Entergy Reports Third Quarter Earnings

Oct 21, 2010, 07:00 ET from Entergy Corporation

NEW ORLEANS, Oct. 21 /PRNewswire-FirstCall/ -- Entergy Corporation (NYSE: ETR) today reported third quarter 2010 as-reported earnings of $492.9 million, or $2.62 per share, compared with $455.2 million, or $2.32 per share, for third quarter 2009. On an operational basis, Entergy's third quarter 2010 earnings were $518.1 million, or $2.76 per share, compared with $470.7 million, or $2.40 per share, in third quarter 2009.

Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures Third Quarter and Year-to-Date 2010 vs. 2009

(Per share in U.S. $)

Third Quarter

Year-to-Date

2010

2009

Change

2010

2009

Change

As-Reported Earnings

2.62

2.32

0.30

5.38

4.66

0.72

Less Special Items

(0.14)

(0.08)

(0.06)

(0.40)

(0.26)

(0.14)

Operational Earnings

2.76

2.40

0.36

5.78

4.92

0.86

*GAAP refers to United States generally accepted accounting principles.

Operational Earnings Highlights for Third Quarter 2010

  • Utility's earnings were higher primarily due to increased net revenue, which was partially offset by an increase in non-fuel operation and maintenance expense.
  • Entergy Nuclear's earnings decreased as a result of lower net revenue, resulting from decreased generation output due to increased planned and unplanned outage days, and higher non-fuel operation and maintenance expense.
  • Parent & Other's results improved due primarily to lower income tax expense on Parent & Other activities.

"Despite challenging times, near-record warm temperatures boosted Entergy's third quarter earnings per share to the highest of any quarterly period in company history," said J. Wayne Leonard, Entergy's chairman and chief executive officer. "Even with this achievement, we continue to focus on the building blocks for delivering long-term value – safety, operational excellence, and meeting regulatory expectations – in both the Utility and Entergy Wholesale Commodities businesses as well as maintaining solid financial strength and disciplined risk management."

Other Business Highlights

  • Entergy Texas reached an unopposed settlement in its base rate case, subject to approval by the Public Utility Commission of Texas, reflecting a total $68 million rate increase to be fully implemented by May 2011.
  • The J.A. FitzPatrick plant completed a record-setting "breaker to breaker" run, setting a new all-time record for the number of days of continuous operation within the Entergy fleet and seventh all-time for all boiling water reactors in the United States.
  • Reports by the New York Independent System Operator and ISO New England point to the criticality of Indian Point and Vermont Yankee to their regions.
  • For the ninth consecutive year Entergy was named to the Dow Jones Sustainability World Index.

Entergy will host a teleconference to discuss this release at 10 a.m. CT on Thursday, Oct. 21, 2010, with access by telephone, 719-457-2080, confirmation code 5590047. The call and presentation slides can also be accessed via Entergy's website at www.entergy.com. A replay of the teleconference will be available through Oct. 28, 2010, by dialing 719-457-0820, confirmation code 5590047. The replay will also be available on Entergy's website at www.entergy.com.

Utility

In third quarter 2010, Utility's as-reported and operational earnings were $333.6 million, or $1.78 per share, compared to $294.8 million, or $1.50 per share, on the same bases in third quarter 2009. The Utility earnings increase in the current quarter is due primarily to higher net revenue as a result of both increased sales across all customer classes and rate adjustments associated with base rate cases at Entergy Arkansas and Entergy Texas implemented during the current quarter and prior year rate adjustments at Entergy Gulf States Louisiana and Entergy Louisiana under their formula rate plans. Partially offsetting higher net revenue was higher non-fuel operation and maintenance expense driven by increased compensation-related expenses and higher outage costs at generating units. The net effect of lower depreciation expense, lower other income, and higher income tax expense were also partially offsetting. New depreciation rates established in the Arkansas rate case settlement contributed to the reduction in depreciation expense in the current quarter. Other income decreased as a result of the absence of income from storm carrying charges and a gain on a land sale recorded in third quarter 2009. Higher income tax expense was primarily due to the net effect of consolidated income tax adjustments across the Entergy companies, partially offset by state income tax benefits realized in connection with storm cost financings in Louisiana.

Residential sales in third quarter 2010, on a weather-adjusted basis, increased 0.9 percent compared to third quarter 2009. Commercial and governmental sales, on a weather-adjusted basis, increased 1.7 percent quarter over quarter. Industrial sales in the third quarter increased 8.5 percent compared to the same quarter of 2009.

The industrial customer segment reflected strong sales growth on continuing signs of economic recovery, which was also evident in the residential and commercial classes. In addition, residential and commercial sales benefited from significantly warmer-than-normal weather. The improvement in industrial sales in the third quarter 2010 was driven by inventory restocking and strong exports with the chemicals, refining, and miscellaneous manufacturing sectors leading the improvement.

Entergy Nuclear

Entergy Nuclear earned $133.9 million, or 71 cents per share, on an as-reported basis in third quarter 2010, compared to as-reported earnings of $200.4 million, or $1.02 per share, in third quarter 2009. On an operational basis, third quarter 2010 Entergy Nuclear's earnings were $159.1 million, or 85 cents per share, versus $210.7 million, or $1.07 per share, in the third quarter of the prior year. Entergy Nuclear's operational earnings decreased as a result of lower net revenue due primarily to lower generation resulting from additional planned and unplanned outages. Also, contributing to the decrease in earnings was higher non-fuel operation and maintenance expense due to higher compensation-related expenses. Partially offsetting these decreases was lower income tax expense, which was primarily due to adjustments in an income tax reserve and the net effect of consolidated income tax adjustments.

Parent & Other

Parent & Other reported earnings of $25.4 million, or 13 cents per share, on both as-reported and operational bases in third quarter 2010 compared to losses of $40.0 million, or 20 cents per share on an as-reported basis and $34.8 million, or 17 cents per share on an operational basis in third quarter 2009. Lower income tax expense on Parent & Other activities was the primary factor driving results for the quarter. The current quarter reflects an adjustment in income tax reserves resulting from a favorable Tax Court ruling. The net effect of consolidated income tax adjustments also contributed.

Outlook

Entergy affirmed its earnings guidance ranges of $5.95 to $6.80 per share on an as-reported basis and $6.40 to $7.20 per share on an operational basis. On April 15, 2010, Entergy revised its 2010 as-reported earnings guidance to a range of $5.95 to $6.80 per share from $6.15 to $6.95 per share to reflect the potential charge in connection with the previously announced business unwind of the internal organizations created for Enexus Energy Corporation and EquaGen LLC. This charge will be classified as a special item in 2010, and therefore is excluded from the operational earnings per share guidance range. The total potential charge estimated at $0.40 to $0.45 per share as of April 2010, includes previously identified special items for spin-off dis-synergies and expenses for outside services provided to pursue the spin-off, for which $0.25 per share had already been reflected in as-reported earnings guidance. Efforts to eliminate spin-off dis-synergies are well under way, with expectations to eliminate these costs during 2010.

Additional information regarding Entergy's quarterly results of operations, regulatory proceedings and other operations is available in Entergy's investor news release dated Oct. 21, 2010, a copy of which has been filed today with the Securities and Exchange Commission on Form 8-K and is 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: (i) Entergy's Form 10-K for the year ended December 31, 2009; (ii) Entergy's Form 10-Qs for the quarters ended March 31, 2010 and June 30, 2010; and (iii) 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 operating and regulatory risks; and (e) legislative and regulatory actions, 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 in subsequent securities filings.

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

Appendix A:  Consolidated Earnings – Reconciliation of GAAP to Non-GAAP Measures Third Quarter and Year-to-Date 2010 vs. 2009

(Per share in U.S. $)

Third Quarter

Year-to-Date

2010

2009

Change

2010

2009

Change

As-Reported

Utility

1.78

1.50

0.28

3.68

2.80

0.88

Entergy Nuclear

0.71

1.02

(0.31)

1.83

2.34

(0.51)

Parent & Other

0.13

(0.20)

0.33

(0.13)

(0.48)

0.35

 Consolidated As-Reported Earnings

2.62

2.32

0.30

5.38

4.66

0.72

Less Special Items

Utility

-

-

-

-

-

-

Entergy Nuclear

(0.14)

(0.05)

(0.09)

(0.50)

(0.17)

(0.33)

Parent & Other

-

(0.03)

0.03

0.10

(0.09)

0.19

 Consolidated Special Items

(0.14)

(0.08)

(0.06)

(0.40)

(0.26)

(0.14)

Operational

Utility

1.78

1.50

0.28

3.68

2.80

0.88

Entergy Nuclear

0.85

1.07

(0.22)

2.33

2.51

(0.18)

Parent & Other

0.13

(0.17)

0.30

(0.23)

(0.39)

0.16

 Consolidated Operational Earnings

2.76

2.40

0.36

5.78

4.92

0.86

Entergy Corporation Consolidated Income Statement Three Months Ended September 30 (in thousands)

2010

2009

(unaudited)

Operating Revenues:

    Electric

$2,638,752

$2,195,461

    Natural gas

27,263

24,030

    Competitive businesses

666,161

717,604

                     Total

3,332,176

2,937,095

Operating Expenses:

   Operation and maintenance:

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

748,863

559,129

        Purchased power

484,694

388,308

        Nuclear refueling outage expenses

64,885

61,441

        Other operation and maintenance

808,688

681,576

    Decommissioning

53,380

50,069

    Taxes other than income taxes

138,217

128,851

    Depreciation and amortization

264,621

280,641

    Other regulatory charges (credits) – net

(1,814)

(13,224)

                     Total

2,561,534

2,136,791

Operating Income

770,642

800,304

Other Income (Deductions):

    Allowance for equity funds used during construction

15,064

14,770

    Interest and dividend income

38,911

64,730

    Other than temporary impairment losses

(206)

(457)

    Miscellaneous - net

(14,748)

5,739

                     Total

39,021

84,782

Interest and Other Charges:

    Interest on long-term debt

126,078

130,132

    Other interest - net

9,997

22,625

    Allowance for borrowed funds used during construction

(8,949)

(8,252)

                     Total

127,126

144,505

Income Before Income Taxes

682,537

740,581

Income Taxes

184,636

280,414

Consolidated Net Income

497,901

460,167

Preferred Dividend Requirements of Subsidiaries

5,015

4,998

Net Income Attributable to Entergy Corporation

$492,886

$455,169

Earnings Per Average Common Share

    Basic

$2.65

$2.35

    Diluted

$2.62

$2.32

Average Number of Common Shares Outstanding - Basic

185,962,431

193,424,904

Average Number of Common Shares Outstanding - Diluted

187,777,172

195,875,241

Entergy Corporation Consolidated Income Statement Nine Months Ended September 30 (in thousands)

2010

2009

(unaudited)

Operating Revenues:

    Electric

$6,859,791

$6,140,823

    Natural gas

154,426

126,914

    Competitive businesses

1,940,256

1,979,259

                     Total

8,954,473

8,246,996

Operating Expenses:

   Operation and maintenance:

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

1,939,077

1,927,692

        Purchased power

1,376,055

1,034,483

        Nuclear refueling outage expenses

191,395

178,454

        Other operation and maintenance

2,211,382

2,021,462

    Decommissioning

157,423

148,119

    Taxes other than income taxes

400,597

385,649

    Depreciation and amortization

789,392

799,183

    Other regulatory charges (credits) – net

15,555

(29,371)

                     Total

7,080,876

6,465,671

Operating Income

1,873,597

1,781,325

Other Income (Deductions):

    Allowance for equity funds used during construction

45,990

47,499

    Interest and dividend income

123,124

170,007

    Other than temporary impairment losses

(1,255)

(85,396)

    Miscellaneous - net

(32,050)

(20,910)

                     Total

135,809

111,200

Interest and Other Charges:

    Interest on long-term debt

420,314

383,255

    Other interest - net

43,140

69,406

    Allowance for borrowed funds used during construction

(27,274)

(26,547)

                     Total

436,180

426,114

Income Before Income Taxes

1,573,226

1,466,411

Income Taxes

536,227

534,101

Consolidated Net Income

1,036,999

932,310

Preferred Dividend Requirements of Subsidiaries

15,048

14,993

Net Income Attributable to Entergy Corporation

$1,021,951

$917,317

Earnings Per Average Common Share

    Basic

$5.44

$4.73

    Diluted

$5.38

$4.66

Average Number of Common Shares Outstanding - Basic

187,968,582

194,044,214

Average Number of Common Shares Outstanding - Diluted

189,914,439

197,382,562

Entergy Corporation Utility Electric Energy Sales & Customers

Three Months Ended September 30

2010

2009

% Change

% Weather- Adjusted

(Millions of KWh)

Electric Energy Sales:

Residential

12,365

11,213

10.3

0.9

Commercial

8,660

8,131

6.5

1.8

Governmental

681

663

2.7

1.0

Industrial

10,276

9,473

8.5

8.5

   Total to Ultimate Customers

31,982

29,480

8.5

3.6

Wholesale

1,063

1,164

(8.7)

   Total Sales

33,045

30,644

7.8

Nine Months Ended September 30

2010

2009

% Change

% Weather- Adjusted

(Millions of kwh)

Electric Energy Sales:

Residential

29,715

26,206

13.4

2.2

Commercial

21,935

20,842

5.2

2.1

Governmental

1,854

1,802

2.9

2.4

Industrial

28,871

26,402

9.4

9.4

   Total to Ultimate Customers

82,375

75,252

9.5

4.7

Wholesale

3,351

3,864

(13.3)

   Total Sales

85,726

79,116

8.4

September 30

2010

2009

% Change

Electric Customers  (End of period):

Residential

2,356,216

2,335,387

0.9

Commercial

334,642

330,922

1.1

Governmental

16,166

15,652

3.3

Industrial

47,622

47,647

(0.1)

   Total Ultimate Customers

2,754,646

2,729,608

0.9

Wholesale

24

29

(17.2)

   Total Customers

2,754,670

2,729,637

0.9

SOURCE Entergy Corporation



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