Entergy Reports Second Quarter Earnings Improved EWC fleet performance and industrial sales growth at Utility highlight quarter

NEW ORLEANS, July 29, 2014 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) today reported second quarter 2014 as-reported earnings of $189.4 million, or $1.05 per share, compared with $163.7 million, or 92 cents per share, for second quarter 2013. Operational earnings per share were 10 percent higher than the same quarter a year ago. On an operational basis, Entergy's second quarter 2014 earnings were $200.3 million, or $1.11 per share, compared with $179.7 million, or $1.01 per share, in second quarter 2013.

"Our focus on operational excellence allowed us to continue to deliver on our commitments in the second quarter. At the Utility, we saw strong quarter-over-quarter industrial sales growth of 5.3 percent, and at Entergy Wholesale Commodities, solid performance was driven largely by improved fleet operations and no refueling outages, which allowed us to provide extended periods of uninterrupted power to the market," said Entergy Chairman and Chief Executive Officer Leo Denault. "These results are further evidence of the progress we've made on many fronts over the past 18 months. The state of Entergy's business is strong."

Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures

Second Quarter and Year-to-Date 2014 vs. 2013

(Per share in U.S. $)








Second Quarter

Year-to-Date


2014

2013

Change

2014

2013

Change

As-Reported Earnings

1.05

0.92

0.13

3.29

1.82

1.47

Less Special Items

(0.06)

(0.09)

0.03

(0.11)

(0.13)

0.02

Operational Earnings

1.11

1.01

0.10

3.40

1.95

1.45

*GAAP refers to United States generally accepted accounting principles.

Operational Earnings Per Share Highlights for Second Quarter 2014

  • Entergy Wholesale Commodities earnings increased, driven by higher net revenue, and partially offset by higher income tax and depreciation expenses.
  • Utility results were essentially flat. Higher net revenue and lower non-fuel operation and maintenance expense were offset by higher depreciation expense and a higher effective income tax rate.
  • Parent & Other results matched the prior period.

Other Business Highlights

  • River Bend was rated in the "excellence" category as compared to peers.
  • Since June, the Utility has signed economic development projects totaling approximately 100 megawatts.
  • J.D. Power's 2014 satisfaction study of electric utility residential customers results show that all Entergy utility operating companies improved their performance by several points over last year.
  • Corporate Responsibility Magazine named Entergy one of America's 100 Best Corporate Citizens.

A teleconference will be held at 10 a.m. CDT on Tuesday, July 29, 2014, to discuss Entergy's second quarter 2014 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 (719) 325-2115, confirmation code 6761108, no more than 15 minutes prior to the start of the call. The presentation slides are also on 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 noon CDT on Tuesday, Aug. 5, 2014, by dialing (719) 457-0820, confirmation code 6761108. This release and presentation slides are also available on the Entergy Investor Relations mobile web app at enter.gy/ir.

Utility

In second quarter 2014, Utility earnings were $207.8 million, or $1.15 per share, on an as-reported basis and $211.3 million, or $1.17 per share, on an operational basis, compared to $196.2 million, or $1.10 per share, on an as-reported basis and $211.1 million, or $1.18 per share, on an operational basis for second quarter 2013. Higher net revenue and lower non-fuel O&M expense were offset by higher depreciation expense and a higher effective income tax rate.

The increase in Utility net revenue was driven largely by pricing adjustments from recent rate actions. The contribution attributable to volume was slightly negative. Higher weather-adjusted billed sales volume, particularly sales to industrial customers, was offset by the effects of weather, including milder weather in late June 2014 reflected in the unbilled period.

Billed retail sales increased 2.6 percent on a weather-adjusted basis. The increase was attributable largely to 5.3 percent growth in the industrial customer class. The industrial increase was led by the refining, chemicals and small industrial segments and was aided by expansions. Growth in Entergy Texas, Inc. and Entergy Gulf States Louisiana, L.L.C. service areas accounted for approximately 85 percent of the total industrial quarter-over-quarter increase.

Residential sales in second quarter 2014, on a weather-adjusted basis, increased 0.2 percent compared to second quarter 2013. Commercial and governmental sales, on a weather-adjusted basis, increased 1.5 percent and 0.4 percent, respectively, quarter over quarter. Industrial sales in the second quarter increased 5.3 percent compared to the same quarter of 2013.

Utility non-fuel O&M was lower than the same quarter a year ago. The decrease reflected lower compensation and benefits costs from fewer employees and lower post-retirement benefit costs.

Entergy Wholesale Commodities 

EWC reported as-reported earnings of $25.9 million, or 14 cents per share, and operational earnings of $33.4 million, or 18 cents per share, for second quarter 2014, compared to second quarter 2013 earnings of $11.5 million, or 6 cents per share, on an as-reported basis and $12.7 million, or 7 cents per share, on an operational basis. The increase in operational earnings was driven by higher operational adjusted earnings before interest, income taxes, depreciation and amortization and interest and investment income excluding decommissioning expense and other than temporary impairment losses on decommissioning trust fund assets. The increase was partially offset by higher depreciation and income tax expenses.

EWC operational adjusted EBITDA was $145 million in second quarter 2014, compared to $61 million in the same period a year ago. The quarter-over-quarter increase was attributable to net revenue. EWC's nuclear fleet capacity factor improved on no refueling outages in second quarter 2014 as well as 37 fewer unplanned outage days. Higher realized price, driven by improved Northeast capacity prices, also contributed to the net revenue increase. The realized price for EWC's nuclear fleet was approximately $50 per MWh in the second quarter of this year, compared to $46.40 in the comparable quarter a year ago.

Contribution to second quarter 2014 operational adjusted EBITDA from the Vermont Yankee Nuclear Power Station, scheduled to be closed later this year at the end of its current operating cycle, was approximately $12 million.

Parent & Other

Parent & Other reported a loss of $44.3 million, or 24 cents per share, on an as-reported and operational basis for second quarter 2014, compared to a loss of $44.0 million, or 24 cents per share, on an as-reported and operational basis for second quarter 2013. No line items were individually significant.

Earnings Guidance

Entergy affirmed its previously issued 2014 operational earnings guidance to be in the range of $5.55 to $6.75 per share.

Three-Year Financial Outlook

Entergy's current three-year financial outlook for 2014 through 2016 is summarized below.

Utility operational net income outlook of $1 billion to $1.050 billion by 2016, or 5 to 7 percent compound annual growth rate off 2013 base, through a combination of rate base growth and return on equity improvement. Three major aspects of the Utility growth strategy which support the outlook, include:

  • Productive investment to meet existing and potential demand growth as well as reliability improvements,
  • Unique economic development opportunity driving 3.5 to 3.75 percent retail sales growth (CAGR off 2013 weather-adjusted results) to support rate stability and help fund productive investment and
  • Ongoing engagement and collaboration with regulators on initiatives to benefit customers.

EWC operational adjusted EBITDA estimates will experience volatility based on commodity market activities at specific points in time. The EWC strategy is to preserve optionality and manage risks in that business. Cornerstones of that strategy include:

  • Operational excellence and disciplined cost management,
  • Robust hedging strategy to position the business to take advantage of price volatility,
  • Continued pursuit of fair and competitive wholesale markets that provide proper compensation for needed plants and
  • Ongoing efforts to educate parties on Indian Point's critical role in the community and to continue along multiple paths to advocate for continued operations at that plant.

Parent and Other operational earnings per share outlook of $(1.10) to $(1.20) in 2016. Key drivers include level of borrowings as well cost of debt, level of affiliate preferred investments and effective income tax rate.

Entergy continues to reasonably believe that the company can achieve consolidated operational earnings per share growth of 2 to 4 percent CAGR by 2016 (2013 base year), based on factors described above and assuming realization of Entergy's point of view on market power prices.

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 July 29, 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 and on Entergy's Investor Relations mobile web app at enter.gy/ir.

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 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 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.

Table 1: Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures

Second Quarter and Year-to-Date 2014 vs. 2013

(Per share in U.S. $)


Second Quarter

Year-to-Date


2014

2013

Change

2014

2013

Change

As-Reported







Utility

1.15

1.10

0.05

2.28

1.79

0.49

Entergy Wholesale Commodities

0.14

0.06

0.08

1.49

0.52

0.97

Parent & Other

(0.24)

(0.24)

-

(0.48)

(0.49)

0.01

  Consolidated As-Reported Earnings

1.05

0.92

0.13

3.29

1.82

1.47








Less Special Items







Utility

(0.02)

(0.08)

0.06

(0.03)

(0.12)

0.09

Entergy Wholesale Commodities

(0.04)

(0.01)

(0.03)

(0.08)

(0.01)

(0.07)

Parent & Other

-

-

-

-

-

-

  Consolidated Special Items

(0.06)

(0.09)

0.03

(0.11)

(0.13)

0.02








Operational







Utility

1.17

1.18

(0.01)

2.31

1.91

0.40

Entergy Wholesale Commodities

0.18

0.07

0.11

1.57

0.53

1.04

Parent & Other

(0.24)

(0.24)

-

(0.48)

(0.49)

0.01

  Consolidated Operational Earnings

1.11

1.01

0.10

3.40

1.95

1.45















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

Second Quarter and Year-to-Date 2014 vs. 2013

($ in millions)


Second Quarter

Year-to-Date


2014

2013

Change

2014

2013

Change

Net income

26

12

14

269

94

175

Add back: interest expense

3

4

(1)

8

7

1

Add back: income tax expense

20

(15)

35

138

42

96

Add back: depreciation and amortization

71

50

21

141

100

41

Subtract: interest and investment income

22

22

-

48

51

(3)

Add back: decommissioning expense

35

30

5

69

61

8

Adjusted EBITDA

133

59

74

577

253

324

Add back: special item for HCM implementation expenses (pre-tax)

1

2

(1)

2

2

-

Add back: special item resulting from the decision to close VY (pre-tax)

11

-

11

21

-

21

Operational adjusted EBITDA

145

61

84

600

255

345








Totals may not foot due to rounding


Entergy Corporation

Consolidated Income Statement

Three Months Ended June 30

(in thousands)












2014


2013



(unaudited)


Operating Revenues:





     Electric

$2,373,842


$2,177,210


     Natural gas

35,469


33,881


     Competitive businesses

587,339


527,117


                      Total

2,996,650


2,738,208


Operating Expenses:





    Operation and maintenance:





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

604,081


489,608


         Purchased power

517,898


485,744


         Nuclear refueling outage expenses

66,497


66,464


         Other operation and maintenance

816,609


844,195


     Decommissioning

67,250


59,389


     Taxes other than income taxes

152,736


144,888


     Depreciation and amortization

331,742


297,516


     Other regulatory charges (credits) – net

(14,640)


3,892


                      Total

2,542,173


2,391,696


Operating Income

454,477


346,512


Other Income (Deductions):





     Allowance for equity funds used during construction

14,788


16,249


     Interest and investment income

24,245


40,541


     Miscellaneous – net

(14,675)


(13,157)


                      Total

24,358


43,633


Interest Expense:





     Interest expense

164,327


155,768


     Allowance for borrowed funds used during construction

(8,516)


(6,791)


                      Total

155,811


148,977


Income Before Income Taxes

323,024


241,168


Income Taxes

128,743


73,113


Consolidated Net Income

194,281


168,055


Preferred Dividend Requirements of Subsidiaries

4,898


4,332


Net Income Attributable to Entergy Corporation

$189,383


$163,723












Earnings Per Average Common Share





     Basic

$1.06


$0.92


     Diluted

$1.05


$0.92







Average Number of Common Shares Outstanding – Basic

179,354,103


178,196,525


Average Number of Common Shares Outstanding – Diluted

180,045,432


178,614,383



Entergy Corporation

Consolidated Income Statement

Six Months Ended June 30

(in thousands)












2014


2013



(unaudited)


Operating Revenues:





     Electric

$4,600,306


$4,126,490


     Natural gas

113,689


87,202


     Competitive businesses

1,491,498


1,133,390


                      Total

6,205,493


5,347,082


Operating Expenses:





    Operation and maintenance:





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

1,147,910


999,940


         Purchased power

1,092,525


858,873


         Nuclear refueling outage expenses

126,041


127,183


         Other operation and maintenance

1,554,590


1,598,453


     Decommissioning

133,049


118,494


     Taxes other than income taxes

307,204


295,983


     Depreciation and amortization

660,465


598,392


     Other regulatory charges (credits) – net

(10,645)


9,207


                      Total

5,011,139


4,606,525


Operating Income

1,194,354


740,557


Other Income (Deductions):





     Allowance for equity funds used during construction

29,917


29,000


     Interest and investment income

59,493


78,847


     Miscellaneous – net

(26,379)


(26,779)


                      Total

63,031


81,068


Interest Expense:





     Interest expense

326,877


308,918


     Allowance for borrowed funds used during construction

(15,535)


(11,979)


                      Total

311,342


296,939


Income Before Income Taxes

946,043


524,686


Income Taxes

345,709


189,648


Consolidated Net Income

600,334


335,038


Preferred Dividend Requirements of Subsidiaries

9,777


9,915


Net Income Attributable to Entergy Corporation

$590,557


$325,123












Earnings Per Average Common Share





     Basic

$3.30


$1.83


     Diluted

$3.29


$1.82







Average Number of Common Shares Outstanding – Basic

179,077,503


178,112,709


Average Number of Common Shares Outstanding – Diluted

179,547,020


178,534,201



Entergy Corporation

Utility Electric Energy Sales & Customers








Three Months Ended June 30












2014


2013


%

 Change


%

Weather-Adjusted



(Millions of kWh)





Electric Energy Sales:









Residential


7,266


7,377


(1.5)


0.2

Commercial


6,762


6,684


1.2


1.5

Governmental


587


583


0.6


0.4

Industrial


10,902


10,357


5.3


5.3

    Total to Ultimate Customers


25,517


25,001


2.1


2.6

Wholesale


2,048


590


247.1



    Total Sales


27,565


25,591


7.7





















Six Months Ended June 30












2014


2013


%

 Change


%

Weather-Adjusted



(Millions of kWh)





Electric Energy Sales:









Residential


17,293


15,721


10.0


1.1

Commercial


13,563


13,105


3.5


1.8

Governmental


1,170


1,167


0.3


0.2

Industrial


21,015


20,225


3.9


3.9

    Total to Ultimate Customers


53,041


50,218


5.6


2.4

Wholesale


4,282


1,219


251.3



    Total Sales


57,323


51,437


11.4





















June 30











2014


2013


%

Change


Electric Customers (End of period):







Residential


2,405,182


2,395,491


0.4


Commercial


344,894


342,014


0.8


Governmental


17,281


16,695


3.5


Industrial


45,071


44,041


2.3


    Total Ultimate Customers


2,812,428


2,798,241


0.5


Wholesale


11


29


(62.1)


    Total Customers


2,812,439


2,798,270


0.5













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SOURCE Entergy Corporation



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