Vistra Corp. 2026 Q2 Earnings Call

Please go ahead. Good morning, thank you for joining Vistra's investor webcast discussing our second quarter 2026 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. Providing our prepared remarks today are Jim Burke, Vistra's President and Chief Executive Officer, and Kris Moldovan, Vistra's Executive Vice President and Chief Financial Officer. Other senior Vistra executives will be available to address questions during the second part of today's call as necessary. Our earnings release presentation and other matters discussed on the call today include references to certain non-GAAP financial measures. All references to Adjusted EBITDA and Adjusted Free Cash Flow before Growth throughout this presentation refer to ongoing operations' Adjusted EBITDA and ongoing operations' Adjusted Free Cash Flow before Growth.

Reconciliations to the most directly comparable GAAP measures are provided in the earnings release and in the appendix in the investor presentation available in the investor relations section of Vistra's website. Today's discussion contains forward-looking statements, which are based on assumptions we believe to be reasonable only as of today's date. 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 our 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 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. Good morning, thank you all for joining us today to discuss our second quarter 2026 results. We remain on track to achieve another record result in 2026 as the business continues to perform very well. Within the geographies we serve, we are observing a structurally improved demand environment, with both PJM and ERCOT hitting new all-time summer peak loads in July. This recent experience reinforces our focus on operational excellence, delivering power to our customers in a reliable and safe manner when it's needed most. Data center development activity remains strong, we continue to be in active negotiations with large load customers as they seek to meet their power needs both in the short and long-term planning horizons.

With our large, diversified, and flexible fleet, our development capabilities, innovative retail franchise, and experienced commercial team, we believe Vistra is well positioned to deliver on these opportunities. The activity level we see today reinforces our view that the long-term expected improvement in power market fundamentals is underway, and we remain excited about the growth opportunities ahead. Turning to slide five, the team has worked hard across the business, building on the first quarter momentum to deliver strong first half results for the company. We achieved second quarter Adjusted EBITDA of nearly $1.8 billion, compared to second quarter 2025 of approximately $1.35 billion, representing an over 30% increase year-over-year.

At the core of these results are the 7,000 team members across the organization, whose close collaboration and consistent execution across generation, commercial, and retail highlights the one team culture that is central to our success and reflects the strength of the integrated business model. Operationally, the team successfully completed our annual spring maintenance cycle, positioning the fleet for strong performance through the critical summer period. To provide some perspective, the nuclear fleet successfully completed planned refueling outages for three of our units, and our gas and coal fleet successfully completed 92 planned outages in preparation for the summer run. This preparation was evident during the recent heat waves in Texas and PJM, where we achieved commercial availability of over 97% across the entire fleet.

Moving to the outlook, we are reaffirming the guidance ranges for 2026 Adjusted EBITDA and Adjusted Free Cash Flow before Growth and maintaining the range of potential 2027 Adjusted EBITDA midpoint opportunities. Kris will cover this in more detail later. Finally, we are also pleased to announce our partnership with KKR, NVIDIA, and the Kuwait Investment Authority to be a founding investor in Helix Digital Infrastructure. Helix will focus on combining power solutions for data centers with land and other digital infrastructure, creating a rack-to-grid one-stop shop solution that customers increasingly prefer. As part of this solution, the Helix platform will seek to leverage our deep expertise in power markets, our proven commercial track record, and our generation capabilities to deliver tailored energy solutions. Vistra's role will be twofold.

First, as a founding investor, Vistra will commit up to $1 billion to be invested over time, with any amount in excess of $500 million subject to the achievement of certain milestones. This aligns our participation in what we expect to be a leading digital infrastructure platform. Second, Vistra will serve as the preferred power partner, allowing us to participate in Helix development projects either through contracted new build projects or through new contracts with existing assets. We believe this structure creates an additional avenue for growth and broadens our participation in a thoughtful manner as the digital economy expands. Importantly, we retain significant optionality to develop projects with Helix where it makes sense to do so while continuing to develop projects on our own as well.

We're excited about the potential this platform brings to our company and look forward to working with the team to execute on this strategy. Turning to slide six, as we have outlined on previous calls, we see a structurally improved demand environment in power markets that supports our long-term outlook. We believe annual load growth of at least 4%-6% in ERCOT and 2%-3% in PJM through 2030 remain reasonable estimates for these markets. In July, we've also seen new all-time peaks in load in both PJM and ERCOT, with PJM hitting over 168 GW and ERCOT hitting over 91 GW. While data centers will be an important driver of load, particularly in 2028 and beyond, we believe a significant component of this growth is from sources other than data centers.

This includes industrial reshoring, increasing electrification, population growth, particularly in Texas, and broader economic expansion. Importantly, despite the strong level of growth, the performance of power grids during these recent summer peaks demonstrates that the power grids in our key markets are able to meet this growing demand. As a diversified company with multiple forms of generation across the country, Vistra is well positioned to benefit from strengthening fundamentals across markets. Although recent demand trends combined with strong weather have driven strength in PJM forward pricing, the power price environment in ERCOT has softened recently. We view this as normal, with variability expected as load additions are lumpy and weather impacts can change year to year. We believe long-term growth fundamentals remain on track across our key markets, and our team is committed to delivering on our strategy given this growing load environment.

This quarter has demonstrated strong execution across our business. Not to be left out of the discussion, we have been very active on many fronts related to the regulatory process and advocacy in our key markets. While there is still more to finalize, overall, we are encouraged by the direction of travel. I kept my opening remarks brief, recognizing that we will have an opportunity to provide our perspective on this topic in Q&A. With that, I'll turn it over to Kris to provide more details on our second quarter results, our outlook, and our capital allocation.

Thank you, Jim. Turning to slide eight, Vistra delivered second quarter Adjusted EBITDA of $1.767 billion, representing a more than 30% increase compared to the second quarter of 2025. This strong performance was driven by contributions across both our generation and retail segments, reflecting the benefits of our integrated business model and comprehensive hedging program. Our generation business delivered approximately $994 million of Adjusted EBITDA in the quarter, compared to approximately $593 million in the second quarter of 2025. The year-over-year improvement was primarily driven by favorable hedging activity, resulting in the company's average realized prices being approximately 5% higher on a per MWh basis compared to the same quarter last year.

Higher capacity revenues in PJM, optimizing the run profile of our flexible gas generation assets to capture margin opportunities, the restart of Martin Lake Unit 1, and contributions from the assets acquired from Lotus in the third quarter of 2025. Retail also had a strong quarter, contributing approximately $773 million of Adjusted EBITDA, compared to approximately $756 million in the second quarter of 2025. As a reminder, the second and fourth quarters are typically the strongest quarters for retail given seasonal timing of margins. Turning to slide nine, we are reaffirming our 2026 Adjusted EBITDA guidance range of $6.8 billion-$7.6 billion and our adjusted free cash flow before growth guidance range of $3.925 billion-$4.725 billion. Given our performance through the first half of the year, we are confident in our ability to deliver at or above the midpoint of these ranges.