NRG Energy, Inc. (NRG) delivered a strong third-quarter performance, exceeding analyst expectations and signaling optimism for the future. The company reported adjusted earnings per share (EPS) of $1.85, surpassing the consensus estimate of $2.00. Despite a 9.1% year-over-year decline in revenue to $7.22 billion, missing the expected $9.381 billion, NRG showcased a healthy financial position.
One key highlight was the significant increase in adjusted EBITDA, which jumped 6.9% year-over-year to $1.055 billion. The EBITDA margin also expanded by 218 basis points to 14.6%, demonstrating efficient operations and cost management. This strong performance fueled NRG’s decision to raise its full-year 2024 guidance for adjusted EPS to a range of $5.95 to $6.75, up from the initial $5.00 to $6.30. The company also unveiled its 2025 guidance, projecting adjusted EPS between $6.75 and $7.75 and adjusted EBITDA in the range of $3.725 billion to $3.975 billion.
NRG’s commitment to shareholder value was further evident in its enhanced share buyback program. The company boosted its 2024 buyback plan from $825 million to $925 million, having already repurchased $544 million by October. The completion of the buyback is anticipated towards the end of the fourth quarter. This aggressive buyback strategy underscores NRG’s confidence in its future growth prospects and its desire to reward investors.
Looking beyond the current quarter, NRG targets a long-term adjusted EPS compounded annual growth rate (CAGR) of over 10%. This ambitious goal is fueled by organic growth initiatives, excluding potential impacts from power price changes and ERCOT project contributions. The company aims to add $750 million in EBITDA by 2029 and return over $8 billion in capital to shareholders.
NRG’s financial health is robust, with $1.1 billion in cash and $5.3 billion in credit availability as of September 30, 2024, resulting in a total liquidity of $6.4 billion. This strong position is attributed to increased receivables and proceeds from the sale of the Airtron HVAC unit. On September 16, 2024, NRG divested Airtron for $500 million, netting $484 million after taxes. This divestiture, acquired in 2021, was executed at an attractive 8.6x multiple on 2023 adjusted EBITDA.
NRG’s commitment to allocating 80% of its cash for capital returns and 20% for growth further supports its shareholder-centric approach. The company’s strong financial position, robust growth plans, and commitment to shareholder value provide investors with a compelling reason to be optimistic about NRG’s future performance. NRG shares rose by 1.34% in after-hours trading, reflecting investor confidence in the company’s positive outlook.
