Entergy Reports Second Quarter Earnings

Sales and productive investments drove top-line Utility growth, overall performance as expected

Aug 04, 2015, 07:00 ET from Entergy Corporation

NEW ORLEANS, Aug. 4, 2015 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported second quarter 2015 earnings per share of 83 cents on an as-reported basis and an operational basis, compared to second quarter 2014 as-reported EPS of $1.05 and operational EPS of $1.11.

"Once again, financial results in the second quarter were in line with our expectations, and Entergy remains on track to meet its full year guidance," said Entergy Chairman and CEO Leo Denault. "The Utility continues to implement its program to replace aging infrastructure, strengthen reliability and enhance the environmental profile of our generation fleet. The industrial expansion across our service territory also continues to advance. And Entergy Wholesale Commodities, despite market volatility, maintained solid operational and commercial performance."

Business highlights included the following:

  • The U.S. Department of Commerce named the New Orleans-to-Lake Charles chemical corridor to a program designed to accelerate the resurgence of manufacturing in America through federal incentives and grants.
  • The City Council of New Orleans approved storm securitization financing, which was completed in July.
  • Entergy Gulf States Louisiana, L.L.C. and Entergy Louisiana, LLC reached a settlement with all parties in the business combination of the two companies.
  • The St. Charles Energy Center was selected in response to a request for proposals for new long-term capacity.
  • The Nuclear Energy Institute issued a report finding that the Indian Point Energy Center contributes an estimated $1.6 billion annually to New York state's economy and $2.5 billion to the nation as a whole.
  • Entergy Corporation issued a $650 million, seven-year note at a 4 percent coupon.

Table of Contents

Page

News Release

1

Appendices

6

A: Consolidated Results and Special Items

7

B: Variance Analysis

9

C: Utility Performance Measures

11

D: EWC Performance Measures

12

E: Financial Performance Measures

13

F: Definitions, Abbreviations and Acronyms

14

G: GAAP to Non-GAAP Reconciliations

18

Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures

Second Quarter and Year-to-Date 2015 vs. 2014

Second Quarter

Year-to-Date

2015

2014

Change

2015

2014

Change

As-Reported Earnings ($ in millions)

148.8

189.4

(40.6)

446.9

590.6

(143.7)

Less Special Items:

  HCM implementation expenses

(4.1)

4.1

(7.1)

7.1

  Decision to close VY

(1.1)

(6.9)

5.8

(5.7)

(12.7)

7.0

Total Special Items

(1.1)

(11.0)

9.9

(5.7)

(19.8)

14.1

Operational Earnings

149.9

200.3

(50.4)

452.6

610.4

(157.8)

Weather Impact

(2.9)

(9.3)

6.4

11.4

23.2

(11.8)

As-Reported Earnings (per share in $)

0.83

1.05

(0.22)

2.48

3.29

(0.81)

Less Special Items:

  HCM implementation expenses

(0.02)

0.02

(0.04)

0.04

  Decision to close VY

(0.04)

0.04

(0.03)

(0.07)

0.04

Total Special Items

(0.06)

0.06

(0.03)

(0.11)

0.08

Operational Earnings

0.83

1.11

(0.28)

2.51

3.40

(0.89)

Weather Impact

(0.02)

(0.05)

0.03

0.06

0.13

(0.07)

Totals may not foot due to rounding

Business Unit Results

In addition to the summary business unit discussions below and results provided in Appendix A, a comprehensive analysis of quarterly and year-to-date variances is provided in Appendix B to this release. Appendix A also provides information on operating cash flow by business.

Utility Results

In second quarter 2015, Utility earnings were $1.11 per share on an as-reported and an operational basis. In comparison, second quarter 2014 as-reported EPS was $1.15 and operational EPS was $1.17. Operational results reflected sales growth, the effects of productive investments and higher operating expenses.

Billed retail sales volume increased quarter-to-quarter on the effects of weather and residential sales growth. On a weather-adjusted basis, billed volume declined (0.5) percent; the components of the sales growth were:

  • Weather-adjusted residential sales growth of 0.7 percent,
  • Commercial sales decline of (0.2) percent on a weather-adjusted basis,
  • Weather-adjusted governmental sales increase of 1.8 percent and
  • Industrial sales decline of (1.5) percent.

During second quarter 2015, new industrial and expansion projects continued to ramp-up and come into service. However, billed industrial volume declined due largely to extended seasonal outages for existing large refinery customers, as well as existing chlor-alkali customer outages. On a revenue basis, sales growth, including weather-adjusted residential sales resulted in a quarter-over-quarter positive revenue contribution.

Higher Utility net revenue also reflected rate adjustments for the Ninemile Point Unit 6 plant that went in service at the end of 2014 and the Entergy Mississippi, Inc. rate case. The earnings effect from these changes was largely offset by changes in other line items (e.g., non-fuel operation and maintenance and depreciation expenses). Higher nuclear generation expenses in part due to increased regulatory compliance at Arkansas Nuclear One, higher vegetation maintenance spending and increased scope of work for fossil generation were also reflected in the higher non-fuel O&M.

For additional details on Utility's performance for the quarter, see Appendix C.

Entergy Wholesale Commodities Results

EWC operational adjusted earnings before interest, taxes, depreciation and amortization were $62 million in second quarter 2015, compared to $145 million in the same period a year ago. Principal reasons for the EBITDA decrease include lower wholesale power prices and decreased nuclear generation as well as the closure of the Vermont Yankee Nuclear Power Station last year.

EWC Operational Adjusted EBITDA – Reconciliation of GAAP to Non-GAAP Measures

Second Quarter and Year-to-Date 2015 vs. 2014

($ in millions)

Second Quarter

Year-to-Date

2015

2014

Change

2015

2014

Change

Net income

(4)

26

(30)

120

269

(149)

Add back: interest expense

6

3

3

12

8

4

Add back: income tax expense

(3)

20

(23)

67

138

(71)

Add back: depreciation and amortization

64

71

(7)

126

141

(15)

Subtract: interest and investment income

36

22

14

86

48

38

Add back: decommissioning expense

33

35

(2)

68

69

(1)

Adjusted EBITDA

60

133

(73)

307

577

(270)

Add back:

  Special item for HCM implementation (pre-tax)

1

(1)

2

(2)

  Special item for the decision to close VY (pre-tax)

2

11

(9)

9

21

(12)

Operational adjusted EBITDA

62

145

(83)

315

600

(285)

Totals may not foot due to rounding

Excluding the effects of VY, the change in EBITDA was driven largely by lower net revenue due primarily to lower nuclear energy prices. In addition, nuclear production was lower in the current period with more refueling outage days (34 days for Pilgrim Nuclear Power Station in the current period compared to zero in second quarter 2014).

EWC reported a loss of 2 cents per share on an as-reported basis and an operational basis for second quarter 2015, compared to second quarter 2014 as-reported earnings of 14 cents per share and operational earnings of 18 cents per share. Key drivers for the period-over-period decline in earnings are the lower wholesale prices and generation discussed previously.

For additional details on EWC's performance for the quarter, see Appendix D.

Parent & Other Results

Parent & Other reported a loss of 26 cents per share on an as-reported and an operational basis for second quarter 2015 compared to an as-reported and operational loss of 24 cents per share in second quarter 2014. No drivers were individually significant.

Earnings Guidance

Entergy affirmed its 2015 operational earnings guidance in the range of $5.10 to $5.90 per share. See webcast presentation slides for additional details.

Earnings Teleconference

A teleconference will be held at 10 a.m. CDT on Tuesday, Aug. 4, 2015, to discuss Entergy's second quarter 2015 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 (855) 893-9849, conference ID 44024303, no more than 15 minutes prior to the start of the call. The presentation slides are 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 Aug. 11, 2015, by dialing (855) 859-2056, conference ID 44024303. This release and presentation slides 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 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 $12 billion and approximately 13,000 employees.

Entergy Corporation's common stock is listed on the New York and Chicago exchanges under the symbol "ETR."

Additional information regarding Entergy's quarterly results of operations, regulatory proceedings and other matters is available in Entergy's earnings release package, a copy of which has been filed with the U.S. Securities and Exchange Commission, and the quarterly presentation slides. The earnings package contains appendices to this release and financial statements. Both the earnings release package and quarterly presentation slides 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.

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 2015 operational earnings guidance, its current financial and operational outlook, and other statements of Entergy's plans, beliefs or expectations included in 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 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) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning VY or any of Entergy's other 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 proposed acquisition of the Union Power Station near El Dorado, Arkansas and the proposed combination of Entergy Louisiana and Entergy Gulf States Louisiana, 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 and (h) economic conditions and conditions in commodity and capital markets during the periods covered by the forward-looking statements.

For definitions of certain operational performance measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the quarterly materials, see Appendix F.

Second Quarter 2015 Earnings Release Package

Appendices

Seven appendices are presented in this section as follows:

  • Appendix A: Consolidated Results and Special Items
  • Appendix B: Variance Analysis
  • Appendix C: Utility Performance Measures
  • Appendix D: EWC Performance Measures
  • Appendix E: Financial Performance Measures
  • Appendix F: Definitions, Abbreviations and Acronyms
  • Appendix G: GAAP to Non-GAAP Reconciliations

Also included in this earnings release package are:

  • Financial Statements

Accompanying the earnings package is a webcast slide presentation.

A: Consolidated Results and Special Items

Appendix A-1 provides a comparative summary of consolidated EPS for second quarter and year-to-date 2015 versus 2014, including a reconciliation of GAAP as-reported earnings to non-GAAP operational earnings.

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

Second Quarter and Year-to-Date 2015 vs. 2014

(Per share in $)

Second Quarter

Year-to-Date

2015

2014

Change

2015

2014

Change

As-Reported

Utility

1.11

1.15

(0.04)

2.35

2.28

0.07

EWC

(0.02)

0.14

(0.16)

0.66

1.49

(0.83)

Parent & Other

(0.26)

(0.24)

(0.02)

(0.53)

(0.48)

(0.05)

  Consolidated As-Reported Earnings

0.83

1.05

(0.22)

2.48

3.29

(0.81)

Less Special Items

Utility

(0.02)

0.02

(0.03)

0.03

EWC

(0.04)

0.04

(0.03)

(0.08)

0.05

Parent & Other

  Consolidated Special Items

(0.06)

0.06

(0.03)

(0.11)

0.08

Operational

Utility

1.11

1.17

(0.06)

2.35

2.31

0.04

EWC

(0.02)

0.18

(0.20)

0.69

1.57

(0.88)

Parent & Other

(0.26)

(0.24)

(0.02)

(0.53)

(0.48)

(0.05)

  Consolidated Operational Earnings

0.83

1.11

(0.28)

2.51

3.40

(0.89)

Weather Impact

(0.02)

(0.05)

0.03

0.06

0.13

(0.07)

Detailed earnings variance analyses are included in Appendix B-1 and Appendix B-2.

Appendix A-2 provides the components of OCF contributed by each business with current quarter and year-to-date comparisons.

Appendix A-2: Consolidated Operating Cash Flow

Second Quarter and Year-to-Date 2015 vs. 2014

($ in millions)

Second Quarter

Year-to-Date

2015

2014

Change

2015

2014

Change

Utility

762

599

163

1,216

1,004

212

EWC

8

225

(217)

216

649

(433)

Parent & Other

(43)

(63)

20

(94)

(124)

30

  Total Operating Cash Flow

727

761

(34)

1,338

1,529

(190)

Totals may not foot due to rounding

The primary driver of the $34 million quarter-over-quarter decrease was

  • Lower EWC net revenue

Partially offsetting was:

  • Higher Utility net revenue and
  • Lower Utility nuclear refueling outage spending.

Appendix A-3 and Appendix A-4 list special items by business. Amounts are shown on both an EPS basis and a net income basis. Special items are those events that are not routine. Special items are included in as-reported EPS consistent with GAAP, but are excluded from operational EPS. As a result, operational EPS is considered a non-GAAP measure.

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

Second Quarter and Year-to-Date 2015 vs. 2014

(After-tax, per share in $)

Second Quarter

Year-to-Date

2015

2014

Change

2015

2014

Change

Utility

HCM implementation expenses

(0.02)

0.02

(0.03)

0.03

  Total Utility

(0.02)

0.02

(0.03)

0.03

EWC

Decision to close VY

(0.04)

0.04

(0.03)

(0.07)

0.04

HCM implementation expenses

(0.01)

0.01

  Total EWC

(0.04)

0.04

(0.03)

(0.08)

0.05

Total Special Items

(0.06)

0.06

(0.03)

(0.11)

0.08

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

Second Quarter and Year-to-Date 2015 vs. 2014

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

Second Quarter

Year-to-Date

2015

2014

Change

2015

2014

Change

Utility

Non-fuel O&M

(5.6)

5.6

(9.5)

9.5

Taxes other than income taxes

(0.3)

0.3

(0.5)

0.5

Income taxes – other

2.4

(2.4)

4.2

(4.2)

  Total Utility

(3.5)

3.5

(5.8)

5.8

EWC

Non-fuel O&M

(1.6)

(9.6)

8.0

(9.1)

(17.5)

8.4

Taxes other than income taxes

(0.8)

0.8

0.3

(1.4)

1.7

Asset write-off and impairments

(1.7)

1.7

(3.9)

3.9

Income taxes – other

0.6

4.6

(4.0)

3.0

8.8

(5.8)

  Total EWC

(1.1)

(7.5)

6.4

(5.7)

(14.0)

8.3

Total Special Items

(1.1)

(11.0)

9.9

(5.7)

(19.8)

14.1

Totals may not foot due to rounding

B: Variance Analysis

Appendix B-1 and Appendix B-2 provide details of current quarter and year-to-date 2015 versus 2014 as-reported and operational earnings variance analysis for Utility, EWC, Parent & Other and Consolidated.

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

Second Quarter 2015 vs. 2014

(After-tax, per share in $, sorted in consolidated operational column, most to least favorable)

Utility

EWC

Parent & Other

Consolidated

As- Reported

Opera- tional

As- Reported

Opera- tional

As- Reported

Opera- tional

As- Reported

Opera- tional

2014 earnings

1.15

1.17

0.14

0.18

(0.24)

(0.24)

1.05

1.11

Other income (deductions) – other

0.02

0.02

0.04

0.04

(0.02)

(0.02)

0.04

0.04

Income taxes – other

(0.01)

(0.01)

0.03

0.03

0.02

0.02

Asset write-off and impairments

0.01

0.01

Interest expense and other charges

(0.02)

(0.02)

(0.01)

(0.01)

0.02

0.02

(0.01)

(0.01)

Decommissioning expense

(0.01)

(0.01)

(0.01)

(0.01)

Taxes other than income taxes

(0.01)

(0.01)

(0.01)

(0.01)

(0.02)

(0.02)

Depreciation/amortization expense

(0.05)

(0.05)

(a)

0.02

0.02

(0.03)

(0.03)

Non-fuel O&M

(0.20)

(0.22)

(b)

0.17

0.14

(c)

(0.01)

(0.01)

(0.04)

(0.09)

Net revenue

0.24

0.24

(d)

(0.41)

(0.41)

(e)

(0.01)

(0.01)

(0.18)

(0.18)

2015 earnings

1.11

1.11

(0.02)

(0.02)

(0.26)

(0.26)

0.83

0.83

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

Year-to-Date 2015 vs. 2014

(After-tax, per share in $, sorted in consolidated operational column, most to least favorable)

Utility

EWC

Parent & Other

Consolidated

As- Reported

Opera- tional

As- Reported

Opera- tional

As- Reported

Opera -tional

As- Reported

Opera -tional

2014 earnings

2.28

2.31

1.49

1.57

(0.48)

(0.48)

3.29

3.40

Other income (deductions) – other

0.08

0.08

(f)

0.12

0.12

(g)

(0.05)

(0.05)

0.15

0.15

Income taxes – other

0.11

0.11

(h)

(0.07)

(0.07)

(i)

(0.01)

(0.01)

0.03

0.03

Asset write-off and impairments

0.01

0.01

Share effect

(0.01)

(0.01)

(0.01)

(0.01)

Decommissioning expense

(0.02)

(0.02)

(0.02)

(0.02)

Taxes other than income taxes

(0.04)

(0.04)

0.02

0.01

(0.02)

(0.03)

Interest expense and other charges

(0.04)

(0.04)

(0.01)

(0.01)

0.02

0.02

(0.03)

(0.03)

Depreciation/amortization expense

(0.10)

(0.10)

(a)

0.05

0.05

(j)

0.01

0.01

(0.04)

(0.04)

Non-fuel O&M

(0.40)

(0.43)

(b)

0.22

0.19

(c)

(0.01)

(0.01)

(0.19)

(0.25)

Net revenue

0.49

0.49

(d)

(1.17)

(1.17)

(e)

(0.01)

(0.01)

(0.69)

(0.69)

2015 earnings

2.35

2.35

0.66

0.69

(0.53)

(0.53)

2.48

2.51

(a)

The current quarter and year-to-date decreases were due to additions to plant in service, including the Ninemile 6 project which was placed in service in December 2014. Higher depreciation rates at EMI (offset in net revenue) also contributed.

(b)

The current quarter and year-to-date decreases reflected higher nuclear generation expenses due partly to spending for regulatory compliance resulting from the NRC's decision to move ANO into Column 4 of the reactor oversight process action matrix. Also higher were fossil generation costs from an overall higher scope of work and distribution expenses for vegetation maintenance. Other non-fuel O&M changes with offsets in net revenue in the current and year-to date periods included transmission costs allocated by MISO and energy efficiency program costs.

(c)

The increases quarter-over-quarter and year-to-date were attributable to the closure of VY at the end of 2014. Excluding VY, the year-over-year non-fuel O&M was higher due to higher refueling outage amortization and fewer refueling outage days resulting in the lower deferral of costs for future amortization.

(d)

The current quarter and year-to-date increases were due to both price and volume factors. The price variance included the Louisiana FRP rate adjustments for placing Ninemile 6 in rates and the EMI rate case. In the quarter, the net revenue volume variance was positive due to sales growth, including weather-adjusted residential sales growth, and increased sales to new and expansion industrial projects. On a year-to-date basis, the year-over-year effect of weather was negative while weather-adjusted sales volume increased across all segments.

(e)

The current quarter and year-to-date decreases were due largely to the VY closure and lower energy pricing for the operating nuclear fleet. In the current quarter, nuclear generation was also lower due to more outage days. In addition, for the year-to-date period, the net effect of mark-to-market activity was negative in the current period compared to a positive contribution in the comparable period a year ago.

(f)

The year-to-date increase was due primarily to higher earnings on investments in affiliate preferred membership interests (offset in Parent & Other) and an increase in realized gains on nuclear decommissioning trust funds (offset in net revenue).

(g)

The year-to-date increase was due primarily to higher realized gains on decommissioning trusts, including the rebalancing of VY's decommissioning trust portfolio in the current year.

(h)

The year-to-date increase was attributable to a first quarter 2015 adjustment of approximately $24 million involving the reversal of a portion of the provision for uncertain tax provisions related to interest accrual.

(i)

The year-to-date decrease was due primarily to a first quarter 2014 adjustment of approximately $21.5 million related to a change in New York law which resulted in a reduction of deferred income taxes. Partially offsetting this decrease was a favorable second quarter 2015 adjustment of approximately $7.7 million related to a settlement of a state tax audit.

(j)

The year-to-date increase was mainly attributable to the absence of VY depreciation.

See webcast appendix for more details on the effects of the VY closure on EWC line item variances.

Utility As-Reported Net Revenue

Variance Analysis

2015 vs. 2014 ($ EPS)

Second Quarter

Year-to- Date

Weather

0.03

(0.07)

Sales growth/pricing

0.22

0.59

Other

(0.01)

(0.03)

Total

0.24

0.49

C: Utility Performance Measures

Appendix C-1 provides a comparative summary of Utility operational performance measures.

Appendix C-1: Utility Operational Performance Measures

Second Quarter and Year-to-Date 2015 vs. 2014

Second Quarter

Year-to-Date

2015

2014

% Change

% Weather Adjusted (k)

2015

2014

% Change

% Weather Adjusted (k)

GWh billed

Residential

7,364

7,266

1.3%

0.7%

16,796

17,293

(2.9%)

0.7%

Commercial

6,904

6,762

2.1%

(0.2%)

13,625

13,563

0.5%

0.2%

Governmental

602

587

2.6%

1.8%

1,194

1,170

2.1%

1.8%

Industrial

10,737

10,902

(1.5%)

(1.5%)

21,144

21,015

0.6%

0.6%

Total Retail Sales

25,607

25,517

0.4%

(0.5%)

52,759

53,041

(0.5%)

0.6%

Wholesale

3,138

2,048

53.2%

4,949

4,282

15.6%

Total Sales

28,745

27,565

4.3%

57,708

57,323

0.7%

Number of electric retail customers

Residential

2,430,698

2,405,182

1.1%

Commercial

348,337

344,894

1.0%

Governmental

17,487

17,281

1.2%

Industrial

45,892

45,071

1.8%

Total Retail Customers

2,842,414

2,812,428

1.1%

Net Revenue ($ millions)

1,488

1,418

4.9%

2,898

2,755

5.2%

As-reported non-fuel O&M per MWh

$22.35

$21.21

5.4%

$21.26

$19.38

9.7%

Operational non-fuel O&M per MWh

$22.35

$21.00

6.4%

$21.26

$19.21

10.7%

(k)

The effects of weather are estimated using monthly heating degree days and cooling degree days 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 subject to change.

See webcast presentation appendix slides for information on select regulatory cases.

Appendix

D: EWC Performance Measures

Appendix D-1 provides a comparative summary of EWC operational performance measures.

Appendix D-1: EWC Operational Performance Measures

Second Quarter 2015 vs. 2014

Second Quarter

Year-to-Date

2015

2014

% Change

2015

2014

% Change

Owned capacity (MW) (l)

5,463

6,068

(10.0%)

5,463

6,068

(10.0%)

GWh billed

9,578

11,533

(17.0%)

19,170

21,547

(11.0%)

As-reported average total revenue per MWh

$45.87

$50.11

(8.5%)

$56.44

$69.15

(18.4%)

Adjusted average total revenue per MWh (m)

$45.47

$49.75

(8.6%)

$56.04

$68.77

(18.5%)

Net revenue ($ millions)

350

471

(25.7%)

877

1,219

(28.1%)

As-reported non-fuel O&M per MWh

$25.97

$25.83

0.5%

$25.93

$26.04

(0.4%)

Operational non-fuel O&M per MWh (n)

$25.80

$24.99

3.2%

$25.46

$25.23

(0.9%)

EWC Nuclear Fleet

Capacity factor

89%

95%

(6.3%)

89%

89%

GWh billed

8,555

10,588

(19.2%)

17,173

19,667

(12.7%)

As-reported average total revenue per MWh

$45.84

$50.18

(8.7%)

$55.85

$68.25

(18.2%)

Adjusted average total revenue per MWh (o)

$45.40

$49.79

(8.8%)

$55.41

$67.83

(18.3%)

Production cost per MWh

$26.21

$25.88

1.3%

$25.91

$26.11

(0.8%)

Net revenue ($ millions)

336

459

(26.8%)

847

1,190

(28.8%)

Refueling outage days

  Indian Point 2

24

  Indian Point 3

23

  Palisades

56

  Pilgrim

34

34

(l) 

Second quarter and year-to-date 2014 include capacity for VY, which was retired in December 2014 (605 MW).

(m) 

Excluding VY, $50.49/MWh and $67.04/MWh in second quarter and year-to-date 2014 periods.

(n) 

Excluding VY, $24.53/MWh and $24.80/MWh in second quarter and year-to-date 2014 periods.

(o) 

Excluding VY, $50.61/MWh and $65.76/MWh in second quarter and year-to-date 2014 periods.

See webcast presentation appendix slides for EWC hedging and price disclosures.

E: Financial Performance Measures

Appendix E-1 provides comparative financial performance measures for the current quarter. Financial performance measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP measures.

As-reported measures are computed in accordance with GAAP as they include all components of net income, including special items. Operational measures are non-GAAP measures as they are calculated using operational net income, which excludes the impact of special items. A reconciliation of operational measures to as-reported measures is provided in Appendix G.

Appendix E-1: GAAP and Non-GAAP Financial Performance Measures

Second Quarter 2015 vs. 2014

For 12 months ending June 30

2015

2014

Change

GAAP Measures

ROIC – as-reported

5.0%

5.8%

(0.8%)

ROE – as-reported

7.9%

10.1%

(2.2%)

Book value per share

$56.58

$56.04

$0.54

End of period shares outstanding (millions)

179.5

179.6

(0.1)

Non-GAAP Measures

ROIC – operational

5.4%

6.8%

(1.4%)

ROE – operational

8.8%

12.6%

(3.8%)

As of June 30 ($ in millions)

2015

2014

GAAP Measures

Cash and cash equivalents

910

650

260

Revolver capacity

4,158

4,003

155

Commercial paper outstanding

895

909

(14)

Total debt

13,858

13,692

166

Securitization debt

734

832

(98)

Debt to capital ratio

57.0%

56.9%

0.1%

Off-balance sheet liabilities:

Debt of joint ventures – Entergy's share

80

85

(5)

Leases – Entergy's share

422

456

(34)

Power purchase agreements accounted for as leases

224

224

Total off-balance sheet liabilities

726

765

(39)

Non-GAAP Measures

Debt to capital ratio, excluding securitization debt

55.6%

55.4%

0.2%

Gross liquidity

5,068

4,653

415

Net debt to net capital ratio, excluding securitization debt

53.9%

54.1%

(0.2%)

Parent debt to total debt ratio, excluding securitization debt

20.3%

20.2%

0.1%

Debt to operational adjusted EBITDA, excluding securitization debt

3.9

3.5

0.4

Operational FFO to debt ratio, excluding securitization debt

28.4%

28.9%

(0.5%)

F: Definitions, Abbreviations and Acronyms

Appendix F-1 provides definitions of certain operational performance measures, as well as GAAP and non-GAAP financial measures which are referenced in the quarterly materials. Non-GAAP measures are included in these quarterly materials to provide metrics that remove the effect of financial events that are not routine from commonly used financial metrics.

Appendix F-1: Definitions

Utility Operational Performance Measures

GWh billed

Total number of GWh billed to all retail and wholesale customers

Net revenue

Operating revenue 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 retail customers

Number of customers at end of period

EWC Operational Performance Measures

As-reported average total revenue per MWh

As-reported revenue per MWh billed, excluding revenue from investments in wind generation accounted for under the equity method of accounting

Adjusted average total revenue per MWh

As-reported average total revenue per MWh, excluding revenue from the amortization of the Palisades below-market PPA

Average revenue under contract per kW per month (applies to capacity contracts only)

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

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

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-NE, the NYISO and MISO

Capacity factor

Normalized percentage of the period that the nuclear plants generate power

Cost-based contracts

Contracts priced in accordance with cost-based rates, a ratemaking concept used for the design and development of rate schedules to ensure that the filed rate schedules recover only the cost of providing the service; these contracts are on owned EWC resources located within Entergy's utility service territory and were executed prior to EWC receiving market-based authority under MISO

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

Appendix F-1: Definitions

EWC Operational Performance Measures (continued)

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

GWh billed

Total number of GWh billed to customers, excluding investments in wind generation accounted for under the equity method of accounting and financially-settled instruments

Net revenue

Operating revenue less fuel, fuel related expenses and purchased power

Non-fuel O&M

Operation and maintenance expenses excluding fuel, fuel-related expenses and gas purchased for resale, purchased power and investments in wind generation accounted for under the equity method of accounting

Non-fuel O&M per MWh

Non-fuel O&M per MWh billed

Offsetting positions

Transactions for the purchase of energy, generally to offset a Firm LD transaction

Owned capacity (MW)

Installed capacity owned and operated by EWC, including investments in wind generation accounted for under the equity method of accounting; VY (nuclear) was retired on Dec. 29, 2014 (605 MW)

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

Amount of installed capacity to generate power and/or sell capacity; non-nuclear also includes purchases from affiliated and non-affiliated counterparties under long-term contracts and excludes energy and capacity from EWC's wind investment accounted for under the equity method of accounting

Planned TWh of generation

Amount of output expected to be generated by EWC resources considering plant operating characteristics, outage schedules and expected market conditions which impact dispatch, assuming uninterrupted normal plant operation and timely renewal of plant operating licenses; non-nuclear also includes purchases from affiliated and non-affiliated counterparties under long-term contracts and excludes energy and capacity from EWC's wind investment accounted for under the equity method of accounting

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 scheduled refueling outage during the period

Unit-contingent

Transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages

Financial Measures – GAAP

Book value per share

End of period common equity divided by end of period shares outstanding

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

Appendix F-1: Definitions

Financial Measures – GAAP (continued)

ROIC – as-reported

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

ROE – as-reported

12-months rolling Net Income divided by average common equity

Securitization debt

Debt associated with securitization bonds issued to recover storm costs from hurricanes Rita, Ike and Gustav at ETI; the 2009 ice storm at EAI and investment recovery of costs associated with the cancelled Little Gypsy repowering project at ELL

Total debt

Sum of short-term and long-term debt, notes payable and commercial paper and capital leases on the balance sheet

Financial Measures – Non-GAAP

Adjusted EBITDA

Earnings before interest, depreciation and amortization and income taxes excluding decommissioning expense and other than temporary impairment losses on decommissioning trust fund assets; for Entergy consolidated, also excludes AFUDC-equity funds and subtracts securitization proceeds

Debt to capital ratio, excluding securitization debt

Total debt divided by total capitalization, excluding securitization debt

Debt to EBITDA

End of period total debt excluding securitization debt divided by 12-months rolling operational adjusted EBITDA

FFO

Net cash flow provided by operations less AFUDC-borrowed funds, working capital items in operating cash flow (receivables, fuel inventory, accounts payable, prepaid taxes and taxes accrued, interest accrued and other working capital accounts) and securitization regulatory charge

FFO to debt

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

Gross liquidity

Sum of cash and revolver capacity

Operational adjusted EBITDA

Adjusted EBITDA excluding effects of special items

Operational earnings

As-reported Net Income adjusted to exclude the impact of special items

Operational FFO

FFO excluding effects of special items

Parent debt to total debt

End of period Entergy Corporation debt, including amounts drawn on credit revolver and commercial paper facilities, as a percent of total debt excluding securitization debt

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

ROIC – operational

12-months rolling operational Net Income adjusted for preferred dividends and tax-effected interest expense divided by average invested capital

ROE – operational

12-months rolling operational Net Income divided by average common equity

Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.

G: GAAP to Non-GAAP Reconciliations

Appendix F-2: Abbreviations and Acronyms

AFUDC-borrowed funds

Allowance for borrowed funds used during construction

ISO-NE

ISO New England

LHV

Lower Hudson Valley

LPSC

Louisiana Public Service Commission

AFUDC-equity funds

Allowance for equity funds used during construction

LTM

Last twelve months

MISO

Midcontinent Independent System Operator, Inc.

ADIT

Accumulated deferred income taxes

MPSC

Mississippi Public Service Commission

ALJ

Administrative law judge

NEPOOL

New England Power Pool

ANO

Arkansas Nuclear One (nuclear)

Ninemile 6

Non-fuel O&M

Ninemile Point Unit 6

Non-fuel O&M

APSC

Arkansas Public Service Commission

NRC

NYISO

Nuclear Regulatory Commission

New York Independent System Operator, Inc.

BTA

Best Technology Available

CCGT

Combined cycle gas turbine

NYSDEC

New York State Department of Environmental Conservation

CCNO

Council of the City of New Orleans, Louisiana

NYSDOS

NYSE

New York State Department of State

New York Stock Exchange

CZM

Coastal zone management

O&M

Operation and maintenance expense

DCRF

Distribution cost recovery factor

OCF

Operating cash flow

DOJ

U.S. Department of Justice

OPEB

Other post-employment benefits

EAI

EBITDA

Entergy Arkansas, Inc.

Earnings before interest, income taxes, depreciation and amortization

Palisades

Palisades Power Plant (nuclear)

Pilgrim

Pilgrim Nuclear Power Station (nuclear)

EGSL

Entergy Gulf States Louisiana, L.L.C.

PPA

Power purchase agreement

ELL

Entergy Louisiana, LLC

PUCT

Public Utility Commission of Texas

EMI

Entergy Mississippi, Inc.

RFP

Request for proposal

ENOI

Entergy New Orleans, Inc.

RISEC

Rhode Island State Energy Center (CCGT)

EPS

Earnings per share

ROE

Return on equity

ETI

Entergy Texas, Inc.

ROIC

Return on invested capital

ETR

Entergy Corporation

ROS

Rest of state

EWC

Entergy Wholesale Commodities

RPCE

Rough production cost equalization

FCA

Forward capacity auction

SEC

U.S. Securities and Exchange Commission

FERC

Federal Energy Regulatory Commission

SEMARI

Southeast Massachusetts/Rhode Island

FFO

Funds from operations

SERI

System Energy Resources, Inc.

Firm LD

Firm liquidated damages

SPDES

State Pollutant Discharge Elimination System

FitzPatrick

James A. FitzPatrick Nuclear Power Plant

SPP

Southwest Power Pool

FRP

Formula rate plan

VY

Vermont Yankee Nuclear Power Station (nuclear)

GAAP

Generally accepted accounting principles

WACC

Weighted-average cost of capital

HCM

Human Capital Management program

WOTAB

West of the Atchafalaya Basin

Indian Point 2

Indian Point Energy Center Unit 2 (nuclear)

WQC

Water Quality Certification

Indian Point 3

Indian Point Energy Center Unit 3 (nuclear)

YOY

Year-over-year

IPEC

Indian Point Energy Center (nuclear)

ISES

Independence Steam Electric Station (coal)

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 – Utility and EWC Non-fuel O&M per MWh, EWC and EWC Nuclear Average Total Revenue per MWh

($ in thousands except where noted)

Second Quarter

Year-to-Date

2015

2014

2015

2014

Utility

As-reported Utility non-fuel O&M

(A)

642,538

584,529

1,226,839

1,110,777

Special Items included in non-fuel O&M:

  HCM implementation expenses

5,573

9,521

     Total special items included in non-fuel O&M

(B)

5,573

9,521

Operational Utility non-fuel O&M

(A-B)

642,538

578,956

1,226,839

1,101,256

Utility billed sales (GWh)

(C)

28,745

27,565

57,708

57,323

As-reported Utility non-fuel O&M per MWh

(A/C)

22.35

21.21

21.26

19.38

Operational Utility non-fuel O&M per MWh

[(A-B)/(C)]

22.35

21.00

21.26

19.21

EWC

As-reported EWC non-fuel O&M

(D)

248,738

297,863

497,063

561,023

Special Items included in non-fuel O&M:

  Decision to close VY

1,579

8,705

9,068

15,433

  HCM implementation expenses

949

2,042

     Total special items included in non-fuel O&M

(E)

1,579

9,654

9,068

17,475

Operational EWC non-fuel O&M

(D-E)

247,159

288,209

487,995

543,548

EWC billed sales (GWh)

(F)

9,578

11,533

19,170

21,547

As-reported EWC non-fuel O&M per MWh

(D/F)

25.97

25.83

25.93

26.04

Operational EWC non-fuel O&M per MWh

[(D-E)/(F)]

25.80

24.99

25.46

25.23

As-reported EWC operating revenue

(G)

439,306

577,891

1,081,896

1,490,013

Less Palisades below-market PPA amortization

(H)

3,800

4,124

7,600

8,248

Adjusted EWC operating revenue

(G-H)

435,506

573,767

1,074,296

1,481,765

As-reported EWC nuclear operating revenue

(I)

392,188

531,340

959,096

1,342,227

Less Palisades below-market PPA amortization

(H)

3,800

4,124

7,600

8,248

Adjusted EWC nuclear operating revenue

(I-H)

388,388

527,216

951,496

1,333,979

As-reported EWC average total revenue per MWh

(G)/(F)

45.87

50.11

56.44

69.15

Adjusted EWC average total revenue per MWh

[(G-H)/(F)]

45.47

49.75

56.04

68.77

EWC nuclear billed sales (GWh)

(J)

8,555

10,588

17,173

19,667

As-reported EWC nuclear average total revenue per MWh

(I)/(J)

45.84

50.18

55.85

68.25

Adjusted EWC nuclear average total revenue per MWh

[(I-H)/(J)]

45.40

49.79

55.41

67.83

VY operational non-fuel O&M

(K)

37,723

74,815

VY operating revenue

(L)

58,242

214,488

VY billed sales

(M)

1,322

2,643

Operational EWC non-fuel O&M per MWh excluding VY

[(D-E)-(K)]/[(F)-(M)]

24.53

24.80

Adjusted EWC average total revenue per MWh excluding VY

[(G-H)-(L)]/(F)-(M)]

50.49

67.04

Adjusted EWC nuclear average total revenue per MWh excluding VY

[(I-H)-(L)]/(J)-(M)]

50.61

65.76

Totals may not foot due to rounding

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

($ in millions)     

Second Quarter

2015

2014

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

(A)

797

977

Preferred dividends

20

19

Tax effected interest expense

391

381

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

(B)

1,208

1,377

Special items, rolling 12 months

Decision to close VY

(93)

(218)

Transmission business spin-merge expenses

15

HCM implementation expenses

(3)

(40)

  Total special items, rolling 12 months

(C)

(95)

(243)

Operational earnings, rolling 12 months adjusted for preferred dividends and tax effected interest expense

(B-C)

1,303

1,620

Operational earnings, rolling 12 months

(A-C)

892

1,220

Average invested capital

(D)

24,190

23,680

Average common equity

(E)

10,110

9,668

ROIC – as-reported %

(B/D)

5.0

5.8

ROIC – operational %

[(B-C)/D]

5.4

6.8

ROE – as-reported %

(A/E)

7.9

10.1

ROE – operational %

[(A-C)/E]

8.8

12.6

Totals may not foot due to rounding

Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures – Credit and Liquidity Metrics

($ in millions)

Second Quarter

2015

2014

Total debt

(A)

13,858

13,692

Less securitization debt

(B)

734

832

Total debt, excluding securitization debt

(C)

13,124

12,860

Less cash and cash equivalents

(D)

910

650

  Net debt, excluding securitization debt

(E)

12,214

12,210

Total capitalization

(F)

24,321

24,059

Less securitization debt

(B)

734

832

Total capitalization, excluding securitization debt

(G)

23,587

23,227

Less cash and cash equivalents

(D)

910

650

Net capital, excluding securitization debt

(H)

22,677

22,577

Debt to capital ratio %

(A/F)

57.0

56.9

Debt to capital ratio, excluding securitization debt %

(C/G)

55.6

55.4

Net debt to net capital ratio, excluding securitization debt %

(E/H)

53.9

54.1

Revolver capacity

(I)

4,158

4,003

Gross liquidity

(D+I)

5,068

4,653

Entergy Corporation notes:

  Due September 2015

550

550

  Due January 2017

500

500

  Due September 2020

450

450

    Total parent long-term debt

(J)

1,500

1,500

Revolver draw

(K)

271

195

Commercial paper

(L)

895

909

Total parent debt

(J)+(K)+(L)

2,666

2,604

Parent debt to total debt ratio, excluding securitization debt %

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

20.3

20.2

Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures – Credit and Liquidity Metrics (continued)

($ in millions)

Second Quarter

2015

2014

Total debt

(A)

13,858

13,692

Less securitization debt

(B)

734

832

Total debt, excluding securitization debt

(C)

13,124

12,860

As-reported consolidated net income, rolling 12 months

817

996

Add back: interest expense, rolling 12 months

636

618

Add back: income tax expense, rolling 12 months

494

382

Add back: depreciation and amortization, rolling 12 months

1,331

1,323

Add back: regulatory charges (credits), rolling 12 months

10

26

Subtract: securitization proceeds, rolling 12 months

130

133

Subtract: interest and investment income, rolling 12 months

196

180

Subtract: AFUDC - equity funds, rolling 12 months

59

67

Add back: decommissioning expense, rolling 12 months

278

257

  Adjusted EBITDA, rolling 12 months

(D)

3,181

3,222

Add back: special item for transmission business spin-merge expenses, rolling 12 months (pre-tax)

-

16

Add back: special item for HCM implementation expenses, rolling 12 months (pre-tax)

4

66

Add back: special item resulting from decision to close VY, rolling 12 months (pre-tax)

143

364

  Operational adjusted EBITDA, rolling 12 months

(E)

3,328

3,668

Debt to operational adjusted EBITDA, excluding securitization debt

(C)/(E)

3.9

3.5

Net cash flow provided by operating activities, rolling 12 months

(F)

3,699

3,602

AFUDC borrowed funds used during construction, rolling 12 months

(G)

(30)

(29)

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

  Receivables

45

(9)

  Fuel inventory

(32)

31

  Accounts payable

(164)

(11)

  Prepaid taxes and taxes accrued

(43)

(124)

  Interest accrued

5

1

  Other working capital accounts

104

(48)

  Securitization regulatory charge

99

99

       Total

(H)

14

(61)

FFO, rolling 12 months

(F)+(G)-(H)

3,655

3,634

Add back: special item for transmission business spin-merge expenses, rolling 12 months (pre-tax)

-

21

Add back: special item for HCM implementation expenses, rolling 12 months (pre-tax)

15

55

Add back: special item resulting from decision to close VY, rolling 12 months (pre-tax)

57

8

Operational FFO, rolling 12 months

(I)

3,727

3,718

Operational FFO to debt ratio, excluding securitization debt %

(I)/(C)

28.4

28.9

Totals may not foot due to rounding

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SOURCE Entergy Corporation



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