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Entergy Reports Third Quarter Earnings

NEW ORLEANS, Oct. 31, 2018 /PRNewswire/ -- Entergy Corporation (ETR) reported third quarter 2018 earnings per share of $2.92 on an as-reported basis and $3.77 on an operational basis (non-GAAP), which excludes the effects of special items.

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

"We are on track to meet our strategic, operational and financial objectives, and our accomplishments this year include major milestones in our transition to a pure-play utility," said Entergy Chairman and Chief Executive Officer Leo Denault. "With strong results to date, we are affirming our core business UP&O adjusted guidance for the year, and we are raising our consolidated operational guidance."

Business highlights included the following:

  • Entergy raised its consolidated operational earnings guidance to $6.75–$7.25 per share.
  • Entergy Mississippi entered into an agreement to acquire the 810 MW Choctaw Generating Station.
  • Entergy Texas filed an unopposed settlement agreement with the PUCT in its 2018 rate case.
  • Entergy Arkansas filed a partial settlement agreement in its FRP filing.
  • Entergy New Orleans refiled its 2018 rate case with the CCNO.
  • Entergy Louisiana signed a long-term agreement to provide power to the expanding Shintech Louisiana, LLC manufacturing complex in Iberville Parish.
  • The NRC approved the license transfer of Vermont Yankee.
  • Entergy was named to the 2018 Dow Jones Sustainability North America Index and received perfect scores in four areas, including climate strategy; this is the 17th consecutive year Entergy has appeared on the World or North America Index or both.

Consolidated Earnings (GAAP and Non-GAAP Measures)

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


Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

(After-tax, $ in millions)







As-reported earnings

536

398

138

915

891

24

Less special items

(157)

(26)

(131)

(316)

(272)

(44)

Operational earnings (non-GAAP)

693

424

269

1,231

1,163

68

  Estimated weather in billed sales

5

(45)

50

42

(90)

132








(After-tax, per share in $)







As-reported earnings

2.92

2.21

0.71

5.01

4.94

0.07

Less special items

(0.85)

(0.14)

(0.71)

(1.73)

(1.51)

(0.22)

Operational earnings (non-GAAP)

3.77

2.35

1.42

6.74

6.45

0.29

  Estimated weather in billed sales

0.03

(0.25)

0.28

0.23

(0.50)

0.73








Calculations may differ due to rounding


Consolidated Results

For third quarter 2018, the company reported earnings of $536 million, or $2.92 per share, on an as-reported basis and earnings of $693 million, or $3.77 per share, on an operational basis. This compared to third quarter 2017 earnings of $398 million, or $2.21 per share, on an as-reported basis and earnings of $424 million, or $2.35 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 third quarter 2018, the Utility business reported earnings attributable to Entergy Corporation of $505 million, or $2.75 per share, compared to $401 million, or $2.22 per share, in third quarter 2017. Drivers for the quarterly increase included favorable weather and the lower federal income tax rate, partially offset by higher non-fuel O&M.

The current period results 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 $283 million, reduced net revenue by $277 million and increased non-fuel O&M by $6 million.

Excluding the return of $277 million of unprotected excess ADIT to customers, net revenue increased, driven by favorable weather in third quarter 2018 compared to unfavorable weather a year ago. Rate actions to recover investments that benefit customers also contributed to the increase. Current period results also included regulatory provisions to return benefits of the lower federal tax rate to customers at Entergy Louisiana and Entergy New Orleans. Weather-adjusted billed sales volume increased period over period, but was more than offset by lower volume in the unbilled period.

On a weather-adjusted basis, billed retail sales increased 1.8 percent, including 0.8 percent and 1.4 percent for residential and commercial sales, respectively. Industrial billed sales volume increased 3.0 percent primarily driven by small industrials and cogeneration sales, as well as continued growth from new and expansion customers.

Excluding the $283 million unprotected excess ADIT, income taxes were lower driven by the reduction of the federal income tax rate.

Utility non-fuel O&M increased quarter-over-quarter. The primary drivers were higher spending on fossil operations and higher contract costs. Energy efficiency spending was also higher, but was largely offset in net revenue.

For third quarter 2018, Parent & Other reported a loss of $(73 million), or (40) cents per share, compared to a loss of $(58 million), or (32) cents per share, in third quarter 2017.

On a combined basis, Utility, Parent & Other (non-GAAP) contributed $2.35 to third quarter 2018 consolidated EPS compared to $1.90 in third quarter 2017. On an adjusted basis, excluding special items and normalizing weather and income taxes, Utility, Parent & Other contributed $2.27 in third quarter 2018 to consolidated EPS, compared to $2.15 in third quarter 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 third quarter 2018, EWC recorded earnings attributable to Entergy Corporation of $105 million, or 57 cents per share, on an as-reported basis and earned $262 million, or $1.42 per share, on an operational basis. This compared to third quarter 2017 earnings of $55 million, or 31 cents per share, on an as-reported basis and earnings of $81 million, or 45 cents per share, on an operational basis.

As-reported results in both periods reflected impairments and other expenses recorded as a result of strategic decisions for the wholesale business. These items totaled $(157 million), or (85) cents per share, in third quarter 2018, compared to $(26 million), or (14) cents per share, a year ago. The current period results included an upward revision to Pilgrim's asset retirement obligation, which resulted from an updated decommissioning study. The revision in the ARO resulted in a pre-tax asset impairment of $(117 million). Third quarter 2018 results also included a pre-tax write-off of materials and supplies at Pilgrim totaling $(25 million). These costs, along with other costs associated with strategic decisions for the wholesale business, were considered special items and excluded from operational earnings.  

In addition, the current period results included two income tax items which reduced income taxes and increased earnings by $130 million, or 71 cents per share. Other income also increased largely due to higher realized gains on decommissioning trust funds. Partially offsetting the increase was lower net revenue as a result of lower nuclear energy pricing, as well as lower nuclear energy volume.

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

Earnings Guidance

Entergy updated its 2018 consolidated operational earnings guidance range to $6.75 to $7.25 per share and affirmed its Utility, Parent & Other adjusted guidance range of $4.50 to $4.90 per share. The updated consolidated operational earnings guidance range reflects a midpoint increase of 45 cents and a narrowing of the range to 50 cents (versus previous range of 60 cents). The updated guidance considers the effects of weather through September 30, 2018; higher-than-planned income tax items, including a potential item in the fourth quarter of 2018; and the effect of market performance to date in 2018 on EWC nuclear decommissioning trust returns. See webcast presentation slides for additional details.

The company has provided 2018 earnings guidance with regard to the non-GAAP measures of consolidated operational EPS and Utility, Parent & Other adjusted EPS. These measures exclude from the corresponding GAAP financial measures the effect of special items 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 special items that may occur during 2018. The only anticipated special items that the company can reasonably estimate at this time are those that relate to the decisions to sell or close the company's merchant nuclear plants; these estimated costs, which are excluded from the earnings guidance, are expected to decrease as-reported EPS by approximately $(2.95) per share in 2018.

Earnings Teleconference

A teleconference will be held at 10:00 a.m. Central Time on Wednesday, October 31, 2018, 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 2269758, 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 November 7, 2018, by dialing 855-859-2056, conference ID 2269758. 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 more than 13,000 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 only 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, gains or losses on certain asset sales, and other gains or losses occurring as a result of strategic decisions such as Entergy's decisions to shut down or sell its merchant nuclear plants. 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.

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 shares of common stock outstanding for the period. 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 cash budgeting 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 2018 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) nuclear plant relicensing, operating and regulatory costs and risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning 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, during the periods covered by the forward-looking statements.

Third 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



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

Third 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)


Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

(After-tax, $ in millions)







Earnings (loss)







Utility

505

401

104

1,095

809

286

Parent & Other

(73)

(58)

(16)

(211)

(169)

(42)

EWC

105

55

50

30

251

(221)

Consolidated

536

398

138

915

891

24








Less special items







Utility

-

-

-

-

-

-

Parent & Other

-

-

-

-

-

-

EWC

(157)

(26)

(131)

(316)

(272)

(44)

Consolidated

(157)

(26)

(131)

(316)

(272)

(44)








Operational earnings (loss) (non-GAAP)







Utility

505

401

104

1,095

809

286

Parent & Other

(73)

(58)

(16)

(211)

(169)

(42)

EWC

262

81

181

346

523

(177)

Consolidated

693

424

269

1,231

1,163

68

Estimated weather in billed sales

5

(45)

50

42

(90)

132








Diluted average number of common shares outstanding (in millions)

183.7

180.5


182.7

180.2









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







Earnings (loss)







Utility

2.75

2.22

0.53

6.00

4.49

1.51

Parent & Other

(0.40)

(0.32)

(0.08)

(1.15)

(0.94)

(0.21)

EWC

0.57

0.31

0.26

0.16

1.39

(1.23)

Consolidated

2.92

2.21

0.71

5.01

4.94

0.07








Less special items







Utility

-

-

-

-

-

-

Parent & Other

-

-

-

-

-

-

EWC

(0.85)

(0.14)

(0.71)

(1.73)

(1.51)

(0.22)

Consolidated

(0.85)

(0.14)

(0.71)

(1.73)

(1.51)

(0.22)








Operational earnings (loss) (non-GAAP)







Utility

2.75

2.22

0.53

6.00

4.49

1.51

Parent & Other

(0.40)

(0.32)

(0.08)

(1.15)

(0.94)

(0.21)

EWC

1.42

0.45

0.97

1.89

2.90

(1.01)

Consolidated

3.77

2.35

1.42

6.74

6.45

0.29

Estimated weather in billed sales

0.03

(0.25)

0.28

0.23

(0.50)

0.73








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 special items by driver.

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


Appendix A-2: Consolidated Operating Cash Flow

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

($ in millions)


Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

Utility

845

878

(33)

1,994

2,005

(11)

Parent & Other

(99)

(92)

(7)

(214)

(318)

104

EWC

33

107

(74)

79

26

53

Consolidated

780

893

(113)

1,860

1,713

147








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 and planned VY decommissioning spending at EWC. The decrease was partially offset by favorable weather and increased collections for fuel and purchased power cost recovery at the Utility.

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)

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

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


Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change








EWC







Items associated with decisions to close or sell EWC nuclear plants

(198)

(39)

(159)

(400)

(503)

103

Gain on the sale of FitzPatrick

-

-

-

-

16

(16)

Income tax effect on adjustments above (b)

42

14

28

84

170

(86)

Income tax benefit resulting from FitzPatrick transaction

-

-

-

-

45

(45)

   Total EWC

(157)

(26)

(131)

(316)

(272)

(44)








Total special items

(157)

(26)

(131)

(316)

(272)

(44)








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







EWC







Items associated with decisions to close or sell EWC nuclear plants

(0.85)

(0.14)

(0.71)

(1.73)

(1.82)

0.09

Gain on the sale of FitzPatrick

-

-

-

-

0.06

(0.06)

Income tax benefit resulting from FitzPatrick transaction

-

-

-

-

0.25

(0.25)

   Total EWC

(0.85)

(0.14)

(0.71)

(1.73)

(1.51)

(0.22)








Total special items

(0.85)

(0.14)

(0.71)

(1.73)

(1.51)

(0.22)








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)

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

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


Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

EWC







Net revenue

-

-

-

-

91

(91)

Non-fuel O&M

(40)

(22)

(18)

(97)

(179)

82

Asset write-off and impairments

(155)

(16)

(139)

(297)

(422)

125

Taxes other than income taxes

(3)

(2)

(1)

(6)

(8)

2

Gain on sale of assets

-

-

-

-

16

(16)

Miscellaneous net (other income)

-

-

-

-

15

(15)

Income taxes (d)

42

14

28

84

215

(131)

   Total EWC

(157)

(26)

(131)

(316)

(272)

(44)








Total special items (after-tax)

(157)

(26)

(131)

(316)

(272)

(44)








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

Third Quarter 2018 vs. 2017

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


Utility


Parent & Other


EWC


Consolidated


As-
Reported

Opera-
tional


As-
Reported

Opera-
tional


As-

Reported

Opera-
tional


As-

Reported

Opera-

tional

2017 earnings

401

401


(58)

(58)


55

81


398

424

Net revenue

(254)

(254)

(e)

-

-


(51)

(51)

(f)

(305)

(305)

Non-fuel O&M

(48)

(48)

(g)

(3)

(3)


(23)

(4)

(h)

(74)

(55)

Asset write-offs and impairments

-

-


-

-


(139)

-

(i)

(139)

-

Decommissioning expense

(3)

(3)


-

-


4

4


2

2

Taxes other than income taxes

(1)

(1)


-

-


(1)

1


(2)

-

Depreciation/amortization exp.

17

17

(j)

-

-


13

13


30

30

Other income (deductions)

27

27

(k)

(1)

(1)


88

88

(l)

114

114

Interest exp. and other charges

(2)

(2)


(7)

(7)


(3)

(3)


(13)

(13)

Income taxes

368

368

(m)

(4)

(4)


161

133

(n)

525

497

2018 earnings

505

505


(73)

(73)


105

262


536

693














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

Opera-
tional


As-
Reported

Opera-
tional


As-

Reported

Opera-
tional


As-

Reported

Opera-

tional

2017 earnings

809

809


(169)

(169)


251

523


891

1,163

Net revenue

(377)

(377)

(e)

-

-


(141)

(50)

(f)

(518)

(427)

Non-fuel O&M

(115)

(115)

(g)

(8)

(8)


71

(11)

(h)

(53)

(135)

Asset write-offs and impairments

-

-


-

-


125

-

(i)

125

-

Decommissioning expense

4

4


-

-


21

21

(o)

24

24

Taxes other than income taxes

(19)

(19)

(p)

-

-


2

-


(17)

(19)

Depreciation/amortization exp.

(11)

(11)


-

-


41

41

(q)

30

30

Gain on sale of assets

-

-


-

-


(16)

-

(r)

(16)

-

Other income (deductions)

29

29

(k)

(2)

(2)


26

41

(l)

52

67

Interest exp. and other charges

(9)

(9)


(19)

(19)

(s)

(8)

(8)


(36)

(36)

Income taxes

785

785

(m)

(12)

(12)


(341)

(210)

(n)

432

563

2018 earnings

1,095

1,095


(211)

(211)


30

346


915

1,231













Calculations may differ due to rounding





Utility Net Revenue

Variance Analysis

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


Third Quarter

Year-to-Date

Estimated weather

80

203

Volume/unbilled

(36)

-

Retail electric price

10

73

Reg. provisions for lower tax rate

(19)

(77)

Unprotected excess ADIT

(277)

(555)

Other, including Grand Gulf recovery

(12)

(21)

Total

(254)

(377)





(e)

The third 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 regulatory provisions at E-LA and E-NO to reflect regulatory agreements to return the benefits of the lower federal tax rate to customers. The decreases were partially offset by higher retail sales volume, including the effects of weather. In the third quarter, weather-adjusted billed sales volume increased, however this was more than offset by lower volume in the unbilled period. 2018 results also included rate changes from E-AR's 2018 FRP and E-TX's DCRF. An adjustment for updated depreciation rates at SERI and higher decommissioning trust fund returns also contributed to the decrease (largely offset in depreciation expense and other income).



(f)

The third quarter earnings decrease from lower EWC net revenue reflected lower energy 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). The year-to-date variance also reflected lower nuclear energy prices, partially offset by higher nuclear energy volume.



(g)

The third quarter and year-to-date earnings decreases from higher Utility non-fuel O&M were due primarily to higher spending on fossil operations and higher contract costs. Energy efficiency spending was also higher (largely offset in net revenue). The year-to-date variance also included higher storm reserves (also largely offset in net revenue). This was partially offset by higher nuclear insurance refunds in 2018 compared to 2017.



(h)

The third quarter as-reported earnings decrease from higher EWC non-fuel O&M was due primarily to higher severance and retention costs related to the exit of the EWC business compared to third quarter 2017 (classified as a special item). The year-to-date as-reported earnings increase is due primarily to costs incurred in first quarter 2017 related to the agreement to sell FitzPatrick (classified as a special item and offset in net revenue). The year-to-date variance also reflected increased nuclear spending and higher benefit costs, as well as lower nuclear refueling outage expenses.



(i)

The third quarter as-reported earnings decrease from higher EWC asset write-offs and impairments resulted from an upward revision of Pilgrim's ARO and a write-off of materials and supplies at Pilgrim (classified as special items). The ARO revision resulted from a recent decommissioning cost study. The year-to-date as-reported earnings increase from lower EWC asset write-offs and impairments also reflected lower impairment charges for EWC nuclear plants, partly due to Palisades no longer being impaired as a result of the decision to operate that plant until May 2022 (classified as special items).



(j)

The third quarter earnings increase from lower Utility depreciation expense was due primarily to updated depreciation rates at SERI (largely offset in net revenue). This was partially offset by higher depreciation expense due to higher plant in service.



(k)

The third quarter and year-to-date earnings increases from higher Utility other income (deductions) were due largely to gains on the decommissioning trust fund investments (largely offset in net revenue), as well as higher AFUDC – equity funds due to higher CWIP balances.



(l)

The third quarter and year-to-date earnings increases from higher EWC other income (deductions) were due largely to gains on decommissioning trust fund investments, including unrealized gains/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 increase 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).



(m)

The third 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), as well as the change in the federal income tax rate. The year-to-date variance also reflected income tax benefits from the settlement of the 2012‒2013 IRS audit in second quarter 2018.



(n)

The third quarter earnings increase from lower EWC income taxes reflected two tax items in third quarter 2018. First, a restructuring of its interest in an EWC decommissioning trust fund resulted in a reduction in income tax expense of $107 million. Second, the conclusion of a state income tax audit resulted in a benefit of $23 million. The year-to-date earnings decrease also reflected a $373 million reduction in tax expense in second quarter 2017 and $13 million in tax benefits in second quarter 2018, as well as the change in the federal income tax rate. 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).



(o)

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



(p)

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



(q)

The year-to-date earnings increase from lower 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 as-reported earnings decrease from lower EWC gain on sale of assets was due to the gain on the sale of FitzPatrick in first quarter 2017 (classified as a special item).



(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

Third Quarter and Year-to-Date 2018 vs. 2017 (See Appendix A for details on special items)


Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

($ in millions)







Utility as-reported earnings

505

401

104

1,095

809

286

Parent & Other as-reported (loss)

(73)

(58)

(16)

(211)

(169)

(42)

UP&O as-reported earnings

431

343

88

885

640

245








Less:







Special items

-

-

-

-

-

-

Estimated weather (t)

7

(73)

80

57

(146)

203

Tax effect of estimated weather (u)

(2)

28

(30)

(15)

56

(71)

Estimated weather (after-tax)

5

(45)

50

42

(90)

132








Other income tax items (v)

10

-

9

73

(9)

82








UP&O adjusted earnings

416

388

29

770

738

31








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







Utility as-reported earnings

2.75

2.22

0.53

6.00

4.49

1.51

Parent & Other as-reported (loss)

(0.40)

(0.32)

(0.08)

(1.15)

(0.94)

(0.21)

UP&O as-reported earnings

2.35

1.90

0.45

4.85

3.55

1.30








Less:







Special items

-

-

-

-

-

-

Estimated weather

0.03

(0.25)

0.28

0.23

(0.50)

0.73

Other income tax items

0.05

-

0.05

0.40

(0.05)

0.45

UP&O adjusted earnings

2.27

2.15

0.12

4.22

4.10

0.12








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 third quarter and year-to-date 2018 periods exclude reductions of $283 million and $561 million, respectively, for the return of unprotected excess ADIT (no earnings impact).



(w)

Per share amounts are calculated by dividing the corresponding earnings (loss) by the diluted average number of common shares outstanding for the period.







Appendix C-2 and Appendix C-3 provides comparative summaries of Utility operating and financial measures.


Appendix C-2: Utility Operating and Financial Measures

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


Third Quarter

Year-to-Date


2018

2017

%

Change

% Weather
Adjusted (x)

2018

2017

%

Change

% Weather
Adjusted (x)

GWh billed









Residential

11,821

10,833

9.1%

0.8%

28,857

25,810

11.8%

0.7%

Commercial

8,726

8,271

5.5%

1.4%

22,401

21,595

3.7%

0.7%

Governmental

714

682

4.7%

2.7%

1,934

1,885

2.6%

1.5%

Industrial

12,879

12,503

3.0%

3.0%

36,503

35,829

1.9%

1.9%

   Total retail sales

34,140

32,289

5.7%

1.8%

89,695

85,119

5.4%

1.2%

Wholesale

2,978

3,387

(12.1%)


8,788

8,255

6.5%


   Total sales

37,118

35,676

4.0%


98,483

93,374

5.5%











Number of electric retail customers









Residential





2,482,698

2,472,199

0.4%


Commercial





357,050

355,186

0.5%


Governmental





17,867

17,803

0.4%


Industrial





49,491

47,090

5.1%


   Total retail customers





2,907,106

2,892,278

0.5%











Net revenue ($ in millions)

1,558

1,811

(14.0%)


4,388

4,765

(7.9%)


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

18.12

17.52

3.4%


19.95

18.78

6.2%
















Appendix C-3: Utility Operating Measures

Twelve Months Ended September 30, 2018 vs. 2017


Twelve Months Ended September 30


2018

2017

%

Change

% Weather
Adjusted (x)

GWh billed





Residential

36,881

33,887

8.8%

0.6%

Commercial

29,551

28,854

2.4%

0.7%

Governmental

2,560

2,520

1.6%

0.8%

Industrial

48,443

46,987

3.1%

3.1%

   Total retail sales

117,435

112,248

4.6%

1.7%






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

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

($ in millions)

Third Quarter

Year-to-Date


2018

2017

Change

2018

2017

Change

Net income (loss)

106

56

50

31

252

(221)

Add back: interest expense

9

5

4

25

18

7

Add back: income taxes

(136)

26

(162)

(167)

(508)

341

Add back: depreciation and amortization

40

52

(12)

116

157

(41)

Subtract: interest and investment income

127

41

86

183

143

40

Add back: decommissioning expense

56

60

(4)

174

195

(21)

Adjusted EBITDA (non-GAAP)

(52)

158

(210)

(5)

(29)

24

Add back pre-tax special items for:







Items associated with decisions to close or sell EWC nuclear plants

198

39

159

400

503

(103)

Gain on the sale of FitzPatrick

-

-

-

-

(16)

16

Operational adjusted EBITDA (non-GAAP)

146

197

(51)

395

458

(63)








Calculations may differ due to rounding




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

Appendix D-2: EWC Operating and Financial Measures

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


Third Quarter

Year-to-Date


2018

2017

% Change

2018

2017

% Change

Owned capacity (MW)




3,962

3,962

-

GWh billed

7,576

8,234

(8.0)

21,853

22,616

(3.4)

As-reported net revenue ($ in millions)

341

392

(13.0)

995

1,136

(12.4)

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

341

392

(13.0)

995

1,045

(4.8)








EWC Nuclear Fleet







Capacity factor

90%

98%

(8.2)

86%

79%

8.9

GWh billed

6,976

7,633

(8.6)

20,096

20,861

(3.7)

Production cost per MWh

$17.15

$14.91

15.0

$17.93

$18.68

(4.0)

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)

339

391

(13.4)

984

1,129

(12.8)

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

339

391

(13.4)

984

1,038

(5.2)

Refueling outage days







FitzPatrick

-

-


-

42


Indian Point 2

-

-


33

-


Indian Point 3

-

-


-

66


Palisades

-

-


-

27


Pilgrim

-

-


-

43









Calculations may differ due to rounding


(y)

Average energy and capacity revenue per MWh excluding FitzPatrick was $51.78 in year-to-date 2017.


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

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



For 12 months ending September 30

2018

2017

Change

GAAP Measures




ROIC – as-reported

3.7%

(1.8%)

5.5%

ROE – as-reported

5.1%

(9.4%)

14.5%

Non-GAAP Measures




ROIC – operational

7.3%

6.5%

0.8%

ROE – operational

16.0%

13.0%

3.0%





As of September 30 ($ in millions)

2018

2017

Change

GAAP Measures




Cash and cash equivalents

988

546

442

Revolver capacity

3,653

4,213

(560)

Commercial paper

1,947

1,272

675

Total debt

18,485

16,224

2,261

Securitization debt

463

582

(119)

Debt to capital ratio

68.2%

64.6%

3.6%

Off-balance sheet liabilities:




Debt of joint ventures – Entergy's share

62

68

(6)

Leases – Entergy's share

429

397

32

Power purchase agreements accounted for as leases

136

166

(30)

Total off-balance sheet liabilities

627

631

(4)

Non-GAAP Measures




Debt to capital ratio, excluding securitization debt

67.7%

63.8%

3.9%

Gross liquidity

4,641

4,759

(118)

Net debt to net capital ratio, excluding securitization debt

66.4%

62.9%

3.5%

Parent debt to total debt ratio, excluding securitization debt

24.5%

20.8%

3.7%

Operational FFO to debt ratio, excluding securitization debt

13.1%

15.3%

(2.2%)

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

15.0%

15.3%

(0.3%)








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 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

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 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, 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 (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)

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

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

IRS

Internal Revenue Service

AFUDC – borrowed funds

Allowance for borrowed funds used during construction

ISO

Independent system operator

AFUDC – equity funds

Allowance for equity funds used during construction

LPSC

Louisiana Public Service Commission

AMI

Advanced metering infrastructure

LTM

Last twelve months

ANO

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

LTSA

Long-term service agreement

APSC

Arkansas Public Service Commission

MISO

Midcontinent Independent System Operator, Inc.

ARO

Asset retirement obligation

Moody's

Moody's Investor Service

bps

Basis points

MPSC

Mississippi Public Service Commission

CCGT

Combined cycle gas turbine

MTEP

MISO Transmission Expansion Planning

CCNO

Council of the City of New Orleans, Louisiana

Nelson 6

Unit 6 of Roy S. Nelson plant (coal)

COD

Commercial operation date

NEPOOL

New England Power Pool

CT

Simple cycle combustion turbine

Ninemile 6

Ninemile Point Unit 6 (CCGT)

CWIP

Construction work in progress

Non-fuel O&M

Non-fuel operation and maintenance expense

DCRF

Distribution cost recovery factor

NDT

Nuclear decommissioning trust

E-AR

Entergy Arkansas, Inc.

NOPS

New Orleans Power Station (RICE/natural gas)

E-LA

Entergy Louisiana, LLC

NorthStar

NorthStar Decommissioning Holdings, LLC

E-MS

Entergy Mississippi, Inc.

NRC

Nuclear Regulatory Commission

E-NO

Entergy New Orleans, LLC

NYISO

New York Independent System Operator, Inc.

E-TX

Entergy Texas, Inc.

NYPA

New York Power Authority

EBITDA

Earnings before interest, income taxes, depreciation and amortization

NYSE

New York Stock Exchange

ENGC

Entergy Nuclear Generation Company

O&M

Operation and maintenance expense

ENP

Entergy Nuclear Palisades, LLC

OCF

Net cash flow provided by operating activities

ENVY

Entergy Nuclear Vermont Yankee

OpCo

Operating Company

EPS

Earnings per share

OPEB

Other post-employment benefits

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

Firm LD

Firm liquidated damages

RICE

Reciprocating Internal Combustion Engine

FitzPatrick

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

RFP

Request for proposals

FRP

Formula rate plan

ROE

Return on equity

GAAP

U.S. generally accepted accounting principles

ROIC

Return on invested capital

Grand Gulf or GGNS

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

RPCE

Rough production cost equalization

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)

SEC

U.S. Securities and Exchange Commission

ISES 2

Unit 2 of Independence Steam Electric Station (coal)

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)


Third Quarter

Year-to-Date



2018

2017

2018

2017

EWC






As-reported net revenue

(A)

341

392

995

1,136

Special items included in net revenue:






EWC Nuclear costs associated with decisions to close or sell plants


-

-

-

91

Total special items included in net revenue

(B)

-

-

-

91

Operational net revenue

(A-B)

341

392

995

1,045







EWC Nuclear






As-reported EWC Nuclear net revenue

(C)

339

391

984

1,129

Special items included in EWC Nuclear net revenue:






EWC Nuclear costs associated with decisions to close or sell plants


-

-

-

91

Total special items included in EWC Nuclear net revenue

(D)

-

-

-

91

Operational EWC Nuclear net revenue

(C-D)

339

391

984

1,038









Calculations may differ due to rounding




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

($ in millions except where noted)


Third Quarter



2018

2017

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

(A)

435

(878)

Preferred dividends


14

14

Tax-effected interest expense


520

404

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

(B)

969

(460)





Special items in prior quarters


(776)

(2,071)

Items associated with decisions to close or sell EWC nuclear plants


(157)

(26)

Total special items, rolling 12 months

(C)

(933)

(2,097)





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

(B-C)

1,902

1,637





Operational earnings, rolling 12 months (non-GAAP)

(A-C)

1,368

1,219





Average invested capital

(D)

26,107

25,246





Average common equity

(E)

8,551

9,380





ROIC – as-reported

(B/D)

3.7%

(1.8%)

ROIC – operational

[(B-C)/D]

7.3%

6.5%

ROE – as-reported

(A/E)

5.1%

(9.4%)

ROE – operational

[(A-C)/E]

16.0%

13.0%





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)


Third Quarter



2018

2017

Total debt

(A)

18,485

16,224

Less securitization debt

(B)

463

582

Total debt, excluding securitization debt

(C)

18,022

15,642

Less cash and cash equivalents

(D)

988

546

Net debt, excluding securitization debt

(E)

17,034

15,096





Total capitalization

(F)

27,095

25,118

Less securitization debt

(B)

463

582

Total capitalization, excluding securitization debt

(G)

26,632

24,536

Less cash and cash equivalents

(D)

988

546

Net capital, excluding securitization debt

(H)

25,644

23,990





Debt to capital ratio

(A/F)

68.2%

64.6%

Debt to capital ratio, excluding securitization debt

(C/G)

67.7%

63.8%

Net debt to net capital ratio, excluding securitization debt

(E/H)

66.4%

62.9%





Revolver capacity

(I)

3,653

4,213





Gross liquidity

(D+I)

4,641

4,759





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)

630

150

Commercial paper

(L)

1,947

1,272

Unamortized debt issuance and discounts

(M)

(10)

(11)

Total parent debt

(J+K+L+M)

4,417

3,261





Parent debt to total debt ratio, excluding securitization debt

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

24.5%

20.8%





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)


Third Quarter



2018

2017

Total debt

(A)

18,485

16,224

Less securitization debt

(B)

463

582

Total debt, excluding securitization debt

(C)

18,022

15,642





Net cash flow provided by operating activities, rolling 12 months

(D)

2,770

2,459





AFUDC – borrowed funds, rolling 12 months

(E)

(57)

(41)





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




Receivables


(53)

(24)

Fuel inventory


26

30

Accounts payable


258

(1)

Taxes accrued


10

9

Interest accrued


(3)

-

Other working capital accounts


(9)

28

Securitization regulatory charges


125

114

Total

(F)

354

156





FFO, rolling 12 months

(G)=(D+E-F)

2,359

2,262





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




Items associated with decisions to close or sell EWC nuclear plants


-

126

Operational FFO, rolling 12 months

(H)

2,359

2,388





Operational FFO to debt ratio, excluding securitization debt

(H/C)

13.1%

15.3%





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

(I)

342

-





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

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

15.0%

15.3%





Calculations may differ due to rounding

 


 

Cision

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