01—Abstract
Summary
Summary of the 10-K filed February 28, 2017. Cited figures are marked; the original filing is the authoritative source.
NRG Energy, Inc. reported a 2016 net loss attributable to NRG Energy, Inc. of $774 milliona, compared with a $6.38 billion loss in 2015, as operating revenues fell to $12.35 billion from $14.67 billion.
The filing attributes the improvement mainly to lower impairment losses ($918 millionb in 2016 versus $5.03 billion in 2015). Operating income was $527 million, against an operating loss of $4.04 billion in 2015. Cash flow from operations rose to $2.07 billion from $1.31 billion, and liquidity excluding counterparty collateral was $3.6 billion at year-end.
The dominant risk flagged in the filing is GenOn, a consolidated subsidiary. GenOn has $691 millionc of senior notes due June 15, 2017, and the filing states there is substantial doubt about its ability to continue as a going concern. GenOn is considering options that include negotiations with creditors, refinancing, asset sales and a possible Chapter 11 filing, and the filing says any resolution may have a material impact on NRG's results and financial position.
GenOn represents 15.6% of consolidated total assets and 16.9% of consolidated total liabilities. The filing also notes that on February 28, 2017 the trustees of GenOn Mid-Atlantic's lessors drew $125 milliond on letters of credit under the 2016 Revolving Credit Facility.
Other items include a dividend cut to $0.12 per share annualized in 2016, debt repurchases of $3.0 billion in aggregate principal, and the sale of a majority interest in EVgo. Commodity price declines weighed on wholesale power prices and on the company's Texas and East regions, and a $337 million goodwill impairment was recorded for the Texas reporting unit.
02—Key points
Key Highlights
- Net loss attributable to NRG Energy, Inc. of $774 million in 2016, versus $6.38 billion in 2015
- Operating revenues of $12.35 billion in 2016, down from $14.67 billion in 2015
- Impairment losses of $918 million in 2016, down from $5.03 billion in 2015, including a $337 million goodwill impairment for the Texas reporting unit
- Operating income of $527 million in 2016 versus an operating loss of $4.04 billion in 2015
- GenOn's $691 million of senior notes due June 2017 are current, and the filing states there is substantial doubt about GenOn's ability to continue as a going concern
- Cash flow from operations of $2.07 billion in 2016, up from $1.31 billion, with total liquidity of $3.6 billion excluding counterparty collateral
- Quarterly dividend cut to $0.030 per share, $0.12 per share annualized, from $0.58 per share in 2015
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2016, NRG Energy lost $0.09.
- Revenue$8.91B100.0%
- Cost of revenue−$6.68B74.9%
- Gross profit$2.24B25.1%
- Operating costs−$2.21B24.7%
- Operating income$33.0M0.4%
- Interest, other & tax−$807.0M9.1%
- Net income−$774.0M8.7%
Where FY2016 revenue went
$8.91B- Cost of revenue: $6.68B, 75% of revenue
- Other operating costs: $1.13B, 13% of revenue
- Operating income: $33.0M, 0.4% of revenue
- R&D: $48.0M, 0.5% of revenue
- SG&A: $1.03B, 12% of revenue
Kept 0.4% as operating incomeOperating income $33.0M · 0.4%R&D $48.0M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 28, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $8.91B$12.33B | −27.7% |
| Cost of Revenue | $6.68B$9.00B | −25.8% |
| Gross Profit | $2.24B$3.33B | −32.7% |
| R&D Expenses | $48.00M$154.00M | −68.8% |
| SG&A Expenses | $1.03B$1.23B | −16.0% |
| Operating Expenses | $8.99B$16.59B | −45.8% |
| Operating Income | $33.00M-$4.05B | +100.8% |
| Interest Expense | $583.00M$937.00M | −37.8% |
| Net Income | -$774.00M-$6.38B | +87.9% |
| EPS (Basic) | $-2.22$-19.46 | +88.6% |
| EPS (Diluted) | $-2.22$-19.46 | +88.6% |
| Shares Outstanding (Basic) | 316.00M329.00M | −4.0% |
| Shares Outstanding (Diluted) | 316.00M329.00M | −4.0% |
05—Questions
Frequently Asked Questions
Why did NRG report a large net loss in 2016?
The 2016 net loss attributable to NRG of $774 million was driven mainly by impairment losses of $918 million on facilities and goodwill, plus $268 million of impairment losses on investments. Interest expense was $1.06 billion and net loss on debt extinguishment was $142 million. The filing also reports income tax expense of $16 million on a pre-tax loss of $875 million.
What is the main risk to NRG's investors discussed in the filing?
The filing highlights GenOn's going concern doubt. GenOn has $691 million of senior notes due June 15, 2017, and is not expected to have sufficient liquidity to repay them. GenOn is considering creditor negotiations, refinancing, asset sales and a possible Chapter 11 filing. The filing states NRG has no obligation to provide financial support beyond a secured intercompany revolving credit agreement, under which $228 million was available at year-end.
How did NRG change its capital allocation in 2016?
NRG reduced its annual common dividend to $0.12 per share from $0.58 in 2015, as part of its 2016 Capital Allocation Program. It repurchased $3.0 billion of senior notes for $3.1 billion, including accrued interest, and redeemed its 2.822% preferred stock for $226 million. It also issued $1.25 billion of 6.625% senior notes due 2027 and $1.0 billion of 7.25% senior notes due 2026.
What asset sales and acquisitions did NRG complete in 2016?
NRG sold its Seward, Shelby, Rockford and Aurora generating stations, and a majority interest in its EVgo business. It acquired about 1,000 MW of utility-scale solar and wind assets and 29 MW of distributed generation. The filing reports a $215 million gain on sale of assets in 2016.
How did NRG's generation and retail performance change in 2016?
Average on-peak power prices fell about 15% in 2016 compared with 2015, driven by lower natural gas prices. Generation gross margin decreased by $788 million, with the Gulf Coast region down $531 million and the East region down $360 million. Retail gross margin increased by $347 million, mainly from a $364 million increase in unrealized mark-to-market gains on economic hedges. Retail mass customer count ended the year at 2,818 thousand.
06—Continue