Q4 2025 Earnings Call Transcript

Good day, and welcome to Vistra's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. I would now like to turn the conference over to Eric Micek, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining Vistra's investor webcast discussing our fourth quarter and full year 2025 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 to the investor presentation available in the Investor Relations section of Vistra's website.

Also, 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 2 of the investor presentation on our website that explains 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, and good morning, everyone. Thank you for joining us to discuss Vistra's fourth quarter and full year 2025 results. 2025 was a transformational year for Vistra. We made a number of moves that I believe underscore the value of our integrated model. We executed strategic asset acquisitions and entered into long-term power purchase agreements, accomplishments that were made possible by close collaboration across the company, including development, operations and commercial as well as our retail and functional teams.

This tightly coordinated execution is a direct result of the focus and discipline of our people and reflects the One Team culture that drives our strong performance at Vistra. These accomplishments demonstrate our ability to deliver industry-leading power solutions to our customers, execute complex transactions and deliver day-to-day operational excellence, all while driving significant value for our shareholders. We remain confident in the ever-increasing customer demand for power, enthusiastic about the growth opportunities that load growth presents for Vistra and eager to continue to partner with our customers to realize those opportunities and serve their needs.

We look forward to building on this momentum as we move through 2026 and beyond. Turning to Slide 5. Our integrated business model once again demonstrated its value and effectiveness as we delivered another year of record financial performance. For the full year, we achieved approximately $5.9 billion of adjusted EBITDA and approximately $3.6 billion of adjusted free cash flow before growth, both meaningfully above the midpoint of our original guidance ranges. These results reflect consistent operational performance from our generation, commercial and retail teams.

The importance of operating assets safely and reliably was underscored during Winter Storm Fern at the end of January. During the 9-day event, where we saw significant cold front impact most of the U.S., including temperatures below 0 in West Texas and the Northeast, the team and the generation fleet delivered very strong performance. Our team not only operated safely during difficult weather conditions, but also ran our assets extremely well during the event. This, coupled with our commercial risk management approach, enabled us to serve our millions of retail customers and deliver a positive financial outcome, despite the high volatility of both gas and power prices.

Moving to growth. We took meaningful steps during the year to expand and strengthen our generation portfolio. In October, we closed the acquisition of 7 modern natural gas generation facilities totaling approximately 2,600 megawatts from Lotus Infrastructure Partners. This transaction added highly efficient dispatchable assets across key competitive regions, including PJM, New England, New York and California.

Winter Storm Fern was our first weather experience with these new assets, and we were pleased with their performance and with the value they added to our overall fleet. Building on the Lotus transaction, we recently announced our agreement to acquire Cogentrix Energy, which includes 10 modern natural gas generation facilities totaling approximately 5,500 megawatts of capacity, including 2 plants, Patriot and Hamilton-Liberty that were completed in 2016 with heat rates well below 7,000. Together with the Lotus acquisition, these assets will further diversify our fleet, improve our geographic balance and significantly strengthen our ability to meet the growing demand for dispatchable generation across the country.

Owning and operating high-quality dispatchable generation in competitive markets is core to our strategy. We believe strategic acquisitions and asset integrations are one of our core capabilities that continue to deliver value to our shareholders. We also made significant progress contracting long-term nuclear capacity, enhancing the amount and durability of our cash flows. We have now contracted approximately 3.8 gigawatts of nuclear capacity through multiple power purchase agreements, including a 20-year agreement with Amazon Web Services for 1,200 megawatts at our Comanche Peak nuclear power plant in Texas and 20-year agreements with Meta covering 2,176 megawatts of operating capacity and an additional 433 megawatts of upgrades at our PJM nuclear plants, the largest nuclear operate supported by a corporate customer in the United States.

We are excited to partner with these world-class companies to be able to continue to provide reliable 0 carbon electricity decades into the future. Overall, these and other actions taken in 2025 continue to strengthen Vistra's ability to reliably and affordably support the nation's growing power needs. Turning to Slide 6. For the eighth consecutive quarter, we continue to see a structurally improved demand environment that supports our long-term outlook. U.S. electricity consumption reached an all-time peak of approximately 4,200 terawatt hours during 2025, up about 2.5% versus 2024. We expect calendar years 2026 and 2027 to continue to show growth, which would mark the first 4-year period of sustained growth since the 4-year period ending 2007. Demand growth no longer appears to be episodic, but increasingly durable, a dynamic with important implications for the power sector.

While the near-term outlook remains strong, we continue to believe the impact of data centers on tightening supply-demand dynamics will not meaningfully begin until late 2027 or early 2028, given most build schedules and interconnect timing. This is something we've been consistently messaging for some time. Load growth is real and significant, but it is likely not at the extremely elevated levels in the rapid time frame that has been forecasted by many third parties. The fact that we see the load growth coming more slowly than some forecast does not dampen our enthusiasm for the tremendous opportunities in front of us.

In fact, we view a measured pace of growth as a positive. It naturally takes some time for supply and demand to go from concept to reality. We believe our company and the markets in which we operate can meet the moment. Our primary regions continue to outperform.

We maintain our view that annual peak load growth of at least 3% to 5% in ERCOT and low single-digit growth in PJM is achievable through 2030. Importantly, we expect overall load growth to outpace peak demand, resulting in higher expected utilization across the system rather than short duration peaks alone, implying the economics of existing generation assets will improve on a sustained basis. Data center development remains robust, and we believe key markets such as PJM and ERCOT will continue to attract a disproportionate share of new load growth. While not every announced project will ultimately be built, even applying conservative assumptions, the level of activity supports the load growth outlook that we've discussed.

Recent commentary from hyperscale customers reinforces this view as they continue to emphasize expanding investment in AI and digital infrastructure. Capital spending by the hyperscalers continues to rise to record levels and is expected to eclipse $700 billion in 2026, equivalent to roughly 50% year-over-year growth. This level of investment is notable and provides further support for sustained load growth. Demand growth creates meaningful opportunity for Vistra.

Following the closing of Cogentrix, our large modern fleet of combined cycle gas generation assets will total approximately 26 gigawatts of capacity. Importantly, our fleet currently operates at a utilization rate of approximately 60%, and we continue to believe higher energy demand should drive materially higher utilization of existing assets over time, providing a practical and cost-effective way to meet load growth. Taken together, these trends underscore a demand environment that is structurally stronger than prior cycles, and Vistra is well positioned to meet growing electricity needs in our core markets.

Moving to Slide 7. The Cogentrix acquisition represents the second opportunistic expansion of our generation footprint over the last 12 months. Similar to Lotus transaction, it is an acquisition of high-quality dispatchable assets in competitive markets at an attractive price that we believe will drive meaningful per share accretion. As I mentioned earlier, we believe successfully integrating and operating generation assets at scale is a core competency of the company as we've demonstrated time and again, starting with the Dynegy transaction and continuing with our Energy Harbor and Lotus acquisitions.

For Cogentrix, we see similar opportunities to boost the portfolio's earnings profile over time as we get into our normal integration activities. From a financial perspective, we view the purchase price as attractive at approximately $730 per kilowatt of capacity, net of expected tax benefits, and we expect the transaction to deliver mid-single-digit adjusted free cash flow before growth per share accretion in 2027, with a high single-digit accretion on average over the '27 to '29 period. We look forward to closing the transaction in 2026 and welcoming our new team members to the Vistra family.

More broadly, we continue to believe that natural gas generation will play a critical role in delivering reliable, affordable and flexible power to U.S. electricity markets. Winter Storm Fern reinforced this view. During the tightest hours, thermal generation accounted for approximately 93% of all power delivered to the ERCOT grid. Once again, demonstrating that when conditions are the most demanding, firm dispatchable resources are relied upon much more than on a typical day.

We've seen this story repeat itself time and again during Elliott, Mara, Heather and now Fern. Given this backdrop, we will continue to evaluate future inorganic opportunities that create value within our integrated model. Moving to Slide 8. Our nuclear power purchase agreements represent a significant milestone, not just for Vistra, but for the industry. We have now signed approximately 3.8 gigawatts of nuclear capacity, including up rates under long-term contracts, more than any other power company in the country.

These agreements executed with 2 of the world's leading technology companies represent meaningful long-term commitments to the safe and reliable operation of nuclear power generation in the United States. The first agreement, which we announced in September last year, is a 20-year contract with Amazon at our Comanche Peak nuclear plant in Texas. Under this agreement, Amazon will cite a facility on our property to utilize the 1,200 megawatts of capacity. Importantly, Amazon also plans to bring one-for-one backup generation, a structure we believe supports future expansion at the site, while maintaining reliability across the system.

Progress on the site continues to be made with initial energization still expected in the fourth quarter of 2027 and full ramp expected by the fourth quarter of 2032. The agreement also includes options to explore new nuclear development with a specific focus on possible uprates and small modular reactors. We are excited about this partnership and the long-term potential at the Comanche Peak site. Building on that momentum, in January of this year, we announced long-term power purchase agreements with Meta. The agreements, which are also for 20 years, cover 2,176 megawatts of operating capacity from our Perry and Davis-Besse nuclear power plants and an additional 433 megawatts of upgrade capacity from our Perry, Davis-Besse and Beaver Valley power plants.

We expect delivery of the operating capacity at Perry to commence in December of 2026 and Davis-Besse in December 2027. Uprate capacity remains longer dated with Perry upgrades expected to be online in the fourth quarter of 2031, with each subsequent year seeing an additional upgrade online until all 4 upgrades are completed by the fourth quarter of 2034. From an operating perspective, the plants will continue to operate as they do today with power flowing to the grid for the benefit of all customers. The financial impact from all of our nuclear PPAs is significant, providing the financial backing to operate these facilities for decades to come and in the case of the PJM nuclear sites to apply for additional license renewals and extend site operations into the 2050s and 2060s.

Upon achieving full ramp of all the nuclear agreements, we see a pathway to nearly 25% adjusted free cash flow before growth accretion on an annual basis. From a capital perspective, the Comanche Peak agreement will not require significant incremental spend from Vistra and the PJM agreements for operating capacity won't require any additional spend. The PJM nuclear uprates will require growth capital over an 8-year period with the majority of the spend occurring after 2028. We believe these investments represent attractive growth opportunities given the higher capacity, expected improvement in reliability and the enhancements that will allow for an additional operational license extension, all while exceeding our mid-teens levered return requirements.

Taken together, these nuclear PPAs position Vistra to support reliable carbon-free power as demand continues to grow, while also increasing and extending the earnings profile of our company for the longer term. While these agreements are important for our company, we have more we can do. We still see an opportunity to contract up to an additional 3.2 gigawatts of nuclear capacity across our Beaver Valley and Comanche Peak sites, including potential upgrades of approximately 200 megawatts at Comanche Peak. Continuing with the theme of an enhanced and more predictable earnings profile, let's move to Slide 9. We continue to make meaningful progress in derisking our business, locking in higher levels of contracted revenue while at the same time growing our total earnings.

It's important to emphasize this point. We are not trading growth for stability. We are achieving both. Our percentage of contracted wholesale will increase substantially and shift the earnings certainty longer term and more insulated from changes with tax policy.

This is particularly noteworthy as the earnings profile of the business continues to grow significantly on an absolute basis as well. On a consolidated basis, based on the contracts signed to date, when combined with the reliable contribution from our retail business, we expect nearly half of our total adjusted EBITDA to be generated from highly stable earnings sources, with the potential to increase this percentage as we execute on additional opportunities. This will be a meaningful shift in the composition of our earnings, reducing volatility, enhancing visibility and improving our credit profile.

We continue to pursue attractive arrangements to serve our customers given the accretion to our business on many levels. Finally, turning to Slide 10. Our 4 strategic priorities remain core to delivering long-term value. With our One Team approach, we've demonstrated superior execution on these priorities. The acquisitions of Energy Harbor, Lotus and soon Cogentrix have proven to be valuable through adherence to price discipline, best-in-class integration and enhancements of scale.

Our measured approach to development has enabled us to generate attractive returns, whether through contracted renewables such as Oak Hill and Pulaski or high-return thermal additions like our coal conversions, gas plant augmentations or Permian new build gas units. Turning to the balance sheet. Our prioritization of liquidity and low leverage has placed us in a strong financial position. Combined with the improved earnings profile of the company, we continue to expect leverage to decline and have been pleased to see multiple rating agencies recognize our improved credit profile.

While this chart highlights the last few years, I would like to spend a minute on the future and how the continued execution of our 4 key strategic priorities will unlock multiple growth opportunities in the years ahead. Our generation development teams will continue to pursue highly accretive capacity additions. We continue to advance our plans to convert our Miami Fort facility in Ohio from coal to gas. While our targeted 500 megawatts of augmentations at our Texas gas fleet are largely complete, the team continues to study options at our current PJM fleet, which could total approximately 300 megawatts.

Further, the team remains hard at work reviewing new PJM plant additions, which would likely involve expanding existing sites. Contracting work also continues. As I already mentioned, we still see an approximately 3.2 gigawatts of opportunities at Beaver Valley and Comanche Peak that can be contracted on a long-term basis. On the thermal side, we continue to make progress in our discussions with customers on new and existing gas solutions.

We will continue to provide updates as those opportunities materialize. Finally, our retail team continues to deliver novel products to customers to help them better manage their budget, while meeting their power needs. The ability for customers to choose their provider, their electric plan and ultimately have some control over their energy needs is a proven way to address the concerns related to affordability. No matter the product category, customers prefer having a choice, and our team is working hard to make sure that we are the preferred choice of customers from residential to industrial, including the hyperscalers.

Ultimately, we believe the combination of these capabilities position Vistra to be the energy solutions provider to our customers by developing and delivering innovative strategies to meet our customers' needs in this growing demand environment. I'm excited about what our team has accomplished and what we can deliver in the years to come. Now I'll turn it over to Kris to provide more details on the fourth quarter and full year results, outlook and capital allocation. Kris?

Thank you, Jim. Turning to Slide 12. Vistra delivered $5.912 billion in adjusted EBITDA for full year 2025, including $4.290 billion from generation and $1.622 billion from retail. The Generation segment continued to realize material benefits from our comprehensive hedging program. The strong realized revenue across the fleet and 2 months of contribution from the Lotus assets more than offset extended outages at Martin Lake Unit 1 and our Moss Landing battery facilities.

The Retail segment continues to perform extremely well, benefiting from strong customer count and margin performance. Although the retail business continues to generate strong earnings in a variety of market conditions, 2025's record result was partly driven by some tailwinds that are not expected to repeat in the future, including some supply cost benefits and gains related to the Energy Harbor acquisition. Over the medium term, we continue to expect retail to achieve adjusted EBITDA in the neighborhood of approximately $1.4 billion. Turning to Slide 13. Based on our expectations for 2026 and our previously communicated range of midpoint opportunities for 2027 as well as the expected contribution in 2026 and 2027 from the Meta PPAs and the closing of the Cogentrix acquisition, we project to generate more than $10 billion of cash through year-end 2027. Our confidence in our outlook and cash generation is supported by our comprehensive hedging program and the downside protection of the nuclear PTC, resulting in a highly hedged position over the coming years.

Even after allocating approximately $3 billion to our equity holders through share repurchases and common and preferred dividends in 2026 and 2027 and approximately $4 billion towards accretive growth investments, including the Cogentrix acquisition, the development of the Permian gas units and the PJM nuclear uprates supported by PPAs with Meta, we still expect to have more than $3 billion of additional capital available to allocate through year-end 2027, all while achieving an attractive net debt to adjusted EBITDA ratio of approximately 2.3x by year-end 2027. Although changes in power market fundamentals and customer preferences have expanded the growth opportunity set, the capital framework used to allocate this additional capital remains consistent, balancing shareholder returns, a strong balance sheet and growth through strategic investments.

Our share repurchase program continues to produce tremendous value. Since initiating the program in November 2021, we have retired approximately 167 million shares at an average cost below $36 per share, delivering over $20 billion of value for our long-term shareholders. We currently have approximately $1.8 billion of share repurchase authorization remaining, enough to meet our annual share repurchase target through 2027. We continue to believe share repurchases offer meaningful value to our shareholders, particularly in light of the recent deals we've announced as our shares are trading at an attractive free cash flow yield relative to the average of the S&P 500. We expect our share repurchase program will continue to operate utilizing a 10b5-1 plan, allowing us to stay in the market even when in possession of material nonpublic information.

While this plan allows us to remain consistent buyers of our shares, we have designed it such that it accelerates repurchase amounts during times of market dislocation, including the recent share price weakness in January and February. Turning to the balance sheet. We continue to target leverage metrics consistent with investment-grade credit ratings. We believe the improvement in our net leverage levels, combined with the higher earnings visibility from more contracted earnings streams, could position us for additional ratings upgrades potentially as early as later this year.

For strategic investments, we will continue to be opportunistic yet disciplined in the deployment of capital. We haven't wavered on our target return threshold, whether for organic or inorganic growth investments, which remains mid-teens or higher on a levered basis. Finally, moving to Slide 14. We are in the early stages of a multiyear execution plan, driving a sustainably higher level of earnings power for our long-term shareholders. You can see on the chart, based on forward curves as of February 20 and a stable share count as of December 31, we continue to see adjusted free cash flow before growth per share to exceed $12.5 for 2026. Given additional actions taken to date, including the Cogentrix acquisition and Meta power purchase agreements, together with a simplifying assumption with respect to the deployment of our cash available for allocation through 2027 to share repurchases, we project adjusted free cash flow before growth per share to increase to approximately $16. Other actions such as the PPA with Amazon and the uprate supported by contracts with Meta won't contribute to our free cash flow until further into the future, but will be meaningful sources of increased contracted earnings.

Over the long-term, we believe these transactions as well as the roll-off of out-of-the-money hedges will result in a meaningful step-up in our adjusted free cash flow before growth per share. Despite already delivering on multiple key initiatives, we still have numerous opportunities to further grow and stabilize our business. We see heightened engagement from our customer base across a range of additional opportunities, and we remain confident in our differentiated ability to meet our customers' needs and continue to increase our adjusted free cash flow before growth per share. Of course, share repurchases, and balance sheet management will continue to be an important component of our capital allocation framework.

I will now turn the call back to Jim for his closing remarks.

Thank you, Kris. 2025 was a record year for Vistra, reflecting strong execution across the business and continued progress against our long-term strategy. Our improving growth trajectory, supported by an increasing level of contracted revenue provides greater confidence in our future cash flows. We enter the next phase of growth with a diversified reliable fleet, a strong balance sheet and a customer focus that positions us well to meet rising demand across our markets. We remain disciplined in how we allocate capital, applying a consistent framework that balances growth, shareholder returns and financial strength.

I want to thank our team for their tremendous efforts to deliver value day in and day out for our customers, our communities and our shareholders. One last thing. I regret that I will be unable to participate in the live Q&A portion due to an unforeseen personal matter, but I am proud to share these remarks given the team's hard work and the company's strong performance in 2025 as well as the fast start out of the blocks in 2026. You are no doubt in good hands as my team, whom you know well, including Kris, Stacey Doré, Scott Hudson and Shawn Stuckey will address any questions that you may have.

I look forward to connecting with many of you in the coming days and weeks. With that, I'd like to turn the call back to the operator for questions.

[Operator Instructions] Today's first question comes from Shar Pourreza with Wells Fargo.

Just maybe starting off on PJM. Do the rule changes impact the Meta deal if PJM changes how new load gets treated? I guess, could there be kind of incremental cost for Meta? And if PJM tariff changes, is that sort of could be a net positive for additional load contracting like with Beaver Valley as we're thinking about future announcements.

So have you seen any impact around future discussions while the rule changes are up in the air? It's a little bit of a 2-part question.

Shar, this is Stacey. Thanks for the question. The PJM activity, of course, as you know, is very high. There are many moving pieces of the puzzle in PJM right now.

We do not believe that any of the current activity affects our Meta deal. That deal is more akin to a typical front-of-the-meter deal. It's not tied to colocation or to any particular load. So we don't believe any of the PJM activity affects that deal.

As I've mentioned, there is a lot going on in PJM right now. And of course, all customers and stakeholders are watching the activity closely. We expect PJM to file any time now an extension of the existing price collar for the next 2 auctions. Just this week, PJM did make a filing regarding specific tariff provisions applicable to colocation arrangements.

We do think that getting clarity on the colocation tariff provisions will be helpful to the discussions that we continue to have about Beaver Valley and other colocation opportunities. Of course, we're also watching the reliability backstop auction filing that we expect PJM to make in the coming months. PJM is also working on load forecasting improvements and expedited interconnection track for new generation and in the longer term, possibly additional capacity market reforms. We're actively participating in all of these proceedings.

And at the last open meeting, FERC commissioners made clear that they are also paying close attention to these activities, and they are ready to rule on these various proposals, all of which will continue to provide more clarity and investment certainty in PJM. It's too early to tell what will become of all of these proceedings, including the tariff proceedings around colocation that I think you're asking about. But we view the overall backdrop as positive because the administration, the state governments as well as most PJM stakeholders are rightly focused on the same objectives we're focused on, which are getting large loads connected quickly, and that includes support from FERC and the White House for colocation with existing generation, properly allocating costs across load classes and doing what's necessary to incentivize an appropriate amount of new build.

And finally, avoiding unnecessary disruption to our existing market and existing resources. These are all the right goals to focus on. We share those goals. But of course, the details will matter, and we'll stay engaged on all of those proceedings to advocate for Vistra's interest.

So we do think, at the end of the day, the continuing clarity and transparency around some of these upcoming rule changes will facilitate getting a deal done at Beaver Valley and possibly other colocation deals in PJM. And we continue to see a very high level of interest in Beaver Valley in particular. Pennsylvania is a market that the hyperscalers continue to focus on, and we think that site is very attractive for either colocation or a front-of-the-meter deal, we could do either one at Beaver Valley.

Got it. And then just lastly, as we're looking at the next leg of contracting opportunities, do you sort of have a view around hyperscaler appetite around gas risk? I mean, is there a preferred structure for Vistra for existing or new build assets in terms of contract structure? A peer presented sort of this viewpoint around a fixed capacity plus [ e-way call ] type of arrangement.

So curious to see if that's a preferred path for Vistra as you guys are thinking about contracting gas.

Yes. Thanks, Shar. Stacey, again here. So we do think that hyperscalers will contract for new gas build going forward.

We are engaged in a number of those conversations as well. And we agree that we think the customers will ultimately take the gas risk there, which we're well positioned to help them manage as well. And so I think the kind of structure you're talking about with a large fixed capacity payment along with a variable component that includes gas risk is a structure that we see a lot of customer interest in. Those deals take time.

Frankly, new construction takes time. And so we continue to focus on those, but to focus at the same time on the advantage that Vistra has in offering speed to market with so many of our existing sites being available to help to get a data center online. So we continue to have a high level of interest from customers on all of these different arrangements, including colocation with existing new build, colocation with nuclear plants as well. and renewables, PPAs, bridge power solutions and front-of-the-meter retail deals. I think Vistra is uniquely positioned with our large fleet of dispatchable assets and our leading retail, commercial and regulatory capabilities to serve these customer needs creatively and reliably.

So we remain very excited about the numerous opportunities ahead of us to enter into more contracts with our largest customers.

And our next question today comes from Angie Storozynski with Seaport.

So first of all, thank you for showing us longer-term projections of free cash flow per share. I know I've been asking for those for quite some time. So I really, really appreciate it. And hopefully, we will have more of those projections to come in the future.

But my main question is about this sort of debate about contracting of existing assets versus bring your own generation requirements. We're waiting, obviously, for those commitments from hyperscalers to be made about how they're going to power their data center load. And so I'm just wondering, how you see that requirement or that push vis-a-vis your large and growing generation portfolio? And then secondly, I'm just wondering, in PJM gas-fired new build, how you think you see the demand for long-term contracts for gas-fired new build ahead of this RBA, if you see any interest to contract for gas-fired new build outside of the RBA?

Yes, Angie, thank you. This is Stacey. So on your first question around contracting existing versus new build, I mean, I think, obviously, the 2 large deals that we've announced at Comanche Peak and also across our PJM nuclear fleet are both deals that involve contracting with existing assets. So we've demonstrated that the hyperscaler interest is high with respect to that.

And I think the Meta deal, in particular, is a very thoughtful approach where they are taking existing -- purchasing existing offtake and also supporting the nuclear uprates. And then at Comanche Peak, we're able to offer a speed-to-market solution for Amazon there. So I think those 2 deals, which were both fairly recent, demonstrate the interest by hyperscalers in contracting with existing assets. And we continue to have a number of conversations around other existing assets, including, as I mentioned, Beaver Valley, but also gas plants as well.

There is a constraint around some of those existing asset deals, and that is the interconnection process, which you still have to go through when you're contracting if you're locating near an existing asset if you're locating the data center there. So obviously, we continue to work on a number of fronts in the ongoing regulatory processes for interconnection. And I think most markets are trying to move those processes forward, recognizing that we need to get customers connected. So I think you will continue to see a lot of interest in both.

I do think colocation with existing assets continues to offer a speed advantage versus new build. But you'll see a combination of all of those solutions, and we're in all of those types of conversations with hyperscalers and others. Regarding your question around PJM new build, I do think that given that there -- it appears that PJM is targeting a reliability backstop auction, as early as this September that, that will feed into the conversations around new build in PJM in terms of customers trying to figure out whether it would be better to participate in the RBA or to bilaterally contract outside of the RBA.

But the good news is that those rules will become clear in fairly short order. And it has not slowed the actual commercial conversations. Those continue in parallel about all sorts of new build options. But I do think the whole market is looking for clarity around the reliability backstop auction rules.

And as you can probably see from a lot of the information that's been published about the PJM RBA discussions, we are heavily engaged and have submitted our own proposal in that regard.

And our next question today comes from Jeremy Tonet at JPMorgan.

Sending our best to Jim here. Just want to start off with regards to the 2027 midpoint opportunity. I grant that this isn't something that you normally change, but you seem like some pretty big developments here recently. So why not include the Meta opportunity here?

And also post the near-term potential of $16 per share, just wondering if you might be able to provide order of magnitude of some of the further upside drivers there.

Yes. Thanks, Jeremy. I think we've said previously, and you mentioned it that we don't expect to update our guidance or midpoint opportunities on a quarterly basis. But of course, as you noted, we did announce 2 very significant transactions with the Cogentrix and Meta transactions since we last provided 2026 guidance and the 2027 midpoint opportunity.

I think we didn't want to really update -- I think our view is once the Cogentrix deal closes, we'll update both. I mean we do -- we have mentioned that we expect Cogentrix to close in the second half of this year. And so there's a -- depending on the timing of that closing, we would be updating 2026 guidance at that time. And our belief is that's just the right time for us to go ahead and update both 2026 guidance and the 2027 midpoint opportunity.

The other thing that I'll say is we put out a lot of disclosure about these transactions. I think with the disclosure we've put out, you could get to a -- I think, pretty easily to an addition to 2027 from just those transactions of -- in the neighborhood of $700 million to $750 million. Now that is absent any other impacts, including curve changes, other things. So again, it's hard to just add that on top.

We'd have to roll everything forward. But -- and that amount also, you have to remember, it includes the full year impact of only one of the assets from Meta, and that will -- which will begin in the late 2026. So it will be a full contributor in 2027, whereas the second contract begins in late 2027. So I think it will -- we will update as we move along with the Cogentrix transaction. As for the $16, I think it's important to talk about what that is and what it isn't. We show a 2026 adjusted free cash flow per share amount, but that's just simply using our original guidance.

It doesn't include Cogentrix, and it doesn't include any share repurchases. We're holding shares flat for even 2026. And as you're aware, we're already buying shares. So what we showed is, I think, a conservative number for 2026, but we wanted to show the growth of transactions that we've already announced. And again, those are from Cogentrix, excluding the tax benefits, just what we think that's separate.

We haven't included those and from operating PPAs with Meta. We did make a simplifying assumption because we are going to be buying in that indicative number, the $2 billion, we'll be using the $2 billion that's already set aside for share repurchases, but we made a simplifying assumption of an additional $3 billion. So that's not a -- that's not a projection or there's no time around that. That's a short-term number.

If we think about going forward, to your question on where this could go, we're showing some of the tailwinds, which would be the hedge roll-off and the -- and as well as other -- the PJM nuclear upgrades. But if we do look at just our -- as we go forward and we look at our cash available for allocation moving forward, and if we made a simplifying assumption that we used all of that cash for share repurchases between 2026 and 2030 of what we think we can generate and we use it at a price per share that's reasonably above where we trade today. I do think that the free cash flow per share could be -- would be in the range of $22 to $25, and that doesn't include some upside that we would look for transactions that are more accretive than share repurchases.

Got it. That free cash flow per share with 60% conversion points to a pretty big EBITDA number there. So that's very helpful. And I just want to take a step back.

You've talked a lot about the long-term PPA discussions here. But just at a very high level, how would you characterize the level of discussion now versus any point in the past? And just any qualification, I guess, between nuclear versus gas discussions here?

This is Stacey. Thank you for that question. We continue to see a very high level of interest in power PPAs for data centers. We really see 2026 as the year in which customers are focusing on what is real and what is credible after spending the last couple of years sorting through a lot of different alternatives.

And we think that really gives Vistra an advantage because we do have so many sites. We have so much land available, and we have a demonstrated capability of developing and operating generation. Our deal with Meta is a great example of that. It combines the purchase of operating capacity with financial support for new megawatts across our PJM nuclear fleet.

And so we continue to be in numerous conversations with all of the major customers in this space about all of the various structures that we've been talking about. And I think we've shown -- we've demonstrated a real ability to execute not just on PPAs, but as a reminder, we've augmented our ERCOT thermal fleet by 500 megawatts of upgrades. We've executed on the Oak Hill solar PPA last year with Amazon as well as Pulaski with Microsoft. So we have those existing customer relationships, and I think we're viewed as a credible and viable partner for these customers.

We've also -- we have in process not only the 433 megawatts of nuclear uprates, but 2 coal-to-gas conversions at Miami Fort and Coleto Creek as well as our Permian gas plants that we're building in West Texas. If you add all of this up between what we've already added to the grid and what is currently underway, under construction and under development, it's over 3,600 megawatts of capacity. And that's just the beginning that if we have customer PPAs for building new generation or for our existing assets, we will continue on that trajectory. So I think we see the appetite as high as ever, but the difference now versus maybe a year ago is I think the customers themselves are very focused on the deals and the opportunities that are actionable as they have sorted through what is real and what is credible, and we think that positions Vistra extremely well to support these customers.

Our next question today comes from Steve Fleishman of Wolfe Research.

Best to Jim. Hopefully, everything is okay. I guess, Stacey, first, on the -- on the idea of the new build you've already done, but also further opportunities there. Just how do you feel about your equipment and EPC capability to meet needs not too far out. A lot of other people talk about being well positioned there. Maybe you could just talk to that.

Yes. Steve, sure. Happy to do that. So as you know, we have one of the largest gas fleets in the country.

We have excellent and long-standing relationships with all of the turbine OEMs, and we're frequently in conversations with third parties and bridge power providers about equipment that, frankly, they are trying to market, including parties that have already purchased turbines and are looking for places to deploy them. Because of our pre-existing development pipeline, we also have ample access to high-voltage equipment, and we have long-tenured relationships with multiple EPC providers that we are currently using for our development projects. So we do not see equipment or EPC as the gating items to building new generation or to developing behind-the-meter interconnections for existing sites.

Customers have choices. And when they're ready to sign PPAs, projects can move forward. Vistra is certainly prepared to do that and can offer a variety of both speed to power options as well as long-term new build.

Great. And then totally separate question for Kris. Just as you -- the free cash flow per share chart was very helpful, and it looks like you're going to be on '27. The balance sheet is very strong. But the EBITDA with some of these -- a lot of the drivers really show up after '27 and the EBITDA will be going up a lot, which probably leaves a lot more balance sheet room.

So could you just talk to kind of how you're thinking about balance sheet targets beyond '27? And then what you going to do with the cash?

Yes, Steve, thanks for the question. I think as we showed on the capital available for allocation chart, we have $3 billion between now and 2027, and that's even at a 2.3x. And that level would be strong and we think would be strong in consideration for strong investment-grade ratings. So yes, as we said, I mean, there's -- as we move forward, we expect the cash generation to be significant.

And we're going to continue to stay balanced with capital allocation. We're going to continue to return capital to shareholders and take advantage of opportunities. Again, when our stock is under pressure. We're going to continue to maintain the balance sheet.

We are focused on investment-grade ratings. And as we've continued to say, we don't want to be right on the edge of investment-grade ratings. We would like to get to that strong investment-grade ratings. But I think we can get there without a lot of debt paydown, we're just -- we can do that with some growth.

And then obviously, we're going to continue to look for inorganic and organic growth opportunities, but staying disciplined to our return thresholds. And that hasn't changed in the last several years, and it won't change going forward. And it's not always easy to find growth opportunities that meet our return thresholds, and you don't know when they'll come along, but we're consistently -- we have a lot of things in front of us, a lot of organic opportunities. And so we'll continue to evaluate those.

In the meantime, we can always pay down some additional debt and be ready for when those opportunities arise.

Our next question today comes from Andrew Weisel with Scotiabank.

First, a question on nuclear uprates. I think you've talked about potential in the neighborhood of about 600. You've identified the 400 and change with Meta, and I think you talked about 200 today with Comanche. Does that essentially cover the opportunity? Or do you see potential for more?

No, I think that covers it. The 433 megawatts with Meta, those were -- those are in process. The 200 megawatts, we still have some work to do on those, and that's a future opportunity. But that -- for operates at the existing plants that covers it. Obviously, we're continuing to look at new nuclear and other opportunities. But from an operate perspective, that I think you've got it covered.

Okay. Great. Then on the gas side in ERCOT, I believe you're planning to move forward with Permian Power 1 and 2. The news about the batching process potentially impact those? My understanding is you haven't yet decided if you're going to pursue TEF funding.

And if you did, they probably wouldn't be eligible for data center contracts. But do those dynamics impact your thinking? Or are you just moving forward despite the potential changes or uncertainty? How are you thinking about that?

No, I think we continue -- we made the decision on those. We had a lot of advantages, including the pricing on some equipment we had ordered and some -- the pricing out in West Texas and the land that we had. We continue to see those as being high-return projects. I think we're still in a tough process, and I would expect us to continue to stay in that process.

And we're working through that. With respect to contracts, I think that we're -- there is interest from a number of different counterparties about those assets. And I think our view is that being in the TEF process doesn't prohibit us from locking in some of the revenue on those assets, but we're going to continue to feel out those opportunities and move forward only if we see something that we feel like is the right deal for the company.

Yes. And Andrew, the batching process doesn't affect the TEF units. It's a load interconnection process that's being considered to start studying load requests on a more grouped basis as opposed to one by one, but it won't affect our Permian TEF units.

Okay. Great. Then one last one, if I can. On repurchases, can you talk about the flexibility under the 10b5-1 program?

You mentioned it, I see you were pretty active year-to-date with $200 million, which is quite a bit ahead of the ratable pace compared to $1 billion for the full year. Can you just explain a bit how that works and what sort of discretion you have over the pace and timing and how to think about the outlook going forward mechanically under the 10b5-1?

Yes. I can't really get into the specifics, but we -- as we've said, we have structured it, and there's ways to structure those programs where -- depending on where the trading values are, it can increase the pace, and we obviously do that. You can see that in January and February at the prices that we've been trading, we've been leaning in. Same thing happened last year.

There was -- again, early in the year, there was some price pressure. We leaned in -- the program leaned in. And then as the price rebounded, it pulled back, and we ended up spending right around the $1 billion last year. But importantly, as we looked at last year, if you look at the weighted average price throughout the year, our program beat that by just under $10 a share.

So that's just -- that's -- the intention is for it to be more active when we see some price pressure. And we continue to tweak how we go about that. And when we get into open windows -- as we get into open windows, we're able to make changes, and we continue to rethink and optimize that program so that it's doing exactly what we wanted to do.

Okay. Sounds good. Appreciate it.

And our final question today comes from David Arcaro with Morgan Stanley.

Stacey, thanks for all the updates here on where your discussions stand with potential counterparties. I was curious if you could just maybe give us any color on timing as to what we might expect for the next iteration of data center contracting activity that you might be able to achieve on your fleet. I know you've been very busy over the last couple of months, clearly with your successes. But I'm just wondering if you could give -- are we going to have to wait for the backstop auction in PJM, for example, and not expect anything until we get more clarity there?

What's the pace of those discussions? And yes, any color on [indiscernible] would be helpful.

Yes. David, well, it's only been 6 weeks since we announced the Meta deal. So you're not giving me a lot of time there. But I'm not going to comment on specific timing.

I can just tell you that we have a number of conversations underway. Customers are very motivated to start making some of these things happen because they're anxious to get going with the data center development. So we feel good about where our conversations stand. And as we've always said, when we have an actual contract and agreement to announce, as you've now seen us do twice, we will announce that.

Okay. Got it. And then maybe just on Comanche Peak. I was wondering, what the -- maybe timing or milestones as to what would drive the uprate opportunity there? And could you be involved in any other on-site power opportunities, whether it's new generation or would you be involved in the backup generation there? Curious any color on that.

Yes. Thanks, David. Yes, on the uprate timing, we're continuing to study that possible uprate at Comanche Peak. And -- but right now, honestly, we're very focused on executing for our customer, all the things that need to happen to make sure the data center on-site at Comanche Peak gets online on time.

That's our #1 focus at Comanche Peak at the moment. But certainly, the team continues to explore the uprate in the background. And as we've mentioned earlier, we have the opportunity potentially with the same customer to add that uprate to the portfolio. So we'll continue to keep you updated as there's news on that front.

Certainly, we have a lot of land at Comanche Peak, and we definitely could explore new generation at that site. As you may know, in the past, the company had looked at Comanche Peak Units 3 and 4. There was plenty of land to do that. In fact, we had an early application in with the NRC to do that before we pulled it kind of around 2015, I think. It's also a site that has access to gas.

So there's a lot of opportunities to make that site really a center for energy and hopefully a data center as well with Amazon coming on site.

That concludes our question-and-answer session. I'd like to turn the conference back over to Kris Moldovan for any closing remarks.

Yes. I just want to thank everybody that participated on today's call. As Jim noted in our prepared remarks, we're very proud of what the team accomplished in 2025. And as we've been talking about, we're very excited to execute on the numerous opportunities in front of us. So thank you for your interest in Vistra, and have a great day.

Thank you. That concludes our conference for today. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.