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NRG Energy, Inc. Reports Full Year 2018 Results

PRINCETON, N.J.--(BUSINESS WIRE)--

  • Closed on all previously announced asset sales, including South Central and Carlsbad in February 2019 for $1.4 billion1
  • Completed $1.5 billion in share repurchases
  • Announcing additional $1 billion share repurchase authorization
  • Announcing up to $600 million reserved to achieve investment grade metrics

NRG Energy, Inc. (NRG) today reported full year 2018 income from continuing operations of $460 million, or $0.87 per diluted common share. Adjusted EBITDA for the full year 2018 was $1.8 billion, cash from continuing operations was $1.0 billion and FCFbG was $1.1 billion.

“Our platform delivered another year of strong financial results with execution across all strategic initiatives while achieving our best safety and environmental performance on record,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. “We now have the financial flexibility to create significant and sustainable shareholder value as we continue to perfect our platform, strengthen our balance sheet and return capital to shareholders."

Consolidated Financial Results

NRG completed the sale of its Renewables Platform, and its interests in NRG Yield, as well as the South Central Portfolio on August 31, 2018, and February 4, 2019, respectively. As a result, financial information for the South Central Portfolio, NRG Yield, the Renewables Platform and Carlsbad Energy Center was recast to reflect the presentation of these entities as discontinued operations for all current and historical periods.

  Three Months Ended   Twelve Months Ended
($ in millions) 12/31/18   12/31/17 12/31/18   12/31/17
Income/(Loss) from Continuing Operations $ (93 ) $ (1,390 ) $ 460 $ (1,345 )
Cash From Continuing Operations $ 317 $ 426 $ 1,003 $ 856

Adjusted EBITDA

$ 273 $ 297 $ 1,777 $ 1,389
Free Cash Flow Before Growth Investments (FCFbG) $ 336   $ 385   1,120   $ 877  

1 Excludes transaction fees, working capital and other adjustments

Segment Results

Table 1: Income/(Loss) from Continuing Operations

($ in millions)   Three Months Ended   Twelve Months Ended
Segment 12/31/18   12/31/17 12/31/18   12/31/17
Retail $ 331 $ 497 $ 1,062 $ 873
Generation a (257 ) (1,718 ) (7 ) (1,602 )
Corporate (167 ) (169 ) (595 ) (616 )
Income/(Loss) from Continuing Operations $ (93 ) $ (1,390 ) $ 460   $ (1,345 )

a. In accordance with GAAP, 2018 and 2017 results have been recast to reflect the discontinued operations of the South Central Portfolio, NRG Yield, the Renewables Platform and Carlsbad Energy Center and the deconsolidation of GenOn.

Table 2: Adjusted EBITDA

($ in millions)   Three Months Ended   Twelve Months Ended
Segment 12/31/18   12/31/17 12/31/18   12/31/17
Retail $ 197 $ 210 $ 952 $ 825
Generation a 84 128 856 645
Corporate (8 ) (41 ) (31 ) (81 )
Adjusted EBITDA b $ 273     $ 297   $ 1,777   $ 1,389  

a. In accordance with GAAP, 2018 and 2017 results have been recast to reflect the discontinued operations of the South Central Portfolio, NRG Yield, the Renewables Platform and Carlsbad Energy Center and the deconsolidation of GenOn.
b. See Appendices A-1 through A-4 for Operating Segment Reg G reconciliations.

Retail

Full year 2018 Adjusted EBITDA was $952 million, $127 million higher than 2017, driven by our margin enhancement and cost reduction initiatives, increased usage and growth related to M&A activity, and higher gross margins from increased demand response MWs sold, partially offset by higher supply costs and higher operating expenses related to margin enhancements.

Fourth quarter Adjusted EBITDA was $197 million, $13 million lower than the fourth quarter 2017, driven by higher margin enhancement costs, higher bad debt and higher supply costs, offset by higher gross margins from our margin enhancement initiatives, growth related to M&A activity, and cost savings.

Generation

Full year 2018 Adjusted EBITDA was $856 million, $211 million higher than 2017, driven by:

  • Texas: $179 million increase on higher realized energy prices, partially offset by higher outage costs
  • East/West2: $32 million increase due to higher capacity revenues, partially offset by the deconsolidation impact of the non-controlling interest in Ivanpah and Agua Caliente

Fourth quarter Adjusted EBITDA was $84 million, $44 million lower than the fourth quarter 2017, driven by:

  • Texas: $17 million decrease primarily due to higher operating expenses related to the fall outage at the South Texas Project (STP)
  • East/West2: $27 million decrease due to lower realized energy margins, higher outage costs and the deconsolidation impact of the non-controlling interest in Ivanpah and Agua Caliente, partially offset by higher capacity revenues

Corporate

Full year 2018 Adjusted EBITDA was $(31) million, $50 million better than 2017, driven by lower expenses associated with the Transformation Plan, partially offset by the reduction in shared services revenue from GenOn.

Fourth quarter Adjusted EBITDA was $(8) million, $33 million better than the fourth quarter 2017, driven by lower expenses associated with the Transformation Plan.

2 Includes BETM through date of sale, Retained Renewable assets, Cottonwood, International, and generation overhead

Liquidity and Capital Resources

Table 3: Corporate Liquidity

($ in millions)   12/31/18   12/31/17
Cash and Cash Equivalents $ 563 $ 770
Restricted Cash 17 279
Total $ 580 $ 1,049
Total credit facility availability   1,397   1,711
Total Liquidity, excluding collateral received   $ 1,977     $ 2,760

As of December 31, 2018, NRG-level cash was at $0.6 billion, and $1.4 billion was available under the Company’s credit facilities. Total liquidity was $2.0 billion, including restricted cash. Overall liquidity as of the end of the fourth quarter 2018 was $0.8 billion lower than at the end of 2017.

On February 4, 2019, and February 27, 2019, NRG closed on the sale of the South Central Portfolio $1.0 billion3 and Carlsbad project for $387 million3, respectively, providing additional sources of liquidity.

NRG Strategic Developments

Transformation Plan

NRG realized $532 million of its 2018 cost savings target and $32 million in margin enhancement, as part of the Transformation Plan. With respect to the asset sales, on February 4, 2019, the Company completed the sale of its South Central Portfolio to Cleco, for approximately $1.0 billion3 and on February 27, 2019, completed the sale of Carlsbad to Global Infrastructure Partners III (GIP) for $387 million3. NRG's total asset sale proceeds to date are approximately $3.0 billion3.

Agua Caliente Offer

On November 1, 2018, the Company, which indirectly owns a 35% interest in Agua Caliente, a 290 MW utility-scale solar project, offered to Clearway Energy, Inc. (formerly known as NRG Yield, Inc.) its ownership interest in Agua Caliente Borrower 1, LLC, for approximately $120 million. The offer expired on January 31, 2019, with no action taken by Clearway Energy, Inc. As a result, the right of first offer agreement with Clearway Energy, Inc. has expired and NRG's interest in Agua Caliente is no longer subject to a right of first offer thereunder.

2019 Guidance

NRG is maintaining its guidance range for 2019 with respect to Consolidated Adjusted EBITDA, Cash From Operations and FCFbG as set forth below.

Table 4: 2019 Adjusted EBITDA and FCF before Growth Guidance

    2019
($ in millions) Guidance
Adjusted EBITDA a $1,850 - $2,050
Cash From Operations $1,405 - $1,605
Free Cash Flow before Growth $1,250 - $1,450

a. Non-GAAP financial measure; see Appendix Tables A-1 through A-5 for GAAP Reconciliation to Net Income that excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year

3 Excluding transaction fees, working capital and other adjustments

Capital Allocation Update

During the fourth quarter of 2018, NRG completed $250 million of the additional $500 million share repurchase program announced on the third quarter 2018 earnings call and completed the remaining $250 million of share repurchases in January and February 2019. In total, since March 2018, NRG has repurchased $1.5 billion of shares for an average price of $36.24/share. In addition, the Board of Directors of the Company has authorized an additional $1 billion share repurchase program to be executed in 2019.

As previously announced, the Company has completed its targeted $640 million of debt reduction through the redemption of $485 million of its outstanding 6.250% senior notes due 2022 and the prepayment of $155 million of Term Loans, and achieved its target net debt to Adjusted EBITDA ratio of 3.0x for 2018.

NRG is revising its balance sheet target ratios in order to further strengthen its balance sheet. Although the Company is not targeting a specific credit rating improvement at this time, the Company will seek to maintain the following credit metrics, consistent with investment grade ratings:

  • Net Debt/EBITDA: 2.5x - 2.75x
  • Adjusted Cash from Operations / Net Debt: 27.5% - 32.5%
  • Interest Coverage: 5.5x - 6.5x

In order to achieve the revised balance sheet targets, the Company is reserving up to $600 million in 2019 capital which may be allocated toward additional debt reduction.

On January 23, 2019, NRG declared a quarterly dividend on the Company's common stock of $0.03 per share, paid February 15, 2019 to stockholders of record as of February 1, 2019, representing $0.12 per share on an annualized basis.

The Company’s common stock dividend, corporate level debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.

Earnings Conference Call

On February 28, 2019, NRG will host a conference call at 9:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG’s website at http://www.nrg.com and clicking on “Investors” then "Presentations & Webcasts." The webcast will be archived on the site for those unable to listen in real time.

About NRG

At NRG, we are redefining power by putting customers at the center of everything we do. We create value by generating electricity and serving over 3 million residential and commercial customers through our portfolio of retail electricity brands. A Fortune 500 company, NRG delivers customer-focused solutions for managing electricity, while enhancing energy choice and working towards a sustainable energy future. More information is available at www.nrg.com. Connect with NRG on Facebook, LinkedIn and follow us on Twitter @nrgenergy, @nrginsight.

Safe Harbor Disclosure

In addition to historical information, the information presented in this communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue,” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulations, the condition of capital markets generally, our ability to access capital markets, cyber terrorism and inadequate cyber security, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions, repowerings or asset sales, our ability to implement value enhancing improvements to plant operations and company-wide processes, our ability to implement and execute on our publicly announced transformation plan, including any cost savings, margin enhancement, asset sale, and net debt targets, our ability to proceed with projects under development or the inability to complete the construction of such projects on schedule or within budget, the inability to maintain or create successful partnering relationships, our ability to operate our businesses efficiently, our ability to retain retail customers, our ability to realize value through our commercial operations strategy, the ability to successfully integrate businesses of acquired companies, our ability to realize anticipated benefits of transactions (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, and our ability to execute our Capital Allocation Plan. Debt and share repurchases may be made from time to time subject to market conditions and other factors, including as permitted by United States securities laws. Furthermore, any common stock dividend is subject to available capital and market conditions.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The adjusted EBITDA and free cash flow guidance are estimates as of February 28, 2019. These estimates are based on assumptions the company believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this Earnings press release should be considered in connection with information regarding risks and uncertainties that may affect NRG’s future results included in NRG’s filings with the Securities and Exchange Commission at www.sec.gov.

 
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
For the Year Ended December 31,

(In millions, except per share amounts)

2018   2017   2016
Operating Revenues
Total operating revenues $ 9,478   $ 9,074   $ 8,915  
Operating Costs and Expenses
Cost of operations 7,108 6,886 6,676
Depreciation and amortization 421 596 756
Impairment losses 99 1,534 483
Selling, general and administrative 799 836 1,032
Reorganization costs 90 44

-

Development costs 11   22   48  
Total operating costs and expenses 8,528   9,918   8,995  
Other income - affiliate

-

87 193
Gain/(loss) on sale of assets 32   16   (80 )
Operating Income/(Loss) 982   (741 ) 33  
Other Income/(Expense)
Equity in earnings/(losses) of unconsolidated affiliates 9 (14 ) (18 )
Impairment losses on investments (15 ) (79 ) (268 )
Other income, net 18 51 47
Loss on debt extinguishment, net (44 ) (49 ) (142 )
Interest expense (483 ) (557 ) (583 )
Total other expense (515 ) (648 ) (964 )
Income/(Loss) from Continuing Operations Before Income Taxes 467 (1,389 ) (931 )
Income tax expense/(benefit) 7     (44 )   25  
Net Income/(Loss) from Continuing Operations 460 (1,345 ) (956 )
(Loss)/income from discontinued operations, net of income tax (192 ) (992 ) 65  
Net Income/(Loss) 268 (2,337 ) (891 )

Less: Net loss attributable to noncontrolling interests and redeemable noncontrolling interests

-

  (184 ) (117 )
Net Income/(Loss) Attributable to NRG Energy, Inc. 268 (2,153 ) (774 )
Dividends for preferred shares

-

-

5
Gain on redemption of preferred shares

-

 

-

  (78 )
Income/(Loss) Available for Common Stockholders $ 268   $ (2,153 ) $ (701 )
Earnings/(Loss) Per Share Attributable to NRG Energy, Inc. Common Stockholders

Weighted average number of common shares outstanding - basic

304 317 316

Income/(loss) from continuing operations per weighted average common share - basic

$ 1.51 $ (3.66 ) $ (2.42 )

(Loss)/income from discontinued operations per weighted average common share - basic

$ (0.63 ) $ (3.13 ) $ 0.20  

Net Income/(Loss) per Weighted Average Common Share - Basic

$ 0.88   $ (6.79 ) $ (2.22 )

Weighted average number of common shares outstanding - diluted

308 317 316

Income/(loss) from continuing operations per weighted average common share - diluted

$ 1.49 $ (3.66 ) $ (2.42 )

(Loss)/income from discontinued operations per weighted average common share - diluted

$ (0.62 ) $ (3.13 ) $ 0.20  

Net Income/(Loss) per Weighted Average Common Share - Diluted

$ 0.87   $ (6.79 ) $ (2.22 )
Dividends Per Common Share $ 0.12   $ 0.12   $ 0.24  
 
 
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
 
For the Year Ended December 31,
2018   2017   2016
(In millions)
Net Income/(Loss) $ 268 $ (2,337 ) $ (891 )
Other Comprehensive (Loss)/Income, net of tax
Unrealized gain on derivatives, net of income tax expense of $0, $1, and $1 23 13 35
Foreign currency translation adjustments, net of income tax benefit of $0, $(2), and $0 (11 ) 12 (1 )
Available-for-sale securities, net of income tax expense of $0, $10, and $0 1 (8 ) 1
Defined benefit plan, net of income tax (benefit)/expense of $0, $(21), and $0 (35 ) 46   3  
Other comprehensive (loss)/income (22 ) 63   38  
Comprehensive Income/(Loss) 246 (2,274 ) (853 )
Less: Comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interests 14   (179 ) (117 )
Comprehensive Income/(Loss) Attributable to NRG Energy, Inc. 232 (2,095 ) (736 )
Dividends for preferred shares

-

-

5
Gain on redemption of preferred shares

-

 

-

  (78 )
Comprehensive Income/(Loss) Available for Common Stockholders $ 232   $ (2,095 ) $ (663 )
 
 
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
As of December 31,
2018   2017
(In millions)
ASSETS
Current Assets
Cash and cash equivalents $ 563 $ 770
Funds deposited by counterparties 33 37
Restricted cash 17 279
Accounts receivable - trade 1,019 900
Inventory 412 453
Derivative instruments 764 624
Cash collateral posted in support of energy risk management activities 287 171
Accounts receivable - affiliate 5 180
Prepayments and other current assets 302 163
Current assets - held-for-sale 1 116
Current assets - discontinued operations 197   744
Total current assets 3,600   4,437
Property, plant and equipment, net 3,048   5,974
Other Assets
Equity investments in affiliates 412 182
Goodwill 573 539
Intangible assets, net 591 507
Nuclear decommissioning trust fund 663 692
Derivative instruments 317 159
Deferred income taxes 46 6
Other non-current assets 289 310
Non-current assets - held-for-sale 77 43
Non-current assets - discontinued operations 1,012   10,506
Total other assets 3,980   12,944
Total Assets $ 10,628   $ 23,355
 
 
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
 
As of December 31,
2018   2017
(In millions, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt and capital leases $ 72 $ 204
Accounts payable 862 684
Accounts payable - affiliate 1 57
Derivative instruments 673 537
Cash collateral received in support of energy risk management activities 33 37
Accrued expenses and other current liabilities 680 756
Accrued expenses and other current liabilities - affiliate

-

161
Current liabilities - held for sale 5 72
Current liabilities - discontinued operations 72   846  
Total current liabilities 2,398   3,354  
Other Liabilities
Long-term debt and capital leases 6,449 9,180
Nuclear decommissioning reserve 282 269
Nuclear decommissioning trust liability 371 415
Postretirement and other benefit obligations 435 458
Derivative instruments 304 143
Deferred income taxes 65 21
Out-of-market contracts, net 121 129
Other non-current liabilities 718 534
Non-current liabilities - held-for-sale 65 8
Non-current liabilities - discontinued operations 635   6,798  
Total non-current liabilities 9,445   17,955  
Total Liabilities 11,843   21,309  
Redeemable noncontrolling interest in subsidiaries 19 78
Commitments and Contingencies
Stockholders' Equity

Common stock; $0.01 par value; 500,000,000 shares authorized; 420,288,886 and 418,323,134 shares issued; and 283,650,039 and 316,743,089 shares outstanding at December 31, 2018 and 2017

4 4
Additional paid-in capital 8,510 8,376
Accumulated deficit (6,022 ) (6,268 )
Treasury stock, at cost; 136,638,847 and 101,580,045 shares at December 31, 2018 and 2017 (3,632 ) (2,386 )
Accumulated other comprehensive loss (94 ) (72 )
Noncontrolling interest

-

  2,314  
Total Stockholders' Equity (1,234 ) 1,968  
Total Liabilities and Stockholders' Equity $ 10,628   $ 23,355  
 
 
NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the Year Ended December 31,
2018   2017   2016
(In millions)
Cash Flows from Operating Activities
Net income/(loss) $ 268 $ (2,337 ) $ (891 )
(Loss)/income from discontinued operations, net of income tax (192 ) (992 ) 65  
Income/(loss) from continuing operations 460 (1,345 ) (956 )
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Distributions and equity in earnings of unconsolidated affiliates 46 102 67
Depreciation, amortization and accretion 459 596 756
Provision for bad debts 85 68 45
Amortization of nuclear fuel 48 51 49
Amortization of financing costs and debt discount/premiums 29 29 33
Adjustment for debt extinguishment 44 49 142
Amortization of intangibles and out-of-market contracts 45 54 68
Amortization of unearned equity compensation 25 35 10
Net (gain)/loss on sale of assets and equity/cost method investments (49 ) (9 ) 139
Impairment losses 114 1,614 751
Changes in derivative instruments 37 (170 ) 16
Changes in deferred income taxes and liability for uncertain tax benefits 5 13 (12 )
Changes in collateral deposits in support of risk management activities (105 ) (80 ) 396
Changes in nuclear decommissioning trust liability 60 11 41
GenOn settlement, net of insurance proceeds (63 )

-

-

Net loss on deconsolidation of Agua Caliente and Ivanpah projects 13

-

-

Cash provided/(used) by changes in other working capital, net of acquisition and disposition effects:
Accounts receivable - trade (83 ) (83 ) 24
Inventory 31 143 60
Prepayments and other current assets (41 ) (187 ) (120 )
Accounts payable 113 44 (59 )
Accrued expenses and other current liabilities (166 ) (88 ) (61 )
Other assets and liabilities (104 ) 9   32  
Cash provided by continuing operations 1,003 856 1,437
Cash provided by discontinued operations 374   754   471  
Net Cash Provided by Operating Activities 1,377   1,610   1,908  
Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired (243 ) (14 )

-

Capital expenditures (388 ) (254 ) (544 )
Proceeds from renewable energy grants

-

8 36
Net proceeds from sale/(purchases) of emission allowances 19 66 (1 )
Investments in nuclear decommissioning trust fund securities (572 ) (512 ) (551 )
Proceeds from sales of nuclear decommissioning trust fund securities 513 501 510
Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees 1,564 430 241
Deconsolidation of Agua Caliente and Ivanpah projects (268 )

-

-

Changes in investments in unconsolidated affiliates (39 ) (57 ) (33 )
Net (contributions to)/distributions from discontinued operations (60 ) 150 (58 )
Other (6 ) 22   31  
Cash provided/(used) by continuing operations 520 340 (369 )
Cash used by discontinued operations (725 ) (979 ) (388 )
Net Cash Used by Investing Activities (205 ) (639 ) (757 )
 
For the Year Ended December 31,
2018 2017 2016
(In millions)
Cash Flows from Financing Activities
Payments of dividends to preferred and common stockholders (37 ) (38 ) (76 )
Payments for treasury stock (1,250 )

-

-

Payments for preferred shares

-

-

(226 )
Payments for debt extinguishment costs (32 ) (42 ) (121 )
Net distributions to noncontrolling interest from subsidiaries (16 ) (30 ) (27 )
Proceeds/(payments) from issuance of common stock 21 (2 ) 1
Proceeds from issuance of long-term debt 1,100 1,178 4,412
Payments of debt issuance costs (19 ) (18 ) (61 )
Payments for short and long-term debt (1,734 ) (1,884 ) (5,146 )
Receivable from affiliate (26 ) (125 )

-

Other (4 ) (8 ) (7 )
Cash used by continuing operations (1,997 ) (969 ) (1,251 )
Cash provided/(used) by discontinued operations 471   (169 ) 483  
Net Cash Used by Financing Activities (1,526 ) (1,138 ) (768 )
Effect of exchange rate changes on cash and cash equivalents 1   (1 ) 1  
Change in Cash from discontinued operations 120   (394 ) 566  
Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash (473 ) 226 (182 )
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period 1,086   860   1,042  
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period $ 613   $ 1,086   $ 860  
 

Appendix Table A-1: Fourth Quarter 2018 Adjusted EBITDA Reconciliation by Operating Segment
The following table summarizes the calculation of Adj. EBITDA and provides a reconciliation to income/(loss) from continuing operations:

    East/       Corp/  
($ in millions)   Texas  

West1

  Generation   Retail   Elim   Total
Income/(Loss) from Continuing Operations   (174 )   (83 )   (257 )   331     (167 )   (93 )
Plus:
Interest expense, net

-

9 9 1 107 117
Income tax

-

-

-

-

(12 ) (12 )
Loss on debt extinguishment

-

-

-

-

21 21
Depreciation and amortization 21 31 52 30 9 91
ARO expense 1 3 4

-

-

4
Contract amortization 7

-

7

-

-

7
Lease amortization  

-

    (2 )   (2 )  

-

   

-

    (2 )
EBITDA (145 ) (42 ) (187 ) 362 (42 ) 133

Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates

4 26 30

-

-

30

Acquisition-related transaction & integration costs

-

-

-

1 1 2
Reorganization costs2 1

-

1 5 31 37
Legal Settlement

-

10 10

-

-

10
Deactivation costs

-

-

-

-

4 4
Gain on sale of assets

-

-

-

-

(1 ) (1 )
Other non recurring charges (1 ) 1

-

1 (1 )

-

Impairments 5 4 9 1

-

10

Mark to market (MtM) (gains)/losses on economic hedges

  153     68     221     (173 )  

-

    48  
Adjusted EBITDA   17     67     84     197     (8 )   273  

1 Includes International, remaining renewables and Generation eliminations

2 Includes $17 million of non-recurring pension expense

null
 

Fourth Quarter 2018 condensed financial information by Operating Segment:

    East/       Corp/  
($ in millions)   Texas  

West1

  Generation   Retail   Elim   Total
Operating revenues 345 377 722 1,608 (239 ) 2,091
Cost of sales2   198     178     376     1,178     (239 )   1,315  
Economic gross margin3 147 199 346 430 0 776

Operations & maintenance and other cost of operations

116 123 239 81 (1 ) 319

Selling, marketing, general & administrative4

20 42 62 153 9 224
Other expense/(income)5   (6 )   (33 )   (39 )   (1 )  

-

    (40 )
Adjusted EBITDA   17