Depreciation, Amortization, Contract Amortization and ARO Expense
1,235 1,235 Adjustment to reflect NRG share of adjusted EBITDA in
unconsolidated affiliates 110 110 Other Costs b 60 60
Adjusted
EBITDA 2,700 2,900 a. For purposes
of guidance, fair value adjustments related to derivatives are
assumed to be zero. b. Includes deactivation costs, gain on sale of
businesses, reorganization costs, asset write-offs, impairments and
other non-recurring charges
Appendix Table A-12: 2017 FCFbG Guidance
ReconciliationThe following table summarizes the calculation of
Free Cash Flow before Growth providing reconciliation to Cash from
Operations:
2017 ($ in millions)
Guidance Adjusted EBITDA $2,700
- $2,900 Cash Interest payments (1,065) Debt Extinguishment Cash
Cost 0 Cash Income tax (40) Collateral / working capital / other
(240) Cash From Operations $1,355 - $1,555
Adjustments: Acquired Derivatives,
Cost-to-Achieve, Return of Capital
Dividends, Collateral and Other 0 Adjusted Cash flow from
operations $1,355 - $1,555 Maintenance capital expenditures, net
(310) - (340) Environmental capital expenditures, net (10) - (30)
Preferred dividends 0 Distributions to non-controlling interests
(185) - (205) Free Cash Flow - before Growth $800 - $1,000
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 results will be
unaffected by unusual or non-recurring items.
EBITDA represents net income before interest (including loss on
debt extinguishment), taxes, depreciation and amortization. EBITDA
is presented because NRG considers it an important supplemental
measure of its performance and believes debt-holders frequently use
EBITDA to analyze operating performance and debt service capacity.
EBITDA has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for analysis of our
operating results as reported under GAAP. Some of these limitations
are:
- EBITDA does not reflect cash
expenditures, or future requirements for capital expenditures, or
contractual commitments;
- EBITDA does not reflect changes in, or
cash requirements for, working capital needs;
- EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on debt or cash income tax
payments;
- Although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and EBITDA does not
reflect any cash requirements for such replacements; and
- Other companies in this industry may
calculate EBITDA differently than NRG does, limiting its usefulness
as a comparative measure.
Because of these limitations, EBITDA should not be considered as
a measure of discretionary cash available to use to invest in the
growth of NRG’s business. NRG compensates for these limitations by
relying primarily on our GAAP results and using EBITDA and Adjusted
EBITDA only supplementally. See the statements of cash flow
included in the financial statements that are a part of this news
release.
Adjusted EBITDA is presented as a further supplemental measure
of operating performance. As NRG defines it, Adjusted EBITDA
represents EBITDA excluding impairment losses, gains or losses on
sales, dispositions or retirements of assets, any mark-to-market
gains or losses from accounting for derivatives, adjustments to
exclude the Adjusted EBITDA related to the non-controlling
interest, gains or losses on the repurchase, modification or
extinguishment of debt, the impact of restructuring and any
extraordinary, unusual or non-recurring items plus adjustments to
reflect the Adjusted EBITDA from our unconsolidated investments.
The reader is encouraged to evaluate each adjustment and the
reasons NRG considers it appropriate for supplemental analysis. As
an analytical tool, Adjusted EBITDA is subject to all of the
limitations applicable to EBITDA. In addition, in evaluating
Adjusted EBITDA, the reader should be aware that in the future NRG
may incur expenses similar to the adjustments in this news
release.
Management believes Adjusted EBITDA is useful to investors and
other users of NRG's financial statements in evaluating its
operating performance because it provides an additional tool to
compare business performance across companies and across periods
and adjusts for items that we do not consider indicative of NRG’s
future operating performance. This measure is widely used by
debt-holders to analyze operating performance and debt service
capacity and by equity investors to measure our operating
performance without regard to items such as interest expense,
taxes, depreciation and amortization, which can vary substantially
from company to company depending upon accounting methods and book
value of assets, capital structure and the method by which assets
were acquired. Management uses Adjusted EBITDA as a measure of
operating performance to assist in comparing performance from
period to period on a consistent basis and to readily view
operating trends, as a measure for planning and forecasting overall
expectations, and for evaluating actual results against such
expectations, and in communications with NRG's Board of Directors,
shareholders, creditors, analysts and investors concerning its
financial performance.
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, integration and related
restructuring costs. The Company provides the reader with this
alternative view of operating cash flow because the cash settlement
of these derivative contracts materially impact operating revenues
and cost of sales, while GAAP requires NRG to treat them as if
there was a financing activity associated with the contracts as of
the acquisition dates. The Company adds back merger, integration
related restructuring costs as they are one time and unique in
nature and do not reflect ongoing cash from operations and they are
fully disclosed to investors.
Free cash flow (before Growth) is adjusted cash flow from
operations less maintenance and environmental capital expenditures,
net of funding, preferred stock dividends and distributions to
non-controlling interests and is used by NRG predominantly as a
forecasting tool to estimate cash available for debt reduction and
other capital allocation alternatives. The reader is encouraged to
evaluate each of these adjustments and the reasons NRG considers
them appropriate for supplemental analysis. Because we have
mandatory debt service requirements (and other non-discretionary
expenditures) investors should not rely on free cash flow before
Growth as a measure of cash available for discretionary
expenditures.
Free Cash Flow before Growth is utilized by Management in making
decisions regarding the allocation of capital. Free Cash Flow
before Growth is presented because the Company believes it is a
useful tool for assessing the financial performance in the current
period. In addition, NRG’s peers evaluate cash available for
allocation in a similar manner and accordingly, it is a meaningful
indicator for investors to benchmark NRG's performance against its
peers. Free Cash Flow before Growth is a performance measure and is
not intended to represent net income (loss), cash from operations
(the most directly comparable U.S. GAAP measure), or liquidity and
is not necessarily comparable to similarly titled measures reported
by other companies.
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version on businesswire.com: http://www.businesswire.com/news/home/20170228005948/en/
NRG Energy, Inc.Media:Marijke Shugrue,
609-524-5262orInvestors:Kevin L. Cole, CFA,
609-524-4526orLindsey Puchyr, 609-524-4527
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