Vistra Corp.

Good morning and welcome to the VISTA's fourth quarter and four-year results conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference buses 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 telephone keypad. 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 Megan Horn, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Vistra's Investor Webcast, discussing fourth quarter and full year 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 presentations, the related press release, and recent annual quarterly reports on Forms 10-K and 10-Q. 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, if necessary. Before we begin our presentation, I would like to note that today's press release, 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 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. Thank you, and I'll now turn the call over to our president and CEO, Jim Burke.

Thank you, Megan. Good morning. I'm pleased to be here with you all to discuss our fourth quarter and full year 2022 results, which we believe is a positive and straightforward message. Beginning on slide five, as we've reiterated over these past quarters, We remain vigilant and focused on our strategic priorities throughout the year, and the 2022 results demonstrate that focus and set us up well for the future. We believe that operating an integrated business model provides the stability and consistency that our customers and our shareholders expect, and our operations throughout extreme weather events this past year, we believe, have proved this thesis. You recall that we initiated guidance for 2022 for adjusted EBITDA from ongoing operations with a midpoint of $3.06 billion. Despite extreme volatility in commodities and numerous weather events, including winter storm Elliott at the end of December, we ended the year exceeding this midpoint by $55 million. Importantly, we delivered strong adjusted free cash flows along with these higher earnings, delivering a final adjusted free cash flow before growth of $129 million above the midpoint of the narrow guidance range we introduced in the third quarter of 2022. Our integrated portfolio also supported our comprehensive hedging strategy we executed throughout 2022 with the goal of locking in out-year earnings potential in years 2023 to 2025. Chris will speak to this in more detail later, but we concluded the year at approximately 73% hedged across 23 to 25, across all markets. This hedging percentage and the current forward curves continue to support the estimated $3.5 to $3.7 billion midpoint of adjusted EBITDA earnings potentials in those years and with our 2023 adjusted EBITDA guidance midpoint set at $3.7 billion, we look forward to executing squarely on these opportunities. We continue to see Vistra generate significant cash flows, and our strategic priorities remain focused on returning meaningful value to our shareholders. Chris will provide a detailed update on our capital allocation plan, but I will note that we returned approximately $2.25 billion to shareholders via our share repurchase program from November 2021 through December 2022, approximately $250 million more than we had originally planned. Additionally, we paid out $300 million in common stock dividends in 2022 as planned, with each quarter's dividend per share growing as the share count was reduced. The fourth quarter dividend paid in December 2022 represented a 29% increase over the fourth quarter dividend paid in December of 21. We expect shareholders to continue to experience increases in dividend returns into 2023 as we expect to continue to pay out an aggregate $300 million in annual dividends to a decreasing number of shares of Vistra common stock. We remain vigilant this year in maintaining a strong balance sheet. While our debt balance did grow to provide the liquidity we needed to support our comprehensive hedging strategy, we achieved our goal of a sub-three times leverage after margin deposits are considered at year end. We held our debt capacity steady at year end as we saw less return of margin than originally expected. We have seen the margin deposit start to return to us in the first quarter of 2023 and we continue to actively manage our liquidity and focus on opportunistic timing and structures to further optimize our balance sheet with the goal to achieve our long-term sub three times debt leverage ratio target on a pre-margin deposit basis over time. Finally, we are proud of the results we saw in our VISTA Zero business this past year. We added over 400 megawatts of renewable and storage capacity in 2022, and we expect to add another 350 megawatts of storage capacity in California at our Moss Landing Phase 3 facility in mid-2023. We also retired approximately 2,900 megawatts of Ohio and Illinois coal facilities at our Zimmer, Joppa, and Edwards plants. We appreciate the dedication of our teams who worked at these sites for decades, powering their communities and always with a sharp focus on safety. We are pleased to be able to redevelop these sites in the future of this zero energy facilities. Notably, the Joppa and Edwards sites are part of our Illinois coal to solar program where we are transitioning numerous sites into solar and or storage facilities. Turning to slide six, we had a strong 2022 ending the year with $3.115 billion of ongoing operations adjusted EBITDA. This is $55 million above the $3.06 billion midpoint we set in the third quarter of 2021. We achieved nearly $2.4 billion of adjusted free cash flow before growth, $129 million higher than the narrow guidance midpoint we set in the third quarter of 22. Our financial achievements were underscored by the strong performance of our retail and generation teams. Our flagship retail brand, TXU Energy, continues to execute well, growing Texas residential customers nearly 2% year over year while maintaining its PUCT five-star rating. Our generation team has proven its ability to perform in extreme weather conditions in both the summer and winter months. optimizing the maintenance of our fleet to stand ready to perform when needed. The team's commitment is illustrated by the 95.4% commercial availability achieved fleet-wide this past year. Safety remains our top priority, and the culture of continuous improvement is exemplified in our VISTA Best Defense Safety Program. I'm pleased with our performance in 2022, but through continuous improvement, we see opportunities to perform operationally at an even higher level in 2023. We now look forward to delivering on the financial guidance we set forth last quarter for 2023. We are reaffirming our $3.4 to $4 billion adjusted EBITDA from ongoing operations range for 2023. as well as reaffirming our $1.75 to $2.35 billion adjusted free cash flow before growth guidance range. It is early in the year, but notably, despite the volatility in commodity prices we've experienced lately, we continue to have the line of sight to achieve the expectations we've set for ourselves given the potential value our comprehensive hedging program has locked in for 2023. I will now hand the call over to Chris to discuss the 2022 fourth quarter and annual performance in more detail.