NRG Energy Reports Mixed Results - Analyst Blog

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NRG Energy, Inc. ( NRG ) reported a pro forma loss of 92 cents per share in first quarter 2012 compared with a loss of $1.06 in the prior-year quarter. This was due to mild weather, switching from coal to gas and outage of STP unit 2. The quarterly result was wider than the Zacks Consensus Estimate of a loss of 11 cents per share.

Total Revenue    

NRG Energy's total operating revenue of $1.86 billion in first quarter 2012 decreased 6.67% from $2 billion in the year-ago quarter. The year-over-year decline was due to lower commodity prices and mild weather. The quarterly revenue fell short of the Zacks Consensus Estimate of $2.46 billion.  

Segment Details

NRG Energy has realigned its segments into Conventional Power Generation , Retail Businesses , Alternative Energy and Corporate activities . Earlier, the company's operating segments comprised Reliant, Texas, Northeast, South Central and West. After segment restructuring, Conventional Power Generation now includes the erstwhile Texas, Northeast, South Central, West segments and Other (comprising international businesses, thermal and chilled water business and maintenance operations). The Alternative Energy segment deals with solar and wind assets, electric vehicle and carbon capture businesses.

Conventional Power Generation: This segment reported first quarter 2012 adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") of $202 million compared with $300 million in the year-ago quarter. The decline in EBITDA was due to decrease in coal and nuclear generation related to an unplanned outage at STP unit 2, lower pricing across the region and lower coal energy realized prices.

Retail Businesses: This segment reported EBITDA of $112 million in first quarter 2012 compared with $160 million in the prior-year period. This was due to a mild winter in Texas and an increase in operating expenses.

Alternative Energy: This segment's adjusted EBITDA in first quarter 2012 was $1 million compared with a loss of $1 million in the year-ago quarter. This was driven by the addition of the 290-megawatt ("MW") Agua Caliente project and 20 MW Roadrunner solar generation project.

Corporate activities: This segment reported an EBITDA of ($15) million in first quarter 2012 compared with ($4) million in the prior-year quarter.

Operational Update

NRG Energy's first quarter 2012 total operating expenses increased 20.88% year over year to $2.03 billion due to higher cost of operations, and selling, general and administrative expenses; partially offset by a decline in development expenses.

In first quarter 2012, NRG Energy's interest expenses decreased to $165 million from $173 million in the year-ago quarter as a result of lower interest rates.

Financial Update

Cash and cash equivalents as of March 31, 2012 were $1.01 billion compared with $1.11 billion as of December 31, 2011.

As of March 31, 2012, long-term debt and capital leases were $10.15 billion versus $9.75 billion in the year-ago period.

Cash used for operating activities was $76 million in the first quarter 2012 compared with cash provided by operating activities of $216 million in the prior-year quarter.

Guidance for 2012

While estimating fiscal 2012 EBITDA and free cash flow, the company took into account normalized summer weather in the region.

The company maintained 2012 adjusted EBITDA expectation in the range of $1,825 million - $2,000 million, including wholesale and retail contribution in the range of $1,200-$1,300 million and $625-$700 million, respectively.

The 2012 guidance for free cash flow was also reaffirmed in the range of $800 million - $1,000 million.

NRG Energy also expects to pay a quarterly dividend of 36 cents per share, with the first payment likely to be made during third quarter 2012.

Peer Comparison

The AES Corporation ( AES ), which competes with NRG Energy, Inc., is expected to report first quarter 2012 earnings before the market opens on May 4, 2012. The Zacks Consensus Estimate for its first quarter earnings is currently pegged at 28 cents.

Based in Princeton, New Jersey, NRG Energy, Inc. operates as a wholesale power generation company. It is also involved in the fuel and energy trade and offers related products and services in the United States and internationally. NRG Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: AES , NRG

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