NRG Energy Shows Operational Strength in First-Quarter 2015, Notches Down Capex for Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. power generation leader NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey) reported solid operational growth amid weak prices in first-quarter 2015, as the company ramped up investment in its renewables portfolio. NRG's adjusted EBITDA was reported to be $840 million for the quarter, a 2.82% increase from first-quarter 2014.

Net losses stood at $125 million in first-quarter 2015, compared with losses of $58 million in first-quarter 2014, when including factors left out of the adjusted EBITDA measurement, including interest expenses; income taxes; losses on debt extinguishments; depreciation and amortization, including contracts; mark-to-market gains and losses; gains and losses attributable to non-controlling interests; and other one-time or rare factors.

Industrial Info is tracking about $8 billion in projects involving NRG, including $560 million in additions and upgrades at a gas turbine plant in Astoria, New York. The project involves removing seven 20-MW Siemens SGT-900 simple-cycle combustion turbines, and constructing two 175-MW General Electric (NYSE:GE) MS7001FA natural gas-fired combustion turbine generators and two 89-MW GE steam turbine generators . The project is expected to kick off in the fourth quarter.

Total operating revenues stood at $3.83 billion, a 9.75% increase from the same period last year. The Home Retail segment reported an adjusted EBITDA increase of nearly 50%, as stronger customer numbers and rough winter weather boosted sales volumes. The Renew segment, which focuses on renewables, and the Yield segment, which acquires and operates natural gas, solar and wind plants, benefited from last year's Edison Mission Energy and Alta Wind acquisitions, both of which focused on wind-power assets. NRG's Business segment, however, saw weaker adjusted EBITDA amid lower prices in its East and West U.S. regions, although the Gulf Coast region saw an increase.

Capital expenditures for the quarter stood at $252 million, compared with $237 million in first-quarter 2014.

"We beat the existing [adjusted EBITDA] record in the face of very, very soft wholesale pricing in our core markets," said David Crane, the president and chief executive officer of NRG, in a conference call. "Average on-peak prices in PJM [Interconnection region] in the first quarter of 2015 were just 50% of what they were in the first quarter of 2014."

For full-year 2015, capital expenditures on maintenance are expected to be between $480 million and $510 million, while those on environmental projects recently were lowered to between $305 million and $335 million. Adjusted EBITDA is expected to be between $3.2 billion and $3.4 billion. (The guidance assumes normalized weather in the major markets.) NRG says it will sell (or "drop down") about $600 million of contracted assets to the Yield segment throughout 2015.

In early April, NRG and the Yield segment formed a partnership that will invest in residential solar assets developed by NRG Home Solar. On the outset, it will include an unlevered portfolio of more than 17 MW through more than 2,000 leases.

"Having meaningfully expanded our home solar tax equity runway with two new facilities, we have the two key pieces in place to realize value at NRG today, in excess of the capital requirements of this fast-growing business," said Kirk Andrews, the chief financial officer of NRG, in the conference call. "We have also established a similar, new $100 million partnership with NRG Yield for future dropdowns of solar assets, which we expected over the balance of 2015, providing further value realization at NRG and expanded growth for Yield."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.