Entergy Reports Second Quarter Earnings
NEW ORLEANS, Aug. 1, 2018 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported second quarter 2018 earnings per share of $1.34 on an as-reported basis and $1.79 on an operational basis (non-GAAP), which excludes the effects of special items. Results included 31 cents of income tax benefits from the settlement of its 2012-2013 IRS audit.
"Our results this quarter keep us on track to meet the strategic, operational and financial objectives that we reinforced at our Analyst Day in June," said Entergy Chairman and Chief Executive Officer Leo Denault. "We continue to make significant progress toward transitioning to a pure play utility, as evidenced by our announcement to sell EWC's Pilgrim and Palisades nuclear plants after their scheduled shutdowns."
Business highlights included the following:
-- Entergy entered into purchase and sale agreements for EWC's Pilgrim and
Palisades nuclear plants.
-- The LPSC approved Entergy Louisiana's planned acquisition of Washington
Parish Energy Center.
-- ANO Units 1 and 2 returned to Column 1 of the NRC's reactor oversight
process.
-- Entergy Louisiana and Entergy Arkansas each submitted annual formula
rate plan filings and Entergy New Orleans and Entergy Texas each filed
base rate cases.
-- In June, Entergy Corporation completed a $1.15 billion common stock
offering with a forward component.
-- For the third 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 Earnings (GAAP and Non-GAAP Measures)
Second Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of
special items)
--------------------------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
(After-tax, $ in millions)
As-reported
earnings 245 410 (165) 378 493 (114)
Less special
items (82) (151) 70 (160) (246) 87
--- ---- --- ---- ---- ---
Operational
earnings (non-
GAAP) 327 561 (234) 538 739 (201)
Estimated
weather in
billed sales 21 (16) 36 37 (45) 82
(After-tax, per share in $)
As-reported
earnings 1.34 2.27 (0.93) 2.08 2.74 (0.66)
Less special
items (0.45) (0.84) 0.39 (0.88) (1.37) 0.49
----- ----- ---- ----- ----- ----
Operational
earnings (non-
GAAP) 1.79 3.11 (1.32) 2.96 4.11 (1.15)
Estimated
weather in
billed sales 0.11 (0.09) 0.20 0.20 (0.25) 0.45
Calculations may differ due to
rounding
Consolidated Results
For second quarter 2018, the company reported earnings of $245 million, or $1.34 per share, on an as-reported basis and earnings of $327 million, or $1.79 per share, on an operational basis. This compared to second quarter 2017 earnings of $410 million, or $2.27 per share, on an as-reported basis and earnings of $561 million, or $3.11 per share on an operational basis. Second quarter 2017 results included a $373 million, or $2.07 per share income tax item at EWC.
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 by business is provided in Appendix B.
Utility, Parent & Other Results
For second quarter 2018, the Utility business reported earnings attributable to Entergy Corporation of $376 million, or $2.05 per share, compared to $243 million, or $1.35 per share, in second quarter 2017. Drivers for the quarterly increase included higher retail sales volume and lower income taxes, partially offset by higher operating expenses.
The current period results reflected a $278 million reduction in income taxes, with a corresponding reduction in net revenue, for the amortization of unprotected excess ADIT. Approximately $150 million was credited to customer bills and the balance was recorded as a regulatory charge for recovery of certain rate base and related assets. The net effect was neutral to earnings.
Excluding the $278 million unprotected excess ADIT, net revenue increased, driven by higher retail sales volume, including favorable weather in second quarter 2018 compared to unfavorable weather a year ago. Weather-adjusted billed sales declined period over period, but was more than offset by higher volume in the unbilled period. Rate actions to recover investments that benefit customers also contributed to the increase. Current period results also included regulatory provisions recorded to return benefits of the lower federal tax rate to customers at Entergy Louisiana and Entergy New Orleans.
On a weather-adjusted basis, billed sales decreased (1.3) percent, including (3.4) percent and (1.6) percent for residential and commercial sales, respectively. Industrial sales volume was essentially flat driven by continued growth from new and expansion customers as well as small industrials, largely offset by decreased cogeneration sales.
Excluding the $278 million unprotected excess ADIT, income taxes were lower driven by tax benefits from the settlement of the 2012-2013 IRS audit and the reduction of the federal income tax rate.
Utility non-fuel O&M increased quarter-over-quarter. The primary driver was higher spending on fossil operations. Energy efficiency spending and storm reserves were also higher, but were largely offset in net revenue.
For second quarter 2018, Parent & Other reported a loss of $(73 million), or (40) cents per share, compared to a loss of $(57 million), or (32) cents per share, in second quarter 2017.
On a combined basis, Utility, Parent & Other (non-GAAP) contributed $1.65 to second quarter 2018 consolidated EPS compared to $1.03 in second quarter 2017 consolidated EPS. On an adjusted basis, excluding special items and normalizing weather and income taxes, Utility, Parent & Other contributed $1.23 in second quarter 2018 to consolidated EPS, compared to $1.12 in second quarter 2017.
Appendix C contains additional details on Utility financial and operating measures, including a reconciliation for non-GAAP Utility, Parent & Other adjusted earnings and EPS.
Entergy Wholesale Commodities Results
For second quarter 2018, EWC recorded a loss attributable to Entergy Corporation of $(57 million), or (31) cents per share, on an as-reported basis and earned $25 million, or 14 cents per share, on an operational basis. This compared to second quarter 2017 earnings of $223 million, or $1.24 per share, on an as-reported basis and earnings of $375 million, or $2.08 per share, on an operational basis. The prior period results included an income tax item which reduced income taxes and increased earnings by $373 million, or $2.07 per share.
As-reported results in both periods reflected impairments and other expenses recorded as a result of strategic decisions for the wholesale business. These items totaled $(82 million), or (45) cents per share, in second quarter 2018, compared to $(151 million), or (84) cents per share, a year ago. These costs were considered special items and excluded from operational earnings.
Quarterly earnings also reflected higher net revenue as a result of higher nuclear energy volume, partially offset by lower nuclear energy pricing.
Appendix D contains additional details on EWC financial and operating measures, including a reconciliation for non-GAAP EWC operational adjusted EBITDA.
Earnings Guidance
Entergy affirmed its 2018 consolidated operational earnings guidance range of $6.25 to $6.85 per share and its Utility, Parent & Other adjusted guidance range of $4.50 to $4.90 per share.
The company has provided 2018 earnings guidance with regard to the non-GAAP measures of consolidated operational EPS and Utility, Parent & Other adjusted EPS. These measures exclude from the corresponding GAAP financial measures the effect of special items as described below under "Non-GAAP Financial Measures." The company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify with a reasonable degree of confidence all of the special items that may occur during 2018. The only anticipated special items that the company can reasonably estimate at this time are those that relate to the decisions to sell or close the company's merchant nuclear plants; these estimated costs, which are excluded from the earnings guidance, are expected to decrease as-reported EPS by approximately $(2.75) per share in 2018.
Earnings Teleconference
A teleconference will be held at 9:00 a.m. Central Time on Wednesday, August 1, 2018, to discuss Entergy's quarterly earnings announcement and the company's financial performance. The teleconference may be accessed by visiting Entergy's website at www.entergy.com or by dialing 844-309-6569, conference ID 3594779, 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 8, 2018, by dialing 855-859-2056, conference ID 3594779. This release and the webcast slide presentation are also available on the Entergy Investor Relations mobile web app at iretr.com.
Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of approximately $11 billion and more than 13,000 employees.
Entergy Corporation's common stock is listed on the New York and Chicago stock exchanges under the symbol "ETR."
Details regarding Entergy's results of operations, regulatory proceedings and other matters are available in this earnings release, a copy of which will be filed with the SEC, and the webcast slide presentation. Both documents are available on Entergy's Investor Relations website at www.entergy.com/investor_relations and on Entergy's Investor Relations mobile web app at iretr.com.
Entergy maintains a web page as part of its Investor Relations website, entitled "Regulatory and Other Information," which provides investors with key updates of regulatory proceedings and important milestones on the execution of its strategy. While some of this information may be considered material information, investors should not rely exclusively on this page for all relevant company information.
For definitions of certain operating measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the earnings release materials, see Appendix F.
Non-GAAP Financial Measures
This news release contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Entergy has provided quantitative reconciliations within this release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Certain non-GAAP financial measures in this news release could differ from GAAP only in that the figure or ratio states or includes operational earnings. Operational earnings are not calculated in accordance with GAAP because they exclude the effect of "special items." Special items are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, and may include items such as impairments, gains or losses on asset sales, and other gains or losses occurring as a result of strategic decisions such as Entergy's decisions to shut down or sell its merchant nuclear plants. In addition, other financial measures including net income (or earnings), adjusted for preferred dividends and tax effected interest expense; net revenue; return on average invested capital; and return on average common equity are included on both an operational and as-reported basis. In each case, the metrics defined as "operational" would exclude the effect of special items as defined above.
Entergy reports the combination of the Utility segment with Parent & Other as Utility, Parent & Other, which is all of Entergy excluding the EWC segment, since management uses this combination in making decisions about its ongoing business in light of its decision to exit the merchant power business. Entergy also reports Utility, Parent & Other adjusted earnings, which combines the Utility segment with Parent & Other, excludes applicable special items and normalizes weather and income tax expense for the periods presented, because it believes that these financial metrics provide useful information to investors in evaluating the ongoing results of Entergy's businesses and assist investors in comparing Entergy's financial performance to the financial performance of other companies in the Utility sector. The methodologies employed to determine the normalized weather and income tax expense adjustments, each of which is further described in this release, involve estimations and the judgement of management.
In addition to reporting earnings per share on a consolidated basis, Entergy reports on a per share basis the earnings or loss of each of its segments, together with the combination of the Utility segment and Parent & Other. These per share measures represent the net income or loss of such segment or segments divided by the diluted average number of shares of common stock outstanding for the period. Entergy believes such per share measures provide useful information to investors in understanding the results of operations of those businesses and their contribution to Entergy's consolidated results of operations.
Other non-GAAP measures, including adjusted EBITDA; operational adjusted EBITDA; gross liquidity; debt to capital ratio, excluding securitization debt; net debt to net capital ratio, excluding securitization debt; parent debt to total debt ratio, excluding securitization debt; operational FFO to debt ratio, excluding securitization debt and operational FFO to debt ratio, excluding securitization debt and return of unprotected excess ADIT are measures Entergy uses internally for management and board discussions and cash budgeting and performance monitoring activities to gauge the overall strength of its business. Entergy believes the above data provides useful information to investors in evaluating Entergy's ongoing financial results and flexibility and assists investors in comparing Entergy's credit and liquidity to the credit and liquidity of others in the Utility sector.
The non-GAAP financial measures and other reported adjusted items in this release are presented in addition to, and in conjunction with, results presented in accordance with GAAP. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. These non-GAAP financial measures reflect an additional way of viewing aspects of Entergy's operations that, when viewed with Entergy's GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Entergy's business. Investors are strongly encouraged to review Entergy's consolidated financial statements and publicly filed reports in their entirety and to not rely on any single financial measure. Non-GAAP financial measures are not standardized; therefore, it might not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Cautionary Note Regarding Forward-Looking Statements
In this news release, and from time to time, Entergy Corporation makes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, Entergy's 2018 earnings guidance; its current financial and operational outlook; and other statements of Entergy's plans, beliefs or expectations included in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this news release and in Entergy's most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Entergy's other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with (1) rate proceedings, formula rate plans and other cost recovery mechanisms, including the risk that costs may not be recoverable to the extent anticipated by the utilities and (2) implementation of the ratemaking effects of changes in law; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory costs and risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Entergy's nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with strategic transactions that Entergy or its subsidiaries may undertake, including the risk that any such transaction may not be completed as and when expected and the risk that the anticipated benefits of the transaction may not be realized; (h) effects of changes in federal, state or local laws and regulations and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental or energy policies; and (i) the effects of technological changes and changes in commodity markets, capital markets or economic conditions, during the periods covered by the forward-looking statements.
Second Quarter 2018 Earnings Release Appendices and Financial Statements
Appendices
Appendices are presented in this section as follows:
-- A: Consolidated Results and Special Items
-- B: Earnings Variance Analysis
-- C: Utility Financial and Operating Measures
-- D: EWC Financial and Operating Measures
-- E: Consolidated Financial Measures
-- F: Definitions and 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 as-reported earnings (GAAP) to operational earnings (non-GAAP).
Appendix A-1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A-3 and Appendix A-4 for details on special items, including income tax effects
on adjustments)
-------------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
(After-tax, $ in millions)
Earnings (loss)
Utility 376 243 132 591 408 182
Parent & Other (73) (57) (16) (137) (111) (26)
EWC (57) 223 (280) (75) 196 (271)
--- --- ---- --- --- ----
Consolidated 245 410 (165) 378 493 (114)
Less special items
Utility - - - - - -
Parent & Other - - - - - -
EWC (82) (151) 70 (160) (246) 87
--- ---- --- ---- ---- ---
Consolidated (82) (151) 70 (160) (246) 87
Operational earnings (loss) (non-GAAP)
Utility 376 243 132 591 408 182
Parent & Other (73) (57) (16) (137) (111) (26)
EWC 25 375 (350) 84 442 (358)
--- --- ---- --- --- ----
Consolidated 327 561 (234) 538 739 (201)
Estimated weather in
billed sales 21 (16) 36 37 (45) 82
Diluted average
number of common
shares outstanding
(in millions) 183.0 180.2 182.2 180.0
(After-tax, per share in $) (a)
Earnings (loss)
Utility 2.05 1.35 0.70 3.24 2.27 0.97
Parent & Other (0.40) (0.32) (0.08) (0.75) (0.62) (0.13)
EWC (0.31) 1.24 (1.55) (0.41) 1.09 (1.50)
Consolidated 1.34 2.27 (0.93) 2.08 2.74 (0.66)
Less special items
Utility - - - - - -
Parent & Other - - - - - -
EWC (0.45) (0.84) 0.39 (0.88) (1.37) 0.49
----- ----- ---- ----- ----- ----
Consolidated (0.45) (0.84) 0.39 (0.88) (1.37) 0.49
Operational earnings (loss) (non-GAAP)
Utility 2.05 1.35 0.70 3.24 2.27 0.97
Parent & Other (0.40) (0.32) (0.08) (0.75) (0.62) (0.13)
EWC 0.14 2.08 (1.94) 0.47 2.46 (1.99)
---- ---- ----- ---- ---- -----
Consolidated 1.79 3.11 (1.32) 2.96 4.11 (1.15)
Estimated weather in
billed sales 0.11 (0.09) 0.20 0.20 (0.25) 0.45
Calculations may differ due to
rounding
(a) Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
outstanding for the period.
See Appendix B for detailed earnings variance analysis. See Appendix A-3 for special items by driver.
Appendix A-2 provides a comparative summary OCF, by business.
Appendix A-2: Consolidated Operating Cash Flow
Second Quarter and Year-to-Date 2018 vs. 2017
---------------------------------------------
($ in millions)
Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
Utility 626 569 57 1,149 1,127 22
Parent & Other (58) (51) (7) (115) (226) 111
EWC (45) (228) 183 46 (81) 127
--- ---- --- --- --- ---
Consolidated 523 290 232 1,080 820 260
Calculations may differ due to
rounding
OCF increased quarter-over-quarter due primarily to lower severance and retention payments at EWC and increased collections for fuel and purchased power cost recovery at the Utility. Another contributing factor was lower refueling outage costs at both EWC and the Utility. The increase was partially offset by the return of the unprotected excess ADIT to customers.
Appendix A-3 and Appendix A-4 list special items by business. Amounts are shown on both an earnings and EPS 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 2018 vs. 2017
---------------------------------------------
(Pre-tax except for income tax effects and total, $ in millions)
Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
EWC
Items associated
with decisions to
close or sell EWC
nuclear plants (103) (233) 129 (202) (464) 262
Gain on the sale of
FitzPatrick - - - - 16 (16)
Income tax effect on
adjustments above
(b) 22 82 (60) 42 157 (114)
Income tax benefit
resulting from
FitzPatrick
transaction - - - - 45 (45)
Total EWC (82) (151) 70 (160) (246) 87
Total special items (82) (151) 70 (160) (246) 87
(After-tax, per share in $) (c)
EWC
Items associated
with decisions to
close or sell EWC
nuclear plants (0.45) (0.84) 0.39 (0.88) (1.68) 0.80
Gain on the sale of
FitzPatrick - - - - 0.06 (0.06)
Income tax benefit
resulting from
FitzPatrick
transaction - - - - 0.25 (0.25)
Total EWC (0.45) (0.84) 0.39 (0.88) (1.37) 0.49
Total special items (0.45) (0.84) 0.39 (0.88) (1.37) 0.49
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 common shares outstanding
for the period.
Appendix A-4: Special Items by Income Statement Line Item (shown as positive/(negative) impact on earnings)
Second Quarter and Year-to-Date 2018 vs. 2017
---------------------------------------------
(Pre-tax except for Income taxes and Total, $ in millions)
Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
EWC
Net revenue - 1 (1) - 91 (91)
Non-fuel O&M (32) (37) 5 (57) (157) 100
Taxes other than income
taxes (2) (3) 1 (3) (7) 4
Asset write-off and
impairments (69) (194) 125 (142) (405) 264
Gain on sale of assets - - - - 16 (16)
Miscellaneous net (other
income) - - - - 15 (15)
Income taxes (d) 22 82 (60) 42 201 (159)
--- --- --- --- --- ----
Total EWC (82) (151) 70 (160) (246) 87
Total special items
(after-tax) (82) (151) 70 (160) (246) 87
Calculations may differ due to
rounding
(d) Income taxes included 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 included the
income tax benefit which
resulted from the FitzPatrick
transaction.
B: Earnings Variance Analysis
Appendix B provides details of current quarter 2018 versus 2017 as-reported and operational earnings variance analysis for Utility, Parent & Other and EWC.
Appendix B-1: As-Reported and Operational Earnings Variance Analysis
Second Quarter 2018 vs. 2017
----------------------------
(Pre-tax except for Income taxes, $ in millions)
Utility Parent & Other EWC Consolidated
As- Opera- As- Opera- As- Opera- As- Opera-
Reported tional Reported tional tional
Reported Reported tional
2017 earnings 243 243 (57) (57) 223 375 410 561
Net revenue (179) (179) (e) - - 22 22 (f) (157) (157)
Non-fuel O&M (31) (31) (g) (5) (5) (6) (11) (42) (47)
Asset write-offs and impairments - - - - 125 - (h) 125 -
Decommissioning expense 3 3 - - - - 3 3
Taxes other than income taxes (2) (2) - - (3) (3) (5) (5)
Depreciation/amortization exp. (14) (14) - - 13 13 (1) (1)
Other income (deductions)-other (11) (11) (1) (1) (4) (4) (16) (16)
Interest exp. and other charges (5) (5) (7) (7) (2) (2) (14) (14)
Income taxes 371 371 (i) (3) (3) (425) (365) (j) (57) 3
2018 earnings 376 376 (73) (73) (57) 25 245 327
--- --- --- --- --- --- --- ---
Appendix B-2: As-Reported and Operational Earnings Variance Analysis
Year-to-Date 2018 vs. 2017
--------------------------
(Pre-tax except for Income taxes, $ in millions)
Utility Parent & Other EWC Consolidated
As- Opera- As- Opera- As- Opera- As- Opera-
Reported tional Reported tional tional
Reported Reported tional
2017 earnings 408 408 (111) (111) 196 442 493 739
Net revenue (124) (124) (e) - - (90) 1 (f) (214) (123)
Non-fuel O&M (66) (66) (g) (5) (5) 92 (8) (k) 21 (79)
Asset write-offs and impairments - - - - 263 - (h) 263 -
Decommissioning expense 6 6 - - 17 17 (l) 23 23
Taxes other than income taxes (17) (17) (m) - - 3 (1) (14) (18)
Depreciation/amortization exp. (28) (28) (n) - - 28 28 (o) - -
Gain on sale of assets - - - - (16) - (p) (16) -
Other income (deductions)-other - - (2) (2) (61) (46) (q) (63) (48)
Interest exp. and other charges (7) (7) (11) (11) (4) (4) (22) (22)
Income taxes 417 417 (i) (8) (8) (502) (344) (j) (93) 65
2018 earnings 591 591 (137) (137) (75) 84 378 538
--- --- ---- ---- --- --- --- ---
Calculations may differ due to
rounding
See appendix in the webcast slide presentation for additional details on EWC line item variances.
Utility Net Revenue
Variance Analysis
2018 vs. 2017 (Pre-tax, $ in millions)
-------------------------------------
Second Quarter Year-to-Date
-------------- ------------
Estimated weather 53 123
Volume/unbilled 48 36
Retail electric price 10 28
Unprotected excess ADIT (278) (278)
Reg. provisions for lower
tax rate (29) (58)
Other 17 25
--- ---
Total (179) (124)
----- ---- ----
(e) The second quarter and year-to-date
earnings decreases from lower Utility net
revenue were driven by unprotected excess
ADIT (offset in income taxes), as well as
regulatory provisions at E-LA and E-NO
to reflect regulatory agreements to
return the benefits of the lower federal
tax rate to customers. The decreases were
partially offset by higher retail sales
volume, including the effects of weather
and volume in the unbilled period. In the
second quarter, weather-adjusted billed
sales volume decreased, however this was
more than offset by higher volume in the
unbilled period. 2018 results also
included rate changes from E-AR's 2018
FRP and E-TX's DCRF.
(f) The second quarter earnings increase from
higher EWC net revenue reflected higher
volume from merchant nuclear plants,
partially offset by lower nuclear energy
prices. The year-to-date as-reported
variance reflected cost reimbursements
from the buyer related to the FitzPatrick
sale in first quarter 2017 (classified as
a special item and offset in non-fuel
O&M).
(g) The second quarter earnings decrease from
higher Utility non-fuel O&M was due
primarily to higher spending on fossil
operations. Energy efficiency spending
and storm reserves were also higher
(largely offset in net revenue). The
year-to-date variance was due to higher
spending on fossil and nuclear
operations, as well as higher vegetation
spending. Higher energy efficiency
spending and storm reserves also
contributed (largely offset in net
revenue). This was partly offset by
higher nuclear insurance refunds in 2018
compared to 2017.
(h) The second quarter and year-to-date as-
reported earnings increases from lower
EWC asset write-offs and impairments
were due to lower impairment charges for
EWC nuclear plants, partly due to
Palisades no longer being impaired as a
result of the decision to operate that
plant until May 2022, as well as lower
refueling outage costs charged to
impairment (classified as special items).
(i) The second quarter and year-to-date
earnings increases from lower Utility
income taxes were primarily due to the
amortization of the unprotected excess
ADIT (offset in net revenue), tax
benefits from the settlement of the 2012-
2013 IRS audit totaling $44 million and
the change in the federal income tax
rate.
(j) The second quarter and year-to-date
earnings decreases from higher EWC income
taxes were due primarily to a tax
election in second quarter 2017 that
reduced income taxes by $373 million.
2018 results also reflected $13 million
in tax benefits from the settlement of
the 2012-2013 IRS audit and the change
in the federal income tax rate. The year-
to-date as-reported earnings decrease
also reflected a tax benefit in first
quarter 2017, which resulted from the
sale of FitzPatrick (classified as a
special item).
(k) The as-reported earnings increase from
lower EWC non-fuel O&M was due primarily
to costs incurred in first quarter 2017
related to the agreement to sell
FitzPatrick (classified as a special item
and offset in net revenue).
(l) The earnings increase from lower EWC
decommissioning expense was due primarily
to the sale of FitzPatrick in first
quarter 2017.
(m) The earnings decrease from higher Utility
taxes other than income taxes was due to
higher franchise, ad valorem and payroll
taxes.
(n) The earnings decrease from higher
depreciation expense was due primarily to
higher plant in service.
(o) The earnings increase from lower
depreciation expense was due primarily to
the decision to operate Palisades until
May 2022, thereby extending the period in
which the plant is depreciated.
(p) The as-reported earnings decrease from
lower EWC gain on sale of assets was due
to the gain on the sale of FitzPatrick in
first quarter 2017 (classified as a
special item).
(q) The earnings decrease from lower EWC other
income (deductions)-other was due largely
to losses on the decommissioning trust
fund investments in first quarter 2018,
including unrealized losses on equity
investments that were previously recorded
as other comprehensive income on the
balance sheet, now recorded to the income
statement. The as-reported earnings
decrease also reflected the absence of
gains on the receipt of the Indian Point
3 and FitzPatrick decommissioning trust
funds from NYPA in first quarter 2017
(classified as a special item).
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 2018 vs. 2017 (See Appendix A for details on special items)
------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
($ in millions)
Utility as-
reported
earnings 376 243 132 591 408 182
Parent & Other
as-reported
(loss) (73) (57) (16) (137) (111) (26)
UP&O as-
reported
earnings 303 187 116 454 297 156
Less:
Special items - - - - - -
Estimated
weather (r) 28 (26) 53 49 (73) 123
Tax effect of
estimated
weather (s) (7) 10 (17) (13) 28 (41)
--- --- --- --- --- ---
Estimated
weather impact
(after-tax) 21 (16) 36 37 (45) 82
Other income
tax items (t) 57 1 57 64 (9) 72
UP&O adjusted
earnings 224 202 23 353 351 2
(After-tax, per share
in $) (u)
Utility as-
reported
earnings 2.05 1.35 0.70 3.24 2.27 0.97
Parent & Other
as-reported
(loss) (0.40) (0.32) (0.08) (0.75) (0.62) (0.13)
----- ----- ----- ----- ----- -----
UP&O as-
reported
earnings 1.65 1.03 0.62 2.49 1.65 0.84
Less:
Special items - - - - - -
Estimated
weather 0.11 (0.09) 0.20 0.20 (0.25) 0.45
Other income
tax items 0.31 - 0.31 0.35 (0.05) 0.40
---- --- ---- ---- ----- ----
UP&O adjusted
earnings 1.23 1.12 0.11 1.94 1.95 (0.01)
Calculations may differ due to
rounding
(r) The effects of weather were
estimated using heating degree
days and cooling degree days for
the billing cycles 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 are subject to change.
(s) Income tax effect is calculated by
multiplying the pre-tax amount by
the estimated income tax rates
that are expected to apply.
(t) Other income tax items represent
the adjustment made to income tax
expense to reflect a statutory tax
rate estimated to be 25.5% in 2018
and 38.5% in 2017. The second
quarter and year-to-date 2018
periods exclude $278 million
reduction in net revenue and
income taxes for unprotected
excess ADIT (no earnings impact).
(u) Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
outstanding for the period.
Appendix C-2 and Appendix C-3 provides comparative summaries of Utility operating and financial measures.
Appendix C-2: Utility Operating and Financial Measures
Second Quarter and Year-to-Date 2018 vs. 2017
---------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2018 2017% % Weather 2018 2017% % Weather
Adjusted (v) Adjusted (v)
Change Change
------ ------
GWh billed
Residential 7,749 7,340 5.6% (3.4%) 17,036 14,977 13.7% 0.6%
Commercial 6,943 6,886 0.8% (1.6%) 13,675 13,325 2.6% 0.3%
Governmental 612 609 0.5% (0.5%) 1,220 1,202 1.5% 0.8%
Industrial 12,219 12,209 0.1% 0.1% 23,624 23,326 1.3% 1.3%
------ ------ --- --- ------ ------ --- ---
Total retail sales 27,523 27,044 1.8% (1.3%) 55,555 52,830 5.2% 0.8%
Wholesale 2,566 1,845 39.1% 5,810 4,867 19.4%
----- ----- ---- ----- ----- ----
Total sales 30,089 28,889 4.2% 61,365 57,697 6.4%
Number of electric retail
customers
Residential 2,481,598 2,470,348 0.5%
Commercial 357,177 355,751 0.4%
Governmental 17,917 17,844 0.4%
Industrial 47,694 45,872 4.0%
Total retail customers 2,904,386 2,889,815 0.5%
Net revenue ($ in
millions) 1,382 1,549 (10.8%) 2,842 2,954 (3.8%)
Non-fuel O&M (per MWh
in $) 22.05 21.88 0.8% 21.05 21.25 (0.9%)
Appendix C-3: Utility Operating Measures
Twelve Months Ended June 30, 2018 vs. 2017
------------------------------------------
Twelve Months Ended June 30
---------------------------
2018 2017% % Weather
Adjusted (v)
Change
--- ---
GWh billed
Residential 35,893 34,871 2.9% 1.6%
Commercial 29,096 29,234 (0.5%) 1.0%
Governmental 2,529 2,540 (0.4%) (0.2%)
Industrial 48,067 46,501 3.4% 3.4%
Total retail sales 115,585 113,146 2.2% 2.1%
Calculations may differ due to
rounding
Certain prior year data has
been reclassified to conform
with current year presentation
(v) The effects of weather were
estimated using heating
degree days and cooling
degree days for the billing
cycles from certain
locations within each
jurisdiction and comparing
to "normal" weather based on
20-year historical data. The
models used to estimate
weather are updated
periodically and are subject
to change.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC operational adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2018 vs. 2017
---------------------------------------------
($ in millions) Second Quarter Year-to-Date
-------------- ------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
Net income (loss) (56) 224 (280) (74) 197 (271)
Add back: interest expense 8 6 2 17 12 5
Add back: income taxes (30) (455) 425 (31) (533) 502
Add back: depreciation and
amortization 39 52 (13) 77 105 (28)
Subtract: interest and
investment income 58 59 (1) 56 102 (46)
Add back: decommissioning
expense 60 60 - 118 135 (17)
--- --- --- --- --- ---
Adjusted EBITDA (non-GAAP) (37) (172) 135 50 (186) 236
Add back pre-tax special items for:
Items associated with
decisions to close or
sell EWC nuclear plants 103 233 (129) 202 464 (262)
Gain on the sale of
FitzPatrick - - - - (16) 16
Operational adjusted
EBITDA (non-GAAP) 66 61 5 252 261 (10)
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 2018 vs. 2017 (See Appendix G for reconciliation of GAAP to non-GAAP measures)
-------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
-------------- ------------
2018 2017 % Change 2018 2017 % Change
---- ---- -------- ---- ---- --------
Owned capacity (MW) 3,962 3,962 -
GWh billed 7,281 6,019 21.0 14,277 14,382 (0.7)
As-reported net
revenue ($ in
millions) 272 250 8.8 654 744 (12.1)
Operational net revenue
(non-GAAP) ($ in
millions) 272 250 8.8 654 653 0.2
EWC Nuclear Fleet
-----------------
Capacity factor 86% 59% 45.8 85% 71% 19.7
GWh billed 6,713 5,393 24.5 13,121 13,228 (0.8)
Production cost per MWh $17.15 $27.11 (36.7) $17.93 $20.96 (14.5)
Average energy/
capacity revenue per
MWh (w) $41.82 $51.76 (19.2) $49.21 $53.79 (8.5)
As-reported net
revenue ($ in
millions) 267 247 8.1 646 738 (12.6)
Operational net revenue
(non-GAAP) ($ in
millions) 267 246 8.4 646 647 (0.3)
Refueling outage days
FitzPatrick - - - 42
Indian Point 2 20 - 33 -
Indian Point 3 - 47 - 66
Palisades - 27 - 27
Pilgrim - 43 - 43
Calculations may differ due to
rounding
(w) Average energy and capacity
revenue per MWh excluding
FitzPatrick was $52.02 in
year-to-date 2017.
See appendix in the webcast slide presentation for EWC hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
Appendix E: GAAP and Non-GAAP Financial Measures
Second Quarter 2018 vs. 2017 (See Appendix G for reconciliation of
GAAP to non-GAAP financial measures)
------------------------------------------------------------------
For 12 months ending June 30 2018 2017 Change
---- ---- ------
GAAP Measures
ROIC - as-reported 3.2% (1.9%) 5.1%
ROE - as-reported 3.6% (9.8%) 13.4%
Non-GAAP Measures
ROIC - operational 6.4% 6.5% (0.1%)
ROE - operational 13.4% 13.3% 0.1%
As of June 30 ($ in millions) 2018 2017 Change
---- ---- ------
GAAP Measures
Cash and cash equivalents 813 934 (121)
Revolver capacity 3,885 4,163 (278)
Commercial paper 1,945 1,147 798
Total debt 17,881 16,285 1,596
Securitization debt 483 602 (119)
Debt to capital ratio 68.5% 65.5% 3.0%
Off-balance sheet
liabilities:
Debt of joint ventures - Entergy's share 64 70 (6)
Leases - Entergy's share 429 397 32
Power purchase agreements accounted for as leases 136 166 (30)
--- --- ---
Total off-balance sheet liabilities 629 633 (4)
Non-GAAP Financial
Measures
Debt to capital ratio, excluding securitization debt 67.9% 64.7% 3.2%
Gross liquidity 4,698 5,097 (399)
Net debt to net capital ratio, excluding securitization debt 66.9% 63.2% 3.7%
Parent debt to total debt ratio, excluding securitization debt 24.1% 20.5% 3.6%
Operational FFO to debt ratio, excluding securitization debt 15.4% 15.2% 0.2%
Operational FFO to debt ratio, excluding securitization debt and return of unprotected excess ADIT 15.9% 15.2% 0.7%
F: Definitions and 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 revenues 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 electric retail Number of electric customers at
customers the end of the period
EWC Operating and Financial Measures
------------------------------------
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
Average revenue under Revenue on a per unit basis at
contract (applies to which capacity is expected to be
capacity contracts only) sold to third parties, given
(in $/kW-month) existing contract prices and/or
auction awards
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 revenue
total revenue per MWh 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
Net revenue Operating revenues 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 by EWC
Percent of capacity sold forward Percent of planned qualified
capacity sold to mitigate price
uncertainty under physical or
financial transactions
Percent of planned generation Percent of planned generation
under contract output 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
(average) generate power and/or sell
capacity, assuming intent to
shutdown Pilgrim (May 31, 2019),
Indian Point 2 (April 30, 2020),
Indian Point 3 (April 30, 2021)
and Palisades (May 31, 2022)
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),
Indian Point 2 (April 30, 2020),
Indian Point 3 (April 30, 2021)
and Palisades (May 31, 2022)
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
-------------------------
Debt of joint ventures - Entergy's Entergy's share of debt issued by
share business joint ventures at EWC
Debt to capital ratio Total debt divided by total
capitalization
Leases - Entergy's share Operating leases 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
ROE - as-reported 12-months rolling net income
attributable to Entergy
Corporation divided by average
common equity
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
Securitization debt Debt associated with securitization
bonds issued to recover storm
costs from hurricanes Rita, Ike
and Gustav at E-TX and Hurricane
Isaac at E-NO; the 2009 ice storm
at E-AR and investment recovery
of costs associated with the
cancelled Little Gypsy repowering
project at E-LA
Total debt Sum of short-term and long-term
debt, notes payable and commercial
paper and capital leases on the
balance sheet
Appendix F-1: Definitions
-------------------------
Financial Measures - Non-GAAP
Adjusted EBITDA Earnings before interest, depreciation and
amortization and income taxes and
excluding decommissioning expense
Debt to capital ratio, Total debt divided by total
excluding securitization capitalization, excluding securitization
debt debt
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
Gross liquidity Sum of cash and revolver capacity
Net debt to net capital Total debt less cash and cash equivalents
ratio, excluding divided by total capitalization less cash
securitization debt and cash equivalents, excluding
securitization debt
Operational adjusted Adjusted EBITDA excluding effects of
EBITDA special items
Operational EPS As-reported EPS excluding special items
Operational FFO FFO excluding the effects of special items
Operational FFO to debt 12-months rolling operational FFO as a
ratio, excluding percentage of end of period total debt
securitization debt excluding securitization debt
Operational FFO to debt 12-months rolling operational FFO as a
ratio, excluding percentage of end of period total debt
securitization debt and excluding securitization debt and return
return of unprotected of unprotected excess ADIT
excess ADIT
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
ROE - operational 12-months rolling operational net income
attributable to Entergy Corporation
divided by average common equity
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
UP&O adjusted earnings As-reported earnings excluding special
items and normalizing weather and income
taxes
Utility, Parent & Other Combines the Utility segment with Parent &
Other, which is all of Entergy excluding
the EWC segment
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
AMI Advanced metering infrastructure MISO Midcontinent Independent System Operator,
Inc.
ANO Units 1 and 2 of Arkansas Nuclear
One owned by E-AR (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
bps Basis points Nelson 6 Unit 6 of Roy S. Nelson plant (coal)
CCGT Combined cycle gas turbine NEPOOL New England Power Pool
CCNO Council of the City of New Orleans,
Louisiana Ninemile 6 Ninemile Point Unit 6 (CCGT)
COD Commercial operation date Non-fuel O&M Non-fuel operation and maintenance expense
CT Simple cycle combustion turbine NDT Nuclear decommissioning trust
DCRF Distribution cost recovery factor NOPS New Orleans Power Station (reciprocating
internal combustion engine/natural gas)
E-AR Entergy Arkansas, Inc. NorthStar NorthStar Decommissioning Holdings, LLC
E-LA Entergy Louisiana, LLC NRC Nuclear Regulatory Commission
E-MS Entergy Mississippi, Inc. NYISO New York Independent System Operator, Inc.
E-NO Entergy New Orleans, LLC NYPA New York Power Authority
E-TX Entergy Texas, Inc. NYSE New York Stock Exchange
EBITDA Earnings before interest, income
taxes, depreciation and
amortization O&M Operation and maintenance expense
ENGC Entergy Nuclear Generation Company OCF Net cash flow provided by operating
activities
ENP Entergy Nuclear Palisades, LLC OpCo Operating Company
ENVY Entergy Nuclear Vermont Yankee OPEB Other post-employment benefits
ESI Entergy Services, Inc. Palisades Palisades Power Plant (nuclear)
EPS Earnings per share Pilgrim Pilgrim Nuclear Power Station (nuclear)
ETR Entergy Corporation PPA Power purchase agreement or purchased
power agreement
EWC Entergy Wholesale Commodities PUCT Public Utility Commission of Texas
FERC Federal Energy Regulatory
Commission RICE Reciprocating Internal Combustion Engine
FFO Funds from operations RFP Request for proposals
Firm LD Firm liquidated damages ROE Return on equity
FitzPatrick James A. FitzPatrick Nuclear Power
Plant (nuclear, sold March 31,
2017) ROIC Return on invested capital
FRP Formula rate plan RPCE Rough production cost equalization
GAAP U.S. generally accepted accounting
principles RS Cogen RS Cogen facility (CCGT cogeneration)
Grand Gulf Unit 1 of Grand Gulf Nuclear
or GGNS Station (nuclear), 90% owned or
leased by SERI RSP Rate Stabilization Plan (E-LA Gas)
Indian Point Indian Point Energy Center Unit 1
1 or IP1 (nuclear) (shut down in 1974) S&P Standard & Poor's
Indian Point Indian Point Energy Center Unit 2
2 or IP2 (nuclear) SEC U.S. Securities and Exchange Commission
Indian Point Indian Point Energy Center Unit 3
3 or IP3 (nuclear) SERI System Energy Resources, Inc.
IPEC Indian Point Energy Center
(nuclear) TCRF Transmission cost recovery factor
IRS Internal Revenue Service Union Union Power Station (CCGT)
ISO Independent system operator UPSA Unit Power Sales Agreement
ISES 2 Unit 2 of Independence Steam
Electric Station (coal) UP&O Utility, Parent & Other
VPUC Vermont Public Utility Commission
VY or Vermont Yankee Vermont Yankee Nuclear Power Station
(nuclear)
WACC Weighted-average cost of capital
WPEC Washington Parish Energy Center (CT/
natural gas)
---- -------------------------------------
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
2018 2017 2018 2017
---- ---- ---- ----
EWC
---
As-
reported
net
revenue (A) 272 250 654 744
Special
items
included
in net
revenue:
EWC
Nuclear
costs
associated
with
decisions
to
close
or
sell
plants - 1 - 91
Total
special
items
included
in net
revenue (B) - 1 - 91
Operational
net
revenue (A-B) 272 250 654 653
EWC
Nuclear
--------
As-
reported
EWC
Nuclear
net
revenue (C) 267 247 646 738
Special
items
included
in EWC
Nuclear
net
revenue:
EWC
Nuclear
costs
associated
with
decisions
to
close
or
sell
plants - 1 - 91
Total
special
items
included
in EWC
Nuclear
net
revenue (D) - 1 - 91
Operational
EWC
Nuclear
net
revenue (C-D) 267 247 646 647
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
--------------
2018 2017
---- ----
As-reported net
income (loss)
attributable to
Entergy Corporation,
rolling 12 months (A) 297 (888)
Preferred dividends 14 15
Tax effected interest
expense 510 404
--- ---
As-reported net
income (loss)
attributable to
Entergy Corporation,
rolling 12 months
adjusted for
preferred dividends
and tax effected
interest expense (B) 821 (469)
Special items in
prior quarters (720) (1,947)
Items associated with
decisions to close
or sell EWC nuclear
plants (82) (151)
Total special items,
rolling 12 months (C) (802) (2,098)
Operational earnings,
rolling 12 months
adjusted for
preferred dividends
and tax effected
interest expense
(non-GAAP) (B-C) 1,624 1,629
Operational earnings,
rolling 12 months
(non-GAAP) (A-C) 1,099 1,210
Average invested
capital (D) 25,480 24,886
Average common equity (E) 8,197 9,064
ROIC - as-reported (B/D) 3.2% (1.9%)
ROIC - operational [(B-C)/D] 6.4% 6.5%
ROE - as-reported (A/E) 3.6% (9.8%)
ROE - operational [(A-C)/E] 13.4% 13.3%
Calculations may differ due to
rounding
Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures - Debt Ratios excluding
Securitization Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt and Return of
Unprotected Excess ADIT
-----------------------------------------------------------------------------------------------
($ in millions except
where noted) Second Quarter
--------------
2018 2017
---- ----
Total debt (A) 17,881 16,285
Less securitization
debt (B) 483 602
--- ---
Total debt, excluding
securitization debt (C) 17,398 15,683
Less cash and cash
equivalents (D) 813 934
--- ---
Net debt, excluding
securitization debt (E) 16,585 14,749
Total capitalization (F) 26,102 24,859
Less securitization
debt (B) 483 602
--- ---
Total capitalization,
excluding
securitization debt (G) 25,619 24,257
Less cash and cash
equivalents (D) 813 934
--- ---
Net capital, excluding
securitization debt (H) 24,806 23,323
Debt to capital ratio (A/F) 68.5% 65.5%
Debt to capital ratio,
excluding
securitization debt (C/G) 67.9% 64.7%
Net debt to net capital
ratio, excluding
securitization debt (E/H) 66.9% 63.2%
Revolver capacity (I) 3,885 4,163
Gross liquidity (D+I) 4,698 5,097
Entergy Corporation
notes:
Due September 2020 450 450
Due July 2022 650 650
Due September 2026 750 750
Total parent long-term
debt (J) 1,850 1,850
Revolver draw (K) 390 225
Commercial paper (L) 1,945 1,147
----- -----
Total parent debt (J+K+L) 4,185 3,222
Parent debt to total
debt ratio, excluding
securitization debt [(J+K+L)/C] 24.1% 20.5%
Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures - Debt Ratios
excluding Securitization Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt
and Return of Unprotected Excess ADIT (continued)
-------------------------------------------------------------------------------------------
($ in millions except
where noted) Second Quarter
--------------
2018 2017
---- ----
Total debt (A) 17,881 16,285
Less securitization debt (B) 483 602
--- ---
Total debt, excluding
securitization debt (C) 17,398 15,683
Net cash flow provided by
operating activities,
rolling 12 months (D) 2,884 2,566
AFUDC-borrowed funds,
rolling 12 months (E) (53) (37)
Working capital items in
net cash flow provided by
operating activities
(rolling 12 months):
Receivables (149) (33)
Fuel inventory (1) 35
Accounts payable 190 139
Prepaid taxes and taxes
accrued 28 (38)
Interest accrued 3 (2)
Other working capital
accounts (48) 62
Securitization regulatory
charges 123 115
--- ---
Total (F) 146 278
FFO, rolling 12 months (G)=(D+E-F) 2,685 2,251
Add back special items
(rolling 12 months pre-
tax):
Items associated with
decisions to close or
sell EWC nuclear plants - 126
Operational FFO, rolling
12 months (H) 2,685 2,377
Operational FFO to debt
ratio, excluding
securitization debt (H/C) 15.4% 15.2%
Estimated return of
unprotected excess ADIT
(rolling 12 months pre-
tax) (I) 76 -
Operational FFO to debt
ratio, excluding
securitization debt and
return of unprotected
excess ADIT [(H)+(I)/(C] 15.9% 15.2%
Calculations may differ due to
rounding
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SOURCE Entergy Corporation
