Vistra's GAAP net income slipped 6.7% to $305M on a $472M unrealized hedge loss, while Ongoing Operations Adjusted EBITDA rose 31% to $1.77B on higher PJM capacity prices, stronger Texas gas margins and the Lotus plants; 2026 guidance reaffirmed.
Revenue
$4.0B
-5.5% YoY
Net income
$305M
-6.7% YoY
Diluted EPS
$0.76
-6.2% YoY
Operating margin
13.8%
How VST compares with Utilities peers
Figure
VST
Peer median
Rank
Revenue growth (YoY)
-5.5%
+4.3%
25th of 26
Operating margin
13.8%
21.0%
21st of 26
EPS growth (YoY)
-6.2%
+19.7%
18th of 25
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Utilities companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Hedge accounting hid a 31% jump in operating profit
Vistra's second-quarter 2026 GAAP numbers look like a slight step back: revenue fell 5.5% to $4.02 billion and net income slipped 6.7% to $305 million ($0.76 per diluted share, down from $0.81). The business itself had a very strong quarter. The gap comes from one accounting line: a $472 million unrealized loss on hedges, which are contracts Vistra uses to lock in prices for power it will sell in future years. When market prices move, those contracts get revalued ("marked to market") each quarter and the paper gain or loss runs through earnings, even though no cash changes hands until the contracts settle. Strip that out and Ongoing Operations Adjusted EBITDA, management's main profit measure, rose 31% to $1,767 million from $1,349 million. The drivers were higher capacity prices in the PJM market, better margins from Vistra's Texas gas plants, and three months from the seven gas plants bought from Lotus in October 2025.
At a glance
$1,767M Ongoing Operations Adjusted EBITDA, up 31%. The operating business earned $418M more than a year ago, mostly from higher realized power and capacity prices plus the Lotus plants.
$472M unrealized hedge loss vs a $16M gain a year ago. This $488M swing on paper is why GAAP net income fell while the underlying business grew. In the first half it went the other way: a $251M gain.
2026 guidance of $6.8B–$7.6B reaffirmed, with ~100% of 2026 generation already hedged. First-half Adjusted EBITDA of $3,261M is 45% of the $7.2B midpoint, and the summer quarter, usually the most profitable for a power company, is still ahead.
The numbers
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, with the hedge revaluations and certain one-off items removed. For a power generator it is the figure management guides to and investors follow, because quarterly GAAP profit can swing by hundreds of millions of dollars on hedge revaluations alone. "Ongoing Operations" also leaves out the Asset Closure segment, the plants Vistra is retiring.
Metric
Q2 2026
Q2 2025
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Over the first half, revenue rose 18.0% to $9,657M. Net income was $1,334M ($3.64 per diluted share), compared with $59M (a $0.11 loss per common share after preferred dividends) a year earlier. Ongoing Operations Adjusted EBITDA rose 26.0% to $3,261M.
Where the growth came from
Vistra's own bridge from last year's Adjusted EBITDA to this year's:
+$480M from realized revenue net of fuel, meaning what it earned selling power minus what it paid for fuel. The 10-Q attributes this to "higher realized capacity prices in East, higher energy margins from optimizing the dispatch of select gas units in response to favorable market conditions in Texas, the addition of plants acquired in the Lotus Acquisition, and Martin Lake Unit 1 return to service."
-$70M in plant operating costs, from heavier maintenance and outage work plus the extra Lotus plants.
+$15M retail margin, -$5M weather, -$8M SG&A and other.
East (PJM, New England, New York): $642M, up $224M. Capacity payments, where the grid operator pays plants to be available whether or not they run, were the main driver. Gas-plant output rose 30% to 15,805 GWh from 12,198 GWh, mostly because of Lotus. Coal output fell to 3,058 GWh from 4,020 GWh.
Texas (ERCOT): $311M, up from $142M. The coal and lignite fleet ran at a 60.0% capacity factor (how much it produced compared with running flat-out) vs 49.6% a year earlier. Martin Lake Unit 1 was back after an outage, and combined-cycle gas plants ran at 62.5% vs 54.8%. Texas nuclear output was flat at 4,456 GWh.
Retail: $773M, up only 2.2%. Higher contract rates were mostly offset by lower volumes. Retail sales fell 4.4%, and in Texas they fell 7.8% to 18,326 GWh, which the filing puts partly down to milder weather. Year to date, Retail Adjusted EBITDA is down 10.5% at $841M vs $940M. The filing blames "an increase in excess volumes sold at lower wholesale prices": Vistra bought power ahead for customers who then used less of it and had to resell the surplus cheaply. The retail arm is steady, but it is not what is driving growth right now.
What the headline numbers hide
Hedge revaluation explains nearly all of the GAAP miss. The $488M swing in unrealized hedge results is bigger than the entire $22M decline in net income. By our own arithmetic from the income statement and the reconciliation, pre-tax income excluding commodity hedge revaluation was roughly $899M this quarter vs $387M a year ago. Some of this reverses as the hedges settle, so it is timing, not a permanent loss. It also works in both directions: the first half had a $251M hedge gain, so half-year GAAP profit looks better than the business performed.
Cash conversion improved clearly. First-half operating cash flow was $2,222M vs $1,171M a year earlier, or about 1.7 times net income and 69% of consolidated Adjusted EBITDA ($3,219M). Part of the improvement came from posting less cash collateral (margin deposits) on hedges: $188M vs $368M.
Adjusted EBITDA excludes more than hedges. The Q2 reconciliation also removes $35M of stock-based pay, $15M of merger and transition costs (Lotus, Cogentrix), a $48M insurance gain from the Martin Lake property damage claim, and $90M of nuclear decommissioning-trust and related items. None of these is large next to the $1.77B total.
One-offs flatter the GAAP comparison. Q2 2025 included a $68M impairment that did not recur. Depreciation fell $96M to $445M, mostly because 2025 still carried depreciation on the Moss Landing batteries and on retail customer-relationship intangibles. The Asset Closure segment lost $116M on GAAP, largely from Moss Landing fire costs net of insurance.
Buybacks helped EPS a little; taxes hurt more. Diluted shares fell 1.8% to 339.2M. Vistra bought back 2.16M shares for $331M in Q2 and $710M in the first half. Pre-tax income rose 6.0%, but the effective tax rate went up to 28.6% from 18.9%, which is why EPS fell anyway.
Guidance unchanged. The $6.8B–$7.6B Adjusted EBITDA and $3.925B–$4.725B free-cash-flow-before-growth ranges are the same ones set in November 2025. They exclude the pending Cogentrix acquisition and the Meta power contracts.
Takeaway: The GAAP decline comes from hedge accounting. On the measure management runs the business by, Vistra earned 31% more than a year ago, mostly from PJM capacity prices and the Lotus plants, while its retail arm stayed flat. With nearly all 2026 output already hedged, what remains uncertain is less this year's number and more whether the contracted data-center deals and acquisitions arrive on schedule in 2027.
Balance sheet and capital allocation
Investment grade. S&P and Fitch now rate Vistra Operations BBB-. That removed the collateral behind its senior secured notes and credit facilities in April 2026, and Vistra repaid its $2.444B Term Loan B-3 the same month.
Liquidity was about $6.3B at June 30: $435M cash plus undrawn credit lines.
Shareholder returns: about $6.5B of buybacks since November 2021 have cut the share count by about 30% to about 336M. About $1.2B of authorization remains, which management expects to use by year-end 2027. The quarterly dividend goes up to $0.2300 in September.
Growth spending: an 860 MW gas peaking plant in west Texas (online 2028), financed by a $583M loan at a fixed 3.0% from the Texas Energy Fund, non-recourse to Vistra; up to $1B committed to KKR's Helix digital-infrastructure fund; and the pending Cogentrix deal ($2.3B cash plus 5M shares, and $1.5B of assumed debt) for about 5,500 MW of gas plants. FERC approved Cogentrix in August 2026, with closing expected in late 2026. Vistra has also agreed to sell three smaller Northeast gas plants totaling 754 MW.
What to watch
Management's outlook: 2026 guidance reaffirmed; generation is about 100% hedged for 2026, about 94% for 2027 and about 72% for 2028. The 2027 Adjusted EBITDA "midpoint opportunity" is $7.4B–$7.8B. Management says this is not guidance, and it excludes Cogentrix and Meta.
Data-center demand, as the filing describes it: Vistra has two large contracts to sell nuclear power to data-center companies:
20-year agreements with Meta for 2,609 MW from its Ohio and Pennsylvania nuclear plants. Deliveries of the existing output begin in late 2026 and reach full volume by year-end 2027. Another 433 MW will come from uprates (upgrades that raise an existing reactor's output), phased in from 2031 to 2034.
An Amazon Web Services agreement for 1,200 MW from Comanche Peak, starting in Q4 2027 and ramping up through 2032.
PJM's auction for the 2028–29 year cleared at $325/MW-day, with 10,924 MW of Vistra's capacity accepted. That supports East segment capacity revenue for several more years.
Our read: With the 2026 range effectively locked in by hedging, Q3 (summer) is mainly a test of plant availability. Management reported 97%+ commercial availability during this summer's heat waves in Texas and PJM, which is a good sign. The bigger swing factors are in 2027 and later: when Cogentrix closes, the Meta deliveries starting, and whether retail margins recover from this year's resold-volume squeeze. Expect GAAP earnings to stay volatile. Judge each quarter on Adjusted EBITDA and cash flow, and treat any large GAAP beat or miss as possible hedge noise until the reconciliation shows otherwise.