Vistra Corp.

Good day and welcome to the Vistra first quarter 2023 results conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question, you may press star then one on your telephone keypad If you would like to withdraw your question, please press star then 2. Please note that today's event is being recorded. At this time, I would like to turn the conference over to Megan Horn, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you all for joining Vistra's Investor Webcast discussing our first quarter 2023 results. Today's discussion 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 the earnings release. Leading the call today are Jim Burke, Vistra's President and Chief Executive Officer, and Chris Moldovan, Vistra's Executive Vice President and Chief Financial Officer. They are joined by other Vistra senior executives to address questions during the second part of today's call as necessary. Our earnings release, presentation, and other matters discussed on our call today include references to 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 VISTA'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 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 will now turn the call over to our President and CEO, Jim Burke.

Thank you, Megan. Good morning. Thank you all for joining our first quarter 2023 earnings call. I will begin on slide five. We entered the year focused on our four strategic priorities, and we are making great strides. First, our integrated model continues to demonstrate its value and effectiveness. As you probably recall, we spent a majority of 2022 executing on our comprehensive hedging strategy that we said was locking in earnings opportunities for 2023 through 2025. We utilized available liquidity last year to support this strategy as we believe the additional EBITDA opportunities were significant. This first quarter of 2023, we saw this strategy translate into real value as mild weather was experienced across the major markets in which we operate, which led to lower than expected cleared power prices. While we saw power prices clear at approximately $30 a megawatt hour on average, Our first quarter results reflect a realization of average prices of around $45 per megawatt hour, given we were highly hedged entering the year. In addition, in the outer years where we have been more open, we have seen prices and spark spreads increase as compared to this time last year. We have continued to opportunistically hedge to secure an increasing out-year earnings potential. We believe this is important not only because it provides an enhanced resiliency of our earnings profile despite an uncertain commodity market, but also because it ensures we can deliver on our commitments to reliably serve our customers, consistently return capital to shareholders, maintain a strong balance sheet, and transform our fleet as we strengthen our position for the long term. Second, our return of capital to our shareholders remains consistent and robust. Chris will provide a detailed update on our capital allocation plan in just a moment, but I want to highlight that of the aggregate $4.25 billion share repurchase authorization, we have returned approximately $2.7 billion to shareholders from November 2021 through May 4, 2023. Additionally, we are on track to pay $300 million in common stock dividends in 2023 as planned. with our board approving a second quarter dividend in the amount of 20.4 cents, representing an approximately 15% increase over the second quarter dividend paid in 2022. The share repurchase program, together with the structure of our dividend plan, work in tandem to provide our shareholders with the expectation of dividend growth each quarter as the aggregate $300 million in annual dividends is spread across a decreasing number of shares of Vistra Common Stock. Third, we continue our focus on a strong balance sheet. As we see margin deposits return, we are positioned to utilize that cash for opportunistic delevering and or to reduce the amount of debt we expect to incur to close the Energy Harbor acquisition we announced in March of this year. While the first quarter is typically the lowest free cash flow quarter for Vistra, we were able to repay approximately $500 million of short-term debt. Of course, we're expecting our net debt balance to grow over the balance of the year to fund the Energy Harbor acquisition, which we expect to come with a significant amount of EBITDA, but we remain focused on our goal of a long-term net leverage ratio, excluding any non-recourse debt at Vistra Zero of less than three times, which we expect to achieve in the 2024 to 2025 timeframe. Finally, we are very excited about our announcement just two months ago regarding the acquisition of Energy Harbor, which is expected to close later this year. With this acquisition, our nuclear fleet will grow by an additional 4,000 megawatts in PJM, which will more than double the zero carbon generation we have online today. Turning to slide six, I will discuss this quarter's results. We achieved $554 million of ongoing operations adjusted EBITDA, Strong operational performance and our robust hedging activities helped offset milder-than-normal weather throughout the U.S. Our retail and generation teams continued their strong operational performance, with retail achieving growth in ERCOT customer counts while maintaining attractive margins, and our generation team delivering commercial availability of 97% while maintaining the focus on safety. The generation team has operated over three years without a significant injury across a large and diverse fleet, and safety remains our number one priority. Looking ahead for the remainder of the year, we are confident in our ability to meet or exceed the midpoint of our $3.4 to $4.0 billion adjusted EBITDA from ongoing operations guidance range for 2023, as we announced in the third quarter of 2022. We're also reaffirming our $1.75 to $2.35 billion adjusted free cash flow before growth from ongoing operations guidance range. Of course, with nine months to go in the year, including the important summer months, we believe it would be premature to narrow or otherwise adjust our guidance range for 2023. Chris will cover in more detail why we remain bullish on our opportunities in years ahead. Before I wrap up and turn the call over to Chris to discuss the first quarter's performance in more detail, I want to provide a quick update on the status of our Energy Harbor acquisition. As noted on slide seven, we have filed approval requests with each of the three key agencies and anticipate receiving all needed approvals in time to close by the end of this year. As a reminder, we've committed bridge financing in place in an amount sufficient to close the transaction but we do expect to replace the entirety of our bridge commitments with permanent financing between now and closing. Finally, I think it's worth noting that as we have seen out-year forward price curves improve, our financial forecast for Energy Harbor has also improved in the out-years. Previous estimates we shared in March indicated average adjusted EBITDA midpoint opportunities for 2024 through 2025 of approximately $900 million with adjusted free cash flow before growth opportunities at a 65 to 70% range. This is inclusive of synergies and on an open pre-tax basis. Given recent price curves, we see the average adjusted EBITDA midpoint opportunities from Energy Harbor for 2026 and beyond to be higher than this original estimate. We expect that we will provide more detailed adjusted EBITDA and other financial projections for the combined company closer to closing or just after. Chris, I'll now turn the call over to you.