Previous Statements by RRI
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I would remind you that the principal near-term drivers of our open and adjusted EBITDA are commodity prices. We have provided some commodity price sensitivities that allow you to generally understand the impact commodity price changes would have on an outlook.Turning to Slide 2 of the presentation, all projections or forward-looking statements we make today, including about the proposed merger with Mirant, are based on our current expectations and involve risks, assumptions, and uncertainties. These statements are subject to the Safe Harbors contained in the slide. Actual results may differ materially from our projections or forward-looking statements as a result of many factors, including those described in this slide and in our SEC filings. The Safe Harbors in Slide 3 describe how you may obtain copies of our SEC filed materials related to the proposed merger. We urge you to read all these Safe Harbors and the referenced materials. I will now turn it over to Mark. Mark Jacobs Welcome to our third quarter earnings call. This morning, we released our Q3 2010 results, which are summarized on Slide 5. We reported open and adjusted EBITDA of $212 million. For the first nine months of the year, open EBITDA was $241 million and adjusted EBITDA was $244 million. 2010 year-to-date free cash flow is $84 million. Each of these figures was up significantly versus 2009. Rick will take you through the results in more detail, but the headlines are the Q3 results were bolstered by significantly warmer than normal weather in Eastern US and market conditions have improved in 2010, but reflected challenging commodity price in economic environment. On Slide 6, I will provide you an update on the pending merger with Mirant. The key takeaway is that we have made significant progress since our last earnings call and we are on track to close the merge by the end of the year. Last week shareholders of both RRI and Mirant overwhelming approved the merger. My take is that our shareholder see, as we do that this transaction creates significant value.
In September, we have raised funded debt in a range for new revolving credit facility, which will satisfy the financing condition in the merger agreement. GenOn will have a strong balance sheet and attractive debt maturity profile and adequate liquidity.The transaction has been cleared by the Federal Energy Regulatory Commission and the New York State Public Service Commission. There is one remaining item to be completed before we close the merge and that’s Federal Antitrust Clearance. We are working closely with the Department of Justice in its review with the transaction and we are not aware of any material issues. Once we receive antitrust clearance, we will be prepared to close the merger promptly. I have been very pleased with the integration efforts to-date. Our respected teams are working very well together and they have made excellent progress. I am confident the GenOn is ready for day one operation. Before I turn the call over to Rick, I want to touch on the external landscape on Slide 7. Market fundamentals have improved, but continue to be challenging. On a year-over-year basis Eastern US power demand was up over 9% in Q3 versus last year. Weather played a large role this increase. Higher demand translated into improved market prices. Average on-peak power prices at PJM West hub for Q3 were up over $24 per megawatt hour versus last year. Improved heat rates were significant contributor of better power prices in Q3 with average on-peak heat rates increasing from 11.8 in 2009 to 13.8 in 2010. It’s noteworthy that an increase in demand, in this case due to weather, led to a significant increase in heat rates. To me, it demonstrates the leverage to a recovery and supply/demand fundamentals. Read the rest of this transcript for free on seekingalpha.com