Vistra Corp. (VST) Earnings

Management highlights

• Core Operational Execution and Results - Vistra delivered strong first half 2026 results, with Q2 2026 adjusted EBITDA of nearly $1.8 billion and first half adjusted EBITDA of approximately $1.35 billion, a year-over-year increase. - The company completed planned refueling outages for three generation units and planned gas and coal outages in preparation for summer peak demand, achieving high commercial availability across the entire fleet during heat waves in Texas and PJM markets. - Power market fundamentals are improving, with sustained annual load growth of 4-6% across key markets driving strength in PJM forward pricing; management notes expected market variability and weather impacts from year to year, and remains confident in long-term performance. • New Strategic Partnership: Helix Platform - Vistra is a founding investor in the Helix digital infrastructure platform alongside KKR, the University of Pennsylvania, and the Kuwait Investment Authority. Helix will deliver a rack-to-grid one-stop solution for data center power and infrastructure. - Vistra will commit up to $1 billion in capital investment over time, with an initial $100 million followed by an additional $500 million conditional on meeting development milestones; Vistra is the preferred power partner for Helix, with optionality to participate in new contracted projects or serve existing assets. - The partnership creates an additional growth avenue, extends Vistra's deal evaluation capacity, and leverages partner capital for infrastructure development that aligns with the growth of the digital economy. • Capital Allocation and Shareholder Returns - Since launching the share repurchase program in November 2021, Vistra has retired over $6.5 billion in shares at an average cost of ~$38 per share, exceeding its original target of $6 billion in repurchases by the end of 2026. Approximately $2 billion of repurchase authorization remains. - The company continues to allocate capital to core development projects including Permian gas units, the PJM nuclear site, the Oak Hill II solar facility, and the Helix commitment, while also working to strengthen the balance sheet to achieve mid-investment grade credit ratings across all major agencies, which will support future opportunistic growth. • Policy and Regulatory Engagement - Management is actively engaged in policy and regulatory advocacy across key markets, and is encouraged by the overall direction of regulatory developments related to power market structure and generation development.

Guidance

• Management reaffirms the full year 2026 adjusted EBITDA guidance range and adjusted free cash flow before growth guidance, with a 2026 adjusted EBITDA midpoint of $4.725 billion, and expects to deliver results at or above the midpoint. - For 2027, meaningfully lower ERCOT forward curves create a headwind that is only partially offset by higher PJM prices and existing hedging/PTC downside protection, so management expects 2027 results to trend toward the lower end of the existing guidance range. The 2027 guidance range excludes contributions from the pending Cogentrix acquisition and the Meta long-term power purchase agreement; these two transactions are expected to add roughly $700 million to the 2027 midpoint when closed. - A full updated 2026 and 2027 guidance will be provided on the third quarter 2026 earnings call; if Cogentrix has not closed by that point, a 2027 guidance update will be provided after the transaction closes.

Segment performance

Vistra reported total second quarter 2026 revenue of $767 million, representing a year-over-year increase from Q2 2025. The generation business delivered approximately $900 million in Q2 2026, with year-over-year improvement driven by 5% higher average realized prices compared to Q2 2025, plus optimized flexible gas generation operations and the restart of Martin Lake Unit 1 (contributions from this unit were not present in Q2 2025). The Retail segment also delivered strong performance in the second quarter, with benefits from Vistra's integrated business model. No revenue contribution percentages for individual segments were provided in the transcript.

Risks & headwinds

• Power market price risk: Current wholesale power prices in ERCOT are below the level required to support adequate returns for new generation build, creating a market conundrum for contracting and new development. • Regulatory uncertainty: Unresolved regulatory proceedings in both ERCOT (batch zero queue review, generation development criteria) and PJM (RBP capacity market design, IRAS market rules) create near-term uncertainty for project timelines and returns. • Proposed IRAS rules in PJM: The potential mandated 'stick-based' curtailment requirements for load customers are seen as a blunt, inefficient market approach that could create market distortion, though management notes this may also increase customer interest in co-location with existing generation. • Project timing risk: The paused ERCOT batch zero queue review could create short-term delays for near-term energization projects, though Vistra's own targeted projects are not expected to be materially delayed. • Battery market overbuild risk: Recent battery build in ERCOT has outpaced expected returns, leading to lower-than-projected returns and current market pricing weakness, though management views this as a natural competitive market correction.

Analyst Q&A

• Q: The analyst asked about the impact of Texas' pending ERCOT queue review (Batch Zero) on Vistra's project timeline and power market fundamentals, and whether long-term contracting for new build will remain around historic pricing levels or support clean energy premiums. /

  A: Vistra maintains its 2030 ERCOT load growth forecast of 150 gigawatts, and views the queue thinning as a positive long-term step to remove unrealistic projects and focus on viable development. Vistra's key Comanche Peak project (expected online at end of 2027) is not expected to face material delays. On pricing, new build equipment costs have doubled or tripled, so historic pricing levels are no longer viable; large customers are willing to pay a premium for existing generation contracts, as that is still a discount to new build costs. Vistra uses a customer-driven hybrid approach, pursuing both new build and existing capacity solutions that meet return hurdles.

• Q: The analyst asked how market dynamics and contracting conversations differ between ERCOT and PJM, and what Vistra's strategy is for PJM's upcoming RBP capacity market framework, as well as management's views on proposed IRAS rules. /

  A: ERCOT is currently less supply-tight than PJM, and has a more centralized queue study process that is temporarily paused for the governor's audit. PJM has a more localized, ongoing study process with unresolved criteria for interconnection and costs. Management supports bilateral contracting over heavy reliance on the RBP capacity market, and notes the $555/MW-day RBP cap will need a spread to support most new projects. On proposed IRAS rules, Vistra opposes the mandatory 'stick-based' curtailment mandates and prefers incentive-based (carrot) approaches to reward flexible customers; the proposed rules may actually increase demand for co-location with existing generation, which offers faster interconnection.

• Q: The analyst asked how the Helix partnership will evolve over time, how capital commitments work, and whether additional investors or a future public listing are planned. /

  A: Helix is additive to Vistra's existing data center business, extending Vistra's deal capacity by creating a simplified one-stop solution for customers that combines power and data center infrastructure. Vistra has an initial commitment, with additional capital tied to development milestones, and optionality to participate in any deal that aligns with Vistra's return requirements. Vistra expects Helix to add more outside investors over time to expand its available capital, and does not require Helix to focus only on projects where Vistra acts as power provider. The partnership is complementary to Vistra's core business, as Helix can take on more infrastructure development risk that Vistra's shareholders do not expect the firm to hold.

• Q: The analyst asked about Vistra's willingness to expand share repurchases given available free cash flow, and asked for an update on 2028 hedging activity across regions. /

  A: Vistra has $1.2 billion remaining in repurchase authorization, expected to be exhausted by end of 2027. Both management and the board are flexible about approving additional authorization in 2026 or 2027 if market opportunities for repurchases arise. Management did not provide detailed 2028 hedging data, but noted that lower ERCOT pricing is offset by stronger PJM pricing, which benefits Vistra's diversified portfolio. Current ERCOT price weakness reflects recency bias from recent battery build and mild weather, and long-term load growth will likely strengthen prices over time.