NEW ORLEANS, Aug. 2, 2017 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported second quarter 2017 earnings per share of $2.27 on an as-reported basis and $3.11 on an operational basis (non-GAAP), which excludes the effects of special items. Results included an income tax item which reduced income tax expense and increased earnings.
| Consolidated Earnings (GAAP and Non-GAAP Measures) |
||||||
| Second Quarter 2017 (See Appendix A description of special items and Appendix C for reconciliation of GAAP to non-GAAP measures) |
||||||
| (Per share in $) |
||||||
| Consolidated |
Utility |
Parent & Other |
EWC |
|||
| Segment contribution to as-reported |
2.27 |
1.35 |
(0.32) |
1.24 |
||
| Less special items |
(0.84) |
- |
- |
(0.84) |
||
| Operational (non-GAAP) |
3.11 |
1.35 |
(0.32) |
2.08 |
||
| Estimated weather in billed sales |
(0.09) |
(0.09) |
||||
| Income tax item |
2.07 |
- |
2.07 |
|||
| Utility, Parent & Other adjusted (non-GAAP) |
1.12 |
|||||
"We had another productive quarter executing our strategy to deliver steady, predictable earnings growth at our core utility business, which supports our long-term dividend growth aspiration," said Entergy Chairman and Chief Executive Officer Leo Denault. "2017 is on pace to be another year with significant accomplishments on multiple fronts, which continue to position us to deliver on our outlooks. We are affirming our full-year Utility, Parent & Other adjusted earnings guidance."
Business highlights included the following:
- Entergy shifted its consolidated operational earnings guidance range upward by $2.05 per share to $6.80 to $7.40, to take into account a tax item recorded in the quarter. The company affirmed its Utility, Parent & Other adjusted earnings guidance.
- The LPSC approved ELL's application to construct Lake Charles Power Station and the PUCT approved ETI's application to construct Montgomery County Power Station.
- The Mississippi and Louisiana commissions approved AMI deployment plans for their jurisdictions.
- EAI and ELL made their annual FRP filings.
- For the second consecutive year, Entergy Corporation was named to The Civic 50, a Points of Light initiative honoring the 50 most community-minded companies in the nation.
Consolidated Results
| Consolidated Earnings (GAAP and Non-GAAP Measures) |
||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for reconciliation of GAAP to non-GAAP measures and description of special items) |
||||||
| Second Quarter |
Year-to-Date |
|||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
| (After-tax, $ in millions) |
||||||
| As-reported earnings |
409.9 |
567.3 |
(157.4) |
492.5 |
797.3 |
(304.8) |
| Less special items |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| Operational earnings (non-GAAP) |
561.2 |
557.7 |
3.5 |
738.9 |
800.6 |
(61.7) |
| Estimated weather in billed sales |
(15.9) |
(16.3) |
0.4 |
(45.1) |
(41.8) |
(3.3) |
| (After-tax, per share in $) |
||||||
| As-reported earnings |
2.27 |
3.16 |
(0.89) |
2.74 |
4.45 |
(1.71) |
| Less special items |
(0.84) |
0.05 |
(0.89) |
(1.37) |
(0.02) |
(1.35) |
| Operational earnings (non-GAAP) |
3.11 |
3.11 |
- |
4.11 |
4.47 |
(0.36) |
| Estimated weather in billed sales |
(0.09) |
(0.09) |
- |
(0.25) |
(0.23) |
(0.02) |
| Calculations may differ due to rounding |
For second quarter 2017, the company reported earnings of $410 million, or $2.27 per share, on an as-reported basis and $561 million, or $3.11 per share, on an operational basis. This compared to second quarter 2016 earnings of $567 million, or $3.16 per share, on an as-reported basis and $558 million, or $3.11 per share, on an operational basis. Current and prior period results were both favorably impacted by income tax items of a similar magnitude in each period. Summary discussions by business are below.
Additional details, including information on OCF by business, are provided in Appendix A and a comprehensive analysis of quarterly and year-to-date variances is provided in Appendix B.
Utility, Parent & Other Results
For second quarter 2017, the Utility business earned net income attributable to Entergy Corporation of $243 million, or $1.35 per share, compared to $376 million, or $2.09 per share, in second quarter 2016. The prior period results included income tax items which reduced income tax expense and increased EPS by 68 cents, net of a reserve of approximately 6 cents for guaranteed customer sharing. Other drivers for the current quarter results included higher net revenue and other income as well as higher non-fuel O&M.
Net revenue increased quarter-over-quarter, driven by new base rate actions to recover investments that benefit customers. While billed retail sales volume increased 4 percent in the quarter, the net revenue effect was more than offset by a decline in unbilled revenue. On a weather-adjusted basis, growth in residential and commercial billed sales was 3.4 percent and 1.6 percent, respectively. Industrial sales volume increased more than 6 percent with higher sales to both new and expansion customers as well as existing customers. Increases from new and expansion customers were driven by the primary metals and chlor-alkali segments. Increases from existing customers were also driven by the chlor-alkali segment as well as transportation.
Utility non-fuel O&M increased quarter-over-quarter. The primary driver was higher spending on nuclear operations. In addition, other income increased period-over-period due to higher AFUDC and realized earnings on decommissioning trust funds.
Parent & Other recognized a loss of $(57) million, or $(0.32) per share, for the second quarter 2017, compared to a loss of $(59) million, or $(0.32) per share, for second quarter 2016. There were no individually significant quarter-over-quarter drivers.
On a combined basis, Utility, Parent & Other (non-GAAP) contributed $1.03 to second quarter 2017 consolidated EPS and $1.77 to second quarter 2016 EPS. On an adjusted basis, normalizing for the effects of weather and income taxes, Utility, Parent & Other (non-GAAP) contributed $1.12 per share in second quarter 2017 to consolidated EPS, compared to $1.18 in second quarter 2016.
Appendix C contains additional details on Utility financial and operating measures, including a schedule of non-GAAP Utility, Parent & Other adjusted earnings and EPS.
Entergy Wholesale Commodities Results
For second quarter 2017, EWC earned net income attributable to Entergy Corporation of $223 million, or $1.24 per share, compared to $250 million, or $1.39 per share, for second quarter 2016. On an operational basis, EWC earned $375 million, or $2.08 per share, in second quarter 2017, compared to $241 million, or $1.34 per share, in second quarter 2016. Results in both periods included income tax items which increased EPS $2.07 in second quarter 2017 and $1.33 in second quarter 2016.
The decrease in EWC's as-reported earnings reflected impairments and other items recorded as a result of strategic decisions for the wholesale business. Impairments were for refueling outage costs and fuel purchases as well as capital spending in the period. These were considered special items and were excluded from operational earnings. Second quarter 2016 results also reflected a reversal of expenses which resulted from awards for DOE spent fuel litigation, a portion of which was considered a special item.
In addition, other income increased largely from higher realized earnings on decommissioning trust funds. Higher decommissioning expense, due in part to the agreement with NYPA to transfer decommissioning liabilities and associated trusts to Entergy, partially offset the increase.
The sale of FitzPatrick at the end of first quarter 2017 affected period-over-period variances for multiple line items. In second quarter 2016, the plant contributed 9 cents to as-reported EPS and 6 cents to operational EPS.
Appendix D contains additional details on EWC financial and operating measures, including the calculation of EWC operational adjusted EBITDA (non-GAAP).
Earnings Guidance
Entergy updated its 2017 operational earnings guidance range to be $6.80 to $7.40 per share and affirmed its Utility, Parent & Other adjusted guidance range of $4.25 to $4.55 per share. The updated consolidated operational earnings guidance range was increased by $2.05 per share to reflect the tax item recorded in second quarter 2017, which was not included in the original guidance range. See webcast presentation slides for additional details.
The company has provided 2017 earnings guidance with regard to the non-GAAP measures of operational EPS and Utility, Parent & Other adjusted EPS. These measures exclude from the corresponding GAAP financial measures the effect of special items as described below under "Non-GAAP Financial Measures." The company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify with a reasonable degree of confidence all of the special items that may occur during 2017. The only anticipated special items that the company can reasonably estimate at this time are those that relate to the decisions to sell or close the company's merchant nuclear plants; these estimated costs, which are excluded from the earnings guidance, are expected to decrease as-reported EPS by approximately $2.05 per share.
Earnings Teleconference
A teleconference will be held at 9 a.m. Central Time on Wednesday, August 2, 2017, to discuss Entergy's quarterly earnings announcement and the company's financial performance. The teleconference may be accessed by visiting Entergy's website at www.entergy.com or by dialing 844-309-6569, conference ID 56948204, no more than 15 minutes prior to the start of the call. The webcast slide presentation is also posted to Entergy's website concurrent with this 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 August 9, 2017, by dialing 855-859-2056, conference ID 56948204. This release and the webcast slide presentation 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 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of approximately $10.8 billion and nearly 13,000 employees.
Entergy Corporation's common stock is listed on the New York and Chicago stock exchanges under the symbol "ETR."
Details regarding Entergy's results of operations, regulatory proceedings and other matters are available in this earnings release, a copy of which will be filed with the SEC, and the webcast slide presentation. Both documents are available on Entergy's Investor Relations website at www.entergy.com/investor_relations and on Entergy's Investor Relations mobile web app at iretr.com.
Entergy has launched a new web page as part of its Investor Relations website, entitled "Regulatory and Other Information." Entergy intends for this page to be dedicated to providing investors with key updates of regulatory proceedings and important milestones on the execution of its strategy. The company plans to use its corporate Twitter feed to notify investors of updates to this web page. While some of this information may be considered material information, investors should not rely exclusively on this new page for all relevant company information.
For definitions of certain operating measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the earnings release materials, see Appendix F.
Non-GAAP Financial Measures
This news release contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Entergy has provided quantitative reconciliations within this release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Certain non-GAAP financial measures in this news release could differ from GAAP only in that the figure or ratio states or includes operational earnings. Operational earnings are not calculated in accordance with GAAP because they exclude the effect of "special items." Special items are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, and may include items such as impairments, gains or losses on asset sales, and other gains or losses occurring as a result of strategic decisions such as Entergy's recent decisions to shut down or sell its merchant nuclear plants. In addition, other financial measures including net income (or earnings), adjusted for preferred dividends and tax effected interest expense; net revenue; return on average invested capital; and return on average common equity are included on both an operational and as-reported basis. In each case, the metrics defined as "operational" would exclude the effect of special items as defined above. Entergy reports the combination of the Utility segment with Parent & Other as Utility, Parent & Other, which is all of Entergy excluding the EWC segment, since management uses this combination in making decisions about its ongoing business in light of its decision to exit the merchant power business. Entergy also reports Utility, Parent & Other adjusted earnings, which combines the Utility segment with Parent & Other, excludes applicable special items and normalizes weather and income tax expense for the periods presented, because it believes that these financial metrics provide useful information to investors in evaluating the ongoing results of Entergy's businesses and assist investors in comparing Entergy's financial performance to the financial performance of other companies in the Utility sector. In addition to reporting earnings per share on a consolidated basis, Entergy reports on a per share basis the earnings or loss of each of its segments, together with the combination of the Utility segment and Parent & Other. These per share measures represent the net income or loss of such segment or segments divided by the diluted average number of shares of common stock outstanding over the period. Entergy believes such per share measures provide useful information to investors in understanding the results of operations of those businesses and their contribution to Entergy's consolidated results of operation.
Other non-GAAP measures, including adjusted EBITDA; operational adjusted EBITDA; gross liquidity; debt to capital ratio, excluding securitization debt; net debt to net capital ratio, excluding securitization debt; parent debt to total debt ratio, excluding securitization debt; debt to operational adjusted EBITDA, excluding securitization debt; operational FFO to debt ratio, excluding securitization debt are measures Entergy uses internally for management and board discussions and cash budgeting and performance monitoring activities to gauge the overall strength of its business. Entergy believes the above data provides useful information to investors in evaluating Entergy's ongoing financial results and flexibility and assists investors in comparing Entergy's credit and liquidity to the credit and liquidity of others in the Utility sector.
The non-GAAP financial measures and other reported adjusted items in this release are presented in addition to, and in conjunction with, results presented in accordance with GAAP. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. These non-GAAP financial measures reflect an additional way of viewing aspects of Entergy's operations that, when viewed with Entergy's GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Entergy's business. Investors are strongly encouraged to review Entergy's consolidated financial statements and publicly filed reports in their entirety and to not rely on any single financial measure. Non-GAAP financial measures are not standardized; therefore, it might not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Cautionary Note Regarding Forward-Looking Statements
In this news release, and from time to time, Entergy Corporation makes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, Entergy's 2017 earnings guidance, its current financial and operational outlook, and other statements of Entergy's plans, beliefs or expectations included in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this news release and in Entergy's most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Entergy's other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with rate proceedings, formula rate plans and other cost recovery mechanisms, including the risk that costs may not be recoverable to the extent anticipated by the utilities; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory costs and 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 Entergy's nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with strategic transactions that Entergy or its subsidiaries may undertake, including the risk that any such transaction may not be completed as and when expected and the risk that the anticipated benefits of the transaction may not be realized; (h) effects of changes in federal, state or local laws and regulations and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental or energy policies; and (i) the effects of technological changes and changes in commodity markets, capital markets or economic conditions, during the periods covered by the forward-looking statements.
Second Quarter 2017 Earnings Release Appendices and Financial Statements
Appendices
Appendices are presented in this section as follows:
- A: Consolidated Results and Special Items
- B: Variance Analysis
- C: Utility Financial and Operating Measures
- D: EWC Financial and Operating Measures
- E: Consolidated Financial Measures
- F: Definitions, Abbreviations and Acronyms
- G: GAAP to Non-GAAP Reconciliations
A: Consolidated Results and Special Items
Appendix A-1 provides a comparative summary of consolidated earnings, including a reconciliation of GAAP as-reported earnings to operational earnings (non-GAAP).
| Appendix A-1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A-3 and Appendix A-4 for details on special items, including income tax effects on adjustments) |
||||||
| Second Quarter |
Year-to-Date |
|||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
| (After-tax, $ in millions) |
||||||
| Earnings |
||||||
| Utility |
243.5 |
375.6 |
(132.1) |
408.2 |
570.5 |
(162.3) |
| Parent & Other |
(56.9) |
(58.6) |
1.7 |
(111.3) |
(102.6) |
(8.7) |
| EWC |
223.3 |
250.3 |
(27.0) |
195.6 |
329.3 |
(133.7) |
| Consolidated |
409.9 |
567.3 |
(157.4) |
492.5 |
797.3 |
(304.8) |
| Less special items |
||||||
| Utility |
- |
- |
- |
- |
- |
- |
| Parent & Other |
- |
- |
- |
- |
- |
- |
| EWC |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| Consolidated |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| Operational (non-GAAP) |
||||||
| Utility |
243.5 |
375.6 |
(132.1) |
408.2 |
570.5 |
(162.3) |
| Parent & Other |
(56.9) |
(58.6) |
1.7 |
(111.3) |
(102.6) |
(8.7) |
| EWC |
374.6 |
240.7 |
133.9 |
442.0 |
332.6 |
109.4 |
| Consolidated |
561.2 |
557.7 |
3.5 |
738.9 |
800.6 |
(61.6) |
| Estimated weather in billed sales |
(15.9) |
(16.3) |
0.4 |
(45.1) |
(41.8) |
(3.3) |
| Diluted average number of common shares outstanding (in millions) |
180.2 |
179.5 |
180.0 |
179.2 |
||
| (After-tax, per share in $) (a) |
||||||
| Earnings |
||||||
| Utility |
1.35 |
2.09 |
(0.74) |
2.27 |
3.18 |
(0.91) |
| Parent & Other |
(0.32) |
(0.32) |
- |
(0.62) |
(0.57) |
(0.05) |
| EWC |
1.24 |
1.39 |
(0.15) |
1.09 |
1.84 |
(0.75) |
| Consolidated |
2.27 |
3.16 |
(0.89) |
2.74 |
4.45 |
(1.71) |
| Less special items |
||||||
| Utility |
- |
- |
- |
- |
- |
- |
| Parent & Other |
- |
- |
- |
- |
- |
- |
| EWC |
(0.84) |
0.05 |
(0.89) |
(1.37) |
(0.02) |
(1.35) |
| Consolidated |
(0.84) |
0.05 |
(0.89) |
(1.37) |
(0.02) |
(1.35) |
| Operational (non-GAAP) |
||||||
| Utility |
1.35 |
2.09 |
(0.74) |
2.27 |
3.18 |
(0.91) |
| Parent & Other |
(0.32) |
(0.32) |
- |
(0.62) |
(0.57) |
(0.05) |
| EWC |
2.08 |
1.34 |
0.74 |
2.46 |
1.86 |
0.60 |
| Consolidated |
3.11 |
3.11 |
- |
4.11 |
4.47 |
(0.36) |
| Estimated weather in billed sales |
(0.09) |
(0.09) |
- |
(0.25) |
(0.23) |
(0.02) |
| Calculations may differ due to rounding |
| (a) |
Per share amounts are calculated by dividing the corresponding line item in the chart above by the diluted average number of shares of common outstanding over the period. |
See Appendix B for detailed earnings variance analysis. See Appendix A-3 for special items by driver.
Appendix A-2 provides the components of OCF contributed by each business.
| Appendix A-2: Consolidated Operating Cash Flow |
||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 |
||||||
| ($ in millions) |
||||||
| Second Quarter |
Year-to-Date |
|||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
| Utility |
569 |
690 |
(121) |
1,127 |
1,149 |
(22) |
| Parent & Other |
(51) |
(47) |
(4) |
(226) |
(109) |
(117) |
| EWC |
(228) |
76 |
(304) |
(81) |
212 |
(293) |
| Total OCF |
290 |
719 |
(429) |
820 |
1,252 |
(432) |
| Calculations may differ due to rounding |
OCF decreased quarter-over-quarter, driven in part by higher refueling outage costs at both EWC and the Utility, and the associated loss of revenue from outages at EWC. Other contributing factors included higher severance and retention costs at EWC as well as lower EWC operational net revenue and the timing of recovery of Utility fuel and purchased power.
Appendix A-3 and Appendix A-4 list special items by business. Amounts are shown on both a net income and per share basis. Special items are included in as-reported earnings consistent with GAAP, but are excluded from operational earnings. As a result, operational earnings is considered a non-GAAP measure.
| Appendix A-3: Special Items by Driver (shown as positive/(negative) impact on earnings or EPS) |
||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 |
||||||
| (Pre-tax except for income tax effects and total, $ in millions) |
||||||
| Second Quarter |
Year-to-Date |
|||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
| EWC |
||||||
| EWC Nuclear plant impairments and costs associated with decisions to close or sell plants |
(232.8) |
(19.0) |
(213.8) |
(463.7) |
(38.9) |
(424.9) |
| Gain on the sale of FitzPatrick |
- |
- |
- |
16.3 |
- |
16.3 |
| DOE litigation awards for VY and FitzPatrick |
- |
33.8 |
(33.8) |
- |
33.8 |
(33.8) |
| Income tax effect on adjustments above (b) |
81.5 |
(5.2) |
86.7 |
156.6 |
1.8 |
154.8 |
| Income tax benefit resulting from FitzPatrick transaction |
- |
- |
- |
44.5 |
- |
44.5 |
| Total EWC |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| Total special items |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| (After-tax, per share in $) (c) |
||||||
| EWC |
||||||
| EWC Nuclear plant impairments and costs associated with decisions to close or sell plants |
(0.84) |
(0.07) |
(0.77) |
(1.68) |
(0.14) |
(1.54) |
| Gain on the sale of FitzPatrick |
- |
- |
- |
0.06 |
- |
0.06 |
| DOE litigation awards for VY and FitzPatrick |
- |
0.12 |
(0.12) |
- |
0.12 |
(0.12) |
| Income tax benefit resulting from FitzPatrick transaction |
- |
- |
- |
0.25 |
- |
0.25 |
| Total EWC |
(0.84) |
0.05 |
(0.89) |
(1.37) |
(0.02) |
(1.35) |
| Total special items |
(0.84) |
0.05 |
(0.89) |
(1.37) |
(0.02) |
(1.35) |
| Calculations may differ due to rounding |
| (b) |
Income tax effect is calculated by multiplying the pre-tax amount by the estimated income tax rate that is expected to apply. |
| (c) |
EPS effect is calculated by multiplying the pre-tax amount by the estimated income tax rate that is expected to apply to each adjustment and then dividing by the diluted average number of shares of common outstanding. |
| Appendix A-4: Special Items by Income Statement Line Item (shown as positive/(negative) impact on earnings) |
||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 |
||||||
| (Pre-tax except for Income taxes and Total, $ in millions) |
||||||
| Second Quarter |
Year-to-Date |
|||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
| EWC |
||||||
| Net revenue |
0.5 |
- |
0.5 |
91.0 |
- |
91.0 |
| Non-fuel O&M |
(37.1) |
22.7 |
(59.9) |
(157.4) |
11.2 |
(168.6) |
| Taxes other than income taxes |
(2.5) |
(0.9) |
(1.6) |
(6.6) |
(1.9) |
(4.6) |
| Asset write-off and impairments |
(193.6) |
(7.0) |
(186.6) |
(405.4) |
(14.3) |
(391.0) |
| Gain on sale of assets |
- |
- |
- |
16.3 |
- |
16.3 |
| Miscellaneous net (other income) |
- |
- |
- |
14.6 |
- |
14.6 |
| Income taxes (d) |
81.5 |
(5.2) |
86.7 |
201.0 |
1.8 |
199.3 |
| Total EWC |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| Total special items (after-tax) |
(151.3) |
9.6 |
(160.9) |
(246.4) |
(3.3) |
(243.1) |
| Calculations may differ due to rounding |
| (d) |
Income taxes include the income tax effect of the special items which were calculated using the estimated income tax rate that is expected to apply to each item. The year-to-date 2017 period also includes the income tax benefit which resulted from the FitzPatrick transaction. |
B: Variance Analysis
Appendix B-1 and Appendix B-2 provide details of current quarter and year-to-date 2017 versus 2016 as-reported and operational earnings variance analysis for Utility, Parent & Other and EWC.
| Appendix B-1: As-Reported and Operational EPS Variance Analysis (e) |
|||||||||||
| Second Quarter 2017 vs. 2016 |
|||||||||||
| (After-tax, per share in $, sorted in consolidated operational column, most to least favorable) |
|||||||||||
| Utility |
Parent & Other |
EWC |
Consolidated |
||||||||
| As-Reported |
Opera-tional |
As-Reported |
Opera-tional |
As- Reported |
Opera-tional |
As- Reported |
Opera- tional |
||||
| 2016 earnings |
2.09 |
2.09 |
(0.32) |
(0.32) |
1.39 |
1.34 |
3.16 |
3.11 |
|||
| Other income (deductions)-other |
0.06 |
0.06 |
(f) |
- |
- |
0.10 |
0.10 |
(g) |
0.16 |
0.16 |
|
| Non-fuel O&M |
(0.10) |
(0.10) |
(h) |
- |
- |
(0.08) |
0.13 |
(i) |
(0.18) |
0.03 |
|
| Interest exp. and other charges |
0.03 |
0.03 |
(0.01) |
(0.01) |
- |
- |
0.02 |
0.02 |
|||
| Preferred dividend requirements |
0.01 |
0.01 |
- |
- |
- |
- |
0.01 |
0.01 |
|||
| Income taxes – other |
(0.75) |
(0.75) |
(j) |
0.01 |
0.01 |
0.74 |
0.74 |
(k) |
- |
- |
|
| Asset write-offs and impairments |
- |
- |
- |
- |
(0.67) |
- |
(l) |
(0.67) |
- |
||
| Taxes other than income taxes |
(0.04) |
(0.04) |
- |
- |
0.02 |
0.03 |
(0.02) |
(0.01) |
|||
| Depreciation/ amortization exp. |
(0.03) |
(0.03) |
- |
- |
(0.02) |
(0.02) |
(0.05) |
(0.05) |
|||
| Net revenue |
0.09 |
0.09 |
(m) |
- |
- |
(0.16) |
(0.16) |
(n) |
(0.07) |
(0.07) |
|
| Decommissioning expense |
(0.01) |
(0.01) |
- |
- |
(0.08) |
(0.08) |
(o) |
(0.09) |
(0.09) |
||
| 2017 earnings |
1.35 |
1.35 |
(0.32) |
(0.32) |
1.24 |
2.08 |
2.27 |
3.11 |
|||
| Appendix B-2: As-Reported and Operational EPS Variance Analysis (e) |
|||||||||||
| Year-to-Date 2017 vs. 2016 |
|||||||||||
| (After-tax, per share in $, sorted in consolidated operational column, most to least favorable) |
|||||||||||
| Utility |
Parent & Other |
EWC |
Consolidated |
||||||||
| As-Reported |
Opera-tional |
As-Reported |
Opera-tional |
As- Reported |
Opera-tional |
As- Reported |
Opera- tional |
||||
| 2016 earnings |
3.18 |
3.18 |
(0.57) |
(0.57) |
1.84 |
1.86 |
4.45 |
4.47 |
|||
| Other income (deductions)-other |
0.09 |
0.09 |
(f) |
- |
- |
0.21 |
0.16 |
(g) |
0.30 |
0.25 |
|
| Interest exp. and other charges |
0.04 |
0.04 |
(0.01) |
(0.01) |
- |
- |
0.03 |
0.03 |
|||
| Preferred dividend requirements |
0.02 |
0.02 |
- |
- |
- |
- |
0.02 |
0.02 |
|||
| Asset write-offs and impairments |
- |
- |
- |
- |
(1.41) |
- |
(l) |
(1.41) |
- |
||
| Gain on sale of assets |
- |
- |
- |
- |
0.06 |
- |
(p) |
0.06 |
- |
||
| Taxes other than income taxes |
(0.06) |
(0.06) |
(q) |
- |
- |
0.02 |
0.04 |
(0.04) |
(0.02) |
||
| Non-fuel O&M |
(0.30) |
(0.30) |
(h) |
- |
- |
(0.34) |
0.27 |
(i) |
(0.64) |
(0.03) |
|
| Income taxes – other |
(0.79) |
(0.79) |
(j) |
(0.04) |
(0.04) |
1.01 |
0.76 |
(k) |
0.18 |
(0.07) |
|
| Depreciation/ amortization exp. |
(0.09) |
(0.09) |
(r) |
- |
- |
(0.01) |
(0.01) |
(0.10) |
(0.10) |
||
| Net revenue |
0.19 |
0.19 |
(m) |
- |
- |
(0.05) |
(0.38) |
(n) |
0.14 |
(0.19) |
|
| Decommissioning expense |
(0.01) |
(0.01) |
- |
- |
(0.24) |
(0.24) |
(o) |
(0.25) |
(0.25) |
||
| 2017 earnings |
2.27 |
2.27 |
(0.62) |
(0.62) |
1.09 |
2.46 |
2.74 |
4.11 |
|||
| Calculations may differ due to rounding |
See appendix in the webcast slide presentation for additional details on EWC line item variances.
| (e) |
EPS effect is calculated by multiplying the pre-tax amount by the estimated income tax rate that is expected to apply and dividing by diluted average number of shares of common outstanding; income taxes – other represents income tax differences other than the tax effect of individual line items. |
| (f) |
The current quarter and year-to-date increases reflected higher realized earnings on decommissioning trust funds (partially offset in net revenue) and higher AFUDC due to increased construction work in progress. |
| (g) |
The current quarter and year-to-date increases reflected higher realized earnings on decommissioning trust funds. In the year-to-date period, 5 cents was from gains on the receipt of nuclear decommissioning trust funds from NYPA in January 2017 (classified as a special item and excluded from operational EPS). |
| (h) |
The current quarter and year-to-date decreases reflected higher spending for nuclear operations and vegetation. The year-to date decrease also reflected the first quarter 2016 $18 million (pre-tax) cost deferral at EAI for previously-expensed costs related to post Fukushima and flood barrier compliance and increased compensation and benefits expense due partly to a revision to estimated incentive compensation expense in first quarter 2016. The year-to-date decrease was partly offset by lower regulatory compliance spending at ANO. |
| (i) |
The current and year-to-date as-reported decreases reflected higher severance and retention expenses which resulted from decisions to close or sell EWC's nuclear plants; the 2017 year-to-date period included costs associated with the agreement to sell FitzPatrick. These expenses were classified as special items. Also contributing to the decreases was a second quarter 2016 reduction in expense for litigation awards from the DOE in connection with spent nuclear fuel storage costs; a portion of the amount (12 cents) was considered a special item. Excluding special items, the current quarter and year-to-date operational increases were driven primarily by the sale of FitzPatrick. Lower refueling outage expense, due to impairments, also contributed to the operational increases. |
| (j) |
The current quarter and year-to-date decreases were due to the second quarter 2016 reversal of a portion of the provision for uncertain tax positions totaling $136 million for positions resolved in the 2010-2011 tax audit. This was partly offset by customer sharing recorded as a regulatory charge ($16 million pre-tax, included in net revenue). |
| (k) |
The current quarter and year-to-date increases were largely due to the net effect of income tax elections in second quarter 2017 and 2016. Both tax items resulted from internal reorganizations which, for tax purposes, allowed the company to recognize deductions for decommissioning liabilities today; those deductions created permanent tax losses. The reductions in income tax expense were $373 million in second quarter 2017 and $238 million in second quarter 2016. The year-to-date as-reported increase included a tax benefit which resulted from the re-determination of FitzPatrick's tax basis as a result of the sale of the plant in first quarter 2017 (classified as a special item). |
| (l) |
The current quarter and year-to-date decreases were due to the immediate expensing of refueling outage costs, nuclear fuel purchases and capital expenditures (classified as special items). |
| Utility As-Reported Net Revenue Variance Analysis 2017 vs. 2016 ($ EPS) |
||
| Second Quarter |
Year-to-Date |
|
| Estimated weather in billed sales |
- |
(0.02) |
| Volume/unbilled |
(0.06) |
(0.08) |
| Retail electric price |
0.04 |
0.15 |
| Regulatory sharing |
0.06 |
0.06 |
| Other |
0.05 |
0.08 |
| Total |
0.09 |
0.19 |
| (m) |
The current quarter and year-to-date increases reflected EAI's 2017 FRP, EMI's 2016 FRP and ETI's TCRF rate changes. Grand Gulf recovery also increased for higher operating costs. Partly offsetting was a rate decrease at ELL from exiting the system agreement (offset by changes in expense). The second quarter 2016 $16 million (pre-tax) reserve for the portion of the tax benefit dedicated to customer sharing (noted above) also contributed to the increase. While billed sales volume increased in both periods, the net revenue effect was more than offset by a decline in unbilled revenue. For the year-to-date period, the first quarter rate changes from EAI's 2016 rate case and the Union acquisition contributed to the increase. In addition, in first quarter 2016 EAI recorded a charge to reflect the estimated impact from a FERC order on the opportunity sales case. |
| (n) |
The current quarter decrease was driven by the absence of revenue from FitzPatrick, which was sold. In the quarter, the effects of higher prices were largely offset by lower generation from nuclear plants primarily due to an increase in outage days and lower fuel expense which resulted from impairments. The year-to-date as-reported variance reflected cost reimbursements from the buyer related to the FitzPatrick sale (classified as a special item). The year-to-date variance also reflected lower pricing for nuclear assets and lower fuel expense. |
| (o) |
The current quarter and year-to-date decreases resulted partly from the establishment of decommissioning liabilities at Indian Point 3 in August 2016 from the agreement with NYPA to transfer decommissioning liabilities and associated trusts to Entergy. Revisions to the estimated decommissioning liabilities from the early shutdown decisions for Indian Point and Palisades in the fourth quarter 2016 also contributed to the decreases. The year-to-date decrease also reflected establishment of the decommissioning liability at FitzPatrick (also a result of the agreement with NYPA). |
| (p) |
The year-to-date increase was due to a gain on the sale of FitzPatrick (classified as a special item). |
| (q) |
The year-to-date decrease was due largely to higher franchise, ad valorem and employment taxes. |
| (r) |
The year-to-date decrease was due largely to additions to plant in service, including Union (acquired March 2016). |
C: Utility Financial and Operating Measures
Appendix C-1 provides a comparative summary of Utility, Parent & Other adjusted earnings and EPS contribution, each of which excludes the effects of special items and normalizes weather and income tax expense.
| Appendix C-1: Utility, Parent & Other Adjusted Earnings and EPS - Reconciliation of GAAP to Non-GAAP Measures |
|||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for details on special items) |
|||||||
| Second Quarter |
Year-to-Date |
||||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
||
| ($ in millions) |
|||||||
| Utility earnings |
243.5 |
375.6 |
(132.1) |
408.2 |
570.5 |
(162.3) |
|
| Parent & Other earnings (loss) |
(56.9) |
(58.6) |
1.7 |
(111.3) |
(102.6) |
(8.7) |
|
| UP&O earnings |
186.6 |
317.0 |
(130.4) |
296.9 |
467.9 |
(171.0) |
|
| Less: |
|||||||
| Special items |
- |
- |
- |
- |
- |
- |
|
| Estimated weather |
(25.9) |
(26.6) |
0.7 |
(73.4) |
(67.9) |
(5.5) |
|
| Tax effect of estimated weather (t) |
10.0 |
10.2 |
(0.2) |
28.3 |
26.1 |
2.1 |
|
| Estimated weather (after-tax) |
(15.9) |
(16.3) |
0.4 |
(45.1) |
(41.8) |
(3.3) |
|
| Customer sharing |
- |
(16.1) |
16.1 |
- |
(16.1) |
16.1 |
|
| Tax effect of customer sharing (t) |
- |
6.2 |
(6.2) |
- |
6.2 |
(6.2) |
|
| Other income tax items |
0.5 |
132.4 |
(131.9) |
(8.9) |
138.5 |
(147.3) |
|
| Tax items, net of customer sharing |
0.5 |
122.5 |
(122.0) |
(8.9) |
128.5 |
(137.4) |
|
| UP&O adjusted earnings |
202.0 |
210.9 |
(8.9) |
350.9 |
381.2 |
(30.2) |
|
| (After-tax, per share in $) (s) |
|||||||
| Utility earnings |
1.35 |
2.09 |
(0.74) |
2.27 |
3.18 |
(0.91) |
|
| Parent & Other earnings (loss) |
(0.32) |
(0.32) |
- |
(0.62) |
(0.57) |
(0.05) |
|
| UP&O earnings |
1.03 |
1.77 |
(0.74) |
1.65 |
2.61 |
(0.96) |
|
| Less: |
|||||||
| Special items |
- |
- |
- |
- |
- |
- |
|
| Estimated weather |
(0.09) |
(0.09) |
- |
(0.25) |
(0.23) |
(0.02) |
|
| Other income tax items, net of customer sharing |
- |
0.68 |
(0.68) |
(0.05) |
0.71 |
(0.76) |
|
| UP&O adjusted earnings |
1.12 |
1.18 |
(0.06) |
1.95 |
2.13 |
(0.18) |
|
| Calculations may differ due to rounding |
| (s) |
Per share amounts are calculated by dividing the corresponding line item in the chart above by the diluted average number of shares of common outstanding over the period. |
| (t) |
Income tax effect is calculated by multiplying the pre-tax amount by the estimated income tax rates that are expected to apply to those adjustments. |
Appendix C-2 provides a comparative summary of Utility operating and financial measures.
| Appendix C-2: Utility Operating and Financial Measures |
||||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP measures) |
||||||||
| Second Quarter |
Year-to-Date |
|||||||
| 2017 |
2016 |
% Change |
% Weather |
2017 |
2016 |
% Change |
% Weather |
|
| GWh billed |
||||||||
| Residential |
7,340 |
7,081 |
3.6 |
3.4 |
14,977 |
15,218 |
(1.6) |
(0.8) |
| Commercial |
6,886 |
6,777 |
1.6 |
1.6 |
13,325 |
13,288 |
0.3 |
- |
| Governmental |
609 |
609 |
- |
0.3 |
1,202 |
1,209 |
(0.5) |
(0.7) |
| Industrial |
12,209 |
11,509 |
6.1 |
6.1 |
23,326 |
22,564 |
3.4 |
3.4 |
| Total retail sales |
27,044 |
25,976 |
4.1 |
4.0 |
52,830 |
52,279 |
1.1 |
1.2 |
| Wholesale |
1,845 |
3,579 |
(48.4) |
4,867 |
6,719 |
(27.5) |
||
| Total sales |
28,889 |
29,555 |
(2.3) |
57,697 |
58,998 |
(2.2) |
||
| Number of electric retail customers |
||||||||
| Residential |
2,470,348 |
2,448,934 |
0.9 |
|||||
| Commercial |
355,751 |
352,615 |
0.9 |
|||||
| Governmental |
17,844 |
17,641 |
1.2 |
|||||
| Industrial |
45,872 |
46,752 |
(1.9) |
|||||
| Total retail customers |
2,889,815 |
2,865,942 |
0.8 |
|||||
| Net revenue ($ in millions) |
1,549 |
1,524 |
1.6 |
2,954 |
2,899 |
1.9 |
||
| Non-fuel O&M per MWh |
$22.28 |
$20.80 |
7.1 |
$21.63 |
$19.69 |
9.8 |
||
| Calculations may differ due to rounding |
Appendix C-3 provides a summary of Utility retail sales on a twelve-months-ended basis.
| Appendix C-3: Utility Retail Sales |
||||
| Twelve Months Ended June 2017 vs. June 2016 |
||||
| Twelve months ended June 30 |
||||
| 2017 |
2016 |
% Change |
% Weather |
|
| GWh billed |
||||
| Residential |
34,871 |
34,490 |
1.1 |
(0.2) |
| Commercial |
29,234 |
29,011 |
0.8 |
(0.3) |
| Governmental |
2,540 |
2,529 |
0.4 |
0.2 |
| Industrial |
46,501 |
45,802 |
1.5 |
1.5 |
| Total retail sales |
113,146 |
111,832 |
1.2 |
0.5 |
| Calculations may differ due to rounding |
| (u) |
The effects of weather were estimated using monthly heating degree days and cooling degree days from certain locations within each jurisdiction and comparing to "normal" weather based on 20-year historical data. The models used to estimate weather are updated periodically and subject to change. |
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC operational adjusted EBITDA (non-GAAP).
| Appendix D-1: EWC Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures |
||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 |
||||||
| ($ in millions) |
Second Quarter |
Year-to-Date |
||||
| 2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
| Net income (loss) |
224 |
251 |
(27) |
197 |
330 |
(133) |
| Add back: interest expense |
6 |
6 |
- |
12 |
13 |
(1) |
| Add back: income taxes |
(455) |
(235) |
(220) |
(533) |
(183) |
(350) |
| Add back: depreciation and amortization |
52 |
46 |
6 |
105 |
102 |
3 |
| Subtract: interest and investment income |
59 |
34 |
25 |
102 |
60 |
42 |
| Add back: decommissioning expense |
60 |
39 |
21 |
135 |
70 |
65 |
| Adjusted EBITDA (non-GAAP) |
(172) |
73 |
(245) |
(186) |
272 |
(458) |
| Add back pre-tax special items for: |
||||||
| EWC Nuclear plant impairments and costs associated with decisions to close or sell plants |
233 |
19 |
214 |
463 |
39 |
424 |
| Gain on the sale of FitzPatrick |
- |
- |
- |
(16) |
- |
(16) |
| DOE litigation awards for VY and FitzPatrick |
- |
(34) |
34 |
- |
(34) |
34 |
| Operational adjusted EBITDA (non-GAAP) |
61 |
58 |
3 |
261 |
277 |
(16) |
| Calculations may differ due to rounding |
Appendix D-2 provides a comparative summary of EWC operating and financial measures.
| Appendix D-2: EWC Operating and Financial Measures |
||||||
| Second Quarter and Year-to-Date 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP measures) |
||||||
| Second Quarter |
Year-to-Date |
|||||
| 2017 |
2016 |
% Change |
2017 |
2016 |
% Change |
|
| Owned capacity (MW) (v) |
3,962 |
4,880 |
(18.8) |
|||
| GWh billed |
6,019 |
7,866 |
(23.5) |
14,382 |
17,112 |
(16.0) |
| As-reported net revenue ($ in millions) |
250 |
293 |
(14.7) |
744 |
759 |
(2.0) |
| Operational net revenue (non-GAAP) ($ in millions) |
250 |
293 |
(14.7) |
653 |
759 |
(14.0) |
| EWC Nuclear Fleet |
||||||
| Capacity factor |
59% |
76% |
(22.4) |
71% |
83% |
(14.5) |
| GWh billed |
5,393 |
7,308 |
(26.2) |
13,228 |
15,996 |
(17.3) |
| Production cost per MWh |
$27.11 |
$23.06 |
17.6 |
$20.96 |
$22.44 |
(6.6) |
| Average energy/capacity revenue per MWh (w) |
$51.76 |
$42.34 |
22.2 |
$53.79 |
$49.85 |
7.9 |
| As-reported net revenue ($ in millions) |
247 |
290 |
(15.0) |
738 |
754 |
(2.1) |
| Operational net revenue (non-GAAP) ($ in millions) |
246 |
290 |
(15.2) |
647 |
754 |
(14.1) |
| Refueling outage days |
||||||
| FitzPatrick |
- |
- |
42 |
- |
||
| Indian Point 2 |
- |
77 |
- |
102 |
||
| Indian Point 3 |
47 |
- |
66 |
- |
||
| Palisades |
27 |
- |
27 |
- |
||
| Pilgrim |
43 |
- |
43 |
- |
||
| (v) |
FitzPatrick was sold on 3/31/17 and investments in wind generation were sold in November 2016. |
| (w) |
Average energy and capacity revenue per MWh excluding FitzPatrick was $47.44 in second quarter 2016, $52.02 in year-to-date 2017 and $56.34 in year-to-date 2016. |
See appendix in the webcast slide presentation for EWC hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.
As-reported financial measures in this table are computed in accordance with GAAP as they include all components of net income, including special items. Operational measures in this table are non-GAAP financial measures as they are calculated using operational net income, which excludes the impact of special items.
| Appendix E: GAAP and Non-GAAP Financial Measures |
|||
| Second Quarter 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP financial measures) |
|||
| For 12 months ending June 30 |
2017 |
2016 |
Change |
| GAAP Measures |
|||
| ROIC - as-reported |
(1.9%) |
2.4% |
(4.3%) |
| ROE - as-reported |
(9.8%) |
1.7% |
(11.5%) |
| Book value per share |
$46.63 |
$54.54 |
($7.91) |
| End of period shares outstanding (millions) |
179.5 |
178.9 |
0.6 |
| Non-GAAP Measures |
|||
| ROIC - operational |
6.5% |
7.5% |
(1.0%) |
| ROE - operational |
13.3% |
14.3% |
(1.0%) |
| As of June 30 ($ in millions) |
|||
| GAAP Measures |
|||
| Cash and cash equivalents |
934 |
996 |
(62) |
| Revolver capacity |
4,163 |
4,173 |
(10) |
| Commercial paper |
1,147 |
853 |
294 |
| Total debt |
16,285 |
14,837 |
1,448 |
| Securitization debt |
602 |
716 |
(114) |
| Debt to capital |
65.5% |
59.6% |
5.9% |
| Off-balance sheet liabilities: |
|||
| Debt of joint ventures - Entergy's share |
70 |
76 |
(6) |
| Leases - Entergy's share |
397 |
359 |
38 |
| Power purchase agreements accounted for as leases |
166 |
195 |
(29) |
| Total off-balance sheet liabilities |
633 |
630 |
3 |
| Non-GAAP Financial Measures |
|||
| Debt to capital, excluding securitization debt |
64.7% |
58.4% |
6.3% |
| Gross liquidity |
5,097 |
5,169 |
(72) |
| Net debt to net capital, excluding securitization debt |
63.2% |
56.6% |
6.6% |
| Parent debt to total debt, excluding securitization debt |
20.5% |
19.1% |
1.4% |
| Debt to operational adjusted EBITDA, excluding securitization debt |
4.6x |
4.4x |
0.2x |
| Operational FFO to debt, excluding securitization debt |
15.2% |
21.1% |
(5.9%) |
F: Definitions, Abbreviations and Acronyms
Appendix F-1 provides definitions of certain operating measures, as well as GAAP and non-GAAP financial measures. Non-GAAP financial measures remove the effects of financial events that are not routine from commonly used financial measures.
| Appendix F-1: Definitions |
|
| Utility Operating and Financial Measures |
|
| GWh billed |
Total number of GWh billed to 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 the end of the period |
| EWC Operating and Financial Measures |
|
| Average revenue under contract per kW-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 New England, NYISO and MISO |
| Capacity factor |
Normalized percentage of the period that the nuclear plants generate power |
| 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 |
| 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 |
| Appendix F-1: Definitions |
||
| EWC Operating and Financial Measures (continued) |
||
| GWh billed |
Total number of GWh billed to customers and financially-settled instruments (does not include amounts from investment in wind generation that was accounted for under the equity method of accounting and which was sold in November 2016) |
|
| Net revenue |
Operating revenue less fuel, fuel-related expenses and purchased power |
|
| 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; investment in wind generation was sold in November 2016 |
|
| 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, assuming intent to shutdown Pilgrim (May 31, 2019), Palisades (Oct. 1, 2018), Indian Point 2 (April 30, 2020) and Indian Point 3 (April 30, 2021) |
|
| Planned TWh of generation |
Amount of output expected to be generated by EWC resources considering plant operating characteristics and outage schedules, assuming intent to shutdown Pilgrim (May 31, 2019), Palisades (Oct. 1, 2018), Indian Point 2 (April 30, 2020) and Indian Point 3 (April 30, 2021) |
|
| 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 a scheduled refueling and maintenance outage during the period |
|
| Unit-contingent |
Transaction under which power is supplied from a specific generation asset; if the asset is in operational outage, seller is generally not liable to buyer for any damages, unless the contract specifies certain conditions such as an availability guarantee |
|
| 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 |
|
| ROIC - as-reported |
12-months rolling net income attributable to Entergy Corporation adjusted for preferred dividends and tax-effected interest expense divided by average invested capital |
|
| ROE - as-reported |
12-months rolling net income attributable to Entergy Corporation 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 and Hurricane Isaac at ENOI; the 2009 ice storm at EAI and investment recovery of costs associated with the cancelled Little Gypsy repowering project at ELL |
|
| Appendix F-1: Definitions |
|
| Financial Measures - Non-GAAP |
|
| Total debt |
Sum of short-term and long-term debt, notes payable and commercial paper and capital leases on the balance sheet |
| Adjusted EBITDA |
Earnings before interest, depreciation and amortization and income taxes and excluding decommissioning expense; for Entergy consolidated, also excludes AFUDC-equity funds and subtracts securitization proceeds |
| Utility, Parent & Other |
Combines the Utility segment with Parent & Other, which is all of Entergy excluding the EWC segment |
| Adjusted EPS |
As-reported EPS excluding special items and normalizing weather and income taxes |
| Debt to capital ratio, excluding securitization debt |
Total debt divided by total capitalization, excluding securitization debt |
| Debt to operational adjusted EBITDA, excluding securitization debt |
End of period total debt excluding securitization debt divided by 12-months rolling operational adjusted EBITDA |
| FFO |
OCF less AFUDC-borrowed funds, working capital items in OCF (receivables, fuel inventory, accounts payable, prepaid taxes and taxes accrued, interest accrued and other working capital accounts) and securitization regulatory charges |
| Operational FFO to debt, excluding securitization 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 EPS |
As-reported EPS adjusted to exclude the impact of special items |
| Operational FFO |
FFO excluding effects of special items |
| Parent debt to total debt ratio, excluding securitization debt |
End of period Entergy Corporation debt, including amounts drawn on credit revolver and commercial paper facilities, as a percent of consolidated 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 attributable to Entergy Corporation adjusted for preferred dividends and tax-effected interest expense divided by average invested capital |
| ROE - operational |
12-months rolling operational net income attributable to Entergy Corporation divided by average common equity |
Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.
| Appendix F-2: Abbreviations and Acronyms |
|||
| ADIT |
Accumulated deferred income taxes |
LPSC |
Louisiana Public Service Commission |
| AFUDC - borrowed funds |
Allowance for borrowed funds used during construction |
LTM |
Last twelve months |
| AFUDC - equity funds |
Allowance for equity funds used during construction |
Michigan PSC |
Michigan Public Service Commission |
| AMI |
Advanced metering infrastructure |
MISO |
Midcontinent Independent System Operator, Inc. |
| ANO |
Arkansas Nuclear One (nuclear) |
Moody's |
Moody's Investor Service |
| APSC |
Arkansas Public Service Commission |
MPSC |
Mississippi Public Service Commission |
| ARO |
Asset retirement obligation |
MTEP |
MISO Transmission Expansion Planning |
| CCGT |
Combined cycle gas turbine |
Nelson 6 |
Unit 6 of Roy S. Nelson plant (coal) |
| CCNO |
Council of the City of New Orleans, Louisiana |
NEPOOL |
New England Power Pool |
| COD |
Commercial operation date |
Ninemile 6 |
Ninemile Point Unit 6 |
| CT |
Simple cycle combustion turbine |
Non-fuel O&M |
Non-fuel operation and maintenance expense |
| DCRF |
Distribution cost recovery factor |
NDT |
Nuclear decommissioning trust |
| DOE |
U.S. Department of Energy |
NRC |
Nuclear Regulatory Commission |
| EAI |
Entergy Arkansas, Inc. |
NYISO |
New York Independent System Operator, Inc. |
| EBITDA |
Earnings before interest, income taxes, depreciation and amortization |
NYPA |
New York Power Authority |
| ELL |
Entergy Louisiana, LLC |
NYSE |
New York Stock Exchange |
| EMI |
Entergy Mississippi, Inc. |
O&M |
Operation and maintenance expense |
| ENOI |
Entergy New Orleans, Inc. |
OCF |
Net cash flow provided by operating activities |
| ENVY |
Entergy Nuclear Vermont Yankee |
OpCo |
Operating Company |
| ESI |
Entergy Services, Inc. |
OPEB |
Other post-employment benefits |
| EPS |
Earnings per share |
Palisades |
Palisades Power Plant (nuclear) |
| ETI |
Entergy Texas, Inc. |
PSDAR |
Post-Shutdown Decommissioning Activities Report |
| ETR |
Entergy Corporation |
Pilgrim |
Pilgrim Nuclear Power Station (nuclear) |
| EWC |
Entergy Wholesale Commodities |
PPA |
Power purchase agreement or purchased power agreement |
| FERC |
Federal Energy Regulatory Commission |
PUCT |
Public Utility Commission of Texas |
| FFO |
Funds from operations |
RFP |
Request for proposal |
| Firm LD |
Firm liquidated damages |
RISEC |
Rhode Island State Energy Center (CCGT) |
| FitzPatrick |
James A. FitzPatrick Nuclear Power Plant (nuclear, sold March 31, 2017) |
ROE |
Return on equity |
| FRP |
Formula rate plan |
ROIC |
Return on invested capital |
| GAAP |
U.S. generally accepted accounting principles |
RPCE |
Rough production cost equalization |
| Grand Gulf |
Unit 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy |
RS Cogen |
RS Cogen facility (CCGT cogen) |
| Indian Point 1 |
Indian Point Energy Center Unit 1 (nuclear) |
RSP |
Rate Stabilization Plan (ELL Gas) |
| Indian Point 2 |
Indian Point Energy Center Unit 2 (nuclear) |
S&P |
Standard & Poor's |
| Indian Point 3 |
Indian Point Energy Center Unit 3 (nuclear) |
SEC |
U.S. Securities and Exchange Commission |
| IPEC |
Indian Point Energy Center (nuclear) |
SERI |
System Energy Resources, Inc. |
| ISO |
Independent system operator |
SPDES |
State Pollutant Discharge Elimination System |
| ISES |
Independence Steam Electric Station (coal) |
TCRF |
Transmission cost recovery factor |
| Top Deer |
Top Deer Wind Ventures, LLC |
||
| Union |
Union Power Station (CCGT) |
||
| UP&O |
Utility, Parent & Other |
||
| VY |
Vermont Yankee Nuclear Power Station (nuclear) |
||
| WACC |
Weighted-average cost of capital |
||
| WQC |
Water Quality Certification |
||
| YOY |
Year-over-year |
||
G: GAAP to Non-GAAP Reconciliations
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 - EWC Operational Net Revenue |
|||||
| ($ in millions except where noted) |
Second Quarter |
Year-to-Date |
|||
| 2017 |
2016 |
2017 |
2016 |
||
| As-reported net revenue |
(A) |
250 |
293 |
744 |
759 |
| Special items included in net revenue: |
|||||
| EWC Nuclear costs associated with decisions to close or sell plants |
|||||
| Total special items included in net revenue |
(B) |
1 |
- |
91 |
- |
| Operational net revenue (non-GAAP) |
(A-B) |
250 |
293 |
653 |
759 |
| EWC Nuclear |
|||||
| As-reported EWC Nuclear net revenue |
(C) |
247 |
290 |
738 |
754 |
| Special items included in EWC Nuclear net revenue: |
|||||
| EWC Nuclear costs associated with decisions to close or sell plants |
|||||
| Total special items included in EWC Nuclear net revenue |
(D) |
1 |
- |
91 |
- |
| Operational EWC Nuclear net revenue (non-GAAP) |
(C-D) |
246 |
290 |
647 |
754 |
| Calculations may differ due to rounding |
| Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - ROIC, ROE |
|||
| ($ in millions except where noted) |
Second Quarter |
||
| 2017 |
2016 |
||
| As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months |
(A) |
(888) |
174 |
| Preferred dividends |
15 |
21 |
|
| Tax effected interest expense |
404 |
404 |
|
| As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months adjusted for preferred dividends and tax effected interest expense |
(B) |
(469) |
599 |
| Special items in prior quarters |
(1,947) |
(1,260) |
|
| EWC Nuclear plant impairments and costs associated with decisions to close or sell plants |
(151) |
(12) |
|
| DOE litigation awards for VY and FitzPatrick |
- |
22 |
|
| Total special items, rolling 12 months |
(C) |
(2,098) |
(1,250) |
| Operational earnings, rolling 12 months adjusted for preferred dividends and tax effected interest expense (non-GAAP) |
(B-C) |
1,629 |
1,849 |
| Operational earnings, rolling 12 months (non-GAAP) |
(A-C) |
1,210 |
1,424 |
| Average invested capital |
(D) |
24,886 |
24,617 |
| Average common equity |
(E) |
9,064 |
9,958 |
| ROIC - as-reported |
(B/D) |
(1.9)% |
2.4% |
| ROIC - operational |
[(B-C)/D] |
6.5% |
7.5% |
| ROE - as-reported |
(A/E) |
(9.8)% |
1.7% |
| ROE - operational |
[(A-C)/E] |
13.3% |
14.3% |
| Calculations may differ due to rounding |
| Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios excluding Securitization Debt; Gross Liquidity; Debt to Operational Adjusted EBITDA, excluding Securitization Debt; Operational FFO to Debt Ratio, excluding Securitization Debt |
|||
| ($ in millions except where noted) |
Second Quarter |
||
| 2017 |
2016 |
||
| Total debt |
(A) |
16,285 |
14,837 |
| Less securitization debt |
(B) |
602 |
716 |
| Total debt, excluding securitization debt |
(C) |
15,683 |
14,121 |
| Less cash and cash equivalents |
(D) |
934 |
996 |
| Net debt, excluding securitization debt |
(E) |
14,749 |
13,125 |
| Total capitalization |
(F) |
24,859 |
24,913 |
| Less securitization debt |
(B) |
602 |
716 |
| Total capitalization, excluding securitization debt |
(G) |
24,257 |
24,197 |
| Less cash and cash equivalents |
(D) |
934 |
996 |
| Net capital, excluding securitization debt |
(H) |
23,323 |
23,201 |
| Debt to capital |
(A/F) |
65.5% |
59.6% |
| Debt to capital, excluding securitization debt |
(C/G) |
64.7% |
58.4% |
| Net debt to net capital, excluding securitization debt |
(E/H) |
63.2% |
56.6% |
| Revolver capacity |
(I) |
4,163 |
4,173 |
| Gross liquidity |
(D+I) |
5,097 |
5,169 |
| Entergy Corporation notes: |
|||
| Due January 2017 |
- |
500 |
|
| Due September 2020 |
450 |
450 |
|
| Due July 2022 |
650 |
650 |
|
| Due September 2026 |
750 |
- |
|
| Total parent long-term debt |
(J) |
1,850 |
1,600 |
| Revolver draw |
(K) |
225 |
240 |
| Commercial paper |
(L) |
1,147 |
853 |
| Total parent debt |
(J)+(K)+(L) |
3,222 |
2,693 |
| Parent debt to total debt, excluding securitization debt |
[((J)+(K)+(L))/(C)] |
20.5% |
19.1% |
| Appendix G-3: Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios excluding Securitization Debt; Gross Liquidity; Debt to Operational Adjusted EBITDA, excluding Securitization Debt; Operational FFO to Debt Ratio, excluding Securitization Debt (continued) |
|||
| ($ in millions except where noted) |
Second Quarter |
||
| 2017 |
2016 |
||
| Total debt |
(A) |
16,285 |
14,837 |
| Less securitization debt |
(B) |
602 |
716 |
| Total debt, excluding securitization debt |
(C) |
15,683 |
14,121 |
| As-reported consolidated net income (loss), rolling 12 months |
(873) |
194 |
|
| Add back (rolling 12 months): |
|||
| Interest expense |
657 |
658 |
|
| Income taxes |
(1,038) |
(1,002) |
|
| Depreciation and amortization |
1,375 |
1,335 |
|
| Regulatory charges (credits) |
(7) |
185 |
|
| Decommissioning expense |
397 |
287 |
|
| Subtract (rolling 12 months): |
|||
| Securitization proceeds |
145 |
137 |
|
| Interest and investment income |
203 |
158 |
|
| AFUDC-equity funds used during construction |
76 |
61 |
|
| Adjusted EBITDA, rolling 12 months (non-GAAP) |
(D) |
87 |
1,301 |
| Add back special items (rolling 12 months pre-tax): |
|||
| EWC Nuclear plant impairments and costs associated with decisions to close or sell plants |
3,335 |
2,084 |
|
| DOE litigation awards for VY and FitzPatrick |
- |
(34) |
|
| Top Deer investment impairment |
- |
37 |
|
| Gain on the sale of RISEC |
- |
(154) |
|
| Gain on the sale of FitzPatrick |
(16) |
- |
|
| Operational adjusted EBITDA, rolling 12 months (non-GAAP) |
(E) |
3,406 |
3,234 |
| Debt to operational adjusted EBITDA, excluding securitization debt |
(C)/(E) |
4.6x |
4.4x |
| Net cash flow provided by operating activities, rolling 12 months |
(F) |
2,566 |
3,205 |
| AFUDC-borrowed funds used during construction, rolling 12 months |
(G) |
(37) |
(31) |
| Working capital items in net cash flow provided by operating activities (rolling 12 months): |
|||
| Receivables |
(33) |
81 |
|
| Fuel inventory |
35 |
1 |
|
| Accounts payable |
139 |
15 |
|
| Prepaid taxes and taxes accrued |
(38) |
108 |
|
| Interest accrued |
(2) |
(2) |
|
| Other working capital accounts |
62 |
(111) |
|
| Securitization regulatory charges |
115 |
107 |
|
| Total |
(H) |
278 |
199 |
| FFO, rolling 12 months |
(F)+(G)-(H) |
2,251 |
2,975 |
| Add back special items (rolling 12 months pre-tax): |
|||
| EWC Nuclear plant impairments and costs associated with decisions to close or sell plants |
126 |
6 |
|
| Operational FFO, rolling 12 months |
(I) |
2,377 |
2,981 |
| Operational FFO to debt, excluding securitization debt |
(I)/(C) |
15.2% |
21.1% |
| Calculations may differ due to rounding |
SOURCE Entergy Corporation
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