NRG Energy, Inc. Reports Third Quarter Results, Initiates 2025 Guidance, and Introduces Adjusted Net Income and Adjusted EPS | NRG Stock News

11/08/2024 - 07:12 AM Strong third quarter 2024 financial and operating results; reaffirming recently raised 2024 guidanceIncreasing 2024 share repurchase plan to $925 million, and on target to achieve investment grade credit metrics by the end of 2024Initiating 2025 financial guidance with long-term Adjusted Earnings per Share (Adjusted EPS) growth target of greater than 10% from raised 2024 guidanceAnnouncing 2025 capital allocation with $1.355 billion of share repurchases; share repurchase authorization increased by $1 billion to $3.7 billion through 2025Partnering with Renew Home and Google Cloud to create and operationalize 1 GW of Virtual Power Plant platform capacity in TexasNew build: 415 MW T.H. Wharton peaking generation facility near Houston, selected by the Texas Energy Fund to proceed to due diligenceHOUSTON--(BUSINESS WIRE)--NRG Energy, Inc. (NYSE: NRG) today reports strong third quarter 2024 financial results and reaffirms its raised guidance ranges.“We had another excellent quarter, posting strong performance across the company,” said Larry Coben, NRG Chair, President and Chief Executive Officer. “NRG's financial position has never been stronger as evidenced by our raised 2024 guidance and the 2025 guidance we initiated today. We continue to look to add new capacity to our portfolio, and our exciting new partnership with Renew Home provides further validation of our customer-focused strategy.”Consolidated Financial ResultsTable 1:Three Months EndedNine Months Ended($ in millions, except per share amounts)9/30/20249/30/20239/30/20249/30/2023Net (Loss)/Income$(767)$343$482$(684)(Loss)/Income per Weighted Average Common Share — Basic$(3.79)$1.42$2.08$(3.14)Adjusted EBITDAa$1,055$987$2,887$2,458Adjusted Net Incomeb$393$360$1,066$849Adjusted EPSc$1.90$1.57$5.15$3.69Cash Provided/(Used) by Operating Activities$31$566$1,354$(462)Free Cash Flow Before Growth Investments (FCFbG)$815$355$1,438$983a Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization referenced belowb Not previously provided, Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’; see appendix tables A-1-A-6c Not previously provided, Adjusted EPS calculated based on Adjusted Net Income divided by weighted average number of common shares outstanding - basicFor the third quarter of 2024, GAAP Net Loss was $(767) million as a result of the impact of unrealized non-cash mark-to-market losses on commodity hedges, and GAAP Cash Provided by Operating Activities was $31 million. NRG produced Adjusted EBITDA of $1,055 million and Free Cash Flow before Growth Investments of $815 million in the quarter, an increase of $68 million and $460 million, respectively, over the same period in the prior year. Year-over-year improved financial performance was driven primarily by margin expansion across all NRG reporting segments.Introduction of Adjusted Net Income and Adjusted EPS MetricsNRG is introducing new metrics to enhance its financial reporting. Adjusted Net Income and Adjusted EPS offer additional insight into the performance of the Company, and highlight the maturity and predictability of NRG's integrated platform and robust capital return program. The Company will continue to report and provide guidance on Adjusted EBITDA and FCFbG alongside Adjusted Net Income and Adjusted EPS to ensure transparency and to allow for continuity of analysis.Adjusted Net Income and Adjusted EPS are both non-GAAP measures. The Company defines Adjusted EPS as the Adjusted Net Income available to common shareholders, divided by the weighted average number of basic common shares outstanding. With the retirement of the callable and fully hedged Convertible Senior Notes scheduled to occur in 2025, the weighted average number of basic common shares outstanding will provide a more accurate view of recurring per-share earnings.The Company calculates Adjusted Net Income and Adjusted EPS metrics using an adjusted effective tax rate. Actual cash taxes are materially lower than book income tax expense due to NRG's tax attributes, primarily comprised of sizable gross Net Operating Losses (NOL), which are forecasted to be $7.2 billion as of December 31, 2024.The Company has also recast all amortization of capitalized customer acquisition costs from selling general & administrative expenses and cost of operations into the depreciation and amortization line item of the Company's financial statements. All reported figures have been updated to reflect this change, and historical periods have been recast to aid with comparison. This recast only affects Adjusted EBITDA and has no impact on Adjusted Net Income, Adjusted EPS, or FCFbG.Raised 2024 GuidanceOn September 25, 2024, NRG raised its 2024 Adjusted EBITDA guidance to $3,525 - $3,675 million from $3,300 - $3,550 million and FCFbG guidance to $1,975 - $2,125 million from $1,825 - $2,075 million. With the recasting of the amortization of capitalized customer acquisition costs described above, the 2024 Adjusted EBITDA guidance issued on September 25, 2024 is now $3,655 - $3,805 million, an increase of $130 million. 2024 FCFbG guidance is not changed by the recasting of capitalized contract costs which are non-cash items.NRG is also providing 2024 ranges for Adjusted Net Income and Adjusted EPS of $1,235 - $1,385 and $5.95 - $6.75, respectively. In the third quarter 2024, the Company earned $393 million of Adjusted Net Income and $1.90 of Adjusted EPS.Table 2: Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and FCFbG Guidance for 2024a20242024($ in millions, except per share amounts)Original GuidanceRaised GuidanceAdjusted EBITDAb$3,430 - $3,680$3,655 - $3,805Adjusted Net Incomec$1,040 - $1,290$1,235 - $1,385Adjusted EPSd$5.00 - $6.30$5.95 - $6.75FCFbG$1,825 - $2,075$1,975 - $2,125a Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and FCFbG are non-GAAP financial measures; see Appendix Tables A-10-A-12 for GAAP Reconciliation. Adjusted EBITDA, Adjusted Net Income and Adjusted EPS exclude fair value adjustments related to derivatives. The Company does not guide to GAAP Net Income due to the impact of such fair value adjustments related to derivatives in a given yearb Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortizationc Not previously provided, Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’; see appendix table A-10 and A-11 for GAAP Reconciliationsd Not previously provided, Adjusted EPS calculated based on Adjusted Net Income divided by forecasted weighted average number of common shares outstanding - basic2024 Capital AllocationNRG reaffirms its capital allocation policy targeting approximately 80% of recurring cash available for allocation after debt reduction to return of capital, and approximately 20% to strategic growth. The Company is increasing its share repurchase allocation for 2024 from $825 million to $925 million. Through the third quarter of 2024, the Company continued to repurchase shares in the open market, with $544 million completed as of October 31, 2024. The Company expects to complete the entire $925 million of 2024 repurchases near the end of the fourth quarter.As of September 30, 2024, NRG has executed approximately $1.6 billion of debt reduction since the closing of the Vivint acquisition in March 2023. The Company had set a goal of achieving investment grade credit metrics by the end of 2025, and as a result of its strategic liability management plan and financial out-performance, NRG is on track to achieve its target by the end of 2024, a full year earlier than the original target.On October 11, 2024, the Board of Directors declared a quarterly dividend on the Company's common stock of $0.4075 per share, or $1.63 per share on an annualized basis. The dividend is payable on November 15, 2024, to stockholders of record as of November 1, 2024.Initiating 2025 Guidance and Capital Allocation PlanNRG initiates 2025 guidance as follows:Table 3: Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and FCFbG Guidance for 2025a202420252025($ in millions, except per share amounts)Raised GuidanceGuidanceGuidance MidpointAdjusted EBITDAb$3,655 - $3,805$3,725 - $3,975$3,850Adjusted Net Incomec$1,235 - $1,385$1,330 - $1,530$1,430Adjusted EPSd$5.95 - $6.75$6.75 - $7.75$7.25FCFbG$1,975 - $2,125$1,975 - $2,225$2,100a Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and FCFbG are non-GAAP financial measures; see Appendix Tables A-10-A-12 for GAAP Reconciliation. Adjusted EBITDA, Adjusted Net Income and Adjusted EPS exclude fair value adjustments related to derivatives. The Company does not guide to GAAP Net Income due to the impact of such fair value adjustments related to derivatives in a given yearb Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortizationc Not previously provided, Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’; see appendix table A-10 and A-11 for GAAP Reconciliationd Not previously provided, Adjusted EPS calculated based on Adjusted Net Income divided by forecasted weighted average number of common shares outstanding - basicThe year-over-year increases in the guidance ranges reflect continued improved execution across all of NRG's businesses, and the expected achievement of NRG's previously announced revenue and cost synergy programs which more than offset the loss of Airtron's financial contribution due to the sale of the business. The guidance ranges reflect a flat power price environment and are not dependent on tightening power markets or price speculation, and do not include any potential contributions from sites, or other similar opportunities.The Company is also announcing its 2025 capital allocation plan which adheres to its previously announced policy. The plan includes $1.3 billion in share repurchases and an 8% increase of the annual common dividend to $1.76 per share. NRG's Board of Directors has approved an increase of the Company's share repurchase authorization through 2025 to $3.7 billion from $2.7 billion.NRG's share repurchase program and common stock dividend are subject to maintaining satisfactory credit metrics, available capital, market conditions, and compliance with associated laws and regulations. The timing and amount of any shares of NRG’s common stock repurchased under the share repurchase authorization will be determined by NRG’s management based on market conditions and other factors. NRG will only repurchase shares when management believes it would not jeopardize the Company’s ability to maintain satisfactory credit ratings.Long-Term Adjusted EPS GrowthNRG plans to deliver a long-term cumulative annual growth rate (CAGR) for Adjusted EPS of greater than 10% measured from the midpoint of its raised 2024 guidance. The Company projects this long-term growth rate utilizing a flat power price environment and is not dependent on tightening markets or power price speculation. This projected growth rate also excludes potential earnings uplift from the 21 sites and ERCOT natural gas new build projects not selected by the Texas Energy Fund (TEF). Rather, the CAGR is derived from the Company's organic growth plan comprised of identified initiatives resulting in an incremental $750 million of annual run-rate Adjusted EBITDA by 2029, and over $8 billion of cumulative return of capital from 2025 through 2029.Strategic DevelopmentsPartnering with Renew Home and Google Cloud to Develop Virtual Power PlantNRG has entered into a definitive partnership agreement with Renew Home, a leading Virtual Power Plant platform (VPP) formed by the combination of Google's Nest Renew and OhmConnect. This first-of-its-kind commercial partnership reinforces NRG's customer focus and brings to market unique products and services which will help customers save money while enjoying the benefits of a seamless energy and smart home experience. Leveraging Google Cloud's AI and cloud platforms, NRG and Renew Home plan to develop a VPP portfolio of up to 1 GW of load management capacity, with instantaneous dispatch value during peak events and tight supply conditions. Participating customers will enroll in an NRG branded energy plan and will be eligible for favorable rates on Vivint Smart Home services and additional products. The partnership will initially focus in Texas, with Renew Home supporting upfront customer acquisition costs and Google Nest integration.Texas Energy FundThe Public Utilities Commission of Texas (PUCT) selected NRG's 415 MW new build of the T.H. Wharton peaking facility to move forward through its next phase of diligence.Airtron HVAC SaleOn September 16, 2024, NRG closed the sale of its HVAC business unit Airtron for a purchase price of $500 million and net cash proceeds of $484 million, with approximately $425 million expected after taxes and fees. Airtron is a leading installer of HVAC systems for residential new construction homes and was acquired as part of the Direct Energy acquisition in 2021. The opportunistic divestiture was completed at an accretive 8.6x multiple on 2023 Adjusted EBITDA.Segments ResultsTable 4: Net (Loss)/Income($ in millions)Three Months EndedNine Months EndedSegment9/30/20249/30/20239/30/20249/30/2023Texas$(1,056)$463$259$1,532East883161,116(1,187)West/Services/Othera230(432)(842)(963)Vivint Smart Homeb$(29)$(4)$(51)$(66)Net (Loss)/Income$(767)$343$482$(684)a Includes Corporate segmentb Vivint Smart Home acquired in March 2023Net Loss for the third quarter of 2024 was $(767) million, $1.1 billion lower than the third quarter of 2023. This was primarily driven by higher unrealized non-cash mark-to-market losses on economic hedges in Texas in 2024 impacted by a decrease in ERCOT forward power prices, partially offset by the gain on the sale of Airtron recorded in September of 2024. Certain hedge positions are required to be marked-to-market every period, while the customer contracts related to these items are not, resulting in temporary unrealized losses or gains on the economic hedges that are not reflective of the expected economics at future settlement.Table 5: Adjusted EBITDA($ in millions)Three Months EndedNine Months EndedSegment9/30/20249/30/20239/30/20249/30/2023Texas$584$552$1,255$1,310East164171724562West/Services/Othera502517951Vivint Smart Homeb$257$239$729$535Adjusted EBITDAc$1,055$987$2,887$2,458a Includes Corporate segmentb Vivint Smart Home acquired in March 2023c Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortizationTexas: Third quarter Adjusted EBITDA was $584 million, $32 million higher than the third quarter of 2023. This increase was a result of higher gross margin including lower supply costs and higher revenue rates, partially offset by asset sales in 2023.East: Third quarter Adjusted EBITDA was $164 million, $7 million lower than the third quarter of 2023. This decrease was driven by higher operating expenses, partially offset by increased retail natural gas margins and increased customer counts.West/Services/Other: Third quarter Adjusted EBITDA was $50 million, $25 million higher than the third quarter of 2023. This increase was primarily driven by lower retail power supply costs, partially offset by timing of outages at Cottonwood.Vivint Smart Home: Third quarter Adjusted EBITDA was $257 million, $18 million higher than the third quarter of 2023. The 8% increase was attributable to growth in subscriber count, an increase in monthly recurring revenue per subscriber, and a decrease in monthly recurring net service cost per subscriber.Liquidity and Capital ResourcesTable 6: Corporate Liquidity($ in millions)9/30/2412/31/23Cash and Cash Equivalents$1,104$541Restricted Cash1024Total1,114565Total Revolving Credit Facility and collective collateral facilities5,3304,278Total Liquidity, excluding collateral deposited by counterparties$6,444$4,843As of September 30, 2024, NRG's unrestricted cash was $1.1 billion and $5.3 billion was available under the Company’s credit facilities. Total liquidity increased $1.6 billion from the end of 2023 to $6.4 billion, primarily due to an increase in availability of $1.1 billion in the Receivables Facility and proceeds on hand from the Airtron sale, partly offset by $210 million in other facilities.Earnings Conference CallOn November 8, 2024, NRG will host a conference call at 9:00 a.m. Eastern (8:00 a.m. Central) to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials through the investor relations website under “presentations and webcasts” on investors.nrg.com. The webcast will be archived on the site for those unable to listen in real-time.About NRGNRG Energy is a leading energy and home services company powered by people and our passion for a smarter, cleaner, and more connected future. A Fortune 500 company operating in the United States and Canada, NRG delivers innovative solutions that help people, organizations, and businesses achieve their goals while also advocating for competitive energy markets and customer choice. More information is available at www.nrg.com. Connect with NRG on Facebook and LinkedIn, and follow us on X (formerly known as Twitter), @nrgenergy.Forward-Looking StatementsIn addition to historical information, the information presented in this press release 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 and extreme weather events, competition in wholesale power, gas and smart home markets, the volatility of energy and fuel prices, failure of customers or counterparties to perform under contracts, changes in the wholesale power and gas markets, changes in government or market regulations, the condition of capital markets generally and NRG’s ability to access capital markets, NRG’s ability to execute its supply strategy, risks related to data privacy, cyberterrorism and inadequate cybersecurity, the loss of data, unanticipated outages at NRG’s generation facilities, NRG’s ability to achieve its net debt targets, adverse results in current and future litigation, complaints, product liability claims and/or adverse publicity, failure to identify, execute or successfully implement acquisitions or asset sales, risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process, the impact of changes in consumer spending patterns, consumer preferences, geopolitical tensions, demographic trends, supply chain disruptions, NRG’s ability to implement value enhancing improvements to plant operations and company wide processes, NRG’s ability to achieve or maintain investment grade credit metrics, NRG’s 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, NRG’s ability to operate its business efficiently, NRG’s ability to retain customers, the ability to successfully integrate businesses of acquired companies, including Vivint Smart Home, NRG’s 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, NRG’s ability to execute its capital allocation plan. Achieving investment grade credit metrics is not an indication of or guarantee that the Company will receive investment grade credit ratings. 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, cash provided by operating activities and Free Cash Flow before Growth, Adjusted Net Income, and Adjusted EPS guidance are estimates as of November 8, 2024. These estimates are based on assumptions NRG 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 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. For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in NRG’s most recent Annual Report on Form 10-K, and in subsequent SEC filings. NRG’s forward-looking statements speak only as of the date of this communication or as of the date they are made.NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)Three months endedSeptember 30,Nine months endedSeptember 30,(In millions, except for per share amounts)2024202320242023RevenueRevenue$7,223$7,946$21,311$22,016Operating Costs and ExpensesCost of operations (excluding depreciation and amortization shown below)7,2396,40617,22920,137Depreciation and amortization3523591,045921Impairment losses——15—Selling, general and administrative costs (excluding amortization of customer acquisition costs of $55, $36, $144 and $84, respectively, which are included in depreciation and amortization shown separately above)6456021,7391,502Acquisition-related transaction and integration costs71822111Total operating costs and expenses8,2437,38520,05022,671Gain on sale of assets208—209202Operating (Loss)/Income(812)5611,470(453)Other Income/(Expense)Equity in earnings of unconsolidated affiliates661316Other income, net5143843Loss on debt extinguishment——(260)—Interest expense(213)(173)(528)(472)Total other expense(202)(153)(737)(413)(Loss)/Income Before Income Taxes(1,014)408733(866)Income tax (benefit)/expense(247)65251(182)Net (Loss)/Income$(767)$343$482$(684)Less: Cumulative dividends attributable to Series A Preferred Stock17175138Net (Loss)/Income Available for Common Stockholders$(784)$326$431$(722)(Loss)/Income per ShareWeighted average number of common shares outstanding — basic207230207230(Loss)/Income per Weighted Average Common Share — Basic$(3.79)$1.42$2.08$(3.14)Weighted average number of common shares outstanding — diluted207232213230(Loss)/Income per Weighted Average Common Share —Diluted$(3.79)$1.41$2.02$(3.14)NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME(Unaudited)Three months endedSeptember 30,Nine months endedSeptember 30,(In millions)2024202320242023Net (Loss)/Income$(767)$343$482$(684)Other Comprehensive (Loss)/IncomeForeign currency translation adjustments6(8)(4)—Defined benefit plans(8)1(10)—Other comprehensive (loss)/income(2)(7)(14)—Comprehensive (Loss)/Income$(769)$336$468$(684)NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSSeptember 30, 2024December 31, 2023(In millions, except share data)(Unaudited)(Audited)ASSETSCurrent AssetsCash and cash equivalents$1,104$541Funds deposited by counterparties1284Restricted cash1024Accounts receivable, net3,2583,542Inventory540607Derivative instruments2,4563,862Cash collateral paid in support of energy risk management activities449441Prepayments and other current assets782626Total current assets8,6119,727Property, plant and equipment, net1,8181,763Other AssetsEquity investments in affiliates4942Operating lease right-of-use assets, net172179Goodwill5,0185,079Customer relationships, net1,6482,164Other intangible assets, net1,4391,763Derivative instruments1,7472,293Deferred income taxes2,0982,251Other non-current assets1,124777Total other assets13,29514,548Total Assets$23,724$26,038LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesCurrent portion of long-term debt and finance leases$258$620Current portion of operating lease liabilities7790Accounts payable1,9942,325Derivative instruments2,3514,019Cash collateral received in support of energy risk management activities1284Deferred revenue current761720Accrued expenses and other current liabilities1,8951,642Total current liabilities7,3489,500Other LiabilitiesLong-term debt and finance leases10,42210,133Non-current operating lease liabilities125128Derivative instruments1,4691,488Deferred income taxes822Deferred revenue non-current919914Other non-current liabilities913947Total other liabilities13,85613,632Total Liabilities21,20423,132Commitments and ContingenciesStockholders' EquityPreferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at September 30, 2024 and December 31, 2023, aggregate liquidation preference of $650; at September 30, 2024 and December 31, 2023650650Common stock; $0.01 par value; 500,000,000 shares authorized; 264,056,285 and 267,330,470 shares issued and 204,929,327 and 208,130,950 shares outstanding at September 30, 2024 and December 31, 2023, respectively33Additional paid-in-capital3,1453,416Retained earnings977820Treasury stock, at cost; 59,126,958 shares and 59,199,520 shares at September 30, 2024 and December 31, 2023, respectively(2,150)(1,892)Accumulated other comprehensive loss(105)(91)Total Stockholders' Equity2,5202,906Total Liabilities and Stockholders' Equity$23,724$26,038NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)Nine months ended September 30,(In millions)20242023Cash Flows from Operating ActivitiesNet Income/(Loss)$482$(684)Adjustments to reconcile net income/(loss) to cash provided/(used) by operating activities:Equity in and distributions from earnings of unconsolidated affiliates(6)(16)Depreciation of property, plant and equipment and amortization of customer relationships and other intangible assets814813Amortization of capitalized contract costs231108Accretion of asset retirement obligations2914Provision for credit losses228165Amortization of nuclear fuel—42Amortization of financing costs and debt discounts3242Loss on debt extinguishment260—Amortization of in-the-money contracts and emissions allowances83111Amortization of unearned equity compensation8287Net gain on sale of assets and disposal of assets(197)(187)Impairment losses15—Changes in derivative instruments2681,553Changes in current and deferred income taxes and liability for uncertain tax benefits134(225)Changes in collateral deposits in support of risk management activities(80)(1,188)Changes in nuclear decommissioning trust liability—(4)Changes in other working capital(1,021)(1,093)Cash provided/(used) by operating activities$1,354$(462)Cash Flows from Investing ActivitiesPayments for acquisitions of businesses and assets, net of cash acquired$(33)$(2,502)Capital expenditures(286)(493)Net purchases of emissions allowances(16)(25)Investments in nuclear decommissioning trust fund securities—(293)Proceeds from the sale of nuclear decommissioning trust fund securities—280Proceeds from sales of assets, net of cash disposed495229Proceeds from insurance recoveries for property, plant and equipment, net3173Cash provided/(used) by investing activities$163$(2,631)Cash Flows from Financing ActivitiesProceeds from issuance of preferred stock, net of fees$—$635Payments of dividends to preferred and common stockholders(322)(295)Equivalent shares purchased in lieu of tax withholdings(45)(19)Payments for share repurchase activity(316)(50)Net (payments)/receipts from settlement of acquired derivatives that include financing elements(2)332Net proceeds of Revolving Credit Facility and Receivable Securitization Facilities—300Proceeds from issuance of long-term debt875731Payments of debt issuance costs(13)(29)Repayments of long-term debt and finance leases(960)(15)Payments for debt extinguishment costs(258)—Proceeds from credit facilities1,0503,020Repayments to credit facilities(1,050)(3,020)Cash (used)/provided by financing activities$(1,041)$1,590Effect of exchange rate changes on cash and cash equivalents1—Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash477(1,503)Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period6492,178Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period$1,126$675Appendix Table A-1: Third Quarter 2024 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS ReconciliationThe following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net (Loss)/Income1:($ in millions, except per share amounts)TexasEastWest/Services/OtherVivintSmart HomeCorp/ElimTotalNet (Loss)/Income$(1,056)$88$148$(29)$82$(767)Plus:Interest expense, net11774122205Income tax—1—(8)(240)(247)Depreciation and amortization281392319811352ARO Expense11141——26Contract and emission credit amortization, net5(4)4——5EBITDA(958)139183235(25)(426)Stock-based compensation62215—25Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates——2——2Acquisition and divestiture integration and transaction costs———189Cost to achieve————66Deactivation costs—4———4(Gain) on sale of assets——(208)——(208)Other and non-recurring charges(1)10—6(2)13Mark to market (MtM) losses on economic hedges1,537984——1,630Adjusted EBITDA$584$164$63$257$(13)$1,055Interest expense, net(205)Depreciation and amortization(352)Adjusted Income before income taxes498Adjusted income tax3(88)Adjusted Net Income before Preferred Stock dividends410Cumulative dividends attributable to Series A Preferred Stock(17)Adjusted Net Income4393Weighted average number of common shares outstanding - basic207Adjusted EPS$1.901 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization2 Depreciation and amortization recast to include impact of amortization of capitalized contract costs3 Income tax calculated using Adjusted effective tax rate (ETR) on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods4 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’Third Quarter 2024 condensed financial information by Operating Segment:($ in millions)TexasEastWest/Services/OtherVivintSmart HomeCorp/ElimTotalRevenue1$3,301$2,606$828$499$(11)$7,223Cost of fuel, purchased power and other cost of sales22,2222,16665137(5)5,071Economic gross margin1,079440177462(6)2,152Operations & maintenance and other cost of operations324011964662491Selling, marketing, general and administrative4255154641383614Other—3(14)12(8)Adjusted EBITDA$584$164$63$257$(13)$1,0551 Excludes MtM gain of $(8) million and contract amortization of $8 million2 Includes TDSP expense, capacity and emission credits3 Excludes ARO expenses of $26 million, other and non-recurring charges of $10 million, deactivation costs of $4 million and stock-based compensation of $2 million4 Excludes stock-based compensation of $23 million, cost to achieve of $6 million, acquisition and divestiture integration and transaction costs of $3 million and other and non-recurring charges of $(1) millionThe following table reconciles the condensed financial information to Adjusted EBITDA:($ in millions)Condensed Consolidated Results of OperationsInterest, tax, depr.,amort.MtMDeactivationOther adj.2Adjusted EBITDARevenue$7,223$8$(8)$—$—$7,223Cost of operations (excluding depreciation and amortization shown below)16,7063(1,638)——5,071Depreciation and Amortization352(352)————Gross margin1653571,630——2,152Operations & maintenance and other cost of operations533——(4)(38)491Selling, marketing, general & administrative645———(31)614Other(246)42——196(8)Net (Loss)/Income$(767)$315$1,630$4$(127)$1,0551 Excludes operations & maintenance and other cost of operations of $533 million2 Other adj. includes ARO expenses of $26 million, stock-based compensation of $25 million, other and non-recurring charges of $13 million, acquisition and divestiture integration and transaction costs of $9 million, cost to achieve of $6 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $2 million and gain on sale of assets of $(208) millionAppendix Table A-2: Third Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS ReconciliationThe following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:($ in millions, except per share amounts)TexasEastWest/Services/OtherVivintSmart HomeCorp/ElimTotalNet Income/(Loss)$463$316$(168)$(4)$(264)$343Plus:Interest expense, net(1)(2)643109155Income tax—(2)(37)(20)12465Depreciation and amortization28439242039359ARO Expense36———9Contract and emission credit amortization, net5(16)4——(7)EBITDA554341(171)222(22)924Stock-based compensation42119—26Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates——3——3Acquisition and divestiture integration and transaction costs———21820Deactivation costs—92——11Other and non-recurring charges3(48)3(2)(4)1(50)Mark to market (MtM) losses/(gains) on economic hedges42(184)195——53Adjusted EBITDA$552$171$28$239$(3)$987Interest expense, net(155)Depreciation and amortization(359)Adjusted Income before income taxes473Adjusted income tax4(96)Adjusted Net Income before Preferred Stock dividends377Cumulative dividends attributable to Series A Preferred Stock(17)Adjusted Net Income5360Weighted average number of common shares outstanding - basic230Adjusted EPS$1.571 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization2 Depreciation and amortization recast to include impact of amortization of capitalized contract costs3 Other and non-recurring includes $(50) million of property insurance proceeds4 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods5 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’Third Quarter 2023 condensed financial information by Operating Segment:($ in millions)TexasEastWest/Services/OtherVivintSmart HomeCorp/ElimTotalRevenue1$3,686$2,875$987$478$(5)$8,021Cost of fuel, purchased power and other cost of sales22,6592,44984436(3)5,985Economic gross margin1,027426143442(2)2,036Operations & maintenance and other cost of operations32561105856(1)479Selling, marketing, general & administrative4221143641463577Other(2)2(7)1(1)(7)Adjusted EBITDA$552$171$28$239$(3)$9871 Excludes MtM loss of $70 million and contract amortization of $5 million2 Includes TDSP expense, capacity and emission credits3 Excludes other and non-recurring charges of $(51) million, deactivation costs of $11 million, ARO expense of $9 million and stock-based compensation of $2 million4 Excludes stock-based compensation of $24 million, acquisition and divestiture integration and transaction costs of $2 million and other non-recurring charges of $(1) millionThe following table reconciles the condensed financial information to Adjusted EBITDA:($ in millions)Condensed Consolidated Results of OperationsInterest, tax, depr.,amort.MtMDeactivationOther adj.2Adjusted EBITDARevenue$7,946$5$70$—$—$8,021Cost of operations (excluding depreciation and amortization shown below)15,9561217——5,985Depreciation and amortization359(359)————Gross margin1,63135253——2,036Operations & maintenance and other cost of operations450——(11)40479Selling, marketing, general & administrative602———(25)577Other236(220)——(23)(7)Net Income$343$572$53$11$8$9871 Excludes operations & maintenance and other cost of operations of $450 million2 Other adj. includes stock-based compensation of $26 million, acquisition and divestiture integration and transaction costs of $20 million, ARO expenses of $9 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $3 million and other and non-recurring charges of $(50) millionAppendix Table A-3: Third Quarter 2024 and 2023 Adjusted Net Income and Adjusted EPS ReconciliationsThe following table summarizes the calculation of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net (Loss)/Income1:Three Months Ended($ in millions, except per share amounts)September30, 2024Earnings/(Loss) per Share, Basic2Earnings/(Loss) per Share, Diluted2September30, 2023Earnings perShare, Basic2Earnings perShare, Diluted2Net (Loss)/Income Available for Common Stockholders$(784)$(3.79)$(3.79)$326$1.42$1.41Plus:Dilutive impact adjustment on Net (Loss) Available for Common Stockholders30.09Cumulative dividends attributable to Series A Preferred Stock170.080.08170.070.07ARO expense260.130.1290.040.04Contract and emission credit amortization, net50.020.02(7)(0.03)(0.03)Stock-based compensation250.120.12260.110.11Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates20.010.0130.010.01Acquisition and divestiture integration and transaction costs90.040.04200.090.09Cost to achieve60.030.03———Deactivation costs40.020.02110.050.05(Gain) on sale of assets(208)(1.00)(0.98)———Other and non-recurring charges4130.060.06(50)(0.22)(0.22)Mark to market (MtM) loss on economic hedges1,6307.877.69530.230.23Income Tax5(247)(1.19)(1.17)650.280.28Adjusted Income before income taxes498$2.41$2.35473$2.06$2.04Adjusted income tax6(88)(0.43)(0.42)(96)(0.42)(0.41)Adjusted Net Income before Preferred Stock dividends410$1.98$1.93377$1.64$1.63Cumulative dividends attributable to Series A Preferred Stock(17)(0.08)(0.08)(17)(0.07)(0.07)Adjusted Net Income7$393$1.90$1.85$360$1.57$1.551 Items may not sum due to rounding2 Earnings per share amounts are based on weighted average number of common shares outstanding - basic of 207 million and 230 million for the three months ended September 30, 2024 and 2023, respectively, and on weighted average number of common shares outstanding - diluted of 212 million and 232 million for the three months ended September 30, 2024 and 2023, respectively3 Includes the potential dilutive impacts of the Convertible Senior Notes of 3 million shares and equity compensation of 2 million shares for the three months ended September 30, 2024. Under GAAP when there is a net loss, dilutive securities are not included in the diluted share count as they are anti-dilutive. As Adjusted Net Income is in an income position and not a loss position, this line item reflects the impact of the anti-dilutive securities as if they were dilutive4 2023 other and non-recurring includes $(50) million of property insurance proceeds5 Represents GAAP income tax6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis7 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’Appendix Table A-4: YTD Third Quarter 2024 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS ReconciliationThe following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:($ in millions, except per share amounts)TexasEastWest/Services/OtherVivintSmart HomeCorp/ElimTotalNet Income/(Loss)$259$1,116$90$(51)$(932)$482Plus:Interest expense, net2321161299486Income tax——(21)(8)280251Loss on debt extinguishment————260260Depreciation and amortization224011796561311,045ARO expense15131——29Contract and emission credit amortization, net7547——68EBITDA5231,303194663(62)2,621Stock-based compensation3209446—79Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates——3——3Acquisition and divestiture integration and transaction costs4———91827Cost to achieve5————2323Deactivation costs—132——15Loss/(gain) on sale of assets4—(208)——(204)Other and non-recurring charges191211(8)25Impairments——15——15Mark to market (MtM) losses/(gains) on economic hedges707(610)186——283Adjusted EBITDA$1,255$724$208$729$(29)$2,887Interest expense, net(486)Depreciation and amortization(1,045)Adjusted Income before income taxes1,356Adjusted income tax6(239)Adjusted Net Income before Preferred Stock dividends1,117Cumulative dividends attributable to Series A Preferred Stock(51)Adjusted Net Income71,066Weighted average number of common shares outstanding - basic207Adjusted EPS$5.151 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization2 Depreciation and amortization recast to include impact of amortization of capitalized contract costs3 Stock-based compensation excludes $2 million reflected in cost to achieve and $1 million reflected in acquisition and divestiture integration and transaction costs4 Includes stock-based compensation of $1 million5 Includes stock-based compensation of $2 million6Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods7Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’YTD Third Quarter 2024 condensed financial information by Operating Segment:($ in millions)TexasEastWest/Services/OtherVivintSmart HomeCorp/ElimTotalRevenue1$8,297$8,655$2,950$1,434$(32)$21,304Cost of fuel, purchased power and other cost of sales25,6837,1762,421108(17)15,371Economic gross margin2,6141,4795291,326(15)5,933Operations & maintenance and other cost of operations375432717717831,439Selling, general and administrative costs460442618241961,637Other12(38)—5(30)Adjusted EBITDA$1,255$724$208$729$(29)$2,8871 Excludes MtM gain of $(32) million and contract amortization of $25 million2 Includes TDSP expense, capacity and emission credits3 Excludes ARO expense of $29 million, deactivation costs of $15 million, other and non-recurring charges of $10 million and stock-based compensation of $7 million4 Excludes stock-based compensation of $72 million, cost to achieve of $23 million, acquisition and divestiture integration and transaction costs of $5 million and other and non-recurring charges of $2 millionThe following table reconciles the condensed financial information to Adjusted EBITDA:($ in millions)Condensed Consolidated Results of OperationsInterest, tax, depr.,amort.MtMDeactivationOther adj.2Adjusted EBITDARevenue$21,311$25$(32)$—$—$21,304Cost of operations (excluding depreciation and amortization shown below)115,729(43)(315)——15,371Depreciation and amortization1,045(1,045)————Gross margin4,5371,113283——5,933Operations & maintenance and other cost of operations1,500——(15)(46)1,439Selling, general and administrative costs1,739———(102)1,637Other816(737)——(109)(30)Net Income$482$1,850$283$15$257$2,8871 Excludes operations & maintenance and other cost of operations of $1,500 million2 Other adj. includes loss on debt extinguishment of $260 million, stock-based compensation of $79 million, ARO expense of $29 million, acquisition and divestiture integration and transaction costs of $27 million, other and non-recurring charges of $25 million, cost to achieve of $23 million, impairments of $15 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $3 million and gain on sale of assets $(204) millionAppendix Table A-5: YTD Third Quarter 2023 Adjusted EBITDA Reconciliation by Operating Segment and Consolidated Adjusted EPS ReconciliationThe following table summarizes the calculation of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:($ in millions, except per share amounts)TexasEastWest/Services/OtherVivintSmartHome2Corp/ElimTotalNet Income/(Loss)$1,532$(1,187)$(601)$(66)$(362)$(684)Plus:Interest expense, net2(12)1897319424Income tax—(1)(83)(20)(78)(182)Depreciation and amortization32571227344227921ARO expense77———14Contract and emission credit amortization, net98310——102EBITDA1,807(988)(583)453(94)595Stock-based compensation4156341—65Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates——11——11Acquisition and divestiture integration and transaction costs5———3976115Deactivation costs—198——27(Gain) on sale of assets—(202)———(202)Other and non-recurring charges6(91)4(2)21(86)Mark to market (MtM) (gains)/losses on economic hedges(421)1,723631——1,933Adjusted EBITDA$1,310$562$68$535$(17)$2,458Interest expense, net(424)Depreciation and amortization(921)Adjusted Income before income taxes1,113Adjusted income tax7(226)Adjusted Net Income before Preferred Stock dividends887Cumulative dividends attributable to Series A Preferred Stock(38)Adjusted Net Income8849Weighted average number of common shares outstanding - basic230Adjusted EPS$3.691 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization2 Vivint Smart Home acquired in March 20233 Depreciation and amortization recast to include impact of amortization of capitalized contract costs4 Stock-based compensation excludes $23 million reflected in acquisition and divestiture integration and transaction costs5 Includes stock-based compensation of $23 million6 Other and non-recurring includes $(96) million of property insurance proceeds7 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods8 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’YTD Third Quarter 2023 condensed financial information by Operating Segment:($ in millions)TexasEastWest/Services/OtherVivintSmartHome1Corp/ElimTotalRevenue2$8,235$9,485$3,164$1,070$(10)$21,944Cost of fuel, purchased power and other cost of sales35,6138,1932,77182(6)16,653Economic gross margin2,6221,292393988(4)5,291Operations & maintenance and other cost of operations4785330185127(3)1,424Selling, marketing, general & administrative5530401165326151,437Other(3)(1)(25)—1(28)Adjusted EBITDA$1,310$562$68$535$(17)$2,4581 Vivint Smart Home acquired in March 20232 Excludes MtM gain of $(96) million and contract amortization of $24 million3 Includes TDSP expense, capacity and emission credits4 Excludes other and non-recurring charges of $(93) million, deactivation costs of $27 million, ARO expense of $14 million and stock-based compensation of $5 million5 Excludes stock-based compensation of $60 million, acquisition and divestiture integration and transaction costs of $4 million and other and non-recurring charges of $1 millionThe following table reconciles the condensed financial information to Adjusted EBITDA:($ in millions)Condensed Consolidated Results of OperationsInterest, tax, depr.,amort.MtMDeactivationOther adj.2Adjusted EBITDARevenue$22,016$24$(96)$—$—$21,944Cost of operations (excluding depreciation and amortization shown below)118,760(78)(2,029)——16,653Depreciation and amortization921(921)————Gross margin2,3351,0231,933——5,291Operations & maintenance and Other cost of operations1,377——(27)741,424Selling, marketing, general & administrative1,502———(65)1,437Other140(242)——74(28)Net (Loss)/Income$(684)$1,265$1,933$27$(83)$2,4581 Excludes operations & maintenance and other cost of operations of $1,377 million2 Other adj. includes acquisition and divestiture integration and transaction costs of $115 million, stock-based compensation costs of $65 million, ARO expense of $14 million, NRG share of adjusted EBITDA in unconsolidated affiliates of $11 million, gain on sale of assets of $(202) million and other and non-recurring charges of $(86) millionAppendix Table A-6: YTD Third Quarter 2024 and 2023 Adjusted Net Income and Adjusted EPS ReconciliationsThe following table summarizes the calculation of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income/(Loss)1:Nine Months Ended($ in millions, except per share amounts)September30, 2024Earnings perShare, Basic2Earnings perShare, Diluted2September30, 2023Earnings/(Loss)per Share,Basic2Earnings/(Loss)per Share,Diluted2Net Income/(Loss) Available for Common Stockholders$431$2.08$2.02$(722)$(3.14)$(3.14)Plus:Dilutive impact adjustment on Net (Loss) Available for Common Stockholders30.01Cumulative dividends attributable to Series A Preferred Stock510.250.24380.170.16Loss on debt extinguishment2601.261.22———ARO expense290.140.14140.060.06Contract and emission credit amortization, net680.330.321020.440.44Stock-based compensation4790.380.37650.280.28Adjustment to reflect NRG share of adjusted EBITDA in unconsolidated affiliates30.010.01110.050.05Acquisition and divestiture integration and transaction costs5270.130.131150.500.50Cost to achieve6230.110.11———Deactivation costs150.070.07270.120.12(Gain) on sale of assets(204)(0.99)(0.96)(202)(0.88)(0.87)Other and non-recurring charges7250.120.12(86)(0.37)(0.37)Impairments150.070.07———Mark to market (MtM) loss on economic hedges2831.371.331,9338.408.37Income Tax82511.211.18(182)(0.79)(0.79)Adjusted Income before income taxes1,356$6.55$6.371,113$4.84$4.82Adjusted income tax9(239)(1.15)(1.12)(226)(0.98)(0.98)Adjusted Net Income before Preferred Stock dividends1,117$5.40$5.24887$3.86$3.84Cumulative dividends attributable to Series A Preferred Stock(51)(0.25)(0.24)(38)(0.17)(0.16)Adjusted Net Income10$1,066$5.15$5.00$849$3.69$3.681 Items may not sum due to rounding2 Earnings per share amounts are based on weighted average number of common shares outstanding - basic of 207 million and 230 million for the nine months ended September 30, 2024 and 2023, respectively, and on weighted average number of common shares outstanding - diluted of 213 million and 231 million for the nine months ended September 30, 2024 and 2023, respectively3 Includes the potential dilutive impact of equity compensation of 1 million shares for the nine months ended September 30, 2023. Per GAAP when there is a net loss, dilutive securities are not included in the diluted share count as they are anti-dilutive. As Adjusted Net Income is in an income position and not a loss position, this line item reflects the impact of the anti-dilutive securities as if they were dilutive4 2024 stock-based compensation excludes $2 million reflected in cost to achieve and $1 million reflected in acquisition and divestiture integration and transaction; 2023 stock-based compensation excludes $23 million reflected in acquisition and divestiture integration and transaction costs5 2024 includes stock-based compensation of $1 million; 2023 includes stock-based compensation of $23 million6 2024 includes stock-based compensation of $2 million7 2023 other and non-recurring includes $(96) million of property insurance proceeds8 Represents GAAP income tax9 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis10 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’Appendix Table A-7: Three Months Ended September 30, 2024 and 2023 Free Cash Flow before Growth Investments (FCFbG)The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash provided by operating activities and Adjusted Net Income:Three Months Ended($ in millions)9/30/249/30/23Adjusted Net Income$393$360Cumulative dividends attributable to Series A Preferred Stock1717Interest payments (in excess of)/less than expense28(36)Depreciation and amortization352359Income tax payments less than expense8288Gross capitalized contract costs1(259)(265)Collateral / working capital / other assets and liabilities2(582)43Cash provided by operating activities31566Net receipts from settlement of acquired derivatives that includefinancing elements1014Acquisition and divestiture integration and transaction costs32820GenOn pension18—Adjustment for change in collateral740(167)Nuclear decommissioning trust liability—(8)Effect of exchange rate changes on cash and cash equivalents1(3)Adjusted cash provided by operating activities828422Maintenance capital expenditures, net4(55)(102)Environmental capital expenditures(7)(1)Cost of acquisition4936Free Cash Flow before Growth Investments (FCFbG)$815$3551 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit to depreciation and amortization2 Includes the cash impact of Net deferred revenue3 Three months ended 9/30/24 includes $6 million Cost to achieve payments4 Three months ended 9/30/23 includes W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment of $52 millionAppendix Table A-8: Nine Months Ended September 30, 2024 and 2023 Free Cash Flow before Growth Investments (FCFbG)The following table summarizes the calculation of FCFbG, providing a reconciliation to Cash provided/(used) by operating activities and Adjusted Net Income:Nine Months Ended($ in millions)9/30/249/30/23Adjusted Net Income$1,066$849Cumulative dividends attributable to Series A Preferred Stock5138Interest payments less than expense3428Depreciation and amortization1,045921Income tax payments less than expense127186Gross capitalized contract costs1(698)(622)Collateral/working capital/other assets and liabilities2(271)(1,862)Cash provided by/(used by) operating activities1,354(462)Net (payments)/receipts from settlement of acquired derivatives that include financing elements(2)332Acquisition and divestiture integration and transaction costs36395Astoria fees—3Proceeds from sale of land9—GenOn pension18—Encina site improvement—7Adjustment for change in collateral801,188Nuclear decommissioning trust liability—(13)Effect of exchange rate changes on cash and cash equivalents1—Adjusted cash provided by operating activities1,5231,150Maintenance capital expenditures, net4(178)(256)Environmental capital expenditures(15)(1)Cost of acquisition10890Free Cash Flow before Growth Investments (FCFbG)$1,438$9831 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit to depreciation and amortization2 Includes the cash impact of Net deferred revenue3 Nine months ended 9/30/24 includes $23 million Cost to achieve payments and excludes $3 million non-cash stock-based compensation; nine months ended 9/30/23 excludes $23 million non-cash stock-based compensation4 Nine months ended 9/30/24 includes W.A. Parish Unit 8 insurance recoveries related to property, plant and equipment of $3 million; nine months ended 9/30/23 includes W.A. Parish Unit 8 and Limestone Unit 1 insurance recoveries related to property, plant and equipment of $173 millionAppendix Table A-9: Nine Months Ended September 30, 2024 Sources and Uses of LiquidityThe following table summarizes the sources and uses of liquidity for the nine months ended September 30, 2024:($ in millions)Nine months endedSeptember 30, 2024Sources:Adjusted cash provided by operating activities$1,523Change in availability under revolving credit facility and collective collateral facilities1,052Proceeds from issuance of long-term debt875Proceeds from sales of assets, net of cash disposed495Uses:Repayments of long-term debt and finance leases(960)Payments of dividends to preferred and common stockholders(322)Payments for share repurchase activity(316)Payments for debt extinguishment costs(258)Maintenance and environmental capital expenditures, net1(192)Investments and integration capital expenditures(91)Acquisition and divestiture integration and transaction costs(58)Payments for shares repurchased in lieu of tax withholdings(45)Payments for acquisitions of businesses and assets, net of cash acquired(33)Net purchases of emission allowances(16)Payments of debt issuance costs(13)Cash collateral paid in support of energy risk management activities(8)Other investing and financing(32)Change in Total Liquidity$1,6011 Includes $3 million of W.A. Parish Unit 8 insurance recoveries related to property, plant and equipmentAppendix Table A-10: Guidance ReconciliationsThe following table summarizes the 2024 Original and Raised Guidance calculations of Adjusted EBITDA, Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income1:2024 Original2024 Raised2025($ in millions, except per share amounts)GuidanceGuidanceGuidanceNet Income2$750 - $1,000$925 - $1,075$1,025 - $1,225Interest expense, net640640635Income tax3345395390 - 440Depreciation and amortization41,4201,4201,400ARO expense252525Stock-based compensation100100100Acquisition and divestiture integration and transaction costs555520Other59595130Adjusted EBITDA$3,430 - $3,680$3,655 - $3,805$3,725 - $3,975Interest expense, net(640)(640)(635)Depreciation and amortization(1,420)(1,420)(1,400)Adjusted Income before income taxes$1,370 - $1,620$1,595 - $1,745$1,690 - $1,940Adjusted income tax expense6(263)(293)(293) - (343)Adjusted Net Income before Preferred Stock dividends$1,107 - $1,357$1,302 - $1,452$1,397 - 1,597Cumulative dividends attributable to Series A Preferred Stock(67)(67)(67)Adjusted Net Income7$1,040 - $1,290$1,235 - $1,385$1,330 - $1,530Weighted average number of common shares outstanding - basic206206197Adjusted EPS$5.00 - $6.30$5.95 - $6.75$6.75 - $7.751 Adjusted EBITDA recast to exclude all impacts of amortization of capitalized contract costs related to fulfillment, now reflected in depreciation and amortization2 The Company does not guide to Net Income due to the impact of fair value adjustments related to derivatives in a given year. For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero3 Represents anticipated GAAP income tax4 Depreciation and amortization recast to include impact of amortization of capitalized contract costs5 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs, other non-recurring expenses, and does not include the adjustment for loss on debt extinguishment which was $260 million as of September 30, 2024 and does not include gain on sale of Airtron of $208 million6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis7 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’; see appendix table A-11 for GAAP ReconciliationAppendix Table A-11: 2024 and 2025 Guidance Adjusted Net Income and Adjusted EPS ReconciliationsThe following table summarizes the 2024 Guidance calculations of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income1:2024 Original Guidance2024 Raised Guidance($ in millions, except per share amounts)Full Year2024Earnings perShare, Basic2Full Year2024Earnings perShare, Basic2Net Income3$750 - $1,000N/A$925 - $1,075N/ACumulative dividends attributable to Series A Preferred Stock(67)N/A(67)N/ANet Income Available for Common Stockholders$683 - $933$3.25 - $4.55$858 - $1,008$4.10 - $4.90Plus:Cumulative dividends attributable to Series A Preferred Stock670.33670.33ARO Expense250.12250.12Stock-based compensation1000.491000.49Acquisition and divestiture integration and transaction costs550.27550.27Other4950.46950.46Income Tax53451.673951.92Adjusted Income before income taxes$1,370 - $1,620$6.60 - $7.90$1,595 - $1,745$7.70 - $8.50Adjusted income tax6(263)(1.28)(293)(1.42)Adjusted Net Income before Preferred Stock dividends$1,107 - $1,357$5.35 - $6.65$1,302 - $1,452$6.30 - $7.10Cumulative dividends attributable to Series A Preferred Stock(67)(0.33)(67)(0.33)Adjusted Net Income7$1,040 - $1,290$5.00 - $6.30$1,235 - $1,385$5.95 - $6.751 Items may not sum due to rounding2 Earnings per share amount is based on weighted average number of common shares outstanding - basic of 206 million for 2024 original and 2024 raised guidance3 The Company does not guide to Net Income due to the impact of fair value adjustments related to derivatives in a given year. For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero4 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs, other non-recurring expenses, and does not include the adjustment for loss on debt extinguishment which was $260 million as of September 30, 2024 and does not include gain on sale of Airtron of $208 million5 Represents anticipated GAAP income tax6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis7 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’The following table summarizes the 2025 Guidance calculations of Adjusted Net Income and Adjusted EPS and provides a reconciliation from Net Income1:2025 Guidance($ in millions, except per share amounts)Full Year 2025Earnings perShare, Basic2Net Income3$1,025 - $1,225N/ACumulative dividends attributable to Series A Preferred Stock(67)N/ANet Income Available for Common Stockholders$958 - $1,158$4.85 - $5.85Plus:Cumulative dividends attributable to Series A Preferred Stock670.34ARO Expense250.13Stock-based compensation1000.51Acquisition and divestiture integration and transaction costs200.10Other41300.66Income Tax5390 - 4401.98 - 2.23Adjusted Income before income taxes$1,690 - $1,940$8.70 - $9.70Adjusted income tax6(293) - (343)(1.49) - (1.74)Adjusted Net Income before Preferred Stock dividends$1,397 - $1,597$7.10 - $8.10Cumulative dividends attributable to Series A Preferred Stock(67)(0.34)Adjusted Net Income7$1,330 - $1,530$6.75 - $7.751 Items may not sum due to rounding2 Earnings per share amount is based on weighted average number of common shares outstanding - basic of 197 million for 2025 guidance3 For purposes of guidance, fair value adjustments related to derivatives are assumed to be zero4 Includes adjustments for sale of assets, adjustments to reflect NRG share of Adjusted EBITDA in unconsolidated affiliates, deactivation costs and other non-recurring expenses5 Represents anticipated GAAP income tax6 Income tax calculated using Adjusted ETR on Adjusted Income before income taxes. Adjusted ETR includes impact of NRG’s tax credits, consisting of incentive tax credit in connection with renewable projects as well as production tax credits for carbon recapture for pre-IRA periods. Other Adjustments are shown on pre-tax basis7 Adjusted Net Income as shown here is ‘Adjusted Net Income available for common stockholders’Appendix Table A-12: 2024 and 2025 Guidance ReconciliationsThe following table summarizes the calculation of Adjusted EBITDA providing reconciliation to Net Income, and the calculation of FCFbG providing a reconciliation to Cash provided by operating activities and Adjusted Net Income:2024 Original2024 Raised2025($ in millions)GuidanceGuidanceGuidanceAdjusted Net Income$1,040 - 1,290$1,235 - 1,385$1,330 - 1,530Cumulative dividends attributable to Series A preferred stock676767Interest payments less than expense404025Depreciation and amortization1,4201,4201,400Income tax (excess of)/less than expense103133168 - 218Gross capitalized contract costs1(830)(830)(895)Working capital/other assets and liabilities2(15)(90)(10)Cash provided by operating activities31,825 - 2,0751,975 - 2,1252,085 - 2,335Acquisition and other costs212412435Adjusted cash provided by operating activities1,949 - 2,1992.099 - 2,2492,120 - 2,370Maintenance capital expenditures, net4(240) - (260)(240) - (260)(240) - (260)Environmental capital expenditures(20) - (30)(20) - (30)(20) - (30)Cost of acquisition145145130Free Cash Flow before Growth Investments (FCFbG)$1,825 - 2,075$1,975 - 2,125$1,975 - 2,2251 Gross capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts; these costs include installed products, commissions, other compensation, and cost of installation of new or upgraded customer contracts; these costs are amortized on a straight-line basis over the expected period of benefit to depreciation and amortization2 Working capital / other assets and liabilities include payments for Acquisition and divestiture integration and transaction costs which is adjusted in Acquisition and other costs and Net deferred revenues3 Excludes fair value adjustments related to derivatives and changes in collateral deposits in support of risk management activities4 Includes W.A. Parish Unit 8 expected insurance recoveries related to property, plant and equipmentAppendix Table A-13: Actual Full Year 2023 Adjusted EBITDA Reconciliation for AirtronThe following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation from Net Income:($ in millions)Airtron(Unaudited)Net Income$29Plus:Depreciation and amortization28EBITDA57Other costs1Adjusted EBITDA$58Non-GAAP Financial MeasuresNRG reports its financial results in accordance with the accounting principles generally accepted in the United States (GAAP) and supplements with certain non-GAAP financial measures. These measures are not recognized in accordance with GAAP and should not be viewed in isolation or as an alternative to GAAP measures of performance. In addition, other companies may calculate non-GAAP financial measures differently than NRG does, limiting their usefulness as a comparative measure.NRG uses the following non-GAAP measures to provide additional insight into financial performance:Adjusted EBITDA: Defined as EBITDA (earnings before interest, taxes, depreciation, and amortization, impact of asset retirement obligation expenses and contract amortization consisting of amortization of power and fuel contracts and amortization of emission allowances) with further adjustments for stock-based compensation, impairment losses, deactivation costs, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from forward position of economic hedges, gains or losses on the repurchase, modification or extinguishment of debt, restructuring costs, and other non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments or non-controlling interests. Adjusted EBITDA is intended to facilitate period-to-period comparisons and is widely used by investors for performance assessment.Adjusted Net Income: Defined as net income available to common shareholders excluding the impact of asset retirement obligation expenses, contract amortization consisting of amortization of power and fuel contracts and amortization of emission allowances, stock-based compensation, impairment losses, deactivation costs, gains or losses on sales, dispositions or retirements of assets, any mark-to-market gains or losses from forward position of economic hedges, gains or losses on the repurchase, modification or extinguishment of debt, the impact of restructuring and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments and non-controlling interests.Adjusted Earnings per Share (EPS): Defined as Adjusted Net Income, divided by the average basic common shares outstanding. The Company believes that using average basic common shares outstanding offers a more accurate view of recurring per-share earnings, as it better reflects the impact of the fully hedged convertible note callable in mid-2025.Adjusted Cash provided/(used) by operating activities: Defined as Cash provided/(used) by operating activities with the reclassification of net payments of derivative contracts acquired in business combinations from financing to operating cash flow, as well as the add back of merger, integration, related restructuring costs, adjustment for change in collateral, and the impact of extraordinary, unusual or non-recurring items.Free Cash Flow before Growth Investments: Defined as Adjusted Cash provided/(used) by operating activities less maintenance and environmental capital expenditures, net of funding and insurance recoveries related to property, plant and equipment, and adjustments to exclude cost of acquisition related to growth.Management believes these non-GAAP financial measures are useful to investors and other users of NRG's financial statements in evaluating the Company’s operating performance and growth, as well as the impact of the Company’s capital allocation program. They provide an additional tool to compare business performance across periods and adjust for items that management does not consider indicative of NRG’s future operating performance. Management uses these non-GAAP financial measures to assist in comparing financial performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations, and for evaluating actual results against such expectations, and in communications with NRG's Board of Directors, shareholders, creditors, analysts and investors concerning its financial performance.View source version on businesswire.com: https://www.businesswire.com/news/home/20241107512175/en/MediaChevalier Gray832.763.3454InvestorsBrendan Mulhern609.524.4767Source: NRG Energy, Inc.