01—Abstract
Summary
Summary of the 10-K filed March 1, 2018. Cited figures are marked; the original filing is the authoritative source.
NRG Energy, Inc. reported a net loss attributable to NRG Energy, Inc. of $2,153 milliona for 2017, compared with a net loss of $774 million in 2016, driven largely by $1,709 million of impairment losses and an $789 million loss from discontinued operations related to the deconsolidation of GenOn.
Total operating revenues were $10,629 millionb in 2017 versus $10,512 million in 2016, and cash flow from operations was $1,387 million compared with $2,088 million in 2016. Total stockholders' equity fell to $1,968 million at December 31, 2017, from $4,446 million a year earlier, and total liabilities stood at $21,272 million. The company is executing a three-part Transformation Plan announced July 12, 2017, targeting $1,065 million of recurring cost savings and margin enhancement, up to $3.2 billion of asset sale proceeds, and a reduction in consolidated debt from approximately $19.5 billion to approximately $6.5 billion by 2020.
On February 6, 2018, NRG agreed to sell its full ownership interest in NRG Yield, Inc. and its renewables platform to Global Infrastructure Partners for $1.375 billionc, and its 3,555 MW South Central business to Cleco for $1.0 billion; both transactions are expected to close in the second half of 2018. Consolidated debt and capital leases totaled $16,638 million at year-end 2017.
The GenOn Entities filed for Chapter 11 on June 14, 2017, and the Bankruptcy Court confirmed their plan of reorganization on December 12, 2017; GenOn was deconsolidated as of that June date and recorded at a zero fair value. The filing also notes a $1,248 milliond impairment on the South Texas Project interest, lower long-term natural gas and power price views, and a board authorization of up to $1 billion of share repurchases, with the first $500 million program starting in the first quarter of 2018.
02—Key points
Key Highlights
- Net loss attributable to NRG Energy, Inc. of $2,153 million in 2017 versus $774 million in 2016, including $1,709 million of impairment losses and $789 million of losses from discontinued operations (GenOn).
- Total operating revenues of $10,629 million in 2017, up from $10,512 million in 2016; retail revenue was $6,388 million and energy revenue was $2,461 million.
- Transformation Plan targets $1,065 million of recurring cost savings and margin enhancement, up to $3.2 billion of asset sale cash proceeds, and debt reduction from about $19.5 billion to about $6.5 billion by the end of 2020; $150 million of annual cost savings was realized in 2017.
- Agreed February 6, 2018 sales: NRG Yield, Inc. and renewables platform to GIP for $1.375 billion, and South Central business to Cleco for $1.0 billion, both expected to close in the second half of 2018.
- Cash flow from operating activities fell to $1,387 million in 2017 from $2,088 million in 2016; total liquidity, excluding counterparty collateral funds, was approximately $3.2 billion at year-end.
- Stockholders' equity declined to $1,968 million at December 31, 2017, from $4,446 million a year earlier, with book value per share of $6.20.
- Board authorized up to $1 billion of share repurchases, with the first $500 million program beginning in the first quarter of 2018; the quarterly dividend is $0.03 per share.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2017, NRG Energy lost $0.24.
- Revenue$9.07B100.0%
- Cost of revenue−$6.89B75.9%
- Gross profit$2.19B24.1%
- Operating costs−$2.93B32.3%
- Operating income−$741.0M8.2%
- Interest, other & tax−$1.41B15.6%
- Net income−$2.15B23.7%
04—Financials
Financial Highlights
Figures from 10-KFY2017filed March 1, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $9.07B$8.91B | +1.8% |
| Cost of Revenue | $6.89B$6.68B | +3.1% |
| Gross Profit | $2.19B$2.24B | −2.3% |
| R&D Expenses | $22.00M$48.00M | −54.2% |
| SG&A Expenses | $836.00M$1.03B | −19.0% |
| Operating Expenses | $9.92B$8.99B | +10.3% |
| Operating Income | -$741.00M$33.00M | −2345.5% |
| Interest Expense | $557.00M$583.00M | −4.5% |
| Net Income | -$2.15B-$774.00M | −178.2% |
| EPS (Basic) | $-6.79$-2.22 | −205.9% |
| EPS (Diluted) | $-6.79$-2.22 | −205.9% |
| Shares Outstanding (Basic) | 317.00M316.00M | +0.3% |
| Shares Outstanding (Diluted) | 317.00M316.00M | +0.3% |
05—Questions
Frequently Asked Questions
Why did NRG report a large net loss in 2017?
The 2017 net loss attributable to NRG Energy, Inc. of $2,153 million reflects $1,709 million of impairment losses, mainly a $1,248 million impairment on the South Texas Project interest tied to a lower long-term view of ERCOT power prices, and a $789 million loss from discontinued operations related to GenOn, including a $208 million pre-tax loss on deconsolidation. The filing also cites a $733 million reduction in deferred tax assets from the Tax Act, offset by a $660 million valuation allowance.
What are the main assets being sold under the Transformation Plan?
On February 6, 2018, NRG agreed to sell its full ownership of NRG Yield, Inc. and its renewables platform (a 3,440 MW portfolio) to GIP for $1.375 billion, and its South Central business (3,555 MW) to Cleco for $1.0 billion. It also agreed to sell the 527 MW Carlsbad Energy Center for $365 million and Buckthorn Solar for $42 million to NRG Yield, Inc., and BETM for $70 million. The Carlsbad and Buckthorn sales are expected to close in the fourth and first quarters of 2018, respectively.
What happened with GenOn and how does it affect NRG?
GenOn and certain subsidiaries filed Chapter 11 on June 14, 2017. NRG deconsolidated GenOn that day, recorded its investment at an estimated fair value of zero, and presented GenOn as a discontinued operation. The Bankruptcy Court confirmed the plan of reorganization on December 12, 2017. NRG agreed to pay settlement consideration of $261.3 million to GenOn, net of amounts GenOn owes under the intercompany revolver (about $125 million), and retains certain pension and retiree benefit liabilities.
How is NRG reducing its debt and returning capital to shareholders?
The Transformation Plan targets reducing consolidated debt from approximately $19.5 billion to approximately $6.5 billion, and the company reduced net corporate debt by $604 million in 2017. In 2017 it issued $870 million of 5.75% senior notes due 2028 and redeemed $1.5 billion of senior notes. For shareholders, the quarterly dividend was $0.03 per share, and the board authorized up to $1 billion of share repurchases, with the first $500 million program starting in the first quarter of 2018.
06—Continue