Vistra Corp

Cash Flows

Operating Cash Flows

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 — Cash provided by operating activities totaled $5.453 billion and $485 million in the years ended December 31, 2023 and 2022, respectively. The favorable change of $4.968 billion was primarily driven by (a) a decrease in net margin deposits (return of cash) of $1.899 billion in the year ended December 31, 2023 as compared to an increase in net margin deposits of $1.874 billion in the year ended December 31, 2022 related to commodity contracts which support our comprehensive hedging strategy, including the impacts of cash margin deposits returned and replaced with amounts posted under an affiliate financing agreement (see Note 11 to the Financial Statements) and (b) an increase in cash from operating income exclusive of net margin deposits, partially offset by $544 million of securitization proceeds from ERCOT in the year ended December 31, 2022 (see Note 1 to the Financial Statements).

Depreciation and amortization — Depreciation and amortization expense reported as a reconciling adjustment in the consolidated statements of cash flows exceeds the amount reported in the consolidated statements of operations by $454 million, $451 million and $297 million for the years ended December 31, 2023, 2022 and 2021, respectively. The difference represents amortization of nuclear fuel, which is reported as fuel costs in the consolidated statements of operations consistent with industry practice, and amortization of intangible net assets and liabilities that are reported in various other consolidated statements of operations line items including operating revenues and fuel and purchased power costs and delivery fees (see Note 6 to the Financial Statements).

Investing Cash Flows

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 — Cash used in investing activities totaled $2.145 billion and $1.239 billion in the years ended December 31, 2023 and 2022, respectively. The increase of $906 million was driven by (a) $543 million in higher net purchases of environmental allowances and (b) a $375 million increase in capital expenditures due primarily to continued development of our solar and energy storage generation facilities (see Note 3 to the Financial Statements), partially offset by $37 million in higher proceeds from the sale of assets driven by our sale of property in Freestone County, Texas in the year ended December 31, 2023.

Financing Cash Flows

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 — Cash used in financing activities totaled $294 million and $80 million in the years ended December 31, 2023 and 2022, respectively. The $214 million increase in cash used was driven by (a) the net repayment of $1.075 billion in the year ended December 31, 2023 of short-term debt and accounts receivable financing amounts borrowed in the year ended December 31, 2022 driven by changes in collateral posting requirements and (b) $1.5 billion principal amount of senior secured notes issued in May 2022, partially offset by (1) $2.5 billion principal amount of senior secured and senior unsecured notes issued in September 2023 and December 2023, of which $750 million will be used to fund cash tender offers in January 2024, and (2) lower share repurchases in 2023.

Collateral Financing Agreement With Affiliate

On June 15, 2023, Vistra Operations entered into a facility agreement (Facility Agreement) with a Delaware trust formed by the Company that sold 450,000 pre-capitalized trust securities (P-Caps) redeemable May 17, 2028 for an initial purchase price of $450 million. The Trust is not consolidated by Vistra. The Trust invested the proceeds from the sale of the P-Caps in a portfolio of either (a) U.S. Treasury securities (Treasuries) or (b) Treasuries and/or principal and interest strips of Treasuries (Treasury Strips, and together with the Treasuries and cash denominated in U.S. dollars, the Eligible Assets). At the direction of Vistra Operations, the Eligible Assets held by the Trust will be (i) delivered to one or more designated subsidiaries of Vistra Operations in order to allow such subsidiaries to use the Eligible Assets to meet certain posting obligations with counterparties, and/or (ii) pledged as collateral support for a letter of credit program.

Under the Facility Agreement, Vistra Operations will have the right (Issuance Right), from time to time, to require the Trust to purchase from Vistra Operations up to $450 million aggregate principal amount of Vistra Operations' 7.233% senior secured notes due 2028 (7.233% Senior Secured Notes) in exchange for the delivery of all or a portion of the Treasuries and Treasury Strips corresponding to the portion of the issuance right exercised at such time.

As of December 31, 2023, all of the Eligible Assets were being utilized to meet a portion of our current and future collateral posting obligations.

The Trust will terminate at any time prior to May 17, 2028 and distribute the 7.233% Senior Secured Notes to the holders of the P-Caps if its sole assets consist of 7.233% Senior Secured Notes that Vistra Operations is no longer entitled to repurchase.

See Note 11 for additional details of the collateral financing agreement with affiliate.

Debt Activity

We remain committed to a strong balance sheet and have continued to state our objective to reduce our consolidated net leverage. We also intend to maintain adequate liquidity and pursue opportunities to refinance our long-term debt to extend maturities.

In May 2024 and July 2024, after taking into account the Senior Secured Notes Tender Offer settled in January 2024, $342 million of 4.875% Senior Secured Notes and $1.155 billion of 3.550% Senior Secured Notes, respectively, will reach maturity. We plan to fund these upcoming principal payments using a combination of cash on hand and new debt issuances. Increases in interest rates will likely result in increased borrowing costs.

See Note 10 to the Financial Statements for details of the Receivables Facility and Repurchase Facility and Note 12 to the Financial Statements for details of the Vistra Operations Credit Facilities, the Commodity-Linked Facility and other long-term debt.

Available Liquidity

The following table summarizes changes in available liquidity for the year ended December 31, 2023:

(a)See the Consolidated Statements of Cash Flows in the Financial Statements and Cash Flows above for details of the increase in cash and cash equivalents for the year ended December 31, 2023. The increase includes proceeds from the issuance of $1.75 billion and $750 million principal amount of Vistra Operations senior secured and senior unsecured notes in September 2023 and December 2023, respectively. Proceeds from the September 2023 issuance are expected to be used, together with cash on hand, to fund the Transactions. Proceeds from the December 2023 issuance were used to settle the Senior Secured Notes Tender Offers in January 2024.

(b)The decrease in availability for the year ended December 31, 2023 was driven by a $73 million increase in letters of credit outstanding under the facility and the maturity of $200 million of commitments under the Non-Extended Revolving Credit Facility, partially offset by $250 million in net repayments of borrowings under the facility.

(c)As of December 31, 2023 and 2022, the borrowing bases are less than the facility limits of $1.575 billion and $1.35 billion, respectively. As of December 31, 2023, available capacity reflects the borrowing base of $1.101 billion and no cash borrowings. As of December 31, 2022, available capacity reflects the borrowing base of $1.208 billion less $400 million in cash borrowings.

(d)Excludes amounts available to be borrowed under the Receivables Facility and the Repurchase Facility, respectively. See Note 10 to the Financial Statements for detail on our accounts receivable financing.

(e)Excludes any additional letters of credit that may be issued under the Secured LOC Facilities. See Note 12 to the Financial Statements for detail on our Secured LOC Facilities.

We expect to use cash on hand and borrowings under the Receivables Facility and Repurchase Facility and other liquidity facilities to fund the approximately $3.1 billion cash necessary to close the Energy Harbor acquisition. In addition, we believe that we will have access to sufficient liquidity to fund our other anticipated cash requirements through at least the next 12 months. Our operational cash flows tend to be seasonal and weighted toward the second half of the year.

Interest payments on long-term debt are expected to total approximately $744 million in 2024, $1.293 billion in 2025-2026, $955 million in 2027-2028 and $1.052 billion thereafter. See Note 12 to the Financial Statements for details of our long-term debt maturities.

Our obligations under commodity purchase and services agreements, including capacity payments, nuclear fuel and natural gas take-or-pay contracts, coal contracts, business services and nuclear-related outsourcing and other purchase commitments, are expected to total approximately $2.615 billion in 2024, $2.192 billion in 2025-2026, $982 million in 2027-2028 and $437 million thereafter. See Note 13 to the Financial Statements for maturities of lease liabilities and Note 14 to the Financial Statements for commitments related to long-term service and maintenance contracts.

Capital Expenditures

Estimated 2024 capital expenditures and nuclear fuel purchases as of December 31, 2023 total approximately $1.695 billion and include:

•$745 million for solar and energy storage development;

•$727 million for investments in generation and mining facilities;

•$149 million for nuclear fuel purchases; and

•$74 million for other growth expenditures.

Liquidity Effects of Commodity Hedging and Trading Activities

We have entered into commodity hedging and trading transactions that require us to post collateral if the forward price of the underlying commodity moves such that the hedging or trading instrument we hold has declined in value. We use cash, letters of credit, Eligible Assets (see Note 11 to the Financial Statements) and other forms of credit support to satisfy such collateral posting obligations. See Note 12 to the Financial Statements for discussion of the Vistra Operations Credit Facilities and the Commodity-Linked Facility.

Exchange cleared transactions typically require initial margin (i.e., the upfront cash and/or letter of credit posted to take into account the size and maturity of the positions and credit quality) in addition to variation margin (i.e., the daily cash margin posted to take into account changes in the value of the underlying commodity). The amount of initial margin required is generally defined by exchange rules. Clearing agents, however, typically have the right to request additional initial margin based on various factors, including market depth, volatility and credit quality, which may be in the form of cash, letters of credit, a guaranty or other forms as negotiated with the clearing agent. Cash collateral received from counterparties is either used for working capital and other business purposes, including reducing borrowings under credit facilities, or is required to be deposited in a separate account and restricted from being used for working capital and other corporate purposes. With respect to over-the-counter transactions, counterparties generally have the right to substitute letters of credit for such cash collateral. In such event, the cash collateral previously posted would be returned to such counterparties, which would reduce liquidity in the event the cash was not restricted.

As of December 31, 2023, we received or posted cash, letters of credit and Eligible Assets for commodity hedging and trading activities as follows:

•$1.244 billion in cash and Eligible Assets has been posted with counterparties as compared to $3.137 billion posted as of December 31, 2022;

•$45 million in cash has been received from counterparties as compared to $39 million received as of December 31, 2022;

•$2.408 billion in letters of credit have been posted with counterparties as compared to $2.314 billion posted as of December 31, 2022; and

•$143 million in letters of credit have been received from counterparties as compared to $74 million received as of December 31, 2022.

See Collateral Support Obligations below for information related to collateral posted in accordance with the PUCT and ISO/RTO rules.

Income Tax Payments

In the next 12 months, we do not expect to make federal income tax payments due to Vistra's NOL carryforwards. We expect to make approximately $35 million in state income tax payments offset by $10 million in state tax refunds.

For the year ended December 31, 2023, there were no federal income tax payments, $44 million in state income tax payments, $13 million in state income tax refunds and $9 million in TRA payments.

Capitalization

Our capitalization ratios consisted of 70% and 71% long-term debt (less amounts due currently) and 30% and 29% stockholders' equity at December 31, 2023 and 2022, respectively. Total long-term debt (including amounts due currently) to capitalization was 73% and 71% at December 31, 2023 and 2022, respectively.

Financial Covenants

The Vistra Operations Credit Agreement and the Vistra Operations Commodity-Linked Credit Agreement each includes a covenant, solely with respect to the Revolving Credit Facility and the Commodity-Linked Facility and solely during a compliance period (which, in general, is applicable when the aggregate revolving borrowings and issued revolving letters of credit exceed 30% of the revolving commitments, provided that solely with respect to the Revolving Credit Facility only such amounts in excess of $300 million are taken into account for purposes of determining whether a compliance period is in effect), that requires the consolidated first-lien net leverage ratio not to exceed 4.25 to 1.00 (or, during a collateral suspension period, the consolidated total net leverage ratio not to exceed 5.50 to 1.00). In addition, each of the Secured LOC Facilities includes a covenant that requires the consolidated first-lien net leverage ratio not to exceed 4.25 to 1.00 (or, for certain facilities that include a collateral suspension mechanism, during a collateral suspension period, the consolidated total net leverage ratio not to exceed 5.50 to 1.00). As of December 31, 2023, we were in compliance with the Vistra Operations Credit Agreement, Vistra Operations Commodity-Linked Credit Agreement and Secured LOC Facilities financial covenants.

See Note 12 to the Financial Statements for discussion of other covenants related to the Vistra Operations Credit Facilities.

Collateral Support Obligations

The RCT has rules in place to assure that parties can meet their mining reclamation obligations. In September 2016, the RCT agreed to a collateral bond of up to $975 million to support Luminant's reclamation obligations. The collateral bond is effectively a first lien on all of Vistra Operations' assets (which ranks pari passu with the Vistra Operations Credit Facilities) that contractually enables the RCT to be paid (up to $975 million) before the other first-lien lenders in the event of a liquidation of our assets. Collateral support relates to land mined or being mined and not yet reclaimed as well as land for which permits have been obtained but mining activities have not yet begun and land already reclaimed but not released from regulatory obligations by the RCT, and includes cost contingency amounts.

The PUCT has rules in place to assure adequate creditworthiness of each REP, including the ability to return customer deposits, if necessary. Under these rules, at December 31, 2023, Vistra has posted letters of credit in the amount of $91 million with the PUCT, which is subject to adjustments.

The ISOs/RTOs we operate in have rules in place to assure adequate creditworthiness of parties that participate in the markets operated by those ISOs/RTOs. Under these rules, Vistra has posted collateral support totaling $554 million in the form of letters of credit, $30 million in the form of a surety bond and $3 million of cash at December 31, 2023 (which is subject to daily adjustments based on settlement activity with the ISOs/RTOs).

Material Cross Default/Acceleration Provisions

Certain of our contractual arrangements contain provisions that could result in an event of default if there were a failure under financing arrangements to meet payment terms or to observe covenants that could result in an acceleration of payments due. Such provisions are referred to as "cross default" or "cross acceleration" provisions.

A default by Vistra Operations or any of its restricted subsidiaries in respect of certain specified indebtedness in an aggregate amount in excess of the greater of $300 million and 17.5% of Consolidated EBITDA may result in a cross default under the Vistra Operations Credit Facilities and the Commodity-Linked Facility. Such a default would allow the lenders under each such facility to accelerate the maturity of outstanding balances under such facilities, which totaled approximately $2.5 billion and zero, respectively, as of December 31, 2023.

Each of Vistra Operations' (or its subsidiaries') commodity hedging agreements and interest rate swap agreements that are secured with a lien on its assets on a pari passu basis with the Vistra Operations Credit Facilities lenders contains a cross-default provision. An event of a default by Vistra Operations or any of its subsidiaries relating to indebtedness equal to or above a threshold defined in the applicable agreement that results in the acceleration of such debt, would give such counterparty under these hedging agreements the right to terminate its hedge or interest rate swap agreement with Vistra Operations (or its applicable subsidiary) and require all outstanding obligations under such agreement to be settled.

Under the Vistra Operations Senior Unsecured Indentures, the Vistra Operations Senior Secured Indenture and the Indenture governing the 7.233% Senior Secured Notes, a default under any document evidencing indebtedness for borrowed money by Vistra Operations or any Guarantor Subsidiary for failure to pay principal when due at final maturity or that results in the acceleration of such indebtedness in an aggregate amount of $300 million or more may result in a cross default under the Vistra Operations Senior Unsecured Notes, the Senior Secured Notes, the 7.233% Senior Secured Notes, the Vistra Operations Credit Facilities, the Receivables Facility, the Commodity-Linked Facility and other current or future documents evidencing any indebtedness for borrowed money by the applicable borrower or issuer, as the case may be, and the applicable Guarantor Subsidiaries party thereto.

Additionally, we enter into energy-related physical and financial contracts, the master forms of which contain provisions whereby an event of default or acceleration of settlement would occur if we were to default under an obligation in respect of borrowings in excess of thresholds, which may vary by contract.

The Receivables Facility contains a cross-default provision. The cross-default provision applies, among other instances, if TXU Energy, Dynegy Energy Services, Ambit Texas, Value Based Brands, TriEagle Energy, each indirect subsidiaries of Vistra and originators under the Receivables Facility (Originators), and Vistra or any of their respective subsidiaries fails to make a payment of principal or interest on any indebtedness that is outstanding in a principal amount of at least $300 million, in the case of Vistra, and in a principal amount of at least $50 million, in the case of TXU Energy or any of the other Originators, after the expiration of any applicable grace period, or if other events occur or circumstances exist under such indebtedness which give rise to a right of the debtholder to accelerate such indebtedness, or if such indebtedness becomes due before its stated maturity. If this cross-default provision is triggered, a termination event under the Receivables Facility would occur and the Receivables Facility may be terminated.

The Repurchase Facility contains a cross-default provision. The cross-default provision applies, among other instances, if an event of default (or similar event) occurs under the Receivables Facility or the Vistra Operations Credit Facilities. If this cross-default provision is triggered, a termination event under the Repurchase Facility would occur and the Repurchase Facility may be terminated.

Under the Secured LOC Facilities, a default by Vistra Operations or any of its restricted subsidiaries in respect of certain specified indebtedness in an aggregate amount in excess of $300 million may result in a cross default under the Secured LOC Facilities. In addition, a default under any document evidencing indebtedness for borrowed money by Vistra Operations or any Guarantor Subsidiary for failure to pay principal when due at final maturity or that results in the acceleration of such indebtedness in an aggregate amount of $300 million or more, may result in a termination of the Secured LOC Facilities.

Under the Vistra Operations Senior Unsecured Indenture and the Vistra Operations Senior Secured Indenture governing the 7.750% Senior Unsecured Notes and 6.950% Senior Secured Notes, respectively, a default under any document evidencing indebtedness for borrowed money by Vistra Operations or any Guarantor Subsidiary for failure to pay principal when due at final maturity or that results in the acceleration of such indebtedness in an aggregate amount that exceeds the greater of 1.5% of total assets and $600 million may result in a cross default under the respective notes and other current or future documents evidencing any indebtedness for borrowed money by the applicable borrower or issuer, as the case may be, and the applicable Guarantor Subsidiaries party thereto.

Guarantees

See Note 14 to the Financial Statements for discussion of guarantees.