PRINCETON, N.J.--(BUSINESS WIRE)--NRG Energy, Inc. (NYSE: NRG) today reported full year 2018 income from continuing operations of $460 million, or $0.87 per diluted common share. Adjusted EBITDA for the full year 2018 was $1.8 billion, cash from continuing operations was $1.0 billion and FCFbG was $1.1 billion.

“Our platform delivered another year of strong financial results with execution across all strategic initiatives while achieving our best safety and environmental performance on record,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. “We now have the financial flexibility to create significant and sustainable shareholder value as we continue to perfect our platform, strengthen our balance sheet and return capital to shareholders."

Consolidated Financial Results

NRG completed the sale of its Renewables Platform, and its interests in NRG Yield, as well as the South Central Portfolio on August 31, 2018, and February 4, 2019, respectively. As a result, financial information for the South Central Portfolio, NRG Yield, the Renewables Platform and Carlsbad Energy Center was recast to reflect the presentation of these entities as discontinued operations for all current and historical periods.

Retail

Full year 2018 Adjusted EBITDA was $952 million, $127 million higher than 2017, driven by our margin enhancement and cost reduction initiatives, increased usage and growth related to M&A activity, and higher gross margins from increased demand response MWs sold, partially offset by higher supply costs and higher operating expenses related to margin enhancements.

Fourth quarter Adjusted EBITDA was $197 million, $13 million lower than the fourth quarter 2017, driven by higher margin enhancement costs, higher bad debt and higher supply costs, offset by higher gross margins from our margin enhancement initiatives, growth related to M&A activity, and cost savings.

Generation

Full year 2018 Adjusted EBITDA was $856 million, $211 million higher than 2017, driven by:

• Texas: $179 million increase on higher realized energy prices, partially offset by higher outage costs
• East/West2: $32 million increase due to higher capacity revenues, partially offset by the deconsolidation impact of the non-controlling interest in Ivanpah and Agua Caliente

Fourth quarter Adjusted EBITDA was $84 million, $44 million lower than the fourth quarter 2017, driven by:

• Texas: $17 million decrease primarily due to higher operating expenses related to the fall outage at the South Texas Project (STP)
• East/West2: $27 million decrease due to lower realized energy margins, higher outage costs and the deconsolidation impact of the non-controlling interest in Ivanpah and Agua Caliente, partially offset by higher capacity revenues

Corporate

Full year 2018 Adjusted EBITDA was $(31) million, $50 million better than 2017, driven by lower expenses associated with the Transformation Plan, partially offset by the reduction in shared services revenue from GenOn.

Fourth quarter Adjusted EBITDA was $(8) million, $33 million better than the fourth quarter 2017, driven by lower expenses associated with the Transformation Plan.

As of December 31, 2018, NRG-level cash was at $0.6 billion, and $1.4 billion was available under the Company’s credit facilities. Total liquidity was $2.0 billion, including restricted cash. Overall liquidity as of the end of the fourth quarter 2018 was $0.8 billion lower than at the end of 2017.

On February 4, 2019, and February 27, 2019, NRG closed on the sale of the South Central Portfolio $1.0 billion3 and Carlsbad project for $387 million3, respectively, providing additional sources of liquidity.

NRG Strategic Developments

Transformation Plan

NRG realized $532 million of its 2018 cost savings target and $32 million in margin enhancement, as part of the Transformation Plan. With respect to the asset sales, on February 4, 2019, the Company completed the sale of its South Central Portfolio to Cleco, for approximately $1.0 billion3 and on February 27, 2019, completed the sale of Carlsbad to Global Infrastructure Partners III (GIP) for $387 million3. NRG's total asset sale proceeds to date are approximately $3.0 billion3.

Agua Caliente Offer

On November 1, 2018, the Company, which indirectly owns a 35% interest in Agua Caliente, a 290 MW utility-scale solar project, offered to Clearway Energy, Inc. (formerly known as NRG Yield, Inc.) its ownership interest in Agua Caliente Borrower 1, LLC, for approximately $120 million. The offer expired on January 31, 2019, with no action taken by Clearway Energy, Inc. As a result, the right of first offer agreement with Clearway Energy, Inc. has expired and NRG's interest in Agua Caliente is no longer subject to a right of first offer thereunder.

Capital Allocation Update

During the fourth quarter of 2018, NRG completed $250 million of the additional $500 million share repurchase program announced on the third quarter 2018 earnings call and completed the remaining $250 million of share repurchases in January and February 2019. In total, since March 2018, NRG has repurchased $1.5 billion of shares for an average price of $36.24/share. In addition, the Board of Directors of the Company has authorized an additional $1 billion share repurchase program to be executed in 2019.

As previously announced, the Company has completed its targeted $640 million of debt reduction through the redemption of $485 million of its outstanding 6.250% senior notes due 2022 and the prepayment of $155 million of Term Loans, and achieved its target net debt to Adjusted EBITDA ratio of 3.0x for 2018.

NRG is revising its balance sheet target ratios in order to further strengthen its balance sheet. Although the Company is not targeting a specific credit rating improvement at this time, the Company will seek to maintain the following credit metrics, consistent with investment grade ratings:

• Net Debt/EBITDA: 2.5x - 2.75x
• Adjusted Cash from Operations / Net Debt: 27.5% - 32.5%
• Interest Coverage: 5.5x - 6.5x

In order to achieve the revised balance sheet targets, the Company is reserving up to $600 million in 2019 capital which may be allocated toward additional debt reduction.

On January 23, 2019, NRG declared a quarterly dividend on the Company's common stock of $0.03 per share, paid February 15, 2019 to stockholders of record as of February 1, 2019, representing $0.12 per share on an annualized basis.

The Company’s common stock dividend, corporate level debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.

About NRG

At NRG, we are redefining power by putting customers at the center of everything we do. We create value by generating electricity and serving over 3 million residential and commercial customers through our portfolio of retail electricity brands. A Fortune 500 company, NRG delivers customer-focused solutions for managing electricity, while enhancing energy choice and working towards a sustainable energy future. More information is available at www.nrg.com. Connect with NRG on Facebook, LinkedIn and follow us on Twitter @nrgenergy, @nrginsight.