Vistra Reports Third Quarter 2022 Results; Initiates 2023 Ongoing Operations Adjusted EBITDA Guidance

IRVING, Texas, Nov. 4, 2022 /PRNewswire/ -- Vistra (NYSE: VST) today reported its third quarter 2022 financial results and other highlights.

Financial and Operating Highlights

• Results
• Recorded third quarter 2022 Net Income of $678 million and Net Income from Ongoing Operations¹ of $667 million.
• Delivered third quarter 2022 Ongoing Operations Adjusted EBITDA¹ of $1,038 million, with expected full year results tracking at midpoint of guidance.
• Narrowed 2022 Ongoing Operations Adjusted EBITDA¹ guidance to a range of $2,960 million to $3,160 million, affirming the $3,060 million midpoint.
• Narrowed 2022 Ongoing Operations Adjusted Free Cash Flow before Growth (Adjusted FCFbG)¹ guidance to range of $2,170 million to $2,370 million, reducing the midpoint by $50 million to $2,270 million.
• Initiated 2023 Ongoing Operations Adjusted EBITDA¹ and Ongoing Operations Adjusted FCFbG¹ guidance ranges of $3,400 million to $4,000 million (midpoint of $3,700 million) and $1,750 million to $2,350 million (midpoint of $2,050 million), respectively.
• Vistra's low-cost, diverse generation fleet performed extremely well through the hot summer months.
• TXU Energy was recently recognized as a 5-Star retailer based on PUCT ratings. The business earned strong margins in a higher commodity cost environment, highlighting the brand's strength in volatile market conditions.
• Return of Capital
• Through Nov. 1, 2022, the company has repurchased approximately $2.05 billion under the upsized $3.25 billion share repurchase program. Such repurchases represent approximately 18% of the shares outstanding as of Nov. 2, 2021.
• Declared fourth quarter 2022 dividend of $0.193 per share of common stock, representing an approximately 29% increase from our fourth quarter 2021 dividend.

"Vistra delivered solid results in the third quarter of 2022, with generation performing exceptionally well during the hottest days of the summer," said Jim Burke, president and CEO of Vistra. "In July, ERCOT experienced periods of high demand when solar and/or wind output was low, and our generation fleet provided reliable power to the grid, achieving near perfect capacity factors and highlighting the importance of a diverse, well-maintained portfolio of generation assets. Our retail business was extremely responsive to customer needs in this dynamic environment with innovative products and a strong customer experience in Texas. We are pleased with how the Vistra Zero assets performed this summer in Texas and California, and we will remain disciplined with the execution of our Vistra Zero pipeline. Our Vistra team is committed to the reliability, affordability, and sustainability of electricity and ensuring these factors stay in balance as the electric grid continues to transition."

Burke continued, "Vistra has been locking in significant earnings potential with our comprehensive hedging program in the current elevated pricing environment. Against this backdrop, we initiated our 2023 Ongoing Operations Adjusted EBITDA guidance, with a midpoint of $3,700 million, consistent with the upper end of the opportunity range we announced earlier this year. Our 2023 guidance midpoint reflects the confidence we have in the hedging strategy we've focused on throughout 2022, and we continue to see these opportunities going forward. In addition, from now through the end of 2023, we plan to return to shareholders an amount equivalent to approximately $4/share through dividends and share repurchases with the expectation that returns to shareholders will continue in the future."

For the three months ended Sept. 30, 2022, Vistra reported Net Income of $678 million, Net Income from Ongoing Operations¹ of $667 million, and Ongoing Operations Adjusted EBITDA¹ of $1,038 million. Vistra's third quarter 2022 Net Income of $678 million reflects an increase of $668 million as compared to third quarter 2021 Net Income of $10 million, driven by unrealized gains in Q3 2022 compared to unrealized losses in Q3 2021 (unrealized hedging losses and gains are recorded when increases or decreases in forward commodity prices occur, which requires Vistra to record the current non-cash, unrealized impact of mark-to-market hedging losses and gains for GAAP purposes). Vistra's third quarter 2022 Ongoing Operations Adjusted EBITDA¹ was $1,038 million, $155 million lower than third quarter 2021 results², primarily driven by lower generation volumes from coal plants due to industry-wide fuel delivery challenges and lower margins on higher-than-expected migration of customers to default service providers, partially offset by higher prices on Vistra's open position and strong generation fleet performance in July.

Vistra reported third quarter 2022 Ongoing Operations Adjusted EBITDA¹ from the Retail segment of $(2) million, approximately $67 million lower than third quarter 2021 results, driven by favorable Winter Storm Uri related resettlements in 2021 and ex-ERCOT margin headwinds, partially offset by ERCOT performance. Third quarter 2022 Ongoing Operations Adjusted EBITDA¹ from the generation segments,³ on an aggregate basis, totaled $1,040 million, approximately $88 million lower than third quarter 2021 results² driven primarily by lower generation volumes from coal plants due to industry-wide fuel delivery challenges, lower capacity revenue, and higher-than-expected migration of customers to default service providers, partially offset by strong operational performance during periods of higher pricing and higher margin from Vistra Zero renewable sites.

Guidance

Vistra is narrowing its 2022 Ongoing Operations Adjusted EBITDA¹ and Ongoing Operations Adjusted FCFbG¹ guidance ranges to $2,960 million to $3,160 million, retaining the $3,060 million midpoint, and $2,170 million to $2,370 million, decreasing the midpoint by $50 million to $2,270 million, respectively. The Ongoing Operations Adjusted FCFbG¹ midpoint was decreased primarily to reflect higher interest costs in 2022 from additional debt incurred to provide liquidity for the ongoing comprehensive hedging program that is capturing significant out-year Ongoing Operations Adjusted EBITDA¹ potential.

Vistra is initiating its 2023 guidance ranges, forecasting Ongoing Operations Adjusted EBITDA¹ of $3,400 million to $4,000 million and Ongoing Operations Adjusted FCFbG¹ of $1,750 million to $2,350 million. The midpoint of 2023 Ongoing Operations Adjusted EBITDA¹ guidance is $3,700 million, which is the top of the potential Ongoing Operations Adjusted EBITDA¹ midpoint range Vistra announced in the first quarter of 2022. The midpoint of the 2023 Ongoing Operations Adjusted FCFbG¹ midpoint is $2,050 million. In comparison to 2022, this Ongoing Operations Adjusted FCFbG¹ midpoint results in an estimated cash flow conversion similar to the anticipated 2022 conversion ratio, after adjusting for the securitization proceeds received earlier this year.

As of Sept. 30, 2022, Vistra has hedged approximately 70% of its expected generation volumes on average for the three-year period 2023 to 2025, with 2023 hedged at approximately 90%. Vistra's hedging program supports our 2023 guidance ranges as well as Ongoing Operations Adjusted EBITDA¹ mid-point opportunities in the range of $3,500 million to $3,700 million in 2024 and 2025.²

Share Repurchase Program

As of Nov. 1, 2022, Vistra had completed approximately $2.05 billion in share repurchases since Nov. 2021, repurchasing more than the full $2 billion of share repurchases originally expected to be completed by year-end 2022.  Vistra has approximately $1.2 billion remaining under the upsized cumulative $3.25 billion share repurchase authorization, expected to be utilized by year-end 2023. As of Nov. 1, 2022, Vistra had approximately 398 million shares outstanding, representing an approximately 18% reduction of the amount of the shares outstanding on Nov. 2, 2021.

Vistra Zero

Vistra is focused on transitioning its generation fleet to lower carbon resources, advancing these interests through cost-effective, strategic investments in solar and battery energy storage developments. Vistra has 3,408 MW of zero-emission generation and energy storage online (including our 2,400 MW nuclear facility, Comanche Peak), with additional renewable generation and energy storage developments in the near-term pipeline. Recently, Comanche Peak applied to extend its licenses through 2050 and 2053 for the two-unit facility, an additional 20 years beyond its original license.

Overall, the development of the Vistra Zero portfolio is expected to be financed primarily with third-party capital, including the net proceeds of the $1 billion green perpetual preferred stock issued in December 2021, and nonrecourse financings at the project or Vistra Zero portfolio level.

The Inflation Reduction Act is anticipated to provide the Vistra Zero portfolio, including Comanche Peak, with the opportunity to realize material benefits on renewables and energy storage as well as a strong price floor for our nuclear asset. Vistra remains strategic and disciplined with respect to the timing of investments in Vistra Zero developments.

Liquidity

As of Sept. 30, 2022, Vistra had total available liquidity of approximately $3,438 million, including cash and cash equivalents of $535 million, $1,202 million of availability under its corporate revolving credit facility, and $1,701 million of availability under its commodity-linked revolving credit facility. As of Sept. 30, 2022, available capacity under the commodity-linked revolving credit facility reflects the borrowing base, which is lower than the aggregate commitments of $2,250 million. In October 2022, the commodity-linked revolving credit facility was amended to (i) extend the maturity date to October 2023 and (ii) reduce the aggregate commitments to $1,350 million. As of Nov. 1, 2022, Vistra had total available liquidity of approximately $4,080 million.

Earnings Webcast

Vistra will host a webcast today, Nov. 4, 2022, beginning at 9 a.m. ET (8 a.m. CT) to discuss these results and related matters. The live webcast and the accompanying slides that will be discussed on the call can be accessed via Vistra's website at www.vistracorp.com under "Investor Relations" and then "Events & Presentations." Participants can also listen by phone by registering here prior to the start time of the call to receive a conference call dial-in number. A replay of the webcast will be available on the Vistra website for one year following the live event.

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 (Loss) 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 (Loss) 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.

About Vistra

Vistra (NYSE: VST) is a leading Fortune 500 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. Serving approximately 4 million residential, commercial, and industrial retail customers with electricity and natural gas, Vistra is one of the largest competitive 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 37,000 megawatts powered by a diverse portfolio, including natural gas, nuclear, solar, and battery energy storage facilities. In addition, Vistra is a large purchaser of wind power. The company owns and operates the 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, 2021 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.

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SOURCE Vistra Corp.