Entergy(ETR) - 2024 Q1 - Quarterly Results

News Release Financial Highlights Entergy reported decreased Q1 2024 as-reported and adjusted earnings per share compared to Q1 2023, while affirming full-year guidance Q1 2024 vs. Q1 2023 Earnings Summary | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | As-reported Earnings | $75 million | $311 million | ($236 million) | | As-reported EPS | $0.35 | $1.47 | ($1.11) | | Adjusted Earnings (non-GAAP) | $230 million | $242 million | ($12 million) | | Adjusted EPS (non-GAAP) | $1.08 | $1.14 | ($0.07) | - The company affirmed its 2024 adjusted EPS guidance range of $7.05 to $7.35[17] Business Highlights Entergy achieved significant regulatory and operational milestones, including a SERI agreement, LPSC approval for E-LA's resilience plan, and Grand Gulf's fastest refueling outage - SERI reached an agreement in principle with the CCNO to resolve all complaints, subject to FERC approval[3] - The LPSC approved the first phase of E-LA's resilience and grid hardening plan, totaling $1.9 billion, along with a timely recovery mechanism[3] - Grand Gulf completed its 24th refueling outage in March with a 28-day duration, the plant's shortest since 2007[3] Business Segment Results The Utility segment saw increased adjusted earnings, while Parent & Other reported a wider loss due to affiliate preferred investment dividends Utility Utility segment's Q1 2024 adjusted earnings increased, despite lower as-reported earnings due to regulatory asset write-offs and charges Utility Segment Earnings (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | As-reported Earnings | $195 million | $397 million | | As-reported EPS | $0.91 | $1.87 | | Adjusted Earnings (non-GAAP) | $350 million | $329 million | | Adjusted EPS (non-GAAP) | $1.64 | $1.55 | - Key drivers offsetting higher operating expenses included the net effect of regulatory actions, higher other income from affiliate preferred investments, and increased retail sales volume[14][21] Parent & Other Parent & Other segment reported an increased loss in Q1 2024, primarily driven by deductions from affiliate preferred investment dividends Parent & Other Segment Loss (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | As-reported/Adjusted Loss | ($120 million) | ($86 million) | | As-reported/Adjusted EPS | ($0.56) | ($0.41) | Earnings Guidance Entergy affirmed its full-year 2024 adjusted EPS guidance, noting inability to reconcile to GAAP guidance due to unpredictable adjustments - The company affirmed its 2024 adjusted EPS guidance range of $7.05 to $7.35[17] - A reconciliation of non-GAAP guidance to GAAP guidance was not provided because the company cannot predict and quantify all potential adjustments, such as regulatory charges or significant income tax items[18] Appendices Appendix A: Consolidated results and adjustments This appendix details Q1 2024 GAAP to non-GAAP earnings adjustments, including regulatory write-offs, and notes a decrease in consolidated operating cash flow Q1 2024 Adjustments to Earnings | Adjustment Driver | Pre-tax Amount ($ million) | After-tax EPS Impact ($) | | :--- | :--- | :--- | | E-AR regulatory asset write-off | ($132 million) | ($0.46) | | E-NO customer sharing of tax benefits | ($79 million) | ($0.27) | Consolidated Operating Cash Flow | Period | OCF ($ million) | Change ($ million) | | :--- | :--- | :--- | | Q1 2024 | $521 million | ($439 million) | | Q1 2023 | $960 million | | Appendix B: Earnings variance analysis This appendix details factors contributing to the Q1 2024 adjusted EPS decrease, highlighting higher O&M and depreciation, partially offset by other income Key Drivers of Adjusted EPS Variance (Q1 2024 vs. Q1 2023) | Driver | Consolidated Adjusted EPS Impact ($) | | :--- | :--- | | 2023 Adjusted EPS | 1.14 | | Operating revenue drivers | 0.05 | | Other O&M | (0.19) | | Depreciation/amortization | (0.16) | | Other income (deductions) | 0.34 | | Interest expense | (0.08) | | Other drivers | (0.03) | | 2024 Adjusted EPS | 1.08 | - Higher Utility Other O&M was driven by increased compensation and benefits, power delivery expenses (vegetation management), and costs for operational and customer service initiatives[49] - Increased Utility depreciation expense was primarily due to higher plant in service[49] Appendix C: Utility operating and financial measures This section presents Utility segment operating metrics, showing a 1.4% increase in total retail electricity sales, but flat weather-adjusted sales Utility GWh Sold by Customer Class (Q1 2024 vs. Q1 2023) | Customer Class | Q1 2024 (GWh) | Q1 2023 (GWh) | % Change | % Weather Adjusted Change | | :--- | :--- | :--- | :--- | :--- | | Residential | 7,758 | 7,276 | 6.6% | 1.4% | | Commercial | 6,223 | 6,248 | (0.4)% | (1.2)% | | Industrial | 12,661 | 12,740 | (0.6)% | (0.6)% | | Total Retail Sales | 27,214 | 26,841 | 1.4% | (0.1)% | - The total number of retail electric customers increased by 0.7% to 3,017,897 as of Q1 2024[51] Appendix D: Consolidated financial measures This appendix provides key consolidated financial measures, showing stable adjusted ROE, decreased net liquidity, and improved FFO to debt ratio Key Financial Metrics (as of March 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted ROE (non-GAAP) | 10.4% | 10.4% | (0.1)% | | Debt to capital, excl. securitization | 65.6% | 67.2% | (1.7)% | | Net liquidity ($M) | $3626 million | $5295 million | ($1669 million) | | FFO to debt, excl. securitization | 13.2% | 11.4% | 1.7% | Appendix E: Definitions and abbreviations and acronyms This appendix defines operating, GAAP, and non-GAAP financial measures, and lists abbreviations and acronyms used in the earnings release Appendix F: Other GAAP to non-GAAP reconciliations This section provides detailed reconciliations of non-GAAP financial measures to GAAP counterparts, including ROE, debt, and FFO calculations - Provides a reconciliation of as-reported net income to adjusted earnings for the calculation of Return on Equity (ROE)[60] - Details the adjustments from GAAP debt and capitalization figures to non-GAAP metrics that exclude securitization debt[60] - Reconciles Net Cash Flow Provided by Operating Activities to Funds From Operations (FFO), a key credit metric[62] Financial Statements Consolidating Balance Sheet The balance sheet shows increased total assets driven by cash, while total shareholders' equity slightly decreased as of March 31, 2024 Consolidated Balance Sheet Summary | Item | March 31, 2024 ($ billion) | Dec 31, 2023 ($ billion) | | :--- | :--- | :--- | | Total Assets | $62.0 billion | $59.7 billion | | Total Liabilities | $47.4 billion | $45.1 billion | | Total Shareholders' Equity | $14.5 billion | $14.6 billion | Consolidating Income Statement Q1 2024 consolidated operating revenues decreased, operating expenses increased due to an asset write-off, leading to a sharp fall in net income Consolidated Income Statement Summary (Three Months Ended March 31) | Item | 2024 ($ million) | 2023 ($ million) | | :--- | :--- | :--- | | Operating Revenues | $2794.6 million | $2981.1 million | | Operating Income | $238.0 million | $462.1 million | | Net Income Attributable to Entergy | $75.3 million | $310.9 million | Consolidated Cash Flow Statement Q1 2024 net cash from operations decreased, investing activities used significant cash, while financing activities provided cash, resulting in a net increase in cash Consolidated Cash Flow Summary (Three Months Ended March 31) | Activity | 2024 ($ million) | 2023 ($ million) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $521.1 million | $959.5 million | | Net Cash used in Investing Activities | ($1283.6 million) | ($4.3 million) | | Net Cash from Financing Activities | $1929.1 million | $2070.4 million | | Net Increase in Cash | $1162.3 million | $1746.3 million |