Vistra signals $6.8B+ 2026 EBITDA opportunity as Lotus acquisition advances

Earnings Call Insights: Vistra Corp. (VST) Q2 2025

Management View

President and CEO James A. Burke stated that “the business continues to perform well and with our strong year-to-date results, we remain on track to achieve a record result for the company in 2025.” He highlighted persistent demand growth trends, especially in PJM and the Northeast, noting that recent heat waves led to the highest load levels in years across several regions.
Burke announced, “we are reaffirming the guidance ranges for 2025 adjusted EBITDA of $5.5 billion to $6.1 billion and adjusted free cash flow before growth of $3 billion to $3.6 billion.” The company is also “increasing our 2026 adjusted EBITDA midpoint opportunity, excluding any contribution from the Lotus assets to be at least $6.8 billion.”
Vistra recently announced plans to acquire 7 natural gas facilities from Lotus Infrastructure Partners, adding approximately 2,600 megawatts of capacity, including 1,800 megawatts in PJM. Burke explained, “We believe these assets are highly complementary to our fleet, and we look forward to closing the transaction later this year or early next year.”
The company achieved commercial availability of approximately 95% during critical demand periods and noted continued growth in ERCOT, with Texas business market volumes 10% higher year-over-year.
Burke also referenced the successful relicensing of the Perry Nuclear Power Plant through 2046 and ongoing solar and energy storage developments at Oak Hill, Pulaski, and Newton, all on schedule for 2025 and 2026.
CFO Kristopher E. Moldovan stated, “Vistra delivered $1.349 billion in adjusted EBITDA in the second quarter, including $593 million from Generation and $756 million from retail.”

Outlook

The company reaffirmed guidance for 2025 adjusted EBITDA of $5.5 billion to $6.1 billion and adjusted free cash flow before growth of $3 billion to $3.6 billion.
Management increased the expected floor of the 2026 adjusted EBITDA midpoint opportunity to $6.8 billion, citing current hedge positions and recent PJM capacity auction results. Moldovan said, “we continue to see the possibility for our 2026 adjusted EBITDA midpoint opportunity to be $7 billion.”
The targeted conversion rate of adjusted free cash flow before growth to adjusted EBITDA over the medium term is now set at or above 60% starting in 2026, up from the previous 55% to 60% range.

Financial Results

Vistra reported $1.349 billion in adjusted EBITDA for the second quarter, with $593 million from Generation and $756 million from Retail. Average realized prices in Generation were nearly $3 per megawatt hour higher than the same quarter last year.
The company noted substantial offsetting of unplanned outages through higher realized prices and capacity revenue.
Retail performance remained strong, especially in ERCOT, and is positioned to outperform 2024 results.
Share repurchases reduced shares outstanding by approximately 30% since late 2021, and dividends per share increased by 50% from Q4 2021 to Q2 2025.
Net leverage ratio remains at approximately 3x adjusted EBITDA, with expectations to decline materially beginning in 2026.

Q&A

David Keith Arcaro, Morgan Stanley, inquired about progress and timing for a potential deal at Comanche Peak as well as regulatory clarity. Burke responded that while not ready to preannounce, “I feel very good about where things stand in getting a deal done at Comanche Peak,” and expressed confidence under both existing and forthcoming regulatory frameworks.
Michael Sullivan, Wolfe Research, asked if updates by year-end were specific to Comanche Peak or if other opportunities were expected. Burke clarified that “the year-end comment was not specific to Comanche Peak,” citing multiple ongoing opportunities across the fleet.
Sullivan also questioned whether the Lotus deal would preclude further M&A. Burke replied, “We don’t see it as precluding… There’s plenty of assets that are of interest to us.”
Jeremy Bryan Tonet, JPMorgan, asked about contracting momentum. Burke indicated activity levels “appear just from an activity level to be even greater than it was last quarter.”
William Appicelli, UBS, sought further detail on free cash flow conversion improvements and investment grade targets. Moldovan discussed the increased conversion rate and a clear path to investment-grade ratings, stating, “I could see us being materially below 3x.”
Julien Patrick Dumoulin-Smith, Jefferies, inquired about timing related to SB 6 and backup generation requirements in contracts. Burke noted confidence in compliance regardless of regulatory timing and said, “I think our deal will work pre or post a 9/1 completion.”

Sentiment Analysis

Analysts pressed for details on deal timing, regulatory impacts, and cash deployment, often probing for greater specificity and expressing a slightly positive and engaged tone as they pursued clarity on growth opportunities and capital allocation.
Management maintained a confident tone during both prepared remarks and Q&A, frequently reiterating strong operational performance and optimism about regulatory and market developments. Burke stated, “I feel really good about it. The team feels really good about it and something that the team is working hard at.”
Compared to the previous quarter, management’s tone appeared more assertive regarding guidance and market positioning, while analysts remained consistently focused on deal flow and cash deployment.

Quarter-over-Quarter Comparison

Vistra raised the floor on its 2026 adjusted EBITDA midpoint opportunity from $6 billion to $6.8 billion and reaffirmed 2025 guidance, compared to the previous quarter where the 2026 outlook was described as “approaching mid to high $6 billion and even possibly $7 billion.”
The Lotus acquisition was newly highlighted as a growth catalyst, while ongoing upgrades and the relicensing of Perry Nuclear Power Plant were emphasized this quarter.
Analysts continued to focus on deal timing, regulatory clarity, and capital allocation, but management’s confidence and specificity in responses increased.
Management’s commitment to share repurchases and dividend growth remained a consistent theme, with updated figures reflecting continued execution.

Risks and Concerns

Ongoing unplanned outages at Martin Lake Unit 1 and Moss Landing battery facilities were acknowledged, though management expressed confidence in restoration timelines.
Regulatory developments, particularly in Texas around SB 6, remain a source of uncertainty, but management stated projects are expected to comply with evolving requirements.
Market volatility and capacity auctions were discussed as influencing both opportunity and risk.

Final Takeaway

Vistra’s management underscored strong year-to-date performance, reaffirmed robust 2025 guidance, and raised the 2026 EBITDA outlook, citing favorable market dynamics and successful hedging. The pending Lotus Infrastructure Partners acquisition offers further growth and geographic diversification, while capital returns and balance sheet strength remain top priorities. Management expressed confidence in delivering on its opportunity pipeline, navigating regulatory changes, and maintaining a disciplined approach to capital allocation and growth.

Read the full Earnings Call Transcript