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Entergy Reports First Quarter Earnings

Company affirms 2019 guidance and financial outlooks

NEW ORLEANS, May 1, 2019 /PRNewswire/ -- Entergy Corporation (ETR) reported first quarter 2019 earnings per share of $1.32 on an as-reported basis and 82 cents on an adjusted basis (non-GAAP), which excludes the EWC segment in light of the company's strategic decision to exit the merchant power business.

Entergy Corporation Logo. (PRNewsfoto/Entergy Corporation)

"We had a productive start to 2019.  While weather was a headwind, we remain firmly on track to achieve our full-year financial guidance, as well as our longer-term outlooks," said Entergy Chairman and Chief Executive Officer Leo Denault. "With our announcement of a sale of Indian Point, we now have definitive agreements in place to sell all of our merchant nuclear assets."

Business highlights included the following:

  • Entergy announced an agreement for post-shutdown sale of Indian Point Units 1, 2 and 3.
  • Pilgrim returned to Column 1 in the NRC regulatory oversight program.
  • Entergy Arkansas announced plans for a build-own-transfer of a 100 megawatt solar facility.
  • Entergy Arkansas and Entergy Texas each issued requests for proposals for 200 megawatts of solar resources.
  • Entergy Mississippi made its annual formula rate plan filing.
  • Entergy was named for a fourth consecutive year to the list of America's Top Corporations for Women's Business Enterprise by the Women's Business Enterprise National Council.

Consolidated Earnings (GAAP and Non-GAAP Measures)

First Quarter 2019 vs. 2018 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of adjustments)


First Quarter


2019

2018

Change

(After-tax, $ in millions)




As-reported earnings

255

133

122

Less adjustments

97

(18)

115

Adjusted earnings (non-GAAP)

158

151

7

  Estimated weather in billed sales

(23)

16

(40)





(After-tax, per share in $)




As-reported earnings

1.32

0.73

0.59

Less adjustments

0.50

(0.10)

0.60

Adjusted earnings (non-GAAP)

0.82

0.83

(0.01)

  Estimated weather in billed sales

(0.12)

0.09

(0.21)

Calculations may differ due to rounding

Consolidated Results

For first quarter 2019, the company reported earnings of $255 million, or $1.32 per share, on an as-reported basis and earnings of $158 million, or 82 cents per share, on an adjusted basis. This compared to first quarter 2018 earnings of $133 million, or 73 cents per share, on an as-reported basis and earnings of $151 million, or 83 cents per share on an adjusted basis.

Summary discussions by business are below. Additional details, including information on OCF by business, are provided in Appendix A and a comprehensive analysis of quarterly variances by business is provided in Appendix B.

Business Segment Results

Utility

For first quarter 2019, the Utility business reported earnings attributable to Entergy Corporation of $231 million, or $1.20 per share, on both an as-reported and adjusted basis. This compared to first quarter 2018 earnings of $215 million, or $1.19 per share, on both an as-reported and adjusted basis. The current period results reflected higher net revenue. On a per share basis, 2019 results reflected a higher share count resulting from the company's equity forward.

Excluding the return of unprotected excess ADIT, which is directly offset in income taxes, net revenue increased quarter-over-quarter, driven by regulatory actions at Entergy Arkansas, Entergy Louisiana and Entergy Texas.  Also, first quarter 2018 included regulatory charges to return benefits of the lower federal tax rate to customers. This was partially offset by unfavorable weather in first quarter 2019 compared to favorable weather a year ago.

On a weather-adjusted basis, billed sales increased 0.6 percent driven by industrial sales. Residential and commercial sales decreased (0.3) percent and (1.4) percent respectively.  Industrial billed sales volume increased 2.4 percent with higher sales to both new and expansion customers as well as existing customers. The increase was driven largely by the chlor-alkali segment. Sales to petroleum refining customers were also higher.

Appendix C contains additional details on Utility financial and operating measures.

Parent & Other

For first quarter 2019, Parent & Other reported a loss of $(73 million), or (38) cents per share, on both an as-reported and adjusted basis.  This compared to a loss of $(64 million), or (36) cents per share, on both an as-reported and adjusted basis in first quarter 2018.

Entergy Wholesale Commodities 

For first quarter 2019, EWC recorded earnings attributable to Entergy Corporation of $97 million, or 50 cents per share on an as-reported basis. This compared to a first quarter 2018 loss of $(18 million), or (10) cents per share, on an as-reported basis.

First quarter 2019 earnings reflected higher other income, primarily due to gains on decommissioning trust funds, as well as higher net revenue due to higher nuclear energy volume. These items were partially offset by a tax item related to the sale of Vermont Yankee in January 2019.

Appendix D contains additional details on EWC financial and operating measures, including reconciliation for non-GAAP EWC adjusted EBITDA.

Earnings Guidance

Entergy affirmed its 2019 adjusted earnings guidance range of $5.10 to $5.50 per share.  See webcast presentation slides for additional details.

The company has provided 2019 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 2019. 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 $(1.20) per share in 2019. This estimate is subject to substantial uncertainty due to, among other things, the potential effects of the strategic decision to exit the EWC business.

Earnings Teleconference

A teleconference will be held at 9:00 a.m. Central Time on Wednesday, May 1, 2019, to discuss Entergy's quarterly earnings announcement and the company's financial performance. The teleconference may be accessed by visiting Entergy's website at www.entergy.com or by dialing 844-309-6569, conference ID 1060279, no more than 15 minutes prior to the start of the call. The webcast slide presentation is also posted to Entergy's website concurrent with this release, which was issued before market open on the day of the call. A replay of the teleconference will be available on Entergy's website at www.entergy.com and by telephone. The telephone replay will be available through May 8, 2019, by dialing 855-859-2056, conference ID 1060279.

Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of approximately $11 billion and nearly 13,700 employees.

Entergy Corporation's common stock is listed on the New York Stock Exchange and NYSE Chicago under the symbol "ETR."

Details regarding Entergy's results of operations, regulatory proceedings and other matters are available in this earnings release, a copy of which will be filed with the SEC, and the webcast slide presentation. Both documents are available on Entergy's Investor Relations website at www.entergy.com/investor_relations.

Entergy maintains a web page as part of its Investor Relations website, entitled Regulatory & Other Information, which provides investors with key updates of certain regulatory proceedings and important milestones on the execution of its strategy. While some of this information may be considered material information, investors should not rely exclusively on this page for all relevant company information.

For definitions of certain operating measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the earnings release materials, see Appendix F.

Non-GAAP Financial Measures

This news release contains non-GAAP financial measures, which are generally numerical measures of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Entergy has provided quantitative reconciliations within this release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Entergy reports earnings using the non-GAAP measure of Entergy adjusted earnings, which excludes the effect of certain "adjustments," including the removal of the Entergy Wholesale Commodities segment in light of the company's decision to exit the merchant power business. Adjustments are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, such as the results of the EWC segment, significant tax items and other items such as certain costs, expenses, or other specified items. In addition to reporting GAAP consolidated earnings on a per share basis, Entergy reports its adjusted earnings on a per share basis. These per share measures represent the applicable earnings amount divided by the diluted average number of common shares outstanding for the period.  

Management uses the non-GAAP financial measures of adjusted earnings and adjusted earnings per share for, among other things, financial planning and analysis; reporting financial results to the board of directors, employees, stockholders, analysts and investors; and internal evaluation of financial performance. Entergy believes that these non-GAAP financial measures provide useful information to investors in evaluating the ongoing results of Entergy's business, comparing period to period results, and comparing Entergy's financial performance to the financial performance of other companies in the utility sector. 

Other non-GAAP measures, including adjusted EBITDA; adjusted ROE; adjusted ROIC; gross liquidity; debt to capital, excluding securitization debt; net debt to net capital, excluding securitization debt; parent debt to total debt, excluding securitization debt; FFO; FFO to debt, excluding securitization debt; and FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC are measures Entergy uses internally for management and board discussions and to gauge the overall strength of its business. Entergy believes the above data provides useful information to investors in evaluating Entergy's ongoing financial results and flexibility and assists investors in comparing Entergy's credit and liquidity to the credit and liquidity of others in the Utility sector. In addition, other financial measures including net income (or earnings), adjusted for preferred dividends and tax effected interest expense; net revenue; return on average invested capital; and return on average common equity are included on both an adjusted and as-reported basis. In each case, the metrics defined as "adjusted" would exclude the effect of adjustments as defined above.

These non-GAAP financial measures reflect an additional way of viewing aspects of Entergy's operations that, when viewed with Entergy's GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Entergy's business. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures.  Investors are strongly encouraged to review Entergy's consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.  Although certain of these measures are intended to assist investors in comparing Entergy's performance to other companies in the utility sector, non-GAAP financial measures are not standardized; therefore, it might not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Cautionary Note Regarding Forward-Looking Statements

In this news release, and from time to time, Entergy Corporation makes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, Entergy's 2019 earnings guidance; its current financial and operational outlooks; and other statements of Entergy's plans, beliefs or expectations included in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this news release and in Entergy's most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Entergy's other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with (1) rate proceedings, formula rate plans and other cost recovery mechanisms, including the risk that costs may not be recoverable to the extent anticipated by the utilities and (2) implementation of the ratemaking effects of changes in law; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) risks associated with operating nuclear facilities, including plant relicensing, operating, and regulatory costs and risks; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Entergy's nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with strategic transactions that Entergy or its subsidiaries may undertake, including the risk that any such transaction may not be completed as and when expected and the risk that the anticipated benefits of the transaction may not be realized; (h) effects of changes in federal, state, or local laws and regulations and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental, or energy policies; (i) the effects of technological changes and changes in commodity markets, capital markets or economic conditions; and (j) impacts from a terrorist attack, cybersecurity threats, data security breaches or other attempts to disrupt Entergy's business or operations, and other catastrophic events.

First Quarter 2019 Earnings Release Appendices and Financial Statements

Appendices

Appendices are presented in this section as follows:

  • A: Consolidated Results and Adjustments
  • B: Earnings Variance Analysis
  • C: Utility Financial and Operating Measures
  • D: EWC Financial and Operating Measures
  • E: Consolidated Financial Measures
  • F: Definitions and Abbreviations and Acronyms
  • G: GAAP to Non-GAAP Reconciliations

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

First Quarter 2019 vs. 2018 (See Appendix A-3 and Appendix A-4 for details on adjustments)


First Quarter


2019

2018

Change

(After-tax, $ in millions)




Earnings (loss)




Utility

231

215

16

Parent & Other

(73)

(64)

(9)

EWC

97

(18)

115

Consolidated

255

133

122





Less adjustments




Utility

-

-

-

Parent & Other

-

-

-

EWC

97

(18)

115

Consolidated

97

(18)

115





Adjusted earnings (loss) (non-GAAP)




Utility

231

215

16

Parent & Other

(73)

(64)

(9)

EWC

-

-

-

Consolidated

158

151

7

Estimated weather in billed sales

(23)

16

(40)





Diluted average number of common shares outstanding (in millions)

192.2

181.4






(After-tax, per share in $) (a)




Earnings (loss)




Utility

1.20

1.19

0.01

Parent & Other

(0.38)

(0.36)

(0.02)

EWC

0.50

(0.10)

0.60

Consolidated

1.32

0.73

0.59





Less adjustments


Utility

-

-

-

Parent & Other

-

-

-

EWC

0.50

(0.10)

0.60

Consolidated

0.50

(0.10)

0.60





Adjusted earnings (loss) (non-GAAP)




Utility

1.20

1.19

0.01

Parent & Other

(0.38)

(0.36)

(0.02)

EWC

-

-

-

Consolidated

0.82

0.83

(0.01)

Estimated weather in billed sales

(0.12)

0.09

(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. See Appendix A-3 for adjustments by driver.

Appendix A-2 provides a comparative summary of OCF, by business.

Appendix A-2: Consolidated Operating Cash Flow

First Quarter 2019 vs. 2018

($ in millions)


First Quarter


2019

2018

Change

Utility

455

523

(68)

Parent & Other

(78)

(57)

(21)

EWC

124

91

33

Consolidated

501

557

(56)





Calculations may differ due to rounding

OCF decreased quarter-over-quarter due primarily to the return of the unprotected excess ADIT to customers, as well as unfavorable weather at the Utility. Lower pension contributions partially offset the decrease.

Appendix A-3 and Appendix A-4 list adjustments by business. Amounts are shown on both an earnings and EPS basis. Adjustments are included in as-reported earnings consistent with GAAP, but are excluded from adjusted earnings. As a result, adjusted earnings is considered a non-GAAP measure.

Appendix A-3: Adjustments by Driver (shown as positive/(negative) impact on earnings or EPS) 

First Quarter 2019 vs. 2018


First Quarter


2019

2018

Change

(Pre-tax except for income tax effects and total, $ in millions)




EWC




Income before income taxes

163

(19)

182

Income taxes

66

(1)

67

Preferred dividend requirements of subsidiaries

1

1

-

  Total EWC

97

(18)

115





Total adjustments

97

(18)

115





(After-tax, per share in $)




EWC




  Total EWC

0.50

(0.10)

0.60





Total adjustments

0.50

(0.10)

0.60

Calculations may differ due to rounding




Appendix A-4: Adjustments by Income Statement Line Item (shown as positive/(negative) impact on earnings) 

First Quarter 2019 vs. 2018

(Pre-tax except for Income taxes and total, $ in millions)


First Quarter



2019

2018

Change

EWC




Net revenue

393

382

11

Non-fuel O&M

(201)

(193)

(8)

Asset write-off and impairments

(74)

(73)

(1)

Decommissioning expense

(63)

(58)

(5)

Taxes other than income taxes

(13)

(16)

4

Depreciation/amortization exp.

(38)

(38)

-

Other income (deductions)–other

169

(14)

183

Interest exp. and other charges

(9)

(8)

(1)

Income taxes

(66)

1

(67)

Preferred dividend

(1)

(1)

-

   Total EWC

97

(18)

115






Total adjustments (after-tax)

97

(18)

115

Calculations may differ due to rounding

B: Earnings Variance Analysis

Appendix B provides details of current quarter 2019 versus 2018 as-reported and adjusted earnings variance analysis for Utility, Parent & Other, and EWC.

Appendix B: As-Reported and Adjusted Earnings Variance Analysis (b), (c)

First Quarter 2019 vs. 2018

(After-tax, per share in $)








Utility


Parent & Other


EWC


Consolidated


As-Reported

Adjusted


As-Reported

Adjusted


As-

Reported


As-

Reported

Adjusted

2018 earnings

1.19

1.19


(0.36)

(0.36)


(0.10)


0.73

0.83

Net revenue

0.07

0.07

(d) 

-

-


0.05

(e)

0.12

0.07

Non-fuel O&M

0.02

0.02


(0.02)

(0.02)


(0.03)


(0.03)

-

Asset write-offs and impairments

-

-


-

-


-


-

-

Decommissioning expense

(0.01)

(0.01)


-

-


(0.02)


(0.03)

(0.01)

Taxes other than income taxes

0.01

0.01


-

-


0.01


0.02

0.01

Depreciation/amortization exp.

(0.04)

(0.04)


-

-


-


(0.04)

(0.04)

Other income (deductions)–other

0.03

0.03


(0.01)

(0.01)


0.79

(f)

0.81

0.02

Interest exp. and other charges

(0.03)

(0.03)


(0.03)

(0.03)


-


(0.06)

(0.06)

Income taxes–other

0.03

0.03


0.01

0.01


(0.16)

(g)

(0.12)

0.04

Share effect

(0.07)

(0.07)

(h)

0.03

0.03


(0.04)


(0.08)

(0.04)

2019 earnings

1.20

1.20


(0.38)

(0.38)


0.50


1.32

0.82












Calculations may differ due to rounding. 


(b)

Utility net revenue and Utility income taxes exclude $61 million for the return of unprotected excess ADIT to customers (net effect is neutral to earnings).

(c)

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.

(d)

The earnings increase from higher Utility net revenue was primarily driven by rate activity from E-AR's and E-LA's FRPs, E-LA's AMI rider and E-TX's base rate case.  In addition, in first quarter 2018, E-LA recorded regulatory charges to return the benefits of the lower effective federal tax rate to customers.  Partially offsetting was the net effect of volume/weather primarily due to the effects of weather, which was negative in first quarter 2019 and positive in first quarter 2018.

(e)

The earnings increase from higher EWC net revenue reflected higher volume from merchant nuclear plants.

(f)

The earnings increase from higher EWC other income (deductions)–other was due largely to unrealized gains on the decommissioning trust fund investments in first quarter 2019.

(g)

The earnings decrease from higher EWC income taxes is primarily due to an accrual of $29 million of tax expense, which resulted from the sale of Vermont Yankee in January 2019.

(h)

The earnings per share decrease from share effect is due to the equity forward including the settlement of 6.8 million shares in December 2018.



Utility As-Reported Net Revenue

Variance Analysis

2019 vs. 2018 ($ EPS)


1Q

Volume/weather

(0.16)

Retail electric price

Reg. charges for lower tax rate

0.12

0.12

Other

(0.01)

Total

0.07

C: Utility Financial and Operating Measures

Appendix C-1 and Appendix C-2 provides comparative summaries of Utility operating and financial measures.

Appendix C-1: Utility Operating and Financial Measures

First Quarter 2019 vs. 2018


First Quarter


2019

2018

%

Change

% Weather
Adjusted (i)

GWh billed





Residential

8,471

9,287

(8.8)

(0.3)

Commercial

6,423

6,732

(4.6)

(1.4)

Governmental

601

608

(1.2)

(0.7)

Industrial

11,683

11,405

2.4

2.4

   Total retail sales

27,178

28,032

(3.0)

0.6

Wholesale

3,814

3,244

17.6


   Total sales

30,992

31,276

(0.9)







Number of electric retail customers





Residential

2,483,785

2,476,056

0.3


Commercial

357,613

356,034

0.4


Governmental

18,111

17,945

0.9


Industrial

40,890

40,856

0.1


   Total retail customers

2,900,399

2,890,891

0.3







Net revenue ($ in millions)

1,416

1,460

(3.0)


Non-fuel O&M per MWh

$20.12

$20.09

0.1







Appendix C-2: Utility Operating Measures

Twelve Months Ended March 31, 2019 vs. 2018


Twelve Months Ended March 31


2019

2018

%

Change

% Weather
Adjusted (i)

GWh billed





Residential

36,291

35,484

2.3

(0.6)

Commercial

29,117

29,039

0.3

(0.7)

Governmental

2,574

2,525

1.9

1.2

Industrial

48,662

48,057

1.3

1.3

   Total retail sales

116,644

115,105

1.3

0.2






Calculations may differ due to rounding


(i)

The effects of weather were estimated using heating degree days and cooling degree days for the billing cycles from certain locations within each jurisdiction and comparing to "normal" weather based on 20-year historical data. The models used to estimate weather are updated periodically and are subject to change.



D: EWC Financial and Operating Measures

Appendix D-1 provides a comparative summary of EWC adjusted EBITDA (non-GAAP).

Appendix D-1: EWC Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures

First Quarter 2019 vs. 2018

($ in millions)

First Quarter


2019

2018

Change

Net income (loss)

97

(18)

115

Add back: interest expense

9

8

1

Add back: income taxes

66

(1)

67

Add back: depreciation and amortization

38

38

-

Subtract: interest and investment income

181

(1)

182

Add back: decommissioning expense

63

58

5

Adjusted EBITDA (non-GAAP)

92

86

6





Calculations may differ due to rounding

Appendix D-2 provides a comparative summary of EWC operating and financial measures.

Appendix D-2: EWC Operational and Financial Measures

First Quarter 2019 vs. 2018 (See Appendix G for reconciliation of GAAP to non-GAAP measures)


First Quarter


2019

2018

% Change

Owned capacity (MW)

3,962

3,962

-

GWh billed

7,203

6,996

3.0

Net revenue ($ in millions)

393

382

2.9





EWC Nuclear Fleet




Capacity factor

85%

83%

2.4

GWh billed

6,690

6,408

4.4

Production cost per MWh

$20.04

$18.75

6.9

Average energy/capacity revenue per MWh

$57.99

$56.96

1.8

Net revenue ($ in millions)

389

379

2.6

Refueling outage days




Indian Point 2

-

13


Indian Point 3

21

-






Calculations may differ due to rounding

See 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

First Quarter 2019 vs. 2018 (See Appendix G for reconciliation of GAAP to non-GAAP financial measures)



For 12 months ending March 31

2019

2018

Change

GAAP Measures




As-reported ROIC

5.6%

3.9%

1.7%

As-reported ROE

11.4%

5.8%

5.6%





Non-GAAP Measures




Adjusted ROIC

5.5%

5.0%

0.5%

Adjusted ROE

11.5%

9.4%

2.1%





As of March 31 ($ in millions)

2019

2018

Change

GAAP Measures




Cash and cash equivalents

983

1,206

(223)

Revolver capacity

3,950

3,010

940

Commercial paper

1,942

655

1,287

Total debt

19,325

17,680

1,645

Securitization debt

398

520

(122)

Debt to capital

67.8%

68.4%

(0.6%)

Off-balance sheet liabilities:




Debt of joint ventures – Entergy's share

59

66

(7)

Leases – Entergy's share (j)

-

429

(429)

Power purchase agreements accounted for as leases (j)

-

136

(136)

Total off-balance sheet liabilities

59

631

(572)





Non-GAAP Financial Measures




Debt to capital, excluding securitization debt

67.3%

67.7%

(0.4%)

Gross liquidity

4,933

4,216

717

Net debt to net capital, excluding securitization debt

66.1%

66.1%

0.0%

Parent debt to total debt, excluding securitization debt

21.7%

21.1%

0.6%

FFO to debt, excluding securitization debt

11.1%

14.8%

(3.7%)

FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC

15.0%

15.3%

(0.3%)







(j)

As of January 1, 2019, Entergy adopted ASC 842, the new lease accounting standard. As a result, Entergy re-evaluated all agreements and put all agreements that qualified as operating leases on the balance sheet, and there are no longer any off-balance sheet liabilities for leases.

F: Definitions and Abbreviations and Acronyms

Appendix F-1 provides definitions of certain operating measures, as well as GAAP and non-GAAP financial measures. Non-GAAP financial measures remove the effects of financial events that are not routine from commonly used financial measures.

Appendix F-1: Definitions

Utility Operating and Financial Measures

GWh billed

Total number of GWh billed to retail and wholesale customers

Net revenue

Operating revenues less fuel, fuel related expenses and gas purchased for resale; purchased power and other regulatory charges (credits) – net

Non-fuel O&M

Operation and maintenance expenses excluding fuel, fuel-related expenses and gas purchased for resale and purchased power

Non-fuel O&M per MWh

Non-fuel O&M per MWh of billed sales

Number of retail customers

Number of customers at the end of the prior year



EWC Operating and Financial Measures

Average revenue under contract per kW-month (applies to capacity contracts only)

Revenue on a per unit basis at which capacity is expected to be sold to third parties, given existing contract prices and/or auction awards

Average revenue per MWh on contracted volumes

Revenue on a per unit basis at which generation output reflected in contracts is expected to be sold to third parties (including offsetting positions) at the minimum contract prices and at forward market prices at a point in time, given existing contract or option exercise prices based on expected dispatch or capacity, excluding the revenue associated with the amortization of the below-market PPA for Palisades; revenue will fluctuate due to factors including market price changes affecting revenue received on puts, collars and call options, positive or negative basis differentials, option premiums and market prices at the time of option expiration, costs to convert firm LD to unit-contingent and other risk management costs

Bundled capacity and energy contracts

A contract for the sale of installed capacity and related energy, priced per MWh sold

Capacity contracts

A contract for the sale of the installed capacity product in regional markets managed by ISO New England, NYISO and MISO

Capacity factor

Normalized percentage of the period that the nuclear plants generate power

Expected sold and market total revenue per MWh

Total energy and capacity revenue on a per unit basis at which total planned generation output and capacity is expected to be sold given contract terms and market prices at a point in time, including estimates for market price changes affecting revenue received on puts, collars and call options, positive or negative basis differentials, option premiums and market prices at time of option expiration, costs to convert Firm LD to unit-contingent and other risk management costs, divided by total planned MWh of generation, excluding the revenue associated with the amortization of the Palisades below-market PPA

Firm LD

Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, defaulting party must compensate the other party as specified in the contract, a portion of which may be capped through the use of risk management products



Appendix F-1: Definitions

EWC Operating and Financial Measures (continued)

GWh billed

Total number of GWh billed to customers and financially-settled instruments

Net revenue

Operating revenues less fuel and fuel-related expenses and purchased power

Offsetting positions

Transactions for the purchase of energy, generally to offset a Firm LD transaction

Owned capacity (MW)

Installed capacity owned by EWC

Percent of capacity sold forward

Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions

Percent of planned generation under contract

Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts or options that mitigate price uncertainty that may or may not require regulatory approval or approval of transmission rights or other conditions precedent; positions that are no longer classified as hedges are netted in the planned generation under contract

Planned net MW in operation

Amount of installed capacity to generate power and/or sell capacity, assuming intent to shutdown Pilgrim (May 31, 2019), Indian Point 2 (April 30, 2020), Indian Point 3 (April 30, 2021) and Palisades (May 31, 2022)

Planned TWh of generation

Amount of output expected to be generated by EWC resources considering plant operating characteristics and outage schedules, assuming intent to shutdown Pilgrim (May 31, 2019), Indian Point 2 (April 30, 2020), Indian Point 3 (April 30, 2021) and Palisades (May 31, 2022)

Production cost per MWh

Fuel and non-fuel O&M expenses according to accounting standards that directly relate to the production of electricity per MWh (based on net generation)

Refueling outage days

Number of days lost for a scheduled refueling and maintenance outage during the period

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 Corporation divided by average 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

Book value per share

End of period common equity divided by end of period shares outstanding

Debt of joint ventures – Entergy's share

Entergy's share of debt issued by business joint ventures at EWC

Debt to capital

Total debt divided by total capitalization

Leases – Entergy's share

Operating leases held by subsidiaries capitalized at implicit interest rate

Revolver capacity

Amount of undrawn capacity remaining on corporate and subsidiary revolvers

Securitization debt

Debt associated with securitization bonds issued to recover storm costs from hurricanes Rita, Ike and Gustav at E-TX and Hurricane Isaac at E-NO; the 2009 ice storm at E-AR and investment recovery of costs associated with the cancelled Little Gypsy repowering project at E-LA

Total debt

Sum of short-term and long-term debt, notes payable and commercial paper and capital leases on the balance sheet






Appendix F-1: Definitions

Financial Measures - Non-GAAP

Adjusted EBITDA

Earnings before interest, depreciation and amortization and income taxes and excluding decommissioning expense; for Entergy consolidated, also excludes AFUDC-equity funds and subtracts securitization proceeds

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, excluding securitization debt

Total debt divided by total capitalization, excluding securitization debt

FFO

OCF less AFUDC-borrowed funds, working capital items in OCF (receivables, fuel inventory, accounts payable, prepaid taxes and taxes accrued, interest accrued and other working capital accounts) and securitization regulatory charges

FFO to debt, excluding securitization debt

12-months rolling adjusted FFO as a percentage of end of period total 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

12-months rolling adjusted FFO as a percentage of end of period total debt excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC

Gross liquidity

Sum of cash and revolver capacity

Net debt to net capital, excluding securitization debt

Total debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents, excluding securitization debt

Parent debt to total debt, excluding securitization debt

End of period Entergy Corporation debt, including amounts drawn on credit revolver and commercial paper facilities, as a percent of consolidated total debt, excluding 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

ISO

Independent system operator

AFUDC – borrowed funds

Allowance for borrowed funds used during construction

IT

Information technology 

AFUDC – equity funds

Allowance for equity funds used during construction

LPSC

Louisiana Public Service Commission

ALJ

Administrative law judge

LTM

Last twelve months

AMI

Advanced metering infrastructure

LTSA

Long-term service agreement

ANO

Units 1 and 2 of Arkansas Nuclear One owned by E-AR (nuclear)

MISO

Midcontinent Independent System Operator, Inc.

APSC

Arkansas Public Service Commission

Moody's

Moody's Investor Service 

ARO

Asset retirement obligation

MPSC

Mississippi Public Service Commission

bps

Basis points

MTEP

MISO Transmission Expansion Planning

CCGT

Combined cycle gas turbine

Nelson 6

Unit 6 of Roy S. Nelson plant (coal)

CCN

Certificate of convenience & necessity 

NEPOOL

New England Power Pool

CCNO

Council of the City of New Orleans, Louisiana

Ninemile 6

Ninemile Point Unit 6 (CCGT)

COD

Commercial operation date

Non-fuel O&M

Non-fuel operation and maintenance expense

CT

Simple cycle combustion turbine

NDT

Nuclear decommissioning trust

CWIP

Construction work in progress

NOPS

New Orleans Power Station (RICE/natural gas)

DCRF

Distribution cost recovery factor

NorthStar

NorthStar Decommissioning Holdings, LLC

E-AR

Entergy Arkansas, LLC

NRC

Nuclear Regulatory Commission

E-LA

Entergy Louisiana, LLC

NYISO

New York Independent System Operator, Inc.

E-MS

Entergy Mississippi, LLC

NYPA

New York Power Authority

E-NO

Entergy New Orleans, LLC

NYSE

New York Stock Exchange

E-TX

Entergy Texas, Inc.

O&M

Operation and maintenance expense

EBITDA

Earnings before interest, income taxes, depreciation and amortization

OCF

Net cash flow provided by operating activities

ENGC

Entergy Nuclear Generation Company

OpCo

Operating Company

ENP

Entergy Nuclear Palisades, LLC

OPEB

Other post-employment benefits

EPS

Earnings per share

P&O

Parent & Other

ETR

Entergy Corporation

Palisades

Palisades Power Plant (nuclear)

EWC

Entergy Wholesale Commodities

Pilgrim

Pilgrim Nuclear Power Station (nuclear)

FERC

Federal Energy Regulatory Commission

PPA

Power purchase agreement or purchased power agreement

FFO

Funds from operations

PUCT

Public Utility Commission of Texas

FitzPatrick

James A. FitzPatrick Nuclear Power Plant (nuclear, sold March 31, 2017)

RICE

Reciprocating Internal Combustion Engine

FRP

Formula rate plan

RFP

Request for proposals

GAAP

U.S. generally accepted accounting principles

ROE

Return on equity

Grand Gulf or GGNS

Unit 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by SERI

ROIC

Return on invested capital

Indian Point 1 or IP1

Indian Point Energy Center Unit 1 (nuclear) (shut down in 1974)

RS Cogen

RS Cogen facility (CCGT cogeneration)

Indian Point 2 or IP2

Indian Point Energy Center Unit 2 (nuclear)

RSP

Rate Stabilization Plan (E-LA Gas)

Indian Point 3 or IP3

Indian Point Energy Center Unit 3 (nuclear)

S&P

Standard & Poor's

IPEC

Indian Point Energy Center (nuclear)

SCPS

St. Charles Power Station (CCGT) 

ISES 2

Unit 2 of Independence Steam Electric Station (coal)

SEC

U.S. Securities and Exchange Commission

IRS

Internal Revenue Service 

SERI

System Energy Resources, Inc.



TCRF

Transmission cost recovery factor



Union

Union Power Station (CCGT)



UPSA

Unit Power Sales Agreement



VPUC

Vermont Public Utility Commission



VY or Vermont Yankee

Vermont Yankee Nuclear Power Station (nuclear)



WACC

Weighted-average cost of capital



WPEC

Washington Parish Energy Center (CT/natural gas)

G: GAAP to Non-GAAP Reconciliations

Appendix G-1 and Appendix G-2 provide reconciliations of various non-GAAP financial measures disclosed in this release to their most comparable GAAP measure.

Appendix G-1: Reconciliation of GAAP to Non-GAAP Financial Measures - ROIC, ROE

($ in millions except where noted)


First Quarter



2019

2018

As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months

(A)

970

462

Preferred dividends


15

14

Tax effected interest expense


539

499

As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months adjusted for preferred dividends and tax effected interest expense

(B)

1,524

975





Adjustments in prior quarters


(103)

(276)

EWC adjustments


97

(18)

  Total adjustments

(C)

(6)

(294)

EWC preferred dividends and tax-effected interest expense, rolling 12 months


30

22





Total adjustments, including preferred dividends and tax effected interest expense (non-GAAP)

(D)

24

(272)





Adjusted earnings, rolling 12 months (non-GAAP)

(A-C)

976

756

Adjusted earnings, rolling 12 months including preferred dividends and tax- effected interest expense (non-GAAP)

(B-D)

1,501

1,247





Average invested capital

(E)

27,184

24,862





Average common equity

(F)

8,473

8,016





As-reported ROIC

(B/E)

5.6%

3.9%

Adjusted ROIC (non-GAAP)

[(B-D)/E]

5.5%

5.0%

As-reported ROE

(A/F)

11.4%

5.8%

Adjusted ROE (non-GAAP)

[(A-C)/F]

11.5%

9.4%





Calculations may differ due to rounding




Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios excluding Securitization Debt; Gross Liquidity; 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)


First Quarter



2019

2018

Total debt

(A)

19,325

17,680

Less securitization debt

(B)

398

520

Total debt, excluding securitization debt

(C)

18,927

17,160

Less cash and cash equivalents

(D)

983

1,206

Net debt, excluding securitization debt

(E)

17,944

15,954





Total capitalization

(F)

28,515

25,853

Less securitization debt

(B)

398

520

Total capitalization, excluding securitization debt

(G)

28,117

25,333

Less cash and cash equivalents

(D)

983

1,206

Net capital, excluding securitization debt

(H)

27,134

24,127





Debt to capital

(A/F)

67.8%

68.4%

Debt to capital, excluding securitization debt (non-GAAP)

(C/G)

67.3%

67.7%

Net debt to net capital, excluding securitization debt (non-GAAP)

(E/H)

66.1%

66.1%





Revolver capacity

(I)

3,950

3,010





Gross liquidity (non-GAAP)

(D+I)

4,933

4,216





Entergy Corporation notes:




Due September 2020


450

450

Due July 2022


650

650

Due September 2026


750

750

Total parent long-term debt

(J)

1,850

1,850

Revolver draw

(K)

320

1,125

Commercial paper

(L)

1,942

655

Unamortized debt issuance and discounts

(M)

(9)

(11)

Total parent debt

(J+K+L+M)

4,103

3,619





Parent debt to total debt, excluding securitization debt (non-GAAP)

[(J+K+L+M)/C]

21.7%

21.1%






Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios excluding Securitization Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt; FFO to Debt, excluding Securitization Debt, Return of Unprotected Excess ADIT, and Severance and Retention Payments Associated with Exit of EWC (continued)

($ in millions except where noted)


First Quarter



2019

2018

Total debt

(A)

19,325

17,680

Less securitization debt

(B)

398

520

Total debt, excluding securitization debt

(C)

18,927

17,160





Net cash flow provided by operating activities, rolling 12 months

(D)

2,329

2,652





AFUDC – borrowed funds, rolling 12 months

(E)

(65)

(49)





Working capital items in net cash flow provided by operating activities (rolling 12 months):




Receivables


7

(123)

Fuel inventory


58

(26)

Accounts payable


103

81

Taxes accrued


51

36

Interest accrued


(5)

5

Other working capital accounts


(178)

(25)

Securitization regulatory charges


121

121

Total

(F)

157

69





FFO, rolling 12 months (non-GAAP)

(G)=(D+E-F)

2,107

2,534





FFO to debt, excluding securitization debt (non-GAAP)

(G/C)

11.1%

14.8%





Estimated return of unprotected excess ADIT (rolling 12 months pre-tax)

(H)

692

-

Severance and retention payments associated with exit of EWC (rolling 12 months pre-tax)

(I)

43

100





FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC (non-GAAP)

[(G+H+I)/(C)]

15.0%

15.3%





Calculations may differ due to rounding

 

Cision

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