News Release > Entergy Reports Third Quarter Earnings

For Immediate Release

Entergy Reports Third Quarter Earnings

11/04/2014

Utility posts fifth straight quarter of industrial growth, nuclear fleet posts strong performance

NEW ORLEANS – Entergy Corporation (NYSE: ETR) today reported third quarter 2014 as-reported earnings of $230.0 million, or $1.27 per share, compared with $239.9 million, or $1.34 per share, for third quarter 2013. On an operational basis, Entergy's third quarter 2014 earnings were $304.4 million, or $1.68 per share, compared with $430.4 million, or $2.41 per share, in third quarter 2013.

"We're pleased to report that the Utility posted its fifth straight quarter-over-quarter of industrial sales growth – and the second straight quarter over 5 percent, exceeding our expectations for the year," said Entergy Chairman and CEO Leo Denault. "Our nuclear plants also operated well – we posted a 90 percent capacity factor at EWC, for example – and had fewer unplanned outage days. And as it has been for some time, our strategy is sound and our path is clear. Entergy's long-term value is intact."

 

Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures

Third Quarter and Year-to-Date 2014 vs. 2013

(Per share in U.S. $)

           
 

Third Quarter

Year-to-Date

 

2014

2013

Change

2014

2013

Change

As-Reported Earnings

1.27

1.34

(0.07)

4.56

3.16

1.40

Less Special Items

(0.41)

(1.07)

0.66

(0.52)

(1.20)

0.68

Operational Earnings

1.68

2.41

(0.73)

5.08

4.36

0.72

*GAAP refers to United States generally accepted accounting principles.

 

Operational Earnings Highlights for Third Quarter 2014

  • Utility results were down driven by a higher effective income tax rate, higher other operation and maintenance expense and a regulatory charge; these decreases were partially offset by higher net revenue.
  • Entergy Wholesale Commodities earnings declined due to increased depreciation expense and a higher effective income tax rate on operational earnings. These items were partially offset by lower other O&M expense.
  • Parent & Other results declined due primarily to higher income tax expense.

Other business highlights for the quarter included the following:

  • In a move designed to attract industry and jobs to the state, Entergy Louisiana, LLC and Entergy Gulf States Louisiana, L.L.C. asked the Louisiana Public Service Commission for permission to become a single utility.
  • We also made progress on our rate case in Mississippi, and reached a constructive settlement with the Mississippi Public Utilities Staff – one which aligns customer, regulator and state objectives with our own.
  • For the seventh consecutive year, Site Selection magazine named Entergy one of the nation's top 10 utilities in economic development, citing the more than 9,000 new jobs created and nearly $21 billion in corporate facility investment.
  • James A. FitzPatrick Nuclear Power Plant completed its 21st refueling outage in 44 days, including a complete retube of the plant's main condenser to improve the plant's capacity factor.

A teleconference will be held at 10 a.m. CST on Tuesday, Nov. 4, 2014, to discuss Entergy's third quarter 2014 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 (719) 325-2115, confirmation code 6761108, no more than 15 minutes prior to the start of the call. The presentation slides are 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 noon CST on Nov. 11, 2014, by dialing (719) 457-0820, confirmation code 6761108. This release and presentation slides are also available on the Entergy Investor Relations mobile web app at enter.gy/ir.

Utility

In third quarter 2014, Utility earnings were $310.9 million, or $1.72 per share, on an as-reported basis and $311.2 million, or $1.72 per share, on an operational basis, compared to $348.0 million, or $1.95 per share, on an as-reported basis and $363.3 million, or $2.04 per share, on an operational basis for third quarter 2013. The quarter-over-quarter decrease in operational earnings was driven by several factors including a regulatory charge at Entergy Mississippi, Inc., higher other O&M and a higher effective income tax rate. These decreases were partially offset by higher net revenue.

In third quarter 2014, EMI recorded a regulatory charge related to a proposed settlement with the MPUS of EMI's general rate case. The settlement, subject to approval by the Mississippi Public Service Commission, includes EMI's agreement not to pursue recovery of EMI's regulatory asset for new nuclear generation development costs. This charge reduced operational earnings per share by approximately $(0.23).

Other O&M was higher quarter-over-quarter. The increase was driven by nuclear generation spending and Midcontinent Independent System Operator, Inc. regional transmission organization administration fees. Energy efficiency spending and storm reserve accruals were also higher than the comparable quarter a year ago. These expense increases were partially offset by lower compensation and benefits expenses.

Utility net revenue was higher than the same quarter last year with several contributing factors, both positive and negative. Weather-adjusted sales growth and price contributed to the increase. A portion of the price variance was offset in other line items outside of net revenue, including O&M. The effect of milder-than-normal weather in the current quarter partially offset the increase.

Billed retail sales increased 2.0 percent on a weather-adjusted basis. The increase was attributable largely to 5.3 percent growth in the industrial customer class. The industrial increase was due largely to expansions in the chemicals, refining and primary metals segments as well as growth from small industrial customers.

Residential sales in third quarter 2014, on a weather-adjusted basis, decreased 0.2 percent compared to third quarter 2013. Commercial and governmental sales, on a weather-adjusted basis, increased 0.8 percent and 1.8 percent, respectively, quarter over quarter. Industrial sales in the third quarter increased 5.3 percent compared to the same quarter of 2013.

Entergy Wholesale Commodities 

EWC reported a loss of $33.2 million, or 18 cents per share, on an as-reported basis and earnings of $40.8 million, or 23 cents per share, on an operational basis for third quarter 2014. This compares to an as-reported loss of $92.8 million, or 52 cents per share, and operational earnings of $82.3 million, or 46 cents per share, in third quarter 2013. The decrease in operational earnings was driven by a higher effective income tax rate and higher depreciation expense. These items were partially offset by lower other O&M, as noted below.

EWC operational adjusted earnings before interest, income taxes, depreciation and amortization, and interest and investment income excluding decommissioning expense, and other than temporary impairment losses on decommissioning trust fund assets was $165 million in third quarter 2014, flat from the same period a year ago. Other O&M decreased quarter-over-quarter due primarily to lower compensation and benefits expenses. Offsetting the other O&M variance were several other individually insignificant items

Contribution to third quarter 2014 operational adjusted EBITDA from the Vermont Yankee Nuclear Power Station, scheduled to be closed later this year at the end of its current operating cycle, was essentially neutral.

Parent & Other

Parent & Other reported a loss of $47.7 million, or 27 cents per share, on an as-reported and operational basis for third quarter 2014, compared to a loss of $15.3 million, or 9 cents per share, on an as-reported and operational basis for third quarter 2013. The quarter-over-quarter decline was due primarily to higher income tax expense.

Earnings Guidance

Entergy affirmed its previously-issued 2014 operational earnings guidance to be in the range of $5.55 to $6.75 per share. Current indications point to full-year results below the midpoint of the guidance range. However, absent the third quarter charge associated with the Mississippi rate case settlement, full-year expectations would be around the midpoint.

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 more than 10,000 megawatts of nuclear power, making it one of the nation's leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $11 billion and approximately 14,000 employees.

Additional information regarding Entergy's quarterly and annual results of operations, regulatory proceedings and other matters is available in Entergy's investor news release dated Nov. 4, 2014, a copy of which has been filed today with the SEC on Form 8-K, and Entergy's quarterly presentation slides. These are available on Entergy's Investor Relations website at www.entergy.com/investor_relations and on Entergy's Investor Relations mobile web app at enter.gy/ir.

-30-

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. 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 involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed 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 rate proceedings, formula rate plans and other cost recovery mechanisms; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory 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 Vermont Yankee or any of Entergy's other nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; and (g) economic conditions and conditions in commodity and capital markets during the periods covered by the forward-looking statements, in addition to other factors described elsewhere in this release and subsequent securities filings.

 
 

Appendix A provides a reconciliation of GAAP consolidated as-reported earnings to non-GAAP consolidated operational earnings.

 

Table 1: Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures

Third Quarter and Year-to-Date 2014 vs. 2013

(Per share in U.S. $)

 

Third Quarter

Year-to-Date

 

2014

2013

Change

2014

2013

Change

As-Reported

           

Utility

1.72

1.95

(0.23)

4.00

3.74

0.26

Entergy Wholesale Commodities

(0.18)

(0.52)

0.34

1.30

-

1.30

Parent & Other

(0.27)

(0.09)

(0.18)

(0.74)

(0.58)

(0.16)

  Consolidated As-Reported Earnings

1.27

1.34

(0.07)

4.56

3.16

1.40

             

Less Special Items

           

Utility

-

(0.09)

0.09

(0.03)

(0.21)

0.18

Entergy Wholesale Commodities

(0.41)

(0.98)

0.57

(0.49)

(0.99)

0.50

Parent & Other

-

-

-

-

-

-

  Consolidated Special Items

(0.41)

(1.07)

0.66

(0.52)

(1.20)

0.68

             

Operational

           

Utility

1.72

2.04

(0.32)

4.03

3.95

0.08

Entergy Wholesale Commodities

0.23

0.46

(0.23)

1.79

0.99

0.80

Parent & Other

(0.27)

(0.09)

(0.18)

(0.74)

(0.58)

(0.16)

  Consolidated Operational Earnings

1.68

2.41

(0.73)

5.08

4.36

0.72

             
             
 
 

Appendix B provides a reconciliation of Entergy Wholesale Commodities GAAP net income to non-GAAP operational adjusted EBITDA.

 

Appendix B:  Entergy Wholesale Commodities Operational Adjusted EBITDA – Reconciliation of GAAP to Non-GAAP Measures

Third Quarter and Year-to-Date 2014 vs. 2013

($ in millions)

 

Third Quarter

Year-to-Date

 

2014

2013

Change

2014

2013

Change

Net income

(33)

(93)

60

235

1

234

Add back: interest expense

4

4

-

12

11

1

Add back: income tax expense

2

(107)

109

141

(65)

206

Add back: depreciation and amortization

72

55

17

213

155

58

Subtract: interest and investment income

29

21

8

77

72

5

Add back: decommissioning expense

35

32

3

104

92

12

Adjusted EBITDA

51

(130)

181

627

122

505

Add back: special item for HCM implementation expenses (pre-tax)

1

3

(2)

3

5

(2)

Add back: special item resulting from the decision to close VY (pre-tax)

113

292

(179)

134

292

(158)

Operational adjusted EBITDA

165

165

-

764

419

345

             

Totals may not foot due to rounding

 
 

Entergy Corporation

Consolidated Income Statement

Three Months Ended Sept. 30

(in thousands)

       
 

2014

 

2013

 

(unaudited)

Operating Revenues:

     

     Electric

$2,824,055

 

$2,704,800

     Natural gas

28,039

 

26,113

     Competitive businesses

606,016

 

621,046

                      Total

3,458,110

 

3,351,959

Operating Expenses:

     

    Operation and maintenance:

     

         Fuel, fuel-related expenses, and gas purchased for resale

858,901

 

818,254

         Purchased power

465,106

 

392,545

         Nuclear refueling outage expenses

71,651

 

64,758

         Other operation and maintenance

841,939

 

839,348

     Asset write-off, impairments, and related charges

163,835

 

291,505

     Decommissioning

68,370

 

60,848

     Taxes other than income taxes

159,735

 

156,950

     Depreciation and amortization

332,079

 

325,149

     Other regulatory charges (credits) – net

3,635

 

13,708

                      Total

2,965,251

 

2,963,065

Operating Income

492,859

 

388,894

Other Income (Deductions):

     

     Allowance for equity funds used during construction

16,737

 

17,676

     Interest and investment income

49,547

 

23,430

     Miscellaneous – net

(6,644)

 

(10,214)

                      Total

59,640

 

30,892

Interest Expense:

     

     Interest expense

164,482

 

157,504

     Allowance for borrowed funds used during construction

(8,664)

 

(6,453)

                      Total

155,818

 

151,051

Income Before Income Taxes

396,681

 

268,735

Income Taxes

161,765

 

24,553

Consolidated Net Income

234,916

 

244,182

Preferred Dividend Requirements of Subsidiaries

4,879

 

4,332

Net Income Attributable to Entergy Corporation

$230,037

 

$239,850

       
       

Earnings Per Average Common Share

     

     Basic

$1.28

 

$1.35

     Diluted

$1.27

 

$1.34

       

Average Number of Common Shares Outstanding – Basic

179,610,067

 

178,283,721

Average Number of Common Shares Outstanding – Diluted

180,527,116

 

178,652,210

 
 

Entergy Corporation

Consolidated Income Statement

Nine Months Ended Sept. 30

(in thousands)

       
       
 

2014

 

2013

 

(unaudited)

Operating Revenues:

     

     Electric

$7,424,360

 

$6,831,290

     Natural gas

141,727

 

113,315

     Competitive businesses

2,097,516

 

1,754,436

                      Total

9,663,603

 

8,699,041

Operating Expenses:

     

    Operation and maintenance:

     

         Fuel, fuel-related expenses, and gas purchased for resale

2,006,811

 

1,818,194

         Purchased power

1,557,631

 

1,251,418

         Nuclear refueling outage expenses

197,692

 

191,940

         Other operation and maintenance

2,392,590

 

2,437,801

     Asset write-off, impairments, and related charges

167,772

 

291,505

     Decommissioning

201,418

 

179,342

     Taxes other than income taxes

466,939

 

452,934

     Depreciation and amortization

992,544

 

923,541

     Other regulatory charges (credits) – net

(7,010)

 

22,914

                      Total

7,976,387

 

7,569,589

Operating Income

1,687,216

 

1,129,452

Other Income (Deductions):

     

     Allowance for equity funds used during construction

46,654

 

46,675

     Interest and investment income

109,040

 

102,277

     Miscellaneous – net

(33,026)

 

(36,992)

                      Total

122,668

 

111,960

Interest Expense:

     

     Interest expense

491,359

 

466,422

     Allowance for borrowed funds used during construction

(24,199)

 

(18,432)

                      Total

467,160

 

447,990

Income Before Income Taxes

1,342,724

 

793,422

Income Taxes

507,474

 

214,202

Consolidated Net Income

835,250

 

579,220

Preferred Dividend Requirements of Subsidiaries

14,656

 

14,247

Net Income Attributable to Entergy Corporation

$820,594

 

$564,973

       
       

Earnings Per Average Common Share

     

     Basic

$4.58

 

$3.17

     Diluted

$4.56

 

$3.16

       

Average Number of Common Shares Outstanding – Basic

179,256,975

 

178,170,339

Average Number of Common Shares Outstanding – Diluted

179,867,018

 

178,520,063

 
 

Entergy Corporation

Utility Electric Energy Sales & Customers

             

Three Months Ended Sept. 30

                 
   

2014

 

2013

 

%

 Change

 

%

Weather-
Adjusted

   

(Millions of kWh)

       

Electric Energy Sales:

               

Residential

 

10,869

 

11,359

 

(4.3)

 

(0.2)

Commercial

 

8,281

 

8,393

 

(1.3)

 

0.8

Governmental

 

659

 

648

 

1.7

 

1.8

Industrial

 

11,620

 

11,038

 

5.3

 

5.3

    Total to Ultimate Customers

 

31,429

 

31,438

 

-

 

2.0

Wholesale

 

2,075

 

667

 

211.1

   

    Total Sales

 

33,504

 

32,105

 

4.4

   
                 
                 

Nine Months Ended Sept. 30

                 
   

2014

 

2013

 

%

 Change

 

%

Weather-
Adjusted

   

(Millions of kWh)

       

Electric Energy Sales:

               

Residential

 

28,162

 

27,080

 

4.0

 

0.5

Commercial

 

21,844

 

21,498

 

1.6

 

1.4

Governmental

 

1,829

 

1,814

 

0.8

 

0.8

Industrial

 

32,635

 

31,264

 

4.4

 

4.4

    Total to Ultimate Customers

 

84,470

 

81,656

 

3.4

 

2.2

Wholesale

 

6,357

 

1,887

 

236.9

   

    Total Sales

 

90,827

 

83,543

 

8.7

   
                 
                 

Sept. 30

               
   

2014

 

2013

 

%

Change

 

Electric Customers (End of period):

           

Residential

 

2,411,773

 

2,397,877

 

0.6

 

Commercial

 

344,436

 

342,291

 

0.6

 

Governmental

 

17,314

 

16,941

 

2.2

 

Industrial

 

50,770

 

48,709

 

4.2

 

    Total Ultimate Customers

 

2,824,293

 

2,805,818

 

0.7

 

Wholesale

 

9

 

25

 

(64.0)

 

    Total Customers

 

2,824,302

 

2,805,843

 

0.7