Vistra Updates Financial Impact of Winter Storm Uri and Reissues 2021 Guidance
Vistra (NYSE: VST) announced a significant financial impact from Winter Storm Uri, estimating a ~$(1,600) million effect on 2021 Ongoing Operations Adjusted EBITDA and Ongoing Operations Adjusted Free Cash Flow before Growth. The company revised its 2021 guidance ranges to $1,475-$1,875 million for EBITDA and $200-$600 million for FCFbG. Despite the challenges, Vistra plans to uphold its dividend and has executed part of a share repurchase program. The company aims to reduce net debt by ~$1,250 million by the year’s end.
- Vistra plans to maintain its quarterly dividend of $0.15 per share.
- Executed ~$175 million of its $1,500 million share repurchase program, repurchasing ~8.7 million shares.
- Total available liquidity of ~$2,784 million as of April 19, 2021, enhancing financial stability.
- Estimated net financial impact of Winter Storm Uri is ~$(1,600) million.
- Revised Ongoing Operations Adjusted EBITDA guidance significantly reduced from initial $3,075-$3,475 million to $1,475-$1,875 million.
- Net debt increased by ~$2,050 million in Q1 2021, indicating financial strain.
IRVING, Texas, April 26, 2021 /PRNewswire/ -- Vistra (NYSE: VST) announced today that it is:
- Estimating the financial impact of Winter Storm Uri ("Uri") on 2021 Ongoing Operations Adjusted EBITDA1 and Ongoing Operations Adjusted Free Cash Flow before Growth (FCFbG)1 at ~
$(1,600) million , including self-help initiatives. - Reissuing 2021 Ongoing Operations Adjusted EBITDA1 and Ongoing Operations Adjusted FCFbG1 guidance ranges at
$1,475 to$1,875 million and$200 to$600 million , respectively. - Providing an update on its 2021 capital allocation plan.
- Hosting an investor update call today at 8 a.m. EDT (7 a.m. CDT) in lieu of its regularly scheduled quarterly earnings conference call; filing its Quarterly Report on Form 10-Q for the first quarter of 2021 and posting the related investor materials to its website on May 5, 2021.
Winter Storm Uri
Since its initial announcement regarding the estimated financial impact of Uri on Feb. 26, 2021, Vistra has received additional customer load information, which drove a negative variance to its previous estimate of
In mid-April, Vistra received the 55-day resettlement statements from ERCOT, which drove an estimated negative variance of more than
Vistra estimates the entire 2021 Adjusted EBITDA impact from the storm was less than the negative impact from gas deliverability issues and the incredibly high costs to procure gas. Vistra's firm gas contracts that were not honored by third parties led to the company procuring replacement gas at incredibly high costs, while the lack of physical gas and insufficient pressures on the pipelines impacted the company's ability to generate power at full capacity. As a result of these challenges, Vistra had to procure power in the ERCOT market at prices at or near the price cap to meet its supply obligations. Absent these issues with gas deliverability and increased gas costs, Vistra estimates that the 2021 Adjusted EBITDA impact of Uri would have been a slight positive.
"Vistra positioned itself to handle the unprecedented Winter Storm Uri in Texas and executed well in the areas that we could control. The storm led to a confluence of unpredictable events and substantially altered the company's risk profile, driven by issues with the integrated gas and electric systems, principally impaired gas deliverability, that we had never before seen. We are obviously very disappointed with the financial loss as a result of the effects of Uri and it is even more difficult to accept given our team members' preparation and execution before, during, and after the storm," said Curt Morgan, Vistra's chief executive officer. "The results do not reflect our performance; however, we understand the reality in front of us and are prepared to move the company forward. We have a strong core to build from and have faith in our business model and strategic direction, especially as we implement a number of measures to mitigate the risks we observed from the winter storm event. Vistra is confident in the company's ability to bounce back in 2021 and get back on track with our transformation, the execution of our long-term capital allocation plan, and creating value for our stakeholders over the long-term."
(1) | Excludes the Asset Closure segment. Ongoing Operations Adjusted EBITDA and Ongoing Operations Adjusted FCFbG are non-GAAP financial measures. See the "Non-GAAP Reconciliation" tables for further detail. |
Reissued 2021 Guidance
($ in millions) | Initial 2021 (September 2020) | Reissued 2021 (April 2021) | ||
Ongoing Ops. Adj. EBITDA1 | $ | 3,075 – 3,475 | $ | 1,475 – 1,875 |
Ongoing Ops. Adj. FCFbG1 | $ | 1,765 – 2,165 | $ | 200 – 600 |
(1) | Excludes the Asset Closure segment. Ongoing Operations Adjusted EBITDA and Ongoing Operations Adjusted FCFbG are non-GAAP financial measures. See the "Non-GAAP Reconciliation" tables for further details. |
Vistra is reissuing its 2021 Ongoing Operations Adjusted EBITDA and Ongoing Operations Adjusted FCFbG guidance ranges at
Liquidity and Related Financing Transactions
In the first quarter of 2021, Vistra took various steps to strengthen liquidity due to the impacts of Uri and enhance liquidity heading into the summer, including increasing borrowings under its Accounts Receivables financing agreements by
Capital Allocation
Through March 31, 2021, Vistra executed ~
Vistra remains committed to its quarterly dividend of
Vistra also remains committed to maintaining a strong balance sheet. The company's net debt increased by ~
(1) | Based on management's anticipated recommendations; subject to Board's approval at the applicable time. |
Investor Update Call
Vistra will host a conference call and webcast today, April 26, 2021, beginning at 8 a.m. EDT (7 a.m. CDT) to discuss this business update and related matters. The live webcast and the accompanying slides that will be discussed on the call can be accessed via the investor relations section of Vistra's website at www.vistracorp.com under "Investor Relations" and then "Events & Presentations." Participants can also listen by phone by dialing (833) 287-0796 and referencing conference ID 4987178. For those unable to participate in the live event, a replay will be available on Vistra's website for one year following the call.
First Quarter 2021 Financial Results
Vistra plans to file its Quarterly Report on Form 10-Q for the first quarter of 2021 and post the related investor materials to its website on May 5, 2021. Today's conference call to provide this business update will take the place of Vistra's regularly scheduled first quarter 2021 financial and operating results conference call.
About Non-GAAP Financial Measures and Items Affecting Comparability
"Adjusted EBITDA" (EBITDA as adjusted for unrealized gains or losses from hedging activities, tax receivable agreement impacts, reorganization items, and certain other items described from time to time in Vistra's earnings releases),"Adjusted Free Cash Flow before Growth" (or "Adjusted FCFbG") (cash from operating activities excluding changes in margin deposits and working capital and adjusted for capital expenditures (including capital expenditures for growth investments), other net investment activities, and other items described from time to time in Vistra's earnings releases), "Ongoing Operations Adjusted EBITDA" (adjusted EBITDA less adjusted EBITDA from Asset Closure segment), "Net Income from Ongoing Operations" (net income less net income from Asset Closure segment), "Ongoing Operations Adjusted Free Cash Flow before Growth" or "Ongoing Operations Adjusted FCFbG" (adjusted free cash flow before growth less cash flow from operating activities from Asset Closure segment before growth), are "non-GAAP financial measures." A non-GAAP financial measure is a numerical measure of financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in Vistra's consolidated statements of operations, comprehensive income, changes in stockholders' equity, and cash flows. Non-GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. Vistra's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
Vistra uses Adjusted EBITDA as a measure of performance and believes that analysis of its business by external users is enhanced by visibility to both Net Income prepared in accordance with GAAP and Adjusted EBITDA. Vistra uses Adjusted Free Cash Flow before Growth as a measure of liquidity and believes that analysis of its ability to service its cash obligations is supported by disclosure of both cash provided by (used in) operating activities prepared in accordance with GAAP as well as Adjusted Free Cash Flow before Growth. Vistra uses Ongoing Operations Adjusted EBITDA as a measure of performance and Ongoing Operations Adjusted Free Cash Flow before Growth as a measure of liquidity and Vistra's management and Board have found it informative to view the Asset Closure segment as separate and distinct from Vistra's ongoing operations. Vistra uses Net Income from Ongoing Operations as a non-GAAP measure that is most comparable to the GAAP measure Net Income in order to illustrate the company's Net Income excluding the effects of the Asset Closure segment, as well as a measure to compare to Ongoing Operations Adjusted EBITDA. The schedules attached to this earnings release reconcile the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
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About Vistra
Vistra (NYSE: VST) is a leading, Fortune 275 integrated retail electricity and power generation company based in Irving, Texas, providing essential resources for customers, commerce, and communities. Vistra combines an innovative, customer-centric approach to retail with safe, reliable, diverse, and efficient power generation. The company brings its products and services to market in 20 states and the District of Columbia, including six of the seven competitive wholesale markets in the U.S. and markets in Canada and Japan, as well. Serving nearly 4.3 million residential, commercial, and industrial retail customers with electricity and natural gas, Vistra is one of the largest competitive residential electricity providers in the country and offers over 50 renewable energy plans. The company is also the largest competitive power generator in the U.S., with a capacity of approximately 39,000 megawatts powered by a diverse portfolio, including natural gas, nuclear, solar, and battery energy storage facilities. In addition, the company is a large purchaser of wind power. The company is currently constructing a 400-MW/1,600-MWh battery energy storage system in Moss Landing, California, the largest of its kind in the world. Vistra is guided by four core principles: we do business the right way, we work as a team, we compete to win, and we care about our stakeholders, including our customers, our communities where we work and live, our employees, and our investors. Learn more about our environmental, social, and governance efforts and read the company's sustainability report at https://www.vistracorp.com/sustainability/.
Cautionary Note Regarding Forward-Looking Statements
The information presented herein includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which Vistra Corp. ("Vistra") operates and beliefs of and assumptions made by Vistra's management, involve risks and uncertainties, which are difficult to predict and are not guarantees of future performance, that could significantly affect the financial results of Vistra. All statements, other than statements of historical facts, that are presented herein, or in response to questions or otherwise, that address activities, events or developments that may occur in the future, including such matters as activities related to our financial or operational projections, the potential impacts of the COVID-19 pandemic on our results of operations, financial condition and cash flows, projected synergy, value lever and net debt targets, capital allocation, capital expenditures, liquidity, projected Adjusted EBITDA to free cash flow conversion rate, dividend policy, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of power generation assets, market and industry developments and the growth of our businesses and operations (often, but not always, through the use of words or phrases, or the negative variations of those words or other comparable words of a future or forward-looking nature, including, but not limited to: "intends," "plans," "will likely," "unlikely," "believe," "confident", "expect," "seek," "anticipate," "estimate," "continue," "will," "shall," "should," "could," "may," "might," "predict," "project," "forecast," "target," "potential," "goal," "objective," "guidance" and "outlook"),are forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. Although Vistra believes that in making any such forward-looking statement, Vistra's expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and risks that could cause results to differ materially from those projected in or implied by any such forward-looking statement, including, but not limited to: (i) adverse changes in general economic or market conditions (including changes in interest rates) or changes in political conditions or federal or state laws and regulations; (ii) the ability of Vistra to execute upon its contemplated strategic, capital allocation, performance, and cost-saving initiatives and to successfully integrate acquired businesses; (iii) actions by credit ratings agencies; (iv) the severity, magnitude and duration of pandemics, including the COVID-19 pandemic, and the resulting effects on our results of operations, financial condition and cash flows; (v) the severity, magnitude and duration of extreme weather events (including winter storm Uri), contingencies and uncertainties relating thereto, most of which are difficult to predict and many of which are beyond our control, and the resulting effects on our results of operations, financial condition and cash flows; and (vi) those additional risks and factors discussed in reports filed with the Securities and Exchange Commission by Vistra from time to time, including the uncertainties and risks discussed in the sections entitled "Risk Factors" and "Forward-Looking Statements" in Vistra's annual report on Form 10-K for the year ended December 31, 2020 and any subsequently filed quarterly reports on Form 10-Q.
Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, Vistra will not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible to predict all of them; nor can Vistra assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
VISTRA CORP. | |||||||||||||||||||||||
Ongoing Operations | Asset Closure | Vistra Corp. Consolidated | |||||||||||||||||||||
Low | High | Low | High | Low | High | ||||||||||||||||||
Net income (loss) | $ | 607 | $ | 920 | $ | (80) | $ | (60) | $ | 527 | $ | 860 | |||||||||||
Income tax expense | 195 | 283 | — | — | 195 | 283 | |||||||||||||||||
Interest expense and related charges (a) | 429 | 429 | — | — | 429 | 429 | |||||||||||||||||
Depreciation and amortization (b) | 1,650 | 1,650 | — | — | 1,650 | 1,650 | |||||||||||||||||
EBITDA before Adjustments | $ | 2,881 | $ | 3,282 | $ | (80) | $ | (60) | $ | 2,801 | $ | 3,222 | |||||||||||
Unrealized net (gain)/loss resulting from hedging transactions | 59 | 59 | — | — | 59 | 59 | |||||||||||||||||
Fresh start / purchase accounting impacts | 2 | 2 | — | — | 2 | 2 | |||||||||||||||||
Impacts of Tax Receivable Agreement | 75 | 75 | — | — | 75 | 75 | |||||||||||||||||
Non-cash compensation expenses | 45 | 45 | — | — | 45 | 45 | |||||||||||||||||
Transition and merger expenses | 10 | 10 | — | — | 10 | 10 | |||||||||||||||||
Other, net | 3 | 2 | — | — | 3 | 2 | |||||||||||||||||
Adjusted EBITDA guidance | $ | 3,075 | $ | 3,475 | $ | (80) | $ | (60) | $ | 2,995 | $ | 3,415 | |||||||||||
Interest paid, net | (456) | (456) | — | — | (456) | (456) | |||||||||||||||||
Tax (paid)/received (c) | (60) | (60) | — | — | (60) | (60) | |||||||||||||||||
Tax Receivable Agreement payments | (3) | (3) | — | — | (3) | (3) | |||||||||||||||||
Working capital and margin deposits | 60 | 60 | — | — | 60 | 60 | |||||||||||||||||
Reclamation and remediation | (38) | (38) | (100) | (100) | (138) | (138) | |||||||||||||||||
Other changes in other operating assets and liabilities | 1 | 1 | (6) | (6) | (5) | (5) | |||||||||||||||||
Cash provided by operating activities | $ | 2,579 | $ | 2,979 | $ | (186) | $ | (166) | $ | 2,393 | $ | 2,813 | |||||||||||
Capital expenditures including nuclear fuel purchases and LTSA prepayments | (771) | (771) | — | — | (771) | (771) | |||||||||||||||||
Solar and storage development and other growth expenditures | (687) | (687) | — | — | (687) | (687) | |||||||||||||||||
(Purchase)/sale of environmental credits and allowances | (29) | (29) | — | — | (29) | (29) | |||||||||||||||||
Other net investing activities | (20) | (20) | 6 | 6 | (14) | (14) | |||||||||||||||||
Free cash flow | $ | 1,072 | $ | 1,472 | $ | (180) | $ | (160) | $ | 892 | $ | 1,312 | |||||||||||
Working capital and margin deposits | (60) | (60) | — | — | (60) | (60) | |||||||||||||||||
Solar and storage development and other growth expenditures | 687 | 687 | — | — | 687 | 687 | |||||||||||||||||
Purchase/(sale) of environmental credits and allowances | 29 | 29 | — | — | 29 | 29 | |||||||||||||||||
Transition and merger expenses | 28 | 28 | — | — | 28 | 28 | |||||||||||||||||
Transition capital expenditures | 9 | 9 | — | — | 9 | 9 | |||||||||||||||||
Adjusted free cash flow before growth guidance | $ | 1,765 | $ | 2,165 | $ | (180) | $ | (160) | $ | 1,585 | $ | 2,005 | |||||||||||
______________ | |
1 | Regulation G Table for 2021 Initial Guidance prepared as of September 29, 2020. |
(a) | Includes unrealized gain on interest rate swaps of |
(b) | Includes nuclear fuel amortization of |
(c) | Includes state tax payments. |
VISTRA CORP. | |||||||||||||||||||||||
Ongoing Operations | Asset Closure | Vistra Corp. Consolidated | |||||||||||||||||||||
Low | High | Low | High | Low | High | ||||||||||||||||||
Net income (loss) | $ | (1,083) | $ | (771) | $ | (126) | $ | (106) | $ | (1,209) | $ | (877) | |||||||||||
Income tax expense | (274) | (186) | — | — | (274) | (186) | |||||||||||||||||
Interest expense and related charges (a) | 420 | 420 | — | — | 420 | 420 | |||||||||||||||||
Depreciation and amortization (b) | 1,660 | 1,660 | — | — | 1,660 | 1,660 | |||||||||||||||||
EBITDA before Adjustments | $ | 723 | $ | 1,123 | $ | (126) | $ | (106) | $ | 597 | $ | 1,017 | |||||||||||
Unrealized net (gain)/loss resulting from hedging transactions | (116) | (116) | — | — | (116) | (116) | |||||||||||||||||
Fresh start / purchase accounting impacts | 15 | 15 | — | — | 15 | 15 | |||||||||||||||||
Impacts of Tax Receivable Agreement | 8 | 8 | — | — | 8 | 8 | |||||||||||||||||
Non-cash compensation expenses | 44 | 44 | — | — | 44 | 44 | |||||||||||||||||
Transition and merger expenses | 10 | 10 | (15) | (15) | (5) | (5) | |||||||||||||||||
Winter Storm Uri (c) | 793 | 793 | — | — | 793 | 793 | |||||||||||||||||
Other, net | (2) | (2) | 1 | 1 | (1) | (1) | |||||||||||||||||
Adjusted EBITDA guidance | $ | 1,475 | $ | 1,875 | $ | (140) | $ | (120) | $ | 1,335 | $ | 1,755 | |||||||||||
Interest paid, net | (498) | (498) | — | — | (498) | (498) | |||||||||||||||||
Tax (paid)/received (d) | (35) | (35) | — | — | (35) | (35) | |||||||||||||||||
Tax Receivable Agreement payments | (3) | (3) | — | — | (3) | (3) | |||||||||||||||||
Working capital and margin deposits | (110) | (110) | (4) | (4) | (114) | (114) | |||||||||||||||||
Accrued environmental allowances | 234 | 234 | — | — | 234 | 234 | |||||||||||||||||
Reclamation and remediation | (43) | (43) | (81) | (81) | (124) | (124) | |||||||||||||||||
Other changes in other operating assets and liabilities | (76) | (76) | 15 | 15 | (61) | (61) | |||||||||||||||||
Cash provided by operating activities | $ | 944 | $ | 1,344 | $ | (210) | $ | (190) | $ | 734 | $ | 1,154 | |||||||||||
Capital expenditures including nuclear fuel purchases and LTSA prepayments | (680) | (680) | — | — | (680) | (680) | |||||||||||||||||
Solar and storage development and other growth expenditures | (428) | (428) | — | — | (428) | (428) | |||||||||||||||||
(Purchase)/sale of environmental allowances | (133) | (133) | — | — | (133) | (133) | |||||||||||||||||
Other net investing activities | (20) | (20) | 6 | 6 | (14) | (14) | |||||||||||||||||
Free cash flow | $ | (317) | $ | 83 | $ | (204) | $ | (184) | $ | (521) | $ | (101) | |||||||||||
Working capital and margin deposits | 110 | 110 | 4 | 4 | 114 | 114 | |||||||||||||||||
Solar and storage development and other growth expenditures | 428 | 428 | — | — | 428 | 428 | |||||||||||||||||
Accrued environmental allowances | (234) | (234) | — | — | (234) | (234) | |||||||||||||||||
Purchase/(sale) of environmental allowances | 133 | 133 | — | — | 133 | 133 | |||||||||||||||||
Transition and merger expenses | 20 | 20 | 40 | 40 | 60 | 60 | |||||||||||||||||
Transition capital expenditures | 60 | 60 | — | — | 60 | 60 | |||||||||||||||||
Adjusted free cash flow before growth guidance | $ | 200 | $ | 600 | $ | (160) | $ | (140) | $ | 40 | $ | 460 | |||||||||||
___________ | |
1 | Regulation G Table for 2021 Reissued Guidance prepared as of April 26, 2021. |
(a) | Includes unrealized gain on interest rate swaps of |
(b) | Includes nuclear fuel amortization of |
(c) | Includes the following amounts, which we believe are not reflective of our operating performance: |
(d) | Includes state tax payments. |
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SOURCE Vistra
FAQ
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