News Release > Entergy Reports Fourth Quarter and Full Year Financial Results; Initiates 2020 Earnings Guidance

Entergy Reports Fourth Quarter and Full Year Financial Results; Initiates 2020 Earnings Guidance

02/19/2020

NEW ORLEANS – Entergy Corporation (NYSE: ETR) reported fourth quarter 2019 earnings per share of $1.92 on an as-reported basis and 68 cents on an adjusted basis (non-GAAP).  For the full year, the company reported 2019 earnings per share of $6.30 on an as-reported basis and $5.40 on an adjusted basis. 

“We are reporting strong results for another very successful year,” said Entergy Chairman and Chief Executive Officer Leo Denault. “The favorable turn in weather in the second half of the year was a good opportunity for us to take on additional stakeholder initiatives. The fundamentals supporting our steady, predictable growth are strong and give us confidence in our financial outlooks.  And as we take our business to the next level, we aspire to do even better.” 

Business highlights included the following:

• Entergy initiated 2020 adjusted EPS guidance of $5.45 to $5.75 and affirmed 2021–2022 outlooks of $5.80 to $6.10 and $6.15 to $6.45, respectively.
• Entergy Mississippi acquired Choctaw County Generating Station, an 810-megawatt CCGT.
• Entergy Louisiana completed its Southwest Louisiana Improvement Project (transmission).
• The APSC approved Entergy Arkansas’ FRP settlement.
• Chicot Solar Energy Center, the largest solar project in Arkansas, broke ground.
• Entergy was inducted in the Corporate Citizenship Hall of Fame by the U.S. Chamber of Commerce Foundation Corporate Citizenship Center.
• Entergy raised its dividend for the fifth consecutive year. 

Calculations may differ due to rounding

Consolidated Results

For fourth quarter 2019, the company reported earnings of $385 million, or $1.92 per share, on an as-reported basis, and earnings of $137 million, or 68 cents per share, on an adjusted basis. This compared to a fourth quarter 2018 loss of $(66 million), or (36) cents per share, on an as-reported basis, and earnings of $128 million, or 70 cents per share, on an adjusted basis.

For the full year, the company reported earnings of $1,241 million, or $6.30 per share, on an as-reported basis, and earnings of $1,064 million, or $5.40 per share, on an adjusted basis. This compared to 2018 earnings of $849 million, or $4.63 per share, on an as-reported basis, and earnings of $970 million, or $5.29 per share, on an adjusted basis. 

Summary discussions by business are below. Additional details, including information on OCF by business, are provided in Appendix A. An analysis of quarterly and year-to-date variances by business is provided in Appendix B. 

Business Segment Results

Utility 

For fourth quarter 2019, the Utility business reported earnings attributable to Entergy Corporation of $271 million, or $1.35 per share, on an as-reported basis, and earnings of $229 million, or $1.14 per share, on an adjusted basis. This compared to fourth quarter 2018 earnings of $388 million, or $2.12 per share, on an as-reported basis, and earnings of $209 million, or $1.14 per share, on an adjusted basis. Drivers for the quarter included:

• rate activity at E-AR, E-LA, E-MS, and E-TX;
• regulatory charges and provisions in fourth quarter 2018; and
• a fourth quarter 2019 favorable income tax item (considered an adjustment and excluded from adjusted earnings). 

These drivers were partially offset by:

• lower retail sales volume;
• higher operating expenses (primarily depreciation and other O&M);
• higher interest expense;
• a fourth quarter 2018 favorable income tax item, net of customer sharing (considered an adjustment and excluded from adjusted earnings); and
• a fourth quarter 2018 reversal of a tax reform accrual (considered an adjustment and excluded from adjusted earnings). 

For full year 2019, the Utility business reported earnings attributable to Entergy Corporation of $1,411 million, or $7.16 per share, on an as-reported basis, and earnings of $1,369 million, or $6.95 per share, on an adjusted basis. This compared to full year 2018 earnings of $1,483 million, or $8.09 per share, on an as-reported basis, and $1,262 million, or $6.88 per share, on an adjusted basis. Drivers for the full year included:

• rate activity at E-AR, E-LA, E-MS, and E-TX;
• regulatory charges and provisions in 2018; and
• a fourth quarter 2019 favorable income tax item (considered an adjustment and excluded from adjusted earnings). 

These drivers were partially offset by:

• lower retail sales volume, including less favorable weather;
• higher operating expenses (primarily depreciation and other O&M);
• higher interest expense;
• second and fourth quarter 2018 favorable income tax items, net of customer sharing, (considered adjustments and excluded from adjusted earnings); and
• a fourth quarter 2018 reversal of a tax reform accrual (considered an adjustment and excluded from adjusted earnings). 

On a per share basis, both fourth quarter and full year 2019 results reflected higher common shares outstanding. 

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

Parent & Other 

For fourth quarter 2019, Parent & Other reported a loss attributable to Entergy Corporation of $(103 million), or (51) cents per share, on an as-reported basis, and a loss of $(92 million), or (46) cents per share, on an adjusted basis. This compared to a loss of $(81 million), or (44) cents per share, on both an as-reported and an adjusted basis in fourth quarter 2018. Drivers for the quarter included:

• lower other income (deductions)–other due to the timing of a charitable contribution; and
• a fourth quarter 2019 income tax item related to a valuation allowance recorded on an interest expense deduction (the amount related to the 2018 tax year was considered an adjustment and excluded from adjusted earnings). 

For the full year, Parent & Other reported a loss attributable to Entergy Corporation of $(316 million), or $(1.60) per share, on an as-reported basis, and a loss of $(305 million), or $(1.55) per share, on an adjusted basis. This compared to a full year 2018 loss of $(292 million), or $(1.59) per share, on both an as-reported and an adjusted basis. The drivers for fourth quarter 2019 discussed above were also the drivers for the full year. 

On a per share basis, both fourth quarter and full year 2019 results reflected higher common shares outstanding. 

Entergy Wholesale Commodities 

For fourth quarter 2019, EWC reported earnings attributable to Entergy Corporation of $217 million, or $1.08 per share, on an as-reported basis. This compared to a fourth quarter 2018 loss attributable to Entergy Corporation of $(373 million), or $(2.04) per share, on an as-reported basis. Drivers for the quarter included:

• higher gains on decommissioning trust funds;
• favorable income tax items recorded in fourth quarter 2019;
• lower asset write-offs, impairments and related charges as compared to a year ago; and
• lower severance and retention expense, as well as lower O&M expense due to the shutdown of Pilgrim. 

These drivers were partially offset by lower revenue primarily due to the shutdown of Pilgrim. 

For the full year, EWC reported earnings attributable to Entergy Corporation of
$147 million, or 74 cents per share, on an as-reported basis. This compared to a full year 2018 loss attributable to Entergy Corporation of $(343 million), or $(1.87) per share, on an as-reported basis. Drivers for the year included:

• higher gains on decommissioning trust funds;
• lower asset write-offs, impairments and related charges as compared to a year ago;
• lower severance and retention expense, as well as lower O&M expense due to the shutdown of Pilgrim; and
• favorable income tax items in 2019 as compared to 2018. 

These drivers were partially offset by lower revenue primarily due to the shutdown of Pilgrim and higher nuclear refueling outage expense. 

On a per share basis, both fourth quarter and full year 2019 results reflected higher common shares outstanding. 

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

Earnings per Share Guidance 

Entergy initiated its 2020 adjusted EPS guidance range of $5.45 to $5.75. See webcast presentation slides for additional details. 

The company has provided 2020 earnings guidance with regard to the non-GAAP measure of Entergy adjusted EPS. This measure excludes from the corresponding GAAP financial measure the effect of adjustments as described below under “Non-GAAP Financial Measures.” The company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify with a reasonable degree of confidence all of the adjustments that may occur during the periods. 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 (40) cents in 2020. These estimates are subject to substantial uncertainty due to, among other things, the potential effects of exiting the EWC business. 

Earnings Teleconference 

A teleconference will be held at 10:00 a.m. Central Time on Wednesday, February 19, 2020, to discuss Entergy’s quarterly earnings announcement and the company’s financial performance. The teleconference may be accessed by visiting Entergy’s website at www.entergy.com or by dialing 844-309-6569, conference ID 1253867, no more than 15 minutes prior to the start of the call. The webcast slide presentation is also posted to Entergy’s website concurrent with this news release, which was issued before market open on the day of the call. A replay of the teleconference will be available on Entergy’s website at www.entergy.com and by telephone. The telephone replay will be available through February 26, 2020, by dialing 855-859-2056, conference ID 1253867. 

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 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 $11 billion and approximately 13,600 employees. 

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

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

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

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

Non-GAAP Financial Measures 

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

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

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

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

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

Cautionary Note Regarding Forward-Looking Statements 

In this news release, and from time to time, Entergy Corporation makes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, Entergy’s 2020 earnings guidance; its current financial and operational outlooks; and other statements of Entergy’s plans, beliefs, or expectations included in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 

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

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