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TXU Parent Cites Retail Acquisitions As Use For Capital, Looks For Retail Tuck-In Acquisitions, Organic Growth In Northeast

Vistra Reports Retail Customer Count, Change

February 26, 2018

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Reporting by Paul Ring • ring@energychoicematters.com

In discussing earnings for the year 2017 (see story here on results), Vistra Energy CEO Curt Morgan said that retail acquisitions remain a top potential use for capital after Vistra closes on the acquisition of Dynegy

Regarding capital allocation at the post-merger firm, which will produce significant cash flow, for the first 12 to 24 months following the close of the Dynegy acquisition, "our focus will be on paying down our debt to achieve our net debt-to-EBITDA target in the range of 2.5 times as we discussed before. We will of course, evaluate growth opportunities during this period, predominantly on the retail side," Morgan said during an earnings call

Morgan later reiterated this goal, as the company will, "pay down the debt, look for some tuck-in asset type things around our retail business," as initial priorities for capital allocation

Regarding any use of capital for growth of Vistra, Morgan said that any such growth will focus on retail, particularly in areas, such as the Northeast, where the combined Vistra-Dynegy will be long on generation.

"I think we are going to be a lot steadier about investments in the generation side of our business, outside of maybe renewables, and batteries and other things, that support our retail business, and I think our bigger focus is going to be more around our retail business," Morgan said

"[W]e are significantly long in [the] PJM and ISO New England markets, and we'd like to be shorter than that. So we are embarking on developing a strategy this year in 2018, we are already in the middle of it, on our retail business that's outside of Texas. And it's focused on a double prong -- [it's] not rocket science, we're going to try to grow organically, and then we will look for opportunities for acquisitions that we think have a compelling value proposition. We bring a lot to the table on that: one on expertise in retail, but secondly, we can wipe out a lot of costs that a company would bring, given just the scale of our business," Morgan said

In an earnings presentation, Vistra also reported its retail customer count

Vistra reported its residential retail customer count at 1.472 million as of December 31, 2017, versus 1.477 million as of Q3 2017, and 1.478 million as of December 31, 2016

As previously reported, Vistra reduced annual residential customer net attrition to 0.4%, its lowest level since 2008. Annual residential attrition had been 0.7% in 2016.

Vistra reported its business retail customer count (in meters) as approximately 203,000 at Q4 2017, versus 195,000 at Q4 2016

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