Vistra Energy Corp. Aktie

Good day, everyone. Welcome to the Vistra Corp. Third Quarter 2026 Earnings Call. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Eric Micek, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining Vistra's investor webcast discussing our third quarter 2026 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 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 explain 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.

hank you, Eric. Good morning, and thank you all for joining us today to discuss our third quarter 2026 results. Before we jump into our performance, I recognize there is interest in the election results and any anticipated impacts for our business. I'm sure we will discuss this more in Q&A, but just a few opening thoughts. Given our company has a very long history of serving customers and operating in our communities, we constantly work with policymakers of both parties at local, state and federal levels.

We offer an essential service, and our focus remains the same after the election, providing reliable and affordable power to our customers. We operate a diversified fleet of assets across the country while serving retail customers in 16 states plus D.C. We believe we are in some of the most attractive states for growth, and we expect policymakers to remain focused on economic opportunities and ensuring load growth is managed in a constructive manner for all customers. To be clear, the pacing was already being impacted ahead of the election, but our plans have always had a more conservative view of the AI build-out. Stated more simply, the election results do not change our fundamental view of the opportunities Vistra has, and our team is prepared to continue executing.

Starting on Slide 5, Vistra delivered approximately $2.4 billion of adjusted EBITDA in the third quarter, a record for the company. Our generation team performed very well, delivering commercial availability approaching 95% across the thermal fleet despite the elevated demand from the record third quarter weather. This impressive operational performance was complemented by the results delivered by our commercial team through execution of our comprehensive hedging program, and our retail team, which continues to deliver strong results.

With this record third quarter performance, combined with our results year-to-date and the recent closing of the Cogentrix acquisition, we are narrowing our guidance ranges for our 2026 adjusted EBITDA to $7.1 billion to $7.5 billion and our 2026 adjusted free cash flow before growth to $4.3 billion to $4.7 billion, with each reflecting a higher midpoint than the original ranges. Importantly, this marks the fifth consecutive year we expect to finish above the midpoint of our original guidance range.

Moving to the near-term outlook. We are introducing guidance ranges for 2027 adjusted EBITDA of $7.7 billion to $8.5 billion and 2027 adjusted free cash flow before growth of $4.3 billion to $5.1 billion, including the expected contribution from the Cogentrix acquisition, and the power purchase agreement with Meta for the operating capacity at our Perry nuclear plant.

Moving to Slide 6. We closed the Cogentrix acquisition on October 30, and we are excited to welcome our new team members to the Vistra family. As we've said before, we believe integrating and operating generation assets at scale is a core competency of Vistra. We've demonstrated this with Dynegy, Energy Harbor and most recently the assets acquired from LOTUS. We see similar opportunities with Cogentrix -- these assets are a strong complement to our existing fleet, expanding our presence in key markets and our ability to serve growing customer demand with reliable, flexible power. They also fit with our core strategy of owning and operating dispatchable generation assets, which we believe will continue to play a critical role in delivering reliable, affordable and flexible power to U.S. electricity markets.

With Cogentrix, Vistra now owns a generation portfolio of approximately 50,000 megawatts, including approximately 25,000 megawatts of modern combined cycle gas generation across all the major competitive markets. In early 2018, 100% of our generation earnings came from Texas. However, today, just under 40% of our generation earnings comes from the Texas fleet reflecting the diversification of our business across markets, technologies and customer classes. From a financial perspective, the Cogentrix deal economics were even more attractive. We acquired approximately 5,500 megawatts for a net purchase price of approximately $4 billion, including 5 million shares of common stock at an agreed value of $185 per share equating to a value of approximately $729 per kilowatt of capacity. Since the announcement of the transaction, our forecast for the earnings contribution of the Cogentrix assets has meaningfully improved. Accordingly, we now expect the transaction to deliver high single-digit adjusted free cash flow accretion over the near term, increasing the double-digit accretion beginning in 2029.

Turning to Slide 7. actualized data continues to confirm the structurally improved demand environment we've talked about for our core markets. In 2026, both PJM and ERCOT set new all-time peak load records with PJM reaching approximately 168 gigawatts and ERCOT approximately 91 gigawatts and importantly, the power markets performed well during these peaks, demonstrating that competitive power markets can respond effectively as demand grows. Growth in energy continues to be robust, and it's coming from multiple sources -- increased industrial activity, population growth, particularly in Texas, ongoing electrification and data centers. You see these strong demand trends playing out in PJM with higher forward prices.

ERCOT prices, however, have been trending lower. We believe this is due to several factors, including some crypto mining facilities coming offline, so they can convert into data centers as well as the data center audit and permitting pause. We do not see this as a long-term impact. As we've said for some time, load interconnect queues were overstated across the country and especially in ERCOT, driven by speculation from developers who are keeping options open to see where progress can be made. Residents and some communities are understandably concerned about the level of proposed development activity and policymakers are working on longer-term solutions. As we've advocated in multiple forums, raising the bar on these projects can go a long way towards identifying the ones that are likely to move forward. This includes higher collateral requirements for interconnect requests, committing the take-or-pay agreement for the incremental wires charges, line of sight to equipment and an agreement with an end use customer.

Aspects of this have been done effectively in other states, and has helped to focus on the real projects that are ready to move forward. Despite the recent political and regulatory activity, our outlook has not changed. We still see low growth of 4% to 6% in ERCOT and 2% to 3% in PJM through 2030. Vistra with its large diversified fleet is well equipped to meet this growth. Our flexible combined cycle gas plants and quick-start peaking plants can operate at higher utilizations and that remains the cheapest and quickest source of incremental generation.

Turning to Slide 8. You can see how the load growth fundamentals support Vistra's multiyear improvement in profitability levels. At the center of this forecast is the day-to-day execution by the teams in our base business, which continues to perform very well across generation, retail and our commercial activities. Moving beyond operational excellence, the team has already made substantial progress on several major initiatives that underpin the significant growth forecasted for our business. We've now successfully closed on over 12 gigawatts of acquisitions through Energy Harbor, LOTUS and Cogentrix, at attractive acquisition multiples of less than 7x forward EBITDA on average.

Additionally, the development team has delivered over 4 gigawatts of long-term power purchase agreements across both our nuclear and gas sites, some of which like the perinuclear contract with Meta will begin contributing to our 2027 results. We also see an extensive list of near-term initiatives and development opportunities like the coal to gas conversions and Permian Peaker new build that will begin contributing in 2028. Looking longer term, customer conversations and activity levels remain high. We're in active discussions with large load customers in both PJM and ERCOT on existing and new build assets, addressing both short-term and long-term power needs. Customers would prefer to have clarity. But working together, we are finding ways to work through the uncertainty and our team remains engaged on multiple projects to help customers develop solutions to meet their power needs.

We see pathways to realize multiple additional contracting opportunities across our large and diversified fleet of approximately 50,000 megawatts of nuclear, gas, coal and renewable generation. Our expanded development team continues to work through these opportunities, and we are encouraged by the significant progress achieved to date.

Now I'll turn it over to Kris to provide more details on our third quarter results our capital allocation priorities and our adjusted free cash flow per share growth expectations. Kris?

Thank you, Jim. Turning to Slide 10. Vistra delivered adjusted EBITDA of $2 billion $378 million, a company record that represents a more than 50% increase compared to the third quarter of 2025. Our Generation business delivered $2.28 billion of adjusted EBITDA in the quarter compared to $1.544 billion in the third quarter of 2025. The year-over-year improvement was primarily driven by average realized prices that were more than 10% higher on a per megawatt hour basis compared to the same quarter last year, higher capacity revenue optimizing the dispatch of our flexible gas generation assets in response to market conditions, the restart of Martin Lake Unit 1 and the contribution from assets acquired from LOTUS in the fourth quarter of 2025.

Retail also had a strong quarter, contributing approximately $98 million of adjusted EBITDA. As a reminder, we expect lower profitability in the first and third quarters due to the shape and level of supply cost. Despite the higher summer costs, retail performed very well, driven by favorable margins and strong customer volumes, largely due to the hotter-than-normal weather in the quarter.

Moving to our year-to-date results. Adjusted EBITDA totaled approximately $5,639 million, representing a more than 35% increase over the prior year period. Similar to the quarter, the year-to-date improvement was largely driven by higher average realized prices across our fleet, higher capacity payments in PJM, the return of Martin Lake Unit 1 fleet dispatch optimization and the contribution from the assets acquired from LOTUS.

Moving to Slide 11. We continue to take a disciplined approach to capital allocation, prioritizing a strong balance sheet, return of capital and strategic growth opportunities. Beginning with the balance sheet, the diversification of our business and a significantly higher and more contracted earnings outlook, have driven the derisking of our credit profile which contributed to us achieving investment-grade credit ratings from 2 of the 3 major credit rating agencies. Pro forma for the closing of the Cogentrix acquisition and the redemption of our Series A preferred stock with proceeds from the issuance of junior subordinated notes, our net debt to adjusted EBITDA ratio is approximately 2.8x.

Going forward, we expect our leverage ratio to continue to decline resulting in credit metrics consistent with our target credit ratings of BBB flat and Baa2.

Moving to capital return. Our share repurchase program continues to create significant value. Since initiating the program in November 2021, we have retired approximately 172 million shares at an average cost of approximately $39 per share including the approximately $1 billion in share repurchases already completed this year through November 2. With the additional Board authorization this quarter, we now have approximately $2.5 billion of share repurchase authorization which we currently expect to fully utilize by no later than the end of 2028. This additional authorization provides us flexibility to purchase more than our annual target of at least $1 billion of share repurchases in 2026, 2027 and/or 2028 as market conditions warrant. And of course, we continue to target at least $300 million of annual dividends.

Finally, turning to growth. As Jim outlined, the improved power demand backdrop has increased the number of available growth opportunities we have. Some of these growth opportunities, such as contracts with existing assets, would result in little to no incremental capital requirements, leading to high rates of return, other opportunities like our Permian peakers and Nuclear uprates as well as potential contracted new build do require incremental capital. Importantly, we have the opportunity to work with strategic partners like Helix digital infrastructure that can expand our access to long-term capital.

Finally, M&A continues to be a strong driver of value for the business. We will continue to be opportunistic, looking to strategically add assets that are complementary to our existing fleet. As always, we will be disciplined in the deployment of capital to growth investments, whether organic or inorganic. For all investment decisions, our target return threshold remains consistent at mid-teens or higher on a levered basis.

Finally, moving to Slide 12. As we discussed earlier this year, we believe adjusted free cash flow before growth per share is an important indicator of long-term value creation for shareholders as it captures not only the sustainably higher level of cash flow generation of the business, but also the benefits of our consistent allocation of a significant portion of our available cash to share repurchases. You can see from the chart that we are already well underway to delivering on a compelling growth trajectory over the next several years, with adjusted free cash flow per share growing from just under $10.5 in 2025 to approximately $14 in 2027, assuming the midpoint of our adjusted free cash flow before growth guidance and the deployment of capital to share repurchases at the November 2 share price.

Looking beyond 2027, the actions we've already taken to date, including our agreement with AWS at Comanche Peak, our agreement with Meta for operating capacity at Davis-Besse and the completion of our Permian peakers provide line of sight to continued growth through the end of the decade. Combined with the current forward curves and a simplifying assumption with respect to the deployment of our excess cash available for allocation to share repurchases. We have line of sight to approximately 70% growth in adjusted free cash flow before growth per share from 2027 to 2030, while achieving leverage metrics meaningfully below what we believe would be required for us to be at our target ratings of BBB flat and Baa2. We think that the level of growth is compelling, particularly when you consider the additional opportunities that are not fully reflected in that outlook including the final ramp of the AWS Comanche Peak agreement assumed in 2032 and the contributions from the PJM nuclear uprates, which are expected to begin in 2031.

Additionally, we believe we can execute on additional growth opportunities that would provide higher returns than repurchasing our shares. As Jim outlined earlier, the level of customer engagement across our portfolio remains robust, and we remain optimistic in our ability to deliver additional long-term contracts across both our nuclear and gas fleets. We also see continued improvement in power market fundamentals that is not fully reflected in market curves today. These opportunities vary in timing, but we believe they have the potential to drive meaningful additional growth beyond what is reflected in this outlook. Our objective remains the same to allocate capital to opportunities that we believe create the highest long-term value for our shareholders.

In closing, we believe we have a clear and tangible path to substantial per share free cash flow growth with a number of additional opportunities to build on that trajectory over time. Our team remains focused on finishing the year strong including finishing the preparation of our fleet to deliver reliable performance through the winter months ahead.

With that, operator, we're ready to open the line for questions.

[Operator Instructions] Our first question will come from the line of Shar Pourrezza with Wells Fargo.

Eric got a little technological this morning. It's throwing me off. So hope it's working. It's working great. It's working great. So just, Jim, on the 2030 free cash flow per share outlook of $24 million, obviously, there's a disconnect between sort of the forwards and fundamentals, especially if all the battery capacity goes away with the bad projects post '28 alone in ERCOT. Can you just comment on what is embedded in that number from a market perspective? What inorganic assumptions are in there? It seems like maybe there's some placeholders for that. And is there continued buybacks in there, et cetera. So maybe just elaborate on the $24 because that's a lot of growth.

Yes. I will start, Shar. First of all, we have seen some depression in ERCOT forwards. Obviously, the '26 settles and even where '27 is trading, I think, is a function of some of the slower load growth that we've seen, and we reflected that in our charts, still robust growth, but not at the levels that we would have expected. When we do this analysis out to 2030, we're still reflecting kind of the market forward. So we're not making an assumption that there's going to be some big recovery in ERCOT. However, we think things will tighten if the load starts to get hooked up, which we think Texas is going to be in a position to do it. So there's not an assumption here of some recovery, Shar. I think that is -- that is something that we would expect to get more clarity on as we work through the details with PUC and ERCOT and obviously, this new administration for the state.

And then I'll let Kris comment here, but then we always make choices about capital allocation. We like the growth projects that we've already got announced. We still think there are growth projects to come that we haven't yet announced. But this assumes that if some of those growth projects don't come, we could lean in a little bit harder on the buyback program because that's always an opportunity for us. Clearly, where we're trading, we think that's a pretty nice return for us to go in harder on the buyback. But we also think there's great growth opportunities on top of that. That's not assumed in here. So you might want to just share a little bit about the magnitude of how we're thinking about this capital allocation that drives the $24.

Thanks, Jim. Thanks for the question, Chad. I want to start by reiterating what as Jim said, even at current market curves, we continue to project that we are going to produce a significant amount of cash on an annual basis. So what is in here, as Jim said, what we start with is the $1 billion a year in share repurchases of $300 million a year in dividends. And then we only have the spend that we have from projects and growth projects that we've already announced. We have the spend and the earnings from those, but we haven't done a pro forma. So for instance, on the growth projects that includes the Permian peakers and the Nuclear uprates in PJM. But the nuclear uprates, the spend is happening during this period, but we aren't getting the earnings until after the period, and we're not bringing those earnings in -- so it's really just how we see the earnings going through 2030.

Even after you account for all those commitments that we've announced and we have committed to we still have roughly $2 billion a year to allocate, and that can go to additional share repurchases or growth projects. For the purposes of this chart, we've made a simplifying assumption that will allocate that to share repurchases. Of course, right now, the Board has just recently upped the authorization, so approximately $500 million of that is already allocated to share repurchases. But it's also important to note that, that number you assumes, as I said in the opening remarks, assumes that we are the leverage ratio that's well below what would be required for BBB flat and BAA2, -- it's actually more approaching BBB+ and Baa1.

So after that, simplifying assumption, again, to be clear, that's $2 billion extra per year. So we're effectively in this chart, assuming a roughly $3 billion a year of share repurchases. And as Jim noted, we would expect to beat those returns. We're hoping to find growth projects that will meet the returns that we're showing from share repurchases.

Got it. Perfect. And then just lastly, it is good to see the upsized buy back the $1.5 billion. And obviously, you've got cash flows there to reallocate to additional buybacks. But I'm just curious, like you guys closed Cogentrix, you have LOTUS is there opportunities to potentially look at any single noncore assets within those deals to capitalize on the delta valuation delta between the public and private side? Or are you comfortable with all the assets that you've acquired between the 2 Cogentrix and LOTUS.

Sure. We -- first of all, we like the portfolio a lot. We have agreed to sell Rumford. So there's going to be a divestiture that's just part of how we were able to get to the close. We had sold some other assets. You've read about recently the notable 1 in Maine, Casco Bay -- we will continue to look at the portfolio, but we think a core competency of what we bring to the table is the integration and the synergies and the operating performance improvements. And we think on the Cogentrix portfolio, we think there's upside even what we've put into this forecast. It takes time to get to that work. So it isn't just day 1 synergies, which we did capture, but the ongoing improvements.

We also like the flexibility of these assets. This is a heavy CCGT portfolio. There are also some peakers in it. We think as renewable penetration continues throughout the country. You're seeing these assets get called on more. And you see that even in the appendix where you look at the CCGT capacity factors across our fleet. They're all up in Q3 relative to prior years. So we've been bullish on dispatchable. We've been bullish on flexibility. So I think we're going to continue to see that not getting the value in today's market, but we think it's going to show up over time. So as a long-term owner-operator, we like the fleet.

Your next question will come from the line of James West with Melius Research.

And James, quick 1 for me really to address kind of the elephant in the room, I guess, from the suite with the midterms and what happened there. I'd love to get your thoughts on kind of Texas and what could unfold, also PJM, I mean, our view is not consistent with what the market sell off. Showed, but you're obviously in conversations with leadership in both markets. And I just wanted to get your kind of high-level thoughts on -- has there been a real change on kind of the more so on the data center development side, which is what seemed to be on the put out or in advanced manufacturing.

Yes. James, thank you for the question. So a couple of thoughts there. Before the elections, in many markets, we were seeing concerns about data centers in the way that the public was reacting to the pace of development, who had control over those decisions what impact could it have on electric prices, water, all of that. And that was a bipartisan issue. So I think that issue was already showing itself and it obviously was a topic in the midterms and probably not the single most important topic, but it was a topic for the midterms. I believe in any of our markets that we're in, moving past this election is a positive just in terms of being able to understand what's at stake and now how do we move forward.

Clearly, most states we're operating in have had changes in leadership in terms of party leadership with some frequency. And Texas is not. So this was a bigger shift for Texas, no doubt in terms of the pattern -- but the key messages that have come from Governor electing a hose have been actually very similar to some of the key messages that Governor Abbott had expressed and, frankly, consistent with messages we've been expressing, which is -- there has to be some guardrails on this development. The queues are overstated. The public is concerned. When they talk about 75% of people don't want a data center developed in their community, I don't even know what the question really means because the community might mean next door. But if they're developed by our power plant like the 1 that we're developing next to our Comanche Peak plant, there was a town hall held this week.

With Amazon and members of our site, and it was very well received. That's a data center going next to an industrial facility, obviously, our nuclear power plant. Public, I don't think has a strong reaction against data centers being next to power plants. The other thing the public struggles with is, it's different to have 1 data center somewhere in the area. But if you think 10 are coming to your area, which is what happens with these overstated Qs, you get a reaction. So I think we're all on the same page with respect to raising the bar fitting the queues and getting to the real projects that are going to move it forward. And Governor like Dinahosa on new circuits and some of her early commentary wants to see Texas grow.

She just wants to see the benefits of that growth be evenly distributed as do we. So I actually view where we sit today is just clarity of some sort not having it tied us directly to an election season is going to be beneficial to taking some of the noise. I think it's been overdone, as you mentioned, James, in the last couple of days. That doesn't change our outlook. In fact, if anything, you heard Kris talk about the back and leaning in there, it can create opportunities for Vistra. Our customer conversations, and I'll give Stacy a chance to comment on a later question because I'm sure we're going to get it. Customer conversations have been consistent throughout. And I actually think this is going to provide some opportunities to bring some of these to completion. So overall, we're positive on the trajectory of where we can go as it relates to our business opportunities.

Next up will be Michael Sullivan with Wolfe.

I want to appreciate the kind of updated free cash flow per share outlook and understand there's a bunch of assumptions. But maybe can you just help us with thinking about kind of the core power price outlook there, like just given your hedge near-term ERCOT's in pretty steep contango. So just thinking about the puts and the takes of what power prices are doing to that outlook as you step from '27 to '30.

Yes. And Michael, I was trying to maybe I wasn't as clear as I needed to be. We are not making any assumptions about power price recoveries. It reflects the curves as you see them as noted in our hedge profiles and just kind of stepping that forward based off public available information. Now we think the near term on this is really going to be a function of how does Texas get back into gear in terms of hooking up load. We know there is load that's approved to energize, but it has not been allowed to energize. There's been the audits. As you know, there's been some permit holds at TC.

We think by the long term, the '29, '30 period, we think we still end up in a similar place for ERCOT. So I think it's more about this near term where we see a little bit more of this pricing pressure there's a chance for ERCOT to even go better than where the curves are even out even though it is contango to go better than that from a pricing standpoint if we kind of get our mojo back, and I think we can.

And so -- but we're not making any special assumptions as it relates to get to that $24.

Okay. Great. That's very helpful. And then I just wanted to ask the latest on the contracting environment for you all, given what we've seen from some peers like on the nuclear front, we've seen Constellation continue to leverage upgrades. You have a couple of those still available yourself and then just today, some news on gas finally from someone. So just how you're thinking about puts and takes there.

Sure, sure. Michael, I'm going to let Stacy jump in because I'm going to send it to the person who's doing the bulk of these negotiations on a daily basis. And thanks for your question on that.

Yes. Michael, thanks for the question. We -- we've said this for a while, but we just continue to see interest in Vistra's assets and Vistra's capabilities, and we're involved in multiple conversations around our existing assets around new build. We continue to just see a large appetite for these kinds of projects. And I think you've continued to see the hyperscalers, as an example, talk about increasing their CapEx spend. So there certainly is no slowdown on that front. As typical, we're not going to comment on the timing of new deals, but we're confident in our ability to execute additional nuclear PPAs. We still have not contracted Fever Valley. We still have not contracted the second part of Comanche Peak. There's an upgrade potential at Kamunsu peak as well.

So we have a lot of megawatts still to contract on nuclear we're in a number of conversations about our existing gas plants as well as new gas build, and we feel confident on our ability to execute there. And in fact, in this quarter, we announced a PPA for our existing Odessa gas plant in Texas. So I think we've demonstrated an ability to execute on existing gas plants, and we believe there's more to come on that front as well. The load interconnection process does continue to be a timing constraint on particularly the gas asset projects because for those types of PPAs, the customer guys typically want a grid connection. And so that's why we continue to advocate for spinning the Qs and raising the bar on the load interconnection queue so that we can begin to get approval for load interconnections that would support additional gas plant deals as well.

So we just feel really good about our opportunity set. It's busier than ever. And it allowed -- the fact that we have so many opportunities in our pipeline allows us to also be selective about the counterparties that we work with, about the projects that we work on. And so we really prioritize the opportunities that we have the best chance of execution on as well as the ones that meet, of course, our return targets and our economic objectives. So we feel really good about it. We're excited about the months and years to come to serve these customers.

Yes. And Michael, I'm just going to add real quick as a supportive point to what Stacy is saying is that over the course of the year, there's also been a lot of concern about how will the PJM rules evolve? And is that going to limit our ability to do contracting with existing or even co-location we've seen through time, these things never play out at the level that the initial concern is. So there's usually an immediate reaction, and then we work our way through it. I think that's happening right now in PJM -- and so I do think that the opportunity set with existing assets, even though it does still take time to get through the study process, but is trying to accelerate that as well.

So I do think it's been choppy. It's probably choppier than anybody would like. But when you see that settle, the dust settle, the opportunity set continues to be clear and that's why we're bullish about being able to bring some of these across the finish line.

Your next question will come from the line of Rinny Singh with Bank of America.

I guess to just add on to the previous question. As you think about these customer negotiations, and you mentioned that greater interconfection is a key constraint. How do you think about the economics for them and then the willingness to be flexible or at additionality, What's, I guess, the bars that and the conversations you're having on that front?

Yes. Thanks, Randy, for the question. So these customers are hyperscalers as well as the model companies and other data center and developers. They're all somewhat unique in their priorities and their wishes for the types of projects that they want to work on. So it's really hard to just group it all into 1 bucket. But I would say -- they all -- 1 consistent theme is they all really do want to be on the grid as quickly as they can. But I think the grid interconnection process across our markets, which has been slower than anyone wants it to be, does -- has resulted in customers expressing a lot of interest in Bridge solutions.

And so you will see and you have seen projects that will start with a behind-the-meter solution until there can be a grade connection. And so that obviously is an expensive -- a more expensive solution for these customers than just starting with the grid connection. And so they certainly are showing a willingness to pay for that. From Vistra's perspective, any project that we do really just needs to -- needs to meet our return thresholds, which we've expressed as mid-teens returns or higher, and that's what we go after, and that's what we've been able to achieve and better -- so that's how we think about the economic opportunity there.

In terms of flexibility, the customers have really come a long way in being willing and able to consider being flexible we were very pleased to see that FERC struck down PJM's Ira's proposal, which was going to require customers to bring brand-new generation capacity megawatt for megawatt for any new load that they brought. And we consistently said over time that that's not the right way to approach the flexibility question. These customers are willing to be flexible. But as FERC recognized discriminating against existing resources on the grid by requiring a strict BYOD policy is not really the right way to encourage resource adequacy and reliability on the grade today.

And so we think the elimination of the IRS proposal really has given customers the additional clarity that they need to move forward with projects where -- they have a variety of options. They can bring some additionality with new generation. They can choose instead to just bring backup generation and connect to an existing plant so that they can be available during emergencies for the grid, which is what Amazon is doing at Community Peak. They can also choose to just curtail their load. And so they -- those choices should be theirs to make and the markets, in our view, should support the customer choice as to how to make sure that they can be flexible and support the grid during times of need.

Very helpful. And then I guess, can I just ask on the Texas legislature. Jim, I think you mentioned that all these governors and they just kind of want these deals to be done right in a respectable way and benefiting the community. So as we get to the Texas legislative process, what do you think it's kind of going to be addressed? And what do you expect, I guess, to see to, I guess, get to this more realistic view of what can actually come on the grid?

Yes, Rinny, thank you. I think well before we even get to the lead session, there's a process underway, which we expect will continue, which is the audit process that Governor Abbott started, and there's been some additional RFIs issued to large loads to complete the questions and complete the information being sought -- whether that leads to some of these projects dropping out of the queue or not, I don't know. But the intent, I think, of that audit and ultimately, the review that's being done is to make sure that complete applications are being used to then establish this back 0. Obviously, the permit hold that's been in place. We expect in what it was initially put in place that it might be lifted as part of the sort of mid-December timing for completing the audit work.

Again, back to the comments we've made on this call and previous calls, we would be comfortable if the bar continues to be raised on projects so that doing projects the right way is rewarded and that those projects get higher allocations and they get moved to earlier in the interconnection process. So even before we get into the session, I think the business as usual, could potentially thin some of this by this mid-December time frame. I think the 765 kV projects are going to continue to move forward. I think that's important because that's part of the backbone of being able to energize some of the batch 0, not all of them, but some of the bat 0 projects.

I think if the 765 keep moving forward, and I think the third east-west line has a chance to be approved here by the end of the year by the PUC. That now establishes the foundation for the load being able to be hooked up and served with existing generation on the system as some new generation continues to be built out. You're then going to want that load to come on to the system and share in the cost of the 765. And that's also part of the focus of the Public Utility Commission is to create a tariff that large loads would be committing to that would have some minimum take requirements and a duration requirements so that costs don't get pushed on to residential customers -- so there's actually a lot already underway with the PUC and ERCOT that I think is going to set the stage heading into the legislative session that I think will give some comfort to lawmakers and the governor elect that the PUC and ERCOT are thinking about some of these issues.

And then what the legislature ends up deciding to do is hard to say. We don't have a crystal ball. Obviously, with sort of a split house incentive it's unclear what legislative environment we're going to actually be in. But what I like about this issue is there's not really that much of an argument happening between Republicans and Democrats on this issue. This issue has general concern for both parties to get it right. And so whether they let PUC at ERCOT more manage that or they decide to be a little bit more hands on during the legislative session I think it's too early to call. But the direction of travel is to raise the bar and do high-quality projects. And we're supportive of that. And I think the legislature is going to look for ways to add to what the PUC and ERCOT are doing if they don't think it's sufficient. But we're supportive. We're supportive, and we've been supportive of raising the bar.

Your next question will come from David Arcaro with Morgan Stanley.

Maybe a little bit following on that line of questions. I was curious, to the extent there is any effort to move forward with something like a moratorium on data centers next year in Texas. I was wondering how you're thinking about whether there could be any risk to the Comanche Peak contract and construction that's going on there? And maybe more broadly, whether that could impact some of your efforts in the batch 0 process if there's potential risk of delay or push out there?

Yes, David, I'll tell you, if Texas decides to just go down a moratorium, it would be problematic, I think, for lots of customers, not just our Comanche Peak project. I don't know what form that would actually take. So that would take some potential legislative activity, I think, to have something that would create that type of a significant limiter -- as we noted, construction started with Comanche Peak, and we expect high-quality projects to move forward. So I think it's more about raising the bar that I think the conceptual moratorium. I mean you heard the governor elect say, she want Texas to grow. The moratorium, I think where this language has come in, obviously, even audits were kind of viewed as on moratorium.

Any time you've got to study something in clear a bar, it does take some time to do that. But I have not heard -- I have not heard the governor elect and I haven't heard the legislature say they do not want Texas to have any of this load. So clearly, if someone changed their mind and the whole legislature decided to go along with it, that would be difficult, right, for us as a power company, but certainly difficult for people that are bringing hundreds of billions of dollars of capital to the state of Texas. And I just think that is where the conversations just kind of continue to sort of faster a little bit out of concern.

That is not the conversations we're having with leaders, and it's not the conversations we're having with members that are returning for this upcoming session. So I just don't entertain that, David, because I really just think that's a bridge too far from where the dialogue is at this point?

Got it. Yes. That's helpful. If that makes sense. And then maybe shifting over to PJM. I was wondering if you might be able to give your latest maybe progress in thinking around the RDP and some of your bilateral efforts there. What's -- what are the prospects for those? Have those changed as the timing has shifted kind of into next year?

Sure. I'm going to let Stacy comment on that, David. I think the -- I'll just say that at the highest level, we've been supportive of the emphasis on bilaterals and markets moving towards contracting for capacity and energy and not being as dependent on a single clearing price of a centralize auction. And I think the pushout of the RVP a little bit from a timing standpoint can help facilitate some of those bilateral conversations. But even if it's not to new projects, just what we've already done with Meta what we're doing with other conversations is contracting even with existing. I just think that starts to put the onus on the load serving entities like Vistra.

And I think that's a responsibility that we accept in serving customers from residential to large commercial industrial and data center. So all of that from a theme standpoint, we're supportive of. And Stacy, I'll let you comment about how we're thinking about the bilateral process.

Yes. Thanks for the question. We continue -- we do continue to have a lot of bilateral discussions in PJM. As I mentioned earlier, I think the FERC striking down the iris proposal actually was helpful in that it kind of removed 1 layer of uncertainty for customers about how they might want to contract and kind of what the rules of the road might be around that. And so I think that was helpful pushing out the RBP to next year is also helpful because it just gives more time for those bilateral discussions to really result in agreements. And also more time, frankly, for anyone who's thinking about building new generation in PJM to understand what the network upgrade costs might be and the generation interconnection cost might be, which was a concern we had expressed about the timing -- the previous timing of the RBP in September is that there just wasn't a lot of certainty about what those costs are.

So it's hard to build into your contracting process, you don't know what those costs are. So I think all of that is positive. I do think that customers still have a big incentive to do bilateral contracts in relation to the RBP because, as you know, if you have a bilateral contract, you can present it to PJM as a means of reducing the ultimate procurement target for the RVP and therefore, reducing a customer's cost allocation responsibility as well for the RVP. So I think we'll we're optimistic that we'll see a number of bilateral contracts in the market that are presented to reduce the ultimate RVP target. And frankly, the smaller the target is the better because it means that the bilateral contracts have really satisfied the forecasted need as opposed to using this kind of bifurcated RBP process, which, as a matter of principle, we typically wouldn't support, but we think it's going to end up being small enough that it mitigates that risk.

So we continue to have active conversations about uprates and other opportunities across our fleet as a means to reduce that RBP ultimate target. So we feel good about that.

Next question will come from Paul Zimbardo with Jefferies.

I appreciate it. And apologies if I missed it earlier. The timing change on Helix investment potential, if you could discuss that a little bit. And I know you've mentioned a few times the mid-teens target returns, and I know IRRs are not the same as free cash flow yield, but just using your $24 in the stock price, you get to a number higher than mid-teens on buying back your stock. So just curious if kind of your return thresholds have changed with the stock price.

Yes. On the second one, I think we view the $1 billion a year, obviously, that's something that we view as commitment that we've made. Obviously, it's not set in stone, but I would say it's pretty close. We continue to weigh all projects against our share buybacks. And so as our stock price has come under has been challenged the last couple of days. I mean that moves the needle. But we also have a lot of projects, as we said in the prepared remarks that are with existing assets that have little cost for us and have extremely high returns.

Some of the deals that we've struck have almost 0 are basically 0 cost and we get premium on those transactions. So we're going to continue to look at opportunities. We're going to still try to stay relatively balanced, but we do compare all opportunities against share buybacks.

And Paul, what I would add is these customer conversations they can be 6 months, 12 months in duration. Our stock might move $30 in 2 days. We're not going to work with long-term customer relationships and negotiate around 1 or 2 a megawatt hour trying to just react to the stock buyback opportunity in the moment. This is a franchise, and we have a reputation, and we're going to build a book of business that will also be a contracted book of business, which I think also lowers the discount rate ultimately. So it's a little different in Horizon to be thinking about it relative to our free cash flow yield and a buyback at a point in time. Having said that, you can bet that's the conversation we have as a management team and with our Board, and that's why the board was comfortable authorizing a larger share repurchase to take us through that 2028 period because it's not lost on us that as we think about what are we going to do to build that next incremental value the hurdles do rise when you have this kind of an alternative for the cash.

So it's -- there's a tension there. The last thing I'll say is on Helix, that's really about a draw schedule. So Helix is not about us just pushing cash to them to sit. It's what are the projects that Helix is driving where they're going to have a capital call. We're working with Helix on a number of projects. So we're just assuming that from a timing standpoint, it's going to fall more into next year than this year. But that's not surprising, just given all the things we've been talking about how the political environment has slowed down some of the activities in any of the markets really, and we see that picking back up, and that's why we moved the capital assumption.

Okay. No, that's very helpful. And I know it's a tougher 1 to answer, just given the volatility I appreciate that. And then the last one, just to check in. I know you kind of -- I don't want to put words in your mouth, it sounds like you acknowledge maybe softer power pricing dynamic in Texas in the near-term years. Does that influence kind of the hedging profile that you pursue, whether kind of more hedges in -- I know you have a lot in Jan 7, but maybe a '28, '29.

It does, Paul. In fact, with the 78% hedged for 28, we are much less hedged in ERCOT than the 78%. So we do not look at the curves for 2028 and feel a need to be moving a lot of power at this point in time. And I do think, as we see what the pace of play is for hooking up load in 2027 and seeing what the pent-up demand is because the utilities are reporting on their calls to pent-up demand that they see. Some of it is actually not AI-related. It's manufacturing, it's government, it's oil and gas. If we start to see that pick up pace, then I think you might see some response in 2028, and we're certainly more open in 2028 in ERCOT than we are in the other markets.

Our next question will come from Jeremy Tonet with JPMorgan.

This is Gatan Reddy on for Jeremy. I think it's been hit on a couple of times, but I just wanted to ask, PJM versus ERCOT, is there any change you're seeing in terms of the customer interest, 1 versus the other? And if that's I guess, just broadly how that's evolved post election.

Well, I'm going to let Stacy take that one. It's a lot to digest just postelection. But maybe leading into the election and post election, Stacy, you provide some context on the relative attractiveness.

Yes. Look, Texas continues to be attractive to these customers. Any given day, of course, they're looking at the political environment. They're looking at some of the guardrail proposals and they're trying to decide what the risk profile is across these different markets. But frankly, almost every market in every state that we're operating in as well as states we're not operating in, where they may be pursuing projects has been looking at these similar types of guardrails. So across the country, states and local bodies are looking at things like water usage and land usage and tax incentives.

So I really think I know the election was a surprise to some in Texas, in particular. But I really think if you take a step back, there's not a higher risk profile in Texas versus other places that are considering the same types of guardrails. And in fact, we believe Texas continues to be 1 of the easiest places to get things built and will continue to be so in the long run. So leading up to the election, we did not see a change in customer behavior of Texas versus PJM. We just got questions about both, and we continue to get questions about both. Ohio, as an example, had a change of administration as well, and they're in PJM.

So again, I don't see Texas as standing out as peculiar in this regard. And I think customers across the country are just looking at their opportunities, looking at number one, speed to power -- number two, where can they be welcomed into the communities. And number three, how much political support are they going to get. And so I think that continues to be the case, and everybody is trying to assess their alternatives. But for Vistra, the good news is we operate across almost 20 states in all the competitive markets, and we have opportunities in all of those markets to serve these customers. So we really try to follow their lead and also help them navigate some of these political and regulatory hurdles that we've all been dealing with.

I think the fact that we had the election and it's now over and the results are clear. As Jim referenced earlier, is actually a help to us and it will be a help to us in getting a lot of our projects across the finish line because we can now kind of understand a little bit more about what the rules of the road are. But to have -- we'll continue to have regulation that comes into play. And the kinds of customers that we deal with, and this is kind of with reference to my earlier comment about us being able to be a bit choosy about the customers we work with the customers that we work with, they're going to clear this higher bar that policymakers are putting into place. And that's 1 reason we advocate to raise the bar because our projects, like the 1 we have with Amazon, the 1 we have the PPAs that we have with Meta.

Our projects clear those -- all of those bars by far. And so we're not concerned about the regulation. We just want certainty and clarity to continue to come and then our projects will be able to move forward.

This concludes our Q&A session. I will now turn the call back to Jim Burke for closing remarks.

Thank you, everybody, for joining. I especially want to thank our Vistra team for their continued execution and service to our customers and communities. Once again, we're going to welcome the Cogentrix team and for our investors, we know this is a very dynamic time, and our team is very focused on delivering. We do appreciate your interest in Vistra, and we hope to see you in person soon. Have a great rest of your day and a nice weekend.

The call has concluded. Thank you for joining. You may now disconnect.

Good day, and welcome to the Vistra Corp. Second Quarter 2026 Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Eric Micek, VP of Investor Relations. Please go ahead.

Good morning, and thank you for joining Vistra's investor webcast discussing our second quarter 2026 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's executives will be available to address questions during the second part of today's call as necessary.

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 explain 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. Good morning, and thank you all for joining us today to discuss our second quarter 2026 results. We remain on track to achieve another record result in 2026 as the business continues to perform very well. Within the geographies we serve, we are observing a structurally improved demand environment with both PJM and ERCOT hitting new all-time summer peak loads in July. This recent experience reinforces our focus on operational excellence, delivering power to our customers in a reliable and safe manner when it's needed most.

Data center development activity remains strong, and we continue to be in active negotiations with large load customers as they seek to meet their power needs both in the short- and long-term planning horizons. With our large, diversified and flexible fleet, our development capabilities, innovative retail franchise and experienced commercial team, we believe Vistra is well positioned to deliver on these opportunities. The activity level we see today reinforces our view that the long-term expected improvement in power market fundamentals is underway, and we remain excited about the growth opportunities ahead.

Turning to Slide 5. The team has worked hard across the business, building on the first quarter momentum to deliver strong first half results for the company. We achieved second quarter adjusted EBITDA of nearly $1.8 billion compared to second quarter of 2025 of approximately $1.35 billion, representing an over 30% increase year-over-year. At the core of these results are the 7,000 team members across the organization whose close collaboration and consistent execution across generation, commercial and retail highlights the One Team culture that is central to our success and reflects the strength of the integrated business model.

Operationally, the team successfully completed our annual spring maintenance cycle positioning the fleet for strong performance through the critical summer period. To provide some perspective, the nuclear fleet successfully completed planned refueling outages for 3 of our units, and our gas and coal fleet successfully completed 92 planned outages in preparation for the summer run. This preparation was evident during the recent heat waves in Texas and PJM where we achieved commercial availability of over 97% across the entire fleet.

Moving to the outlook. We are reaffirming the guidance ranges for 2026 adjusted EBITDA and adjusted free cash flow before growth and maintaining the range of potential 2027 adjusted EBITDA midpoint opportunities. Kris will cover this in more detail later.

Finally, we are also pleased to announce our partnership with KKR, NVIDIA and the Kuwait Investment Authority to be a founding investor in Helix Digital Infrastructure. Helix will focus on combining power solutions for data centers with land and other digital infrastructure, creating a rack to grid one-stop shop solution that customers increasingly prefer. As part of this solution, the Helix platform will seek to leverage our deep expertise in power markets, our proven commercial track record and our generation capabilities to deliver tailored energy solutions.

Vistra's role will be twofold. First, as a founding investor, Vistra will commit up to $1 billion to be invested over time with any amount in excess of $500 million, subject to the achievement of certain milestones. This aligns our participation in what we expect to be a leading digital infrastructure platform. Second, Vistra will serve as the preferred power partner, allowing us to participate in Helix development projects, either through contracted newbuild projects or through new contracts with existing assets. We believe this structure creates an additional avenue for growth and broadens our participation in a thoughtful manner as the digital economy expands.

And importantly, we retained significant optionality to develop projects with Helix where it makes sense to do so while continuing to develop projects on our own as well. We're excited about the potential this platform brings to our company, and look forward to working with the team to execute on this strategy.

Turning to Slide 6. As we have outlined on previous calls, we see a structurally improved demand environment in power markets that supports our long-term outlook. We believe annual load growth of at least 4% to 6% in ERCOT and 2% to 3% in PJM through 2030 remain reasonable estimates for these markets. In July, we've also seen new all-time peaks in load in both PJM and ERCOT with PJM hitting over 168 gigawatts and ERCOT hitting over 91 gigawatts.

While data centers will be an important driver of load, particularly in 2028 and beyond, we believe a significant component of this growth is from sources other than data centers. This includes industrial reshoring, increasing electrification, population growth, particularly in Texas and broader economic expansion.

Importantly, despite the strong level of growth, the performance of power grids during these recent summer peaks demonstrates that the power grids in our key markets are able to meet this growing demand. As a diversified company with multiple forms of generation across the country, Vistra is well positioned to benefit from strengthening fundamentals across markets. Although recent demand trends, combined with strong weather, have driven strength in PJM forward pricing, the power price environment at ERCOT has softened recently. We view this as normal with variability expected as load additions are lumpy and weather impacts can change year-to-year. We believe long-term growth fundamentals remain on track across our key markets, and our team is committed to delivering on our strategy given this growing load environment.

This quarter has demonstrated strong execution across our business. Not to be left out of the discussion, we have been very active on many fronts related to the regulatory process and advocacy in our key markets. While there is still more to finalize, overall, we are encouraged by the direction of travel. I kept my opening remarks brief, recognizing that we will have an opportunity to provide our perspective on this topic in Q&A.

With that, I'll turn it over to Kris to provide more details on our second quarter results, our outlook and our capital allocation.

Thank you, Jim. Turning to Slide 8. Vistra delivered second quarter adjusted EBITDA of $1.767 billion, representing a more than 30% increase compared to the second quarter of 2025. This strong performance was driven by contributions across both our Generation and Retail segments, reflecting the benefits of our integrated business model and comprehensive hedging program.

Our Generation business delivered approximately $994 million of adjusted EBITDA in the quarter compared to approximately $593 million in the second quarter of 2025. The year-over-year improvement was primarily driven by favorable hedging activity, resulting in the company's average realized prices being approximately 5% higher on a per megawatt hour basis compared to the same quarter last year.

Higher capacity revenues in PJM, optimizing the run profile of our flexible gas generation assets to capture margin opportunities, the restart of Martin Lake Unit 1 and contributions from the assets acquired from LOTUS in the third quarter of 2025.

Retail also had a strong quarter, contributing approximately $773 million of adjusted EBITDA, compared to approximately $756 million in the second quarter of 2025. As a reminder, the second and fourth quarters are typically the strongest quarters for retail given seasonal timing of margins.

Turning to Slide 9. We are reaffirming our 2026 adjusted EBITDA guidance range of $6.8 billion to $7.6 billion, and our adjusted free cash flow before growth guidance range of $3.925 billion to $4.725 billion. Given our performance through the first half of the year, we are confident in our ability to deliver at or above the midpoint of these ranges.

Looking forward to 2027, current ERCOT forward curves are meaningfully lower than they were on October 31, 2025, which formed the basis for the 2027 midpoint opportunity range we provided on our Q3 2025 earnings call. However, due to several offsetting factors, including higher prices in PJM, the support from our comprehensive hedging program and the downside protection afforded by the nuclear PTC, we are maintaining our 2027 adjusted EBITDA midpoint opportunity range of $7.4 billion to $7.8 billion. As a reminder, that range excludes any contribution from the pending acquisition of Cogentrix and the premium above market we expect to receive under the long-term power purchase agreements at our PJM nuclear sites with Meta.

Finally, turning to Slide 10. Our forecast indicates that we will generate more than $10 billion of available cash in 2026 and 2027. We have been opportunistic, yet disciplined in allocating this available cash. We have allocated approximately $3 billion to our equity holders in 2026 and 2027 through share repurchases and common and preferred dividends. Notably, our share repurchase program continues to create significant value. Since initiating the program in November 2021, we have retired approximately 171 million shares at an average cost of approximately $38 per share. We currently have approximately $1.2 billion of share repurchase authorization remaining, which we expect to exhaust no later than the end of 2027.

I am also pleased to report that with the amount of repurchases through August 3, we have returned over $6.5 billion to our shareholders through share repurchases since initiating the program in late 2021, well ahead of the target we communicated at that time of at least $6 billion through year-end 2026.

Pursuant to the opportunistic design of our 10b5-1 trading plan, our repurchase activity through July continued to run ahead of pro rata pace given the elevated free cash flow yield indicated by our share price. We will continue to evaluate our allocation to our shareholders with the flexibility to allocate additional cash to share repurchases in 2026 and/or 2027 should market conditions warrant.

In addition to allocating significant amounts directly to our equity holders, we also expect to allocate approximately $4.5 billion to $5 billion to accretive growth investments, including the Cogentrix acquisition, the development of the Permian gas units, the PGM Nuclear uprates supported by power purchase agreements with Meta, the development of the Oak Hill 2 solar facility supported by a power purchase agreement with a large investment-grade counterparty and now our capital commitment to Helix. Although we cannot predict the amount or timing of any potential capital calls by Helix, we believe it is prudent to allocate a portion of our available cash to cover any such requests.

Even after these significant allocations directly to our equity holders into growth, we expect approximately $2 billion to $2.5 billion of additional cash available to allocate through year-end 2027. As always, we will be disciplined in how we allocate this remaining capital, balancing return of capital to our shareholders, strategically investing in attractive organic and inorganic growth opportunities that meet our mid-teens levered return threshold and further strengthening our balance sheet.

Speaking of the balance sheet, we have achieved investment-grade credit ratings from 2 of the major credit rating agencies. However, we don't plan to stop there. Our long-term goal is to achieve mid-investment-grade credit ratings at all 3 major credit rating agencies. We believe we can achieve these ratings primarily through disciplined EBITDA growth, but we will also consider allocating some of our available capital to additional debt paydown as necessary or appropriate. We believe mid-investment-grade credit ratings would allow us to maintain financial flexibility to continue to opportunistically grow our business and would position us well for long-term value creation.

In closing, we are pleased with our second quarter results and the momentum we have built through the first half of the year. We continue to see load growth materializing in our primary markets and we believe our integrated business model positions us well to deliver significant value to our stakeholders. With that, operator, we're ready to open the line for questions.

[Operator Instructions] The first question today comes from Shar Pourreza with Wells Fargo.

It's actually Constantine here for Shar. I just wanted to get your view on Texas, the data center audits potential delays at 0. Have there been any commercial or counterparty concerns that you've heard just from existing or potential customers. And as we kind of get through this uncertainty, especially with the curve impacts that we're seeing, is there any kind of pressure on near-term outlook mitigation strategy for hedging, especially for '27, '28 portfolio is a little bit wide?

Yes, sure. There's a lot there. I appreciate the question. Let me -- let me start by framing it first as we put out a load forecast a little over 2 years ago in May of 2024 with an expectation of 115 to 120 gigawatts of load in ERCOT in 2030, that's still what we're projecting. So from a long-term fundamentals of the business, we haven't actually changed our forecast for ERCOT, even though the queues have certainly grown. And I think that's part of the challenge of what policymakers are balancing is I think the concerns around generation supply are overstated when you look at a lot of the media reporting. And I think the demand is overstated when you look at the interest that's being expressed in these queues.

So policymakers are saying, we need better information to make decisions because they're going to prioritize reliability and affordability for customers, and we support that. We fully support it.

So I do think in the near term, I think the audit is going to probably pause some of the reviews for a couple of months. We don't know exactly the time frame. The key project that we have in our portfolio at Comanche Peak, we're looking to energize at the end of 2027. We don't see that being affected at this point, and we support the conversation that the governor is wanting to have with the data center community to make sure that Texas does this right.

So I don't think it's a concern in the intermediate and long term. I think, and we'll talk, I'm sure, at some point in the Q&A about the forward pricing. But what you see right now is the grid has more supply on it. This load that we expect to hook up, we expected to hook up in the '27, '28 time frame. So 2026 being soft is not that big of a surprise to us. That's also why we do the comprehensive hedging that we do. So I'd like to see the queues call at the end of the day, I think everybody, if we raise the criteria and raise the bar on what is being proposed from the data center load an ERCOT Q that has at times been expressed is over 400 gigawatts. We think it's somewhere in the 12 to 15 gigawatts by 2030. So when you have numbers overstated by more than 20x, it causes problems for policymakers.

So we support the thinning of the queues and getting the better realistic decisions to make sure we can all move forward.

Excellent. Appreciate that. And then maybe just shifting to some of the commercial contracts. There have been multiple data points recently from peers around new projects -- project, IRR, pricing, margin expectations on existing gen. Do you have a view here to long-term contracting still focus on the new build cost kind of in that 90% range? Or is there room for clean premium speed market, et cetera?

Yes. There's a big spread. Obviously, that's one of the ironies of this discussion again from a media standpoint. There's a view that power prices are too high, they need to come down. Depends on what you're measuring off of. Year-to-date, ERCOT wholesale prices have been $30 a megawatt hour. They were $30 a megawatt hour last year. $30 is not going to get new stuff built. That's part of the dilemma.

I think even when we talk about PJM and talking about a cap on the RVP of $555 million that might get some things built, but there's still a lot that may not get built if you're looking at that as a hard cap. Now there's a range with that $555. So some things can be above it, if something is clear below that. But in our role as investors and also owner operators, the price of equipment, in some cases, has doubled, if not tripled. So what was an acceptable price to build that a year or 2 ago is no longer an acceptable price.

So I think the challenge is going to be from a contracting standpoint is when the customers, the large load customers, they are in contracting with existing and they are in contracting at a premium with existing because it's still a discount to what new build would require, whether you're doing a bilaterally or you expect to do it on your own. So as a behind the meter or Island is. So there's a big spread there. That's why I think our large base load position -- there's a big spread between what we're currently receiving in a day ahead spot-type market versus what new build looks like.

So we still see that interest level from the customer base. And I think you're going to see customers still contracting for new because there's areas of the country they want to be, and they're looking for speed and there's going to be customers that are contracting with existing. So that our views on that have not changed. And as far as margins and premiums, our views on that haven't changed. I think the cost of new build has continued to tick up. If there's anything that's changed, that's kind of been where we've seen the pressure.

And the preference for Vistra is still kind of the hybrid solution. So make some new plus existing capacity for this sort of deal?

Yes. Look, we have been a bit of an all of the above. It really is customer driven. And some customers are going to put more of a preference on new and additionality. Others are going to look more for speed and where can they get hooked up. So colocation, for instance, can bring a speed advantage to hook up that even a new build, even if it were islanded might still take more time. So yes, we're going to be in all forms of that. We have to get a return that we think is attractive for our shareholders, but we have the capabilities to be in all of those solution sets, and I'd expect us to continue going forward.

The next question comes from Jeremy Tonet with JPMorgan.

Interesting times across both PJM and ERCOT. I was just wondering if you could talk about the relative dynamics between the 2, and you're looking to secure more contracts, I guess, how the conversation trend compares contrast between the 2?

Yes, that's a great question. I'll start off, and I'm going to ask Stacey comments as she is in the middle of these discussions on a daily basis. The 2 markets are starting in slightly different places. So as you know, with Texas and you can see it in the forwards, you can see it in the real-time settles. The Texas market is just a lot less tight at the moment than the PJM market. And what we have here is a situation where customers are just trying to get through the study processes, ERCOT took an approach to do that sort of slow things down for a moment and then study as much as you can realistically want to give clear guidance to people. Now that's going to pause for the reasons we just covered on the call for a few months, but the approach is still the same.

In PJM, there's still a process that's much more localized in terms of how the study process works. And obviously, even the criteria that's being used around some of the wires costs and whether there's minimum takes and credit and other things that are still not yet settled in ERCOT. So the markets are at different levels of maturity in terms of how different utilities are prioritizing the studies and the load, and we have to work with customers on that. Of course, our assets would have some unique characteristics in each market. But since we're having conversations across both those major markets, I'm going to let Stacey provide more color on how she sees these developing.

Yes. Thanks, Jim, and thanks for the question, Jeremy. We continue to see a lot of interest in both PJM and ERCOT. We're in active discussions in both markets across multiple sites and both about our existing resources as well as new build. And both markets have their own share of regulatory uncertainty and things in flux. So I think at this point in time, it really comes down more to where are individual customers looking to expand their presence and each customer is a little bit different in that regard. They have their own zone-type goals. And when they come to us, they kind of share with us where they're looking to locate their data centers, and we continue to see really high interest in both of our largest markets, ERCOT and PJM.

And I'd say the regulatory uncertainty, of course, customers want more clarity. And as we move along, we're getting more clarity. We're seeing a lot of progress at FERC. As Jim started this -- the Q&A session off with, we're also supportive of Governor Abbott's attempt to kind of [ find ] the queue and ensure responsible development. And you've seen customers come out in support of Governor Abbott's efforts. So those are positives. Those are actually helping us move towards clarity. And at the same time, as we've seen with even the contracts we've executed to date, customers don't need perfect clarity in order to contract. You can find ways to deal with those risks through contractual provisions. And so they're not waiting on perfect clarity, but obviously, the more clarity, the better. So we continue to feel very optimistic about our opportunities in both PJM and ERCOT.

Got it. That's helpful. And then dialing into PJM a little bit more. Just wondering, as PJM continues to evolve here and we step towards the -- wondering what Vistra's strategy would be here at the relative level of appeals here? And also how [indiscernible] compares to bilateral discussions if there's a preference one way or the other?

Yes. So I believe the bilateral discussion which is something we've been supportive of even under current market conditions, unrelated to whether we're specifically talking about an RBP and the other framework around this IRAS, which I'm sure we'll talk about. Setting that aside, the bilateral conversation is something that we have real possibilities with customers. We have good sites. We have some opportunities to develop these with their interest. Again, that has to meet their needs from a speed and a cost standpoint. So that's a willing buyer, willing seller marketplace. But any bilaterals, as you know, that get done that meet the hurdles could drop the required RBP procured amount.

And ultimately, over time, I think if energy markets and bilaterals can continue to develop adequate returns, even less dependence on a capacity market, I think with overall be helpful for clarity of what kind of returns people can expect in these various markets, including PJM. So we're active in those discussions. When we think about the RBP itself, there's realistically batteries, peakers, CCGTs that you could see bid into that. Depending on where people are with their cost of equipment and EPC and when they got some of that locked down the $555, there's going to probably need to be a spread around that $555 a megawatt day for certain projects to work. And so there's going to be pressure there.

I think the bilaterals, you're going to see some pressure on that. So that is, again, the conundrum of power markets today are still lower than where new build would require power markets to be to earn an [ advert ] return. So whether that's going to come through the RBP or come through bilateral remains to be seen.

Got it. That makes a lot of sense since you brought up IRAS. Maybe any thoughts you could share there, how you see things unfolding from this point?

Yes. I'm going to start off, but I'm going to turn it over to Stacey to give some of detail and tracking all of these dockets and how this is unfolding. I just would like to say that our discussions with customers have been evolving over the last 2 years, and we've mentioned this that large load customers are willing to be part of the solution. They're willing to offer some flexibility.

Our DNA is a choice-based DNA. I mean we like customers to have incentives to be flexible, whether that's speeding them up in the interconnect queue, being able to ramp their load faster, maybe getting a discount on wires or capacity if they offered in DR. So we're much more of a carrot approach because certain customers are making investments to be flexible, they should be compensated for it in some form, either actually or with speed.

Some of these dockets and we understand why go much more to a stick approach, and it effectively says if you don't do these things, you're at risk of disconnection. I think that's a much more blunt instrument. And I think this idea that you might actually be required to curtail before those that were paid to be curtailed, that feels odd to me. That's not the way markets should clear. You should actually have spectrum of benefits or attributes that customers are willing to be paid for. And I think we've got to work on this, and we're going to weigh in on this as I'm sure many of the stakeholders in the process will weigh in, and it's not filed yet. So we don't know all the details. But obviously, there'll be a lot to unpack when it comes in. So I'm going to let Stacey add any comments to this.

[indiscernible] the only thing I would add, really, and I think Jim covered it well is we obviously have said for a long time, we don't support bring your own new capacity mandates as we referenced even in this discussion today. Customers in PJM are already in conversations about bilateral agreements for new build, and we should let the market drive the incentives to do that rather than using kind of the stick approach. So we will be weighing in on that proposal when it gets filed at FERC, many others will be as well.

We do continue to believe that data center flexibility is a key asset really for the grid, and it should be encouraged, but it should be encouraged with incentives and it should also be recognized as a valuable resource that can be used during times of grid tightness. And so we need to kind of wait and see what the proposal says and see what provisions are really specified in that proposal before we respond. But we do have some concerns about it. We think customers have some concerns about it as well.

And frankly, it may actually even give some advantage to co-location with existing resources, we believe, at the end of the day because there's still a speed advantage to avoiding some of the transmission build that's necessary often to connect front of the meter, and typically in these colocation conversations, customers are bringing back up generation anyway. And so we actually see it as potentially driving customers to be even more interested in co-location with existing resources.

The next question comes from Michael Sullivan with Wolfe Research.

I wanted to ask a little more on the Helix platform and just how you see that playing out, had a big announcement and you put some money into it this year. How does that materialize through time? Maybe some color on what the milestones are that would require putting more money into it. And then like how does that work at the same time you've been working through some of these existing commercial discussions?

Yes, Michael, thank you for that. It's -- first of all, it is considered an additive proposition for Vistra. So as we looked at the extent of the customer conversations we were having and I've even mentioned on previous calls, we've added staff to have conversations, and Stacey would say she's still short staffed to have conversations.

So it's part of extending our -- what I'd call our channel or our capability to actually evaluate more deals and it's focused on both existing assets and new assets and then bringing a simpler solution for customers. So they can talk about the infrastructure of a data center and where it gets its power. And today, they're having to string all these conversations together. And it is complicated and they go in fits and starts. And so being customer focused, our partnership, obviously, led first by KKR is helping us to bring a platform to a customer conversation. It is an option for Vistra to participate on any of these. So if we want to use an existing asset to support a deal like this, that's our opportunity, it's not a requirement. But we're excited about it because the more deals you can evaluate the better chance you're going to find something that's meeting the spectrum of customer need as they evaluate their business over time.

In addition, there's some criteria that if there are certain milestones met and the deals are actually coming and they're valuable to Vistra, then we put in an additional $500 million, and we'd be excited to do so because we wanted the interest to be aligned. That was important for us. That was important for KKR and the other partners is that they're skin in the game.

So, we're excited about the opportunity. We think this is, again, a customer orientation, and we view that the chance to market our current assets as well as develop some new ones with someone who has a much greater access to capital in a sense that if it's required to do things like powered shells, powered land, that's something we don't believe our shareholders are expecting us to put a lot of capital in, given our core business, but having a partner who can is very complementary, and that's how we see it unfolding.

Okay. Great. Very helpful. And then, Kris, I think you mentioned just in terms of the financial outlook, midpoint or better in '26, maybe just a sense of what's driving that. And then for '27, the midpoint opportunity, you mentioned the ERCOT softness and some of the offsets there. Should we just think about that as kind of netting out to a similar place or any kind of like upward or downward bias or around that range?

Yes. Thanks, Michael. I think on 2026, obviously, what we talked about in the prepared remarks were the start that we've had to the year positions us well. And we see ourselves we don't typically -- it's not typical for us to change guidance absent if there's a deal has closed or something at this time of the year, we're still getting through the summer. But we still feel good about the full year and that we'll be at or above the midpoint, and we have confidence that, that will be the case.

As we turn to '27, as you mentioned and as we mentioned in the prepared remarks, the ERCOT forwards are meaningfully lower. There are -- that headwind is offset by some higher prices in PJM. And we do have the hedging program and the downside protection of the PTC.

I would say that they don't fully offset the ERCOT headwind. So we're -- we would be trending towards the lower end of that range. But of course, we have announced 2 significant transactions that aren't included in that and that's Cogentrix and the Meta PPA, they're still excluded.

So our current expectation is that we'll provide a guidance update for 2026 and 2027 on the third quarter earnings call. If Cogentrix hasn't closed at that time, we'll wait and likely provide an update to earnings for 2027 on our next earnings call after it closes. Again, with those 2 transactions, though, as you look to 2027 that we have not included based on our previous disclosures, you could reasonably conclude that they'd add roughly $700 million to our midpoint opportunity, absent any other impacts. And those impacts could obviously be further curve moves or what we learn about the hedge levels with respect to Cogentrix among some other things. So we're excited about 2026, and we feel that we have an opportunity to get back to where we want to be in 2027.

The next question comes from James West with Melius Research.

I was curious to dig in a little more on Helix. Clearly, deep pocket is a good term to use to describe your current partners. But you also described yourselves as founding partners, which maybe suggests additional partners are coming in. So that's kind of the first part of the question.

And then the second part is, how are you thinking about this entity and its capital raising abilities going forward? Is it going to be from these platform companies -- sorry, the infrastructure companies that you have and the investors that you have? Or do you think this is something that could be a publicly traded entity over time? I mean how are you guys thinking about the evolution here?

Yes, thanks. I think we do. We are a founding investor, and we do expect that they will continue to add more investors over time and substantially increase the amount of the capital that they have access to. I think from how we utilize that, the best word is we have a lot of flexibility in every deal. There will be deals where we could potentially -- each deal will be different, and we could access some -- we could bring them in as an equity partner in any kind of new build power that we do. We could do that all of ourselves. We could search other opportunities to finance those.

So I think each deal will be different. It is -- we do expect to work with them and -- but on the power side, it will be a negotiation each time about how we go about financing our portion of any transaction that we get involved in.

And James, let me just add, one of the things we were really excited about is actually approached us as part of this and wanted us to be the preferred power partner for this relationship. And that gives us a lot of optionality with this and again, not a requirement. If there is an opportunity for Helix to develop a project in a market that doesn't really make sense for Vistra's capabilities, we may not be the actual power provider in that, and we want Helix to be successful. But since we cover so much of the market and the markets we're in are actually attractive data center markets, we expect to be developing and being in that relationship with Helix to be able to bring a powered solution, whether it's existing assets or new. But we want to be good partners.

And so if we don't have something to bring to the table on something we'll just be effectively carried in our financial investment that we have committed on the deal. But we do expect a lot of overlap with what we're doing and what they're doing.

Okay. Okay. Got it. Then maybe just one quick follow-up, and you may have mentioned this earlier, I may have missed it, but with Governor Abbott's moratorium here, is there a certain time line that's been set to go through all the audit process and to clean up the queue?

Yes. Well, first of all, this is also -- and I know I've used the term media a couple of times, and I'm just trying to -- I'm just trying to recognize that things get distilled to words that aren't being used like there isn't a moratorium at this point in time, and there is a pause on letting people know we were expecting to hear where we would stand from a baseload for batch 0 any day now. We expect that's going to get kicked out. And the PUC and ERCOT are going to work to get through these audits, we think in a couple of months' time frame, but we don't see it impacting our projects and the time frame that we were expecting to energize.

It is possible that there were people looking to energize here more -- in the more short-term horizon that might see a delay. But I think this is about confidence and the fact that there's a lot of attention on this data center topic. And I'll give you a simple example because we lived it. We've got 2 counties around our nuclear power plant. We had an idea that 1 of the counties would probably be the more ideal location to start citing a data center. There were 8 projects being considered in that county. Per my earlier remarks, there's a reasonable chance there'll be no projects in that county. But it stirred up, as you would imagine, a lot of concern in the local community about I might be okay with one of these, but I don't know if I'm okay with 8 of these.

So we welcome the queue getting smaller and let the real projects move forward. But if there's some short-term delay as a function of that, in the long run, I think we're all going to be better off if we can start talking about more realistic numbers.

The next question comes from Carly Davenport with Goldman Sachs.

Maybe just one on capital allocation. Just as you think about that $2 billion to $2.5 billion of cash available for allocation. Can you talk about your kind of general willingness to lean in on the buyback if the market gives you opportunities? And if there's some -- if that's something that you would potentially go back to the Board on in terms of the remaining $1.2 billion on the authorization?

Yes. Thanks, Carly. I think I mentioned in the prepared remarks that we do have flexibility. We have the $1.2 billion left. And we said that we would -- we expect to exhaust that no later than the end of 2027. Both management and the Board are -- have -- as we look at opportunities for share repurchases, I think we -- there will be -- there could be an opportunity, and we are flexible in adding to the share repurchase program in 2026 and/or 2027. And I think if we add to it in 2026, we will go to the Board and ask for additional authorization to make sure that we have at least $1 billion for 2027 and potentially more. .

Great. Okay. That's very clear. And then maybe just one on -- you've referenced the moves in the power curves a number of times on the call. Could you just talk a little bit about the hedge updates that you provided and particularly on 2028. Is there any detail you can share across regions in terms of how you've changed activity across ERCOT and the East over the last quarter?

Well, Carly, I don't think we're going to talk that much about hedging strategies in detail on the call. You've seen some offsets in the portfolio. Of course, you've seen PJM strengthening, you've seen ERCOT weakening. It helps to be a diversified player in this context. And that has played out not only in year-to-date results, but we expect that to continue to play out going forward. I think what we're seeing in ERCOT is a recency bias with what we're seeing with the weather.

And frankly, a lot of batteries that came into the system post August 2023, when the eCRS payments were rather large. And what we've seen since then as returns on batteries have been about 1/5 of what investors probably expected that they would be. And that's the way competitive markets work. There's no guaranteed rate of return. And so -- but they are putting more supply in critical hours in that bridging solar hours to wind hours and batteries were able to bridge that at this time.

We're seeing the battery cues slow down, which you would expect. That's kind of natural when you're not getting the rates of return that you expected. And then you're going to see the load eventually hook up. And that is something that we've talked about, obviously, with this data center load.

In Texas, the oil and gas and the residential small business load is about 3% of the 5% to 6%. So the data center piece is about 2%. So you've got a 3% CAGR on nondata center sectors, about 2% CAGR being driven by the data center. So I think we're going to see some strengthening that you're not seeing at the moment because of the recent effects. And I'd be interested -- Shawn Stuckey is here, our Head of Commercial. They did a little bit of a deep dive on the battery performance, just to give some insight as to how that affected pricing over the tightest days. And really, we were not close to any reliability of then, but we were closer to seeing pricing that would be more expected with the kind of demand that we saw that day. So Shawn, I'd love for you to add some commentary there.

Thanks, Jim. I'll add a little bit of color. If you look at July 22, there was about a 3.5 hour window as the solar was dropping off the grid that you needed the batteries to serve load. And you needed about 25 gigawatt hours worth of batteries to serve, and there's only about 31 gigawatt hours worth of batteries available on the system. So even though that day cleared $57, the batteries knew that they were not going to run out. And so it's a little bit of a kind of a chase to the bottom as they were looking to sort of deplete their energy toward the end of the day and capture the last bit of revenue that they could get.

Had they known that they were going to have the ability to price themselves and be a little bit more competitive, we think it's very easy that, that day could have cleared closer to $400 or $500 a day. So it's just a function of this market that you're sort of right on the razor's edge. It very easily with just a couple of thousand megawatts difference in either thermal performance or load and/or wind, $57 could have been $400 to $500.

And just really clear, Raiser's Edge is more about pricing. There were still reliability reserves that ERCOT was maintaining. But as you know, Carly, there's pricing mechanisms that as you get tighter, you'd expect to see the real-time prices reflect that. And so it really is a closer dynamic, and that's just the way these markets work, but good for customers. I mean, this is exactly the way market should clear that's what competition does, whether it's on the retail or the wholesale side. And so again, this notion that this is a market that's not able to handle this load growth is not bearing out in the facts.

The next question comes from David Arcaro with Morgan Stanley.

Probably on Helix, I was wondering if you might be able to give any additional color on the project pipeline in terms of megawatts or any progress or timing that could be possible just kind of where is it in terms of its development outlook? I'm also curious about return targets, if there's any way that you'd be able to frame that up maybe versus your own capital return targets internally?

Sure, sure. I'm going to let Stacey take this one, David, since she's working the pipelines, both the internal pipeline that we have and the pipelines that we'll look at with our Helix partnership.

Yes. Thanks, Jim. Yes, it's obviously, we just launched it last month and -- or I guess, in June. And so it's early days, but we're having a very close collaboration with in particular, and they are staffing Helix up for development. And we're really excited about the opportunity to simplify the conversations, especially on our existing sites.

On our own, we are working on in customer conversations about PPAs for our existing sites. But those end up being, in a lot of cases, multiparty conversations that we have to pull together because typically, for those sites, the hyperscaler customers want to bring in a co-location developer. And so you've got them in the conversation. You've got other equipment providers in the conversation. And Helix really is going to provide us an opportunity to simplify those conversations on our existing sites.

So you can think about, honestly -- you can think about the pipeline as really anything that's in our existing portfolio, we're able to -- we're able to bring that to bear with Helix and as well as pipeline conversations that they bring to us where they're getting inbounds from customers and they bring us into the power conversation. So there's a number of those conversations as well, where there's opportunities that we would not have otherwise seen, but they're bringing us into the conversation to kind of help them understand what the power possibilities are.

So it goes both ways. They bring us opportunities. We show them opportunities and that's just another channel for us to increase our opportunity set.

For us, at Vistra, we would be looking to achieve the same mid-teens return targets that we've always promised our investors. And so we would only do projects that hit our return targets. Obviously, Helix is going to have a bit of a different risk appetite for projects, and that's part of why we think it is a good channel for us to be able to look at projects and just benefit even as an investor from projects where maybe we're not providing the power, but they're taking more risk on capital.

So it's a good opportunity for us to not only have another channel to promote our own pipeline, but also to benefit from the economics associated with data centers to the extent that they -- they get those projects done. So we're in very close coordination with them and a lot of activity going on to launch that business and we're in direct conversations with all of the major hyperscalers about it.

Great. Yes, that all makes sense. I appreciate that. And then I was just curious, looking at batch 0. Do you have other projects outside of Comanche Peak that you may be working on with partners just within your own development pipeline that might be going through the batch 0 process? Any color you'd be able to provide there would be great.

Yes. Thanks, David. We do have projects in batch 0 base load, in that 0 to be studied load and even in the 2 come batch 1 process, which is not yet finalized in terms of the rules for those. So we have multiple projects there. We're not going to comment on specifics beyond that, but we do have projects throughout the pipeline of batch 0.

And I think on the earlier questions, David, about some of the delays. I think the studied load, which would be studied in consideration of the base load of batch 0, that's part of what probably is going to see more of the uncertainty at this point. I think the baseload projects because they've been studied, you'd expect those to be moving forward. I think the IIb study has yet another potential of figuring out what's the allocation, when is that going to be completed. And that's why with some confidence, we feel the baseload projects, and obviously, we need to meet delivery dates for our customers, but that's important that we keep moving forward, and we haven't gotten any signals that, that folks in Austin see the baseload projects at this point as being materially off of a time frame.

As I mentioned, if some were looking to energize in the very near future, there may be an issue, but ours are tagged towards next year. So we feel we can continue to make the progress we need.

And if I could just add, the PUC and ERCOT have worked really hard this year to launch batch 0 in record time, frankly, and a very active stakeholder process. And so of course, we will know more at the open meeting next week where they discuss the Governor's directive, and it's very important that they carry out the Governor's directive and that what comes out of that are only projects that are going to engage in responsible development.

But I would just say, I think that the PUC and ERCOT and really all of Texas stakeholders are motivated to preserve the value that they've created through the batch 0 process and to get the audit done in a timely manner and in a way that it doesn't result in material delays for the projects there.

That's a good add. Thanks, Stacey.

The last question today comes from Rinny Singh with Bank of America.

I think first, I think, Stacey, you mentioned that the IRS procedure could increase some of this colocation, especially speak of advantage in the transmission. I guess how are you thinking about that colocation proceeding, I guess, the time line for it and the remaining uncertainty that kind of we need to figure out for that procedure?

Yes. Thank you for that question. Well, first of all, I'd just say we were very pleased with FERC's colocation order that came out in June. They really -- they have made it crystal clear that PJM and the transmission owners need to accommodate colocation, they need to adopt these new transmission services that do so. And they've given TJM, very clear instructions about amending the tariffs to do so.

So that was a very positive development for colocation projects, and we see that customers see it that way as well. They had ordered PJM to make a compliance filing and the transmission owners as well by mid-August. PJM and the transmission owners have now asked for more time to do that. We don't know if FERC is going to grant more time. But if they do, I think they will still want there to be as quick of a response as possible because this docket has been pending for some time and FERC has made it clear they want these projects to be able to move forward with clarity.

So I think sometime in the next, call it, 30 to 60 days, whatever amount of time FERC decides to give PJM and the transmission owners, we will see a filing from PJM and the TOs that get specific around accommodating these arrangements and the types of transmission services that apply to them. And that will give all of us clarity about the rates that apply to these projects as well. So we're very optimistic about the outcome of that and the order itself frankly, adopted a lot of Vistra's arguments and positions as we advocated for those projects to be available to customers.

Okay. Great. That makes sense. And then if I could just ask like sticking on PJM, just like what's the appetite for contracting, energy and capacity versus just energy with this environment of potentially the bring your own capacity charges and then also the possibility of being flexible in your conversations? Just how is that kind of shaping up? .

Yes, we're still seeing robust customer appetite for both energy and capacity. The in order to actually power their data centers, they need both. And so -- and they see a rising price environment. And so they have interest in locking in some cost for that. So I wouldn't say that we've seen a big increase in appetite for energy-only deals, although, of course, we're open to whatever conversations customers want to have. But the conversations we're in, they're still interested in contracting for energy and capacity.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.

Thank you, everyone, for joining. I want to take a moment to thank our team for their continued execution and service to our customers and communities, especially during these hot summer months. The other thing that we'll continue to do is give you the most accurate view we can on the supply and demand variables and how they'll actually play out. Well, I'm sorry, I thought I was done here and now I'm giving you more.

But look, it's important that we give you an accurate view on these variables because these are serious policy matters, and we're going to be engaged with customers and our peers in the industry and policymakers to get it right. And we look forward to updating you on the progress of our business. We look forward to seeing you also in the fall, hopefully in person, and thank you for joining, and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Vistra Corp First Quarter 2026 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Eric Micek. Please go ahead.

Good morning, and thank you for joining Vistra's investor webcast discussing our first quarter 2026 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 explain 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 first quarter 2026 operational and financial results. 2026 is off to a fast start. As outlined on our year-end call, within the first week of the year, we announced the acquisition of the 5,500-megawatt Cogentrix natural gas generation portfolio as well as long-term power purchase agreements with Meta for approximately 2,600 megawatts of energy and capacity at our PJM nuclear sites. These actions further strengthen our generation footprint and enhance our ability to serve growing customer demand with high-quality dispatchable and zero carbon resources.

The quarter also provided a good test for our generation fleet. Volatile weather created a dynamic backdrop that underscored the importance of operating assets safely and reliably, and I'm proud to say our team rose to the occasion. Within the geographies we serve, we are seeing a structurally improved demand environment. Load growth remains elevated. Hyperscalers are executing on record CapEx spending plans and our conversations with large load customers continue to advance. All of this reinforces our view that power market fundamentals will continue to improve through the end of the decade and beyond.

We remain excited about the growth opportunities for new and existing generation. We are working with policymakers, regulators, transmission providers and our customers to create innovative solutions that can support new load while preserving an affordable framework for existing customers. With our large, diversified and flexible fleet, our development capabilities, innovative retail franchise and experienced commercial team, we believe Vistra is uniquely positioned to deliver on these initiatives, and we look forward to building on our early momentum throughout the rest of this year and beyond.

Turning to Slide 5. Vistra delivered approximately $1.5 billion of adjusted EBITDA, a record result for a calendar first quarter. The strong financial performance is a direct result of the consistent execution of our generation, commercial and retail teams as well as diversification afforded by our integrated business model. This was particularly evident during the first quarter as we managed through a volatile weather backdrop. Weather was exceptionally mild across the geographies we serve for most of the period, especially in ERCOT, where the quarter was the second warmest first quarter since 1950, only to be interrupted by Fern, a protracted winter storm that brought significant snow and ice as well as below 0 temperatures to a significant portion of the country.

Despite those conditions, our generation team performed very well during Fern with our natural gas fleet performing at 97% commercial availability and our nuclear fleet at 100%. During the milder portions of the quarter, our commercial team successfully optimized the fleet, responding to market conditions by backing down assets when warranted and buying low-cost power in the market. Importantly, Martin Lake Unit 1 returned from an extended outage late in Q1 and has been running well since.

Moving to the outlook. We are reaffirming the guidance ranges for 2026 adjusted EBITDA and adjusted free cash flow before growth, both of which we introduced on our third quarter 2025 call. We are also maintaining our 2027 adjusted EBITDA midpoint opportunity range. Our confidence in the outlook continues to be supported by strong operational performance and our comprehensive hedging program, where we have successfully hedged a significant amount of our expected generation through the end of 2027. Our comprehensive hedging program, which focuses on opportunistically locking in value, ensures a more stable and resilient earnings stream across varying economic cycles.

As a reminder, our outlook does not include any potential contribution from the pending Cogentrix acquisition nor does it include any uplift from the long-term power purchase agreements with Meta at our PJM nuclear sites. We expect to update our guidance ranges as well as our adjusted EBITDA midpoint opportunity following the closing of the Cogentrix acquisition. Finally, the amount of capital we expect to generate over the coming years provides flexibility to execute on both organic and inorganic growth opportunities as well as return a meaningful amount of capital to our shareholders. We can do both.

Our approach remains disciplined and opportunistic, and that was reflected again this quarter. Through the design of our share repurchase program and given our increasing free cash flow yield, we accelerated share repurchases during the first 4 months of the year, deploying approximately $525 million. Combined with our first quarter dividend of approximately $75 million, we have already returned approximately $600 million to our shareholders this year.

Turning to Slide 6. As we have outlined for the last 2 years, we continue to see a structurally improved demand environment that supports our long-term outlook. While large-scale data centers remain a key component of the expected growth, we expect incremental demand from multiple sources, including medium-sized data centers, increased industrial activity and ongoing electrification.

In ERCOT, we believe annual load growth of at least 5% to 6% through 2030 is reasonable. And in PJM, 2% to 3% annual load growth appears likely to persist. Importantly, while these views remain below many third-party forecasts and ISO projections, they reflect what we believe to be the pace of physical development and are consistent with the perspective we shared nearly 2 years ago on our first quarter 2024 earnings call.

While there are large interconnect queues in our major markets for both load and generation, we believe our estimates to be realistic load growth forecast that reinforce that competitive markets are ready to meet the coming demand. Since we expect overall load growth to outpace peak demand growth, a dynamic that should result in higher utilization of the existing generation and transmission infrastructure, we believe the existing grids can handle this level of growth successfully, providing a helpful runway to bring on additional generation resources later this decade and beyond.

Moreover, utilizing the existing infrastructure more efficiently is key to preserving affordability. With more power moving through the system, fixed costs are spread over more volumes, which should support lower unit costs for customers over time. And third-party research confirms this dynamic. A Lawrence Berkeley National Laboratory study demonstrated that states with positive load growth over the last 5 years experienced a decline in inflation-adjusted prices on average, while states with flat load growth or a decline in load experienced double-digit inflation-adjusted price increases.

Policymakers and industry participants, including large load customers are working on solutions to better manage the infrequent peak load and are willing to be creative. At Vistra, we remain focused on developing these solutions, including through the deployment of demand response capabilities or through distributed generation technologies as they could enable a faster time to power while awaiting a grid connection and help manage through super peak hours during the year, all while enhancing reliability and affordability. In summary, the load growth is real and is actualizing, and that creates meaningful opportunities for Vistra to support all its customers from residential to commercial and industrial, including data centers.

Finally, turning to Slide 7. As we have highlighted, the load growth developing across our markets creates significant opportunities to deploy capital towards organic development projects that can further increase the earnings power of our business. As you can see on the page, we currently have approximately 4,500 megawatts of organic development opportunities that were recently completed or in process across our portfolio.

They include contracted renewables such as Oak Hill 1, the recently contracted Oak Hill 2, Pulaski and the recently energized Newton project, high-return thermal additions such as our coal-to-gas conversions at Coleto Creek and Miami Fort, Texas gas expansions, including gas plant augmentations in our Permian new build gas units and longer lead time projects such as the PJM nuclear upgrade supported by our long-term power purchase agreements with Meta. These projects represent cost-effective and efficient ways to achieve incremental capacity with the majority expected to be online by 2028.

At the same time, the development opportunity set is not limited to the projects shown here. The team remains hard at work advancing multiple additional gigawatts of opportunities across the generation spectrum. Uprates will continue to play an important role, and we see the opportunity for more than 200 megawatts at Comanche Peak and approximately 300 additional megawatts at our PJM gas sites. We see numerous development opportunities at existing coal and gas sites that provide options for meaningful contracts for existing capacity as well as capacity additions with favorable speed and cost profiles relative to greenfield projects. As we advance these projects, the team will look for ways to partner on these investments through long-term power purchase agreements with creditworthy customers.

Now I'll turn it over to Kris to discuss our more recent financial results, outlook and capital allocation. Kris?

Thank you, Jim. Turning to Slide 9. Vistra delivered $1.494 billion in adjusted EBITDA for the first quarter of 2026, up approximately 20% from the same quarter last year and up nearly 85% from Q1 2024. Generation, which delivered $1.426 billion of adjusted EBITDA in the quarter, benefited from strong realized revenue across the fleet, higher capacity revenues in PJM and the contribution from the assets we acquired in late 2025 from Lotus. Retail, which delivered $68 million of adjusted EBITDA in the quarter, continues to benefit from strong counts and margins, partially offsetting extremely mild weather in ERCOT. It is important to note that we expected a year-over-year decline in the first quarter results for retail, and we continue to project retail's full year performance to moderate from the record result last year. However, retail remains on track to achieve its medium-term adjusted EBITDA target this year.

Turning to Slide 10. We are reaffirming both our 2026 guidance ranges and maintaining our 2027 adjusted EBITDA midpoint opportunity range. Our confidence in our outlook and cash generation is supported by our comprehensive hedging program, the long-term power purchase agreements we have executed and the downside protection of the nuclear PTC, resulting in a highly hedged position in 2026 and 2027.

As Jim stated earlier, our financial guidance excludes any potential impacts from the pending acquisition of Cogentrix and the long-term power purchase agreements at our PJM nuclear sites with Meta. Cogentrix is on track to close in the second half of this year, and we plan to update our guidance ranges and 2027 midpoint opportunity range thereafter. Importantly, we see multiple additional opportunities to further expand and stabilize our earnings potential. Customer engagement remains strong, and we are confident in our ability to create value and drive stronger financial results.

Our near-term priorities include approximately 3.2 gigawatts of nuclear capacity at Beaver Valley and Comanche Peak that can be contracted on a long-term basis and ongoing opportunities with customers with respect to our existing gas plants as well as potential new construction.

Finally, turning to Slide 11. Based on our outlook, we still have line of sight to more than $10 billion of cash generation over 2026 and 2027. 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, the PJM nuclear uprate supported by PPAs with Meta and the development of Oak Hill 2 supported by a PPA with a large investment-grade counterparty, we continue to expect to have approximately $3 billion of additional capital available to allocate through year-end 2027.

As always, we will be disciplined in how we allocate this remaining capital, balancing return of capital to our shareholders, further strengthening our balance sheet and strategically investing in attractive organic and inorganic growth. Our share repurchase program continues to create significant value. Since initiating the program in November 2021, we have retired approximately 169 million shares at an average cost of approximately $37 per share. We currently have approximately $1.475 billion of share repurchase authorization remaining.

Pursuant to the opportunistic design of our 10b5-1 plan, our repurchase activity was accelerated in the first 4 months of the year as our free cash flow yield increased. We will evaluate our share repurchase authorization and availability throughout the year with the option to continue to accelerate share repurchases should market conditions warrant.

Turning to the balance sheet. During the quarter, we received an upgrade of our corporate issuer rating to investment grade from Fitch Ratings. Combined with the upgrade from S&P Global Ratings late last year, we have now achieved investment-grade ratings from 2 rating agencies. We are pleased to see the recognition of our efforts to increase our earnings power, derisk our business model and execute on our disciplined capital allocation plan. With this milestone, the fallaway provisions in our senior secured debt agreements were triggered, releasing the liens on our assets under those documents. Achieving investment-grade ratings positions the company well to maintain financial flexibility and support long-term value creation.

We will continue to target leverage metrics consistent with solid investment-grade credit ratings. As for strategic investments, we remain opportunistic yet disciplined, maintaining our mid-teens levered return threshold across organic or inorganic growth investments. In closing, Vistra remains well-positioned to create long-term value for our stakeholders. The resilience of our business is evident in our strong results and reaffirmed earnings outlook despite a volatile weather backdrop during the quarter. We see load growth materializing in our primary markets, and the team remains focused on positioning Vistra to win in that environment.

With that, operator, we're ready to open the line for questions.

[Operator Instructions] The first question comes from Shar Pourreza with Wells Fargo.

It's actually Constantine here for Shar. I appreciate the updates today. Maybe starting out on PJM. Do you anticipate the FERC PJM colocation rules to kind of start opening up more opportunities to do repeat deals like the Meta deal? Does the rule changes impact the framework of combining new capacity with contracting existing resources? And does this kind of, in your mind, extend beyond the nuclear assets over time?

Yes. Constantine, this is Jim. I'll start, and I'm sure we'll talk a lot about policy and PJM. So you'll hear from Stacey on a number of these topics. But we're encouraged by the colocation recognition. I think we're seeing in all markets, not just PJM that if we're going to hook this load up quickly enough, colocation with existing and colocation with new needs to be supported. There's obviously tariff work to be done and there's -- the details are going to need to continue to be worked out, and we hope PJM can move to support the colocation in the way that we think FERC was providing direction to support it.

So we do think there's opportunity to do additional deals like the one we did with Meta doesn't need to just be with nuclear. I think we have opportunities to do it with gas as well. But this is a process. And we've seen that there's a back and forth on this, and there's coming to a common understanding that's needed. And so I can't say it's going to be quick or simple, but we're optimistic that the logic around colocation continues to get more and more support. And then it's just a matter of making sure we've got the avenues to be able to execute on it. I'm going to ask Stacey to share her perspective.

Yes. Thanks, Jim. FERC's colocation order in December made it very clear that colocation is something that PJM must support. And so the filings are now just trying to sort through what the rules of the road are, and we do expect FERC to be motivated to act quickly on that. We've seen them recently order some pretty short time lines for PJM to respond to that order with compliance filings. And so we do think FERC is very focused on clarifying the rules of the road. And in the meantime, customers continue to explore colocation with us at both gas and nuclear sites. And so those contracting discussions can continue in parallel while the rules are clarified. And we think that has to be part of the solution for meeting this demand because there is a speed to power advantage while additional resources take longer to come on the grid.

That's really helpful. And maybe shifting to ERCOT, obviously, milder weather here in the quarter. Does that shift any of the expectations? And are you thinking of any offsets around '26 kind of just within the current guidance ranges? And maybe extending that to your views on the moving forwards in ERCOT? Is there a degree of load expectations shifting energy storage impacts? Any color that you can provide?

Yes. Constantine, what was noted, I think, in many external reports was just how mild this first quarter was, and we noted that. Fortunately, one of the benefits of our business is a highly diversified business, both generation and retail. So we saw some offsets. That's why we had a good quarter. So retail bore the brunt of some of the mild weather for this particular quarter. But the rest of the business, particularly generation had a good quarter. And I expect to see that integrated model continuing to be a strength for Vistra. So we don't feel the need to necessarily have offsets. Obviously, we'd always like to outperform. So you'd like to have the full performance of generation and retail all the time. But when you do see these offsets like this happen, that's why our model is designed the way it is. So I actually feel really good about how the integrated model performed.

The second question, which is the ERCOT forwards. Obviously, we've seen ERCOT forwards come off. We didn't see much weather as a function of what we just discussed. I think that tends to read through to some of the future periods. I think the concern about the pace of load getting hooked up because there's a big discussion, obviously, about the batch process and how long is it going to take to get through the approval process. So I think there's a bit of a sort of a perspective at the moment of how quickly will the load come. And I think towards the back end of the decade, I don't think there's any doubt about how quickly the load is going to come. In our chart, we're showing very consistently this 5% to 6% compounding kind of load in ERCOT. But I think the market is expecting more than that. And what we're saying is I don't even think the market forwards reflect 5% or 6% compounding load.

So I think there is a wide disparity in view out there because I think the market had a view that it was going to compound a lot faster than this. We did not. We actually have said the physical world takes much longer to develop than what people might imagine it takes, and we just think that's playing out. So I think there are folks trading around that. We feel very solid that the 5% to 6% is a good compound growth rate. I also don't believe the 400-plus gigawatts of interconnection. We've said that. We believe that ERCOT is looking at something in the order of probably 30 to 40 gigawatts of growth in total by 2030. We think 10 to 15 of that's likely large data centers. So I think there's just a lot of confusion out there because there's a lot of information people are trying to sort through. But we feel good about the position we have in ERCOT.

We think it's going to be a market that's going to continue to strengthen through time. And I think because we're on both sides of it, both retail and gen, it can work for us from a durability standpoint with the integrated model. So I think we'll just have to see this play out, Constantine. We'd love to see the load hooking up a little faster than it is. But this pace of play is about what we expected, and we think the forwards would still actually improve from where they are even if the 5% to 6% were maintained.

Our next question is from Steve Fleishman with Wolfe Research.

So just -- I heard Kris' commentary on the customer engagement being strong, both on the nuclear and the gas. But we did have Constellation come out in the last month or 2 and talk about a little bit of a pause from customers due to the kind of RBP uncertainty and some of the structural uncertainty, I guess, particularly PJM. So I'm curious just have you seen a similar change in tone from your customers? Or are you still seeing the same interest that you have talked about on the last call?

Yes, Steve, this is Jim. So I think it's logical that with the amount of information flying around that people are just even trying to digest it. I mean just yesterday, PJM put out a 70-page paper. I think it's actually quite helpful in raising the discussion around market design. So our partners that we're talking to, the customers we already have and the ones we hope to become customers, they look to us also for insights and guidance on how to navigate this. Because these deals, and we've maintained for several years, these deals are complicated. They take time. We have said that from the beginning, and I think we would still say that. And this just becomes yet another variable that we have to talk to them about. But the load is still coming.

And the question really is going to be, when is there enough clarity on some of these that they feel confident it's time to go. And they have real questions, for instance, in PJM, how does participating in an RBP help or not with speed to market? Does connect and manage come into play? What does that look like? Some of those are unknowns, but they know they can't wait for clarity either. So our discussions are going in parallel. They're consistent. The activity level has remained as high as we've ever seen in this. So I don't see a change there. We'd all want clarity. They want clarity, and we're all going to work hard to get it. But Steve, I think the pace of play on this is where we expected it to be, and we're comfortable with where it is. But from a competitive markets person, I want the competitive markets to get as much of the opportunity to serve these customers as anybody. So we're eager to get on with any and all clarity. And I think that's how the customers feel too. But the pace of play is where we expected and it's still strong.

And Stacey, anything you'd like to add to that?

Continuing to engage at the same level that they have been. And I've said, I think, several times that there are uncertainties for sure on the regulatory front that you can contract around those uncertainties. It's just a matter of allocating risk. And so as Jim said, that's just another variable that comes into the negotiation. But of course, they want to understand how all of these rules of the road will work. And they talk to us about that. They get our take on the regulatory hurdles and the regulatory rules, and we work through that with them and try to help them come up with the solutions that deliver speed to power, which is what they want.

And those solutions sometimes can include things like bridge power, for example, because they're not sure when they can get connected. So what we've been advocating is while we're working out the rules of the road, we really need to get load connected as quickly as possible because that's the best way to deliver for the customers, but also to address the affordability issue.

Okay. Great. And my follow-up is on that -- is actually on that topic on the bridge power. I think you mentioned called the distributed gen faster time to power in your remarks. Just could you talk about some of the options you're looking at there for customers?

Sure, Steve. So on the bridge power, the discussions, obviously, customers want to get power as quickly as possible. So bridge has become part of the workaround for these customers. Ideally, customers would like a grid connection and like it quickly. I mean that's the starting point. When they can't get that, then they look at bridge. And ultimately, that bridge might be longer in some cases, depending on how long it takes to get the hookup.

The reason why colocation, we think, makes so much sense is there's less transmission work involved, so you could actually get the hookup quickly. But in the case where they decide to go down the bridge power path, we're having discussions with multiple parties about bridge power ultimately to get to grid connection. And that takes a variety of the technologies that you're familiar with. But more of our conversations have been leaning towards the use of gas in these bridge power solutions. And obviously, that's something we're comfortable with. But the customers ultimately are looking to scale up. And so it's more about how do you get started.

And I think that gets to the earlier question, which is the pace isn't really slowing down. It's just the way in which folks are trying to get to market. They've had to be a bit more creative. And we're part of that with them. We wish it were simpler. We wish it could actually get to the existing grid because as we've talked about, there's plenty of existing gen capacity on the system. We just need to manage the super peak hours. I think that's being recognized more, but there's plenty of generation on the grid. And it's unfortunate we can't tap it as quickly as we'd like. So this bridge will be part of that solution. But hopefully, ultimately, we get all of this hooked up, and we're able to support the customer in the most cost-effective way possible.

The next question comes from James West with Melius Research.

I wanted to get a framework or think about how to frame the conversations you're having with the data center hyperscalers. And with all the -- as you've alluded to several times, the kind of noise or the information in the system and in the regulatory environment, which is going through some changes and their own framework. But speed to power is still the most important thing for the hyperscalers. And so are they willing still to go bilateral in negotiations with you guys? And as we get some of this clarity, go ahead and contract well ahead of if it's PJM in an auction or batching if it's FERC?

Yes, James, I'm going to go ahead and let Stacey kick this one off.

Yes. Thanks, James, for the question. Yes, they are willing to and are engaging in discussions about bilateral contracts even ahead of the rules for the backstop procurement being clarified. And I'd just go back to what's really important is that we talk about raising the bar on the interconnection queue because it's not as much -- I mean, certainly, the lack of clarity on some of the rules in PJM, as we just talked about, are impacting discussions. But really, what they want and what they -- what these customers start with is they want a grid connection and they can contract for generation, both existing and new, to bring their power, but they still have to get a load interconnection done.

And so what we really would like for the focus to be on is how do we start raising the bar on these load interconnection queues and have the utilities, particularly in PJM, where they control the load interconnection process, get these customers hooked up as quickly as possible. And so those are the things that we focus on, and they are certainly talking to us about bilateral contracts. And we think bilateral contracts is a good way to solve the issues in these markets because it addresses the affordability issue. It addresses the resource adequacy issue and particularly colocation with existing plants where the customers are bringing back up generation, as we said many times, solves the super peak issue and takes advantage of the excess capacity that's on the grid today.

Right. Got it. That's very helpful. And then you mentioned -- you guys mentioned the shift a little bit towards natural gas. I'm curious in your conversations with the gas providers, upstream, both in the midstream providers, is the -- we have the resource. We know that in the U.S. we have that. That's very clear. But is the infrastructure in place to provide this increase in natural gas? Or is it getting in place?

Yes. Broadly speaking, James, it's like everything in this business, location matters. But in quantity of supply, plenty. I mean -- and I think that's why you're seeing some of the announcements, not just from us but other parties as to where folks are expanding. I mean even us putting capital to work in West Texas, where we see the Permian units having real opportunity, just like our colocation point, it makes sense to go where the resources are. So yes, there may be some infrastructure that needs to be built out. I'd call it modest like in some of our coal to gas conversions, but all that's factored into this. So as a country, we are blessed to have the gas resources that we have.

I think the customers see that as a real opportunity. And obviously, speed to power, gas is available. And with the places where we're looking to go, you can get access to it even if there needs to be some laterals built that's not the biggest hurdle. So to me, it's smart. It's actually aligned with speed and affordability. And so I think working with our gas partners, and we've had some really good relationships over the years and developing them as part of this new load growth, they're excited about it. Like they see this as a real opportunity, too. And so I think this is a nice solution for the customer.

The next question comes from Moses Sutton with BNP Paribas.

I wanted to turn to the ERCOT batch process. You mentioned the 30-40 type number by 2030, that's about 5%, 6% CAGR. We have the same type of numbers in our own model. Do you expect all or most of that come through in batch 0? It seems a bit opaque that has 145 gigawatts in there. And then under the hood, how much would you look at in terms of nonfirm and CLR classification? And we could see Vistra is pretty heavy in the public proceedings there. So any color there would be quite helpful and how you think that plays out.

Yes. Moses, let me start. I think part of the challenge here, and this is something that is a positive about competitive markets, but could also be a challenge with competitive markets as the bar is really low to get into the load queue and it's low to get into the generation queue. And the resources to study this, both at the utilities as well as at ERCOT, there is ultimately a constraint. And the question before us, I think, is what's real. And we're trying to give a view as to what's real. We wish the bar were higher for both of the queues, but particularly now the load queue because I think what we run the risk of is that a bunch of projects get allocated some level of transmission, but they're not real and they're not going to move as fast as the projects that are ready and are real.

I've heard that batch 0 could be as big as potentially even 100 gigawatts, okay? If we think the number is 10 to 15 of additional data center between 2025 and 2030, you don't even really need a whole lot of batch 0. You actually need what's already been allowed to ramp. It's been energized, but is not at the full take at this point in terms of peak capacity, plus what's in baseline, which could be about 17 gigawatts. So batch 0 could almost end up becoming on top of every estimate that we've provided. So -- but it's getting a lot of focus because people say, how are we going to serve hundreds, potentially 300 to 400 gigawatts of load. That is not helpful from a policy perspective.

And if I were a policymaker, I'd be worried if that were the number. You can't get to that number with a $3 trillion to $4 trillion CapEx spend by the hyperscalers. You can't get to that number if it all came to Texas. And we think Texas is going to get more than its fair share, but it's not all coming to Texas. So in my view and where we've been trying to inform policymakers is we've been pushing that the world gets simpler if the commitments to be real move up. And we're still advocating for that. And I think that would speed up the load that's real. And I think it would also address some of these affordability and reliability concerns. So that zero is interesting. We'll see where it goes. But most of the numbers -- the numbers that we're sharing with you don't even really require a lot coming to fruition as energized load by 2030. Now we hope it comes, but there's already a lot that's being processed and will continue to be energized.

Incredibly helpful. And I guess some of the parallel questions on PJM, with the behind-the-meter comments you made, how big -- you mentioned connect and manage. How big do you think it can actually be? Do you think the majority is headed that way? Is that going to be more of an Ohio story, Virginia? Any thoughts you can give on connect and manage beyond high level?

Yes. you've actually -- and we should probably have a bigger discussion offline, Moses, because I think the policy paper yesterday, which I mentioned already, I thought was incredibly helpful. It raises the level of discussion to where I think we ultimately should go, which is different products will probably have different attributes. Some products might actually be firm from a capacity standpoint. Some may not be. That could be a cheaper product. That could be one that gets you connected sooner. And that's ultimately a customer choice. And where I'd like to see the conversation go is where load-serving entities such as Vistra are actually looking at these as products that they're offering to their customers and customers are opting into the product that provides the attributes they're looking for, that could cover capacity, that could cover energy.

I realize I'm moving forward in that discussion from white paper to recommendation. But I think where we're having trouble right now is we have a central body that's trying to make product choices for everybody and where to set that bar. And I think the hyperscalers are learning the opportunities to be flexible. You've seen some hyperscalers really lean into that with a lot of public announcements. We were part of announcements with Emerald AI about their tools to be more flexible, and they're doing some pilots in Silicon Valley with NVIDIA that I think will be very interesting from a demonstration of this capability. So I do think the world, as we look at trade-offs is starting to become more accepting of some level of flexibility in order to get speed.

How soon does that materialize? I can't say and at what price because the question is where does an RVP clear and what does it cost to be firm versus potentially be connect and manage. I don't think we have those details yet. I think that's something we're very active in. But I think it's too early to call it. And I think customers, because they have choices as to where to go, they can decide which markets to go into, which states, obviously to go into. We serve a lot of them. So we hope to serve them in one of our markets. But I don't think we can give you a prediction of how much would be flexible and how much would be firm. And Stacey, welcome any feedback on this.

Yes. Thanks, Jim. I would just add that, as Jim noted, the customers are willing to be flexible. And in some ways, the rules, especially in PJM, actually need to catch up to the customer because the customers just want to know what those rules are so they can make decisions about do they bring back up gen, how much do they bring, when are they going to have to turn it on. And so Connect and Manage, as an example, is behind from a process standpoint, the backstop procurement. And what PJM, I think, is hearing from customers and other stakeholders, and they're acknowledging this in the stakeholder meetings is that really those 2 things have to go together, the backstop procurement and Connect and Manage because customers will make decisions about how much generation they contract with when they understand what it means for their flexibility criteria. And I think PJM is trying to be responsive to that and potentially accelerating some of the connect and manage rulemaking, but we'll see how that plays out.

In ERCOT, for example, we are starting to get more clarity around what the flexibility rules are. Some of the net metering arrangements that have been approved have now set some of those rules. And so as the rules are set, I think the customers, to Jim's point, will adopt the products that match what the availability of those products are. And so I just think the regulatory process in some ways, needs to actually catch up with the customer willingness to be flexible so that they can get connected. But again, it kind of we're maybe beating a dead horse on this. But again, it goes back to like can they get connected and when. And if they can, I think you'll see them be very creative around these flexibility solutions.

The next question is from David Arcaro with Morgan Stanley.

I was wondering if you could comment on what the -- where is the conversation on contracting your remaining nuclear fleet versus potentially making more progress with the gas plants?

Sure. David, we can count on you for that question. So we appreciate it. I'm going to let Stacey comment. Thanks, David.

Thanks, David, for the question. We do continue to have conversations on both. I'm not going to get into which is going to come first or predictions about dates because as we've said before, these are complex discussions. They're customer-driven. And we continue to make progress, and we feel very good about what our opportunity set is on across our portfolio, both gas, nuclear and even new build options.

Got it. Okay. And then maybe looking at Slide 7, I see you maybe more explicitly highlighting here development opportunities at gas and coal plants, the new gas plants that you mentioned there. Just curious, are you kind of intentionally moving more toward a new build strategy or looking more at hybrid offerings, combining new megawatts and existing gen as you're progressing these contracting conversations?

Yes, David, it's really customer-driven. I think part of what we've seen happen in the last 2 years, as we've talked about, customers came in with a set of what I call preferences and then those evolved to needs as they tried to figure out what the art of the possible was. I think that's still happening. I think that's why bridge power, which came up on one of the earlier questions. This discussion 2 years ago wasn't about bridge power. and it sort of has evolved to bridge power as an example.

I think colocation was an early idea, then people are trying to figure out how the tariffs work. I think colocation is going to be coming back with new and existing into the picture. So I would not view this as we have a shift in strategy. What we're doing is kind of meeting the customer needs as the customer needs adapt, and they are different by hyperscalers or even different in different geographies. I think this 4,500 megawatts was as much a reminder to ourselves as it was to the market that we are developing a fair amount of assets, but not because we started off with just the intention of let's go develop a lot of assets.

We have to steward the shareholders' capital. And if the right stewardship of that capital is not to do these kinds of projects, then we're going to make the right call. And I think Kris can talk at length about how we think about that. But we do want to meet customer needs, and we can do that and get the right returns for shareholders. That's a win-win, growing our business, meeting the needs of the customers, returning capital to shareholders. So I would not say that we have some commitment to a pipe or a commitment to build a certain number of megawatts as an overall theme because I think that can be limiting in terms of market opportunities. And we have been opportunistic. I think we've shown that, and we've been disciplined. So I see us sticking with that.

Our next question is from Bill Appicelli with UBS.

Just going back to some of the commentary you had earlier around ERCOT and the forward curves. You talked about the incremental load growth you see over the next several years. I mean what do you think is driving that sort of mispricing that you see in the curve? Is that just a lack of conviction given all the sort of confusion out there? I mean, how much upside do you see just based on your load forecast?

Yes. I'm going to start, and I'm going to ask Shawn Stuckey to chime in. I think there's a couple of drivers. One is, I think folks are trying to get their head around what is a fair load forecast for the reasons we talked about earlier on the call and just the amount of discussion around the size of these batches and when are you going to get approvals to hook up the load. Again, I don't think that is actually driving what our view of a load forecast is in the near term, and we think the forward curves don't reflect even our view of a load forecast.

I do think the amount of batteries that have come into the market for the last 3 years have returned virtually nothing to the owners of those batteries. And I do think the batteries will end up shaking out at some point because as we know, most of them are in the 1- to 2-hour variety. So when the higher load factor load does come on to the system, it's not designed to meet that high load factor customer profile. But the batteries have been a material increase in supply. And when you have a low volatility kind of environment because the weather has not been that strong, you haven't seen the clears be very high.

So I think that's part of this backdrop that we're seeing and particularly since 2023 when you saw the kind of peak in the August '23 real-time prices. And we just haven't seen that level since then. Even though the underlying load is growing, the peak has not been growing quite as fast. So Shawn, I'd love to hear your comments if there's anything about how that's kind of worked its way through the forwards and anything you're seeing as sort of drivers that they could keep an eye on.

Yes. Thanks, Jim. So what I would add to that is this is a recurring theme that we've seen across the ERCOT market throughout the years. The term markets really do trade off of near-term weather and near-term pricing. So expectations of load growth in the term is obviously a significant driver. But we've seen it time and time again, existing weather in cash really drives the forwards. And I think if you look at what happened around April 14, April 15, 2 things happened. ERCOT released their long-term load forecast.

I think people looked at some of the numbers in there and started to wake up and sort of think about the possibility of what was realistic as well as what was not realistic in those load growth expectations. And there was also some heat that was showing up in late April. We did see some heat. We did see some pricing. And you've seen the forwards respond accordingly. You saw both summer and winter prices move up fairly materially. And I think that has been a recurring theme over time, and we expect that to continue. So I think it's kind of more of the same.

Okay. That's very helpful. And then just one quick follow-up. When you guys are talking about the gas bridge power, I mean, is that generally aero derivatives? Is that what you're looking at there?

Bill, we haven't been technology. We actually are talking to multiple OEMs about different technologies and some customers have different preferences to technology. So unless Stacey has a different view, based on the discussions I'm in with Stacey and her team, we're seeing all of the varieties coming through, and it sort of depends on availability, cost and the customer preferences.

Yes, I agree, Jim. That's actually an advantage that Vistra has is we're driven by what the customer need is. We're not committed to one technology or another. So based on what their needs are, we're able to help them identify what's available and what would serve their needs, and that can be a variety of different types of OEMs and technologies.

Our next question is from Julien Dumoulin-Smith with Jefferies LLC.

Maybe to talk in a little bit of a different term or permutation here. Can you talk about like hedging capacity? We saw one of your smaller peers here put up a 12-year capacity deal here. Can you talk about how you think about hedging out maybe in a comparable way, any kind of MISO or MISO exports on term in a way that might sidestep additionality? And then separately, any ability to get term in PJM on capacity? How do you think about that opportunity here? And then I've got a quick follow-up.

Sure. So Julien, just to make sure I understand your question. I mean, our deals that we have announced include capacity as part of the construct. Obviously, there's different ways we can contract. But as we discussed what we've announced already with Meta as an example, we were contracting capacity and energy. So I just want to make sure I understand your question. Was it in light of everything...

Yes, incrementally, right?

Yes, incrementally.

In this day and age, if you can't -- if it's more difficult to get an energy and capacity contract, how do you think about just simply hedging capacity, right? I hear you. In fact, your earlier comments, you were very clear in saying, look, it seems as if you're maintaining length in '28 onwards when it comes to your energy hedging. And so especially given what your peers are doing in hedging their capacity, I'm trying to bifurcate how you think about the different attributes that you can monetize and especially being conscious that one of your peers got this long-duration capacity contract, MISO, you all being very heavily oriented in the Midwest in some respects, is there an ability to kind of lean on that side?

Yes. So the MISO fleet, as you know, has been going through a transition. That's one of the markets that we serve that is a coal-fired fleet. And there's a lot in that question, Julien, because there's a lot of overlay of what's happening with federal policies and obviously, state policies. I would turn the question a little bit broader to say those are great sites and opportunities for us to do things with parties that may not be with assets because in reality, the existing assets have a life to them. There's a debate about just how much more life is there, but it's not the same as the nuclear fleet.

So I think you're going to see the development opportunities come to pass for us. And as we noted in our slides, we have hundreds of thousands of acres and 70 sites, but it's still going to be customer-driven. So I don't view MISO at the moment as we have an asset that's there, can I go get a 12-year contract off of it. I don't know that, that's going to be the right match for that type of asset. But I do think those sites have real opportunity for us to do things for customers that are probably going to be a little bit more organic and take the redevelopment of the site into consideration.

And Jim, since you bring it up that way, I mean, you all have been pretty instrumental in Illinois and talking about storage. I haven't heard you talk much about it today in the context of additional capacity. How do you think about leading the charge on that front, whether it's in Illinois in response to both the backstop and/or the state mandates or frankly, across the footprint? I mean, complementing with storage, it seems like a ripe conversation for you guys in particular, but you haven't emphasized it here today, notably.

Yes. Well, that is probably because, Julien, the way we, again, think about our business is we start with a customer and what does the customer need look like. Batteries have different roles to play. Obviously, batteries on sites that might support data centers play a different role than just putting a wholesale battery out onto the system and hoping that it gets a fair capacity payment and maybe a spark or some sort of spread. And we've seen in ERCOT, that's been a difficult proposition. So when you look at the cost of these batteries, they have not come down in price as much as people might think.

Obviously, there's ITC challenges if it's not more domestic in origin. But we don't see from our math that batteries inherently have a better IRR opportunity than some of the other dispatchable options. But again, we're going to be customer-driven in the way we think about this. And so there will be customers that prefer batteries. If that's part of the additionality for them, that's important. If the grid operators from an ELCC give credit for that or that helps with the flexibility requirement that they may have as part of their load ramp, then batteries will come into the picture. But I would tell you that simply the battery strategy as a wholesale product in the market, I would say, have debatable returns unless you can get a really long contract with an offtaker for it and reduce your market exposure.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.

Yes. I just want to thank everybody for joining. I think you can tell based on this call, it's a very busy time, but it's also incredibly exciting for Vistra. And we're going to provide you updates as we continue to execute on this strategy. It's also an important moment for all of us in the industry. And I think a lot of policy discussion is occurring, and Vistra is going to do its part to make sure that we're part of that and that we deliver reliably and affordably. I want to thank our team for their service to our customers and to our communities. And I want to thank our shareholders for their interest in Vistra, and we look forward to seeing you in person soon. Have a great rest of your day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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 vista 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 enter 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 zero 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 dispatch and 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 [ 430 ] megawatts of uprates at our PJM nuclear plants, the largest nuclear operates 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 zero 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 continued 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 low growth coming more slowly than some forecast has not dampened 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% at ERCOT, and low single-digit growth in PJM is achievable through 2030. Importantly, we expect overall loan 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 loan growth. While not every announced project will ultimately be built, even applying conservative assumptions, the level of activity supports the [indiscernible] 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 a meaningful opportunity for Vistra. Following 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 the Lotus transaction, it is an acquisition of high-quality dispatchable assets, 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 is 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, '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 the U.S. electricity markets. Winter storm Fern reinforced this view. During the tightest hour, thermal generation accounted for approximately 93% of all power delivered to the ERCOT grid, once again demonstrated that when conditions are the most demanding, firm dispatchable resources [indiscernible] 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 uprates under long-term contracts, more than any other power company in the country. These agreements executed with two 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 sign 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, covered 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, [indiscernible] and Beaver Valley power plants. We expect delivery of the operating capacity of Perry to commence in December of 2026, and [indiscernible] in December 2027. Upgrade capacity remains longer dated with [indiscernible] uprates expected to be online in the fourth quarter of 2031, with each subsequent year seeing an additional upgrade online until all 4 uprates 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 2050 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 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 [indiscernible] 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 in 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 recognized 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 that are 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 [indiscernible] 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 hedge 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 in our previously communicated range 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's $4 billion towards accretive growth investments, including the [indiscernible] acquisition, the development of the Permian gas units, and the PJM nuclear upgrade 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 fuel of $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 for 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 other 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, Stacy Dore, Scott Hudson and [ Sean Stucki ] will address any questions that you may have. I look forward to connecting with many of you in the coming days and weeks.

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

Just maybe starting off on PJM. Did 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 [ Viva ] Valleys 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 co-location, 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 [ White House ] for co-location 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 co-location, 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. [indiscernible] presented sort of this viewpoint around a fixed capacity plus a [ e-way call ] type of arrangement. So curious to see if that's a preferred path for the strategy 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 out 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 [indiscernible] 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 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 them 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 are waiting, obviously, for those commitments from hyperscalers to be made about how they're going to power their data center load. And so 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 contract for gas fired new build ahead of this RBA, if you see any interest to contract for gas [indiscernible] 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, two 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 upgrades. And then at Comanche Peak, we're able to offer a speed-to-market solution for Amazon there. So I think those deals, which were both fairly recent, demonstrate the interest by hyperscalers and 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 your 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 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 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 back 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 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 they 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 two 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 and 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 in 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 addition to 2027 from just those transactions 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 into 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 [indiscernible] transaction. As per 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 will 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 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 -- as well as other -- the PJM nuclear operates.

But if we do look at just 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 was 60% conversion points to a pretty big EBITDA number there. So that's very helpful. And just wanted 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 categorize 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 an operating generation.

Our deal with Meta is a great example of that 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 uprates. 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 two 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 in a 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.

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 [indiscernible] capability to meet needs not too far out. A lot of other people talk about, they're 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 your -- the free cash flow per share that 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 should 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 are you going to do with the cash?

Yes, Steve, thanks for the question. I think as we showed on the cap available for allocation chart, we have $3 billion between now and 2027, and that's even at 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 a -- 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 continue 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 pay down, and 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 question on nuclear upgrades. I think you've talked about potential in the neighborhood of about [ 600 ]. You've identified the [ 400 ] [indiscernible] 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 the uprate 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 [indiscernible] The news about the badging process potentially impact those. My understanding, if you haven't yet it if you're going to pursue [indiscernible] 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 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 have. 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 and from a number of different counterparties about those assets. And I think -- our view is that being in the tough process doesn't prohibit us from locking in some of the revenue that -- on those assets, but we're going to continue to fill 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 test 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 [indiscernible] 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 had 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 want it to do.

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

Stacey, thanks for all the updates here 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 any color [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 upgrade opportunities? 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 upgrade at Comanche Peak. But right now, honestly, we are 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 number one focus at Comanche Peak at the moment. But certainly, the team continues to explore the upgrade in the background. And as we've mentioned earlier, we have the opportunity potentially with the same customer to add that up rate to the portfolio. So we'll continue to keep you updated as [indiscernible] 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 Unit 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 data center as well with Amazon coming on site.

That [indiscernible] 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. This now 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.

Good day, and welcome to Vistra's Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this 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 third quarter 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. Leading the call today are Jim Burke, Vista's President and Chief Executive Officer; and Chris Moldovan, Vistra's Executive Vice President and Chief Financial Officer. They are joined by other Vistra's senior executives 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 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 Vistar'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 at explaining 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. I appreciate you joining us to review Vistra's third quarter 2025 results. This year continues to be a transformational one for our company, and the activity during the quarter was a key driver of our progress. We announced the landmark power purchase agreement at Comanche Peak, announced our plan to develop 2 gas-fired units in West Texas and successfully closed the acquisition of approximately 2.6 gigawatts of natural gas-fired assets from Lotus Infrastructure Partners. Importantly, while we are successfully advancing our growth efforts, we continue to be steadfastly focused on execution in our core business. As we will discuss, our core business continues to point to additional value creation in the years ahead. I'm proud of what our team has accomplished this year as we continue building the foundation for sustainable growth and value creation well into the future.

Continuing on the topic of sustainable growth on Slide 5, you can see the positive impact of steps we've taken over the past several years. Combined with a more favorable demand backdrop, those actions are now translating into sustainably higher levels of profitability for our company. At the core of this success are the approximately 7,000 team members across the organization. Their dedication and hard work allowed us to deliver another solid quarter of financial performance.

Combined with our results year-to-date, we are narrowing our guidance range for 2025 adjusted EBITDA to $5.7 billion to $5.9 billion, and our 2025 adjusted free cash flow before growth to $3.3 billion to $3.5 billion.

Moving to our near-term outlook. We are introducing guidance ranges for 2026 adjusted EBITDA of $6.8 billion to $7.6 billion and adjusted free cash flow before growth of $3.925 billion to $4.725 billion, including the expected contribution from the assets acquired from LOTUS Infrastructure Partners. It's worth noting that excluding the benefits from the LOTUS assets, the midpoint of our 2026 adjusted EBITDA guidance range is above our previously communicated 2026 adjusted EBITDA midpoint opportunity of $6.8 billion plus, another clear sign of sustainable momentum across our business.

We are confident in our forecast as we expect consistent earnings from our retail business paired with strong performance from a reliable, flexible and highly hedged generation fleet.

Finally, for 2027, we are introducing an adjusted EBITDA midpoint opportunity range of $7.4 billion to $7.8 billion. While multiple drivers of gross margin variability remain, including the 2027, 2028 PJM capacity auction, our hedge percentage, which currently sits at approximately 70% of expected generation, provides line of sight to our adjusted EBITDA midpoint opportunity.

Finally, the recently announced power purchase agreement at Comanche Peak marks a major milestone for our company, for our site and for Texas. We believe this 20-year agreement, which enables our customer to energize up to 1,200 megawatts of new load ensures the Comanche Peak nuclear plant will continue to deliver power to Texans at least through the middle of this century. As you may recall, we recently relicensed Comanche Peak out to the 2050s, and this agreement provides the financial backing to maintain operations through that date and potentially beyond.

Further, the customer's commitment to bring significant backup generation to the site will also enhance resource adequacy while meeting their own reliability needs. I want to commend our team for their hard work and constant dedication in getting this agreement over the finish line, working, of course, very closely with our customer. We believe this is yet another example of why Vistra is a reliable and trusted partner for these types of long-term agreements needed to meet the ever-increasing power demand across the U.S.

We continue to see multiple pathways for long-term agreements at other sites as we believe our fleet and development capabilities are well positioned to provide a variety of power solutions to meet the needs of these large load customers.

Turning to Slide 6. Our 4 strategic priorities remain integral to our success. We believe our integrated business model and comprehensive hedging program provide our stakeholders greater visibility into our future financial performance. Our diverse fleet of generation assets, combined with our trusted retail brands and strong commercial acumen form an integrated platform that consistently delivers attractive earnings and downside protection.

Our generation team achieved another solid quarter of commercial availability of approximately 93% for our coal and gas fleet. This included exceptional performance during the late July nationwide heat wave and the impacts of the extended outage at 1 of our 3 Martin Lake units. Nuclear also had a solid quarter of performance, achieving a capacity factor of approximately 95%.

Complementing our generation portfolio, our commercial team continues to deliver strong results through disciplined execution over a comprehensive hedging strategy. We've established a highly hedged position for '26 as we enter the year, providing enhanced earnings visibility and stability. Over the next 12 months, the team will continue to prudently manage our open length for '27 to further strengthen that position. As I'll discuss later, we are also making solid progress in advancing additional capacity contracts with large load customers, which will further enhance the long-term value of our company.

On the retail side, we continue to see strong customer count growth driven by our portfolio of brands in the Texas market. We believe the team's continuous innovation combined with strong customer service drives the consistent earnings level of the business while outperforming on customer complaint performance versus our key competitors and maintaining our 5-star ranking.

Switching to capital allocation, we remain disciplined in our approach by targeting a significant return of capital executing on our attractive growth project pipeline and maintaining a strong balance sheet. Since implementing the capital return plan put in place during the fourth quarter of 2021, we have returned over $6.7 billion to our shareholders through share repurchases and common stock dividends. Chris will cover capital allocation in more detail later in the presentation, but you will see that we expect to return at least an additional approximately $2.9 billion through share repurchases and common dividends, including the additional $1 billion authorized this quarter by the Board for share repurchases through 2027.

Turning to growth. With the increasing power needs in West Texas, including from the state's expanding oil and natural gas industries, combined with expected demand growth from data center additions, we have made the decision to move forward with developing 2 natural gas units totaling 860 megawatts. We view these projects as attractive for our owners with projected returns in excess of our mid-teens levered return thresholds. Both units remain part of the Texas Energy Fund due diligence process, and we plan to make a final decision on financing in the coming months.

Equipment and EPC procurement is progressing well, and we remain on track to deliver this West Texas capacity in early to mid-2028.

Lastly, we successfully closed on our acquisition of 7 natural gas plants from LOTUS Infrastructure Partners, totaling approximately 2,600 megawatts of capacity. This acquisition, which includes assets across PJM, New England, New York and California reflects our disciplined and opportunistic approach to M&A. It will enhance our already wide geographic footprint and strengthen our ability to meet the diverse needs of our customers. We look forward to integrating these assets into the Vistra portfolio and driving operational efficiencies by running them in line with the high standards of our current large combined cycle and peaking gas fleet.

We continue to target approximately $270 million of adjusted EBITDA from these assets in 2026, with potential upside in the out years driven by synergies and higher capacity revenue.

Moving to the balance sheet. We continue to prioritize liquidity and low leverage to manage the business prudently. While we currently have a strong balance sheet with leverage of approximately 2.6x, we expect additional deleveraging through the end of 2027 through higher earnings and continued prudent management of our debt levels.

As we stated on our last call, we believe the lower leverage levels, combined with a reduction in business risk as a result of more contracted revenue sources, puts us on the path for an upgrade to investment-grade credit ratings.

On our strategic energy transition, we continue to execute on our strategy of utilizing existing land and interconnects to develop solar and energy storage projects. Our Oak Hill solar project in ERCOT reached commercial operations last month, bringing 200 megawatts of clean energy to the ERCOT grid. Our Pulaski and [indiscernible] sites remain on schedule for commercial operations by year-end 2026.

We continue to evaluate the remainder of our development portfolio for additional opportunities as long-term power agreements materialize.

Finally, we believe nuclear, with its carbon-free profile and 24/7 availability, is a vital component in meeting the country's electricity needs for decades to come. Large load customers clearly have a preference for this type of generation. To meet these needs, we continue to evaluate upgrade opportunities at our nuclear plants with studies planned to be completed by the end of this year. Initial assessments are promising, indicating the potential to increase capacity at nuclear plants by approximately 10%, with the additional capacity starting to come online in the early 2030s.

Turning to Slide 7. We continue to see a structurally improved demand environment, which carries significant positive implications for our business. As we've discussed over the past several quarters, electricity consumption across the country is undergoing a fundamental shift. Load growth in our largest markets remains well ahead of national averages, with weather-normalized load in PJM rising approximately 2% to 3% and the ERCOT market growing around 6% year-over-year. Importantly, customer investment continues to send stronger, more sustained market signals. Data center development remains robust with a number of planned facilities across the U.S. more than doubling from 12 months ago. Our largest markets, PJM and ERCOT, continue to be targeted for a larger share of these developments. As an example, ERCOT's market share of these announcements is over double the region's market share of currently installed data centers. While it's unlikely that every announced project ultimately reaches completion, even factoring in a haircut, we believe this data indicates the low growth levels we covered at the top of the slide will materialize. In fact, we continue to see the potential for even greater acceleration. This is especially evident in recent results calls from the hyperscalers where they've emphasized expanded investments in AI and data infrastructure, signaling that development activity is expected to remain strong, if not increase further, in the year ahead.

This load growth is already leading to higher utilization rates for our combined cycle gas assets where capacity factors have increased from the low 50% range to the high 50s over the last several years. Growing consumption should efficiently drive existing assets to higher utilization levels over time, potentially reaching rates in the mid-80% range for combined cycle gas plants. This is evidence that there is capacity currently on the grid capable of meeting the load growth anticipated over the next 3 to 5 years.

In addition to supply-side solutions, there is also increasing interest in demand-side solutions. The infrequent super peak hours can also be met through practical solutions like on-site backup generation and demand response, approaches that large load customers are continuing to develop and implement. This framework supports accelerating demand growth from emerging sectors such as data centers, crypto operations and other industrial load, allowing them to integrate into our markets by leveraging existing grid investments while improving system utilization and lowering unit costs for end customers.

Turning to Slide 8. Vistra is in the middle of a multiyear plan to drive significantly higher profitability levels against the backdrop of accelerating electricity demand growth just outlined. The team has already delivered on several initiatives that have led to our increased outlook through 2027. Our retail business consistently achieved strong margin performance and high levels of free cash flow conversion. Our commercial team through our comprehensive hedging program lock-in benefits from stronger power markets, while our generation team looks for attractive and cost-effective ways to organically add capacity, such as our natural gas upgrades in Texas.

Inorganic expansion has also been a big value driver through both the acquisitions of Energy Harbor and the natural gas plants from LOTUS. However, we see an extensive list of near-term and long-term opportunities that are not included in our outlook that will enable us to grow our business through the end of the decade and beyond. Some of these initiatives are already underway, such as the 1,200-megawatt power purchase agreement at Comanche Peak, or the Coleto Creek coal to gas conversion, and these are expected to begin contributing to profitability in the next few years. Projects like the new Permian gas units and the Miami Fort coal-to-gas conversion are in the early stages of project execution.

Others such as the nuclear uprates, while still early in the process, could provide significant additional optionality around our assets. Long-term power purchase agreements will also be a key driver of increasing our earnings visibility, and we see multiple pathways to agreements across our large diversified fleet of more than 40,000 megawatts of nuclear, gas, coal and renewable generation.

We also see numerous opportunities for contracting new build capacity across our geographies and our experienced development team is actively progressing these options. We continue to see an acceleration in strong customer interest we outlined last quarter, and we believe the momentum we have today should enable us to realize multiple contracting opportunities. In fact, we set aside roughly $50 million per year over the next several years, including 2026, and increased expenses for investments in people and development activities to capture these opportunities and handle the level of customer interest. Importantly, all the potential future drivers I've outlined remain incremental to the core objective of delivering for our customers for running an efficient and reliable fleet that benefits from improving power market fundamentals.

We believe there is significant optionality embedded in our large generation fleet, particularly our combined cycle and peaking gas fleet given that strong market fundamentals can drive higher volumes and higher revenue without significant incremental investment. Now I'll turn it over to Kris to provide more details on our third quarter results outlook and capital allocation. Kris?

Thank you, Jim. Turning to Slide 10. Vistra delivered $1.581 billion in adjusted EBITDA in the third quarter including $1.544 billion from Generation and $37 million from retail. Consistent with last quarter, the Generation segment continued to realize material benefits from our comprehensive hedging program, with average realized prices over $10 per megawatt hour higher compared to the same quarter last year. The stronger realized price benefit, together with the higher capacity revenue in our E segment, and the expected nuclear PTC revenue recognized at Comanche Peak, more than offset the impacts of extended outages at Martin Lake Unit 1 and our battery facilities at Moss Landing.

On a year-to-date basis, the incremental contribution from 2 additional months of Energy Harbor results, combined with stronger realized wholesale prices and higher capacity revenue, have more than offset the impact from the outages and are driving the strong year-over-year performance gains. Moving to retail. As a reminder, based on the shape and level of supply costs, we typically expect lower profitability in the first and third quarters, with this year being no exception. Notably, the third quarter, like the first 6 months of the year, benefited from strong customer count and margin performance, with the results in the quarter being offset by weather-driven gains in the third quarter of last year that were not repeated this summer, and some expected intra-year timing impacts of supply costs. Importantly, the retail business continues to generate strong earnings to our business in a variety of market conditions and remains on track to outperform 2024 results.

Turning to Slide 11. Based on our expectations for 2025 and 2026 and the range of midpoint opportunities for 2027 that Jim outlined earlier as well as our expectation that we will continue to achieve a targeted medium-term adjusted EBITDA to adjusted free cash flow before growth conversion rate of at least 60%, we project to generate a significant amount of cash, approximately $10 billion, through year-end 2027.

The confidence in our outlook and the cash generation of our business continues to be underpinned by our comprehensive hedging program, and the downside support provided by the nuclear PTC, resulting in a highly hedged position over the next several years.

As we've highlighted in previous quarters, our share repurchase program has generated significant value for our shareholders. Since beginning the program in November 2021, we have reduced our shares outstanding by approximately 30% through repurchase of approximately 165 million shares at an average price per share under $34. We continue to expect to return at least $1.3 billion to our shareholders each year through share repurchases and common dividends. With the Board's recent authorization of an additional $1 billion of share repurchases, we have approximately $2.2 billion of share repurchase authorization, enough to meet our annual share repurchase target through 2027. We will continue to execute the share repurchase program through our 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.

On the balance sheet, after increasing our net debt to reflect the closing of the Lotus transaction, and the financing activities completed in October as well as incorporate the midpoint of our 2026 guidance range for adjusted EBITDA, our net leverage ratio is approximately 2.6x. As mentioned last quarter, we are targeting leverage metrics consistent with investment-grade credit ratings and believe the improvement in our net leverage levels, combined with the higher earnings visibility from more contracted earnings streams, could position us for an upgrade, potentially within the next 12 to 18 months.

Turning to growth investments. We will continue to be opportunistic, yet disciplined in the deployment of capital. In addition to our planned solar and energy storage investments, we will be allocating capital to our new gas-fired units in West Texas, which we estimate will require approximately $900 million before any offsets from project financing. Finally, we expect to continue to evaluate M&A opportunities for both the generation and retail businesses.

Even after allocating approximately $3.4 billion to our equity holders through share repurchases in common and preferred dividends and $2.6 million for accretive growth investments, including closing the acquisition of the gas assets from LOTUS Infrastructure Partners, we still expect to have approximately $4 billion of additional capital available to allocate through year-end 2027.

Share repurchases remain an important capital allocation priority, and we still believe our shares are trading at an elevated free cash flow yield, especially when compared to the average free cash flow yield for companies in the S&P 500. A strong balance sheet is also important, and we see multiple benefits to achieving investment-grade credit ratings.

Finally, the shift in power market fundamentals have led to a significantly wider opportunity set for growth compared to years past. Notably, while the opportunity set has changed, our approach is not. We remain disciplined, seeking to balance growth with shareholder returns and a strong balance sheet. We continue to place a high threshold on capital, targeting at least mid-teens levered returns for any opportunity we pursue.

Finally, moving to Slide 12. As Jim mentioned, we are in a multiyear execution plan that is leading to a sustainably higher level of earnings power for our business. This is evident in the higher adjusted EBITDA and adjusted free cash flow before growth guidance we've provided today. While these metrics have been the focus of our guidance historically and will likely continue to be going forward, at least in the short term, these metrics don't fully capture our best-in-class capital allocation demonstrated over the past several years. As a result, we've included a new perspective focused on adjusted free cash flow before growth per share through 2026. We view this metric as a direct indicator of long-term value creation for shareholders. It demonstrates both our ability to generate recurring cash flow and the capacity is deployed that cash toward value-enhancing initiatives. It's also an important measure with Vistra's long-term incentive compensation framework, keeping management and shareholders aligned on how we define success. You can see from the chart on the left that based on actions taken to date, Ford curves at the end of October and a stable share count as of September 30, we see a trajectory for adjusted free cash flow before growth per share to grow by approximately 50% from 2024 through 2026.

We think this level of improvement over the 2-year period is compelling and is a testament to both the operational excellence and disciplined capital allocation by the team.

As Jim outlined earlier, the number of opportunities for our business have never been higher, and we continue to see heightened engagement from our customer base. These opportunities vary in the amount of capital required as well as our ability to control them. Some of these opportunities, like continued share repurchases, are fully in our control. Many of these opportunities, like the recently announced Permian gas units, the 1,200-megawatt Comanche Peak PPA or other new long-term contracts that existing or new build generation assets are highly accretive, but are not expected to begin contributing immediately to our results.

The continued improvement in power markets remains a potentially significant source of future growth in our business. Collectively, we see these multiple drivers leading to a meaningfully higher adjusted free cash flow before growth per share with a compelling growth rate over the next 3 to 5 years. We will continue to deploy our excess capital to maximize the value creation from these opportunities, and we'll provide updates as they materialize.

In closing, the growth and results we shared today reflect the strength of our strategy and the dedication of our entire team in consistently delivering for our customers and our shareholders. As we look to the months ahead, our focus remains on finishing the year with solid execution, ensuring reliable performance through the winter season and setting the stage for continued success in 2026.

With that, operator, we're ready to open the line for questions.

[Operator Instructions] And your first question today will come from Shar Pourreza with Wells Fargo.

So just maybe focusing on the '27 opportunities, which is generally in line with expectations. I guess, what's currently embedded in that range? Obviously, it's a little early for the Comanche deal ramp. But I guess where do you see opportunities to improve versus the midpoint? Is it sort of market vol and locking in some of the forward curves? Or is there a more strategic dry powder just given the $4 billion of cash available for allocation?

Thank you, Shar. I think there are a number of levers still to pull. Obviously, there is an open position. We've disclosed we're still open in 2027. We disclosed about a 70% hedge percentage. So as you continue to see the markets strengthen, we have exposure to that for sure.

In terms of strategic deals, obviously, contracting is one of these topics that comes up, and we see opportunities to have contracts, some of which could start in a 2027 time period. We do not have that embedded in our forward view. And so I do think, Shar, there's -- it's always difficult to put numbers that far out and make too many assumptions because we have to deliver on these opportunities, but we think there's upside in our business. That's why we have a wider range there. And our goal would obviously be to continue to do what we've done in the past, which is trend upwards as we get closer to the delivery year. And I think we've shown a track record of doing that, and I think we have quite a few levers to pull.

Perfect. I appreciate that, Jim. And then just on the '27 sort of like you talked about contracting opportunities. I mean peers have been talking about deals becoming unanimously more front of the meter for obviously, reasons including circumventing political sensitivities and reliability arguments. Is this how you're thinking about your Eastern fleet like Beaver Valley? And are you seeing converging pricing between front and behind the meter?

Yes, that's a really good question, Shar. There are challenges and opportunities with both co-located deals and front of the meter. The additionality concept comes up. And so folks -- some folks are doing the bridge power to then get started and potentially then later get a grid connection. Some are starting in front of the meter from the get-go. I do think, ultimately, customers are going to look for a grid connection. I think that's been integral to long-term reliability from a data center point of view. The way we think about this is that each deal, and we've talked about this for over a year, each deal has unique characteristics, and that's hard, I think, to explain in advance because customers have different goals around sustainability, around speed to market, around which markets they prefer to actually support from a data center standpoint.

So when you even think about the new build opportunities, which we're part of, that we're in discussions with parties, some of those are looking at how can they bring additional resources to the marketplace to address the long-term concerns folks have that loan growth ultimately is going to have to be met with additional generation. It doesn't have to be in the near term. I think 1 of our key messages that I think is starting to resonate is there is excess capacity on the system in most markets today, particularly the major markets we're in, ERCOT and PJM, to meet most of the load growth during these non-super peak hours. And then the super peak hours, the customers are bringing some solutions as well with their backup generation. So I really think all options are on the table from a customer standpoint, whether it's front of the meter, whether it's co-located, whether it's bridge power to then get to the greater bridge power to then get to building an on-site generation resource that more directly supports their data center.

We haven't seen any options come off the table from our discussions with customers. And I think that's what's really important is customers are being creative as well because they want to work with stakeholders like the regulators and the state leaders who want to make sure things stay reliable and affordable. So I don't see a trend yet, Shar. I still see the same variety of options on the table that we were talking about a year ago.

Your next question today will come from Jeremy Tonet with JPMorgan.

I just wanted to pick up on some of the comments in the prepared remarks there. I believe you talked about meaningfully higher adjusted free cash flow before growth in compelling growth rate over the next 3 to 5 years here. Just wondering if you might look to quantify that in some sense for the market in the future, given there's a lot of variables as you laid out there, but just wondering any more sense you could provide to that?

Yes, Jeremy, this is Kris. I appreciate the question. And I think we talked about this, and we're expecting this question. As we look forward, there are so many opportunities that we just think it's a disservice to try to put a growth rate on there and to give a range because there's just a number of different things that could come and the timing of them and when they come could be different. So I think we do see -- we laid out all the opportunities on the right side of that slide, and we see a lot of those opportunities. And we feel like that the right time to announce those, we'll continue to update the growth on likely on a -- at least on an annual basis. But we're just not going to try to forecast when and at what level all these opportunities are going to become reality.

Jeremy, this is -- I would just like to add that when we give you our '26 view and our '27 midpoint opportunities, we're in a highly hedged position, obviously, when we provide that. So part of our strategy has been, let's give our investors the information that we've got, the hedging and the contracting, to give you high confidence in it. As you go further out and you start looking 4 and 5 years in a cycle where there hasn't been capacity clears and auctions, you haven't necessarily hedged that far out. The degrees of variability out there are wide. And I think that's actually positive from a Vistra shareholder standpoint because the fundamentals of the business, as we talked about in our prepared remarks, are really strong. But just to put a number out there and put a growth rate number out there, I think is there's too many variables at play that I think you would have many more questions about what are the assumptions underlying that? And I don't think we would be giving you enough confidence around all those assumptions to say take that to the bank. We've been, as a company, very consistent, I think, in our view that we want to give you things you can count on, and that's our focus. And I think what we've given you in disclosures in the '26, '27 time frame, meet that hurdle.

Got it. That's helpful. And I just wanted to come back to, I guess, contracting discussions if we could. And any color you might be able to provide here, granted deals happen when they happen. But just as far as conversations related to gas power generation relative to nuclear, wondering if you could provide any more color, I guess, on how those trend?

Sure. And I'm going to ask Stacy to provide some feedback here as well. You noticed in our prepared remarks, we talked about investing in growth even [indiscernible] which we're reluctant. I have to tell you, our business is one where we know that in a fundamentally in a commodity-driven business, you need to be a low-cost operator. But then these are unique opportunities and the pace at which we have not seen before. In fact, this is the highest level of engagements we've been part of is what we're in right now. And so recognizing that, we're adding people, and we're adding dollars to make sure that we can handle the level of inbounds that we're getting. And it's an exciting time. It's a stressful time because there's a ton of work that customers are asking of us. But I think the range of options from gas to nuclear to doing some things that are more short term versus long term, those options are on the table. And frankly, our people are excited to see the growth opportunities they haven't seen in this industry and their whole career.

So we're investing in that, not only in SG&A and O&M, but also some CapEx assumptions to capture it. But I'd like Stacy to weigh in on this.

Yes. Thanks, Tim. Jeremy, yes, I would just say, to echo what Jim said, all options continue to be on the table, and we continue to see sort of record levels of interest across our portfolio as well as in opportunities to do new build generation. Demand actually seems to be accelerating from our standpoint based on the conversations we're having and also lengthening into the later years of the debt gain, whereas I would say, a year ago, customers were very focused on 2026, 2027 power, they're now starting to recognize that they need to layer in longer-dated deals as well and serve their needs in the later part of this decade.

And so we just continue to have a number of conversations across our fleet. The number of engagements we have currently and the number of inbounds we're getting are the highest that they've ever been. So we're really excited about the opportunity, but we're also very committed to being disciplined about what opportunities we pursue, making sure that we can deliver and execute on those opportunities.

Understood. Real quick last one, if I could. As it relates to '27 hedging price levels, are you able to provide any color there?

We are not providing that at this point. We will next quarter. That's our typical cadence for providing the roll forward, if you will, of the hedge disclosures. But obviously, we've been laddering into increasing our market through time. And so you would expect to see that increase year-over-year, and you've seen that from '24 to '25, '25, '26, you're going to see it again in '27.

As you know, our philosophy isn't to try to capture the absolute peak on any of this because the volumes that we're hedging are so large that you do need to thoughtfully execute in the marketplace, both on the retail customer contract side, any of the large commercial industrial and data center contracts as well as third-party hedging in the market. But we will provide that disclosure, Jeremy, in the next quarter.

And your next question today will come from Steve Fleishman with Wolfe Research.

Jim, so just on that last question on the hedging, just given the kind of bullish factors you mentioned all the demand, et cetera, and time to power, I'm just curious, though, why not? Have you considered maybe a little less hedging kind of than the ratable you've done in the past? And just how you're thinking about that? I guess it sounds like you [indiscernible] your volumes are so big, you just feel like you need to get a decent chunk of it put in with customers but [indiscernible] curious your view?

Yes, Steve, that is a really -- it's a great question. Even if you look at this year, and I know you follow these markets very closely, you can be hedging out in the forward and even in like 2026, it can look like your hedges are out of the money because the market continues to move up after you hedge. Then you can get into like a third quarter of 2025 at ERCOT, where the weather really didn't materialize and now all those hedges settle deeply in the money. And so I do think there is a reality that when you decide you want to hedge, it still takes some time to be moving some of these volumes. And I think that gives certainty to our investors that our share buyback program and our dividends and our CapEx plans to sustain and grow the business, debt paydown that we can deliver on all of those.

So I don't think the idea for a fleet the size producing over 200 terawatt hours a year is easy to just back off and then say, now it's time to hit the gas pedal on the hedging. And so we do have to be thoughtful. We do use a point of view, so we're not constantly hedging in a programmatic way. We do, just like our share buyback, we have some flexibility in our program that when we like prices at certain times, we'll do more. But I do think it's partly a reality of the hedging dynamic of a large fleet. It's also the retail customers pulling through their pricing and their products because they too want to hedge some of their exposure. And that's part of the value add that we have as distros to meet customers in their needs when they want to meet them. And we have the discussions all the time internally, how far out should we go? What's the right risk premium for going out that far? But I do think you're hitting on the key aspects, Steve, in terms of the size of the business being -- having a method to it.

Okay. And then just on the kind of M&A and investment-grade metrics, maybe you could talk to how to balance those -- how you're looking at balancing those things? And I know you've got $4 billion cash still available. Is that enough for the M&A opportunities you're seeing? If you saw something bigger, would you be willing to go above the metric targets a little bit on debt to do it? How should we just think about that?

Yes, Steve, thanks. That's a good question. As we -- and we have been upfront in our discussions with the rating agencies that we think that the opportunity set for inorganic growth is at a high level right now. And we don't want to be in a position where we're not able to be opportunistic. And so one of the things why we think that it could be I said 12 to 18 months is we have certainly talked to the agencies about having some cushion that we don't want to just get into investment-grade land and then be at risk of missing an opportunity.

I do think, though, that if you look at our -- where our metrics are going, even with the $4 billion and we've noted in the presentation that, that would assume a 2.3x leverage ratio that there is a lot of dry powder there and where we'd still meet investment-grade metrics, and that leverage could probably come. As our business risk improves, that leverage -- there's probably some room there even with that to increase that leverage. So there's probably a little bit more than $4 billion. And then the last thing I'll say is, if it's the right opportunity, we do view -- we're buyers of our stock. But the stock could be used -- our equity could be used as a currency as well. We've seen others in our industry do that. That would obviously have to be for the right opportunity, but that could be a path as well for us.

Your next question today will come from Bill Appicelli with UBS.

Just a question around your views on the forward curves. You mentioned earlier about the soft weather and the Ford's held up reasonably well, all things considered. You highlight here about 6.5% year-to-date growth on a weather-normal basis in ERCOT. When you guys think about the potential for constructing additional generation, I know you made the decision to move forward with the peak curse. But maybe just some updated thoughts around where the curves are and as you sort of look out to the demand profile, what's your bias on the pricing level from here?

Sure. Bill, great question. I'll start with our decision, obviously, for Texas because the 860 megawatts, which is in addition to almost 500 megawatts of gas augmentations and things that we've done in the ordinary course to bring more megawatts to the grid. But 860 megawatts of putting that in West Texas is a unique opportunity because of what we've been seeing in West Texas specifically. That hub out there used to trade at a discount to the north hub, which picks up the Dallas-Fort Worth area. Now it's trading at a premium, a significant premium, and we're looking at fundamental supply and demand activity in West Texas, driven with the electrification of oil and gas load as well as data centers. And we think that these -- having a site there already, our Permian gas site, which we're tripling by virtue of bringing these turbines to that site, that's a unique opportunity.

It would not have penciled in the same manner in other parts of Texas. So I think that's just an important thing to note is I don't think this is all of a sudden new build economics, and you saw we're building these at 1,100 at KW, which is lower than where a fully priced new build would be because we had preordered some of this equipment, and we have good relations on our EPC that we feel good about being able to deliver this really at a below market cost. So that's unique. But to your forward curve aspect, we are seeing more life in ERCOT forwards than we had seen obviously a year ago. And I think that's still not fully reflective of the low growth forecast that we have, and we're conservative in our low growth forecast. And we've -- I'd say, conservative we try to ground our forecast and our best view of physically what can come on to the grid in a certain time frame. And we have lower numbers than where the utilities are and even where ERCOT is, and we're comfortable with our numbers, and we're comfortable the forward curves don't even reflect that level of load growth. So we're still bullish on where we think power prices could go just on supply and demand. In PJM, that market has actually not shown as much life on the energy side. It had on capacity because it's predicting supply demand on capacity driven by load growth. But in the actual load, that's materializing and then looking at the dynamics of supply and demand, we haven't seen those curves move as much. But in the last quarter, we have seen more life in PJM.

And we think that also is not reflective of where load growth is likely to take energy prices in PJM, but it is starting to, I think, recognize that tightening aspect. And we don't know if coal plant retirements and any extensions, what might happen fundamentally with supply-demand in the next 3 to 5 years, but you get beyond that, you're going to have to still deal with load growth and ultimately, what new resources will come on in plus time frame and what do we do with some of the older assets. There's more call to retire in PJM as a market than, say, ERCOT.

And so I do think those supply-demand fundamentals over time will still show strength in the forwards that we really still don't see with today's marks.

Okay. That's very helpful. And then just 1 other 1 around the nuclear upgrades. I think what you described sounds like potentially 600 to 700 megawatts. How would you consider pursuing that? Does that have to come with offtake agreements or contracting of that output to potentially pursue it? Or maybe just to think through, I know you're still evaluating, but maybe just how would that potentially come to fruition?

Yes, Bill, that's the most [indiscernible]. That is still, while it's maybe less expensive than building new nuclear, it's still expensive. And so the market price [indiscernible] and the clean attributes, there is interest in the uprates from support with potential data center parties. And so those are conversations that are ongoing, and those are obviously complex because they do take time to bring to market. Those things will come on beginning in the 2030s. So they're not not quick capacity. And so to Stacy's earlier point, there are -- the customers are doing longer-term planning. So I think this does meet their interest levels, but we don't think the current forwards in either market would support just embarking on upgrades for that reason.

Last question today will come from David Arcaro with Morgan Stanley.

I was wondering, could you give an update on the other data center contracting opportunities that I think in the last quarter, you had suggested could come to fruition by year-end? Just any comments as to whether that time frame is still looking possible for certain opportunities? And then any just directional is it nuclear versus gas or PJM versus ERCOT? Curious any color you might be able to offer?

Sure. The exact timing, I think this has come up on our previous calls and certainly some of our peers have had this question. The exact timing is hard to predict just because it's a complex contract, 2 parties need to reach agreement and 2 parties have to get through their own approval processes because these are material deals for both sides of these agreements. I do think there's possibilities of that, David. I think we have stages of contracts that are much closer to execution, and we've got some that are longer in terms of the development cycle to be able to bring those to market. But I do think that, as we mentioned earlier, the activity level is the highest that it's been. I think that also drives a bit of a sense of urgency on both sides of the equation.

I think we want to make sure that we're able to deliver and capture this value. But the other side of the equation is the large customers know that there aren't that many immediate opportunities with which to execute. And so we are seeing heightened activity levels, and we certainly hope to be able to give you some more specifics and execute what we call put points on the board by year-end. But I can't predict that specifically. I mean, we're into November, we hit the holidays. But either way, whether it's right before year-end or sometime thereafter, we're signing deals that would be in the 10-, 15-, 20-year horizon. We need to get these right, and that's what we're focused on.

Yes, absolutely. I appreciate that color. And on -- well, congratulations on Comanche Peak. And I was just wondering if you could maybe touch on the further opportunities that exist on the site. What are the prospects for contracting the second unit there? And I'm just curious, is there any other infrastructure on the site that you could be involved in?

David, it's a really good question. Thank you for actually bringing it up. We thought that might be question number one. And -- but it's always in the rearview mirror, right, once you announce it. But yes, about 5 weeks ago, we were very excited to announce that agreement. And we have great hope for expanding that agreement. There's been some interest on the customer's part to do so. But I also caution that a data center gets up to 1,200 megawatts is still a very large data center. And I'm actually unaware of any data center even operating in the U.S. today that's 1,000 megawatts in terms of actual pulling power and operating. So we want to get the first 1,200 right? It's important for the state of Texas, the state leaders, for ERCOT, for [indiscernible] that we show leadership here on this and getting this right. But the customer conversations have talked about more capacity. They've talked about the potential for uprates. And so once you establish a beachhead like this, I think you're going to have more options, but it all depends on the quality obviously, of our execution here.

And so I do think of this as a relationship and not a transaction. And I think there's going to be multiple opportunities.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.

Yes. Thank you, everyone, for joining. As you can see, this has been a very active time. And we put a lot of points on the board in the third quarter as we like to call it. This is an incredibly exciting time for Vistra. We look forward to executing not only on our large and growing base business, but our growth initiatives that we talked a lot about on today's call. I want to thank our team for their service to our customers and our communities, and we appreciate your interest in Vistra, and we hope to see you in person soon. Have a great rest of your day.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.