NRG Energy Q1 2010 Earnings Call Transcript

NRG Energy Q1 2010 Earnings Call Transcript
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NRG Energy (NRG)

Q1 2010 Earnings Call

May 10, 2010 9:00 am ET

Executives

Jason Few - SVP of Mass Markets and Operations, Reliant Energy, Inc.

John Ragan - Chief Operating Officer and Executive Vice President

David Crane - Chief Executive Officer, President, Executive Director and Member of Nuclear Oversight Committee

Mauricio Gutierrez - Senior Vice President of Commercial Operations

Christian Schade - Chief Financial Officer and Executive Vice President

Nahla Azmy - Vice President of Investor Relations

Gerald Luterman - Director, Member of Audit Committee and Member of Finance Committee

Analysts

Dan Eggers - Crédit Suisse

Michael Lapides - Goldman Sachs Group Inc.

Brandon Blossman - Tudor Pickering

Ameet Thakkar - BofA Merrill Lynch

James Dobson - Wunderlich Securities Inc.

Neel Mitra - Simmons & Company

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the NRG Energy First Quarter 2010 Earnings Conference Call. My name is Channel, and I'll be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Ms. Nahla Azmy. Please proceed.

Nahla Azmy

Thank you, Channel. Good morning, and welcome to our first quarter 2010 earnings call. This call is being broadcast live over the phone and from our website at www.nrgenergy.com. You can access the call presentation and press release through a link on the Investor Relations page of our website. A replay of the call will also be available on our website. This call, including the formal presentation and question-and-answer session, will be limited to one hour. In the interest of time, we ask that you please limit yourself to one question with just one follow up.

And now for the obligatory Safe Harbor statement. During the course of this morning's presentation, management will reiterate forward-looking statements made in today's press release regarding future events and financial performance. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors contained in our press release and other filings with the SEC that could cause actual results to differ materially from those in the forward-looking statements in this press release and this conference call.

In addition, please note that the date of this conference call is May 10, 2010, and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events, except as required by law.

During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the company's operating and financial results. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to today's press release and this presentation.

And now with that, I'm pleased to turn the call over to David Crane, NRG's President and Chief Executive Officer.

David Crane

Well, thank you, Nahla, and let me add my welcome to everyone. Good morning. Welcome to our first quarter 2010. While I'm speaking to you from Tokyo, joining me in Princeton and speaking on this call are John Ragan, our Chief Operating Officer; Gerry Luterman and Chris Schade, our outgoing and incoming Chief Financial Officers. Also, with us in Princeton and available to answer any specific questions you might ask on the call are Mauricio Gutierrez, who runs our Commercial Operations business; and Jason Few, who is responsible for our Retail business. So let's begin.

Ladies and gentlemen, the shareholders of NRG, thank you for being patient and waiting until the very end of the first quarter reporting period for our earnings release. Today, we're pleased to bring you exciting news, both about the extraordinary financial results, which we achieved in the first quarter 2010 and also about the agreement signed today here in Tokyo with Tokyo Electric Power Company to invest in the South Texas Project, STP 3 & 4.

First, with respect to the quarter, Gerry and Chris will report to you more fulsomely in a few minutes. But I simply want to emphasize you the magnitude and significance of what the women and men who make up NRG have achieved: a 26% increase in the first quarter compared to what was considered by most to be a very strong first quarter 2009. Our $601 million of adjusted EBITDA for the quarter was fueled by strong operating performance across all regions and all business segments. Of course, the two factors which made this number most possible in the face of a declining commodity price environment and generally weak economic conditions were our effective and farsighted forward hedging program and the exceptional performance, financially and operationally, of our Retail Energy business in Texas.

We have spoken to the financial community repeatedly in the past about the strength of our wholesale and retail combination in Texas. Our strength that is unique among competitive power generation companies and today, you have another data point which visibly demonstrates that strength. In a quarter that was challenging for our Generation business as a result of macroeconomic conditions, our Retail business more than picked up the slack financially. Indeed, our Retail business, ably led by Jason and his team, not only posted exceptional results, they also largely stabilized the Mass business from a customer-account perspective and took giant strides towards resurrecting our C&I business in Texas. You will hear more about our strength and improved performance across all performance metrics in the Retail segment in the months to come.

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