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NRG Energy, Inc.
CEO : Mr. Mauricio Gutierrez

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	11.5% YoY	168.1%	156.5%	2023-02-16

Mauricio Gutierrez says,

Financial Results for 2022 and 2023 Outlook

• NRG delivered $435 million of adjusted EBITDA in Q4 2022 and $1.754 billion for the full year, which is below expectations.
• Reaffirming 2023 financial guidance ranges and expecting improving fundamentals in the business.
• Targeting $500 million in net cash proceeds from asset sales by the end of 2023.
• Expecting growing ideation products and services, completing the direct energy integration and increasing the number of customers that purchase multiple products from NRG.

Vivint Smart Home Acquisition

• The acquisition is on track to close by the end of Q1 2023.
• Providing further disclosures around revenue synergies to ensure additional tools to properly value the transaction.
• Vivint is a leader in smart home solutions with nearly 2 million highly engaged customers with an average life of 9 years.
• The acquisition of Vivint enhances NRG’s ability to achieve its free cash flow before growth per share targets by using their smart home ecosystem to connect all their currently isolated products and services into a seamless experience that is highly engaging and personalized.

Value Opportunities of the Combination

• Expecting $300 million of incremental free cash flow before growth by 2025, primarily from growing and optimizing the network of customers.
• Identified $100 million of gross synergies to be achieved by 2025, primarily from combining two public companies.
• Cross-selling means direct access to NRG’s customers in the East and expanding margin and extending customer lifetime value.

Capital Allocation Plan

• Expecting the growth opportunity to require $500 million to $600 million in capital over the next three years.
• Combination provides the financial flexibility to have a balanced approach between growth and return of capital while maintaining a strong balance sheet.
• Expecting to execute the remaining amount of $1 billion share repurchases program when cash is available and when full visibility to achieve targeted credit metrics.

Direct Energy Integration

• The integration nearing completion and on track to deliver run rate synergy targets in 2023.
• The focus is on optimizing the portfolio to better serve NRG’s customers.

Alberto Fornaro says,

Lower-than-expected Q4 2022 Results

• Q4 adjusted EBITDA of $435 million was below the guidance range by $196 million;
• Lower-than-expected power prices, especially on on-peak prices in Texas, resulted in reduced profitability from the generation fleet;
• Winter storm Elliott caused approximately $80 million in negative impact, primarily due to capacity performance in PJM and increased power purchases in ERCOT.

2022 Full Year Results

• Full year adjusted EBITDA of $1.754 billion fell short of the midpoint of guidance by $346 million;
• Extended outage at Parish with $220 million of lost margin partially offset by business interruption proceeds of $52 million;
• Winter storm Elliott had an estimated $80 million impact;
• Incremental $44 million of pension expenses resulting from reduced prices of financial assets in the second half of the year and some increased O&M expenses;
• Reduced earnings of $15 million for the divestiture of Watson and $16 million of growth expenses.

2023 Guidance

• Reaffirmed full-year guidance for both adjusted EBITDA and free cash flow before growth;
• Winter storm Yuri net cost reduced to approximately $259 million from $380 million in 2021;
• Direct energy synergies achieved total $259 million, and the remaining synergies will be completed in 2023;
• $434 million is expected to be available for future allocation which will fund the remaining share repurchase program upon full visibility of achieving 2023 target credit metrics.

Capital Allocation Plan

• Excess cash from 2022 plus proceeds from the sales of Astoria equals $249 million in the bottom left;
• Vivint has a full year free cash flow below growth of $1.73 billion including energy stand-alone guidance of $1.62 billion plus pro forma $110 million for EBIT and $300 million of cash available;
• Targeting $500 million of leverage neutral net inflow from asset sales;
• Expecting total $434 million available for future allocation to fund the remaining share repurchase program.

Q & A sessions,

2023 Financial Guidance

• The company expects 2023 to be more conservative than 2022, with more reliable plans and conservative assumptions.
• The guidance is in line with what was provided at the Investor Day and is a little more conservative given the volatility in the market.
• The company expects to achieve its guidance with the current tailwinds, falling gas prices, and opportunities in the East market.

Generation and Supply Strategy

• The company’s supply strategy is divided into three buckets: generation, medium-term PPAs, and market purchases.
• The company is investing in additional maintenance CapEx to increase the reliability of their units.
• The company is diversifying its risk by trading operational risk or counterparty risk, credit risk, and diversifying the risk of all-generation and all-operational risk.

Financial Results

• NRG delivered $435 million of adjusted EBITDA in Q4 2022, bringing the full-year result to $1.754 billion, which was below expectations.
• The company executed $645 million of share repurchases out of the $1 billion program and increased its dividend by 8%.

2023 Outlook

• The company is reaffirming its 2023 financial guidance ranges and sees improving fundamentals in its business.
• The company is targeting $500 million in net cash proceeds from asset sales by the end of the year.
• The company is focused on expanding its capital-light PPA program for renewables to dispatchable generation.

Vivint Smart Home Acquisition

• The acquisition of Vivint Smart Home is expected to close by the end of Q1 2023 and is on track.
• The company will use Vivint’s smart home ecosystem to connect all its products and services into a seamless, personalized experience.
• The engagement will provide valuable insights into pricing, customer experience, and new solutions that create greater brand loyalty and longer customer lifetime.