Q1 2024 Vistra Corp Earnings Call

Operator: Good day, and welcome to Vistra's First Quarter 2024 Earnings. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by Z. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch screen; to withdraw your question, please press star.

Good day and welcome to the Vista first quarter 'twenty 'twenty four earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Operator: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

Operator: To withdraw your question. Please press Star then two please.

Operator: Please note, this event is being recorded. I would now like to turn the conference over to Eric Micek, Director of Investor Relations. Please go ahead.

Operator: Please note this event is being recorded.

Speaker Change: I would now like to turn the conference over to Eric My Sick VP Investor Relations. Please go ahead.

Eric Micek: Good morning, and thank you all for joining Vistra's Investor Webcast discussing our first quarter 2024 results. Our discussion today 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 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.

Eric Micek: Good morning, and thank you all for joining Mistras investor webcast discussing our first quarter 2024 results. Our discussion today is being broadcast live from the Investor Relations section of our website at Www Dot District Court Dot com.

Eric Micek: They will be joined by other Vistra senior executives to address questions during the second part of today's call, as necessary. The earnings release, presentation, and other matters discussed on the call today include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are provided in the earnings release and in the appendix to the investor presentation available in the Investor Relations section of Vistra's website.

Eric Micek: You can also find copies of today's investor presentation and earnings release, leading the call today are Jim Burke, President and Chief Executive Officer, and Chris motivated Mistras Executive Vice President and Chief Financial Officer, They're joined by other Mr. Senior executives to address questions. During the second part of today's call as necessary our earnings release presentation and other matters discussed.

Eric Micek: On the call today include references to certain non-GAAP financial measures reconciliations to the most directly comparable GAAP measures are provided in the earnings release and in the appendix to the Investor presentation available on the Investor Relations section of visitors 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.

Eric Micek: Also, today's discussion contains forward-looking statements that are based on assumptions we believe to be reasonable. However, 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 such forward-looking statements.

Eric Micek: 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 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 <unk>.

Eric Micek: 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. I will now turn the call over to our President and CEO, Jim Burke. Thank you, Eric.

Eric Micek: History and market data included in the presentation and the use of non-GAAP financial measures I will now turn the call over to our President and CEO Jim Burke.

James A. Burke: I appreciate all of you taking the time to join our first quarter 2024 results call. This call is taking place in conjunction with a major milestone for Vistra, namely the first day of inclusion of our stock in the S&P 500. I want to recognize the hard work of our Vistra team and the support and patience exhibited by our shareholders as this is a result of both strong execution over time, bolstered by improving market dynamics in the power sector.

James A. Burke: Thank you Eric I appreciate all of you taking the time to join our first quarter 2024 results call. This call is taking place in conjunction with a major milestone for distress.

James A. Burke: Namely the first day of inclusion of our stock in the S&P 500.

James A. Burke: I want to recognize the hard work of our district team and supporting patients exhibited by our shareholders. As this is a result of both strong execution overtime bolstered by improving market dynamics in the power sector.

James A. Burke: We are pleased to be included in the index and excited about the future prospects for Vistra and its stakeholders. Turning to slide five, before we cover the positive results for the quarter, it's worth noting that we see a significant increase in Vistra's long-term outlook. Our team's been hard at work to ensure Vistra's best position for the increasing power demand fundamentals while providing reliable, affordable, and sustainable power to our customers. Continuing the theme of execution, our integration teams were hard at work during this quarter.

James A. Burke: We are pleased to be included in the index and excited about the future prospects for distress and its stakeholders.

James A. Burke: Turning to slide five before we cover the positive results for the quarter, it's worth noting that we see a significant increase in Vista as long term outlook. Our team has been hard at work to ensure investors best position, but the increasing power demand fundamentals, while providing reliable affordable and sustainable power to our customers.

James A. Burke: Continuing the theme of execution our integration teams are hard at work during this quarter with the closing of our acquisition of Energy Harbor on March 1st we were ready on day, one to unify under the Vistaprint and welcome our new colleagues.

James A. Burke: With the closing of our acquisition of Energy Harbor on March 1st, we were ready on day one to unify under the Vistra name and welcome our new colleagues. The core theme throughout the integration process has been one team.

James A. Burke: The core theme throughout the integration process has been one team and we believe that is crucial to a sustainable high performance organization.

James A. Burke: And we believe that is crucial to a sustainable, high-performance organization. The sites are working closely with each other to share best practices and create a culture of continuous improvement. As a result, the teams identified the potential for several operational and performance improvements throughout the nuclear fleet. As Chris will cover later, including the expected financial benefits of these improvements and the additional synergies we've identified, we now expect the run rate adjusted EBITDA contribution from Energy Harbor to exceed $1.1 billion beginning in 2026.

James A. Burke: Sites are working closely with each other to share best practices and create a culture of continuous improvement.

James A. Burke: As a result, the teams identified the potential for several operational performance improvements throughout the nuclear fleet is.

James A. Burke: As Chris will cover later, including the expected financial benefits of these improvements and the additional synergies. We've identified we now expect the run rate adjusted EBITDA contribution from energy Harbor to exceed $1 $1 billion beginning in 2026.

James A. Burke: Turning to the other key priorities, we continue to execute on our capital return plan put in place during the fourth quarter of 2021. Since that time, we've returned to our investors approximately $4.6 billion, including $3.9 billion of share repurchases through May 3rd of this year.

James A. Burke: Turning to the other key priorities, we continue to execute on our capital return plan put in place during the fourth quarter of 2021.

James A. Burke: Since that time, we've returned to our investors of approximately $4.6 billion, including $3 $9 billion of share repurchases through May 30 of this year.

James A. Burke: We continue to view our shares as an attractive investment and expect to execute at least $2.25 billion of share repurchases throughout 2024 and 2025. Crucially, our balance sheet remains strong, enabling the ongoing capital return plan. Our net leverage finished the quarter at approximately three times, exceeding our expectations indicated on the previous quarter results call. We expect net leverage to be below three times by year end 2024. Our disciplined capital approach also enables us to invest in solar and energy storage growth that capitalizes on site-centered connections in the Vistra portfolio. Our Baldwin and Coffin sites, where construction began earlier this year on paired solar energy storage facilities, are good examples of this strategy, and we expect these to be online by the end of the year.

James A. Burke: We continue to view our shares as an attractive investment and expect to execute at least $2.25 billion of share repurchases throughout 'twenty four and 'twenty five.

James A. Burke: Crucially, our balance sheet remained strong enabling the ongoing capital return plan.

James A. Burke: Our net leverage finished the quarter at approximately three times exceeding your expectations indicated on the previous quarter results call.

James A. Burke: We expect net leverage to be below three times by year end 2024.

James A. Burke: Our disciplined capital approach also enables us to invest in solar and energy storage growth to capitalizes on sites Interconnects into Vista portfolio.

James A. Burke: Our Baldwin and coffee insights, where construction began earlier this year on parents solar energy storage facilities are good examples of this strategy and we expect these to be online by the end of the year.

James A. Burke: Finally, we've completed our first non-recourse financing at Vistra Zero, providing attractive capital for our growing portfolio of operating renewable assets. Moving to slide six, we achieved ongoing operations adjusted EBITDA of $813 million, a 47% increase compared to the first quarter of 2023. As you can see, many of the themes contributing to results last year continued into the first quarter of this year. The first quarter of 2024 again reflected the benefits of our comprehensive hedging program as the warmest winter on record in the US led to lower than expected cleared power prices across the country, specifically, while power prices in the markets we serve cleared below $30 per megawatt hour on average for their first quarter. Our first quarter results reflect an average realized power price of over $50 per megawatt hour.

James A. Burke: Finally, we've completed our first nonrecourse financing industry zero, providing attractive capital for our growing portfolio of operating renewable assets.

James A. Burke: Moving to slide six we achieved ongoing operations adjusted EBITDA was $813 million.

James A. Burke: A 47% increase compared to the first quarter of 2023.

James A. Burke: As you can see many of the themes contributing to results last year continued into the first quarter of this year.

James A. Burke: The first quarter of 2024 again reflected the benefits of our comprehensive hedging program as the warmest winter on record in the U S led to lower than expected cleared power prices across the country.

James A. Burke: Specifically, while power prices in the markets, we serve cleared below $30 per megawatt hour on average for the first quarter. Our first quarter results reflect an average realized power price of over $50 per megawatt hour.

James A. Burke: In these volatile weather environments, which included a winter event in mid-January and then mild weather in February and March, our generation team once again delivered with another strong quarter of commercial availability at approximately 98%. Being flexible with not only daily operations, including ramping down when economics signal us to do so, but rescheduling planned outages to optimize opportunities, enabled the business to deliver strong results. Finally, the retail team delivered another positive quarter of customer count growth across our Texas, Midwest, and Northeast geographies.

James A. Burke: In these volatile weather environments, which include a winter that in mid January and mild weather in February and March our generation team once again delivered with another strong quarter of commercial availability at approximately 98%.

James A. Burke: Being flexible with not only daily operations, including ramping down when economic signal us to do so we're rescheduling planned outages to optimize opportunities enabled the business to deliver strong results.

James A. Burke: Finally, the retail team delivered another positive quarter of customer count growth across our Texas, and Midwest and northeast geographies.

James A. Burke: With the acquisition of Energy Harbor now complete, we're initiating guidance on a combined basis for ongoing operations adjusted EBITDA of $4,550,000,000 to $5,050,000,000 and ongoing operations adjusted free cash flow before growth of $2,200,000,000 to $2,700,000,000. It's important to note that this guidance excludes any potential benefit from the Nuclear Production Tax Credit or PTC, given the uncertainty around how it will be implemented when the regulations are issued later this year.

James A. Burke: With the acquisition of Energy Harbor now complete we are initiating our guidance on a combined basis for ongoing operations adjusted EBITDA.

James A. Burke: $4.550 billion to $5.050 billion in ongoing operations adjusted free cash flow before growth of $2.200 billion to $2.700 billion.

James A. Burke: It's important to note that this guidance excludes any potential benefit from the nuclear production tax credit or PTC.

James A. Burke: Given the uncertainty around how it will be important that it when the regulations are issued later this year.

James A. Burke: However, based on where prices settled in the first quarter and the forward curves for the balance of the year, we believe the PTC could add a significant amount to our 2024 ongoing operations adjusted EBITDA guidance range. Finally, you will note that the implied conversion rate from ongoing operations-adjusted EBITDA to ongoing operations-adjusted free cash flow before growth for 2024 is below our stated target of 55 to 60 percent, primarily due to a couple of timing impacts.

James A. Burke: However, based on where prices settle in the first quarter and the forward curve for the balance of the year. We believe the PTC could add a significant amount to our 2020 for ongoing operations adjusted EBITDA guidance range.

James A. Burke: Finally, you will note that the implied conversion rate from ongoing operations adjusted EBITDA and the ongoing operations adjusted free cash flow before growth for 2024 is below our stated target of 55% to 60%.

James A. Burke: Primarily due to a couple of timing impacts we expect a return to our target 55% to 60% range in 2025 and beyond.

James A. Burke: We expect to return to our target 55% to 60% range in 2025 and beyond. While we are not providing guidance to reflect specific ranges for Vistra Vision and Vistra Tradition, our view is that each is expected to contribute roughly half of our adjusted EBITDA over time. However, given the business mix and current capital structure, you can expect Vistra Vision to convert adjusted EBITDA to free cash flow before growth at a higher rate over time, roughly 60 to 65%, compared to Vistra Tradition, which we expect to convert at a rate of approximately 50 to 55%.

James A. Burke: While we are not providing guidance to reflect specific ranges for this revision industry tradition.

James A. Burke: Our view is that each is expected to contribute roughly half of our adjusted EBITDA over time.

James A. Burke: However, given the business mix and current capital structure. You can expect this revision will convert adjusted EBITDA to free cash flow before growth at a higher rate over time, roughly 60% to 65% compared to district tradition, which we expect to convert at a rate of approximately 50 to 55.

James A. Burke: Percent.

James A. Burke: Turning to slide seven, there has been much discussion in recent months about the substantial power demand growth forecast, including from the potential build-out of data centers and other sources of electricity demand. Third-party research indicates data center-related activity could approach 35 gigawatts of additional demand by 2030. However, our teams also see multiple additional potential drivers of demand in the geographies we serve. These drivers include continued reshoring of industrial activity as evidenced by multiple large chip manufacturing site buildouts, partially due to the Chips Act, increased electrification of commercial, industrial, and residential load across the country, as evidenced by the expectation of approximately 20 gigawatts of additional power demand in West Texas by 2030, and strong population growth, particularly in the state With these drivers, we see the potential demand outcome skewing higher, albeit with a wider range. In their most recent report, PJM's low growth expectations through 2030 doubled from their 2023 estimate.

James A. Burke: Turning to slide seven there has been much discussion in recent months about the substantial power demand growth forecast in <unk>.

James A. Burke: Clothing from the potential build out of data centers and other sources of electricity demand.

James A. Burke: Third Party research indicates data center related activity could approach 35, gigawatts of additional demand by 2030. However.

James A. Burke: However, our teams also see multiple additional potential drivers of demand in the geographies we serve.

James A. Burke: These drivers include continued re shoring of industrial activity as evidenced by multiple large chip manufacturing site build outs, partially due to the chips Act incur.

James A. Burke: Increased electrification of commercial industrial and residential load across the country as evidenced by the expectation of approximately 20 gigawatts of additional power demand in west, Texas by 2030.

James A. Burke: And strong population growth, particularly in the state of Texas, which has been steady at 1.5% to 2% per year.

James A. Burke: With these drivers we see the potential demand outcome skewing higher, albeit with a wider range.

James A. Burke: In their most recent report pjm's low growth expectations through 2030 doubled from their 2023 estimate.

James A. Burke: In Texas, recent reports from ERCOT suggest load growth from 2030 in a wide range, from as low as 1.6% per year to as high as 6% growth per year, or even higher if more than half of the large loads recently discussed at ERCOT actually materialize. The trailing 10 years has been approximately 2.5%. And that was before some of these more recent drivers of Permian Electrification, the CHIPS Act, and data center demand.

James A. Burke: In Texas recent reports from ERCOT suggest load growth through 2030, and a wide range from as low as 1.6% per year to as high as 6% growth per year or even higher if more than half of the large loads recently disgusted ERCOT actually materialize.

James A. Burke: The trailing 10 years has been approximately 2.5% and that was before some of these more recent drivers of the Permian electrification the chips Act and the data center demand.

James A. Burke: This increase in demand across the country will need to be served by an electric grid that will continue to see coal plant retirements in all markets. The Inflation Reduction Act will continue to incentivize wind, solar, and battery resources. We will also need gas fired generation to back up those intermittent sources. The new greenhouse gas rules issued by the EPA on April 25th are expected to make it more challenging to economically build baseload combined cycle gas turbine facilities.

James A. Burke: This increase in demand across the country will need to be served by an electric grid that will continue to see coal plant retirements and all markets.

James A. Burke: The inflation reduction act will continue to incentivize wind solar and battery resources, we will also need gas fired generation to backup those intermittent sources.

James A. Burke: The new greenhouse gas rules issued from the EPA on April 25th are expected to make it more challenging to economically build baseload combined cycle gas turbine facilities, but.

James A. Burke: But we expect those rules to be litigated, and it's unclear what the final outcome will be. Natural gas peakers could be a solution that threads the needle of environmental rules and demand needs. In addition, it is likely that existing assets will need to run at higher capacity factors to meet overall annual energy needs as more coal retires. We see Vistra as well positioned for these trends given our diversified portfolio of reliable and sustainable assets in growing markets.

James A. Burke: But we expect those rules to be litigated and it's unclear what the final outcome will be.

James A. Burke: Natural gas P group can be a solution that thread the needle of environmental rules and demand needs.

James A. Burke: In addition, it is likely that existing assets will need to run at higher capacity factors to meet overall annual energy needs as more colon retires.

James A. Burke: We see this year is well positioned for these trends given our diversified portfolio of reliable and sustainable assets in growing markets.

James A. Burke: As you can see on slide eight, the forward curves have moved up considerably in both the Texas and PGM markets on the improved demand outlook, particularly on the longer end of the curve. As an example, ERCOT North around the clock fixed price forwards for calendar 2026 increased over $7 per megawatt hour, or approximately 13% since we last provided guidance in November 2023. For 2027 and 2028, the increases were even more significant.

James A. Burke: As you can see on slide eight the forward curves it moved up considerably in both the Texas and PJM markets on the improved demand outlook.

James A. Burke: Particularly on the longer end of the curve.

James A. Burke: As an example, ERCOT north a round the clock fixed price forwards for calendar 2026 increased over $7 per megawatt hour or approximately 13% since we last provided guidance in November 2023.

James A. Burke: For 2027 and 2028, the increases were even more significant.

James A. Burke: In the past, we've commented that the backwardation and forward curves did not reflect the tighter grid conditions that we expected to result from continued load growth and planned thermal asset retirement. With the recent improvement of both forward power prices and some additional market interest in transacting farther out on the curve, we believe the market is beginning to recognize these dynamics. As I stated at the beginning of the call, our integrated business model, which combines increasingly critical dispatchable generation assets with a premier retail business, positions us well to create long-term value in this dynamic and growing market.

James A. Burke: In the past we've commented that the backwardation and forward curve did not reflect the tighter grid conditions that we expect it to result from the continued load growth and planned thermal asset retirements.

James A. Burke: With the recent improvement in both forward power prices and some additional market interest in transacting farther out on the curve.

James A. Burke: We believe the market is beginning to recognize these dynamics.

James A. Burke: As I stated at the beginning of the call our integrated business model, which combines increasingly critical dispatch of coal generation assets with a premier retail business.

James A. Burke: <unk> us well to create long term value in this dynamic and growing market.

James A. Burke: As a result, based on recent market curves, we are currently estimating a combined ongoing operations adjusted EBITDA midpoint opportunity for 2025 of $5 billion to $5.5 billion. Additionally, while significant uncertainty to both the upside and downside remains for 2026, given our 2026 hedge percentage, which is approximately 50%, we have line of sight to an ongoing operations-adjusted EBITDA midpoint opportunity of more than $6 billion. Like the 2024 guidance, our long-term outlook excludes any potential benefit from the nuclear PTC, and we will continue to evaluate the appropriate timing for including any of that potential benefit.

James A. Burke: As a result based on recent market curves. We are currently estimating a combined ongoing operations adjusted EBITDA midpoint opportunity for 2025 or $5 billion to $5 $5 billion. In addition, while significant uncertainty to both the upside and downside remains for two.

James A. Burke: 26 <unk>.

James A. Burke: Given our 2026 hedge percentage, which is approximately 50%.

James A. Burke: We have line of sight to an ongoing operations adjusted EBITDA midpoint opportunity of more than $6 billion.

James A. Burke: Like the 'twenty 'twenty four guidance, our long term outlook excludes any potential benefit from the nuclear PTC and we will continue to evaluate the appropriate timing for including any of that potential benefit.

James A. Burke: Even without the inclusion of any PTC benefit, the improvement in the near-term and long-term outlook for Vistra is expected to result in a meaningful amount of unallocated capital through 2026. And with that, I will turn it over to Chris to provide a detailed review of our first quarter results. Chris. Thank you, Jim.

James A. Burke: Even without the inclusion of any PTC benefit the improvement in near term and long term outlook for Vista is expected to result in a meaningful amount of unallocated capital through 2026.

James A. Burke: And with that I will turn it over to Chris to provide a detailed review of our first quarter results Chris.

Kristopher E. Moldovan: Turning to slide 10, Vistra delivered strong first quarter results in 2024 with ongoing operations adjusted EBITDA of approximately $813 million, including $841 million from generation, offset by negative $28 million from retail. This represents a $259 million improvement, nearly 50% year over year. For Generation, despite another quarter of mild weather conditions, including the warmest winter on record, our comprehensive hedging program, combined with the team's ability to optimize our flexible assets, enabled another quarter of strong results.

Chris: Thank you Jim turning to slide 10, Mr delivered strong first quarter results and 2024 with ongoing operations adjusted EBITDA of approximately $813 million, including $841 million from generation.

Kristopher E. Moldovan: Set by negative $28 million from retail this represents a $259 million improvement nearly 50% year over year.

Kristopher E. Moldovan: For generation, despite another quarter of mild weather conditions, including the warmest winter on record our comprehensive hedging program combined with the team's ability to optimize our flexible assets enabled another quarter of strong results.

Kristopher E. Moldovan: Turning to retail, as was the case in 2023, the first quarter result was within the range of what we expected. However, we continue to see higher hedge power costs in the winter and summer months due to entry year shaping, and therefore, we anticipate substantially all of ongoing operations adjusted EBITDA for retail to be achieved in the second and fourth quarters. We believe continued strong counts and margins in the first quarter position retail well for the balance of the year.

Kristopher E. Moldovan: Turning to retail as was the case in 2023, our first quarter result was within the range of what we expected we continue to see higher hedge power cost in the winter and summer months due to entry year shaping and therefore anticipate substantially all of our ongoing operations adjusted EBITDA for retail to be achieved in the second and fourth.

Kristopher E. Moldovan: Orders, we believe continued strong counts and margins in the first quarter position retail well for the balance of the year.

Kristopher E. Moldovan: Finally, our first quarter results benefited from the inclusion of one month of Energy Harbor, which totaled approximately $60 million for generation and retail combined. Regarding Energy Harbor, we provide an update on the integration process on slide 11. As Jim mentioned earlier, the teams made significant progress integrating the businesses despite a later than expected closing. In the short time since completing the acquisition, the team has identified approximately $150 million of timing and gross margin benefits that are expected to be realized in 2024. These benefits are expected to bring the in-year 2024 contribution from Energy Harbor to approximately $700 million, which compares favorably to our 10-month contribution estimate.

Kristopher E. Moldovan: Finally, our first quarter results benefited from the inclusion of one month of energy Harbor, which totaled approximately $60 million for generation and retail to come back.

Kristopher E. Moldovan: On energy Harbor, we provide an update on the integration process on slide 11, as Jim mentioned earlier. The team has made significant progress integrating the businesses. Despite a later than expected closing in the short time since completing the acquisition. The team has identified approximately $150 million of timing and gross margin benefits.

Kristopher E. Moldovan: They are expected to be realized in 2024.

Kristopher E. Moldovan: These benefits are expected to bring the in year 2024 contribution from energy Harbor to approximately $700 million, which compares favorably to our 10 month contribution estimate.

Kristopher E. Moldovan: Turning to integration benefits, we previously communicated expected run rate synergies of $79 million by year-end 2024 and a run rate of $125 million by year-end 2025. Based on the efforts of the teams completed to date, we are increasing the amount of expected run rate synergies by $25 million to a total of $150 million. Furthermore, when we first announced the acquisition of Energy Harbor, we highlighted our core competency of integrating generation assets, citing the achievements of our Operational Performance Improvement, or OPI, program following the Dynegy acquisition.

Kristopher E. Moldovan: Turning to integration benefits, we previously communicated expected run rate synergies of $79 million by year end 2024, and a run rate of $125 million by year end 2025.

Kristopher E. Moldovan: Based on the efforts of the teams completed to date, we are increasing the amount of expected run rate synergies by $25 million to a total of $150 million.

Kristopher E. Moldovan: Further when we first announced the acquisition of Energy Harbor, we highlighted our core competency of integrating generation assets, citing the achievements of our operational performance improvement for Ob program. Following the Dynegy acquisition.

Kristopher E. Moldovan: I am pleased to report that this program continues to deliver, with the teams having identified opportunities for more efficient operations across our nuclear fleet that we expect to lead to $50 million of run rate adjusted EBITDA improvements by year-end 2026. Importantly, we expect these additional opportunities to be achieved with little incremental capital expenditure. Finally, we provide an update on the execution of our capital allocation plan on slide 12. As of May 3rd, we executed approximately $3.9 billion of share repurchases, leading to an approximately 28% reduction compared to the number of shares that were outstanding in November 2021.

Kristopher E. Moldovan: I am pleased to report that this program continues to deliver with the teams having identified opportunities for more efficient operations across our nuclear fleet that we expect to lead to $50 million of run rate adjusted EBITDA improvements by year end 2026.

Kristopher E. Moldovan: Importantly, we expect these additional opportunities to be achieved with little incremental capital spend.

Kristopher E. Moldovan: Finally, we provide an update on the execution of our capital allocation plan on slide 12.

Kristopher E. Moldovan: As of May 3rd we executed approximately $3 $9 billion of share repurchases, leading to an approximately 28% reduction compared to the number of shares that were outstanding in November 2021.

Kristopher E. Moldovan: In line with our statements on the fourth quarter 2023 call, we expect to execute at least $2.25 billion of share repurchases over the course of 2024 and 2025. With the long-term update provided today, we still see our shares trading at an elevated free cash flow yield and thus continue to believe share repurchases to be a sound use of our capital. Moving to our dividend program, we announced last week the first quarter 2024 Common Sock dividend of 21.75 cents per share, which represents an increase of approximately 7% over the dividend paid in Q2 2023 and an impressive 45% increase over the dividend paid in the fourth quarter of 2021, when our capital allocation plan was first established.

Kristopher E. Moldovan: In line with our statements on the fourth quarter 2023 call, we expect to execute at least $2.25 billion of share repurchases over the course of 'twenty 'twenty, four and 2020 five.

Kristopher E. Moldovan: With the long term update provided today, we still see our shares trading at an elevated free cash flow yield and does continue to believe share repurchases to be a sound use of our capital.

Kristopher E. Moldovan: Moving to our dividend program, we announced last week, our first quarter 2024, common stock dividend of $21 75 per share, which represents an increase of approximately 7% over the dividend paid in Q2, 2023, and an impressive 45% increase over the dividend paid in the fourth quarter of 2021.

Kristopher E. Moldovan: When our capital allocation plan was first established.

Kristopher E. Moldovan: Turning to the balance sheet, Vistra's net leverage ratio currently sits at three times. As Jim stated earlier, we expect to return to below three times by the end of 2024 and continue to target a long-term net leverage ratio below three times. As you may have seen, we successfully issued $1.5 billion of senior secured and unsecured notes at the beginning of April.

Kristopher E. Moldovan: Turning to the balance sheet mysteries net leverage ratio currently sits at three times.

Kristopher E. Moldovan: As Jim stated earlier, we expect to return to below three times by the end of 2024 and continue to target a long term net leverage ratio below three times.

Kristopher E. Moldovan: As you May have seen we successfully issued $1 $5 billion of senior secured and unsecured notes at the beginning of April.

Kristopher E. Moldovan: These notes were issued primarily to fund our 2024 maturities and are not expected to increase our overall leverage level. We were very pleased with the transaction and view the tight issuance spreads as recognition by bondholders of Vistra's well-positioned business model and favorable outlook. Finally, the first quarter of the year was an active period for Vistra Zero.

Kristopher E. Moldovan: These notes were issued primarily to fund our 2024 maturities and are not expected to increase our overall leverage levels.

Kristopher E. Moldovan: We were very pleased with the transaction and view the type of issuance spreads as recognition by bondholders. The Vista is well positioned business model and favorable outlook.

Kristopher E. Moldovan: Finally, the first quarter of the year was an active period for Vista zero. Our team began construction activity that two of our larger, Illinois solar and energy storage developments at our family called plant sites. This spring, notably despite the current inflationary environment. We continue to expect these projects to comfortably exceed our targeted return thresholds.

Kristopher E. Moldovan: Our team began construction activities at two of our larger Illinois solar and energy storage developments at our formal coal plant sites this spring. Notably, despite the current inflationary environment, we continue to expect these projects to comfortably exceed our targeted return threshold. Importantly, we took the initial step in developing the long-term capital structure of the Vistra Zero Renewables business, closing on a non-recourse financing at Vistra Zero. The $700 million term loan, which was also well-received, is the first step towards our goal to fund our solar and energy storage growth with a combination of free cash flow from operating renewable projects and non-recourse financing. Finally, in connection with the closing of the Energy Harbor Acquisition, we have begun paying dividends to the minority investors in Vistra Vision.

Kristopher E. Moldovan: Importantly, we took the initial step in developing our long term capital structure of the Vista zero renewables business closing on a nonrecourse financing at Mr Zero.

Kristopher E. Moldovan: The $700 million term loan, which was also well received is the first step towards our goal to fund our solar and energy storage growth with a combination of free cash flow from operating renewable projects and nonrecourse financings.

Kristopher E. Moldovan: Finally in connection with the closing of the Energy Harbor acquisition, we have begun paying dividends to the minority investors in Vista vision. Our current expectation is that we will pay approximately $100 million in 2024.

Kristopher E. Moldovan: We view these dividends as part of our capital allocation program as we continue to analyze the Mistras earnings power on a consolidated basis.

Kristopher E. Moldovan: We are very proud of the Vista team's performance to begin the year and we remain committed to executing against our four strategic priorities. We look forward to updating you on our progress on our second quarter call.

Operator: Our current expectation is that we will pay approximately $100 million in 2024. We view these dividends as part of our capital allocation program as we continue to analyze Vistra's earnings power on a consolidated basis. We are very proud of the Vistra team's performance to begin the year, and we remain committed to executing against our four strategic priorities. We look forward to updating you on our progress during our second quarter call. With that operator, we're ready to open the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press the star, then 1 on your touch screen.

Speaker Change: With that operator, we're ready to open the line for questions.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause.

Operator: If you are using a speakerphone, please pick up your handset before pressing the button. If at any time your question has been addressed and you would like to withdraw your..., please press star. At this time, we will pause momentarily to assemble our roster, and Shahriar Pourreza with Guggenheim Partners. Please go ahead. Hey guys, good morning. Good morning. Good morning.

Shahriar Pourreza: Momentarily to assemble our roster.

Operator: Okay.

Shahriar Pourreza: The first question comes from Shar <unk> with Guggenheim Partners. Please go ahead.

Shahriar Pourreza: Hey, guys good morning.

Shahriar Pourreza: Hey, Shar good morning, good morning, Jim not to sound like a broken record here, but obviously the moves we've seen in Sparks.

James A. Burke: Jim, not to sound like a broken record here, but obviously the moves we've seen in SPARC, does that change your thoughts around maybe tradition, standalone viability, and potentially separating the two companies sooner rather than later, or kind of vice versa? And maybe, at the very least, should we expect more details around re-segmentation with a roll forward later this year as it moves in the curves? I can obviously change the kind of that top level disclosure you just provided between the two segments, or is this not a priority? Thank you, Shahriar.

James A. Burke: Does that change you know your thoughts around maybe tradition, standalone viability and potentially separating the two companies sooner rather than later or kind of vice versa. And then maybe at the very least should we expect more details around re segmentation with a roll forward later this year that the moves in the curves can obviously change kind of that.

Speaker Change: Top level disclosure you just provided between the two segments or was just not a priority.

Speaker Change: Sure. Thank you Shar.

James A. Burke: Yeah, as you've noted, the sparks have obviously increased, and fixed price power has also increased. This discussion about the value of tradition, which I think has come into focus a lot in the last two months, has been really positive for Vistra overall. As you note, the Vistra tradition business is a key part of how we integrate our model overall. So we have a very large retail business that we have in VistraVision, and a lot of that business is residential.

Speaker Change: Yeah as you've noted the Sparks have obviously increased fixed price power.

James A. Burke: It's also increased.

James A. Burke: <unk> discussion about the value of creation, which I think has come into focus a lot in the last two months has been really positive for district overall.

James A. Burke: As you note.

James A. Burke: The district to tradition business is a key part of how we integrate our model overall, so we have a very large retail business.

James A. Burke: Having this revision.

James A. Burke: And a lot of that business is residential residential has a level of usage that can vary with weather.

James A. Burke: Residential has a level of usage that can vary with weather, and that's something that the asset side and district tradition support extremely well. On the vision side, we of course have a large nuclear fleet and our storage and solar, but that will not help us with the intraday and some of the weather swings that we would see in the seasons.

James A. Burke: And that's something that the asset side and district tradition supports extremely well on the vision side. We of course have a large nuclear fleet in our storage and solar.

James A. Burke: But that will not help us with the intra day and some of the weather swings that we would see in the seasons.

James A. Burke: And so, Shahriar, I think what we were hoping to happen is happening, which is the Vistra tradition side of Vistra is being recognized for being highly valuable. I think there was, months ago, obviously already a view that the assets in Vistra Vision were valuable, and there was a question mark about the tradition side. I think that's being addressed by the tightening you're seeing in the marketplace and, frankly, the inbounds that we receive of folks interested in assets of tradition because these are hard assets to replicate. And I would suggest that with some of the EPA rules that have been issued, they're gonna be even harder to replicate.

James A. Burke: And so sure I think what we were hoping to happen is happening which is the district tradition side is being recognized for being highly valuable I think there was months ago. Obviously already have you that the assets in disc revision where valuable when there was a question mark about the tradition side I think that's being addressed by the <unk>.

James A. Burke: Lightning youre seeing in the marketplace and frankly, the inbounds that we receive.

James A. Burke: Folks interested in assets in tradition, because these are all hard assets to replicate and I would suggest with some of the EPA rules that have been issued they're gonna be even harder to replicate so we think the integrated model has a lot of value as far as disclosures.

James A. Burke: So we think the integrated model has a lot of value as far as disclosures are concerned. We try, and obviously in our script today, we shared some information about the free cashflow conversion of Vision and Tradition and the relative EBITDA weights. So our goal here was to provide some insights into how the financials work on the integrated model. But I don't think at this point it's a priority for us to do gap reporting associated with that.

James A. Burke: We try and obviously in our script today, we shared some information.

James A. Burke: About the free cash flow conversion of vision and tradition and the relative EBITDA weights. So our goal here was to provide some some insights into how the financials work on the integrated model, but I don't think at this point, it's a priority for us to do a GAAP reporting associated with.

James A. Burke: I think our goal is to provide our investors with the key insights that drive the economics, which, as you know, have a lot more to do with the forwards and our ability to capture them than some of the traditional segmentation methods. So that's a little bit of what color char is how we're thinking about it. Got it. That's perfect.

James A. Burke: That I think our goal is to provide our investors the key insights that drive the economics, which as you know have a lot more to do with the forwards and our ability to capture it and some of the traditional segmentation that day. So that's what that's a little bit I think of color Shar is how are we thinking about it.

James A. Burke: And then, Jim, just on the market dynamics, I mean, a big investor debate right now over a new entry in ERCOT and whether it'll even make a dent in demand through the end of the decade. I guess, what's your house view on gas due bills and scarcity at this point? Are we kind of setting up for another early 2000s rush of turbines? Great question, Shahriar. I think, so first of all, I think the queue for gas is starting to build a little bit. The application process will officially open for the Texas loan program in June.

Speaker Change: Got it that's perfect and then Jim just on the market dynamics, I mean, a big Investor debate right now over and you entering ERCOT and whether it'll even make a dent in demand through the end of the decade I guess, what's your house view on you know gas do builds and scarcity at this point or are we kind of setting up for another early two thousands.

Shahriar: Rushmore crush of turbines.

Shahriar: Great question Shar I think so first of all I think the the queue of gas is starting to build a little bit the application process will officially open for the Texas.

James A. Burke: I think it's different than the early 2000s in a couple of ways. Number one, while sparks have improved over even the last two months in ERCOT, we no longer have the severe backwardation that we are accustomed to seeing. So that's a bullish sign. The loan program would be a good sign. However, the EPA rules, the proposed rule, and the final rule that was issued last week will make it very difficult for somebody to be comfortable with combined cycle gas turbine technology, which is different than in the early 2000s.

Speaker Change: Loan program in June.

James A. Burke: I think it's different than the early two thousands and a couple of ways number one.

James A. Burke: While sparks have improved over the even the last two months in ERCOT, we no longer have the severe backwardation that we are accustomed to seeing even though that's a bullish sign the loan program would be a bullish sign.

James A. Burke: However, the EPA rules the proposed rule and the final rule that was issued last week will make it very difficult for somebody to be comfortable with a combined cycle gas turbine technology, which was different than the early two thousands.

James A. Burke: That baseload technology, if it were to run over 40 percent capacity factor, would need to have carbon capture capability installed by 2032. We do not see an operating combined cycle with carbon capture technology anywhere in the world that we can point to.

James A. Burke: That baseload technology, if it were to run over 40% capacity factor would need to have the carbon capture capability installed by 2032.

James A. Burke: We do not see an operating combined cycle with carbon capture capture technology anywhere in the world.

James A. Burke: That we can point to so I think the emphasis ultimately will be on pickers Packers or a higher heat rate machines are going to run and would need to run less than 40% capacity factor and I think with the build out of renewables the solar the wind and even the shorter duration batteries pickers makes sense from a build out.

James A. Burke: So I think the emphasis will ultimately be on peakers because peakers are a higher heat rate machine. They're going to run and would need to run less than 40% of their capacity factor. And I think with the build-out of renewables, solar, wind, and even shorter duration batteries, peakers make sense from a build-out standpoint. But I don't think they're going to be the 60-plus percent capacity factor assets that you saw coming in in the early 2000s. As far as it is an oversupply, I think we're in a chicken and egg situation with ERCOT.

James A. Burke: [noise] standpoint, but I don't think they're going to be the the 60 plus percent capacity factor assets that you saw coming in in the early two thousands as far as is it or is it a oversupply I think we're in a chicken and egg situation with with ERCOT I think the demand is there and the demand is going to be.

James A. Burke: I think the demand is there, and the demand is going to be waiting for the supply. And so I don't think it's a situation where we're dealing with static demand and which asset can best serve it. I think there is going to be an ever-increasing demand that will continue to come as long as assets are coming onto the grid. And I believe Texas, which has positioned itself as open for business, wants to be a leader in this economic development opportunity. And I think that's true for transmission.

James A. Burke: I think it's true for renewables. I think it's true for dispatchable assets like gas peakers. So I think the fundamentals are really different than what we saw a couple decades ago. Perfect, thank you. And then just one really quick one for Chris.

James A. Burke: Waiting for the supply and so I don't think it's a situation, where we're dealing with static demand and which asset can best serve it I think it's going to be an ever increasing demand that will continue to come as long as assets are coming on to the grid in I believe Texas, which has positioned itself is open for business wants to be.

James A. Burke: Peter in this economic development opportunity and I think that's true for transmission I think is true for renewables I think it's true for dispatch of coal assets like gas pickers. So I think the fundamentals are really different than what we saw a couple of decades ago.

Kristopher E. Moldovan: Chris, just on the 26 midpoint opportunity, how much incremental EBITDA would there be if you were fully open in 26? So I guess, how sensitive are you to that number? Thanks. Yeah. On the sensitivity, what I'll say is we feel good about the $6 billion number. We have high confidence in that number given where the curves are and where our hedge percentage is. As we look to sensitivities, we haven't given that, but as we think about it versus what you'll see in our deck in 2025, it's roughly twice, I would say, as sensitive to moves and power and sparks as what we're showing for 2025.

James A. Burke: Perfect. Thank you and then just one really quick one for Chris Chris just on the 26 midpoint opportunity how much incremental EBITDA would there be if you were fully opened in 26. So I guess, how sensitive are you to that number. Thanks.

Speaker Change: Yeah, we are.

Chris: On the sensitivity what I'll say is we are we feel good about the $6 billion number we we have a high confidence in that number given where the curves are and where as a percentage is.

Kristopher E. Moldovan: As we look to sensitivities, we haven't given that but as we think about it versus what youll see in our deck from 'twenty 2025.

Kristopher E. Moldovan: It's roughly twice I would say is sensitive to moves in power and Sparks is what we're showing for 2025, so but we do feel confident in that in that $6 billion number.

Speaker Change: Perfect. Thank you guys. So much Jim fantastic execution today. Thank you.

Speaker Change: Thank you Shar.

Kristopher E. Moldovan: Yeah.

Kristopher E. Moldovan: We do feel confident in that $6 billion number. Perfect. Thank you guys so much. Jim, fantastic execution today. Thank you, Shahriar. The next question comes from Durgesh Chopra with Evercore ISI. Please go ahead. Hey, good morning team.

Kristopher E. Moldovan: The next question comes from dirt Gosh Chopra with Evercore ISI. Please go ahead.

James A. Burke: Congratulations on the solid print. Thank you. Thanks, thanks, Tim. Hey, just maybe, can I ask you about the free cash flow conversion? So, it looks like the 24 guidance is about 50% of EVDA. And then you gave us the numbers for Vistra Vision and then Tradition.

Durgesh Chopra: Hey, good morning team congrats on the on the solid print.

Durgesh Chopra: Thank you.

Durgesh Chopra: Thanks, Tim.

Durgesh Chopra: Maybe can I ask you on the free cash flow conversion.

Durgesh Chopra: So it looks like the 24 guidance is about 50% of EBITDA and then you gave us the numbers for Vista vision, and then tradition, just how do you see that trending you know the answer to that is higher but what are the drivers that get you from 50% on on the video side of the things to 60% is that integration.

Kristopher E. Moldovan: Just how do you see that trending? You know, the answer to that is higher. But what are the drivers that get you from 50% on the vision side of things to 60%?

Kristopher E. Moldovan: And more efficiencies, maybe just talk to that please.

Kristopher E. Moldovan: Is that integration, more efficiency? Maybe just talk to that, please. Yeah, that's a good question. As you would expect, we put a lot of emphasis internally on the free cash flow conversion rate. And as Jim said in our prepared remarks, we target 55 to 60%, and we're a little bit lower than that based on two timing issues this year. One of those..., is that on slide 11, you'll see that Energy Harbor increased by $150 million. One of those is 100 million of that $150 million is really due to a change in accounting methodology for outage expense recognition.

Speaker Change: Yeah. That's a good question as you would expect we put a lot of emphasis internally on the free cash flow conversion rate and as Jim said in our prepared remarks, we target, 55% to 60% and we're a little bit lower than that based on two.

Kristopher E. Moldovan: On two timing issues I would say this year one of those.

Kristopher E. Moldovan: Is that of the on slide 11, you'll see that energy harbor increased to $150 million. One of that is 100 $100 million of the $150 million is really a.

Kristopher E. Moldovan: Is it due to a change in accounting methodology for outage expense recognition. So that's that's a noncash item that is increasing EBITDA, but not turning into cash. So that is hurting free cash flow conversion and then.

Kristopher E. Moldovan: So that's a non-cash item that is increasing EBITDA but not turning into cash. So that is hurting free cash flow conversion. And then the other one is that, as you would expect, the retail team enters into contracts for future periods. We generally, as prices have increased, we generally see the hedge of that. We do that hedging through a variety of structures. And if that price has risen in recent years, the cost of those products has increased.

Kristopher E. Moldovan: The other one is that as you would expect the retail team entered into contracts for future periods. We generally as the prices have increased we generally see the hedges that we.

Kristopher E. Moldovan: We do that we do that hedging through a variety of structures and is that prices have risen in the outer years the cost of those products has increased.

Kristopher E. Moldovan: So that does create a timing mismatch between when we pay the cash premiums on those options and when we recognize the revenue in future years. But we would expect that to reverse as we go forward. So if you just reverse those two timing impacts, our free cash flow conversion this year would be closer to 55%. And then we just see some other improvements that get us closer to 60% starting next year and moving forward. And Durgesh, what I would add to Chris's comment is, as you see the curves rise...

Kristopher E. Moldovan: It does create a timing mismatch between when we pay the cash premiums on those options and when we when we recognize the revenue in future years. So.

Speaker Change: We would expect that to reverse as we go forward. So if you just.

Kristopher E. Moldovan: Reverse those two timing impacts our free cash flow conversion this year would be closer to 55%.

Kristopher E. Moldovan: And then we just see some other improvements that get us closer to the 60% 30 next year and moving forward.

Speaker Change: Integrate that I would add comment is as you see the curves.

Speaker Change: [noise] rise some of that does not necessarily require additional capital and expense to achieve the higher earnings and free cash flow. So is <unk>.

James A. Burke: Some of that does not necessarily require additional capital and expense to achieve the higher earnings and free cash flow. So, as you see the projections improve, you would expect to see some of the free cash flow conversion improve by the nature of the gross margin expansion, and more of that falling to the bottom line. So, that is part of the trend that we were describing when we gave you the outlook for the free cash flow conversion. I appreciate all that color.

James A. Burke: You see the projections improve you would expect to see some of the free cash flow conversion improved by the nature of the gross margin expansion and more of that dropping to the bottom line. So that's that is part of the trends that we're describing when we gave you the outlook for the free cash flow.

James A. Burke: Yeah.

James A. Burke: Very helpful. And then, just Jim and Chris, you know, there's a lot of debate around, you know, how long are you going to do these share buybacks? I appreciate there's not a clear-cut answer, but can you give us some parameters? What metrics are you looking at? Is it free cash flow yield? Is it EBITDA? What is the comp group you're comparing it to?

Speaker Change: I appreciate all that color very helpful. And then just Jim and Chris.

James A. Burke: There's a lot of debate around you know how long are you going to do the share buybacks I. Appreciate there's not a clear cut answer but can you give us some parameters what metrics are you looking at as a free cash flow yield as it is.

James A. Burke: EBITDA.

James A. Burke: Is it IPPs or the broader market as we think about your decision-making on those share buybacks going forward? Sure. Durgesh Alstor, I view it as more of a free cash flow yield comparison and how that compares to the next best use of capital. When we started this process, of course, years ago, we were talking about free cash flow yields north of 20% for the business. It was a very obvious choice, I think, as to how we would deploy capital, recognizing, you know, where our relative value was in the marketplace.

James A. Burke: What does the comp group youre comparing it to the is it a I b BS or the broader market as we think about it.

James A. Burke: Asian, making on those share buybacks going forward.

James A. Burke: Sure.

Speaker Change: I'll start.

James A. Burke: Are you at as a more of a free cash flow yield comparison, and how does that compare to the next best use of capital.

James A. Burke: When we started this process of course years ago, we were talking about free cash flow yields north of 20% for the business. It was a very obvious choice I think as to how we would deploy capital recognizing where our relative value was in the marketplace.

James A. Burke: As we've continued to see our share price move, which is a good thing, we've also seen the forward curves move, and the earnings power of the business move. And so... We still certainly see upside from where we sit today from a share value, but you'll see the free cash flow yields have certainly come down, still well above some peers in the market, but we also have other competitive projects now with those free cash flow yields.

Durgesh Alstor: As we've continued to see our share price move which is a good thing. We've also seen the forward curves move and the earnings power of the business move and so we.

James A. Burke: We start still certainly see upside from where we sit today from a from a share value, but you'll see the free cash flow yields have certainly come down it's still well above some peers.

James A. Burke: In the market, but we also have other competitive projects now with those free cash flow yields the ability to do our <unk> zero projects in the mid teens type of free cash flow type returns that gives us some confidence there we've got some organic opportunities, including some gas plants that we think are competitive.

James A. Burke: The ability to do our Vistra Zero projects and the mid-teens type of free cash flow type returns gives us some confidence there. We've got some organic opportunities, including some gas plants that we think are competitive. There may be inorganic opportunities like M&A on both retail and generation. Those are all more competitive today where we're currently trading, and the good news is that I think we could do multiple of those, not just one.

James A. Burke: There may be inorganic opportunities like M&A on both retail and generation those are all more competitive today, where we're currently trading and the good news is I think we can do multiple of those not an either or so I still believe where we sit today with our free cash flow yield returning cash.

James A. Burke: So I still believe where we sit today with a free cash flow yield, the returning capital through our buybacks, as we've discussed through 2025, the two and a quarter building makes a lot of sense. We have additional and allocated cash flow that we could use for either more return of capital through buybacks or other shareholder opportunities such as dividends, but we're really focused on other growth opportunities, and as long as they're competitive with that benchmark for return of capital through repurchases, we've got a lot of options on the table. I think that's an exciting place to be for Vistra.

James A. Burke: Capital through the through our buybacks as we've discussed through 2025 to two and a quarter building makes a lot of sense. We have additional unallocated cash flow that we could do either more.

James A. Burke: Turn of capital through buybacks other shareholder opportunities such as dividends, but we're really focused on other growth opportunities and as long as they're competitive with that benchmark on the return of capital through repurchases. We've got a lot of options on the table.

Speaker Change: That's an exciting place to be for this room, it's not where we were three years ago in terms of this choice said, but it's opened up considerably and Chris anything like that just again reiterate that we do maintain an internal model and evaluation and then we get feedback from our our partners our consultants as well.

Kristopher E. Moldovan: It's not where we were three years ago in terms of this choice set, but it's opened up considerably. Chris, anything you'd like to add? Yeah, I would just again reiterate that we do maintain an internal model and evaluation, and then we get feedback from our partners, our consultants as well, and we've done that recently, and we continue to look at different ways to value our stock, and right now where it sits is any way we look at it given the update that we've provided today, we still feel like our stock is a good buy to the extent it gets to the point where it exceeds our internal valuation, which we don't see as being a near-term issue, but we would have to then discuss what we will be disciplined in how we spend our capital.

Chris: And we've done that recently and we continue to look at different ways to evaluate stock in right now where it sits as any way we look at it given the update that we provided today, we still feel like our stock is a goodbye.

Chris: To the extent it gets to the point, where it exceeds our internal valuation, which we don't see as being a near time near term issue, but you know we would have to then discuss what we will be disciplined in how we spend our capital.

Speaker Change: No that's really helpful guys. Thanks again.

Kristopher E. Moldovan: Okay.

Speaker Change: Thanks to the edge.

Kristopher E. Moldovan: Now that's really helpful guys, thank you again. Thanks, Durgesh. The next question comes from David Arcaro with Morgan Stanley. Please go ahead. Oh hey, good morning, so much, and great up. Thank you, Dave. I was wondering, could you tell me...

Kristopher E. Moldovan: The next question comes from David Arcaro with Morgan Stanley. Please go ahead.

David Keith Arcaro: Oh, Hey, good morning, and great update.

David Keith Arcaro: Thank you David.

Kristopher E. Moldovan: Hum.

Kristopher E. Moldovan: Yeah.

Kristopher E. Moldovan: Sure.

James A. Burke: I'm curious about which location... Hey David, this is Jim. I think I heard you mention data centers and was curious about locations. Was that the question? It broke up a little bit between us.

David Keith Arcaro: I'm curious with the Asian.

James A. Burke: Yeah.

James A. Burke: Yeah.

James A. Burke: Hey, David This is Jim I think I heard you mentioned data centers and curious about locations is that was that the question you broke up a little bit on this I'm sorry.

David Keith Arcaro: About that I was wondering I thought the datacenter opportunity with your nuclear plants could you give an update as to potential timing, which location might be more attractive than others.

Operator: I'm sorry about that. I was wondering about the data center opportunity with your nuclear plants. Could you give an update as to potential timing, and which locations might be more attractive than others? Sure. Yeah, thank you, David.

Operator: Sure Yeah. Thank you David.

James A. Burke: You know, I think the conversation certainly has picked up this year. We started our process actually last year, looking at our, at the time, there was, you know, a perspective close of Energy Harbor, which of course is now, now in the rearview mirror, which is great. And of course, the Talon AWS deal came out early March, so that was certainly a benchmark and a watershed event for the industry. I will say the two-unit sites still have, you know, this is an order of preference that I think the market is grappling with. The two-unit sites have more desirability for what their redundancy can provide.

Speaker Change: Yes, I think during the conversation certainly has picked up this year, we started our process actually last year looking at.

James A. Burke: Or at the time that was.

James A. Burke: Prospective close of Energy Harbor, which of course is now now in the rearview mirror, which is great and of course, the Talon AWS deal.

James A. Burke: Came out early March so that was certainly a benchmark and a watershed event for the industry.

James A. Burke: I will say the two units side still have you know this is in order of preference that I think the market is grappling with the two unit sites have more.

James A. Burke: Desirability for what their redundancy can provide then there is the single unit sites of course, and then there is the gas plants and what's been very interesting David about our discussions with with potential partners is we have normally sort of tried to search for opportunities for us to find partners in bid into there.

James A. Burke: Then there's the single-unit sites, of course, and then there's the gas plants. And what's been very interesting, David, about our discussions with potential partners is that we have normally sort of tried to search for opportunities for us to find partners and bid on their energy needs. Now this has been reversed.

James A. Burke: Energy needs now this has been reversed we actually have partners to enter partners coming to us directly and speed is really very important to them I would say gas has become as interesting to many of them as nuclear has in fact, even a preference for something so from our standpoint all.

James A. Burke: We actually have partners, potential partners, coming to us directly, and speed is really very important to them. I would say gas has become as interesting to many of them as nuclear power has, in fact, even a preference for some. So, from our standpoint, all options are on the table with 40,000 megawatts. And, you know, we've obviously got 12 states and 40,000 megawatts that we can do some of our projects with. But we've actually flipped it a little bit.

James A. Burke: Options are on the table with 40000 megawatts.

James A. Burke: We've got obviously 12 states and 40000 megawatts that we can do some of our projects with <unk>.

James A. Burke: But we've actually flipped it a little bit so we've actually put out some rfps ourselves. So instead of just responding to the inbounds, we've actually gone out to the marketplace too.

James A. Burke: So we've actually put out some RFPs ourselves. Instead of just responding to the inbounds, we've actually gone out to the marketplace to handle multiple conversations simultaneously and see what the best opportunity might be for us. And so, that process is not concluded yet, but we're in the middle of that process, and we're very excited about the interest. Of course, you can imagine the hyperscalers, the co-locators, and the specific developers are involved in that process.

James A. Burke: To handle actually multiple conversations simultaneously and see what the best opportunity might be for us and so that process has not concluded yet, but we're in the middle of that process and we're very excited about the interest of course, you can imagine the hyperscale or to co locators and the specific developers.

James A. Burke: Are in that process.

James A. Burke: We're dedicating a ton of time to it, as I am personally, and it's probably been the most exciting development for our industry in quite some time. But we think we can be a great partner to one or more capable parties because of the size of the fleet and multiple geographies. And I don't know yet which one's going to happen first, but it's a huge opportunity set for us, David, and one that I think we're going to be making really good progress on here shortly. Great, that's really helpful, Culler. I was wondering if you could also touch on just other power plants and other co-location opportunities at gas plants. And are you potentially considering a new build yourself as well?

James A. Burke: We're dedicating a ton of time to it as I am personally.

David: And it's probably been the most exciting development for our industry in quite some time, but we think we can be a great partner to one or more capable parties because of the size of the fleet in multiple geographies and I don't know yet, which one is going to happen first.

James A. Burke: But it's a it's a huge opportunity set for us David and one that I think we're going to be making really good progress on here shortly.

David: Great. That's really helpful color I was wondering if you could also touch on just other power plants and other co location opportunities at gas plants.

David: And are you potentially considering new build yourself as well would be curious.

James A. Burke: We'd be curious. Yeah, David, it actually ties into the earlier question, which is, you have existing assets that we have in our portfolio, large-scale combined cycle assets. The goal, obviously, for any of these potential partners with the data centers is speed and then reliability that they can, you know, count on for supply. It's going to be really hard to build an asset like a combined cycle to support a new data center without it having the carbon capture equipment that we were talking about earlier. And that's a huge lift.

James A. Burke: David actually ties into the earlier question, which is.

Speaker Change: You have existing assets that we have in our portfolio large scale combined cycle assets.

James A. Burke: The goal obviously for the any of these potential partners with the Datacenters as speed and reliability that they can count on for supply, it's going to be really hard to build an asset like a combined cycle to support a new data center without it having the carbon capture equipment that.

James A. Burke: We were talking about earlier.

James A. Burke: And that's a huge lift that carbon capture equipment could double if not triple the cost of that combined cycle.

James A. Burke: That carbon capture equipment could double, if not triple, the cost of the combined cycle, so I don't view that as a really attractive near-term option at this point until that technology matures. So I think the existing combined cycles are an opportunity for somebody to co-locate. I think the next best alternative, if it's involving gas, is likely to be peakers.

James A. Burke: I don't view that as a really attractive near term option at this point until that technology matures. So I think the existing combined cycles are an opportunity for some for somebody to co locate.

James A. Burke: I think the next best alternative if it's involving gas is likely to be P curves.

James A. Burke: But that will probably require that data center to be prepared to pull from the grid so it can get the cheaper wind and solar power on the margin when available, but be prepared to run the peakers for continuity of supply and potentially a price head. That, I think, is a potential model, and I think some of our partners we're talking to are wrestling with the fact that to build out the number of gigawatts that they're talking about, there's only so many large meters you can be behind. You're going to have to actually add supply to the grid, and you're probably going to have to work in a hybrid-type situation where you're pulling when there's a surplus but then producing when you need it.

James A. Burke: But that will probably require that that data center needs to also be prepared to pull from the grid. So they could get the cheaper wind and solar power on the margin when available, but being prepared to run the <unk> for continuity of supply and potentially a price hedge that I think is a potential model and I think some of our partners we're talking to are.

James A. Burke: Wrestling with the fact that to build out the number of Gigawatts that theyre talking about theres only so many large meters you can be behind youre going to have to actually add supply to the grid and you're probably going to have to work in a hybrid type situation, where you are pulling when there is surplus, but then producing when you need and I think <unk> can potentially play that.

James A. Burke: And I think peakers could potentially play that role, and I think, again, that plays into this Q discussion of, what if there's a lot of gas to be built? I actually think that means more load comes, and then we might have to build more gas, along with the wind, solar, and battery that is, as you know, already heavily in the Q. But this gas, from a reliability standpoint, I think it will play a role one way or the other. I just don't see it being combined with brand-new combined cycles for that purpose until there's more clarity about these EPA rules. They're likely to be litigated.

James A. Burke: Roll in and I think again that plays into this Q discussion of what if theres a lot of gas to be built I actually think that means more load comes and then we might have to build more gas along with the wind solar and battery that is as you know already heavily in the Q, but this gas from a reliability standpoint, I think will play.

James A. Burke: Her role one way or the other I just don't see it being combined into a brand new combined cycles for that purpose until there's more clarity about these EPA rules, they're likely to be litigated I think its tough to invest into an environment, where you've got uncertainty with protracted litigation and so I think it's going to be difficult.

James A. Burke: I think it's tough to invest in an environment where you've got uncertainty with protracted litigation, and so I think it's going to be difficult to create new baseload assets with confidence, and that's why I think the existing baseload assets are getting as much attention as they are. Excellent. That's really helpful. Thanks so much for all the color.

James A. Burke: To create new baseload assets with confidence and that's why I think the existing baseload assets are getting as much attention as they are.

Speaker Change: Excellent that's really helpful. Thanks, so much for all the color.

Speaker Change: Thank you David.

Operator: The next question comes from Angie Storozynski. Please go ahead. So I'd personally be starting with your credit metrics and investment grade aspirations. So just wondering, you know, what's the timeline when you think you're going to hit below investment, I mean, investment grade metrics, and how you could potentially use, you know, like stock-based M&A to actually accelerate this path to investment. Yeah, thanks, Angie. I appreciate that.

James A. Burke: The next question comes from Angie <unk> stores and skiing with Seaport. Please go ahead.

Speaker Change: Thank you.

Operator: Maybe starting with your credit metrics.

Operator: And the grade.

Operator: Hum.

Operator: Just wondering you know what's the timeline.

Operator: Hopefully.

Operator: From a great metric.

Operator: How you could potentially use yeah.

Operator: Okay, MMO crap alright.

Speaker Change: Oh, okay.

Kristopher E. Moldovan: As you know, we just said today that we're right at three times. I think we're two notches away from investment grade with two of the agencies and one notch away from the other one. So we have some work to do even to get closer to investment grade. I think we're continuing to look at, as we look at the outlook, our leverage metrics go down just with the increase in EBITDA that you're seeing over time.

Speaker Change: Yeah. Thanks, Andrew I appreciate that as you know, we just said today, we're right at three times I think there.

Kristopher E. Moldovan: We're two notches away from us and from investment grade with two of the agencies and one notch away from the other ones. So we have some work to do even to get closer to investment grade I think we're continuing to look at it as we as we look at the outlook I mean, our leverage metrics go down just with the increase in EBITDA.

Kristopher E. Moldovan: We're seeing over time, and then we have sufficient a significant amount of cash that is yet to be allocated and so some of that will go to debt repayment. So we do expect to.

Kristopher E. Moldovan: And then we have a significant amount of cash that is yet to be allocated, and some of that will go to debt repayment. So we do expect that there could be opportunities to be talking about investment grade metrics in the next year or two. But first, we want to make sure that we get the agencies to the one level below.

Kristopher E. Moldovan: There could be opportunities to be talking about investment grade metrics in the next year or two of them first we want to make sure that we get the agencies to the the one level below and then we'll really started talking to them about timing for the deleveraging and where we need to get I think we said on the last call. It is important for us to get to investment grade if we if we do.

Kristopher E. Moldovan: And then we'll really start talking to them about timing for the deleveraging and where we need to get. I think we said on the last call that it's important for us to get to investment grade. If we do that, we are comfortably in investment grade. We don't want to be right at the edge of the metrics. We want to be significantly into that area, so we haven't had those detailed discussions yet because, like I said, we're still waiting to get the upgrade to one notch below.

Kristopher E. Moldovan: That we are comfortably investment grade, we don't want to be a.

Kristopher E. Moldovan: Right at the edge of the metrics, we wanna be significantly into that area. So we haven't had those detailed discussions yet because I think I said, we're still waiting to get the upgrade to to the one notch below.

Kristopher E. Moldovan: I think as you think about our currency, as we said, we're still, we've been focused. The price of the stock has come up, and there could be opportunities to use it in transactions. But at this point, as we just noted earlier in the call, we still see room for our stock to run, and we're currently buying. So I don't think that that would be the driver for why investment grade wouldn't be the driver for any deal like that. We would certainly think about our ratings as we did any potential opportunistic transaction, but we're comfortable where we are.

Kristopher E. Moldovan: It gives you as you think about our currency.

Kristopher E. Moldovan: As I said, we're still we've been focused since the price of the stock has come up in and there could be opportunities to use it in transactions, but at this point as we just noted earlier in the call we still see room for our stock to run and we're currently buying so I don't think that that would be the driver for why you're investment grade wouldnt be the driver free.

Kristopher E. Moldovan: Do you like that we would certainly think about our ratings as we did any potential opportunistic transaction, but we're comfortable where we are we do think we'll get to investment grade metrics, but we don't have a specific timeline to do so.

Kristopher E. Moldovan: We do think we'll get to investment grade metrics, but we don't have a specific timeline to do so. Okay, and then changing topics a bit, like your Sunset Assets and brownfield sites, especially those associated with the former Dinergy Co. plants, so just wondering, you know, is there any change in your views about the longevity of those Sunset Assets? Now it seems like they're profitable, right?

James A. Burke: I'm sure that some of the increased output from these assets is embedded in those EBITDA ranges that you provided us with, but I just wonder if some of these assets might get reallocated back to Vistra Vision, meaning that you will not put them in that Sunset bucket, and number two, if there is any, you know, upside associated with those brownfield sites from the former Co. plants, especially in Illinois. So, Angie, I think on the coal plants themselves, the main driver that we're looking at on a go forward basis is really the EPA, rules that we need to comply with, which means that all but two of our coal plants, the two being Martin Lake and Oak Grove, will be retiring in that 2027 time frame unless there's some other change in rule or law that we don't anticipate. They are more economical given these curves.

Kristopher E. Moldovan: Okay, and then shifting topics, but oh, well some cut off well and.

Speaker Change: Actually both.

James A. Burke: Associated with <unk>.

Speaker Change: Well my biological plan I was just wondering.

James A. Burke: Was there any change in your views about what room do you have any of those from Galactic mileage.

James A. Burke: Economic growth, but I'm sure that some of the.

Angie: And keep up with some of these office has been bothered them both.

James A. Burke: Borrowings that you provided I quit but wonder if there's.

Angie: And if some of these assets might get reallocated back to cause this provision we didn't go through or not.

Angie: Bucket number two is if there's any.

James A. Burke: Well I played associated with those bump outs on Mcallen, Nicole clients, especially on the on line.

Angie: So so AMG I think on the on the coal plants themselves the main driver.

Angie: We're looking at on a go forward basis is really the EPA.

Speaker Change: Rules that we need to comply with which means that.

James A. Burke: All but two of our coal plants, the two B Martin Lake and Oak Grove will be retiring and that 2027 time frame.

Angie: Unless there's some other change in rule of law that we don't anticipate.

Speaker Change: They are more economic given these curves I think part of the reason for the backward.

James A. Burke: I think part of the reason for the backward, you know, the farther dated parts of the curve, particularly 2028 in PJM and even in Texas, have moved up as the dates are becoming more, you know, real. And I think the supply-demand dynamic is becoming more apparent. And so it's not as much about the economics of those sites at this point that are in, you know, Ohio and Illinois but more about compliance, which, of course, we're going to comply with the EPA rules that are in effect.

Speaker Change: Farther dated parts of the curve, particularly 2028 in PJM and even in Texas has moved up because the data are becoming more real.

James A. Burke: And I think the supply demand dynamic is becoming more apparent.

James A. Burke: And so it's not as much about the economics of those sites at this point that are in.

James A. Burke: Hi, Oh in Illinois, and more about the compliance which of course, we're going to comply with the EPA rules that are that are in effect.

James A. Burke: As far as Martin Lake and Oak Grove are concerned, with the new rules that played out last week, we would either have to add carbon capture technology to those sites, which again would be very difficult to do, similarly to the comments I made about Kamban cycle, or co-fire 40% with gas, which we believe is a possibility, something that we think could extend the life of if those assets are needed, potentially all the way up to 2039. That's something we would have to evaluate because we've got to have a sufficient gas supply to be doing co-firing at that level. And currently, we don't; we have some co-firing at Oak Grove, but it's a much lower level.

James A. Burke: As far as Martin Lake and Oak Grove with the new rules that played out last week, we would either have to add carbon capture technology to those sites, which again would be very difficult to do similarly to the comment I made about combined cycle or co fire, 40% with gas, which.

James A. Burke: We believe there is a possibility something that we think could extend the life of those assets are needed potentially all the way up to 2039.

James A. Burke: That's something we would have to evaluate because we've got to have the sufficient gas supply to be doing a co firing at that level and currently we don't we have some co firing at Oak Grove, but it's much lower level.

James A. Burke: So I think, Angie, this transition is happening on the grid; this baseload across the country, whether it's regulated markets or competitive markets, has to comply with these EPA rules. And I think the opportunity for us to do something with those sites and redevelop the sites down the road is possible, but operating in the coal configuration that it is right now seems unlikely for those sites in Ohio and Illinois. Okay, and just one last one about capacity prices.

James A. Burke: So I think Angie this transition is happening on the grid this base load across the country, whether it's regulated markets are competitive markets has to comply with these EPA rules and I think the opportunity for us to do something with those sites and redevelop the site's down the road is possible but to operate in the coal configure.

James A. Burke: <unk> net is right now seems unlikely for for those sites in Ohio and Illinois.

James A. Burke: I'm just wondering what kind of assumptions you embedded or like versus at least the last PJM capacity auction and those ranges that you provided us with given that we're, you know, awaiting the next capacity auction in PJM and we're seeing some bilateral contracts, we're seeing those incremental capacity auctions clearing meaningfully higher than that last auction. I'm just wondering, at least directionally, if you can give us a sense of what you expect and what is embedded in those.

James A. Burke: Okay, and then just one last one about the Boston Places I'm just wondering what.

James A. Burke: What kind of assumptions within that Oh.

James A. Burke: At least the last again capacity auction in both veins that you provided.

Speaker Change: Well you know our.

James A. Burke: Our ratings on that Oh.

James A. Burke: E auction and pizza alarm on whats being from bilateral contracts with things like incremental property option flooring.

James A. Burke: That last option I'm just wondering.

James A. Burke: Okay.

James A. Burke: What's your what's your thoughts on what it's about.

James A. Burke: Okay.

James A. Burke: Yes, Angie, we do see some bilateral trades that are indicating improvement in PJM capacity clearing. But I think we've still been pretty conservative with our forecast and how we've built assumptions for the auctions that are forthcoming, the first one coming in July. You know, I think where we've seen some of these clears, we've seen them in the $90, $100 kind of megawatt day range. Whether we're going to see that in this upcoming clear or it's going to be one later in December, we like the steps that PJM has been attempting to bring forward. However, they haven't been successful in all of the market reforms that they've recommended.

Speaker Change: Yes, Angie we do see some bilateral trades that are that are indicating improved.

James A. Burke: Improvement in PJM capacity clears.

James A. Burke: We still been pretty conservative with our forecast and how we've built.

James A. Burke: <unk> for the auctions that are forthcoming the first one coming.

James A. Burke: In July.

James A. Burke: <unk>.

James A. Burke: Where we've seen some of these clears we've seen them in the 90 to $100 kind of megawatt day range, whether we're going to see that in this upcoming clear it's gonna be one later in December.

James A. Burke: We like the steps that that PJM has been attempting to bring forward. They haven't been successful in all of the market reforms that they recommended but I think there is a recognition of the tightening supply demand dynamics and also the fact that this call is going to be retiring and theirs.

James A. Burke: But I think there is a recognition of the tightening supply-demand dynamics and also the fact that this coal is going to be retiring. And there's frankly an interest from stakeholders that, in our visits to Ohio state leaders, they'd like to see some new gas plants built. So it's not just a Texas market dynamic; it's other places where they're attracting industry, you know, in the reshoring, the chips build out, and they want to see more assets come to ground, which capacity markets play certainly a key role in sending that signal.

James A. Burke: Frankly interest and stakeholders at our visits to Ohio State leaders they'd like to see some new gas plants built so it's not just the Texas market dynamic. It's other places where there are attractive industry.

James A. Burke: <unk> the chips build out and they want to see more assets come to ground, which capacity markets play certainly a key role in sending that signal. So we have an improvement embedded angie, but certainly not anything that I would call a big lift from what we've seen some historical clears b, but.

James A. Burke: So we have an improvement embedded, Angie, but certainly not anything that I would call a big lift from what we've seen some historical clearances be. But it's going to have to prove out in the auctions themselves. And at this point, you know, we await the results. They've been delayed for a while.

James A. Burke: It's going to have to prove out in the auctions themselves and at this point, we await the <unk> been delayed for a while so we're all eager to see how these next couple auctions play out Steve anything you'd like to add I think Jimmy you hit it. It's basically if you look historically PJM cleared on average $100 a megawatt day historically, we see that happening at the very lease.

James A. Burke: So we're all eager to see how these next couple of auctions play out. Steve, anything you'd like to add? No, I think Jimmy, you hit it.

James A. Burke: It's basically, if you look historically, PJM cleared on average $100 a megawatt day historically. We see that happening at the very least. And obviously, as grids continue to get tighter, with demand growth in PJM and the retirements of coal that Jim mentioned, which are really more environmentally driven than they are price driven, that market should continue to tighten. Great, thank you. Thank you. When the next question comes, please go ahead. Thanks, Good morning.

James A. Burke: And obviously instruments continue to get tighter with demand growth in PJM and the retirements of coal and Jim mentioned, which are really more environmentally driven and they are price driven at market should continue to tighten.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

James A. Burke: The next question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Operator: Jim, Chris, thanks for some of the new disclosures. I'm going to go back to an earlier question just on the 2026 hedging, the 50% hedged. Could you give a little more color on just how the pricing of those hedges is versus the current market and or kind of the timing like at that 50% number? Where was it at year end 23 Q1?

Speaker Change: Thanks, Good morning.

Operator: Jim Chris Thanks for the so some of the new disclosures they the.

Operator: I'm going to go back to an earlier question just on the 20th twenty-six hedging the 50% hedged.

Operator: Could you give a little more color on just how the pricing of those hedges are versus current market <unk>.

Operator: Or kind of the timing of like if that 50% number.

Operator: Where was it at year end 'twenty three Q1.

Operator: 24, just.

James A. Burke: That would be, that would be helpful. Sure, Steve, the hedging, obviously, from our standpoint, we look at it as... more opportunistic. So we look at where the price obviously is, where our fundamental view is, and then is there actual liquidity in the market to transact. So just to give you an example, at the end of last year, so December time frame. We were in a hedge percentage that was going to be closer to 10 to 15 percent hedged for 2026. So the team, as they've seen this move, particularly more recently, have been moving more volume.

Speaker Change: That would be that'd be helpful.

Speaker Change: Sure Steve the the hedging obviously for our from our standpoint.

James A. Burke: We look at it as.

James A. Burke: As more opportunistic so we look at where the price obviously is where our fundamental view is and then is there actual liquidity.

James A. Burke: And the market to transact.

James A. Burke: So just to give a perspective at the end of last at the end of last year. So December time frame.

James A. Burke: We were in our hedge percentage that was going to be closer to 10% to 15% hedged for 2026. So the team as they've seen us move, particularly more recently had been had been they've been moving more volume Steve. There has also been more liquidity.

James A. Burke: Steve, there's also been more liquidity in the marketplace. And I'm going to ask Stephen Muscato to comment on that a little bit because, obviously, if you're looking to move some of your volume, you know, depending on the depth in the market, you could be having impacts as well, and the team is sensitive to that. And I'd like Steve to comment on how he's seen that dynamic change because it's been more recent, and I think it's been indicative, again, of this recognition by market participants that the load is coming, some of the base load is retiring, and this is, you know, coming together in a supply-demand dynamic. Sure, Jim.

Stephen J. Muscato: In the marketplace and I've been asked Ive muscocho to comment on that a little bit because obviously, if you're if you are looking to move some of your volume.

James A. Burke: Pending on the depth in the market you could be having impacts as well and the team is the team is sensitive to that and I'd like Steve to comment on how you've seen that dynamic change because its been more recent and I think it's been indicative again of this recognition by market participants that the load has come.

Stephen J. Muscato: Some of the base load is retiring and this is coming together in a supply demand dynamic and Steve I'd Love for you to comment sure Jim and as you pointed out we've been waiting for the curve in ERCOT.

Stephen J. Muscato: As you pointed out, we've been waiting for the curve in ERCOT to no longer be in backwardation and move up into a contango formation, which it is. And the second thing we look for is basically liquidity events, meaning there's got to be people that are willing to buy it with enough scale for us to get our hedges off, and we're starting to see that liquidity come in. We're seeing trades that are no longer, let's say, 10 or 15 megawatts out in the 26-28 period. We are seeing people willing to buy a couple of hundred megawatts at a time.

Stephen J. Muscato: No longer being backwardation in move up into a contango formation, which it is and the second thing. We look for is basically liquidity events, meaning theres got to be people that are willing to buy it.

Stephen J. Muscato: With enough scale for us to get our hedges off and we're starting to see that liquidity come in were seeing trades that are no longer, let's say 10 or 15 megawatts out in the 26 through 28 period, we are seeing people willing to buy a couple of hundred megs at a time and so we tried to scale into that because it has a finite market. It is something we can scale up and now that <unk>.

Stephen J. Muscato: And so we try to scale into that because it is a finite market. It is something we can scale up, and now that we're seeing some of that contango come in, we're taking some off the table. But I don't think we're done yet. I think gas prices are part of the reason why ERCOT is in contango, not just heat rate. But if you look at sparks, sparks are expanding.

Stephen J. Muscato: We're seeing some of that contango come in we're taking some off the table I don't think we're done yet I think the gas prices are part of the reason why ERCOT is in contango not just heat rate, but if you look at Sparks Sparks are expanding but if you look at heat rates and I really want to bring that to your focus he rates are.

Stephen J. Muscato: But if you look at heat rates, and I really want to bring that to your attention, heat rates are not expanding as fast as you would think given a tightening market. So a lot of this contango is gas-driven, and we think there's more to come in terms of heat rates. Okay, and then just two other questions on the hedging. Is there, in that 50%, a big difference between your hedges, between ERCOT and PJM? Are they both around 50 or so?

Stephen J. Muscato: Not expanding as fast as you would think given a tightening market. So a lot of this contango is gas driven and we think theres more to come in terms of heat rate expansion.

Speaker Change: Okay, and then just two.

Stephen J. Muscato: Other questions on the hedging D.

Stephen J. Muscato: Is there in that 50% is there a big difference between your hedges between ERCOT and PJM are they both around 50 or.

Stephen J. Muscato: Yeah.

James A. Burke: Yes, Steve, we... We weren't planning to comment specifically by region on that front, but obviously those are our two biggest portfolios. So, you know, I would just leave it at that. I think, you know, it depends on the depth of the market and where we feel we can comfortably move some of the volume. And Steve, I do want to correct one thing I shared a minute ago. I was one file off as I was trying to respond to your question.

Speaker Change: Yes, Steve.

Stephen J. Muscato: We weren't planning to comment on specifically by region on that front, but obviously those are our two biggest portfolio. So.

James A. Burke: You know I I would just leave it at that I think it depends on the depth in the market and where we feel we can.

James A. Burke: Comfortably move some of the volume and Steve I do want to correct. One thing I shared a minute ago I was one file off as I was trying to respond to your question, we were closer to around 25% hedge at the end of the of the year in 2023, and Thats moved up closer to the 50. So I was I was.

James A. Burke: We were closer to a 25% hedge at the end of the year in 2023, and that's moved up closer to the 50. So I was trying to be a little bit too nimble in pulling out my information. Yeah, no worries. Directionally correct, though.

James A. Burke: Trying to be a little bit to nipple and.

Speaker Change: Yeah, No worries just directionally are directionally correct. So.

James A. Burke: Okay. And then just, we've been getting a lot of questions on nuclear fuel with the current law being passed. Could you comment on how you're positioned on enriched uranium and the like? That would be helpful.

Speaker Change: Okay, and then just we've been getting a lot of questions on nuclear fuel with the with the current law.

James A. Burke: Yes, I think past just could you comment on how you're positioned on.

James A. Burke: Enriched uranium and alike that'd be helpful Cherokee.

James A. Burke: Sure. Yes, we have secured the supply physically for the outages all the way through 2027 and substantially financially. There are a few of our products that have some index pricing to them. And we are significantly hedged into 2028 as well. So we feel really good about fueling the six units over this planning horizon with the Russian ban with an uncertain, you know, or to be determined waiver process, I should say.

Speaker Change: Yes, we have Steve we have secured the supply.

James A. Burke: Physically.

James A. Burke: For the outage is all the way through 2027 and substantially financially. There's a few of our products that have some index pricing to it.

James A. Burke: And we are significantly hedged into 2028 as well so we feel really good about.

James A. Burke: Fueling the six units.

James A. Burke: Over this planning horizon.

James A. Burke: With the Russian ban with an uncertain to be determined waiver process I should say, we're very active in the discussion just to make sure that there's ample liquidity.

James A. Burke: We're very active in the discussions just to make sure that there's ample liquidity in the market as, you know, folks will look at these disruptions potentially, and it can cause the spot prices to move up considerably. We're fairly well hedged in the financial range. We're kind of looking at $7 over the whole kind of time period, including Energy Harbor and, you know, the Comanche Peak site. So we were a little bit further hedged out for the Texas site, a little bit more open on the back end with Energy Harbor.

James A. Burke: In the market.

James A. Burke: As folks will look at the <unk>.

James A. Burke: These disruptions potentially and it can cause the spot prices to move up considerably we're fairly well hedged in the financial range, we're kind of looking at a seven dollar over the whole kind of time period, including energy Harbor and.

James A. Burke: The Comanche peak site. So we were a little bit further hedged out for the Texas site, a little bit more open on the backend with energy Harbor, if we put it all together and locked it all down.

James A. Burke: If we put it all together and locked it all down, you know, it's roughly a $7 a megawatt hour average over that period. But the spot markets are in the $11 to $12 range, so DOE. With the additional funding of roughly $2.7 billion, we'll be looking to incentivize domestic production, and we'll see how that develops. But it's probably going to take until the end of this decade to see something physically materialized there.

James A. Burke: It is.

James A. Burke: Roughly a $7 a megawatt hour average over that period.

James A. Burke: But the spot markets are in the 11% to $12 range. So.

James A. Burke: With the additional funding of roughly $2 7 billion will be looking to incentivize domestic production.

James A. Burke: And we'll see how that develops but that's probably going to take into that timeframe at the end of this decade to see something physically materialize, there, but I think we've done a.

James A. Burke: But I think we've done a good job of locking down some of these risks, both physically and financially, and that's embedded in the numbers we've provided today. Great, thanks so much. The next question comes from Bill Apicelli, CEO of CBS.

James A. Burke: Good job.

William Appicelli: Of locking down some of these risks both physically and financially and that's embedded in the numbers we've provided today.

William Appicelli: Great. Thanks, so much.

William Appicelli: Thank you.

James A. Burke: Yes.

William Appicelli: The next question comes from Bill Epic Shelley with UBS. Please go ahead.

Operator: Hi, good morning. Most of my questions have been answered, but just on the retail side, can you remind us the average duration of the contracts and the ability to roll those prices forward as the wholesale prices go higher as we move through time? Sure. Yes, Bill.

William Appicelli: Hi, good morning.

William Appicelli: Hey, guys. Most of my questions have been been answered, but just on the retail side can you remind us what the average duration of the contracts and the ability to roll those prices Ford is that wholesale prices go higher as you move through time.

Operator: Sure.

James A. Burke: So the business contracts that we sell can be for a duration of one to two years, all the way up to 10 years. Now, our portfolio is more skewed to the residential business, which I would say those tend to be one to two year contracts. Residential customers don't tend to have as much appetite for the longer-dated contracts.

William Appicelli: Yes, Bill so the business that.

James A. Burke: The business contracts that we sell can be a duration of one to two years all the way up to 10 years now our portfolio is more skewed.

James A. Burke: To the residential.

James A. Burke: Business, which I would say is tend to be one to two year contracts residential customers don't.

James A. Burke: They'll tend to have as much appetite for the longer dated.

James A. Burke: And so if you see a sustained higher price environment, you'd expect the competitive market, from a retail perspective, to reflect the new cost of goods sold over time. And that would mean higher prices in a sustained high-powered market. It also has meant lower prices in the past when you've seen, you know, lower power prices sustain themselves, and retailers need to respond to that. I do believe that, in this situation, this has been a relatively stable and steady build in power prices, so these aren't shock-driven like the Polar Vortex and even Winter Storm Yuri, where there were large bills being sent by retailers that hadn't fully hedged.

James A. Burke: Contracts.

James A. Burke: So if you see a sustained higher price environment.

James A. Burke: You would expect the competitive market from a retail perspective to reflect the new cost of goods sold overtime.

James A. Burke: And that would mean higher prices sustained high power market. It also has met in the past lower prices when <unk> seen lower power prices sustain themselves and retailers need to respond to that I.

James A. Burke: I do believe that in this situation. This has been a relatively stable and steady build in power prices. So these aren't shocked driven like the polar vortex and even winter storm here, where there were large bills being sent by retailers that hadn't fully.

James A. Burke: This has been more of a steady build, I think more consistent with inflation that folks have been seeing in other categories that they procure, but from our integrated model standpoint. You would expect that after you get past the one- to two-year horizon, you start to reflect the higher or lower retail revenues associated with wholesale power costs, and we try to target more of a steady dollar-per-megawatt-hour margin in retail so that it's additive to whatever's happening on the wholesale side. Thank you; that's very helpful.

James A. Burke: <unk> hedged this has been more of a steady build I think more consistent with inflation that folks have been seeing in other categories that they procure but from our integrated model standpoint.

James A. Burke: You would expect that after you get past the one to two year horizon, you start to reflect the higher or lower retail revenues associated with wholesale power cost and we try to target more of a steady.

James A. Burke: <unk> per megawatt hour type margin in retail so that it's additive to whatever is happening on the wholesale side.

Scott A. Hudson: And then just one follow-up on that same topic, in terms of the given population growth, and can you just speak to your market share and, you know, customer accounts, as you know, you've seen a growing pool of potential customers in the state? Sure, Bill. I'm going to ask Scott Hudson, our president of the retail businesses here, and I'll ask Scott to cover. Sure. Well, first of all, let me just touch on current retail performance.

Speaker Change: Thank you that's very helpful. And then just one follow up on that same topic in terms of given the population growth and could you just speak to your market share in custom.

Scott A. Hudson: Customer counts as you've seen a growing pool of potential customers in the state.

Scott A. Hudson: Sure Bill I'm going to ask Scott Hudson, our president of the retail business is here and I'll, let I'll ask Scott to cover sure well first of all let me just touch on current retail performance, we really had strong performance in the quarter and year over year, we grew residential direct to consumer customer counts by 13.

Scott A. Hudson: We really had strong performance in the quarter and year over year. We grew our residential direct consumer customer counts by 13%. That came not only from the Energy Harbor acquisition, and we had some really nice success in the Lubbock market that just opened, but we're also growing these books across all markets, you know, sort of organically. So, you know, really nice growth rates in Texas around the population. As Jim mentioned earlier, roughly 1.5 to 2%.

Scott A. Hudson: And that came not only from the energy Harbor acquisition, and we had some really nice success in Lubbock market that just opened but we're also growing these books across all markets sort of organically, so really nice growth rates in.

Scott A. Hudson: In Texas around the population as Jim mentioned earlier, roughly one 5% to 2% and it's our goal at retail to grow with the market or exceed that marketing grow kind of market share. So.

Scott A. Hudson: And, you know, it's our goal at retail to grow with the market or exceed that market and grow, you know, kind of market share. So we have a very large flagship brand with TXU, you know, energy that holds a significant share in the URCOP market, but we also have five other brands that continue to complement one another. And our goal is sort of optimizing those brands by targeting them towards specific populations.

Scott A. Hudson: We have a very large flagship brand with <unk> energy that hold significant share in New York Hot market, but we also have five other brands that.

Scott A. Hudson: They continue to complement one another and our goal is sort of optimizing those brands targeting them towards specific populations. It really is that coordination and sort of our use of advanced analytics to understand what populations what want like brands in.

Scott A. Hudson: It really is that coordination and sort of our use of advanced analytics to understand what populations, what brands, and what particular products allow us to continue to grow in these markets. Thank you, Scott. Thank you, Bill. This concludes our question and answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.

James A. Burke: Particular products that allow us to continue to grow in these markets.

James A. Burke: Alright, Thank you Scott.

James A. Burke: Yes, Thank you bill.

Scott A. Hudson: Yeah.

Scott A. Hudson: This concludes our question and answer session I would like to turn the conference back over to Jim Burke for any closing remarks.

James A. Burke: Yeah, thank you everyone for joining us. And I again want to thank the Vistra team, which includes our new members in Ohio and Pennsylvania. We are very excited about our platform and our unique growth opportunity. The S&P 500 inclusion is a great milestone, and our future looks bright.

James A. Burke: Yeah. Thank you everyone for joining us and I again want to thank the district team, which includes our new members in Ohio, and Pennsylvania, and we are very excited about our platform and our unique growth opportunities. The S&P 500 inclusion is a great milestone and our future looks bright and we appreciate.

James A. Burke: We appreciate your interest and investment in Vistra, and we look forward to visiting you soon. Have a great day! Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. BF-WATCH TV 2021, The Ultimate Parody Site! == See also == New York City Museum of Art and the National Gallery New York City Museum of Art and the National Gallery, [inaudible] BF-WATCH TV 2021, The Ultimate Parody Site!

James A. Burke: <unk> your interest and investment in <unk>, and we look forward to visiting soon have a great day. Thank you.

James A. Burke: Okay.

James A. Burke: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

James A. Burke: [music].

James A. Burke: Yeah.

James A. Burke: [music].

Operator: ???

Operator: Okay.