Entergy Reports Fourth Quarter and Full Year Financial Results; Initiates 2019 Earnings Guidance Based on Single New Measure
NEW ORLEANS, Feb. 20, 2019 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported a fourth quarter 2018 loss per share of (36) cents on an as-reported basis and earnings per share of 60 cents on an operational basis (non-GAAP), which excludes the effects of special items. For the full year, the company reported 2018 earnings per share of $4.63 on an as-reported basis and $7.31 on an operational basis. The as-reported results for the quarter and full year reflected asset impairments and other expenses related to the strategic decision to exit the EWC business.
"Today we are reporting strong results for another successful year, and we are firmly on track to achieve our long-term goals," said Entergy Chairman and Chief Executive Officer Leo Denault. "In 2018 we executed on our strategy and met major milestones in our transition to a pure-play utility. We expect 2019 will be no different."
Business highlights included the following:
-- Entergy initiated 2019 guidance and 2020-2021 outlooks for its new ETR
adjusted EPS measure.
-- The APSC and PUCT issued orders approving settlements in E-AR's and
E-TX's base rate proceedings.
-- In January 2019, Entergy completed the sale of VY to NorthStar.
-- Entergy and Holtec filed Pilgrim's license transfer application with the
NRC.
-- Entergy raised its dividend for the fourth consecutive year.
-- The U.S. Chamber of Commerce Foundation named Entergy a finalist in its
2018 Corporate Citizenship Awards in the "Best Economic Empowerment
Program" category.
Consolidated Earnings (GAAP and Non-GAAP Measures)
Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of
special items)
---
Fourth Quarter Year-to-Date
---
2018 2017
Change 2018 2017
Change
---
(After-tax, $ in millions)
As-reported
earnings (66) (479) 413 849 412 437
Less special
items (176) (617) 440 (493) (889) 396
---
Operational
earnings (non-
GAAP) 110 138 (27) 1,341 1,300 41
Estimated
weather in
billed sales 25 11 14 67 (79) 146
(After-tax, per share in $)
As-reported
earnings (0.36) (2.66) 2.30 4.63 2.28 2.35
Less special
items (0.96) (3.42) 2.46 (2.68) (4.92) 2.24
---
Operational
earnings (non-
GAAP) 0.60 0.76 (0.16) 7.31 7.20 0.11
Estimated
weather in
billed sales 0.13 0.06 0.07 0.37 (0.44) 0.80
Calculations may differ due to
rounding
Consolidated Results
For fourth quarter 2018, the company reported a loss of $(66 million), or (36) cents per share, on an as-reported basis and earnings of $110 million, or 60 cents per share, on an operational basis. This compared to a fourth quarter 2017 loss of $(479 million), or $(2.66) per share, on an as-reported basis and earnings of $138 million, or 76 cents per share on an operational basis.
For the full year, the company reported 2018 earnings of $849 million, or $4.63 per share, on an as-reported basis and $1,341 million, or $7.31 per share, on an operational basis. This compared to 2017 earnings of $412 million, or $2.28 per share, on an as-reported basis and earnings of $1,300 million, or $7.20 per share, on an operational basis.
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 fourth quarter 2018, the Utility business reported earnings attributable to Entergy Corporation of $388 million, or $2.12 per share, on an as-reported basis, and earnings of $350 million, or $1.91 per share, on an operational basis. This compared to a fourth quarter 2017 loss of $(47 million), or (26) cents per share, on an as-reported basis, and earnings of $133 million, or 74 cents per share on an operational basis.
Drivers for the increase in quarterly earnings included:
-- A fourth quarter 2017 revaluation of certain tax assets as a result of
tax reform, net of adjustments for customer sharing, which decreased
2017 earnings by $181 million (considered a special item and excluded
from operational earnings),
-- In fourth quarter 2018, a $38 million reversal of a portion of the tax
reform accrual recorded in 2017 (considered a special item and excluded
from operational earnings),
-- A fourth quarter 2018 favorable income tax item, net of a portion
reserved for sharing with E-AR customers, which increased earnings by
approximately $140 million,
-- New base rate actions to recover investments that benefit customers and
-- Non-fuel O&M expense decreased quarter-over-quarter.
The drivers above were partially offset by:
-- Regulatory provisions in 2018 that lowered earnings into the allowed
ranges at E-AR and E-MS as required by their FRPs,
-- A regulatory charge in 2018 for amounts due to E-TX customers for the
benefit of the lower federal tax rate retroactive to January 2018 and
-- Higher depreciation expense and taxes other than income taxes.
The current period results also included a $215 million reduction in income taxes, with a corresponding reduction in net revenue, for the amortization of unprotected excess ADIT. This was neutral to earnings.
For fourth quarter 2018, Parent & Other reported a loss of $(81 million), or (44) cents per share, on both an as-reported and operational basis. This compared to a fourth quarter 2017 loss of $(6 million), or (4) cents per share, on an as-reported basis, and a loss of $(58 million), or (33) cents per share, on an operational basis.
As-reported results for 2017 reflected a reduction in income tax expense of $52 million for the revaluation of certain tax assets, which resulted from tax reform. This was considered a special item and excluded from operational earnings.
On a combined basis, Utility, Parent & Other (non-GAAP) contributed $1.68 to fourth quarter 2018 consolidated EPS compared to a loss of (30) cents in fourth quarter 2017. On an adjusted basis, excluding special items and normalizing weather and income taxes, Utility, Parent & Other contributed 51 cents in fourth quarter 2018 to consolidated EPS, compared to 48 cents in fourth quarter 2017.
For full year 2018, the Utility business earned net income attributable to Entergy Corporation of $1,483 million, or $8.09 per share, on an as-reported basis, and earnings of $1,445 million, or $7.88 per share, on an operational basis. This compared to full year 2017 earnings of $762 million, or $4.22 per share, on an as-reported basis, and $942 million, or $5.22 per share on an operational basis.
Drivers for the increase in annual earnings included:
-- A fourth quarter 2017 revaluation of certain tax assets, net of customer
sharing, discussed above (considered a special item and excluded from
operational earnings),
-- A fourth quarter 2018 reversal of a tax reform accrual discussed above
(considered a special item and excluded from operational earnings),
-- Second and fourth quarter 2018 favorable income tax items, net of
customer sharing,
-- New base rate actions to recover investments that benefit customers and
-- Higher retail sales, attributable to weather.
The drivers above were partially offset by:
-- Higher operating expenses (non-fuel O&M, taxes other than income taxes
and depreciation expense) and
-- 2018 regulatory provisions that lowered earnings into the allowed ranges
at E-AR and E-MS as required by their FRPs.
Full year 2018 results also reflected the return of unprotected excess ADIT to customers, which affected several income statement line items but was neutral to earnings. Specifically, this reduced income taxes by $775 million, but was offset in net revenue and non-fuel O&M.
For 2018, Parent & Other reported a loss of $(292 million), or $(1.59) per share, on an as-reported and operational basis. This compared to a 2017 loss of $(175 million), or (97) cents per share, on an as-reported basis, and $(228 million), or $(1.26) per share, on an operational basis. As-reported results for 2017 included a decrease in income tax expense, which resulted from tax reform as described above. This was considered a special item and excluded from operational earnings. 2018 results also reflected higher interest expense.
On a combined basis, Utility, Parent & Other (non-GAAP) contributed $6.50 to 2018 consolidated EPS, compared to $3.25 in 2017. On an adjusted basis, normalizing weather and income taxes, Utility, Parent & Other contributed $4.71 to 2018 consolidated EPS, compared to $4.57 in 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 fourth quarter 2018, EWC recorded a loss attributable to Entergy Corporation of $(373 million), or $(2.04) per share, on an as-reported basis and loss $(158 million), or (87) cents per share, on an operational basis. This compared to fourth quarter 2017 loss of $(425 million), or $(2.36) per share, on an as-reported basis and earnings of $63 million, or 35 cents per share, on an operational basis.
As-reported results in both periods reflected impairments and other expenses recorded as a result of the strategic decision to exit the EWC business. In fourth quarter 2018, these items totaled $(214 million), or $(1.17) per share. This amount included a revision to Vermont Yankee's asset retirement obligation as a result of its approved sale, which resulted in in a pre-tax asset impairment of $(173 million). In fourth quarter 2017, these items totaled $(92 million), or (51) cents per share. Fourth quarter 2017 results also reflected the write-down of certain tax assets totaling $(397 million) as a result of tax reform. All of these items were considered special items and excluded from operational earnings.
The current period results included losses on decommissioning trust fund investments, as well as lower net revenue as a result of lower nuclear energy volume. Partially offsetting these items were lower non-fuel O&M expense and lower income tax expense primarily due to lower pre-tax income.
For the full year, EWC reported a loss of $(343 million), or $(1.87) per share, on an as-reported basis, and earnings of $188 million, or $1.02 per share on an operational basis. In 2017, EWC realized a loss of $(175 million), or (97) cents per share, on an as-reported basis, and earnings of $586 million, or $3.24 per share on an operational basis. Both periods reflected the effects of the strategic decision to exit the EWC business as well as the 2017 tax reform item noted above. Other drivers included lower net revenue from the nuclear business, losses on decommissioning trust fund investments and lower depreciation and decommissioning expenses. Additionally, 2018 results included less favorable income tax items, excluding the 2017 tax reform item.
Appendix D contains additional details on EWC financial and operating measures, including a reconciliation for non-GAAP EWC operational adjusted EBITDA.
Earnings Guidance
Entergy initiated its 2019 adjusted earnings guidance range of $5.10 to $5.50 per share. See webcast presentation slides for additional details.
The company has provided 2019 earnings guidance with regard to the non-GAAP measure of Entergy adjusted EPS. This measure excludes from the corresponding GAAP financial measures the effect of adjustments as described below under "Non-GAAP Financial Measures." The company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify with a reasonable degree of confidence all of the adjustments that may occur during 2019. One such adjustment will be the exclusion of EWC earnings from Entergy adjusted EPS. We currently estimate that the contribution of EWC to Entergy's as-reported EPS will be approximately $(1.25) per share in 2019. This estimate is subject to substantial uncertainty due to, among other things, the potential effects of the strategic decision to exit the EWC business.
Earnings Teleconference
A teleconference will be held at 10:00 a.m. Central Time on Wednesday, February 20, 2019, 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 6799533, 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 February 27, 2019, by dialing 855-859-2056, conference ID 6799533. 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 nearly 13,700 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 certain regulatory proceedings and important milestones on the execution of its strategy. While some of this information may be considered material information, investors should not rely exclusively on this page for all relevant company information.
For definitions of certain operating measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the earnings release materials, see Appendix F.
Non-GAAP Financial Measures
This news release contains non-GAAP financial measures. 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 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, and certain gains or losses including those that may occur as a result of strategic decisions such as Entergy's decision to exit the EWC business. 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.
Beginning with first quarter 2019 financial results, Entergy intends to report earnings using the non-GAAP measure of Entergy adjusted earnings, which excludes the effect of certain "adjustments," including the removal of the Entergy Wholesale Commodities segment in light of its decision to exit the merchant power business. Beginning with this release, Entergy is also providing guidance and outlooks using adjusted earnings on a per share basis. Adjustments are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, such as the EWC segment given its strategic decision to exit the EWC business, and items such as certain costs, expenses, significant tax items, or other specified items. Entergy believes that this financial measure provides useful information to investors in evaluating the ongoing results of Entergy's business, comparing period to period results, and comparing Entergy's financial performance to the financial performance of other companies in the utility sector.
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 common shares outstanding for the period. Beginning with Entergy's first quarter 2019 financial results, Entergy intends to report its adjusted earnings on a per share basis. 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 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 2019 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) risks associated with operating nuclear facilities, including plant relicensing, operating and regulatory costs and risks; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Entergy's nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with 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; and (j) impacts from a terrorist attack, cybersecurity threats, data security breaches or other attempts to disrupt Entergy's business or operations, and other catastrophic events.
Fourth 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
Financial Statements
Financial statements are presented in this section.
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
Fourth 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)
---
Fourth Quarter Year-to-Date
---
2018 2017
Change 2018 2017
Change
---
(After-tax, $ in millions)
Earnings (loss)
Utility 388 (47) 435 1,483 762 722
Parent & Other (81) (6) (75) (292) (175) (116)
EWC (373) (425) 53 (343) (175) (168)
---
Consolidated (66) (479) 413 849 412 437
Less special items
Utility 38 (181) 219 38 (181) 219
Parent & Other 52 (52) 52 (52)
EWC (214) (488) 274 (531) (760) 229
---
Consolidated (176) (617) 440 (493) (889) 396
Operational earnings (loss) (non-GAAP)
Utility 350 133 217 1,445 942 503
Parent & Other (81) (58) (23) (292) (228) (64)
EWC (158) 63 (221) 188 586 (398)
---
Consolidated 110 138 (27) 1,341 1,300 41
Estimated weather in
billed sales 25 11 14 67 (79) 146
Diluted average
number of common
shares outstanding
(in millions) 183.1 180.3 183.4 180.5
(After-tax, per share in $) (a)
Earnings (loss)
Utility 2.12 (0.26) 2.38 8.09 4.22 3.87
Parent & Other (0.44) (0.04) (0.40) (1.59) (0.97) (0.62)
EWC (2.04) (2.36) 0.32 (1.87) (0.97) (0.90)
Consolidated (0.36) (2.66) 2.30 4.63 2.28 2.35
Less special items
Utility 0.21 (1.00) 1.21 0.21 (1.00) 1.21
Parent & Other 0.29 (0.29) 0.29 (0.29)
EWC (1.17) (2.71) 1.54 (2.89) (4.21) 1.32
---
Consolidated (0.96) (3.42) 2.46 (2.68) (4.92) 2.24
Operational earnings (loss) (non-GAAP)
Utility 1.91 0.74 1.17 7.88 5.22 2.66
Parent & Other (0.44) (0.33) (0.11) (1.59) (1.26) (0.33)
EWC (0.87) 0.35 (1.22) 1.02 3.24 (2.22)
---
Consolidated 0.60 0.76 (0.16) 7.31 7.20 0.11
Estimated weather in
billed sales 0.13 0.06 0.07 0.37 (0.44) 0.80
Calculations may differ due to rounding
(a) Per share amounts are
calculated by dividing the
earnings (loss) by the
diluted average number of
common shares outstanding for
the period.
See Appendix B for detailed earnings variance analysis.
Appendix A-2 provides a comparative summary of OCF by business.
Appendix A-2: Consolidated Operating Cash Flow
Fourth Quarter and Year-to-Date 2018 vs. 2017
---
($ in millions)
Fourth Quarter Year-to-Date
---
2018 2017
Change 2018 2017
Change
---
Utility 699 934 (235) 2,693 2,939 (246)
Parent & Other (20) (134) 114 (234) (452) 218
EWC (153) 111 (264) (74) 137 (211)
---
Consolidated 526 911 (385) 2,385 2,624 (239)
Calculations may differ due to
rounding
OCF decreased quarter-over-quarter due primarily to the return of the unprotected excess ADIT to customers, as well as lower net revenue at EWC, higher spending on nuclear refueling outages and higher severance and retention payments at EWC.
OCF decreased year-over-year, driven by the return of the unprotected excess ADIT to customers and lower net revenue at EWC. Favorable weather at the Utility and lower severance and retention payments at EWC, partially offset the decrease.
For both the quarter and the full year, intercompany income tax payments contributed to the line of business variances.
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)
Fourth Quarter and Year-to-Date 2018 vs. 2017
---
(Pre-tax except for income tax effects and total, $ in millions)
Fourth Quarter Year-to-Date
---
2018 2017
Change 2018 2017
Change
---
Utility
Tax reform 38 (181) 219 38 (181) 219
---
Total Utility 38 (181) 219 38 (181) 219
Parent & Other
Tax reform 52 (52) 52 (52)
Total Parent & Other 52 (52) 52 (52)
EWC
Items associated
with the strategic
decision to exit
the EWC business (271) (141) (131) (672) (628) (44)
Income tax effect on
adjustments above
(b) 57 49 8 141 220 (79)
Income tax benefit
resulting from
FitzPatrick
transaction 45 (45)
Tax reform (397) 397 (397) 397
Total EWC (214) (488) 274 (531) (760) 229
Total special items (176) (617) 440 (493) (889) 396
(After-tax, per share in $) (c)
Utility
Tax reform 0.21 (1.00) 1.21 0.21 (1.00) 1.21
---
Total Utility 0.21 (1.00) 1.21 0.21 (1.00) 1.21
Parent & Other
Tax reform 0.29 (0.29) 0.29 (0.29)
Total Parent & Other 0.29 (0.29) 0.29 (0.29)
EWC
Items associated
with the strategic
decision to exit
the EWC business (1.17) (0.51) (0.66) (2.89) (2.26) (0.63)
Income tax benefit
resulting from
FitzPatrick
transaction 0.25 (0.25)
Tax reform (2.20) 2.20 (2.20) 2.20
Total EWC (1.17) (2.71) 1.54 (2.89) (4.21) 1.32
Total special items (0.96) (3.42) 2.46 (2.68) (4.92) 2.24
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)
Fourth Quarter and Year-to-Date 2018 vs. 2017
---
(Pre-tax except for Income taxes and Total, $ in millions)
Fourth Quarter Year-to-Date
---
2018 2017
Change 2018 2017
Change
---
Utility
Net revenue 56 (56) 56 (56)
Income taxes (d) 38 (236) 274 38 (236) 274
---
Total Utility 38 (181) 219 38 (181) 219
Parent & Other
Income taxes (d) 52 (52) 52 (52)
Total Parent & Other 52 (52) 52 (52)
EWC
Net revenue 91 (91)
Non-fuel O&M (34) (22) (11) (131) (201) 70
Asset write-off and
impairments (235) (117) (118) (532) (538) 6
Taxes other than income
taxes (3) (2) (1) (8) (10) 1
Gain on sale of assets 16 (16)
Miscellaneous net (other
income) 15 (15)
Income taxes (d) 57 (347) 404 141 (133) 274
---
Total EWC (214) (488) 274 (531) (760) 229
Total special items
(after-tax) (176) (617) 440 (493) (889) 396
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
Fourth Quarter 2018 vs. 2017
---
(Pre-tax except for Income taxes, $ in millions)
Utility Parent & Other
EWC Consolidated
As-Reported
Operational
As-Reported
Operational
As-
Operational
As- Opera
tional
Reported
Reported
2017 earnings (47) 133 (6) (58) (425) 63 (479) 138
Net revenue (315) (259) (e) (52) (52) (f) (367) (311)
Non-fuel O&M 33 33 (g) (2) (2) 12 23 (h) 43 54
Asset write-offs and impairments - (118) (i) (118)
Decommissioning expense (2) (2) (5) (5) (7) (7)
Taxes other than income taxes (7) (7) (1) (8) (7)
Depreciation/amortization exp. (13) (13) 3 3 (10) (10)
Other income (deductions) (7) (7) (4) (4) (247) (247) (j) (258) (258)
Interest exp. and other charges 4 4 (11) (11) (2) (2) (9) (9)
Income taxes 742 468 (k) (58) (6) (l) 463 58 (m) 1,147 520
2018 earnings 388 350 (81) (81) (373) (158) (66) 110
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-Reported
Operational
As-Reported
Operational
As-
Operational
As- Opera
tional
Reported
Reported
2017 earnings 762 942 (175) (228) (175) 586 412 1,300
Net revenue (693) (637) (e) (192) (101) (f) (885) (738)
Non-fuel O&M (81) (81) (g) (10) (10) 67 13 (h) (25) (78)
Asset write-offs and impairments - 6 6
Decommissioning expense 1 1 16 16 (n) 17 17
Taxes other than income taxes (26) (26) (o) 1 (24) (25)
Depreciation/amortization exp. (23) (23) (p) 43 43 (q) 20 20
Other income (deductions) 22 22 (r) (7) (7) (222) (207) (j) (206) (192)
Interest exp. and other charges (6) (6) (29) (29) (s) (10) (10) (45) (45)
Income taxes 1,527 1,253 (k) (70) (18) (l) 123 (151) (m) 1,579 1,083
2018 earnings 1,483 1,445 (292) (292) (343) 188 849 1,341
Calculations may differ due to
rounding
Utility Net Revenue
As-reported Variance Analysis
2018 vs. 2017 (Pre-tax, $ in millions)
---
Fourth Quarter Year-to-Date
---
Estimated weather 15 218
Volume/unbilled (7) (8)
Retail electric price 33 106
Regulatory credit for tax
reform (56) (56)
Regulatory charge for
lower tax rate (25) (102)
Reg. provisions for E-AR
and E-MS FRPs (44) (44)
Regulatory liability for
tax sharing (40) (40)
Unprotected excess ADIT (215) (770)
Other, including Grand
Gulf recovery 24 3
Total (315) (693)
---
(e) The fourth quarter and year-to-date
earnings decreases from lower Utility net
revenue were driven by the return of
unprotected excess ADIT to customers
(offset in income taxes), as well as a
regulatory credit of $56 million in
fourth quarter 2017 as a result of tax
reform (classified as a special item).
Regulatory charges at E-LA, E-TX, and
E-NO to return the benefit of the lower
federal tax rate to customers, regulatory
provisions that lowered earnings into the
allowed ranges at E-AR and E-MS as
required by their FRPs, and a regulatory
liability for tax sharing with E-AR
customers (this partially offsets the
income tax item discussed in footnote k)
contributed to the variances. These
decreases were partially offset by the
effects of weather. In the fourth
quarter, weather-adjusted billed sales
volume decreased. However year-to-date
weather-adjusted billed sales volume
increased, but this was more than offset
by lower volume in the unbilled period.
2018 results also included rate changes
from E-AR's and E-LA's FRP and E-TX's
base rate case.
(f) The fourth quarter and year-to-date
earnings decreases from lower EWC net
revenue reflected lower prices as well as
lower volume from EWC's merchant nuclear
plants. 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 fourth quarter earnings increase from
lower Utility non-fuel O&M was due
primarily to lower nuclear costs, lower
benefits costs and a gain on the sale of
an asset. The year-to-date earnings
decrease from higher Utility non-fuel
O&M was due primarily to higher spending
on fossil and distribution operations, as
well as higher transmission and IT costs.
Energy efficiency spending and storm
reserves were also higher (largely offset
in net revenue). This was partially
offset by higher nuclear insurance
refunds in 2018 compared to 2017, as well
as the gain on the sale of an asset in
fourth quarter 2018.
(h) The fourth quarter earnings increase from
lower EWC non-fuel O&M was due primarily
to lower labor and contract costs. The
year-to-date as-reported earnings
increase reflected costs incurred in
first quarter 2017 related to the
agreement to sell FitzPatrick (classified
as a special item and offset in net
revenue). This was partially offset by
higher severance and retention costs
related to the strategic decision to exit
the EWC business compared to 2017, as
well as the gain on the sale of
FitzPatrick in first quarter 2017 (both
classified as a special items).
(i) The fourth quarter as-reported earnings
decrease from higher EWC asset write-
offs and impairments resulted from a
revision of Vermont Yankee's ARO,
partially offset by a gain on proceeds
from the settlement of spent fuel
litigation at Pilgrim (both classified as
special items).
(j) The fourth quarter and year-to-date
earnings decreases from lower EWC other
income (deductions) were due largely to
losses on decommissioning trust fund
investments, 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 year-to-date 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).
(k) The fourth 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) and an
income tax item in fourth quarter 2018 of
approximately $170 million resulting from
the restructuring of E-AR (this was
partly offset by customer sharing
recorded as a regulatory charge, included
in net revenue). The change in the
federal income tax rate also contributed
to the increases. The fourth quarter and
year-to-date as-reported earnings
increases also reflected the write-down
of certain tax assets totaling $236
million as a result of tax reform in
fourth quarter 2017 (classified as a
special item and a portion offset in net
revenue) and $38 million in fourth
quarter 2018 related to the reversal of a
tax accrual (classified as special item).
The year-to-date variance also
reflected income tax benefits from the
settlement of the 2012?2013 IRS audit in
second quarter 2018.
(l) The fourth quarter and year-to-date
earnings decreases reflected a fourth
quarter 2017 reduction of income tax
totaling $52 million as a result of tax
reform (classified as a special item).
The change in the federal income tax rate
also contributed to the variances.
(m) The fourth quarter and year-to-date as-
reported earnings increases from lower
EWC income taxes reflected the write-
down of certain tax assets totaling $397
million as a result of tax reform in
fourth quarter 2017 (classified as a
special item). The year-to-date as-
reported variance also reflected
additional income tax expense due to the
lower level of special items and a tax
benefit in first quarter 2017, which
resulted from the sale of FitzPatrick
(classified as a special item). The year-
to-date operational earnings decrease
reflected a $373 million reduction in tax
expense in second quarter 2017. The
increase was partially offset by $13
million in tax benefits from the
settlement of the 2012?2013 IRS audit in
second quarter 2018, a reduction in
income tax expense of $107 million for a
restructuring of its interest in an EWC
decommissioning trust fund in third
quarter 2018 and a benefit of $23 million
from the conclusion of a state income tax
audit also in third quarter 2018. Changes
in pre-tax income and the federal income
tax rate also contributed to the fourth
quarter and year-to-date variances.
(n) The year-to-date earnings increase from
lower EWC decommissioning expense was due
primarily to the sale of FitzPatrick in
first quarter 2017.
(o) The year-to-date earnings decrease from
higher Utility taxes other than income
taxes was due to higher ad valorem and
payroll taxes.
(p) The year-to-date earnings decrease from
higher Utility depreciation expense was
due to higher plant in service, partially
offset by updated depreciation rates at
SERI (offset in net revenue).
(q) The year-to-date earnings increase from
lower EWC depreciation expense was due
primarily to the decision to operate
Palisades until May 2022, thereby
extending the period in which the plant
is depreciated.
(r) The year-to-date earnings increase from
higher Utility other income (deductions)
was due primarily to higher AFUDC -
equity funds due to higher CWIP balances,
partially offset by losses on the
decommissioning trust fund investments
(largely offset in net revenue).
(s) The year-to-date earnings decrease from
higher Parent & Other interest expense
was due to higher borrowings, combined
with higher variable interest rates.
C: Utility Financial and Operating Measures
Appendix C-1 provides a comparative summary of Utility, Parent & Other adjusted earnings and EPS contribution, each of which excludes the effects of special items and normalizes weather and income tax expense.
Appendix C-1: Utility, Parent & Other Adjusted Earnings and EPS - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A for details on special items)
---
Fourth Quarter Year-to-Date
2018 2017 Change 2018 2017 Change
($ in millions)
Utility as-
reported
earnings (loss) 388 (47) 435 1,483 762 722
Parent & Other
as-reported
(loss) (81) (6) (75) (292) (175) (116)
UP&O as-
reported
earnings 307 (54) 360 1,191 586 605
Less:
Special items 38 (129) 167 38 (129) 167
Estimated
weather (t) 34 18 15 90 (128) 218
Tax effect of
estimated
weather (u) (9) (7) (2) (23) 49 (72)
Portion of E-AR
and E-MS
weather
reserved for
customers (15) (15) (15) (15)
Tax effect on E-
AR and E-MS
customer
reserve (u) 4 4 4 4
Estimated
weather, net of
customer
reserve (after-
tax) 14 11 3 56 (79) 135
Difference
between
effective and
statutory 160 (22) 183 233 (31) 264
income tax rates (v)
UP&O adjusted
earnings 94 86 8 864 824 40
(After-tax, per share
in $) (w)
Utility as-
reported
earnings 2.12 (0.26) 2.38 8.09 4.22 3.87
Parent & Other
as-reported
(loss) (0.44) (0.04) (0.40) (1.59) (0.97) (0.62)
UP&O as-
reported
earnings 1.68 (0.30) 1.98 6.50 3.25 3.25
Less:
Special items 0.21 (0.71) 0.92 0.21 (0.71) 0.92
Estimated
weather, net of
customer
reserve 0.08 0.06 0.01 0.31 (0.44) 0.75
Difference
between
effective and
statutory 0.88 (0.12) 1.00 1.27 (0.17) 1.44
income tax rates (v)
UP&O adjusted
earnings 0.51 0.48 0.04 4.71 4.57 0.14
Calculations may differ due to rounding
(t) 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.
(u) Income tax effect is calculated
by multiplying the pre-tax
amount by the estimated income
tax rates that are expected to
apply.
(v) 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 fourth quarter and
year-to-date 2018 periods
exclude reductions of $215
million and $775 million,
respectively, for the return of
unprotected excess ADIT (no
earnings impact).
(w) EPS effect is calculated by
multiplying the pre-tax amount
by the estimated income tax
rate that is expected to apply
to each adjustment and then
dividing by the diluted average
number of common shares
outstanding for the period.
Appendix C-2 provides comparative summaries of Utility operating and financial measures.
Appendix C-2: Utility Operating and Financial Measures
Fourth Quarter and Year-to-Date 2018 vs. 2017
---
Fourth Quarter
Year-to-Date
2018 2017 % Weather 2018 2017
% %
% Weather
Adjusted (x) Adjusted (x)
Change
Change
GWh billed
Residential 8,250 8,024 2.8% (0.1%) 37,107 33,834 9.7% 0.5%
Commercial 7,026 7,150 (1.7%) (1.8%) 29,426 28,745 2.4% 0.1%
Governmental 646 627 3.0% 3.1% 2,581 2,511 2.8% 1.9%
Industrial 11,882 11,940 (0.5%) (0.5%) 48,384 47,769 1.3% 1.3%
Total retail sales 27,804 27,741 0.2% (0.6%) 117,498 112,859 4.1% 0.8%
Wholesale 2,927 3,295 (11.2%) 11,715 11,550 1.4%
Total sales 30,731 31,036 (1.0%) 129,213 124,409 3.9%
Number of electric retail
customers
Residential 2,481,027 2,466,671 0.6%
Commercial 356,618 354,189 0.7%
Governmental 17,839 17,828 0.1%
Industrial 45,790 46,193 (0.9%)
Total retail customers 2,901,274 2,884,881 0.6%
Net revenue ($ in
millions) 1,238 1,553 (20.3%) 5,626 6,318 (11.0%)
Non-fuel O&M (per MWh
in $) 22.36 23.21 (3.7%) 20.52 20.66 (0.7%)
Calculations may differ due to rounding
Certain prior year data has been
reclassified to conform with current year
presentation
(x) The effects of weather were
estimated using heating
degree days and cooling
degree days for the billing
cycles from certain
locations within each
jurisdiction and comparing
to "normal" weather based on
20-year historical data. The
models used to estimate
weather are updated
periodically and are subject
to change.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC operational adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2018 vs. 2017
---
($ in millions) Fourth Quarter Year-to-Date
---
2018 2017
Change 2018 2017
Change
---
Net income (loss) (372) (425) 53 (341) (172) (169)
Add back: interest expense 8 6 2 34 24 10
Add back: income taxes (102) 361 (463) (269) (146) (123)
Add back: depreciation and
amortization 34 36 (2) 150 193 (43)
Subtract: interest and
investment income (169) 81 (250) 15 224 (209)
Add back: decommissioning
expense 64 60 4 239 255 (16)
---
Adjusted EBITDA (non-
GAAP) (199) (43) (156) (202) (71) (131)
Add back pre-tax special items for:
Items associated with the
strategic decision to
exit the EWC business 271 141 130 672 644 28
Gain on the sale of
FitzPatrick (16) 16
Operational adjusted
EBITDA (non-GAAP) 72 98 (26) 470 557 (87)
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
Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix G for reconciliation of GAAP to non-GAAP measures)
---
Fourth Quarter Year-to-Date
---
2018 2017
% Change 2018 2017
% Change
---
Owned capacity (MW) 3,962 3,962 3,962 3,962
GWh billed 8,022 7,885 1.7 29,875 30,501 (2.1)
As-reported net
revenue ($ in
millions) 281 333 (15.6) 1,276 1,469 (13.1)
Operational net revenue
(non-GAAP) ($ in
millions) 281 333 (15.6) 1,276 1,378 (7.4)
EWC Nuclear Fleet
---
Capacity factor 78% 93% (16.1) 84% 83% 1.2
GWh billed 7,520 7,317 2.8 27,617 28,178 (2.0)
Production cost per MWh $18.79 $18.73 0.3 $17.68 $18.70 (5.5)
Average energy/
capacity revenue per
MWh (y) $48.97 $48.82 0.3 $49.13 $51.82 (5.2)
As-reported net
revenue ($ in
millions) 274 327 (16.2) 1,258 1,456 (13.6)
Operational net revenue
(non-GAAP) ($ in
millions) 274 327 (16.2) 1,258 1,365 (7.8)
Refueling outage days
FitzPatrick 42
Indian Point 2 33
Indian Point 3 66
Palisades 61 61 27
Pilgrim 43
Calculations may differ due to rounding
(y) Average energy/capacity revenue per
MWh excluding FitzPatrick was $50.05
in year-to-date 2017.
See appendix in the webcast slide presentation for EWC nuclear capacity and generation disclosure.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
Appendix E: GAAP and Non-GAAP Financial Measures
Fourth Quarter 2018 vs. 2017 (See Appendix G for reconciliation of GAAP to non-GAAP
financial measures)
---
For 12 months
ending December 31 2018 2017
Change
---
GAAP Measures
ROIC - as-reported 5.3% 3.4% 1.9%
ROE - as-reported 10.1% 5.1% 5.0%
Non-GAAP Measures
ROIC - operational 7.2% 7.1% 0.1%
ROE - operational 15.9% 16.2% (0.3%)
As of December 31
($ in millions) 2018 2017
Change
---
GAAP Measures
Cash and cash
equivalents 481 781 (300)
Revolver capacity 4,056 4,174 (118)
Commercial paper 1,942 1,467 475
Total debt 18,133 16,677 1456
Securitization debt 424 545 (121)
Debt to capital
ratio 66.7% 67.1% (0.4%)
Off-balance sheet liabilities:
Debt of joint
ventures -
Entergy's share 61 67 (6)
Leases - Entergy's
share 448 429 19
Power purchase
agreements
accounted for as
leases 106 136 (30)
---
Total off-balance
sheet liabilities 615 632 (17)
Non-GAAP Measures
Debt to capital
ratio, excluding
securitization
debt 66.1% 66.3% (0.1%)
Gross liquidity 4,537 4,955 (418)
Net debt to net
capital ratio,
excluding
securitization
debt 65.5% 65.2% 0.4%
Parent debt to
total debt ratio,
excluding
securitization
debt 22.6% 21.8% 0.8%
Operational FFO to
debt ratio,
excluding
securitization
debt 12.0% 15.9% (3.9%)
Operational FFO to
debt ratio,
excluding
securitization
debt and return of
unprotected excess
ADIT 15.3% 15.9% (0.6%)
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.
Error occurred while generating ASCII Content for table
Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.
Appendix F-2: Abbreviations and Acronyms
---
ADIT Accumulated deferred income taxes
ISO
Independent system operator
AFUDC - Allowance for borrowed funds used
borrowed during construction
funds
IT
Information technology
AFUDC - Allowance for equity funds used
equity during construction
funds
LPSC Louisiana Public Service Commission
ALJ
Administrative law judge
LTM
Last twelve months
AMI Advanced metering infrastructure
LTSA
Long-term service agreement
ANO Units 1 and 2 of Arkansas Nuclear
MISO Midcontinent Independent System Operator,
One owned by E-AR (nuclear) Inc.
APSC Arkansas Public Service Commission
Moody's
Moody's Investor Service
ARO Asset retirement obligation
MPSC Mississippi Public Service Commission
bps
Basis points
MTEP MISO Transmission Expansion Planning
CCGT Combined cycle gas turbine
Nelson 6 Unit 6 of Roy S. Nelson plant (coal)
CCN Certificate of convenience &
necessity
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
CWIP Construction work in progress
NOPS New Orleans Power Station (RICE/natural
gas)
DCRF Distribution cost recovery factor
NorthStar NorthStar Decommissioning Holdings, LLC
E-AR
Entergy Arkansas, LLC
NRC
Nuclear Regulatory Commission
E-LA
Entergy Louisiana, LLC
NYISO New York Independent System Operator, Inc.
E-MS
Entergy Mississippi, LLC
NYPA
New York Power Authority
E-NO
Entergy New Orleans, LLC
NYSE
New York Stock Exchange
E-TX
Entergy Texas, Inc.
O&M Operation and maintenance expense
EBITDA Earnings before interest, income Net cash flow provided by operating
taxes, depreciation and activities
amortization
OCF
ENGC Entergy Nuclear Generation Company
OpCo
Operating Company
ENP Entergy Nuclear Palisades, LLC
OPEB
Other post-employment benefits
EPS
Earnings per share
P&O
Parent & other
ETR
Entergy Corporation
Palisades
Palisades Power Plant (nuclear)
EWC Entergy Wholesale Commodities
Pilgrim Pilgrim Nuclear Power Station (nuclear)
FERC Federal Energy Regulatory
PPA Power purchase agreement or purchased
Commission power agreement
FFO
Funds from operations
PUCT Public Utility Commission of Texas
FitzPatrick James A. FitzPatrick Nuclear Power
Plant (nuclear, sold March 31,
2017)
RICE Reciprocating Internal Combustion Engine
FRP
Formula rate plan
RFP
Request for proposals
GAAP U.S. generally accepted accounting
principles
ROE
Return on equity
Grand Gulf Unit 1 of Grand Gulf Nuclear
or GGNS Station (nuclear), 90% owned or
leased by SERI
ROIC
Return on invested capital
Indian Point Indian Point Energy Center Unit 1
1 or IP1 (nuclear) (shut down in 1974)
RS Cogen RS Cogen facility (CCGT cogeneration)
Indian Point Indian Point Energy Center Unit 2
2 or IP2 (nuclear)
RSP Rate Stabilization Plan (E-LA Gas)
Indian Point Indian Point Energy Center Unit 3
3 or IP3 (nuclear)
S&P
Standard & Poor's
IPEC Indian Point Energy Center
(nuclear)
SCPS St. Charles Power Station (CCGT)
ISES 2 Unit 2 of Independence Steam
Electric Station (coal)
SEC U.S. Securities and Exchange Commission
IRS
Internal Revenue Service
SERI
System Energy Resources, Inc.
TCRF Transmission cost recovery factor
Union
Union Power Station (CCGT)
UPSA
Unit Power Sales Agreement
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 millions
except where noted) Fourth Quarter Year-to-Date
2018 2017 2018 2017
EWC
---
As-reported net
revenue (A) 281 333 1,276 1,469
Special items
included in net
revenue:
EWC Nuclear costs
associated with the
strategic decision
to exit the EWC
business 91
Total special items
included in net
revenue (B) 91
Operational net
revenue (A-B) 281 333 1,276 1,378
EWC Nuclear
---
As-reported EWC
Nuclear net revenue (C) 274 327 1,258 1,456
Special items
included in EWC
Nuclear net
revenue:
EWC Nuclear costs
associated with the
strategic decision
to exit the EWC
business 91
Total special items
included in EWC
Nuclear net revenue (D) 91
Operational EWC
Nuclear net revenue (C-D) 274 327 1,258 1,365
Calculations may differ due to
rounding
Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures
- ROIC, ROE
($
in
millions
except
where
noted) Fourth Quarter
2018 2017
As-
reported months
net
income
(loss)
attributable
to
Entergy
Corporation,
rolling
12 849 412
(A)
Preferred
dividends 14 14
Tax-
effected
interest
expense 527 407
As-
reported months
net adjusted
income for
(loss) preferred
attributable dividends
to and
Entergy tax-
Corporation, effected
rolling interest
12 1,390 833
Special
items
in
prior
quarters (317) (272)
(B)
Items
associated
with
the
strategic
decision
to
exit
the
EWC
business (214) (91)
Tax
reform 38 (525)
Total
special
items,
rolling
12
months
(C) (493) (889)
Operational
earnings, effected
rolling interest
12 expense
months (non-
adjusted GAAP)
for
preferred
dividends
and
tax 1,882 1,721
Operational
(B-C)
earnings,
rolling
12
months
(non-
GAAP)
(A-C) 1,341 1,300
Average
invested
capital
(D) 26,032 24,213
Average
common
equity
(E) 8,418 8,037
ROIC
-
as-
reported
(B/D) 5.3% 3.4%
ROIC
-
operational [(B-C)/D] 7.2% 7.1%
ROE
-
as-
reported
(A/E) 10.1% 5.1%
ROE
-
operational [(A-C)/E] 15.9% 16.2%
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) Fourth Quarter
2018 2017
Total debt
(A) 18,133 16,677
Less securitization
debt
(B) 424 545
Total debt, excluding
securitization debt
(C) 17,709 16,132
Less cash and cash
equivalents
(D) 481 781
Net debt, excluding
securitization debt
(E) 17,228 15,351
Total capitalization
(F) 27,196 24,867
Less securitization
debt
(B) 424 545
Total capitalization,
excluding
securitization debt
(G) 26,772 24,322
Less cash and cash
equivalents
(D) 481 781
Net capital, excluding
securitization debt
(H) 26,291 23,541
Debt to capital ratio
(A/F) 66.7% 67.1%
Debt to capital ratio,
excluding
securitization debt
(C/G) 66.1% 66.3%
Net debt to net capital
ratio, excluding
securitization debt
(E/H) 65.5% 65.2%
Revolver capacity
(I) 4,056 4,174
Gross liquidity
(D+I) 4,537 4,955
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) 220 210
Commercial paper
(L) 1,942 1,467
Unamortized debt
issuance and discounts
(M) (10) (11)
Total parent debt
(J+K+L+M) 4,002 3,516
Parent debt to total
debt ratio, excluding
securitization debt
[(J+K+L+M)/C] 22.6% 21.8%
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 (continued)
---
($ in millions except
where noted) Fourth Quarter
2018 2017
Total debt
(A) 18,133 16,677
Less securitization debt
(B) 424 545
Total debt, excluding
securitization debt
(C) 17,709 16,132
Net cash flow provided by
operating activities,
rolling 12 months
(D) 2,385 2,624
AFUDC - borrowed funds,
rolling 12 months
(E) (61) (45)
Working capital items in
net cash flow provided by
operating activities
(rolling 12 months):
Receivables 99 (98)
Fuel inventory 46 (3)
Accounts payable 97 102
Taxes accrued 39 34
Interest accrued 5 1
Other working capital
accounts (164) (4)
Securitization regulatory
charges 124 116
Total
(F) 246 148
FFO, rolling 12 months (G)=(D+E-F) 2,079 2,431
Add back special items
(rolling 12 months pre-
tax):
Items associated with the
strategic decision to
exit the EWC business 43 126
Operational FFO, rolling
12 months
(H) 2,122 2,557
Operational FFO to debt
ratio, excluding
securitization debt
(H/C) 12.0% 15.9%
Estimated return of
unprotected excess ADIT
(rolling 12 months pre-
tax)
(I) 592
Operational FFO to debt
ratio, excluding
securitization debt and
return of unprotected
excess ADIT [(H)+(I)/(C)] 15.3% 15.9%
Calculations may differ due to
rounding
View original content to download multimedia:http://www.prnewswire.com/news-releases/entergy-reports-fourth-quarter-and-full-year-financial-results-initiates-2019-earnings-guidance-based-on-single-new-measure-300798622.html
SOURCE Entergy Corporation
