Dynegy Inc fka DYN

[Enterprising Investor]

Dynegy Announces First Quarter 2014 Results (5/07/14)

First Quarter 2014 Financial Highlights:

• $152 million in consolidated Adjusted EBITDA, an increase of Segments, 95% for Gas Segment.

• MISO capacity auction cleared 16 times higher than 2013 auction, reflecting tightening supply in MISO due to MATS-related plant retirements.

• Realized first quarter 2014 energy prices for the Coal Segment increased 172% compared to first quarter of 2013.

Recent Developments:

• Illinois Power Marketing (IPM) secured 240 MW of transmission capacity into PJM commencing with the 2017/2018 planning year at no incremental cost, bringing total IPH firm transmission $109 million compared to the first quarter 2013.

• $1,037 million in liquidity at Dynegy Inc. and $268 million at IPH at March 31, 2014.

• $166 million in Cash Flow from Operations.

• Maintained full-year 2014 Adjusted EBITDA guidance of $300-350 million and Free Cash Flow guidance of $10-60 million.

Operating and Commercial Highlights:

• Plant equivalent availability averaged 89% for Coal and IPH capacity into PJM to over 1,100 MW.

• 80 MW uprate at Kendall eligible for 2017/2018 PJM capacity auction.

• Entered into additional bilateral MISO capacity sales for various planning years at prices ranging from $2.00/kw-month to $2.50/kw-month since Company’s Investor Day on April 11, 2014.

HOUSTON--(BUSINESS WIRE)--Dynegy Inc. (NYSE: DYN) reported first quarter 2014 consolidated Adjusted EBITDA of $152 million, compared to $43 million for the first quarter 2013. The $109 million increase in Adjusted EBITDA was primarily due to improved spark spreads in the Gas segment, improved energy prices for the Coal segment and the addition of the IPH segment. The Company’s operating income was $1 million for the first quarter 2014 compared to an operating loss of $115 million for the same period in 2013. The net loss attributable to Dynegy Inc. for the first quarter 2014 was $41 million, compared to a net loss of $142 million for the first quarter 2013.

“Strong operational performance and commercial execution throughout the first quarter allowed us to capitalize on the favorable market conditions which existed during the period,” said Dynegy President and Chief Executive Officer Robert C. Flexon. “In addition, the continuing trend of generation capacity retirements combined with dramatically lower natural gas inventory is driving forward capacity and energy prices higher in several of our key markets. We are seeing a sustained improvement in 2015 and 2016 forward energy prices and we continue to be successful in executing bilateral capacity transactions in MISO at average prices in excess of $2.00 per kw-month. Dynegy is well-positioned to benefit from improving market dynamics.”

Segment Review of Results Quarter-over-Quarter

Coal – The first quarter 2014 operating income was $9 million, compared to an operating loss of $80 million for the same period in 2013. Adjusted EBITDA totaled $42 million during the first quarter 2014 compared to $4 million during the same period in 2013 primarily due to higher realized prices during first quarter 2014 compared to first quarter 2013.

Gas – The first quarter 2014 operating income was $34 million, compared to an operating loss of $8 million for the same period in 2013. Adjusted EBITDA totaled $104 million during the first quarter 2014 compared to $61 million during the same period in 2013. The quarter-over-quarter increase in Adjusted EBITDA is due to higher generation and spark spreads primarily at Independence and Ontelaunee and higher ancillary services revenues across the Gas fleet, which more than offset a decline in tolling revenues at Moss Landing.

IPH – The first quarter 2014 operating loss was $16 million. Adjusted EBITDA totaled $30 million during the first quarter 2014 as the segment generated 6.7 million megawatt-hours, a meaningful portion of which was hedged through the segment’s retail business and other third parties.

Consolidated Cash Flow

Cash flow provided by operations for the first quarter 2014 was $166 million. During the period, our power generation business provided cash of $151 million, which was partially offset by acquisition and integration costs. Corporate activities used cash of approximately $31 million, which includes interest payments to service debt related to our Credit Agreement and Senior Notes, employee-related expenses and other general and administrative expenses. This use of cash was partially offset by $46 million in positive changes in working capital, net of $38 million of increased collateral postings.

Cash flow used in investing activities totaled $17 million for the quarter entirely for capital expenditures, including $4 million in maintenance capital expenditures, $8 million in environmental capital expenditures and $5 million in capitalized interest.

Cash flow provided by financing activities during the quarter was $4 million.

PRIDE Reloaded

Over the next three years, the Company is targeting $135 million in operating improvements and $165 million in balance sheet efficiencies from its PRIDE (Producing Results through Innovation by Dynegy Employees) Reloaded program. The Company has already identified and is implementing initiatives that are expected to meet its 2014 PRIDE Reloaded EBITDA improvement target of $60 million. The overall goal of the PRIDE Reloaded program remains improving operating performance, cost structure and the balance sheet to drive incremental cash flow benefits.

Recent Developments

Exporting energy and capacity from MISO to PJM for both the Coal Segment and IPH continues to be pursued. In connection with these efforts, IPM recently secured 240 MW of firm transmission into PJM. This incremental transmission capacity, effective for the 2017/2018 planning year, requires no capital investment and brings IPH’s firm import capacity into PJM to 1,140 MW.

The first phase of uprates at Kendall was partially completed during April. This uprate will increase the plant’s capacity by 40 MW and an additional 40 MW of uprates are scheduled for 2016. All 80 MW of this capacity is eligible to participate in the 2017/2018 PJM capacity auction.

Dynegy continues to enter into bilateral capacity transactions in MISO for future planning years at prices averaging more than $2.00 per kw-month.

2014 Guidance

As previously disclosed, Dynegy’s 2014 consolidated Adjusted EBITDA guidance range is $300 million to $350 million, and its consolidated 2014 Free Cash Flow guidance range is $10 million to $60 million. Both guidance ranges are being maintained as the Company heads into the summer season and continues to work with the recently acquired IPH portfolio. Further guidance updates will be made during Dynegy’s second quarter 2014 earnings call.

Investor Conference Call/Webcast

Dynegy’s earnings presentation and management comments on the earnings presentation will be available on the “Investor Relations” section of www.dynegy.com later today. Dynegy will answer questions about its first quarter 2014 financial results during an investor conference call and webcast tomorrow, May 8, 2014 at 9 a.m. ET/8 a.m. CT. Participants may access the webcast from the Company’s website.

ABOUT DYNEGY

Dynegy's subsidiaries produce and sell electric energy, capacity and ancillary services in key U.S. markets. The Dynegy Power, LLC power generation portfolio consists of approximately 6,121 megawatts of primarily natural gas-fired intermediate and peaking power generation facilities. The Dynegy Midwest Generation, LLC portfolio consists of approximately 2,980 megawatts of primarily coal-fired baseload power plants. The Illinois Power Holdings, LLC portfolio consists of approximately 4,062 megawatts of primarily coal-fired baseload power plants. Homefield Energy is a retail electricity provider serving businesses and residents in Illinois.

http://www.businesswire.com/news/home/20140507006827/en/Dynegy-Announces-Quarter-2014-Results#.U2qb_K1OWUk