NRG - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the NRG Energy, Inc.'s Third Quarter 2021 Earnings Call. At this time, all participants [Indiscernible] There will be a question and answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator the like Cole, conference to Head Safe and now host to read hand Harbor Kevin today, of introduce to would over the your the I call. Investor Relations,

Kevin Cole

reasonable note website and and located Thank you, on future XXXX our of this review call. assumptions which section that in that via law. SEC over the events morning's no This webcast, obligation to filings. as webcasts. of well live these our we believe Energy materially. by presentation, is everyone broadcast phone based today's date, we differ results third We as Investors earnings are being to undertake contain welcome We as at call the may [Indiscernible]. in urge a presentations update result as may except to forward-looking quarter NRG the which Please in actual www.nrg.com factors statements required morning Harbor under Good and discussion Safe can as the of be statements this risk

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

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

Mauricio Gutierrez

presentation. Good like we today's X questions Home of operations. Fornaro, Financial for head Officer, Chief Killinger, on Kevin. you to for the joined Alberto by and and start slide your Elizabeth and available Retail you morning, Thank thank Moser, head I'm also everyone, morning interest I'd in [Indiscernible] Chris this NRG. have call of on

summer consumer services the and stable deliver results. platform Our well performed through

initiating the guidance. our the guidance at XXXX low narrowing end range of are financial financial XXXX We and

financial supply chain Our platform are the actively and constraints, working navigating mitigate to the impact. we is unprecedented

customer expanding we power continue focused Integration, gas, near and growth make growth options. product the in organic In with our and progress dual Direct base on X-year on Finally, our term, plan. are we to Energy the

on Moving at side of third results this with performance. XX I and level Beginning slide, performance. top for left-hand this the testament quarter to -- X. deliver A of start safety to Slide quarters strong our decile financial of marks the These another We to culture. straight the of operational safety. quarter safety on want

As top we continue priority. return the remains safety of employees our our to well-being office, the our and

During quarter, which or Energy. adjusted the primarily billion delivered Direct brings $XXX of million our the year, we by than results to higher third of acquisition EBITDA, previous driven $X.XX year-to-date XX% the

a the range, narrowing half however, will to XXXX XXXX results. supply This impact quarter the are, our primarily of unanticipated lower chain guidance will I impacting address also shortly. which We as result constraints guidance of fourth

quarter we good made our strategic During key initiatives. progress the on

million full-year ahead Energy XXX% original year-to-date the $XXX achieving integration of Direct is a plan. pace, First, of well or

are increasing synergy XXXX of to targets million, in our the $XXX realization We target early which XXXX. reflects

the We are target of XXXX. plan maintaining million rate in run XXX full

which market during weatherization that winter. will the effect the call, these best In phase X standards, the winter PUCT practices weather-related yearly. are to addresses PUCT standard current necessary of implemented our be reliability. improve upcoming in to actions Next, issues adopts October, and This weatherization advance continues in for

ideas solution in PUCT for At dispatchable remains making our the compliance PUCT investments incentivize on and resources. in improve are offering to winter support consideration. design, focused we and direction taken this a market in fleet to leading operations. We necessary the be 's NRG, comprehensive ready the On role reliability and have for our

the also a approved for the aircraft and protecting the want address have thank competitive the tirelessly to the harden of for through market. markets that PUCT integrity to issues benefited securitization a The over comprehensive competitive expose and system We years. have solution it ensure and orders the to consumers commend prioritize to to and competitive solutions. reliability working I legislature, proposed and and healthy achieve governor, final PUCT the Uri

Now, experience the our customer turning during Retail, continue we best-in-class quarter. to to advance Home

with in awards brand customers support energy reliant Leader installing is American the panels. that North Impact without recognized quarter. energy during renewable offering, management Solar the Innovation was crisis to and Centricity Customer the Award XXXX It solar The Make X Our our then initiative for category, Award allows which

the Now, this moving discuss XXXX. slide right-hand to to side of

But to flow chain growth to is synergies, removing reflects synergies, XXXX, on plans would the Also and of our financial five-year growth. smaller on to business otherwise In in ERCOT, staging achieving returning Direct of introducing during With capital XXXX. and realize outage for streamlining XXXX earnings share to our that, X focused previously X.XX year EES our growth integrating flow that temporary terminal billion. constraints, our leave First, our Investor of Energy per June $X.XX announced before ancillary valuation as from business are shareholders. to amount cash XXXX generation high-quality continues our to and have free $X.XX plants billion Unit impacts free no our we these high-grading unforeseen our and our cash business. a weigh fully streamline remain and capital given of services, retail concerns Deploying impacting EES and our doubt. significant we're prepare value we masked growth April platform achieving guidance guidance that plan detailed EBITDA $X.XX generation of through adjusted amounts plan. the a to limestone XX% for Day, or to supply guidance This XX% and charges

we near-term into XXXX. headwinds, these have that Now focused impacts identified are on these we mitigating

our dividend of Finally, announcing an also line stated with dividend X% in increase our XXXX are X we in rate to X%. growth

the turn advancing after let detailed how our will five-year more roadmap. call And for over Now, discuss financial we review. to Services Alberto a I me Alberto? are Consumer

Alberto Fornaro

Mauricio. you, Thank

review now will I brief quarterly the to of financials. a for turn results. Slide X to our Moving

higher in in million quarter last $XX million impact acquisition synergies third Tower earnings QX, Country offset The and of delivered Direct was partially Limestone outage NRG of the than or achieved by additional in EBITDA year. and increase Energy X driven of quarter, headwinds constraints. consolidated Unit the the supply facility For set-tops the by Dion $XXX other the at to related related

Specifically to chain sale controls. the our Direct well by was by chemical in constraints the region offset and million East contribution as acquisition benefit incremental some from $XX necessity Energy lower power, for Synergies environmental This benefited the profitability by volume partially supply fleet due PJM ran as expected reduced our of to by coal and through cost savings. driven

region due the load. to costs supplier million to by serve our our decreased IF $XX retail Texas Next,

in With cost the contribution to lost was the priced supply the offset by purchase outage Energy to partially of Limestone Unit X, this This Direct acquisition. we increase supplement generation. from had supply higher

-- advised -driven market Energy growth XXXX. As a prices. the $XXX of the interest And million. by exceptionally reduction due second cash a the customers. million The million movement flow in X late from the Be quarter in in shutdown, A last billion that reminder, $XX was business during usage COVID low XXX to power in favorable and movement factors, before Direct free we And mix in economic financing benefited year increase between home year-over-year, X primarily a is cash inventory. in driven

utilization. XX driven by inventory by reduced cold we trends and XXXX, million, seasonal QX, During

and mostly the This terms by XXXX, million needs cash gas the the driven QX, $XX overall built we during [Indiscernible]. up [Indiscernible] inventories resulted by for seasonal negative of incremental our million, profitability flow Energy. a year-to-date of in in of While Direct basis, business. $XXX acquisition On progress

range $XXX the to shift estimated total cash in recouping expecting [Indiscernible] Uri probability large developments some in now of Our expectation increase for credits bill and reduced that the XXXX. Have to $XXX higher costs, old the X million losses. a the our commercial million the increase at been this and legislator mitigants positive the similar or customer. at impact as next slightly $XX offset billings of impact industrial in with negative million, remains by for by The Texas time of increase as

cash negative increased XX consequence, has impact movement million by XXXX. XXXX with a in current their As that funding Uri

the year. receive tranche expect first with possible to securitization first the of We this majority proceeds during quarter a the later XXXX of

Now, XXXX. turning our of goal confirming $XXX we by Energy Direct run to rate million a synergies are achieve Integration, to the

During earlier than as in farther XXXX synergies realize have areas and synergy fully Overall, anticipated. savings for identified million were year-to-date cost far, able one-time are we As for our certain track respectively are well XXXX, to cost actuals. to XXXX XXX Synergy achieved on realize synergies million expectation, we and of guidance embedded the year-to-date. so with $XXX achieve

are the affecting supply As constraints chain you industry and are as are familiar, country operation well. our they across affecting all many

both now has the which addition of constraints our and costs availability Limestone meet are coal outage, X Unit April In to impacting XXXX, in to volumes. extended

chemicals in $X.X environmental coal our guidance our Midwest to now addition, In necessary constraints, guidance our fleet. to the to shortfall billion. plants run to $X.X impacted generation original end the are the controls of to are we these Due narrowing of lower by

this before We are also billion range, our to the to $X.XX cash near growth free narrowed to but $X.XX are we guidance currently bottom improve intensively results. flow of we working our Consequently, billion.

X of lines. initiating deactivation east generation, from The our [Indiscernible] decrease $X.XX Slide related to current Plant highlighted elements on and laid-out New for XXXX XXXX and from capacity reduction of impact that costs the plants, This Midwest significant guidance to already XXXX. are revenues are the Day. is and the Investor our to transitory these X, by billion a City west driven York power in Moving we billion. $X.XX results, in to the as

the by increase $XXX would by above, driven the increase contribution from mentioned XXXX in Energy anticipated As synergies. in Direct million

action. $XXX believe our benefits XXXX in target we And for can achieve million. accelerating already We XXXX, more realized of have some Therefore, that we synergy

EBITDA next retirement $XXX anticipated of in sales west EBITDA $XX in million $XXX mid net the a month the decreased we XXXX, in million and east going by the to forward. proceeds, of a in for our will With east, reducing close Next, sale million by assets assets year. of core our

have we XXXX to on expect EBITDA constraints million. at to and price, X And the facility. believe what levels in onetime extended Unit chain capacity by and are commodity power and coal $XXX to is if we to and $XX returning in XXXX facility million million results increased basis In supply our experiencing our XXXX. transitory capacity in negatively With fuel change normal [Indiscernible] while more our supply outage affecting impacting $XX York parameters, supply forced by we cost prices at we Limestone our chemical be to extended And keel limestone year. deliveries further increasing addition, constraints a XXXX -- due reducing outage Mentionable, Astoria, cost future facilities are on permanent correct them increased New further that decreased a after market prices, April and expect to by

cash of of best one-time as to can we possible, In outcome these to cash were changes with have the we tirelessly this initiated our plan to and primary million the that XXXX management change charges increasing environments, negative we also is to in our practice the ancillary any starting XXXX the the capital portion volatility midpoint past, the updating working is our incur were free the will future, X increase growth. offset $XX is to EBITDA But Due are contracted market, incremental cash with with $X.XX we and identify to blue, future XXXX latest in Slide flow I are included driver the to most The large, enough in will expecting in costs. the This mitigate lower XXXX, including is a after XX in we be during billion, further now our range cash left prices. we allocation. updated column, us price. mitigants. flow In free opportunity. turn where ancillary AdCos reducing are margin as costs incremental deduction available excess team quarter included the proceedings highlight these an by costs. these customer Lastly not In guidance the increased an last contract in for million. on an expectation these from in of from that our will we costs before

the $XX cash has Winter net at mitigants credit only as the million, for $XXX midpoint impact estimated Storm to XXXX, after increased utilization and remains net Winter that Uri the increased of to for given the to million. Moving the but Storm discussed by million before, in same Uri cash customer in amount XXXX, in impact $XXX XXXX decreased and assuming

SBXXXX We and occur portion been by release of that aware, our quarter the builds securitization and PUCT. of during the has funds been approved have you're anticipate the and much HBXXXX first As financing main and regulation of finalized [Indiscernible] the the XXXX. the will

column, net totaling next targeted of $XXX million. completed pursue We in QX, EBITDA our Plus Moving adjusted $XXX fees to delivering redemption the early million. million the to debt to of ratio. $XX

sale million for $XXX Finally, net we incremental powerfully leverage After million, X.X will anticipated allocation. process. on capital allocation, conclusion XXX Easter-west remaining to remaining $XX capital $XXX our of the fees This regions, have million in added of generation for maintain successful reduction. our the million the impact. for available of and data million capital cash proceeds and utilized the be leaves the of $XXX is will this general dependent to be securitization gigawatt

XXXX debt delivering for debt will which debt balance when adjusted the above net our midpoint after be implies XXXX, ratio approximately of slightly late cash, corporate X based the and Finally, EBITDA times our adjusted of minimum $X.X to debt at billion, balance a net for reducing EBITDA.

X.XX earnings during with to metrics Direct to discussed ratio. through achieve it back committed and of Sheet, adjusted to remain rate balance Day, investment-grade you, growth X.X primarily strong net full Mauricio. profile, is land to to goal X.X X.XX continued EBITDA given or to the debt As Energy target our Investor realization We our ratio,

Mauricio Gutierrez

Thank Alberto.

on to provide five-year an turning our I So progress XX, want roadmap. to executing Slide update growth our

Optimizing of to underway, growth expanding the increased the and core within to gas execute significantly pure will transaction you our NRG fleet. in increasing told and capabilities near-term our continuing our experience we scale the our Integration strategic Efforts X these core. dual on materially will areas Investor our are and customers, the product targeted I core leverage of The natural Energy natural Day, and network in and and to our the of of our NRG of our completing As capabilities. This well the customers. these both number gas Direct teams opportunities, strengthening businesses, grow two areas. and created focus power at Direct enhance of priorities collective gas our existing Energy on Energy optimize generation decarbonization are

market-leading electricity and customers where customers to operations reiterating Integration addition meet dual product without in growth, number our gas the continuing Upon power of well we brands. is competitive position to expect In come from any full core its and to customer our deliver targets. extend begun with on invest The to geographic Energy, are track the system Direct continue to will Company. overlap retail in have we areas natural to consolidations completed by that our Energy are, NRG, to in the of business employee offices and Direct innovation they significant plan today, rationalizing and the a meaningful immediately closing synergy family impact of and we critical

responsible have plan, synergy we highly executing the integration for that is you. the shared led the the same to in targets our are ability confident team achieve we by that Given with being transformation

X.X decarbonization with outstanding. to ArcLight Our efforts The close only gigawatt remains to by portfolio remain on York asset approval ongoing. PSC track year-end New sale

have assets strategic in slated gigawatts PJM retire the of X.X fleet review. XXXX We our coal with under to in of PJM remainder mid

procure to additional battery signed and and on markets. our our to execute continue in PPA having solar, expect wind, more gigawatts nationally, X.X for air-force through power core renewable strategy, We renewable storage

to customer grow and Services. are in around Power experiences quarter, Home shifting objectives the Now, centered both our Services distinct

proposition, while learn us how and sustained stay will [Indiscernible] optimal test pieces these learn and inform model, small, starting be customer gathering discrete for we these business we deploy nimble shape approach down serve By new market limited we customer environment year and refine will them XXXX a as As order we the our test capital growth. go-to-market on critical discipline intelligence in work apply and will staging value to it offerings discussed. to where strategy. focused to and break allows to long-term customer distinct a experiences, into

as years, Although conviction will in order significant our XXXX. year data is have XXXX growth later as in in will more develop not a staging need in it back intensive to year we which capital the to capital confidence to the be this deploy crucial and initiatives

as be to progresses. our will efforts year We on sure XXXX the share more

Now, capital including cash allocation, over Beginning allocation. as available limited we're side of left I million billion XXXX hand to turning XXXX. our with attention our and want the on review in on to a allocation framework cost to allocated capital, we capital take on capital available expect to have for from XXX of $X.X our this slide, for moment

apply side principles that allocation of will this right capital our the are We outlining slide.

use sheet. operational capital our excellence, strong for maintain achieve and sake Beyond balance allocation to a and of first is

But while idea that strength cash financial significant am proud continues chain flexibility. and our a differentiated five-year target and X.XX Our our resulting constraints, end to for be capital growth, of allocation both in frameworks. a the of products our forward metrics for these our plan focus XX% excess XX% our opportunistic flexibility grow to our to of customers provide give capital despite of is the of to to the allocation near-term into should shareholders, to execute update return you you on the X.X our times our look I our investors. our by returning throughout services. platform financial ambitious earnings supply vast comprehensive providing And of cash good available call. I of next majority to XXXX,

turning provide Now closing today's a on want to XX, thoughts Slide few I to presentation.

our on this strategic to quarter, year. do During still make work but have we priorities, to progress the we significant third continue

execute asset capital expect allocation our remainder on close the on consequently priorities. and announced saw to our we Over sales the of year,

confident to I and results predictable into am value. create As significant and XXXX, platform we is our deliver move shareholder well-positioned strong

will that, line open with So the Benjamin questions. for

Operator

the Your from first of of Thank you. from Julien comes Dumoulin-Smith Bank [Operator Instructions] line question America.

Julien Dumoulin-Smith

time. Hey, for good Thanks morning, the team.

Mauricio Gutierrez

Hey, Julien. good morning,

Julien Dumoulin-Smith

Hey, good morning.

confidence supplies just through really this about chain will. dynamic versus that further expecting in get, a to just little Can itself? of So anticipating more as understand exposure you are kick to here. you And understand to getting bit on real in things level And you turbulent here level to resolve this the the could are quickly, of markets much want walk think is how the I specifically, basically. when you are just supply more off unrealized? I of realized the if exist that you your coal

Mauricio Gutierrez

Yes, Julien.

let by start prices. all experienced, a -- So we an southern seeing me natural increasing pretty gas

off been when Flexus cost past gas cold-generation for Not in level. or have natural prices but move generating four a years where chain stress certain a mean, call I supply five cold-generation we and So only the up, that because the industry. entire us, the

So you flex up. when rapidly

up flex doesn't chain, as supply quickly. call Your

whether is You would which to it which commodity, chemicals, the emissions. rail like is it's be delivery, or control -- the the to

that when that variable will to generation pricing. serve their normal incremental use happens, customers Now, our we are on that month-to-month in circumstance, a

we How stability, pass Now, then higher flex up higher retention. are means mind we and decision. procure our balancing because prices. that to through at then constrained, cannot much and the of make when margin in Keep saw these a we customers. we cost are here, we we when go-to-market have supply have of the constraints, Which

mid want increases, that to we objectives we when sure the maintain pass don't also customer. the X and we Obviously the short-term, cause have customers. not all if in So sudden cost, you're can because some that to want of but to a money our these to back you shorts in costs, the -- pass want that bill lose customer, shock We to -- the deal short-term term, all cost. avoid you spend but the we you going of really of increases in make the -- see the acquiring in long sudden the we

very and margin a act this is deliberate, is balancing between this why a stability that's retention. and So

these, of expect the in in primarily Now, of year. I terms to first-half duration the the these of be

chain second half levels. will will this in the respond increasing chain off because ease and think to the supply cost I pricing supply

around your on to realized, Most Now of right and question realized non these customers. month-to-month realize. is now are because on these

the mitigate We levers have some impact. to

running is, down constant obviously, margin are The we optimize first in be margin coal at communication, market low in our only we terms in strategy do priorities. how high generation? hours one Should the of when retail We you looking pricing backing really and hours? where and have our testing and then

these leverage, this Direct And on and fairly at other we you we're finally, going moved synergies. a down will be of system up entire therefore, continue is come constraints The a back change synergies, so back normal then if can gas, very as expand things Direct natural story, the ease, back will it levels, can to in just environment. normalized looking more the evolving mentioned, Energy like Energy and more to this to quickly, can and we'll --

So these seeing on that that framework we're explanation provides I that what hope that today. you and

Julien Dumoulin-Smith

Excellent.

you Just gas that increasing out you these wanting season switching the on 'XX if make coal-to-gas the factors can per such cold-Jan that to this, think 'XX? this transient we're in just had just than you on next and reaffirm and year. intact sure, quickly, more remain also, ramp fall be nature existing year heard you coming here, about that I price throw think can here, the into already of to otherwise want etc. if you commentary, it clear into question just when clear super especially third your I Those commitment on about as rail, will, a the about was basically, expectations I And here crystal the

Mauricio Gutierrez

normalized expect basis, in earnings and the provide and Why the I that And you XXXX on mean, these outage is the wanted it wanted for all we but XXXX some just to that's I we these Absolutely. there for specifically chain to beyond. of I XX you. normalize that's transitory we think supply of to think plus of lay in platform out how power Limestone. of our

Julien Dumoulin-Smith

you, there. it leave We'll guys. Thank

Mauricio Gutierrez

you, Thank Julien.

Operator

of from from comes Goldman Sachs. Michael Lapides line question next the Your

Michael Lapides

Hey curious. guys, just

things abnormal these about of talked a You lot items. or one-off being

capital, be equity willing push a either the opportunity to even As XXX initiatives equally to accretive you date evaluate gross generate net return? pay for to that do think higher you which repurchase investing a really may and to opportunities to you a or X in or about generates when higher an gives to debt get use timing it to high for that the use to wanting you the timing How set EBITDA do down about would quarter return capital be you nature market the may transient versus investments? debt the of the more of other out

Mauricio Gutierrez

opportunity can Yes of be to it we Michael, mean, opportunities to a that approach NRG, opportunities maintaining growing customer we're what I happening we the these service believe tremendous have. aware in I always the have proposition the and balance into strong flexible of markets. our I service a to the we is have this we growing or that balance now. around of around that And shareholders [Indiscernible] see that sheet, is on organization Company market. mean, returning consumer be value capital not and the

So we're that. excited about very

going going think be a deploying, share capital in business the since say and the past. that that have our XXXX, over than which -- to be using smaller and to be billion. indicated Now, of to our the going expect a bit capital 'XX. $X.X little would 'XX, in is, investing I returning XXXX lighter our we're allocation cash growing. only having is capital the I I be perhaps to excess opposed XX% be to But is as should part principles, we generating bigger that, growth that you business tremendous to expect said 'XX, to returning shareholders on What means We're in

how about that's So I it. would think

to grow we remain on we we that X.X Michael, the continue by -- to frame see how Direct growth we'll will through our we'll That's X.XX with be and market. generate. Now, opportunities not flexible, that it. achieve our and obviously to the can the we EBITDA XXXX growing and that the opportunistic expect executing EBITDA synergies, remain we incremental what going -- I in Energy we by toned we would to remain are now committed we and EBITDA what

Michael Lapides

Got you About for it. you make for XX%. XXXX decisions would about available think the when other cash on do How allocation? the

Mauricio Gutierrez

have of Since the took we of where earnings Identify back what idea I have Well, you plan as point. we shares think you the our I over more terms -- good for we the discount in to We what lot would create and But next magnitude value a provided the CEO, in a of number I growth that shareholders. shares bought excess all to our where I said call. XX% we're provide goes and today. capital hope the shareholders. you have and at that leaning we outstanding. do have Gives return to that are to to that I mean the going our to value. see have pretty opportunities clarity investments cash would I that be the past, we creates in close do to believe buying back

is it. about proposition, this part is going So to continue remain opportunistic of we're and that to we're our value doing, something going

Michael Lapides

And it. hey, I'll Got question be last here. quick

another curious the when growth, tends there goals important, share and of you growth, to we with free curious when is Board, can EBITDA Just just flow we in with think metrics or conversations should the per But Company. that have cash outline what Board, most at the the various about? proxy metric be the look financial the

Mauricio Gutierrez

will XX% flow to Well, free The metrics, shareholders. matters cash XX% to tell free you. Michael, share what growth cash per-share plan. and our that's always we've flow X-year I our It's outlined in per share because growth a per

very, that's compelling. think very I

strong on We a have and then the excess the Sheet. in while terms growing both numerator of cash the reducing Balance maintaining that to denominator execute

in us looking So well I but other to value at term balanced there our approach want here. long long the I'm creation run. the shareholders in think short-term, this for do be Perhaps people serves that may things

Michael Lapides

Thank you Got guys. it. Appreciate Mauricio. it

Mauricio Gutierrez

you, Michael. Thank

Operator

the of from Guggenheim. comes Shahriar question Your line Pourreza next from

Shahriar Pourreza

Hey, good guys. morning,

Mauricio Gutierrez

morning, Shahriar. Good

Shahriar Pourreza

isn't beat bit The target, is I here get thinking a Well, just sort those sense sorry longevity? are this of be the if 'XX future walk X, as Texas they a gas still transitory, why to mean, and want of it. mitigate on sort years coal And normalized this headwind? this guidance is on to the and has kind run especially but what bit, a in supply a we're of short-term questions bucket getting d the then, exactly stronger the can little assume I cost curve significant cost, chain transitory charges of about fair if before rate EBITDA ancillary again? I'm a 'XX service

Mauricio Gutierrez

was Think you service before on want to around bit of understands increasing more we it to to provide ancillary short-term want our instituted to everybody do The maintain run little I and I you, the the before ancillaries slide specifically just reliable into system. go I on Chris, sure make that a X. ERCOT rate. a pass have actually their it

billion. little flexing that because they're chain supply normalized takes cold-generation, your off is, time. their And chain you're have we transitory, around transitory say We to a the $X.XX when supply

allocated are think I sets and call mining that chemicals. railroad to about

have up in fairly has or take year. when this we You years. so why that's six the said the time. It plant, going been of be the bit it's type of little I to generation can quickly, up first-half a doesn't chain that I to supply flex of that expect flex that the for five for quickly. sized -- can the A experienced past

s? in transitory. off you I year, ancillary the is detail think just can I so into this to But, around service them why second-half refer as going to that's of Chris, go the ease the

Christopher Moser

up a responsive of non-spend the megawatts. year on and up the moved But the made little X. that of in a summer XXX by Yeah. the and bit, the middle they that and big the Shahriar, change day moved was depending last three factor hour X between then was they couple requirements

they've impacts the terms made ancillary So been of the so far. in that's of that bigger two changes

There's what of reserves whereas moving late cap, to too? I've seen do what debate kind is of to at in, to December. seen various Now, memo we've from coming detailing certainly should a PUCT now that group what want the and thing. mid part going a ORDC hard start to to in. on the should according should hey, sessions. that and a plenty at ORDC we lot we're of ancillaries is They're down by of, see on parameters a right you schedule And of his the be pieces thoughts. still Chairman forward waiting in to designs kick terms Brattle There of is going do incline nailed Lake working combinations about, slope study market

a that there's is I we'll too we've pick or in level what -- posting year. than that there December also so their bunch in planning the spend. about, which in winter of been that will think phase years. then Chairman to they here on around included which these get obligation advocating XX, as moving getting memo stuff I ORDC a that talking something for design we ancillary X that different that's of the would fuel to couple of and end And market his be for a over they the they're be an LSD have want not changes, of am whether ancillaries And non Lake

Mauricio Gutierrez

And to now, be be to Shahriar, still clear. just

we our -- said, costs bill customers, of we like describing them want Some of them shock. of we I these some that a to preceded a don't through ancillary lot them, create pass already,

the bill managing call That's all and So in of in just to short-term, why shock the passed I in keep stability that ancillaries we're through medium margin mind. these be transitory. run, of numbers, to retention will this But these customers. long our versus

Shahriar Pourreza

Right.

Mauricio Gutierrez

it And medium they out. pass long it to the -- all make to over run

Shahriar Pourreza

PPA megawatts of just you XXX pressures potentially market opportunities? just last ERCOT And lastly, renewable the guys. this importantly, does in of in PPAs input cost more little seeing bit? maybe Thanks, now? you behind quarter. impact Can these that And unpack you specifically this? right added What are future your then, a could the space, in What's some

Mauricio Gutierrez

I that's Yes, once again, short think term. in

seeing in particularly We chain issues are the supply solar. in some solar,

in RSPs we to are They attractive constantly standpoint. very the to going at get from wind an are looking market continue economic to We solar actually be running be batteries. and now

slowing out these to a are -- of works down on how We these feet the are off because see aware taking probably we chain, it's little our just and from so want then supply pedal are the We bit re-engage. we PPAs.

want with in PPAs to that's now able issue of these also thing But pleased at disciplined to been the of today we in We've signing I that that to able I'm are where I I think PPA's execute very terms the achieve. be transitory have higher very don't terms right prudent have is been actually do. to supply where we that PPAs. with there the we recognize costs. we sign been and chain economics that a

like the these little So down And my up start months, I has off think going couple picking issues bit. going a expectation when ease we over continue supply it's of that. seeing to it we're slowed to past start chain is

Shahriar Pourreza

it. Appreciate I'll Great. Thanks, guys. stop there.

Mauricio Gutierrez

Thank Shahriar. you,

Operator

Your from the Fleishman Steve from next comes of line Wolfe question Research.

Steve Fleishman

Hi, good morning.

Mauricio Gutierrez

Steve. morning, Good

Steve Fleishman

which how as cost in you is don't there and everything because prices a as is you able along you're kind customers 'XX. lag mention or additional much is like -- that like also that is in to prices to feel [Indiscernible] pressure? something things that pressure that also Another and power gas lifting essentially pass that some Is and up

Mauricio Gutierrez

in now X a power that and business. So think about this gas have markets we

the the ownership. me all let So on with newest that's of the start -- perhaps gas because for our business you

a of, we natural pipeline, relationships. a it of risk. LDC call assets it And tremendous don't it back-to-back time as a amount price customer, logistics think storage, business, gas business. with we part get sign take we We commodity that, Every of Our gas. as

that exist. infrastructure of manage to the volatility So us that gives some the ability

Alberto Fornaro

more and nymex of price on the on the Less basis.

confident has very network our very of natural manage that the feel ability -- I So large team infrastructure that to that have. because gas we networks

quite I issue Steve, -- of don't these our gas everything. And term of act on in of going pass higher prices want higher natural terms in pass coal almost on to in already it, you So power it's long choose -- business. general, prices, actually to described the actually gas of you And the constraints, I'm our but then natural the we think I comfortable side, gas this the with on exposure you be In that. We can term pressure. a through to pass balancing to and the medium it think inflationary as long some between we -- have

Mauricio Gutierrez

customers, compelling same cause our stable business. margins numbers, very want shock and are the which a bill our time very, at to manage on good you retention to

if about I higher prices, transitory. coal it's why always up constraints have comes structurally So I that's and these it addressing then a that's that. these don't I gas have very, mean, thinking we issue are and that's what And -- move how when on issue gas mean, as it supply big I'm a with prices you the chain, very quickly. here the

Steve Fleishman

Okay. were lower. you asking, maybe others targets, obviously EBITDA meaningfully think And debt EBITDA is I then explicitly what where just earlier. It The more are. when look affect at -- to you

going not going this EBITDA are and this that normal Just say you or to just off of targeting is 'XX guidance. to it? to we're going ignore Are you be just

Mauricio Gutierrez

need expect and that a go normalized this back achieving we you recognize our in our is which commitment XXXX, to is to I think to earnings. year transition 'XX

trajectory that today into to this get thinking issue seeing consideration from XXXX, you're we're about when So you on we the have take where how we chain. on are to anticipated to our always supply

metrics now, get Energy We Direct on. synergies, we think it. that additional that's growing can I we growth And EBITDA we but to by that only believe committed how XXXX. So about not credit can for also into remain execute them those

I into the So much XXXX. in wouldn't too number read

objective I think what in important XXXX. our is is

Steve Fleishman

you. thank Okay,

Operator

question of Storozynski line Seaport. next from Your the Angie from comes

Angie Storozynski

stock they start And clarity. question need you. Thank with about I wanted buybacks. to a to the support

quarter. understand in an usually have decisions I badly fourth Well, the makes would that Board updates, those given needed. Well, I'll decision argue the today's that earlier Okay. been

Your some front. decisions peer on unique made that

You is guys support need money of going stock. the soon, not is to and again, buybacks would that seems there -- like to most to a anytime go materialize the

be So support something revolver here open either buybacks unorthodox either you again to the to would -- stock or to accelerate solutions now? don't use else just I the some know,

Mauricio Gutierrez

proposition value think always thing a Well, Sheet, has capital this I first is strong Balance as Angie, the growing. NRG I returning approach said of balanced the been and between

you're up describing back that's what not point at stock. And buy our So basically this is to focus. levering

our can indication. the of as I on the billion XX floor we see in are is this already like principles. continued tremendous allocation We're I going be that the focus next gives described But balanced you cash. an to executing months. Our share deploying with target on said, generating approach. on $X.X because buybacks That consistently clearly excess you excess cash

look dividend -- what at the can number You then you if a XX/XX, is. that's know

about as But about, confident that other to of be floor. -- that accordingly true off. want the done on we're us. tell we're evaluate And record deployment that's react want buybacks think to become to And then what right? have of gets shares, deep XX%, opportunistic that the going you I we're us that's what we execution want that options be can that the are to the I flexing to be the will That's also in value a stay available proposition talking going should it. our to FNG, You is discount shareholders. all XX%, share the We to going that should we the that think the and you not have indicated to and to to We're past. on I our we there of if the our opportunistic

Angie Storozynski

question. And the Okay. second then

retail weighing know margins protect when retail on an all like between of So retail I EBITDA generation on like you related. it feel it you generation. on like these But side. that differentiating you the been of is the but seems if it to X.X read really, And are charges But again, like it's I pitch to reasons, I separate, like to retail just release, do like control. on are large the this you which when retail all I seems And don't book my but related those the of about that understand that them so attempt attempting have initial it talking of seems normalize there is you're weighing it longer the not take no are again, should it's call, all a of side seems to that the your and seem the again, was retail more some we're generation weakening when listen me press of issues are discussion for profitability that of book. various that to far these to profitability make

Mauricio Gutierrez

always because off, have actually, Well, these we use a our Angie, to generation but our that cover constraints, that market was normal cannot indicates in because the the we able and from actually additional we if off. to circumstance, month-on-month it don't flex that -- have generation should, megawatts flex when We plan side stems if it you we to we customers. coal

it cost. We replacement have to buy as

So I wouldn't a characterize it thing. as retail

would wouldn't the you be month-to-month I call think stems to up so It this side rate trying is but generation gas, actually those I flex that's our be serve -- if having the option from megawatts able the why understand connect this customers. happening. to two conversation. I'm the heat I We had on a and reason

is on characterize starts every an than on our impacts impacts that a a actually month coal-generation as basically continuous issue were with thinking I that supply your be then want concern. how wouldn't month-to-month which about coal retail those it careful basis. economics to managing we pricing This I So, just customers

Angie Storozynski

don't one just at had because hedging I quite you understand if using hedge. your that I the economic have here, -- your I follow-up thought book would of here the strategy generation the -- guess time So the because retail

light power from increased. generation they in so in coal higher plants And economic has of prices the has

plants, a gas of many there's have really not detriment. don't You so much

supplies, generation hedge? materializing have drag access incremental why the a because you it be versus but from -- plans be excess So coal don't the there it's to not which potential initial would should okay, coal

Mauricio Gutierrez

month-to-month, don't the month-to-month. have initial on you hedge because the Well, an

said, of but cost, that some like You your passing I the price low. And hedge all cost. are of we not against fixed

stems flex do of our need prices from the these fact desirable at increase make we month-to-month, in has terms supply really have we of that expense constraint seen extent decision, prices, to we these the because us this So in in that up you we impact it not? on want you where the have that a gas because generation of to have put coal of power But retention issues. or through a cannot the all position the pricing, pass but some all

Angie Storozynski

Okay. Thank you.

Mauricio Gutierrez

you, Thank Angie.

Operator

question Next of Research. Vertical comes from Arnold Jonathan the from line

Jonathan Arnold

Yeah, good morning, guys.

Mauricio Gutierrez

Jonathan. Hey morning. Good

Jonathan Arnold

April. expected what Hi. they and And been, at a to that more will of Could A couple happened things. or impact you you what little what come Limestone, in are exactly has caused 'XX maybe back us confident on give the just is the quantify be. extension how in that

Mauricio Gutierrez

Sure, Jonathan, Chris?

Christopher Moser

Yes, Jonathan, this is Chris.

back-end to underway on In the restoration gone XX, expected we've terms we plan, April done part demolition Limestone, that the middle is very April. to close collapsed, so on but in of duct be are And in which the what that. stack connects right the controls and happened still of through the well at of root the that, finalizing cause,

Jonathan Arnold

Okay.

Mauricio Gutierrez

be -- summer. the the ahead of will available be will plant It

Jonathan Arnold

have business -- have assumptions? on interruption you Do insurance you what these that

Christopher Moser

process interruption, work we've property there's right. it of notified Yes, going the the demolition to and They've terms business through that as But through and in little working will on a them. but damage take with been been while of we reconstruction it.

Jonathan Arnold

that the moderation X to half second or Okay. mentioned you that confident the the And number half, are these if in see then million that year? of the Slide increase that don't moderate back is obviously, in you're XXX going on pressures you in assumed what's could

Mauricio Gutierrez

Yes.

coal gets you gets number is these Obviously, to if -- they, to this the we as our number. not are it and things we're There that and reflected I harder. get I'm it expectation. What are than hearing listed not it back if pleased will try And we're things. with can and already suppliers We're this than to going expect I we're mitigate. if opportunity unrealized worse hard to don't number. in quicker they're working is then long be want as these normal some mitigate a our better, unrealized upside and realize, to right going So partners this So from railroad now working our to and few of incorporates seeing mitigate

we think mitigate of for ahead would a in how of have these pretty it, I believe characterize good yes, can it. I we terms getting how But that's we're we XXXX.

Jonathan Arnold

mitigation assuming not you're But currently, right?

Christopher Moser

No.

Jonathan Arnold

normalized number, 'XX what then like. so And we're looks on Okay. to trying that finally, about think this

Beyond ' incremental add direct XX. right? synergies, We'd

Mauricio Gutierrez

Correct.

Jonathan Arnold

Which are -- could you remind me.

Mauricio Gutierrez

going our lever just where obviously, working So to a to year-to-date. XXXX $XXX looking and I another I'm we more pleased addition be synergies we're that X. very at on we're -- efficient. hard. opportunities are But in additional we that's see this to to about in platform think have always what million we [Indiscernible], make is

Jonathan Arnold

Okay.

and that XXX So exceed hoping top that? also you on of the would expect, clearly X.XX you're

Mauricio Gutierrez

which also to your then $XX is mind remaining a order normalization that of in have to the the million, keep [Indiscernible] in And exercise. the unit Correct. about assets, complete you PJM their of

Jonathan Arnold

I see you that. Great. Thank very much.

Mauricio Gutierrez

Jon. All right. Great. Thanks,

Operator

the questions. conference. remarks. we all closing to it It is pass Gutierrez for portion of for now That time have concludes the today's Mauricio Q&A I'll

Mauricio Gutierrez

thank Thank in you, talking and interest look to Benjamin. NRG, Well, forward I Thank to soon. your for you, everybody, you. you

Operator

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

NRG Energy (NRG) 4 Nov 212021 Q3 Earnings call transcript