Entergy Reports Fourth Quarter and Full Year Earnings Strong Utility Industrial Sales Growth, Rise in Entergy Wholesale Commodities 2014 Northeast Forward Power Prices Highlight the Quarter

NEW ORLEANS, Feb. 11, 2014 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) today reported fourth quarter 2013 as-reported earnings of $146.9 million, or 82 cents per share, compared with $296.3 million, or $1.66 per share, for fourth quarter 2012. On an operational basis, Entergy's fourth quarter 2013 earnings were $179.3 million, or $1.00 per share, compared with $307.0 million, or $1.72 per share, in fourth quarter 2012. For the year, Entergy's as-reported earnings were $711.9 million, or $3.99 per share, and operational earnings were $957.1 million, or $5.36 per share. These results compare with 2012 as-reported earnings of $846.7 million, or $4.76 per share, and operational earnings of $1.1 billion, or $6.23 per share. The period-over-period declines were due largely to income tax benefits recorded in 2012.

Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures

Fourth Quarter and Year-to-Date 2013 vs. 2012

(Per share in U.S. $)








Fourth Quarter

Year-to-Date


2013

2012

Change

2013

2012

Change

As-Reported Earnings

0.82

1.66

(0.84)

3.99

4.76

(0.77)

Less Special Items

(0.18)

(0.06)

(0.12)

(1.37)

(1.47)

0.10

Operational Earnings

1.00

1.72

(0.72)

5.36

6.23

(0.87)


*GAAP refers to United States generally accepted accounting principles.

(Logo: http://photos.prnewswire.com/prnh/20120913/MM74349LOGO)

Operational Earnings Highlights for Fourth Quarter 2013

  • Utility earnings were lower due primarily to higher income tax expense and higher expenses for non-fuel operation and maintenance, depreciation and other taxes, partially offset by an increase in net revenue.
  • Entergy Wholesale Commodities earnings increased, driven by a gain on sale, higher other income and lower income tax expense, partially offset by lower net revenue and higher non-fuel operation and maintenance and depreciation expenses.
  • Parent & Other results decreased due primarily to higher income tax expense.

"In the fourth quarter, we saw encouraging top-line results at the Utility from continued strong industrial sales growth," said Leo Denault, Entergy's chairman and chief executive officer. "Growth was driven by increased production from existing customers tied to favorable global economic conditions. We expect to see continued load growth in the future as facility expansions come on line. During the quarter, EWC saw a surge in spot and 2014 forward power prices for the Northeast. The hedging strategy we've employed over the past several years positioned us to participate in this price run-up, which will largely be reflected in 2014 results.

"On a full year basis, we delivered solid 2013 operational results that reflected productive investments for Utility customers and a trend toward tightening supply/demand fundamentals in the Northeast as well as upward movement of energy spot prices. Moreover, we executed on several strategic initiatives, such as joining the Midcontinent Independent System Operator, Inc., reducing our cost structure and improving productivity across our businesses and making portfolio changes at EWC consistent with our strategy."

Other Business Highlights

  • Entergy operating companies successfully completed integration of their transmission systems into the MISO regional transmission organization.
  • The Louisiana Public Service Commission approved a settlement resolving outstanding rate cases for Entergy Louisiana, LLC and Entergy Gulf States Louisiana, L.L.C.
  • The Arkansas Public Service Commission issued a decision on Entergy Arkansas, Inc.'s rate case and EAI has requested rehearing of the Commission's order.
  • EGSL signed a six-year commercial agreement with Sasol North America Inc. to supply up to 200 megawatts to Sasol's proposed ethane cracker and derivatives project.
  • The sale of EWC's District Energy business was completed in November 2013.
  • Entergy Nuclear Vermont Yankee, LLC and Entergy Nuclear Operations, Inc. and the state of Vermont announced a settlement agreement on the plant's operations through 2014 and its later transition to decommissioning.

A teleconference will be held at 9 a.m. CT on Tuesday, Feb. 11, 2014, to discuss Entergy's fourth quarter 2013 earnings announcement and the company's financial performance. The teleconference may be accessed by dialing (719) 325-2115, confirmation code 6761108, no more than 15 minutes prior to the start of the call or by visiting Entergy's website at www.entergy.com. The presentation slides for the teleconference will be available on Entergy's website prior to market open on the day of the call. A replay of the teleconference will be available by telephone and on Entergy's website at www.entergy.com. The telephone replay will be available through noon CT on Tuesday, Feb. 18, 2014, by dialing (719) 457-0820, confirmation code 6761108.

Utility

In fourth quarter 2013, Utility earnings were $161.2 million, or 90 cents per share, on an as-reported basis and $153.7 million, or 86 cents per share, on an operational basis, compared to $279.7 million, or $1.57 per share, on an as-reported basis and $290.5 million, or $1.63 per share, on an operational basis for fourth quarter 2012. The quarter-over-quarter decrease in operational earnings per share was due primarily to higher income tax expense as well as higher expenses for non-fuel operation and maintenance, depreciation and other taxes. These items were partially offset by an increase in net revenue.

Fourth quarter 2012 results included a reduction in income tax expense driven by a tax audit settlement. There were income tax items in fourth quarter 2013 which resulted in a net benefit to earnings. The benefit in fourth quarter 2012 was larger than the benefit recorded in fourth quarter 2013.

Non-fuel operation and maintenance expense was higher due partly to increased compensation and benefits costs. A portion of the higher non-fuel operation and maintenance expense as well as the depreciation expense increases was offset by higher net revenue.

Higher net revenue partially offset expense increases. Pricing adjustments contributed to the net revenue increase. Current quarter net revenue reflected regulatory actions from placing major generation investments in service. A portion of the net revenue increase was for recovery of costs below net revenue. Also contributing to the increase in net revenue was higher volume due to the effects of weather. Weather was favorable in fourth quarter 2013 while it was unfavorable in the comparable quarter one year ago.

Residential sales in fourth quarter 2013, on a weather-adjusted basis, decreased 0.3 percent compared to fourth quarter 2012. Commercial and governmental sales, on a weather-adjusted basis, increased 0.9 percent and 1.6 percent, respectively, quarter over quarter. Industrial sales in the fourth quarter increased 3.2 percent compared to the same quarter of 2012.

Billed retail sales increased 1.5 percent on a weather-adjusted basis, driven largely by strong industrial sales growth. The industrial sales increase was due primarily to growth in the refining, chemicals and small industrial segments. Residential weather-adjusted sales reflected continued emphasis on energy efficiency and demand-side management programs.

For the year 2013, the Utility earned $828.9 million, or $4.64 per share, on an as-reported basis and $857.8 million, or $4.80, per share on an operational basis, compared to $943.0 million, or $5.30 per share, on an as-reported basis and $980.1 million, or $5.51 per share, on an operational basis in 2012. The year-over-year decrease was due largely to higher income tax expense. Results in both years reflected tax items that resulted in decreases in income tax expense. The income tax expense benefit in 2012 exceeded the benefit in 2013. A portion of the benefits resulting from a second quarter 2012 IRS agreement included customer sharing, which reduced net revenue in the same period. Increased non-fuel operation and maintenance expense, depreciation expense and taxes other than income taxes also contributed to the decrease. Interest expense and nuclear refueling outage expense were also higher year-over-year.

The year-over-year decreases were partially offset by higher net revenue, which included the previously noted second quarter 2012 customer sharing. The net revenue increase also reflected the net effect of rate adjustments, including recovery for a portion of the expense increases noted above. Sales growth was also positive, including the effects of weather. Overall billed retail sales increased 0.7 percent year-over-year; excluding the effects of weather, billed retail sales increased 0.2 percent.

Entergy Wholesale Commodities

EWC reported as-reported earnings of $42.1 million, or 24 cents per share, and operational earnings of $85.6 million, or 48 cents per share, for fourth quarter 2013, compared to fourth quarter 2012 earnings of $58.8 million, or 33 cents per share, on both an as-reported and an operational basis. The increase in operational earnings was driven by higher other income and a decrease in income tax expense. The increase in other income was due primarily to higher realized decommissioning trust earnings in fourth quarter 2013, which are directly reinvested into the trust funds.

Partially offsetting the increase was higher depreciation expense and lower operational adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, and interest and investment income excluding decommissioning expense and special items). Depreciation expense increased due to the effects of the Vermont Yankee Nuclear Power Station shutdown decision. In addition, fourth quarter 2012 results included an accrual for reimbursement of VY spent nuclear fuel storage costs from the Department of Energy, which reduced depreciation expense as well as reduced non-fuel O&M and increased miscellaneous other income included in EBITDA. The gain on the sale of the District Energy business provided a partial offset in operational adjusted EBITDA.

For the year, EWC earnings were $42.9 million, or 24 cents per share, on an as-reported basis, and $262.7 million, or $1.47 per share, on an operational basis, compared to as-reported earnings of $40.4 million, or 23 cents per share, and operational earnings $263.9 million, or $1.49 per share, in 2012. Several drivers contributed to the slight decline in operational earnings. In addition to the operational adjusted EBITDA drivers noted below, decommissioning and depreciation expenses were higher due primarily to items recorded in 2012. The decrease was partially offset by higher other income and lower income tax expense.

EWC operational adjusted EBITDA was $133 million in fourth quarter 2013, compared to $161 million in the same period a year ago. The decline in EWC quarter-over-quarter operational adjusted EBITDA was due largely to increased non-fuel operation and maintenance expense and decreased net revenue, partially offsetting was the gain on the sale noted above.

During fourth quarter 2013, EWC revenues were reduced by mark-to-market activity. As part of an asymmetric and protective risk management hedging strategy, additional financial power sales were conducted in fourth quarter 2013 to offset the exercise of in-the-money protective call options and to lock in margins. These additional sales did not qualify for hedge accounting treatment, and increases in forward prices after those sales were made accounted for the majority of the negative mark-to-market variance. It is expected that the underlying transactions will result in earnings in first quarter 2014 as these positions settle. Within net revenue, higher nuclear production due to 36 fewer refueling and unscheduled outage days provided a partial offset.

For the year, EWC operational adjusted EBITDA was $553 million compared to $618 million in 2012. The main drivers for the year-over-year decrease were the same as the quarterly drivers noted previously – lower net revenue and higher non-fuel operation and maintenance expense, partially offset by a gain on the sale of the District Energy business.

Contributions to 2013 operational adjusted EBITDA from VY, scheduled to be closed later this year at the end of its current operating cycle, were approximately $(2) million in the fourth quarter and $18 million for the full year.

Parent & Other

Parent & Other reported a loss of $56.3 million, or 32 cents per share, on an as-reported basis and $60.0 million, or 34 cents per share, on an operational basis for fourth quarter 2013, compared to a fourth quarter 2012 as-reported and operational loss of $42.3 million, or 24 cents per share. The period-over-period decline in operational results was due to income tax expense on the EWC District Energy sale noted previously. The sale of EWC's District Energy business affected the earnings of both EWC and Parent & Other. The pre-tax gain was recorded at EWC while the associated income expense was included in Parent & Other results.

For the year 2013, Parent & Other reported a loss of $159.9 million, or 89 cents per share, on an as-reported basis and $163.5 million, or 91 cents per share, on an operational basis. This compares to a loss of $136.7 million, or 77 cents per share, on an as-reported basis and $135.7 million, or 77 cents per share, an operational basis in 2012. Higher income tax expense, including income tax on the District Energy gain, was the primary factor in the year-over-year operational earnings per share decrease.

Earnings Guidance

Entergy affirmed its previously issued 2014 operational earnings guidance in the range of $4.60 to $5.40 per share and noted that indications are near the upper end of the guidance range based on assumptions as of Dec. 31, 2013.

Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including more than 10,000 megawatts of nuclear power, making it one of the nation's leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $11 billion and approximately 14,000 employees.

Additional information regarding Entergy's quarterly and annual results of operations, regulatory proceedings and other matters is available in Entergy's investor news release dated Feb. 11, 2014, a copy of which has been filed today with the SEC on Form 8-K, and Entergy's quarterly presentation slides. These are available on Entergy's investor relations website at www.entergy.com/investor_relations.

In this news release, and from time to time, Entergy Corporation makes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed in this news release and in: (i) Entergy's most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and (ii) Entergy's other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with rate proceedings, formula rate plans and other cost recovery mechanisms; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; and (f) economic conditions and conditions in commodity and capital markets during the periods covered by the forward-looking statements, in addition to other factors described elsewhere in this release and subsequent securities filings.

Appendix A provides a reconciliation of GAAP consolidated as-reported earnings to non-GAAP consolidated operational earnings.

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

Fourth Quarter and Year-to-Date 2013 vs. 2012

(Per share in U.S. $)


Fourth Quarter

Year-to-Date


2013

2012

Change

2013

2012

Change

As-Reported







Utility

0.90

1.57

(0.67)

4.64

5.30

(0.66)

Entergy Wholesale Commodities

0.24

0.33

(0.09)

0.24

0.23

0.01

Parent & Other

(0.32)

(0.24)

(0.08)

(0.89)

(0.77)

(0.12)

  Consolidated As-Reported Earnings

0.82

1.66

(0.84)

3.99

4.76

(0.77)








Less Special Items







Utility

0.04

(0.06)

0.10

(0.16)

(0.21)

0.05

Entergy Wholesale Commodities

(0.24)

-

(0.24)

(1.23)

(1.26)

0.03

Parent & Other

0.02

-

0.02

0.02

-

0.02

  Consolidated Special Items

(0.18)

(0.06)

(0.12)

(1.37)

(1.47)

0.10








Operational







Utility

0.86

1.63

(0.77)

4.80

5.51

(0.71)

Entergy Wholesale Commodities

0.48

0.33

0.15

1.47

1.49

(0.02)

Parent & Other

(0.34)

(0.24)

(0.10)

(0.91)

(0.77)

(0.14)

  Consolidated Operational Earnings

1.00

1.72

(0.72)

5.36

6.23

(0.87)








Appendix B provides a reconciliation of Entergy Wholesale Commodities GAAP net income to non-GAAP operational adjusted EBITDA.

Appendix B:  Entergy Wholesale Commodities Operational Adjusted EBITDA – Reconciliation of GAAP to Non-GAAP Measures


Fourth Quarter and Year-to-Date 2013 vs. 2012


($ in millions)



Fourth Quarter

Year-to-Date



2013

2012

Change

2013

2012

Change


Net Income

42

59

(17)

43

40

3


Add back: interest expense

5

3

2

16

18

(2)


Add back: income tax expense

(12)

50

(62)

(77)

61

(138)


Add back: depreciation and amortization

61

47

14

216

176

40


Subtract: interest and investment income

66

28

38

138

105

33


Add back: decommissioning expense

33

30

3

125

72

53


  Adjusted EBITDA

63

161

(98)

185

262

(77)


Add back: special item for HCM

  implementation expenses (pre-tax) 

19

-

19

24

-

24


Add back: special item for VY asset

  impairments / related charges (pre-tax)

52

-

52

343

356

(13)


  Operational Adjusted EBITDA

133

161

(28)

553

618

(65)





















Totals may not foot due to rounding


Entergy Corporation

Consolidated Income Statement

Three Months Ended Dec. 31

(in thousands)












2013


2012



(unaudited)


Operating Revenues:





     Electric

$2,111,070


$1,830,897


     Natural gas

41,039


37,392


     Competitive businesses

539,797


567,971


                      Total

2,691,906


2,436,260


Operating Expenses:





    Operation and maintenance:





         Fuel, fuel-related expenses, and gas purchased for resale

627,624


464,571


         Purchased power

302,914


288,984


         Nuclear refueling outage expenses

64,861


61,311


         Asset impairment and related charges

50,032


-


         Other operation and maintenance

894,027


785,634


     Decommissioning

62,762


58,120


     Taxes other than income taxes

147,416


132,969


     Depreciation and amortization

337,503


307,874


     Other regulatory charges (credits) – net

22,683


12,595


                      Total

2,509,822


2,112,058


Gain on Sale of Investment

43,569


-


Operating Income

225,653


324,202


Other Income (Deductions):





     Allowance for equity funds used during construction

19,378


21,773


     Interest and investment income

97,023


33,010


     Miscellaneous – net

(22,876)


(11,421)


                      Total

93,525


43,362


Interest Expense:





     Interest expense

163,114


154,434


     Allowance for borrowed funds used during construction

(7,068)


(9,435)


                      Total

156,046


144,999


Income Before Income Taxes

163,132


222,565


Income Taxes

11,780


(79,285)


Consolidated Net Income

151,352


301,850


Preferred Dividend Requirements of Subsidiaries

4,423


5,582


Net Income Attributable to Entergy Corporation

$146,929


$296,268












Earnings Per Average Common Share





     Basic

$0.82


$1.67


     Diluted

$0.82


$1.66







Average Number of Common Shares Outstanding – Basic

178,332,416


177,742,807


Average Number of Common Shares Outstanding – Diluted

178,751,436


178,042,364



Entergy Corporation

Consolidated Income Statement

Twelve Months Ended Dec. 31

(in thousands)












2013


2012



(unaudited)


Operating Revenues:





     Electric

$8,942,360


$7,870,649


     Natural gas

154,353


130,836


     Competitive businesses

2,294,234


2,300,594


                      Total

11,390,947


10,302,079


Operating Expenses:





    Operation and maintenance:





         Fuel, fuel-related expenses, and gas purchased for resale

2,445,818


2,036,835


         Purchased power

1,554,332


1,255,800


         Nuclear refueling outage expenses

256,801


245,600


         Asset impairment and related charges

341,537


355,524


         Other operation and maintenance

3,331,934


3,045,392


     Decommissioning

242,104


184,760


     Taxes other than income taxes

600,350


557,298


     Depreciation and amortization

1,261,044


1,144,585


     Other regulatory charges (credits) – net

45,597


175,104


                      Total

10,079,517


9,000,898


Gain on Sale of Investment

43,569


-


Operating Income

1,354,999


1,301,181


Other Income (Deductions):





     Allowance for equity funds used during construction

66,053


92,759


     Interest and investment income

199,300


127,776


     Miscellaneous – net

(59,762)


(53,214)


                      Total

205,591


167,321


Interest Expense:





     Interest expense

629,537


606,596


     Allowance for borrowed funds used during construction

(25,500)


(37,312)


                      Total

604,037


569,284


Income Before Income Taxes

956,553


899,218


Income Taxes

225,981


30,855


Consolidated Net Income

730,572


868,363


Preferred Dividend Requirements of Subsidiaries

18,670


21,690


Net Income Attributable to Entergy Corporation

$711,902


$846,673












Earnings Per Average Common Share





     Basic

$3.99


$4.77


     Diluted

$3.99


$4.76







Average Number of Common Shares Outstanding – Basic

178,211,192


177,324,813


Average Number of Common Shares Outstanding – Diluted

178,570,400


177,737,565



Entergy Corporation

Utility Electric Energy Sales & Customers








Three Months Ended Dec. 31












2013


2012


%

 Change


%

Weather-Adjusted



(Millions of kWh)





Electric Energy Sales:









Residential


8,089


7,360


9.9


(0.3)

Commercial


7,049


6,730


4.7


0.9

Governmental


598


583


2.6


1.6

Industrial


10,389


10,067


3.2


3.2

    Total to Ultimate Customers


26,125


24,740


5.6


1.5

Wholesale


1,133


798


42.0



    Total Sales


27,258


25,538


6.7





















Twelve Months Ended Dec. 31












2013


2012


%

 Change


%

Weather-Adjusted



(Millions of kWh)





Electric Energy Sales:









Residential


35,169


34,664


1.5


(0.6)

Commercial


28,547


28,724


(0.6)


(0.1)

Governmental


2,412


2,435


(0.9)


(0.5)

Industrial


41,653


41,181


1.1


1.1

    Total to Ultimate Customers


107,781


107,004


0.7


0.2

Wholesale


3,020


3,200


(5.6)



    Total Sales


110,801


110,204


0.5





















Dec. 31











2013


2012


%

Change


Electric Customers  (End of period):








Residential


2,395,267


2,379,955


0.6


Commercial


341,972


339,228


0.8


Governmental


17,168


16,642


3.2


Industrial


45,789


42,230


8.4


    Total Ultimate Customers


2,800,196


2,778,055


0.8


Wholesale


44


23


91.3


    Total Customers


2,800,240


2,778,078


0.8












SOURCE Entergy Corporation



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