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NRG Energy Increases Guidance Following Completion of GenOn Transaction



  NRG Energy Increases Guidance Following Completion of GenOn Transaction

Business Wire

PRINCETON, N.J. -- January 22, 2013

NRG Energy is increasing its guidance for both adjusted EBITDA and Free Cash
Flow before Growth investments following the successful close of the GenOn
transaction on December 14, 2012. Specifically, NRG is reaffirming 2013
adjusted EBITDA guidance, increasing its 2014 adjusted EBITDA guidance by $70
million and increasing both 2013 and 2014 Free Cash Flow before Growth
guidance by $75 million and $55 million, respectively. These increases in
guidance are relative to the guidance ranges for the combined company
previously provided in connection with the merger announcement in July 2012
and are due to a number of factors, including:

  * Updated outlook on forward commodity prices
  * Review of expenditures for the combined portfolio
  * Impact of reduction in projected environmental capital expenditures
    previously disclosed

2013 and 2014 Guidance
($ in Millions)                                        
                                   2013                      2014
Adjusted EBITDA^1                  $2,535-$2,735             $2,700-$2,900
Wholesale                          1,685 - 1,800             1,705 - 1,820
Retail                             650 - 725                 675 – 750
Solar Projects ^2                  200 - 210                 320 – 330
FCF, before growth                 $900-$1,100               $900-$1,100
investments
Note: Reconciliation of Adjusted EBITDA are shown in Appendix
^1Includes $150 million and $200 million in 2013 and 2014, respectively, of
synergies as previously disclosed
^2Solar projects include the EBITDA contribution from the projects net of
non-controlling interest and excluding development expenses
 

“Having closed the GenOn transaction ahead of our original expectations, we
now have the opportunity to complete our review of the combined company’s
business operations and are pleased to announce increased adjusted EBITDA and
free cash flow guidance for 2013-2014,” said David Crane, NRG’s President and
Chief Executive Officer. “NRG’s personnel are already fully engaged realizing
both the synergies of the combination and the potential of our 47,000
megawatts of multi-fuel, multi-regional, across-the-merit-order generation
capacity.”

NRG expects to provide the financial community with full year results for both
NRG and GenOn as well as further updates of its activities on its fourth
quarter 2012 earnings call, to be held in late February.

About NRG Energy

NRG is at the forefront of changing how people think about and use energy. We
deliver cleaner and smarter energy choices for our customers, backed by the
nation’s largest independent power generation portfolio of fossil fuel,
nuclear, solar and wind facilities. A Fortune 300 company, NRG is challenging
the U.S. energy industry by becoming the largest developer of solar power,
building the first privately-funded electric vehicle charging infrastructure,
and providing customers with the most advanced smart energy solutions to
better manage their energy use. In addition to 47,000 megawatts of generation
capacity, enough to supply nearly 40 million homes, our retail electricity
providers – Reliant, Green Mountain Energy and Energy Plus – serve more than
two million customers. More information is available at www.nrgenergy.com.
Connect with NRG Energy on Facebook and follow us on Twitter @nrgenergy.

Appendix Table A-1: 2013 Reconciliation of Adjusted EBITDA Guidance
($ in millions)
Adjusted EBITDA guidance                             2,535 – 2,735
Interest payments                                    (925)
Income tax                                           (30)
Collateral/working capital/other changes             (50)
Cash flow from operations                            1,525 – 1,725
Maintenance capital expenditures, net                (420) – (440)
Environmental capital expenditures, net              (175) – (195)
Preferred dividends                                  (9)
Free cash flow – before growth investments           900 – 1,100
Note: Subtotals and totals are rounded
 

Appendix Table A-2: 2014 Reconciliation of Adjusted EBITDA Guidance
($ in millions)
Adjusted EBITDA guidance                             2,700 – 2,900
Interest payments                                    (1,010)
Income tax                                           40
Collateral/working capital/other changes             (200)
Cash flow from operations                            1,550 – 1,750
Maintenance capital expenditures, net                (390) – (410)
Environmental capital expenditures, net              (230) – (250)
Preferred dividends                                  (9)
Free cash flow – before growth investments           900 – 1,100
Note: Subtotals and totals are rounded
 

EBITDA and adjusted EBITDA are non-GAAP financial measures. These measurements
are not recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. The presentation of adjusted
EBITDA should not be construed as an inference that NRG’s future results will
be unaffected by unusual or non-recurring items.

EBITDA represents net income before interest (including loss on debt
extinguishment), taxes, depreciation and amortization. EBITDA is presented
because NRG considers it an important supplemental measure of its performance
and believes debt-holders frequently use EBITDA to analyze operating
performance and debt service capacity. EBITDA has limitations as an analytical
tool, and you should not consider it in isolation, or as a substitute for
analysis of our operating results as reported under GAAP. Some of these
limitations are:

  * EBITDA does not reflect cash expenditures, or future requirements for
    capital expenditures, or contractual commitments;
  * EBITDA does not reflect changes in, or cash requirements for, working
    capital needs;
  * EBITDA does not reflect the significant interest expense, or the cash
    requirements necessary to service interest or principal payments, on debt
    or cash income tax payments;
  * Although depreciation and amortization are non-cash charges, the assets
    being depreciated and amortized will often have to be replaced in the
    future, and EBITDA does not reflect any cash requirements for such
    replacements; and
  * Other companies in this industry may calculate EBITDA differently than NRG
    does, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered as a measure of
discretionary cash available to use to invest in the growth of NRG’s business.
NRG compensates for these limitations by relying primarily on our GAAP results
and using EBITDA and adjusted EBITDA only supplementally. See the statements
of cash flow included in the financial statements that are a part of this news
release.

Adjusted EBITDA is presented as a further supplemental measure of operating
performance. Adjusted EBITDA represents EBITDA adjusted for mark-to-market
gains or losses, asset write offs and impairments; and factors which we do not
consider indicative of future operating performance. The reader is encouraged
to evaluate each adjustment and the reasons NRG considers it appropriate for
supplemental analysis. As an analytical tool, adjusted EBITDA is subject to
all of the limitations applicable to EBITDA. In addition, in evaluating
adjusted EBITDA, the reader should be aware that in the future NRG may incur
expenses similar to the adjustments in this news release.

Free cash flow (before growth investments) is cash flow from operations less
maintenance and environmental capital expenditures and preferred stock
dividends and is used by NRG predominantly as a forecasting tool to estimate
cash available for debt reduction and other capital allocation alternatives.
Because we have mandatory debt service requirements (and other
non-discretionary expenditures) investors should not rely on free cash flow as
a measure of cash available for discretionary expenditures.

Forward Looking Statements

In addition to historical information, the information presented in this
communication includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act.
These statements involve estimates, expectations, projections, goals,
assumptions, known and unknown risks and uncertainties and can typically be
identified by terminology such as “may,” “will,” “should,” “could,”
“objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,”
“expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,”
“predict,” “target,” “potential” or “continue” or the negative of these terms
or other comparable terminology. Such forward-looking statements include, but
are not limited to, statements about the anticipated benefits of the
transaction between NRG and GenOn, the combined company’s future revenues,
income, indebtedness, capital structure, plans, expectations, objectives,
projected financial performance and/or business results and other future
events, and economic and market conditions.

Forward-looking statements are not a guarantee of future performance and
actual events or results may differ materially from any forward-looking
statement as result of various risks and uncertainties, including, but not
limited to, those relating to: impact of the transaction on relationships with
customers, suppliers and employees, the ability to finance the combined
business post-closing and the terms on which such financing may be available,
the financial performance of the combined company following completion of the
transaction, the ability to successfully integrate the businesses of NRG and
GenOn, the ability to realize anticipated benefits of the transaction
(including expected cost savings and other synergies) or the risk that
anticipated benefits may take longer to realize than expected, legislative,
regulatory and/or market developments, the outcome of pending or threatened
lawsuits, regulatory or tax proceedings or investigations, the effects of
competition or regulatory intervention, financial and economic market
conditions, access to capital, the timing and extent of changes in law and
regulation (including environmental), commodity prices, prevailing demand and
market prices for electricity, capacity, fuel and emissions allowances,
weather conditions, operational constraints or outages, fuel supply or
transmission issues, hedging ineffectiveness.

Additional information concerning other risk factors is contained in NRG’s and
GenOn’s most recently filed Annual Reports on Form 10-K, subsequent Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC
filings.

Many of these risks, uncertainties and assumptions are beyond NRG’s ability to
control or predict. Because of these risks, uncertainties and assumptions, you
should not place undue reliance on these forward-looking statements.
Furthermore, forward-looking statements speak only as of the date they are
made, and NRG does not undertake any obligation to update publicly or revise
any forward-looking statements to reflect events or circumstances that may
arise after the date of this communication. All subsequent written and oral
forward-looking statements concerning NRG, the transaction, the combined
company or other matters and attributable to NRG or any person acting on their
behalf are expressly qualified in their entirety by the cautionary statements
above.

Contact:

NRG Energy
Media:
Lori Neuman, 609-524-4525
Dave Knox, 713-537-2130
David Gaier, 609-524-4529
or
Investors:
Chad Plotkin, 609-524-4526
Stefan Kimball, 609-524-4527
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