NRG Energy, Inc. (NRG)

NRG 
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NRG Energy, Inc. (NRG)

Q3 2009 Earnings Call

October 29, 2009 9:00 am ET

Executives

Nahla Azmy - SVP of IR

David Crane - President and CEO

John Ragan - EVP and COO

Bob Flexon - EVP and CFO

Mauricio Gutierrez - EVP, Commercial Operations

Jason Few - SVP of Mass Markets and Operations, Reliant Energy, Inc.

Analysts

Neel Mitra - Simmons & Company International

Lasan Johong - RBC Capital Markets

Michael Lapides - Goldman Sachs

Brandon Blossman - Tudor Pickering

Anthony Crowdell - Jefferies

Nitin Dahiya - Nomura Securities

Angie Storozynski - Macquarie Capital

Presentation

Operator

Welcome to the NRG Energy Third Quarter 2009 Earnings Conference Call. (Operator Instructions).

I would now like to turn the presentation over to your host for today, Ms. Nahla Azmy, SVP, Investor Relations. Please proceed.

Nahla Azmy

Good morning and welcome to our third quarter 2009 earnings call. This call is being broadcast live over the phone and from our website, at www.nrgenergy.com. You can access the call presentation and press release furnished to the SEC through a link on the Investor Relations page of our website. A replay of the call will also be available on our website.

This call, including the formal presentation and the question-and-answer session, will be limited to one hour. In the interest of time, we ask that you please limit yourself to one question with just one follow-up.

Now, for the obligatory safe harbor statement. During the course of this morning's presentation, management will reiterate forward-looking statements made in today's press release regarding future events and financial performance. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors contained in our press release and our filings with the SEC that could cause actual results to differ materially from those in the forward-looking statements in the press release and this conference call.

In addition, please note that the date of this conference call is October 29, 2009, and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events, except as required by law.

During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the company's operating and financial results. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please revert to today's press release and presentation.

Now with that, I would like to turn the call over to David Crane, NRG's President and Chief Executive Officer.

David Crane

I'm joined here today by Bob Flexon, our Chief Financial Officer; and John Ragan, our Chief Operating Officer, both of who will be handling the lion's share of the presentation. Other colleagues that I have with me who are available to answer questions today are Mauricio Gutierrez, who runs Commercial Operations, (inaudible), who heads our Risk Group; Jason Few, who runs Reliant; and Jim Ingoldsby, who is our Chief Accounting Officer.

Finally, I'm joined by Gerry Luterman, who I think most of you know is going to be joining the company as our Interim Chief Financial Officer, succeeding Bob. He is here as our special guest and observer. As he is not on the payroll today, I don't really expect him to have to answer any questions. We want him here because, as we sit around here and we actually talk like this, for reporting purposes Bob Flexon owns this quarter, the third quarter 2009, from a reporting perspective. Gerry Luterman will own the fourth quarter of 2009 and the full year 2009. So next quarter, if all goes according to plan, Gerry will own the quarters thereafter.

Today I'm going to focus more than usual on our actual third quarter and year-to-date 2009 financial performance and describing our initial view for 2010, as reflected in our EBITDA and free cash flow guidance for next year, released today for the first time. In terms of our various growth initiatives, the topic I usually cover, while we, of course, will happily answer any questions you might have about them, I intend to mention them only in passing during my prepared remarks. I don't want you to misconstrue this as connoting pessimism on my part. Quite to the contrary, all it indicates is that I'm trying to reserve on the growth discussion and on our vision of the future of our company and the future of this industry until we have the opportunity for a more exhaustive discussion at our Investor Conference in Houston, which is now just three weeks away.

Now getting started and turning to slide four for my part, the three topics I want to comment on before passing the mike over to John and Bob for a more detailed explanation, our stellar 2009 performance, our cautious outlook for 2010 and our exceptional achievements on all levels with Reliant, not only the deal itself or Reliant's financial performance, but the success of which should be obvious to all, but the benefit of Reliant in the context of NRG.

As to 2009, by stepping up full year guidance to $2.575 billion we are on track to achieve a 15% improvement in EBITDA year-on-year, making 2009 a record year for our company on top of a record financial performance in 2008. The fact that the company achieved the results we did back in 2008, a year in which the second half was consumed by the global financial meltdown, and that we're on track to achieve the results we expect in 2009, a year that is being affected 100% by the first great recession of the 21st Century, with both years being marked by a precipitous decline in the spot prices for our core commodities, provides total validation of the business model we've been pursuing consistently at NRG for the six years of our existence.

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