Vistra Corp. (VST)

Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with the condensed consolidated financial statements and related notes included in Part I, Item 1. Financial Statements.

Business Environment and Outlook

Electricity Demand

Electricity demand drivers including the rise of large scale data centers, the electrification of oil field operations, and electric vehicle load building are contributing to a projected fast-paced load growth in the regions we serve. Our integrated retail electricity and power generation operations allow us to quickly respond to electricity demand changes. To support growing demand from large‑scale electricity consumers, we continue to engage in discussions with various counterparties regarding the potential long-term sale of power from our generation facilities, and we are progressing a series of development initiatives across our generation portfolio, including nuclear uprates and other capacity expansions.

Supply Chain Constraints

Our industry continues to face ongoing supply chain constraints and labor shortages, which have reduced the availability of essential equipment and supplies for constructing new generation facilities, increased the lead times for procuring materials, and raised equipment and labor costs associated with maintaining our natural gas, nuclear, and coal fleet.

We are proactively managing these constraints by continuously re-evaluating the business cases and timing of our planned development projects. This has led to the deferral or abandonment of some planned capital expenditures for our solar and battery projects and could impact the economic feasibility of additional projects in our new generation development pipeline. We are engaging with suppliers to secure key materials needed to maintain our existing generation facilities before future planned outages.

Iran Conflict

We are monitoring the conflict involving the United States, Israel, and Iran and related instability in the Middle East, including the potential for further escalation and disruption. Although the Company does not conduct operations in the affected region, prolonged or expanded instability could indirectly affect the Company through broader macroeconomic and commodity-market impacts, including changes in natural gas and power prices, supply-chain disruptions, construction delays, increased inflationary pressures, and capital-market volatility, which could impact our future results of operations. See Factors Affecting Our Financial Condition and Results of Operations — Commodity Prices for additional information on our commodity hedging strategy and estimated hedging levels for the balance of 2026 and 2027.

Noteworthy Developments

Capacity Markets — PJM Auction Results

In July 2026, Vistra received its results from the PJM Capacity Auction for planning year 2028-2029, and the table below lists clearing price per MW-day and our cleared capacity volumes by zone:

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Strategic Investment in Digital Infrastructure

In June 2026, the Company entered into a limited partnership agreement governing KKR Helix C L.P. (the Helix Fund), an open-ended investment fund managed by affiliates of KKR & Co. Inc. (KKR). As a founding investor in the Helix Fund, the Company committed up to $1 billion consisting of (i) an initial $500 million commitment and (ii) an additional $500 million commitment subject to the Helix Fund meeting certain commercial power supply milestones for our existing generation assets or, at the Company's election, regardless of whether such milestones are achieved.

The Helix Fund will seek to invest in and manage assets critical to enabling artificial intelligence (AI), including hyperscale data center development and operations; baseload and flexible power generation; transmission and distribution infrastructure; and fiber and connectivity infrastructure, among other assets. This investment reflects our strategy to participate in the growing demand for power generation assets supporting hyperscale data center development, while leveraging our existing fleet and development capabilities.

Gas Plants Disposition

In June 2026, Vistra Operations entered into a purchase and sale agreement for the sale of our Casco Bay, Beaver Falls, and Syracuse natural gas generation facilities (the Disposal Group). The transaction is expected to close in the second half of 2026, subject to customary closing conditions, including receipt of applicable regulatory approvals. The related assets and liabilities of the Disposal Group were classified as held for sale as of June 30, 2026 and are reported in the East segment. See Note 2 to the Financial Statements for additional information.

Planned Gas-Fueled Dispatchable Power in ERCOT

In May 2024, we announced our intention to add up to 2,000 MW of dispatchable, natural gas-fueled electricity capacity in west, central, and north Texas consisting of the following projects:

•Building up to 860 MW of advanced simple-cycle peaking plants to be located in west Texas to support the increasing power needs of the region, including the state's oil and gas industry. Early development work is underway on this project which we anticipate will be online in 2028.

•Repowering the coal-fueled Coleto Creek Power Plant near Goliad, Texas, set to retire in 2026 to comply with EPA rules, as a natural-gas-fueled plant with up to 600 MW of capacity.

•Completing upgrades at existing natural-gas-fueled plants that will add more than 500 MW of summer capacity and 100 MW of winter capacity.

In June 2026, Permian Power entered into a $583 million loan agreement with the Texas Energy Fund (TxEF) to finance the development of the 860 MW peaking plant in west Texas (TxEF Loan). The loan is non-recourse to Vistra, and interest on the TxEF Loan is calculated at a fixed rate of 3.0% per annum. As of June 30, 2026, $172 million was outstanding under the agreement.

Collateral Release

On December 2, 2025, S&P upgraded Vistra Operations' issuer credit rating from BB+ to BBB- and revised its outlook from Positive to Stable, and on March 20, 2026, S&P upgraded the Senior Unsecured Notes rating from BB+ to BBB-. On March 16, 2026, Fitch upgraded Vistra Operations' issuer default rating and the Senior Unsecured Notes rating from BB+ to BBB- and revised its outlook from Positive to Stable. As a result of these investment-grade ratings and the satisfaction of certain other conditions specified in the Vistra Operations Senior Secured Indenture, an investment-grade event was deemed to have occurred, and the liens on the collateral securing the Senior Secured Notes were automatically terminated and released in full on April 2, 2026 (Indenture Collateral Release).

The Indenture Collateral Release represents the elimination of the collateral and related lien provisions under the Vistra Operations Senior Secured Indenture only and did not modify, refinance, extinguish, or otherwise change the outstanding principal amount, maturity, interest rates, or other material terms of the Senior Secured Notes. Following the Indenture Collateral Release, the Senior Secured Notes are effectively unsecured and rank pari passu with the Senior Unsecured Notes. The Indenture Collateral Release is subject to reversion if the applicable rating agencies withdraw the investment-grade ratings or downgrade the ratings below investment grade, subject to a 60-day grace period.

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Additionally, Vistra Operations repaid $2.444 billion in outstanding borrowings under the Term Loan B-3 facility in April 2026, and in coordination with the investment-grade ratings, met the collateral suspension provisions of the Vistra Operations Credit Agreement and Commodity-Linked Credit Agreement releasing all liens securing the Vistra Operations Credit Facilities and the Vistra Operations Commodity-Linked Credit Facility (Credit Facility Collateral Release). The Vistra Operations Credit Agreement and Vistra Operations Commodity-Linked Credit Facility were amended in June 2026 to, among other things, remove the collateral reinstatement requirements applicable to the Vistra Operations Credit Agreement and the Vistra Operations Commodity-Linked Credit Facility. The Vistra Operations Credit Agreement was also amended to release each guarantor from its guarantee to the extent related to the revolving credit loans, revolving credit commitments, letters of credit, letters of commitments and/or secured cash management agreements, in each case, under the Vistra Operations Credit Agreement. The Vistra Operations Commodity-Linked Credit Facility was amended to release each guarantor from its guarantee.

PJM Nuclear Power Purchase Agreements and Uprates

In January 2026, Vistra announced it had entered into 20-year PPAs with Meta, pursuant to which the Company has agreed to supply Meta with a total of 2,609 MW of carbon-free power and capacity from the Company's PJM nuclear power plants as follows:

•1,268 MW of energy and capacity from Perry and 908 MW of energy and capacity from Davis-Besse; and

•213 MW of uprate energy and capacity from Perry, 80 MW of uprate energy and capacity from Davis-Besse, and 140 MW of uprate energy and capacity from Beaver Valley.

Under the terms of the PPAs, the Company anticipates commencing delivery on a portion of the operating energy and capacity in late 2026 and full delivery of the operating energy and capacity by year end 2027. Additionally, the Company anticipates commencing delivery on a portion of the uprate energy and capacity by 2031 and full delivery of the uprate energy and capacity by year end 2034. To achieve the uprates, the Company expects to incur capital expenditures commencing in 2026 and extending through 2034, with less than 20% of the aggregate spend projected to occur by year end 2028. The timing and amount of our planned uprate expenditures will depend on a range of factors, including regulatory approvals, engineering evaluations and capital allocation decisions.

Cogentrix Transaction

On December 31, 2025, Vistra executed definitive agreements to acquire Cogentrix Energy which consists of 10 modern natural gas generation facilities totaling approximately 5,500 MW of capacity (Cogentrix Transaction). The facilities include three combined cycle gas turbine facilities and two combustion turbine facilities located across PJM, four combined cycle gas turbine facilities in ISO-NE, and one cogeneration facility in ERCOT.

Aggregate consideration at closing will consist of approximately (i) $2.3 billion in cash, net of adjustments for the assumption of an estimated $1.5 billion of outstanding indebtedness of Cogentrix as of the closing date, and (ii) 5,000,000 shares of Vistra common stock, par value $0.01, to be issued to the seller, at a mutually agreed-upon value of $185 per share.

Consummation of the Cogentrix Transaction is subject to customary closing conditions, including receipt of all requisite regulatory approvals, including approvals of FERC and the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In August 2026, we received FERC approval. The Cogentrix Transaction is expected to close in late 2026.

Lotus Acquisition

On October 22, 2025, pursuant to a purchase and sale agreement dated May 15, 2025, Vistra Operations acquired 100% of the membership interests of certain subsidiaries of Lotus (Lo

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Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with the consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Data. See Item 7. Management's Discussion and Analysis of Financial Condition, and Results of Operations in our 2024 Form 10-K for a discussion of our financial condition and results of operations for the year ended December 31, 2023 and for the year ended December 31, 2024 compared to the year ended December 31, 2023, which is incorporated here by reference.

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Key Financial Results

The following are financial and operating highlights we achieved in the execution of our four strategic priorities:

Long-term, attractive earnings profile through the integrated business model.

•We continued to execute our integrated business model, delivering strong operational and financial performance while responding effectively to market opportunities. Our ability to combine a diversified and dependable generation fleet with a scaled retail platform and disciplined wholesale risk management capabilities remains a core competitive advantage and supports more stable and predictable cash flows across commodity price cycles.

•Long-term contracts entered in 2025 underwrite higher base profitability in the future.

◦In September 2025, we announced that we had entered into a 20-year power purchase agreement (PPA) (with options to extend for up to an additional 20 years) with Amazon Web Services (AWS) to supply 1,200 MW of carbon-free power from our Comanche Peak Nuclear Power Plant. We anticipate power delivery to begin in the fourth quarter of 2027 and ramp to full capacity by 2032.

◦In January 2026, we announced that we had entered into 20-year PPAs with Meta Platforms, Inc. (Meta) to supply 2,609 MW of carbon-free power and capacity from our PJM nuclear power plants, including 2,176 MW of operating energy and capacity and 433 of uprate energy and capacity to be constructed. We anticipate commencing delivery on a portion of the operating energy and capacity in late 2026 and full delivery by year end 2027. We anticipate commencing delivery on a portion of the uprate energy and capacity by 2031 and full delivery by year end 2034.

Disciplined capital allocation.

•Executed disciplined capital allocation through targeted natural gas expansion, including the development of an 860 MW facility in West Texas and the acquisition of 2,600 MW of natural gas generation capacity from Lotus.

•In December 2025, we executed definitive agreements to acquire Cogentrix Energy, consisting of 10 natural gas generation facilities totaling approximately 5,500 MW of capacity. The transaction is expected to close in mid-to-late 2026.

•During the year ended December 31, 2025, we paid dividends to common stockholders totaling $306 million.

•In October 2025, the Board authorized an incremental amount of $1.0 billion under our stock repurchase program established in October 2021. During the year ended December 31, 2025, we repurchased 6.6 million shares for approximately $1.0 billion under the program. Through February 18, 2026, total shares repurchased under the program totaled 167 million shares for $5.9 billion, and we have $1.8 billion available for additional repurchases under the program.

•In December 2025, S&P raised its issuer credit rating on Vistra to investment grade from BB+ to BBB-.

Maintaining a resilient balance sheet.

•We further diversified our sources of liquidity and improved associated borrowing costs and credit terms through a number of enhancements and amendments to our facilities throughout the year, including (i) extending the maturity of the Commodity-Linked Facility to September 2026, (ii) increasing the commitment cap under the alternative letter of credit facility from $500 million to $800 million, and (iii) expanding and extending the Receivables Facility purchase limit by $100 million and extended the term to July 2026.

•In October 2025, we issued $750 million of 4.300% senior secured notes due 2028, $500 million of 4.600% senior secured notes due 2030, and $750 million of 5.250% senior secured notes due 2035. The net proceeds from these issuances were used to refinance senior unsecured debt maturities in September 2026 and for general corporate purposes, including to fund a portion of the Lotus Acquisition.

Strategic energy transition focused on the reliability, affordability, and sustainability of electric grid.

•Planned uprates at the Company's operating Perry Nuclear Power Plant (Perry), Davis-Besse Nuclear Power Plant (Davis-Besse), and Beaver Valley Nuclear Power Plant (Beaver Valley) would add 433 MW of incremental carbon-free nuclear energy and capacity to the PJM region commencing delivery on a portion of the uprate energy and capacity by 2031 and full delivery of the uprate energy and capacity by year end 2034.

•We reached commercial operations at the Oak Hill solar facility in Texas totaling 200 MW of capacity and continued development and construction activities on additional facilities at retired or to-be-retired plant sites in Illinois.

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•We announced plans to repower the Coleto Creek and Miami Fort coal generation facilities as natural gas-fueled facilities upon their retirement no later than 2027 and the middle of 2028, respectively.

Business Environment and Outlook

Electricity Demand

Electricity demand drivers including the rise of large scale data centers, the electrification of oil field operations, and electric vehicle load building are contributing to a projected fast paced load growth in the regions we serve. Our integrated retail electricity and power generation operations allows us to quickly respond to electricity demand changes. To support growing demand from large‑scale electricity consumers, we continue to engage in discussions with various counterparties regarding the potential long-term sale of power from our generation facilities, and we are progressing a series of development initiatives across our generation portfolio, including nuclear uprates and other capacity expansions.

Supply Chain Constraints

Our industry continues to face ongoing supply chain constraints and labor shortages, which have reduced the availability of essential equipment and supplies for constructing new generation facilities, increased the lead times for procuring materials, and raised labor costs associated with maintaining our natural gas, nuclear, and coal fleet.

We are proactively managing these constraints by continuously re-evaluating the business cases and timing of our planned development projects. This has led to the deferral or abandonment of some planned capital expenditures for our solar and battery projects and could impact the economic feasibility of additional projects in our new generation development pipeline. We are engaging with suppliers to secure key materials needed to maintain our existing generation facilities before future planned outages.

Russia/Ukraine Conflict

We are closely monitoring developments in the Russia and Ukraine conflict, specifically sanctions (or potential sanctions) against Russian energy exports and Russian nuclear fuel supply and enrichment activities, and actions by Russia to limit energy deliveries, which may further impact commodity prices in Europe and globally. The Prohibiting Russian Uranium Imports Act (PRUI Act), which was signed into law on August 11, 2024, prohibits importation of Russian uranium; however, the DOE can issue waivers (subject to decreasing annual caps) until December 31, 2027 if there is no alternate source of low-enriched uranium available to keep U.S. nuclear reactors operating or is in the national interest. Additionally, passage of the PRUI Act enabled the allocation of $2.72 billion in federal funding to ramp up production of domestic uranium fuel. On November 15, 2024, the Russian Federation temporarily suspended shipments of uranium to the U.S., stating that they would grant future export licenses on a case-by-case basis.

Our 2026 refueling plans have not been affected by the Russia and Ukraine conflict, nor have we seen any disruption to the delivery of nuclear fuel impacting our refueling schedules. All nuclear fuel requirements for 2026 are either in inventory or are onshore. We work with a diverse set of global nuclear fuel cycle suppliers to procure our nuclear fuel years in advance. We have nuclear fuel contracted to support all our refueling needs through 2030 without any additional Russian deliveries. We continue to take affirmative action by building strategic inventory and deploying mitigating strategies in our procurement portfolio to ensure we can secure the nuclear fuel needed to continue to operate our nuclear facilities through potential Russian supply disruption.

Noteworthy Developments

PJM Nuclear Power Purchase Agreements and Uprates

In January 2026, Vistra announced it had entered into 20-year PPAs with Meta, pursuant to which the Company has agreed to supply Meta with a total of 2,609 MW of carbon-free power and capacity from the Company's PJM nuclear power plants as follows:

•1,268 MW of energy and capacity from Perry and 908 MW of energy and capacity from Davis-Besse; and

•213 MW of uprate energy and capacity from Perry, 80 MW of uprate energy and capacity from Davis-Besse, and 140 MW of uprate energy and capacity from Beaver Valley.

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Under the terms of the PPAs, the Company anticipates commencing delivery on a portion of the operating energy and capacity in late 2026 and full delivery of the operating energy and capacity by year end 2027. Additionally, the Company anticipates commencing delivery on a portion of the uprate energy and capacity by 2031 and full delivery of the uprate energy and capacity by year end 2034. To achieve the uprates, the Company expects to incur capital expenditures commencing in 2026 and extending through 2034, with less than 20% of the aggregate spend projected to occur by year end 2028. The timing and amount of our planned uprate expenditures will depend on a range of factors, including regulatory approvals, engineering evaluations and capital allocation decisions.

Cogentrix Transaction

On December 31, 2025, Vistra executed definitive agreements to acquire Cogentrix Energy which consists of 10 modern natural gas generation facilities totaling approximately 5,500 MW of capacity (Cogentrix Transaction). The facilities include three combined cycle gas turbine facilities and two combustion turbine facilities located across PJM, four combined cycle gas turbine facilities in ISO-NE, and one cogeneration facility in ERCOT.

Aggregate consideration at closing will consist of approximately (i) $2.3 billion in cash, net of adjustments for the assumption of an estimated $1.5 billion of outstanding indebtedness of Cogentrix as of the closing date, and (ii) 5,000,000 shares of Vistra common stock, par value $0.01, to be issued to the seller, at a mutually agreed-upon value of $185 per share.

Consummation of the Cogentrix Transaction is subject to customary closing conditions, including receipt of all requisite regulatory approvals, including approvals of FERC and the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Cogentrix Transaction is expected to close in mid-to-late 2026.

Lotus Acquisition

On October 22, 2025, pursuant to a purchase and sale agreement dated May 15, 2025, Vistra Operations acquired 100% of the membership interests of certain subsidiaries of Lotus (Lotus Acquisition). The Lotus Acquisition resulted in the addition of seven natural gas generation facilities totaling 2,600 MW in Delaware and Pennsylvania (PJM), Rhode Island (ISO-NE), New York (NYISO), and California (C

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