Entergy Reports Third Quarter Earnings
NEW ORLEANS, Oct. 28, 2020 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported third quarter 2020 earnings of $2.59 per share on an as-reported basis and $2.44 per share on an adjusted basis (non-GAAP).
"We delivered another strong quarter. With the confidence and clarity we have for the remainder of the year, we are narrowing our 2020 adjusted earnings per share guidance range, and we are affirming our longer-term outlooks," said Entergy Chairman and Chief Executive Officer Leo Denault. "This year has presented challenges for all of us and, at Entergy, we were well prepared. For the past several years, we've been building the culture, processes, and resources to successfully deliver on our commitments, even in the face of extraordinary times. It's what our stakeholders expect of us. Our strong results demonstrate the progress we've made."
Business highlights included the following:
-- E-LA customers began to receive power from Capital Region Solar, the
largest solar facility in Louisiana.
-- E-AR selected Walnut Bend Solar from its renewable RFP, and E-TX
selected Liberty County Solar and Umbriel Solar from its renewable RFP.
-- The PUCT approved E-TX's DCRF filing.
-- The CCNO approved a settlement agreement, resolving E-NO's rate case
appeal and FRP delay.
-- Palisades completed its final refueling outage.
-- Entergy was named as one of the nation's top utilities in economic
development by Site Selection magazine for the 13(th) consecutive year.
Consolidated Earnings (GAAP and Non-GAAP Measures)
Third Quarter and Year-to-Date 2020 vs. 2019 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of
adjustments)
---
Third Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
(After-tax, $ in millions)
As-reported
earnings 521 365 156 1,000 856 144
Less adjustments 30 (141) 171 4 (70) 74
---
Adjusted
earnings (non-
GAAP) 491 506 (15) 996 927 70
Estimated
weather in
billed sales 1 13 (12) (53) 1 (54)
(After-tax, per share in $)
As-reported
earnings 2.59 1.82 0.77 4.98 4.38 0.60
Less adjustments 0.15 (0.70) 0.85 0.02 (0.36) 0.38
---
Adjusted
earnings (non-
GAAP) 2.44 2.52 (0.08) 4.96 4.74 0.22
Estimated
weather in
billed sales 0.01 0.06 (0.05) (0.26) 0.01 (0.27)
Calculations may differ due to
rounding
Consolidated Results
For third quarter 2020, the company reported earnings of $521 million, or $2.59 per share, on an as-reported basis, and earnings of $491 million, or $2.44 per share, on an adjusted basis. This compared to third quarter 2019 earnings of $365 million, or $1.82 per share, on an as-reported basis, and earnings of $506 million, or $2.52 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 third quarter 2020, the Utility business reported earnings attributable to Entergy Corporation of $552 million, or $2.74 per share, on both an as-reported and an adjusted basis. This compared to third quarter 2019 earnings of $578 million, or $2.88 per share, on both an
as-reported basis and an adjusted basis. Drivers for the quarter included:
-- lower sales volume, including the effects of COVID-19, Hurricane Laura,
and weather; and
-- higher depreciation and interest expenses.
These drivers were partially offset by:
-- regulatory actions at E-AR, E-LA, E-MS, and E-TX; and
-- lower other O&M.
Appendix C contains additional details on Utility financial and operating measures.
Parent & Other
For third quarter 2020, Parent & Other reported a loss attributable to Entergy Corporation of $(61 million), or (30) cents per share, on both an as-reported basis and an adjusted basis. This compared to a loss of $(72 million), or (36) cents per share, on both an as-reported and an adjusted basis in third quarter 2019.
Entergy Wholesale Commodities
For third quarter 2020, EWC reported earnings attributable to Entergy Corporation of
$30 million, or 15 cents per share, on an as-reported basis. This compared to a third quarter 2019 loss of $(141 million), or (70) cents per share, on an as-reported basis. Drivers for the quarter included:
-- lower asset write-offs and impairments;
-- higher gains on decommissioning trust funds;
-- lower other O&M expense due to the shutdown of Indian Point 2; and
-- lower depreciation expenses.
These drivers were partially offset by lower revenue due to the shutdown of Indian Point 2.
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 narrowed its 2020 adjusted EPS guidance to a range of $5.60 to $5.70 from $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 (30) cents 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, October 28, 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 7684714, 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 November 4, 2020, by dialing 855-859-2056, conference ID 7684714.
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, statements regarding 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 executing on business strategies, including strategic transactions that Entergy or its subsidiaries may undertake and 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 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; (k) the direct and indirect impacts of the COVID-19 pandemic on Entergy and its customers; and (l) the effects of technological change, including the costs, pace of development and commercialization of new and emerging technologies.
Third 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
Third Quarter and Year-to-Date 2020 vs. 2019 (See Appendix A-3 and Appendix A-4 for details on adjustments)
---
Third Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
(After-tax, $ in millions)
As-reported earnings (loss)
Utility 552 578 (27) 1,216 1,140 76
Parent & Other (61) (72) 11 (220) (213) (6)
EWC 30 (141) 171 4 (70) 74
---
Consolidated 521 365 156 1,000 856 144
Less adjustments
Utility -
Parent & Other -
EWC 30 (141) 171 4 (70) 74
---
Consolidated 30 (141) 171 4 (70) 74
Adjusted earnings (loss) (non-GAAP)
Utility 552 578 (27) 1,216 1,140 76
Parent & Other (61) (72) 11 (220) (213) (6)
EWC -
Consolidated 491 506 (15) 996 927 70
Estimated weather in
billed sales 1 13 (12) (53) 1 (54)
Diluted average
number of common
shares outstanding
(in millions) 201 200 201 196
(After-tax, per share in $) (a)
As-reported earnings (loss)
Utility 2.74 2.88 (0.14) 6.05 5.83 0.22
Parent & Other (0.30) (0.36) 0.06 (1.09) (1.09) (0.00)
EWC 0.15 (0.70) 0.85 0.02 (0.36) 0.38
Consolidated 2.59 1.82 0.77 4.98 4.38 0.60
Less adjustments
Utility -
Parent & Other -
EWC 0.15 (0.70) 0.85 0.02 (0.36) 0.38
---
Consolidated 0.15 (0.70) 0.85 0.02 (0.36) 0.38
Adjusted earnings (loss) (non-GAAP)
Utility 2.74 2.88 (0.14) 6.05 5.83 0.22
Parent & Other (0.30) (0.36) 0.06 (1.09) (1.09) (0.00)
EWC -
Consolidated 2.44 2.52 (0.08) 4.96 4.74 0.22
Estimated weather in
billed sales 0.01 0.06 (0.05) (0.26) 0.01 (0.27)
Calculations may differ due to rounding
Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
(a) outstanding for the period.
See Appendix B for detailed earnings variance analysis.
Appendix A-2 provides a comparative summary of OCF, by business.
Appendix A-2: Consolidated Operating Cash Flow
Third Quarter and Year-to-Date 2020 vs. 2019
---
($ in millions)
Third Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
Utility 976 1,143 (168) 2,371 2,297 73
Parent & Other (67) (93) 26 (211) (216) 5
EWC 13 15 (3) 211 37 174
---
Consolidated 922 1,065 (143) 2,370 2,118 252
Calculations may differ due to
rounding
OCF decreased quarter-over-quarter due primarily to lower collections from Utility customers, due in part to COVID-19, and higher pension funding, partially offset by a lower amount of unprotected excess ADIT returned to customers. 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)
Third Quarter and Year-to-Date 2020 vs. 2019
---
Third 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 43 (171) 214 12 (43) 55
Income taxes (12) 31 (43) (6) (26) 20
Preferred dividend
requirements (1) (1) (2) (2)
Total EWC 30 (141) 171 4 (70) 74
Total adjustments 30 (141) 171 4 (70) 74
(After-tax, per share in $) (b)
EWC
Total EWC 0.15 (0.70) 0.85 0.02 (0.36) 0.38
Total adjustments 0.15 (0.70) 0.85 0.02 (0.36) 0.38
Calculations may differ due to rounding
Per share amounts are calculated by
dividing the corresponding
earnings (loss) by the diluted
average number of common shares
(b) outstanding for the period.
Appendix A-4: Adjustments by Income Statement Line Item (shown as positive/(negative) impact on earnings)
Third Quarter and Year-to-Date 2020 vs. 2019
---
(Pre-tax except for income taxes, preferred dividend requirements, and totals; $ in millions)
Third Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
EWC
Operating revenues 214 300 (86) 747 1,024 (277)
Fuel and fuel-related expenses (14) (26) 11 (51) (76) 25
Purchased power (29) (18) (11) (49) (49) (1)
Nuclear refueling outage expense (11) (12) 2 (35) (36) 2
Other O&M (114) (136) 23 (385) (513) 128
Asset write-off and impairments (4) (198) 194 (16) (289) 272
Decommissioning expense (51) (60) 9 (152) (187) 35
Taxes other than income taxes (10) (13) 3 (44) (46) 1
Depreciation/amortization exp. (21) (38) 17 (81) (114) 33
Other income (deductions)-other 87 34 53 97 266 (170)
Interest exp. and other charges (5) (6) 1 (17) (24) 7
Income taxes (12) 31 (43) (6) (26) 20
Preferred dividend requirements (1) (1) (2) (2)
---
Total EWC 30 (141) 171 4 (70) 74
Total adjustments 30 (141) 171 4 (70) 74
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)
Third 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 (loss) 2.88 2.88 (0.36) (0.36) (0.70) 1.82 2.52
Operating revenue less: 0.12 0.12 (e) (0.34) (f) (0.22) 0.12
Fuel, fuel-related expenses and
gas purchased for resale,
Purchased power, and
Regulatory charges (credits)
Nuclear refueling outage expense 0.02 0.02 0.01 0.03 0.02
Other O&M 0.09 0.09 (g) 0.02 0.02 0.09 (h) 0.20 0.11
Asset write-offs and impairments - 0.76 (i) 0.76
Decommissioning expense (0.01) (0.01) 0.04 0.03 (0.01)
Taxes other than income taxes (0.03) (0.03) 0.01 (0.02) (0.03)
Depreciation/amortization exp. (0.15) (0.15) (j) 0.07 (k) (0.08) (0.15)
Other income (deductions)-other (0.12) (0.12) (l) 0.03 0.03 0.20 (m) 0.11 (0.09)
Interest exp. and other charges (0.05) (0.05) (n) 0.02 0.02 (0.03) (0.03)
Income taxes-other - (0.01) (0.01) 0.01 (0.01)
Preferred dividend requirements -
Share effect (0.01) (0.01) (0.01) (0.01)
2020 earnings (loss) 2.74 2.74 (0.30) (0.30) 0.15 2.59 2.44
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 (loss) 5.83 5.83 (1.09) (1.09) (0.36) 4.38 4.74
Operating revenue less: 0.53 0.53 (e) (1.02) (f) (0.49) 0.53
Fuel, fuel-related expenses and
gas purchased for resale,
Purchased power, and
Regulatory charges (credits)
Nuclear refueling outage expense 0.04 0.04 0.01 0.05 0.04
Other O&M 0.40 0.40 (g) 0.02 0.02 0.52 (h) 0.94 0.42
Asset write-offs and impairments - 1.10 (i) 1.10
Decommissioning expense (0.04) (0.04) 0.14 (o) 0.10 (0.04)
Taxes other than income taxes (0.06) (0.06) (p) (0.06) (0.06)
Depreciation/amortization exp. (0.52) (0.52) (j) 0.13 (k) (0.39) (0.52)
Other income (deductions)-other (0.16) (0.16) (l) 0.06 0.06 (q) (0.69) (m) (0.79) (0.10)
Interest exp. and other charges (0.18) (0.18) (n) 0.02 0.02 0.03 (0.13) (0.16)
Income taxes-other 0.38 0.38 (r) (0.13) (0.13) (s) 0.16 (t) 0.41 0.25
Preferred dividend requirements (0.01) (0.01) (0.01) (0.01)
Share effect (0.16) (0.16) (u) 0.03 0.03 (0.13) (0.13)
2020 earnings (loss) 6.05 6.05 (1.09) (1.09) 0.02 4.98 4.96
Calculations may differ due to
rounding
(c) Utility operating revenue /regulatory
charges, Utility other O&M, and Utility
income taxes-other exclude $16 million,
$- million, and $16 million respectively
in third quarter 2020 and $93 million, $3
million, and $96 million respectively in
third 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, Utility other O&M,
and Utility income taxes-other exclude
$61 million, $- million, and $61 million
respectively in 2020 and $216 million, $3
million, and $219 million respectively 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 third quarter and year-to-date
earnings increases were primarily driven
by E-AR's FRP; E-LA's FRP, including
recovery of the LCPS; E-MS's FRP,
vegetation rider, and recovery of Choctaw;
and E-TX's TCRF. Partially offsetting was
volume/weather, including the effects of
COVID-19 and Hurricane Laura as well as
E-NO's rate case. The year-to date
variance also reflected recovery of the J.
Wayne Leonard Power Station, 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 r).
(f) The third quarter and year-to-date
earnings decreases were due largely to
lower revenues from the shutdown of Indian
Point 2 in April 2020. The year-to-date
variance also reflected lower revenues
from the shutdown of Pilgrim in May 2019
and lower capacity and energy prices,
partially offset by higher energy volume
in the remaining EWC nuclear fleet.
(g) The third quarter and year-to-date
earnings increases from lower Utility
other O&M were due primarily to a decrease
in loss provisions, lower contract costs
related to new customer initiatives, and
lower non-nuclear generation expenses
related to long-term service agreements
and the timing and scope of outages,
including a delay in planned outages as a
result of COVID-19. These were partially
offset by higher compensation and benefits
costs, primarily pension. The year-to-
date variance also reflected lower nuclear
generation expenses, higher nuclear
insurance refunds, and higher E-MS storm
damage provisions (offset in operating
revenue).
(h) The third quarter and year-to-date
earnings increases from lower EWC other
O&M were due largely to the shutdown of
Indian Point 2 in April 2020. The year-
to-date variance also reflected the
shutdown of Pilgrim in May 2019, as well
as a decrease in severance and retention
expense.
(i) The third quarter and year-to-date
earnings increases from lower EWC asset
write-offs and impairments were due
primarily to a $191 million loss (pre-
tax) on the sale of Pilgrim in third
quarter 2019. The year-to-date variance
also reflected higher impairment charges
in first quarter 2019, largely refueling
outage costs at Indian Point.
(j) The third quarter and year-to-date
earnings decreases from higher Utility
depreciation expense were due primarily to
higher plant in service, including the
LCPS and Choctaw. The year-to-date
variance also reflected the J. Wayne
Leonard Power Station being placed in
service in second quarter 2019, as well as
higher depreciation rates at E-MS.
(k) The third quarter and year-to-date
earnings increases from lower EWC
depreciation expense were due primarily to
the shutdown of Indian Point 2 in April
2020. The year-to-date variance also
reflected the shutdown of Pilgrim in May
2019.
(l) The third quarter and year-to-date
earnings decreases from lower Utility
other income (deductions)-other were due
largely to changes in decommissioning
trust fund activity (based on regulatory
treatment, decommissioning-related
variances are largely earnings neutral).
Lower AFUDC as a result of higher
construction work in progress in 2019 also
contributed.
(m) The third 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, as well as a $16
million pension settlement charge in third
quarter 2019 related to the exit of the
EWC business. The year-to-date earnings
decrease was due largely to performance of
nuclear decommissioning trust fund
investments in 2020 as compared to 2019.
(n) The third quarter and year-to-date
earnings decreases from higher Utility
interest expense were due primarily to
higher debt balances at E-LA, E-TX, and
E-MS. The year-to-date variance also
reflected a higher debt balance at E-AR.
(o) The year-to-date earnings increase from
lower EWC decommissioning expense was due
to the sale of Pilgrim in 2019.
(p) The year-to-date earnings decrease from
higher Utility taxes other than income
taxes was due primarily to an increase in
ad valorem taxes at E-LA.
(q) The year-to-date earnings increase from
Parent & Other other income
(deductions)-other was due primarily to
intercompany interest.
(r) 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.
(s) 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 r).
(t) The year-to-date earnings increase from
EWC effective income tax rate is primarily
due to a first quarter 2019 accrual of $29
million of tax expense, which resulted
from the sale of Vermont Yankee in January
2019.
(u) The earnings per share impacts from share
effect were due to settlement of the
equity forward (8.4 million shares settled
in May 2019).
Utility as-reported operating revenue less fuel, fuel-related
expenses and gas purchased for resale; purchased power;
and regulatory charges (credits) variance analysis
2020 vs. 2019 ($ EPS)
---
3Q
YTD
---
Volume/weather (0.30) (0.55)
Retail electric price 0.42 1.12
Reg. provision for E-AR FRP - 0.05
Reg. liability for tax sharing - (0.10)
Other - 0.01
---
Total 0.12 0.53
---
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
Third Quarter and Year-to-Date 2020 vs. 2019
Third Quarter
Year-to-Date
2020 2019 % Weather Adjusted (v) 2020 2019
% % % Weather Adjusted (v)
Change Change
GWh billed
Residential 11,634 11,627 0.1 1.6 27,519 27,749 (0.8) 2.5
Commercial 7,791 8,499 (8.3) (7.5) 20,106 21,764 (7.6) (7.1)
Governmental 660 705 (6.4) (6.2) 1,826 1,932 (5.5) (5.8)
Industrial 11,994 12,861 (6.7) (6.7) 35,655 36,509 (2.3) (2.3)
Total retail sales 32,079 33,692 (4.8) (4.1) 85,106 87,954 (3.2) (2.1)
Wholesale 4,881 3,025 61.4 11,109 10,009 11.0
Total sales 36,960 36,717 0.7 96,215 97,963 (1.8)
Number of electric retail customers
Residential 2,530,150 2,500,653 1.2
Commercial 361,401 359,591 0.5
Governmental 17,653 17,860 (1.2)
Industrial 48,651 49,051 (0.8)
Total retail customers 2,957,855 2,927,155 1.0
Other O&M and refueling outage expense
per MWh $18.02 $19.02 (5.3) $19.66 $20.53 (4.2)
Appendix C-2: Utility Operating Measures
Twelve Months Ended September 30, 2020 vs. 2019
---
Twelve Months Ended September 30
2020 2019
% % Weather Adjusted (v)
Change
---
GWh billed
Residential 35,863 35,999 (0.4) 1.7
Commercial 27,098 28,789 (5.9) (5.9)
Governmental 2,472 2,579 (4.1) (4.4)
Industrial 47,629 48,390 (1.6) (1.6)
Total retail sales 113,062 115,757 (2.3) (1.7)
Calculations may differ due to rounding
(v) The effects of weather were
estimated using heating
degree days and cooling
degree days for the billing
cycles from certain
locations within each
jurisdiction and comparing
to "normal" weather based on
20-year historical data. The
models used to estimate
weather are updated
periodically and are subject
to change.
On a weather-adjusted basis for third quarter 2020, billed retail sales decreased (4.1) percent, including the impacts of Hurricane Laura and COVID-19. Residential billed sales increased 1.6 percent and commercial billed sales decreased (7.5) percent. Industrial billed sales volume decreased (6.7) reflecting lower sales to existing large and small customers, partially offset by continued growth from new/expansion customers.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Third Quarter and Year-to-Date 2020 vs. 2019
---
($ in millions) Third Quarter Year-to-Date
---
2020 2019
Change 2020 2019
Change
---
Net income (loss) 31 (141) 171 6 (69) 74
Add back: interest expense 5 6 (1) 17 24 (7)
Add back: income taxes 12 (31) 43 6 26 (20)
Add back: depreciation and
amortization 21 38 (17) 81 114 (33)
Subtract: interest and
investment income 95 59 37 130 316 (185)
Add back: decommissioning
expense 51 60 (9) 152 187 (35)
---
Adjusted EBITDA (non-
GAAP) 24 (127) 151 132 (34) 166
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
Third Quarter and Year-to-Date 2020 vs. 2019
---
Third Quarter Year-to-Date
---
2020 2019
% Change 2020 2019
% Change
---
Owned capacity (MW) (w) 2,246 3,274 (31.4) 2,246 3,274 (31.4)
GWh billed 4,332 6,847 (36.7) 16,047 21,308 (24.7)
EWC Nuclear Fleet
---
Capacity factor 83% 98% (15.3) 94% 91% (3.3)
GWh billed 3,943 6,210 (36.5) 14,782 19,602 (24.6)
Production cost per MWh $21.85 $16.27 34.3 $18.24 $18.48 (1.3)
Average energy/
capacity revenue per
MWh $49.71 $42.15 17.9 $45.23 $46.53 (2.8)
Refueling outage days
Indian Point 3 29
Palisades 32 32
Calculations may differ due to rounding
(w) 2020 excludes IP2 (1,028MW),
shut down April 30, 2020.
See the appendix in the webcast slide presentation for EWC hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
Appendix E: GAAP and Non-GAAP Financial Measures
Third Quarter 2020 vs. 2019 (See Appendix G for reconciliation of GAAP to non-GAAP financial
measures)
---
For 12 months ending
September 30 2020 2019
Change
---
GAAP Measures
As-reported ROIC 6.3% 4.8% 1.5%
As-reported ROE 13.3% 8.6% 4.8%
Non-GAAP Financial Measures
Adjusted ROIC 5.4% 5.6% (0.1)%
Adjusted ROE 10.9% 11.4% (0.5)%
As of September 30 ($ in
millions, except where
noted) 2020 2019
Change
---
GAAP Measures
Cash and cash equivalents 1,240 956 284
Available revolver capacity 4,125 4,115 10
Commercial paper 1,398 1,918 (520)
Total debt 22,127 19,441 2,686
Securitization debt 209 338 (129)
Debt to capital 66.7% 65.4% 1.4%
Off-balance sheet liabilities:
Debt of joint ventures -
Entergy's share 49 56 (7)
---
Total off-balance sheet
liabilities 49 56 (7)
Storm escrows 373 410 (37)
Non-GAAP Financial Measures ($ in millions, except
where noted)
Debt to capital, excluding
securitization debt 66.5% 65.0% 1.5%
Net debt to net capital,
excluding securitization
debt 65.2% 63.8% 1.4%
Gross liquidity 5,364 5,071 293
Net liquidity 3,966 3,153 813
Net liquidity, including
storm escrows 4,339 3,563 776
Parent debt to total debt,
excluding securitization
debt 22.4% 20.5% 1.9%
FFO to debt, excluding
securitization debt 11.8% 14.2% (2.3)%
FFO to debt, excluding
securitization debt,
return of unprotected
excess ADIT, and severance
and retention payments
associated with exit of
EWC 12.5% 17.6% (5.1)%
Calculations may differ due to
rounding
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-1: Definitions (continued)
---
EWC Financial and Operating Measures (continued)
---
Unit contingent Transaction under which power
is supplied from a specific
generation asset; if the
asset is in operational
outage, seller is generally
not liable to buyer for any
damages, unless the contract
specifies certain conditions
such as an availability
guarantee
Financial Measures - GAAP
---
As-reported ROE 12-months
rolling net
income
attributable
to Entergy
Corp. divided
by avg.
common equity
As-reported ROIC 12-months
rolling net
income
attributable
to Entergy
Corporation
adjusted for
preferred
dividends and
tax-effected
interest
expense
divided by
average
invested
capital
Debt of joint Entergy's
ventures - Entergy's share of debt
share issued by
business
joint
ventures at
EWC
Debt to capital Total debt
divided by
total
capitalization
Available revolver Amount of
capacity undrawn
capacity
remaining on
corporate and
subsidiary
revolvers
Securitization debt Debt on the
balance sheet
associated
with
securitization
bonds that is
secured by
certain
future
customer
collections
Total debt Sum of short-
term and
long-term
debt, notes
payable and
commercial
paper, and
finance
leases on the
balance sheet
Financial Measures - Non-GAAP
---
Adjusted EPS As-reported
EPS excluding
adjustments
Adjusted ROE 12-months
rolling
adjusted net
income
attributable
to Entergy
Corporation
divided by
average
common equity
Adjusted ROIC 12-months
rolling
adjusted net
income
attributable
to Entergy
Corporation
adjusted for
preferred
dividends and
tax-effected
interest
expense
divided by
average
invested
capital
Adjustments 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
Debt to capital, Total debt
excluding divided by
securitization debt total
capitalization,
excluding
securitization
debt
FFO OCF less
AFUDC-
borrowed
funds,
working
capital items
in OCF
(receivables,
fuel
inventory,
accounts
payable,
taxes
accrued,
interest
accrued, and
other working
capital
accounts),
and
securitization
regulatory
charges
FFO to debt, 12-months
excluding rolling FFO
securitization debt as a
percentage of
end of period
total debt
excluding
securitization
debt
FFO to debt, excl. 12-months
securitization debt, rolling FFO
return of excluding
unprotected excess return of
ADIT, and severance unprotected
and retention excess ADIT
payments associated and severance
with exit of EWC and retention
payments
associated
with exit of
EWC as a
percentage of
end of period
total debt
excluding
securitization
debt
Gross liquidity Sum of cash
and available
revolver
capacity
Net debt to net Total debt
capital, excl. less cash and
securitization debt cash
equivalents
divided by
total
capitalization
less cash and
cash
equivalents,
excluding
securitization
debt
Net liquidity Sum of cash
and available
revolver
capacity less
commercial
paper
borrowing
Net liquidity, Sum of cash,
including storm available
escrows revolver
capacity, and
escrow
accounts
available for
certain storm
expenses,
less
commercial
paper
borrowing
Parent debt to total Entergy Corp.
debt, excl. debt, incl.
securitization debt amounts drawn
on credit
revolver and
commercial
paper
facilities,
as a percent
of
consolidated
total debt,
excl.
securitization
debt
--- ---
Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.
Appendix F-2: Abbreviations and Acronyms
---
ADIT Accumulated deferred income taxes
ISES 2 Unit 2 of Independence Steam Electric
Station (coal)
AFUDC - Allowance for borrowed funds used
during
Internal Revenue Service
borrowed
funds construction
IRS
Independent system operator
ALJ
Administrative law judge
ISO
Lake Charles Power Station (CCGT)
AMI Advanced metering infrastructure
LCPS
Louisiana Public Service Commission
ANO Units 1 and 2 of Arkansas Nuclear One
owned
LPSC
by E-AR (nuclear)
Last twelve months
LTM
Arkansas Public Service Commission Montgomery County Power Station (CCGT)
APSC
MCPS
Asset retirement obligation Midcontinent Independent System Operator,
Inc.
ARO
MISO
Basis points
Moody's Investor Service
bps
Moody's
Combined cycle gas turbine Mississippi Public Service Commission
CCGT
MPSC
Certificate of convenience and
necessity MISO Transmission Expansion Plan
CCN
MTEP
Council of the City of New Orleans Unit 6 of Roy S. Nelson plant (coal)
CCNO
Nelson 6
Choctaw County Generating Station
(CCGT)
Nuclear decommissioning trust
Choctaw
NDT
Commercial operation date
New Orleans Power Station
COD
NOPS
Simple cycle combustion turbine U.S. Nuclear Regulatory Commission
CT
NRC
Construction work in progress New York Public Service Commission
CWIP
NY PSC
Distribution cost recovery factor New York Independent System Operator, Inc.
DCRF
NYISO
U.S. Department of Energy
New York Stock Exchange
DOE
NYSE
Entergy Arkansas, LLC Net cash flow provided by operating
activities
E-AR
OCF
Entergy Louisiana, LLC
Utility operating company
E-LA
OpCo
Entergy Mississippi, LLC
Other post-employment benefits
E-MS
OPEB
Entergy New Orleans, LLC Other non-fuel operation and maintenance
expense
E-NO
Other O&M
Entergy Texas, Inc.
E-TX
Earnings before interest, income
taxes, and depreciation and
amortization
P&O
Parent & Other
EBITDA
Entergy Nuclear Palisades, LLC
Palisades
Palisades Power Plant (nuclear)
Earnings per share
Pilgrim Pilgrim Nuclear Power Station (nuclear,
sold
ENP August 26, 2019)
Entergy Corporation
EPS
Performance Management Rider
Entergy Wholesale Commodities
PMR
ETR Power purchase agreement or purchased
power
Federal Energy Regulatory Commission
PPA agreement
EWC
Funds from operations
Public service commission
FERC
FASB Interpretation No.48,
"Accounting for Uncertainty in
Income Taxes"
PSC Public Utility Commission of Texas
FFO
Formula rate plan
PUCT Reciprocating internal combustion engine
FIN 48
U.S. generally accepted accounting
principles
RICE
Request for proposals
Generation Cost Recovery Rider
RFP
Return on equity
FRP
Unit 1 of Grand Gulf Nuclear Station
(nuclear), 90% owned or leased by
SERI
ROE
Return on invested capital
GAAP
Infrastructure investment recovery
rider -gas
ROIC RS Cogen facility (CCGT cogeneration)
GCRR
Indian Point Energy Center Unit 1
(nuclear)
RS Cogen Rate Stabilization Plan (E-LA Gas)
Grand Gulf
or GGNS (shut down in 1974)
RSP
Standard & Poor's
IIRR-G Indian Point Energy Center Unit 2
(nuclear)
(shut down 4/30/20)
S&P U.S. Securities and Exchange Commission
Indian
Point 1
Indian Point Energy Center Unit 3
(nuclear)
SEC
System Energy Resources, Inc.
SERI Transmission cost recovery factor
Indian
Point 2 Indian Point Energy Center (nuclear)
or IP2
TCRF
Unit Power Sales Agreement
Indian
UPSA Vermont Yankee Nuclear Power Station
Point 3 (nuclear, sold January 11, 2019)
or IP3
Vermont Weighted-average cost of capital
IPEC Yankee
Washington Parish Energy Center
WACC
WPEC
---
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
(LTM
$ in
millions
except
where
noted) Third Quarter
2020 2019
As-
reported
net
income
(loss)
attributable
to
Entergy
Corporation
(A) 1,385 790
Preferred
dividends 18 16
Tax-
effected
interest
expense 582 548
As-
reported preferred
net dividends
income and
(loss) tax-
attributable effected
to interest
Entergy expense
Corporation
adjusted
for 1,985 1,354
Adjustments
(C) 252 (264)
(B)
EWC
preferred
dividends
and
tax-
effected
interest
expense
included
in
adjustments 20 27
Total
adjustments, (non-
excluding GAAP)
EWC
preferred
dividends
and
tax-
effected
interest
expense 272 (237)
(D)
Adjusted
earnings
(non-
GAAP)
(A-C) 1,134 1,054
Adjusted
earnings, (non-
excluding GAAP)
preferred
dividends
and
tax-
effected
interest
expense 1,713 1,591
(B-D)
Average
invested
capital
(average
of
beginning
and
ending
balances)
(E) 31,442 28,413
Average
common
equity
(average
of
beginning
and
ending
balances)
(F) 10,403 9,224
As-
reported
ROIC
(B/E) 6.3% 4.8%
Adjusted
ROIC
(non-
GAAP) [(B-D)/E] 5.4% 5.6%
As-
reported
ROE
(A/F) 13.3% 8.6%
Adjusted
ROE
(non-
GAAP) [(A-C)/F] 10.9% 11.4%
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 escrows
---
($ in millions except
where noted) Third Quarter
2020 2019
Total debt
(A) 22,127 19,441
Less securitization debt
(B) 209 338
Total debt, excluding
securitization debt
(C) 21,918 19,103
Less cash and cash
equivalents
(D) 1,240 956
Net debt, excluding
securitization debt
(E) 20,678 18,147
Commercial paper
(F) 1,398 1,918
Total capitalization
(G) 33,153 29,730
Less securitization debt
(B) 209 338
Total capitalization,
excluding securitization
debt
(H) 32,944 29,392
Less cash and cash
equivalents
(D) 1,240 956
Net capital, excluding
securitization debt
(I) 31,704 28,436
Debt to capital
(A/G) 66.7% 65.4%
Debt to capital,
excluding securitization
debt (non-GAAP)
(C/H) 66.5% 65.0%
Net debt to net capital,
excluding securitization
debt (non-GAAP)
(E/I) 65.2% 63.8%
Available revolver
capacity
(J) 4,125 4,115
Storm escrows
(K) 373 410
Gross liquidity (non-
GAAP)
(D+J) 5,364 5,071
Net liquidity (non-GAAP)
(D+J-F) 3,966 3,153
Net liquidity, including
storm escrows (non-
GAAP)
(D+J-F+K) 4,339 3,563
Entergy Corporation
notes:
Due September 2020 450
Due July 2022 650 650
Due September 2025 800
Due September 2026 750 750
Due June 2030 600
Due June 2050 600
Total Entergy Corporation
notes
(L) 3,400 1,850
Revolver draw
(M) 150 155
Unamortized debt issuance
costs and discounts
(N) (40) (9)
Total parent debt
(F+L+M+N) 4,909 3,914
Parent debt to total
debt, excluding
securitization debt
(non-GAAP)
[(F+L+M+N)/C] 22.4% 20.5%
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 Third
where noted) Quarter
2020 2019
Total debt
(A) 22,127 19,441
Less securitization
debt
(B) 209 338
Total debt, excluding
securitization debt
(C) 21,918 19,103
Net cash flow provided
by operating
activities, LTM 3,069 2,644
(D)
AFUDC - borrowed funds,
LTM
(E) (55) (67)
Working capital items
in net cash flow
provided by operating
activities, LTM:
Receivables (71) 21
Fuel inventory (14) (18)
Accounts payable 277 (158)
Taxes accrued 188 (7)
Interest accrued 14 12
Other working capital
accounts (98) (97)
Securitization
regulatory charges,
LTM 125 120
Total
(F) 421 (127)
FFO, LTM (non-GAAP)
(G)=(D+E-F) 2,594 2,704
FFO to debt, excluding
securitization debt
(non-GAAP)
(G/C) 11.8% 14.2%
Estimated return of
unprotected excess
ADIT, LTM
(H) 119 469
Severance and retention
payments associated
with exit of EWC, LTM
pre-tax
(I) 17 183
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)] 12.5% 17.6%
Calculations may differ due to
rounding
View original content to download multimedia:http://www.prnewswire.com/news-releases/entergy-reports-third-quarter-earnings-301161446.html
SOURCE Entergy Corporation
