NRG Expects 7% To 9% Long-term Annual Dividend Per Share Growth

(RTTNews) - While hosting a virtual Investor Day later on Thursday, NRG Energy Inc. (NRG) said its management will provide an update on its consumer services strategy as well as new capital allocation framework and operating efficiency initiatives.

NRG expects free cash flow before growth (FCFbG) per share to increase approximately 15% to 20% on a compounded annual basis between 2023 and 2027, equating to $8.3 billion of cumulative excess cash.

NRG has updated its capital allocation framework and plans to, after deleveraging, return 80% of excess cash to shareholders and invest 20% in growth initiatives. This compares to the Company's prior 50% / 50% allocation.

As a result of the expected cash flow generation, the Company expects $6.9 billion of cumulative capital returns to shareholders through share repurchases and dividends through 2027.

The Company's Board of Directors has increased the share repurchase authorization from $1.0 billion to $2.7 billion through 2025. NRG also expects 7% to 9% long-term annual dividend per share growth.

In addition to significant capital returns to shareholders, NRG also expects to complete up to $2.55 billion of debt reduction.

The Company is announcing a new $150 million cost reduction initiative that is expected to be completed by 2025, derived from operations and maintenance efficiencies, sourcing optimization, automation, service levels, spans of control and other redundancies.

These savings are in addition to $300 million in Direct Energy cost synergies that are expected to be completed by the end of 2023 and $100 million in cost synergies related to the Vivint acquisition that are expected to be completed by 2025.

Through a combination of cross-selling, bundling and organic growth, NRG expects to achieve $300 million of incremental free cash flow before growth by 2025.