Entergy Reports Second Quarter Earnings
NEW ORLEANS, Aug. 2, 2017 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported second quarter 2017 earnings per share of $2.27 on an as-reported basis and $3.11 on an operational basis (non-GAAP), which excludes the effects of special items. Results included an income tax item which reduced income tax expense and increased earnings.
Consolidated Earnings (GAAP and Non-GAAP Measures)
Second Quarter 2017 (See Appendix A description of special items and Appendix C for reconciliation of GAAP to non-GAAP
measures)
----------------------------------------------------------------------------------------------------------------------
(Per share in $)
Consolidated Utility Parent & Other EWC
------------ ------ -------------- ---
Segment
contribution
to as-
reported 2.27 1.35 (0.32) 1.24
Less special
items (0.84) - - (0.84)
----- --- --- -----
Operational
(non-GAAP) 3.11 1.35 (0.32) 2.08
Estimated
weather in
billed sales (0.09) (0.09)
Income tax item 2.07 - 2.07
----
Utility, Parent & Other adjusted (non-GAAP) 1.12
"We had another productive quarter executing our strategy to deliver steady, predictable earnings growth at our core utility business, which supports our long-term dividend growth aspiration," said Entergy Chairman and Chief Executive Officer Leo Denault. "2017 is on pace to be another year with significant accomplishments on multiple fronts, which continue to position us to deliver on our outlooks. We are affirming our full-year Utility, Parent & Other adjusted earnings guidance."
Business highlights included the following:
-- Entergy shifted its consolidated operational earnings guidance range
upward by $2.05 per share to $6.80 to $7.40, to take into account a tax
item recorded in the quarter. The company affirmed its Utility, Parent &
Other adjusted earnings guidance.
-- The LPSC approved ELL's application to construct Lake Charles Power
Station and the PUCT approved ETI's application to construct Montgomery
County Power Station.
-- The Mississippi and Louisiana commissions approved AMI deployment plans
for their jurisdictions.
-- EAI and ELL made their annual FRP filings.
-- For the second consecutive year, Entergy Corporation was named to The
Civic 50, a Points of Light initiative honoring the 50 most
community-minded companies in the nation.
Consolidated Results
Consolidated Earnings (GAAP and Non-GAAP Measures)
Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of special
items)
----------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
(After-tax, $ in millions)
As-reported
earnings 409.9 567.3 (157.4) 492.5 797.3 (304.8)
Less special
items (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
------ --- ------ ------ ---- ------
Operational
earnings
(non-GAAP) 561.2 557.7 3.5 738.9 800.6 (61.7)
Estimated
weather in
billed sales (15.9) (16.3) 0.4 (45.1) (41.8) (3.3)
(After-tax, per share in $)
As-reported
earnings 2.27 3.16 (0.89) 2.74 4.45 (1.71)
Less special
items (0.84) 0.05 (0.89) (1.37) (0.02) (1.35)
----- ---- ----- ----- ----- -----
Operational
earnings
(non-GAAP) 3.11 3.11 - 4.11 4.47 (0.36)
Estimated
weather in
billed sales (0.09) (0.09) - (0.25) (0.23) (0.02)
Calculations may differ due to
rounding
For second quarter 2017, the company reported earnings of $410 million, or $2.27 per share, on an as-reported basis and $561 million, or $3.11 per share, on an operational basis. This compared to second quarter 2016 earnings of $567 million, or $3.16 per share, on an as-reported basis and $558 million, or $3.11 per share, on an operational basis. Current and prior period results were both favorably impacted by income tax items of a similar magnitude in each period. 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 and year-to-date variances is provided in Appendix B.
Utility, Parent & Other Results
For second quarter 2017, the Utility business earned net income attributable to Entergy Corporation of $243 million, or $1.35 per share, compared to $376 million, or $2.09 per share, in second quarter 2016. The prior period results included income tax items which reduced income tax expense and increased EPS by 68 cents, net of a reserve of approximately 6 cents for guaranteed customer sharing. Other drivers for the current quarter results included higher net revenue and other income as well as higher non-fuel O&M.
Net revenue increased quarter-over-quarter, driven by new base rate actions to recover investments that benefit customers. While billed retail sales volume increased 4 percent in the quarter, the net revenue effect was more than offset by a decline in unbilled revenue. On a weather-adjusted basis, growth in residential and commercial billed sales was 3.4 percent and 1.6 percent, respectively. Industrial sales volume increased more than 6 percent with higher sales to both new and expansion customers as well as existing customers. Increases from new and expansion customers were driven by the primary metals and chlor-alkali segments. Increases from existing customers were also driven by the chlor-alkali segment as well as transportation.
Utility non-fuel O&M increased quarter-over-quarter. The primary driver was higher spending on nuclear operations. In addition, other income increased period-over-period due to higher AFUDC and realized earnings on decommissioning trust funds.
Parent & Other recognized a loss of $(57) million, or $(0.32) per share, for the second quarter 2017, compared to a loss of $(59) million, or $(0.32) per share, for second quarter 2016. There were no individually significant quarter-over-quarter drivers.
On a combined basis, Utility, Parent & Other (non-GAAP) contributed $1.03 to second quarter 2017 consolidated EPS and $1.77 to second quarter 2016 EPS. On an adjusted basis, normalizing for the effects of weather and income taxes, Utility, Parent & Other (non-GAAP) contributed $1.12 per share in second quarter 2017 to consolidated EPS, compared to $1.18 in second quarter 2016.
Appendix C contains additional details on Utility financial and operating measures, including a schedule of non-GAAP Utility, Parent & Other adjusted earnings and EPS.
Entergy Wholesale Commodities Results
For second quarter 2017, EWC earned net income attributable to Entergy Corporation of $223 million, or $1.24 per share, compared to $250 million, or $1.39 per share, for second quarter 2016. On an operational basis, EWC earned $375 million, or $2.08 per share, in second quarter 2017, compared to $241 million, or $1.34 per share, in second quarter 2016. Results in both periods included income tax items which increased EPS $2.07 in second quarter 2017 and $1.33 in second quarter 2016.
The decrease in EWC's as-reported earnings reflected impairments and other items recorded as a result of strategic decisions for the wholesale business. Impairments were for refueling outage costs and fuel purchases as well as capital spending in the period. These were considered special items and were excluded from operational earnings. Second quarter 2016 results also reflected a reversal of expenses which resulted from awards for DOE spent fuel litigation, a portion of which was considered a special item.
In addition, other income increased largely from higher realized earnings on decommissioning trust funds. Higher decommissioning expense, due in part to the agreement with NYPA to transfer decommissioning liabilities and associated trusts to Entergy, partially offset the increase.
The sale of FitzPatrick at the end of first quarter 2017 affected period-over-period variances for multiple line items. In second quarter 2016, the plant contributed 9 cents to as-reported EPS and 6 cents to operational EPS.
Appendix D contains additional details on EWC financial and operating measures, including the calculation of EWC operational adjusted EBITDA (non-GAAP).
Earnings Guidance
Entergy updated its 2017 operational earnings guidance range to be $6.80 to $7.40 per share and affirmed its Utility, Parent & Other adjusted guidance range of $4.25 to $4.55 per share. The updated consolidated operational earnings guidance range was increased by $2.05 per share to reflect the tax item recorded in second quarter 2017, which was not included in the original guidance range. 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 predict and quantify with a reasonable degree of confidence all of the special items that may occur during 2017. 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 $2.05 per share.
Earnings Teleconference
A teleconference will be held at 9 a.m. Central Time on Wednesday, August 2, 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 56948204, 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 August 9, 2017, by dialing 855-859-2056, conference ID 56948204. 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.
Entergy has launched a new web page as part of its Investor Relations website, entitled "Regulatory and Other Information." Entergy intends for this page to be dedicated to providing investors with key updates of regulatory proceedings and important milestones on the execution of its strategy. The company plans to use its corporate Twitter feed to notify investors of updates to this web page. While some of this information may be considered material information, investors should not rely exclusively on this new 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. 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 recent 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. 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 over 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 operation.
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 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 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.
Second Quarter 2017 Earnings Release Appendices and Financial Statements
Appendices
Appendices are presented in this section as follows:
-- A: Consolidated Results and Special Items
-- B: Variance Analysis
-- C: Utility Financial and Operating Measures
-- D: EWC Financial and Operating Measures
-- E: Consolidated Financial Measures
-- F: Definitions, Abbreviations and Acronyms
-- G: GAAP to Non-GAAP Reconciliations
A: Consolidated Results and Special Items
Appendix A-1 provides a comparative summary of consolidated earnings, including a reconciliation of GAAP as-reported earnings to operational earnings (non-GAAP).
Appendix A-1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A-3 and Appendix A-4 for details on special items, including income tax effects on
adjustments)
----------------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
(After-tax, $ in millions)
Earnings
Utility 243.5 375.6 (132.1) 408.2 570.5 (162.3)
Parent & Other (56.9) (58.6) 1.7 (111.3) (102.6) (8.7)
EWC 223.3 250.3 (27.0) 195.6 329.3 (133.7)
----- ----- ----- ----- ----- ------
Consolidated 409.9 567.3 (157.4) 492.5 797.3 (304.8)
Less special items
Utility - - - - - -
Parent & Other - - - - - -
EWC (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
------ --- ------ ------ ---- ------
Consolidated (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
Operational (non-GAAP)
Utility 243.5 375.6 (132.1) 408.2 570.5 (162.3)
Parent & Other (56.9) (58.6) 1.7 (111.3) (102.6) (8.7)
EWC 374.6 240.7 133.9 442.0 332.6 109.4
----- ----- ----- ----- ----- -----
Consolidated 561.2 557.7 3.5 738.9 800.6 (61.6)
Estimated weather in
billed sales (15.9) (16.3) 0.4 (45.1) (41.8) (3.3)
Diluted average
number of common
shares outstanding
(in millions) 180.2 179.5 180.0 179.2
(After-tax, per share in $) (a)
Earnings
Utility 1.35 2.09 (0.74) 2.27 3.18 (0.91)
Parent & Other (0.32) (0.32) - (0.62) (0.57) (0.05)
EWC 1.24 1.39 (0.15) 1.09 1.84 (0.75)
Consolidated 2.27 3.16 (0.89) 2.74 4.45 (1.71)
Less special items
Utility - - - - - -
Parent & Other - - - - - -
EWC (0.84) 0.05 (0.89) (1.37) (0.02) (1.35)
----- ---- ----- ----- ----- -----
Consolidated (0.84) 0.05 (0.89) (1.37) (0.02) (1.35)
Operational (non-GAAP)
Utility 1.35 2.09 (0.74) 2.27 3.18 (0.91)
Parent & Other (0.32) (0.32) - (0.62) (0.57) (0.05)
EWC 2.08 1.34 0.74 2.46 1.86 0.60
---- ---- ---- ---- ---- ----
Consolidated 3.11 3.11 - 4.11 4.47 (0.36)
Estimated weather in
billed sales (0.09) (0.09) - (0.25) (0.23) (0.02)
Calculations may differ due to
rounding
(a) Per share amounts are calculated by
dividing the corresponding line
item in the chart above by the
diluted average number of shares
of common outstanding over the
period.
See Appendix B for detailed earnings variance analysis. See Appendix A-3 for special items by driver.
Appendix A-2 provides the components of OCF contributed by each business.
Appendix A-2: Consolidated Operating Cash Flow
Second Quarter and Year-to-Date 2017 vs. 2016
---------------------------------------------
($ in millions)
Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Utility 569 690 (121) 1,127 1,149 (22)
Parent & Other (51) (47) (4) (226) (109) (117)
EWC (228) 76 (304) (81) 212 (293)
---- --- ---- --- --- ----
Total OCF 290 719 (429) 820 1,252 (432)
Calculations may differ due to
rounding
OCF decreased quarter-over-quarter, driven in part by higher refueling outage costs at both EWC and the Utility, and the associated loss of revenue from outages at EWC. Other contributing factors included higher severance and retention costs at EWC as well as lower EWC operational net revenue and the timing of recovery of Utility fuel and purchased power.
Appendix A-3 and Appendix A-4 list special items by business. Amounts are shown on both a net income and per share basis. Special items are included in as-reported earnings consistent with GAAP, but are excluded from operational earnings. As a result, operational earnings is considered a non-GAAP measure.
Appendix A-3: Special Items by Driver (shown as positive/(negative) impact on earnings or EPS)
Second Quarter and Year-to-Date 2017 vs. 2016
---------------------------------------------
(Pre-tax except for income tax effects and total, $ in millions)
Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
EWC
EWC Nuclear plant
impairments and
costs associated
with decisions to
close or sell
plants (232.8) (19.0) (213.8) (463.7) (38.9) (424.9)
Gain on the sale of
FitzPatrick - - - 16.3 - 16.3
DOE litigation
awards for VY and
FitzPatrick - 33.8 (33.8) - 33.8 (33.8)
Income tax effect on
adjustments above
(b) 81.5 (5.2) 86.7 156.6 1.8 154.8
Income tax benefit
resulting from
FitzPatrick
transaction - - - 44.5 - 44.5
Total EWC (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
Total special items (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
(After-tax, per share in $) (c)
EWC
EWC Nuclear plant
impairments and
costs associated
with decisions to
close or sell
plants (0.84) (0.07) (0.77) (1.68) (0.14) (1.54)
Gain on the sale of
FitzPatrick - - - 0.06 - 0.06
DOE litigation
awards for VY and
FitzPatrick - 0.12 (0.12) - 0.12 (0.12)
Income tax benefit
resulting from
FitzPatrick
transaction - - - 0.25 - 0.25
Total EWC (0.84) 0.05 (0.89) (1.37) (0.02) (1.35)
Total special items (0.84) 0.05 (0.89) (1.37) (0.02) (1.35)
Calculations may differ due to
rounding
(b) Income tax effect is calculated
by multiplying the pre-tax
amount by the estimated income
tax rate that is expected to
apply.
(c) EPS effect is calculated by
multiplying the pre-tax
amount by the estimated income
tax rate that is expected to
apply to each adjustment and
then dividing by the diluted
average number of shares of
common outstanding.
Appendix A-4: Special Items by Income Statement Line Item (shown as positive/(negative) impact on earnings)
Second Quarter and Year-to-Date 2017 vs. 2016
---------------------------------------------
(Pre-tax except for Income taxes and Total, $ in millions)
Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
EWC
Net revenue 0.5 - 0.5 91.0 - 91.0
Non-fuel O&M (37.1) 22.7 (59.9) (157.4) 11.2 (168.6)
Taxes other than income
taxes (2.5) (0.9) (1.6) (6.6) (1.9) (4.6)
Asset write-off and
impairments (193.6) (7.0) (186.6) (405.4) (14.3) (391.0)
Gain on sale of assets - - - 16.3 - 16.3
Miscellaneous net (other
income) - - - 14.6 - 14.6
Income taxes (d) 81.5 (5.2) 86.7 201.0 1.8 199.3
---- ---- ---- ----- --- -----
Total EWC (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
Total special items
(after-tax) (151.3) 9.6 (160.9) (246.4) (3.3) (243.1)
Calculations may differ due to
rounding
(d) Income taxes include the
income tax effect of the
special items which were
calculated using the
estimated income tax rate
that is expected to apply to
each item. The year-to-date
2017 period also includes the
income tax benefit which
resulted from the FitzPatrick
transaction.
B: Variance Analysis
Appendix B-1 and Appendix B-2 provide details of current quarter and year-to-date 2017 versus 2016 as-reported and operational earnings variance analysis for Utility, Parent & Other and EWC.
Appendix B-1: As-Reported and Operational EPS Variance Analysis (e)
Second Quarter 2017 vs. 2016
----------------------------
(After-tax, per share in $, sorted in consolidated operational column, most to least favorable)
Utility Parent & Other EWC Consolidated
As-Reported Opera-tional As-Reported Opera-tional As- Opera-tional As- Opera-
Reported Reported tional
------ ------
2016 earnings 2.09 2.09 (0.32) (0.32) 1.39 1.34 3.16 3.11
Other income
(deductions)-other 0.06 0.06 (f) - - 0.10 0.10 (g) 0.16 0.16
Non-fuel O&M (0.10) (0.10) (h) - - (0.08) 0.13 (i) (0.18) 0.03
Interest exp. and other
charges 0.03 0.03 (0.01) (0.01) - - 0.02 0.02
Preferred dividend
requirements 0.01 0.01 - - - - 0.01 0.01
Income taxes - other (0.75) (0.75) (j) 0.01 0.01 0.74 0.74 (k) - -
Asset write-offs and
impairments - - - - (0.67) - (l) (0.67) -
Taxes other than income
taxes (0.04) (0.04) - - 0.02 0.03 (0.02) (0.01)
Depreciation/
amortization exp. (0.03) (0.03) - - (0.02) (0.02) (0.05) (0.05)
Net revenue 0.09 0.09 (m) - - (0.16) (0.16) (n) (0.07) (0.07)
Decommissioning expense (0.01) (0.01) - - (0.08) (0.08) (o) (0.09) (0.09)
2017 earnings 1.35 1.35 (0.32) (0.32) 1.24 2.08 2.27 3.11
---- ---- ----- ----- ---- ---- ---- ----
Appendix B-2: As-Reported and Operational EPS Variance Analysis (e)
Year-to-Date 2017 vs. 2016
--------------------------
(After-tax, per share in $, sorted in consolidated operational column, most to least favorable)
Utility Parent & Other EWC Consolidated
As-Reported Opera-tional As-Reported Opera-tional As- Opera-tional As- Opera-
Reported Reported tional
------ ------
2016 earnings 3.18 3.18 (0.57) (0.57) 1.84 1.86 4.45 4.47
Other income
(deductions)-other 0.09 0.09 (f) - - 0.21 0.16 (g) 0.30 0.25
Interest exp. and other
charges 0.04 0.04 (0.01) (0.01) - - 0.03 0.03
Preferred dividend
requirements 0.02 0.02 - - - - 0.02 0.02
Asset write-offs and
impairments - - - - (1.41) - (l) (1.41) -
Gain on sale of assets - - - - 0.06 - (p) 0.06 -
Taxes other than income
taxes (0.06) (0.06) (q) - - 0.02 0.04 (0.04) (0.02)
Non-fuel O&M (0.30) (0.30) (h) - - (0.34) 0.27 (i) (0.64) (0.03)
Income taxes - other (0.79) (0.79) (j) (0.04) (0.04) 1.01 0.76 (k) 0.18 (0.07)
Depreciation/
amortization exp. (0.09) (0.09) (r) - - (0.01) (0.01) (0.10) (0.10)
Net revenue 0.19 0.19 (m) - - (0.05) (0.38) (n) 0.14 (0.19)
Decommissioning expense (0.01) (0.01) - - (0.24) (0.24) (o) (0.25) (0.25)
2017 earnings 2.27 2.27 (0.62) (0.62) 1.09 2.46 2.74 4.11
---- ---- ----- ----- ---- ---- ---- ----
Calculations may differ due to
rounding
See appendix in the webcast slide presentation for additional details on EWC line item variances.
(e) EPS effect is calculated by multiplying
the pre-tax amount by the estimated
income tax rate that is expected to
apply and dividing by diluted average
number of shares of common outstanding;
income taxes - other represents income
tax differences other than the tax
effect of individual line items.
(f) The current quarter and year-to-date
increases reflected higher realized
earnings on decommissioning trust funds
(partially offset in net revenue) and
higher AFUDC due to increased
construction work in progress.
(g) The current quarter and year-to-date
increases reflected higher realized
earnings on decommissioning trust
funds. In the year-to-date period, 5
cents was from gains on the receipt of
nuclear decommissioning trust funds
from NYPA in January 2017 (classified
as a special item and excluded from
operational EPS).
(h) The current quarter and year-to-date
decreases reflected higher spending for
nuclear operations and vegetation. The
year-to date decrease also reflected
the first quarter 2016 $18 million
(pre-tax) cost deferral at EAI for
previously-expensed costs related to
post Fukushima and flood barrier
compliance and increased compensation
and benefits expense due partly to a
revision to estimated incentive
compensation expense in first quarter
2016. The year-to-date decrease was
partly offset by lower regulatory
compliance spending at ANO.
(i) The current and year-to-date as-
reported decreases reflected higher
severance and retention expenses which
resulted from decisions to close or
sell EWC's nuclear plants; the 2017
year-to-date period included costs
associated with the agreement to sell
FitzPatrick. These expenses were
classified as special items. Also
contributing to the decreases was a
second quarter 2016 reduction in
expense for litigation awards from the
DOE in connection with spent nuclear
fuel storage costs; a portion of the
amount (12 cents) was considered a
special item. Excluding special items,
the current quarter and year-to-date
operational increases were driven
primarily by the sale of FitzPatrick.
Lower refueling outage expense, due to
impairments, also contributed to the
operational increases.
(j) The current quarter and year-to-date
decreases were due to the second
quarter 2016 reversal of a portion of
the provision for uncertain tax
positions totaling $136 million for
positions resolved in the 2010-2011
tax audit. This was partly offset by
customer sharing recorded as a
regulatory charge ($16 million pre-
tax, included in net revenue).
(k) The current quarter and year-to-date
increases were largely due to the net
effect of income tax elections in
second quarter 2017 and 2016. Both tax
items resulted from internal
reorganizations which, for tax
purposes, allowed the company to
recognize deductions for
decommissioning liabilities today;
those deductions created permanent tax
losses. The reductions in income tax
expense were $373 million in second
quarter 2017 and $238 million in second
quarter 2016. The year-to-date as-
reported increase included a tax
benefit which resulted from the re-
determination of FitzPatrick's tax
basis as a result of the sale of the
plant in first quarter 2017 (classified
as a special item).
(l) The current quarter and year-to-date
decreases were due to the immediate
expensing of refueling outage costs,
nuclear fuel purchases and capital
expenditures (classified as special
items).
Utility As-Reported Net Revenue
Variance Analysis
2017 vs. 2016 ($ EPS)
--------------------
Second Quarter Year-to-Date
-------------- ------------
Estimated
weather in
billed sales - (0.02)
Volume/
unbilled (0.06) (0.08)
Retail
electric
price 0.04 0.15
Regulatory
sharing 0.06 0.06
Other 0.05 0.08
---- ----
Total 0.09 0.19
----- ---- ----
(m) The current quarter and year-to-date
increases reflected EAI's 2017 FRP,
EMI's 2016 FRP and ETI's TCRF rate
changes. Grand Gulf recovery also
increased for higher operating costs.
Partly offsetting was a rate decrease
at ELL from exiting the system
agreement (offset by changes in
expense). The second quarter 2016 $16
million (pre-tax) reserve for the
portion of the tax benefit dedicated to
customer sharing (noted above) also
contributed to the increase. While
billed sales volume increased in both
periods, the net revenue effect was
more than offset by a decline in
unbilled revenue. For the year-to-
date period, the first quarter rate
changes from EAI's 2016 rate case and
the Union acquisition contributed to
the increase. In addition, in first
quarter 2016 EAI recorded a charge to
reflect the estimated impact from a
FERC order on the opportunity sales
case.
(n) The current quarter decrease was driven
by the absence of revenue from
FitzPatrick, which was sold. In the
quarter, the effects of higher prices
were largely offset by lower generation
from nuclear plants primarily due to an
increase in outage days and lower fuel
expense which resulted from
impairments. The year-to-date as-
reported variance reflected cost
reimbursements from the buyer related
to the FitzPatrick sale (classified as
a special item). The year-to-date
variance also reflected lower pricing
for nuclear assets and lower fuel
expense.
(o) The current quarter and year-to-date
decreases resulted partly from the
establishment of decommissioning
liabilities at Indian Point 3 in August
2016 from the agreement with NYPA to
transfer decommissioning liabilities
and associated trusts to Entergy.
Revisions to the estimated
decommissioning liabilities from the
early shutdown decisions for Indian
Point and Palisades in the fourth
quarter 2016 also contributed to the
decreases. The year-to-date decrease
also reflected establishment of the
decommissioning liability at
FitzPatrick (also a result of the
agreement with NYPA).
(p) The year-to-date increase was due to a
gain on the sale of FitzPatrick
(classified as a special item).
(q) The year-to-date decrease was due
largely to higher franchise, ad valorem
and employment taxes.
(r) The year-to-date decrease was due
largely to additions to plant in
service, including Union (acquired
March 2016).
C: Utility Financial and Operating Measures
Appendix C-1 provides a comparative summary of Utility, Parent & Other adjusted earnings and EPS contribution, each of which excludes the effects of special items and normalizes weather and income tax expense.
Appendix C-1: Utility, Parent & Other Adjusted Earnings and EPS - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for details on special items)
------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
($ in millions)
Utility
earnings 243.5 375.6 (132.1) 408.2 570.5 (162.3)
Parent & Other
earnings
(loss) (56.9) (58.6) 1.7 (111.3) (102.6) (8.7)
UP&O earnings 186.6 317.0 (130.4) 296.9 467.9 (171.0)
Less:
Special items - - - - - -
Estimated
weather (25.9) (26.6) 0.7 (73.4) (67.9) (5.5)
Tax effect of
estimated
weather (t) 10.0 10.2 (0.2) 28.3 26.1 2.1
---- ---- ---- ---- ---- ---
Estimated
weather
(after-tax) (15.9) (16.3) 0.4 (45.1) (41.8) (3.3)
Customer
sharing - (16.1) 16.1 - (16.1) 16.1
Tax effect of
customer
sharing (t) - 6.2 (6.2) - 6.2 (6.2)
Other income
tax items 0.5 132.4 (131.9) (8.9) 138.5 (147.3)
--- ----- ------ ---- ----- ------
Tax items, net
of customer
sharing 0.5 122.5 (122.0) (8.9) 128.5 (137.4)
UP&O adjusted
earnings 202.0 210.9 (8.9) 350.9 381.2 (30.2)
(After-tax, per share
in $) (s)
Utility
earnings 1.35 2.09 (0.74) 2.27 3.18 (0.91)
Parent & Other
earnings
(loss) (0.32) (0.32) - (0.62) (0.57) (0.05)
----- ----- --- ----- ----- -----
UP&O earnings 1.03 1.77 (0.74) 1.65 2.61 (0.96)
Less:
Special items - - - - - -
Estimated
weather (0.09) (0.09) - (0.25) (0.23) (0.02)
Other income
tax items, net
of customer
sharing - 0.68 (0.68) (0.05) 0.71 (0.76)
--- ---- ----- ----- ---- -----
UP&O adjusted
earnings 1.12 1.18 (0.06) 1.95 2.13 (0.18)
Calculations may differ due to
rounding
(s) Per share amounts are calculated by
dividing the corresponding line
item in the chart above by the
diluted average number of shares
of common outstanding over the
period.
(t) Income tax effect is calculated by
multiplying the pre-tax amount by
the estimated income tax rates
that are expected to apply to
those adjustments.
Appendix C-2 provides a comparative summary of Utility operating and financial measures.
Appendix C-2: Utility Operating and Financial Measures
Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP measures)
-------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2017 2016% % Weather 2017 2016% % Weather
Adjusted (u) Adjusted (u)
Change Change
--- --- ---
GWh billed
Residential 7,340 7,081 3.6 3.4 14,977 15,218 (1.6) (0.8)
Commercial 6,886 6,777 1.6 1.6 13,325 13,288 0.3 -
Governmental 609 609 - 0.3 1,202 1,209 (0.5) (0.7)
Industrial 12,209 11,509 6.1 6.1 23,326 22,564 3.4 3.4
------ ------ --- --- ------ ------ --- ---
Total retail sales 27,044 25,976 4.1 4.0 52,830 52,279 1.1 1.2
Wholesale 1,845 3,579 (48.4) 4,867 6,719 (27.5)
----- ----- ----- ----- ----- -----
Total sales 28,889 29,555 (2.3) 57,697 58,998 (2.2)
Number of electric retail customers
Residential 2,470,348 2,448,934 0.9
Commercial 355,751 352,615 0.9
Governmental 17,844 17,641 1.2
Industrial 45,872 46,752 (1.9)
Total retail customers 2,889,815 2,865,942 0.8
Net revenue ($ in
millions) 1,549 1,524 1.6 2,954 2,899 1.9
Non-fuel O&M per MWh $22.28 $20.80 7.1 $21.63 $19.69 9.8
Calculations may differ due to
rounding
Appendix C-3 provides a summary of Utility retail sales on a twelve-months-ended basis.
Appendix C-3: Utility Retail Sales
Twelve Months Ended June 2017 vs. June 2016
-------------------------------------------
Twelve months ended June 30
---------------------------
2017 2016% % Weather
Adjusted (u)
Change
--- ---
GWh billed
Residential 34,871 34,490 1.1 (0.2)
Commercial 29,234 29,011 0.8 (0.3)
Governmental 2,540 2,529 0.4 0.2
Industrial 46,501 45,802 1.5 1.5
Total
retail
sales 113,146 111,832 1.2 0.5
Calculations may differ due to
rounding
(u) The effects of weather were
estimated using monthly
heating degree days and
cooling degree days from
certain locations within
each jurisdiction and
comparing to "normal"
weather based on 20-year
historical data. The models
used to estimate weather are
updated periodically and
subject to change.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC operational adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2017 vs. 2016
---------------------------------------------
($ in millions) Second Quarter Year-to-Date
-------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Net income (loss) 224 251 (27) 197 330 (133)
Add back: interest
expense 6 6 - 12 13 (1)
Add back: income taxes (455) (235) (220) (533) (183) (350)
Add back: depreciation
and amortization 52 46 6 105 102 3
Subtract: interest and
investment income 59 34 25 102 60 42
Add back: decommissioning
expense 60 39 21 135 70 65
--- --- --- --- --- ---
Adjusted EBITDA (non-
GAAP) (172) 73 (245) (186) 272 (458)
Add back pre-tax special items for:
EWC Nuclear plant
impairments and costs
associated with
decisions to close or
sell plants 233 19 214 463 39 424
Gain on the sale of
FitzPatrick - - - (16) - (16)
DOE litigation awards for
VY and FitzPatrick - (34) 34 - (34) 34
--- --- --- --- --- ---
Operational adjusted
EBITDA (non-GAAP) 61 58 3 261 277 (16)
Calculations may differ due to
rounding
Appendix D-2 provides a comparative summary of EWC operating and financial measures.
Appendix D-2: EWC Operating and Financial Measures
Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP measures)
-------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Owned capacity (MW) (v) 3,962 4,880 (18.8)
GWh billed 6,019 7,866 (23.5) 14,382 17,112 (16.0)
As-reported net revenue
($ in millions) 250 293 (14.7) 744 759 (2.0)
Operational net revenue
(non-GAAP) ($ in
millions) 250 293 (14.7) 653 759 (14.0)
EWC Nuclear Fleet
-----------------
Capacity factor 59% 76% (22.4) 71% 83% (14.5)
GWh billed 5,393 7,308 (26.2) 13,228 15,996 (17.3)
Production cost per MWh $27.11 $23.06 17.6 $20.96 $22.44 (6.6)
Average energy/capacity
revenue per MWh (w) $51.76 $42.34 22.2 $53.79 $49.85 7.9
As-reported net revenue
($ in millions) 247 290 (15.0) 738 754 (2.1)
Operational net revenue
(non-GAAP) ($ in
millions) 246 290 (15.2) 647 754 (14.1)
Refueling outage days
FitzPatrick - - 42 -
Indian Point 2 - 77 - 102
Indian Point 3 47 - 66 -
Palisades 27 - 27 -
Pilgrim 43 - 43 -
(v) FitzPatrick was sold on
3/31/17 and investments in
wind generation were sold in
November 2016.
(w) Average energy and capacity
revenue per MWh excluding
FitzPatrick was $47.44 in
second quarter 2016, $52.02
in year-to-date 2017 and
$56.34 in year-to-date
2016.
See appendix in the webcast slide presentation for EWC hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
As-reported financial measures in this table are computed in accordance with GAAP as they include all components of net income, including special items. Operational measures in this table are non-GAAP financial measures as they are calculated using operational net income, which excludes the impact of special items.
Appendix E: GAAP and Non-GAAP Financial Measures
Second Quarter 2017 vs. 2016 (See Appendix G for reconciliation of
GAAP to non-GAAP financial measures)
------------------------------------------------------------------
For
12
months
ending
June
30 2017 2016 Change
---- ---- ------
GAAP Measures
ROIC
-
as-
reported (1.9%) 2.4% (4.3%)
ROE
-
as-
reported (9.8%) 1.7% (11.5%)
Book
value
per
share $46.63 $54.54 ($7.91)
End
of
period
shares
outstanding
(millions) 179.5 178.9 0.6
Non-GAAP Measures
ROIC
-
operational 6.5% 7.5% (1.0%)
ROE
-
operational 13.3% 14.3% (1.0%)
As of June 30 ($ in
millions)
GAAP Measures
Cash
and
cash
equivalents 934 996 (62)
Revolver
capacity 4,163 4,173 (10)
Commercial
paper 1,147 853 294
Total
debt 16,285 14,837 1,448
Securitization
debt 602 716 (114)
Debt
to
capital 65.5% 59.6% 5.9%
Off-balance sheet
liabilities:
Debt
of
joint
ventures
-
Entergy's
share 70 76 (6)
Leases
-
Entergy's
share 397 359 38
Power
purchase
agreements
accounted
for
as
leases 166 195 (29)
--- --- ---
Total
off-
balance
sheet
liabilities 633 630 3
Non-GAAP Financial
Measures
Debt
to
capital,
excluding
securitization
debt 64.7% 58.4% 6.3%
Gross
liquidity 5,097 5,169 (72)
Net
debt
to
net
capital,
excluding
securitization
debt 63.2% 56.6% 6.6%
Parent
debt
to
total
debt,
excluding
securitization
debt 20.5% 19.1% 1.4%
Debt
to
operational
adjusted
EBITDA,
excluding
securitization
debt 4.6x 4.4x 0.2x
Operational
FFO
to
debt,
excluding
securitization
debt 15.2% 21.1% (5.9%)
F: Definitions, Abbreviations and Acronyms
Appendix F-1 provides definitions of certain operating measures, as well as GAAP and non-GAAP financial measures. Non-GAAP financial measures remove the effects of financial events that are not routine from commonly used financial measures.
Appendix F-1: Definitions
-------------------------
Utility Operating and Financial Measures
----------------------------------------
GWh billed Total number of GWh billed to
retail and wholesale customers
Net revenue Operating revenue less fuel,
fuel related expenses and gas
purchased for resale, purchased
power and other regulatory
charges (credits) - net
Non-fuel O&M Operation and maintenance
expenses excluding fuel, fuel-
related expenses and gas
purchased for resale and
purchased power
Non-fuel O&M per MWh Non-fuel O&M per MWh of billed
sales
Number of retail customers Number of customers at the end
of the period
EWC Operating and Financial Measures
------------------------------------
Average revenue under Revenue on a per unit basis at
contract per kW-month which capacity is expected to
(applies to capacity be sold to third parties, given
contracts only) existing contract prices and/
or auction awards
Average revenue per MWh on Revenue on a per unit basis at
contracted volumes which generation output
reflected in contracts is
expected to be sold to third
parties (including offsetting
positions) at the minimum
contract prices and at forward
market prices at a point in
time, given existing contract
or option exercise prices based
on expected dispatch or
capacity, excluding the revenue
associated with the
amortization of the below-
market PPA for Palisades;
revenue will fluctuate due to
factors including market price
changes affecting revenue
received on puts, collars and
call options, positive or
negative basis differentials,
option premiums and market
prices at the time of option
expiration, costs to convert
firm LD to unit-contingent and
other risk management costs
Bundled capacity and energy A contract for the sale of
contracts installed capacity and related
energy, priced per MWh sold
Capacity contracts A contract for the sale of the
installed capacity product in
regional markets managed by ISO
New England, NYISO and MISO
Capacity factor Normalized percentage of the
period that the nuclear plants
generate power
Expected sold and market Total energy and capacity
total revenue per MWh revenue on a per unit basis at
which total planned generation
output and capacity is expected
to be sold given contract terms
and market prices at a point in
time, including estimates for
market price changes affecting
revenue received on puts,
collars and call options,
positive or negative basis
differentials, option premiums
and market prices at time of
option expiration, costs to
convert Firm LD to unit-
contingent and other risk
management costs, divided by
total planned MWh of
generation, excluding the
revenue associated with the
amortization of the Palisades
below-market PPA
Firm LD Transaction that requires
receipt or delivery of energy
at a specified delivery point
(usually at a market hub not
associated with a specific
asset) or settles financially
on notional quantities; if a
party fails to deliver or
receive energy, defaulting
party must compensate the other
party as specified in the
contract, a portion of which
may be capped through the use
of risk management products
------- -------------------------------
Appendix F-1: Definitions
-------------------------
EWC Operating and Financial Measures (continued)
-----------------------------------------------
GWh billed Total number of GWh billed to
customers and financially-settled
instruments (does not include
amounts from investment in wind
generation that was accounted for
under the equity method of
accounting and which was sold in
November 2016)
Net revenue Operating revenue less fuel, fuel-
related expenses and purchased
power
Offsetting positions Transactions for the purchase of
energy, generally to offset a Firm
LD transaction
Owned capacity (MW) Installed capacity owned and
operated by EWC; investment in wind
generation was sold in November
2016
Percent of capacity sold Percent of planned qualified
forward capacity sold to mitigate price
uncertainty under physical or
financial transactions
Percent of planned Percent of planned generation output
generation under contract sold or purchased forward under
contracts, forward physical
contracts, forward financial
contracts or options that mitigate
price uncertainty that may or may
not require regulatory approval or
approval of transmission rights or
other conditions precedent;
positions that are no longer
classified as hedges are netted in
the planned generation under
contract
Planned net MW in operation Amount of installed capacity to
generate power and/or sell
capacity, assuming intent to
shutdown Pilgrim (May 31, 2019),
Palisades (Oct. 1, 2018), Indian
Point 2 (April 30, 2020) and Indian
Point 3 (April 30, 2021)
Planned TWh of generation Amount of output expected to be
generated by EWC resources
considering plant operating
characteristics and outage
schedules, assuming intent to
shutdown Pilgrim (May 31, 2019),
Palisades (Oct. 1, 2018), Indian
Point 2 (April 30, 2020) and Indian
Point 3 (April 30, 2021)
Production cost per MWh Fuel and non-fuel O&M expenses
according to accounting standards
that directly relate to the
production of electricity per MWh
(based on net generation),
excluding special items
Refueling outage days Number of days lost for a scheduled
refueling and maintenance outage
during the period
Unit-contingent Transaction under which power is
supplied from a specific generation
asset; if the asset is in
operational outage, seller is
generally not liable to buyer for
any damages, unless the contract
specifies certain conditions such
as an availability guarantee
Financial Measures - GAAP
-------------------------
Book value per share End of period
common equity
divided by end
of period shares
outstanding
Debt of joint Entergy's share
ventures -Entergy's of debt issued
share by business
joint ventures
at EWC
Debt to capital ratio Total debt
divided by total
capitalization
Leases -Entergy's Operating leases
share held by
subsidiaries
capitalized at
implicit
interest rate
Revolver capacity Amount of undrawn
capacity
remaining on
corporate and
subsidiary
revolvers,
including
Entergy Nuclear
Vermont Yankee
ROIC - as-reported 12-months
rolling net
income
attributable to
Entergy
Corporation
adjusted for
preferred
dividends and
tax-effected
interest expense
divided by
average invested
capital
ROE - as-reported 12-months rolling
net income
attributable to
Entergy
Corporation
divided by
average common
equity
Securitization debt Debt associated
with
securitization
bonds issued to
recover storm
costs from
hurricanes Rita,
Ike and Gustav
at ETI and
Hurricane Isaac
at ENOI; the
2009 ice storm
at EAI and
investment
recovery of
costs associated
with the
cancelled Little
Gypsy repowering
project at ELL
Appendix F-1: Definitions
-------------------------
Financial Measures - Non-GAAP
Total debt Sum of short-term and long-term debt,
notes payable and commercial paper and
capital leases on the balance sheet
Adjusted EBITDA Earnings before interest, depreciation
and amortization and income taxes and
excluding decommissioning expense; for
Entergy consolidated, also excludes
AFUDC-equity funds and subtracts
securitization proceeds
Utility, Parent & Other Combines the Utility segment with Parent
& Other, which is all of Entergy
excluding the EWC segment
Adjusted EPS As-reported EPS excluding special items
and normalizing weather and income
taxes
Debt to capital ratio, Total debt divided by total
excluding securitization capitalization, excluding
debt securitization debt
Debt to operational End of period total debt excluding
adjusted EBITDA, excluding securitization debt divided by
securitization debt 12-months rolling operational adjusted
EBITDA
FFO OCF less AFUDC-borrowed funds, working
capital items in OCF (receivables, fuel
inventory, accounts payable, prepaid
taxes and taxes accrued, interest
accrued and other working capital
accounts) and securitization regulatory
charges
Operational FFO to debt, 12-months rolling operational FFO as a
excluding securitization percentage of end of period total debt
debt excluding securitization debt
Gross liquidity Sum of cash and revolver capacity
Operational adjusted EBITDA Adjusted EBITDA excluding effects of
special items
Operational EPS As-reported EPS adjusted to exclude the
impact of special items
Operational FFO FFO excluding effects of special items
Parent debt to total debt End of period Entergy Corporation debt,
ratio, excluding including amounts drawn on credit
securitization debt revolver and commercial paper
facilities, as a percent of
consolidated total debt, excluding
securitization debt
Net debt to net capital Total debt less cash and cash
ratio, excluding equivalents divided by total
securitization debt capitalization less cash and cash
equivalents, excluding securitization
debt
ROIC - operational 12-months rolling operational net
income attributable to Entergy
Corporation adjusted for preferred
dividends and tax-effected interest
expense divided by average invested
capital
ROE - operational 12-months rolling operational net income
attributable to Entergy Corporation
divided by average common equity
Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.
Appendix F-2: Abbreviations and Acronyms
----------------------------------------
ADIT Accumulated deferred income taxes LPSC Louisiana Public Service Commission
AFUDC - Allowance for borrowed funds used
borrowed during construction
funds LTM Last twelve months
AFUDC - Allowance for equity funds used
equity during construction
funds Michigan PSC Michigan Public Service Commission
AMI Advanced metering infrastructure MISO Midcontinent Independent System Operator,
Inc.
ANO Arkansas Nuclear One (nuclear) Moody's Moody's Investor Service
APSC Arkansas Public Service Commission MPSC Mississippi Public Service Commission
ARO Asset retirement obligation MTEP MISO Transmission Expansion Planning
CCGT Combined cycle gas turbine Nelson 6 Unit 6 of Roy S. Nelson plant (coal)
CCNO Council of the City of New Orleans,
Louisiana NEPOOL New England Power Pool
COD Commercial operation date Ninemile 6 Ninemile Point Unit 6
CT Simple cycle combustion turbine Non-fuel O&M Non-fuel operation and maintenance
expense
DCRF Distribution cost recovery factor NDT Nuclear decommissioning trust
DOE U.S. Department of Energy NRC Nuclear Regulatory Commission
EAI Entergy Arkansas, Inc. NYISO New York Independent System Operator,
Inc.
EBITDA Earnings before interest, income
taxes, depreciation and
amortization NYPA New York Power Authority
ELL Entergy Louisiana, LLC NYSE New York Stock Exchange
EMI Entergy Mississippi, Inc. O&M Operation and maintenance expense
ENOI Entergy New Orleans, Inc. OCF Net cash flow provided by operating
activities
ENVY Entergy Nuclear Vermont Yankee OpCo Operating Company
ESI Entergy Services, Inc. OPEB Other post-employment benefits
EPS Earnings per share Palisades Palisades Power Plant (nuclear)
ETI Entergy Texas, Inc. PSDAR Post-Shutdown Decommissioning Activities
Report
ETR Entergy Corporation Pilgrim Pilgrim Nuclear Power Station (nuclear)
EWC Entergy Wholesale Commodities PPA Power purchase agreement or purchased
power agreement
FERC Federal Energy Regulatory
Commission PUCT Public Utility Commission of Texas
FFO Funds from operations RFP Request for proposal
Firm LD Firm liquidated damages RISEC Rhode Island State Energy Center (CCGT)
FitzPatrick James A. FitzPatrick Nuclear Power
Plant (nuclear, sold March 31,
2017) ROE Return on equity
FRP Formula rate plan ROIC Return on invested capital
GAAP U.S. generally accepted accounting
principles RPCE Rough production cost equalization
Grand Gulf Unit 1 of Grand Gulf Nuclear
Station (nuclear), 90% owned or
leased by System Energy RS Cogen RS Cogen facility (CCGT cogen)
Indian Point Indian Point Energy Center Unit 1
1 (nuclear) RSP Rate Stabilization Plan (ELL Gas)
Indian Point Indian Point Energy Center Unit 2
2 (nuclear) S&P Standard & Poor's
Indian Point Indian Point Energy Center Unit 3
3 (nuclear) SEC U.S. Securities and Exchange Commission
IPEC Indian Point Energy Center
(nuclear) SERI System Energy Resources, Inc.
ISO Independent system operator SPDES State Pollutant Discharge Elimination
System
ISES Independence Steam Electric Station
(coal) TCRF Transmission cost recovery factor
Top Deer Top Deer Wind Ventures, LLC
Union Union Power Station (CCGT)
UP&O Utility, Parent & Other
VY Vermont Yankee Nuclear Power Station
(nuclear)
WACC Weighted-average cost of capital
WQC Water Quality Certification
YOY Year-over-year
G: GAAP to Non-GAAP Reconciliations
Appendix G-1, Appendix G-2 and Appendix G-3 provide reconciliations of various non-GAAP financial measures disclosed in this release to their most comparable GAAP measure.
Appendix G-1: Reconciliation of GAAP to Non-GAAP Financial Measures - EWC
Operational Net Revenue
-------------------------------------------------------------------------
($ in Second
millions Quarter
except
where
noted) Year-to-Date
2017 2016 2017 2016
---- ---- ---- ----
As-
reported
net
revenue (A) 250 293 744 759
Special
items
included
in net
revenue:
EWC
Nuclear
costs
associated
with
decisions
to
close
or
sell
plants
Total
special
items
included
in net
revenue (B) 1 - 91 -
Operational
net
revenue
(non-
GAAP) (A-B) 250 293 653 759
EWC
Nuclear
--------
As-
reported
EWC
Nuclear
net
revenue (C) 247 290 738 754
Special
items
included
in EWC
Nuclear
net
revenue:
EWC
Nuclear
costs
associated
with
decisions
to
close
or
sell
plants
Total
special
items
included
in EWC
Nuclear
net
revenue (D) 1 - 91 -
Operational
EWC
Nuclear
net
revenue
(non-
GAAP) (C-D) 246 290 647 754
Calculations may differ due to
rounding
Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - ROIC, ROE
($ in millions
except where
noted) Second Quarter
--------------
2017 2016
---- ----
As-reported net
income (loss)
attributable to
Entergy
Corporation,
rolling 12
months (A) (888) 174
Preferred
dividends 15 21
Tax effected
interest
expense 404 404
--- ---
As-reported net
income (loss) expense
attributable to
Entergy
Corporation,
rolling 12
months adjusted
for preferred
dividends and
tax effected
interest (469) 599
(B)
Special items in
prior quarters (1,947) (1,260)
EWC Nuclear
plant
impairments and
costs
associated with
decisions to
close or sell
plants (151) (12)
DOE litigation
awards for VY
and FitzPatrick - 22
Total special
items, rolling
12 months (C) (2,098) (1,250)
Operational
earnings,
rolling 12
months adjusted
for preferred
dividends and
tax effected
interest
expense (non-
GAAP) (B-C) 1,629 1,849
Operational
earnings,
rolling 12
months (non-
GAAP) (A-C) 1,210 1,424
Average invested
capital (D) 24,886 24,617
Average common
equity (E) 9,064 9,958
ROIC - as-
reported (B/D) (1.9)% 2.4%
ROIC -
operational [(B-C)/D] 6.5% 7.5%
ROE - as-
reported (A/E) (9.8)% 1.7%
ROE -
operational [(A-C)/E] 13.3% 14.3%
Calculations may differ due to
rounding
Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures -
Debt Ratios excluding Securitization Debt; Gross Liquidity; Debt to
Operational Adjusted EBITDA, excluding Securitization Debt; Operational
FFO to Debt Ratio, excluding Securitization Debt
------------------------------------------------------------------------
($ in
millions
except
where
noted) Second Quarter
--------------
2017 2016
---- ----
Total
debt (A) 16,285 14,837
Less
securitization
debt (B) 602 716
--- ---
Total
debt,
excluding
securitization
debt (C) 15,683 14,121
Less
cash
and
cash
equivalents (D) 934 996
--- ---
Net
debt,
excluding
securitization
debt (E) 14,749 13,125
Total
capitalization (F) 24,859 24,913
Less
securitization
debt (B) 602 716
--- ---
Total
capitalization,
excluding
securitization
debt (G) 24,257 24,197
Less
cash
and
cash
equivalents (D) 934 996
--- ---
Net
capital,
excluding
securitization
debt (H) 23,323 23,201
Debt to
capital (A/F) 65.5% 59.6%
Debt to
capital,
excluding
securitization
debt (C/G) 64.7% 58.4%
Net
debt
to net
capital,
excluding
securitization
debt (E/H) 63.2% 56.6%
Revolver
capacity (I) 4,163 4,173
Gross
liquidity (D+I) 5,097 5,169
Entergy
Corporation
notes:
Due
January
2017 - 500
Due
September
2020 450 450
Due
July
2022 650 650
Due
September
2026 750 -
Total
parent
long-
term
debt (J) 1,850 1,600
Revolver
draw (K) 225 240
Commercial
paper (L) 1,147 853
----- ---
Total
parent
debt (J)+(K)+(L) 3,222 2,693
Parent
debt
to
total
debt,
excluding
securitization
debt [((J)+(K)+(L))/(C)] 20.5% 19.1%
Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures - Debt Ratios excluding Securitization
Debt; Gross Liquidity; Debt to Operational Adjusted EBITDA, excluding Securitization Debt; Operational FFO to
Debt Ratio, excluding Securitization Debt (continued)
--------------------------------------------------------------------------------------------------------------
($ in millions except where
noted) Second Quarter
--------------
2017 2016
---- ----
Total debt (A) 16,285 14,837
Less securitization debt (B) 602 716
--- ---
Total debt, excluding
securitization debt (C) 15,683 14,121
As-reported consolidated net
income (loss), rolling 12 months (873) 194
Add back (rolling 12 months):
Interest expense 657 658
Income taxes (1,038) (1,002)
Depreciation and amortization 1,375 1,335
Regulatory charges (credits) (7) 185
Decommissioning expense 397 287
Subtract (rolling 12 months):
Securitization proceeds 145 137
Interest and investment income 203 158
AFUDC-equity funds used during
construction 76 61
Adjusted EBITDA, rolling 12
months (non-GAAP) (D) 87 1,301
Add back special items (rolling
12 months pre-tax):
EWC Nuclear plant impairments and
costs associated with decisions
to close or sell plants 3,335 2,084
DOE litigation awards for VY and
FitzPatrick - (34)
Top Deer investment impairment - 37
Gain on the sale of RISEC - (154)
Gain on the sale of FitzPatrick (16) -
Operational adjusted EBITDA,
rolling 12 months (non-GAAP) (E) 3,406 3,234
Debt to operational adjusted
EBITDA, excluding securitization
debt (C)/(E) 4.6x 4.4x
Net cash flow provided by
operating activities, rolling 12
months (F) 2,566 3,205
AFUDC-borrowed funds used during
construction, rolling 12 months (G) (37) (31)
Working capital items in net cash
flow provided by operating
activities (rolling 12 months):
Receivables (33) 81
Fuel inventory 35 1
Accounts payable 139 15
Prepaid taxes and taxes accrued (38) 108
Interest accrued (2) (2)
Other working capital accounts 62 (111)
Securitization regulatory charges 115 107
--- ---
Total (H) 278 199
FFO, rolling 12 months (F)+(G)-(H) 2,251 2,975
Add back special items (rolling
12 months pre-tax):
EWC Nuclear plant impairments and
costs associated with decisions
to close or sell plants 126 6
Operational FFO, rolling 12
months (I) 2,377 2,981
Operational FFO to debt,
excluding securitization debt (I)/(C) 15.2% 21.1%
Calculations may differ due to
rounding
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SOURCE Entergy Corporation
