Executive Summary / Key Takeaways

• Vistra Corp. is strategically positioned to capitalize on surging U.S. electricity demand, particularly from AI and data centers, through its integrated retail and generation business model.
• The company delivered strong financial performance in 2025, narrowing its adjusted EBITDA guidance to $5.7 billion to $5.9 billion and raising its adjusted free cash flow before growth to $3.3 billion to $3.5 billion.
• Vistra's diversified generation fleet, including significant nuclear and gas assets, coupled with a comprehensive hedging program, provides a resilient and stable earnings stream, underpinning robust 2026 and 2027 outlooks.
• Strategic growth initiatives, including new gas-fired units, coal-to-gas conversions, nuclear uprates, and long-term power purchase agreements, are enhancing future capacity and earnings visibility.
• A disciplined capital allocation strategy prioritizes substantial shareholder returns and deleveraging, with a target of achieving investment-grade credit ratings within 12 to 18 months.

Setting the Scene: An Integrated Powerhouse in a Transforming Market

Vistra Corp., a venerable entity founded in 1882 and headquartered in Irving, Texas, stands as a pivotal integrated retail electricity and power generation company operating across the competitive U.S. energy markets. The company's core business encompasses electricity generation, wholesale energy sales and purchases, sophisticated commodity risk management, and retail sales of electricity and natural gas to approximately 5 million end-users across 16 states and the District of Columbia. This integrated model, a foundational strength, allows Vistra to manage the entire value chain from power production to direct customer sales, providing a unique competitive advantage in volatile markets.

The U.S. electricity landscape is undergoing a profound transformation, marked by an unprecedented surge in demand. Weather-normalized load in the ERCOT market is growing approximately 6% year-over-year, while PJM sees a 2% to 3% increase. This acceleration is largely driven by the rapid proliferation of large-scale data centers and the electrification of various industries, including oil field operations and electric vehicles. Hyperscalers, key drivers of this demand, have increased their capital expenditure budgets by over 50% to 60% on average compared to the prior year, signaling sustained and even escalating development activity. This structural shift presents a significant tailwind for Vistra, whose diversified generation fleet and agile commercial capabilities are well-positioned to meet these evolving needs.

Technological Edge and Operational Agility

Vistra's competitive moat is not built on a single proprietary technology, but rather on its integrated fleet management and operational optimization capabilities across a highly diverse portfolio of generation assets. This strategic approach leverages the strengths of each asset class to provide reliable, flexible, and cost-effective power solutions.

The company's dispatchable generation assets, primarily its natural gas and nuclear fleet, are crucial differentiators. Vistra operates a substantial combined cycle gas turbine (CCGT) fleet of nearly 20 gigawatts (GW), which currently operates at average utilization rates of approximately 55% to 60%. This fleet possesses significant headroom, capable of running at substantially higher capacity factors, potentially reaching rates in the mid-80% range, thereby improving grid utilization and lowering unit costs for customers. Complementing this are approximately 2 GW of simple cycle peakers, offering quick-start capabilities to rapidly ramp up as load materializes, further bolstering grid reliability.

Vistra's nuclear fleet is a cornerstone of its carbon-free offerings, providing 24/7 baseload power. This includes the Comanche Peak Nuclear Power Plant, whose license was renewed in Q4 2024, and the Perry Nuclear Power Plant, whose license was extended through 2046 in July 2025. Large load customers, particularly data centers, are increasingly preferring carbon-free generation, giving Vistra a distinct advantage in securing long-term power purchase agreements (PPAs). The Inflation Reduction Act of 2022 (IRA) further enhances this advantage by providing a nuclear Production Tax Credit (PTC) of up to $15 per MWh, offering significant downside support to earnings. Vistra recognized transferable nuclear PTC revenues of $145 million in the third quarter of 2025.

In terms of innovation and future capacity, Vistra is actively pursuing several initiatives:

• Nuclear Uprates: Feasibility studies are underway for potential nuclear uprates across the fleet, with initial estimates indicating a potential increase of approximately 10% (over 600 MW) in capacity. These additions are targeted to come online in the early 2030s.
• Coal-to-Gas Conversions: The company plans to repower its 650 MW Coleto Creek coal plant in ERCOT and its 1020 MW Miami Fort coal plant in PJM as gas-fueled facilities upon their retirement by the end of 2027 and mid-2028, respectively. This strategy extends the operational life of existing sites and adds dispatchable capacity.
• New Gas-Fired Units: Vistra is developing 860 MW of advanced simple-cycle peaking plants in West Texas, anticipated online by 2028. These projects boast an attractive build cost of approximately $1,000 per kilowatt, significantly advantaged compared to current industry estimates of over $1,500 per kilowatt for peakers.
• Energy Storage Systems (ESS): The Vistra Zero initiative focuses on developing solar and energy storage projects on existing land and interconnects. The Oak Hill solar project in ERCOT (200 MW) reached commercial operations in Q3 2025, and the Pulaski (Illinois) and Newton (Illinois) sites are on track for commercial operations by year-end 2026.

These technological and operational capabilities translate directly into a strong competitive position. Vistra can offer tailored, reliable, and increasingly carbon-free energy solutions, enabling it to capture premium contracts and drive higher margins and stable cash flows in a tightening energy market.

Competitive Landscape and Strategic Positioning

Vistra operates within a highly competitive landscape, contending with major utility players such as Duke Energy (DUK), Southern Company (SO), NextEra Energy (NEE), and Exelon (EXC). Each competitor brings distinct strengths and strategies to the market.

Duke Energy and Southern Company, largely regulated utilities, typically exhibit more stable but potentially slower growth profiles. Their regulated asset bases often provide predictable cash flows and margins, a contrast to Vistra's exposure to competitive markets, which offers higher upside potential in a demand-driven environment. NextEra Energy is a recognized leader in renewable energy, emphasizing sustainable growth and innovation. While NextEra's focus on renewables positions it strongly for the long-term energy transition, Vistra's diversified portfolio, particularly its dispatchable nuclear and gas assets, offers immediate reliability and firm capacity, which is critical for the continuous power demands of AI and data centers. Exelon, with its substantial nuclear fleet, shares some similarities with Vistra's nuclear operations. However, Vistra's integrated retail business and broader mix of generation assets provide a more comprehensive and diversified offering beyond just nuclear power.

Vistra's competitive advantages stem from its integrated business model and geographic reach. Its ability to manage both generation and retail operations across 16 states allows for optimized resource allocation and hedging strategies. The recent acquisition of seven natural gas generation facilities from Lotus Infrastructure Partners in October 2025, totaling 2,600 MW across PJM, ISO-NE, NYISO, and CAISO markets, further enhances Vistra's geographic diversification and strengthens its ability to meet varied customer needs. This expansion is expected to contribute approximately $270 million of adjusted EBITDA in 2026, with potential for further upside.

Vistra's retail segment consistently demonstrates strong customer count growth and disciplined margin management, outperforming competitors in customer satisfaction and maintaining a 5-star ranking. This robust retail franchise provides a stable demand base for its generation assets. The company's large and flexible generation fleet, capable of rapid dispatch and high utilization, allows it to respond effectively to market signals and customer demands. Vistra's management believes it can build generation faster and at a lower cost than other areas of the country, positioning Texas, in particular, to capture a disproportionate share of data center load growth.

However, Vistra faces vulnerabilities, particularly its historical reliance on fossil fuels, which could lead to increased operational costs and regulatory scrutiny. The company is actively addressing this through coal-to-gas conversions and significant investments in renewables. Regulatory and policy uncertainties, such as those surrounding Texas Senate Bill 6 (SB6) and FERC's stance on co-located load in PJM, also pose challenges. While FERC has indicated that co-located load in PJM will likely be permitted, the specifics of tariff issues and regulatory clarity are still being ironed out. Similarly, Texas policymakers are grappling with how to manage rapidly growing load while ensuring grid reliability, with proposed legislation raising questions for both generators and large load customers. Vistra actively engages with policymakers to advocate for market-based solutions that incentivize new, reliable generation and optimize existing infrastructure.

Financial Performance and Liquidity

Vistra has demonstrated robust financial performance, reflecting its strategic execution and operational effectiveness. For the full year 2024, the company delivered an adjusted EBITDA of $5.656 billion, exceeding the top end of its original guidance range, even before accounting for the $545 million benefit from the nuclear production tax credit. This strong performance underscores the resilience of its diversified business model.

In 2025, Vistra continued its upward trajectory. The first quarter of 2025 saw adjusted EBITDA reach $1,240 million, followed by $1,349 million in the second quarter, and $1,581 million in the third quarter. The Generation segment has been a significant driver, benefiting from a comprehensive hedging program that resulted in average realized prices nearly $4 per MWh higher in Q1 2025 compared to Q1 2024, and over $10 per MWh higher in Q3 2025 compared to Q3 2024. The inclusion of Energy Harbor's results for a full nine months in 2025 (compared to seven months in 2024) also contributed favorably to the East and Retail segments.

Despite these operational successes, GAAP Net Income saw a decrease in Q3 2025, falling by $1.19 billion to $652 million compared to Q3 2024. This was primarily due to a $1.67 billion decrease in unrealized mark-to-market gains on commodity derivative positions, coupled with increased operating costs of $39 million and higher selling, general, and administrative (SGA) expenses of $33 million. Similarly, for the nine months ended September 30, 2025, GAAP Net Income decreased by $1.61 billion to $711 million, largely influenced by a $2.09 billion increase in unrealized mark-to-market losses on commodity derivative positions, $77 million in operating costs related to the Moss Landing Incident, and $73 million in impairment of long-lived assets. These impacts were partially offset by strong realized revenue, nuclear PTC benefits, and increased insurance income, including an $80 million involuntary conversion gain from the Martin Lake Incident.

Vistra maintains a robust liquidity position, with $3.71 billion in total available liquidity as of September 30, 2025.

Cash provided by operating activities for the nine months ended September 30, 2025, was $2.64 billion. The company's disciplined capital allocation strategy has seen over $6.7 billion returned to shareholders through share repurchases and common stock dividends since Q4 2021. Vistra's net leverage ratio stood at approximately 2.6x as of October 2025, and the company is targeting investment-grade credit ratings within the next 12 to 18 months through continued deleveraging and earnings growth.

Outlook and Growth Trajectory

Vistra's forward-looking guidance reflects increasing confidence in its earnings power and strategic growth initiatives. For 2025, the company has narrowed its adjusted EBITDA guidance range to $5.7 billion to $5.9 billion and raised its adjusted free cash flow before growth (FCFbG) guidance to $3.3 billion to $3.5 billion. This revised outlook is underpinned by consistent earnings from the retail business and strong performance from a highly hedged generation fleet.

Looking ahead, Vistra introduced a 2026 adjusted EBITDA guidance range of $6.8 billion to $7.6 billion and an adjusted FCFbG range of $3.925 billion to $4.725 billion, which includes the expected contribution from the Lotus Infrastructure Partners acquisition. Notably, even excluding the benefits from the Lotus assets, the midpoint of the 2026 adjusted EBITDA guidance range surpasses previous expectations, signaling sustainable momentum across the business. The company's hedge ratio for 2026 increased to approximately 90% in Q1 2025, providing enhanced earnings visibility and stability.

For 2027, Vistra introduced an adjusted EBITDA midpoint opportunity range of $7.4 billion to $7.8 billion. With approximately 70% of expected generation already hedged, the company has clear line of sight to this target, while retaining upside potential from market strengthening and strategic contracting opportunities not yet factored into the outlook. A significant driver of future cash flow is the expected increase in FCFbG conversion to at least 60% from 2026 onwards, largely due to benefits from the One Big Beautiful Bill Act (OBBBA) related to depreciation.

Strategic growth initiatives are poised to further enhance Vistra's long-term value. The 20-year power purchase agreement signed in September 2025 to supply 1,200 MW of carbon-free power from the Comanche Peak Nuclear Power Plant, with delivery starting in Q4 2027, is a landmark deal. The commitment to construct 860 MW of new gas-fired peaking plants in West Texas by 2028, coupled with coal-to-gas conversions at Coleto Creek and Miami Fort, will add crucial dispatchable capacity. Furthermore, potential nuclear uprates could add over 600 MW to the fleet by the early 2030s.

Risks and Challenges

Despite a compelling growth narrative, Vistra faces several risks. Operational incidents, such as the January 2025 fire at the Moss Landing 300 MW energy storage facility, which led to its permanent closure and an estimated $110 million in remediation costs, highlight the inherent risks in operating complex energy infrastructure. Similarly, the November 2024 fire at Martin Lake Unit 1, an 815 MW unit, impacted energy production, though insurance recoveries are expected to mitigate financial impact.

Regulatory and policy uncertainties remain a significant concern. The evolving landscape of EPA rules regarding greenhouse gas emissions, cross-state air pollution, and coal combustion residuals, coupled with the reevaluation of these rules by the Trump administration, creates an unpredictable environment. In Texas, legislative activity like Senate Bill 6 (SB6) introduces potential complexities for large load customers and co-located generation, raising questions about grid connection protocols and transmission charges. While Vistra actively engages in these discussions, the ultimate resolution of these proceedings could impact project timelines and economics.

Macroeconomic factors, including ongoing supply chain constraints, labor shortages, and geopolitical events like the Russia-Ukraine conflict affecting nuclear fuel supply, could also influence operational costs and project development. Management acknowledges that the business model of AI is still proving itself out, and the long-term sustainability of hyperscaler capital expenditure levels is a factor to monitor.

Conclusion

Vistra Corp. is strategically positioned at the forefront of a transformative era in the U.S. energy sector, driven by unprecedented electricity demand from AI and data centers. Its integrated business model, diversified generation fleet, and sophisticated hedging strategies provide a robust foundation for sustained growth and resilient earnings. The company's commitment to disciplined capital allocation, evidenced by substantial shareholder returns and a clear path to investment-grade credit ratings, further strengthens its investment appeal.

While operational incidents and regulatory uncertainties present challenges, Vistra's proactive approach to asset development, including new gas-fired units, coal-to-gas conversions, and nuclear uprates, coupled with its ability to secure long-term PPAs, underscores its leadership in meeting the nation's evolving energy needs. The company's technological agility and operational excellence, particularly in optimizing its dispatchable fleet, provide a distinct competitive edge. As the U.S. electrifies and demand continues to surge, Vistra's strategic vision and execution position it as a compelling investment for discerning audiences seeking exposure to the future of American energy.