UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 7, 2014
 
NRG YIELD, INC.
(Exact name of Registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation)	 	001-36002
(Commission File Number)	 	46-1777204
(IRS Employer Identification No.)	
 
211 Carnegie Center, Princeton, New Jersey 08540
(Address of principal executive offices, including zip code)
 
(609) 524-4500
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
Item 2.02                                          Results of Operations and Financial Condition
 
On August 7, 2014, NRG Yield, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2014.  A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K and is hereby incorporated by reference.
 
Item 9.01                                          Financial Statements and Exhibits
 
(d)        Exhibits
 
Exhibit
Number	 	Document	
 	 	 	
99.1	 	Press Release, dated August 7, 2014	
 
2

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	NRG Yield, Inc.	
 	(Registrant)	
 	 	 	
 	By:	/s/ David R. Hill	
 	 	David R. Hill	
 	 	Executive Vice President and	
 	 	General Counsel	

Dated: August 7, 2014	 	 	
 
3

 
Exhibit Index
 
Exhibit
Number	 	Document	
 	 	 	
99.1	 	Press Release, dated August 7, 2014	
 
4

Exhibit 99.1

 
NRG Yield, Inc. Reports Second Quarter 2014 Financial Results,
Completes First ROFO Acquisition, Closes Green Bond and Equity Offerings, and Raises Quarterly Dividend by 4.3%
 
Financial Highlights(1)
 
·                 $109 million of Adjusted EBITDA in the second quarter of 2014
·                 $38 million of Cash Available for Distribution (CAFD) in the second quarter of 2014
·                 $0.35 per share quarterly dividend to Class A common stock ($1.40 per share annualized) paid on June 16, 2014 to shareholders of record as of June 2, 2014
 
Increasing Dividend
 
·                 4.3% quarter over quarter increase in dividend payable in third quarter of 2014 for the Company’s Class A common stock to $0.365 per share ($1.46 per share annualized)
·                 Targeting $1.50 per share annualized dividend by the fourth quarter
 
Closed the Acquisition of NRG Right of First Offer Assets
 
·                 Completed its announced acquisition of three Right of First Offer (ROFO) assets from NRG Energy, Inc. on June 30, 2014 for total consideration of $357 million, representing a base purchase price of $349 million and $8 million of working capital adjustments, increasing the annual run-rate Adjusted EBITDA and CAFD by approximately $100 million and $30 million, respectively
 
Completed New Corporate Financings for Pending Alta Wind Acquisition
 
·                 Closed the issuance of 12,075,000 Class A common shares at $54.00 per share on July 29, 2014
·                 NRG Yield Operating LLC issued $500 million of senior unsecured notes on August 5, 2014
·                 Above offerings resulted in an estimated $188 million in excess cash proceeds (above the amount expected to be required to fund the Alta Wind Acquisition), providing surplus capital to fund future acquisitions
 
NRG Energy, Inc. Announced Intention to Offer a Second Set of Assets
 
·                 NRG Energy, Inc. announced its intention to offer a second set of assets later in the third quarter consisting of Walnut Creek, Tapestry and Laredo Ridge totaling approximately $35 million of incremental annual CAFD and $120 million of annual Adjusted EBITDA
 
Reaffirming 2014 Guidance
 
·                 Full year guidance of $410 million Adjusted EBITDA and $140 million CAFD

(1) In accordance with GAAP, 2014 and 2013 results restated to include full impact of the assets in the ROFO drop down transaction which closed on June 30, 2014
 
1

 
PRINCETON, NJ; August 7, 2014 — NRG Yield, Inc. (NYSE: NYLD) today reported second quarter 2014 Adjusted EBITDA of $109 million. Net income for the second quarter was $34 million, or $0.26 per diluted Class A common share.
 
“Through successful dropdowns, direct acquisitions, increased dividends, strong operational performance, and continued close alignment with our parent, NRG, we have fulfilled the promise of our IPO roadshow one year ago,” said NRG Yield’s Chairman and Chief Executive Officer David Crane. “Furthermore, NRG Yield’s strong liquidity position, bolstered by the latest equity offering, provides the flexibility to continue to acquire assets which fit our growth profile.”
 
Overview of Financial and Operating Results
 
Note 1: NRG Yield closed on its initial public offering (IPO) on July 22, 2013. Results for periods prior to the IPO are attributable to its predecessor.
Note 2: In accordance with GAAP, 2014 and 2013 results have been restated to include full impact of the assets in the ROFO drop down transaction which closed on June 30, 2014
 
Table 1: Selected Financial Results
 
 	 	Three Months Ended	 	Six Months Ended	 	
(dollars in millions)	 	6/30/14	 	6/30/13	 	6/30/14	 	6/30/13	 	
Operating Revenue	 	134	 	82	 	274	 	135	 	
Net Income	 	34	 	35	 	60	 	46	 	
Adjusted EBITDA	 	109	 	65	 	201	 	97	 	
Cash Available for Distribution	 	38	 	35	 	43	 	32	 	
 
Table 2: Selected Operating Results
 
 	 	Three Months Ended	 	Six Months Ended	 	
(MWh and MWht in thousands)	 	6/30/14	 	6/30/13	 	6/30/14	 	6/30/13	 	
Equivalent Availability Factor (Conventional)	 	98.1	%	98.7	%	91.6	%	95.9	%	
Renewable Generation Sold (MWh)	 	404	 	312	 	686	 	535	 	
Thermal Generation Sold (MWht)(1)	 	493	 	401	 	1,233	 	907	 	

(1) Also includes Thermal MWh sold
 
Segment Results
 
Table 3: Adjusted EBITDA
 
(dollars in millions)	 	Three Months Ended	 	Six Months Ended	 	
Segment	 	6/30/14	 	6/30/13	 	6/30/14	 	6/30/13	 	
Conventional	 	57	 	25	 	110	 	34	 	
Renewable	 	41	 	32	 	62	 	47	 	
Thermal	 	13	 	10	 	33	 	20	 	
Corporate	 	(2	)	(2	)	(4	)	(4	)	
Adjusted EBITDA	 	109	 	65	 	201	 	97	 	
 
2

 
Table 4: Net Income/(Loss)
 
(dollars in millions)	 	Three Months Ended	 	Six Months Ended	 	
Segment	 	6/30/14	 	6/30/13	 	6/30/14	 	6/30/13	 	
Conventional	 	18	 	16	 	44	 	20	 	
Renewable	 	19	 	17	 	14	 	21	 	
Thermal	 	6	 	4	 	19	 	9	 	
Corporate	 	(9	)	(2	)	(17	)	(4	)	
Net Income	 	34	 	35	 	60	 	46	 	
 
NRG Yield reported Net Income of approximately $34 million for the quarter ended June 30, 2014. Adjusted EBITDA was $109 million and CAFD was $38 million. Adjusted EBITDA was higher by $44 million, or 68%, when compared to the same quarter of 2013 as new assets came online during the second and third quarter of 2013.
 
Operational Performance
 
For the second quarter of 2014, generation for the Company’s renewable assets was 29% higher than during the same period in 2013, primarily driven by CVSR and Kansas South reaching commercial operations in 2013. Overall reliability improvement was driven by improved year on year performance from the GenConn Middletown and GenConn Devon facilities. Additionally, improved availability and favorable generation for the conventional assets were driven by full quarter operation of Marsh Landing and El Segundo Energy Center in second quarter 2014.
 
3

 
Liquidity and Capital Resources
 
Table 5: Liquidity
 
(dollars in millions)	 	6/30/14	 	3/31/14(1)	 	12/31/13	 	
Cash and Cash Equivalents	 	87	 	434	 	59	 	
Restricted Cash	 	23	 	33	 	67	 	
Total Cash	 	110	 	467	 	126	 	
Revolver Availability	 	450	 	60	 	60	 	
Total Liquidity	 	560	 	527	 	186	 	
Excess Cash from Recent Equity and Debt Offerings (2)	 	188	 	—	 	—	 	
Expected LCs to be posted for Alta Wind Assets	 	(30	)	—	 	—	 	
Pro Forma Liquidity	 	718	 	527	 	186	 	

(1) Includes convertible debt issued in Q1 for purpose of ROFO acquisition (closed in Q2)
(2) Represents excess proceeds from the debt and equity offerings, net of Alta acquisition
 
Total pro forma liquidity as of June 30, 2014 was $718 million, an increase of $532 million from December 31, 2013.  This reflects an increase in revolver availability of $390 million, the excess cash of $188 million from the recent debt and equity offerings related to the Alta acquisition, partially offset by $30 million of LCs to be posted for Alta Wind Assets, as well as changes in cash driven by the following items:
 
·                 $602 million of cash outflows, consisting of the following items:
·                 $357 million payment to NRG for purchase of ROFO assets
·                 $105 million payments for cash grant bridge loans
·                 $44 million of dividends and distributions to NRG Yield shareholders and NRG
·                 $43 million for payments for long-term debt
·                 $29 million in capital expenditures
·                 $24 million in dividends and returns of capital
 
·                 Partially offset by $586 million of cash inflows, consisting of the following items:
·                 $373 million proceeds from the issuance of the convertible notes and project financings, net of debt issuance costs
·                 $137 million of proceeds from renewable energy grants
·                 $73 million of net cash provided by operating activities
·                 $3 million of other cash inflows
 
Agreement to Purchase Alta Wind facility
 
On June 3, 2014, NRG Yield entered into an agreement to acquire the Alta Wind facility located in Tehachapi, CA, from Terra-Gen Power LLC for $870 million plus the assumption of $1.6 billion of non-recourse project financings and subject to customary working capital adjustments. The acquisition is expected to close in the third quarter of 2014. The acquisition, which totals 947 megawatts (MW) of operating wind capacity, also includes a portfolio of land leases associated with the Alta Wind facility. NRG Yield plans to fund the purchase price through a combination of the net proceeds of $492 million from the recently issued green unsecured notes and proceeds totaling $442 million from the recently completed common stock offering. The acquisition will increase the annual run-rate EBITDA by approximately $220 million and CAFD by approximately $70 million (before debt service associated with acquisition financing) by 2016.
 
4

 
NRG Yield Operating LLC Issuance of $500 million of “Green” Unsecured Notes
 
On August 5, 2014, NRG Yield Operating LLC issued $500 million of unsecured notes due 2024 at a coupon rate of 5.375%. The notes are senior unsecured obligations of NRG Yield Operating LLC and are guaranteed by certain of its subsidiaries and its direct parent, NRG Yield LLC. Furthermore, these unsecured notes are pari passu to the company’s corporate credit facility and convertible notes.
 
Closed on offering of Class A Common Stock
 
On July 29, 2014, the Company raised $630 million (net of issuance costs) in its latest public offering with the sale of 12,075,000 shares of Class A common stock at a price of $54 per share. Proceeds totaling $442 million from this issuance will be used to fund the acquisition of the Alta Wind facility while the remaining funds will be used for general corporate purposes, including future acquisitions.
 
Drop-Down of Assets from NRG Energy, Inc.
 
NRG Energy, Inc. announced intention to offer a second set of assets to NRG Yield, Inc. representing approximately $35 million in annual CAFD and $120 million of annual Adjusted EBITDA. The assets include:
 
·                 Walnut Creek — 500 MW natural gas facility located in City of Industry, CA
·                 Tapestry — three wind facilities totaling 204 MW; including Buffalo Bear 19 MW in Oklahoma, Taloga 130 MW in Oklahoma, and Pinnacle 55 MW in Pennsylvania
·                 Laredo Ridge — 81 MW wind facility located in Petersburg, NE
 
Quarterly Dividend
 
On May 5, 2014, the Company’s Board of Directors declared a quarterly dividend on Class A common stock of $0.35 per share ($1.40 per share annualized) which was paid on June 16, 2014 to shareholders of record as of June 2, 2014.
 
On July 29, 2014, the Company’s Board of Directors declared a quarterly dividend on Class A common stock of $0.365 per share ($1.46 per share annualized) payable on September 15, 2014 to shareholders of record as of September 2, 2014. This equates to a 4.3% increase over the prior quarter.
 
Guidance
 
As initiated last quarter, NRG Yield is providing guidance for the prompt quarter.  For the third quarter of 2014, the Company expects Adjusted EBITDA of $120 million and CAFD of $74 million.
 
Table 6: Adjusted EBITDA and Cash Available for Distribution Guidance
 
(dollars in millions)	 	Third Quarter	 	2014 Full Year	 	
Adjusted EBITDA	 	120	 	410	 	
Pro-rata Adjusted EBITDA from unconsolidated affiliates	 	(25	)	(73	)	
Cash distributions from unconsolidated affiliates	 	27	 	43	 	
Cash interest paid	 	(30	)	(99	)	
Maintenance capital expenditures	 	(4	)	(17	)	
Change in other assets	 	30	 	(15	)	
Principal amortization of indebtedness	 	(44	)	(110	)	
Estimated Cash Available for Distribution	 	74	 	140	 	
 
5

 
Earnings Conference Call
 
On August 7, 2014, NRG Yield will host a conference call at 10:30 am Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG Yield’s website at http://www.nrgyield.com .The webcast will be archived on the site for those unable to listen in real time.
 
About NRG Yield
 
NRG Yield owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the U.S., including fossil fuel, solar and wind power generation facilities that provide the capacity to support more than 1.5 million American homes and businesses. Our thermal infrastructure assets provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units in multiple locations. NRG Yield is traded on the New York Stock Exchange under the symbol NYLD. Visit nrgyield.com for more information.
 
Safe Harbor Disclosure
 
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions and include our Adjusted EBITDA, cash available for distribution, expected earnings, future growth and financial performance, and typically can be identified by the use of words such as “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “believe” and similar terms. Although NRG Yield believes that its expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulation of markets and of environmental emissions, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify or successfully implement acquisitions, our ability to enter into new contracts as existing contracts expire, our ability to acquire assets from NRG Energy, Inc. or third parties, failure to successfully close the Alta Wind acquisition (including receipt of third-party consents and regulatory approvals), and our ability to maintain and grow our quarterly dividends. Furthermore, any dividends are subject to available capital, market conditions, and compliance with associated laws and regulations.
 
NRG Yield undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Adjusted EBITDA and cash available for distribution are estimates as of today’s date, August 7, 2014, and are based on assumptions believed to be reasonable as of this date. NRG Yield expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause NRG Yield’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect NRG Yield’s future results included in NRG Yield’s filings with the Securities and Exchange Commission at www.sec.gov. In addition, NRG Yield makes available free of charge at www.nrgyield.com, copies of materials it files with, or furnish to, the SEC.
 
Contacts:	 	
 	 	
Media:	Investors:	
 	 	
Karen Cleeve	Chad Plotkin	
 
6

 
609.524.4608	609.524.4526	
 	 	
Dave Knox	Daniel Keyes	
713.537.2130	609.524.4527	
 
7

 

 
NRG YIELD, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
 	 	Three months
ended June 30,	 	Six months ended
June 30,	 	
(In millions, except per share amounts)	 	2014	 	2013 (a)	 	2014	 	2013 (a)	 	
Operating Revenues	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	$	134	 	$	82	 	$	274	 	$	135	 	
Operating Costs and Expenses	 	 	 	 	 	 	 	 	 	
Cost of operations	 	45	 	32	 	105	 	61	 	
Depreciation and amortization	 	36	 	10	 	60	 	20	 	
General and administrative — affiliate	 	2	 	2	 	4	 	4	 	
Total operating costs and expenses	 	83	 	44	 	169	 	85	 	
Operating Income	 	51	 	38	 	105	 	50	 	
Other Income/(Expense)	 	 	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	 	14	 	2	 	15	 	6	 	
Other income, net	 	—	 	1	 	1	 	1	 	
Interest expense	 	(29	)	(6	)	(56	)	(11	)	
Total other expense	 	(15	)	(3	)	(40	)	(4	)	
Income Before Income Taxes	 	36	 	35	 	65	 	46	 	
Income tax expense	 	2	 	—	 	5	 	—	 	
Net Income	 	34	 	35	 	60	 	46	 	
Pre-acquisition net income of Acquired ROFO Assets	 	9	 	1	 	17	 	1	 	
Net Income Excluding Pre-acquisition Net Income of Acquired ROFO Assets	 	25	 	34	 	43	 	45	 	
Income attributable to NRG (b)	 	19	 	 	 	33	 	 	 	
Net Income Attributable to NRG Yield, Inc.	 	$	6	 	 	 	$	10	 	 	 	
 	 	 	 	 	 	 	 	 	 	
Basic and Diluted Earnings per Share Attributable to Class A Common Stockholders	 	 	 	 	 	 	 	 	 	
Weighted average number of Class A common shares outstanding	 	23	 	 	 	23	 	 	 	
Basic and Diluted Earnings per Class A Common Share	 	$	0.26	 	 	 	$	0.42	 	 	 	
Dividends per Class A Common Share	 	$	0.35	 	 	 	$	0.68	 	 	 	

(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.
(b) The calculation of income attributable to NRG excludes pre-acquisition net income of the Acquired ROFO Assets.
 
8

 
NRG YIELD, INC.
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
(Unaudited)
 
 	 	Three months ended
June 30,	 	Six months ended June
30,	 	
 	 	2014	 	2013 (a)	 	2014	 	2013 (a)	 	
 	 	(In millions)	 	
Net Income	 	$	34	 	$	35	 	$	60	 	$	46	 	
Other Comprehensive (Loss) Income, net of tax	 	 	 	 	 	 	 	 	 	
Unrealized (loss) gain on derivatives	 	(12	)	25	 	(24	)	29	 	
Other comprehensive (loss) income	 	(12	)	25	 	(24	)	29	 	
Comprehensive Income	 	22	 	60	 	36	 	75	 	
Less: Pre-acquisition net income of Acquired ROFO Assets	 	9	 	1	 	17	 	1	 	
Less: Comprehensive income attributable to NRG	 	11	 	59	 	18	 	74	 	
Comprehensive Income Attributable to NRG Yield, Inc.	 	$	2	 	$	—	 	$	1	 	$	—	 	

(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.
 
9

 
NRG YIELD, INC.
 
CONSOLIDATED BALANCE SHEETS
 
(In millions)	 	June 30, 2014	 	December 31, 2013 (a)	 	
 	 	(unaudited)	 	 	 	
ASSETS	 	 	 	 	 	
Current Assets	 	 	 	 	 	
Cash and cash equivalents	 	$	87	 	$	59	 	
Restricted cash	 	23	 	67	 	
Accounts receivable — trade	 	56	 	51	 	
Accounts receivable — affiliate	 	1	 	5	 	
Inventory	 	14	 	15	 	
Derivative instruments	 	1	 	1	 	
Notes receivable	 	6	 	6	 	
Renewable energy grant receivable	 	—	 	147	 	
Deferred income taxes	 	1	 	—	 	
Prepayments and other current assets	 	7	 	27	 	
Total current assets	 	196	 	378	 	
Property, plant and equipment	 	 	 	 	 	
In service	 	2,477	 	2,459	 	
Under construction	 	11	 	6	 	
Total property, plant and equipment	 	2,488	 	2,465	 	
Less accumulated depreciation	 	(233	)	(174	)	
Net property, plant and equipment	 	2,255	 	2,291	 	
Other Assets	 	 	 	 	 	
Equity investments in affiliates	 	253	 	227	 	
Notes receivable	 	17	 	21	 	
Notes receivable — affiliate	 	—	 	2	 	
Intangible assets, net of accumulated amortization of $8 and $6	 	105	 	103	 	
Derivative instruments	 	5	 	20	 	
Deferred income taxes	 	312	 	146	 	
Other non-current assets	 	93	 	50	 	
Total other assets	 	785	 	569	 	
Total Assets	 	$	3,236	 	$	3,238	 	

(a)  Retrospectively adjusted as discussed in Note 1, Nature of Business.
 
10

 
NRG YIELD, INC.
 
CONSOLIDATED BALANCE SHEETS (Continued)
 
(In millions, except share information)	 	June 30, 2014	 	December 31, 2013 (a)	 	
 	 	(unaudited)	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	
Current Liabilities	 	 	 	 	 	
Current portion of long-term debt	 	$	119	 	$	214	 	
Accounts payable	 	15	 	42	 	
Accounts payable — affiliate	 	50	 	52	 	
Derivative instruments	 	30	 	31	 	
Accrued expenses and other current liabilities	 	19	 	30	 	
Total current liabilities	 	233	 	369	 	
Other Liabilities	 	 	 	 	 	
Long-term debt	 	1,880	 	1,569	 	
Out-of-market contracts	 	5	 	5	 	
Derivative instruments	 	24	 	16	 	
Other non-current liabilities	 	21	 	27	 	
Total non-current liabilities	 	1,930	 	1,617	 	
Total Liabilities	 	2,163	 	1,986	 	
Commitments and Contingencies	 	 	 	 	 	
Stockholders’ Equity	 	 	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	 	—	 	—	 	
Class A common stock, $0.01 par value; 500,000,000 shares authorized; 22,511,250 shares issued	 	—	 	—	 	
Class B common stock, $0.01 par value; 500,000,000 shares authorized; 42,738,750 shares issued	 	—	 	—	 	
Additional paid-in capital	 	815	 	621	 	
Retained earnings	 	3	 	8	 	
Accumulated other comprehensive loss	 	(9	)	—	 	
Noncontrolling interest	 	264	 	623	 	
Total Stockholders’ Equity	 	1,073	 	1,252	 	
Total Liabilities and Stockholders’ Equity	 	$	3,236	 	$	3,238	 	

(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.
 
11

 
NRG YIELD, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)
 
 	 	Six months ended June 30,	 	
 	 	2014	 	2013 (a)	 	
 	 	(In millions)	 	
Cash Flows from Operating Activities	 	 	 	 	 	
Net income	 	$	60	 	$	46	 	
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	 	 	 	 	 	
Distributions and equity in earnings of unconsolidated affiliates	 	(8	)	3	 	
Depreciation and amortization	 	60	 	20	 	
Amortization of financing costs and debt discount/premium	 	5	 	1	 	
Amortization of intangibles and out-of-market contracts	 	1	 	1	 	
Changes in deferred income taxes	 	5	 	—	 	
Changes in derivative instruments	 	—	 	(10	)	
Changes in other working capital	 	(50	)	(80	)	
Net Cash Provided by (Used in) Operating Activities	 	73	 	(19	)	
Cash Flows from Investing Activities	 	 	 	 	 	
Payment to NRG for Acquired ROFO Assets	 	(357	)	—	 	
Capital expenditures	 	(29	)	(267	)	
Decrease (increase) in restricted cash	 	44	 	(52	)	
Decrease in notes receivable, including affiliates	 	5	 	3	 	
Proceeds from renewable energy grants	 	137	 	24	 	
Investments in unconsolidated affiliates	 	(15	)	(19	)	
Other	 	11	 	—	 	
Net Cash Used in Investing Activities	 	(204	)	(311	)	
Cash Flows from Financing Activities	 	 	 	 	 	
Capital contributions from NRG	 	2	 	150	 	
Dividends and returns of capital to NRG	 	(24	)	(312	)	
Payment of dividends and distributions	 	(44	)	—	 	
Proceeds from issuance of long-term debt — external	 	386	 	519	 	
Payment of debt issuance costs	 	(13	)	(4	)	
Payment of borrowings from affiliate	 	—	 	(2	)	
Payments for long-term debt — external	 	(148	)	(25	)	
Net Cash Provided by Financing Activities	 	159	 	326	 	
Net Increase in Cash and Cash Equivalents	 	28	 	(4	)	
Cash and Cash Equivalents at Beginning of Period	 	59	 	22	 	
Cash and Cash Equivalents at End of Period	 	$	87	 	$	18	 	

(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.
 
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Appendix Table A-1: Second Quarter 2014 Segment Adjusted EBITDA Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/ (Loss):
 
(dollars in millions)	 	Conventional	 	Renewable	 	Thermal	 	Corporate	 	Total	 	
Net Income/(Loss)	 	18	 	19	 	6	 	(9	)	34	 	
Plus:	 	 	 	 	 	 	 	 	 	 	 	
Income Tax	 	—	 	—	 	—	 	2	 	2	 	
Interest Expense, net	 	11	 	11	 	2	 	5	 	29	 	
Depreciation and Amortization Expense	 	24	 	7	 	5	 	—	 	36	 	
Adjustments to reflect Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates	 	4	 	4	 	—	 	—	 	8	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	57	 	41	 	13	 	(2	)	109	 	
 
Appendix Table A-2: Second Quarter 2013 Segment Adjusted EBITDA Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/ (Loss):
 
(dollars in millions)	 	Conventional	 	Renewable	 	Thermal	 	Corporate	 	Total	 	
Net Income/(Loss)	 	16	 	17	 	4	 	(2	)	35	 	
Plus:	 	 	 	 	 	 	 	 	 	 	 	
Income Tax	 	—	 	—	 	—	 	—	 	—	 	
Interest Expense, net	 	3	 	1	 	2	 	—	 	6	 	
Depreciation and Amortization Expense	 	2	 	5	 	3	 	—	 	10	 	
Adjustments to reflect Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates	 	4	 	10	 	—	 	—	 	14	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	25	 	33	 	9	 	(2	)	65	 	
 
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Appendix Table A-3: YTD June 30, 2014 Segment Adjusted EBITDA Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/ (Loss):
 
(dollars in millions)	 	Conventional	 	Renewable	 	Thermal	 	Corporate	 	Total	 	
Net Income/(Loss)	 	44	 	14	 	19	 	(17	)	60	 	
Plus:	 	 	 	 	 	 	 	 	 	 	 	
Income Tax	 	—	 	—	 	—	 	5	 	5	 	
Interest Expense, net	 	22	 	22	 	4	 	8	 	56	 	
Depreciation and Amortization Expense	 	36	 	15	 	9	 	—	 	60	 	
Adjustments to reflect Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates	 	8	 	12	 	—	 	—	 	20	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	110	 	63	 	32	 	(4	)	201	 	
 
Appendix Table A-4: YTD June 30, 2013 Segment Adjusted EBITDA Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to Net Income/ (Loss):
 
(dollars in millions)	 	Conventional	 	Renewable	 	Thermal	 	Corporate	 	Total	 	
Net Income/(Loss)	 	20	 	21	 	9	 	(4	)	46	 	
Plus:	 	 	 	 	 	 	 	 	 	 	 	
Income Tax	 	—	 	—	 	—	 	—	 	—	 	
Interest Expense, net	 	3	 	4	 	4	 	—	 	11	 	
Depreciation and Amortization Expense	 	2	 	11	 	7	 	—	 	20	 	
Adjustments to reflect Yield’s pro-rata share of Adjusted EBITDA from Unconsolidated Affiliates	 	9	 	11	 	—	 	—	 	20	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	34	 	47	 	20	 	(4	)	97	 	
 
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Appendix A-5: Cash Available for Distribution Reconciliation
 
The following table summarizes the calculation of Cash Available for Distribution and provides a reconciliation to adjusted EBITDA:
 
 	 	Three Months Ended	 	Six Months Ended	 	
(dollars in millions)	 	6/30/14	 	6/30/13	 	6/30/14	 	6/30/13	 	
Adjusted EBITDA	 	109	 	65	 	201	 	97	 	
Pro-rata Adjusted EBITDA from unconsolidated affiliates	 	(21	)	(5	)	(34	)	(17	)	
Cash distributions from unconsolidated affiliates	 	3	 	11	 	10	 	11	 	
Cash interest paid	 	(23	)	(17	)	(45	)	(27	)	
Maintenance Capital expenditures	 	(2	)	(1	)	(5	)	(2	)	
Change in other assets	 	(19	)	(5	)	(41	)	(5	)	
Principal amortization of indebtedness	 	(9	)	(13	)	(43	)	(25	)	
Cash Available for Distribution	 	38	 	35	 	43	 	32	 	
 
Appendix Table A-6: Adjusted EBITDA Guidance Reconciliation
 
The following table summarizes the calculation of Adjusted EBITDA and provides a reconciliation to net income:
 
 	 	For the Twelve
Months Ending	 	For the Three
Months Ending	 	
(dollars in millions)	 	12/31/14	 	9/30/14	 	
Net Income	 	135	 	49	 	
Adjustments to net income to arrive at Adjusted EBITDA:	 	 	 	 	 	
Depreciation and amortization	 	93	 	23	 	
Interest expense, net	 	106	 	29	 	
Contract amortization	 	2	 	0	 	
Income tax expense	 	24	 	6	 	
Adjustment to reflect pro-rata Adjusted EBITDA from unconsolidated affiliates	 	50	 	13	 	
Adjusted EBITDA	 	410	 	120	 	
 
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Appendix Table A-7: Alta Wind Projected Reg G.
 
The following table summarizes the calculation of Adjusted EBITDA and CAFD and provides a reconciliation to income before taxes:
 
(dollars in millions)	 	FY 2016
Run Rate	 	
Income Before Taxes	 	35	 	
Adjustments to net income to arrive at Adjusted EBITDA:	 	 	 	
Depreciation and amortization	 	100	 	
Adjustment to reflect reported equity earnings	 	—	 	
Interest expense, net	 	85	 	
Adjusted EBITDA	 	220	 	
Cash Interest Paid	 	(85	)	
Working Capital / Other	 	—	 	
Maintenance capital expenditures	 	(5	)	
Principal amortization of indebtness	 	(60	)	
Cash Available for Distribution	 	70	 	
 
Appendix Table A-8: Adjusted NRG Yield Drop Down Assets Projected Reg G.
 
The following table summarizes the calculation of Adjusted EBITDA and CAFD and provides a reconciliation to income before taxes:
 
(dollars in millions)	 	2014 2H Drop
Downs	 	
Income Before Taxes	 	38	 	
Adjustments to net income to arrive at Adjusted EBITDA:	 	 	 	
Depreciation and amortization	 	45	 	
Adjustment to reflect reported equity earnings	 	0	 	
Interest expense, net	 	37	 	
Adjusted EBITDA	 	120	 	
Cash Interest Paid	 	(37	)	
Working Capital / Other	 	(1	)	
Maintenance capital expenditures	 	—	 	
Principal amortization of indebtness	 	(47	)	
Cash Available for Distribution	 	35	 	
 
EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.
 
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EBITDA represents net income before interest (including loss on debt extinguishment), taxes, depreciation and amortization. EBITDA is presented because NRG Yield considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:
 
·                 EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
·                 EBITDA does not reflect changes in, or cash requirements for, working capital needs;
·                 EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
·                 Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
·                Other companies in this industry may calculate EBITDA differently than NRG Yield does, limiting its usefulness as a comparative measure.
 
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG Yield’s business. NRG Yield compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this news release.
 
Adjusted EBITDA is presented as a further supplemental measure of operating performance. Adjusted EBITDA represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which we do not consider indicative of future operating performance. The reader is encouraged to evaluate each adjustment and the reasons NRG Yield considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG Yield may incur expenses similar to the adjustments in this news release.
 
Cash available for distribution is adjusted EBITDA plus cash dividends from unconsolidated affiliates, less maintenance capital expenditures, pro-rata adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in others assets. Management believes cash available for distribution is a relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors.
 
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