Q4 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
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At this time all participants on in listen only mode.
The speakers presentation, there will be a question and answer session.
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Have you acquire any further [laughter], please first thought into ROE.
Oh, no like the hand, the conference I would see a speaker for today, Kevin Cole head of Investor Relations you may begin.
Thank you to Wanda good morning, welcome to NRG Energys fourth quarter and full year 2019 earnings call. This morning's call is scheduled for 45 minutes or like it'd be broadcast live over the phone via webcast, which can be located at the investor section of our website Www Dot NRG dotcom under presentations and Webcasts. Please note that today.
Discussion may contain forward looking statements, which are based on assumptions that we believed to be reasonable as of the state actual results may differ materially we urge everyone to review the safe Harbor in todays presentation as well as risk factors and her as she she filings we undertake no obligation to update these days as a result of future events, except as required by law. In addition, we referred.
Both GAAP and non-GAAP financial measures for information regarding our non-GAAP financial measures reconciliations the most directly comparable GAAP measures. Please refer to today's presentation now that I'm really hoping to Murray said whichever is energy's president and CEO.
Thank you Kevin and good morning, everyone. Thank you for your interest in NRG [laughter].
I'm joined this morning by a Kirk Andrews, our Chief Financial Officer.
Also on the call and available for questions. We have at least with killinger kind of our retail mass business and create small circuit of our operations.
These earnings call marks the four year on anniversary since we started a new directional for NRG.
We have accomplished many things together.
We refocus and streamline our business to better serve our customers.
We significantly reviews, our total depth and strengthen our balance sheet.
She is now on a path to any investment grade rating.
We provide a disciplined and transparency on how we invest our capital and most importantly, we have done at the right way for our employees and our stake holders.
The company has never been stronger or with a brighter future than it is today.
I'd like to start by highlighting the key messages for the quarter on slide three.
First.
Our integrated business delivered EBITDA inline with our 2019 expectations during a period of volatile market conditions.
Further validating the benefits of integration between retail and wholesale.
As such we're also reaffirming 2020 guidance.
Second.
We have a comprehensive sustainability framework with industry, leading carbon reduction goals.
Given that I view these framework, that's foundational to our business and an integral part of our long term strategy.
I will provide additional detail later in the presentation.
And third we continue to execute our capital allocation strategy by adhering to our principles and our commitment to being excellent stores or shareholder capital.
Moving to the business on financial highlights on slide four.
Beginning with our 2019 scorecard on the left hand side on the slide we executed well on all our priorities.
We delivered strong financial and operational results despite challenging market conditions during the summer.
We also had our best safety year ever marking these the second back to back years on record performance.
Congratulations to all my colleagues for these remarkable accomplishment.
With respect to our transformation plan.
We deliver on our goals.
We have now completed over 90% of the plan.
With all cost savings on working capital completed an $80 million of additional margin enhancing and transmit remaining to be achieving 2020.
After two years of focusing on Rightsizing, the business and strengthening our balance sheet.
In 2019, we focus on perfecting our integrated business.
We sign 1.6 Gigawatts of medium term solar PPH in our Coke.
Return, our Gregory plant to service ahead over the summer.
An acquired stream energy, adding important capabilities to our retail portfolio.
We also announced the acceleration of our science based carbon reduction goals to align with guidance from the new Intergovernmental panel on climate change to limit global warming two wanting to have degrees Celsius. So as to avoid the worst affects of climate change.
Finally, we continue to adhere to our capital allocation principles and provided additional transparency into our long term capital allocation plan.
In 2019, we returned approximately $1.5 billion to shareholders through share repurchases and dividends.
We also announced the increase on the dividend from 12 cents per share to what dollar 20 per share with the first payment made in the first quarter of 2020.
During the fourth quarter, we received an upgrade from Moody's with a positive outlook moving us closer to our goal, but solid investment grade rating.
On the right hand side on the slide.
Similar to how we have presented the financials throughout the year EBITDA is shown on a same store basis.
Adjusted for asset sales somebody consolidations.
We ended the year with $1.977 billion of EBITDA or 24% higher than last year.
Well, we delivered on EBITDA, our free cash flow came in below our spec that range due to timing issues with Kirk, which Curt will address in greater detail later in the presentation.
On the next two sites I want to talk to you about our comprehensive sustainability framework.
It is one that expense across our business from operations on employees to customers and suppliers.
Sustainability is embedded in our culture aligned with our strategy and necessary for a long term success.
Beginning on slide five our sustainability philosophies guided by three core principles accountability transparency and engagement.
So let me start with accountability.
But didn't actually I'm, sorry, just not enough.
We need goals that are clear and measurable.
We have a few examples in this slide including safety environmental responsibility and our commitment to inclusion and diversity.
You have heard me say these before.
Safety is our number one priority.
We measure and report our safety performance every quarter and we hold ourselves accountable to top decile performance.
In this way, we're able to take corrective actions to improve our performance in periods, where we fall below our standards.
Like safety, we have many other goals across our business that measure not just what do we.
But how we do it including our carbon reduction goals, which I will address in more detail in the next slide.
No measurable goals are important.
What do we also need to communicate our progress in a clear and transparent way.
We do these every year with the release of our sustainability report.
We were the first and only company in our sector to comply with the sustainability accounting standards board or Saxby back in 2016.
We were one of the first companies to publicly committed to the task force on climate related financial disclosures 40 CMV.
And recently, we were awarded leadership level across all three carbon disclosure project or CVP programs on climate risk water security and supply chain and game engagement.
Finally, we are committed to engaging and investing in the communities, where we live and do business.
Familiar Cds with large concentrations of customers to smaller communities that are formed our power plants and employees.
In 2019 alone we donated to almost 700 organizations.
But we arent just focus on monetary donations.
We're also investing our timing the communities with over 11000 volunteer hours by our employees across 264 organizations.
We also participate with organizations like CCB, where we presented our sustainability framework and long term strategy to investors.
This engagement is something that makes us very proud and defined so sounds like pumping.
Now, let me turn to slide six I want to talk to you about our de carbonization efforts as we transition our business away from traditional generation and closer to the retail customer.
In September of last year.
We accelerated our carbon reduction goals to conform with the wanting to have degree trajectory.
This means reducing our carbon emissions, 50% by 2025 and to be net zero by 2015.
These goals are some of the most ambitious in this sector and we're proud with a program that we have made to date.
We are already 83% of the way to our 2025 goal, we clear line of sight to achieve it with our current portfolio.
Although our baseline is 2014.
We shopping Decarbonizing our fleet since 2000, and then as you can see on the left hand side of the slide.
We have reduced our carbon emissions by 40 million metric tons in just the last 10 years.
That is the equivalent of taking 9 million cars off the road every year.
As you can see our actions move the needle.
We will continue to share our progress and plants in the month to come.
From an earnings perspective.
As we progress towards decarbonization.
Coal generation is contributing less and less or earnings.
Moving to the Rightside on this slide.
In just the last six years call. That's a percentish of our total revenues has decreased 55% and that's inclusive of capacity revenues.
This is an important distinction as energy revenues have been the bulk of the decline and our coal assets in the East Now Act, primarily that's insurance for grid reliability and not for electric generation.
Finally sustainability is an integral part of our culture and incorporated in our incorporated in our strategic decisions.
We continue to take concrete actions to limit our own carbon footprint.
While also providing customers with cleaner energy choices.
So just electricity plans from renewable resources.
I look forward to updating you on our progress in the future and be on the look out for the release of our annual sustainability report in early May.
Now turning to slide seven I want to provide you a brief update on our core markets.
Beginning on the left side of the slide.
As you can see on the chart electric demand the market continues to grow at the fastest space in the nation.
Between two and 3% per year for the foreseeable future.
Now as you all know the direct result of these robust loan growth.
Our record tight supply demand balance for reserve margin.
These requires a tremendous amount of generation investments simply to maintain the current low reserve margin.
As a large participant in the market. We are looking to facilitate solar new builds to improve reliability and rebalance our portfolio by entering into medium term PPA pace.
These BPAC enable developers to obtain cost effective financing and tax equity to economically develop that project.
And for us they complements our generation profile lowered our cost structure and allows us to better serve our customers.
From an overall market perspective, we expect ERCOT to remain tight and volatiles for the foreseeable future.
Our integrated platform is well positioned to thrive during these volatile and emerging renewable build cycle.
Moving to the right side of this life.
We are seeing steady progress in all of our core markets with FERC Isos and states addressing the current market the sign and adapting it to the evolved greed of the future.
While progress has not been perfect.
We support efforts that create durable markets that benefit consumers and fosters the transition to a cleaner and sustainable energy future.
In ergo regulators continue to refine their scarcity pricing mechanism to incentivize new generation, which is predominantly renewable and intermittent.
While adequately compensating existing resources that provide firm or dispatchable generation.
In the east.
FERC issued a ruling on the PJM capacity market proceeding.
Which resulted from its finding that current market design is unjust and unreasonable.
These ruling.
Six to correctly account for resources that receive state subsidies.
Particularly out of markets nuclear self service that stifles development, the renewable energy and distorts the integrity of competitive markets.
These ruling.
Just the most recent in a series of market reforms that PJM and FERC has undertaken since 2004 to protect the integrity of competitive markets.
Okay.
Moving to capital allocation on slide eight.
You can see that our track record is directly in line with our roadmap to value creation of Stabilise rightsize and now redefine our company.
During 2019.
We achieved our investment grade credit metric target.
We announced the highly accretive stream retail transaction and close that within three months.
And in line with my commitment to returning capital, we increase our dividend 10 fold and executed $1.44 billion in share repurchases.
For our 2020 capital allocation plan.
We are already executing.
We paid our first dividend on their our recently announced $1.20 per share with 7% to 9% I know growth dividend policy.
We have already begun executing share repurchases on the our current 400 million dollar share buyback program consistent with the 50% return of capital commitment.
And like in 2019, and every year since I took over as CEO.
You can expect discipline and timely allocation of our excess on committed capital as we earn it throughout the year.
Last.
I want to remind everyone about our capital allocation framework on the right side of this like.
As you can see on the waterfall.
We remain committed to maintaining top deciles safety and operational excellence.
We will continue to have a strong balance sheet, having now achieved investment grade credit metrics.
And last quarter, we provided enhanced visibility into our long term capital return philosophy.
At least 50% will be return through a mix of dividends and share repurchases.
For the other 50%.
We remain committed to our growth investment criteria.
Which must meet or exceed our financial thresholds.
And be consistent with our core strategy or it will be returned to shareholders.
Now given that the seasonality of our cash flows and liquidity ultimately foreign capital allocation.
It is my intention for the 50% return of capital to be allocated more programmatically.
With the dividend paid quarterly.
And share repurchases throughout the year.
You know the risk of being redundant.
As we have consistently said on nearly every earnings call and every meeting.
We are committed to being prudent allocators of shareholder capital.
We will continue to demonstrate our disciplined by adhering to our stated principles.
And allocate capital to opportunities that maximizes long term value for your investment.
That's our mindset.
So with that I will turn it over to current financial review.
Thank you ratio.
Turning to financial summary on Slide 10, NRG finished 2019 with 1.977 billion in adjusted EBITDA and 1.2 point 2 billion in free cash flow for growth.
Retail delivered 920 million in adjusted EBITDA, a $32 million decrease versus 2018, largely due to higher supply costs in the burkart region.
Highlighting the benefits of our integrated platform wholesale higher wholesale parties prices particular in ERCOT benefited our generation segment, which delivered 1.057 billion in 2019.
Moreover, as our prior year 2018 generation results included approximately 180 million in EBITDA from assets subsequently sold those well as Aguascalientes Ivan power results prior to their deconsolidation.
On a same store basis, our 2019 generation EBITDA results represented over a 400 million year over year increase in EBITDA.
Our consolidated 2019 results also include the benefit of the full run rate of $590 million and cost savings as well as $135 million margin enhancement from our transformation plan.
2019 free cash flow before growth was 1.212 billion.
Although these results represent a $92 million increase over 2018.
Free cash flow fell short of our guidance range of 1.25 to 1.35 billion.
Due to the impact of a delay in the timing of certain cash flow items, which will now contribute to 2020 free cash flow.
In total on a net basis the impact of these timing related items was approximately 60 million.
The largest component of these items was to delay in the receipt of 34 million in A.M.T. credit refunds due to NRG in 2019 as a result for the tax reform and jobs Act.
NRG filed the required documentation associated with these refunds on time, and we fully expect to receive them in 2020.
The balance of the next timing impact primarily consist of other working capital related items, which we now expect in 2020.
And as a result, the full amount of the 60 million will be realized in this year.
Turning to an update on share repurchase activity, we completed the latest $250 million share repurchase program announced in 2019 and have now turned toward executing on programmatic share repurchases in 2020 as a part of our revised capital allocation framework announced last quarter.
This framework includes our commitment to returning at least 50% of annual free cash flow to our shareholders through a combination of our increased dividend and ongoing share repurchases.
As a result in 2020, we expect to execute on approximately 380 million of incremental share repurchases will look which Alex bring in greater detail and a few bonds.
In 2019, we reduced debt by 600 million and achieved our target investment grade metrics for the year.
We also realized an important milestone as we continue toward our goal to align our ratings with our credit metrics and our reduce risk profile as we received an upgrade from Moody's to be a war.
One notch below investment grade with a positive outlook.
Finally, as Maria mentioned in his opening remarks, we are reaffirming our 2020 adjusted.
Saldate adjusted EBITDA guidance range of 1.9 billion to 2.1 billion and consolidated free cash flow before growth guidance of 1.275 billion into 1.475.
Okay.
Turning to slide 12 for a final summary of 2019 capital allocation.
With changes since our prior update highlighted in blue.
After adjusting for 2019 actual cash flow results. Our total 2019 excess capital available was 2.84 or 5 billion and was allocated as follows.
Just over 700 million or approximately 25% was used to fund reductions in total debt in order to achieve our target investment grade metrics.
1.44 billion, representing just over 50% of total capital was used to fund share repurchases during 2019.
We ended the year with 60 million remaining under the most recent $250 million buyback program.
And have completed these repurchases during early 2020.
Dividends in 2019 under the prior dividend policy represented the balance of return of shareholder capital and of course will represent a significantly more robust component of capital allocation going forward.
551 million was allocated to growth and other investments or approximately $30 million increase versus our prior update reflecting M&A fees and other integration cost associated with our retail acquisition.
After a slight shift in transformation plan cost to achieve from 2019 to 2020. We ended 2019 with 35 million in unallocated capital, which will be part of the 2020 summary.
And I'll now turn to that on slide 12.
As shown on the left of slide 12, the combination of 35 million carried over from 2019, plus the midpoint of our 2020 free cash flow guidance leads to just over 1.4 billion in capital available for allocation in 2020.
As I mentioned before we ended 2018 with $60 million balance remaining under our latest buyback program, which has now been completed in 2020.
Adjusting for that 2019 carryover, we have 1.35 billion in 2020 capital remaining to be allocated to which we then apply our framework of 50% return of shareholder capital and 50% toward potential value accretive investment opportunities.
675 million will be returned to shareholders in 2020 via our increased dividend for 295 million and the balance of 380 million through ongoing share repurchases.
Okay, which we have executed 62 million year to date.
The remaining 50% of excess capital is available for potential investment opportunities, which only 61 million or currently identified.
As shown in the box below the chart. This consist of the balance of cost to achieve associated with the transformation plan.
Our ongoing commitment to legacy jet on pension obligations.
And costs associated with readying the site of our retired Sina generating station in California to be marketed for redevelopment.
This site is located in San Diego County, and as a prime location for real estate development.
As with our successful sale of the Potrero site outside San Francisco, just a few years ago.
The in Sina site represents a similar compelling opportunity for monetization.
The balance of $614 million unallocated capital remains available for accretive investment opportunities.
However, should we be unable to find sufficient magnitude of strategically consistent value enhancing opportunities, which exceed both our hurdle rate as well as the opportunity cost of our own stuff, we intend to allocate any remaining balance of this capital to our shareholders.
Finally, turning to slide 13 based on 2019 actual results. We ended the year near the midpoint of our target investment grade metric range.
For 2020, we remain on track to further strengthen our investment grade credit metrics to 2.5 times net debt to EBITDA.
Making 2020, this second year of achieving investment grade credit metrics for NRG.
Importantly, we expect to achieve these results without the need for additional capital allocation towards debt reduction.
We continue to believe that the combination of our stable cash flows and strong credit metrics along with the continued execution.
Places us in a position to build on our recent ratings upgrade toward achieving investment grade ratings over the next 12 18 months.
And with that I'll turn it back to receive.
Thank you Kirk turning to slide 15.
I want to provide you a few closing thoughts on our 2020 priorities on expectations.
As always our top priority remains delivering on our financial and operational objectives, and I'd be or into our capital allocation principles.
In addition to completing our transformation plan, we remain focused on further perfecting a growing our business.
These means rebalancing our current portfolio through additional asset optimization efforts and growing our customer base with compelling retail products supported by capital light generation supply.
With a large asset sales completed we're looking up further optimizing single assets and our real estate portfolio at large.
An example of that is what we're doing a bmcs site getting it ready for commercial redevelopment.
And the development on sale of come out three.
These type of projects are generally highly accretive don't use permanent capital and further simplify our story.
We will also continue to enhance on simplify our disclosures to better align with the way we manage our integrated business.
In the next earnings call, we will provide additional disclosures around our core platform.
Finally.
And like I said earlier, our company today is stronger than it has ever been.
We have the financial flexibility to continue perfecting our platform to make it simpler and more predictable.
While consistently returning significant capital to shareholders I.
I am very excited for 2020, and the future of our company and I want to thank you for your time and interest in NRG.
With that the Wanda we're now ready to open the line for questions.
Thank you.
Ladies and gentlemen, as a reminder to ask the question you will need to press Star then one on your telephone.
So what are your question press the pound Keith.
Again that star one to ask the question.
Please standby, while we compile the Kiani Boston.
First question comes from a lot of Michael <unk> with Goldman Sachs. Your line is open.
Hey, guys. Thanks for taking my question I really have to one is how far into the year will you kind of seek growth related opportunities before you decide to pivot and utilize that capital for shareholders for per share buybacks. That's question one.
Question can you just wanted to think about.
The the asset base and how you're looking at whether it's the you know some of the fossil plants in the northeast or some of the gas plants in California.
What could potentially.
Not be a long term core asset for NRG.
Yes, Michael Good morning, Thank you for your questions.
I mean, the first one related to the timing on you know, whether we allocate the suck up the boat to grow where we reallocated to share buybacks.
I think during the second half of the year, we're gonna have more clarity in whether we have actionable growth opportunities that not only meet our financial thresholds.
What are better than the opportunity coastal buying our own shares. So I think at that time, we will now start you know reallocating that capital through share buybacks.
And then with respect to Youre central Eastern Yeah with respect to your second question about I think it's more broadly just what what is core generation in our portfolio I.
I think in the past I said, Texas is pretty well balanced and we're actually.
Complementing our supply generation with BP Ace in the east and particularly in California, I mean in these we are generation is bigger than our retail supply so either we grow retail or we reduce our generation position and we're evaluating that now keep in mind up.
You know the model that we have going forward. These we really one generation that serves a purpose and that purposes to better serve our customers in the most cost efficient way, so we're constantly and continuously going to evaluate.
Our generation portfolio in light of that about priority, California is less strategic less core because we don't have a retail business. So.
Why do we have benefited from an increasing capacity pricing, California. You know, we're gonna are continuously evaluate a that portfolio through the less of our long term strategic goals.
Got it. Thank you very much for that and then finally, when you're looking at cost management opportunities kind of longer term.
Where do you think the greatest opportunities exist and I'm thinking kind of post 2020.
I think or you know first I'm, assuming you're talking about opportunities for growth I mean side, what you're referring to Michael no I'm talking about cost management, so reducing I'll back.
Yes, Okay, well a couple of things we've been completely focused right now and executing a transformation right now so I mean, I'm very pleased with a with the progress that we have made we're not done yet we got to deliver on the margin enhancement as we finalize that we're going to start looking you know how do we.
We where other opportunities are as we integrate the portfolio and simplify the story even beyond the let's call. It the big asset sales I think there we saw an opportunity to further streamline.
They were inner workings of our organization, which will translate in cost savings.
Got it thank you guys much appreciated.
Thank you.
Our next question comes from below Crisil Mehta with Citigroup. Your line is open.
Thanks, So much high guys.
Good morning can you hear me.
Yes morning.
Good morning, Alright. So that's the first question was on PJM and I'm always here you talked about the assets.
Basically getting more capacity Robin energy, given the uncertainty with what's happening with the FERC ruling, allowing capacity auctions and the capacity market do you see any concern that if every state where to step away from the PJM capacity market that it has the risk for you in terms of your capacity revenue or or kind of how do you see that.
Laying out.
Yes, so well, let me provide just a little bit of context on perhaps I I'll turn it over to Chris to talk about how is going to play out.
I mean, I want to remind everyone that our total exposure to PJM.
It's less than 5% of our EBITDA.
Why do we have been you know and very active on the PJM discussion I also I'm mindful that is the exposure that we have is just less than 5% of I'd be dot. So we need to allocate resources accordingly for that.
Having said that I will tell you that I was very pleased with it for a quarter I think it is very consistent with what they have dawn in previous years, we cheese maintained the integrity of competitive markets, which have greatly benefited consumers across the PJM footprint, so without set off.
Chris in terms of what the spec next.
Praful, it's Chris I would say that I agree with Maria there. The FERC MOPA ruling was positive for competitive markets and should help mitigate some of the impact of handouts to some local utilities.
You're talking about states pulling out arguably that's the f. our process and I think as states look at that they may see that the f., our our as an inferior alternative for consumers, who regionwide capacity market. I mean, if you look at the history of Fr ours.
Consistently cost the consumers in that area three to 10 times, the prevailing auction rate they shift risk onto a captive set a rate payers lock in the local human.
Napoli the latest numbers I saw from the Imam indicates that the nukes that are getting this ex right now are profitable without him. So it's unclear to me why an f. our would be the choice of anybody except the ones receiving those subsidies.
So yes, there's obviously a lot of of smoke around this right now and a lot of states are talking about it but I mean, if you do if you dig into whatever ours have done in the past and what they are expected to do in the future. It doesn't seem like a great idea for me.
Got it well that's super helpful color, there and maybe moving onto more strategic question, which is as you know as GE and you've talked about it as run in your slides has become a big focus investor focus has changed and continues to change with environmental becoming a big factor.
Do you see at some point going private doesn't option that you would consider or how would you look at that go private given how generally investor perception is changed over time.
Yeah, well first I I agree that the FDA has gotten a lot of focus lately for AWS. These has been a focus on the company since I became CEO I mean as you can see from the.
Progress and the details that I provided today on the presentation.
I mean, you don't believe overnight. This is the result of yeah, three and a half years almost four years of intense work an intense focus on energy. So not only is important for us is foundational annie's embedded in everything that that.
That we do to your second question around going private right now it's not lost on me the up you know where our stock prices and you know the difference between that it really doesn't reflect the fundamental value of our company. You know we continued to be focused on executing and delivering on our results.
We believe that value proposition that we have both a business that is balanced between generation at retail that provides a stable and predictable earnings.
We they investment grade metrics balance sheet, and a meaningful return of capital shareholders is compelling.
And if that doesn't translate we will evaluate all options. My goal my mandate is to maximize shareholder value and everything that we do and all the decisions that we take on allocating capital is with that mindset. So you know I mean right now we're gonna be focused on executing but he's not lost.
For me that at some point, we will have to evaluate all options.
Gotcha, and just to clarify on that when you say to evaluate all options is that our time window, we should be thinking about in terms of is the public market looks on Oct. How should we think about that.
Yes, I mean right now we're still in the final year of the three year transformation plan that we have dawn we are on a path to achieving investment grade credit rating.
I think when we started seeing the all of those things finalizing and obviously, we already provided enhanced visibility on our capital allocation. So when these things start.
All visible for shareholders and we just don't see we continued to see a significant GAAP between the stock price and the fundamental value for our company I think I will be the tying to start evaluating all other options.
Got it very helpful very clear thanks, so much money.
Thank you.
Thank you.
As a reminder, ladies and gentlemen, that's fall line to ask the question.
Final question comes from the line up.
Julien Dumoulin Smith of Bank of America. Your line is open.
Hey, good morning team. Thanks for the time again, just following up on some of the capital allocation conversations here.
Can we talk a little bit more about the unallocated piece and just how you think about.
Finding opportunities that meet this more stringent hurdle rate and again I'll say it I mean I appreciate.
The capital allocation diligence.
That you've articulated here, but given just how high of a threshold that is.
How do you think about maybe the timing, but also related to that the the opportunity set that might be available at that told to 15% beyond just retail it would seem as if.
Buybacks would would be the the obvious default here and so I.
And any thoughts on that.
Yeah, Joe again, well first of all.
The recent a price of our stock is never lost on me and particularly when it comes to capital allocation.
So you know I think about these growth opportunities such as I said before not only they have to meet our financial hurdles, but they need to be superior to that cost of not buying back our own shares so.
Having said that I you know there are some areas of opportunities that are consistent with our.
With our long term strategy I will say that retail a while there has been a lot of consolidation there's still some opportunities I would say in the small to medium size companies and given the scale that we haven't the scope of our operational platform, we can achieve significant synergies when it.
Looking at these opportunities I don't see the same you know attractive opportunities in the generational side. That's why we have been executing on our copied the light PPA strategy. So I mean, I don't disagree with you I mean, particularly with the recent performance of our stock price. It makes it so much.
Harder to allocate capital to growth or in this case.
It makes the probability of reallocating that capital from grow to share buybacks, you know much more probable.
Got it and if I can follow up on one more niche type issue here. How are you thinking about New York ultimately given some of the new Reg and compliance and just.
Strategic.
Options broadly.
Hey, Julian Chris Here you. If you go look at the 10-K, there's a line in there that says in effect late last year, New York finalized more stringent Knox regulation that will result in the retirement of the asset.
The story at Pratt and Whitney is.
In early 2023.
Okay, all right so it's pretty definitive.
Yeah, I mean, the filing will go in and a couple of days, but to give you that line is in the 10-K somewhere.
Okay, Alright excellent. Thank you all very much no. Yes. The one thing that I will say just keep in mind up that asset. This is very valuable to slip to New York City and as we always do with our portfolio. We try to evaluate what is the most profit maximizing way of.
Looking up these real estate sites.
Yeah.
Thank you Julien.
Thank you.
Those are the inches of time that is all the time, we have a question I would now like to turn the call over to Mark.
Got to me.
Thank you so on the once again, thank you very much for your interest in NRG and I look forward to continuing our conversation. Thank you.
Ladies and gentlemen, this concludes todays conference. Thank you for participating you may now disconnect everyone have a wonderful day.
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