News Release > Entergy reports second quarter earnings

Entergy reports second quarter earnings

08/03/2022

Company affirms guidance and financial outlooks; expect 2022 results in top half of the range 

NEW ORLEANS – Entergy Corporation (NYSE: ETR) reported second quarter 2022 earnings per share of 78 cents on an as-reported basis and $1.78 on an adjusted basis (non-GAAP).

“We had a productive second quarter with accomplishments that made meaningful progress toward our stakeholder objectives,” said Leo Denault, Entergy chairman and chief executive officer. “Higher retail sales were driven by customer growth and hot temperatures across our region. As a result, we are implementing several initiatives to improve affordability and customer experience.”

Business highlights included the following:

• E-TX and Sempra Infrastructure entered into a memorandum of understanding to develop options designed to accelerate the deployment of new renewable generation and to increase the resilience of power supply in E-TX’s Southeast Texas service area, where Sempra Infrastructure’s facilities are under development.
• Construction was completed on E-MS’s 100 MW Sunflower Solar Station.
• E-MS announced that the company selected several resources from its 2022 renewable RFP.
• E-AR increased its 2022 renewable RFP to 1,000 MW from 500 MW.
• E-TX completed a substation that is part of a $44 million investment in the Huntsville distribution network, improving the reliability and resiliency of the local grid.
• The MPSC approved a settlement agreement to resolve all of the MPSC’s complaints against SERI; the proposed settlement is subject to FERC approval.
• The MPSC approved E-MS’s annual FRP filing.
• E-NO submitted its preliminary grid hardening and resilience plan to the CCNO.
• E-LA, E-NO, and E-AR filed their annual FRPs, and E-TX filed its base rate case.
• E-NO submitted its filing for certification of Hurricane Ida costs.
• Entergy completed the sale of Palisades, EWC’s last remaining nuclear asset.
• Edison Electric Institute announced Entergy as a recipient of its Emergency Assistance Award.
• For the seventh consecutive year, Entergy was named to The Civic 50, a Points of Light initiative honoring the 50 most community-minded companies in the U.S.

Calculations may differ due to rounding

Consolidated results

For second quarter 2022, the company reported earnings of $160 million, or 78 cents per share, on an as-reported basis, and earnings of $364 million, or $1.78 per share, on an adjusted basis. This compared to a second quarter 2021 loss of $(6 million), or (3) cents per share, on an as-reported basis, and earnings of $269 million, or $1.34 per share, on an adjusted basis.

Summary discussions by business are below. Additional details, including information on OCF by business, are provided in Appendix A. An analysis of quarterly and year-to-date variances by business is provided in Appendix B.

Business segment results

Utility 

For second quarter 2022, the Utility business reported earnings attributable to Entergy Corporation of $153 million, or 75 cents per share, on an as-reported basis, and earnings of $444 million, or $2.17 per share, on an adjusted basis. This compared to second quarter 2021 earnings of $326 million, or $1.62 per share, on both an as-reported and an adjusted basis. There were several drivers for the quarter’s results.  

In second quarter 2022, SERI recorded a regulatory charge of $(551 million) ($(413 million) after tax) to increase a regulatory liability to reflect the effects of a partial settlement agreement and offer of settlement related to pending proceedings before the FERC.  In June 2022, the MPSC approved a settlement for its 40 percent portion of the complaints.  The $588 million liability balance reflects potential refunds if a full settlement is reached with all parties on the same terms as the MPSC settlement.  This item was considered an adjustment and excluded from adjusted earnings. 

As a result of receiving approvals for storm cost recovery and issuance of securitized debt at E-LA and E-TX, the companies recorded the following:

• the equity portion of carrying costs on storm expenditures not previously recorded (the portions related to prior years were considered an adjustment and excluded from adjusted earnings),
• a reduction in other income to account for LURC’s 1 percent beneficial interest in the trust established as part of E-LA’s securitization (considered an adjustment and excluded from adjusted earnings),
• a reduction in income tax expense as a result of securitization (considered adjustments and excluded from adjusted earnings), and
• amounts reserved to share benefits of securitization with customers (considered adjustments and excluded from adjusted earnings). 

Other drivers included:

• higher retail sales volume, including the impacts of weather;
• the net effect of regulatory actions across the operating companies;
• higher operating expenses including other O&M, depreciation expense, and taxes other than income taxes; and
• regulatory provisions recorded in second quarter 2021. 

On a per share basis, second quarter 2022 results reflected higher diluted average number of common shares outstanding.

Appendix C contains additional details on Utility operating and financial measures.

Parent & Other 

For second quarter 2022, Parent & Other reported a loss attributable to Entergy Corporation of $(80 million), or (39) cents per share, on both an as-reported and an adjusted basis. This compared to a second quarter 2021 loss of $(57 million), or (28) cents per share, on both an as-reported and an adjusted basis. Income taxes contributed to the variance.

On a per share basis, second quarter 2022 results reflected higher diluted average number of common shares outstanding.

Entergy Wholesale Commodities

For second quarter 2022, EWC reported earnings attributable to Entergy Corporation of $87 million, or 42 cents per share, on an as-reported basis. This compared to a second quarter 2021 loss attributable to Entergy Corporation of $(275 million), or $(1.37) per share, on an as-reported basis. Drivers for the quarter included:

• a gain of $166 million ($130 million after-tax) as a result of the sale of Palisades in second quarter 2022,
• a loss of $340 million ($268 million after-tax) on the sale of Indian Point in second quarter 2021,
• lower other O&M and depreciation expense due primarily to the shutdown of Indian Point 3 and Palisades, and
• lower decommissioning expenses primarily due to the sale of Indian Point. 

These drivers were partially offset by:

• lower revenue primarily due to the shutdown of Indian Point 3 and Palisades, and
• the absence of earnings from NDTs as a result of the sale of Indian Point. 

On a per share basis, second quarter 2022 results reflected higher diluted average number of common shares outstanding.

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

Earnings per share guidance 

Entergy affirmed its 2022 adjusted EPS guidance range of $6.15 to $6.45, and the company expects results to be in the top half of the range. See webcast presentation for additional details.

The company has provided 2022 earnings guidance with regard to the non-GAAP measure of Entergy adjusted EPS. This measure excludes from the corresponding GAAP financial measure the effect of adjustments 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 adjustments that may occur during the period. One adjustment will be the exclusion of EWC earnings from Entergy adjusted EPS. We currently estimate that the contribution of EWC to Entergy’s as-reported EPS will be approximately 20 cents in 2022.

Earnings teleconference 

A teleconference will be held at 10:00 a.m. Central Time on Wednesday, August 3, 2022, to discuss Entergy’s quarterly earnings announcement and the company’s financial performance. The teleconference and a replay of the teleconference may be accessed by visiting Entergy’s website at www.entergy.com; for participants who would like to participate via telephone, please register at https://register.vevent.com/register/BI6152b07a27274da89f66365f26ee51ee to receive the dial-in number along with a unique PIN that is required to access the call (the registration link can also be found on Entergy’s website). The webcast presentation is also being posted to Entergy’s website concurrent with this news release. Entergy Corporation, a Fortune 500 company headquartered in New Orleans, powers life for 3 million customers through its operating companies across Arkansas, Louisiana, Mississippi, and Texas. Entergy is creating a cleaner, more resilient energy future for everyone with our diverse power generation portfolio, including increasingly carbon-free energy sources. With roots in the Gulf South region for more than a century, Entergy is a recognized leader in corporate citizenship, delivering more than $100 million in economic benefits to local communities through philanthropy and advocacy efforts annually over the last several years. Our approximately 12,000 employees are dedicated to powering life today and for future generations.

Entergy Corporation’s common stock is listed on the New York Stock Exchange and NYSE Chicago 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 presentation. Both documents are available on Entergy’s Investor Relations website at www.entergy.com/investor_relations.

Entergy maintains a web page as part of its Investor Relations website, entitled Regulatory and Other Information, which provides investors with key updates on certain 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. 

Non-GAAP financial measures

This news release contains non-GAAP financial measures, which are generally numerical measures of a company’s performance, financial position, or cash flows that either exclude or include 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 news release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Entergy reports earnings using the non-GAAP measure of Entergy adjusted earnings, which excludes the effect of certain “adjustments,” including the removal of the Entergy Wholesale Commodities segment in light of the company’s exit from the merchant power business. Adjustments are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, such as the results of the EWC segment, significant tax items, and other items such as certain costs, expenses, or other specified items. In addition to reporting GAAP consolidated earnings on a per share basis, Entergy reports its adjusted earnings on a per share basis. These per share measures represent the applicable earnings amount divided by the diluted average number of common shares outstanding for the period.

Management uses the non-GAAP financial measures of adjusted earnings and adjusted earnings per share for, among other things, financial planning and analysis; reporting financial results to the board of directors, employees, stockholders, analysts, and investors; and internal evaluation of financial performance. Entergy believes that these non-GAAP financial measures provide useful information to investors in evaluating the ongoing results of Entergy’s business, comparing period to period results, and comparing Entergy’s financial performance to the financial performance of other companies in the utility sector.

Other non-GAAP measures, including adjusted EBITDA; adjusted ROE; adjusted ROE, excluding affiliate preferred; gross liquidity; net liquidity; net liquidity, including storm escrows; debt to capital, excluding securitization debt; net debt to net capital, excluding securitization debt; parent debt to total debt, excluding securitization debt; FFO to debt, excluding securitization debt; and FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC, are measures Entergy uses internally for management and board discussions and 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. In addition, ROE is included on both an adjusted and an as-reported basis. Metrics defined as “adjusted” (other than EWC’s adjusted EBITDA) exclude the effect of adjustments as defined above. EWC’s adjusted EBITDA represents EWC’s earnings before interest, taxes, and depreciation and amortization, and also excludes decommissioning expense.

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. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. Investors are strongly encouraged to review Entergy’s consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. Although certain of these measures are intended to assist investors in comparing Entergy’s performance to other companies in the utility sector, 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, statements regarding Entergy’s 2022 earnings guidance; current financial and operational outlooks; industrial load growth outlooks; statements regarding its climate transition and resilience plans, goals, beliefs, or expectations; 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 or on the timeline anticipated by the utilities and (2) implementation of the ratemaking effects of changes in law; (c) uncertainties associated with (1) realizing the benefits of its resilience plan, including impacts of the frequency and intensity of future storms and storm paths, as well as the pace of project completion and (2) efforts to remediate the effects of major storms and recover related restoration costs; (d) risks associated with operating nuclear facilities, including plant relicensing, operating, and regulatory costs and risks; (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 executing on business strategies, including strategic transactions that Entergy or its subsidiaries may undertake and 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) impacts from terrorist attacks, geopolitical conflicts, cybersecurity threats, data security breaches, or other attempts to disrupt Entergy’s business or operations, and/or other catastrophic events; (i) the direct and indirect impacts of the COVID-19 pandemic on Entergy and its customers; and (j) effects on Entergy or its customers of (1) 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; (2) the effects of changes in commodity markets, capital markets, or economic conditions; and (3) the effects of technological change, including the costs, pace of development, and commercialization of new and emerging technologies.

View complete earnings release (PDF)