NRG - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full-Year 2017 NRG Energy Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

As a reminder, this call is being recorded. I would now like to turn the conference over to Kevin Cole, Head of Investor Relations.

begin. may You

Kevin L. Cole

via Sonia. www.nrg.com fourth you, morning's and to of phone welcome is in be Great. Investors Presentations the and Good & full-year Energy's section and the over quarter broadcast website This This XXXX NRG can being located at Thank our live morning webcast. under earnings call call. Webcasts.

NRG's the call may perspective. statement made be call that pertain Actual As discussion the NRG forward-looking any result our provided note by may SEC this that risk reasonable everyone results on date. obligations statements, law. based materially. differ Please filings. to We Energy, this believe from is undertake safe We update a that today's review today's which as for in as NRG to as no be the on will to these statements urge earnings except required well factors of harbor we Yield contain to this assumptions are of in may as events, future presentation,

addition, both non-GAAP measures. GAAP to we will financial and In refer

our regarding most please reconciliations presentation. to to information comparable GAAP For financial measures, measures directly refer today's non-GAAP and the

the and to call I'll Gutierrez, NRG's Mauricio President that, with Now, CEO. turn over

Mauricio Gutierrez

Moser, X. three business. I'm our by call key of Thank on of Chief Chris on to by Financial questions, Operations; the you, the for Head joined Officer. and like today's Killinger, Retail call morning, Kevin, Head messages the and presentation Kirk start good have highlighting slide everyone. we Also morning Elizabeth this Andrews, our I'd and for the available

upside a a focus multiple our we're we path our business, given am strength seeing First, value, much goals and optimistic in potential transformative are priorities, particularly we year delivered guidance. and XXXX for have the After on about our markets. clearer very I in core to the we reaffirming relentless of on XXXX

Transformation progress executing Second, on significant we have our Plan. in made

to us our asset have the few target over past announcements over sale sale XX% proceeds. weeks brought Our of

to We announced, target majority have metrics. million savings confidence we third, cost our track reflection And and achieve our our for announcing now remain $X on asset outlook are billion vast a a the share immediately. buyback $XXX as exceeded also program our credit of sales the significantly in with XXXX to begin business, of our the target authorization and with first

side progress. making our update we're X, slide to our as turning by Now, see on left-hand you Transformation of page, good Plan scorecard on can the the

which over $XXX excellent We the target jumpstart our target is our cost initiatives continuous have recurring XXXX. of our led on our original of early and realized $XX our meant XXX% the accretive of million. some of million organization XXXX, during The savings EBITDA throughout exceed last focus and we were improvement year. able to initiative a This XXXX to program of pull forward that for work

remain rate we track forward, total $XXX by achieve to our in on cost Looking savings XXXX. million run

be Analyst also Our on Day. at with target of covered to is this initiative margin enhancement our details track,

Trading Energy today, brings will and end asset moving as our on the This recently remain the $X progress. track remaining year sales for our you total million to by transactions the all to proceeds. sale continue focus or $XX our of capital Now, over proceeds streamline our update billion. We to we're structure. simplify, Last, intended announced our in portfolio they business, Boston we is our Marketing we and our announcing optimization, further to close business, and of announced on of BETM, strengthen to and transaction

the times by debt-to-EBITDA net the end to are year. track on ratio We achieve X of target our of

to program, a believe other as to capital that sale immediately. to closing execute program sales at repurchase billion our we capital deployed million and repurchase continue billion to time. we significant sight progress now look that price our the towards of reflect with pleased will authorization be our $XXX million to of priorities. this the opportunity business best and completion launched have of can share announcement, $XXX be the return for remaining announce stock we $X am we $X our the presents program, the With upon for the current line capital does our our of not program. asset I initial recent value asset have And that allocation to I of

want make to of that we as all with a achieved is employees. This Moving to for it Harvey their priority. of year top Hurricane keeping business moving performance, and but ourselves X not slide year of year safety Gulf order us in all stronger top testament hard the devastation for long-term our core second-best was to our in to culture gratitude my only I my express safety the in work decile well our our company history. busy Despite to these and for region, a and pieces focus challenged position our was of to colleagues our as of business it And safety throughout the financial highlights, success.

billion the respect with almost $XXX cash our free NRG of results, the at year level. of flow we with adjusted financial EBITDA Now, just ended million $X.X to under and

a of its XXXX. Retail in Retail the business delivered every continues light Hats off and year year. business consecutive results to adjusted in growth Generation fourth performed mild our EBITDA team, which million $XXX to with outstanding well of deliver of summer Our EBITDA

approved services over transition to December of to and two slide the and into intended to in this comprehensive be that actions executed our provides in reorganization a years standalone I on and briefly on Bankruptcy entity in Now, On objective need plan NRG to GenOn, portfolio. certainty a is the to describe that to Plan impact in GenOn past Court visibility targets, by of Transformation The XXXX. provided want to addition resulting the GenOn we period. was timing X, the with our a plan resolution our for transition XXXX, during find also our

our We meantime, the this our to improving just and we're Day, will detail in integrated opportunity I'd ways simplifying of greater Analyst highlight but at power like in few a vertically to business. have the an discuss impact

First, roughly focusing one-half XX,XXX by megawatts we over our are reducing business to to Texas our match and our markets better on our business. capacity East core and Retail

It important, continued EBITDA from generation, steady the you XX% And with As accounts we third our to business can earnings. Retail in our XXXX as the the increasingly strong, from see XX% in is business solid customer row on stream back contribution are scaling to continues be a and slide, Retail the increase going will of becoming total machine. our in increases to these increase we our earnings These will given balance And Generation and flow earnings. efficient. the visibility XXXX changes cash free the conversion. and EBITDA cash changes, of has conversion with Retail. stability between more profile, even NRG flow make always a our also of our been better

cash XX% will flow in our conversion XX% unmatched from We over XXXX XXXX, business It in ratio free to improve is industry. a in is our improving. our changing. And

value, the stronger becoming future. portfolio to are and shareholder create We positioned the today into both better leaner, and and rightsizing

improvement, as markets the of highlighted on signs show Now, continued steady slide X. to

chronic regulators stakeholders new-builds, highlighted to years, low extensive have retirements ERCOT the slowdowns of risk the the prices. and Over past and given we several in

are dramatically over the plants of on and left-hand ensure working of provide tightening lowest past per ERCOT summer XXXX proactively in are bills. and dynamics conditions expected, This reserve causing megawatt At average forward and as NRG, summer the market markets price to X.X%. their stark responding are energy with as margin tight ready for months to these customers to at on we're the meet six below margin the the can chart. years you we're entering the manage where to hour the more to of is is the the $XX solutions significant Now, of have all prices the This few a XX.XX%. reserve comparison well market And $XXX only target megawatt these record power past our and to per demand summer, hour. see

broadly, markets to been states for across power competitive markets. persistent action have in Now and across there more calls reform

work perspective. are the to continue and competitive signals markets. markets. the able improve power must We we markets retail the We consume customers At markets positive generation with in are make power of that a retail way in advocate and competitive or momentum from pricing right and state we vocal disrupted level, to see that towards these market and continue sure not access for to regulators the be get generation and a to federal many indications objectives, will customers

to slide update. allocation provide to turning X, capital I want a Now,

ensure existed of knew of our down in debt capital. deliver with first we the market the given ago, balance of to doubt During on have extended We deploying cycle. debt. wanted sheet during XXXX, therefore that in leave strengthening told $X.X nature maturities, we XXXX. any my billion to $X as we our two balance on Since paying robustness that paid first years and our when them I call our and to sheet ability deep cyclical about of our sector, focus roughly beyond CEO you have value no We almost the portfolio billion due most well

we reserve another are debt. Our temporary deleveraging $X identified $X.X to the year. close allocated debt-to-EBITDA achieve of to by and $XXX end of with our asset to sales us on well our of million our And credit to target times help achieve X billion of will cash metrics, net also reduce towards the way billion

top shareholders. pivoting we we capital to returning our As growth evaluate meet now are capital and opportunities priorities, to continue allocation to

on expect million And $XXX sales, to outcome progress $XXX the our immediate share our seeking execute reflective we of closing capital. authorization. we additional asset towards to our value-maximizing for Our buyback million is as our commitment

will review. with it I now the over for that, to Kirk So, financial turn

Kirkland B. Andrews

Thank you, Mauricio.

that generated the growth, on in free adjusted $X.X nearly $XXX of the NRG in to cash at before available $X.XXX flow billion in XXXX, consolidated NRG Turning billion slide cash summary with flow level. million financial EBITDA, XX,

to Energy just million reduction announced $XXX delivered a execution announced and in impairment impact business, was total of charge expect sale of million the I'd million of $XX non-cash to and on across or $X closed Renewables year, the totals approximately to notes. of is Transformation like of address facility XXXX low sales expectations. impact and fuel in related NRG Including corporate commodity billion our total million to Generation savings debt of we south the our in a our Plan line need revised of charge resulted the assets, of our Trading $XXX of rate in with of including a of extending $XX our the goodwill A XXXX corporate and including goodwill These from in which portion EBITDA impairment a on EBITDA, and expense not In approximately the a customer inventory by over cost annual and announced the $X.X continued reach with XXXX, primarily obsolete prices the annual parts only prices, including $XXX expense process refinanced the to $XXX included is to-date fourth consists million. our oil and regular to by balances fixed which from we a for our element South $XXX and today's was non-cash of XXXX sale the interest income Retail inventory billion. For our and the years. quarter growth. redemption Houston. refinancing spare EBITDA, billion, fleet. contributed the impact or forecast combined interest redemptions STP. NRG Yield power or one assets our the certain adjusted results. revising combined to our take interest write-off delivered a eliminated the of cash robust impairment of in due nuclear on fourth XXXX STP, million target, notes million and Project, through XXXX asset write-down The led one-time plant of of loss of Texas million write-down on $XXX excess XXXX XXXX of flows largely we previous Marketing BETM. quarter, the successfully write-down In at Boston That and interest away record unsecured also This X.XX%, in completed maturity remaining fixed reduction reducing statement, notes cash low five $X.X maturities savings on moment nearest a

Turning our before adjusted are to for both ranges XXXX cash reaffirming guidance, and growth. EBITDA we flow free

Plan Our contribution XXXX which unchanged savings and call cost numbers, implied and are based of also from the XXXX month. the from pro businesses last forma are our Transformation reflect retained improvements, and guidance on midpoint margin

$X.XX flow table, shown cash the of from Importantly, results. significant improvement cash row demonstrate businesses, a flow, bottom every flow our XXXX over efficiency financials forma as $X benefits also the the retained cash free in into EBITDA XX% we of our pro as efficiency convert of in versus

in margin bottom noted savings of additional a table, benefits expect of we EBITDA right our as XXXX incremental as the plan, of run savings and cost pro forma portion an the substantial our rate $XXX includes EBITDA Finally, of while we reach the of beyond XXXX million XXXX. recurring by the

portion allocation, highlighted $XXX slide with provided XXXX quarter third since our million our largely in capital excess available and XXXX of million NRG The for finished to to a a a to we year $XXX $XXX blue. allocation, due to summary increase allocations remaining an the of of XXXX. Turning versus from with substantial the financial XX, expenditures and now timing due in million update third increase total quarter is shift of in decrease level available our changes capital commitments increase update. in We capital

total previous NRG guidance, Minnesota as dropdowns result $XXX Wind of million, was party shown of well remaining XXXX our of $XXX distributed which third left as as to flow and a a difference by form First, this increase the to reflects $XX various The of basis million allocations of midpoint the the far chart. update. increased portfolio the the actual cash to for the solar prior available between level NRG Yield. capital sale on our million

restructuring $XX Actual repaid as side, capital by shift draw a to December. the The following NRG's allocated in intercompany by On of to and under part in the lower to due of balance million pension XXXX in of approved million. required capital funded XXXX was will upon emergence expected will actual $XXX uses GenOn which revolver of capital for to consists GenOn the allocated the which XXXX plan from GenOn emergence be XXXX capital GenOn I'll court shortly. review the XXXX, allocation, GenOn contribution be the

Next, NRG's XXXX changes than timing delay due a small And costs with the cost-to-achieve minor were the expectations, reflect XXXX. Plan associated original allocated in in updates exclusively to to Transformation from lower related finally, in actual actual capital remaining to in capital shown The forms the allocation, XXXX now ending right-side of debt for excess $XXX XXXX of year-end the capital basis financing investments. at which balance the slide the million slide and review I'll growth XX. on the our on

XX sources XXXX Our the on expected on the includes ending of flow left capital the page of from cash existing free XXXX. forma plus from million chart pro billion balance, $XXX the $X

$X.X just the of our available the asset leading expect include billion. reflect sale net expected significantly costs by excess of asset of BETM. capital to We of XXXX $X.XXX billion over sales, announced transaction total the to be of closing announced of which XXXX now net proceeds this aggregate total The our proceeds augmented sales

have in debt-to-EBITDA. to I'll comprised basis approximately this And But we and of net $X this a XXXX million just to reduction net the of of debt-to-EBITDA of slide end achieve reserve reduction in of to to billion X sheet. $XXX and at my million to the our allocated ensure times debt to this ratio detail beyond. balance billion on expect review uses the temporary necessary permanent greater billion in ratio achieve expected be times Turning the be over section. XXXX credit $X.X X debt we for is permanent of the capital, target balance reserve $X.X $XXX the we

as million recurring the in of the rate will reflect from not run earlier, However, yet full I the XXXX, our fact full not $XXX mentioned in of in EBITDA the does impact to realize ratio we due XXXX transformation, that part the yet plan.

increasing temporarily XXXX As achieve target are billion such, order we cash in in to by minimum balance the our ratio. $X.X

and reserve be would available ratio our improves expect would that we As this released allocation. future for over time,

the as we immediately. allocated return of towards XXXX capital we're the balance $XXX the which begin XXXX shareholder, $X are million capital rate. of expect which Mauricio to share unchanged Next, versus first repurchases, billion to earlier, Dividends, represent of mentioned of allocating

under $XXX we This to expected the $XXX GenOn contribution, by towards as Turning plan of commitments to amount settlement of XXXX intercompany revolver. consists of capital offset the GenOn, pension expect the XXXX. merge partially million the and in remaining million by repayment the the GenOn

under from the expect to including million the amounts in the investment toward Transformation cost-to-achieve $XXX our of We in delayed capital I XXXX XXXX, mentioned earlier. Plan, allocation completion

dropdown left point project, update the purchase forward the I'll bar as a and expected under of to Finally, Transformation XXXX this remaining excess capital provided XXXX starting with $XXX the XXXX to Beginning X, in and the to which uses option left, this primarily balance asset update chart by and $XXX that we roll pro first reflected forma be a walk start remains right is Based sources reorganization. side GenOn by to slide, from announcement. excess $XXX the million current excess of in XXXX. Canal capital. under on of left XXXX Plan to offset which to July from part or of XXXX summarize we to to consist of of ending as expected allocated million. on for the the revise in the last capital XX, Please Carlsbad the and proceeds allocation, of this briefly investments cumulative excess than more the the plan turn use sale growth million capital on implies slide I'll

of billion pro First, cash. additional basis and free using a $X cash adds XXXX, flow forma XXXX as XXXX our for

flow not pro cash versus additional due toward rate run the savings our XXXX had Transformation from million the reflected Next, is is third XXXX in and run cash $XXX $XXX enhancements in rate bar, of increase the to forma free Plan, the rate, million, cumulative flow. increase of in incremental table flow million XXXX we as incremental the primarily above cash margin shown in million This the cost green which in maintenance the $XX CapEx. $XX

while our million two target, savings the in of million Next, reflects flow take $XXX the by XXXX. of balance for permanent we $XXX year to $XX expected additional XXXX. million reduction corporate we capital bulk XXXX reflect proceeds sales assume asset remaining interest at the cash place end of cash the of allocation of additional cumulative years reflects on toward debt

the based capital on just account market in an capital the And share million $XX final pro uses, earlier, debt billion the about And for on term Gen update implied of I billion the annual to years debt of million XXXX finally, cash years amortization as a billion taking on accounting $X.X pension lower XX% minimis Turning excess which structure XX. capacity aggregate spoke be over our at the of buyback. loan. represents ongoing fund capitalization. current plan. before relatively turning of will million finally, part fund for to ongoing through and commitment our de represents into of which, dividend Midwest slightly of reflects well in We arrive of comparative current forma GenOn to two to course, as allocation, XXXX, buyback balance slide but share the the XXXX over the of is two to portion as of amortization $XX contributions $XX release monetization $X.X reserve, $X.X our repayment add purposes shown on as of purposes rate, brief

reflect divestitures. consolidated targeted debt to pro slide the left First, on and of our in modified this balance forma side debt balance we've clearly more the context

of of by the at is business of PPA. dropdowns debt will Midwest balance by debt Just pro which is be non-recourse repaid $X.X remaining life the Yield debt which associated of closure our The and the forma debt project upon well What debt over as non-recourse balance NRG the of billion amortizes, billion eliminated is $X.X the debt. consolidated this project non-recourse and of transaction, level what treated funded sale NRG at Gen Yield. Renewables ending project capacity to remaining is as XXXX. the of remains Approximately consolidated of for balance of cash the purposes, billion, XX% remains balance Ivanpah the $X.X balance as over monetization flows a accounting is of level which fully debt

the will debt billion further slide, part term in our balance XXXX Transformation Turning the the reduced permanent capital to XXXX the a right loan the of debt amortization corporate $X.XXX in recourse and side be XXXX by and Plan allocation. as of included of reduction

does yet Ivanpah expected EBITDA, the of the ratios, as distributions year. of those $XXX billion XXXX, that EBITDA. entities, non-recourse back in only not consistent earlier previous pro $XXX minimum certain $X.X slide, with balance reserve the subsidiaries, the million savings included other box non-cash expenses Gen, on as, reflect Midwest starts rate For with forma spoke of derive denominator deduct The in well remaining of $XXX allocated Plan I additional cash in impact ratio which from to our the about the bottom cash presentation in assume cash debt. million capital add the slides to with from the Transformation EBITDA our we've beyond implied million excess credit and purposes, XXXX net has included We and the been We full run and opportunities. red at this shown

of EBITDA, revised net for closing of by reduced a target. $X.X debt forma it reserve temporarily with our I'll back the our With ratio to $X.X in X billion balance Mauricio line Our times reflects recourse turn that, cash billion remarks. pro

Mauricio Gutierrez

Kirk. you, Thank

close we comprehensive executing a on this few priorities priority during was as operational Transformation slide it final half objective. to remarks XXXX, financial and year, resolution on a asset objectives priority achieve the the second GenOn, year. announced for And first to XX. of focused our always, for a sales find a bringing in the is our able In were timely and to deliver goals. to year and our Plan on our We're the our Just on

under to with and transition Now, look simplifying conversation so we're services am your company market I a continuing Analyst for confirmation about for company be on of a courts, the forward strategic cycles. standalone thrive stemming company from I thank of we that XXXX. by underwent our important want the time working we focused was an our business XX. plan our to success the may and ready that proud of want for interest strategy GenOn in acknowledge XXXX any of our are positioning a very to I I changes questions. open series our that, ourselves and and greatly on initiatives. September today long-term Sonia, in multiple with on GenOn year prospects at Day your March to you to the NRG. lines And with now by

Operator

you. Thank

Our comes Stephen Morgan from first of Byrd Stanley. question

line now open. Your is

Stephen Calder Byrd

Hi. Good morning.

Mauricio Gutierrez

Good Stephen. morning,

Stephen Calder Byrd

continued Transformation Plan. on Congratulations your progress on

Mauricio Gutierrez

you. Thank

Stephen Calder Byrd

we us tell to I high take the touch do share think Can that moves? positioned We open to summer, megawatts first high to the it's speak Wanted just how for relatively open remaining challenging about optimism know strategy tightening supply-demand of at to position, you level? positioned see of Texas. summertime we for advantage about exact the likely on and your to but the a extent to can price such balance. you're how be prices,

Mauricio Gutierrez

Right.

question answer timeframes. with, I Stephen, So, let me the two guess,

prices pretty then more increase is structural for have first seen The significant in this which perhaps change. we because longer-term, and is of summer, a XXXX, a

very forma are our you're on percentages is as disclosed heat on open pro our business in So, the rate We XX% about positioned. And basis. actually to a for now our going well see, Generation of exposure. Appendix we XXXX, hedge summer

market exist the the that market. from we we're conditions a positioned or standpoint, – Generation So, to – from are in tightening well tightening the benefit

well. as Our Retail well business positioned is

Retail, load and guess, As half fixed our portfolio of about you price. recall, is our we back-to-back I all

expect of should portfolio you are locked So in that the the in. that margins locked completely and half is

that progresses that We in the or perfect we to what as detail fixes on load and steps it I is, have is price, hedges variable their manage load that pricing half and can, load. variable other The pricing. describe we the take

Now, business hedging we Generation longer-term, that tell provided. as pretty XXXX and our you is open, the beyond, on can disclosures have

these will have continue chance changes. not we of half span going Texas to at we least a And new-builds is any year XXXX two to years. benefit a the So, for a since of is – going repricing or have from believe XXXX, and structural to perhaps which in that the market and

structural other market, the in business, will a you new retailers Our the is level Texas there hand, see as of change the Retail appreciate, if in all on this market. pricing

thing – and and So, of in to that And generation well as want any should – little look capitalized, final creates has Retail provide. this to it during perhaps saw prices we better opportunities superior put retail from disadvantage. business, customers then, and that ready all, are it it capitalize expect are the that it opportunity companies to compression positioned. are bit business, that creates Generation say margin vortex actually and having that polar that opportunities we could volatility that for you doesn't retail companies companies in two, our more our first service offsets them and a offsets We move us Number or generation on behind the I you from that expect than will higher that. is

that see as we also an opportunity. So,

Stephen Calder Byrd

given No, that's opportunities, the very about on Shifting generating growth growth fields be of opportunities. that obviously, helpful. think great deployed over to implied excess you cash opportunities? sizeable return of you're a do in relatively fairly just see at? repurchases looking share target-rich today, the your we set stand of stock? is it Or How likely should you're a Is given organic this could own you additional deal where opportunities

Mauricio Gutierrez

retail stock the of question, two, is believe opportunities. those East, the latter mean, our the attractive is $X still I And in business. be number first are likely sector, right the are, return that where the We is say terms opportunity both I we're we're What business returns is we're billion because part on. And in is perhaps the for Retail Generation. in we compelling given of we're if attractive I conditions capital focusing. now, your market that. there which evaluating the a pretty most growing in to our where an Well, opportunities But evaluate organically. need that's the Yeah. than always business Retail continue focusing more keep without we stock are perhaps, the to going will will market in mean, attractive. on and in attractive are mind just Generation our we deploying doubt, that's our where own long And

Stephen Calder Byrd

very you Thank great. much. That's

Mauricio Gutierrez

Thank you, Stephen.

Operator

Thank you.

America Our next question of Dumoulin-Smith Bank Lynch. of Merrill comes from Julien

is now Your open. line

Antoine Aurimond

is This for are Antoine guys. How Julien, you? Hey, actually.

Mauricio Gutierrez

morning. Hey. Good

Antoine Aurimond

Hi. back buyback, the a terms you $X guys a allocation how of To come in beyond the and program think on bit little capital dividend payout recurring about would billion yield?

Mauricio Gutierrez

allocation, it's And have of options capital a returning We that and operating that using it's I financial we one we Yes. deployment capital those earnings to our you. to make mean, think our our couple and articulated out the that need principles want. our level to at just of priorities performing already We when ago. to laid we capital calls have business that sure of shareholders. the I is our

execute I viable hopefully, our complete way repurchases, have We're throughout finish then opted have with the going today a making dividend. are evaluating once but buybacks the to returning start we're metrics, credit of is board the way will the after mean, to But, of stock to portfolio, announcements when thinking to is, shareholders. of or the directors very And year. have our a the and best we capital our and then bucket, it clear given our returning in continue conversation to see that it where to robust to to we right of about what allocation examples asset shareholders. to we or to we initiatives we Now capital capital the a internally share just opportunity return shareholders. with capital sales capital line commitment dividends sight have And demonstrate the very to are and our be growth now, returning that comes repositioning disciplined on on gives to us that the share shareholders And

Antoine Aurimond

and bit million how changed you a the plan terms EBITDA the us has that to more detail then, achieve $XXX on And all? Got you Retail previously laid give it. enhancement out of whether timing at can in you

Mauricio Gutierrez

Yeah.

about enhancement talking right? for margin you're Retail, So, the

Antoine Aurimond

Right.

Mauricio Gutierrez

calls. actually some we're us that our more both further of the provided Plan you or we clarity in million. manage in and we our years, past visibility is Yes. heavily better Analyst $XXX integration is, and optimize achieved In only you Day, – three you our last the and on subsequent investing to Generation plan asset I when tell We if that made manage what about and in how to that business which business in and have helps Retail announced margins. our look of our that one do of $XXX just achieve at terms our platform, provide Retail, and Transformation Retail lot I grew The we million. the the a objective point also by we information have IT channels would the sale

it years, So, what grow we're another in we're next saying three is, going million. $XXX to by the

have specificity we're Elizabeth achievable, to Retail need provide with done about am it mindful colleagues, to responsibles to going particularly of do as We my how the to specificity do a intend provide more about And that businesses, that I do to lot but it. It's and we're we Rob, more very that. before. going I how

Antoine Aurimond

much. you very Thank Great.

Mauricio Gutierrez

Antoine. Thank you,

Operator

Thank you.

comes Gordon Our of next Greg Evercore ISI. question from

Your line open. is now

Greg Gordon

Thanks. Good morning.

Mauricio Gutierrez

Greg. morning, Good Hey.

Greg Gordon

below despite to that range, Can robust. called the you key a Just thing the bit bit down the the that came that The below flow as was non-cash of in fiscal EBITDA guidance that little $XX results. but was clean free of QX on that that year a you being cash quite and in the QX range? I million write-down took out to sort guys attribute up

Kirkland B. Andrews

Yeah. But why the I that's highlighted our to to we of correct. fact Kirk. inventory non-cash, larger EBITDA, that fixed because couple the due we accrual of the statement as of deduct which an as obviously non-cash. for mean Greg, damages which impairments but which depreciation, Carlsbad which roll COGS, obviously, it's – highlighting reasons that's other are through that EBITDA. that's That's and to would charge, one to chose (XX:XX) liquidated go of impairment the potential that other made the delay leave obviously that's non-cash, on we non-recurring of assets, part isn't the get elements normally A just the project. of one-time of through acceleration part I the

contribution is EBITDA. largely the projects main to we that the really of Renewables I better obviously which related if $XX like variances, side, delays Code We want to ZIP lack think some of was still in that overall, COD, had accrual remainder the highlight year had you with. which their you is reaching a started of the end. delays call of sort term, million is one $XX million But consolidated. for towards of it And of really the unexpected the to

Greg Gordon

Right. Two questions. more

the Analyst I that currently you're you're Day. presume million, at some on more to give us allocate On going $XXX-and-change to unallocated. how capital that's the guidance going

allocate of you're us business therefore it's sort back and to a going so of you're so been held how strategy you the And dollars? sense where and those give can focusing

Mauricio Gutierrez

Yes, Greg. the provide that applied allocation today date. what clarity but can capital be I same I mean, some you we're principle going during tell the more applying Day, have we Analyst to we'll is you to

Analyst in the don't we that will capital approach do of you surprises while Day, So, any disciplined expect taking I think we're terms should on the on that allocation. big

Greg Gordon

just a more range. I Great. years, little the market It's to direct. quite over guidance dynamics in bit think be gave in of alluded the Byrd and been forward last to And early to significantly you since curves a too terms the improved ranges excited have mistake hindsight and my earlier, power in question, always them. year too guidance Stephen get changing But this

us to or So, get you've hold would want and the the early too be any sense it whether to Where don't you of given sort portfolio, of, forward is remainder you were in the year? the how you curves guidance within too these can hedged year the range of just for levels give at it? up excited about

Mauricio Gutierrez

of appendix. summer. portfolio on we're you we for disclosures provided going cash how are that why XX% all, can first the mean, we're That's about tell reaffirming we heat for And I on we're we I with total exposure. the positioning as not very Number you specifically comfortable to have it. two, guidance Well, today. roughly the tell, we mean, provided ourselves the our rate are you open

closely So, the in managing is team, and very commercial Chris the summer. the position Moser

have Retail – pretty the Generation needs needs of to terms with that a line has integrations further you. potential have But business stand that in the of the have very we very, guidance we any and we on Now, impact today, it. Retail, business sight mitigate good just our our between with where I the position that feel provided to of I comfortable and

Greg Gordon

great Okay. Thank you, a Have guys. morning.

Kirkland B. Andrews

Thanks.

Mauricio Gutierrez

Greg. you, Thank

Operator

next Thank question And Wolfe our of Steve you. Research. Fleishman from comes

now is line open. Your

Steve Fleishman

Yeah. Good Hi. morning.

Mauricio Gutierrez

Steve. morning, Good Hey.

Steve Fleishman

Hey, Mauricio.

So this out but the continued cost just the – do give cutting the enhancement margin benefits you in the and just, XXXX. to I past, know the asked I've of

other off of kind XXXX, about flattish Just a that, fair there's any being kind in guidance business, XXXX. it fair excluding but – it of we've is or do, moving the know talked that there of base a base still assume the and to of I lot drivers? on thing in parts, Is the past,

Kirkland B. Andrews

that which confidence of that side, you of the that our I an Kirk. roll-forward reaffirm you. to Transformation trajectory that the feel Steve. provided we as the the already for yes, sort informed Transformation the aspect of mean, I comfortable what is Yeah, underpinnings with the million. Plan anchor setting walk using It's in referenced base to Plan, business, on-to-come of sort But obviously, $XXX

outlook perspective consistent beyond with Our yes. is over XXXX, that long-term the

Steve Fleishman

and of then And Could the et in event great. peak. spiky is the periods, there you about to question at specific Okay, talk your really on days, protecting one summer peak high-volume terms pricing? match ERCOT more summer generation-to-load cetera, in

Chris Moser

I Hey, way. would Chris here. it think this of Moser Steve.

With flexibility, see. to in we're situation, and the up yet. and and in situation as a price, Retail out high-price in And they load we're on-peak be there should covering that beyond, have margin, protecting going extreme the some Retail into we're in situation. should haven't that hour us XXXX just set mind, some going hours bleed on extreme depend XXXX, the an that's an given forwards. hour through is going the to high-load, sold perform fine good up in the pretty hedging If is of in come Retail any load, where area opportunities integrated the But carry-forward where extreme unit's keep actuals out pricing If in units limit final of give random the retains in the and which that up – to and position portfolio, to given that XXX extreme how given length upside lot it everything price so. ends a that's it's

good So, I now. in feel pretty we're right like a shape

Steve Fleishman

for Okay. not whether you're to something just to to main One the that rating might Analyst a look you question, investment-grade priority about your metrics thinking in want peer a and really or you on? but that Is credit want that this last they talked little may Day, future. at bit leave about, or to is the focused company all,

Kirkland B. Andrews

access focused of on in ratio reliability I I Kirk. that. towards will. last prior call, I improvements as not you cost to it's reasonably are say call from mean, capital ratings even of capital ratio, cycle. I the we set the think credit one leg to Yeah. scale, with BB we confidence the of credit importantly, objectives that sheet a of the we of said certainly and on we balance striking Not maybe in of it. right the market you primarily mean, Steve, maintaining a ZIP the as equity think in and a on the something the certainly, don't aspire do if as our hand sort look continue comfortable in our right to feel But between to the maybe up shareholders sort return the it. at access had, the code and managing forget priced the I balance even look our we to That's most through risk it and delivering other,

the robust the obviously fact it in months that Act. see, not the tax is by limited of the as ago virtue Reform but few Tax to, today shield of not continue We those including, quite as what review a context we was to

BB I constant that's but focus. target. primary So to We're not with that's suffice think comfortable review, a in our say,

Steve Fleishman

Great.

Mauricio Gutierrez

just Steve, have been let very me add that about we priorities. our And, clear

We reevaluate. priorities are focus execution. delivered to on towards mentioned, Those and we're those of on once made, execute we that will I Kirk that That's now now, But are we've now clear right have on we priorities right to mean, executing communicated very you. then all is those for And commitments as demonstrated that we've them. our have our priorities.

Steve Fleishman

Thank you.

Mauricio Gutierrez

Thank Steve. you,

Operator

Guggenheim. our And Pourreza Shar of from next you. question comes Thank

now line Your open. is

Shahriar Pourreza

Hey, guys. morning. Good

Mauricio Gutierrez

Hey. Good Shar. morning,

Shahriar Pourreza

ratio my of longevity a this most sort answered, assuming quick just dividend just given you to growing of dividend? the capital on buy to like low looking cash potentially a to we you back this think why if of it profile removing questions it keep the dividend and of the you're economic going dividend, it's in token such at shares, maintain higher about what that decide think payout and altogether? about you or but as level? more sort retain either Should returning your dividend? enact follow-up. as So So sort token policy were maybe Is is, why a and there of So flow sort

Mauricio Gutierrez

a the appreciate, have we allocation And the going about around good actually prospects our No, as going – you importantly, And of you have having talking we're program, Shar. we're to long-term that that strategy to has. in be internally been that. observation, can but our long-term conversations more in basis and is capital company a to comprehensive context

more something into So, Analyst going getting that to be at is we're this Day. the detail

Shahriar Pourreza

ratings, that's noticeably targets, Kirk, quick leverage on do Okay. of like of real have that. sort just you shooting me – let a helpful. your And then, follow-up peer outside and That's below

GenCos got the You've certainly utility integrated leaner. are that

turns an that tighter that have industries of outside a optimal especially really ratings, Is have You to of without going have cyclical X and metrics. left other eventually, industry, you're kind given sector, should optimal, message project evolve? investors? to thought your industries process X to turns as Is is cyclical So, benchmark this optimal? sort still what with you it or other yourself of is

Kirkland B. Andrews

what response X reaffirming the talked target. cash about past the Well, to end are striking cash of about is in everything right in things beyond comfortable else context some flow and and I that said matters avoid the question, us I've informs our to times balance we Steve's what to a And And thinking repeating what at Mauricio the translate of ability translating, of reiterated big I knock-on in efficiently with every or the pleased free that Transformation EBITDA both effect means the flow. again the day. $X.XX $X more and we're our legging how what doing we to are Plan makes to towards difference. in of And two-thirds

at financial that's somebody where is $X informs our if of converting terms rules a EBITDA because comparing ignore the worth X distinction is repeating. they're else's on is to a times net while ratio, a $X.XX, that I statistic, every I'm apples-to-apples And in important calibration flow, I cash And on day thinking. to I'm cash not So, think, but nice debt-to-EBITDA think $X.XX flexibility. certainly it converting that factor

Shahriar Pourreza

Okay. That's plan on Congrats, helpful. far. guys, on the so executing

Mauricio Gutierrez

you, Thank Shar. Okay.

Operator

comes next our from Storozynski And you. Thank Macquarie. of Angie question

I to to back changes you. of to sensitivity Your Thank Angie - Macquarie in go open. rates. wanted the (USA), Storozynski is earnings Inc. line now Capital heat

– move And the So, pretty margins, showed financial rates I when I call. seems us, during the look actually, at of slide earnings you the Texas. the XX, had in meaningful it during heat you where quarter your a Texas largely show unchanged business, especially you for third sensitivity in versus think, what update

this year, is So, at sensitivity? versus the that the levels for the sensitivity end versus basis the What guidance? the current is of the

Chris Moser

that I heat Angie sensitivity, - believe of – This Yes. as is Texas are XXXX? this week Chris, (USA), rate $XX you million at is Capital Angie. Storozynski Macquarie the Inc. that looking

Chris Moser

(USA), from million Inc. looking spot. it That's what of what Yeah, think Macquarie Angie you're a at? as - $XX Capital Storozynski higher arguably is

Okay.

Mauricio Gutierrez

hedge assets selling, mention or me it's so business. And, that think LaGen to out you just – this the of some were disclosures, think we I the about let previous particularly in portfolios comparing disclosure, new I against pulled important Angie, talking because that we're

disclosures working that is new this new Angie want just And that that does Macquarie piece apples-to-apples. looking you're Capital for I – team with are information, disclosures to include you're sale as hedge make I So, the disclosure at businesses previous sure guess important Angie. too, - with you, Inc. believe Storozynski that's important that's not an the held But (USA), now. I of an comparing

nothing assets Okay. Texas being in Texas, But right? Generation are sold mean, there's intact. I

that So you're the... saying

Chris Moser

(USA), Angie can... Inc. - Angie, Storozynski we Capital Macquarie

Okay.

Chris Moser

Central heat earnings $XX Storozynski the Texas let we one me of – make you the quarter you Macquarie Inc. like. – only. million looking rate you is - for if million the where off at front this But I sensitivity in third sure have is can Angie the XXXX $XX South and am just Texas and the We can presentation that call, with run (USA), Capital down

Okay. Thank you.

Chris Moser

Okay.

Mauricio Gutierrez

Angie. you, Thank

Operator

Thank you. And more have we question. one time for

comes final line the Abe from Our question Azar Bank. of with Deutsche

now Your line open. is

Abe C. Azar

Congratulations. morning. Good

Mauricio Gutierrez

Abe. you, Thank

Abe C. Azar

you liquidity potentially profile, Just there's your more improvement on else? or I following up hedge in you recent your reflection or something of for that next remain this is in this a years. Is the being more than forward open year view remember curves

Chris Moser

and kind a pro give the you if given XXXX, the gas. a previous the two against pretty pull given that of situation, of is, slightly at Central looking rest out number, in about it look goes quarters, contracts, XXXX looking short hedged Central that XX% – look would a of at looking take, talking in co-op It's a we But things itself that. you're they we're Texas you're just position at the less bit forma And was it's that what it'll XXXX, little And XXXX, you Angie Central XX% were XQ or hedged. back if if has just XX%. South No. to about for now I kind XQ have it Texas when South by or the South of and to at big at had and included

of the or the pulled XXXX numbers XXXX, tough, were on South and of Central the XXXX take, So, rough QX we to on that apples-to-apples out number. looks where Unfortunately, aren't apples-to-apples give being basis. pretty because an similar QX

Mauricio Gutierrez

We it's in accelerate or were expecting chronic to Yeah. a Texas. that down ourselves prices retirements going that we that knew I experienced to slow were But market six fair we tightening positioned new-builds. the say over We think years correctly.

will our ratios strategy we have And commodity in our strategy benefits past. portfolio. the be think – we just Retail. our manage the hedging opportunistic will that balance that now, execute on yield. mindful see on way our in the we the And price We're our I we on and synergies our based credit also Generation have matching exist to sheet. We between and executed

strategic hedging our of program. legs three the are these So,

We are and reprices execute not the that the we from will year or accordingly. should itself expect And progresses think as re-rates deviating I itself market you that.

Abe C. Azar

And month. you will at that's I all. Great. the the see end of

Mauricio Gutierrez

Thank great. Abe. you, Okay,

Operator

the to conclude you. turn Thank I this closing call over does like for back session. And now Gutierrez question-and-answer any our Mauricio to would remarks.

Mauricio Gutierrez

in our of our portfolio have end And your very to Thank excited I and month. you NRG. again you Great. changes Sonia, all about interest made Thank We're talking you, to at the of and thank in business. the the you. look that we for forward

Operator

gentlemen, you and program. concludes thank today's Ladies today's in This for conference. participating

You great may have Everyone, day. all a disconnect.

NRG Energy (NRG) 1 Mar 182017 Q4 Earnings call transcript