Good day, and welcome to Vistra's Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Eric Micek, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining Vistra's investor webcast discussing our third quarter 2025 results. Our discussion today is being broadcast live from the Investor Relations section of our website at www.vistracorp.com. There, you can also find copies of today's investor presentation and earnings release. Leading the call today are Jim Burke, Vistra's President and Chief Executive Officer; and Kris Moldovan, Vistra's Executive Vice President and Chief Financial Officer. They are joined by other Vistra's senior executives to address questions during the second part of today's call as necessary. Our earnings release, presentation and other matters discussed on the call today include references to certain non-GAAP financial measures. All references to adjusted EBITDA and adjusted free cash flow before growth throughout this presentation refer to ongoing operations adjusted EBITDA and ongoing operations adjusted free cash flow before growth. Reconciliations to the most directly comparable GAAP measures are provided in the earnings release and in the appendix to the investor presentation available in the Investor Relations section of Vistra's website. Also, today's discussion contains 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. I encourage all listeners to review the safe harbor statements included on Slide 2 of 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. I will now turn the call over to our President and CEO, Jim Burke.

Thank you, Eric, and good morning, everyone. I appreciate you joining us to review Vistra's third quarter 2025 results. This year continues to be a transformational one for our company, and the activity during the quarter was a key driver of our progress. We announced the landmark power purchase agreement at Comanche Peak, announced our plan to develop 2 gas-fired units in West Texas and successfully closed the acquisition of approximately 2.6 gigawatts of natural gas-fired assets from Lotus Infrastructure Partners. Importantly, while we are successfully advancing our growth efforts, we continue to be steadfastly focused on execution in our core business. As we will discuss, our core business continues to point to additional value creation in the years ahead. I'm proud of what our team has accomplished this year as we continue building the foundation for sustainable growth and value creation well into the future. Continuing on the topic of sustainable growth on Slide 5, you can see the positive impact of steps we've taken over the past several years. Combined with a more favorable demand backdrop, those actions are now translating into sustainably higher levels of profitability for our company. At the core of this success are the approximately 7,000 team members across the organization. Their dedication and hard work allowed us to deliver another solid quarter of financial performance. Combined with our results year-to-date, we are narrowing our guidance range for 2025 adjusted EBITDA to $5.7 billion to $5.9 billion, and our 2025 adjusted free cash flow before growth to $3.3 billion to $3.5 billion. Moving to our near-term outlook. We are introducing guidance ranges for 2026 adjusted EBITDA of $6.8 billion to $7.6 billion and adjusted free cash flow before growth of $3.925 billion to $4.725 billion, including the expected contribution from the assets acquired from…

Thank you, Jim. Turning to Slide 10. Vistra delivered $1.581 billion in adjusted EBITDA in the third quarter including $1.544 billion from Generation and $37 million from retail. Consistent with last quarter, the Generation segment continued to realize material benefits from our comprehensive hedging program, with average realized prices over $10 per megawatt hour higher compared to the same quarter last year. The stronger realized price benefit, together with the higher capacity revenue in our East segment, and the expected nuclear PTC revenue recognized at Comanche Peak, more than offset the impacts of extended outages at Martin Lake Unit 1 and our battery facilities at Moss Landing. On a year-to-date basis, the incremental contribution from 2 additional months of Energy Harbor results, combined with stronger realized wholesale prices and higher capacity revenue, have more than offset the impact from the outages and are driving the strong year-over-year performance gains. Moving to Retail. As a reminder, based on the shape and level of supply costs, we typically expect lower profitability in the first and third quarters, with this year being no exception. Notably, the third quarter, like the first 6 months of the year, benefited from strong customer count and margin performance, with results in the quarter being offset by weather-driven gains in the third quarter of last year that were not repeated this summer, and some expected intra-year timing impacts of supply costs. Importantly, the Retail business continues to generate strong earnings to our business in a variety of market conditions and remains on track to outperform 2024 results. Turning to Slide 11. Based on our expectations for 2025 and 2026 and the range of midpoint opportunities for 2027 that Jim outlined earlier as well as our expectation that we will continue to achieve a targeted medium-term adjusted EBITDA to…

[Operator Instructions] And your first question today will come from Shar Pourreza with Wells Fargo.

So just maybe focusing on the '27 opportunities, which is generally in line with expectations. I guess, what's currently embedded in that range? Obviously, it's a little early for the Comanche deal ramp. But I guess where do you see opportunities to improve versus the midpoint? Is it sort of market vol and locking in some of the forward curves? Or is there a more strategic dry powder just given the $4 billion of cash available for allocation?

Thank you, Shar. I think there are a number of levers still to pull. Obviously, there is an open position. We've disclosed we're still open in 2027. We disclosed about a 70% hedge percentage. So as you continue to see the markets strengthen, we have exposure to that for sure. In terms of strategic deals, obviously, contracting is one of these topics that comes up, and we see opportunities to have contracts, some of which could start in a 2027 time period. We do not have that embedded in our forward view. And so I do think, Shar, there's -- it's always difficult to put numbers that far out and make too many assumptions because we have to deliver on these opportunities, but we think there's upside in our business. That's why we have a wider range there. And our goal would obviously be to continue to do what we've done in the past, which is trend upwards as we get closer to the delivery year. And I think we've shown a track record of doing that, and I think we have quite a few levers to pull.

Perfect. I appreciate that, Jim. And then just on the '27 sort of like you talked about contracting opportunities. I mean peers have been talking about deals becoming unanimously more front of the meter for obviously, reasons including circumventing political sensitivities and reliability arguments. Is this how you're thinking about your Eastern fleet like Beaver Valley? And are you seeing converging pricing between front and behind the meter?

Yes, that's a really good question, Shar. There are challenges and opportunities with both co-located deals and front of the meter. The additionality concept comes up. And so folks -- some folks are doing the bridge power to then get started and potentially then later get a grid connection. Some are starting front of the meter from the get-go. I do think, ultimately, customers are going to look for a grid connection. I think that's been integral to long-term reliability from a data center point of view. The way we think about this is that each deal, and we've talked about this for over a year, each deal has unique characteristics, and that's hard, I think, to explain in advance because customers have different goals around sustainability, around speed to market, around which markets they prefer to actually support from a data center standpoint. So when you even think about the new build opportunities, which we're part of, that we're in discussions with parties, some of those are looking at how can they bring additional resources to the marketplace to address the long-term concerns folks have that loan growth ultimately is going to have to be met with additional generation. It doesn't have to be in the near term. I think one of our key messages that I think is starting to resonate is there is excess capacity on the system in most markets today, particularly the major markets we're in, ERCOT and PJM, to meet most of the load growth during these non-super peak hours. And then the super peak hours, the customers are bringing some solutions as well with their backup generation. So I really think all options are on the table from a customer standpoint, whether it's front of the meter, whether it's co-located, whether it's bridge power to then get to the grid or bridge power to then get to building an on-site generation resource that more directly supports their data center. We haven't seen any options come off the table from our discussions with customers. And I think that's what's really important is customers are being creative as well because they want to work with stakeholders like the regulators and the state leaders who want to make sure things stay reliable and affordable. So I don't see a trend yet, Shar. I still see the same variety of options on the table that we were talking about a year ago.

Your next question today will come from Jeremy Tonet with JPMorgan.

I just wanted to pick up on some of the comments in the prepared remarks there. I believe you talked about meaningfully higher adjusted free cash flow before growth and compelling growth rate over the next 3 to 5 years here. Just wondering if you might look to quantify that in some sense for the market in the future, given there's a lot of variables as you laid out there, but just wondering any more sense you could provide to that?

Yes, Jeremy, this is Kris. I appreciate the question. And I think we talked about this, and we're expecting this question. As we look forward, there are so many opportunities that we just think it's a disservice to try to put a growth rate on there and to give a range because there's just a number of different things that could come and the timing of them and when they come could be different. So I think we do see -- we laid out all the opportunities on the right side of that slide, and we see a lot of those opportunities. And we feel like that the right time to announce those, we'll continue to update the growth on likely on a -- at least on an annual basis. But we're just not going to try to forecast when and at what level all these opportunities are going to become reality.

Jeremy, this is -- I would just like to add that when we give you our '26 view and our '27 midpoint opportunities, we're in a highly hedged position, obviously, when we provide that. So part of our strategy has been, let's give our investors the information that we've got, the hedging and the contracting, to give you high confidence in it. As you go further out and you start looking 4 and 5 years in a cycle where there hasn't been capacity clears and auctions, you haven't necessarily hedged that far out. The degrees of variability out there are wide. And I think that's actually positive from a Vistra shareholder standpoint because the fundamentals of the business, as we talked about in our prepared remarks, are really strong. But to just to put a number out there and put a growth rate number out there, I think, is there's too many variables at play that I think you would have many more questions about what are the assumptions underlying that. And I don't think we would be giving you enough confidence around all those assumptions to say, take that to the bank. We've been, as a company, very consistent, I think, in our view that we want to give you things you can count on, and that's our focus. And I think what we've given you in disclosures in the '26, '27 time frame, meet that hurdle.

Got it. That's helpful. And just wanted to come back to, I guess, contracting discussions, if we could. And any color you might be able to provide here, granted deals happen when they happen. But just as far as conversations related to gas power generation relative to nuclear, wondering if you could provide any more color, I guess, on how those trend?

Sure. And I'm going to ask Stacey to provide some feedback here as well. You noticed in our prepared remarks, we talked about investing in growth even [Technical Difficulty] which we're reluctant. I have to tell you, our business is one where we know that in a fundamentally in a commodity-driven business, you need to be a low-cost operator. But then these are unique opportunities and the pace at which we have not seen before. In fact, this is the highest level of engagements we've been part of is what we're in right now. And so recognizing that, we're adding people, and we're adding dollars to make sure that we can handle the level of inbounds that we're getting. And it's an exciting time. It's a stressful time because there's a ton of work that customers are asking of us. But I think the range of options from gas to nuclear to doing some things that are more short term versus long term, those options are on the table. And frankly, our people are excited to see the growth opportunities they haven't seen in this industry and their whole career. So we're investing in that, not only in SG&A and O&M, but also some CapEx assumptions to capture it. But I'd like Stacey to weigh in on this.

Yes. Thanks, Jim. Jeremy, yes, I would just say, to echo what Jim said, all options continue to be on the table, and we continue to see sort of record levels of interest across our portfolio as well as in opportunities to do new build generation. Demand actually seems to be accelerating from our standpoint based on the conversations we're having and also lengthening into the later years of the decade, whereas I would say, a year ago, customers were very focused on 2026, 2027 power. They're now starting to recognize that they need to layer in longer-dated deals as well and serve their needs in the later part of this decade. And so we just continue to have a number of conversations across our fleet. The number of engagements we have currently and the number of inbounds we're getting are the highest that they've ever been. So we're really excited about the opportunity, but we're also very committed to being disciplined about what opportunities we pursue, making sure that we can deliver and execute on those opportunities.

Understood. Real quick last one, if I could. As it relates to '27 hedging price levels, are you able to provide any color there?

We are not providing that at this point. We will next quarter. That's our typical cadence for providing the roll forward, if you will, of the hedge disclosures. But obviously, we've been laddering into an increasing power market through time. And so you would expect to see that increase year-over-year, and you've seen that from '24 to '25, '25, '26, you're going to see it again in '27. As you know, our philosophy isn't to try to capture the absolute peak on any of this because the volumes that we're hedging are so large that you do need to thoughtfully execute in the marketplace, both on the retail customer contract side, any of the large commercial and industrial and data center contracts as well as third-party hedging in the market. But we will provide that disclosure, Jeremy, in the next quarter.

And your next question today will come from Steve Fleishman with Wolfe Research.

Jim, so just on that last question on the hedging, just given the kind of bullish factors you mentioned, all the demand, et cetera, and time to power, I'm just curious, though, why not have you considered maybe a little less hedging kind of than the ratable you've done in the past? And just how you're thinking about that? I guess it sounds like you -- just your volumes are so big, you just feel like you need to get a decent chunk of it put in with customers. But I'd be curious, your view?

Yes, Steve, that is a really -- it's a great question. Even if you look at this year, and I know you follow these markets very closely. You can be hedging out in the forward and even in like 2026, it can look like your hedges are out of the money because the market continues to move up after you hedge. Then you can get into like a third quarter of 2025 at ERCOT, where the weather really didn't materialize and now all those hedges settle deeply in the money. And so I do think there is a reality that when you decide you want to hedge, it still takes some time to be moving some of these volumes. And I think that gives certainty to our investors that our share buyback program and our dividends and our CapEx plans to sustain and grow the business, debt paydown that we can deliver on all of those. So I don't think the idea for a fleet this size producing over 200 terawatt hours a year is easy to just back off and then say, now it's time to hit the gas pedal on the hedging. And so we do have to be thoughtful. We do use a point of view, so we're not constantly hedging in a programmatic way. We do, just like our share buyback, we have some flexibility in our program that when we like prices at certain times, we'll do more. But I do think it's partly a reality of the hedging dynamic of a large fleet. It's also the retail customers pulling through their pricing and their products because they too want to hedge some of their exposure. And that's part of the value add that we have as Vistra is to meet customers in their needs when they want to meet them. And we have the discussions all the time internally, how far out should we go? What's the right risk premium for going out that far? But I do think you're hitting on the key aspects, Steve, in terms of the size of the business being -- having a method to it.

Okay. And then just on the kind of M&A and investment-grade metrics, maybe you could talk to how to balance those -- how you're looking at balancing those things? And I know you've got $4 billion cash still available. Is that enough for the M&A opportunities you're seeing? If you saw something bigger, would you be willing to go above the metric targets a little bit on debt to do it? How should we just think about that?

Yes, Steve, thanks. That's a good question. As we -- and we have been upfront in our discussions with the rating agencies that we think that the opportunity set for inorganic growth is at a high level right now. And we don't want to be in a position where we're not able to be opportunistic. And so one of the things why we think that it could be -- I said 12 to 18 months is we have certainly talked to the agencies about having some cushion that we don't want to just get into investment-grade land and then be at risk of missing an opportunity. I do think, though, that if you look at our -- where our metrics are going, even with the $4 billion and we've noted in the presentation that, that would assume a 2.3x leverage ratio that there is a lot of dry powder there and where we'd still meet investment-grade metrics, and that leverage could probably come. As our business risk improves, that leverage -- there's probably some room there even with that to increase that leverage. So there's probably a little bit more than $4 billion. And then the last thing I'll say is, if it's the right opportunity, we do view -- we're buyers of our stock. But the stock could be used -- our equity could be used as a currency as well. We've seen others in our industry do that. That would obviously have to be for the right opportunity, but that could be a path as well for us.

Your next question today will come from Bill Appicelli with UBS.

Just a question around your views on the forward curves. You mentioned earlier about the soft weather and the forwards held up reasonably well all things considered. You highlight here about 6.5% year-to-date growth on a weather-normal basis in ERCOT. When you guys think about the potential for constructing additional generation, I know you made the decision to move forward with the peak curves. But maybe just some updated thoughts around where the curves are and as you sort of look out to the demand profile and what's your bias on the pricing level from here?

Sure. Bill, great question. I'll start with our decision, obviously, for Texas because the 860 megawatts, which is in addition to almost 500 megawatts of gas augmentations and things that we've done in the ordinary course to bring more megawatts to the grid. But 860 megawatts of putting that in West Texas is a unique opportunity because of what we've been seeing in West Texas specifically. That hub out there used to trade at a discount to the north hub, which picks up the Dallas-Fort Worth area. Now it's trading at a premium, a significant premium, and we're looking at fundamental supply and demand activity in West Texas, driven with the electrification of oil and gas load as well as data centers. And we think that these -- having a site there already, our Permian gas site, which we're tripling by virtue of bringing these turbines to that site, that's a unique opportunity. It would not have penciled in the same manner in other parts of Texas. So I think that's just an important thing to note is I don't think this is all of a sudden new build economics, and you saw we're building these at 1,100 a KW, which is lower than where a fully priced new build would be because we had preordered some of this equipment, and we have good relations on our EPC that we feel good about being able to deliver this really at a below market cost. So that's unique. But to your forward curve aspect, we are seeing more life in ERCOT forwards than we had seen obviously a year ago. And I think that's still not fully reflective of the load growth forecast that we have, and we're conservative in our load growth forecast. And we've -- I'd say, conservative. We…

Okay. That's very helpful. And then just one other one around the nuclear upgrades. I think what you described sounds like potentially 600 to 700 megawatts. How would you consider pursuing that? Does that have to come with offtake agreements or contracting of that output to potentially pursue it? Or maybe just to think through, I know you're still evaluating, but maybe just how would that potentially come to fruition?

Yes, Bill, that's the most [Technical Difficulty] That is still, while it's maybe less expensive than building new nuclear, it's still expensive. And so the market price [Technical Difficulty] and the clean attributes, there is interest in the uprates from support with potential data center parties. And so those are conversations that are ongoing, and those are obviously complex because they do take time to bring to market. Those things will come on beginning in the 2030s. So they're not quick capacity. And so to Stacey's earlier point, there are -- the customers are doing longer-term planning. So I think this does meet their interest levels, but we don't think the current forwards in either market would support just embarking on uprates for that reason.

Last question today will come from David Arcaro with Morgan Stanley.

I was wondering, could you give an update on the other data center contracting opportunities that I think in the last quarter, you had suggested could come to fruition by year-end? Just any comments as to whether that time frame is still looking possible for certain opportunities? And then any just directional, is it nuclear versus gas or PJM versus ERCOT? Curious any color you might be able to offer.

Sure. The exact timing, I think this has come up on our previous calls and certainly some of our peers have had this question. The exact timing is hard to predict just because it's a complex contract, 2 parties need to reach agreement and 2 parties have to get through their own approval processes because these are material deals for both sides of these agreements. I do think there's possibilities of that, David. I think we have stages of contracts that are much closer to execution, and we've got some that are longer in terms of the development cycle to be able to bring those to market. But I do think that, as we mentioned earlier, the activity level is the highest that it's been. I think that also drives a bit of a sense of urgency on both sides of the equation. I think we want to make sure that we're able to deliver and capture this value. But the other side of the equation is the large customers know that there aren't that many immediate opportunities with which to execute. And so we are seeing heightened activity levels, and we certainly hope to be able to give you some more specifics and execute what we call put points on the board by year-end. But I can't predict that specifically. I mean, we're into November, we hit the holidays. But either way, whether it's right before year-end or sometime thereafter, we're signing deals that would be in the 10-, 15-, 20-year horizon. We need to get these right, and that's what we're focused on.

Yes, absolutely. I appreciate that color. And on -- well, congratulations on Comanche Peak. And I was just wondering if you could maybe touch on the further opportunities that exist on the site. What are the prospects for contracting the second unit there? And I'm just curious, is there any other infrastructure on the site that you could be involved in?

David, it's a really good question. Thank you for actually bringing it up. We thought that might be question number one. And -- but it's always in the rearview mirror, right, once you announce it. But yes, about 5 weeks ago, we were very excited to announce that agreement. And we have great hope for expanding that agreement. There's been some interest on the customer's part to do so. But I also caution that a data center gets up to 1,200 megawatts is still a very large data center. And I'm actually unaware of any data center even operating in the U.S. today that's 1,000 megawatts in terms of actual pulling power and operating. So we want to get the first 1,200 right? It's important for the state of Texas, the state leaders, for ERCOT, for the PUC that we show leadership here on this and getting this right. But the customer conversations have talked about more capacity. They've talked about the potential for uprates. And so once you establish a beachhead like this, I think you're going to have more options, but it all depends on the quality obviously, of our execution here. And so I do think of this as a relationship and not a transaction. And I think there's going to be multiple opportunities.

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

Yes. Thank you, everyone, for joining. As you can see, this has been a very active time. And we put a lot of points on the board in the third quarter as we like to call it. This is an incredibly exciting time for Vistra. We look forward to executing not only on our large and growing base business, but our growth initiatives that we talked a lot about on today's call. I want to thank our team for their service, to our customers and our communities, and we appreciate your interest in Vistra, and we hope to see you in-person soon. Have a great rest of your day.

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