What NRG Energy (NRG) Said on Its Q3 Earnings Call

Key Points

• NRG plans to sell six power plants totaling nearly 4.9 gigawatts to LS Power for $4 billion, with closing expected in Q2 2027 pending approvals. It plans to use $2 billion of proceeds to reduce debt, retain $1 billion for growth or debt reduction, and has raised planned 2026–27 share repurchases to $3 billion.
• NRG reported Q3 adjusted EBITDA of $2 billion and adjusted EPS of $4.68. Its 2027 guidance midpoint is $5.75 billion in adjusted EBITDA, $3.15 billion in free cash flow before growth, and $9.05 in adjusted EPS; the outlook includes the assets slated for sale and will be updated after closing.
• NRG expects to announce approved agreements by year-end for its initial 1.2-gigawatt Texas data center project and is seeking financing partners, with partnerships—not equity issuance—as its preferred funding approach.

NRG Energy NYSE: NRG plans to sell six power generation facilities to LS Power for $4 billion and increase its planned share repurchases, as the company reported higher third-quarter earnings and introduced its 2027 financial outlook.

The assets being sold have a combined capacity of just under 4.9 gigawatts and are located in New York, Texas and New England. NRG expects the transaction to close in the second quarter of 2027, subject to regulatory approvals.

President and Chief Executive Officer Robert Gaudette said LS Power approached NRG with an unsolicited offer valued at eight times the assets’ expected 2027 adjusted EBITDA. The facilities were part of a portfolio NRG acquired from LS Power earlier in 2026.

“At that valuation, we saw a compelling opportunity to further focus our portfolio and create more value per share by redeploying the proceeds than by continuing to own those assets,” Gaudette said.

Sale Proceeds to Support Buybacks and Debt Reduction

NRG increased its planned share repurchases by $1 billion, bringing the total to $3 billion across 2026 and 2027. The company intends to begin the incremental $1 billion program in 2026, before the expected sale closing. Its base allocation plan already included $1 billion in repurchases for 2026 and at least $1 billion for 2027.

NRG also plans to use $2 billion of the sale proceeds to reduce debt when the transaction closes. It expects to retain the remaining $1 billion for contracted growth opportunities or further debt reduction.

Gaudette said NRG would retain the entire PJM generation portfolio and CPower, the demand-response business that were central to its rationale for the LS Power acquisition. The company also expects to retain a substantial generation fleet in Texas to support its residential business.

Chief Financial Officer Bruce Chung cautioned against interpreting the sale as a shift toward a greater emphasis on retail. NRG viewed the assets being sold as not necessarily core to its base business and earnings power, he said.

Quarterly Results and 2027 Outlook

NRG reported third-quarter adjusted EBITDA of $2 billion, free cash flow before growth of $1.2 billion and adjusted earnings per share of $4.68. Chung said all four of the company’s key financial metrics increased by at least 50% from a year earlier.

Results benefited from the acquired LS Power portfolio, higher capacity revenue and growth in consumer businesses, Chung said. Home Energy benefited from higher retail margins and favorable Texas weather, while Smart Home adjusted EBITDA rose 14% year over year, supported by customer growth and higher monthly recurring service margin per customer.

NRG reaffirmed its 2026 guidance across its four financial metrics. Chung said the company expects to finish the year slightly below the midpoint of its adjusted EBITDA guidance range, even though ERCOT power prices had averaged nearly 40% below its original planning assumption year to date.

For 2027, NRG introduced guidance midpoints of $5.75 billion in adjusted EBITDA, $3.15 billion in free cash flow before growth and $9.05 in adjusted earnings per share. The outlook includes the assets covered by the announced sale; the company expects to update its guidance after the transaction closes.

Chung said the 2027 adjusted EBITDA outlook reflects $185 million of net wholesale power price pressure against the assumptions in NRG’s long-term plan, primarily from lower ERCOT prices, partly offset by higher PJM prices. It also includes $100 million in Regional Greenhouse Gas Initiative compliance costs.

The company reaffirmed its expectation for more than 14% compound annual growth in adjusted earnings per share and free cash flow before growth per share through 2030. Chung said the growth rate applies over the full planning period, rather than as a minimum for each individual year, and holds with or without the asset sale.

Data Center Project Advances

Gaudette said NRG expects to announce approved agreements for its initial 1.2-gigawatt Texas data center project by year-end. The project is designed to pair new dispatchable generation with new demand under a long-term customer commitment.

During the question-and-answer session, Gaudette said the parties had agreed on terms and needed to complete internal processes. He said no key regulatory milestones were preventing a commercial agreement from being signed.

NRG has allocated $721 million in its 2026 base capital plan toward the project. The company is also discussing opportunities beyond the initial project with the same customer, although Gaudette did not provide a timetable for additional agreements.

Chung said NRG is in discussions with potential financing partners for the first project and a broader pipeline. Ideally, a partner would be lined up by year-end alongside a definitive agreement, he said, though the process could extend into the new year. He said partnerships would be the primary method NRG would look to use to fund future opportunities and ruled out equity issuance.

NRG’s long-term financial plan does not require contributions from the initial data center project, 2 gigawatts of PJM upgrade opportunities or other projects in its development pipeline, Chung said.

Managing Power Price Exposure

NRG said it is 75% hedged in ERCOT and 90% hedged in PJM for 2027. Gaudette said that coverage includes generation allocated to serve retail customers as well as positions hedged with external counterparties.

Gaudette described current ERCOT prices as depressed, citing recent battery and solar additions that demand has not yet fully absorbed. He said NRG has hedged to protect near-term cash flows while expecting longer-term pricing improvement as demand grows.

NRG’s first Texas Energy Fund plant came online in May, and its two remaining plants are expected to add about 4 terawatt-hours of annual generation in 2028. Gaudette said both remaining projects are on schedule and on budget.

About NRG Energy (NYSE:NRG)

NRG Energy, Inc is an integrated energy company that produces and sells electricity and natural gas and provides home services. Its businesses serve residential, commercial and industrial customers, primarily in the United States and Canada.

The company supplies retail electricity and natural gas through a range of plans and brands, while its power-generation operations help support electricity markets across its service areas. NRG also offers energy-management programs and related services for businesses and other large customers.

NRG expanded into smart-home services with its 2023 acquisition of Vivint Smart Home.

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