01—Abstract
Summary
Summary of the 10-K filed February 28, 2012. Cited figures are marked; the original filing is the authoritative source.
NRG Energy, Inc. reported 2011 net income attributable to NRG Energy, Inc. of $197 milliona, down 59% from $477 million in 2010, and total operating revenues of $9.08 billion versus $8.85 billion.
The decline reflects lower realized wholesale prices, reduced gross margin from the August 2011 Texas heat wave, a $160 millionb impairment on Acid Rain SO2 emission allowances, a $495 million impairment of the investment in Nuclear Innovation North America LLC, and a $175 million loss on debt extinguishment. These were partly offset by a $843 million income tax benefit, largely from the June 2011 resolution of the federal tax audit. NRG's wholesale generation portfolio totaled approximately 23,585 MW of fossil and nuclear capacity, and the company is expanding into renewables, principally utility-scale and distributed solar, with 860 MW of solar capacity under construction at year-end 2011.
The company acquired Energy Plus in September 2011 and held about 2.1 million retail customers. Total liquidity excluding collateral received fell to $2.07 billionc from $4.25 billion, primarily due to a $1.8 billion decline in cash and cash equivalents from capital spending on solar and repowering projects and share repurchases of $430 million.
The filing also discloses a planned dividend and capital allocation shift: on February 28, 2012, NRG announced its intention to initiate an annual common stock dividend of $0.36d per share, with the first quarterly payment expected in the third quarter of 2012, and an intention to refinance the remaining $1.1 billion of 2017 Senior Notes. Material uncertainties include the U.S. DOJ Clean Air Act lawsuit against Louisiana Generating, LLC at Big Cajun II, the CDWR contract refund proceeding at FERC, and environmental capital expenditures estimated at $553 million for 2012 through 2016.
02—Key points
Key Highlights
- Net income attributable to NRG Energy, Inc. was $197 million in 2011, down 59% from $477 million in 2010, with EPS of $0.78 diluted versus $1.84 in 2010.
- Total operating revenues rose to $9.08 billion from $8.85 billion, driven by retail revenue of $5.81 billion (up from $5.28 billion), while energy revenue fell to $2.07 billion from $2.85 billion.
- Non-cash charges weighed on results: a $495 million impairment on the NINA investment, a $160 million impairment on Acid Rain SO2 emission allowances, and a $175 million loss on debt extinguishment.
- An $843 million income tax benefit in 2011, primarily from the resolution of the federal tax audit for 2004 through 2006, reversed uncertain tax reserves of $561 million.
- Liquidity excluding collateral received was $2.07 billion at year-end 2011, down from $4.25 billion, as cash fell $1.8 billion on solar and repowering capital spending and share repurchases.
- NRG repurchased 19,975,654 shares for $430 million in 2011 and announced an intention to initiate a $0.36 per share annual dividend, first payable in Q3 2012.
- NRG held 2.1 million retail customers at year-end 2011 and completed the Energy Plus acquisition on September 30, 2011, for $194 million in cash net of cash acquired.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, NRG Energy kept $0.02.
- Revenue$9.08B100.0%
- Cost of revenue−$6.75B74.3%
- Gross profit$2.33B25.7%
- Operating costs−$1.70B18.7%
- Operating income$635.0M7.0%
- Interest, other & tax−$438.0M4.8%
- Net income$197.0M2.2%
Where FY2011 revenue went
$9.08B- Cost of revenue: $6.75B, 74% of revenue
- Other operating costs: $1.11B, 12% of revenue
- Net income: $197.0M, 2.2% of revenue
- SG&A: $586.0M, 6.5% of revenue
- Interest, other & tax: $438.0M, 4.8% of revenue
Kept 2.2% as net incomeNet income $197.0M · 2.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 28, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $9.08B$8.85B | +2.6% |
| Cost of Revenue | $6.75B$6.07B | +11.1% |
| Gross Profit | $2.33B$2.78B | −15.9% |
| SG&A Expenses | $586.00M$598.00M | −2.0% |
| Operating Expenses | $8.44B$7.56B | +11.6% |
| Operating Income | $635.00M$1.31B | −51.5% |
| Interest Expense | $665.00M$630.00M | +5.6% |
| Net Income | $197.00M$477.00M | −58.7% |
| EPS (Basic) | $0.78$1.86 | −58.1% |
| EPS (Diluted) | $0.78$1.84 | −57.6% |
| Shares Outstanding (Basic) | 240.00M252.00M | −4.8% |
| Shares Outstanding (Diluted) | 241.00M254.00M | −5.1% |
05—Questions
Frequently Asked Questions
Why did NRG's net income decline sharply in 2011?
Net income attributable to NRG fell to $197 million from $477 million. The filing attributes the decline to lower realized wholesale prices, reduced margin from the August 2011 Texas heat wave, a $160 million emission allowance impairment, a $495 million impairment on the NINA investment, and a $175 million loss on debt extinguishment, partly offset by an $843 million income tax benefit.
What is NRG's new dividend policy?
On February 28, 2012, NRG announced its intention to initiate an annual common stock dividend of $0.36 per share, with the first quarterly payment expected in the third quarter of 2012. The filing notes that prior to this, NRG had not declared or paid dividends on its common stock, and that any dividend remains limited by its senior secured credit agreements and high-yield note indentures.
How much liquidity does NRG have and how did it change?
Total liquidity, including collateral received, was $2.33 billion at December 31, 2011, compared with $4.66 billion a year earlier. Excluding collateral received, liquidity was $2.07 billion versus $4.25 billion, a decrease of about $2.2 billion, due mainly to lower cash balances from solar and repowering capital expenditures and share repurchases.
What are the major solar and renewable growth projects?
At December 31, 2011, NRG had 545 MW of renewable generation in operation and 860 MW of solar capacity under construction. Major Utility Scale Solar projects under construction include Ivanpah (392 MW, expected 2013), Agua Caliente (290 MW, 2012-2014), and CVSR (250 MW, 2012-2013), supported by U.S. DOE-guaranteed Federal Financing Bank loans of up to $1.6 billion, $967 million, and $1.2 billion, respectively.
What significant legal and regulatory risks does the filing disclose?
The filing describes a U.S. DOJ Clean Air Act lawsuit against Louisiana Generating, LLC over the Big Cajun II plant, with a liability-phase trial scheduled for October 15, 2012, and civil penalties potentially applicable for the five years before the February 2009 filing. It also discusses the CDWR contract proceeding at FERC, which could require significant refunds, and estimated environmental capital expenditures of approximately $553 million from 2012 through 2016.
06—Continue