01—Abstract
Summary
Summary of the 10-K filed February 27, 2015. Cited figures are marked; the original filing is the authoritative source.
NRG Energy, Inc. reported 2014 total operating revenues of $15.87 billiona, up from $11.29 billion in 2013, and net income attributable to NRG Energy, Inc. of $134 million, compared with a net loss of $386 million in 2013.
The increase was driven primarily by the April 1, 2014 acquisition of Edison Mission Energy (EME), which contributed $1.1 billionb in operating revenues and $224 million in net income attributable to NRG since acquisition. Interest expense rose to $1.12 billion, and the company ended 2014 with total assets of $40.67 billion and long-term debt including current maturities of $20.37 billion. Management describes the company's strategy as "Enhance Generation, Expand Retail and Go Green while engaging in Smart Capital Allocation," organized around NRG Business, NRG Home, NRG Renew, NRG Yield, NRG Carbon 360 and NRG eVgo.
The company owns and operates approximately 52,000 MWs of generation, with 47,636 MW of fossil and nuclear capacity in NRG Business at 93 plants as of December 31, 2014. Retail operations served about 2.8 million Recurring customers, and NRG Home Retail delivered approximately 41 TWhs in 2014. Key risks flagged in the filing include exposure to natural gas price declines that reduce the margins of coal and nuclear assets, PJM and ISO-NE capacity market rule changes, environmental regulations such as MATS, CSAPR and proposed CO2 rules, and goodwill at the NRG Texas reporting unit, which the filing says could be impaired by a non-cash charge not to exceed $1.7 billionc if long-term natural gas prices remain depressed.
Capital returns were active during the year. Quarterly common dividends rose to $0.14d per share in 2014 and the board's February 17, 2015 payment was $0.145 per share, while 2014 repurchases totaled 1,624,360 shares for approximately $44 million under the 2015 Capital Allocation Program, with a further 2,224,830 shares purchased in the first quarter of 2015 for approximately $56 million.
02—Key points
Key Highlights
- Total operating revenues rose to $15,868 million in 2014 from $11,295 million in 2013, and net income attributable to NRG Energy, Inc. was $134 million versus a net loss of $386 million in 2013.
- The April 1, 2014 EME acquisition contributed $1.1 billion in operating revenues and $224 million in net income attributable to NRG since the acquisition date.
- Interest expense increased to $1,119 million in 2014 from $848 million in 2013, and long-term debt including current maturities was $20,374 million at December 31, 2014.
- Liquidity excluding collateral received was $3,940 million at year-end 2014, compared with $3,695 million a year earlier.
- Cash flow from operations was $1,510 million in 2014, up from $1,270 million in 2013.
- Impairment losses of $97 million in 2014 related primarily to the Osceola and Coolwater facilities, compared with $459 million in 2013 for Indian River.
- Goodwill of $2,574 million includes $1.7 billion for NRG Texas, where the filing states a non-cash charge not to exceed $1.7 billion could result if long-term natural gas prices remain depressed.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, NRG Energy kept $0.01.
- Revenue$15.87B100.0%
- Cost of revenue−$11.81B74.4%
- Gross profit$4.06B25.6%
- Operating costs−$2.79B17.6%
- Operating income$1.27B8.0%
- Interest, other & tax−$1.14B7.2%
- Net income$134.0M0.8%
Where FY2014 revenue went
$15.87B- Cost of revenue: $11.81B, 74% of revenue
- Net income: $134.0M, 0.8% of revenue
- R&D: $88.0M, 0.6% of revenue
- SG&A: $1.02B, 6.4% of revenue
- Other operating costs: $1.69B, 11% of revenue
- Interest, other & tax: $1.14B, 7.2% of revenue
Kept 0.8% as net incomeNet income $134.0M · 0.8%R&D $88.0M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 27, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $15.87B$11.29B | +40.5% |
| Cost of Revenue | $11.81B$8.13B | +45.2% |
| Gross Profit | $4.06B$3.17B | +28.3% |
| R&D Expenses | $88.00M$84.00M | +4.8% |
| SG&A Expenses | $1.02B$895.00M | +13.5% |
| Operating Expenses | $14.62B$10.95B | +33.5% |
| Operating Income | $1.27B$343.00M | +270.6% |
| Interest Expense | $1.12B$848.00M | +32.0% |
| Net Income | $134.00M-$386.00M | +134.7% |
| EPS (Basic) | $0.23$-1.22 | +118.9% |
| EPS (Diluted) | $0.23$-1.22 | +118.9% |
| Shares Outstanding (Basic) | 334.00M323.00M | +3.4% |
| Shares Outstanding (Diluted) | 339.00M323.00M | +5.0% |
05—Questions
Frequently Asked Questions
Why did NRG swing from a net loss in 2013 to net income in 2014?
Operating revenues rose by $4,573 million, with energy revenue, capacity revenue and retail revenue all higher, and the filing attributes much of the change to the EME acquisition. The 2013 results also included a $459 million impairment on Indian River, which did not recur at that scale in 2014. Income tax expense was $3 million on pre-tax income of $135 million, compared with a $282 million benefit in 2013.
How exposed is NRG to natural gas prices?
The filing states that power prices in NRG's markets are generally correlated with natural gas prices, and that decreases in gas prices have reduced the margins of its coal and nuclear baseload assets. At low gas prices, gas plants can become more economical than coal, causing NRG's coal units to cycle more or shut down. NRG hedges part of its coal and nuclear output, and retail margins have historically improved when gas prices decline, which partly offsets the effect.
What are the main regulatory and environmental risks identified?
The filing cites PJM capacity market proposals such as Capacity Performance and the capacity import limit, ISO-NE's Performance Incentive program, and FERC rulings on demand response. On the environmental side it lists MATS compliance beginning April 2015, CSAPR which replaced CAIR on January 1, 2015, proposed CO2 standards for new and existing plants, and Maryland's proposed NOx regulation. NRG estimates environmental capital expenditures of approximately $641 million for 2015 through 2019.
How much capital has NRG returned to shareholders?
Quarterly common dividends were $0.14 per share in each quarter of 2014 and totaled $0.54 per share for the year, compared with $0.45 in 2013. On February 17, 2015, NRG paid a quarterly dividend of $0.145 per share. Under the 2015 Capital Allocation Program, NRG bought 1,624,360 shares in 2014 for approximately $44 million and an additional 2,224,830 shares in the first quarter of 2015 for approximately $56 million.
06—Continue