News Release > Entergy Reports First Quarter Earnings

Entergy Reports First Quarter Earnings

04/25/2018

Company affirms 2018 guidance and long-term financial outlooks

NEW ORLEANS – Entergy Corporation (NYSE: ETR) reported first quarter 2018 earnings per share of 73 cents on an as-reported basis and $1.16 on an operational basis. These results reflect the lower federal income tax rate, favorable weather of 9 cents and a loss of (4) cents from the implementation of ASU No. 2016-01, which now requires the mark-to-market of equity investments in the nuclear decommissioning trust funds at EWC.

“We’ve had a solid start to 2018 with success on key projects and regulatory initiatives,” said Entergy Chairman and Chief Executive Officer Leo Denault. “Our results keep us on track to achieve our full year guidance and long-term outlooks.”

Business highlights included the following:

• Entergy New Orleans received approval for the New Orleans Power Station.
• The LPSC approved Entergy Louisiana’s unopposed settlement for its formula rate plan.
• Entergy Mississippi made its annual formula rate plan filing.
• Entergy and parties filed a settlement memorandum of understanding with the Vermont PUC for the sale of Vermont Yankee.
• Indian Point 2 completed its final refueling and maintenance outage before retirement.
• Entergy was named for a third consecutive year by the Women’s Business Enterprise National Council to the list of America’s Top Corporations for Women’s Business Enterprise, honoring corporations that have implemented world-class policies and programs to enable growth and reduce barriers for women-owned businesses. 

Calculations may differ due to rounding

Consolidated Results

For first quarter 2018, the company reported earnings of $133 million, or 73 cents per share, on an as-reported basis and earnings of $211 million, or $1.16 per share, on an operational basis. This compared to first quarter 2017 earnings of $83 million, or 46 cents per share, on an as-reported basis and earnings of $178 million, or 99 cents per share on an operational basis.

Summary discussions by business are below. Additional details, including information on OCF by business, are provided in Appendix A and a comprehensive analysis of quarterly variances by business is provided in Appendix B.

Utility, Parent & Other Results

For first quarter 2018, the Utility business reported earnings attributable to Entergy Corporation of $215 million, or $1.19 per share, compared to $165 million, or 92 cents per share, in first quarter 2017. Key drivers for the quarterly increase included higher net revenue and lower income tax expense, partially offset by higher operating expenses.

Net revenue increased quarter-over-quarter driven by favorable weather in first quarter 2018 compared to unfavorable weather a year ago. Weather-adjusted sales growth was positive, but was more than offset by lower volume in the unbilled period. Rate actions to recover investments that benefit customers were also more than offset by regulatory provisions recorded to return benefits from tax reform to customers at Entergy Louisiana and Entergy New Orleans.

On a weather-adjusted basis, billed sales increased 3.0 percent, including 4.1 percent and 2.4 percent for residential and commercial billed sales, respectively. Industrial billed sales volume increased 2.6 percent with higher sales to both new and expansion customers as well as existing customers. The increase was driven largely by the primary metals segment. Sales to petroleum refining customers were also higher.

Income tax expense was lower due primarily to the reduction of the federal income tax rate. Utility non-fuel O&M increased quarter-over-quarter, driven by higher spending on nuclear operations, primarily labor, and taxes other than income taxes.

For first quarter 2018, Parent & Other reported a loss of $(64 million), or (36) cents per share, compared to a loss of $(54 million), or (30) cents per share, in first quarter 2017.

On a combined basis, Utility, Parent & Other (non-GAAP) contributed 83 cents to first quarter 2018 consolidated EPS compared to 62 cents to first quarter 2017 consolidated EPS. On an adjusted basis, excluding special items and normalizing weather and income taxes, Utility, Parent & Other contributed 71 cents in first quarter 2018 to consolidated EPS, compared to 83 cents in first quarter 2017.

Appendix C contains additional details on Utility financial and operating measures, including a reconciliation for non-GAAP Utility, Parent & Other adjusted earnings and EPS.

Entergy Wholesale Commodities Results

For first quarter 2018, EWC recorded a loss attributable to Entergy Corporation of $(18 million), or (10) cents per share, on an as-reported basis and earned $60 million, or 33 cents per share, on an operational basis. This compared to a first quarter 2017 loss of $(28 million), or (16) cents per share, on an as-reported basis and earnings of $67 million, or 37 cents per share, on an operational basis.

As-reported losses in both periods reflected impairments and other expenses recorded as a result of strategic decisions for the wholesale business. These items were considered special items and excluded from operational earnings.

The sale of FitzPatrick at the end of first quarter 2017 affected period-over-period variances for multiple line items. Excluding FitzPatrick, quarterly earnings reflected lower other income, primarily due to losses on decommissioning trust funds previously classified as other comprehensive income on the balance sheet, now recorded to the income statement. The decrease was partially offset by lower income tax expense which resulted primarily from the reduction of the federal income tax rate.

Appendix D contains additional details on EWC financial and operating measures, including reconciliation for non-GAAP EWC operational adjusted EBITDA.

Earnings Guidance

Entergy affirmed its 2018 consolidated operational earnings guidance range of $6.25 to $6.85 per share and its Utility, Parent & Other adjusted guidance range of $4.50 to $4.90 per share. See webcast presentation slides for additional details, including Progress Against Guidance on slide 35.

The company has provided 2018 earnings guidance with regard to the non-GAAP measures of consolidated operational EPS and Utility, Parent & Other adjusted EPS. These measures exclude from the corresponding GAAP financial measures the effect of special items as described below under “Non-GAAP Financial Measures.” The company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify with a reasonable degree of confidence all of the special items that may occur during 2018. The only anticipated special items that the company can reasonably estimate at this time are those that relate to the decisions to sell or close the company’s merchant nuclear plants; these estimated costs, which are excluded from the earnings guidance, are expected to decrease as-reported EPS by approximately $(2.55) per share in 2018.

Earnings Teleconference

A teleconference will be held at 10:00 a.m. Central Time on Wednesday, April 25, 2018, to discuss Entergy’s quarterly earnings announcement and the company’s financial performance. The teleconference may be accessed by visiting Entergy’s website at www.entergy.com or by dialing 844-309-6569, conference ID 9178845, no more than 15 minutes prior to the start of the call. The webcast slide presentation is also posted to Entergy’s website concurrent with this release, which was issued before market open on the day of the call. A replay of the teleconference will be available on Entergy’s website at www.entergy.com and by telephone. The telephone replay will be available through May 2, 2018, by dialing 855-859-2056, conference ID 9178845. This release and the webcast slide presentation are also available on the Entergy Investor Relations mobile web app at iretr.com.

Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of approximately $11 billion and more than 13,000 employees.

Entergy Corporation’s common stock is listed on the New York and Chicago stock exchanges under the symbol “ETR.”

Details regarding Entergy’s results of operations, regulatory proceedings and other matters are available in this earnings release, a copy of which will be filed with the SEC, and the webcast slide presentation. Both documents are available on Entergy’s Investor Relations website at www.entergy.com/investor_relations and on Entergy’s Investor Relations mobile web app at iretr.com.

Entergy maintains a web page as part of its Investor Relations website, entitled “Regulatory and Other Information,” which provides investors with key updates of regulatory proceedings and important milestones on the execution of its strategy. While some of this information may be considered material information, investors should not rely exclusively on this page for all relevant company information.

For definitions of certain operating measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the earnings release materials, see Appendix F.

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Non-GAAP Financial Measures

This news release contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Entergy has provided quantitative reconciliations within this release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Certain non-GAAP financial measures in this news release could differ from GAAP only in that the figure or ratio states or includes operational earnings. Operational earnings are not calculated in accordance with GAAP because they exclude the effect of “special items.” Special items are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, and may include items such as impairments, gains or losses on asset sales, and other gains or losses occurring as a result of strategic decisions such as Entergy’s decisions to shut down or sell its merchant nuclear plants. In addition, other financial measures including net income (or earnings), adjusted for preferred dividends and tax effected interest expense; net revenue; return on average invested capital; and return on average common equity are included on both an operational and as-reported basis. In each case, the metrics defined as “operational” would exclude the effect of special items as defined above.

Entergy reports the combination of the Utility segment with Parent & Other as Utility, Parent & Other, which is all of Entergy excluding the EWC segment, since management uses this combination in making decisions about its ongoing business in light of its decision to exit the merchant power business. Entergy also reports Utility, Parent & Other adjusted earnings, which combines the Utility segment with Parent & Other, excludes applicable special items and normalizes weather and income tax expense for the periods presented, because it believes that these financial metrics provide useful information to investors in evaluating the ongoing results of Entergy’s businesses and assist investors in comparing Entergy’s financial performance to the financial performance of other companies in the Utility sector. The methodologies employed to determine the normalized weather and income tax expense adjustments, each of which is further described in this release, involve estimations and the judgement of management.

In addition to reporting earnings per share on a consolidated basis, Entergy reports on a per share basis the earnings or loss of each of its segments, together with the combination of the Utility segment and Parent & Other. These per share measures represent the net income or loss of such segment or segments divided by the diluted average number of shares of common stock outstanding for the period. Entergy believes such per share measures provide useful information to investors in understanding the results of operations of those businesses and their contribution to Entergy’s consolidated results of operations.

Other non-GAAP measures, including adjusted EBITDA; operational adjusted EBITDA; gross liquidity; debt to capital ratio, excluding securitization debt; net debt to net capital ratio, excluding securitization debt; parent debt to total debt ratio, excluding securitization debt; debt to operational adjusted EBITDA ratio, excluding securitization debt; and operational FFO to debt ratio, excluding securitization debt are measures Entergy uses internally for management and board discussions and cash budgeting and performance monitoring activities to gauge the overall strength of its business. Entergy believes the above data provides useful information to investors in evaluating Entergy’s ongoing financial results and flexibility and assists investors in comparing Entergy’s credit and liquidity to the credit and liquidity of others in the Utility sector.

The non-GAAP financial measures and other reported adjusted items in this release are presented in addition to, and in conjunction with, results presented in accordance with GAAP. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. These non-GAAP financial measures reflect an additional way of viewing aspects of Entergy’s operations that, when viewed with Entergy’s GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Entergy’s business. Investors are strongly encouraged to review Entergy’s consolidated financial statements and publicly filed reports in their entirety and to not rely on any single financial measure. Non-GAAP financial measures are not standardized; therefore, it might not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Cautionary Note Regarding Forward-Looking Statements

In this news release, and from time to time, Entergy Corporation makes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, Entergy’s 2018 earnings guidance; its current financial and operational outlook; and other statements of Entergy’s plans, beliefs or expectations included in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this news release and in Entergy’s most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Entergy’s other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with (1) rate proceedings, formula rate plans and other cost recovery mechanisms, including the risk that costs may not be recoverable to the extent anticipated by the utilities and (2) implementation of the ratemaking effects of changes in law; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory costs and risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Entergy’s nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with strategic transactions that Entergy or its subsidiaries may undertake, including the risk that any such transaction may not be completed as and when expected and the risk that the anticipated benefits of the transaction may not be realized; (h) effects of changes in federal, state or local laws and regulations and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental or energy policies; and (i) the effects of technological changes and changes in commodity markets, capital markets or economic conditions, during the periods covered by the forward-looking statements.

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