Entergy Reports Second Quarter Earnings
NEW ORLEANS, July 29, 2020 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported second quarter 2020 earnings of $1.79 per share on an as-reported basis and $1.37 per share on an adjusted basis (non-GAAP).
"We delivered another strong quarter and remain on track to achieve our full-year objectives. Sales were better than expected, we're on pace to achieve our cost savings target for the year, and our capital plan is unchanged. With these results, we are affirming our full-year guidance, our longer-term outlooks, and our dividend growth aspirations," said Entergy Chairman and Chief Executive Officer Leo Denault. "The COVID-19 pandemic has placed a burden on our customers, employees, and communities, and we continue to support our stakeholders as we all work to recover from its effects. The foundation of our business remains strong and sustainable. We are committed to our strategic, operational, and financial objectives and our resolve to be the premier utility."
Business highlights included the following:
-- Western Region Phase 2 economic transmission project was completed.
-- The New Orleans Power Station was placed in service.
-- E-LA issued an RFP for up to 300 megawatts of new renewable resources.
-- The MPSC approved E-MS's annual FRP filing.
-- E-LA and E-AR each submitted their annual FRP filings.
-- The PUCT finalized its generation rider rulemaking.
-- In 2019, Entergy provided power to customers at the second-lowest
average price in the U.S., according to an S&P Global Market
Intelligence study.
-- For the fifth consecutive year, Entergy was named to The Civic 50, a
Points of Light initiative honoring the 50 most community-minded
companies in the U.S.
Consolidated Earnings (GAAP and Non-GAAP Measures)
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Second Quarter and Year-to-Date 2020 vs. 2019 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of adjustments)
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Second Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
(After-tax, $ in millions)
As-reported earnings 361 236 124 479 491 (12)
Less adjustments 85 (26) 111 (26) 71 (97)
---
Adjusted earnings (non-GAAP) 276 262 14 506 420 85
Estimated weather in billed sales (4) 12 (16) (54) (12) (42)
(After-tax, per share in $)
As-reported earnings 1.79 1.22 0.57 2.39 2.54 (0.15)
Less adjustments 0.42 (0.13) 0.55 (0.13) 0.36 (0.49)
---
Adjusted earnings (non-GAAP) 1.37 1.35 0.02 2.52 2.18 0.34
Estimated weather in billed sales (0.02) 0.06 (0.08) (0.27) (0.06) (0.21)
Calculations may differ due to
rounding
Consolidated Results
For second quarter 2020, the company reported earnings of $361 million, or $1.79 per share, on an as-reported basis, and earnings of $276 million, or $1.37 per share, on an adjusted basis. This compared to second quarter 2019 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.
Summary discussions by business are below. Additional details, including information on OCF by business, are provided in Appendix A. An analysis of quarterly and year-to-date variances by business is provided in Appendix B.
Business Segment Results
Utility
For second quarter 2020, the Utility business reported earnings attributable to Entergy Corporation of $345 million, or $1.71 per share, on both an as-reported and an adjusted basis. This compared to second quarter 2019 earnings of $331 million, or $1.70 per share, on both an as-reported basis and an adjusted basis. Drivers for the quarter included:
-- regulatory actions at E-AR, E-LA, E-MS, and E-TX; and
-- lower non-nuclear generation expenses, including a delay in planned
outages in 2020 as a result of the COVID-19 pandemic, as well as lower
nuclear generation expenses.
These drivers were partially offset by:
-- lower sales volume, including the effects of weather; and
-- higher depreciation and interest expenses.
On a per share basis, second quarter 2020 results reflected higher common shares outstanding.
Appendix C contains additional details on Utility financial and operating measures.
Parent & Other
For second quarter 2020, Parent & Other reported a loss attributable to Entergy Corporation of $(69 million), or (34) cents per share, on both an as-reported basis and an adjusted basis. This compared to a loss of $(69 million), or (35) cents per share, on both an as-reported and an adjusted basis in second quarter 2019.
On a per share basis, second quarter 2020 results reflected higher common shares outstanding.
Entergy Wholesale Commodities
For second quarter 2020, EWC reported earnings attributable to Entergy Corporation of
$85 million, or 42 cents per share, on an as-reported basis. This compared to a second quarter 2019 loss of $(26 million), or (13) cents per share, on an as-reported basis. Drivers for the quarter included:
-- gains on decommissioning trust funds;
-- lower other O&M expense due to the shutdown of Pilgrim and Indian Point
2, as well as lower severance and retention expense; and
-- lower decommissioning and depreciation expenses.
These drivers were partially offset by lower revenue due to the shutdown of Pilgrim and Indian Point 2.
On a per share basis, second quarter 2020 results reflected higher common shares outstanding.
Appendix D contains additional details on EWC financial and operating measures, including a reconciliation for non-GAAP EWC adjusted EBITDA.
Earnings per Share Guidance
Entergy affirmed its 2020 adjusted EPS guidance range of $5.45 to $5.75. See webcast presentation slides for additional details.
The company has provided 2020 earnings guidance 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 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 the period. 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 $(0.55) in 2020. These estimates are subject to substantial uncertainty due to, among other things, the potential effects of exiting the EWC business.
Earnings Teleconference
A teleconference will be held at 10:00 a.m. Central Time on Wednesday, July 29, 2020, 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 5161259, 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 news 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 5, 2020, by dialing 855-859-2056, conference ID 5161259.
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 8,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy has annual revenues of $11 billion and approximately 13,600 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 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, 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 news 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; net liquidity; net liquidity, including storm escrows; 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; ROIC; and ROE are included on both an adjusted and an as-reported basis. In each case, the metrics defined as "adjusted" (other than EWC's adjusted EBITDA) excludes 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 2020 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; (j) impacts from a terrorist attack, cybersecurity threats, data security breaches, or other attempts to disrupt Entergy's business or operations, and/or other catastrophic events; and (k) the direct and indirect impacts of the COVID-19 pandemic on Entergy and its customers.
Second Quarter 2020 Earnings Release Appendices and Financial Statements
Appendices
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: Other GAAP to Non-GAAP Reconciliations
Financial Statements
Consolidating Balance Sheets
Consolidating Income Statements
Consolidated Cash Flow Statements
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 2020 vs. 2019 (See Appendix A-3 and Appendix A-4 for details on adjustments)
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Second Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
(After-tax, $ in millions)
As-reported earnings (loss)
Utility 345 331 14 665 562 103
Parent & Other (69) (69) (159) (141) (18)
EWC 85 (26) 111 (26) 71 (97)
---
Consolidated 361 236 124 479 491 (12)
Less adjustments
Utility -
Parent & Other -
EWC 85 (26) 111 (26) 71 (97)
---
Consolidated 85 (26) 111 (26) 71 (97)
Adjusted earnings (loss) (non-GAAP)
Utility 345 331 14 665 562 103
Parent & Other (69) (69) (159) (141) (18)
EWC -
Consolidated 276 262 14 506 420 85
Estimated weather in billed sales (4) 12 (16) (54) (12) (42)
Diluted average number of common shares outstanding (in millions) 201 194 201 193
(After-tax, per share in $) (a)
As-reported earnings (loss)
Utility 1.71 1.70 0.01 3.31 2.91 0.40
Parent & Other (0.34) (0.35) 0.01 (0.79) (0.73) (0.06)
EWC 0.42 (0.13) 0.55 (0.13) 0.36 (0.49)
Consolidated 1.79 1.22 0.57 2.39 2.54 (0.15)
Less adjustments
Utility -
Parent & Other -
EWC 0.42 (0.13) 0.55 (0.13) 0.36 (0.49)
---
Consolidated 0.42 (0.13) 0.55 (0.13) 0.36 (0.49)
Adjusted earnings (loss) (non-GAAP)
Utility 1.71 1.70 0.01 3.31 2.91 0.40
Parent & Other (0.34) (0.35) 0.01 (0.79) (0.73) (0.06)
EWC -
Consolidated 1.37 1.35 0.02 2.52 2.18 0.34
Estimated weather in billed sales (0.02) 0.06 (0.08) (0.27) (0.06) (0.21)
Calculations may differ due to
rounding
(a) Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
outstanding for the period.
See Appendix B for detailed earnings variance analysis.
Appendix A-2 provides a comparative summary of OCF, by business.
Appendix A-2: Consolidated Operating Cash Flow
Second Quarter and Year-to-Date 2020 vs. 2019
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($ in millions)
Second Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
Utility 792 699 94 1,395 1,154 241
Parent & Other (64) (45) (19) (144) (123) (22)
EWC 60 (102) 163 198 22 176
---
Consolidated 789 552 237 1,448 1,053 395
Calculations may differ due to
rounding
OCF increased quarter-over-quarter due primarily to higher collections for fuel and purchased power cost recovery and a lower amount of unprotected excess ADIT returned to customers. Lower nuclear refueling outage spending and lower severance and retention payments at EWC also contributed. Lower collections from customers partially offset the increase. Intercompany income tax payments contributed to the line of business variances.
Appendix A-3 and Appendix A-4 list adjustments by business. 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 2020 vs. 2019
---
Second Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
(Pre-tax except for income taxes,
preferred dividend
requirements, and totals; $ in millions)
EWC
Income before income
taxes 110 (35) 144 (31) 128 (160)
Income taxes (24) 9 (34) 6 (57) 63
Preferred dividend
requirements (1) (1) (1) (1)
Total EWC 85 (26) 111 (26) 71 (97)
Total adjustments 85 (26) 111 (26) 71 (97)
(After-tax, per share in $) (b)
EWC
Total EWC 0.42 (0.13) 0.55 (0.13) 0.36 (0.49)
Total adjustments 0.42 (0.13) 0.55 (0.13) 0.36 (0.49)
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 2020 vs. 2019
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(Pre-tax except for income taxes, preferred dividend requirements, and totals; $ in millions)
Second Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
EWC
Operating revenues 200 290 (90) 532 723 (191)
Fuel and fuel-related expenses (17) (26) 9 (37) (51) 14
Purchased power (10) (15) 5 (21) (31) 10
Nuclear refueling outage expense (12) (12) (24) (24)
Other O&M (140) (188) 47 (271) (376) 105
Asset write-off and impairments (7) (16) 10 (12) (90) 79
Decommissioning expense (51) (64) 13 (102) (128) 26
Taxes other than income taxes (14) (20) 6 (34) (33) (1)
Depreciation/amortization exp. (25) (38) 13 (60) (76) 16
Other income (deductions)-other 194 64 130 10 232 (222)
Interest exp. and other charges (7) (9) 2 (12) (18) 6
Income taxes (24) 9 (34) 6 (57) 63
Preferred dividend requirements (1) (1) (1) (1)
---
Total EWC 85 (26) 111 (26) 71 (97)
Total adjustments 85 (26) 111 (26) 71 (97)
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 2020 versus 2019 as-reported and adjusted earnings variance analysis for Utility, Parent & Other, and EWC.
Appendix B-1: As-Reported and Adjusted Earnings Variance Analysis (c), (d)
Second Quarter 2020 vs. 2019
(After-tax, per share in $)
Utility Parent & Other
EWC Consolidated
As-Reported
Adjusted
As-Reported
Adjusted
As-
As-
Adjusted
Reported
Reported
2019 earnings 1.70 1.70 (0.35) (0.35) (0.13) 1.22 1.35
Operating revenue less: 0.14 0.14 (e) (0.31) (f) (0.17) 0.14
Fuel, fuel-related expenses and
gas purchased for resale,
Purchased power, and
Regulatory charges (credits)
Nuclear refueling outage expense 0.02 0.02 0.02 0.02
Other O&M 0.23 0.23 (g) (0.01) (0.01) 0.19 (h) 0.41 0.22
Asset write-offs and impairments - 0.04 0.04
Decommissioning expense (0.01) (0.01) 0.05 (i) 0.04 (0.01)
Taxes other than income taxes (0.01) (0.01) 0.02 0.01 (0.01)
Depreciation/amortization exp. (0.20) (0.20) (j) 0.05 (k) (0.15) (0.20)
Other income (deductions)-other (0.02) (0.02) 0.03 0.03 0.53 (l) 0.54 0.01
Interest exp. and other charges (0.08) (0.08) (m) (0.01) (0.01) 0.01 (0.08) (0.09)
Income taxes-other - (0.01) (0.01) (0.02) (0.03) (0.01)
Preferred dividend requirements -
Share effect (0.06) (0.06) (n) 0.01 0.01 (0.01) (0.06) (0.05)
2020 earnings 1.71 1.71 (0.34) (0.34) 0.42 1.79 1.37
Appendix B-2: As-Reported and Adjusted Earnings Variance Analysis (c), (d)
Year-to-date 2020 vs. 2019
(After-tax, per share in $)
Utility Parent & Other
EWC Consolidated
As-Reported
Adjusted
As-Reported
Adjusted
As-
As-
Adjusted
Reported
Reported
2019 earnings 2.91 2.91 (0.73) (0.73) 0.36 2.54 2.18
Operating revenue less: 0.41 0.41 (e) (0.68) (f) (0.27) 0.41
Fuel, fuel-related expenses and
gas purchased for resale,
Purchased power, and
Regulatory charges (credits)
Nuclear refueling outage expense 0.02 0.02 0.02 0.02
Other O&M 0.31 0.31 (g) 0.43 (h) 0.74 0.31
Asset write-offs and impairments - 0.32 (o) 0.32
Decommissioning expense (0.03) (0.03) 0.11 (i) 0.08 (0.03)
Taxes other than income taxes (0.02) (0.02) (0.01) (0.03) (0.02)
Depreciation/amortization exp. (0.38) (0.38) (j) 0.06 (k) (0.32) (0.38)
Other income (deductions)-other (0.04) (0.04) 0.03 0.03 (0.91) (l) (0.92) (0.01)
Interest exp. and other charges (0.13) (0.13) (m) 0.03 (0.10) (0.13)
Income taxes-other 0.39 0.39 (p) (0.12) (0.12) (q) 0.15 (r) 0.42 0.27
Preferred dividend requirements -
Share effect (0.13) (0.13) (n) 0.03 0.03 0.01 (0.09) (0.10)
2020 earnings 3.31 3.31 (0.79) (0.79) (0.13) 2.39 2.52
Calculations may differ due to rounding
(c) Utility operating revenue /regulatory
charges and Utility income taxes-other
exclude $15 million in second quarter
2020 and $61 million in second quarter
2019 for the return of unprotected excess
ADIT to customers (net effect is neutral
to earnings). On a year-to-date basis,
Utility operating revenue /regulatory
charges and Utility income taxes-other
exclude $45 million in 2020 and $122
million in 2019 (net effect is neutral to
earnings).
(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 E-AR's FRP; E-LA's FRP, including
recovery of the J. Wayne Leonard Power
Station and the Lake Charles Power
Station; E-MS's FRP; E-MS's vegetation
rider; recovery of E-MS's Choctaw County
Generating Station; and E-TX's TCRF.
Partially offsetting was volume/weather
and E-NO's rate case. The year-to date
variance also reflected a first quarter
2019 regulatory reserve at E-AR and a
regulatory liability for tax sharing with
E-LA customers (this partially offsets
the Hurricane Isaac Act 55 income tax
item discussed in footnote p).
(f) The second quarter and year-to-date
earnings decreases were due largely to
lower revenues from the shutdown of
Pilgrim (May 2019) and Indian Point 2
(April 2020). The year-to-date variance
also reflected lower capacity and energy
prices, partially offset by higher energy
volume at Indian Point 3.
(g) The second quarter and year-to-date
earnings increases from lower Utility
other O&M were due largely to lower non-
nuclear generation expenses due to the
timing and scope of outages including a
delay in planned outages in 2020 as a
result of the COVID-19 pandemic, lower
nuclear generation expenses, and lower
spending on initiatives to explore new
customer products. The year-to-date
variance also reflected higher nuclear
insurance refunds, partially offset by
higher pension and benefits expenses and
higher E-MS storm damage provisions
(offset in operating revenue).
(h) The second quarter and year-to-date
earnings increases from lower EWC other
O&M were due largely to the shutdown of
Pilgrim in May 2019 and Indian Point 2 in
April 2020, as well as a decrease in
severance and retention expense.
(i) The second quarter and year-to-date
earnings increases from lower EWC
decommissioning expense were due to the
sale of Pilgrim in 2019.
(j) The second quarter and year-to-date
earnings decreases from higher Utility
depreciation expense were due primarily
to higher plant in service, including the
J. Wayne Leonard Power Station, the Lake
Charles Power Station, and the Choctaw
County Generating Station, as well as
higher depreciation rates at E-MS.
(k) The second quarter and year-to-date
earnings increases from lower EWC
depreciation expense were due primarily
to the shutdown of Pilgrim in May 2019
and Indian Point 2 in April 2020.
(l) The second quarter earnings increase from
higher EWC other income
(deductions)-other was due largely to
higher gains on decommissioning trust
fund investments in 2020 as compared to
2019. The year-to-date earnings
decrease was due largely to performance
of nuclear decommissioning trust fund
investments in 2020 as compared to 2019.
(m) The second quarter and year-to-date
earnings decreases from higher Utility
interest expense were due primarily to
higher debt balances at E-LA and E-TX.
The year-to-date variance also
reflected higher debt balances at E-AR.
(n) The earnings per share impacts from share
effect were due to settlement of the
equity forward (8.4 million shares
settled in May 2019).
(o) The year-to-date earnings increase from
lower EWC asset write-offs and
impairments was due primarily to higher
impairment charges in first quarter 2019,
largely refueling outage costs at Indian
Point. This was partially offset by a
gain on the sale of a switchyard at
Pilgrim in second quarter 2019.
(p) The year-to-date earnings increase from
Utility effective income tax rate
reflected two first quarter 2020 items. A
$55 million tax benefit was recorded as a
result of an IRS settlement related to
Act 55 financing of Hurricane Isaac costs
(partly offset by customer sharing,
recorded as a regulatory charge discussed
in footnote e). In addition, an annual
tax deduction related to stock-based
compensation resulted in an income tax
benefit of $22 million, $20 million
greater than first quarter 2019.
(q) The year-to-date earnings decrease from
Parent & Other effective income tax rate
was due to an increase in income tax
expense of $23 million as a result of the
IRS settlement related to the Hurricane
Isaac Act 55 financing (discussed in
footnote p).
(r) The year-to-date earnings increase from
EWC effective income tax rate is
primarily due to a first quarter 2019
accrual of $29 million of tax expense,
which resulted from the sale of Vermont
Yankee in January 2019.
Utility as-reported operating revenue less fuel,
fuel-related expenses and gas purchased for resale;
purchased power; and regulatory charges (credits)
variance analysis
2020 vs. 2019 ($ EPS)
---
2Q
YTD
---
Volume/weather (0.21) (0.24)
Retail electric
price 0.36 0.70
Reg. provision
for E-AR FRP - 0.05
Reg. liability
for tax sharing - (0.10)
Other (0.01) -
Total 0.14 0.41
---
C: Utility Financial and Operating Measures
Appendix C-1 and Appendix C-2 provide comparative summaries of Utility operating and financial measures.
Appendix C-1: Utility Operating and Financial Measures
Second Quarter and Year-to-Date 2020 vs. 2019
---
Second Quarter
Year-to-Date
---
2020 2019 % Weather Adjusted (s) 2020 2019
% % % Weather Adjusted (s)
Change Change
---
GWh billed
Residential 7,759 7,652 1.4 5.1 15,885 16,123 (1.5) 3.1
Commercial 6,070 6,841 (11.3) (10.8) 12,315 13,264 (7.2) (6.8)
Governmental 570 626 (8.9) (9.5) 1,165 1,227 (5.1) (5.6)
Industrial 11,847 11,965 (1.0) (1.0) 23,662 23,648 0.1 0.1
---
Total retail sales 26,246 27,084 (3.1) (2.0) 53,027 54,262 (2.3) (0.8)
Wholesale 3,111 3,170 (1.9) 6,228 6,984 (10.8)
Total sales 29,357 30,254 (3.0) 59,255 61,246 (3.3)
Number of electric retail customers
Residential 2,517,718 2,489,842 1.1
Commercial 362,812 358,545 1.2
Governmental 17,940 17,906 0.2
Industrial 42,033 41,416 1.5
Total retail customers 2,940,503 2,907,709 1.1
Other O&M and refueling outage expense per
MWh $21.19 $22.79 (7.0) $20.69 $21.44 (3.5)
---
Appendix C-2: Utility Operating Measures
Twelve Months Ended June 30, 2020 vs. 2019
---
Twelve Months Ended June 30
2020 2019
%
% Weather
Change Adjusted (s)
---
GWh billed
Residential 35,856 36,194 (0.9) 0.2
Commercial 27,806 29,015 (4.2) (4.7)
Governmental 2,517 2,588 (2.7) (3.2)
Industrial 48,497 48,408 0.2 0.2
Total retail sales 114,676 116,205 (1.3) (1.1)
Calculations may differ due to rounding
(s) The effects of weather were
estimated using heating
degree days and cooling
degree days for the billing
cycles from certain
locations within each
jurisdiction and comparing
to "normal" weather based on
20-year historical data. The
models used to estimate
weather are updated
periodically and are subject
to change.
On a weather-adjusted basis for second quarter 2020, billed retail sales decreased (2.0) percent. Residential billed sales increased 5.1 percent and commercial billed sales decreased (10.8) percent driven by impacts from the COVID-19 pandemic. Industrial billed sales volume decreased (1.0) percent primarily driven by lower sales to existing large and small customers, partially offset by continued growth from new/expansion customers.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Second Quarter and Year-to-Date 2020 vs. 2019
---
($ in millions) Second Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
Net income (loss) 85 (25) 110 (25) 72 (97)
Add back: interest expense 7 9 (2) 12 18 (6)
Add back: income taxes 24 (9) 34 (6) 57 (63)
Add back: depreciation and
amortization 25 38 (13) 60 76 (16)
Subtract: interest and
investment income 207 75 132 35 257 (222)
Add back: decommissioning
expense 51 64 (13) 102 128 (26)
---
Adjusted EBITDA (non-GAAP) (15) 2 (17) 108 94 14
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 2020 vs. 2019
---
Second Quarter Year-to-Date
---
2020 2019
% Change 2020 2019
% Change
---
Owned capacity (MW) (t) 2,246 3,274 (31.4) 2,246 3,274 (31.4)
GWh billed 4,958 7,258 (31.7) 11,714 14,461 (19.0)
EWC Nuclear Fleet
---
Capacity factor 96% 92% 4.3 98% 89% 10.1
GWh billed 4,580 6,703 (31.7) 10,839 13,392 (19.1)
Production cost per MWh $19.45 $19.93 (2.4) $17.13 $19.49 (12.1)
Average energy/
capacity revenue per
MWh $37.55 $37.85 (0.8) $43.84 $48.55 (9.7)
Refueling outage days
Indian Point 3 8 29
Calculations may differ due to rounding
(t) 2020 excludes IP2 (1,028MW)
that was shut down April 30,
2020.
See the appendix in the webcast slide presentation for EWC hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
Appendix E: GAAP and Non-GAAP Financial Measures
Second Quarter 2020 vs. 2019 (See Appendix G for reconciliation of GAAP to non-GAAP financial measures)
---
For 12 months ending June 30 2020 2019
Change
---
GAAP Measures
As-reported ROIC 5.9% 5.5% 0.4%
As-reported ROE 12.2% 10.8% 1.4%
Non-GAAP Financial Measures
Adjusted ROIC 5.6% 5.5% 0.2%
Adjusted ROE 11.4% 11.0% 0.4%
As of June 30 ($ in millions, except where noted) 2020 2019
Change
---
GAAP Measures
Cash and cash equivalents 935 636 300
Available revolver capacity 4,110 4,120 (10)
Commercial paper 1,946 1,635 311
Total debt 21,493 19,054 2439
Securitization debt 232 360 (128)
Debt to capital 66.8% 65.5% 1.3%
Off-balance sheet liabilities:
Debt of joint ventures - Entergy's share 51 58 (7)
---
Total off-balance sheet liabilities 51 58 (7)
Storm escrow balances 373 407 (34)
Non-GAAP Financial Measures ($ in millions, except where noted)
Debt to capital, excluding securitization debt 66.6% 65.1% 1.5%
Net debt to net capital, excluding securitization debt 65.6% 64.3% 1.2%
Gross liquidity 5,045 4,756 289
Net liquidity 3,099 3,121 (22)
Net liquidity, including storm escrows 3,472 3,528 (56)
Parent debt to total debt, excluding securitization debt 22.0% 19.4% 2.6%
FFO to debt, excluding securitization debt 14.6% 11.8% 2.8%
FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated
with exit of EWC 16.0% 15.8% 0.2%
Calculations may differ due to
rounding
G: Other 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 news 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
2020 2019
As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months
(A) 1,230 961
Preferred dividends 18 15
Tax-effected interest expense 574 543
As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months adjusted for preferred dividends and tax-effected interest
expense
(B) 1,822 1,519
Adjustments in prior three quarters (5) 8
Adjustments in current quarter 85 (26)
Total adjustments, last 12 months
(C) 80 (18)
EWC preferred dividends and tax-effected interest expense, rolling 12 months 21 30
Total adjustments, adding back EWC preferred dividends and tax-effected interest expense (non-GAAP)
(D) 101 12
Adjusted earnings, rolling 12 months (non-GAAP)
(A-C) 1,150 979
Adjusted earnings, rolling 12 months including preferred dividends and tax- effected interest expense (non-GAAP)
(B-D) 1,720 1,507
Average invested capital
(E) 30,622 27,586
Average common equity
(F) 10,112 8,910
As-reported ROIC
(B/E) 5.9% 5.5%
Adjusted ROIC (non-GAAP)
[(B-D)/E] 5.6% 5.5%
As-reported ROE
(A/F) 12.2% 10.8%
Adjusted ROE (non-GAAP)
[(A-C)/F] 11.4% 11.0%
Calculations may differ due to
rounding
Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - Debt ratios excluding securitization debt; gross liquidity; net liquidity; net liquidity, including storm escrow balances
---
($ in millions except where noted) Second Quarter
2020 2019
Total debt
(A) 21,493 19,054
Less securitization debt
(B) 232 360
Total debt, excluding securitization debt
(C) 21,261 18,694
Less cash and cash equivalents
(D) 935 636
Net debt, excluding securitization debt
(E) 20,326 18,058
Commercial paper
(F) 1,946 1,635
Total capitalization
(G) 32,173 29,071
Less securitization debt
(B) 232 360
Total capitalization, excluding securitization debt
(H) 31,941 28,711
Less cash and cash equivalents
(D) 935 636
Net capital, excluding securitization debt
(I) 31,006 28,075
Debt to capital
(A/G) 66.8% 65.5%
Debt to capital, excluding securitization debt (non-GAAP)
(C/H) 66.6% 65.1%
Net debt to net capital, excluding securitization debt (non-GAAP)
(E/I) 65.6% 64.3%
Available revolver capacity
(J) 4,110 4,120
Storm escrows
(K) 373 407
Gross liquidity (non-GAAP)
(D+J) 5,045 4,756
Net liquidity (non-GAAP)
(D+J-F) 3,099 3,121
Net liquidity, including storm escrows (non-GAAP)
(D+J-F+K) 3,472 3,528
Entergy Corporation notes:
Due September 2020 450
Due July 2022 650 650
Due September 2026 750 750
Due June 2030 600
Due June 2050 600
Total parent long-term debt
(L) 2,600 1,850
Revolver draw
(M) 160 150
Unamortized debt issuance costs and discounts
(N) (32) (9)
Total parent debt
(F+L+M+N) 4,675 3,626
Parent debt to total debt, excluding securitization debt (non-GAAP)
[(F+L+M+N)/C] 22.0% 19.4%
Calculations may differ due to
rounding
Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures - 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
2020 2019
Total debt
(A) 21,493 19,054
Less securitization debt
(B) 232 360
Total debt, excluding securitization debt
(C) 21,261 18,694
Net cash flow provided by operating activities, rolling 12 months
(D) 3,212 2,358
AFUDC - borrowed funds, rolling 12 months
(E) (58) (67)
Working capital items in net cash flow provided by operating activities (rolling 12 months):
Receivables (5) 17
Fuel inventory (35) 24
Accounts payable (92) (19)
Taxes accrued 62 9
Interest accrued 5 7
Other working capital accounts (15) (81)
Securitization regulatory charges 123 121
Total
(F) 43 78
FFO, rolling 12 months (non-GAAP)
(G)=(D+E-F) 3,110 2,213
FFO to debt, excluding securitization debt (non-GAAP)
(G/C) 14.6% 11.8%
Estimated return of unprotected excess ADIT (rolling 12 months pre-tax)
(H) 189 651
Severance and retention payments associated with exit of EWC (rolling 12 months pre-tax)
(I) 102 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)] 16.0% 15.8%
Calculations may differ due to
rounding
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SOURCE Entergy Corporation
