GenOn Energy, Inc.
) posted second-quarter 2012 pro forma loss of 14 cents per share
compared with a loss of 11 cents per share in the prior-year
quarter. The company reported wider loss primarily due to a decline
in contracted and capacity revenues in Eastern PJM and Western
PJM/MISO; partially offset by higher realized value of hedges and
lower adjusted operating costs.
GENON ENERGY (GEN): Free Stock Analysis Report
NRG ENERGY INC (NRG): Free Stock Analysis
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Quarterly loss was wider than the Zacks Consensus Estimate of a
loss of 10 cents.
In the reported quarter, GenOn's GAAP loss was 30 cents versus a
loss of 18 cents in the year-ago quarter. The variance between GAAP
and pro forma loss was due to costs of 20 cents related to
unrealized charges, Mirant/RRI merger-related expenses, charges for
deactivation of generating facilities, litigation charges, market
inventory adjustments and other several charges; partially offset
by gains of 4 cents which includes reversal of Potomac River
settlement obligations and large scale remediation and settlement
GenOn Energy's total revenue for second-quarter 2012 was $521
million, down 35.8% from $812 million reported in the year-ago
period. The decline was due to a drop in revenues in each of the
company's segments. Reported quarter revenue fell short of the
Zacks Consensus Estimate of $707 million.
In the reported quarter, the segment revenue decreased 26.3% year
over year to $221 million from $300 million in the year-ago
quarter. This year-over-year decline was due to lower power
generation volumes in coal-fired facilities and mild weather.
The segment revenue was $180 million versus $293 million in the
year-ago quarter. The drop in quarterly revenue was primarily due
to an outage at one of the generating facilities, mild weather as
well as lower capacity prices.
Revenue decreased 13.8% year over year to $31 million in
second-quarter 2012 from $36 million in the year-ago quarter. This
was primarily due to the shutdown of the Potrero generating plant.
Total revenue for second-quarter 2012 was $45 million versus $119
million in second-quarter 2011, reflecting a drop of 62.1%. The
year-over-year decline was due to a fall in income from proprietary
Total revenue for second-quarter 2012 was $44 million, down 31.3%
year over year. This was due to a decrease in intermediate
generation volumes for a outage at the company's Northeast
In second-quarter 2012, GenOn's adjusted earnings before interest,
tax, depreciation and amortization ("EBITDA") was $72 million
compared with $104 million in the prior-year quarter.
In the quarter under review, total operating expenses decreased 24%
year over year to $354 million primarily due to lower operation and
Operating loss during the reported quarter was $139 million versus
$42 million in the year-ago period.
Interest expenses during the quarter decreased to $85 million from
$96 million a year ago. This was due to the repayment of GenOn
Americas Generation senior unsecured notes and PEDFA bonds.
Cash and cash equivalents as of June 30, 2012 were $1,677 million
versus $1,668 million as of December 31, 2011.
Net cash used in operating activities in second-quarter 2012 was
$39 million, down from $203 million in the comparable period last
year. This decline was primarily due to changes in energy prices
and fluctuations in working capital needs.
In the first six months, capital expenditure was $342 million, up
from $183 million in the prior-year period. This growth in capital
expenditure was due to construction of Marsh Landing generation
facility and payment of the scrubber contract litigation settlement
Total debt as of June 30, 2012 was $4.3 billion versus $4.1 billion
as of December 31, 2011.
In July 2012, GenOn Energy Inc. has entered into an agreement,
worth $18 billion, with
NRG Energy Inc.
) to merge in a stock for stock tax free transaction. The
transaction is subject to the approval of both the companies'
shareholders, the Federal Energy Regulatory Commission, the New
York Public Service Commission and the Public Utility Commission of
Texas. Both the companies are expected to close the merger by
first-quarter 2013. The merged entity will retain the name of "NRG
The merger will enable fuel innovation, increase operational
efficiency and generate approximately 47,000 megawatts from its
Eastern, Gulf Coast and Western assets.
GenOn Energy, Inc. currently retains a Zacks #2 Rank, which
translates into a short-term Buy rating.
Houston, Texas-based GenOn Energy, Inc. is a competitive wholesale
electricity provider in 12 states of the U.S. The company has total
generating capacity of 22,700 megawatts. GenOn has several types of
power generation facilities, which include baseload, intermediate
and peaking units by utilizing coal, natural gas and oil.