Vistra Reports Lower Customer Count Versus Q1 2020
Retail Segment Earnings Higher On Acquisitions
Vistra "Active" In Reviewing Retail Book Acquisition Opportunities From REPs Experiencing Stress From COVID-19
August 5, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
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Vistra, the parent of TXU and other retail brands, reported earnings for the quarter ending June 30, 2020.
Vistra reported second quarter Adjusted EBITDA for the Retail segment of $401 million, $108 million higher than the $293 million recorded in the second quarter of 2019, driven by the acquisitions of Crius and Ambit
On a GAAP basis, net income for the Retail segment was $229 million, versus a GAAP loss of $585 million a year ago, which reflects unrealized impacts from hedging
Vistra reported its residential retail customer count as 2.764 million as of Q2 2020, versus 2.791 million as of Q1 2020, and 1.528 million as of a year ago. The residential customer count reflects direct-to-consumer electric/gas residential counts excluding municipal aggregation and international customers.
Vistra said in a presentation that it, "grew residential counts in ERCOT across all retail
brands while managing operational and channel impacts
The decline in residential customer count versus Q1 2020 was attributed to the Northeast, due to COVID-related restrictions on certain sales channels.
Vistra also said that it, "Exceeded Business Markets sales performance goals for
Retail volumes for the second quarter were as follows:
Total Retail operating revenues were $1.956 billion for the second quarter of 20202, versus $1.421 billion a year ago
Retail operating revenues in ERCOT were $1.426 billion for the second quarter of 2020, versus $1.110 billion a year ago
With respect to opportunities for inorganic retail growth through book purchases from retail suppliers experiencing stress from COVID-19, Vistra CEO Curt Morgan said, "We have seen pockets of books and companies that have seen some signs of stress," but Morgan noted that, in ERCOT, summer hasn't "shown up" yet, providing some relief to such retail providers
"We're active," in reviewing any such retail book opportunities, Morgan said, who expects more books to become available if scarcity pricing, which Vistra expects, occurs in ERCOT
COO Jim Burke added that Vistra is, "constantly monitoring the [retail] market for [book] opportunities."
Morgan stressed that Vistra is looking for "quality books" that provide value, warning that the value of several retail suppliers has atrophied because the books were built on door-to-door or other face-to-face channels that have been challenged from COVID-19.
Concerning capital allocation, Vistra said that, for 2020, the priority is to reduce debt to track toward long-term leverage target of ~2.5x Net Debt/EBITDA. Vistra anticipates >$1.3 billion of capital will be allocated toward debt reduction in 2020, with ~$750 million of debt paid down as of July 31, 2020
For 2021, core tenants of Vistra's long-term capital allocation plan are
• Maintain balance sheet strength
• Capital allocated to growth investments on an
opportunistic basis in retail and renewables only if
investment thresholds are met
• Most of capital returned to stakeholders including via
share repurchases and a competitive dividend
Vistra reported that it is projected to achieve nearly $700 million of the ~$760 million of identified Dynegy, Crius Energy, and Ambit Energy transaction synergies and Operations Performance Initiative (OPI) EBITDA value lever targets by year-end 2020