Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the NRG Energy First Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Kevin conference of Cole, like first to Investor now today, speaker Treasurer would hand over the your Relations. I and Head

Kevin Cole

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

undertake today's reasonable that forward-looking result well statements results which this today's note urge harbor as contain no the of Please presentation, discussion we statements, We to Actual We safe are may that everyone as as assumptions except believe date. update the to law. future may these materially. by factors based as required in as events, a risk in on differ to obligation our filings. review SEC be of

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

our back of For information presentation. the reconciliation earnings non-GAAP the see regarding the in please measures, financial

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

Mauricio Gutierrez

of morning Thank Smart Officer; Alberto are you, morning, thank this and for Fornaro, Vivint interest of our available members Kevin. other Rasesh in the joined Head I'm Home. Chief including everyone, your Financial call on Patel, and NRG. questions also you and Good by for team, management

messages for I'd like presentation. key to start today's three four on the slide with

and strong wholesale our performed during financial delivered First, businesses and well first the retail results. quarter

and resilient. to operations have steps predictable our our make platform energy core We more on and are focused taken

This point. brings me second my to

portfolio the improving market fundamentals our as head we into seeing summer. We that should are benefit

begun efforts Smart and integration in the Home completed have Vivint we full. Finally, acquisition now

to updating also guidance XXXX acquisition. are We account for ranges this our

We decile were synergies These asset energy one when is by EBITDA. and the driven to from top strong the of operations performance on and XX% direct million $XXX earnings. Vivint core retirements. adjusted results in of a sales addition quarter year energy adjusted delivered safety for This and of our slide five. improvement month first results Moving last primarily business,

our we During good the priorities. progress strategic quarter, made advancing

We the achieve target this to on full for direct year. energy are track synergy

portfolio sale and be the March. with to opportunistic of acquisition efforts optimization Astoria in the Vivint we on continue our closed We early

for efforts activities the Day Integration defined we well, growth now $XX are now synergy million of target Vivint fully XXXX. one underway. have for went and

our We additional at upcoming will total share for Day. details the program Investor

business to the moment take impressed with I and welcome the the experience. and focuses alignment in corporate on the our be want team and to customer I safety to family. Vivint that particularly continue a NRG values

provide we me ranges two are our include let our alignment in companies. of Vivint more quick you EBITDA overview. this detail, updating a to guidance but adjusted Alberto XXXX between unpack the will and Finally,

our full of year. to synergies billion We're flow billion billion year cash months $X.XX expected cost updating to XX billion before to $X.XX for $X.XX of This includes $X.XX guidance growth. and and this adjusted growth Vivint, EBITDA, free

consumer services EBITDA reflects both companies industry. of the to with the This also align adjusted harmonization more

unchanged impact the stand-alone the NRG of changes, guidance Excluding XXXX core these remains with of business energy traditional ranges. previous

Now, brief Texas. X. a for to provide I update to turning market slide want

north economy. of continue state weather-normalized strong robust growth growth see a by We demand to on population a tenant basis driven and X%,

trend this in the to expect We continue future. foreseeable

the This mild platform the our market on and and while in settled by market expectations. power and was This chart the first the our the was weather characterized power fully allowing demand, natural side margin exactly lower below perform. additional from in performed designed see can periods slide, buying prices, maintenance, well down quarter benefited to plants offsetting much resulted expansion gas our own lower during and weather-driven our prices platform power than of cheaper bring left-hand by low preventive this generation. us integrated of which you to As is

portfolio ahead run power the are our on us, of this Looking part to as results. and Supply positioned constraints most to chain plants increased is spend. summer, behind we ready second well to our stable progress maintenance our are year for deliver

hedging also operating are plants. conservative and We more assumptions using power on for our we're the our

to track unit Importantly, WA summer. remains Parish the on return to service before

predictable. can we portfolio our steps more As taken see, to make you have

considering After enhancements. The XXXX, Texas unanimously Texas to Public during widely currently that Finally, supported Utility PCM other competitive solution legislature is the update Commission PCM. the I reviewing market This design on provide is approved performance entities want ERCOT a and many market-based brief a the mechanism is by or enhancements. of alternatives regulators. credit and

that market curve or implemented. online In expect reserve the interim, Texas operating design May will of ORDC May enhances resolution with We anticipate end PUCT are bridge that be the demand few We a on legislative the PCM a XX. by session, concluding and to years reserves. solution take the to increase considering the ERCOT

We by legislature, of the and grid market-based the to improve through the applaud reliability PUCT the solutions. efforts governor, ERCOT

several in require before regulatory of of can certainty brownfield stages projects will they have various move forward. them We all development, but

Moving supply This to Energy update count. consumer-facing driven by stable lower platform, X%, were offset costs somewhat load by Services due to the quarter. mild lower was up and slide by customer businesses. our I Retail Beginning weather want during & provide with year-over-year to an on X. margins our

an to our we to provide alternative acquisition the In prices. through grew incumbent efforts customer utility rising East, consumers

continue in services which debt, the We of see direct of a provide. the bad increase material nature result to is no we essential

uses and enables on insights manage that that a uniquely launched their app regarding usage experience in web energy are provide for EVs solar our we able solutions. to of we generate home their energy to actionable and customers modernized model through and their Finally, digital their

to by While same owned month, a statistics and to the compared grew we have last X% one first for XX% quarter year. Vivint only for want by provide full I Vivint period comparison. customers revenue

The experience the in also busy bad their to want quarter, and continues was products I company Vivint two of enhancing offerings, introducing NRG, innovative Like to strong and debt. stable retention highlight. which

monitor so cost production savings. customers app their beta Vivint actively and can the now our conservation solar includes energy First,

Second, and they it owners renters basics driven system the than get $XXX. starter product called do-it-yourself less alike to that makes introduced easy a for for

single is DIY integrated viable later can our that key fully of and for we a point strategy to offering. to entry solutions our Having more creating customers points smart home upgrade

reaffirming free run flow and cash primarily cost million $XXX of expected with synergies, and full the companies XXXX growth respect targets to both combination are to growth. total for are the Now, are our two Cost before the plan. synergies public of we and rate in recurring result

recurring to energy is $XXX through Vivint now fully by target be optimization. led the achieved In over of be underway the expect will years. the same integration. for The team million for synergies channel and responsible synergies three Growth sales million the transformation $XXX we plan plan cross-sell, a organic of next achieved synergy and growth and is total, integration direct and

side slide, scorecard see right-hand for the the the will Vivint. you On of

further now scorecard introduced XXXX growth keep targets cost in provide on have you update plan informed quarters We and to our progress. this coming We and to the transparency achieve. to

Vivint the strengthen that our smart have I XX% infrastructure before, that very our business network opportunities technology to this brings expands customer forward. but I home and a company about moving and platform. said for excited complementary are by the combined know we nearly

home plan significantly America, Day in services deliver a the X.X acquisition we the our the also leading provider Together, create customers, to North Investor million network shareholder out creates laid nearly opportunity and and essential at serving the of accelerates we value. XXXX

and growth During customer the to see through first nationally, out will customer years three number through growing on which both synergies, lifetime. solutions and are the laid integration, count average the increasing In this medium slide. long-term, value I create the extending of and of per be materially the customer more opportunity value cost even created

over it So, with that, financials the review. for I to Alberto will pass

Alberto Fornaro

a start Mauricio. results you, curves. gas power winter entered seeing the high weather during and milder-than-expected to forward experienced season and We year delivered the strong Thank conditions. good NRG

much Texas most actual weather exception with the stability power much lower Moderate relatively in in prices into geopolitical of volumes in markets and East translated and and lower California. the

liquidity NRG our after of the management Additionally, global significantly the winter has utilization. requirements to due collateral proactive improved collateral and season

acquisition the financial stake. Vivint's performance our included and have in Smart completed March Vivint also We Home of

more was please detail year not companies continue, we a Vivint. about it. consistent me have into identical. metric a segments. reflect all two including in let provide but prior bit At figures, more I little detail Therefore, harmonized EBITDA guidance go close, Before section, that note the we the for across EBITDA will the

consolidated to quarter go of $XXX first the Let's quarter EBITDA higher XXXX. $XXX adjusted the results. first than is now NRG million million of

sales asset approximately of million. page, $XX include impact chart and you at second As a Legacy the the results anticipated in EBITDA On see $XX Legacy Energy Energy XXXX, the the like-to-like negative by of increased can the of retirements basis, totaling million. in quarter bottom

Last the costs outage, year, in temporary Unit and impacted spike extended ancillary our transitory the including coal profitability. and items, chemical X Limestone constraints

QX EBITDA. which EBITDA Vivint been $XX related included is March quarter results these recovered. first also results Our contributed in XXXX million additional that $XX items We've of increase to show harmonization. fully have financials, our The million remaining

gross $XX Texas, top increased unit segment have to we left. prior mitigated and general margin million $XXX an by with higher. of lower year different experienced been have on Starting geographical volumes in was now the and Across that performance Going versus the EBITDA margins regions, expansion by usage. million adjusted

of outages, historical in first insurance compared quarter to bad planned and to pension the to an increases return premium levels operating Opportunistic expenses on contributed debt and increase the XXXX. cost

offset adjusted In by Texas. driven the a volume segment, and than million decline. EBITDA negative supply versus asset more power sales the Services and impact margin $X to year, similar retirement increased lower year-over-year, cost East, a Other declined Gross West & of last primarily

a we these said, QX have March basis. EBITDA, included better our and in on year results comparable than results As prior were

KPIs, by quarterly reporting Vivint, we basis, not very major including the standalone compared to On are prior we results. improved While a are metrics, all full the encouraged results having QX year. profitability for

and expected been planned. confirmed integration and begun We be activities in targets have to have as realized are cross-selling

with million, growth temperatures line Energy free by drove down, power that was cash increasing in thus inventory generation purchases flow impacted power before milder and expectations levels. our up fuel $XXX

expect until after the summer We reduce to any but action defer inventories, season. identified have to initiative the

account trending receivable in Lastly, cash are that last NRG account of received collateral on we This quarters. and trend payables and mark-to-market of the inversion all the portfolio the by is have down. the sheet, six an positive derivative counterparties seen balance

the Let's now discuss to for slide to XXXX. move XX guidance

detail included will As in differently, now are this accounted what additional harmonized are and to items Prior within we mentioned, providing EBITDA. Vivint and the forward. be for going we acquisition, NRG for adjusted metric adjusted EBITDA

fulfillment and NRG acquisition from Vivint will split customer costs. mostly amortization from and also will installation costs EBITDA. be adjusted of EBITDA. commission into by can cash mostly expenses Stock-based costs Vivint impacts fulfillment The capital excluded amortization be from flow. acquisition free no and The be adjusted costs, There costs excluded both excluded sales to EBITDA. be are capitalized product Capitalized expenses no adjusted will longer paid of compensation

the substantially Legacy of world QX bottom earnings The EBITDA the to compared $XXX Moving at increase the exception harmonization. page, our a guidance unchanged XXXX is to to only is Energy million due call.

For EBITDA includes for XXXX from unchanged of fleet. forma owner This Vivint, been XX months December. has guidance pro prorated

from million net in guidance we $XX and in accordingly. the impact and synergies million positive, growth, $XX updated added have the is EBITDA Overall, expected harmonization. XXXX have minus We XXXX

pro guidance before from by XXXX. has XX guidance million flow contribution cash for is and increased of Free Legacy NRG the the the free number $XXX prorated and December flow sum the This growth forma simply months. cash

original of As impact growth, free a before reminder, for pro interest before Vivint, growth flow on flow synergies acquisition XXXX the forma included debt. cash and additional the the free cash the the

guidance of Lastly, million to of slightly $XXX Vivint basis. on plus range we guidance, incorporated the a or have consolidated midpoint the addition higher minus a our from

turning Now brief a XX our slide capital update XXXX to for allocation. on

is Astoria, for and indicating million in right standalone left growth the inflow $XXX of asset $X.XXX with Moving to free $XXX There billion. inclusive target from leverage of XXXX, This captured $XXX of million excess energy of shading change to neutral This provision. the million the sales. roughly cash flow below sale no full XXXX excess impact cash $X.XXX guidance year plus of updates. billion, proceeds finance. net $XXX including million blue additional also the includes from of cash equals the $X.XXX expected of billion, debt

reduction. includes $XXX cash expenses This the and Vivint Moving million debt on of expected to balance, requirement cash cash Vivint. $XXX for $XXX minimum utilized about of million the utilization, of million $XXX integration Vivint of additional net cash, in million NRG

remuneration cash the $XXX The for growth investments have of totaled dividend million we the million, including initiatives. to issued preferred our to equity of Next, March. $XX about holders the and allocation in

Now, bar. moving to the far right

a visibility remaining future target expect for our program methods, the total repurchase available of slide. fund million We share in achieving XXXX detailed This which of are allocation. $XXX will credit the upon full next

We slide we partially This committed and to remain we lower a does -- last EBITDA, lower mitigated our change updated by since not balance to substantially higher energy slide adjustment XX. turning Quickly partially sheet. updated [indiscernible]. a strong the slightly just update,

and We leverage net we metrics for debt-to-adjusted on XXXX reduction ratio and metrics, growth. are on by XXXX EBITDA, ready later achieving which are XXXX our a focused and approximately through times target investment-grade X.X debt track include both credit

you Mauricio. to Back

Mauricio Gutierrez

Alberto. you, Thank

quarter today's presentation. balance well first and delivered to the of XX. Turning to for the results I the a year. provide are on want thoughts positioned for We strong closing slide few

our acquisition the growth and complete, With to Vivint we synergies. focus integration, turn

well forward you execution. comprehensive home and on efforts it is update about Investor strategy I providing all business upcoming our to and are now underway, Day. Our at a our look

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

Operator

comes will you. of a our Bank And this session. question question-and-answer Instructions] with [Operator conduct time, And Julien Thank we America. Dumoulin-Smith first at from

Julien Dumoulin-Smith

Appreciate Thank morning the it. very for time. team. done good you here. Hey much guys Nicely

Mauricio Gutierrez

Julien. Hey morning, good

Julien Dumoulin-Smith

morning, Good Pleasure. Mauricio.

in more synergy million How tie synergies, through consolidated Vivint just you're translating million for can Just laying we million least a here XX% out -- well? the wanted again? does up it and fit you $XXX if scorecard do I about And/or, with EBITDA how Vivint to today, you've to the at cost got here Just target bit to $XXX here. you that revenue be on $XXX best as FCF to XX% that respectively. as out little follow think and mean to try and back the want specific. thinking can

Mauricio Gutierrez

Yes.

synergies, when about the we we're free you capability assuming provide revenue to flow our lay the return. share or I'm And on support Julien, be cost flow synergies top million and then we talking look the that that, free at you that XX% of that per to very that per cash and So to XX% XX% NRG cash $XXX flow on of and on going feel cash you're target EBITDA growth. that generation share achieve of path confident XX% free

we have of a excess matter generate now Vivint traditional on more reduce The one we acquisition financial As fact, that achieving buy little flexibility, denominator. stock. have that. price what the us be of bit gives cash is on that control the a at needed, cannot the control our tremendous there we variable that Remember, we before can the back will NRG used and we to

control Now XXXX. this $XXX $XX.XX for more that the in laid and just incremental with we this put increase achievement the engine the the opportunity increased numerator. have to value, we Vivint out the tools create we have to million that And of of

out share very feel laid calls achieving I on that previous that what with XXXX. and that to today by comfortable $XX.XX track So are in we a we

Julien Dumoulin-Smith

Right.

that platform yeah, clearly to synergies. the initial And what XX% about So you to be point, to at -- layering grow guidance else is with the Day. focused note additional with updated Vivint Analyst assumptions on the on the Any I'll XX%. here done as rolling to this more can out it. thoughts really outset on potentially think continue commentary

can at do compounding period how revenue Maybe XXXX here of you're talked go here first far Analyst prospective beyond that you you growth initial today? years, about couple about Day. providing this thoughts that the think on any You how and in the

Mauricio Gutierrez

first that consumer was the on, also opportunity business I we're are high business, has focused say leverage. I will going when high that about think an leverages Well, big the Vivint is the and there thing Right. the cost there high, a had was on three be It acquisition financing. Vivint to

these value we're creates So focused for an that me, creation. for And on three it buckets specific optimizing. opportunity are

customers have. Now million focused we optimizing we're on worth right X.X net that the now,

the We're have to communication our -- We opened to going to introduced we're of have we sales going continue them. optimize channels lines bundling. across

are cross-sell centers between doing digital call and assets. our We our now

We bundle. are testing the in market

and the best-in-class is our customers think is beyond, XXXX product focus is that smart I that currently one on When a in how the have XXXX right on how that growth offerings we with together about smart we the energy, create it's one drive home. going now. on do that bring in this experience and be about This the the something to So that a we we about with Day two to more vision that talking really beyond. home Investor experience going energy and for have comes have we're we

and investors So investor. make upcoming real we it will for our more all tangible at the

Julien Dumoulin-Smith

Wonderful. All right. day. much. very guys Have I’ll leave it a there. Thank great you

Mauricio Gutierrezk

Thank you, Julie.

Operator

would I time, turn like closing Mauricio for to it this At comments. back to

Mauricio Gutierrezk

be forward for our NRG. Okay. summer to home transparency performance provide we're of additional indicators talking should about upcoming going Well, early going we in to hosting business. model that our the you provide the plan our smart have and on in will that Thank your more to growth key interest in better you I Day you. where you all help look details on you We're thank Investor strategy.

speaking your Thank with I soon. that, want thank you. you forward look interest So to and to you with for

Operator

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

NRG Energy (NRG) 4 May 232023 Q1 Earnings call transcript