NRG Energy CEO ‘Not Going Anywhere’ Despite Pressure From Activist Investor Elliott

The chief executive officer of NRG Energy Inc. vowed to fight for his job, citing stronger-than-expected earnings, despite an activist investor calling for his ouster.

(Bloomberg) — The chief executive officer of NRG Energy Inc. vowed to fight for his job, citing stronger-than-expected earnings, despite an activist investor calling for his ouster.

“I’m not going anywhere,” CEO Mauricio Gutierrez said in a telephone interview. “Right now, my focus is on executing this strategy.”

That strategy involves NRG Energy’s move from being a traditional power generator to a company going beyond that to also manage energy for smart homes. Already a major retail power provider in the US, this pivot will allow the company to expand services to customers and, as a result, keep them for longer, according the Houston-based firm. NRG argues this is the best way to fend off increasing pressure from investor Elliott Investment Management LP. 

NRG reported better-than-expected performance for the second quarter. That was thanks to strong operations in its core energy business and the first full quarter including the recent Vivint Smart Home Inc. acquisition, Gutierrez said. 

Shares of NRG slipped 2.6% on Tuesday to $36.54 as of 11:33 a.m. in New York. The stock is down about 10% since the close of Dec. 5. The Vivint deal was announced Dec. 6.


Read More: NRG Lifts Buybacks, Mulls Board Moves Amid Elliott Criticism

In May, Elliott excoriated NRG’s $2.8 billion acquisition of Vivint, a leading home security provider, as the power industry’s “worst deal” of the decade because of the price tag and because it created a distraction from the company’s main power business. Elliott then demanded Gutierrez be replaced. 

Gutierrez said the second-quarter results are evidence NRG is heading in the right direction. The company said it generated $819 million in earnings before interest, taxes, depreciation and amortization in the three months ended June 30, up from $386 million a year earlier. Analysts expected $763 million. NRG is reaffirming its 2023 adjusted ebitda guidance of about $3 billion to $3.25 billion, and Gutierrez said the company is trending toward the top of that range.   

NRG’s power generating fleet performed more in line with expectations, Gutierrez said. The W.A. Parish coal-fired plant in Texas is slated to return to service by the end of this month. The company also grew its customer base in the second quarter by 7% from its new smart home unit and retail energy by about 2%, he said.  

Vivint is foremost a technology platform that will give NRG the ability to manage devices, which can include smart thermostats and appliances, Gutierrez said. The acquisition is, in the early days, starting to drive crossover sales between NRG’s energy and smart home businesses, he said. “For me, this is the most exciting part of the power industry today. Vivint is an integral part of the strategy,” Gutierrez said. 

The push to electrify large swaths of the economy from home heating to electric vehicles and industry is creating a convergence of industries that were historically siloed. With rising electricity usage and more extreme weather already testing America’s aging infrastructure, consumers have been asked to do their part to keep the grid stable by curtailing energy usage during periods of stress. Harnessing that response in programs, like NRG to Telsa Inc. hope to do, to create more flexible consumers is increasingly seen as a critical piece of the energy transition. It’s also a test for NRG to prove its new business model can be profitable for the long haul. 

“We need to have a deeper relation with the customer given the convergence with electricity and smart home technology,” he said. 

(Updates with more company comments, share price and context starting in the second paragraph.)

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