Entergy Reports Second Quarter Earnings
NEW ORLEANS, July 31, 2019 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported second quarter 2019 earnings per share of $1.22 on an as-reported basis and $1.35 on an adjusted basis (non-GAAP).
"Our results for the quarter keep us well-positioned to achieve our full-year financial guidance," said Entergy Chairman and Chief Executive Officer Leo Denault. "With a track record of success, clarity in our vision, and confidence in our strategy going forward, we are raising our 2020 and 2021 adjusted EPS outlooks and narrowing our adjusted EPS ranges across our forecast period."
Business highlights included the following:
-- Entergy narrowed its 2019 adjusted EPS guidance to $5.15 to $5.45 and
raised and narrowed its 2020 and 2021 adjusted EPS outlooks to $5.45 to
$5.75 and $5.80 to $6.10, respectively.
-- The St. Charles Power Station was placed in service on budget and ahead
of schedule.
-- Phase 1 of the Western Region economic transmission project was placed
in service.
-- The MPSC approved the settlement in Entergy Mississippi's annual FRP
filing.
-- Entergy Louisiana and Entergy Arkansas each submitted annual FRP
filings.
-- Pilgrim Nuclear Power Station permanently shut down on May 31, 2019.
-- The Edison Electric Institute awarded its Emergency Assistance Award to
Entergy.
-- For the fourth consecutive year, Entergy Corporation was named to The
Civic 50, a Points of Light initiative honoring the 50 most
community-minded companies in the United States.
Consolidated Earnings (GAAP and Non-GAAP Measures)
Second Quarter and Year-to-Date 2019 vs. 2018 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of
adjustments)
---
Second Quarter Year-to-Date
---
2019 2018
Change 2019 2018
Change
---
(After-tax, $ in millions)
As-reported
earnings 236 245 (9) 491 378 113
Less adjustments (26) (14) (12) 71 (32) 103
---
Adjusted
earnings (non-
GAAP) 262 259 3 420 410 10
Estimated
weather in
billed sales 12 21 (9) (12) 37 (48)
(After-tax, per share in $)
As-reported
earnings 1.22 1.34 (0.12) 2.54 2.08 0.46
Less adjustments (0.13) (0.08) (0.05) 0.36 (0.18) 0.54
---
Adjusted
earnings (non-
GAAP) 1.35 1.42 (0.07) 2.18 2.26 (0.08)
Estimated
weather in
billed sales 0.06 0.11 (0.05) (0.06) 0.20 (0.26)
Calculations may differ due to
rounding
Consolidated Results
For second quarter 2019, the company reported earnings of $236 million, or $1.22 per share, on an as-reported basis and earnings of $262 million, or $1.35 per share, on an adjusted basis. This compared to second quarter 2018 earnings of $245 million, or $1.34 per share, on an as-reported basis and earnings of $259 million, or $1.42 per share on an adjusted 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.
Business Segment Results
Utility
For second quarter 2019, the Utility business reported earnings attributable to Entergy Corporation of $331 million, or $1.70 per share, on both an as-reported and an adjusted basis. This compared to second quarter 2018 earnings of $376 million, or $2.05 per share, on an as-reported basis and $333 million, or $1.82 per share, on an adjusted basis. Drivers for the quarter included:
-- rate activity at Entergy Arkansas, Entergy Louisiana, and Entergy Texas;
-- second quarter 2018 regulatory charges to return benefits of the lower
federal tax rate to customers; and
-- higher other income largely due to higher AFUDC-equity funds.
These increases were partially offset by:
-- less favorable weather in second quarter 2019 compared to a year ago;
-- lower sales volume in the unbilled period;
-- higher spending on nuclear operations, information technology, and
initiatives to explore new customer products and services; and
-- higher depreciation expense.
On a per share basis, 2019 results reflected higher shares outstanding from settlement of the company's equity forward.
Appendix C contains additional details on Utility financial and operating measures.
Parent & Other
For second quarter 2019, Parent & Other reported a loss of $(69 million), or (35) cents per share, on both an as-reported and an adjusted basis. This compared to a loss of $(73 million), or (40) cents per share, on both an as-reported and an adjusted basis in second quarter 2018.
Entergy Wholesale Commodities
For second quarter 2019, EWC recorded a loss attributable to Entergy Corporation of $(26 million), or (13) cents per share on an as-reported basis. This compared to a second quarter 2018 loss of $(57 million), or (31) cents per share, on an as-reported basis.
Second quarter 2019 earnings reflected lower impairment charges as compared to a year ago. EWC also recorded higher gains on decommissioning trust funds. These items were partially offset by lower revenue due to the shutdown of Pilgrim and tax benefits incurred in second quarter 2018.
Appendix D contains additional details on EWC financial and operating measures, including reconciliation for non-GAAP EWC adjusted EBITDA.
Earnings per Share Guidance and Outlook
Entergy narrowed its 2019 adjusted EPS guidance range to $5.15 to $5.45 per share from $5.10 to $5.50.
In addition, with its customers in mind, the company identified investment opportunities to improve reliability and enable new customer products and services. Combined with non-fuel O&M efficiencies, customers will receive an improved level of service with minimal bill impacts. As a result, the company is increasing its 2020 and 2021 adjusted EPS outlook ranges to $5.45 to $5.75 and $5.80 to $6.10, respectively.
See webcast presentation slides for additional details.
The company has provided 2019 earnings guidance and 2020 and 2021 outlooks with regard to the non-GAAP measure of Entergy adjusted EPS. This measure excludes from the corresponding GAAP financial measure the effect of adjustments as described below under "Non-GAAP Financial Measures." The company has not provided a reconciliation of such non-GAAP guidance or outlooks to guidance or outlooks 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 the periods. 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 (95) cents, (35) cents and $(1.35) per share in 2019, 2020 and 2021, respectively. These estimates are 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, July 31, 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 7299636, 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 7, 2019, by dialing 855-859-2056, conference ID 7299636.
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 Stock Exchange and NYSE Chicago 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.
Entergy maintains a web page as part of its Investor Relations website, entitled Regulatory & 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, which are generally numerical measures of a company's performance, financial position, or cash flows that either exclude or include 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.
Entergy reports 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 the company's decision to exit the merchant power business. 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 results of the EWC segment, significant tax items and other items such as certain costs, expenses, or other specified items. In addition to reporting GAAP consolidated earnings on a per share basis, Entergy reports its adjusted earnings on a per share basis. These per share measures represent the applicable earnings amount divided by the diluted average number of common shares outstanding for the period.
Management uses the non-GAAP financial measures of adjusted earnings and adjusted earnings per share for, among other things, financial planning and analysis; reporting financial results to the board of directors, employees, stockholders, analysts and investors; and internal evaluation of financial performance. Entergy believes that these non-GAAP financial measures provide 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.
Other non-GAAP measures, including adjusted EBITDA; adjusted ROE; adjusted ROIC; gross liquidity; debt to capital, excluding securitization debt; net debt to net capital, excluding securitization debt; parent debt to total debt, excluding securitization debt; FFO; FFO to debt, excluding securitization debt; and FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC, are measures Entergy uses internally for management and board discussions and 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. In addition, other financial measures including net income (or earnings), adjusted for preferred dividends and tax-effected interest expense; return on average invested capital; and return on average common equity are included on both an adjusted and as-reported basis. In each case, the metrics defined as "adjusted" (other than EWC's adjusted EBITDA) would exclude the effect of adjustments as defined above. EWC's adjusted EBITDA represents EWC's earnings before interest, taxes, and depreciation and amortization, and also excludes decommissioning expense.
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. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. Investors are strongly encouraged to review Entergy's consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. Although certain of these measures are intended to assist investors in comparing Entergy's performance to other companies in the utility sector, 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 outlooks; 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; (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.
Second Quarter 2019 Earnings Release Appendices and Financial Statements
Appendices
Appendices are presented in this section as follows:
-- A: Consolidated Results and Adjustments
-- 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 Adjustments
Appendix A-1 provides a comparative summary of consolidated earnings, including a reconciliation of as-reported earnings (GAAP) to adjusted earnings (non-GAAP).
Appendix A-1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2019 vs. 2018 (See Appendix A-3 and Appendix A-4 for details on adjustments)
---
Second Quarter Year-to-Date
---
2019 2018
Change 2019 2018
Change
---
(After-tax, $ in millions)
Earnings (loss)
Utility 331 376 (44) 562 591 (29)
Parent & Other (69) (73) 4 (141) (137) (4)
EWC (26) (57) 31 71 (75) 146
---
Consolidated 236 245 (9) 491 378 113
Less adjustments
Utility 43 (43) 43 (43)
Parent & Other -
EWC (26) (57) 31 71 (75) 146
---
Consolidated (26) (14) (12) 71 (32) 103
Adjusted earnings (loss) (non-GAAP)
Utility 331 333 (1) 562 548 14
Parent & Other (69) (73) 4 (141) (137) (4)
EWC -
Consolidated 262 259 3 420 410 10
Estimated weather in
billed sales 12 21 (9) (12) 37 (48)
Diluted average
number of common 194 183 193 182
shares outstanding (in
millions)
(After-tax, per share in $) (a)
Earnings (loss)
Utility 1.70 2.05 (0.35) 2.91 3.24 (0.33)
Parent & Other (0.35) (0.40) 0.05 (0.73) (0.75) 0.02
EWC (0.13) (0.31) 0.18 0.36 (0.41) 0.77
Consolidated 1.22 1.34 (0.12) 2.54 2.08 0.46
Less adjustments
Utility 0.23 (0.23) 0.23 (0.23)
Parent & Other -
EWC (0.13) (0.31) 0.18 0.36 (0.41) 0.77
---
Consolidated (0.13) (0.08) (0.05) 0.36 (0.18) 0.54
Adjusted earnings (loss) (non-GAAP)
Utility 1.70 1.82 (0.12) 2.91 3.01 (0.10)
Parent & Other (0.35) (0.40) 0.05 (0.73) (0.75) 0.02
EWC -
Consolidated 1.35 1.42 (0.07) 2.18 2.26 (0.08)
Estimated weather in
billed sales 0.06 0.11 (0.05) (0.06) 0.20 (0.26)
Calculations may differ due to rounding
(a) Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
outstanding for the period.
See Appendix B for detailed earnings variance analysis. See Appendix A-3 for adjustments by driver.
Appendix A-2 provides a comparative summary of OCF, by business.
Appendix A-2: Consolidated Operating Cash Flow
Second Quarter and Year-to-Date 2019 vs. 2018
---
($ in millions)
Second Quarter Year-to-Date
---
2019 2018
Change 2019 2018
Change
---
Utility 699 626 73 1,154 1,149 5
Parent & Other (45) (58) 13 (123) (115) (8)
EWC (102) (45) (57) 22 46 (24)
---
Consolidated 552 523 29 1,053 1,080 (27)
Calculations may differ due to
rounding
OCF increased quarter-over-quarter due primarily to a lower amount of unprotected excess ADIT returned to customers, lower nuclear refueling outage spending, and lower ARO spending at EWC. Higher severance and retention payments at EWC partially offset the increase.
Appendix A-3 and Appendix A-4 list adjustments by business. Amounts are shown on both an earnings and EPS basis. Adjustments are included in as-reported earnings consistent with GAAP but are excluded from adjusted earnings. As a result, adjusted earnings is considered a non-GAAP measure.
Appendix A-3: Adjustments by Driver (shown as positive/(negative) impact on earnings or EPS)
Second Quarter and Year-to-Date 2019 vs. 2018
---
(Pre-tax except for income tax effects and total, $ in millions)
Second Quarter Year-to-Date
---
2019 2018
Change 2019 2018
Change
---
(Pre-tax except for income tax effects
and total, $ in millions)
Utility
2012 /2013 IRS
settlement 43 (43) 43 (43)
Total Utility 43 (43) 43 (43)
EWC
Income before income
taxes (35) (86) 52 128 (105) 234
Income taxes 9 30 (21) (57) 31 (88)
Preferred dividend
requirements of
subsidiaries (1) (1) (1) (1)
Total EWC (26) (57) 31 71 (75) 146
Total adjustments (26) (14) (12) 71 (32) 103
(After-tax, per share in $) (b)
Utility
2012 /2013 IRS
settlement 0.23 (0.23) 0.23 (0.23)
Total Utility 0.23 (0.23) 0.23 (0.23)
EWC
Total EWC (0.13) (0.31) 0.18 0.36 (0.41) 0.77
Total adjustments (0.13) (0.08) (0.05) 0.36 (0.18) 0.54
Calculations may differ due to rounding
(b) Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
outstanding for the period.
Appendix A-4: Adjustments by Income Statement Line Item (shown as positive/(negative) impact on earnings)
Second Quarter and Year-to-Date 2019 vs. 2018
---
(Pre-tax except for Income taxes and total, $ in millions)
Second Quarter Year-to-Date
---
2019 2018
Change 2019 2018
Change
---
Utility
Income taxes 43 (43) 43 (43)
EWC
Operating revenues 290 309 (19) 723 728 (5)
Fuel and fuel-related expenses (26) (19) (7) (51) (39) (12)
Purchased power (15) (18) 3 (31) (35) 4
Non-fuel O&M (200) (200) 1 (401) (393) (7)
Asset write-off and impairments (16) (69) 53 (90) (142) 52
Decommissioning expense (64) (60) (4) (128) (118) (9)
Taxes other than income taxes (20) (22) 2 (33) (39) 6
Depreciation/amortization exp. (38) (39) 1 (76) (77) 1
Other income (deductions)-other 64 40 24 232 26 206
Interest exp. and other charges (9) (8) (0) (18) (17) (1)
Income taxes 9 30 (21) (57) 31 (88)
Preferred dividend (1) (1) (1) (1)
---
Total EWC (26) (57) 31 71 (75) 146
Total adjustments (after-tax) (26) (14) (12) 71 (32) 103
Calculations may differ due to
rounding
B: Earnings Variance Analysis
Appendix B-1 and Appendix B-2 provide details of current quarter and year-to-date 2019 versus 2018 as-reported and adjusted earnings variance analysis for Utility, Parent & Other, and EWC.
Appendix B: As-Reported and Adjusted Earnings Variance Analysis (c), (d)
Second Quarter 2019 vs. 2018
---
(After-tax, per share in $)
Utility Parent & Other
EWC Consolidated
As-
Adjusted
As-
Adjusted
As-
As-
Adjusted
Reported Reported
Reported
Reported
2018 earnings 2.05 1.82 (0.40) (0.40) (0.31) 1.34 1.42
Operating revenue less: 0.18 0.18 (e) (0.10) (f) 0.08 0.18
Fuel, fuel-related expenses and
gas purchased for resale,
Purchased power, and
Regulatory charges (credits)
Non-fuel O&M (0.11) (0.11) (g) 0.03 0.03 (0.08) (0.08)
Asset write-offs and impairments - 0.23 (h) 0.23
Decommissioning expense (0.01) (0.01) (0.02) (0.03) (0.01)
Taxes other than income taxes (0.03) (0.03) 0.01 (0.02) (0.03)
Depreciation/amortization exp. (0.05) (0.05) (i) (0.05) (0.05)
Other income (deductions)-other 0.05 0.05 (j) (0.01) (0.01) 0.10 (k) 0.14 0.04
Interest exp. and other charges (0.03) (0.03) (0.03) (0.03)
Income taxes-other (0.24) (0.01) (l) 0.01 0.01 (0.05) (m) (0.28) -
Share effect (0.11) (0.11) (n) 0.02 0.02 0.01 (0.08) (0.09)
2019 earnings 1.70 1.70 (0.35) (0.35) (0.13) 1.22 1.35
Appendix B-2: As-Reported and Adjusted Earnings Variance Analysis (c), (d)
Year-to-Date 2019 vs. 2018
---
(After-tax, per share in $)
Utility Parent & Other
EWC Consolidated
As-
Adjusted
As-
Adjusted
As-
As-
Adjusted
Reported Reported
Reported
Reported
2018 earnings 3.24 3.01 (0.75) (0.75) (0.41) 2.08 2.26
Operating revenue less: 0.25 0.25 (e) (0.06) (f) 0.19 0.25
Fuel, fuel-related expenses and
gas purchased for resale,
Purchased power, and
Regulatory charges (credits)
Non-fuel O&M (0.09) (0.09) (g) 0.02 0.02 (0.03) (0.10) (0.07)
Asset write-offs and impairments - 0.22 (h) 0.22
Decommissioning expense (0.02) (0.02) (0.04) (0.06) (0.02)
Taxes other than income taxes (0.02) (0.02) 0.03 0.01 (0.02)
Depreciation/amortization exp. (0.09) (0.09) (i) (0.09) (0.09)
Other income (deductions)-other 0.08 0.08 (j) (0.02) (0.02) 0.89 (k) 0.95 0.06
Interest exp. and other charges (0.05) (0.05) (o) (0.03) (0.03) (0.01) (0.09) (0.08)
Income taxes-other (0.21) 0.02 (l) 0.01 0.01 (0.21) (m) (0.41) 0.03
Preferred dividend requirements (0.01) (0.01) (0.01) (0.01)
Share effect (0.17) (0.17) (n) 0.04 0.04 (0.02) (0.15) (0.13)
2019 earnings 2.91 2.91 (0.73) (0.73) 0.36 2.54 2.18
Calculations may differ due to rounding.
(c) Utility revenue and Utility income taxes exclude $61
million in second quarter 2019 and $278 million in
second quarter 2018 for the return of unprotected excess
ADIT to customers (net effect is neutral to earnings).
On a year-to-date basis, Utility revenue and Utility
income taxes exclude $122 million in 2019 and $278
million in 2018.
(d) EPS effect is calculated by multiplying the pre-tax
amount by the estimated income tax rate that is expected
to apply and dividing by diluted average number of
common shares outstanding for the prior period; income
taxes-other represents income tax differences other than
the tax effect of individual line items.
(e) The second quarter and year-to-date earnings increases
were primarily driven by rate activity from E-AR's FRP,
E-LA's FRP, E-LA's AMI rider, as well as E-TX's base
rate case. Second quarter 2019 also included recovery of
the St. Charles Power Station. In addition, in the
second quarter and year-to-date 2018, E-LA recorded
regulatory charges to return the benefits of the lower
effective federal tax rate to customers. Partially
offsetting was the net effect of volume/weather
primarily due to the effects of weather and lower volume
in the unbilled period.
(f) The second quarter and year-to-date earnings decreases
were due largely to lower revenues due to the shutdown
of Pilgrim in May 2019, as well as impacts on fuel
expense from EWC plant impairments. The year-to-date
decrease was partially offset by higher nuclear energy
volume.
(g) The second quarter and year-to-date earnings decreases
from higher Utility non-fuel O&M reflected higher
spending on information technology, initiatives to
explore new customer products and services, and fossil-
fueled generation due to higher scope of work during
outages. These were partially offset by lower E-MS
storm damage provisions (offset in operating revenue).
The second quarter variance also included higher
spending on nuclear operations, including higher outage
costs and amortization. The year-to-date variance
reflected lower nuclear spending in addition to the
items previously noted.
(h) The second quarter and year-to-date earnings increases
from lower EWC asset write-offs and impairments were
due to lower refueling outage costs being impaired in
2019, as well as a gain on the sale of a switchyard at
Pilgrim.
(i) The second quarter and year-to-date earnings decreases
from higher Utility depreciation expense were due
primarily to higher plant in service, including the St.
Charles Power Station, partially offset by updated Grand
Gulf depreciation rates.
(j) The second quarter and year-to date earnings increases
from Utility other income (deductions)-other were due
largely to higher AFUDC-equity funds from higher CWIP
in 2019, including the Lake Charles Power Station,
Montgomery County Power Station and New Orleans Power
Station. Changes in decommissioning trust fund activity
also contributed.
(k) The second quarter and year-to-date earnings increases
from higher EWC other income (deductions)-other were due
largely to gains on the decommissioning trust fund
investments in 2019.
(l) The second quarter and year-to-date as-reported
earnings decreases from higher Utility income taxes were
primarily due to the settlement of the 2012 /2013 IRS
audit totaling $43 million in second quarter 2018.
(m) The second quarter and year-to-date earnings decreases
from higher EWC income taxes were primarily due to $13
million in tax benefits from the settlement of the 2012
/2013 IRS audit in second quarter 2018. The year-to
date earnings decrease also reflected an accrual of $29
million of tax expense, which resulted from the sale of
Vermont Yankee in January 2019.
(n) The second quarter and year-to-date earnings per share
decreases from share effect were due to settlement of
the equity forward (6.8 million shares settled in
December 2018 and 8.4 million shares settled in May
2019).
(o) The year-to-date earnings decrease from higher Utility
interest expense was largely due to higher debt balances
at E-AR and E-LA.
Utility As-Reported Operating revenue less
Fuel, fuel-related expenses and gas purchased
for resale; Purchased power; and Regulatory
charges (credits) Variance Analysis
2019 vs. 2018 ($ EPS)
---
2Q
YTD
---
Volume/weather (0.17) (0.33)
Retail electric price 0.22 0.34
Reg. charges for lower tax rate 0.11 0.22
Other 0.02 0.02
Total 0.18 0.25
---
C: Utility Financial and Operating Measures
Appendix C-1 and Appendix C-2 provides comparative summaries of Utility operating and financial measures.
Appendix C-1: Utility Operating and Financial Measures
Second Quarter and Year-to-Date 2019 vs. 2018
Second Quarter
Year-to-Date
2019 2018
% Weather 2019 2018
% %
% Weather
Adjusted (p) Adjusted (p)
Change
Change
GWh billed
Residential 7,652 7,749 (1.3) 0.4 16,123 17,036 (5.4)
Commercial 6,841 6,943 (1.5) (0.4) 13,264 13,675 (3.0) (0.9)
Governmental 626 612 2.3 2.3 1,227 1,220 0.6 0.8
Industrial 11,965 12,219 (2.1) (2.1) 23,648 23,624 0.1 0.1
Total retail sales 27,084 27,523 (1.6) (0.9) 54,262 55,555 (2.3) (0.2)
Wholesale 3,170 2,566 23.5 6,984 5,810 20.2
Total sales 30,254 30,089 0.5 61,246 61,365 (0.2)
Number of electric retail customers
Residential 2,489,842 2,479,833 0.4
Commercial 358,545 356,688 0.5
Governmental 17,906 17,966 (0.3)
Industrial 41,416 43,212 (4.2)
Total retail customers 2,907,709 2,897,699 0.3
Non-fuel O&M per MWh $22.79 $22.05 3.4 $21.44 $21.05 1.8
On a weather-adjusted basis for second quarter 2019, billed sales decreased (0.9) percent, including lower industrial and commercial sales. Industrial billed sales volume decreased (2.1) percent driven by lower sales to cogeneration customers as well as existing customers. This was partially offset by continued growth from new and expansion customers. Residential billed sales increased 0.4 percent.
Appendix C-2: Utility Operating Measures
Twelve Months Ended June 30, 2019 vs. 2018
---
Twelve Months Ended June 30
2019 2018
%
% Weather
Adjusted (p)
Change
---
GWh billed
Residential 36,194 35,893 0.8 0.3
Commercial 29,015 29,096 (0.3) (0.4)
Governmental 2,588 2,529 2.3 1.9
Industrial 48,408 48,067 0.7 0.7
Total retail sales 116,205 115,585 0.5 0.3
Calculations may differ due to rounding
Certain prior year data has been
reclassified to conform with current
year presentation
(p) The effects of weather were
estimated using heating
degree days and cooling
degree days for the billing
cycles from certain
locations within each
jurisdiction and comparing
to "normal" weather based on
20-year historical data. The
models used to estimate
weather are updated
periodically and are subject
to change.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2019 vs. 2018
---
($ in millions) Second Quarter Year-to-Date
---
2019 2018
Change 2019 2018
Change
---
Net income (loss) (25) (56) 31 72 (74) 146
Add back: interest expense 9 8 1 18 17 1
Add back: income taxes (9) (30) 21 57 (31) 88
Add back: depreciation and
amortization 38 39 (1) 76 77 (1)
Subtract: interest and
investment income 75 58 17 257 56 201
Add back: decommissioning
expense 64 60 4 128 118 10
---
Adjusted EBITDA (non-
GAAP) 2 (37) 39 94 50 44
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 2019 vs. 2018
---
Second Quarter Year-to-Date
---
2019 2018
% Change 2019 2018
% Change
---
Owned capacity (MW) (q) 3,274 3,962 (17.4) 3,274 3,962 (17.4)
GWh billed 7,258 7,281 (0.3) 14,461 14,277 1.3
EWC Nuclear Fleet
---
Capacity factor 92% 86% 7.0 89% 85% 4.7
GWh billed 6,703 6,713 (0.1) 13,392 13,121 2.1
Production cost per MWh $24.82 $17.15 44.7 $21.92 $17.93 22.3
Average energy/
capacity revenue per
MWh $37.85 $41.82 (9.5) $48.55 $49.21 (1.4)
Refueling outage days
Indian Point 2 20 33
Indian Point 3 8 29
Palisades
Pilgrim
Calculations may differ due to
rounding
(q) Second quarter and year-
to-date 2019 exclude
Pilgrim (688MW), which
was shut down May 31,
2019.
See the appendix in the webcast slide presentation for EWC hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
Appendix E: GAAP and Non-GAAP Financial Measures
Second Quarter 2019 vs. 2018 (See Appendix G for reconciliation of GAAP to non-GAAP financial measures)
---
For 12 months ending June 30 2019 2018
Change
---
GAAP Measures
As-reported ROIC 5.5% 3.2% 2.3%
As-reported ROE 10.8% 3.6% 7.2%
Non-GAAP Measures
Adjusted ROIC 5.5% 5.2% 0.3%
Adjusted ROE 11.0% 10.1% 0.9%
As of June 30 ($ in millions) 2019 2018
Change
---
GAAP Measures
Cash and cash equivalents 636 813 (177)
Revolver capacity 4,120 3,885 235
Commercial paper 1,635 1,945 (310)
Total debt 19,054 17,881 1,173
Securitization debt 360 483 (123)
Debt to capital 65.5% 68.5% (3.0%)
Off-balance sheet liabilities:
Debt of joint ventures - Entergy's
share 58 64 (6)
Leases - Entergy's share (r) 429 (429)
Power purchase agreements accounted
for as leases (r) 136 (136)
Total off-balance sheet liabilities 58 629 (571)
Non-GAAP Financial Measures
Debt to capital, excluding
securitization debt 65.1% 67.9% (2.8%)
Gross liquidity 4,756 4,698 58
Net debt to net capital, excluding
securitization debt 64.3% 66.9% (2.6%)
Parent debt to total debt, excluding
securitization debt 19.4% 24.0% (4.6%)
FFO to debt, excluding securitization
debt 11.8% 15.4% (3.6%)
FFO to debt, excluding securitization
debt, return of unprotected excess
ADIT, and severance and retention
payments associated with exit of EWC 15.8% 15.9% (0.1%)
(r) As of January 1, 2019, Entergy
adopted ASC 842, the new lease
accounting standard. As a
result, Entergy re-evaluated
all agreements and put all
agreements that qualified as
operating leases on the
balance sheet, and there are
no longer any off-balance
sheet liabilities for leases.
F: Definitions and Abbreviations and Acronyms
Appendix F-1 provides definitions of certain operating measures, as well as GAAP and non-GAAP 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
LPSC Louisiana Public Service Commission
AFUDC - Allowance for equity funds used
equity during construction
funds
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
NRC
Nuclear Regulatory Commission
DCRF Distribution cost recovery factor
NYISO New York Independent System Operator, Inc.
E-AR
Entergy Arkansas, LLC
NYPA
New York Power Authority
E-LA
Entergy Louisiana, LLC
NYSE
New York Stock Exchange
E-MS
Entergy Mississippi, LLC
O&M Operation and maintenance expense
E-NO
Entergy New Orleans, LLC
OCF Net cash flow provided by operating
activities
E-TX
Entergy Texas, Inc.
OpCo
Operating Company
EBITDA Earnings before interest, income
taxes, depreciation and
amortization
OPEB
Other post-employment benefits
ENGC Entergy Nuclear Generation Company
P&O
Parent & Other
ENP Entergy Nuclear Palisades, LLC
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
FRP
Formula rate plan
ROE
Return on equity
GAAP U.S. generally accepted accounting
principles
ROIC
Return on invested capital
Grand Gulf Unit 1 of Grand Gulf Nuclear
or GGNS Station (nuclear), 90% owned or
leased by SERI
RS Cogen RS Cogen facility (CCGT cogeneration)
Indian Indian Point Energy Center Unit 1
Point 1 (nuclear) (shut down in 1974)
RSP Rate Stabilization Plan (E-LA Gas)
Indian Indian Point Energy Center Unit 2
Point 2 (nuclear)
or IP2
S&P
Standard & Poor's
Indian Indian Point Energy Center Unit 3
Point 3 (nuclear)
or IP3
SCPS St. Charles Power Station (CCGT)
IPEC Indian Point Energy Center
(nuclear)
SEC U.S. Securities and Exchange Commission
ISES 2 Unit 2 of Independence Steam
Electric Station (coal)
SERI
System Energy Resources, Inc.
IRS
Internal Revenue Service
TCRF Transmission cost recovery factor
Union
Union Power Station (CCGT)
UPSA
Unit Power Sales Agreement
Vermont Yankee Vermont Yankee Nuclear Power Station
(nuclear, sold January 11, 2019)
WACC Weighted-average cost of capital
G: GAAP to Non-GAAP Reconciliations
Appendix G-1 and Appendix G-2 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 -
ROIC, ROE
($
in
millions
except
where
noted) Second Quarter
2019 2018
As-
(A)
reported months
net
income
(loss)
attributable
to
Entergy
Corporation,
rolling
12 961 297
Preferred
dividends 15 14
Tax
effected
interest
expense 543 510
As-
(B)
reported months
net adjusted
income for
(loss) preferred
attributable dividends
to and
Entergy tax
Corporation, effected
rolling interest
12 1,519 821
Adjustments
in
prior
quarters 8 (517)
Adjustments (26) (14)
Total
adjustments
(C) (18) (531)
EWC
preferred
dividends
and
tax- months
effected
interest
expense,
rolling
12
30 24
Total
(D)
adjustments, GAAP)
including
preferred
dividends
and
tax
effected
interest
expense
(non- 12 (507)
Adjusted
earnings,
rolling
12
months
(non-
GAAP)
(A-C) 979 828
Adjusted
earnings, effected
rolling interest
12 expense
months (non-
including GAAP)
preferred
dividends
and
tax-
1,507 1,328
Average
(B-D)
invested
capital
(E) 27,586 25,480
Average
common
equity
(F) 8,910 8,197
As-
reported
ROIC
(B/E) 5.5% 3.2%
Adjusted
ROIC
(non-
GAAP)
[(B-D)/E] 5.5% 5.2%
As-
reported
ROE
(A/F) 10.8% 3.6%
Adjusted
ROE
(non-
GAAP)
[(A-C)/F] 11.0% 10.1%
Calculations may differ due to
rounding
Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - Debt Ratios excluding Securitization
Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt; FFO to Debt, excluding Securitization
Debt, Return of Unprotected Excess ADIT, and Severance and Retention Payments Associated with Exit of EWC
---
($ in millions except
where noted) Second Quarter
2019 2018
Total debt
(A) 19,054 17,881
Less securitization
debt
(B) 360 483
Total debt, excluding
securitization debt
(C) 18,694 17,398
Less cash and cash
equivalents
(D) 636 813
Net debt, excluding
securitization debt
(E) 18,058 16,585
Total capitalization
(F) 29,071 26,102
Less securitization
debt
(B) 360 483
Total capitalization,
excluding
securitization debt
(G) 28,711 25,619
Less cash and cash
equivalents
(D) 636 813
Net capital, excluding
securitization debt
(H) 28,075 24,806
Debt to capital
(A/F) 65.5% 68.5%
Debt to capital,
excluding
securitization debt
(non-GAAP)
(C/G) 65.1% 67.9%
Net debt to net
capital, excluding
securitization debt
(non-GAAP)
(E/H) 64.3% 66.9%
Revolver capacity
(I) 4,120 3,885
Gross liquidity (non-
GAAP)
(D+I) 4,756 4,698
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) 150 390
Commercial paper
(L) 1,635 1,945
Unamortized debt
issuance and discounts
(M) (9) (11)
Total parent debt
(J+K+L+M) 3,626 4,174
Parent debt to total
debt, excluding
securitization debt
(non-GAAP)
[(J+K+L+M)/C] 19.4% 24.0%
Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - Debt Ratios excluding
Securitization Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt; FFO to Debt, excluding
Securitization Debt, Return of Unprotected Excess ADIT, and Severance and Retention Payments Associated
with Exit of EWC (continued)
---
($ in millions except
where noted) Second Quarter
2019 2018
Total debt
(A) 19,054 17,881
Less securitization debt
(B) 360 483
Total debt, excluding
securitization debt
(C) 18,694 17,398
Net cash flow provided by
operating activities,
rolling 12 months
(D) 2,358 2,884
AFUDC - borrowed funds,
rolling 12 months
(E) (67) (53)
Working capital items in
net cash flow provided by
operating activities
(rolling 12 months):
Receivables 17 (149)
Fuel inventory 24 (1)
Accounts payable (19) 190
Taxes accrued 9 28
Interest accrued 7 3
Other working capital
accounts (81) (48)
Securitization regulatory
charges 121 123
Total
(F) 78 146
FFO, rolling 12 months
(non-GAAP)
(G)=(D+E-F) 2,213 2,685
FFO to debt, excluding
securitization debt (non-
GAAP)
(G/C) 11.8% 15.4%
Estimated return of
unprotected excess ADIT
(rolling 12 months pre-
tax)
(H) 651 76
Severance and retention
payments associated with
exit of EWC (rolling 12
months pre-tax)
(I) 97
FFO to debt, excluding
securitization debt,
return of unprotected
excess ADIT, and
severance and retention
payments associated with
exit of EWC (non-GAAP)
[(G+H+I)/(C)] 15.8% 15.9%
Calculations may differ due to
rounding
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SOURCE Entergy Corporation
