NRG Energy (NYSE: NRG) is increasing its guidance for both adjusted EBITDA and FCF before growth investments following todayâs announcement on improved synergies resulting from the GenOn combination as well as providing an update on current market conditions. Specifically, NRG is reaffirming 2013 adjusted EBITDA guidance, increasing 2014 adjusted EBITDA guidance by $90 million, and increasing FCF before growth guidance in 2013 and 2014 by $50 million and $200 million, respectively. These changes to guidance are relative to the guidance ranges previously provided on NRGâs first quarter earnings presentation on May 7, 2013 and are due to a number of factors, including:
* Increases in all GenOn combination-related synergies (Cost, Operational, and Balance Sheet)
* Updated outlook on forward commodity prices, competitive markets, and impact of mild weather experienced year to date.
Increased Guidance
* 2014 Free Cash Flow (FCF) before growth increased by $200 million to $1,100 – 1,300 million
* 2014 Adjusted EBITDA increased by $90 million to $2,850 – $3,050 million
* 2013 FCF before growth increased by $50 million to $1,050 – 1,250 million
* 2013 Adjusted EBITDA reaffirmed
Synergy Highlights
* Increasing expected FCF benefits resulting from the GenOn combination to $467 million per year by 2014 (up from $310 million per year) * Increasing expected adjusted EBITDA benefits resulting from Operational and Cost synergies arising out of the GenOn combination to $325 million per year by 2014 (up from $210 million per year) * Cash flow benefits from balance sheet efficiencies increased to $142 million
Operational Highlights
* Reactivation of Avon Lake and New Castle; Over 1 GW in ATSI Region cleared most recent capacity auction
* New Reliability Support Service Agreement at Dunkirk
* Improving cash flow profile through both new and accelerated plant deactivations
âAs a result of our ongoing continuous improvement and integration program over the past six months following the GenOn combination, we are pleased to announce significantly increased guidance for 2013 and 2014,â said David Crane, NRGâs President and Chief Executive Officer. âOur continued focus on relentless execution in our core businesses, combined with the inherent benefits of our combined energy platform, is putting us in a position to deliver strong financial performance even through the softer portion of the commodity price cycle.â
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