NRG Energy, Inc. Q2 FY2025 earnings call

• Delivered strong second quarter results, reaffirming full year financial guidance and trending at the high end of ranges.
• Announced long-term retail power agreements with a data center operator for 295 megawatts with potential to grow to 1 gigawatt.
• T.H. Wharton project closed Texas Energy Fund loan, construction underway, on track for mid-2026 completion.
• Texas Residential Virtual Power Plant off to fast start, increasing 2025 target to 150 megawatts of curtailable capacity.
• Rockland acquisition closed, LS Power acquisition in progress, strengthening portfolio.
• Strong safety performance, continued capital return plan, and broad-based business strength.

Adjusted earnings per share for the second quarter were $1.73, reflecting an 8% growth year-over-year when normalized for asset sales and retirements. For the first half of '25, adjusted EPS was $4.42, representing an increase of 48% on the same basis. The Texas segment produced $512 million of adjusted EBITDA in the quarter and $811 million in the first half of 2025, an improvement of over 13% and 20%, respectively, from the same periods in 2024. The West/Services/Other segment had an adjusted EBITDA of $43 million in the second quarter and $120 million for the first half of 2025. The Smart Home business achieved an adjusted EBITDA of $255 million in the second quarter and $531 million in the first half of 2025, with consistent customer growth, expansion to recurring service margins, and record customer retention at over 90%.

• Reaffirmed full-year financial guidance across all key metrics, trending at the high end of the ranges.
• Increased Texas Residential Virtual Power Plant 2025 target from 20 megawatts to 150 megawatts of curtailable capacity.

• Commercial sensitivity in discussing details of certain contracts.
• Complexity and timing uncertainties in executing partnerships and development projects.
• Uncertainty in converting letters of intent for data center agreements into firm deals due to factors beyond control like interconnection study timelines.

Q: Talk about the structure and margin profile of the 295 megawatts data center agreement.

A: Viewed closer to a C&I contract with premium margins, longer duration than average C&I contract, with mechanisms to protect margin like indexing and hedging.

Q: Update on partnership opportunities beyond the 1 gigawatt data center arrangement.

A: Exciting about potential but complexity means not all letters of intent will conclude, and timing is hard to predict.

Q: Adoption rates in Texas VPP and PJM opportunity.

A: Texas VPP adoption better than expected, but PJM opportunity to be evaluated after Texas shakedown, not expected this year.

Q: Impact of Big Beautiful Bill, Rockland transaction on free cash flow per share and PJM asset bidding.

A: OB3 and Rockland transactions expected to bring cash savings, still in purchase price allocation; will bid on attractive PJM assets at right price.

Q: Data center contracts for TEF assets.

A: TEF assets must go into grid, can't be directed solely to data center but can supply data center from existing plants.

Q: Color on data center deal load ramp and PowLan/Menlo.

A: Data center deal has modular design leading to slower ramp; still working with PowLan and Menlo under letters of intent.

Q: Outlook for power prices in Texas.

A: Off-peak power prices upward due to large industrial loads, forward curves not reflecting reality yet, but see upside in Texas curves.