Genon Energy Inc : GenOn Reports 3rd Quarter 2011 Results and Initiates 2013 Adjusted EBITDA Guidance
11/09/2011| 07:40am US/Eastern
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HOUSTON, TX, Nov 09, 2011 (MARKETWIRE via COMTEX) --
GenOn Energy, Inc. (NYSE: GEN)
-- Merger integration on track to achieve $160 million annual cost
savings starting in January 2012
-- Reduced 2011 guidance to $607 million from $621 million
-- Reduced 2012 guidance to $496 million from $608 million which includes
the negative impact of CSAPR
-- Initiated guidance for 2013 of $761 million
GenOn Energy, Inc. (NYSE: GEN) today reported adjusted EBITDA
of $256 million for the third quarter of 2011 compared to
$190 million for the same period of 2010. Adjusted income
from continuing operations was $76 million for the third
quarter of 2011 compared to $86 million for the same period
last year. GenOn reported a net loss of $38 million for the
third quarter of 2011 compared to net income of $254 million
for the same period of 2010.
GenOn was formed on December 3, 2010 through the merger of
Mirant Corporation and RRI Energy, Inc. The merger was
accounted for as a reverse acquisition, and Mirant was deemed
to be the acquirer for accounting purposes. The consolidated
financial statements therefore reflect Mirant's
historical financial information through December 2, 2010 and
GenOn's results thereafter, in accordance with the
acquisition method of accounting for business combinations.
On a pro forma basis, adjusted EBITDA for the third quarter
of 2010 was $415 million, adjusted income from continuing
operations was $224 million and net income was $339 million.
The pro forma information gives effect to the merger as if it
had occurred on January 1, 2010.
Guidance GenOn reduced adjusted EBITDA guidance for 2011 to
$607 million from $621 million, reduced adjusted EBITDA
guidance for 2012 to $496 million from $608 million, and
initiated adjusted EBITDA guidance for 2013 of $761 million.
The guidance for all three years is based on forward
commodity prices on October 6, 2011. The guidance for 2012
and 2013 incorporates expected impacts from the recently
promulgated Cross-State Air Pollution Rule (CSAPR) and does
not include any sales of excess CSAPR allowances because such
sales would not optimize their value. The previous guidance
for 2012 did not incorporate any cost of allowances, value of
allocations of allowances or changes in generation dispatch
resulting from CSAPR. The guidance for 2013 assumes CSAPR
emissions allocations under State Implementation Plans are
largely consistent with the Federal Implementation Plan for
2012.
"The prices of CSAPR allowances have been very volatile
and thinly traded since the rule was issued in August,"
said Edward R. Muller, chairman and chief executive officer
of GenOn. "CSAPR currently has a significant negative
impact on our guidance for adjusted EBITDA. In contrast, we
expect the EPA's hazardous air pollutants rule, which is
scheduled to be issued in December, will have a very positive
impact on GenOn's results starting in the second half of
the decade."
Financial Information On September 30, 2011, GenOn had
771,690,694 common shares outstanding.
Third Quarter 2011 versus Third Quarter 2010
Net Income (Loss) to Adjusted Income from Continuing Operations and
Adjusted EBITDA
------------ ------------ ------------
Quarter Quarter Quarter
Ended Ended Ended
September September September
(in millions) 30, 2011 30, 2010 30, 2010
------------ ------------ ------------
Pro Forma
Net Income (Loss) $ (38) $ 339 $ 254
Unrealized gains (38) (218) (167)
Merger-related costs 24 - 8
Impairment losses 133 113 -
Other, net (5) (10) (9)
------------ ------------ ------------
Adjusted Income from Continuing
Operations $ 76 $ 224 $ 86
============ ============ ============
Provision for income taxes 1 - -
Interest expense, net 85 95 51
Depreciation and amortization 94 96 53
------------ ------------ ------------
Adjusted EBITDA $ 256 $ 415 $ 190
============ ============ ============
Adjusted EBITDA was $256 million for the third quarter of
2011 compared to $415 million on a pro forma basis for the
same period of 2010. The decline resulted from lower adjusted
energy gross margin primarily because of lower generation
volumes and lower contracted and capacity principally in the
Eastern PJM and Western PJM/MISO segments. These declines
were partially offset by an improvement in adjusted operating
and other expenses, primarily related to merger cost savings.
Adjusted income from continuing operations was $76 million
for the third quarter of 2011 compared to adjusted income of
$224 million on a pro forma basis for the same period of
2010. The decline was primarily related to the same items
that affected adjusted EBITDA, partially offset by reductions
in interest expense, net.
GenOn's net loss was $38 million for the third quarter of
2011 compared to net income of $339 million on a pro forma
basis for the same period of 2010. The decline was primarily
a result of a reduction of unrealized gains, an increase in
merger-related costs, an increase in impairment losses, and
the same items that affected adjusted income from continuing
operations. The impairment losses in the third quarter of
2011 were related to emissions allowances from the Clean Air
Interstate Rule (CAIR), which has been replaced by CSAPR. The
impairment losses in the third quarter of 2010 were related
to the New Castle and Titus generating facilities.
Net cash provided by operating activities of continuing
operations was $267 million for the third quarter of 2011
compared to $193 million reported for the same period of
2010.
Nine Months 2011 versus Nine Months 2010
Net Income (Loss) to Adjusted Income from Continuing Operations and
Adjusted EBITDA
----------- ----------- -----------
Nine Months Nine Months Nine Months
Ended Ended Ended
September September September
(in millions) 30, 2011(1) 30, 2010(1) 30, 2010
----------- ----------- -----------
Pro Forma
Net Income (Loss) $ (282) $ 163 $ 398
Unrealized (gains) losses 59 (291) (179)
Merger-related costs 61 - 13
Impairment losses 133 361 -
Loss on early extinguishment of debt 23 - -
Large scale remediation and settlement
costs 30 - -
Western states litigation and similar
settlements - 17 -
Postretirement benefits curtailment
gain - (37) (37)
Other, net (18) (24) (2)
----------- ----------- -----------
Adjusted Income from Continuing
Operations $ 6 $ 189 $ 193
=========== =========== ===========
Provision for income taxes 4 1 1
Interest expense, net 290 290 150
Depreciation and amortization 265 288 157
----------- ----------- -----------
Adjusted EBITDA $ 565 $ 768 $ 501
=========== =========== ===========
1. Results of operations have been retroactively amended for the revisions
to the provisional allocation of the merger purchase price at December 3,
2010.
Adjusted EBITDA was $565 million for the nine months ended
September 30, 2011 compared to $768 million on a pro forma
basis for the same period in 2010. The decline resulted
primarily from lower adjusted energy gross margin primarily
because of lower generation volumes in the Eastern PJM
segment and lower contracted and capacity. These items were
partially offset by an improvement in adjusted operating and
other expenses, primarily related to merger cost savings and
reduced planned outages and projects.
The adjusted income from continuing operations was $6 million
for the nine months ended September 30, 2011 compared to $189
million on a pro forma basis for the same period in 2010. The
decline was primarily related to the same items that affected
adjusted EBITDA, partially offset by lower depreciation and
amortization expense.
GenOn's net loss was $282 million for the nine months
ended September 30, 2011 compared to net income of $163
million on a pro forma basis for the same period in 2010. The
decline was primarily related to the same items that affected
adjusted loss from continuing operations in addition to the
items listed in the table above.
Net cash provided by operating activities of continuing
operations was $282 million for the nine months ended
September 30, 2011 compared to $343 million for the same
period in 2010.
Liquidity Total cash and cash equivalents at September 30,
2011 was $1.7 billion. When taken together with availability
under existing credit facilities, GenOn's total available
liquidity at September 30, 2011 was $2.3 billion.
Total debt at September 30, 2011, excluding unamortized debt
discounts and adjustments to fair value of debt, was $4.1
billion. The unamortized debt discounts and adjustments to
fair value of debt totaled ($62) million.
Conference Call GenOn Energy will host its third quarter 2011
earnings conference call beginning at 9:00 a.m. Eastern Time
on Wednesday, November 9, 2011. The conference call will be
webcast live with audio and slides at www.genon.com in the
Investor Relations section. A replay of the call can be
accessed approximately two hours after the call's
completion.
About GenOn Energy, Inc. GenOn Energy, Inc. (NYSE: GEN) is
one of the largest competitive generators of wholesale
electricity in the United States. With power generation
facilities located in key regions of the country and a
generation portfolio of approximately 24,200 megawatts, GenOn
is helping meet the nation's electricity needs.
GenOn's portfolio of power generation facilities includes
baseload, intermediate and peaking units using coal, natural
gas and oil to generate electricity. We have experienced
leadership, dedicated team members, financial strength and a
solid commitment to safety, the environment, operational
excellence and the communities in which we operate. GenOn
routinely posts all important information on its web site at
www.genon.com.
Non-GAAP Financial Measures This press release includes
"non-GAAP financial measures" as defined in
Regulation G under the Securities Exchange Act of 1934, as
amended. Reconciliations of these measures to the most
directly comparable GAAP measures are contained herein. This
press release is available in the Investor Relations section
of our web site at www.genon.com. To the extent required, the
Company has included a more detailed description of each of
the non-GAAP financial measures used in this press release,
together with a discussion of the usefulness and purpose of
these measures as an exhibit to the Company's Current
Report on Form 8-K furnished to the SEC with this press
release, which is also available on our web site.
Certain factors that could affect GAAP financial measures are
not accessible on a forward-looking basis, but could be
material to future reported earnings and cash flow.
Net Income (Loss) to Adjusted Income from Continuing Operations and
Adjusted EBITDA
------------ ------------ ------------
Quarter Quarter Quarter
Ended Ended Ended
September September September
(in millions) 30, 2011 30, 2010 30, 2010
------------ ------------ ------------
Pro Forma
Net Income (Loss) $ (38) $ 339 $ 254
Unrealized gains (38) (218) (167)
Merger-related costs 24 - 8
Impairment losses 133 113 -
Lower of cost or market inventory
adjustments, net (1) (8) (7)
Major litigation costs, net of
recoveries 5 - -
Other, net (9) (2) (2)
------------ ------------ ------------
Adjusted Income from Continuing
Operations $ 76 $ 224 $ 86
============ ============ ============
Provision for income taxes 1 - -
Interest expense, net 85 95 51
Depreciation and amortization 94 96 53
------------ ------------ ------------
Adjusted EBITDA $ 256 $ 415 $ 190
============ ============ ============
Quarter Ended September 30, 2010 Pro Forma Net Income to Adjusted Income
from Continuing Operations and Adjusted EBITDA
---------- ---------- ----------- ----------
Pro Forma
(in millions) Reported RRI Energy Adjustments Pro Forma
---------- ---------- ----------- ----------
Net Income $ 254 $ 23 $ 62 $ 339
Unrealized gains (167) (51) - (218)
Merger-related costs 8 5 (13) -
Lower of cost or market
inventory adjustments, net (7) (1) - (8)
Impairment losses - 113 - 113
Other, net (2) - - (2)
---------- ---------- ----------- ----------
Adjusted Income from
Continuing Operations $ 86 $ 89 $ 49 $ 224
========== ========== =========== ==========
Provision (benefit) for
income taxes - 18 (18) -
Interest expense, net 51 39 5 95
Depreciation and
amortization 53 65 (22) 96
---------- ---------- ----------- ----------
Adjusted EBITDA $ 190 $ 211 $ 14 $ 415
========== ========== =========== ==========
Net Income (Loss) to Adjusted Income from Continuing Operations and
Adjusted EBITDA
------------ ------------ ------------
Nine Months Nine Months Nine Months
Ended Ended Ended
September September September
(in millions) 30, 2011(1) 30, 2010(1) 30, 2010
------------ ------------ ------------
Pro Forma
Net Income (Loss) $ (282) $ 163 $ 398
Unrealized (gains) losses 59 (291) (179)
Merger-related costs 61 - 13
Western states litigation and
similar settlements - 17 -
Impairment losses 133 361 -
Lower of cost or market inventory
adjustments, net (13) (19) (1)
Postretirement benefits curtailment
gain - (37) (37)
Loss on early extinguishment of
debt 23 - -
Major litigation costs, net of
recoveries 12 - -
Large scale remediation and
settlement costs 30 - -
Reversal of Montgomery County
carbon levy assessment for prior
year (8) - -
Other, net (9) (5) (1)
------------ ------------ ------------
Adjusted Income from Continuing
Operations $ 6 $ 189 $ 193
============ ============ ============
Provision for income taxes 4 1 1
Interest expense, net 290 290 150
Depreciation and amortization 265 288 157
------------ ------------ ------------
Adjusted EBITDA $ 565 $ 768 $ 501
============ ============ ============
1. Results of operations have been retroactively amended for the revisions
to the provisional allocation of the merger purchase price at December 3,
2010.
Nine Months Ended September 30, 2010 Pro Forma Net Income (Loss) to
Adjusted Income (Loss) from Continuing Operations and Adjusted EBITDA
Pro Forma
------------ ------------ -------------- ------------
(in millions) Reported RRI Energy Adjustments(1) Pro Forma(1)
------------ ------------ -------------- ------------
Net Income (Loss) $ 398 $ (426) $ 191 $ 163
Net income from
discontinued
operations - (4) - (4)
Unrealized gains (179) (112) - (291)
Postretirement
benefits
curtailment gain (37) - - (37)
Merger-related
costs 13 19 (32) -
Lower of cost or
market inventory
adjustments, net (1) (18) - (19)
Impairment losses - 361 - 361
Western states
litigation and
similar
settlements - 17 - 17
Other, net (1) - - (1)
------------ ------------ -------------- ------------
Adjusted Income
(Loss) from
Continuing
Operations $ 193 $ (163) $ 159 $ 189
============ ============ ============== ============
Provision for
income taxes 1 69 (69) 1
Interest expense,
net 150 122 18 290
Depreciation and
amortization 157 196 (65) 288
------------ ------------ -------------- ------------
Adjusted EBITDA $ 501 $ 224 $ 43 $ 768
============ ============ ============== ============
1. Results of operations have been retroactively amended for the revisions
to the provisional allocation of the merger purchase price at December 3,
2010.
Net Loss to Adjusted Income (Loss) from Continuing Operations and Adjusted
EBITDA Guidance
------------ ------------ ------------
Year Ending Year Ending Year Ending
December 31, December 31, December 31,
(in millions) 2011 2012(1) 2013(1,2)
------------ ------------ ------------
Net Loss $ (585) $ (473) $ (194)
Unrealized losses 223 231 232
Merger-related costs 68 10 -
Impairment losses 133 - -
Major litigation costs, net of
recoveries 18 3 -
Reversal of Montgomery County
carbon levy assessment for prior
year (8) - -
Lower of cost or market inventory
adjustments, net (14) - -
Loss on early extinguishment of
debt 23 - -
Large scale remediation and
settlement costs 32 - -
Other, net (8) 13 (16)
------------ ------------ ------------
Adjusted Income (Loss) from
Continuing Operations $ (118) $ (216) $ 22
============ ============ ============
Provision for income taxes 3 - -
Interest expense, net 385 366 377
Depreciation and amortization 337 346 362
------------ ------------ ------------
Adjusted EBITDA $ 607 $ 496 $ 761
============ ============ ============
1. The guidance for 2012 and 2013 incorporates expected impacts from the
recently promulgated CSAPR and does not include any sales of expected
excess emissions allowances.
2. The 2013 guidance assumes CSAPR emissions allocations under State
Implementation Plans for 2013 are largely consistent with the Federal
Implementation Plan for 2012.
Forward Looking Statements This press release contains
statements, estimates or projections that are
"forward-looking statements" as defined under U.S.
federal securities laws. In some cases, one can identify
forward-looking statements by terminology such as
"will," "expect," "estimate,"
"think," "forecast,"
"guidance," "outlook," "plan,"
"lead," "project" or other comparable
terminology. Forward-looking statements are subject to
certain risks and uncertainties that could cause actual
results to differ materially from our historical experience
and our present expectations or projections. These risks
include, but are not limited to: (i) legislative and
regulatory initiatives or changes in regulations affecting
the electric industry; (ii) changes in, or changes in the
application of, environmental or other laws and regulations;
(iii) failure of our generating facilities to perform as
expected, including due to outages for unscheduled
maintenance or repair; (iv) changes in market conditions or
the entry of additional competition in our markets; (v) the
ability to integrate successfully the businesses following
the merger and realize cost savings and any other synergies;
and (vi) those factors contained in our periodic reports
filed with the SEC, including in the "Risk Factors"
section of our most recent Annual Report on Form 10-K. The
forward-looking information in this document is given as of
the date of the particular statement, and we assume no duty
to update this information. Our filings and other important
information are also available on the Investor Relations page
of our web site at www.genon.com.
SOURCE: GenOn Energy, Inc.
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