Vistra Corp.

specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Molly Sorg, head of investor relations. Please go ahead, ma'am.

Thank you, and good morning, everyone. Welcome to Vistra's third quarter 2021 results conference call, which is being broadcast live from the investor relations section of our website at www.vistracorp.com. Also available on our website are a copy of today's investor presentation, our form 10-Q, and the related press release. Joining me for today's call are Kurt 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 two and three 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 Kurt Morgan to kick off our discussion.

Thank you, Molly, and good morning to everyone on the call. As always, we appreciate your interest in Vistra. While we have a lot to cover today, we will do our best to be as pithy as possible to leave sufficient time for Q&A. Not only will we be discussing our third quarter and year-to-date financial results, but we are also initiating our 2022 guidance, as is customary on our third quarter results call. And most importantly, we are laying out additional details of our long-term capital allocation plans. which I'm excited to share with you. So let's get started. It's hard to believe we're still in the same year where we experienced the significant effects from winter storm URI. I'm proud of how our company has recovered from a business standpoint, and we are beginning to execute on our strategic priorities, which are a product of a thorough review with the board that had begun prior to URI but accelerated greatly immediately on the heels of the storm. We will discuss these priorities in more detail later. Consistent with the bounce back of our business, slide six reports our strong third quarter financial results despite a weak Texas summer where Vistra delivered adjusted EBITDA from ongoing operations of $1.177 billion or $1.167 billion excluding the impacts from winter storm Yuri realized in the third quarter, which included a small positive impact from ERCOT's 180-day resettlement statements. As of September 30th, Vistra has already achieved approximately 85% of the $500 million self-help target we announced following Yuri, and all of that done without really impacting any future periods. And we have a clear line of sight to achieving the balance in the fourth quarter. The combination of our solid execution on these self-help initiatives together with the inclusion of the approximately $500 million of proceeds we expect to realize from ERCOT's securitization of certain charges allocated to load-serving entities during EURIC We are in a position today to both narrow and raise our 2021 ongoing operations adjusted EBITDA guidance range, as shown on the slide. The securitization and self-help materially offset the more than $2 billion loss from URI, such as the retail bill credits we will discuss later. As you likely recall, internal and third-party analysis has shown that BISTRA's URI loss was driven predominantly by the uncontrollable failure of the Texas intrastate gas system. We are also narrowing and revising our ongoing operations adjustment free cash flow before growth guidance, which is similarly reflected on slide six. The cash flow associated with securitization is expected to be received in the first half of 2022. Consequently, The cash impact of securitization is reflected in our 2022 guidance on the next slide. So turning to slide seven, VISTA is initiating its 2022 guidance today, forecasting ongoing operations adjusted EBITDA in the range of $2.81 to $3.31 billion. With ongoing operations adjusted free cash flow before growth in the range of $2.07 to $2.57 billion. This represents a free cash flow conversion ratio of approximately 76%, which is higher than our historical conversion ratio due to the anticipated receipt of the securitization proceeds in the first half of 2022. On slide seven, we also offer an illustrative view of VISTA's 2022 guidance ranges. which exclude Winter Storm URI-related bill credits of approximately $185 million, and also the negative in-year impact from the execution of NPV-positive long-dated contracts with retail customers of approximately $55 million, and the $500 million of securitization proceeds in free cash flow before growth only. We believe this illustrative view is the best way to think about district's future financial performance potential as it demonstrates the long-term earnings power and cash generation of the business. Notably, the adverse impact from the bill credits in 2022 guidance are more than offset by the securitization included in the 2021 updated guidance. In fact, securitization will likely more than offset the retail bill credits across all years. Looking beyond 2022, Vistra's long-term view of our earnings power remains robust. The company is less edged in 2023 and beyond, which affords an even greater opportunity to capture momentum from the rising curves we have observed in recent months. In fact, we have seen a move up in both gas and heat rate in ERCOT as the gap between market and our fundamental view converge, which we have similarly seen in the last several years. In fact, this conversion has resulted in projected results using market curves for the next several years in line with our stated view that we can generate consistent EBITDA of $3 billion or greater. Previously, the out years using steeply backwardated market curves were below $3 billion. This leaves us in a stronger position to optimize our EBITDA within the $3 billion or greater EBITDA range, especially as we add our growth investments. We continue to remain confident in the ability of this business to earn significant cash flow on an annual basis, and we intend to return a majority of that cash flow to our financial stakeholders in the years ahead, as I will outline on the next few slides. Slide eight sets forth the four key priorities that our recent strategic review identified. We believe the best way to unlock the value inherent in this business and maximize value for our financial stakeholders is to drive long-term sustainable value through our integrated business model, which has been strengthened following URI through various investments in our fleet and fuel supply, as well as our enhanced risk management practices. return a significant amount of capital to shareholders via share repurchases and a meaningful dividend program, especially for as long as our stock remains at what we believe is such a meaningful discount to its fundamental value. And if our stock responds, we will continue to return that capital in the most optimal way to our shareholders. The key is that we generate substantial capital year-over-year, and we intend to return a significant amount to our shareholders. Also, we intend to maintain a strong balance sheet and, last but not least, accelerate our Bistro Zero growth pipeline with cost-effective capital. As we set forth on the next slide, our long-term capital allocation plan reflects these strategic priorities. Bistra's long-term capital allocation plan reflects an anticipated return of capital of at least $7.5 billion to its common stockholders through year-end 2026, while simultaneously reducing our corporate level leverage and accelerating our Bistra zero growth pipeline. Specifically, as we announced in October, our board recently approved a $2 billion share repurchase program, which we expect to fully execute by year-end 2022. The share repurchase program is partially funded by the $1 billion of 8% preferred equity we issued last month. We then expect we will allocate approximately $1 billion per year towards share repurchases from 2023 through 2026 for a total of $6 billion in five years. And again, if our stock responds, we will reallocate those funds back to our shareholders in some other cost-effective manner. This $6 billion of return of capital represents more than 60% of our current market cap. This significant amount of capital allocated to share repurchases is evidence of both management and the board's conviction of the long-term earnings power of the business, juxtaposed with what we believe is a significant undervaluation of our stocks. We will expect we will continue to prioritize share repurchases so long as we believe our stock is undervalued. And let me tell you, in my view, we have a long way to go. We're also reinforcing our commitment to paying a meaningful and growing dividend. Rather than identifying a target annual growth rate for our dividend, management expects that it will, subject to board approval at the appropriate time, allocate $300 million per year toward its common dividend. As we retire more and more of our shares over time, this $300 million dividend pool will be spread over fewer shares and will offer potentially outsized growth on the remaining shares. For example, if we were to execute all $6 billion worth of the share repurchases at our recent stock price, our annualized dividend per share would grow by more than 175% by year end 2026. At our current share price, these share repurchases and dividend programs are projected to result in an annual average cash yield on the stock of an attractive 15%. As always, we are also committed to a strong balance sheet. We expect we will retire another approximately $1.5 billion of corporate-level debt by the end of next year and up to $3 billion by 2026 with projections of debt to EBITDA in the mid to high twos during this time frame for the VISTA-based business. For our previous comments, we expect to combine project financing with renewable-related preferred equity and cash flows from existing renewable projects to cost-effectively develop our current nearly five gigawatt renewable and battery pipeline over the next five years using only $500 million of our own capital. And that is $500 million on a cumulative basis over the five-year period, a significantly lower estimate than our previous expectation of spending approximately $500 million per year on growth capital. These funds can now be used to support other capital allocation priorities. especially share repurchases. It is important to note that Vistra Zero will be a highly contracted business with third-party and internal PPAs, so the leverage ratios will be commensurate with similarly situated businesses. Slide 10 outlines the sources and uses for the long-term capital allocation plan that I just laid out. Importantly, we expect we will be able to execute on this capital allocation plan while growing our VISTA Zero renewable and battery storage portfolio to a more than 5 gigawatt business generating approximately $450 to $500 million of adjusted EBITDA annually by year end 2026. We are excited about this long-term capital allocation plan and believe strongly that it is the best way to maximize the value of our business. As we expect, we will return the majority of our free cash flow from our base business to our financial stakeholders while being mindful of our overall leverage levels and cost-effectively accelerating our renewables and battery storage growth pipeline, which should ultimately be valued at a higher multiple over time. Using the midpoint of the Vistra Zero EBITDA of $475 million by 2026 and a 14 times multiple would result in a total value of $6.65 billion for these projects. As I mentioned earlier, the strategic review we undertook was thorough, evaluating multiple scenarios and potential paths to unlock shareholder value. Ultimately, we believe the path we have outlined here today will be the path that will result in the greatest financial reward over time, taking into account risk of execution, cost effectiveness, and economies of scale. With that, I will now turn the call over to Jim Burke to discuss our financial results in more detail. Jim?