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Vistra Reports Higher Retail Adjusted EBITDA, Increased Texas Residential Customer Count

Vistra Announces Evaluation Of Strategic Direction, Emphasis On Capital Allocation

August 5, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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Vistra, the parent of TXU Energy and several other retail energy brands, reported second quarter Adjusted EBITDA from its Retail segment of $510 million, $109 million higher than second quarter 2020 results of $401 million, "driven by the execution of Vistra's self-help initiatives following Uri."

Vistra said that it grew its residential customer counts year-over-year and quarter-over-quarter in ERCOT through its multi-brand and channel strategy

Vistra's overall residential customer count across all markets was 2.716 million as of Q2 2021, versus 2.728 million as of Q1 2021 and 2.764 million a year ago. Vistra said that the year-over-year decline reflects a decline in Midwest and Northeast customers, partially offset by an increase in ERCOT customers

The net loss of 12,000 customers from Q1 2021 to Q2 2021 compares to a net loss of 8,000 customers from Q4 2020 to Q1 2021, and a net increase of 12,000 residential customers from Q3 2020 to Q4 2020.

Retail volumes for the first quarter were as follows by customer segment (in TWh):

Vistra Retail Volumes (TWh)
            Q2 2020   Q2 2021
Residential   8.2       7.7
Business      9.5      11.9
Muni Agg.     3.8       2.5

Total        21.5      22.1

In the Retail segment, operating revenues for the second quarter of 2021 were $1.919 billion, versus $1.956 billion a year ago

During an earnings call, Vistra announced it was undertaking a review of its strategic direction, particularly with respect to capital allocation

Vistra executives said that the drivers of such evaluation include what executives termed the company's undervalued stock, which compels taking a "hard look" at share buybacks

Executives emphasized the desire for a strong balance sheet

Executives also cited the potential for the accelerated growth of its battery development business, and having a competitive cost of capital for such growth, which may mean bringing in investment partners

Asked by an analyst if this evaluation is specifically related to potential consideration of taking the company private, Curt Morgan, Vistra's chief executive officer, said that such consideration is not the primary direction of the review, but that the company is willing to listen to attractive offers

Asked by an analyst if Vistra would consider as a possibility, not selling the company outright, but finding a like-minded partner that sees the value of the company's cash flow streams, and selling a portion of the assets or a portion of the company, Morgan said, "Yes."

Vistra expects the review to be complete by the Q3 conference call time frame

Vistra is reaffirming its 2021 Ongoing Operations Adjusted EBITDA and Ongoing Operations Adjusted FCFbG guidance ranges of $1,475 to $1,875 million and $200 to $600 million, respectively. Excluding the impacts of Winter Storm Uri, Vistra expects it would have reaffirmed its original 2021 guidance.

As of June 30, 2021, Vistra had total available liquidity of approximately $2,337 million, including cash and cash equivalents of $444 million and $1,893 million of availability under its revolving credit facility.

Vistra’s net debt increased by ~$2.05 billion in Q1 2021 as a result of Uri and is currently ~$1.03 billion higher than Q2 2020

On a consolidated basis, Vistra's second quarter 2021 Ongoing Operations Adjusted EBITDA was $909 million, which excludes the impacts from Winter Storm Uri and was in-line with management expectations for the period. Including these Uri impacts, Vistra's second quarter 2021 Ongoing Operations Adjusted EBITDA was $825 million, down from $929 million a year ago

Vistra said that it is implementing post-Uri activities including investing nearly $50 million in 2021 for enhanced weatherization of power generating units in the ERCOT market, and adding additional dual fuel capabilities and gas storage

As it had announced in a prior business update, Vistra is also now in ERCOT reserving ~1,000+ MW of additional generation length leading into peak periods, for ~2,000+ MW of physical insurance. The level of excess generation will be a function of the weatherization investments and ERCOT market improvements implemented going forward

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