Good morning, and welcome to the Fourth Quarter and Full Year 2021 Vistra Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Meagan Horn, Vice President, Investor Relations and Sustainability. Please go ahead.

Thank you. Good morning. Welcome to Vistra's investor webcast discussing fourth quarter and full year 2021 results, which is being broadcast live from the Investor Relations section of our website at www.vistracorp.com. Also available on our website are copies of today's investor presentation, our Form 10-K and the related press release. Joining me for today's call are Curt Morgan, Chief Executive Officer; and Jim Burke, President and Chief Financial Officer. We have a few additional senior executives present to address questions during the second part of today's call as necessary. Before we begin our presentation, I encourage all listeners to review the safe harbor statements included on Slides 2 and 3 in the investor presentation on our website that explain the risks of forward-looking statements, the limitations of certain industry and market data included in the presentation and the use of non-GAAP financial measures. Today's discussion will contain forward-looking statements, which are based on assumptions we believe to be reasonable only as of today's date. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected or implied. We assume no obligation to update our forward-looking statements. Further, today's press release, slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are provided in the press release and in the appendix to the investor presentation. I will now turn the call over to Curt Morgan to kick off our discussion.

Thank you, Meagan, and good morning to everyone on the call. As always, we appreciate your interest in Vistra. 2021 was undoubtedly a challenging year and, in many ways, a pivotal one for Vistra. We were faced with an unprecedented weather event at the beginning of the year with Winter Storm Uri, and the financial strength we worked so hard to put in place was challenged. Yet sitting here today, I'm proud of how our team came together to not only confront and mitigate the impact, but to then shift to building a stronger company. That strong balance sheet we built and the resilience of our team helped us stabilize the company and ultimately get back on track within months. Importantly, we accomplished what we set out to do following Uri. We shifted our strategic direction and implemented an enhanced comprehensive capital allocation plan with substantial share repurchases, a new dividend policy and an acceleration of our Vistra Zero portfolio, all while derisking our company after Uri. We believe we exited the year in a position of strength. And we are excited about our competitive positioning and the long-term value creation opportunity ahead. I'd like to now turn to Slide 6 to begin the presentation to discuss the key takeaways from our 2021 performance. We delivered on our adjusted EBITDA from ongoing operations guidance we issued in November which notably was an increased and narrowed range from what we had announced in April. After immediately stabilizing our company after Uri, we conducted a thorough review of our business, announcing a capital allocation plan that returns billions of capital to shareholders, enables us to cost effectively fund the development of Vistra Zero and maintains a strong capital structure by continuing to pay down debt. We also made significant progress in establishing…

Thank you, Curt. Turning now to Slide 11. Vistra delivered strong financial results during the quarter, with adjusted EBITDA from ongoing operations of approximately $1.2 billion, which is $363 million higher than 2020. Retail is approximately $526 million higher than Q4 2020, primarily driven by our accrual of the expected $544 million of securitization proceeds. The favorability was partially offset by mild weather. Period-over-period, the collected generation segments ended the quarter $163 million lower than fourth quarter 2020, driven primarily by lower realized margin in ERCOT and our Sunset segments. Adjusted EBITDA from ongoing operations was $1.941 billion for 2021 after subtracting the favorable bill credit settlement cost. Year-over-year, the retail segment was $329 million higher than 2020, driven primarily by our self-help initiatives, partially offset by net Winter Storm Uri impacts and milder weather in ERCOT. The generation segment year-over-year was $2.15 billion lower than 2020, driven primarily by the Winter Storm Uri losses. While 2021 was significantly impacted by Winter Storm Uri, we believe we are back on track with 2022 adjusted EBITDA from ongoing operations guided to a midpoint of approximately $3 billion. I'm turning now to Slide 12, which provides a more detailed breakdown of our 2021 execution on the announced capital allocation plan. We executed on our $2 billion share buyback plan with a total of $764 million of buybacks occurring through February 22, 2022. This leaves just over $1.2 billion remaining of buybacks to be completed by year-end 2022. We remain confident that we will achieve this goal. With those buybacks through February 22, we have 448.8 million shares that remain outstanding, representing an approximately 7% reduction in share count or approximately 35 million shares since our last reported share count in the third quarter of 2021 10-Q. We continue to believe that buying…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Stephen Byrd with Morgan Stanley. Please go ahead.

Hi, good morning. Thanks for taking my questions.

Hi, good morning, Stephen.

So I wanted to start with a fairly high-level question on private market appetite for assets and for cash flows. Now this is a topic that I know you all think about a lot over time, but the – I guess, our sense is the private market has a very strong bid for assets with strong cash flows. You all obviously have very strong cash flows. Those buyers also might have a different point of view on leverage. And I just – I see this large disconnect that's been around for quite some time in terms of the kinds of valuations and cash flows that the private market would be willing to accept versus where the public market is pricing your stock. And then you're taking great steps to take advantage of that, you have a lot of capital flexibility, but there seems to be this persistent disconnect between the private and public market. And I'm just curious to get your latest thoughts on that disconnect. Are there ways to take advantage of that? What's your latest thinking there?

Well, I think, you outlined the things from a private market perspective that would be attractive about a company like ours, right? So I can't argue with those attributes because I believe they exist. I think I've said this before that we're a big-sized company in terms of a private market transaction. I was with a private equity firm, they have their own set of issues with their LPs in terms of what they can invest in. And they're getting the same pressures on ESG as anybody else. So I think the long-term valuation question that comes up with companies like ours and other fossil fuel-oriented companies, even though we're shifting, tend to come up in a private market setting as they do in a public market setting. Having said that, I think the investments we're making would be attractive on a private market basis. So look, I think we should be attractive, both in public markets and in private markets. I get the point that you make, that this company could be suitable to being in the private markets. And I think there are attributes that make us attractive. So I can't argue with that. Other than that, I can't say anything more than that because there's nothing really to say. I think you're right about that, Stephen.

Understood. And are there ways beyond, obviously, just at the corporate level, more at the asset level, where you could optimize, find ways to essentially bring cash back at yields that are essentially lower than the stock overall to take advantage of this dynamic?

There could be, yes. We, at time to time, have looked at that and we did not see what we thought were accretive transactions. But yes, there are opportunities and could be opportunities like that, and that's something that we look at on an ongoing basis. So if there is an opportunity like that, we'd be interested in it. And so, it's one of the things that we look at.

Understood. Just one last one for me. Just on storage, you gave a good update there. I was just curious in terms of just next steps in resolution of determining liability. Who's liable for the damages? Are you optimistic about sort of recovery of costs that you've incurred there? Could you just speak a little bit more to kind of next steps there on the storage operational issues?

Yes. So look, I mean, here's the reality. We have warranties with our contractors and equipment suppliers and we have insurance. There are deductibles with the insurance. But we do – one way or another, we feel like we are covered in this from a cost standpoint. The area where it gets gray sometimes is when you want to improve the current situation, which we are undoubtedly going to want to do. And then there's a question about who pays for those improvements and we'll sort through that. I think the biggest thing we're doing now is we're focused with our contractors and equipment manufacturers to work together because this is bigger than just Vistra or bigger than any one contractor or manufacturer. This is about the long-term transition in the energy sector and batteries have to work. And these two facilities are critical to the summer and beyond. And so I think what we're trying to do is keep this in a situation where we're working together and we're not splintered. And I think once you start going to battle stations on this, then it creates even more issues. I think there's a way to do this in partnership with the folks that worked with us on bringing these two facilities up, and that's what we're going to do. But I think at the end of the day, Stephen, that we have warranties and we have insurance. And we believe that, ultimately, the lion's share of the cost of this are going to be borne by others, but I'll just say that this company is committed to bringing these facilities back online. The good news in my mind is it's not huge money to really fix these the way that they need to be fixed. We're talking about basically the transportation and storage of water and then the release of water into each individual battery module. That should be able to be done in every building and every manufacturing facility in this country and in the world. There are water-based fire suppression systems that do that very thing. And it's frustrating to me that we could not put a system in place that work. These were turnkey deals, we expected the engineering to be right and we're going to get it right. And I think we can do it relatively quickly, and we will get this done right. So we'll sort out the rest of it, but we do have the things in place that you would expect us to, to make sure that we're covered from a cost standpoint.

Really clear and very helpful. Thank you very much.

The next question comes from Steve Fleishman with Wolfe. Please go ahead.

Yes. Good morning. Hi, Curt.

Hi, Steve.

Just on that topic on the Moss Landing issues. The two units have different EPC contractors. So I guess, is it more the actual equipment not kind of working as supposed to or design or not clear?

It's – look, I got to be careful about because we're still going through all this. I think, Steve, there's a little bit of difference, we believe, in what happened at Moss Landing 300 in the initial phase versus Moss Landing 100. And there are subtleties to all of this. But I think that you hit the areas that we're focused on. It's whether the parts, some of the parts that were part of the water-based heat suppression system were either not installed correctly and/or they had a defect to them or that the design of the overall system needs to be improved. And I think there's – frankly, Steve, there's an element to all of that. And that's what makes it a little complicated in sorting all this out. And I'm just being as honest as I can be about it that, that's what we – we'll end up sorting out in the long run. And I think we've made a lot of progress on it. I think we were making a lot of progress on Moss 300 until 100 happen. And that opened up some additional learnings that we are taking into account. And I think we'll take all of those together and come up with the right game plan for both 300 and 100 to get this right. But there are elements of each of the things you mentioned, Steve, in both the Moss 300 and the Moss 100 situation, but they're a little bit different for each one, and that's about all I can say about it.

Okay. And a separate topic, just commodity exposure overall, could you just maybe give a sense of kind of how to think? Obviously, commodities are moving around a decent amount. How to think about kind of your position 2022, but maybe more importantly, 2023/2024 to kind of come up – I know you gave your hedging, but just maybe kind of frame it broadly on how to think about it.

Yes. So in 2022, we're pretty hedged. So probably not a lot to talk about. Although we are carrying a little more length going into this summer than what we would normally carry. I think that most of the markets we're in, the price of power is set in many hours by a natural gas unit. So we effectively are long natural gas equivalents as a company. But we also have, obviously, a big short position on, which is our retail business. But we're net long. And I think in 2023 and beyond, we have length, gas length. And it feels to me, I'm not particularly good at predicting commodities, but we're in it. And I think we know it pretty well. But it does feel like we're in a period where natural gas, in particular, is probably going to be set at a little bit higher level than the old $2.50 to $3. It's feeling more to me like $3.50 to $4 or more. You're seeing that U.S. gas is being connected to worldwide gas. We've got geopolitical issues and those are likely to persist for some time, with Russian gas into Europe, China has a big appetite as well as the rest of Asia. And so gas is beginning to trade on a global basis. And it feels like whether it's artificial or not, there's tightness in that system on a worldwide basis which is probably going to mean in the next few years, potentially several years, that we're just at a little higher plateau for gas. That in the long run, is good for our company, given that we are long natural gas equivalent. So I think we're positioned well. The real key though is for us to manage the volatility and to take advantage of it. Because I do believe that regardless of where it settles, the one thing we can pretty much bet on is that it's going to be volatile just given the geopolitical issues that persist in the world. I think our team is up to that challenge and can take advantage of that. Volatility is something that if you're good at it, you can benefit from it. And I think we're in a good position to do that. I don't know if – Jim is on, too. I don't know if he has anything he wants to add to that.

Yes, sure, Curt. Hi Steve, I would only add that as we put out our guidance last fall, we have certainly seen commodity complex move up considerably. We see it particularly even outside of ERCOT. Spark spreads are up $3 to $5. We are largely open to that, particularly when you get to 2023 and 2024. We're less than 20% hedged out in that 2024 and beyond time frame, and you see us more hedged in 2023. We just put that hedge disclosure out. Still just about 25% hedged to spark out in 2023. So it's nice to see the diversification of the portfolio where, at times, we've seen ERCOT run, but not the other areas. Now we're seeing some of the other areas really have some swing up and we have good opportunities to capture that. And as Curt mentioned, we'll get through the summer, and we'll come out with our guidance for 2023. And we'll hopefully give some view as to how the out years look, but it's been a favorable move overall over the complex since we put out the guidance last fall.

Steve, one other thing just to tell you is that while we've seen forwards move, the liquidity in the markets has been limited. And that's because I think the markets are – the bid and the ask are trying to figure out where this thing is going to settle out and whether some of these geopolitical issues are long-lived or short-lived. And so it takes some time and patience to manage in this type of an environment, and you have to pick and choose the right time to do it. And just – it's not a cautionary note, but more of just a factual one, that the liquidity in the markets has been somewhat limited just because buyers and sellers are trying to sort out whether these are long-term moves or not. Again, if you're in the market every day and you're patient and you take it as it comes, you can take advantage of this. And I think that's what we're trying to do.

Okay. Last quick question, just on the pace of the buyback. Should we assume if the stock stays in this rough area that you're going to continue an aggressive pace? Or do you think you'll kind of more average it out over the rest of the period?

Well, go ahead.

I'm sorry. We've made the commitment, obviously, we've made the commitment to continue down this buyback to be able to deliver the $2 billion buyback by the end of the year. We've made I think tremendous progress so far, Steve. And I think, hopefully, these disclosures, which come out periodically, folks saw it with the dividend increase of approximately 13%, obviously being reflective of how aggressive we've been on the buybacks. But since we're just a little over 1/3 of the way through that program, we've got a good ways to go through the end of this year, but we feel very good about it. And then we've announced, as we've said before, we intend to do another $1 billion in 2023. So I think the program has been well executed up to this point, and we're going to continue to be aggressive through the balance of the year.

Great. Thank you.

Yes. Thanks Steve.

The next question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Hey, good morning team. Thanks for the opportunity.

Hey, Julien.

Do you hear me?

Yes. Can you hear us?

Excellent. Absolutely. Thank you so much. Curt, if I could go back, we were talking a lot about Vistra Zero a couple of questions ago. But of the $450 million to $500 million, how much of this EBITDA is effectively locked in, if you will, right? Can you talk about the cadence of this EBITDA materializing? You've obviously had great success already. How much of this effectively have you sort of captured? How much of it is "yet to go?" And effectively, how much of this eventually comes from California given your perhaps disproportionate successes in that geography. Do you guys hear me? Excuse me.

Yes. Sorry, I was talking, Julien, and I had it on mute. So I think we said that both Illinois and California that the underlying revenue streams and EBITDA were about sort of 50% contracted based on the constructs in both of those. They're different constructs, but they ended up coming out about the same, a little bit over that. In Texas, we will contract essentially 100% of those with our – likely with our retail business. And so if you just look at Vista Zero on an isolated basis – and then on a megawatt basis, we're probably looking at maybe half coming out of Texas or so. And so that pushes you into kind of the, I'd say, 2/3 contracted, something like that, just in pure math. And so I'd say that's about what it is. And then, of course, we will try to hedge as we go on further. Jim, anything you want to add to that? But that's the quick math in my head tells me that we'll be somewhere in that range, just given the way that we are contracted both in California and Illinois, how we expect the contract in fact.

Curt, that's correct. And Julien, we put out announcements. What we've tried to do is give the five-year view which we did in the fall, and then we want to keep filling that in so that we can talk to our investors in the market about how are we progressing. So we announced – since the fall, we had announced the fact that we had completed this Illinois coal to solar through the legislative activities, that's progressing well. We'll be going to the procurement of the REC contract here shortly, the Angus solar facility and then the Moss 350 which would be the third phase of Moss Landing. All of that, that 900 megawatts there, is going towards that 5 gigawatts. But then importantly, we've got three projects coming online right now. We've got Brightside at 50 megawatts, Emerald Grove, 108 megawatts, Grove solar facilities in Texas and then a DeCordova energy store will be on the spring 260 megawatts. That's the unique hybrid project where we paired the combustion turbine with the one hour battery, incredibly flexible, instant ramp but with 24/7 duration, if needed. Those are all coming online now, and that's part of what we want to do is keep bringing the awareness that this is real. It's coming online, and we're going to continue to roll out the announcements, both when we secure the projects and have the contracts to back them, but also as they come online physically.

Julien, sorry, but these are 10- to 15- to 20-year type contracts, just to remind you that there's a mix of that. But go ahead, sorry.

Absolutely. No, no, please. I mean on the $450 million to $500 million though, so what's the cadence? How quickly does that ramp, right? So how do you think about the EBITDA profile in say, 2023, 2024, 2025 in the interim? And when I said locked in, what I was trying to get at, is how much of a line of sight do you have on that EBITDA already versus having to win contracts still in California? I.e., is there upside in that $450 million to $500 million? Maybe even said differently.

Yes. I'd say – go ahead, Jim.

In the earnings deck, I do think you can get a view, Curt covered the map of the U.S. And what we've done here is put the items that are basically inked and ready to go, we've itemized. And then the other items where we've left the queue, where we said, here's what we have line of sight to but don't have a contract to back in California, that was just over a gigawatt of storage capabilities. And then in Texas, we have 1.3 gigs of other opportunities. Some of those we do have within our portfolio. We're just not ready to announce those yet. So of the five gigs, roughly 2.5 to three, what we would say, line of sight secured. And then the rest, we're going to continue to develop over the next couple of years and feel confident that by the 2026 time frame, we can at least have accomplished this level of development.

Got it. Yes, at least. And just separately, but in parallel with this, I mean, I do want to touch on the strategic aspect here. I mean you guys have substantial plants that are retiring. These have existing latent transmission interconnect, right? So you've got a leg up, shall we say, on independent renewable developers. And in this environment in which so many developers are struggling to get that interconnect, can you speak to your ability to monetize and effectively capitalize on your existing position on the grid from a transmission perspective? It seems like you're doing so already, but again I'd love to hear that from an even more holistic perspective beyond just the narrow context of the plants that you talked about.

Yes. So look, I mean, it's been why we have been able to build this, in my opinion, why we've been able to build this business. Because it's all started, frankly, with California and with that Moss Landing site, which, if anybody has ever been out there, it's a world-class industrial site in the state that doesn't have many of those. So there's a scarcity value to that site. There's a scarcity value to our Oakland site as well as our Morro Bay site, all of which have transmission yards right next to them and access to transmission. And then if you think about it, we've got the same type of situation in Texas. We have multiple sites that were either purchased many years ago to put a power plant on that never happened, but have access to transmission because the site – the reason we bought the sites is because of their proximity to transmission or they already had a transmission interconnect. And of course, the nine sites in Illinois all have transmission interconnect. In fact, the transmission system was built around those assets. We also have the two sites – at least the two sites in Ohio, the two coal sites that we think ultimately will be available to us for batteries and solar. Same thing is we've got an opportunity at our NEPCO site that came from Dynegy in Pennsylvania. So there's a number of opportunities – and transmission, you're right about this. I mean, we're seeing that PJM is struggling to keep up with transmission interconnect. We know that MISO is because we're working with those guys as well. And so having that access and in particular that proximity, because there's also a cost in many of those markets to interconnect, and if it's significant, it can weigh down the economics of any particular project. And if you're right next the transmission, because that site was obviously used previously by a power plant, it just changes the game. So I think it's something that we started doing. I'm not going to – it was because we had a good site and PG&E knew it and they came to us. But it's something that we can replicate across the country with the sites that we have as we retire plants. We can add batteries and battery storage and solar. We would do win too if it was the right economic decision, it just hasn't been that way.

Got it. I will leave it there. Thank you guys.

Thanks.

The next question comes from Shahriar Pourreza with Guggenheim. Please go ahead.

Hey, good morning guys.

Hey, Shahriar.

Just, you guys, I think you've hit the EBITDA question pretty well. But just given sort of the strong start, you have visibility, you guys are fairly hedged. Any thoughts on narrowing the 22 range in 2Q versus the traditional 3Q time frame following some visibility in June, July? I mean the range remained somewhat wide and you guys do have a lot of good visibility. So just some thoughts there.

Yes. Look, I think we'll take a look at it around second quarter, because we will have July pretty much in the bucket. But August is the biggest month for us in the summer. And because we've carried more length going into the summer and the winter months, that is what creates the wider distribution. But I think – look, I think we always look at it. And if we feel like we have a high degree of confidence one way or another, we would come to the market with that. But because August is such a big month, and in Texas, September – the first part of September can always be a game changer, we've been hesitant really, Shahriar, to come out and change that until we got into the third quarter call. And in fact, from a retail perspective, the shoulder months are really what are key, and that can be months like October. So that's why we've been a little more hesitant to change. But because we did widen the guidance, I think we'll take a look at it. I just think it's going to be – come down to confidence. And because we're carrying a little bit more length, we may be less apt to do that, but we'll see.

Okay. Got it. And I know, Curt [ph] it's minor, but it looks like year-over-year customer losses in the Eastern markets kind of continued for another quarter. Can you just maybe touch on what you're seeing in this segment in terms of attrition. Just the ability to add new customers. It seems like Texas is doing well. But any color there would be helpful.

Yes. Look, I mean, we'll call a spade here. I mean, Crius has been – we've struggled, and it's because it was a predominantly door-to-door channel. And door-to-door has suffered because of COVID. You can't go knocking on people's doors with COVID. So we have pivoted to digital offering, but it's been a struggle. The other thing is, is that the standard service offers were hedged out and we've seen power prices go up. And so what's happened is there's been a squeeze on margin. And people also, because the standard service offers have been lower than where market is from some of the retail providers like us, they've moved over to standard offer. That's going to change as those standard offers roll off and there'll be an opportunity. And we're also beginning to get back out on the door to door, but we're also strengthening our other channels. So I think over time, we think we can build back what we've lost, but it's an unfortunate thing that would happen with COVID, and it disproportionately affected Crius because of the door-to-door nature of that channel. But we think we can build it back over time. And Scott Hudson, who's on this call with us is – he and his team have a good plan to do that and it's going to take time, Shahriar. It's not an overnight thing. We think we can do it. The good news is Ambit has been particularly good in Texas. And we've also sort of moved into more of a value offering rather than just an offering on price. We've been successful with that. Our consultants are doing a really good job in that particular channel. And so we're very happy with the Ambit acquisition, in particular, in the ERCOT market in Texas. Crius has struggled some. Overall, though still both very good acquisitions and we think in the long run were the right things to do. And Texas just overall, in particular with TXU Energy, when we went through Uri and some other things, that flight to quality was big. And obviously, TXU Energy was part of that flight to quality and so we grew customers in a significant way. 23,000 customers in a year for us is a big deal down in ERCOT, because as you know, we had typically lost a slight amount of customers in the last few years. But we've been able to turn that tide around and add customers. So that's kind of the lay of the land for retail.

Got it. And then just literally one last question. I know you're getting this a lot on the private side, single asset, whole company, whatever. But just – and it makes sense, given where valuations are. But I just want to confirm something, maybe just round out exactly what the key message is, is this an exercise you even looked at? I mean has there been serious considerations internally around this path or at this juncture when you're looking at sort of the visibility, you're looking at the clean energy, the transitioning. It's just the plan is too cemented to even give it a serious consideration. So if you could just round out everything and just give us a sense on whether you can kick the tires around there.

Well, look, here's – what I'll say about that is after Uri, Shahriar, regardless of what we determined about why it happened, you can't ignore the fact that it happened. And so the Board and the management team went to work. And so we looked at a very broad set of actions that we should consider in the wake of that event. And I'll just say that everything got looked at and looked at seriously. And so I think the Board, along with the management team, are – and I know this is going to sound cliche, but I just honestly believe, because I was in the middle of this, we were focused on what we thought was going to bring the most value to the table. The one thing we control, obviously, is our strategy and our capital allocation plan, and we believe we did the right thing around that. Whether there's somebody out there someday that would pay more than what we think that strategy is worth, we're way open-minded on that. And we are flexible in terms of that. Because that's our job at the end of the day, is to get the most value for the company. But in terms of just actively going out and pitching that, we look at that relative to other opportunities. And that's all I can say about it. I just can't get into in more detail. But we are open-minded people and our job is to maximize the value of this company for our current shareholders. And I can guarantee you that's what we're trying to do.

Perfect. Thank you for that. I just to want to hit that and concluded. I appreciate it. Thank you guys.

Thank you.

The next question comes from Jonathan Arnold with Vertical Research Partners. Please go ahead.

Good morning, guys.

Hey, Jonathan. How are you?

Good. Thank you. Just want to be sure I understand, on the dividend, Curt, your intention is to run at this $75 million per quarter level but declare it on a per share basis each quarter so we could see multiple changes during the year? Or is it set now for the whole of 2022? I want to make sure I got that right.

No. Yes, I'll let Jim – Jim can take you through it. Because we looked at a couple of different options and made a call. But Jim, do you want to take them through the details?

Sure. Yes, hey Jonathan. We think one of the benefits of this strategy is, as we continue to buy back shares throughout the year, it will constantly change the denominator as we go. So for this quarter, when we announced the dividend, we set the x dividend date from March 21 and the record date for March 22. We had to estimate how many shares do we think will be outstanding by that point in time because we're going to continue to buy back shares. And then that's how we set the dividend rate at $0.17. And then we're going to come back in the next quarter and we'll do the same thing. So you should expect to see, as long as we're consistently out in the marketplace buying back our stock, you would expect to see that increase each quarter as we go. And that gives the investor obviously a sense of just how much of the equity we continue to buy back, but also reward the holders that are continuing to hold the stock that they will see double-digit year-over-year increases in the dividend.

Great. Okay. Thank you for that. And then just on Vistra Zero and the way you intend to sort of communicate around it going forward. Do you foresee this being pulled out as a separate segment or embedded within your current segments? And just I'm curious how you plan to highlight executing against the EBITDA target.

Jim, you want to take that, too?

Sure. Jonathan, as noted on this call and since we announced it last fall, there is a lot of interest in seeing the visibility into Vistra Zero. So we're looking at our segmentation across the business and analyzing the best way to bring that to light, because as folks have covered the space, they are attributing different value to different asset classes. And when we take this investment and we contract it, it becomes meaningful in the eyes of a lot of the investors that we're speaking to, that are putting these much higher multiples on that asset class relative to some of our base business. And so we will probably bring that forward, it will come shortly. I don't know if it will be at this next quarter, it could. But we are looking to bring segmentation that allows our investors to see that as it continues to grow. As you know, the rest of the business, retail is an important part of the business that folks want to continue to have visibility into. So I think it really will come down to how we think about some of our generating assets and which we see a lot of cash flow coming off these assets don't necessarily get as high a multiple as we think they deserve, but we also think that the power of the capital allocation plan is to buy back the equity, obviously continue to pay down debt, as we said, consistent with our target. But if we can bring that Vistra Zero to light, continue to do the capital allocation steps that we have outlined last fall, we think both the sum of the parts as well as just the sheer force of the capital allocation program that we have instituted, we're going to realize a better Vistra value overall.

Okay, great. Thank you for that. And I will leave with that.

Thank you, Jonathan.

This concludes our question-and-answer session. I would like to turn the conference back over to Curt Morgan for any closing remarks.

Well, thanks, everybody, again for – I know it's a busy season here, obviously, when – all the earnings calls, but thanks for being on. Look, we feel like we've turned the corner here and strengthened our company. We derisked it. We've got a very good set of priorities that we're working on and a capital allocation plan that matches that. And so we think the future is bright. So thank you for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.