NRG Reports Second Quarter Earnings

August 6, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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NRG reported Adjusted EBITDA of $574 million for the second quarter of 2020, versus $469 million a year ago

As previously reported, NRG has revised its earnings reporting segment for its earnings releases, and no longer reports a Retail segment

Second quarter Income from Continuing Operations was $313 million versus $189 million a year ago

For NRG's Texas reporting segment, second quarter Adjusted EBITDA was $378 million, $52 million higher than second quarter of 2019. This increase is driven by the acquisition of Stream Energy and lower supply costs resulting from reductions in power and fuel prices, the company said

For NRG's East segment, second quarter Adjusted EBITDA was $138 million, $45 million higher than second quarter of 2019. This increase is driven by the acquisition of Stream Energy, lower supply costs due to reductions in power and natural gas prices and lower operating costs; partially offset by lower capacity revenues, NRG said

As of June 30, 2020, NRG cash was at $0.4 billion, and $1.8 billion was available under the Company’s credit facilities. Total liquidity was $2.2 billion, including restricted cash. Overall liquidity as of the end of the second quarter 2020 was $61 million higher than at the end of 2019, driven by free cash flow generated by the Company partially offset by share repurchases and the repayment of balances outstanding on NRG's revolver.

"As part of the Company's long-term capital allocation policy, the return of capital to shareholders during the first half of 2020 was comprised of a quarterly dividend of $0.30 per share, or $148 million, and share repurchases of $228 million through August 6, 2020 at an average price of $33.05 per share," NRG said

The Company does not anticipate executing any further share repurchases over the remainder of 2020 and has allocated all of its remaining 2020 excess capital to fund the Direct Energy acquisition.

As previously reported (see story here), on July 24, 2020, NRG entered into a definitive purchase agreement with Centrica plc to acquire Direct Energy, a North American subsidiary of Centrica plc. The acquisition will add over 3 million customers to NRG’s business and build on and complement its integrated model, enabling better matching of power generation with customer demand. It will also broaden the Company’s presence in the Northeast and into states and locales where it does not currently operate.

NRG will pay an aggregate purchase price of $3.625 billion in cash, subject to customary purchase price adjustments. The Company expects to fund the purchase price using a combination of cash on hand, approximately $2.4 billion in newly-issued secured and unsecured corporate debt and approximately $750 million in convertible preferred stock or other equity-linked instrument. The Company also expects to increase its collateral facilities by $3.5 billion through a combination of new letter of credit facilities and an increase to its existing Revolving Credit Facility.

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