Thank you for standing by, and welcome to NRG Energy, Inc. fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. I would now like to hand the call over to Kevin Cole, Head of Treasury and Investor Relations, to read the Safe Harbor and introduce the call. Thank you. Morning, and welcome to NRG Energy's fourth quarter and full year 2024 earnings guidance. Morning's call is being broadcast live, over the phone, and via webcast. The webcast and presentation earnings release can be located in the Investors section of our website at www.nrg.com under Presentations and Webcasts. Please note that today's discussion may contain forward-looking statements which are based upon assumptions that we believe to be reasonable as of the 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, now with that, I'll now turn the call over to Larry Coben, NRG's chair, president, and CEO.

Thank you, Kevin, and good morning, everyone. Joining me today are Bruce Chung, our CFO, Rasesh Patel, Head of NRG Consumer, and Rob Gaudette, Head of NRG Business, who will provide an update on our large load and data center strategy. Other members of our team are also on the call and available for questions. 2024 was a defining year for NRG. Every part of our business performed at a high level, and the momentum behind our strategy continues to build. We exceeded the high end of our raised EPS guidance range and delivered record financial and operational results. This marks our second consecutive year of outperformance, reinforcing the strength of our platform and the power of our disciplined execution. We are well positioned to deliver at least 10% EPS CAGR growth through 2029, by the base plan that we provided you on our last earnings call. Beyond that plan, we see significant upside from power market trends, site monetization, and our data center and other large load strategy. We are unlocking these upside opportunities on multiple fronts. By establishing an integrated partnership to accelerate new natural gas generation development, by signing multiple letters of intent with data center developers, and by advancing our 1.5 gigawatts of brownfield development projects in Texas. These initiatives strengthen our platform and create significant long-term value. Turning to slide five. In our 2024 results, we delivered record financial performance while advancing key strategic priorities. Our adjusted EPS of $6.83 per share exceeded the midpoint of our increased guidance range by 8% and was 45% higher than 2023. We exceeded targets across all key financial metrics, achieving the highest adjusted EBITDA and free cash flow before growth in our company's history. Kudos to everyone on the teams that made that happen. Strong execution across the…

Thank you, Larry. Turning to slide seven, the power sector is undergoing a structural shift. Driven by accelerating electrification, industrial expansion, and the rapid scaling of AI and data centers. This transformation is exciting. It's real. And it's fueling what we believe to be the start of a power demand super cycle. NRG is uniquely positioned to capture this value. Our commercial natural gas and power platform and our development team are unlocking significant opportunities. We're pairing these capabilities with strategic partnerships to further solidify our leadership. Over the next few slides, I'll take you through the state of the power markets, the advancement of our data center and large load strategy, and how our portfolio is geared to benefit significantly from market tightening. Beginning on slide eight, it is clear we've entered a new era of power demand growth. Markets that once saw only modest growth or even declines are now experiencing significant and sustained increases. All indicators point to continued acceleration in the years ahead. This surge is being driven by large-scale industrial onshoring, oil and gas expansion, the electrification of transportation in the home, and an unprecedented wave of data center development. ERCOT and PJM are at the forefront of load growth. Since November, ERCOT's large load interconnection forecast has expanded by 30%, reinforcing Texas as the nation's fastest-growing power market. With low energy costs, a business-friendly regulatory framework, and the ability to bring projects online quickly, Texas is uniquely positioned to capture this demand at scale. PJM is also a key market. Home to some of the most established data center hubs in the country. With the signs of the market tightening now and into the future. The impact on supply is clear. Reserve capacity is tightening as new load comes online. While not every new…

Thank you, Rob. Turning to slide fifteen. I'm pleased to share that NRG had another outstanding year in 2024. Executing at exceptionally high levels both operationally and financially across the company. Our 2024 adjusted earnings per share of $6.83 came in above the raised guidance range beating the midpoint by nearly fifty cents. This represents an increase of $2.11 per share or 45% year-over-year growth from the $4.72 per share delivered in 2023. Strong performance by our businesses accounted for $1.46 per share of the year-over-year growth while the remaining sixty-five cents per share came from the execution of our share repurchase program in 2024. We repurchased close to eleven million shares at an average price of $87.57. Representing 5% of our shares outstanding at the beginning of 2024. As a reminder, we introduced adjusted EPS to provide you with additional insight into our profitability and growth and the strong results we are reporting today, highlight the strength of NRG's earnings profile and the power of our capital allocation framework. NRG's full-year 2024 adjusted EBITDA was $3.8 billion, an increase of $470 million over 2023 results. We also delivered $1.4 billion in adjusted net income and $2.1 billion in free cash flow before growth. Each of these key financial metrics exceeded the midpoint of our raised guidance ranges marking the second consecutive year of such outperformance. Our East and West segments benefited from expanded power and natural gas margins, driven by lower supply costs, and our East segment also benefited from increased customer accounts. In Texas, year-over-year results were lower due to the impact of asset sales closed in 2023 and additional opportunistic preventative maintenance taken at our plants. After adjusting for these items, Texas' EBITDA was higher by approximately $150 million compared to 2023. Our ability to deliver higher…

Thank you, Bruce. On slide eighteen, to reiterate NRG delivered record earnings in 2024 marking two consecutive years of exceptional execution. The opportunities ahead have never been better or stronger. Our growth plan is well underway, our platform continues to expand, and we're creating meaningful long-term value for our shareholders even before considering any contribution from the significant upside opportunities such as those discussed today. We are making strong progress on several of these opportunities. Today's announcements showcase our ability to serve the growing needs of both existing and new, large load customers at scale. Strategic agreements with the leading turbine manufacturer, EPC, and data center developers, position us to meet large load demand with unmatched speed and execution. I am thrilled to share these updates on our data center strategy with you, And as we move forward, we will remain laser-focused on maximizing shareholder value. I must tell you that each of these transactions is unique shaped by site-specific attributes and customer priorities. This is a competitive space that may not lend itself to regular quarterly updates. So we expect to share progress when there is meaningful news or milestones. Either through formal announcements or through our overall growth trajectory. In other words, as excited as I am about these opportunities, you may have to wait for some of the details. Thank you for your time and continued interest. Operator, please open the lines for questions.

Our first question comes from the line of Julien Dumoulin-Smith of Jefferies. Your question, please, Julien.

Good morning, team. Thank you, operator. Appreciate it. Nicely done on the results yet again here. Thank you, Julian. Good morning. Good morning to you guys. Look, key question here. How does the latest announcement position and signal on future opportunities on data centers? And specifically, you've announced a series of LOIs here. Given the timing that you're talking about, literally, 2026 is around the corner. You got the supply chain lined up. I mean, how long we really expect to wait here to transpose those LOIs into firmer arrangements? I mean, just given the practical need to execute, I would imagine that when you talk about patience here, could this be intra-quarter? Can you speak to that a little bit? And I get a follow-up on that.

Happy to, Julian. Look, what I don't wanna do is have every quarter sit there and try to give people a step-by-step of development and tell people this one is ten percent, this one is twenty, this one is thirty, it doesn't really make any sense. You've been in the business long enough on the power plant side to know what development is like, and development is done when development is done. You know, having said that, you know, we've talked about having plants in service in 2026, 2028. And 2029. And so, you know, you can expect that, you know, working back from those time frames, it's not gonna be three or five years before you get these updates. But, you know, what I don't want people to do is expect they're gonna get an update on the May calls six weeks from now that, you know, we've moved this forward x, y, and z. I think also, Julian, quite frankly, when we have things to say, something we haven't done historically, we'll put stuff out, you know, between quarters as well. We've always historically kind of waited for the quarterly calls to do this. But I don't think we need to do that anymore.

Got it. Excellent. Thank you. And then can you expand a little bit on the line of sight? Obviously, five gigs plus with GV here this morning. What kind of line of sight do you have on LOIs there? I mean, certainly, it's a big and specific number here. Can you elaborate there? And then also, I think one of the comments from your prepared remarks was on test. To what extent could you seek to expand your Tef participation as well? Would seem like a ripe opportunity, you said, which you have further sites and further supply chain are already established.

Let me take the test part first, and then I'll go back to the GE, if I may. You know, we do have two of the three shovel-ready projects are in test today. The third one is, you know, certainly step ready of step of, you know, step comes to us and do that. You might recall that initially it was one per customer, and then we were able to enter our second project in that. And if they come for the third one, we'll certainly consider that very, very seriously. So I think from a test point of view, we're extremely well positioned with the shovel-ready 1.5 gigs to go forward. On GE, look, we've already got the two slots. I think that probably tells you that that's where the best line of sight is today. But we are you know, we've been working over the past year on a series of development projects. And as we continue to get slots, we'll continue to give you more information about you know, when those projects will be coming online as well. But, you know, our goal, as you can see from this update, is to have a significant amount of new capacity online well before 2030.

Yep. Absolutely, guys. Nicely done. Speak to you soon. Thank you.

Thanks, Julian. Appreciate you.

Thank you. Our next question comes from Shar Pourreza of Guggenheim Partners. Your line is open, Shar.

Hey, guys. Good morning.

Morning, Shar. How are you?

Good, Larry. Quite an update. Maybe just starting at a high level. Can you just confirm the venture to develop the 5.4 gigs by 2032? Is it your intention for all those to be fully contracted as they come online or will they be some merchant? Just trying to foot the 5.4 gigs. Yeah. Of being with the 7.5. Yeah.

Absolutely. I think the vast majority, Shar, will be. I won't know, tell you today, you know, what's gonna happen for sure over the next five years, but the intention would be for that to be contracted. You know, as you know that we're not in the business taking significant amounts of merchant risk, we've always got our C and I book, our retail book, and, you know, now our data center clientele. So I would expect that all to be contracted for the vast majority of it to be contracted.

Perfect. That was a key question. And then just, I guess, how are you thinking about funding the project? It's kind of a substantial check-in a short period of time. How should we, I guess, think about the ramp-up of the growth CapEx?

CapEx thing? As we look at it, Shar, between, you know, leverage off contracts with the kinds of people that we're talking about plus our internally generated cash flow, think we'll be able to pay, you know, for all of it out of that. You know, obviously, there's a lot of people who wanna be in this business now, and if we can take on some accretive partner capital, we would consider that. If worse comes to worst, Bruce has agreed to forego his bonus.

You may start to buy back stock at that point.

I'm gonna leave it at that, and then I'll tell you too, Larry. I'm glad to see that Bruce is still very busy at work. I was a little bit worried there.

Thanks, guys. Always willing to take one for the team, Shar.

You guys. Bye. Thanks, Shar.

Thank you. Our next question comes from Durgesh Chopra of Evercore ISI. Go ahead, Durgesh.

Hey, team. Good morning. Thanks for taking my questions.

Good morning. How are you?

Very great. Great. Great. And a great update. And nice to see Bruce taking continuing to take one for the team. So listen. So two questions. First, can you just clarify these letter of intent you know, with the two developers? This is gonna be new megawatts, right, coming to the market? These are all an existing assets. Just wanna be clear there.

Yeah. Hey, this is Rob. So the way to think about them is these developers are out securing agreements for two kinds of structures. One is get a data center, build it on our site, so a new demand. And those sites don't have power plants on them, so we're not gonna build a plant there. The second piece is the way you alluded, which is we'll build it they will build a data center, we'll build a power plant to support it. So everything you should think about is additional. Nothing's sticking, you know, behind existing generation. That we currently run for our fleet. That answer your question?

It does. Exactly. So these are additional megawatts coming to the market, not the existing. Okay. Perfect. And then maybe in that context, can you speak to the legislative session in Texas? You've seen a couple of bills there. We've talked about large loads. How do you see that impacting your discussions? And what are your thoughts on what the investors should be focused on there, please?

Look. We actually think, you know, bills like SB six are positive. But if provides real clarification in the market. It shines a light on what the actual additional costs are of being a data center person starting to work towards allocating the costs in the system properly so that people who build data centers pay their fair share and it doesn't fall entirely on retail customer. You know, we don't this needs to be done without, you know, retail rate shock for the consumers of Texas. We obviously are huge proponents of that and as the biggest supplier in Texas. And we think this bill will actually provide for a fair allocation of cost across it. So think the actions that the legislator are taking are generally quite positive, and we look forward to, you know, working with them to try to get a bill that makes sense for the entire system.

Perfect. Thank you for that, Clark.

Thanks.

Thank you. Our next question comes from Angie Storozynski of Seaport. Your question please, Angie.

Thank you. Lots of details. So, Rob, first, you mentioned long-term revenue rate, seventy to ninety dollars. For those new gas plans. Lots of questions there. So how would you structure these contracts? Are these gonna be spark spread driven contracts? When you build? Are we gonna be, you know, more mimicking the towing agreements that we saw in California? How do you manage the, you know, collaterals and, like, commodity price volatility over, you know, probably, like, ten to twenty-year contracts for these new gas plans?

Sure. So to start with, you know, every structure will be slightly different depending on the customer. Some will want to lock up for ten years, will probably wanna lock up, meaning lock their price but keep it fast for twenty. And then we'd reset. But the way to think about it is, you know, ultimately, if you have a power plant, serving one of these loads, your exposure is gas, not power. Right? It's a heat rate locked in. So we know what we're doing. From the heat rate perspective because we have the facility backing it up. We know what our revenue rates would be, and seventy to ninety is, you know, just the energy side to be clear. There's other adders that would go on. And if you did it somewhere in PJM, it would be plus capacity. But so that leaves you with gas exposure, which is the ultimate question you're asking. And you know this, and I'll just say it out loud. We've got the biggest gas platform in the country. We've got an incredible team. Of people who work both physical and financial gas. Out the term and so we feel very confident that we'll be able to lock up whatever kinds of exposures that the customer may wanna do. And remember, Angie, we do this for large C and I customers already. This is not something new for us.

So it's not like every plant will have to come with its own l c. I mean, I've heard that that was one of the reasons why we haven't really had a contract for existing gas plants because there are some credit issues associated collateral postings on both the power side and gas side given the duration of these contracts. So, again, that's something that you can deal with within the current business.

That's correct.

Okay. So and the other question I have is, you know, so if you take a step back, you know, besides a little noise around what is the total demand growth, It seems like regulated utilities are actually progressing much faster on the gas side new build and contracting for data centers than IPPs are. And there is this growing concern that there is red tape surrounding both existing and new build assets in competitive power markets. Again, it probably varies by market. But how do you see this? I mean, are you competing with regulated utilities? And again, if these are contract-based power plants, does that matter that you have a higher cost of capital to build these assets?

Angie, I think, you know, let's start with, you know, and certainly in Texas, it's not the case. We have one regulator. They want data centers in the state. That's why they're working on SB six. So I don't see that I don't see us being slow to market, and I don't see anything in this update that shows that we're being slow to market. I can't speak to others, but these are complex and people are gonna, you know, wait to do announcements at different times. Look, regulated people will get a fair share of this. I mean, we'll need data centers everywhere. When they need them in regulated markets, they'll be in regulated markets, and when competitive ones, they'll go to competitive people. I don't, you know, I don't I think the regulated versus competitive is a bit of a false divide. Though I do think the competitive advantages that we have given our all existing commercial business is the venture we announced today, the letters of intent we have today, it's hard for me to imagine any regulated utility being as fast to market as we are, but if they are, that's probably a stock you should be buying.

Okay. Now just the last one on the CDR. So Rob mentioned it in your prepared remarks. I mean, you know, you've seen many of these CDRs, so have we. I mean, we went through from a fifty percent surplus for ten years to a thirty percent shortage. Within six months. And I know there are changes in the calculation here, but you know, we haven't really seen much of a reaction in forward power curves. You know, I think we all have a sense of why that is. And so are you seeing some sort of a reaction, for example, from existing large loads, be it in the Permian or anywhere else? In our call that are looking at these, you know, projected supply-demand dynamics and are willing to lock in power at currently observable prices because they do expect a step change in those forwards.

There's a lot there. Alright. So let me try to knock it out. The CDR update so you know, you're right. We've all been through this and we've looked at it multiple times. What happened in the CDR were two big things. One, they adjusted the supply side to a more realistic view. Right? So that created a reduction in supply to the grid. And then they threw in a bunch of loads and, you know, what's your view on load will determine what you think the value of the CDR is. You're right. The curves haven't fully reflected you know, whatever the reserve margins look like out in twenty-seven and twenty-eight. I would tell you they are up a little bit. You know, they're probably mid-fifties now around the clock. Which is considerably better than where they were, you know, a month or two months ago. And to your last question, and I'm glad you asked it, you know, in the C and I book, so with the large loads in every zone, in Texas, they are looking to lock up power. Right? We have seen a dramatic increase in power customers coming to us who've been sitting on the sidelines for a couple of years looking to lock up power for terms of, you know, five, plus years or out into twenty-nine, thirty. So they see it, and they're trying to get ahead of it, and we're happy to help them do that.

Very good. To infinity and beyond. Thank you.

Thank you.

Our next question comes from Michael Sullivan of Wolfe Research. Your line is open, Michael.

Hey. Good morning.

Good morning. Thanks for the update here and definitely can appreciate you wanna maybe wait on some of the details. But maybe just directionally, can you give us a sense of this GV agreement, the new builds you're gonna do there, how the cost compares to the brownfields you're doing in Texas, and then maybe how we can square, you know, seventy to ninety dollar PPA with ultimately the return that you're targeting on these investments.

Yeah. I mean, obviously, you know, with the GE key with partnership, it's obviously gonna be more than the brownfields. I mean, the brownfields are because of all the work we did in advance, that's a number that's not achievable. You know, again, the numb you know, in terms of, you know, that was, what, a thousand round of it. Yeah. Roughly, we're so, you know, I think you can look at us with this other transaction to be more at the market, you know, which seems to be in that fifteen hundred to two thousand range right now. And I don't expect that you know, I think we will, you know, do better than most as we'll be repeating and replicable with these partners, and we'll have the events of this venture, which will help us expedite things, avoid construction, delays, learn a heck of a lot. All of those kinds of things will get us at the lower end of that range. We're hopeful or at least lower than anyone else is going to be able to do them for. So I think that kind of would be the broadest outline that I can give you. With respect to those costs.

Okay. And just on the returns you're targeting, our hurdle rate hasn't changed. But I actually think it would we will exceed our posted hurdle rate significantly. We're not, you know, we're not changing our target hurdle rate here today. But I think, you know, all of these new we're doing this with the premium pricing and the transaction and putting in all this time and investment as we think we're going to significantly beat the hurdle rate that we've set forth. The public market.

Okay. That's helpful. And also just tied to that, the eighty-twenty framework that holds through this full period, like, even beyond twenty-nine when you're doing I think it holds it. So I think it holds our goal, you know, not accretive anymore, the buybacks. I mean, our stock is still an incredibly attractive option and know, we'll continue to always look at that. But I don't think for the next three years you have to think about that. I'm not gonna tell you that our capital allocation follows five years from that will be the same as today, but I don't know what the world will look like. If you look at when we're gonna have to spend the capital to do this, it's not really this year and it's not a ton of it next year. If it ramps, it'll be renting in late twenty-seven, twenty-eight, twenty-nine. And that's perhaps the time for revisiting. But at this time, no change.

Okay. Great. And last one just in Texas, anything else we should be watching beyond s v six in the legislative session as we sit right now?

No. I think s b six is the big one. That's, you know, where that's certainly where our eyes are.

Okay. Thanks very much.

Thanks.

Our final question comes from David Arcaro of Morgan Stanley. Please go ahead, David.

Hey. Thanks. Good morning.

Hi, David.

Let me see. I had a question on the high priority and the medium priority sites. Do those have transmission access in place? You know, can they offer the speed to market for large loads, or would you still need to deal with grid studies transmission upgrades, things like that?

So, David, every site, regardless of what it is, you have to do a filing around transition sites and interconnects. The speed component, you know, and typically, and especially in Texas, those interconnects happen a lot faster than the turbine deliveries. So that I'm not really worried about that interconnection piece. Other value of our sites is that some of that equipment is already there. So you get the study back and it says you need x, y, or z, x, y, and z is already on-site. So that speeds up the process also. But nobody's gonna build anything without having that re smile with each of the iSS.

Got it. Okay. Great. Yeah. Thanks for that. And then just had a clarifying question on the Giovinova and CUIT Venture here. That one point two gigawatt order or slots for turbine that you've got, do you have a project specifically connected to that? Do you have an offtaker for that initial one point two gigawatts?

We when we do, you will be among the first to know. I mean, we obviously have pretty good line of sight, David, to where, you know, what we think is happening there, but we still have some you know, we're still exploring options. There's a lot of people who are interested. You know, we do have the two letters of intent. Like, for scalers. So we have obviously, if we've signed anything like that, we'd have to announce it. I think, anyway, it would probably be material. So but we're very confident that, you know, as I said before, that we will have you know, PPAs in place prior to making significant commitments on those.

Yep. Got it. Makes sense. And then I was just curious broadly. There's been, you know, some concerns in the market or jitters around data center demand and urgency in the pace given some of the industry updates deep seek, etcetera. But are you detecting any hesitation maybe around, you know, the legislative session in Texas or concerns with the supply-demand backdrop, you know, is the grid getting too tight for data centers to be in the state? Just any, you know, any reconsiderations or hesitation among the high priority that you're talking to.

I think we're actually seeing the opposite. We have more people know, beating down our doors. I mean, I think one of the great you know, the one of the reasons we've we have this new venture is all of us, we wanted to work together so people wouldn't have we'd all win have to be beating down each other's doors in order to prioritize projects. But we're seeing that. And if you look, all the hyperscalers are either reaffirming or expanding their capital commitments. So clearly, you know, they're gonna spend it. They're gonna need to build it. And if they build it, they're gonna need our power. So we're not seeing that, you know look. I think David, as you know, there's a lot of new investors in the space now, and every time a rumor comes out positive or negative, they get either super enthusiastic or super depressed. And I think we're all just gonna have to live with that for the next year or so. Maybe longer.

Yeah. Absolutely. No. Understood. I appreciate it. Thanks for the color.

Thanks, David.

Thank you. I would now like to turn the conference back to Larry Coben for closing remarks.

I want to thank you all for listening and for your great questions. As you can hear, we are super excited about NRG as a company and where we sit both in our core businesses and in the super cycle opportunities we discussed. Look forward to sharing more with you in the days ahead.

This concludes today's conference call. Thank you for participating. You may now disconnect.