Vistra Corp

Results of Operations

Net income (loss) attributable to Vistra common stock increased $2.6 billion to income of $1.5 billion for the year ended December 31, 2023 from a loss of $1.2 billion for the year ended December 31, 2022. For additional information see the following discussion of our results of operations.

EBITDA and Adjusted EBITDA

In analyzing and planning for our business, we supplement our use of GAAP financial measures with non-GAAP financial measures, including EBITDA and Adjusted EBITDA as performance measures. These non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed (i) with our GAAP results and (ii) the accompanying reconciliations to corresponding GAAP financial measures may provide a more complete understanding of factors and trends affecting our business. Because EBITDA and Adjusted EBITDA are financial measures that management uses to allocate resources, determine our ability to fund capital expenditures, assess performance against our peers, and evaluate overall financial performance, we believe they provide useful information for investors.

These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures and are, by definition, an incomplete understanding of Vistra and must be considered in conjunction with GAAP measures. In addition, non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

When EBITDA or Adjusted EBITDA is discussed in reference to performance on a consolidated basis, the most directly comparable GAAP financial measure to EBITDA and Adjusted EBITDA is Net income (loss).

Vistra Consolidated Financial Results — Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

The following table presents net income (loss), EBITDA and adjusted EBITDA for the year ended December 31, 2023:

(a)Includes $36 million of unrealized mark-to-market net losses on interest rate swaps.

(b)Includes nuclear fuel amortization of $91 million in the Texas segment.

(c)Includes $29 million gain recognized on the repurchase of TRA Rights in December 2023 (see Note 8 to the Financial Statements).

(d)Represents estimate of anticipated market participant defaults or settlements on initial PJM capacity performance penalties due to extreme magnitude of penalties associated with Winter Storm Elliott.

(e)Includes the application of bill credits. The Company incentivized certain large commercial and industrial customers to curtail their usage during Winter Storm Uri by providing bill credits for use in future periods. The Company believes the inclusion of the bill credits as a reduction to Adjusted EBITDA in the years in which such bill credits are applied more accurately reflects its operating performance. We estimate remaining bill credit amounts to be applied in future periods for 2024 (approximately $11 million) and 2025 (approximately $26 million).

The following table presents net income (loss), EBITDA and adjusted EBITDA for the year ended December 31, 2022:

(a)Includes $250 million of unrealized mark-to-market net gains on interest rate swaps.

(b)Includes nuclear fuel amortization of $86 million in the Texas segment.

(c)Adjusted EBITDA impacts of Winter Storm Uri reflects $183 million related to a reduction in the allocation of ERCOT default uplift charges which were expected to be paid over several decades under protocols existing at the time of the storm and $144 million related to the application of bill credits to large commercial and industrial customers that curtailed their usage during Winter Storm Uri. The adjustment for ERCOT default uplift charges relates to (i) ERCOT receiving payments that reduced the market wide default balance and (ii) the fourth quarter 2022 derecognition of the remaining default balance in connection with a settlement between Brazos and ERCOT.

Operating income increased $3.838 billion to $2.661 billion in the year ended December 31, 2023 compared to the year ended December 31, 2022. Results for the year ended December 31, 2023 were favorably impacted by $490 million in pre-tax unrealized mark-to-market gains on derivative positions due to power and natural gas forward market curves moving down in the year ended December 31, 2023 compared to $2.510 billion in pre-tax unrealized mark-to-market losses on commodity derivative positions due to power and natural gas forward market curves moving up materially in the year ended December 31, 2022. See further information on our derivative results in Energy-Related Commodity Contracts and Mark-to-Market Activities below.

Operating results for the year ended December 31, 2023, compared to the year ended December 31, 2022 were favorably impacted by strong plant operating performance allowing us to realize the value created by our comprehensive hedging strategy, partially offset by lower than expected retail sales volumes due to unfavorable weather. The following table presents operational performance of our retail and generation segments.

(a)Reflects cooling degree or heating degree days for the region based on Weather Services International (WSI) data.

(a)Reflects the average of daily quoted prices for the periods presented and does not reflect costs incurred by us.

(b)Reflects the average of day-ahead quoted prices for the periods presented and does not necessarily reflect prices we realized.

For the year ended December 31, 2023, other income totaled $257 million driven by a gain of $89 million from the sale of property in Freestone County, Texas recorded in the Asset Closure Segment and $86 million in interest income due to holding a material cash balance anticipating the Energy Harbor transaction closing. For the year ended December 31, 2022, other income totaled $117 million driven by insurance proceeds of $70 million which primarily consists of business interruption claim proceeds recorded in the Texas segment. See Note 22 to the Financial Statements.

The increase in consolidated interest expense and related charges of $372 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, is primarily due to (a) unrealized mark-to-market losses on interest rate swaps of $36 million in 2023 compared to unrealized mark-to-market gains on interest rate swaps of $250 million in 2022 due to less volatility in interest rates in the year ended December 31, 2023 compared to the year ended December 31, 2022, (b) an increase in interest paid/accrued of $63 million driven by higher effective interest rates in 2023 and (c) $21 million of commitment fees related to the Commitment Letter in the year ended December 31, 2023. See Note 22 to the Financial Statements.

The following table presents additional changes to net income (loss) and Adjusted EBITDA for the year ended December 31, 2023 compared to the year ended December 31, 2022.

To supplement the amounts and explanations noted above, primary drivers of results for the year ended December 31, 2023 compared to the year ended December 31, 2022 include:

•Comprehensive hedging strategy. See Energy-Related Commodity Contracts and Mark-to-Market Activities below.

•Winter Storm Uri impacts. 2022 GAAP and Adjusted EBITDA results continued to be materially impacted by Winter Storm Uri. In 2022, a $189 million default uplift liability to ERCOT was extinguished and resulted in net income during the year, but had no impact on Adjusted EBITDA in 2022 as the initial liability incurred in 2021 was excluded from Adjusted EBITDA.

•SG&A expenses and other. 2023 is unfavorable compared to 2022 driven primarily by higher incentive compensation in 2023 and insurance recoveries recorded in Texas in 2022.

Asset Closure Segment— Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

For the year ended December 31, 2022, results and volumes for the Asset Closure segment include those from Edwards generation plant that we retired on January 1, 2023 and include unrealized hedging gains related to coal and power derivatives of $19 million. Operating costs for the years ended December 31, 2023 and 2022 also include ongoing costs associated with the decommissioning and reclamation of retired plants and mines. GAAP and Adjusted EBITDA results for 2023 are favorable to 2022 primarily due to the $89 million gain on sale of land in Freestone County, Texas.

Energy-Related Commodity Contracts and Mark-to-Market Activities

As forward power prices materially increased in 2022, our generation segments (Texas, East, West and Sunset) aggressively sold forward power for 2023 and future years. While settled power prices in 2023 are lower than 2022, the strategic hedging allowed us to lock in margins for 2023 which resulted in realized revenue net of fuel above what we were able to recognize in 2022 (were mostly hedged going into 2022 so did not recognize the full benefit of settled prices). The forward power sales are also the drivers of the changes in unrealized gains/losses on hedging activities. As power prices increase/decrease in comparison to what our generation segments have sold forward, the generation segments recognize unrealized losses/gains. The retail segment procures power from the generation segments to serve future load obligations and thus changes in forward power prices have an inverse effect on unrealized mark to market for the retail segment as compared to the generation segments. This is evident in 2022 as material increase in forward power prices drove material unrealized losses in our generation segment, partially offset by unrealized gains in our retail segment. In 2023, forward power prices decreased slightly which resulted in unrealized gains in our generation segments which is partially offset by unrealized losses in our retail segment.

The table below summarizes the changes in commodity contract assets and liabilities for the years ended December 31, 2023 and 2022. The net change in these assets and liabilities, excluding "other activity" as described below, reflects $490 million in unrealized net gains and $2.51 billion in unrealized net losses for the years ended December 31, 2023 and 2022, respectively, arising from mark-to-market accounting for positions in the commodity contract portfolio.

(a)Represents reversals of previously recognized unrealized gains and losses upon settlement/termination (offsets realized gains/(losses) recognized in the settlement period). Excludes changes in fair value in the month the position settled as well as amounts related to positions entered into, and settled, in the same month.

(b)Represents unrealized net gains/(losses) recognized, reflecting the effect of changes in fair value. Excludes changes in fair value in the month the position settled as well as amounts related to positions entered into, and settled, in the same month.

(c)Represents changes in fair value of positions due to receipt or payment of cash not reflected in unrealized gains or losses. Amounts are generally related to premiums related to options purchased or sold as well as certain margin deposits classified as settlement for certain transactions executed on the CME.

The following maturity table presents the net commodity contract liability arising from recognition of fair values at December 31, 2023, scheduled by the source of fair value and contractual settlement dates of the underlying positions.

We have engaged in natural gas hedging activities to mitigate the risk of higher or lower wholesale electricity prices that have corresponded to increases or declines in natural gas prices. When natural gas prices are elevated or depressed, we continue to seek opportunities to manage our wholesale power price exposure through hedging activities, including forward wholesale and retail electricity sales.

Estimated hedging levels for generation volumes in our Texas, East, West and Sunset segments as of December 31, 2023 were as follows: