Good day, ladies and gentlemen, and welcome to the NRG Energy, Inc. 4Q 2016 Earnings Call. As a reminder, this conference is being recorded. I'd like to introduce your host for today's conference, Mr. Kevin Cole, Head of Investor Relations. Sir, please begin.

Thank you, Vince. Good morning and welcome to NRG Energy's full year and fourth quarter 2016's earnings call. This morning's call is being broadcast live over the phone and via webcast, which can be located in the Investors section of our website at www.nrg.com under Presentations and Webcasts. As this is the earnings call for NRG Energy, any statement made on this call that may pertain to NRG Yield will be provided from the NRG perspective. Please note that today's discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the Safe Harbor in today's presentation as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's press release and this presentation. Now, with that, I'll turn the call over to Mauricio Gutierrez, NRG's President and Chief Executive Officer.

Thank you, Kevin, and thank you, everyone, for your interest in NRG. Joining me this morning is Kirk Andrews, our Chief Financial Officer. Also on the call and available for questions, we have Elizabeth Killinger, Head of our Retail business; and Chris Moser, Head of Operations. Before I turn to our presentation, I would like to acknowledge Howard Cosgrove and Ed Muller for their years of service as directors on the NRG board. I want to thank them for their dedication and wish them well in their next endeavors. Let me also congratulate our current Director, Larry Coben, on his appointment as Chairman of the Board. I'd also like to welcome our two new board members, John Wilder and Barry Smitherman. I look forward to working with both of them on all of the exciting opportunities ahead for NRG. 2016 was a pivotal year for our company. Just one year ago, I made a commitment to simplify our business, strengthen our platform and restore confidence in our direction and decision making. We have made significant progress on all fronts. Today, NRG is in a much better place to continue executing on our multiyear strategic plan to solidify our position as the premier integrated power company in the country. Let's move now to slide 3, where I'd like to summarize the key highlights from today's call. First, we delivered on our numbers. Our track record of strong results and execution continued in 2016. We had our second best safety performance year on record and our integrated platform delivered earnings that were even stronger than last year. We grew both adjusted EBITDA and free cash flow before growth despite the difficult commodity price environment that reduced our total generation by 14% from 2015. Our Retail business delivered its third consecutive year or…

Thank you, Mauricio, and good morning, everyone. Beginning with the financial summary on slide 11, before I review the full-year results, I'd like to take a moment to highlight a change we've made to both our segment disclosure for 2016 and our guidance breakdown. We're now combining both Mass Retail and Business Solutions into a single Retail segment in order to bring all of our direct customer-facing businesses together as a single segment. Business Solutions, which consists of our C&I, demand response and other B2B initiatives, was previously part of the Generation segment. Our results for 2016 as well as our guidance for 2017 now reflect this change, which we believe will provide greater clarity of disclosure in helping our investors better understand the NRG value proposition. Turning to 2016 financial results, NRG delivered $3.257 billion in adjusted EBITDA and $1.2 billion in consolidated free cash flow before growth. Our results highlight the benefits and resilience of our integrated platform as the low commodity price environment helped Retail deliver $800 million in adjusted EBITDA. Mass Retail contributed $755 million of this total, in line with the midpoint of our latest guidance for Mass Retail, which was announced on our third quarter call. Generation and Renewables achieved $1.547 billion in adjusted EBITDA, while NRG Yield, aided primarily by robust wind conditions through the year, contributed $899 million. We ended 2016 having completed $1 billion of our $1.4 billion corporate debt reduction program, the balance of which is part of our 2017 capital allocation to retire the remainder of our 2018 bond maturity. When combined with the retirement of our convertible preferred and the extension of corporate debt maturities at more favorable rates, including the recent refinancing of our term loan, which occurred in January, our deleveraging efforts have generated in total…

Thank you, Kirk. And to close on slide 16, I just like to summarize our main priorities as we move into 2017. You may notice similar themes to last year. This is because our focus on continuous improvement and our strategic objectives remain the same. We will continue to work towards perfecting our integrated platform, seizing market opportunities to grow, and demonstrating leadership in the competitive power sector. And we will enhance our business by remaining focused on operational excellence, reducing costs, strengthening the balance sheet, and repositioning our fleet. We continue with the process of seeking a comprehensive resolution for GenOn, where we are in active dialog with bondholders, and expect to provide more clarity next quarter. With a solid foundation put in place this year, we can continue on executing our strategy to drive greater shareholder value in the months and years to come. So with that, operator, we're ready to open the lines for questions.

Thank you, sir. Our first question is from Stephen Byrd of Morgan Stanley. Your line is open. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Hi. Good morning.

Good morning, Stephen. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Thanks for the additional disclosure on the cost structure, and congrats for exceeding your cost cutting targets. Just a few questions on your SG&A, for 2017, what is built into overall guidance in terms of your overall SG&A position?

Let me turn it to Kirk, specifically. But for 2017, on our guidance, we included the $400 million target that we had on our cost reduction initiatives. Is that what you wanted, Stephen, or what level of specificity you need? Stephen Calder Byrd - Morgan Stanley & Co. LLC: Well, I was thinking just in terms of the – just the aggregate SG&A amount for the entire company for 2017. How should we be thinking about that aggregate level in 2017?

Well, as we move into 2017, I think when you look at the additional disclosures that we have on the, I believe it was, slide 6, for 2016, you should expect that we're going to continue to focus on reducing our cost structure overall. And at the very least, when it comes to SG&A, not only we're going to hold the line, but as I mentioned on my prepared remarks, I think it's difficult given the initiative that we're going to go through in the Business Review Committee to put a specific target as we have done in the past. So, I hope that you all indulge us with holding on to, I guess, the direction that we have provided in terms of our new FORNRG program, our new cost initiatives. But there is a lot that we're going to go through in the next couple of months in revising our entire businesses around the company. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Very much understood. Shifting gears over to something you mentioned in your remarks about asset dispositions. You mentioned that there's potential for additional asset dispositions. Without getting too specific, what types of assets should we be thinking about in terms of the most logical candidates for disposition?

I mean, I think it's similar to what we did in 2016. I mean, we went through a very thorough review process on assets that were not necessarily core on specific regions, that were single assets that have been underperforming. But the most important thing to me is, if we can actually monetize assets at value. And that's what we're going to be focusing on, on the next steps of asset dispositions. As I've said in the past, we ended up with a portfolio of close to 50,000 megawatts of generation through a number of acquisitions, and it is the time now to be pruning around that portfolio and to recalibrate and resize that portfolio. But we will only do that if we can actually monetize assets at value, like we did last year where we set a target of $500 million and we came in a little over $550 million. So, I think that's how you should be thinking about the asset optimization efforts going into 2017. And of course, I mean, now that we have a new framework around the Business Review Committee, we will have a conversation about single assets. But every part of our business and – evaluate that and make a determination in the next couple of months, which I will be in a position to announce to you later in the year. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Very good. I'll give time for others. Thank you very much.

Thank you, Stephen.

Thank you. Our next question is from Julien Dumoulin-Smith of UBS. Your line is open.

Hey, guys. This is Antoine actually covering for Julien. How are you?

Good. Good morning. How are you?

Good. First, can you expand a little bit on where the incremental $139 million savings were made, both in terms of O&M versus SG&A and also by business unit?

Yes. So, the first thing I think it was important to – as we go in through this period of asset rebalancing and asset optimization, I feel it was important to provide you with the total cost reduction on the platform, and not only focusing on one specific category. So, what we attempted to do was provide you with the entire cost platform of the company. Some of the additional cost reductions happened around asset dispositions that we've made. And it is important, as we go in through this asset rebalancing, that we have the transparency to provide you the level that you need to be able to compare where we were before and where we are today. I will also say that a lot of the over-performance happened just across all the different categories; SG&A, O&M, selling and marketing. So, there is not just one area to pinpoint. But I think it was, as I mentioned, completely across the organization.

And just to add on – it's Kirk. I mean I think this is part of one of the pages that Mauricio spoke to in the total cost comparison versus the baseline, on which those cost targets were set. This is what we achieved in 2016. And I think we had about $130 million in SG&A and marketing savings, about $300 million in O&M, and another $100 million of rounding in development. If you recall, I mean our original target of $150 million, as we said in the reset, which was a part of that $400 million, was to come from G&A, marketing and development. So pursuant to what I just described, the combination of those two elements in terms of savings between the baseline and 2016 is more like $230 million. So, that gives you a directional sense of at least where that component of the overage came from.

Got it. Thank you. And on the $400 million of excluded part of the Generation business, how much of that is non-recurring? And also, how do you think about your initiative of IPP going forward?

In terms of non-recurring, and I believe you'll find a walk of that in the appendix. Always hate to refer to pages deep in the appendix, but I understand this is an important question. I think it's back on page 35 of the appendix. The only really non-recurring of that deduction is some non-cash gains or losses, and most of those are losses, related to just retirements or write-offs of small assets and inventory and the like. The bulk of that, excluding the component that we obviously left to the side that's associated with the cost of the South Texas Project, the nuclear asset, and we did that obviously for comparative purposes. We're the only IPP among the three that Mauricio had spoken to that has a nuclear asset. The remainder of that are – it's a list of different things. It's deactivation costs for deactivations that took place, obviously, those megawatts are not included; ARO or asset retirement obligation expense; the purchase accounting effect of lease accounting for some of our acquired assets that are under lease. And the remainder of that is, basically, just lease expense, which is really more of a financing charge that's largely associated with the GenOn and a subset of that is, obviously, the Midwest Gen asset. So, that's non-recurring and more just not what you think about as traditional O&M and SG&A, or maintenance CapEx.

Got it. Thank you.

Thank you. Our next question is from Greg Gordon of Evercore ISI. Your line is open.

Thanks. Just wanted to be – sort of make sure I state the obvious and understand that the guidance you've given for EBITDA and free cash flow this year does not include anything that might result from the strategic review currently underway in terms of incremental cost reductions, asset sales, et cetera?

Yes, Greg. Good morning and, yes, that is correct. I mean, the guidance does not include anything that will come from the review that we're going to undergo in the next couple of months. That is correct.

Okay. So, it basically assumes the benefits you've achieved through cost cutting are sort of stable, but don't improve materially until you can give us a more detailed update on where you think you can go?

Yes.

Okay. Great. And then I noticed a couple other small things on page 36, 37, 38 of the release that you both modestly reduced capital expenditures – you came in slightly below your – the last guidance on CapEx for fiscal year 2016 and also modestly reduced the CapEx budget for the next few years. And at the same time, it also looks like the fixed and contracted revenues have improved somewhat substantially, mostly out in 2020. Looks like a cumulative improvement of about $200 million. Am I observing that correctly? And I know these are not massive changes, but cumulatively, they're significant. Can you walk us through what's improved?

Yeah. So, I mean, let me just start with the capacity, and part of the change is just the result that we had from the New England capacity auction. So, keep in mind that what we have here on page 36, it really reflects the latest data points that we have on capacity prices and available capacity that we sell under that. And with respect to the other small IE, we can follow up with you, because I think it sounds like you have some specific questions about CapEx and small changes. So, we can follow up with you, Greg, after the call. But if you have something specific, we can certainly address it now.

No. That's fine. I can ask. I'll follow up later. I wanted to ask Chris a question about Texas, because you did spend some time on it in the presentation. We are expecting, obviously, a new peak in demand this summer. How much incremental supply though are we expecting to come on from incremental wind capacity this summer as well? And is this sort of still the view that under normal weather conditions that we should, would see, all things equal, a significant reduction in renewables contributing to peak demand?

So, if I got the CDR right from December of 2016, there's about 18,000 megawatts or so that was on when they published that in the early part of December. By the time we get to the summer of 2017, they're looking at about 20,000 total, give or take. The split is 18,000-ish in the non-coastal and 2,000 and just a little bit over on the coastal side of things. Interestingly, that puts the non-coastal areas at very, very close to the CREZ limit of around 18,000. So that looks relatively full from our perspective. But yeah, I mean, we've got a chart in here. I don't remember what page it is. It's early in the section. What number is that one?

24.

Yeah, on page 24, where we've laid out some of the past peaks when we hit basically 71.1 last year. The forecast right now unadjusted is 72.9. And just to make it clear, what we could be staring at if August of 2011 comes back down around on the roulette wheel, we took the previous adder for high temperatures and tacked it on to their new one, you're pushing almost 76,000 megawatts, which would be an incredibly impressive kind of a number out there. Having said that, you've got Wolf Hollow and Colorado Bend coming on this year, two very efficient new CCGTs, which should keep things down a little bit. And then the question that you end up with, which was the $1 million question last year was, which was how much does the wind blow. The expectation that they built into the CDR is 14% and 58%, depending on whether you're talking about non-coastal or coastal. We obviously got more than that last year on the non-coastal piece, and that remains to be seen. I will say that, just one last thing, I will say that, I mean, we've seen them raise their load forecast by a couple thousand megawatts for the next couple years, which ate into the reserve margins, CDR over CDR kind of a thing, and that load growth is real. I mean that's part of the chart that we put there on page 24 as well.

Okay. One final question, and this is a recent data point, so I don't know if you'll have an answer. But we've noticed that in the last week or two, that in some regions where you guys have power plants and some regions where you don't, that we're seeing a significant amount of coal-to-gas switching happening in real time with spot gas prices in the mid to high $2 range. And that's very different from the switching point we saw last time we were in a bear market for gas, when it was down in the low $2s. A, is that a correct observation? And B, is that just because Powder River Basin and rail costs are up or are there other factors?

I mean, I don't think Powder River Basin coal has moved up all that much over the past time period. The last chart I saw, which was last week, had it ticking down ever so slightly. What I would say on that is you've got the Powder River Basin definitely down a little bit. But in terms of coal-to-gas switching, we haven't seen a huge change in those levels for us. What we have seen is cash gas awfully cheap, because it's going to be about 67 degrees here in Princeton today, and it's still at least by the calendar February. And so, cash gas is awfully cheap. So I think gas has come back on a little bit compared to what we saw in the earlier part of the winter where gas prices were much higher and coal was having stronger runs prior to this, call it, really mild weather.

Okay. Thank you.

Sure.

Thank you. Our next question is from Steve Fleishman of Wolfe Research. Your line is open.

Yeah. Hi. Good morning.

Good morning, Steve.

First, one clarification. The guidance for 2017, does that include the $400 million prior cost target or the $539 million updated number?

It includes the full impact of the latter, the $539 million.

Okay. And then, the $539 million, like what, maybe just breaking, and you've kind of answered this and maybe I missed it, but on the slide, there's $71 million of plants that shut. How much is also related to the kind of like businesses that shut or exited and the like?

Beyond the savings associated with the divesture of plants, there's very little save a small amount of year-over-year change in terms of residential solar overhead. We streamlined that business and obviously changed the business model. But I'd say that number is less than $50 million in terms of overhead. The bulk of the difference, as you alluded to earlier, is just the changes associated with the plant sales, so Shelby, Seward, Rockford and Aurora.

Okay. And then, a question on just maybe a little clarification on the Business Review Committee, so I think per the agreement there, like an end date of August 15, is it fair to say you're targeting to complete that well before then?

Yes, Steve, I think that's the goal. And over the next couple of weeks, we're going to meet as a Committee, start looking at every single one of our business with the benefit now of full information, including non-public information and the strategic plan that I laid out to the board last year. And I think that process, we're going to do it on an expedited basis. And one thing that it was important for me to highlight is, the areas where the Business Review Committee is going to focus is very well in line with the priorities that I laid out in 2016 and that we're continuing in 2017. So, now, we're going to have the benefit of working together with the same set of information, so we can make the best evaluation and make recommendations to the board and communicate that to investors later in the year. So, I think that an assumption that we're going to be communicating to the market before August is a fair assumption. Now, keep in mind that, I want to make sure that as we communicate the decisions to our shareholders and to our investors, we need to make sure that we don't jeopardize the execution of any of those decisions. So, I will make that determination in the next – in the coming weeks and months. But we are on a fast track to make a full evaluation of every single one of our businesses.

Okay. Thank you.

Thank you. Our last question is from Shahriar Pourreza of Guggenheim Partners. Your line is open.

Hey, guys. Thanks. Most of my questions were answered. But, Mauricio, let me ask, you guys have – and if your slide is correct on 7 – have a very competitive cost structure sort of to begin with, right. So, I'm kind of curious on what do activists seem like they're going to be able to extrapolate from this business? And maybe, is it more focused on asset sales and monetization versus further cost cut?

Well, two things. One, we understand that many of our investors were working with information from 2015 and partial information throughout the year. So, it is important that everybody recognizes the great efforts that we have gone through and the progress that we've made in terms of streamlining the organization and reducing costs. And this is the first step to improving our disclosures to all of you, so you can actually not only be able to benchmark us with our peers, but also hold us accountable on our efforts going forward. I mean, we may be competitive with other peers as we've put it in this additional disclosure. But certainly, that doesn't take us from our focus on continuing streamlining the organization. And irrespective of asset optimization or asset sales, this is part of who we are and this is part of the refocus of the company over the past 12 months. Now, as you can appreciate, and I think I have mentioned already that, as we go through this process, we're certainly changing and recalibrating the makeup of our portfolio, and repositioning in a way that becomes more – that is better prepared to take advantage of the market opportunities as they will present themselves. So, I think it's going to be combination of two things. One is continue streamlining the organization; and then two, repositioning the portfolio that will have an impact on our total cost structure.

Got it. That's helpful. And then just real lastly is, you did highlight some of the stuff in your prepared remarks as far as items impacting deregulated power markets. But one of the things that appeared to be missing was sort of some of the state initiatives that are looking to maintain viability of these money-losing nuclear plants, like whether you're looking at Illinois, New York, potentially Connecticut, and obviously potential moves in Pennsylvania. So, I'd be kind of curious on getting your viewpoint there and sort of where you guys sort of fit as additional states may look to come out with their own form of initiatives.

No, that's a great point, and I'm glad that they didn't – it didn't get unnoticed on my remarks. I will tell you that we're completely focused. We're going to be active and we're going to be vocal in defending the integrity of competitive markets. We have done that already in New York and Illinois. And wherever we see that out-of-market payments for uneconomic generation to really subsidize and slow down the most efficient mix of generation and technologies that consumers need and want, we will be there. And like I said, I mean, today New York, Illinois, and wherever that pops, we're going to be a very vocal and active proponent of competitive markets.

Terrific. Thanks, guys.

Thank you.

Thank you. There's no other questions in queue at this time. I'd like to turn it back to Mr. Gutierrez for any closing remarks.

Well, great. Thank you, and thank you for your interest in NRG and spending some time with us this morning, and look forward to talk to you in the next earnings call. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.