NRG - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to NRG Energy Inc.'s Second Quarter 2018 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 provided at that time. And as a reminder, this conference is being recorded for replay purposes. I'd now like to turn the conference over to Kevin Cole, Head of Investor Relations, please go ahead.

Kevin L. Cole

Great. James. you, Thank welcome call. and Energy's quarter second Good to earnings XXXX morning NRG This in webcast, XX being be under section morning's will call at website minutes located the over www.nrg.com phone of our be and broadcast the length and can via Webcasts. which Presentations in Investors live is and

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

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

NRG's call our to information with reconciliations directly most that, the And please measures turn today's GAAP financial measures, I'll the For to comparable refer Gutierrez, now, CEO. and Mauricio to non-GAAP President regarding and presentation. over

Mauricio Gutierrez

morning, Good in NRG. you everyone, Kevin. you, for Thank thank and your interest

X. Mass for the me morning quarter we key Retail Elizabeth Chris questions, and the available on have second Andrews, slide with our is call our Kirk the Chief Head Moser, Joining like messages and this Operations. to business; I'd also, Financial on Officer. Head And Killinger, start of for of

same with earnings period the Our business last XX% up quarter performed from exceptionally during the year. well

hit Transformation on progress Plan track are and excellent on targets. initiatives making are all we our We to

so the the rest our particularly results summer Finally, generation summer pleased is and beyond. the we are for Texas. during demonstrating retail the I of volatile positioned and well with confident in I months, our again far, very am value of am between once integration and portfolio

moving now on of to the slide highlights quarter the on So, X.

of As the higher in second million impact you additional quarter, impact on will color loads, our EBITDA of results realized side during Kirk on by primarily can $XXX cost-savings. retail higher accretive delivered credit we the left-hand and Texas, slide, see our of provide metrics. on and the the prices the driven

For has the first we warmest year, on the business of will volatile guidance $X well, and months XXXX practice, with update range guidance quarter our XXXX to half still our historically been most of us, third our of initiate performed the has call. $X.X the ahead are billion And our as but XXXX maintaining EBITDA billion. guidance we exceptionally and

repurchased quarter, completed $XX.XX million price an per also share XX share. the million which at in almost we first buyback of During $XXX our average we shares

execute capital shareholder close we returning the also in settlement final to commitment NRG to made track Our to continues our are continues, either bankruptcy or of forward we XX, from we have Renewables second on share exit South the August X I And on a GenOn. Central associated year. In terminate on to on on will GenOn, $XXX towards our million progress October portfolio. services. we highlight to want and and following buyback which July, this which executed move planning is shared received of GenOn resolution. releases we Yield

our Transformation slide our Plan, on scorecard see X. you progress significant making also by on which can are We

well and removed placing through bringing to us million we an additional on $XXX million end to savings of the quarter, achieving our the path target. the of During XXXX June costs, $XXX our

progress enhancement We our also continue to margin make on program.

enhancement our second cost efforts XXXX and in remain plan the really Both on scorecard track our ramping full XXXX. the during see with XXXX and to targets. the of You their up margin current program results year our will on of this results half of savings for begin and

the closed while asset We reaching know, to Conemaugh. Boston a sell the our an sale additional interest XXXX were assets on actually agreement for had timeline this and two to in BETM asset, remain assets, you focus We organization. ahead key in As sales Keystone Energy anticipated these of of assets our and Town monetize or and to able we Trading schedule. and selling execute on opportunity Spanish the accelerate but these Marketing

Our NRG along is well. Yield process very sales moving

the regulatory necessary finalizing We and approvals have consents. received all are

of the portfolio and a we second every sale transaction will bring making this possible this making in to half expect continue are and close. close South make as attempt year. are as third-quarter also to Central to that of is swiftly to conclusion this We our The hard progress, working good this

Although many on many, the in tightest been the middle summer has are I you to is it Texas, supply/demand as on of the X. integrated in model slide wanted in years. of a our update ERCOT you all provide we know, balance the positioning brief And

Following the This the in past higher growth. this an probability forward scarcity months tightening to and of load X steady summer, retirement nearly XX increased conditions was which prices. of led in gigawatts market reflected

has setting a new not disappointed, record July. in demand peak XX gigawatts far, of So over

the which on nearly real-time it can In slide. record you was across side this to equally met see summer took demand. meet the impressive grid, reliability pricing However, load system-wide with left-hand reliability the of words, peak temper perfect other the as

during fleet extensive going commend recordable Now, our preparation well results recent into this the I driven perform teams heat like to planning operational would exceedingly we having for excellent by our generation no put and injuries during this wave. summer. achieving the and period,

This leveraging to the saw of XXXX customers conditions term integrated business. increases. exactly (XX:XX:XX) our our of executed majority proactively summers tight to took manage is our stability XXXX. attractive opportunities took with to period the bills. of prices generation predictability their and and help that at ensure helping created in power We included longer for also supply price These advantage cost higher earnings. also the our of and the This ensure approach manage hedges Texas retail We levels market measures of the

off-peak months with I increase with as in strength this showcased to and businesses complementary has took the model proxy predictability our that of earnings. of also mean, years. gas hedge far power periods We same integrated our summer for those the so the shoulder natural opportunity our a

halfway As still summer and I we're months said of before, historically, through are only us. more the the volatile ahead

focused organization all we at successful ensuring NRG on the So, remain summer. a across

and this term X. outlook outlook strong. Now, very with moving ERCOT fundamentals the ERCOT market to Much longer summer, remain our on starting slide like for

very growing and the X% a and year. continues on see to we on chart, loads grow This soon. at weather-normalized expect to you can anytime As left-hand remain a per change dynamic basis, is total robust don't

anywhere dynamic between in to We near project prices also term. given anticipate to five remain of the new delays to don't that And continue new build below change also three forward this generation years. economics, see we

the bottom as highlight So, slide. greater and and business for you right-hand an on our system expect as conditions works future, probability to stay tight of the opportunity ERCOT of the side our These longer-term line, scarcity balance. in we can pricing in the sides reserve approach, and both margins the higher volatility see integrated value of foreseeable of with for create

loads predictability a to position opportunities us while opportunity generation And allows retention players in levels. our generation invest on market take competitors. scalable of to business Also, is engine. in prices fleet achieve our acquisition to of Increasing greater an mitigate volatility our benefits volatility prices due at portfolio customers and business. opportunities a higher with for the higher means to the share hedged and our integration market the other from increase retail to attractive from earnings, customer the higher to new relative hedge reliability, stronger the potential business impact increased retail and in Our with other creates

less X. builds Now, past development the its held planning East May. results the capacity, year this onto and amounts for signaling on behavior. bidding The more reflected unclear slide capacity auction significant disciplined PJM new and of XXXX-XXXX

can higher basis, cleared on see previous side left-hand a than megawatts the auction. on slide, the the As at prices of same-store NRG more you

at fleet we the premium on We which, will once reform Throughout the maintaining multiple benefit businesses. megawatt East, regulatory a could to assets market day. optimize PJM and zone, of we again, by encouraged that continue the our avenues have per for to are the clear ComEd we $XXX retail now both As our in price separated focus locations. XX% our of fleet, in premium generation

committed wants to is by protecting out example, subsidized us PJM's putting FERC the FERC. clear generation. to of capacity into resources For on subsidized of true of generation. market coming a FERC reflected impact that recently a pro-competitive price all clear and cost against floor This It's strong state-driven the see position the to market

price in FERC FRR, the We possibility these on the requested and As its fix it formation, rejected Fixed to This generation confident and to remain this impact the we're perhaps the its FERC. as this out and We principles process, will on also carving part does referred idea with is units consistent spirit of PJM recent matter negatively engaging both forward actively or FERC that single issue orders believe act the ruling. That for details additional pro-market from and FERC's market low the comments in Requirement the market. Resource said, with counter not of entirety. communicated that of out to or of either and FRR. taking comments is looking of to ensure the requests subsidized

it So, our Kirk for over summary. will that, with financial I to turn

Kirkland B. Andrews

Mauricio. you, Thank

find the to slide first on Turning financial summary XX. you'll

NRG is For year. EBITDA, quarter, prior $XXX increase adjusted XX% which the in the over second million delivered a

for were continue nearly prices as primarily its And by in and half $X.X the improvement Plan. of billion in hit Our cost Transformation enhanced our delivered to of now cost driven strong EBITDA we beginning the first results has retail across our by year, power and program organization on Texas is only the reductions second NRG further load adjusted quarter the progress stride. the impact higher and

and more margin update $X.XX the targets. these that cash from And to $X.XX first our are note enhancements, the with half will midpoint third time, pleased million billion our very of expectations quarter our with $XXX XXXX, At for and robust our for in which the XXXX, the our XXXX in range. cost free strength, currently XXXX guidance on targets these plays year, however ranges guidance will billion billion expected above ERCOT call. we're maintaining initiatives our outlook for ranges provide $X.X EBITDA nearly summer and results show we'll to narrow EBITDA flow. in prices of and in additional will nonetheless balance results, XXXX for versus I also guidance savings our we that include impact of well these in with $X we Although year-to-date continued billion to combined to the of

in mentioned of focused also our one launch Mauricio a two share we'll XX.X million average repurchase program asset large closing the be of the the first and Renewables program sale is sale which price second that quarter. buyback we've NRG and on earlier, completed half repurchased transactions $X As remain transactions, to with share – phase $X of shares later to of $XX.XX. close, billion Yield this following of likely at our these highly two billion price We

as we mark retire During of By the debt quarter, $XXX to-date million free notes $XX XXXX of NRG's repurchasing convertible the and unchanged, completed nearest savings, shorter-dated notes, of issuance aggregate unsecured the we've varying coupon higher-coupon X.XX%. associated notice an also refinancing expect recently flow of issuance. have balance notes, million of augmenting note in this with maturities of provided $XX senior we million annual and further will already maturities. the unsecured our repurchase and senior amount million equivalent the new completion cash notes with interest maturities, which a To of end, approximately to $XXX senior NRG repurchased the be in second we will convertible

this take As also set Restructuring NRG net-debt-to-EBITDA settlement this the items emergence. million Support complete And $XXX the on place payment the a reduction, our successfully to times of revolver, reminder, at we target of which the finally, Agreement, portion including the we quarter, settlement were year previously which by achieve we've forth significant later in which intercompany GenOn, ratio. million the X targeted GenOn by $XXX original with closed in to a accelerated expect expected debt of to repayment order and

is the the bankruptcy in the behind and bankruptcy advanced financial with efforts, fourth GenOn commitments GenOn us its associated well emergence now quarter. With from GenOn in an largely (XX:XX:XX) targeting early

I'd our Next, to find a to like summary, take XX. which financial pro moments on slide update few you'll forma

provides and and the on as the summary a a selling XXXX view and a free retained consolidated As businesses businesses, our of part flow is contribution midpoint net for based assets we this of any cash of reminder, guidance Transformation Plan. are EBITDA XXXX from of

pro forma side the under we earnings our the on On forma, XXXX call. with of last left we heading, summary prior start slide the provided the pro

events Next, two gave pro to our the view. rise forma need second-quarter to adjust

restructuring amendment the Ivanpah. of change project's second the the of Ivanpah for First, project some in governing documents the a accounting treatment the resulted the quarter and of non-recourse debt; during in

forma. NRG's as stake a of pro EBITDA, As second NRG's elimination midpoint partner's leaving contribution EBITDA but million. deconsolidation $XX is was On is our of from the of reflecting Ivanpah's consolidated XX% Ivanpah result, no EBITDA Ivanpah only of the The will approximately impact basis, equity a appear statements of of to quarter, in our the an in share financial $XXX approximately revised fully as longer million consolidated investment. our XX% range Ivanpah,

the non-recourse no from adjusted appear NRG's the aside total $X.X approximately balance debt income Ivanpah's statement consolidated on impact and longer billion of Importantly, EBITDA, of will sheet.

flow on is XXXX partial the of this Turning EBITDA to of results to second closing Ivanpah's the increase from remains in result, reflected XOOM and, XOOM pro is to the while expected pro the result, $XX million is as annualized of a and, EBITDA for of deconsolidation EBITDA. adjusted XOOM The the EBITDA of annualized from $X.X EBITDA forma addition forma limited for revised portion actual as EBITDA XOOM EBITDA our $XX by total now our for for pro basis from retail $X.XX for the free The a EBITDA EBITDA billion. adjustment Transformation XOOM XOOM impact XXXX on the contribution XXXX will pro Of our the as an a of free And guidance, the adjustment year. cash only midpoint of the half the forma year, and flow the noted note, billion. be Ivanpah are consolidated with we a adding which targets. is forma our of impact before deconsolidation finally, to acquisition, are the I've offset Plan cash the number reflecting previously, forma annualized to forma approximately view, second pro million growth, our includes which our based is pro of

free as $XXX targets. million we annual Plan of EBITDA cash XXXX reaches flow Transformation expect XXXX, by additional adjusted final and Beyond an the its

Turning capital allocation. a very XXXX XX on to brief for slide update

is The Our most from largely to capital XXXX by our has million outlay available GenOn aspects capital exception for as well the on bankruptcy, our capital financial committed allocation of as $XX items are unchanged now settled the been front only GenOn million. reduced the previous the $XXX having of update.

million, annual half associated the in GenOn $XX box be only shown year. dotted approximately with take which which remains will the settlement, this allocation below the chart, item is the to paid, our As second the of in contribution capital place of pension

as sales capital committed not right, in shown unallocated $XXX reduction the million, million has our previously both $XX in in by asset towards until the approximately $XX to of from resulting GenOn, allocated. in of be XXXX, proceeds XXXX occur capital, the remaining result on to smaller far a receipt remaining increased capital As XXXX approximately million expected as well

to unchanged based smaller of reviewed deconsolidation. disclosure. the EBITDA. XXXX our is EBITDA, on our our now walk debt calculation XXXX well we've as This pro which on net forma the pro Finally, XXXX Ivanpah forma is I is ratio, to adjustment to and calculation The for EBITDA as on based slideXX, impact the provided earlier, pro revised from previous again all largely forma due

previously cash and $X again net as made EBITDA to maintaining billion available to from by initiatives, while for our beyond XXXX free in times capital the the us this up XXXX, additional are key operations a balance established we reminder, provide picture debt this coverage additional achieve debt-to-EBITDA from cash more two cash well temporarily in order the be with Transformation you X a of cash expect net to we're X updates, times exclusively strength important interest of Having metrics: that as allocation EBITDA, and beyond cash credit sheet quarter, Plan Transformation providing complete net credit focused this times ratio. allows Plan net XXXX adjusted to to reserving profile. in on our we X ratio ratio debt, also the just As debt-to-EBITDA these in still over the as XXXX, will

these to we platform, his by integrated turn earn rating strength this back simplified credit With execution and believe that, company, have resiliency BB-rated a the to with consistent remain our of opportunity of reflect rating. metrics. fully sheet, continuing strength it I'll our supported closing demonstrate we I Although not for to the improved and the balance Mauricio credit improve And remarks. and does

Mauricio Gutierrez

you, Thank Kirk.

to few our and Turning expectations. provide on slide XX, to you I a with want closing thoughts XXXX priorities

to remaining under We operational targets continue results cost solid our on Plan. deliver track financial Transformation with our margin all and of while and

as for platform summer designed the integrated well-positioned market is future. through the and in volatile working remains Our months conditions tight

winning clarity of our updating the sales and focus. second I providing announced asset you our to our closing most you our summer said, on I move capital the and on the half look forward we year. into progress as location As on more is immediate

for ready for to your with I we're time open So, thank James, that, want in line and the NRG. questions. to you interest now

Operator

Yes, sir.

will of America from with line Lynch. question the of Bank first come Merrill Our Julien Dumoulin-Smith

Your line is open. now

Julien Dumoulin-Smith

are How you? Good Hey. morning.

Mauricio Gutierrez

morning, Julien. Good Good.

Julien Dumoulin-Smith

Hey.

progress. here I to follow sale up on So, wanted the asset

bit a of clarity. Just wanted to get little

about on call, how think stuff? quarter next And do respect set be larger to capital Have with expect respect on to to kind execution to provide round some potentially the potentially you balance, of you of the allocation, the that to you of expedited the with sales, of smaller asset separately, today. have what's basis the these you portfolio? to close the commitment prior But seeing the transactions? the opting some yet you balance hold Obviously, Keystone/Conemaugh then, a to would to the announced level? third the and of of the announced? smaller And an stuff buybacks are First, timeline next that reviewed

Mauricio Gutierrez

Yes, Julien.

either our So the once one. to we're Yield, the next the with going $XXX Renewables first share start close or launch let – of buyback I million portfolio. next of on round mean, me South Central we

the that investors know will you third about respect our sales, question With evaluation be the we will But know. on the if in transactions. right your move of will update and we're happens balance as quarter So, these the asset the is as evaluating to remaining the that going end you And to close another all the for focus call, go towards just into this before asset closing. year, to second be the shifting other through keep providing I is done mean, we and team our of year. mind, now, two gears now

closing we Now, going we're sales right mean, from opportunity completely now we to XXXX did the some South see that we do and XXXX, in Central. that asset with accelerated like Renewables to resources to all as just I make want if have we can sure, an you and But are of the tell, Yield focused I it.

Julien Dumoulin-Smith

period this customers just sort does this forward? the of quarter? Understood. and obviously you I how attrition it resiliency stand curious. adding did in at of then alluded bit but talk mean, retail, the what of the August, I'm it. kind through you point? about little secondly, you Got think going actually to You prepared where do in today can And remarks, a Are in kind more about on you

Mauricio Gutierrez

Yeah.

loads also second temperatures. start phenomenal the well. our for We Solutions me load that saying a basically retail one had by XOOM Business in had added quarter. quarter warmer-than-normal That month. in mind So, also that Keep and let usage. pushed we And performed

some I quarter mean, was the But for a it with around attrition respect So, of to good retail. questions. Elizabeth, all

Elizabeth R. Killinger

tell Sure. Thank our largely by by you can XX%, over actually saw, results, XOOM. counts up you, Julien. as We driven customer

to pressure attrition retention say, but steady both the I and with what is little nothing ordinary I through There's of retention and really We're and or pleased and out engine call fourth pretty a the strong quarter the performance. looking that, are would acquisition have bit We as a the quarter third forward would unexpected. second of well. performance of

Julien Dumoulin-Smith

side. with retail the that track on targets the delineated line, on you previously Bottom

Elizabeth R. Killinger

Yes, sir.

Julien Dumoulin-Smith

Excellent. Thank you, all.

Mauricio Gutierrez

Julien. you, Thank

Operator

you. Thank

Our from question Gordon comes Greg Evercore. with next

open. now is line Your

Greg Gordon

Thanks. Good on good Congratulations morning. a quarter.

Mauricio Gutierrez

morning, Thank Greg. you. Good

Greg Gordon

I'd debate So, your there's of hear a perspective in that on. bit a like Mauricio, the to market,

one long-term volatility not the disconcerting hand, and, those lack volatility really, On been hand, this the has the that to investors load has market despite to your there. validate Texas high who other solid of of your thought really outlook. do on really actually that may to margins what promulgated you allowed profit print levels some summer thesis power and strong in But the high of on of market have the been the some or volatility on lack levels the would continue actually, stable massive may hedging relative you to upside maybe view

a perspective, potentially on cycle? now of conditions the would from have put you a stress that business rather and massive see, more or entry So, faster you volatility new business bring the levels what

Mauricio Gutierrez

in real. was is see mean, most in you very you'll which to even pleased the that a look XX.X to July, the I record Yes. I – encouraging. the was is that need Texas. fundamentals very new is I at weather, not the demand extreme month what setting Well, gigawatts this normally peak of And summer first think see is

think hasn't when ERCOT, (XX:XX:XX) about and And the changed. future. validated this for you the has here summer it actually, foreseeable that picture supply/demand of So, it's exist, the that the timings fundamental

had I just I in of also very to with, met perfect have expected, they remarkable. very to perfect say demand that normal. One wind look like outages and performed, strong degree. said, were I performance, but a that few things. was And summer by as mean, demand, that this when peak a close a strong (XX:XX:XX), you at saw I a quite is just I the performance think we there what mean, forced you combination was

want of you don't is I of yeah, from below have what were obviously, people they see we necessarily type years They were not below generation like none We strong structure combination. on where and a fundamentals also, shading people I a one prices too market that we extremes retail good guess, pricing past have And to are a low expecting. that and have perspective, clearing want both don't to in But the frustrated market market So, a were doesn't see Texas, ERCOT. the couple perfect two market that a low, our and of perhaps necessarily leads for situation, so were that a so, to and that that's are low, my what the the want that reflect when good very we have situation but franchise. the been of scarcity fundamentals expecting. this has those you we over mean, has in why really real-time is

integrated of generation the franchise Our and is somewhere in middle. retail

the are future. but the foreseeable they've you prices, So, important going prices market. be is thing incredibly the to strong. I most And the that the rising, fundamentals see they the are where economics. I point incentivized Texas of for forward new-build And reflect mean, look I if not they're at even from fundamentals strong the that mean, very at in are been it,

was on continues that we strong. to Demand, very just generation. delay be saw So, new supply it

is a well-functioning, of that not that mean, is extremes. either to side bouncing see want I I market on the So,

Greg Gordon

and in till QX of inside wait Great. the are you. position is the you're the rest a Thank card, now too And of a us summer to trending guidance tighten to outlook? just where tell you rather year-to-date? much range wild the you Or

Kirkland B. Andrews

our I just current I Greg, us question. the I'd our of gave that of well for range. outlook it's year little the in year-to-date, places balance guidance anticipated the midpoint my that repeat, a to And you actually performance the above Kirk. of combined is said, what current bit with remarks.

(XX:XX:XX). So,

Greg Gordon

I if that. missed Sorry Apologies.

Kirkland B. Andrews

okay. okay. That's It's

Greg Gordon

just you EBITDA I customer And transactions to on give they that or some a those, were couple call the details or were too in then, small out? also can multiples just I counts more there saw quarter us retail – small to on

Mauricio Gutierrez

mean, books. mean, Yes, opportunities. terms of normal Greg. effective I have actually she's of engine we very just We course Elizabeth I identifying and these business. is in the this buy an in

is they of So, a are always retail This like books We're we and representative XOOM. course think transaction a looking I that's what add just normal business, that of to wouldn't were. business. even for our that they can

Greg Gordon

Take Okay. care. Thank you, guys.

Kirkland B. Andrews

Thanks, Greg.

Mauricio Gutierrez

Thank you.

Operator

you. Thank

Our with Azar Deutsche next from question comes Abe Bank.

is open. line Your now

Abe C. Azar

across morning board. congratulations the on solid Good progress and

Mauricio Gutierrez

you, Thank Abe. Good morning.

Abe C. Azar

get curves buybacks the And closer the best have forward hedging above cash the years on you or your over couple Based share stock there Thanks. changed value? allocation and capital are could next on fair today, way to your to high the the at billion? that I all, be mean, more available, thoughts $X.X then, do and confident remain

Mauricio Gutierrez

thoughts we're stock our stock. allocation given going me there is, matter, than And And the let today, providing that earnings going see don't going our that principles. adhere saying price by we're on and attractive is own any I just our our to Well, of to guidance I third capital to as the Yes. be call, for be deployment, continue for My which quarter buybacks capital strictly not other to think start share same. investment all we're (XX:XX:XX) front-run that more XXXX. to compelling where

focusing So, be that's on. we're until that fair that assume it's to think where changes, to going I

Abe C. Azar

XXXX? Texas, little view you particularly bit with your your then, discuss to how prices, can and you Great. a fundamental of strategy hedging balance gears shifting margin And in the reserve

Mauricio Gutierrez

Moser? Sure. Chris

Chris Moser

This Abe. Yeah. Yeah. is Chris. Good morning,

take. on was compared where balance where XX we're good XXXX got the be as But of a it table get in off view X, X, we've amount XXXX, and we that's at level as we're of sweeping that we XXXX prices So, of no a a months to mistake, approach looking there's seeing. should a that profit that and make and certain to the good when XXXX sense and obviously, and the ago, above that did clears be of level some kind from the kind comes things

Abe C. Azar

you. Thank it. Got

Mauricio Gutierrez

And Chris? sure, of summer of XXXX, the in right, mean, to just happen summer most Yeah. make of XXXX I and the the hedging

Chris Moser

The put Yeah. on on hedges. the summer peak hedges were that True. hedges were in power QX, mainly

Abe C. Azar

Yeah.

Okay. Got it.

Operator

Thank you.

Wolfe Steve comes question from next with Our Research. Fleishman

Your is open. line now

Steve Fleishman

Good morning.

(sic) the be just up little on still you [NRG N consents. sale, specific finishing Yield Yield] you need? consents you're the getting on more you on (XX:XX:XX) what mentioned Could So, a

Mauricio Gutierrez

details we're way and on our mean mean morning, I providing are Steve. specific Good be tell like At any is that, to said, not what all have Yield position I third we're Renewables, them. quarter. can ones close a what which Yes, you confidence remaining we're will Yes. I of I to share I regulatory well all Steve. done, the have That's that on point, going I are consents, but to in on this that approvals the in in

Steve Fleishman

Great.

Mauricio Gutierrez

we're just progress the But great making consents. on

Steve Fleishman

is That's to great. make it just And this market. – just, the then clear,

So, should time? assuming the $XXX first we will and closes will in that expect that that one, announced be QX announced million that's buyback be the this – buyback at

Mauricio Gutierrez

soon on Yeah, will transaction. as close will that be we announced, be not only launched as

Steve Fleishman

Great.

much kind the How of are terms to they just of hedges you? how Okay. portfolio? more And your hedged meaningful then, were additional in XXXX-XXXX

Chris Moser

Steve. Yeah,

what you of then natural the putting up XX% this covering equivalent as layered annual did see is focused we on off-peak back more basis. the summer. Think see Chicago. or the shoulder on of XX% hedging really an – big and don't power And assets in on hedge We that we're hedges. But look the in the you'll page of – were page months you'll and gas I timeframe specifically there. Appendix, kind of If a chunk that move XX, the in

Mauricio Gutierrez

Yes.

So, annualized basis, while appears were that on disclosure a Steve, of it an as all from mean, percentage they on in I standpoint, put think summer. it the

So, than the summer what percentage the... much was is showing higher in

Chris Moser

and Yeah. sell we thick put there. out was right? for mini was the very part the it happy curve the the of to that and on was that XXXX of trying with curve, use part were I hedge we XXXX. the I'm the mean liquidity It

Steve Fleishman

In back to last are on has premiums way three-year meaningfully might Texas mean, goes what totality, plan put fall. little then; I Okay. your in be prices the natural Obviously, And to lower. been? a guidance being these are light, just hedges higher the that though, at since your all

Mauricio Gutierrez

on was curve, a Yeah. Plan. provided what all else Kirk? mean, with positive clear, Steve, the mean, impact move. just it's pro I been the if perfectly forma XXXX, yes, back of I mean, I the Transformation I – we to based then, look a be And at equal, you mean,

Kirkland B. Andrews

it's Steve, Yeah. Kirk.

an higher that the around are centered expectations And said when in XXXX our first summer expected XXXX at quantify higher and give since the where is view view that all prices give is – further summer answer expectations, rise established to increase midpoint yes XXXX the to this it that our that time. think, back, can XXXX, in than be our that summer the guidance forma XXXX tell would that looking that XXXX, speaking, anchored prices on in which I by First, would midpoint I all XXXX. established third is would currently the that expectations degree the year, example, XXXX, that the And, are, we would informed you our time pro no overall you is of can at third the that And what example, the we case, range for the forma our and the guidance, pro rise in of XXXX fact can and of guidance I well to those is was since and I question are that you that been reason above it say today, be equal, the 've generally for for quarter look time. to as by would to yes. of quarter fact previous than our I answer are being things for confirm at

Steve Fleishman

think just being That's one plant performance you quick on decent. strong Texas the great. and wind, market, I And a very last, thing also, mentioned

about in response is how much impacting and demand this how thinking? your Just that

Mauricio Gutierrez

Chris? Sure.

Chris Moser

slide was worse When megawatts – hour load was that about the on compared around on about talking expectation. higher XXth the mean, go or Yeah. there, I and we the I look Mauricio back XXX peak just about, was XXX the to or if CERA load talking megawatts

which across to had extra in really megawatts that was And execution I'm X,XXX say spring group. for better, We generation operations performance be outages paid put just we've fantastic us. some had flawless the You around happy really the ready to grid. and off from

X,XXX anyway, than So, of And or take, XXX so the megawatts megawatts CERA to the it. those two had CERA. net in space give out around better be,

into where that get we other market the – the bear an interesting come position I Thursday will setup it supposed to the market. to to needed ton really save a high we the wasn't things because didn't So, was to of be day. say

forecast which was following over this part the of that to XXth. XXrd, megawatts week. Monday, better that supposed the actually It at for So, be XX,XXX was is the

Monday, bit being may lot the the brought to And think the to of was whatnot because a it so, on and be prepared bear turned Thursday I that day. missed high a and they have little be that DR to party was out

Steve Fleishman

you. Thank Okay.

Mauricio Gutierrez

Steve. you, Thank

Operator

you. Thank

Praful Our next question Citigroup. comes from with Mehta

Your line open. is now

Praful Mehta

Hi, so much. guys. Thanks

Mauricio Gutierrez

morning, Good Praful.

Praful Mehta

Good morning.

just EBITDA to sold of for and of between the the the assets Kirk, retained is is driving clarify, on midpoint, terms guidance split what in is a there or what what's being above that well kind that So, retained uptick? is

Kirkland B. Andrews

relatively estimates to right? doesn't look Yield integrated and contracted, say view big on consists going that two bulk unchanged. if it the specific consolidated is of back, of provides is pro is type about to will, get remains our of which because have you And a adjustment, step which what which to business, point largely take is official of upside of portion is, own Well, at volatility, I'm the not can you if a low to LaGen, And guidance which it But downside. primarily. beyond forma an you not Yield, get guidance, is One what a the kind things their being is breaking largely portfolio guidance.

anchored go to from I the wouldn't balance is basis I So, that that, degree, on far a you of to the outlook specifics reasonable as for infer so described. infer just can large than to what other the I give it's think think you off portfolio. of But I our of expectations

Praful Mehta

helpful that's on super Got ERCOT All right. and color. And secondly up you. PJM the just And question. following

do no and in of Mauricio, so reserve suitable Is is So, or margins unsustainable firstly a XXXX, that it's signal you whereby you for your spike low ERCOT are business? these there in that on you think that and if you XXXX vary dry actually (XX:XX:XX) ERCOT, gets that how concern have XXXX which do there not reach mitigated? that point that

Mauricio Gutierrez

my don't then prices is not I best is if that, that the mean, me to keeps Yes, I do the not fundamental mean, the me generators, – with concern because the prices perhaps at the we can't night up we're of reflect always market. reflect that view developers, information. making what decisions

Now, of one obviously to real-time I ahead. prices mean, look just day you at the aspect are it. have

get a But the decisions going that is then and was of forward You an of right real-time the are so perfect very rational the have want basically most think far forwards, rational way. to prices to make And Texas. the to XXXX what the I sure talking to pricing. and set fundamental have as market how demand. which I look up. developments, I participants about prices strong grid at The obviously prices about lost, is and people in result And situation reflecting market also are we XXXX, indication been day-ahead that performance mean, are of in the real-time made happens. on the react the that extent on

important very me structure. to what we're that to thing, and That's is a the striving do. market most strong strong So, fundamentals

Praful Mehta

pretty FERC I create then, or marketing the the here thing enough said, right and next wants to a PJM, right think the and think and to the do gets out do year competitive you. there is what Got done or market big finally, gap as are right But Thank you. proposals you now. competitive January you And there's now get on it's signals. that between that maybe? clear pushed Do this you think between to time this

Mauricio Gutierrez

when act. really to it's hard to mean, handicap it going timing to FERC I the they're when and comes

What going markets. not to we very I'm now the tell has so, of the that have into FERC couple been competitive that. I a orders in on integrity venture taken encouraged of is terms of And now you position will protecting for just

mean coming there go back you to a Mystic, I (XX:XX:XX) capacity, of has been the If PJM FERC. lot and of consistency out

we that don't a the Everything we else then point speculation. data have. the have details, it's that's So,

will venturing think don't that don't have enough information into quantify. I be So, something even to we we

I what that's So, say. will

Praful Mehta

Thank Really appreciate you. it. Got guys. you,

Mauricio Gutierrez

Thank you.

Operator

you. Thank

from Storozynski comes Angie Macquarie. Our question next with

is Storozynski open. Inc. (USA), Angie Thank Capital you. line now Your - Macquarie

to going question. I'm share okay, buybacks go the So, to back

do yet Yield of that So, a sight line am Kirk, are expect of you're next you you It saying excess like almost here? I now NRG $XXX the missing cash What seems and buybacks. for you million. batch of launching transaction have closing the not

Kirkland B. Andrews

we've We to given just is outside free right? Well, some that everything in relatively The proceeds, summer start need one keep sale asset is through thing cash flow generation mind cash. build in backend to the described get our the which correct. to indication loaded, order you of organic is about timing, to

we interim the liquidity, forward thereof draw still summer ample the which to do for but the cash the So, begin of, our while appreciate. pricing then have that we supply to entails be to we that that on also additional or during see as a scarcity market, balances in collateral. the waiting be have that if fall, we events prepared need cash, in anticipation posting tends come significant In into the months, more

is of the by on have supplemented proceeds receipt backend-loaded, which the to the we sale the determined organic liquidity, balance flow obviously is reality the closing. So, asset that cash

Macquarie Angie - of all timing that So, into Phase launching Inc. X. in Capital in terms of factor those of Storozynski expectation terms the (USA),

were that mean depending be cash small here, to follow-up you actually mean to that are I your the might on the I it before waiting entering past talking Yield indicating as off? thought in so Okay. transaction sight difference you of be bank just line but far time a that about I'm basically buyback desperately But one transaction of for is know the accounts that you seem just and kick really just can concerned, I be as probably a NRG I talking. close, more we will

Mauricio Gutierrez

first good launched performed And Angie, the first, announced because megawatts. were this and is we I XXX progress. had how on megawatts that felt Mauricio. well, very making comfortable we pleased we XXX I we with the first was transactions this mean, been

we when to feel megawatts and balance the with to be once any saying, volatility Kirk I of that. in it back-end type cash comfortable when be loaded mean, in come second (XX:XX:XX) on for – the the we We that precaution. close. important we then is the providing in of And, clarity. at allocation, launched QX QX. that have The we're our in those market, seeing do is capital remaining we'll And quarter coming said I is that take what XXX with extra is as and then going we Particularly that, flows that available are third is call,

you Angie. that Storozynski Capital should So, (USA), Macquarie Inc. that's I - Angie sequence think expecting, the be

Okay. And my quick last question.

in So, if the say you portfolio second you happened quarter. on in showed generation especially strength, retail in continued? Can Texas, what that in and performance July earnings, the your us retail

Mauricio Gutierrez

the I in investors specifically But know what be are of earnings, where integrated as high And a information, our Yeah. want very whole, our us. volatile I'm in August we months. we right just wanted I have I just you important I temperature markets, don't the what ahead what first still generation that the the July. talking that actually, to a think what I the you is both the where will I happened of that performed business, with months. sharing like tell I we're summer with summer. of that's from in run mean, mean, and pleased pleased it you consecutive I ready, performed the was that we're – the day. with. felt mean, think the on to the described the tell with And the of – month. see retail we now of in most how I earnings platform can comfortable we're generation months of Historically, that way front about aside lot retail pricing that's and third that's first perform is performance quarter mean, mean, said, we and we receive benefit you to summer middle I in our I'm are to the this I and many very high forward got I fleet. September, going

lot I so focused, the providing on and an you But far, happened that - And months. will summer. what remains I organization very sure entire Storozynski Capital Angie in So, Macquarie make there's to be can a good. still update this want the third that two the happen quarter (USA), I next on feel call Inc.

Okay. Thank you.

Mauricio Gutierrez

Thank you, Angie.

Operator

Thank you.

Our final Goldman line Sachs. the question with Lapides comes Michael of from

now is line Your open.

Michael Lapides

a of the just quarter and and hedged slide slide hedging come number, of on congrats at back comparing kind it I'm and year. half at just slide to want first I'm the the same in XXXX. XX, bit, deck. revenue the to good guys, total to And the XXXX prior-quarter I'm Hey forward looking I only but little looking good a

one $XXX that in of had that's what If billion may cumulatively, million $X $XXX hedged locked it's I the So, in same or ago. XXXX. at quarter, cash I XXXX, that meaning first mean, four what $X that likely flow billion, all you differences bottom between $XXX or in incremental hedged XXXX, million. you what NRG and it's the I had then you hedged thought million flow and have it's months $XXX slide look billion line relative or $X.X Does to for three if take had – just into now, drop have to will million that the year, just

Mauricio Gutierrez

gross this keep margin. is This Michael, mean, I Well, and thank that is you is Yeah. top – in This mind not revenue. line. the just

– fuel on have and both I – happened into did, then equivalents So, we natural as side, haven't the incremental said, power. here. I we another mean, first, you I leg. take hedging what that we provided the that consideration mean, have did think to I And secondly, the right? mean, gas you hedging and this mean we have that on you I have reflects

there So, not an you have is things indication, I the is a that should I line. to completely other mean, this in are but bottom don't – drops are think direction, this that one-to-one captured it's not line. a

Michael Lapides

Right. I think had lot lot But side, if you haven't probably just we mean, fuel and already the move a or a your PRB think uranium. procured seen I move about coal lignite I

in – haven't a So, ton it's of couple and spiked last prices just gas the months. really exactly

all dealing at through fuel would something billion of So, of would you, having retail offset clause, don't unless it. incremental just large not if and a it's dollars I with this that to portion pass assume the maybe contracts the flow retail just least that

Mauricio Gutierrez

I respect keep that affect retail, in Well, every with Yeah. changes and XXXX XXXX, price I any in to single mind mean, retailer. mean,

when some to So, XXXX exposed all the same increase seen and benefits doesn't that I wholesale retail, think in XXXX prices the of dynamic are on price that we have because it and perhaps generation electricity. happen and retailers put pressure

will the prices to impact behaves with our So, how I that's you retail. how why on will – different how on give look comprehensive then I portfolio actually more the portfolio I think that sensitivities in the our the conditions. addresses I depending our think And that's I market mean, way the sensitivities. at respect around would provide your – perhaps a And to we think a concern the sense or changes – portfolio.

direct line the more to revenue. I So, on one you is to sensitivities specific this that as very would opposed

Michael Lapides

you. Thank guys. Much appreciated, it. Got

Mauricio Gutierrez

Michael. you, Thank

Operator

over will for closing remarks. that, With the you. Thank I Gutierrez Mr. to turn back conference

Mauricio Gutierrez

It quarter you, call. you. in you to thank Thank our conversation third forward to and Well, the was look great I talking all. continue

Operator

and Thank for you very participation. your you. today's much gentlemen, Ladies Thank conference. that concludes

Have a all day. wonderful may You disconnect.

Kevin L. Cole	NRG Energy, Inc.
Mauricio Gutierrez	NRG Energy, Inc.
Kirkland B. Andrews	NRG Energy, Inc.
Elizabeth R. Killinger	NRG Energy, Inc.
Chris Moser	NRG Energy, Inc.
Julien Dumoulin-Smith	Bank of America Merrill Lynch
Greg Gordon	Evercore ISI
Abe C. Azar	Deutsche Bank Securities, Inc.
Steve Fleishman	Wolfe Research LLC
Praful Mehta	Citigroup Global Markets, Inc.
Angie Storozynski	Macquarie Capital (NYSE:USA), Inc.
Michael Lapides	Goldman Sachs & Co. LLC

NRG Energy (NRG) 2 Aug 182018 Q2 Earnings call transcript