NRG Energy, Inc. (NYSE:NRG) Q3 2019 Earnings Conference Call Transcript

Nov 07, 2019 • 09:00 am ET

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NRG Energy, Inc. (NYSE:NRG) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the NRG Energy, Inc. Third Quarter 2019 Earnings Call. [Operator Instructions]

It is now my pleasure to hand the conference over to Mr. Kevin Cole, Head of Investor Relations. Sir, you may begin.

Executive
Kevin L. Cole

Thank you, Brian. Good morning and welcome to NRG Energy's Third Quarter 2019 Earnings Call. This morning's call is scheduled for 45 minutes in length and is being broadcast live over the phone and via webcast, which can be located in the Investors section of our website at www.nrg.com under Presentations and Webcast.

Please note that today's discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor in today's presentation, as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law.

In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation.

And with that, I'll turn the call over to Mauricio Gutierrez, NRG's President and CEO.

Executive
Mauricio Gutierrez

Thank you, Kevin, and good morning everyone, and thank you for your interest in NRG. I'm joined this morning by Kirk Andrews, our Chief Financial Officer. And also on the call and available for questions, we have Elizabeth Killinger, Head of our Retail Mass Business; and Chris Moser, Head of Operations.

I would like to start the call with our key messages on Slide 3 that highlight the simplicity of our value proposition and demonstrate the predictability of our platform, particularly after the summer we experienced in Texas with significant weather and price volatility.

First, our integrated platform performed well during the summer, allowing us to narrow our 2019 guidance around the midpoint of our range and validating again the resilience of our business. Second, we're initiating 2020 guidance that further demonstrates our ability to deliver robust and predictable results through varying market conditions. And third, we're providing additional clarity on our capital allocation philosophy, given the financial flexibility that we have afforded ourselves. We are introducing a framework, consistent with our goal of growing and perfecting our business, while returning meaningful capital to our shareholders. These framework targets 50% of excess capital towards growth and 50% to be returned to shareholders, supported now by a more significant dividend policy.

So moving to our third quarter results and highlights on Slide 4. As you can see on the left hand side of the slide, during the quarter, we remained a top decile safety performance and delivered $792 million of adjusted EBITDA or 33% higher than last year on a same-store basis. This was primarily driven by higher realized power prices, margin enhancement and retail customer growth, partially offset by higher retail supply costs and higher