NRG Energy, Inc. (NRG)

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NRG Energy (NRG)

Q4 2011 Earnings Call

February 28, 2012 9:00 am ET

Executives

Chad Plotkin -

David W. Crane - Chief Executive Officer, President, Executive Director and Member of Nuclear Oversight Committee

Mauricio Gutierrez - Chief Operating Officer and Executive Vice President

Jason Few - President

Kirkland B. Andrews - Chief Financial Officer and Executive Vice President

Christopher S. Moser - Chairman, Chief Executive Officer, and President

Analysts

Ameet I. Thakkar - BofA Merrill Lynch, Research Division

Jonathan Cohen - ISI Group Inc., Research Division

Angie Storozynski - Macquarie Research

Stephen Byrd - Morgan Stanley, Research Division

Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

James L. Dobson - Wunderlich Securities Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 NRG Energy, Inc. Earnings Conference Call. My name is Chantilly, and I will be your facilitator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Chad Plotkin, Vice President of Investor Relations. Please proceed, sir.

Chad Plotkin

Thank you, Chantilly, and good morning. I would like to welcome everyone to our year-end and fourth quarter 2011 earnings call. This call is being broadcast live over the phone and through webcast, which can be located on our website at www.nrgenergy.com. You can access the call, presentation and press release 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. [Operator Instructions]

Before we begin, I would like to remind everyone to review the Safe Harbor statement provided on Slide 1 of the presentation. 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 other 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 February 28, 2012, 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 refer to today's press release and this presentation.

With that, I'd like to turn the call over to your host David Crane, NRG's President and Chief Executive Officer.

David W. Crane

Thank you, Chad, and good job. And I want to -- before I begin, I want to start by welcoming Chad to his new position as the Head of Investor Relations. And for the many people on the call who were friends and colleagues with our former Head of Investor Relations, Nahla Azmy, I just want to say how much we appreciate the work she did here for the past 8 years and wish her well in her new position at Energy Capital Partners.

So today, in terms of the presentation, I'm joined, as usual, by Mauricio Gutierrez, our Chief Operating Officer, who will give part of the presentation. We have another member of the management making, I think, his first appearance in a speaking role, that will be Jason Few, who's the President of Reliant, who's going to say a few words about our retail business. And then we have Kirk Andrews, our Chief Financial Officer, who will also be giving part of the presentation. Also available during the question-and-answer period to give answers about what's going on in the marketplace is our Head of Commercial Operations, Chris Moser.

So as we normally do on this -- the year-end call, I'm going to spend just a little time reviewing the past year's performance before turning my attention to the period ahead. So if you're following along in terms of the slide presentation, turning Slide 3.

For us, 2011 was a year in which we stumbled in August and the commodity price cycle moved against us throughout the year. But nonetheless, we finished the year almost exactly or close to the middle of our original guidance range for adjusted EBITDA, and so during the business, overall, showed its diversity and resiliency. And particularly, our solid results reflected the advantage that uniquely amongst the publicly traded IPPs. We benefit from a substantial portfolio of retail businesses, the financial performance of which tends to be inversely correlated to the direction of natural gas prices.

In terms of our clean energy business, we're very proud of the success that we achieved in 2011 and moving over 900 megawatts of new solar power generation into construction. I am also pleased to report that all these projects are progressing well in construction, with no significant cost or timetable issues having yet arisen. This may seem like business as usual to you, but to me, it's remarkable to have a construction program of this magnitude, where every project is either on or ahead of budget and timetable. You will hear and see a great deal more about these projects over the next 12 months, as units complete construction and achieve commercial operation.

Finally, in respect to 2011, it was a year in which we made a lot of progress in readjusting our liquidity position to more normalized levels, and we did so not only by investing further in intrinsic growth but also in returning capital to our stakeholders. $581 million of corporate debt was retired in the course of our refinancings and a total of $430 million of shares were repurchased in satisfaction of our commitment made back in 2006 to return at least 3% of our market cap to shareholders through share repurchases on an annual basis. I'd like to think of the supplemental 250 million share repurchase we did in 2011 as having satisfied our 3% commitment for 2012 as well, making it a 7-year unbroken streak.

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