Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, CCA, ERP

Entergy Reports Fourth Quarter and Full Year Financial Results; Initiates 2018 Earnings Guidance


NEW ORLEANS, Feb. 23, 2018 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported a fourth quarter 2017 loss per share of $(2.66) on an as-reported basis and earnings per share of 76 cents on an operational basis (non-GAAP), which excludes the effects of special items. For the full year, the company reported 2017 earnings per share of $2.28 on an as-reported basis and $7.20 on an operational basis. The as-reported results for the quarter and full year reflected the revaluation of net deferred tax assets as a result of tax reform, in addition to asset impairments and other expenses related to strategic decisions in the EWC business.

Entergy Corporation Logo. (PRNewsFoto/Entergy Corporation) (PRNewsFoto/) (PRNewsFoto/)

"2017 was another productive year with significant accomplishments for our company, and Utility, Parent & Other adjusted earnings exceeded our guidance range," said Entergy Chairman and Chief Executive Officer Leo Denault. "As we look ahead to the next three years, our success continues to be less dependent on strategic initiatives and more on our own operational execution."

Business highlights included the following:

Consolidated Earnings (GAAP and Non-GAAP Measures)

Fourth Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for reconciliation of GAAP to non-GAAP earnings and description of special items)


Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

(After-tax, $ in millions)







As-reported earnings

(479.1)

(1,769.1)

1,290.0

411.6

(583.6)

995.2

Less special items

(616.7)

(1,824.6)

1,207.9

(888.6)

(1,855.3)

966.7

Operational earnings (non-GAAP)

137.6

55.5

82.1

1,300.2

1,271.7

28.5

  Estimated weather in billed sales

11.3

19.1

(7.8)

(78.6)

11.1

(89.7)








(After-tax, per share in $)







As-reported earnings

(2.66)

(9.88)

7.22

2.28

(3.26)

5.54

Less special items

(3.42)

(10.19)

6.77

(4.92)

(10.37)

5.45

Operational earnings (non-GAAP)

0.76

0.31

0.45

7.20

7.11

0.09

  Estimated weather in billed sales

0.06

0.11

(0.05)

(0.44)

0.06

(0.50)








Calculations may differ due to rounding

Consolidated Results

For fourth quarter 2017, the company reported a loss of $(479 million), or $(2.66) per share, on an as-reported basis and earnings of $138 million, or 76 cents per share, on an operational basis. This compared to fourth quarter 2016 loss of $(1,769 million), or $(9.88) per share, on an as-reported basis and earnings of $56 million, or 31 cents per share on an operational basis.

For the full year, the company reported 2017 earnings of $412 million, or $2.28 per share, on an as-reported basis and $1,300 million, or $7.20 per share, on an operational basis. This compared to a 2016 loss of $(584 million), or $(3.26) per share, on an as-reported basis and earnings of $1,272 million, or $7.11 per share, on an operational basis.

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 fourth quarter 2017, the Utility business reported a loss attributable to Entergy Corporation of $(47 million), or (26) cents per share, on an as-reported basis and earnings of $133 million, or 74 cents per share, on an operational basis. This compared to fourth quarter 2016 earnings of $120 million, or 67 cents per share, on an as-reported basis and an operational basis.

The fourth quarter 2017 as-reported loss reflected a decrease in net income of $180.7 million, which resulted from tax reform, for the write-down of certain tax assets that are not subject to the ratemaking process. This was considered a special item and excluded from operational earnings. The Utility also recorded a $3,665 million increase in its net regulatory liabilities associated with the reduction in certain of its net deferred tax liabilities. This revaluation did not impact earnings.

Net revenue increased quarter-over-quarter primarily as a result of favorable sales growth, including volume in the unbilled period, and the absence of regulatory charges recorded in fourth quarter 2016.

On a weather-adjusted basis, billed sales increased 3.2 percent, including 0.4 percent and 0.6 percent for residential and commercial billed sales, respectively.  Industrial billed sales volume increased 7.0 percent with higher sales to both new and expansion customers as well as existing customers. The increase was driven largely by the chlor-alkali and primary metals segments. Sales to petroleum refining and industrial gases customers were also higher.

Utility non-fuel O&M increased quarter-over-quarter, driven by higher expenses for nuclear operations. In addition, other income was higher period-over-period due to AFUDC-equity funds and realized earnings on decommissioning trust funds.

For fourth quarter 2017, Parent & Other reported a loss of $(6 million), or (4) cents per share, on an as-reported basis and $(58 million), or (33) cents per share, on an operational basis. This compared to a fourth quarter 2016 loss of $(57 million), or (32) cents per share, on an as-reported basis and an operational basis.

As-reported results for 2017 reflected a reduction in income tax expense of $52 million primarily for the revaluation of certain consolidated deferred tax assets, which resulted from tax reform.  This was considered a special item and excluded from operational earnings.

On a combined basis, the Utility, Parent & Other (non-GAAP) operational view contributed 41 cents to consolidated EPS in fourth quarter 2017, compared to 35 cents in fourth quarter 2016. On an adjusted basis, excluding special items and normalizing weather and income taxes, Utility, Parent & Other contributed 48 cents in fourth quarter 2017 to consolidated EPS, compared to 27 cents in fourth quarter 2016.

For full year 2017, the Utility business earned net income attributable to Entergy Corporation of $762 million, or $4.22 per share, on an as-reported basis, and earnings of $942 million, or $5.22 per share, on an operational basis.  This compared to full year 2016 earnings of $1,134 million, or $6.34 per share, on both an as-reported basis and an operational basis. As-reported results for 2017 included an increase in income tax expense, which resulted from tax reform described above.  This was considered a special item and excluded from operational earnings. 

Utility net revenue increased due partly to new rate actions to recover investments that benefit customers. The effects of weather were negative year-over-year, but were partially offset by positive weather-adjusted sales growth. Operating expenses also increased. Results in 2016 included an income tax item for resolution of previous positions. 

For 2017, Parent & Other reported a loss of $(176 million), or (97) cents per share, on an as-reported basis and $(228 million), or ($1.26) per share, on an operational basis. This compared to a 2016 loss of $(223 million), or ($1.24) per share, on an as-reported basis and an operational basis. As-reported results for 2017 included a decrease in income tax expense, which resulted from tax reform described above.  This was considered a special item and excluded from operational earnings. 

On a combined basis, the Utility, Parent & Other operational view contributed $3.96 to 2017 consolidated EPS, compared to $5.10 in 2016. On an adjusted basis, normalizing weather and income taxes, Utility, Parent & Other contributed $4.57 to 2017 consolidated EPS, compared to $4.38 in 2016.

Appendix C contains additional details on Utility financial and operating measures, including reconciliation for non-GAAP Utility, Parent & Other adjusted earnings and EPS.

Entergy Wholesale Commodities Results

For fourth quarter 2017, EWC recorded a loss attributable to Entergy Corporation of $(425 million), or $(2.36) per share, on an as-reported basis and earned $63 million, or 35 cents per share, on an operational basis.  This compared to a fourth quarter 2016 loss of $(1,832 million), or $(10.23) per share, on an as-reported basis and a loss of $(8 million), or (4) cents per share, on an operational basis.

The fourth quarter 2017 as-reported loss reflected the write-down of net deferred tax assets totaling $(397 million) as a result of tax reform.  Both periods also reflected impairments and other expenses recorded as a result of strategic decisions for the wholesale business. These items were considered special items and excluded from operational earnings.

The sale of FitzPatrick at the end of first quarter 2017 affected period-over-period variances for multiple line items. In fourth quarter 2016, the plant contributed a (15) cent loss to as-reported EPS and an (11) cent loss to operational EPS.

Excluding FitzPatrick, quarterly earnings increased.  The most significant driver was higher realized earnings on decommissioning trust funds.  

For the full year, in 2017 EWC recorded a loss attributable to Entergy Corporation of $(175 million), or (97) cents per share, on an as-reported basis and earnings of $586 million, or $3.24 per share, on an operational basis. For 2016, EWC reported a loss of $(1,495 million), or $(8.36) per share, on an as-reported basis and earnings of $360 million, or $2.01 per share, on an operational basis.  As-reported losses reflected the write-down of net deferred tax assets in 2017 and impairments and other expenses recorded as a result of strategic decisions for the wholesale business in both periods. These items were considered special items and excluded from operational earnings.

The sale of FitzPatrick at the end of first quarter 2017 affected year-over-year variances for multiple line items. In 2017, the plant contributed EPS of 23 cents to as-reported results and a (4) cent loss to operational EPS. In 2016, the plant contributed a (21) cent loss to as-reported EPS and a (1) cents loss to operational EPS.

Excluding FitzPatrick, both years included income tax items which increased EPS $2.07 in second quarter 2017 and $1.33 in second quarter 2016. Results in both periods also reflected the impacts of previous impairments, specifically lower fuel and refueling outage expenses.  In addition, 2017 reflected higher realized earnings on decommissioning trusts as well as higher decommissioning expense primarily from the establishment of decommissioning liabilities at Indian Point 3 in August 2016.

Appendix D contains additional details on EWC financial and operating measures, including the calculation of EWC operational adjusted EBITDA (non-GAAP).

Earnings Guidance

Entergy initiated its 2018 operational earnings guidance range of $6.25 to $6.85 per share and Utility, Parent & Other adjusted guidance range of $4.50 to $4.90 per share. This assumes balanced regulatory treatment for the recently enacted tax reform legislation. See webcast presentation slides for additional details.

The company has provided 2018 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 2018. 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 $(2.35) per share in 2018. 

Earnings Teleconference

A teleconference will be held at 9:00 a.m. Central Time on Friday, Feb. 23, 2018, 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 3691689, 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 March 2, 2018, by dialing 855-859-2056, conference ID 3691689. 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 $11 billion and more than 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.

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.  The methodologies employed to determine the normalized weather and income tax expense adjustments, each of which is further described in this release, involve estimations and the judgement of management.

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 for 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 operations.

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 ratio, excluding securitization debt; and 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 2018 earnings guidance; its current financial and operational outlook; impacts of tax reform legislation on earnings, cash flow, credit metrics, credit ratings, financing plans, assumed regulatory treatment, and valuation of deferred tax assets and liabilities; 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 (1) 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 and (2) implementation of the ratemaking effects of changes in law; (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.

Fourth Quarter 2017 Earnings Release Appendices and Financial Statements

Appendices

Appendices are presented in this section as follows:

A: Consolidated Results and Special Items

Appendix A-1 provides a comparative summary of consolidated earnings, including a reconciliation of as-reported earnings (GAAP) to operational earnings (non-GAAP).

Appendix A-1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures

Fourth 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)


Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

(After-tax, $ in millions)







Earnings







Utility

(47.4)

120.4

(167.8)

761.6

1,134.2

(372.6)

Parent & Other

(6.3)

(57.1)

50.8

(175.5)

(222.5)

47.1

EWC

(425.3)

(1,832.3)

1,407.0

(174.5)

(1,495.3)

1,320.8

Consolidated

(479.1)

(1,769.1)

1,290.0

411.6

(583.6)

995.2








Less special items







Utility

(180.7)

-

(180.7)

(180.7)

-

(180.7)

Parent & Other

52.1

-

52.1

52.1

-

52.1

EWC

(488.1)

(1,824.6)

1,336.5

(760.0)

(1,855.3)

1,095.2

Consolidated

(616.7)

(1,824.6)

1,207.9

(888.6)

(1,855.3)

966.7








Operational (non-GAAP)







Utility

133.2

120.4

12.8

942.3

1,134.2

(192.0)

Parent & Other

(58.5)

(57.1)

(1.3)

(227.6)

(222.5)

(5.1)

EWC

62.8

(7.7)

70.6

585.5

360.0

225.6

Consolidated

137.6

55.5

82.1

1,300.2

1,271.7

28.5

Estimated weather in billed sales

11.3

19.1

(7.8)

(78.6)

11.1

(89.7)








Diluted average number of common shares outstanding (in millions)

180.3

179.1


180.5

178.9









(After-tax, per share in $) (a)







Earnings







Utility

(0.26)

0.67

(0.93)

4.22

6.34

(2.12)

Parent & Other

(0.04)

(0.32)

0.28

(0.97)

(1.24)

0.27

EWC

(2.36)

(10.23)

7.87

(0.97)

(8.36)

7.39

Consolidated

(2.66)

(9.88)

7.22

2.28

(3.26)

5.54








Less special items







Utility

(1.00)

-

(1.00)

(1.00)

-

(1.00)

Parent & Other

0.29

-

0.29

0.29

-

0.29

EWC

(2.71)

(10.19)

7.48

(4.21)

(10.37)

6.16

Consolidated

(3.42)

(10.19)

6.77

(4.92)

(10.37)

5.45








Operational (non-GAAP)







Utility

0.74

0.67

0.07

5.22

6.34

(1.12)

Parent & Other

(0.33)

(0.32)

(0.01)

(1.26)

(1.24)

(0.02)

EWC

0.35

(0.04)

0.39

3.24

2.01

1.23

Consolidated

0.76

0.31

0.45

7.20

7.11

0.09

Estimated weather in billed sales

0.06

0.11

(0.05)

(0.44)

0.06

(0.50)








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 common shares outstanding for 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

Fourth Quarter and Year-to-Date 2017 vs. 2016

($ in millions)


Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

Utility

934

783

151

2,939

2,861

78

Parent & Other

(134)

53

(187)

(452)

(108)

(344)

EWC

111

(90)

201

137

246

(109)

Total OCF

911

746

164

2,624

2,999

(375)








Calculations may differ due to rounding

OCF increased quarter-over-quarter, due largely to increased collections for fuel and purchased power cost recovery at the Utility.

OCF decreased year-over-year, driven in part by lower EWC operational net revenue and higher refueling outage costs at both EWC and the Utility. Other contributing factors included higher severance and retention payments at EWC, as well as lower DOE litigation awards for spent nuclear fuel storage costs and unfavorable weather at the Utility.  Increased collections for fuel and purchased power cost recovery at the Utility and lower income tax payments partially offset the decrease.

For both the quarter and the full year, intercompany income tax payments contributed to the line of business variances.

Appendix A-3 and Appendix A-4 list special items by business. Amounts are shown on both a earnings and EPS. 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)

Fourth Quarter and Year-to-Date 2017 vs. 2016


Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

(Pre-tax except for income tax effects and total, $ in millions)

Utility







Tax reform

(180.7)

-

(180.7)

(180.7)

-

(180.7)

  Total Utility

(180.7)

-

(180.7)

(180.7)

-

(180.7)








Parent & Other







Tax reform

52.1

-

52.1

52.1

-

52.1

  Total Parent & Other

52.1

-

52.1

52.1

-

52.1








EWC







Items associated with decisions to close or sell EWC nuclear plants

(140.6)

(2,828.5)

2,687.9

(643.7)

(2,909.8)

2,266.2

Gain on the sale of FitzPatrick

-

-

-

16.3

-

16.3

DOE litigation awards

-

-

-

-

33.8

(33.8)

Income tax effect on adjustments above (b)

49.2

1,003.9

(954.7)

219.6

1,020.7

(801.1)

Income tax benefit resulting from FitzPatrick transaction

-

-

-

44.5

-

44.5

Tax reform

(396.7)

-

(396.7)

(396.7)

-

(396.7)

  Total EWC

(488.1)

(1,824.6)

1,336.5

(760.0)

(1,855.3)

1,095.2








Total special items

(616.7)

(1,824.6)

1,207.9

(888.6)

(1,855.3)

966.7








(After-tax, per share in $) (c)







Utility







Tax reform

(1.00)

-

(1.00)

(1.00)

-

(1.00)

  Total Utility

(1.00)

-

(1.00)

(1.00)

-

(1.00)








Parent & Other







Tax reform

0.29

-

0.29

0.29

-

0.29

  Total Parent & Other

0.29

-

0.29

0.29

-

0.29








EWC







Items associated with decisions to close or sell EWC nuclear plants

(0.51)

(10.19)

9.68

(2.32)

(10.49)

8.17

Gain on the sale of FitzPatrick

-

-

-

0.06

-

0.06

DOE litigation awards

-

-

-

-

0.12

(0.12)

Income tax benefit resulting from FitzPatrick transaction

-

-

-

0.25

-

0.25

Tax reform

(2.20)

-

(2.20)

(2.20)

-

(2.20)

  Total EWC

(2.71)

(10.19)

7.48

(4.21)

(10.37)

6.16








Total special items

(3.42)

(10.19)

6.77

(4.92)

(10.37)

5.45








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 common shares outstanding for the period.





Appendix A-4: Special Items by Income Statement Line Item (shown as positive/(negative) impact on earnings)

Fourth Quarter and Year-to-Date 2017 vs. 2016

(Pre-tax except for Income taxes and total, $ in millions)


Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

Utility







Net revenue

55.5

-

55.5

55.5

-

55.5

Income taxes (d)

(236.2)

-

(236.2)

(236.2)

-

(236.2)

  Total Utility

(180.7)

-

(180.7)

(180.7)

-

(180.7)








Parent & Other







Income taxes (d)

52.1

-

52.1

52.1

-

52.1

  Total Parent & Other

52.1

-

52.1

52.1

-

52.1








EWC







Net revenue

-

33.3

(33.3)

91.0

40.7

50.3

Non-fuel O&M

(22.3)

(57.5)

35.2

(201.3)

(75.6)

(125.7)

Asset write-off and impairments

(116.8)

(2,802.5)

2,685.7

(538.4)

(2,835.6)

2,297.3

Taxes other than income taxes

(1.6)

(1.8)

0.2

(9.6)

(5.5)

(4.1)

Gain on sale of assets

-

-

-

16.3

-

16.3

Miscellaneous net (other income)

-

-

-

14.6

-

14.6

Income taxes (d)

(347.4)

1,003.9

(1,351.3)

(132.7)

1,020.7

(1,153.4)

  Total EWC

(488.1)

(1,824.6)

1,336.5

(760.0)

(1,855.3)

1,095.2








Total special items (after-tax)

(616.7)

(1,824.6)

1,207.9

(888.6)

(1,855.3)

966.7








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, as well as tax adjustments as a result of tax reform. The year-to-date 2017 period also includes the income tax benefit which resulted from the FitzPatrick transaction.

B: Earnings 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)

Fourth Quarter 2017 vs. 2016

(After-tax, per share in $)


Utility


Parent & Other


EWC


Consolidated


As-
Reported

Opera-
tional


As-
Reported

Opera-
tional


As-

Reported

Opera-
tional


As-

Reported

Opera-

tional

2016 earnings

0.67

0.67


(0.32)

(0.32)


(10.23)

(0.04)


(9.88)

0.31

Net revenue

0.45

0.26

(f)

-

-


(0.19)

(0.07)

(g)

0.26

0.19

Non-fuel O&M

(0.11)

(0.11)

(h)

(0.01)

(0.01)


0.32

0.19

(i)

0.20

0.07

Asset write-offs and impairments

-

-


-

-


9.67

-

(j)

9.67

-

Decommissioning expense

0.01

0.01


-

-


(0.01)

(0.01)


-

-

Taxes other than income taxes

(0.01)

(0.01)


-

-


-

-


(0.01)

(0.01)

Depreciation/amortization exp.

(0.03)

(0.03)


-

-


0.03

0.03


-

-

Other income (deductions)?other

0.06

0.06

(k)

0.01

0.01


0.22

0.22

(l)

0.29

0.29

Interest exp. and other charges

(0.02)

(0.02)


-

-


-

-


(0.02)

(0.02)

Income taxes ? other

(1.28)

(0.09)

(m)

0.28

(0.01)

(n)

(2.17)

0.03

(o)

(3.17)

(0.07)

2017 earnings

(0.26)

0.74


(0.04)

(0.33)


(2.36)

0.35


(2.66)

0.76













Appendix B-2: As-Reported and Operational EPS Variance Analysis (e)

Year-to-Date 2017 vs. 2016

(After-tax, per share in $)


Utility


Parent & Other


EWC


Consolidated


As-
Reported

Opera-
tional


As-
Reported

Opera-
tional


As-

Reported

Opera-
tional


As-

Reported

Opera-

tional

2016 earnings

6.34

6.34


(1.24)

(1.24)


(8.36)

2.01


(3.26)

7.11

Net revenue

0.48

0.29

(f)

-

-


(0.27)

(0.45)

(g)

0.21

(0.16)

Non-fuel O&M

(0.46)

(0.46)

(h)

(0.02)

(0.02)


0.19

0.65

(i)

(0.29)

0.17

Asset write-offs and impairments

-

-


-

-


8.29

-

(j)

8.29

-

Decommissioning expense

0.01

0.01


-

-


(0.29)

(0.29)

(p)

(0.28)

(0.28)

Taxes other than income taxes

(0.14)

(0.14)

(q)

-

-


0.06

0.07

(r)

(0.08)

(0.07)

Depreciation/amortization exp.

(0.17)

(0.17)

(s)

-

-


0.02

0.02


(0.15)

(0.15)

Gain on sale of assets

-

-


-

-


0.06

-

(t)

0.06

-

Other income (deductions)?other

0.22

0.22

(k)

0.01

0.01


0.48

0.43

(l)

0.71

0.66

Interest exp. and other charges

0.03

0.03


(0.02)

(0.02)


-

-


0.01

0.01

Income taxes ? other

(2.08)

(0.89)

(m)

0.29

-

(n)

(1.12)

0.83

(o)

(2.91)

(0.06)

Preferred dividend requirements

0.03

0.03


-

-


-

-


0.03

0.03

Share effect

(0.04)

(0.04)


0.01

0.01


(0.03)

(0.03)


(0.06)

(0.06)

2017 earnings

4.22

5.22


(0.97)

(1.26)


(0.97)

3.24


2.28

7.20













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 common shares outstanding for the period; 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 a regulatory credit of approximately $56 million as a result of tax reform (classified as a special item and offset in income tax expense).  The increases reflected higher weather-adjusted sales volume, including volume in the unbilled period, as well as a regulatory charge recorded in fourth quarter 2016 for the Waterford 3 replacement steam generator settlement. Rate changes including E-AR's 2017 FRP and E-TX's TCRF, the second quarter 2016 regulatory charge arising from tax sharing agreements and the first quarter 2016 regulatory charge at E-AR for the FERC opportunity sales order contributed to the year-to-date variance. The increases in both periods were partially offset by the effects of weather.                                

(g)

The current quarter and year-to-date decreases reflected lower volume for nuclear assets, including the absence of FitzPatrick after it was sold in first quarter 2017, partially offset by lower fuel expense (due to impairments). The as-reported variances also reflected cost reimbursements from the buyer related to the FitzPatrick sale (classified as a special item and offset in non-fuel O&M).

(h)

The current quarter and year-to-date decreases reflected higher costs for nuclear operations, higher vegetation maintenance costs, and increased compensation and benefits expense.  This was partly offset by lower fossil-fueled generation expense. The year-to-date decrease also reflected the first quarter 2016 $18 million (pre-tax) cost deferral at E-AR for previously-expensed costs related to post Fukushima and flood barrier compliance, partially offset by lower regulatory compliance spending at ANO.

(i)

The current quarter and year-to-date increases were due to the sale of FitzPatrick in first quarter 2017, as well as lower refueling outage expenses (due to impairments).  This was partially offset by DOE litigation awards in fourth quarter 2016 in connection with spent nuclear fuel storage costs. Cost reimbursements from the buyer related to the FitzPatrick sale (classified as a special item and offset in net revenue) also contributed. The year-to-date as-reported increase was also partially offset by higher severance and retention expenses which resulted from decisions to close or sell EWC's nuclear plants and DOE litigation awards in second quarter 2016, a portion of the amount (12 cents) was considered a special item.

(j)

The as-reported current quarter and year-to-date increases reflected lower impairment charges for the EWC nuclear plants. Fourth quarter 2016 included significant impairment charges and related write-offs for Indian Point and Palisades.

(k)

The current quarter and year-to-date increases reflected higher AFUDC-equity funds and higher realized gains on decommissioning trust fund investments (substantially offset in net revenue).

(l)

The current quarter and year-to-date increases reflected higher realized gains on decommissioning trust fund investments. 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).



Utility As-Reported Net Revenue

Variance Analysis

2017 vs. 2016 ($ EPS)


Fourth Quarter

Year-to-Date

Estimated weather in billed sales

(0.05)

(0.50)

Volume/unbilled

0.18

0.29

Retail electric price

0.01

0.23

Regulatory sharing

-

0.06

Regulatory charges

0.10

0.13

Regulatory credit*

0.19

0.19

Other

0.02

0.08

Total

0.45

0.48

*Considered a special item and excluded from operational

   earnings.


(m)

The current quarter and year-to-date decreases reflected a write-down of certain tax assets totaling $180.7 million as a result of tax reform (classified as a special item). The year-to-date decrease also included 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).

(n)

The current quarter and year-to-date as-reported increases reflected a write-down of certain tax assets totaling $52.1 million as a result of tax reform (classified as a special item).

(o)

The current quarter as-reported decrease reflected reflected the write-down of certain tax assets totaling $396.7 million as a result of tax reform (classified as a special item). The year-to-date as-reported decrease also 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). The year-to-date operational increase also reflected 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.

(p)

The year-to-date decrease 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 fourth quarter 2016 also contributed to the decrease.

(q)

The year-to-date decrease was due largely to higher franchise and ad valorem taxes.

(r)

The year-to-date increase was due largely to the lower ad valorem and employment taxes resulting from absence of the FitzPatrick plant, sold on March 31, 2017.

(s)

The year-to-date decrease was due largely to additions to plant in service.  Also contributing was a depreciation expense reduction in third quarter 2016 which resulted from DOE litigation awards related to spent nuclear fuel storage costs.

(t)

The year-to-date as-reported increase was due to a gain on the sale of FitzPatrick (classified as a special item).

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

Fourth Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for details on special items)


Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

($ in millions)







Utility earnings

(47.4)

120.4

(167.8)

761.6

1,134.2

(372.6)

Parent & Other earnings (loss)

(6.3)

(57.1)

50.8

(175.5)

(222.5)

47.0

UP&O earnings (loss)

(53.8)

63.3

(117.0)

586.1

911.7

(325.6)








Less:







Special items

(128.5)

-

(128.5)

(128.5)

-

(128.5)








Estimated weather

18.3

31.0

(12.7)

(127.8)

18.1

(145.9)

Tax effect of estimated weather (u)

(7.0)

(12.0)

5.0

49.2

(7.0)

56.2

Estimated weather (after-tax)

11.3

19.1

(7.8)

(78.6)

11.1

(89.7)








Customer sharing

-

-

-

-

(16.1)

16.1

Tax effect of customer sharing (u)

-

-

-

-

6.2

(6.2)

Other income tax items

(22.3)

(4.9)

(17.3)

(31.0)

126.9

(157.9)

Tax items, net of customer sharing

(22.3)

(4.9)

(17.3)

(31.0)

117.0

(147.9)








UP&O adjusted earnings

85.7

49.2

36.6

824.2

783.6

40.6








(After-tax, per share in $) (v)







Utility earnings

(0.26)

0.67

(0.93)

4.22

6.34

(2.12)

Parent & Other earnings (loss)

(0.04)

(0.32)

0.28

(0.97)

(1.24)

0.27

UP&O earnings (loss)

(0.30)

0.35

(0.65)

3.25

5.10

(1.85)








Less:







Special items

(0.71)

-

(0.71)

(0.71)

-

(0.71)

Estimated weather

0.06

0.11

(0.05)

(0.44)

0.06

(0.50)

Other income tax items, net of customer sharing

(0.12)

(0.03)

(0.09)

(0.17)

0.66

(0.82)

UP&O adjusted earnings

0.48

0.27

0.21

4.57

4.38

0.18








Calculations may differ due to rounding



(u)

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.

(v)

Per share amounts are calculated by dividing the corresponding line item in the chart above by the diluted average number of common shares outstanding for the period.

Appendix C-2 provides a comparative summary of Utility operating and financial measures.

Appendix C-2: Utility Operating and Financial Measures

Fourth Quarter and Year-to-Date 2017 vs. 2016


Fourth Quarter

Year-to-Date



2017

2016

%

Change

% Weather
Adjusted (w)

2017

2016

%

Change

% Weather
Adjusted (w)


GWh billed










Residential

8,024

8,077

(0.7)

0.4

33,834

35,112

(3.6)

0.9


Commercial

7,150

7,259

(1.5)

0.6

28,745

29,197

(1.5)

0.9


Governmental

627

635

(1.3)

(1.3)

2,511

2,547

(1.4)

(0.8)


Industrial

11,940

11,158

7.0

7.0

47,769

45,739

4.4

4.4


  Total retail sales

27,741

27,129

2.3

3.2

112,859

112,595

0.2

2.3


Wholesale

3,295

1,602

105.7


11,550

11,054

4.5



  Total sales

31,036

28,731

8.0


124,409

123,649

0.6













Number of electric retail customers










Residential





2,466,671

2,452,686

0.6



Commercial





354,189

352,147

0.6



Governmental





17,828

17,731

0.5



Industrial





46,193

46,252

(0.1)



  Total retail customers





2,884,881

2,868,816

0.6













As-Reported net revenue ($ in millions)

1,553

1,421

9.3


6,318

6,179

2.2



Operational net revenue ($ in millions)

1,498

1,421

5.4


6,263

6,179

1.3



Non-fuel O&M per MWh

$23.66

$24.41

(3.1)


$21.08

$20.12

4.8













Calculations may differ due to rounding


(w) 

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

Fourth Quarter and Year-to-Date 2017 vs. 2016

($ in millions)

Fourth Quarter

Year-to-Date


2017

2016

Change

2017

2016

Change

Net income (loss)

(425)

(1,832)

1,407

(172)

(1,493)

1,321

Add back: interest expense

6

5

1

24

23

1

Add back: income taxes

361

(1,016)

1,377

(146)

(1,192)

1,046

Add back: depreciation and amortization

36

45

(9)

193

200

(7)

Subtract: interest and investment income

81

21

60

224

108

116

Add back: decommissioning expense

60

58

2

255

175

80

Adjusted EBITDA (non-GAAP)

(43)

(2,761)

2,718

(71)

(2,396)

2,325

Add back pre-tax special items for:







Items associated with decisions to close or sell EWC nuclear plants

141

2,829

(2,688)

644

2,910

(2,266)

Gain on the sale of FitzPatrick

-

-

-

(16)

-

(16)

DOE litigation awards

-

-

-

-

(34)

34

Operational adjusted EBITDA (non-GAAP)

98

68

30

557

480

77








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

Fourth Quarter and Year-to-Date 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP measures)


Fourth Quarter

Year-to-Date


2017

2016

% Change

2017

2016

% Change

Owned capacity (MW) (x)




3,962

4,800

(17.5)

GWh billed

7,885

9,397

(16.1)

30,501

35,881

(15.0)

As-reported net revenue ($ in millions)

333

387

(14.0)

1,469

1,542

(4.7)

Operational net revenue (non-GAAP) ($ in millions)

333

353

(5.7)

1,378

1,502

(8.3)








EWC Nuclear Fleet







Capacity factor

93%

91%

2.2

83%

87%

(4.6)

GWh billed

7,317

8,881

(17.6)

28,178

33,551

(16.0)

Production cost per MWh

$18.73

$23.00

(18.6)

$18.70

$22.93

(18.4)

Average energy/capacity revenue per MWh (y)

$45.33

$42.66

6.3

$50.04

$47.31

5.8

As-reported net revenue ($ in millions)

327

382

(14.4)

1,456

1,533

(5.0)

Operational net revenue (non-GAAP) ($ in millions)

327

349

(6.3)

1,365

1,492

(8.5)

Refueling outage days







FitzPatrick

-

-


42

-


Indian Point 2

-

-


-

102


Indian Point 3

-

-


66

-


Palisades

-

-


27

-


Pilgrim

-

-


43

-











(x)

FitzPatrick (838 MW) was sold on 3/31/17.

(y)

Average energy and capacity revenue per MWh excluding FitzPatrick was $44.85 in fourth quarter 2016, $50.05 in year-to-date 2017 and $51.26 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.

Appendix E: GAAP and Non-GAAP Financial Measures

Fourth Quarter 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP financial measures)



For 12 months ending December 31

2017

2016

Change

GAAP Measures




ROIC ? as-reported

3.4%

(0.7)%

4.1%

ROE ? as-reported

5.1%

(6.7)%

11.8%

Book value per share

$44.28

$45.12

$(0.84)

End of period shares outstanding (in millions)

180.5

179.1

1.4

Non-GAAP Measures




ROIC ? operational

7.1%

7.2%

(0.1)%

ROE ? operational

16.2%

14.7%

1.5%





As of December 31 ($ in millions)

2017

2016

Change

GAAP Measures




Cash and cash equivalents

781

1,188

(407)

Revolver capacity

4,174

3,720

454

Commercial paper

1,467

344

1,123

Total debt

16,677

15,275

1,402

Securitization debt

545

661

(116)

Debt to capital

67.1%

64.8%

2.3%

Off-balance sheet liabilities:




Debt of joint ventures ? Entergy's share

67

72

(5)

Leases ? Entergy's share

429

397

32

Power purchase agreements accounted for as leases

136

166

(30)

Total off-balance sheet liabilities

632

635

(3)

Non-GAAP Financial Measures




Debt to capital, excluding securitization debt

66.3%

63.8%

2.5%

Gross liquidity

4,955

4,908

47

Net debt to net capital, excluding securitization debt

65.2%

61.8%

3.4%

Parent debt to total debt, excluding securitization debt

21.9%

19.8%

2.1%

Debt to operational adjusted EBITDA, excluding securitization debt

4.8x

4.1x

0.7x

Operational FFO to debt, excluding securitization debt

15.9%

18.8%

(2.9)%





F: Definitions and 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 revenues 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 revenues 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 by EWC

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), Indian Point 2 (April 30, 2020), Indian Point 3 (April 30, 2021) and Palisades (May 31, 2022)

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), Indian Point 2 (April 30, 2020), Indian Point 3 (April 30, 2021) and Palisades (May 31, 2022)

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

ROE ? as-reported

12-months rolling net income attributable to Entergy Corporation divided by average common equity

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

Securitization debt

Debt associated with securitization bonds issued to recover storm costs from hurricanes Rita, Ike and Gustav at E-TX and Hurricane Isaac at E-NO; the 2009 ice storm at E-AR and investment recovery of costs associated with the cancelled Little Gypsy repowering project at E-LA

Total debt

Sum of short-term and long-term debt, notes payable and commercial paper and capital leases on the balance sheet






Appendix F-1: Definitions

Financial Measures - Non-GAAP

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

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 ratio, 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

Gross liquidity

Sum of cash and revolver capacity

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

Operational adjusted EBITDA

Adjusted EBITDA excluding effects of special items

Operational EPS

As-reported EPS excluding special items

Operational FFO

FFO excluding the effects of special items

Operational FFO to debt ratio, excluding securitization debt

12-months rolling operational FFO as a percentage of end of period total debt excluding securitization debt

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

ROE ? operational

12-months rolling operational net income attributable to Entergy Corporation divided by average common equity

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

Utility, Parent & Other

Combines the Utility segment with Parent & Other, which is all of Entergy excluding the EWC segment



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

ALJ

Administrative Law Judge

MISO

Midcontinent Independent System Operator, Inc.

AMI

Advanced metering infrastructure

Moody's

Moody's Investor Service

ANO

Units 1 and 2 of Arkansas Nuclear One owned by E-AR (nuclear)

MPSC

Mississippi Public Service Commission

APSC

Arkansas Public Service Commission

MTEP

MISO Transmission Expansion Planning

ARO

Asset retirement obligation

Nelson 6

Unit 6 of Roy S. Nelson plant (coal)

CCGT

Combined cycle gas turbine

NEPOOL

New England Power Pool

CCNO

Council of the City of New Orleans, Louisiana

Ninemile 6

Ninemile Point Unit 6 (CCGT)

COD

Commercial operation date

Non-fuel O&M

Non-fuel operation and maintenance expense

CT

Simple cycle combustion turbine

NDT

Nuclear decommissioning trust

CZM

Coastal Zone Management

NOPS

New Orleans Power Station (reciprocating internal combustion engine/natural gas)

CWIP

Construction work in progress

NRC

Nuclear Regulatory Commission

DCRF

Distribution cost recovery factor

NYISO

New York Independent System Operator, Inc.

DOE

U.S. Department of Energy

NYPA

New York Power Authority

E-AR

Entergy Arkansas, Inc.

NYSE

New York Stock Exchange

E-LA

Entergy Louisiana, LLC

O&M

Operation and maintenance expense

E-MS

Entergy Mississippi, Inc.

OCF

Net cash flow provided by operating activities

E-NO

Entergy New Orleans, LLC

OpCo

Operating Company

E-TX

Entergy Texas, Inc.

OPEB

Other post-employment benefits

EBITDA

Earnings before interest, income taxes, depreciation and amortization

Palisades

Palisades Power Plant (nuclear)

ENVY

Entergy Nuclear Vermont Yankee

PSDAR

Post-Shutdown Decommissioning Activities Report

ESI

Entergy Services, Inc.

Pilgrim

Pilgrim Nuclear Power Station (nuclear)

EPS

Earnings per share

PPA

Power purchase agreement or purchased power agreement

ETR

Entergy Corporation

PUCT

Public Utility Commission of Texas

EWC

Entergy Wholesale Commodities

RFO

Refueling outage

FERC

Federal Energy Regulatory Commission

RFP

Request for proposals

FFO

Funds from operations

ROE

Return on equity

Firm LD

Firm liquidated damages

ROIC

Return on invested capital

FitzPatrick

James A. FitzPatrick Nuclear Power Plant (nuclear, sold March 31, 2017)

RPCE

Rough production cost equalization

FRP

Formula rate plan

RS Cogen

RS Cogen facility (CCGT cogen)

GAAP

U.S. generally accepted accounting principles

RSP

Rate Stabilization Plan (E-LA Gas)

Grand Gulf

Unit 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by SERI

S&P

Standard & Poor's

Indian Point 1
or IP1

Indian Point Energy Center Unit 1 (nuclear)

SEC

U.S. Securities and Exchange Commission

Indian Point 2
or IP2

Indian Point Energy Center Unit 2 (nuclear)

SERI

System Energy Resources, Inc.

Indian Point 3
or IP3

Indian Point Energy Center Unit 3 (nuclear)

SPDES

State Pollutant Discharge Elimination System

IPEC

Indian Point Energy Center (nuclear)

TCRF

Transmission cost recovery factor

ISO

Independent system operator

Union

Union Power Station (CCGT)

ISES

Independence Steam Electric Station (coal)

UP&O

Utility, Parent & Other



VPUC

Vermont Public Utility Commission



VY

Vermont Yankee Nuclear Power Station (nuclear)



WACC

Weighted-average cost of capital



Waterford 3

Unit No. 3 of the Waterford Steam Electric Station, 100% owned or leased by E-LA (nuclear)



WPEC

Washington Parish Energy Center (CT/natural gas)



WQC

Water Quality Certification

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 ? Utility and EWC Operational Net Revenue

($ in millions except where noted)


Fourth Quarter

Year-to-Date



2017

2016

2017

2016

Utility






As-reported Utility net revenue

(A)

1,553

1,421

6,318

6,179

Special Items included in net revenue:






   Tax reform


56

-

56

-

      Total special items included in net revenue

(B)

56

-

56

-

Operational Utility net revenue

(A-B)

1,498

1,421

6,263

6,179







EWC






As-reported EWC net revenue

(C)

333

387

1,469

1,542

Special items included in net revenue:






Items associated with decisions to close or sell EWC nuclear plants


-

33

91

41

Total special items included in net revenue

(D)

-

33

91

41

Operational net revenue (non-GAAP)

(C-D)

333

353

1,378

1,502







EWC Nuclear






As-reported EWC Nuclear net revenue

(E)

327

382

1,456

1,533

Special items included in EWC Nuclear net revenue:






Items associated with decisions to close or sell EWC nuclear plants


-

33

91

41

Total special items included in EWC nuclear net revenue

(F)

-

33

91

41

Operational EWC nuclear net revenue (non-GAAP)

(E-F)

327

349

1,365

1,492







Calculations may differ due to rounding



Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - ROIC, ROE

($ in millions except where noted)


Fourth Quarter



2017

2016

As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months

(A)

412

(584)

Preferred dividends


14

19

Tax effected interest expense


407

410

As-reported net income (loss) attributable to Entergy Corporation, rolling 12 months adjusted for preferred dividends and tax effected interest expense

(B)

833

(155)





Special items in prior quarters


(272)

(30)

Items associated with decisions to close or sell EWC nuclear plants


(91)

(1,825)

Tax reform


(525)

-

Total special items, rolling 12 months

(C)

(888)

(1,855)





Operational earnings, rolling 12 months adjusted for preferred dividends and tax effected interest expense (non-GAAP)

(B-C)

1,721

1,700





Operational earnings, rolling 12 months (non-GAAP)

(A-C)

1,300

1,271





Average invested capital

(D)

24,213

23,492





Average common equity

(E)

8,037

8,669





ROIC ? as-reported

(B/D)

3.4%

(0.7%)

ROIC ? operational

[(B-C)/D]

7.1%

7.2%

ROE ? as-reported

(A/E)

5.1%

(6.7%)

ROE ? operational

[(A-C)/E]

16.2%

14.7%





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)


Fourth Quarter



2017

2016

Total debt

(A)

16,677

15,275

Less securitization debt

(B)

545

661

Total debt, excluding securitization debt

(C)

16,132

14,614

Less cash and cash equivalents

(D)

781

1,188

Net debt, excluding securitization debt

(E)

15,351

13,426





Total capitalization

(F)

24,867

23,560

Less securitization debt

(B)

545

661

Total capitalization, excluding securitization debt

(G)

24,322

22,899

Less cash and cash equivalents

(D)

781

1,188

Net capital, excluding securitization debt

(H)

23,541

21,711





Debt to capital

(A/F)

67.1%

64.8%

Debt to capital, excluding securitization debt

(C/G)

66.3%

63.8%

Net debt to net capital, excluding securitization debt

(E/H)

65.2%

61.8%





Revolver capacity

(I)

4,174

3,720





Gross liquidity

(D+I)

4,955

4,908





Entergy Corporation notes:




Due September 2020


450

450

Due July 2022


650

650

Due September 2026


750

750

Total parent long-term debt

(J)

1,850

1,850

Revolver draw

(K)

210

700

Commercial paper

(L)

1,467

344

Total parent debt

(J)+(K)+(L)

3,527

2,894





Parent debt to total debt, excluding securitization debt

[((J)+(K)+(L))/(C)]

21.9%

19.8%





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)


Fourth Quarter



2017

2016

Total debt

(A)

16,677

15,275

Less securitization debt

(B)

545

661

Total debt, excluding securitization debt

(C)

16,132

14,614

As-reported consolidated net income (loss), rolling 12 months


425

(565)

Add back (rolling 12 months):




Interest expense


662

666

Income taxes


543

(817)

Depreciation and amortization


1,390

1,347

Regulatory charges (credits)


(132)

94

Decommissioning expense


406

327

Subtract (rolling 12 months):




 Securitization proceeds


146

132

 Interest and investment income


288

145

 AFUDC-equity funds


95

68

Adjusted EBITDA, rolling 12 months (non-GAAP)

(D)

2,765

707

Add back special items (rolling 12 months pre-tax):




 Items associated with decisions to close or sell EWC  nuclear plants


644

2,910

 Tax reform


(56)

-

 DOE litigation awards


-

(34)

 Gain on the sale of FitzPatrick


(16)

-

Operational adjusted EBITDA, rolling 12 months (non-GAAP)

(E)

3,337

3,583

Debt to operational adjusted EBITDA, excluding securitization debt

(C)/(E)

4.8x

4.1x

Net cash flow provided by operating activities, rolling 12 months

(F)

2,624

2,999

AFUDC-borrowed funds, rolling 12 months

(G)

(45)

(34)

Working capital items in net cash flow provided by operating activities (rolling 12 months):




Receivables


(98)

(97)

Fuel inventory


(3)

38

Accounts payable


102

174

Prepaid taxes and taxes accrued


34

(29)

Interest accrued


1

(7)

Other working capital accounts


(4)

31

Securitization regulatory charges


116

114

Total

(H)

148

224

FFO, rolling 12 months

(F)+(G)-(H)

2,431

2,741

Add back special items (rolling 12 months pre-tax):




Items associated with decisions to close or sell EWC nuclear plants


126

6

Operational FFO, rolling 12 months

(I)

2,557

2,747

Operational FFO to debt, excluding securitization debt

(I)/(C)

15.9%

18.8%





Calculations may differ due to rounding

 

 

SOURCE Entergy Corporation


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