Entergy
639 Loyola Avenue
New Orleans, LA 70113
| Date: | Nov. 4, 2014 | |
| For Release: | Immediately | |
| Contact: | Shona Sabnis (Media) (504) 576-4238 ssabnis@entergy.com | Paula Waters (Investor Relations) (504) 576-4380 pwater1@entergy.com |
Entergy Reports Third Quarter Earnings
Utility posts fifth straight quarter of industrial growth, nuclear fleet posts strong performance
New Orleans, La. - Entergy Corporation (NYSE: ETR) today reported third quarter 2014 as-reported earnings of $230.0 million, or $1.27 per share, compared with $239.9 million, or $1.34 per share, for third quarter 2013. On an operational basis, Entergy’s third quarter 2014 earnings were $304.4 million, or $1.68 per share, compared with $430.4 million, or $2.41 per share, in third quarter 2013.
“We’re pleased to report that the Utility posted its fifth straight quarter-over-quarter of industrial sales growth - and the second straight quarter over 5 percent, exceeding our expectations for the year,” said Entergy Chairman and CEO Leo Denault. “Our nuclear plants also operated well - we posted a 90 percent capacity factor at EWC, for example - and had fewer unplanned outage days. And as it has been for some time, our strategy is sound and our path is clear. Entergy’s long-term value is intact.”
| Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures | ||||||
| Third Quarter and Year-to-Date 2014 vs. 2013 | ||||||
| (Per share in U.S. $) | ||||||
| Third Quarter | Year-to-Date | |||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |
| As-Reported Earnings | 1.27 | 1.34 | (0.07) | 4.56 | 3.16 | 1.40 |
| Less Special Items | (0.41) | (1.07) | 0.66 | (0.52) | (1.20) | 0.68 |
| Operational Earnings | 1.68 | 2.41 | (0.73) | 5.08 | 4.36 | 0.72 |
*GAAP refers to United States generally accepted accounting principles.
Operational Earnings Highlights for Third Quarter 2014
| • | Utility results were down driven by a higher effective income tax rate, higher other operation and maintenance expense and a regulatory charge; these decreases were partially offset by higher net revenue. |
| • | Entergy Wholesale Commodities earnings declined due to increased depreciation expense and a higher effective income tax rate on operational earnings. These items were partially offset by lower other O&M expense. |
| • | Parent & Other results declined due primarily to higher income tax expense. |
Other business highlights for the quarter included the following:
| • | In a move designed to attract industry and jobs to the state, Entergy Louisiana, LLC and Entergy Gulf States Louisiana, L.L.C. asked the Louisiana Public Service Commission for permission to become a single utility. |
| • | We also made progress on our rate case in Mississippi, and reached a constructive settlement with the Mississippi Public Utilities Staff - one which aligns customer, regulator and state objectives with our own. |
| • | For the seventh consecutive year, Site Selection magazine named Entergy one of the nation’s top 10 utilities in economic development, citing the more than 9,000 new jobs created and nearly $21 billion in corporate facility investment. |
| • | James A. FitzPatrick Nuclear Power Plant completed its 21st refueling outage in 44 days, including a complete retube of the plant’s main condenser to improve the plant’s capacity factor. |
A teleconference will be held at 10 a.m. CST on Tuesday, Nov. 4, 2014, to discuss Entergy’s third quarter 2014 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 (719) 325-2115, confirmation code 6761108, no more than 15 minutes prior to the start of the call. The presentation slides are also posted to Entergy’s website concurrent with this release, which was issued before market open on the day of the call. A replay of the teleconference will be available on Entergy’s website at www.entergy.com and by telephone. The telephone replay will be available through noon CST on Nov. 11, 2014, by dialing (719) 457-0820, confirmation code 6761108. This release and presentation slides are also available on the Entergy Investor Relations mobile web app at enter.gy/ir.
Utility
In third quarter 2014, Utility earnings were $310.9 million, or $1.72 per share, on an as-reported basis and $311.2 million, or $1.72 per share, on an operational basis, compared to $348.0 million, or $1.95 per share, on an as-reported basis and $363.3 million, or $2.04 per share, on an operational basis for third quarter 2013. The quarter-over-quarter decrease in operational earnings was driven by several factors including a regulatory charge at Entergy Mississippi, Inc., higher other O&M and a higher effective income tax rate. These decreases were partially offset by higher net revenue.
In third quarter 2014, EMI recorded a regulatory charge related to a proposed settlement with the MPUS of EMI’s general rate case. The settlement, subject to approval by the Mississippi Public Service Commission, includes EMI’s agreement not to pursue recovery of EMI’s regulatory
asset for new nuclear generation development costs. This charge reduced operational earnings per share by approximately $(0.23).
Other O&M was higher quarter-over-quarter. The increase was driven by nuclear generation spending and Midcontinent Independent System Operator, Inc. regional transmission organization administration fees. Energy efficiency spending and storm reserve accruals were also higher than the comparable quarter a year ago. These expense increases were partially offset by lower compensation and benefits expenses.
Utility net revenue was higher than the same quarter last year with several contributing factors, both positive and negative. Weather-adjusted sales growth and price contributed to the increase. A portion of the price variance was offset in other line items outside of net revenue, including O&M. The effect of milder-than-normal weather in the current quarter partially offset the increase.
Billed retail sales increased 2.0 percent on a weather-adjusted basis. The increase was attributable largely to 5.3 percent growth in the industrial customer class. The industrial increase was due largely to expansions in the chemicals, refining and primary metals segments as well as growth from small industrial customers.
Residential sales in third quarter 2014, on a weather-adjusted basis, decreased 0.2 percent compared to third quarter 2013. Commercial and governmental sales, on a weather-adjusted basis, increased 0.8 percent and 1.8 percent, respectively, quarter over quarter. Industrial sales in the third quarter increased 5.3 percent compared to the same quarter of 2013.
Entergy Wholesale Commodities
EWC reported a loss of $33.2 million, or 18 cents per share, on an as-reported basis and earnings of $40.8 million, or 23 cents per share, on an operational basis for third quarter 2014. This compares to an as-reported loss of $92.8 million, or 52 cents per share, and operational earnings of $82.3 million, or 46 cents per share, in third quarter 2013. The decrease in operational
earnings was driven by a higher effective income tax rate and higher depreciation expense. These items were partially offset by lower other O&M, as noted below.
EWC operational adjusted earnings before interest, income taxes, depreciation and amortization, and interest and investment income excluding decommissioning expense, and other than temporary impairment losses on decommissioning trust fund assets was $165 million in third quarter 2014, flat from the same period a year ago. Other O&M decreased quarter-over-quarter due primarily to lower compensation and benefits expenses. Offsetting the other O&M variance were several other individually insignificant items
Contribution to third quarter 2014 operational adjusted EBITDA from the Vermont Yankee Nuclear Power Station, scheduled to be closed later this year at the end of its current operating cycle, was essentially neutral.
Parent & Other
Parent & Other reported a loss of $47.7 million, or 27 cents per share, on an as-reported and operational basis for third quarter 2014, compared to a loss of $15.3 million, or 9 cents per share, on an as-reported and operational basis for third quarter 2013. The quarter-over-quarter decline was due primarily to higher income tax expense.
Earnings Guidance
Entergy affirmed its previously-issued 2014 operational earnings guidance to be in the range of $5.55 to $6.75 per share. Current indications point to full-year results below the midpoint of the guidance range. However, absent the third quarter charge associated with the Mississippi rate case settlement, full-year expectations would be around the midpoint.
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 more than 10,000 megawatts of nuclear power, making it one of the nation’s leading nuclear generators. Entergy
delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $11 billion and approximately 14,000 employees.
Additional information regarding Entergy’s quarterly and annual results of operations, regulatory proceedings and other matters is available in Entergy’s investor news release dated Nov. 4, 2014, a copy of which has been filed today with the SEC on Form 8-K, and Entergy’s quarterly presentation slides. These are available on Entergy’s Investor Relations website at www.entergy.com/investor_relations and on Entergy’s Investor Relations mobile web app at enter.gy/ir.
-30-
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. 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 involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed 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 rate proceedings, formula rate plans and other cost recovery mechanisms; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Vermont Yankee or any of Entergy’s other nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; and (g) economic conditions and conditions in commodity and capital markets during the periods covered by the forward-looking statements, in addition to other factors described elsewhere in this release and subsequent securities filings.
Appendix A provides a reconciliation of GAAP consolidated as-reported earnings to non-GAAP consolidated operational earnings.
Table 1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures Third Quarter and Year-to-Date 2014 vs. 2013 | ||||||
| (Per share in U.S. $) | ||||||
| Third Quarter | Year-to-Date | |||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |
| As-Reported | ||||||
| Utility | 1.72 | 1.95 | (0.23) | 4.00 | 3.74 | 0.26 |
| Entergy Wholesale Commodities | (0.18) | (0.52) | 0.34 | 1.30 | 1.30 | |
| Parent & Other | (0.27) | (0.09) | (0.18) | (0.74) | (0.58) | (0.16) |
| Consolidated As-Reported Earnings | 1.27 | 1.34 | (0.07) | 4.56 | 3.16 | 1.40 |
| Less Special Items | ||||||
| Utility | (0.09) | 0.09 | (0.03) | (0.21) | 0.18 | |
| Entergy Wholesale Commodities | (0.41) | (0.98) | 0.57 | (0.49) | (0.99) | 0.50 |
| Parent & Other | ||||||
| Consolidated Special Items | (0.41) | (1.07) | 0.66 | (0.52) | (1.20) | 0.68 |
| Operational | ||||||
| Utility | 1.72 | 2.04 | (0.32) | 4.03 | 3.95 | 0.08 |
| Entergy Wholesale Commodities | 0.23 | 0.46 | (0.23) | 1.79 | 0.99 | 0.80 |
| Parent & Other | (0.27) | (0.09) | (0.18) | (0.74) | (0.58) | (0.16) |
| Consolidated Operational Earnings | 1.68 | 2.41 | (0.73) | 5.08 | 4.36 | 0.72 |
Appendix B provides a reconciliation of Entergy Wholesale Commodities GAAP net income to non-GAAP operational adjusted EBITDA.
| Appendix B: Entergy Wholesale Commodities Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures | ||||||
| Third Quarter and Year-to-Date 2014 vs. 2013 | ||||||
| ($ in millions) | ||||||
| Third Quarter | Year-to-Date | |||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |
| Net income | (33) | (93) | 60 | 235 | 1 | 234 |
| Add back: interest expense | 4 | 4 | 12 | 11 | 1 | |
| Add back: income tax expense | 2 | (107) | 109 | 141 | (65) | 206 |
| Add back: depreciation and amortization | 72 | 55 | 17 | 213 | 155 | 58 |
| Subtract: interest and investment income | 29 | 21 | 8 | 77 | 72 | 5 |
| Add back: decommissioning expense | 35 | 32 | 3 | 104 | 92 | 12 |
| Adjusted EBITDA | 51 | (130) | 181 | 627 | 122 | 505 |
| Add back: special item for HCM implementation expenses (pre-tax) | 1 | 3 | (2) | 3 | 5 | (2) |
| Add back: special item resulting from the decision to close VY (pre-tax) | 113 | 292 | (179) | 134 | 292 | (158) |
| Operational adjusted EBITDA | 165 | 165 | 0 | 764 | 419 | 345 |
Totals may not foot due to rounding
| Entergy Corporation | |||
| Consolidated Income Statement | |||
| Three Months Ended Sept. 30 | |||
| (in thousands) | |||
| 2014 | 2013 | ||
| (unaudited) | |||
| Operating Revenues: | |||
| Electric | $2,824,055 | $2,704,800 | |
| Natural gas | 28,039 | 26,113 | |
| Competitive businesses | 606,016 | 621,046 | |
| Total | 3,458,110 | 3,351,959 | |
| Operating Expenses: | |||
| Operation and maintenance: | |||
| Fuel, fuel-related expenses, and gas purchased for resale | 858,901 | 818,254 | |
| Purchased power | 465,106 | 392,545 | |
| Nuclear refueling outage expenses | 71,651 | 64,758 | |
| Other operation and maintenance | 841,939 | 839,348 | |
| Asset write-off, impairments, and related charges | 163,835 | 291,505 | |
| Decommissioning | 68,370 | 60,848 | |
| Taxes other than income taxes | 159,735 | 156,950 | |
| Depreciation and amortization | 332,079 | 325,149 | |
| Other regulatory charges (credits) - net | 3,635 | 13,708 | |
| Total | 2,965,251 | 2,963,065 | |
| Operating Income | 492,859 | 388,894 | |
| Other Income (Deductions): | |||
| Allowance for equity funds used during construction | 16,737 | 17,676 | |
| Interest and investment income | 49,547 | 23,430 | |
| Miscellaneous - net | (6,644) | (10,214) | |
| Total | 59,640 | 30,892 | |
| Interest Expense: | |||
| Interest expense | 164,482 | 157,504 | |
| Allowance for borrowed funds used during construction | (8,664) | (6,453) | |
| Total | 155,818 | 151,051 | |
| Income Before Income Taxes | 396,681 | 268,735 | |
| Income Taxes | 161,765 | 24,553 | |
| Consolidated Net Income | 234,916 | 244,182 | |
| Preferred Dividend Requirements of Subsidiaries | 4,879 | 4,332 | |
| Net Income Attributable to Entergy Corporation | $230,037 | $239,850 | |
| Earnings Per Average Common Share | |||
| Basic | $1.28 | $1.35 | |
| Diluted | $1.27 | $1.34 | |
| Average Number of Common Shares Outstanding - Basic | 179,610,067 | 178,283,721 | |
| Average Number of Common Shares Outstanding - Diluted | 180,527,116 | 178,652,210 | |
| Entergy Corporation | |||
| Consolidated Income Statement | |||
| Nine Months Ended Sept. 30 | |||
| (in thousands) | |||
| 2014 | 2013 | ||
| (unaudited) | |||
| Operating Revenues: | |||
| Electric | $7,424,360 | $6,831,290 | |
| Natural gas | 141,727 | 113,315 | |
| Competitive businesses | 2,097,516 | 1,754,436 | |
| Total | 9,663,603 | 8,699,041 | |
| Operating Expenses: | |||
| Operation and maintenance: | |||
| Fuel, fuel-related expenses, and gas purchased for resale | 2,006,811 | 1,818,194 | |
| Purchased power | 1,557,631 | 1,251,418 | |
| Nuclear refueling outage expenses | 197,692 | 191,940 | |
| Other operation and maintenance | 2,392,590 | 2,437,801 | |
| Asset write-off, impairments, and related charges | 167,772 | 291,505 | |
| Decommissioning | 201,418 | 179,342 | |
| Taxes other than income taxes | 466,939 | 452,934 | |
| Depreciation and amortization | 992,544 | 923,541 | |
| Other regulatory charges (credits) - net | (7,010) | 22,914 | |
| Total | 7,976,387 | 7,569,589 | |
| Operating Income | 1,687,216 | 1,129,452 | |
| Other Income (Deductions): | |||
| Allowance for equity funds used during construction | 46,654 | 46,675 | |
| Interest and investment income | 109,040 | 102,277 | |
| �� Miscellaneous - net | (33,026) | (36,992) | |
| Total | 122,668 | 111,960 | |
| Interest Expense: | |||
| Interest expense | 491,359 | 466,422 | |
| Allowance for borrowed funds used during construction | (24,199) | (18,432) | |
| Total | 467,160 | 447,990 | |
| Income Before Income Taxes | 1,342,724 | 793,422 | |
| Income Taxes | 507,474 | 214,202 | |
| Consolidated Net Income | 835,250 | 579,220 | |
| Preferred Dividend Requirements of Subsidiaries | 14,656 | 14,247 | |
| Net Income Attributable to Entergy Corporation | $820,594 | $564,973 | |
| Earnings Per Average Common Share | |||
| Basic | $4.58 | $3.17 | |
| Diluted | $4.56 | $3.16 | |
| Average Number of Common Shares Outstanding - Basic | 179,256,975 | 178,170,339 | |
| Average Number of Common Shares Outstanding - Diluted | 179,867,018 | 178,520,063 | |
| Entergy Corporation | |||||||||
| Utility Electric Energy Sales & Customers | |||||||||
| Three Months Ended Sept. 30 | |||||||||
| 2014 | 2013 | % Change | % Weather-Adjusted | ||||||
| (Millions of kWh) | |||||||||
| Electric Energy Sales: | |||||||||
| Residential | 10,869 | 11,359 | (4.3) | (0.2) | |||||
| Commercial | 8,281 | 8,393 | (1.3) | 0.8 | |||||
| Governmental | 659 | 648 | 1.7 | 1.8 | |||||
| Industrial | 11,620 | 11,038 | 5.3 | 5.3 | |||||
| Total to Ultimate Customers | 31,429 | 31,438 | 2.0 | ||||||
| Wholesale | 2,075 | 667 | 211.1 | ||||||
| Total Sales | 33,504 | 32,105 | 4.4 | ||||||
| Nine Months Ended Sept. 30 | |||||||||
| 2014 | 2013 | % Change | % Weather-Adjusted | ||||||
| (Millions of kWh) | |||||||||
| Electric Energy Sales: | |||||||||
| Residential | 28,162 | 27,080 | 4.0 | 0.5 | |||||
| Commercial | 21,844 | 21,498 | 1.6 | 1.4 | |||||
| Governmental | 1,829 | 1,814 | 0.8 | 0.8 | |||||
| Industrial | 32,635 | 31,264 | 4.4 | 4.4 | |||||
| Total to Ultimate Customers | 84,470 | 81,656 | 3.4 | 2.2 | |||||
| Wholesale | 6,357 | 1,887 | 236.9 | ||||||
| Total Sales | 90,827 | 83,543 | 8.7 | ||||||
| Sept. 30 | |||||||||
| 2014 | 2013 | % Change | |||||||
| Electric Customers (End of period): | |||||||||
| Residential | 2,411,773 | 2,397,877 | 0.6 | ||||||
| Commercial | 344,436 | 342,291 | 0.6 | ||||||
| Governmental | 17,314 | 16,941 | 2.2 | ||||||
| Industrial | 50,770 | 48,709 | 4.2 | ||||||
| Total Ultimate Customers | 2,824,293 | 2,805,818 | 0.7 | ||||||
| Wholesale | 9 | 25 | (64.0) | ||||||
| Total Customers | 2,824,302 | 2,805,843 | 0.7 | ||||||