Notable Runner: Vistra Energy Corp. (NYSE: VST)

On Friday, Shares of Vistra Energy Corp. (NYSE: VST) rose 1.32% to $26.01. The stock traded total volume of 3,175,264 shares lower than the average volume of 3.59M shares.

Vistra Energy Corp. (VST):

Financial Highlights:

  • Delivered 2018 Ongoing Operations Adjusted EBITDA of $2,809.0M and a Net Loss from Ongoing Operations of $7.0M—results above consensus and in-line with management guidance midpoint; results more than $180.0M above the comparable guidance midpoint when utilizing original guidance curve dates of October 2017.
  • Delivered 2018 Ongoing Operations Adjusted FCFbG of $1,611.0M and Operating Cash Flow of $1,471.0M—results above the high-end of the guidance range and reflecting a free cash flow conversion ratio of nearly 60 percent.

Capital Allocation Highlights:

  • Declared $1.75B in share repurchase authorizations; about $937.0M executed through Feb. 15, 2019, reducing shares outstanding to about 486.0M shares as of the same date, about 7 percent lower than Vistra’s share count as of the Dynegy merger close on April 9, 2018.
  • Reduced annual interest expense by about $210.0M through the refinancing and repayment of about $13.0B aggregate principal amount of indebtedness and revolving credit commitments through Feb. 21, 2019; Vistra believes it is on-track to achieve leverage target of about 2.5x net debt to EBITDA3 (or about 2.7x gross debt to EBITDA) by year-end 2020.

Summary of Financial Results for the Three Months and Year Ended Dec. 31, 2018:

For the three months ended Dec. 31, 2018, Vistra stated a Net Loss from Ongoing Operations of $161.0M and Adjusted EBITDA from Ongoing Operations of $719.0M.

For the full year, Vistra stated a Net Loss from Ongoing Operations of $7.0M and Adjusted EBITDA from Ongoing Operations of $2,809.0M excluding the net impact to Adjusted EBITDA of the Odessa Power Plant earnout buybacks in February and May 2018.  Counting these impacts, Vistra’s Adjusted EBITDA from Ongoing Operations was $2,791.0M.  Also for the full year, Vistra stated Operating Cash Flow of $1,471.0M and Ongoing Operations Adjusted Free Cash Flow before Growth of $1,611.0M.

Acquisition of Crius Energy Trust:

In February 2019, Vistra declared its agreement to acquire Crius Energy Trust for about $378.0M plus the assumption of Crius Energy net debt of about $108.0M.  Vistra anticipates achieving $15.0M of annual EBITDA synergies and an additional $12.0M of annual free cash flow synergies resulting from supply and financing efficiencies.  In addition, Vistra anticipates it will avoid a cumulative $29.0M of organic retail growth investment over the period from 2019 through 2023 as a result of the acquisition.  Pro forma for the full run-rate of synergies, Vistra estimates the purchase at about 4.0 times EV/EBITDA, which is projected to be accretive to both EBITDA and free cash flow and to exceed Vistra’s investment threshold of mid- to high-teens unlevered returns.

2019 Guidance:

Vistra is reaffirming its 2019 Ongoing Operations guidance ranges, forecasting Ongoing Operations Adjusted EBITDA of $3,220 to $3,420.0M and Ongoing Operations Adjusted FCFbG of $2,100 to $2,300.0M.

Share Repurchase Program:

As of Feb. 15, 2019, Vistra has accomplished $937.0M of the $1.750B share repurchase program authorized by its board of directors.  Vistra has purchased about 40.0M shares, lowering Vistra’s shares outstanding to about 486.0M as of Feb. 15, 2019.  $813.0M remains available for execution under the program as of Feb. 15, 2019.

Liquidity:

As of Dec. 31, 2018, Vistra had total available liquidity of about $1.771B, counting cash and cash equivalents of $636.0M and $1,135.0M of availability under its revolving credit facility, which remained undrawn but had $1,365.0M of letters of credit outstanding as of Dec. 31, 2018.

VST has the market capitalization of $12.69B and its EPS growth ratio for the past five years was 53.90%. The return on assets ratio of the Company was -0.20% while its return on investment ratio stands at 2.60%. Price to sales ratio was 1.39.

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