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Actionable news in NRG: NRG ENERGY Inc,

Nrg Energy, Inc. Reports Third Quarter 2015 Results,

The following excerpt is from the company's SEC filing.

Increases Cost Reduction Program to $250 Million

and Initiates 2016 Financial Guidance

Financial Highlights

$1,145 million of Adjusted EBITDA(1) in the third quarter and $2,714 million(1) in the first nine months of 2015

$1,135 million of Free Cash Flow (FCF) before growth investments in the first nine months of 2015

Business and Operational Highlights

$225 million Adjusted EBITDA from NRG Home Retail, best quarterly EBITDA performance since 2010

$251 million of shares repurchased in September and October for a total of $437 million repurchased year-to-date or ap proximately 7% of shares outstanding

$210 million in total cash consideration received on November 3, 2015 for the sale of 75% of the equity interests in a portfolio of wind projects to NRG Yield

NRG Strategic Reset Update

$150 million per year of General and Administrative/Development/Marketing cost reduction program underway and on target

$100 million per year Operations and Maintenance (O&M) cost reduction program for 2016, across NRGs three O&M platforms (Business/Wholesale, Renew and Home), announced today, bringing aggregate cost reduction programs to $250 million

Asset Rebalancing Program on track with internal modifications to capital investment program and launched select asset disposition process

GreenCo reorganization as part of $125 million NRG Runway (the Runway) is finalized and will be effective January 1, 2016

GreenCo strategic alternative process for a majority sell down is underway

Narrowing Full Year 2015 Guidance:

Adjusted EBITDA of $3,250-$3,350 million, excluding negative contribution from NRG Home Solar which continues to be projected at $175 million

FCF before growth investments of $1,125-$1,225 million

Initiating Full Year 2016 Guidance(2):

Adjusted EBITDA of $3,000-$3,200 million

FCF before growth investments (Consolidated) of $1,000-$1,200 million


November 4, 2015

NRG Energy, Inc. (NYSE: NRG) today reported third quarter Adjusted EBITDA of $1,145 million.(1) Year-to-date adjusted cash flow from operations totaled $1,728 million. Net loss for the first nine months of 2015 was ($78)

(1) Excludes negative contribution from NRG Home Solar of $42 million for third quarter of 2015 and $129 million for YTD 2015

(2) Excludes impact of GreenCo businesses subject to $125 million Runway, which will be included in 2016 capital allocation

million, or ($0.25) per diluted common share compared to net income of $35 million, or $0.02 per diluted common share for the first nine months of 2014.

Strong operational performance across our wholesale, retail and renewable platforms, including near record results at Home Retail and strong performance in Commercial Operations, paved the way for a solid third quarter and provides the foundation to support our efforts under the NRG Reset to free up capital for shrinking and enhancing the balance sheet as part of our ongoing capital allocation plan.

said David Crane, NRGs Chief Executive Officer. The strategic processes associated with a majority sell down of the GreenCo businesses and asset sales are all underway. We expect to be able to announce a series of additional outcomes over the next several months that will both streamline the Company and simplify the investor proposition.

Segment Results

Table 1: Adjusted EBITDA

($ in millions)

Three Months Ended

Nine Months Ended



Business (1)(2)

Renew (1)

NRG Yield (1)


Adjusted EBITDA(3)

In accordance with GAAP, 2014 results have been restated to include the full impact of the NRG Yield drop down transactions which closed on January 2, 2015 and June 30, 2014.

See Appendices A-6 through A-9 for NRG Business regional details.

See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations; excludes negative contribution of $42 million and $129 million from Home Solar for the three and nine months ended September 30, 2015, respectively, and $24 million and $31 million for the three and nine months ended September 30, 2014, respectively.

Table 2: Net Income/(Loss)

($ in millions)

Net Income/(Loss)(2)

In accordance with GAAP, 2014 results have been restated to include full impact of the assets in the NRG Yield drop down transactions which closed on January 2, 2015 and June 30, 2014.

Includes mark-to-market gains and losses of economic hedges.

NRG Business:

Third quarter Adjusted EBITDA was $670 million; $33 million higher than in the third quarter 2014 primarily driven by:

Gulf Coast Region: $69 million increase due to higher average realized prices in Texas reflecting ERCOT hedge gains, higher realized energy margins at South Central gas plants, and higher gas plant generation across the Gulf Coast region

East Region: $35 million lower due to lower energy margins caused by declining gas prices and dark spreads, partially offset by higher capacity revenues from increase in PJM cleared auction capacity prices and lower operating costs from reduced scope of outages and decreased run times across the fleet

NRG Home Retail:

Third quarter Adjusted EBITDA was $225 million, $58 million higher than third quarter 2014 driven primarily by favorable supply costs as well as effective margin and cost management across the portfolio.

NRG Renew:

Third quarter Adjusted EBITDA was $81 million, $5 million higher than third quarter 2014 primarily due to the ramp up of Ivanpah as generation continues to increase year over year, partially offset by higher development costs.

NRG Yield:

Third quarter Adjusted EBITDA was $198 million, $32 million higher than third quarter 2014 primarily due to the Desert Sunlight and Alta Wind acquisitions.

Liquidity and Capital Resources

Table 3: Corporate Liquidity


Cash at NRG-Level

Revolver Availability

NRG-Level Liquidity

Restricted cash

Cash at Non-Guarantor Subsidiaries

Total Liquidity

NRG-level cash as of September 30, 2015, was $955 million, an increase of $294 million over the end of 2014, and $1,449 million was available under the Companys credit facilities at the end of the current quarter. Total liquidity was $4,211 million including restricted cash and cash at non-guarantor subsidiaries (primarily GenOn and NRG Yield)(3).

NRG Reset - Update

NRG has begun implementation of a company-wide cost reduction program of $150 million across its general and administrative, marketing and development expenses in connection with which the Company expects to incur one-time severance and associated costs of approximately $60 million(4) in 2015 and 2016.

In addition, to supplement this cost reduction program, NRG is announcing today an additional $100 million per year cost reduction initiative associated with the O&M spend across its wholesale/business, retail and renewable businesses to be achieved on a recurring basis beginning in 2016, measured against projected 2015 aggregate O&M spend. The impact of this program is reflected in the Companys financial guidance for 2016 also announced today and brings the aggregate cost savings expected in 2016 to $250 million.

The Company continues to make progress with respect to the asset rebalancing component of the NRG Reset program, which is aimed at freeing up the balance of the

$1.1 billion in 2016 available capital for allocation through the elimination of capital expenditures, asset dispositions, and targeted non-recourse financings. The Company has already reduced 2016 growth capital expenditures by over $100 million by suspending or modifying its fuel conversion plans at two coal facilities. NRG is now fully prepared to launch the process to raise non-recourse debt financing to fund the remaining capital required to complete the environmental capital expenditures for its Midwest Generation fleet, which is expected to result in an increase of $250 million in available NRG capital previously intended to fund these expenditures.

(3) See Appendix A-10 for the YTD Third Quarter Sources and Uses of Liquidity detail.

(4) Severance and associated costs excluded from 2015 and 2016 EBITDA guidance.

Finally, the GreenCo Runway for the clean energy businesses included within the Runway (NRG Home Solar, NRG Renew (C&I solar business) and NRG EVgo), which will operate under a $125 million defined limit of financial support from NRG beginning in 2016 is established and will be effective January 1, 2016. In addition, the Company has launched strategic processes with respect to the GreenCo businesses aimed at attracting a majority partner that can further enhance those businesses prospects for short, medium and long term success.

Closing of Drop Down to NRG Yield

On November 3, 2015, NRG completed the sale of a 75% interest in an 814 net megawatt (MW) portfolio of twelve wind facilities, representing 611 net MW to NRG Yield for $210 million in total cash consideration (subject to working capital adjustments)

Outlook for 2015 and Initiation of 2016 Guidance

NRG has narrowed the range of its Adjusted EBITDA and FCF before growth investments guidance for 2015 and is also initiating guidance for fiscal year 2016 as set forth below.

As in previous quarters, the Companys guidance assumes normalized weather in its core markets.

Table 4: 2015 and 2016 Adjusted EBITDA and FCF before Growth Investments Guidance


Prior Guidance

Revised Guidance

$3,200 3,400(1)

$3,250 3,350(1)

$3,000 3,200

Interest payments




Income tax

Adjusted EBITDA...