Vistra Corp. expects to buy back the remaining $800 million of common stock tied to its $3.25 billion share repurchase program by the end of the year.
Vistra initially announced a $2 billion share repurchase program in October 2021 as part of a shift in its capital allocation strategy to help bounce back from a deadly Texas winter storm's financial hit. Company management said March 1 that it has executed $2.45 billion of stock buybacks after Vistra's board of directors approved an upsized $3.25 billion share repurchase program in mid-2022.
Vistra's "outstanding share count" fell to about 381 million shares as of Feb. 23, or about a "21% reduction from the aggregate number of shares that were outstanding just under 16 months ago," Executive Vice President and CFO Kristopher Moldovan said on the company's fourth-quarter 2022 earnings call.
The CFO added that the company expects to buy back at least $1 billion in shares annually through 2026, subject to board approval.
Vistra Zero
The Irving, Texas-headquartered power provider also continues to focus on growing its Vistra Zero portfolio of carbon-free resources, which includes its 2,460-MW Comanche Peak nuclear plant in Texas.
As part of this strategy, Vistra expects to bring online the third 350-MW phase of its Moss Landing Energy Storage Facility in Monterey County, Calif., by the middle of the year. This would add to the 400-MW battery assembly at the site, increasing storage capacity to 750 MW.
Vistra said in September 2020 that it would retire more than 6,800 MW of coal-fired capacity in Illinois and Ohio by 2027 to achieve net-zero greenhouse gas emissions by 2050.
At the end of August 2022, Vistra shut down the 1,002-MW Joppa Steam plant in Illinois after accelerating the retirement of the 1,333-MW W.H. Zimmer plant in Ohio to May 2022. The 585-MW E.D. Edwards plant in Illinois was retired at the end of 2022.
"We are pleased to be able to redevelop these sites into future Vistra Zero energy facilities," Vistra President and CEO James Burke said on the call. "Notably, the Joppa and Edwards sites are part of our Illinois Coal to Solar program, where we are transitioning numerous sites into solar and/or storage facilities."
The company expects to add 5,000 MW of solar and battery storage to its Vistra Zero pipeline by 2026, but executives acknowledged challenges to clean energy development.
"What we've done in Texas ... is we slowed down some of the merchant solar development because we've seen those returns be challenged based on not only [engineering, procurement and construction] costs and panel costs, but solar is already starting to cannibalize solar in terms of price realization," Burke said. "We would want to do additional solar under the right circumstances, which would likely be if it were contracted."
In addition, some of the potential solar sites could increase in value over time "as we see these interconnect queues are really hard to get through all over the country."
"The market opportunity, clearly, with the Inflation Reduction Act is improving some of these returns even on the projects that we've already announced," Burke said.
Nuclear asset sales
When asked whether the company would be interested in purchasing merchant nuclear assets or off-loading its Comanche Peak plant, Burke declined to comment but said the company would consider opportunities that "can leverage our core capabilities."
"We're good at three things," Burke said. "We're very good at operating plants, serving customers, and commercially integrating these two activities, which operate in a volatile commodity market."
The CEO said Vistra would look at opportunities that maximize shareholder value, "but I would put a caveat.
"Our investors have been very clear that they do like our return of capital strategy," Burke said. "So, anything that we're going to consider in that front, I believe, needs to fit within that framework. That may or may not be possible, but we have a priority around returning capital to shareholders, and if we can do that and leverage our core capabilities, we'd be interested."
With regard to Vistra's retail and generation strategy, Burke described Comanche Peak as a "core asset," adding that "dispatchable assets are core to serving retail load."
Comanche Peak was the "anchor tenant" in Vistra Zero and will receive additional support from the nuclear production tax credit, the CEO added.
"We just obviously put in for the relicensing of it, and it operates at one of the lowest-cost structures, if not the lowest-cost structure, in the industry," Burke said. "So, we do occasionally get inbounds from people that ask that question, and we are obviously interested in long-term value creation, but we like the Comanche Peak asset."
The two units at Comanche Peak began operating in 1990 and 1993.
Earnings results
Vistra on March 1 reported fourth-quarter 2022 adjusted EBITDA from ongoing operations of $771 million, down from fourth-quarter 2021 adjusted EBITDA of about $1.19 billion.
The company reported adjusted EBITDA from ongoing operations of nearly $3.12 billion for full year 2022, compared to 2021 adjusted EBITDA of about $2.03 billion.
Vistra reaffirmed its 2023 guidance range for adjusted EBITDA from ongoing operations of $3.4 billion to $4 billion as well as its expected $1.75 billion to $2.35 billion adjusted free cash flow before growth.
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