Two of Texas’ biggest power generation companies, Irving-based Vistra and Houston-based NRG Energy, are buying back a combined $2 billion of their own stock after reporting quarterly results this week that included the start of the state’s summer heat wave.
Vistra, the state’s biggest power generator, said Friday that it had bought back $1.6 billion of its shares as of earlier this week and its board of directors authorized spending an additional $1.65 billion on buybacks. Vistra is also the parent company of electricity retailers such as TXU Energy, Ambit Energy and Dynegy.
Share buybacks are generally used to boost a public company’s stock price — a move highly desired by investors because it increases the value of their holdings. It can also restrict how much companies are able to reinvest in their core businesses by shifting profits to shareholders.
“Our confidence in our outlook is reinforced by the upsizing of the share repurchase program to $3.25 billion and we continue to return capital through this program and our $300 million annual dividend,” said Vistra CEO Jim Burke in an earnings call with analysts.
Earlier this week, NRG Energy said it bought back shares totaling $405 million over the last six months under a $1 billion repurchase program that began in December 2021. The company said it expects to buy back the remaining $595 million in shares by the end of the year. The program will return dividends to stockholders on Aug. 15.
NRG reported a profit of $513 million for the April through June period, with $251 million attributable to its Texas market. That was a $220 million drop from the same quarter last year, which the company said resulted from a steam turbine going offline in May.
“During the second quarter, we made good progress on our growth priorities while navigating volatile market conditions,” said NRG chief executive Mauricio Gutierrez. “I am confident in the ability of our customer-focused strategy to deliver significant value to both consumers and shareholders.”
On the other hand, Vistra reported a nearly $1.4 billion loss for the quarter, with $181 million coming from its Texas market. The company posted a $35 million profit for the same period last year. It said this year’s losses are “a result of a material increase in forward power prices.”
The company’s quarterly results used an accounting practice known as “mark to market” to price its hedged commodity positions. It’s a method for measuring the value of assets that can fluctuate over time to provide a realistic appraisal of a company’s financial situation based on current market conditions.
The company’s pre-tax quarterly profit from ongoing operations, before accounting for hedging, totaled $761 million. Vistra said it has hedged over 60% of its expected generation volumes from 2023 to 2025, “locking in significant value opportunities in future years.”
“We are committed to providing the power that the electric grid and our customers need, growing our Vistra Zero portfolio, all while driving significant shareholder value,” Burke said.
Vistra lost $2.5 billion after last year’s winter storm and has been working to recover ever since.
