NRG ENERGY, INC. [NRG] Filings

10-Q 1 nrg-20240630.htm 10-Q nrg-20240630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended:

June 30, 2024

☐

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-15891

NRG Energy, Inc.

(Exact name of registrant as specified in its charter)


Delaware						41-1724239
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


910 Louisiana Street	Houston	Texas	77002
(Address of principal executive offices)			(Zip Code)

(713) 537-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.01	NRG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of July 31, 2024, there were 206,379,832 shares of common stock outstanding, par value $0.01 per share.

TABLE OF CONTENTS

Index


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION			3
GLOSSARY OF TERMS			5
PART I — FINANCIAL INFORMATION			8
ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES			8
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			43
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			78
ITEM 4 — CONTROLS AND PROCEDURES			80
PART II — OTHER INFORMATION			81
ITEM 1 — LEGAL PROCEEDINGS			81
ITEM 1A — RISK FACTORS			81
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			81
ITEM 3 — DEFAULTS UPON SENIOR SECURITIES			81
ITEM 4 — MINE SAFETY DISCLOSURES			81
ITEM 5 — OTHER INFORMATION			81
ITEM 6 — EXHIBITS			82
SIGNATURES			83

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q of NRG Energy, Inc., or NRG or the Company, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates," "should," "forecasts," and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond NRG's control, that may cause NRG's actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are not guarantees of future results. These factors, risks and uncertainties include the factors described under Risk Factors, in Part II, Item 1A of this Form 10-Q and the following:

•Business uncertainties related to NRG's ability to integrate the operations of Vivint Smart Home;

•NRG's ability to obtain and maintain retail market share;

•General economic conditions, changes in the wholesale power and gas markets and fluctuations in the cost of fuel;

•Volatile power and gas supply costs and demand for power and gas, including the impacts of weather;

•Hazards customary to the power production industry and power generation operations, such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that NRG may not have adequate insurance to cover losses as a result of such hazards;

•The effectiveness of NRG's risk management policies and procedures and the ability of NRG's counterparties to satisfy their financial commitments;

•NRG's ability to enter into contracts to sell power or gas and procure fuel on acceptable terms and prices;

•NRG's ability to successfully integrate, realize cost savings and manage any acquired businesses;

•NRG's ability to engage in successful acquisitions and divestitures, as well as other mergers and acquisitions activity;

•Cyber terrorism and cybersecurity risks, data breaches or the occurrence of a catastrophic loss and the possibility that NRG may not have sufficient insurance to cover losses resulting from such hazards or the inability of NRG's insurers to provide coverage;

•Counterparties' collateral demands and other factors affecting NRG's liquidity position and financial condition;

•NRG's ability to operate its businesses efficiently and generate earnings and cash flows from its asset-based businesses in relation to its debt and other obligations;

•The liquidity and competitiveness of wholesale markets for energy commodities;

•Changes in law, including judicial and regulatory decisions;

•Government regulation, including changes in market rules, rates, tariffs and environmental laws;

•NRG's ability to develop and innovate new products, as retail and wholesale markets continue to change and evolve;

•Price mitigation strategies and other market structures employed by ISOs or RTOs that result in a failure to adequately and fairly compensate NRG's generation units;

•NRG's ability to mitigate forced outage risk;

•NRG's ability to borrow funds and access capital markets, as well as NRG's substantial indebtedness and the possibility that NRG may incur additional indebtedness in the future;

•Operating and financial restrictions placed on NRG and its subsidiaries that are contained in NRG's corporate credit agreements, and in debt and other agreements of certain of NRG subsidiaries and project affiliates generally;

•The ability of NRG and its counterparties to develop and build new power generation facilities;

•NRG's ability to implement its strategy of finding ways to meet the challenges of climate change, clean air and protecting natural resources, while taking advantage of business opportunities;

•NRG's ability to increase cash from operations through operational and market initiatives, corporate efficiencies, asset strategy, and a range of other programs throughout NRG to reduce costs or generate revenues;

•NRG's ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives; and

•NRG's ability to develop and maintain successful partnering relationships as needed.

In addition, unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Forward-looking statements speak only as of the date they were made and NRG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as otherwise required by applicable laws. The foregoing factors that could cause NRG's actual results to differ materially from those contemplated in any forward-looking statements included in this Quarterly Report on Form 10-Q should not be construed as exhaustive.

GLOSSARY OF TERMS

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:


2023 Form 10-K						NRG’s Annual Report on Form 10-K for the year ended December 31, 2023
ACE						Affordable Clean Energy
Adjusted EBITDA						Adjusted earnings before interest, taxes, depreciation and amortization
AESO						Alberta Electric System Operator

ASC						The FASB Accounting Standards Codification, which the FASB established as the source of authoritative GAAP
ASR						Accelerated Share Repurchase
ASU						Accounting Standards Updates - updates to the ASC
BTU						British Thermal Unit
Business						NRG Business, which serves business customers
CAA						Clean Air Act
CAISO						California Independent System Operator
CAMT						15% Corporate Alternative Minimum Tax enacted by the IRA on August 16, 2022
CDD						Cooling Degree Day

CFTC						U.S. Commodity Futures Trading Commission

CO2						Carbon Dioxide
Company						NRG Energy, Inc.
Convertible Senior Notes						As of June 30, 2024, consists of NRG’s $232 million unsecured 2.75% Convertible Senior Notes due 2048
Constellation						Constellation Energy Generation
Cottonwood						Cottonwood Generating Station, a natural gas-fueled plant located in Deweyville, Texas, which NRG is leasing through May 2025
CPP						Clean Power Plan

CWA						Clean Water Act
D.C. Circuit						U.S. Court of Appeals for the District of Columbia Circuit
Dth						Dekatherms
Economic gross margin						Sum of retail revenue, energy revenue, capacity revenue and other revenue, less cost of fuels and purchased energy and other cost of sales
EGU						Electric Generating Unit
EIA						U.S. Energy Information Administration
ELG						Effluent Limitations Guidelines
EPA						U.S. Environmental Protection Agency
ERCOT						Electric Reliability Council of Texas, the Independent System Operator and the regional reliability coordinator of the various electricity systems within Texas
ESPP						NRG Energy, Inc. Amended and Restated Employee Stock Purchase Plan
Exchange Act						The Securities Exchange Act of 1934, as amended
FASB						Financial Accounting Standards Board
FERC						Federal Energy Regulatory Commission
FGD						Flue gas desulfurization
FTRs						Financial Transmission Rights
GAAP						Generally accepted accounting principles in the U.S.
GHG						Greenhouse Gas
Green Mountain Energy						Green Mountain Energy Company
GW						Gigawatts
GWh						Gigawatt Hour
HDD						Heating Degree Day


Heat Rate						A measure of thermal efficiency computed by dividing the total BTU content of the fuel burned by the resulting kWhs generated. Heat rates can be expressed as either gross or net heat rates, depending upon whether the electricity output measured is gross or net generation. Heat rates are generally expressed as BTU per net kWh
Home						NRG Home, which serves residential customers
ICE						Intercontinental Exchange
IESO						Independent Electricity System Operator
ISO						Independent System Operator, also referred to as RTOs
ISO-NE						ISO New England Inc.
Ivanpah						Ivanpah Solar Electric Generation Station, a solar thermal power plant located in California's Mojave Desert in which NRG owns 54.5% interest
kWh						Kilowatt-hour

LTIPs						Collectively, the NRG long-term incentive plan ("LTIP") and the Vivint LTIP
MDth						Thousand Dekatherms
Midwest Generation						Midwest Generation, LLC
MISO						Midcontinent Independent System Operator, Inc.
MMBtu						Million British Thermal Units
MW						Megawatts
MWh						Saleable megawatt hour net of internal/parasitic load megawatt-hour
NAAQS						National Ambient Air Quality Standards
NEPOOL						New England Power Pool
NERC						North American Electric Reliability Corporation

Net Exposure						Counterparty credit exposure to NRG, net of collateral
Net Revenue Rate						Sum of retail revenues less TDSP transportation charges
Nodal						Nodal Exchange is a derivatives exchange
NOL						Net Operating Loss
NOx						Nitrogen Oxides
NPNS						Normal Purchase Normal Sale
NRC						U.S. Nuclear Regulatory Commission
NRG						NRG Energy, Inc.


Nuclear Decommissioning Trust Fund						Prior to the sale of STP on November 1, 2023, nuclear decommissioning trust fund assets, for NRG's portion of the decommissioning of the STP units 1 & 2
NYISO						New York Independent System Operator
NYMEX						New York Mercantile Exchange

OCI/OCL						Other Comprehensive Income/(Loss)

OECD						Organization for Economic Cooperation and Development
PJM						PJM Interconnection, LLC
PM2.5						Particulate Matter that has a diameter of less than 2.5 micrometers
PPA						Power Purchase Agreement
PUCT						Public Utility Commission of Texas
RCRA						Resource Conservation and Recovery Act of 1976

Receivables Facility						NRG Receivables LLC, a bankruptcy remote, special purpose, wholly-owned indirect subsidiary of the Company's $2.3 billion accounts receivables securitization facility due 2025, which was last amended on June 21, 2024
Receivables Securitization Facilities						Collectively, the Receivables Facility and the Repurchase Facility
RECs						Renewable Energy Certificates
Renewable PPA						A third-party PPA entered into directly with a renewable generation facility for the offtake of the Renewable Energy Certificates or other similar environmental attributes generated by such facility, couple with the associated power generated by that facility
REP						Retail electric provider


Repurchase Facility						NRG's $150 million uncommitted repurchase facility related to the Receivables Facility due 2024, which was terminated on June 21, 2024
Revolving Credit Facility						The Company's $4.2 billion revolving credit facility due 2028, which was last amended on April 22, 2024
RGGI						Regional Greenhouse Gas Initiative
RMR						Reliability Must-Run
RTO						Regional Transmission Organization, also referred to as ISOs
SEC						U.S. Securities and Exchange Commission
Securities Act						The Securities Act of 1933, as amended
Senior Credit Facility						NRG's senior secured credit facility, comprised of the Revolving Credit Facility and the Term Loan B Facility
Senior Notes						As of June 30, 2024, NRG's $3.9 billion outstanding unsecured senior notes consisting of $375 million of the 6.625% senior notes due 2027, $821 million of 5.750% senior notes due 2028, $733 million of the 5.250% senior notes due 2029, $500 million of the 3.375% senior notes due 2029, $1.0 billion of the 3.625% senior notes due 2031 and $480 million of the 3.875% senior notes due 2032
Senior Secured First Lien Notes						As of June 30, 2024, NRG’s $2.6 billion outstanding Senior Secured First Lien Notes consists of $500 million of the 2.000% Senior Secured First Lien Notes due 2025, $900 million of the 2.450% Senior Secured First Lien Notes due 2027, $500 million of the 4.450% Senior Secured First Lien Notes due 2029 and $740 million of the 7.000% Senior Secured First Lien Notes due 2033
Series A Preferred Stock						As of June 30, 2024, NRG's Series A Preferred Stock consists of 650,000 outstanding shares of the 10.25% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, with a $1,000 liquidation preference per share
Services						NRG Services, which primarily includes the services businesses acquired in the Direct Energy acquisition and the Goal Zero business

SO2						Sulfur Dioxide
SOFR						Secured overnight financing rate
STP						South Texas Project — a nuclear generating facility located near Bay City, Texas in which NRG owned a 44% interest. NRG closed on the sale of its interest in STP on November 1, 2023

TDSP						Transmission/distribution service provider

TWh						Terawatt Hour
U.S.						United States of America
VaR						Value at Risk
VIE						Variable Interest Entity

Winter Storm Uri						A major winter and ice storm that had widespread impacts across North America occurring in February 2021

PART I — FINANCIAL INFORMATION

ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(In millions, except for per share amounts)	2024		2023		2024		2023
Revenue
Revenue	$	6,659	$	6,348	$	14,088	$	14,070
Operating Costs and Expenses
Cost of operations (excluding depreciation and amortization shown below)	4,356		4,962		10,041		13,740
Depreciation and amortization	285		315		553		505
Impairment losses	15		—		15		—
Selling, general and administrative costs	592		522		1,183		948

Acquisition-related transaction and integration costs	6		22		15		93
Total operating costs and expenses	5,254		5,821		11,807		15,286

Gain on sale of assets	5		3		1		202
Operating Income/(Loss)	1,410		530		2,282		(1,014)
Other Income/(Expense)
Equity in earnings of unconsolidated affiliates	4		5		7		10

Other income, net	3		13		33		29
Loss on debt extinguishment	(202)		—		(260)		—
Interest expense	(163)		(151)		(315)		(299)
Total other expense	(358)		(133)		(535)		(260)
Income/(Loss) Before Income Taxes	1,052		397		1,747		(1,274)
Income tax expense/(benefit)	314		89		498		(247)


Net Income/(Loss)	$	738	$	308	$	1,249	$	(1,027)
Less: Cumulative dividends attributable to Series A Preferred Stock	17		17		34		21
Net Income/(Loss) Available for Common Stockholders	$	721	$	291	$	1,215	$	(1,048)
Income/(Loss) per Share
Weighted average number of common shares outstanding — basic	208		231		209		230


Income/(Loss) per Weighted Average Common Share — Basic	$	3.47	$	1.26	$	5.81	$	(4.56)
Weighted average number of common shares outstanding — diluted	214		232		214		230


Income/(Loss) per Weighted Average Common Share —Diluted	$	3.37	$	1.25	$	5.68	$	(4.56)

See accompanying notes to condensed consolidated financial statements.

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(In millions)	2024		2023		2024		2023
Net Income/(Loss)	$	738	$	308	$	1,249	$	(1,027)
Other Comprehensive (Loss)/Income

Foreign currency translation adjustments	(2)		6		(10)		8

Defined benefit plans	(1)		—		(2)		(1)
Other comprehensive (loss)/income	(3)		6		(12)		7
Comprehensive Income/(Loss)	$	735	$	314	$	1,237	$	(1,020)

See accompanying notes to condensed consolidated financial statements.

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2024		December 31, 2023
(In millions, except share data)	(Unaudited)		(Audited)
ASSETS
Current Assets
Cash and cash equivalents	$	376	$	541
Funds deposited by counterparties	688		84
Restricted cash	16		24
Accounts receivable, net	3,402		3,542

Inventory	623		607
Derivative instruments	3,520		3,862
Cash collateral paid in support of energy risk management activities	384		441

Prepayments and other current assets	797		626


Total current assets	9,806		9,727
Property, plant and equipment, net	1,790		1,763
Other Assets
Equity investments in affiliates	45		42

Operating lease right-of-use assets, net	201		179
Goodwill	5,060		5,079
Customer relationships, net	1,946		2,164
Other intangible assets, net	1,467		1,763

Derivative instruments	2,625		2,293
Deferred income taxes	1,841		2,251
Other non-current assets	981		777


Total other assets	14,166		14,548
Total Assets	$	25,762	$	26,038


	June 30, 2024		December 31, 2023
(In millions, except share data)	(Unaudited)		(Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities

Current portion of long-term debt and finance leases	$	262	$	620

Current portion of operating lease liabilities	91		90
Accounts payable	2,109		2,325

Derivative instruments	2,664		4,019
Cash collateral received in support of energy risk management activities	688		84
Deferred revenue current	779		720
Accrued expenses and other current liabilities	1,709		1,642



Total current liabilities	8,302		9,500
Other Liabilities
Long-term debt and finance leases	10,425		10,133
Non-current operating lease liabilities	144		128



Derivative instruments	1,435		1,488
Deferred income taxes	8		22
Deferred revenue non-current	906		914
Other non-current liabilities	919		947


Total other liabilities	13,837		13,632
Total Liabilities	22,139		23,132

Commitments and Contingencies
Stockholders' Equity
Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at June 30, 2024 and December 31, 2023, aggregate liquidation preference of $650 at June 30, 2024 and December 31, 2023	650		650
Common stock; $0.01 par value; 500,000,000 shares authorized; 266,552,386 and 267,330,470 shares issued and 207,498,428 and 208,130,950 shares outstanding at June 30, 2024 and December 31, 2023, respectively	3		3
Additional paid-in-capital	3,229		3,416
Retained earnings	1,863		820
Treasury stock, at cost; 59,053,958 shares and 59,199,520 shares at June 30, 2024 and December 31, 2023, respectively	(2,019)		(1,892)
Accumulated other comprehensive loss	(103)		(91)

Total Stockholders' Equity	3,623		2,906
Total Liabilities and Stockholders' Equity	$	25,762	$	26,038

See accompanying notes to condensed consolidated financial statements.

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30,
(In millions)	2024		2023
Cash Flows from Operating Activities
Net Income/(Loss)	$	1,249	$	(1,027)


Adjustments to reconcile net income/(loss) to cash provided/(used) by operating activities:
Equity in and distributions from earnings of unconsolidated affiliates	(4)		(9)
Depreciation and amortization	553		505
Accretion of asset retirement obligations	3		5
Provision for credit losses	133		80
Amortization of nuclear fuel	—		26
Amortization of financing costs and debt discounts	21		31
Loss on debt extinguishment	260		—
Amortization of in-the-money contracts and emissions allowances	73		112
Amortization of unearned equity compensation	57		61
Net loss/(gain) on sale of assets and disposal of assets	8		(187)

Impairment losses	15		—
Changes in derivative instruments	(1,384)		1,515
Changes in current and deferred income taxes and liability for uncertain tax benefits	390		(282)
Changes in collateral deposits in support of risk management activities	660		(1,355)
Changes in nuclear decommissioning trust liability	—		2


Changes in other working capital	(711)		(505)
Cash provided/(used) by operating activities	$	1,323	$	(1,028)


Cash Flows from Investing Activities
Payments for acquisitions of businesses and assets, net of cash acquired	$	(32)	$	(2,498)
Capital expenditures	(172)		(324)

Net purchases of emissions allowances	(11)		(25)
Investments in nuclear decommissioning trust fund securities	—		(185)
Proceeds from the sale of nuclear decommissioning trust fund securities	—		180
Proceeds from sales of assets, net of cash disposed	11		229
Proceeds from insurance recoveries for property, plant and equipment, net	3		121



Cash used by investing activities	$	(201)	$	(2,502)


Cash Flows from Financing Activities
Proceeds from issuance of preferred stock, net of fees	$	—	$	635
Payments of dividends to preferred and common stockholders	(204)		(174)
Equivalent shares purchased in lieu of tax withholdings	(35)		(16)
Payments for share repurchase activity	(90)		—
Net (payments)/receipts from settlement of acquired derivatives that include financing elements	(12)		318
Net proceeds of Revolving Credit Facility and Receivable Securitization Facilities	—		500
Proceeds from issuance of long-term debt	875		731
Payments of debt issuance costs	(12)		(22)
Repayments of long-term debt and finance leases	(956)		(10)
Payments for debt extinguishment costs	(257)		—



Proceeds from credit facilities	625		1,870
Repayments to credit facilities	(625)		(1,670)
Cash (used)/provided by financing activities	$	(691)	$	2,162


Effect of exchange rate changes on cash and cash equivalents	—		3

Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash	431		(1,365)
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period	649		2,178
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period	$	1,080	$	813

See accompanying notes to condensed consolidated financial statements.

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


(In millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stock-holders' Equity
Balance at December 31, 2023	$	650	$	3	$	3,416	$	820	$	(1,892)	$	(91)	$	2,906
Net income							511						511

Other comprehensive loss											(9)		(9)


Share repurchases(a)					117				(117)				—
Retirement of treasury stock(b)					(38)				38				—
Equity-based awards activity, net(c)					8								8

Common stock dividends and dividend equivalents declared(d)							(86)						(86)


Series A Preferred Stock dividends(e)							(33)						(33)


Balance at March 31, 2024	$	650	$	3	$	3,503	$	1,212	$	(1,971)	$	(100)	$	3,297
Net income							738						738
Other comprehensive loss											(3)		(3)
Shares reissuance for ESPP					1				5				6
Share repurchases(f)									(91)				(91)
Retirement of treasury stock(b)					(38)				38				—
Equity-based awards activity, net(c)					16								16

Common stock dividends and dividend equivalents declared(d)							(87)						(87)
Capped Call Options(g)					(253)								(253)
Balance at June 30, 2024	$	650	$	3	$	3,229	$	1,863	$	(2,019)	$	(103)	$	3,623


(In millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings/(Accumulated Deficit)		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stock-holders' Equity
Balance at December 31, 2022	$	—	$	4	$	8,457	$	1,408	$	(5,864)	$	(177)	$	3,828
Net loss							(1,335)						(1,335)
Issuance of Series A Preferred Stock	650				(14)								636
Other comprehensive income											1		1


Equity-based awards activity, net(c)					38								38

Common stock dividends and dividend equivalents declared(d)							(88)						(88)

Balance at March 31, 2023	$	650	$	4	$	8,481	$	(15)	$	(5,864)	$	(176)	$	3,080
Net income							308						308
Issuance of Series A Preferred Stock					(1)								(1)
Other comprehensive income											6		6
Shares reissuance for ESPP					1				3				4

Equity-based awards activity, net(c)					23								23

Common stock dividends and dividend equivalents declared(d)							(88)						(88)






Balance at June 30, 2023	$	650	$	4	$	8,504	$	205	$	(5,861)	$	(170)	$	3,332

(a)Represents the final settlements of the November 6, 2023 ASR agreements. See Note 9, Changes in Capital Structure for additional information

(b)For further discussion of the treasury stock retirements, see Note 9, Changes in Capital Structure

(c)Includes $(12) million and $(23) million for the quarters ended June 30, and March 31, 2024, respectively, and $(8) million and $(8) million for the quarters ended June 30, and March 31, 2023, respectively, of equivalent shares purchased in lieu of tax withholding on equity compensation issuances

(d)Dividends per common share were $0.4075 for each of the quarters ended June 30 and March 31, 2024 and $0.3775 for each of the quarters ended June 30, and March 31, 2023

(e)Dividend per share of Series A Preferred Stock was $51.25

(f)Includes excise tax accrued of $1 million for the three months ended June 30, 2024

(g)For further discussion of the Capped Call Options, see Note 9, Changes in Capital Structure

See accompanying notes to condensed consolidated financial statements.

NRG ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Nature of Business and Basis of Presentation

General

NRG Energy, Inc., or NRG or the Company, sits at the intersection of energy and home services. NRG is a leading energy and home services company fueled by market-leading brands, proprietary technologies, and complementary sales channels. Across the United States and Canada, NRG delivers innovative, sustainable solutions, predominately under brand names such as NRG, Reliant, Direct Energy, Green Mountain Energy and Vivint, while also advocating for competitive energy markets and customer choice. The Company has a customer base that includes approximately 8 million residential consumers in addition to commercial, industrial, and wholesale customers, supported by approximately 13 GW of generation as of June 30, 2024.

The Company's business is segmented as follows:

•Texas, which includes all activity related to customer, plant and market operations in Texas, other than Cottonwood;

•East, which includes all activity related to customer, plant and market operations in the East;

•West/Services/Other, which includes the following assets and activities: (i) all activity related to customer, plant and market operations in the West and Canada, (ii) the Services businesses and (iii) activity related to the Cottonwood facility and other investments;

•Vivint Smart Home; and

•Corporate activities.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the SEC's regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the consolidated financial statements in the Company's 2023 Form 10-K. Interim results are not necessarily indicative of results for a full year.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated financial position as of June 30, 2024, and the results of operations, comprehensive income/(loss), cash flows and stockholders' equity for the three and six months ended June 30, 2024 and 2023.

The Company identified an error in the previously issued condensed consolidated financial statements for the period ended June 30, 2023 related to the presentation of cash flows associated with certain borrowings and repayments related to certain credit facilities. The statement of cash flows for the period ended June 30, 2023 has been adjusted to present on a gross basis the certain borrowings from credit facilities of $1.9 billion and the related repayments of $1.7 billion. The change had no impact to the total cash used by financing activities for the period ended June 30, 2023. The Company evaluated the materiality of this error both qualitatively and quantitatively and has concluded it is immaterial to the impacted period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Reclassifications

Certain prior period amounts have been reclassified for comparative purposes. The reclassifications did not affect consolidated results of operations, net assets or consolidated cash flows.

Note 2 — Summary of Significant Accounting Policies

Other Balance Sheet Information

The following table presents the accumulated depreciation included in property, plant and equipment, net and accumulated amortization included in customer relationships, net and other intangible assets, net:


(In millions)	June 30, 2024		December 31, 2023
Property, plant and equipment accumulated depreciation	$	1,420	$	1,295
Customer relationships and other intangible assets accumulated amortization	3,319		2,994

Credit Losses

Retail trade receivables are reported on the consolidated balance sheet net of the allowance for credit losses within accounts receivables, net. Long-term receivables are recorded net of allowance for credit losses in other non-current assets on the consolidated balance sheet. The Company accrues a provision for current expected credit losses based on (i) estimates of uncollectible revenues by analyzing accounts receivable aging and current and reasonable forecasts of expected economic factors including, but not limited to, unemployment rates and weather-related events, (ii) historical collections and delinquencies, and (iii) counterparty credit ratings for commercial and industrial customers.

The following table represents the activity in the allowance for credit losses for the three and six months ended June 30, 2024 and 2023:


	Three months ended June 30,				Six months ended June 30,
(In millions)	2024		2023		2024		2023
Beginning balance	$	140	$	121	$	145	$	133
Acquired balance from Vivint Smart Home	—		—		—		22
Provision for credit losses	58		45		133		80
Write-offs	(86)		(66)		(178)		(144)
Recoveries collected	9		12		19		21
Other	6		8		8		8
Ending balance	$	127	$	120	$	127	$	120

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents, restricted cash and funds deposited by counterparties reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows:


(In millions)	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	376	$	541
Funds deposited by counterparties	688		84
Restricted cash	16		24
Cash and cash equivalents, funds deposited by counterparties and restricted cash shown in the statement of cash flows	$	1,080	$	649

Funds deposited by counterparties consist of cash held by the Company as a result of collateral posting obligations from its counterparties related to NRG's hedging program. Though some amounts are segregated into separate accounts, not all funds are contractually restricted. Based on the Company's intention, these funds are not available for the payment of general corporate obligations; however, they are available for liquidity management. Depending on market fluctuations and the settlement of the underlying contracts, the Company will refund this collateral to the counterparties pursuant to the terms and conditions of the underlying trades. Since collateral requirements fluctuate daily and the Company cannot predict if any collateral will be held for more than twelve months, the funds deposited by counterparties are classified as a current asset on the Company's balance sheet, with an offsetting liability for this cash collateral received within current liabilities.

Restricted cash consists primarily of funds held to satisfy the requirements of certain agreements and funds held within the Company's projects that are restricted in their uses.

Goodwill

The following table represents the changes in goodwill during the six months ended June 30, 2024:


(In millions)	Texas		East		West/Services/Other		Vivint Smart Home		Total
Balance as of December 31, 2023	$	643	$	721	$	221	$	3,494	$	5,079

Impairment	—		—		(15)		—		(15)

Foreign currency translation adjustments	—		—		(4)		—		(4)
Balance as of June 30, 2024	$	643	$	721	$	202	$	3,494	$	5,060

Recent Accounting Developments — Guidance Not Yet Adopted

ASU 2023-07 – In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, or ASU 2023-07. The guidance in ASU 2023-07 enhances reportable segment disclosure requirements by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The Company plans to adopt the new guidance for the annual period ending December 31, 2024 and subsequent interim periods thereafter. The guidance will be applied retrospectively for all prior periods presented in the financial statements.

ASU 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, or ASU 2023-09. The guidance in ASU 2023-09 enhances income tax disclosures by requiring disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold. Further the amendments of ASU 2023-09 require certain disclosures on income tax expense and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments of ASU 2023-09 may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact of adopting ASU 2023-09 on its disclosures.

Note 3 — Revenue Recognition

Performance Obligations

As of June 30, 2024, estimated future fixed fee performance obligations are $762 million for the remaining six months of fiscal year 2024, and $1.3 billion, $940 million, $588 million, $308 million and $38 million for the fiscal years 2025, 2026, 2027, 2028 and 2029, respectively. These performance obligations include Vivint Smart Home products and services, as well as cleared auction MWs in the PJM, ISO-NE, NYISO and MISO capacity auctions. The cleared auction MWs are subject to penalties for non-performance.

Disaggregated Revenues

The following tables represent the Company’s disaggregation of revenue from contracts with customers for the three and six months ended June 30, 2024 and 2023:


	Three months ended June 30, 2024
(In millions)	Texas		East		West/Services/Other		Vivint Smart Home		Corporate/Eliminations		Total
Retail revenue:
Home(a)	$	1,766	$	537	$	414	$	467	$	(8)	$	3,176
Business	926		1,824		418		—		—		3,168
Total retail revenue(b)	2,692		2,361

NRG ENERGY, INC. [NRG] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-07]
10-K	[2024-02-28]
10-Q	[2023-11-02]
10-Q	[2023-08-08]
10-Q	[2023-05-04]
10-K	[2023-02-23]
10-Q	[2022-11-07]
10-Q	[2022-08-04]
10-Q	[2022-05-06]
10-K	[2022-02-24]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-03-01]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-27]
10-Q	[2019-11-07]
10-Q	[2019-08-07]
10-Q	[2019-05-02]
10-K	[2019-02-28]
10-Q	[2018-11-08]
10-Q	[2018-08-02]
10-Q	[2018-05-03]
10-K	[2018-03-01]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-02]
10-K	[2017-02-28]
10-Q	[2016-11-04]
10-Q	[2016-08-09]
10-Q	[2016-05-05]
10-K	[2016-02-29]
10-Q	[2015-11-04]
10-Q	[2015-08-04]
10-Q	[2015-05-08]
10-K	[2015-02-27]
10-Q	[2014-11-05]
10-Q	[2014-08-07]
10-Q	[2014-05-06]
10-K	[2014-02-28]
10-Q	[2013-11-12]
S-1	[2013-10-18]
10-Q	[2013-08-09]
10-Q	[2013-05-07]
10-K	[2013-02-27]
10-Q	[2012-11-02]
10-Q	[2012-08-08]
10-Q	[2012-05-03]
10-K	[2012-02-28]