Entergy(ETR) - 2024 Q3 - Quarterly Results

Earnings Release Summary Financial Highlights The company reported Q3 2024 adjusted EPS of $2.99, a decrease from the prior year primarily due to unfavorable weather impacts Q3 & YTD 2024 Earnings Summary | Metric | Q3 2024 | Q3 2023 | Change | YTD 2024 | YTD 2023 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As-Reported EPS | $2.99 | $3.14 | ($0.15) | $3.58 | $6.45 | ($2.87) | | Adjusted EPS (Non-GAAP) | $2.99 | $3.27 | ($0.28) | $5.99 | $6.25 | ($0.26) | | As-Reported Earnings ($M) | $645 | $667 | ($22) | $769 | $1,369 | ($600) | | Adjusted Earnings ($M, Non-GAAP) | $645 | $694 | ($49) | $1,286 | $1,327 | ($41) | Business Highlights & Strategic Developments The company is advancing its growth strategy through new generation projects, infrastructure investments, and key shareholder actions - The company is pursuing significant new investments, including a new natural gas power station in Mississippi and 3 gigawatts of solar resources in Louisiana[2] - Progress in renewable energy includes placing the 100-megawatt Walnut Bend Solar facility in service and closing on the West Memphis Solar and Driver Solar projects[2] - The Board of Directors approved a 6% increase in the quarterly dividend to $1.20 per share and a two-for-one stock split, effective with trading starting December 13, 2024[2] Business Segment Performance Utility segment earnings declined due to weather and higher costs, while the Parent & Other segment reported a larger adjusted loss Utility Segment The Utility segment's adjusted earnings decreased to $787 million, driven by negative weather impacts and higher expenses Utility Segment Q3 Earnings | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | As-Reported Earnings ($M) | $787 | $752 | $35 | | Adjusted Earnings ($M, Non-GAAP) | $787 | $810 | ($24) | | As-Reported EPS | $3.65 | $3.54 | $0.11 | | Adjusted EPS (Non-GAAP) | $3.65 | $3.82 | ($0.17) | - Key drivers for the change in earnings included positive effects from regulatory actions and lower O&M, which were more than offset by negative impacts from weather, higher depreciation expense, and higher interest expense[9] Parent & Other Segment The Parent & Other segment's adjusted loss widened to $(142) million due to lower pension income and higher interest expense Parent & Other Segment Q3 Loss | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | As-Reported Loss ($M) | $(142) | $(85) | $(57) | | Adjusted Loss ($M, Non-GAAP) | $(142) | $(117) | $(25) | | As-Reported EPS | $(0.66) | $(0.40) | $(0.26) | | Adjusted EPS (Non-GAAP) | $(0.66) | $(0.55) | $(0.11) | - Drivers for the increased loss included lower non-service pension income, changes in legal provisions, and higher interest expense[13] 2024 Guidance and Outlook The company narrowed its 2024 adjusted EPS guidance and announced a two-for-one forward stock split - The company narrowed its 2024 adjusted EPS guidance to a range of $7.15 to $7.35 (pre-split)[16] - A two-for-one forward stock split was announced, with a record date of December 5, 2024, and distribution on December 12, 2024[15] Financial Appendices Appendix A: Consolidated Results and Adjustments This appendix reconciles GAAP to non-GAAP earnings and shows an increase in consolidated operating cash flow to $1.56 billion Q3 2024 GAAP to Non-GAAP Reconciliation ($M) | Segment | As-Reported Earnings | Adjustments | Adjusted Earnings (Non-GAAP) | | :--- | :--- | :--- | :--- | | Utility | $787 | $0 | $787 | | Parent & Other | $(142) | $0 | $(142) | | Consolidated | $645 | $0 | $645 | Q3 Operating Cash Flow ($M) | Segment | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Utility | $1,600 | $1,387 | $213 | | Parent & Other | $(37) | $18 | $(55) | | Consolidated | $1,562 | $1,405 | $157 | Appendix B: Earnings Variance Analysis This section details the drivers of the $0.28 decrease in adjusted consolidated EPS from Q3 2023 to Q3 2024 - The change in Q3 adjusted consolidated EPS from $3.27 in 2023 to $2.99 in 2024 was a decrease of $0.28[42] - Key negative drivers for the quarterly EPS variance included electric volume/weather (-$0.41), higher depreciation (-$0.21), and higher interest expense (-$0.14)[42][46] - Partially offsetting factors included favorable retail electric prices (+$0.32) and lower Other O&M (+$0.10)[42][46] Appendix C: Utility Operating and Financial Measures This appendix shows flat total retail sales, but a 5.0% weather-adjusted increase driven by strong industrial demand Q3 GWh Sold by Customer Class | Customer Class | Q3 2024 (GWh) | Q3 2023 (GWh) | % Change | % Weather Adjusted Change | | :--- | :--- | :--- | :--- | :--- | | Residential | 11,519 | 12,661 | (9.0)% | 1.3% | | Commercial | 8,394 | 8,648 | (2.9)% | 2.0% | | Industrial | 15,150 | 13,781 | 9.9% | 9.9% | | Total Retail | 35,747 | 35,790 | (0.1)% | 5.0% | - The strong 9.9% increase in industrial sales was mainly due to higher sales to large industrial customers, particularly in the petroleum refining industry[50] Appendix D: Consolidated Financial Measures This section presents key financial ratios indicating an improved credit profile, with FFO to adjusted debt increasing to 13.5% Key Financial Measures (as of Sept 30) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | As-reported ROE (LTM) | 12.2% | 11.4% | 0.8% | | Adjusted ROE (LTM, Non-GAAP) | 9.7% | 11.1% | (1.4)% | | Adjusted debt to adjusted capitalization | 64% | 66% | (2)% | | FFO to adjusted debt (LTM) | 13.5% | 12.4% | 1.1% | | Gross liquidity ($M) | $5,757 | $5,865 | ($108) | Appendix E: Definitions and Abbreviations This appendix provides definitions for key financial measures and a list of abbreviations used in the report - This section defines key non-GAAP terms used for performance evaluation, such as Adjusted EPS, Adjusted ROE, and FFO to adjusted debt[55] - A comprehensive list of abbreviations is provided, including company-specific terms like E-LA (Entergy Louisiana) and FRP (Formula Rate Plan), and industry terms like MISO and FERC[57] Appendix F: Other GAAP to non-GAAP Reconciliations This appendix provides detailed reconciliations for key non-GAAP metrics including ROE, FFO to debt, and liquidity ratios - Reconciles Last Twelve Months (LTM) As-reported net income of $1,757 million to Adjusted earnings of $1,397 million, resulting in an Adjusted ROE of 9.7%[60] - Details the calculation of FFO to adjusted debt, starting with total debt of $29.1 billion and adjusting it to $28.3 billion to derive the 13.5% ratio[61] - Provides a breakdown of liquidity, showing Gross Liquidity of $5.8 billion and Net Liquidity of $6.4 billion as of September 30, 2024[62] Financial Statements Consolidating Balance Sheets Total assets grew to $64.5 billion as of September 30, 2024, with total shareholders' equity at $15.0 billion Consolidated Balance Sheet Summary ($ thousands) | Account | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $5,217,806 | $3,660,869 | | Total Assets | $64,462,049 | $59,703,396 | | Total Current Liabilities | $5,859,246 | $6,396,492 | | Total Liabilities | $49,100,928 | $44,740,880 | | Total Shareholders' Equity | $15,032,842 | $14,622,647 | Consolidating Income Statements Q3 2024 operating revenues were $3.39 billion, with net income attributable to the corporation at $645 million Q3 Income Statement Summary ($ thousands) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $3,389,100 | $3,595,522 | | Operating Income | $1,125,862 | $1,143,383 | | Net Income Attributable to ETR | $644,940 | $666,755 | Consolidated Cash Flow Statements Year-to-date net cash from operations was $3.11 billion, with increased cash used in investing and provided by financing YTD Cash Flow Summary ($ thousands) | Cash Flow Category | Nine Months Ended Sept 30, 2024 | Nine Months Ended Sept 30, 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $3,108,828 | $3,230,993 | | Net Cash used in Investing Activities | $(4,001,615) | $(3,579,062) | | Net Cash from Financing Activities | $2,172,051 | $1,643,679 | | Net Increase in Cash | $1,279,264 | $1,295,610 |