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Entergy Reports Fourth Quarter and Full Year Financial Results; Initiates 2019 Earnings Guidance Based on Single New Measure

NEW ORLEANS, Feb. 20, 2019 /PRNewswire/ -- Entergy Corporation (ETR) reported a fourth quarter 2018 loss per share of (36) cents on an as-reported basis and earnings per share of 60 cents on an operational basis (non-GAAP), which excludes the effects of special items. For the full year, the company reported 2018 earnings per share of $4.63 on an as-reported basis and $7.31 on an operational basis. The as-reported results for the quarter and full year reflected asset impairments and other expenses related to the strategic decision to exit the EWC business.

Entergy Corporation Logo. (PRNewsFoto/Entergy Corporation) (PRNewsFoto/) (PRNewsFoto/)

"Today we are reporting strong results for another successful year, and we are firmly on track to achieve our long-term goals," said Entergy Chairman and Chief Executive Officer Leo Denault. "In 2018 we executed on our strategy and met major milestones in our transition to a pure-play utility. We expect 2019 will be no different."

Business highlights included the following:

  • Entergy initiated 2019 guidance and 2020-2021 outlooks for its new ETR adjusted EPS measure. 
  • The APSC and PUCT issued orders approving settlements in E-AR's and E-TX's base rate proceedings.
  • In January 2019, Entergy completed the sale of VY to NorthStar.
  • Entergy and Holtec filed Pilgrim's license transfer application with the NRC.
  • Entergy raised its dividend for the fourth consecutive year.
  • The U.S. Chamber of Commerce Foundation named Entergy a finalist in its 2018 Corporate Citizenship Awards in the "Best Economic Empowerment Program" category.

 

Consolidated Earnings (GAAP and Non-GAAP Measures)
Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of special items)


Fourth Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

(After-tax, $ in millions)







As-reported earnings

(66)

(479)

413

849

412

437

Less special items

(176)

(617)

440

(493)

(889)

396

Operational earnings (non-GAAP)

110

138

(27)

1,341

1,300

41

  Estimated weather in billed sales

25

11

14

67

(79)

146








(After-tax, per share in $)







As-reported earnings

(0.36)

(2.66)

2.30

4.63

2.28

2.35

Less special items

(0.96)

(3.42)

2.46

(2.68)

(4.92)

2.24

Operational earnings (non-GAAP)

0.60

0.76

(0.16)

7.31

7.20

0.11

  Estimated weather in billed sales

0.13

0.06

0.07

0.37

(0.44)

0.80








Calculations may differ due to rounding

Consolidated Results

For fourth quarter 2018, the company reported a loss of $(66 million), or (36) cents per share, on an as-reported basis and earnings of $110 million, or 60 cents per share, on an operational basis. This compared to a fourth quarter 2017 loss of $(479 million), or $(2.66) per share, on an as-reported basis and earnings of $138 million, or 76 cents per share on an operational basis.

For the full year, the company reported 2018 earnings of $849 million, or $4.63 per share, on an as-reported basis and $1,341 million, or $7.31 per share, on an operational basis. This compared to 2017 earnings of $412 million, or $2.28 per share, on an as-reported basis and earnings of $1,300 million, or $7.20 per share, on an operational 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 and year-to-date variances by business is provided in Appendix B.

Utility, Parent & Other Results

For fourth quarter 2018, the Utility business reported earnings attributable to Entergy Corporation of $388 million, or $2.12 per share, on an as-reported basis, and earnings of $350 million, or $1.91 per share, on an operational basis. This compared to a fourth quarter 2017 loss of $(47 million), or (26) cents per share, on an as-reported basis, and earnings of $133 million, or 74 cents per share on an operational basis.

Drivers for the increase in quarterly earnings included:

  • A fourth quarter 2017 revaluation of certain tax assets as a result of tax reform, net of adjustments for customer sharing, which decreased 2017 earnings by $181 million (considered a special item and excluded from operational earnings),
  • In fourth quarter 2018, a $38 million reversal of a portion of the tax reform accrual recorded in 2017 (considered a special item and excluded from operational earnings),
  • A fourth quarter 2018 favorable income tax item, net of a portion reserved for sharing with E-AR customers, which increased earnings by approximately $140 million,
  • New base rate actions to recover investments that benefit customers and
  • Non-fuel O&M expense decreased quarter-over-quarter.

The drivers above were partially offset by:

  • Regulatory provisions in 2018 that lowered earnings into the allowed ranges at E-AR and E-MS as required by their FRPs,
  • A regulatory charge in 2018 for amounts due to E-TX customers for the benefit of the lower federal tax rate retroactive to January 2018 and
  • Higher depreciation expense and taxes other than income taxes.

The current period results also included a $215 million reduction in income taxes, with a corresponding reduction in net revenue, for the amortization of unprotected excess ADIT. This was neutral to earnings.

For fourth quarter 2018, Parent & Other reported a loss of $(81 million), or (44) cents per share, on both an as-reported and operational basis. This compared to a fourth quarter 2017 loss of $(6 million), or (4) cents per share, on an as-reported basis, and a loss of $(58 million), or (33) cents per share, on an operational basis.

As-reported results for 2017 reflected a reduction in income tax expense of $52 million for the revaluation of certain tax assets, which resulted from tax reform. This was considered a special item and excluded from operational earnings.

On a combined basis, Utility, Parent & Other (non-GAAP) contributed $1.68 to fourth quarter 2018 consolidated EPS compared to a loss of (30) cents in fourth quarter 2017. On an adjusted basis, excluding special items and normalizing weather and income taxes, Utility, Parent & Other contributed 51 cents in fourth quarter 2018 to consolidated EPS, compared to 48 cents in fourth quarter 2017.

For full year 2018, the Utility business earned net income attributable to Entergy Corporation of $1,483 million, or $8.09 per share, on an as-reported basis, and earnings of $1,445 million, or $7.88 per share, on an operational basis. This compared to full year 2017 earnings of $762 million, or $4.22 per share, on an as-reported basis, and $942 million, or $5.22 per share on an operational basis.

Drivers for the increase in annual earnings included:

  • A fourth quarter 2017 revaluation of certain tax assets, net of customer sharing, discussed above (considered a special item and excluded from operational earnings),
  • A fourth quarter 2018 reversal of a tax reform accrual discussed above (considered a special item and excluded from operational earnings),
  • Second and fourth quarter 2018 favorable income tax items, net of customer sharing,
  • New base rate actions to recover investments that benefit customers and
  • Higher retail sales, attributable to weather.

The drivers above were partially offset by:

  • Higher operating expenses (non-fuel O&M, taxes other than income taxes and depreciation expense) and
  • 2018 regulatory provisions that lowered earnings into the allowed ranges at E-AR and E-MS as required by their FRPs.

Full year 2018 results also reflected the return of unprotected excess ADIT to customers, which affected several income statement line items but was neutral to earnings. Specifically, this reduced income taxes by $775 million, but was offset in net revenue and non-fuel O&M.

For 2018, Parent & Other reported a loss of $(292 million), or $(1.59) per share, on an as-reported and operational basis. This compared to a 2017 loss of $(175 million), or (97) cents per share, on an as-reported basis, and $(228 million), or $(1.26) per share, on an operational basis. As-reported results for 2017 included a decrease in income tax expense, which resulted from tax reform as described above. This was considered a special item and excluded from operational earnings. 2018 results also reflected higher interest expense.

On a combined basis, Utility, Parent & Other (non-GAAP) contributed $6.50 to 2018 consolidated EPS, compared to $3.25 in 2017. On an adjusted basis, normalizing weather and income taxes, Utility, Parent & Other contributed $4.71 to 2018 consolidated EPS, compared to $4.57 in 2017.

Appendix C contains additional details on Utility financial and operating measures, including a reconciliation for non-GAAP Utility, Parent & Other adjusted earnings and EPS.

Entergy Wholesale Commodities Results

For fourth quarter 2018, EWC recorded a loss attributable to Entergy Corporation of $(373 million), or $(2.04) per share, on an as-reported basis and loss $(158 million), or (87) cents per share, on an operational basis. This compared to fourth quarter 2017 loss of $(425 million), or $(2.36) per share, on an as-reported basis and earnings of $63 million, or 35 cents per share, on an operational basis.

As-reported results in both periods reflected impairments and other expenses recorded as a result of the strategic decision to exit the EWC business. In fourth quarter 2018, these items totaled $(214 million), or $(1.17) per share. This amount included a revision to Vermont Yankee's asset retirement obligation as a result of its approved sale, which resulted in in a pre-tax asset impairment of $(173 million). In fourth quarter 2017, these items totaled $(92 million), or (51) cents per share. Fourth quarter 2017 results also reflected the write-down of certain tax assets totaling $(397 million) as a result of tax reform. All of these items were considered special items and excluded from operational earnings.

The current period results included losses on decommissioning trust fund investments, as well as lower net revenue as a result of lower nuclear energy volume. Partially offsetting these items were lower non-fuel O&M expense and lower income tax expense primarily due to lower pre-tax income.

For the full year, EWC reported a loss of $(343 million), or $(1.87) per share, on an as-reported basis, and earnings of $188 million, or $1.02 per share on an operational basis. In 2017, EWC realized a loss of $(175 million), or (97) cents per share, on an as-reported basis, and earnings of $586 million, or $3.24 per share on an operational basis. Both periods reflected the effects of the strategic decision to exit the EWC business as well as the 2017 tax reform item noted above. Other drivers included lower net revenue from the nuclear business, losses on decommissioning trust fund investments and lower depreciation and decommissioning expenses. Additionally, 2018 results included less favorable income tax items, excluding the 2017 tax reform item.

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

Earnings Guidance

Entergy initiated 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 measures 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 $(1.25) 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 10:00 a.m. Central Time on Wednesday, February 20, 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 6799533, 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 February 27, 2019, by dialing 855-859-2056, conference ID 6799533. This release and the webcast slide presentation are also available on the Entergy Investor Relations mobile web app at iretr.com.

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 and Chicago stock exchanges 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 and on Entergy's Investor Relations mobile web app at iretr.com.

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. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes 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.

Certain non-GAAP financial measures in this news release could differ from GAAP in that the figure or ratio states or includes operational earnings. Operational earnings are not calculated in accordance with GAAP because they exclude the effect of "special items." Special items are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, and may include items such as impairments, and certain gains or losses including those that may occur as a result of strategic decisions such as Entergy's decision to exit the EWC business. 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 operational and as-reported basis. In each case, the metrics defined as "operational" would exclude the effect of special items as defined above.

Entergy reports the combination of the Utility segment with Parent & Other as Utility, Parent & Other, which is all of Entergy excluding the EWC segment, since management uses this combination in making decisions about its ongoing business in light of its decision to exit the merchant power business. Entergy also reports Utility, Parent & Other adjusted earnings, which combines the Utility segment with Parent & Other, excludes applicable special items and normalizes weather and income tax expense for the periods presented, because it believes that these financial metrics provide useful information to investors in evaluating the ongoing results of Entergy's businesses and assist investors in comparing Entergy's financial performance to the financial performance of other companies in the Utility sector. The methodologies employed to determine the normalized weather and income tax expense adjustments, each of which is further described in this release, involve estimations and the judgement of management.

Beginning with first quarter 2019 financial results, Entergy intends to report 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 its decision to exit the merchant power business. Beginning with this release, Entergy is also providing guidance and outlooks using adjusted earnings on a per share basis. 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 EWC segment given its strategic decision to exit the EWC business, and items such as certain costs, expenses, significant tax items, or other specified items. Entergy believes that this financial measure provides 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.

In addition to reporting earnings per share on a consolidated basis, Entergy reports on a per share basis the earnings or loss of each of its segments, together with the combination of the Utility segment and Parent & Other. These per share measures represent the net income or loss of such segment or segments divided by the diluted average number of common shares outstanding for the period. Beginning with Entergy's first quarter 2019 financial results, Entergy intends to report its adjusted earnings on a per share basis. Entergy believes such per share measures provide useful information to investors in understanding the results of operations of those businesses and their contribution to Entergy's consolidated results of operations.

Other non-GAAP measures, including adjusted EBITDA; operational adjusted EBITDA; gross liquidity; debt to capital ratio, excluding securitization debt; net debt to net capital ratio, excluding securitization debt; parent debt to total debt ratio, excluding securitization debt; operational FFO to debt ratio, excluding securitization debt and operational FFO to debt ratio, excluding securitization debt and return of unprotected excess ADIT are measures Entergy uses internally for management and board discussions and performance monitoring activities 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.

The non-GAAP financial measures and other reported adjusted items in this release are presented in addition to, and in conjunction with, results presented in accordance with GAAP. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. 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. Investors are strongly encouraged to review Entergy's consolidated financial statements and publicly filed reports in their entirety and to not rely on any single financial measure. 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 outlook; 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; and (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.

Fourth Quarter 2018 Earnings Release Appendices and Financial Statements

Appendices
Appendices are presented in this section as follows:

  • A: Consolidated Results and Special Items
  • 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

Financial Statements
Financial statements are presented in this section.

A: Consolidated Results and Special Items
Appendix A-1 provides a comparative summary of consolidated earnings, including a reconciliation of as-reported earnings (GAAP) to operational earnings (non-GAAP).

Appendix A-1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures

Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A-3 and Appendix A-4 for details on special items, including income tax effects on adjustments)


Fourth Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

(After-tax, $ in millions)







Earnings (loss)







Utility

388

(47)

435

1,483

762

722

Parent & Other

(81)

(6)

(75)

(292)

(175)

(116)

EWC

(373)

(425)

53

(343)

(175)

(168)

Consolidated

(66)

(479)

413

849

412

437








Less special items







Utility

38

(181)

219

38

(181)

219

Parent & Other

-

52

(52)

-

52

(52)

EWC

(214)

(488)

274

(531)

(760)

229

Consolidated

(176)

(617)

440

(493)

(889)

396








Operational earnings (loss) (non-GAAP)







Utility

350

133

217

1,445

942

503

Parent & Other

(81)

(58)

(23)

(292)

(228)

(64)

EWC

(158)

63

(221)

188

586

(398)

Consolidated

110

138

(27)

1,341

1,300

41

Estimated weather in billed sales

25

11

14

67

(79)

146








Diluted average number of common shares outstanding (in millions)

183.1

180.3


183.4

180.5









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







Earnings (loss)







Utility

2.12

(0.26)

2.38

8.09

4.22

3.87

Parent & Other

(0.44)

(0.04)

(0.40)

(1.59)

(0.97)

(0.62)

EWC

(2.04)

(2.36)

0.32

(1.87)

(0.97)

(0.90)

Consolidated

(0.36)

(2.66)

2.30

4.63

2.28

2.35








Less special items







Utility

0.21

(1.00)

1.21

0.21

(1.00)

1.21

Parent & Other

-

0.29

(0.29)

-

0.29

(0.29)

EWC

(1.17)

(2.71)

1.54

(2.89)

(4.21)

1.32

Consolidated

(0.96)

(3.42)

2.46

(2.68)

(4.92)

2.24








Operational earnings (loss) (non-GAAP)







Utility

1.91

0.74

1.17

7.88

5.22

2.66

Parent & Other

(0.44)

(0.33)

(0.11)

(1.59)

(1.26)

(0.33)

EWC

(0.87)

0.35

(1.22)

1.02

3.24

(2.22)

Consolidated

0.60

0.76

(0.16)

7.31

7.20

0.11

Estimated weather in billed sales

0.13

0.06

0.07

0.37

(0.44)

0.80








Calculations may differ due to rounding

(a)

Per share amounts are calculated by dividing the 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

Fourth Quarter and Year-to-Date 2018 vs. 2017

($ in millions)


Fourth Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

Utility

699

934

(235)

2,693

2,939

(246)

Parent & Other

(20)

(134)

114

(234)

(452)

218

EWC

(153)

111

(264)

(74)

137

(211)

Consolidated

526

911

(385)

2,385

2,624

(239)








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 lower net revenue at EWC, higher spending on nuclear refueling outages and higher severance and retention payments at EWC.

OCF decreased year-over-year, driven by the return of the unprotected excess ADIT to customers and lower net revenue at EWC. Favorable weather at the Utility and lower severance and retention payments at EWC, partially offset the decrease.

For both the quarter and the full year, intercompany income tax payments contributed to the line of business variances.

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

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

Fourth Quarter and Year-to-Date 2018 vs. 2017

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


Fourth Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

Utility







Tax reform

38

(181)

219

38

(181)

219

    Total Utility

38

(181)

219

38

(181)

219








Parent & Other







Tax reform

-

52

(52)

-

52

(52)

    Total Parent & Other

-

52

(52)

-

52

(52)








EWC







Items associated with the strategic decision to exit the EWC business

(271)

(141)

(131)

(672)

(628)

(44)

Income tax effect on adjustments above (b)

57

49

8

141

220

(79)

Income tax benefit resulting from FitzPatrick transaction

-

-

-

-

45

(45)

Tax reform

-

(397)

397

-

(397)

397

    Total EWC

(214)

(488)

274

(531)

(760)

229








Total special items

(176)

(617)

440

(493)

(889)

396








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







Utility







Tax reform

0.21

(1.00)

1.21

0.21

(1.00)

1.21

    Total Utility

0.21

(1.00)

1.21

0.21

(1.00)

1.21








Parent & Other







Tax reform

-

0.29

(0.29)

-

0.29

(0.29)

    Total Parent & Other

-

0.29

(0.29)

-

0.29

(0.29)








EWC







Items associated with the strategic decision to exit the EWC business

(1.17)

(0.51)

(0.66)

(2.89)

(2.26)

(0.63)

Income tax benefit resulting from FitzPatrick transaction

-

-

-

-

0.25

(0.25)

Tax reform

-

(2.20)

2.20

-

(2.20)

2.20

    Total EWC

(1.17)

(2.71)

1.54

(2.89)

(4.21)

1.32








Total special items

(0.96)

(3.42)

2.46

(2.68)

(4.92)

2.24








Calculations may differ due to rounding

(b)

Income tax effect is calculated by multiplying the pre-tax amount by the estimated income tax rate that is expected to apply.

(c)

EPS effect is calculated by multiplying the pre-tax amount by the estimated income tax rate that is expected to apply to each adjustment and then dividing by the diluted average number of common shares outstanding for the period.

 

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

Fourth Quarter and Year-to-Date 2018 vs. 2017

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


Fourth Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

Utility







Net revenue

-

56

(56)

-

56

(56)

Income taxes (d)

38

(236)

274

38

(236)

274

    Total Utility

38

(181)

219

38

(181)

219








Parent & Other







Income taxes (d)

-

52

(52)

-

52

(52)

    Total Parent & Other

-

52

(52)

-

52

(52)








EWC







Net revenue

-

-

-

-

91

(91)

Non-fuel O&M

(34)

(22)

(11)

(131)

(201)

70

Asset write-off and impairments

(235)

(117)

(118)

(532)

(538)

6

Taxes other than income taxes

(3)

(2)

(1)

(8)

(10)

1

Gain on sale of assets

-

-

-

-

16

(16)

Miscellaneous net (other income)

-

-

-

-

15

(15)

Income taxes (d)

57

(347)

404

141

(133)

274

    Total EWC

(214)

(488)

274

(531)

(760)

229








Total special items (after-tax)

(176)

(617)

440

(493)

(889)

396








Calculations may differ due to rounding

(d) 

Income taxes included the income tax effect of the special items which were calculated using the estimated income tax rate that is expected to apply to each item. The year-to-date 2017 period also included the income tax benefit which resulted from the FitzPatrick transaction.

B: Earnings Variance Analysis
Appendix B provides details of current quarter 2018 versus 2017 as-reported and operational earnings variance analysis for Utility, Parent & Other and EWC.

Appendix B-1: As-Reported and Operational Earnings Variance Analysis

Fourth Quarter 2018 vs. 2017

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


Utility


Parent & Other


EWC


Consolidated


As-Reported

Operational


As-Reported

Operational


As-

Reported

Operational


As-

Reported

Operational

2017 earnings

(47)

133


(6)

(58)


(425)

63


(479)

138

Net revenue

(315)

(259)

(e)

-

-


(52)

(52)

(f)

(367)

(311)

Non-fuel O&M

33

33

(g) 

(2)

(2)


12

23

(h)

43

54

Asset write-offs and impairments

-

-


-

-


(118)

-

(i)

(118)

-

Decommissioning expense

(2)

(2)


-

-


(5)

(5)


(7)

(7)

Taxes other than income taxes

(7)

(7)


-

-


(1)

-


(8)

(7)

Depreciation/amortization exp.

(13)

(13)


-

-


3

3


(10)

(10)

Other income (deductions)

(7)

(7)


(4)

(4)


(247)

(247)

(j)

(258)

(258)

Interest exp. and other charges

4

4


(11)

(11)


(2)

(2)


(9)

(9)

Income taxes

742

468

(k)

(58)

(6)

(l)

463

58

(m)

1,147

520

2018 earnings

388

350


(81)

(81)


(373)

(158)


(66)

110













 

Appendix B-2: As-Reported and Operational Earnings Variance Analysis

Year-to-Date 2018 vs. 2017

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


Utility


Parent & Other


EWC


Consolidated


As-Reported

Operational


As-Reported

Operational


As-

Reported

Operational


As-

Reported

Operational

2017 earnings

762

942


(175)

(228)


(175)

586


412

1,300

Net revenue

(693)

(637)

(e)

-

-


(192)

(101)

(f)

(885)

(738)

Non-fuel O&M

(81)

(81)

(g)

(10)

(10)


67

13

(h)

(25)

(78)

Asset write-offs and impairments

-

-


-

-


6

-


6

-

Decommissioning expense

1

1


-

-


16

16

(n)

17

17

Taxes other than income taxes

(26)

(26)

(o)

-

-


1

-


(24)

(25)

Depreciation/amortization exp.

(23)

(23)

(p)

-

-


43

43

(q)

20

20

Other income (deductions)

22

22

(r)

(7)

(7)


(222)

(207)

(j)

(206)

(192)

Interest exp. and other charges

(6)

(6)


(29)

(29)

(s)

(10)

(10)


(45)

(45)

Income taxes

1,527

1,253

(k)

(70)

(18)

(l)

123

(151)

(m)

1,579

1,083

2018 earnings

1,483

1,445


(292)

(292)


(343)

188


849

1,341













Calculations may differ due to rounding 

 

Utility Net Revenue

As-reported Variance Analysis

2018 vs. 2017 (Pre-tax, $ in millions)


Fourth Quarter

Year-to-Date

Estimated weather

15

218

Volume/unbilled

(7)

(8)

Retail electric price

33

106

Regulatory credit for tax reform

(56)

(56)

Regulatory charge for lower tax rate

(25)

(102)

Reg. provisions for E-AR and E-MS FRPs

(44)

(44)

Regulatory liability for tax sharing

(40)

(40)

Unprotected excess ADIT

(215)

(770)

Other, including Grand Gulf recovery

24

3

Total

(315)

(693)

 

(e)

The fourth quarter and year-to-date earnings decreases from lower Utility net revenue were driven by the return of unprotected excess ADIT to customers (offset in income taxes), as well as a regulatory credit of $56 million in fourth quarter 2017 as a result of tax reform (classified as a special item). Regulatory charges at E-LA, E-TX, and E-NO to return the benefit of the lower federal tax rate to customers, regulatory provisions that lowered earnings into the allowed ranges at E-AR and E-MS as required by their FRPs, and a regulatory liability for tax sharing with E-AR customers (this partially offsets the income tax item discussed in footnote k) contributed to the variances. These decreases were partially offset by the effects of weather. In the fourth quarter, weather-adjusted billed sales volume decreased. However year-to-date weather-adjusted billed sales volume increased, but this was more than offset by lower volume in the unbilled period. 2018 results also included rate changes from E-AR's and E-LA's FRP and E-TX's base rate case.

(f)

The fourth quarter and year-to-date earnings decreases from lower EWC net revenue reflected lower prices as well as lower volume from EWC's merchant nuclear plants. The year-to-date as-reported variance reflected cost reimbursements from the buyer related to the FitzPatrick sale in first quarter 2017 (classified as a special item and offset in non-fuel O&M).

(g) 

The fourth quarter earnings increase from lower Utility non-fuel O&M was due primarily to lower nuclear costs, lower benefits costs and a gain on the sale of an asset. The year-to-date earnings decrease from higher Utility non-fuel O&M was due primarily to higher spending on fossil and distribution operations, as well as higher transmission and IT costs. Energy efficiency spending and storm reserves were also higher (largely offset in net revenue). This was partially offset by higher nuclear insurance refunds in 2018 compared to 2017, as well as the gain on the sale of an asset in fourth quarter 2018.

(h) 

The fourth quarter earnings increase from lower EWC non-fuel O&M was due primarily to lower labor and contract costs. The year-to-date as-reported earnings increase reflected costs incurred in first quarter 2017 related to the agreement to sell FitzPatrick (classified as a special item and offset in net revenue). This was partially offset by higher severance and retention costs related to the strategic decision to exit the EWC business compared to 2017, as well as the gain on the sale of FitzPatrick in first quarter 2017 (both classified as a special items).

(i) 

The fourth quarter as-reported earnings decrease from higher EWC asset write-offs and impairments resulted from a revision of Vermont Yankee's ARO, partially offset by a gain on proceeds from the settlement of spent fuel litigation at Pilgrim (both classified as special items).

(j) 

The fourth quarter and year-to-date earnings decreases from lower EWC other income (deductions) were due largely to losses on decommissioning trust fund investments, including unrealized losses on equity investments that were previously recorded as other comprehensive income on the balance sheet, now recorded to the income statement. The year-to-date as-reported earnings decrease also reflected the absence of gains on the receipt of the Indian Point 3 and FitzPatrick decommissioning trust funds from NYPA in first quarter 2017 (classified as a special item).

(k) 

The fourth quarter and year-to-date earnings increases from lower Utility income taxes were primarily due to the amortization of the unprotected excess ADIT (offset in net revenue) and an income tax item in fourth quarter 2018 of approximately $170 million resulting from the restructuring of E-AR (this was partly offset by customer sharing recorded as a regulatory charge, included in net revenue). The change in the federal income tax rate also contributed to the increases. The fourth quarter and year-to-date as-reported earnings increases also reflected the write-down of certain tax assets totaling $236 million as a result of tax reform in fourth quarter 2017 (classified as a special item and a portion offset in net revenue) and $38 million in fourth quarter 2018 related to the reversal of a tax accrual (classified as special item). The year-to-date variance also reflected income tax benefits from the settlement of the 2012‒2013 IRS audit in second quarter 2018.

(l) 

The fourth quarter and year-to-date earnings decreases reflected a fourth quarter 2017 reduction of income tax totaling $52 million as a result of tax reform (classified as a special item). The change in the federal income tax rate also contributed to the variances.

(m) 

The fourth quarter and year-to-date as-reported earnings increases from lower EWC income taxes reflected the write-down of certain tax assets totaling $397 million as a result of tax reform in fourth quarter 2017 (classified as a special item). The year-to-date as-reported variance also reflected additional income tax expense due to the lower level of special items and a tax benefit in first quarter 2017, which resulted from the sale of FitzPatrick (classified as a special item). The year-to-date operational earnings decrease reflected a $373 million reduction in tax expense in second quarter 2017. The increase was partially offset by $13 million in tax benefits from the settlement of the 2012‒2013 IRS audit in second quarter 2018, a reduction in income tax expense of $107 million for a restructuring of its interest in an EWC decommissioning trust fund in third quarter 2018 and a benefit of $23 million from the conclusion of a state income tax audit also in third quarter 2018. Changes in pre-tax income and the federal income tax rate also contributed to the fourth quarter and year-to-date variances.

(n) 

The year-to-date earnings increase from lower EWC decommissioning expense was due primarily to the sale of FitzPatrick in first quarter 2017.

(o) 

The year-to-date earnings decrease from higher Utility taxes other than income taxes was due to higher ad valorem and payroll taxes.

(p) 

The year-to-date earnings decrease from higher Utility depreciation expense was due to higher plant in service, partially offset by updated depreciation rates at SERI (offset in net revenue).

(q) 

The year-to-date earnings increase from lower EWC depreciation expense was due primarily to the decision to operate Palisades until May 2022, thereby extending the period in which the plant is depreciated.

(r) 

 The year-to-date earnings increase from higher Utility other income (deductions) was due primarily to higher AFUDC – equity funds due to higher CWIP balances, partially offset by losses on the decommissioning trust fund investments (largely offset in net revenue).

(s) 

The year-to-date earnings decrease from higher Parent & Other interest expense was due to higher borrowings, combined with higher variable interest rates.

C: Utility Financial and Operating Measures
Appendix C-1 provides a comparative summary of Utility, Parent & Other adjusted earnings and EPS contribution, each of which excludes the effects of special items and normalizes weather and income tax expense.

Appendix C-1: Utility, Parent & Other Adjusted Earnings and EPS - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A for details on special items)



Fourth Quarter

Year-to-Date



2018

2017

Change

2018

2017

Change


($ in millions)








Utility as-reported earnings (loss)

388

(47)

435

1,483

762

722


Parent & Other as-reported (loss)

(81)

(6)

(75)

(292)

(175)

(116)


UP&O as-reported earnings

307

(54)

360

1,191

586

605
















Less:








Special items

38

(129)

167

38

(129)

167


Estimated weather (t)

34

18

15

90

(128)

218


Tax effect of estimated weather (u)

(9)

(7)

(2)

(23)

49

(72)


Portion of E-AR and E-MS weather reserved for customers

(15)

-

(15)

(15)

-

(15)


Tax effect on E-AR and E-MS customer reserve (u)

4

-

4

4

-

4


Estimated weather, net of customer reserve (after-tax)

14

11

3

56

(79)

135










Difference between effective and statutory

income tax rates (v)

160

(22)

183

233

(31)

264










UP&O adjusted earnings

94

86

8

864

824

40










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








Utility as-reported earnings

2.12

(0.26)

2.38

8.09

4.22

3.87


Parent & Other as-reported (loss)

(0.44)

(0.04)

(0.40)

(1.59)

(0.97)

(0.62)


UP&O as-reported earnings

1.68

(0.30)

1.98

6.50

3.25

3.25










Less:








Special items

0.21

(0.71)

0.92

0.21

(0.71)

0.92


Estimated weather, net of customer reserve

0.08

0.06

0.01

0.31

(0.44)

0.75


Difference between effective and statutory

income tax rates (v)

0.88

(0.12)

1.00

1.27

(0.17)

1.44


UP&O adjusted earnings

0.51

0.48

0.04

4.71

4.57

0.14
























Calculations may differ due to rounding

(t) 

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.

(u)

Income tax effect is calculated by multiplying the pre-tax amount by the estimated income tax rates that are expected to apply.

(v)

Other income tax items represent the adjustment made to income tax expense to reflect a statutory tax rate estimated to be 25.5% in 2018 and 38.5% in 2017. The fourth quarter and year-to-date 2018 periods exclude reductions of $215 million and $775 million, respectively, for the return of unprotected excess ADIT (no earnings impact).

(w) 

EPS effect is calculated by multiplying the pre-tax amount by the estimated income tax rate that is expected to apply to each adjustment and then dividing by the diluted average number of common shares outstanding for the period.

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


Appendix C-2: Utility Operating and Financial Measures

Fourth Quarter and Year-to-Date 2018 vs. 2017


Fourth Quarter

Year-to-Date


2018

2017

%

Change

% Weather
Adjusted (x)

2018

2017

%

Change

% Weather
Adjusted (x)

GWh billed









Residential

8,250

8,024

2.8%

(0.1%)

37,107

33,834

9.7%

0.5%

Commercial

7,026

7,150

(1.7%)

(1.8%)

29,426

28,745

2.4%

0.1%

Governmental

646

627

3.0%

3.1%

2,581

2,511

2.8%

1.9%

Industrial

11,882

11,940

(0.5%)

(0.5%)

48,384

47,769

1.3%

1.3%

    Total retail sales

27,804

27,741

0.2%

(0.6%)

117,498

112,859

4.1%

0.8%

Wholesale

2,927

3,295

(11.2%)


11,715

11,550

1.4%


    Total sales

30,731

31,036

(1.0%)


129,213

124,409

3.9%











Number of electric retail customers









Residential





2,481,027

2,466,671

0.6%


Commercial





356,618

354,189

0.7%


Governmental





17,839

17,828

0.1%


Industrial





45,790

46,193

(0.9%)


    Total retail customers





2,901,274

2,884,881

0.6%











Net revenue ($ in millions)

1,238

1,553

(20.3%)


5,626

6,318

(11.0%)


Non-fuel O&M (per MWh in $)

22.36

23.21

(3.7%)


20.52

20.66

(0.7%)
























Calculations may differ due to rounding

Certain prior year data has been reclassified to conform with current year presentation

(x) 

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 operational adjusted EBITDA (non-GAAP).

Appendix D-1: EWC Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2018 vs. 2017

($ in millions)

Fourth Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

Net income (loss)

(372)

(425)

53

(341)

(172)

(169)

Add back: interest expense

8

6

2

34

24

10

Add back: income taxes

(102)

361

(463)

(269)

(146)

(123)

Add back: depreciation and amortization

34

36

(2)

150

193

(43)

Subtract: interest and investment income

(169)

81

(250)

15

224

(209)

Add back: decommissioning expense

64

60

4

239

255

(16)

Adjusted EBITDA (non-GAAP)

(199)

(43)

(156)

(202)

(71)

(131)

Add back pre-tax special items for:







Items associated with the strategic decision to exit the EWC business

271

141

130

672

644

28

Gain on the sale of FitzPatrick

-

-

-

-

(16)

16

Operational adjusted EBITDA (non-GAAP)

72

98

(26)

470

557

(87)








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

Fourth Quarter and Year-to-Date 2018 vs. 2017 (See Appendix G for reconciliation of GAAP to non-GAAP measures)


Fourth Quarter

Year-to-Date


2018

2017

% Change

2018

2017

% Change

Owned capacity (MW)

3,962

3,962

-

3,962

3,962

-

GWh billed

8,022

7,885

1.7

29,875

30,501

(2.1)

As-reported net revenue ($ in millions)

281

333

(15.6)

1,276

1,469

(13.1)

Operational net revenue (non-GAAP) ($ in millions)

281

333

(15.6)

1,276

1,378

(7.4)








EWC Nuclear Fleet







Capacity factor

78%

93%

(16.1)

84%

83%

1.2

GWh billed

7,520

7,317

2.8

27,617

28,178

(2.0)

Production cost per MWh

$18.79

$18.73

0.3

$17.68

$18.70

(5.5)

Average energy/capacity revenue per MWh (y)

$48.97

$48.82

0.3

$49.13

$51.82

(5.2)

As-reported net revenue ($ in millions)

274

327

(16.2)

1,258

1,456

(13.6)

Operational net revenue (non-GAAP) ($ in millions)

274

327

(16.2)

1,258

1,365

(7.8)

Refueling outage days







FitzPatrick

-

-


-

42


Indian Point 2

-

-


33

-


Indian Point 3

-

-


-

66


Palisades

61

-


61

27


Pilgrim

-

-


-

43









Calculations may differ due to rounding

(y) 

Average energy/capacity revenue per MWh excluding FitzPatrick was $50.05 in year-to-date 2017.

See appendix in the webcast slide presentation for EWC nuclear capacity and generation disclosure.

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

Fourth Quarter 2018 vs. 2017 (See Appendix G for reconciliation of GAAP to non-GAAP financial measures)



For 12 months ending December 31

2018

2017

Change

GAAP Measures




ROIC – as-reported

5.3%

3.4%

1.9%

ROE – as-reported

10.1%

5.1%

5.0%

Non-GAAP Measures




ROIC – operational

7.2%

7.1%

0.1%

ROE – operational

15.9%

16.2%

(0.3%)





As of December 31 ($ in millions)

2018

2017

Change

GAAP Measures




Cash and cash equivalents

481

781

(300)

Revolver capacity

4,056

4,174

(118)

Commercial paper

1,942

1,467

475

Total debt

18,133

16,677

1456

Securitization debt

424

545

(121)

Debt to capital ratio

66.7%

67.1%

(0.4%)

Off-balance sheet liabilities:




Debt of joint ventures – Entergy's share

61

67

(6)

Leases – Entergy's share

448

429

19

Power purchase agreements accounted for as leases

106

136

(30)

Total off-balance sheet liabilities

615

632

(17)

Non-GAAP Measures




Debt to capital ratio, excluding securitization debt

66.1%

66.3%

(0.1%)

Gross liquidity

4,537

4,955

(418)

Net debt to net capital ratio, excluding securitization debt

65.5%

65.2%

0.4%

Parent debt to total debt ratio, excluding securitization debt

22.6%

21.8%

0.8%

Operational FFO to debt ratio, excluding securitization debt

12.0%

15.9%

(3.9%)

Operational FFO to debt ratio, excluding securitization debt and return of unprotected excess ADIT

15.3%

15.9%

(0.6%)





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 electric retail customers

Number of electric customers at the end of the period



EWC Operating and Financial Measures

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 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 positive or negative basis differentials and other risk management costs

Average revenue under contract (applies to capacity contracts only) (in $/kW-month)

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

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 positive or negative basis differentials 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

GWh billed

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

Net revenue

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

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 (average)

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)



Appendix F-1: Definitions

EWC Operating and Financial Measures (continued)

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), excluding special items

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

Debt of joint ventures – Entergy's share

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

Debt to capital ratio

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, including Entergy Nuclear Vermont Yankee

ROE – as-reported

12-months rolling net income attributable to Entergy Corporation divided by average common equity

ROIC – as-reported

12-months rolling net income attributable to Entergy Corporation adjusted for preferred dividends and tax-effected interest expense divided by average invested capital

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

Debt to capital ratio, excluding securitization debt

Total debt divided by total capitalization, excluding securitization debt

ETR adjusted earnings

As-reported earnings with certain adjustments, which 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 EWC segment given its strategic decision to exit the EWC business, and items such as certain costs, expenses, significant tax items, or other specified items

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

Gross liquidity

Sum of cash and revolver capacity

Net debt to net capital ratio, excluding securitization debt

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

Operational adjusted EBITDA

Adjusted EBITDA excluding effects of special items

Operational EPS

As-reported EPS excluding special items

Operational FFO

FFO excluding the effects of special items

Operational FFO to debt ratio, excluding securitization debt

12-months rolling operational FFO as a percentage of end of period total debt excluding securitization debt

Operational FFO to debt ratio, excluding securitization debt and return of unprotected excess ADIT

12-months rolling operational FFO as a percentage of end of period total debt excluding securitization debt and return of unprotected excess ADIT

Parent debt to total debt ratio, 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

ROE – operational

12-months rolling operational net income attributable to Entergy Corporation divided by average common equity

ROIC – operational

12-months rolling operational net income attributable to Entergy Corporation adjusted for preferred dividends and tax-effected interest expense divided by average invested capital

UP&O adjusted earnings

As-reported earnings excluding special items and normalizing weather and income taxes

Utility, Parent & Other

Combines the Utility segment with Parent & Other, which is all of Entergy excluding the EWC segment



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



UP&O

Utility, Parent & Other



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, Appendix G-2 and Appendix G-3 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 – EWC Operational Net Revenue

($ in millions except where noted)


Fourth Quarter

Year-to-Date



2018

2017

2018

2017

EWC






As-reported net revenue

(A)

281

333

1,276

1,469

Special items included in net revenue:






EWC Nuclear costs associated with the strategic decision to exit the EWC business


-

-

-

91

Total special items included in net revenue

(B)

-

-

-

91

Operational net revenue

(A-B)

281

333

1,276

1,378







EWC Nuclear






As-reported EWC Nuclear net revenue

(C)

274

327

1,258

1,456

Special items included in EWC Nuclear net revenue:






EWC Nuclear costs associated with the strategic decision to exit the EWC business


-

-

-

91

Total special items included in EWC Nuclear net revenue

(D)

-

-

-

91

Operational EWC Nuclear net revenue

(C-D)

274

327

1,258

1,365







Calculations may differ due to rounding

 

Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures – ROIC, ROE

($ in millions except where noted)


Fourth Quarter



2018

2017

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

(A)

849

412

Preferred dividends


14

14

Tax-effected interest expense


527

407

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

(B)

1,390

833





Special items in prior quarters


(317)

(272)

Items associated with the strategic decision to exit the EWC business


(214)

(91)

Tax reform


38

(525)

Total special items, rolling 12 months

(C)

(493)

(889)





Operational earnings, rolling 12 months adjusted for preferred dividends and tax effected interest expense (non-GAAP)

(B-C)

1,882

1,721





Operational earnings, rolling 12 months (non-GAAP)

(A-C)

1,341

1,300





Average invested capital

(D)

26,032

24,213





Average common equity

(E)

8,418

8,037





ROIC – as-reported

(B/D)

5.3%

3.4%

ROIC – operational

[(B-C)/D]

7.2%

7.1%

ROE – as-reported

(A/E)

10.1%

5.1%

ROE – operational

[(A-C)/E]

15.9%

16.2%





Calculations may differ due to rounding

 

Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios excluding Securitization Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt and Return of Unprotected Excess ADIT

($ in millions except where noted)


Fourth Quarter



2018

2017

Total debt

(A)

18,133

16,677

Less securitization debt

(B)

424

545

Total debt, excluding securitization debt

(C)

17,709

16,132

Less cash and cash equivalents

(D)

481

781

Net debt, excluding securitization debt

(E)

17,228

15,351





Total capitalization

(F)

27,196

24,867

Less securitization debt

(B)

424

545

Total capitalization, excluding securitization debt

(G)

26,772

24,322

Less cash and cash equivalents

(D)

481

781

Net capital, excluding securitization debt

(H)

26,291

23,541





Debt to capital ratio

(A/F)

66.7%

67.1%

Debt to capital ratio, excluding securitization debt

(C/G)

66.1%

66.3%

Net debt to net capital ratio, excluding securitization debt

(E/H)

65.5%

65.2%





Revolver capacity

(I)

4,056

4,174





Gross liquidity

(D+I)

4,537

4,955





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)

220

210

Commercial paper

(L)

1,942

1,467

Unamortized debt issuance and discounts

(M)

(10)

(11)

Total parent debt

(J+K+L+M)

4,002

3,516





Parent debt to total debt ratio, excluding securitization debt

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

22.6%

21.8%





Calculations may differ due to rounding

 

Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios excluding Securitization Debt; Gross Liquidity; FFO to Debt, excluding Securitization Debt and Return of Unprotected Excess ADIT (continued)

($ in millions except where noted)


Fourth Quarter



2018

2017

Total debt

(A)

18,133

16,677

Less securitization debt

(B)

424

545

Total debt, excluding securitization debt

(C)

17,709

16,132





Net cash flow provided by operating activities, rolling 12 months

(D)

2,385

2,624





AFUDC – borrowed funds, rolling 12 months

(E)

(61)

(45)





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




Receivables


99

(98)

Fuel inventory


46

(3)

Accounts payable


97

102

Taxes accrued


39

34

Interest accrued


5

1

Other working capital accounts


(164)

(4)

Securitization regulatory charges


124

116

Total

(F)

246

148





FFO, rolling 12 months

(G)=(D+E-F)

2,079

2,431





Add back special items (rolling 12 months pre-tax):




Items associated with the strategic decision to exit the EWC business


43

126

Operational FFO, rolling 12 months

(H)

2,122

2,557





Operational FFO to debt ratio, excluding securitization debt

(H/C)

12.0%

15.9%





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

(I)

592

-





Operational FFO to debt ratio, excluding securitization debt and return of unprotected excess ADIT

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

15.3%

15.9%





Calculations may differ due to rounding

 

Cision

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