Entergy(ETR) - 2025 Q2 - Quarterly Report

Forward-looking Information This section provides cautionary statements regarding future results and identifies key risks and uncertainties Forward-looking Information This section provides cautionary language on forward-looking statements, highlighting risks from regulatory outcomes, operational challenges, market volatility, and environmental factors that could cause actual results to differ - The company identifies numerous risk factors that could cause actual results to differ from forward-looking statements, including regulatory proceedings, operational performance, environmental laws, climate change impacts, and capital project execution[19][20][22] - Significant risks are associated with the company's participation in the Midcontinent Independent System Operator (MISO), including market rules, transmission cost allocation, and interconnection delays, potentially exacerbated by expected load growth from data centers[20] - Entergy highlights its commitment to achieve net-zero carbon emissions by 2050 but notes that expected load growth could challenge the achievement of its climate goals[24] Definitions This section provides a comprehensive list of abbreviations and acronyms used throughout the report, defining key terms related to the company's entities, regulatory bodies, financial metrics, and operational assets - The report defines key entities such as Entergy Corporation, the Registrant Subsidiaries (Entergy Arkansas, Louisiana, Mississippi, New Orleans, Texas, and System Energy), and the Utility operating companies[28][30] - Key regulatory bodies are defined, including the Federal Energy Regulatory Commission (FERC), various state Public Service Commissions (APSC, LPSC, MPSC), and the Public Utility Commission of Texas (PUCT)[28][30] Part I. Financial Information This section presents the company's consolidated financial performance, detailed financial statements, and subsidiary-specific results Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Entergy's consolidated financial performance significantly improved in Q2 and H1 2025 due to higher revenues and the absence of prior-year charges, supported by strong liquidity and updated capital expenditure plans Results of Operations Consolidated net income significantly increased in Q2 and H1 2025, driven by higher operating revenues and the non-recurrence of a 2024 pension settlement charge, with new legislation impacting clean energy incentives Net Income Attributable to Entergy Corporation (In Thousands) | Period | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Q2 | $467,930 | $48,922 | $419,008 | | H1 | $828,690 | $124,203 | $704,487 | Utility Electric Energy Sales Change (GWh) | Period | 2025 vs 2024 | Key Drivers | | :--- | :--- | :--- | | Q2 Total Retail | +3% | Industrial sales up 12%, offsetting a 7% decline in Residential | | H1 Total Retail | +5% | Industrial sales up 11%, Residential sales up 2% | - A significant factor in the year-over-year net income increase was a $317 million ($250 million net-of-tax) non-cash pension settlement charge recognized in Q2 2024, which did not recur in 2025[35][51][72] - The One Big Beautiful Bill Act of 2025 was enacted, modifying clean energy tax incentives by extending credits for existing nuclear facilities but shortening the qualification period for new solar and wind projects, potentially affecting Entergy's resource planning and carbon emission goals[76][81] Liquidity and Capital Resources Entergy maintains a stable capital structure with a $3 billion credit facility and plans over $29.5 billion in capital expenditures for 2025-2027 to support growth and reliability Debt to Capital Ratio | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Debt to capital | 64.9% | 65.3% | | Net debt to net capital (non-GAAP) | 63.8% | 64.4% | Planned Capital Investments (In Millions) | Category | 2025 | 2026 | 2027 | | :--- | :--- | :--- | :--- | | Generation | $4,310 | $6,200 | $5,355 | | Transmission | $1,260 | $2,405 | $2,485 | | Distribution | $2,200 | $2,425 | $1,965 | | Utility Support | $430 | $290 | $265 | | Total | $8,200 | $11,320 | $10,070 | - Entergy Louisiana is pursuing regulatory approval for three new combined cycle gas turbine resources totaling 2,262 MW and significant transmission upgrades to serve a new data center customer[103][104] - In March 2025, Entergy entered into forward sale agreements for 17.8 million shares of common stock, with settlement required by September 30, 2026, to support its financing needs[91][213] Cash Flow Activity Net cash from operating activities increased to $1.8 billion, while investing cash outflow rose to $3.74 billion due to higher construction expenditures, with financing activities supported by common stock issuances Consolidated Cash Flow Summary (Six Months Ended June 30, In Millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from Operating | $1,798 | $1,546 | | Net cash used in Investing | ($3,741) | ($2,466) | | Net cash from Financing | $2,259 | $2,142 | - Operating cash flow increased due to $313 million in customer advance payments and higher collections, partially offset by higher fuel and interest payments[117][118] - Investing cash outflow increased significantly due to a $1.2 billion rise in construction expenditures for new generation projects at Entergy Arkansas, Louisiana, Mississippi, and Texas[119] - Financing activities were bolstered by $805 million in net proceeds from the issuance of common stock under the at-the-market equity program in 2025[121] Nuclear Matters The company provides an update on the NRC Reactor Oversight Process, noting that all utility-owned nuclear plants are in Column 1 (normal oversight), except Waterford 3, which was placed in Column 2 (increased regulatory response) in June 2025 - In June 2025, the NRC placed the Waterford 3 nuclear plant in Column 2 of its Reactor Oversight Process Action Matrix due to an issue with an emergency diesel generator, subjecting the plant to an increased level of inspection[129][130] Entergy Corporation and Subsidiaries Financial Statements and Notes This section presents the unaudited consolidated financial statements for Entergy Corporation and its subsidiaries, including income statements, balance sheets, cash flows, and detailed notes on accounting policies and recent transactions Consolidated Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $6,175,723 | $5,748,248 | | Operating Income | $1,537,529 | $855,613 | | Net Income Attributable to Entergy | $828,690 | $124,203 | | Diluted EPS | $1.87 | $0.29 | Consolidated Balance Sheet Highlights (As of June 30, 2025 and Dec 31, 2024) | Metric (In Thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $68,383,140 | $64,790,032 | | Total Liabilities | $51,854,790 | $49,385,638 | | Total Equity | $16,308,940 | $15,184,984 | - In Q2 2025, Entergy recognized $571.2 million in zero-emission nuclear power production tax credits for electricity generated in 2024 under the Inflation Reduction Act, with a corresponding provision for uncertain tax positions also recorded due to regulatory uncertainty[336][337] - On July 1, 2025, Entergy completed the sale of its natural gas distribution businesses in Louisiana and New Orleans, resulting in an expected consolidated gain of $11 million ($6 million net-of-tax)[360] Entergy Arkansas, LLC and Subsidiaries Entergy Arkansas's net income significantly increased in H1 2025 due to the non-recurrence of a prior-year charge and higher revenues, with a $4.7 billion capital plan focused on new generation Entergy Arkansas Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating Revenues | $1,311,198 | $1,230,843 | | Operating Income | $314,828 | $100,151 | | Net Income | $185,716 | $63,079 | - The significant increase in H1 2025 net income is primarily attributed to the non-recurrence of a $131.8 million ($99.1 million net-of-tax) charge taken in Q1 2024 related to the opportunity sales proceeding[368][387] - Total retail electric sales grew 8% in the first half of 2025, driven by a 19% increase in industrial sales from primary metals and technology customers[379] - Entergy Arkansas plans to invest $1.075 billion in 2025, with a focus on generation projects, including the APSC-approved Lake Catherine Unit 5 and the planned Jefferson Power Station[409][414][415] Entergy Louisiana, LLC and Subsidiaries Entergy Louisiana's net income rose significantly in H1 2025 due to the absence of a prior-year regulatory charge and increased revenues, while advancing major projects and completing a gas distribution business sale Entergy Louisiana Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating Revenues | $2,811,610 | $2,478,564 | | Operating Income | $682,559 | $378,515 | | Net Income | $554,377 | $313,837 | - The primary driver for the net income increase was the non-recurrence of a $151.5 million regulatory charge taken in Q2 2024 related to a formula rate plan settlement[444][445] - The company is pursuing LPSC approval for 2,262 MW of new gas-fired generation and major transmission upgrades to serve a new data center being developed by a subsidiary of Meta Platforms, Inc[492][493] - The sale of the natural gas distribution business was completed on July 1, 2025, for a purchase price of $203 million, resulting in an expected pre-tax gain of $12 million[360][472] Entergy Mississippi, LLC and Subsidiaries Entergy Mississippi's net income increased in H1 2025 due to higher rates and industrial sales, supported by $600 million in new bonds for generation projects, including a planned 754 MW facility Entergy Mississippi Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating Revenues | $915,584 | $857,750 | | Operating Income | $218,309 | $190,279 | | Net Income | $131,138 | $106,997 | - Net income growth was supported by higher retail electric prices from formula rate plan increases and an interim facilities rate adjustment, as well as an 8% increase in industrial sales[536][544][547] - In March 2025, the company issued $600 million of 5.80% Series mortgage bonds to help finance construction of the Delta Blues Advanced Power Station and two solar facilities[237][551] - Entergy Mississippi plans to build a new 754 MW combined cycle combustion turbine facility in Ridgeland, MS, with an expected in-service date of 2029[574] Entergy New Orleans, LLC and Subsidiaries Entergy New Orleans reported a net income turnaround in H1 2025, primarily due to the non-recurrence of a prior-year regulatory charge and the completion of its gas distribution business sale Entergy New Orleans Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating Revenues | $391,055 | $392,302 | | Operating Income (Loss) | $64,867 | ($21,421) | | Net Income (Loss) | $30,141 | ($27,847) | - The swing from a net loss to net income was mainly caused by a $78.5 million regulatory charge recorded in Q1 2024, which was related to sharing income tax benefits with customers[600][618] - The sale of the natural gas distribution business was completed on July 1, 2025, for a purchase price of $288 million, with an expected pre-tax gain of $5 million[360][624] Entergy Texas, Inc. and Subsidiaries Entergy Texas's net income increased in H1 2025 due to higher retail prices and sales volume, despite increased unrecovered MISO costs, as it pursues major generation and transmission projects Entergy Texas Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating Revenues | $973,580 | $963,568 | | Operating Income | $208,908 | $193,296 | | Net Income | $148,352 | $126,966 | - Net income was negatively impacted by $21 million in higher purchased power costs for MISO capacity, which are not currently recovered in base rates; however, recent legislation established a recovery rider mechanism that Entergy Texas plans to file for in 2026[659][675] - Total retail electric sales grew 6% in H1 2025, driven by a 7% increase in residential sales due to favorable weather and a 7% increase in industrial sales[669] - The company is awaiting a PUCT decision on its application to build the Legend and Lone Star Power Stations after ALJs issued a proposal for decision recommending rejection of the application[696][697] System Energy Resources, Inc. System Energy's net income decreased in H1 2025 due to a lower rate of return from regulatory settlements, with key developments including a MPSC dispute resolution and FERC approval for a Unit Power Sales Agreement change System Energy Financial Highlights (Six Months Ended June 30) | Metric (In Thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating Revenues | $285,669 | $298,554 | | Operating Income | $60,804 | $42,392 | | Net Income | $44,714 | $55,966 | - Net income decreased primarily due to a lower authorized rate of return on equity and capital structure limitations implemented as part of settlement agreements with the City Council of New Orleans and the LPSC[730][731] - In May 2025, System Energy issued $240 million of mortgage bonds and used the proceeds to repay $200 million of existing bonds[240] - FERC approved the removal of Entergy Louisiana as a party to the Unit Power Sales Agreement, effective October 2025, as part of a settlement with the LPSC[750][751] Part II. Other Information This section covers legal proceedings, updates on risk factors, and other regulatory and environmental disclosures Item 1. Legal Proceedings This section discloses a new antitrust class action lawsuit filed in July 2025 against Entergy and other nuclear plant operators alleging a conspiracy to suppress employee compensation - On July 11, 2025, an antitrust class action lawsuit was filed against Entergy Corporation and other nuclear plant operators, alleging a conspiracy to suppress employee compensation from May 2003 to the present, with plaintiffs seeking unspecified monetary damages[772] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There have been no material changes to the risk factors discussed in the Annual Report on Form 10-K[773] Item 5. Other Information This section provides updates on nuclear and environmental regulations, including the Waterford 3 plant's oversight status, EPA deregulatory actions, and potential delays to Entergy's carbon reduction goals - The NRC placed the Waterford 3 nuclear plant in Column 2 of its oversight matrix in June 2025, requiring increased regulatory inspection[779][780] - The EPA announced a series of deregulatory actions in March 2025, including the reconsideration of the Mercury and Air Toxics Standard (MATS) rule and greenhouse gas emissions rules[783] - In June 2025, the EPA proposed to repeal the May 2024 rule regulating greenhouse gas emissions from new and existing power plants[788] - Entergy stated that due to stronger than expected sales growth and tax credit uncertainty, its goal of 50% carbon-free capacity may not be achieved by 2030 and its carbon intensity goal may be delayed[789]