Entergy Reports Second Quarter Earnings

Rhea-AI Summary

Entergy Corporation (NYSE: ETR) reported Q2 2020 earnings of $1.79 per share (GAAP) and $1.37 per share (adjusted), outperforming Q2 2019 figures of $1.22 and $1.35, respectively. Key highlights include exceeding sales expectations, reaffirming full-year guidance, and completing significant projects like the Western Region Phase 2 economic transmission. However, year-to-date earnings declined to $2.39 from $2.54 in 2019. The Utility segment achieved $345 million in earnings, while the Parent & Other segment reported a loss of $69 million.

Positive

• Q2 2020 earnings increased to $361 million from $236 million in Q2 2019.
• Sales performance exceeded expectations, contributing to positive outlook.
• Full-year adjusted EPS guidance maintained at $5.45 to $5.75.

Negative

• Year-to-date earnings decreased to $479 million from $491 million in 2019.
• Utility segment faced challenges from lower sales volume and higher expenses.

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)
Second Quarter and Year-to-Date 2020 vs. 2019 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of adjustments)
	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)
	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
($ 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
(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- Reported		As- Reported	Adjusted
2019 earnings	1.70	1.70		(0.35)	(0.35)		(0.13)		1.22	1.35
Operating revenue less:   Fuel, fuel-related expenses and   gas purchased for resale,   Purchased power, and   Regulatory charges (credits)	0.14	0.14	(e)	-	-		(0.31)	(f)	(0.17)	0.14
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- Reported		As- Reported	Adjusted
2019 earnings	2.91	2.91		(0.73)	(0.73)		0.36		2.54	2.18
Operating revenue less:   Fuel, fuel-related expenses and   gas purchased for resale,   Purchased power, and   Regulatory charges (credits)	0.41	0.41	(e)	-	-		(0.68)	(f)	(0.27)	0.41
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	% Change	% Weather Adjusted (s)	2020	2019	% Change	% Weather Adjusted (s)
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	% Change	% Weather 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