Good day and thank you for standing by. Welcome to the NRG Energy First Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kevin Cole, Treasurer and Head of Investor Relations.

Thank you, Sean. Good morning, and welcome to NRG Energy's first quarter 2020 earnings call. This morning's call will be 45 minutes in length and 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 Webcast. 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, please see the reconciliation in the back of the earnings presentation. And with that, I'll turn the call over to Mauricio Gutierrez, NRG's President and CEO.

Thank you, Kevin. Good morning, everyone, and thank you for your interest in NRG. I'm joined this morning by Alberto Fornaro, Chief Financial Officer; and also on the call and available for questions are other members of our management team, including Rasesh Patel, Head of Vivint Smart Home. I'd like to start on slide four with the three key messages for today's presentation. First, our wholesale and retail businesses performed well during the first quarter and delivered strong financial results. We are focused on our core energy operations and have taken steps to make our platform more predictable and resilient. This brings me to my second point. We are seeing improving market fundamentals that should benefit our portfolio as we head into the summer. Finally, we completed the Vivint Smart Home acquisition and integration efforts have now begun in full. We are also updating our 2023 guidance ranges to account for this acquisition. Moving to the first quarter results on slide five. We delivered top decile safety performance and $646 million of adjusted EBITDA. This is a 28% improvement from last year when adjusted for asset sales and retirements. These results were driven primarily by strong operations in our core energy business, direct energy synergies and the addition of one month of Vivint earnings. During the quarter, we made good progress advancing our strategic priorities. We are on track to achieve the full synergy target for direct energy this year. We continue to be opportunistic on our portfolio optimization efforts with the sale of Astoria and we closed the Vivint acquisition in early March. Integration efforts for Vivint are now fully underway. Day one activities went well, and we have now defined the growth synergy target of $30 million for 2023. We will share additional details for the total program…

Thank you, Mauricio. NRG experienced a good start to the year and delivered strong results during milder-than-expected weather conditions. We entered the winter season seeing high forward gas and power curves. Moderate weather and relatively geopolitical stability translated into much lower power volumes in Texas and in the East and much lower actual prices in most markets with the exception of California. Additionally, NRG liquidity has significantly improved due to global collateral requirements after the winter season and the proactive management of our collateral utilization. We also completed the acquisition of Vivint Smart Home and have included Vivint's March performance in our financial stake. Before we continue, let me provide a little bit more detail about Vivint. At close, the EBITDA metric for the two companies was not identical. Therefore, we have harmonized it. I will go into more detail in the guidance section, but please note that all figures, including prior year reflect a consistent EBITDA across segments. Let's go now to the first quarter results. NRG consolidated adjusted EBITDA of $647 million is $137 million higher than the first quarter of 2022. As you can see in the chart at the bottom of the page, Legacy Energy results include the anticipated negative impact of asset sales and retirements in the second quarter of 2022, totaling $30 million. On a like-to-like basis, Legacy Energy EBITDA increased by approximately $67 million. Last year, transitory items, including the Limestone Unit 1 extended outage, coal and chemical constraints and the temporary spike in ancillary costs impacted our profitability. Our Q1 2023 results show that these items have been fully recovered. We've also included Vivint March results in our first quarter financials, which contributed $73 million of additional EBITDA. The remaining $27 million increase is related to EBITDA harmonization. Going now to segment…

Thank you, Alberto. Turning to slide 14. I want to provide a few closing thoughts on today's presentation. We delivered strong results for the first quarter and are well positioned for the balance of the year. With the Vivint acquisition complete, we turn our focus to integration, growth and synergies. Our efforts are well underway, and it is now all about execution. I look forward to providing you a comprehensive update on our home business and strategy at our upcoming Investor Day. So with that, I want to thank you for your time and interest in NRG. Sean, we're now ready to open the lines for questions.

Thank you. And at this time, we will conduct a question-and-answer session. [Operator Instructions] And our first question comes from Julien Dumoulin-Smith with Bank of America.

Hey good morning team. Thank you guys very much for the time. Appreciate it. Nicely done here.

Hey good morning, Julien.

Good morning, Mauricio. Pleasure. Just wanted to follow up on the synergy scorecard here and just thinking through Vivint here. I mean you're laying out -- you've got the $300 million and $100 million in revenue and cost synergies, respectively. How do you think about that translating back to consolidated EBITDA for Vivint here again? And/or, how does that fit with the 12% to 15% FCF target as well? Just want to try to tie it out at least $225 million as best you can today, if we can be a little bit more specific.

Yes. So Julien, I'm assuming that you're talking about the target that we provide on our free cash flow per share that support 15% or 20% growth. And when you look at the EBITDA and free cash flow generation capability of NRG and then you lay on top of that, the $400 million of cost synergies and revenue synergies, we feel very confident that we're going to be on path to achieve that 15% to 20% free cash flow per share return. As a matter of fact, the acquisition of Vivint now gives us a little bit more control on achieving that. Remember, before we have tremendous financial flexibility, and we generate excess cash will be on what the traditional NRG needed, that we have used to reduce the denominator. The one variable that we cannot control there is at the price that we can buy back our stock. Now with the Vivint engine and the opportunity to create this $400 million of incremental value, we just increased the tools that we have to increase the numerator. And put more in control the achievement of this $12.50 that we have laid out for 2025. So I feel very comfortable that with what we laid out today and in previous calls that we are on track to achieving that $12.50 a share by 2025.

Right. So -- yeah, clearly 15% to 20%. And more to the point, as you think about layering on additional assumptions rolling out potentially updated guidance with this Analyst Day. Any initial thoughts on what else can be done with the Vivint platform to continue to grow it. I'll note that the commentary here at the outset is really focused on synergies. You talked about revenue and growth here in the first couple of years, how do you think about compounding that beyond the 2025 period that you're providing here today? Maybe any initial thoughts on how far you can go at this prospective Analyst Day.

Right. Well, the first thing that I will say is when I think about the Vivint business, there are three big leverages that we're going to be focused on, the Vivint business was high, had high leverage. It has a high acquisition cost and there was also an opportunity on the consumer financing. So these are three specific buckets that we're focused on optimizing. And for me, it creates an opportunity for value creation. Now right now, we're focused on optimizing the 7.5 million net worth customers that we have. We have opened the lines of communication across our sales channels we're going to continue to optimize them. We're going to -- we have introduced bundling. We now are doing cross-sell between our call centers and our digital assets. We are testing in the market bundle. So that is the focus right now. When I think about 2025 and beyond, it's really about how do we bring the energy experience that we currently have with the smart home experience that we have and we create a best-in-class product for customers that is going to drive the growth on 2025 and beyond. This is something that we're going to be talking more about on our Investor Day on how this vision comes together with the two offerings that we have one in energy, one in a smart home. So we will make it more tangible and real for all our investors at the upcoming investor.

Wonderful. All right. I’ll leave it there. Thank you guys very much. Have a great day.

Thank you, Julie.

At this time, I would like to turn it back to Mauricio for closing comments.

Okay. Well, thank you. Thank you for your interest in NRG. I look forward to hosting all of you in our upcoming Investor Day that we should have in early summer where we're going to be talking about the smart home strategy. We're going to provide additional details on our growth plan and provide you more transparency on our key performance indicators that will help you better model the business. So with that, I want to thank you for your interest and look forward to speaking with you soon. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program.