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NRG Energy Widens Loss, Misses Est

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NRG Energy Inc. (NRG - Free Report) posted first-quarter 2013 loss per share of $1.02, wider than the Zacks Consensus Estimate of a loss of 27 cents. Quarterly results were also worse than the year-ago loss per share of 92 cents. The significant loss reflects increase in operating and interest expenses.


NRG Energy's total operating revenues of $2.1 billion was down by 25.4% than the Zacks Consensus Estimate. Quarterly revenues increased 11.8% from the year-ago quarter.

Highlights of the Release

NRG Energy’s total operating expenses were $2.3 billion, up 15.2% year over year due to higher cost of operations, depreciation charges, and selling, general and administrative expenses.

The company reported operating loss of $259 million, widened 52.4% year over year due to the rise in operating expenses.

Interest expenses increased 18.8% year over year to $196 million primarily due to a higher debt level.

NRG Energy's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) during the quarter were $373 million, up 18% year over year on favorable performances from the East, Alternate Energy and Corporate segments. These were partially offset by decreases in adjusted EBITDA from the Retail, West, Wholesale Gulf Coast – Texas and South Central, and Other segments.

Financial Update

NRG Energy's cash balance as of Mar 31, 2013 was $1.7 billion versus $2.1 billion as of Dec 31, 2012.

As of Mar 31, 2013, long-term debt and capital leases were $15.9 billion versus $15.7 billion as of Dec 31, 2012.

Net cash used in operating activities during the first three months of 2013 was $124 million, higher than $76 million in the comparable year-ago period.

NRG Energy’s total capital expenditures increased to $813 million from $639 million in the prior-year quarter.


NRG Energy's full-year 2013 and 2014 adjusted EBITDA guidance is in the range of $2.6–$2.8 billion and $2.8–$3.0 billion, respectively.

The company’s guidance for adjusted cash flow from operations is $1.6–$1.8 billion for 2013 and $1.5–$1.7 billion for 2014.

The company’s full-year 2013 and 2014 free cash flow (before growth investments) guidance is in the range of $1.0–$1.2 billion and $0.9–$1.1 billion, respectively.
Other Utility Company Releases

Exelon Corporation (EXC - Free Report) announced first quarter operating earnings of 70 cents per share, beating the Zacks Consensus Estimate by 2 cents.

Entergy Corporation (ETR - Free Report) reported first quarter operational earnings of 94 cents per share that came at par with the Zacks Consensus Estimate.

American Electric Power Co. Inc. (AEP - Free Report) reported first quarter earnings of 80 cents per share, in line with the Zacks Consensus Estimate.

Our Take

In first-quarter 2013, NRG Energy experienced positive impacts from the GenOn merger in terms of improvement in realized gross margin in the East segment. We believe this merger will continue to add some momentum to the company’s forthcoming financial prospects.

In the quarter under review, Retail customer headcount increased by 21,000. We believe the commencement of operations at the newly installed Borrego I Solar Generating Station, Alpine Generating Station and Avra Valley Solar Generating Station will enable the company to meet the growing demand.

However, fuel price volatility, stringent regulatory compliances and over-reliance on weather conditions is likely to pose challenges to NRG Energy’s near-term performance.

Princeton, NJ and Houston, TX-based NRG Energy Inc. together with its subsidiaries operates as an integrated wholesale power generation and retail electricity company. The company currently has a Zacks Rank #3 (Hold).

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