Power generation company NRG Energy, Inc. (NRG) reported a pro forma loss of 48 cents per share for fourth-quarter 2011, narrower than the Zacks Consensus Estimate of a loss of 70 cents per share.
The company also reported GAAP loss of 48 cents per share in the fourth-quarter 2011 versus a loss of 7 cents per share in the prior-year quarter.
NRG Energy’s fiscal 2011 pro forma earnings of $1.63 per share surpassed the Zacks Consensus Estimate of $1.48 per share.
In the year 2011, the company reported GAAP earnings of 78 cents per share versus earnings of $1.84 per share in 2010. The difference between the GAAP and pro forma earnings was due to impairment charges related to the company’s NINA nuclear investment and emission allowances, reversal tax liabilities and early debt extinguishment.
Total Revenue
NRG Energy’s total operating revenue of $2,132.0 million in the fourth quarter increased 17.4% from $1,816.0 million in the year-ago quarter. The year-over-year increase was driven by strong performance from several segments including Reliant, West and Thermal. The quarterly revenue fell short of the Zacks Consensus Estimate of $3,911.0 million.
In fiscal 2011, the company reported total operating revenue of $9,079.0 million versus $8,849.0 million in 2010. It reflected higher revenue from South Central, Thermal and Corporate segments; partially offset by a decline in sales in Reliant, Texas, Northeast and International verticals. The fiscal 2011 revenue missed the Zacks Consensus Estimate of $10,036.0 million.
Operational Update
NRG Energy’s fourth quarter 2011 total operating expenses increased 27.6% from the prior-year quarter due to higher cost of operations, higher depreciation and amortization expenses, and selling, general and administrative expenses; partially offset by lower development expenses.
In fourth quarter 2011, NRG Energy’s interest expenses decreased to $161.0 million from $163.0 million in the year-ago quarter.
Financial Update
Cash and cash equivalents as of December 31, 2011, were $1,105.0 million. Long-term debt and capital leases was $9,745 million as of the same date.
The cash from operating activities as of December 31, 2011 was $1,166.0 million versus $1,623.0 million in the prior-year period.
Guidance for 2012
NRG Energy updated its guidance taking into consideration its fourth quarter 2011 results.
The company maintained the 2012 adjusted EBITDA expectation in the range of $1,825.0 million – $2,000.0 million, considering strong retail platform and strategically managed wholesale costs.
In 2012, free cash flow, before the growth investment, is expected to be in the range of $800.0 million – $1,000.0 million.
NRG Energy also expects to pay a quarterly dividend of 36 cents per share, with the first payment likely to be made during third quarter 2012.
Peer Comparison
NRG Energy’s closest peer, The AES Corporation (AES), posted adjusted earnings of 23 cents per share in fourth quarter of 2011, surpassing the Zacks Consensus Estimate of 20 cents. However, the figure fell short of the year-ago quarter earnings of 25 cents per share.
In the fourth quarter 2011, its consolidated revenue of $4,269 million beat the Zacks Consensus Estimate of $4,118.0 million and year-ago quarterly revenue of $4,230.0 million.
Our View
The company has maintained a consistent healthy cash balance and is using the same to increase shareholder value through share repurchases. In this year, NRG repurchased 20 million shares amounting to $430.0 million.
During the quarter, NRG Energy entered into a few agreements to acquire certain power generation assets and companies for expanding its power generation portfolio. We appreciate the move as the acquired assets were mainly non-pollutant solar power generation units and solar power distribution companies.
NRG Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
Based in Princeton, New Jersey, NRG Energy Inc. operates as a wholesale power generation company. It is also involved in the fuel and energy trade and offers related products and services in the United States and internationally.
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