Vistra Corp.

Good day and welcome to the VISTA third quarter earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference 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 your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Megan Horn. Please go ahead.

Thank you. Good morning, everyone. Welcome to Vistra's investor webcast discussing third quarter 2022 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-Q, and a related press release. Joining me for today's call are Jim Burke, our president and chief executive officer, and Chris Moldovan, our executive vice 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 would like to note that today's press release, the slide presentation, and discussions on this call all include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are provided in the press release and in the appendix to the investor presentation available in the investor relations section of the company's website. Also, 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. I encourage all listeners to review the safe harbor statements included on slide two in the investor presentation on our website that explain the risks of these forward-looking statements, the limitations of certain industry and market data included in the presentation, and the use of these non-GAAP financial measures. Thank you, and I'll now turn the call over to our President and CEO, Jim Burke.

Thank you, Megan. Good morning, everyone. We plan to keep this call relatively short. We believe we have a straightforward message to deliver today. In prior calls, we've shared with you our priorities for the year, and today we're here to share how we are successfully executing against those priorities and provide our view regarding 2023. Starting on slide five, we had another strong quarter financially earning $1.038 billion in ongoing operations adjusted EBITDA. Our generation team performed extremely well throughout the summer, but their performance was most on display during the high heat weather events experienced in July in the ERCOT region. For example, on one particular day in July when ERCOT experienced periods of low wind and solar output, We saw our Texas generation fleet operate at its max capacity. On this day, we saw prices hit the $5,000 price cap on three different hours. A well-maintained fleet is key to delivering reliable power for our customers and our communities and ensuring value is captured during these weather events. And our generation team delivered. Our retail business similarly performed well. shown its resiliency by demonstrating the ability to serve customers at attractive margins, even in light of the higher commodity cost environment. Our retail team responded to our customers' needs, and our performance reflects our deep commitment to our customers. In fact, this commitment was recently acknowledged by the P-U-C-T when TXU Energy was recognized as a five-star rated retailer. With three-quarters of performance now reported, We are able to narrow our previously announced guidance for ongoing operations adjusted EBITDA and ongoing operations adjusted free cash flow before growth. We now see ongoing operations adjusted EBITDA in a range of 2.96 to 3.16 billion dollars and ongoing operations adjusted free cash flow before growth in a range of 2.17 to 2.37 billion dollars for 2022. We're reaffirming our original midpoint of $3.06 billion of ongoing operations adjusted EBITDA for 2022. This has been a year with significant volatility in fuel prices and weather in an environment of rising inflation, and yet our team is performing well and tracking at the original guidance provided last November. Due to our comprehensive hedging program to capture higher earnings in future periods, We have incurred some higher interest charges, which is reflected in our modestly lower midpoint for ongoing operations adjusted free cash flow before growth. This midpoint is now $2.27 billion. As we have discussed in the past, we took on additional short-term debt to fund the liquidity needed for our comprehensive hedging program. The hedges are locking in significant out-year earnings potential. That higher earnings power is reflected on slide six. Today we are initiating guidance for ongoing operations adjusted EBITDA in a range of $3.4 to $4 billion and ongoing operations adjusted free cash flow before growth in a range of $1.75 to $2.35 billion for 2023. Our 2023 guidance midpoint of ongoing operations adjusted EBITDA is $3.7 billion. This is the top end of the midpoint opportunity range we estimated for 2023 during our first quarter call as we saw the dramatic increase in gas and power forward curves. Given the higher EBITDA figures and the volatility we have seen in the market, our range is larger on an absolute basis but is a similar percentage of the midpoint as we have had in recent years. We are confident in our ability to deliver on this value proposition for 2023 And as you know, our comprehensive hedging program extends into future years. With that, I wanted to take a moment to reiterate VISTA's strategic priorities as we summarized on slide seven. We believe these priorities are delivering and are expected to continue to deliver significant value for investors. We previously stated that we saw annual ongoing operations adjusted EBITDA potential of around $3-plus billion going forward. As forward power curves increased, we announced Q1 2022 that we saw ongoing operations adjusted EBITDA midpoint potential in the $3.5 to $3.7 billion range for years 2023 through 2025. We're now approximately 70% hedged on average across 2023 through 2025. Accordingly, we continue to believe in that range of earnings potential. And in turn, we are using the significant cash flows to return value to the shareholders. VISTA continues to execute on our previously announced capital allocation plan. And Chris will speak to those details momentarily. But notably, our capital allocation plan offers a robust returns per share. Looking forward to the target share repurchases and dividends under the capital allocation plan between now and year end 2023. We have $1.2 billion of remaining authorization for share repurchases that we expect to utilize by year-end 2023, plus $375 million in dividends targeted for payment Q4 2022 through Q4 2023. That capital distributed across our current shareholder base delivers an equivalent of approximately $4 per share of capital being returned. I recognize this is a simple illustration. I only point this out to underscore the incredible value proposition we believe Vistra currently offers. As a reminder, these expected cash returns are achieved even after we make the planned maintenance capital investments to ensure our fleet is well positioned for the winter and the summer. This is also after we execute our expected debt reduction to ensure a strong balance sheet. Lastly, we expect Vistra Zero to be financed primarily with third-party capital, enabling us to continue to transition aspects of our fleet, primarily some of our older coal assets, in a capital-efficient manner. Vistra Zero will also benefit from the Inflation Reduction Act, including setting a price floor for a nuclear asset Comanche Peak. You may have seen we recently submitted the relicensing application which would extend our licenses by 20 additional years for each of the two units to 2050 and 2053. We continue to see how important a role our diverse set of assets are playing throughout the U.S. in ensuring reliable, affordable, and sustainable power. Our integrated model is delivering the service that our customers and communities depend upon And we are excited to be able to share our expectations with you, our owners, that the future is bright for our company. I will now hand the call over to Chris to discuss this quarter's financial performance in more detail.