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FOR IMMEDIATE RELEASE

Entergy Reports First Quarter Earnings

04/26/2017

CONTACT

Kay Jones (Media)
(504) 576-4238
cjone22@entergy.com

David Borde (Investor Relations)
(504) 576-5668
dborde@entergy.com

 

First quarter results in line with expectations; 2017 guidance affirmed

NEW ORLEANS – Entergy Corporation (NYSE: ETR) reported first quarter 2017 earnings per share of 46 cents on an as-reported basis and 99 cents on an operational basis, including an estimated negative (16) cents effect from unusually mild weather.

“Entergy’s first quarter results are in line with our expectations and we are affirming our full-year guidance,” said Entergy Chairman and Chief Executive Officer Leo Denault. “These results are a good start to another important year for Entergy as we build on the momentum from last year’s achievements. We are confident that we have the right strategy, leadership and workforce to deliver on our operational plan and financial outlooks.”

Business highlights included the following:

  • The sale of EWC’s FitzPatrick plant to Exelon Generation was completed on March 31, 2017.
  • The settlement on Indian Point is being implemented on the agreed-upon schedule.
  • ELL signed a purchase and sale agreement for an approximately 360 megawatt gas-fired CT. Washington Parish Energy Center One, LLC, a subsidiary of Calpine Corporation, will construct the plant and ELL will purchase the plant once it is complete. The transaction is expected to close in 2021.
  • EAI and ELL made primary selections from proposals offered in response to their RFPs for renewable resources.
  • The PUCT issued a final order in our TCRF filing.
  • Moody’s upgraded Entergy Corporation’s issuer rating to Baa2 from Baa3.
  • Entergy was included in Corporate Responsibility Magazine’s annual list of the 100 Best Corporate Citizens. 

 

Consolidated Earnings (GAAP and Non-GAAP Measures)

First Quarter 2017 vs. 2016 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of special items)

 

First Quarter

 

2017

2016

Change

As-Reported Earnings ($ in millions)

82.6

230.0

(147.4)

Less Special Items

(95.1)

(12.9)

(82.2)

Operational Earnings

177.7

242.8

(65.1)

Estimated Weather Impact (after-tax)

(29.2)

(25.4)

(3.8)

 

 

 

 

As-Reported Earnings (per share in $)

0.46

1.28

(0.82)

Less Special Items

(0.53)

(0.07)

(0.46)

Operational Earnings

0.99

1.35

(0.36)

Estimated Weather Impact

(0.16)

(0.14)

(0.02)

 

 

 

 

Totals may not foot due to rounding


Consolidated Results

For first quarter 2017, the company reported earnings of 46 cents per share on an as-reported basis and EPS of 99 cents on an operational basis, as compared to first quarter 2016 EPS of $1.28 on an as-reported basis and operational EPS of $1.35.

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

Utility, Parent & Other Results

For first quarter 2017, Utility EPS were 92 cents on both an as-reported basis and an operational basis. In first quarter 2016, Utility as-reported and operational EPS were $1.09. The current period results reflected the effects of new rate actions to recover investments that benefit customers. However, the impacts of higher operating expenses and weather led to the overall decline in results.

Net revenue increased quarter-over-quarter, driven by regulatory actions across the utility jurisdictions, including EAI’s 2017 FRP rate changes. Sales volume declined due to lower residential and commercial sales across the service territory, including the effects of weather.  

Industrial sales growth was positive. Growth from new and expanding customers was partly offset by lower sales to existing customers, primarily in the refining segment. Sales to refiners were down on customer outages, which were expected.

Utility non-fuel O&M increased quarter-over-quarter. First quarter 2016 included a favorable deferral of previously-expensed costs which resulted from EAI’s rate case order. In 2017, fossil spending was higher, primarily related to the acquisition of Union in March of last year. Higher spending on nuclear operations was largely offset by lower regulatory compliance costs at ANO.

In first quarter 2017, Parent & Other reported a loss of (30) cents per share on both an as-reported basis and an operational basis. In first quarter 2016, Parent & Other reported an as-reported and operational loss of (25) cents per share.

On a combined basis, Utility, Parent & Other EPS were 62 cents on an as-reported basis and 83 cents on an adjusted basis. In first quarter 2016, Utility, Parent & Other as-reported EPS were 84 cents and adjusted EPS were 95 cents. Adjusted earnings exclude special items and the effects of weather and normalize income taxes. 

Appendix C contains additional details on Utility financial and operational measures, including a schedule of Utility, Parent & Other adjusted earnings and EPS.

Entergy Wholesale Commodities Results

For first quarter 2017, EWC recorded a loss of (16) cents per share on an as-reported basis and operational EPS of 37 cents. For the comparable period in 2016, EWC earned 44 cents per share on an as-reported basis and operational EPS of 51 cents. 

The decrease in EWC’s as-reported results was due largely to impairments and other items recorded as a result of strategic decisions for the wholesale business. Impairments were for fuel purchases and refueling outage costs as well as capital spending. First quarter 2017 as-reported results also included items which resulted from the FitzPatrick transaction, including a gain on that sale and an income tax benefit. All of these were considered special items and excluded from operational earnings.

Excluding the items above, earnings from FitzPatrick’s operations declined. The plant was sold on March 31, 2017.

From the remaining plants, net revenue declined due to lower power prices. This was partially offset by lower nuclear fuel costs, which were affected by impairments. Non-fuel O&M reflected lower refueling outage expense, which was also affected by impairments. Decommissioning expense increased due primarily to the transfer of Indian Point 3 liability from NYPA. This was partially offset by an increase in other income, which was due to earnings on decommissioning trusts.

Appendix D contains additional details on EWC financial and operational measures, including a schedule of EWC operational adjusted EBITDA calculations.

Earnings Guidance

Entergy affirmed its 2017 operational guidance in the range of $4.75 to $5.35 per share and Utility, Parent & Other adjusted EPS guidance range of $4.25 to $4.55. See webcast presentation slides for additional details.

The company has provided 2017 earnings guidance with regard to the non-GAAP measures of 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 reasonably estimate all of the special items that may occur for the periods presented. The company’s current estimate for special items in 2017 relates to the decisions to close or sell its merchant nuclear plants; those anticipated special items are expected to decrease as-reported EPS by approximately $2.10 per share. Other special items may occur during the periods presented, the impact of which cannot reasonably be estimated at this time.

Earnings Teleconference

A teleconference will be held at 10 a.m. Central Time on Wednesday, April 26, 2017, 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 56943997, 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 3, 2017, by dialing 855-859-2056, conference ID 56943997. 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 $10.8 billion and nearly 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.

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

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 and the presentation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Certain non-GAAP 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 impairment, gains or losses on asset sales, and other gains or losses occurring as a result of strategic decisions such as Entergy’s recent decisions to shut down or sell its merchant nuclear plants. Operational earnings per share are presented for each of Entergy’s reportable business segments as well as on a consolidated basis. In addition, other financial measures including net income (or earnings), adjusted for preferred dividends and tax effected interest expense; operational 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 also reports Utility, Parent & Other adjusted earnings and earnings per share, which exclude from GAAP earnings the special items described above and weather and normalizes tax expense for the periods presented. Management believes that financial metrics calculated using operational earnings or otherwise adjusted as described above could provide useful information to investors in evaluating the ongoing results of Entergy’s businesses and could assist investors in comparing Entergy’s operating performance to the operating performance of others in the Utility sector.

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, excluding securitization debt; 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 could provide useful information to investors in evaluating Entergy’s ongoing financial results and flexibility, and could assist 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, could 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 2017 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 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; (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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