NRG Energy Misses Q3 Expectations But Powers Up Guidance And Stock Buyback: Details

NRG Energy, Inc. NRG reported a third-quarter revenue decline of 9.1% year-over-year to $7.22 billion, missing the consensus of $9.381 billion. Adjusted EPS stood at $1.85, missing the consensus of $2.00.

“NRG’s financial position has never been stronger as evidenced by our raised 2024 guidance and the 2025 guidance we initiated today. We continue to look to add new capacity to our portfolio, and our exciting new partnership with Renew Home provides further validation of our customer-focused strategy,” commented Larry Coben, NRG Chair, President, and Chief Executive Officer.

Operating cash flow for the quarter was $31 million, compared to $566 million a year ago. Free Cash Flow Before Growth Investments was $815 million.

Adjusted EBITDA rose 6.9% YoY to $1.055 billion, and the margin expanded 218 bps YoY to 14.6%.

As of September 30, 2024, NRG had $1.1 billion in cash and $5.3 billion in credit availability, boosting total liquidity to $6.4 billion, driven by increased receivables and Airtron sale proceeds.

On September 16, 2024, NRG sold its Airtron HVAC unit for $500 million, netting $484 million ($425 million post-tax). Acquired in 2021, Airtron’s divestiture was at an 8.6x multiple on 2023 Adjusted EBITDA.

NRG reaffirmed its policy to allocate 80% of cash for capital returns and 20% for growth, increasing 2024 share buybacks to $925 million.

NRG raised its 2024 buyback plan from $825 million to $925 million, repurchasing $544 million by October. Completion is expected near the end of the fourth quarter.

NRG targets a long-term Adjusted EPS CAGR above 10%, driven by organic growth initiatives. The plan excludes power price changes and potential boosts from ERCOT projects. It aims for $750 million in added EBITDA by 2029 and over $8 billion in capital returns.

Guidance: NRG Energy now sees 2024 Adjusted EPS of $5.95 – $6.75 (original guidance $5.00 – $6.30) versus $6.67 consensus.

The company expects 2025 Adjusted EPS of $6.75 – $7.75 versus the $6.80 consensus and Adjusted EBITDA of $3.725 billion – $3.975 billion.

Price Action: NRG shares are trading higher by 1.34% at $97.69 at the last check Friday.

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