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NRG Energy, Inc. Reports Full-Year And Fourth Quarter Results; Increases Merger Synergies; Increases Dividend And Announces Share Buyback Program

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Adjusted EBITDA guidance and free cash flows are estimates as of today’s date, February 27, 2013 and are based on assumptions believed to be reasonable as of this date. NRG expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect NRG’s future results included in NRG’s filings with the Securities and Exchange Commission at www.sec.gov. In addition, NRG makes available free of charge at www.nrgenergy.com (in the “Investors” section), copies of materials it files with, or furnishes to, the SEC.



NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

     

(Unaudited)

Three months ended December 31,

       

Twelve months ended December 31,

2012       2011 2012       2011

(In millions, except for per share amounts)

Operating Revenues
Total operating revenues $2,063 $2,132 $8,422 $9,079
Operating Costs and Expenses
Cost of operations 1,469 1,690 6,087 6,675
Depreciation and amortization 247 231 950 896
Impairment charge on emissions allowance 160
Selling, general and administrative 211 189 892 668
Acquisition-related transaction and integration costs 89 107
Development costs 10 13 36 45
Total operating costs and expenses 2,026 2,123 8,072 8,444
Operating Income 37 9 350 635
Other Income/(Expense)
Equity in earnings of unconsolidated affiliates 11 9 37 35
Bargain purchase gain related to GenOn acquisition 560 560
Impairment charge on investment (2) (495)
Other income, net 5 6 19 19
Loss on debt extinguishment (10) (51) (175)
Interest expense (166) (161) (661) (665)
Total other expense 400 (146) (98) (1,281)
Income/(Loss) Before Income Taxes 437 (137) 252 (646)
Income tax benefit (81) (28) (327) (843)
Net Income/(Loss) 518 (109) 579 197
Less: Net income attributable to non-controlling interest 2 20
Net Income /(Loss) Attributable to NRG Energy, Inc. 516 (109) 559 197
Dividends for preferred shares 2 2 9 9
Income/(Loss) Available for Common Stockholders $514 ($111) $550 $188
Earnings/(Loss) Per Share Attributable to NRG Energy, Inc. Common Stockholders
 
Weighted average number of common shares outstanding — basic 247 229 232 240
Net Income/(Loss) per weighted average common share — basic $2.08 ($0.48) $2.37 $0.78
Weighted average number of common shares outstanding —diluted 249 229 234 241
Net Income/(Loss) per weighted average common share —diluted $2.06 ($0.48) $2.35 $0.78
Dividends Per Common Share $0.18 $— $0.18 $—
 
 
 

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)

     

(Unaudited)

Three months ended December 31,

      Twelve months ended December 31,
2012     2011 2012     2011
Net Income/(Loss) $518 ($109) $579 $197
Other Comprehensive Income/(Loss) net of tax
Unrealized loss on derivatives, net of income tax benefit of $18, $50, $94 and

$181

(31) (84) (163) (309)
Foreign currency translation adjustments, net of income tax benefit (expense) of $0,( $3) $1 and $1 3 (1) (2)
Reclassification adjustment for translation gain realized upon sale of Schkopau, net of income tax benefit of $0,$0,$6 and $0 (11)
Available – for-sale securities, net of income tax benefit of $2, ($1), $1 and $0 1 1 3 (1)

Defined benefit plan, net of income tax benefit of $22, $27, $21 and $27

(52) (47) (52) (46)
Other comprehensive loss (82) (127) (224) (358)
Comprehensive Income/( Loss) 436 (236) 355 (161)
Less: Comprehensive income attributable to non-controlling interest 2 20
Comprehensive Income /(Loss) Attributable to NRG Energy, Inc. 434 (236) 335 (161)
Dividends for preferred shares 2 2 9 9
Comprehensive Income /(Loss) available for common stockholders $432 ($238) $326 ($170)
 
 
 

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2012         December 31, 2011

(In millions, except shares)

ASSETS
Current Assets
Cash and cash equivalents $

2,087

$

1,105

Funds deposited by counterparties 271 258
Restricted cash 217 292
Accounts receivable — trade, less allowance for doubtful accounts of $32 and $23 986 834
Inventory 931 308
Derivative instruments 2,644 4,427
Cash collateral paid in support of energy risk management activities 229 311
Deferred income taxes 56 -
Prepayments and other current assets 535 214
Total current assets 7,956 7,749
Property, plant and equipment, net of accumulated depreciation of $5,417 and $4,570 20,268 13,621
Other Assets
Equity investments in affiliates 676 640
Note receivable — affiliate and capital leases, less current portion 79 342
Goodwill 1,956 1,886
Intangible assets, net of accumulated amortization of $1,706 and $1,452 1,200 1,419
Nuclear decommissioning trust fund 473 424
Derivative instruments 662 483
Deferred income taxes 1,261 -
Other non-current assets 597 336
Total other assets 6,904 5,530
Total Assets $

35,128

$

26,900

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt and capital leases $

147

$

87

Accounts payable 1,170 808
Derivative instruments 1,981 4,029
Deferred income taxes - 127
Cash collateral received in support of energy risk management activities 271 258
Accrued interest 191 165
Other accrued expense 567 281
Other current liabilities 350 106
Total current liabilities 4,677 5,861
Other Liabilities
Long-term debt and capital leases 15,733 9,745
Nuclear decommissioning reserve 354 335
Nuclear decommissioning trust liability 273 254
Postretirement and other benefit obligations 803 400
Deferred income taxes 55 1,389
Derivative instruments 500 459
Out-of-market commodity contracts 1,216 183
Other non-current liabilities 735 356
Total non-current liabilities 19,669 13,121
Total Liabilities 24,346 18,982
3.625% convertible perpetual preferred stock; $0.01 par value; 250,000 shares issued and outstanding (at liquidation value of $250, net of issuance costs) 249 249
Commitments and Contingencies
Stockholders’ Equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 399,112,616 and 304,183,720 shares issued and 322,606,898 and 227,519,521 shares outstanding at December 31, 2012 and 2011 4 3
Additional paid-in capital 7,587 5,346
Retained earnings 4,494 3,987
Less treasury stock, at cost — 76,505,718 and 76,664,199 shares at December 31, 2012 and 2011

(1,920

)

(1,924

)
Accumulated other comprehensive (loss) income

(150

)

74
Non-controlling interest 518 183
Total Stockholders’ Equity 10,533 7,669
Total Liabilities and Stockholders’ Equity $

35,128

$

26,900

 
 
 

NRG ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
2012       2011
(In millions)
Cash Flows from Operating Activities
Net income $ 579

 

 

$ 197
Adjustments to reconcile net loss to net cash provided by operating activities:
Distributions and equity in earnings of unconsolidated affiliates 2 9
Gain on bargain purchase (560)
Depreciation and amortization 950 896
Provision for bad debts 45 59
Amortization of nuclear fuel 39 39
Amortization of financing costs and debt discount/premiums 31 32
Loss on debt extinguishment 9 58
Amortization of intangibles and out-of-market commodity contracts 146 167
Amortization of unearned equity compensation 41 28
Loss on disposals and sale of assets 11 14
Impairment charges and asset write downs 657
Changes in derivative instruments 124 (138)
Changes in deferred income taxes and liability for uncertain tax benefits (353)

 

(859)
Changes in nuclear decommissioning trust liability 37 20
Cash (used)/provided by changes in other working capital, net of acquisition and disposition effects:
Accounts receivable – trade (131)

 

(119)
Inventory (172) 145
Prepayments and other current assets (26) 59
Accounts payable (132)

 

9)
Accrued expenses and other current liabilities 231 (111)
Other assets and liabilities   278         4
Net Cash Provided by Operating Activities   1,149

 

      1,166
Cash Flows from Investing Activities
Acquisitions of business, net of cash acquired (81) (377)
Cash acquired in GenOn acquisition 983
Capital expenditures (3,396)

 

(2,310)
Increase in restricted cash, net (66)

 

(35)
Decrease /(increase) in restricted cash to support equity requirements for U.S. DOE funded projects 164 (215)
(Increase)/Decrease in notes receivable (24)

 

12
Proceeds from renewable energy grants 62

Purchases of emission allowances, net of proceeds

(1) (19)
Investments in nuclear decommissioning trust fund securities (436) (406)
Proceeds from sales of nuclear decommissioning trust fund securities 399

 

385
Proceeds from sale of assets, net 137 7
Investments in unconsolidated affiliates (25) (66)
Other   22         (23)
Net Cash Used by Investing Activities   (2,262)

 

      (3,047)
Cash Flows from Financing Activities
Payment of dividends to preferred and common stockholders (50) ) (9)
(Payments for)/net receipts from settlement of acquired derivatives that include financing elements (68) (83)
Payment for treasury stock

 

(430)
Sale proceeds and other contributions from non-controlling interests in subsidiaries 347 29
Proceeds from issuance of common stock 2
Proceeds from issuance of long-term debt 3,165 6,224
Payments for term loan for funded letter of credit (1,300)
Decrease in restricted cash supporting funded letter of credit 1,300
Payment of debt issuance and hedging costs (35)

 

(207)
Payments for short and long-term debt   (1,260)

 

      (5,493)
Net Cash Provided by Financing Activities   2,099         33
Effect of exchange rate changes on cash and cash equivalents   (4)         2
Net Increase/( Decrease) in Cash and Cash Equivalents 982

 

(1,846)
Cash and Cash Equivalents at Beginning of Period   1,105         2,951
Cash and Cash Equivalents at End of Period $ 2,087         $

 

1,105
 
 
 

Appendix Table A-1: Fourth Quarter 2012 Regional Adjusted EBITDA ReconciliationThe following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)

                                                     
(dollars in millions)       Retail       Texas      

SouthCentral

      East       West      

OtherConventional

      Alt. Energy       Corp.       Total
Net Income/(Loss) 37 108 2 (19) 17 8 (12) 377 518
Plus:
Net Income Attributable to Non-Controlling Interest - - - - - - (2) - (2)
Income Tax - - - - - (1) - (80) (81)
Interest Expense 1 - 4 7 1 1 12 140 166
Depreciation, Amortization and ARO Expense 36 116 24 43 5 5 18 4 251
Loss on Debt Extinguishment - - - - - - - 10 10
Amortization of Contracts       32       9       (5)       (1)       -       -       -       -       35
EBITDA 106 233 25 30 23 13 16 451 897
Merger & Transaction Costs - - - - - - - 89 89
Bargain Purchase Gain - - - - - - - (560) (560)
Asset and Investment Write-offs - - 9 - - - - - 9
MtM losses/(gains) 46 (43) (18) 4 (5) - 1 - (15)
                                                                         
Adjusted EBITDA       152       190       16       34       18       13       17       (20)       420
 
 

Appendix Table A-2: Fourth Quarter 2011 Regional Adjusted EBITDA ReconciliationThe following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)

                                                     
(dollars in millions)       Retail       Texas      

SouthCentral

      East       West      

OtherConventional

      Alt. Energy       Corp.       Total
Net Income/(Loss)       19       123       (60)      

(73)

      3       5       (15)       (111)       (109)
Plus:
Income Tax - - - - - 1 - (29) (28)
Interest Expense 1 - 9 9 1 3 4 134 161
Depreciation, Amortization and ARO Expense 45 117 24 30 4 3 9 2 234
Amortization of Contracts       51       13       (4)                       1               -       61
EBITDA 116 253 (31) (34) 8 13 (2) (4) 319
Asset and Investment Write-offs - 2 - 12 - - - - 14
MtM losses/(gains) 44 (55) 50 16 6 - (4) - 57
                                                                         
Adjusted EBITDA       160       200       19       (6)       14       13       (6)       (4)       390
 
 

Appendix Table A-3: YTD 2012 Regional Adjusted EBITDA ReconciliationThe following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/(loss)

                                                     
(dollars in millions)       Retail       Texas      

SouthCentral

      East       West      

OtherConventional

      Alt. Energy       Corp.       Total
Net Income/(Loss)       541       (94)       2       (39)       59       33       (34)       111       579
Plus:
Net Income Attributable to Non-Controlling Interest - - - - - - (20) - (20)
Income Tax - - - - - 3 - (330) (327)
Interest Expense 4 - 18 20 2 11 46 560 661
Depreciation, Amortization and ARO Expense 162 461 93 140 16 17 59 12 960
Loss on Debt Extinguishment - - - - - - 51 51
Amortization of Contracts       115       41       (20)       (1)       -       1       -       -       136
EBITDA 822 408 93 120 77 65 51 404 2,040
Merger & Transaction Costs - - - - - - - 112 112
Bargain Purchase Gain - - - - - - - (560) (560)
Legal Settlement - - 14 - 20 - - - 34
Asset and Investment Write-offs - 8 9 - - - - 5 22
MtM losses/(gains) (166) 464 (17) (3) (10) - 1 - 269
                                                                         
Adjusted EBITDA       656       880       99       117       87       65       52       (39)       1,917
 
 

Appendix Table A-4: YTD 2011 Regional Adjusted EBITDA ReconciliationThe following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income/ (loss)

                                                     
(dollars in millions)       Retail       Texas      

SouthCentral

      East       West      

OtherConventional

      Alt. Energy       Corp.       Total
Net Income/(Loss)       369       316       (14)       (86)       54       19       (57)       (404)       197
Plus:
Income Tax (3) - - - - 7 - (847) (843)
Interest Expense 4 (16) 41 47 2 15 16 556 665
Depreciation, Amortization and ARO Expense 159 466 89 120 13 14 31 12 904
Loss on Debt Extinguishment - - - - - - - 175 175
Amortization of Contracts       169       56       (20)       -       -       1       -       -       206
EBITDA 698 822 96 81 69 56 (10) (508) 1,304
Asset and Investment Write-offs - 170 - 12 - - - 495 677
MtM losses/(gains) (34) (150) 29 (5) 4 - (5) - (161)
                                                                         
Adjusted EBITDA       664       842       125       88       73       56       (15)       (13)       1,820
 
 

Appendix Table A-5: 2012, 2013 and 2014 Adjusted EBITDA and FCF before Growth Investments (Current) to Adjusted EBITDA and FCF before Growth Investments (Revised)The following table summarizes the calculation of Adjusted EBITDA (Current) to Adjusted EBITDA (Revised) and FCF before Growth Investments (Current) to FCF before Growth Investments (Revised)

                             
(dollars in millions) 2012 2013 2014
Adjusted EBITDA (Current) 1,917 2,535-2,735 2,7002,900
+ GAAP Net income attributable to non-controlling interests e.g. Agua Caliente, Ivanpah 19 10 15
+ Adjustment to reflect NRG Share of Adjusted EBITDA in unconsolidated affiliates, e.g. GenConn, Saguaro, Gladstone 55 50 50
+ Deactivation costs 3 30 5
— Interest income       (9)             (10)             (10)
Adjusted EBITDA (Revised)       1,985             2,615-2,815             2,760-2,960
Free Cash Flow Before Growth Investments (Current) 898 900-1,100 900-1,100
— Distributions to non-controlling shareholders

e.g. Agua Caliente1, Ivanpah 1

                             
Free Cash Flow Before Growth Investments (Revised)       898             900-1,100             900-1,100

1 Distributions to minority shareholders for Agua Caliente and Ivanpah will only begin in 2015 per terms of underlying credit agreements

 
 

Appendix Table A-6: 2012, 2013 and 2014 Pro rata Adjusted EBITDA and Pro-rata Debt apportioned to Non-controlling interestsThe following table summarizes the pro-rata Adjusted EBITDA and Debt associated with the Non-controlling interests, as well as the addition of NRG’s pro-rata debt in unconsolidated affiliates

                         
(dollars in millions) 2012 2013 2014
Adjusted EBITDA (Revised) 1,997 2,6152,815 2,7602,960
—Pro-rata Adjusted EBITDA associated with non-controlling interests

e.g. Agua Caliente, Ivanpah

      (19)           (60)           (105)
NRG Adjusted EBITDA (Revised) 1,978 2,555-2,755 2,655-2,855
 
Consolidated Debt 15,485 15,860 15,865
Less Short-term debt to finance cash grant       (470)           (290)          
Consolidated Debt net of short-term debt to finance cash grant 15,015 15,570 15,865
—Pro-rata Debt associated with non-controlling interests

e.g. Agua Caliente, Ivanpah

(1,033) (1,045) (1,040)
+ Pro-rata Debt associated with unconsolidated affiliates       233           225           210
NRG associated Debt 14,215 14,750 15,035
 
 

Appendix Table A-7: 2012 Full-Year Adjusted Cash Flow from Operations ReconciliationThe following table summarizes the calculation of adjusted cash flow operating activities providing a reconciliation to net cash provided by operating activities

     
(dollars in millions)

Twelve months ended December 31, 2012

Twelve months ended

December 31, 2011

Net Cash Provided by Operating Activities 1,149 1,166
Less: Reclassifying of net payments for settlement of acquired derivatives that include financing elements (68) (83)
Add: Genon Merger and integration costs 46      
Adjusted Cash Flow from Operating Activities 1,127       1,083
 
 

Appendix Table A-8: YTD 2012 GenOn Energy, Inc. Adjusted EBITDA ReconciliationThe following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net loss

(dollars in millions)       GenOn Energy, Inc.
Net Loss       (486)
Plus:      
Income Tax 15
Interest Expense, net 338
Depreciation, Amortization and ARO Expense       349
EBITDA 216
Asset and Investment Write-offs and impairments 68
MtM losses 180
Merger related costs 71
Plant deactivation costs 54
Legal settlements (52)
Other, net 6
         
Adjusted EBITDA       543
 
 

EBITDA, Adjusted EBITDA and Adjusted EBITDAR are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.

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