NEW ORLEANS, Feb. 19, 2020 /PRNewswire/ -- Entergy
Corporation (NYSE: ETR) reported fourth quarter 2019 earnings per
share of $1.92 on an as-reported
basis and 68 cents on an adjusted
basis (non-GAAP). For the full year, the company reported
2019 earnings per share of $6.30 on
an as-reported basis and $5.40 on an
adjusted basis.
"We are reporting strong results for another very successful
year," said Entergy Chairman and Chief Executive Officer
Leo Denault. "The favorable turn in
weather in the second half of the year was a good opportunity for
us to take on additional stakeholder initiatives. The fundamentals
supporting our steady, predictable growth are strong and give us
confidence in our financial outlooks. And as we take our
business to the next level, we aspire to do even better."
Business highlights included the following:
- Entergy initiated 2020 adjusted EPS guidance of $5.45 to $5.75 and
affirmed 2021–2022 outlooks of $5.80
to $6.10 and $6.15 to $6.45,
respectively.
- Entergy Mississippi acquired Choctaw County Generating Station,
an 810-megawatt CCGT.
- Entergy Louisiana completed its Southwest Louisiana Improvement
Project (transmission).
- The APSC approved Entergy Arkansas' FRP settlement.
- Chicot Solar Energy Center, the largest solar project in
Arkansas, broke ground.
- Entergy was inducted in the Corporate Citizenship Hall of Fame
by the U.S. Chamber of Commerce Foundation Corporate Citizenship
Center.
- Entergy raised its dividend for the fifth consecutive
year.
Consolidated Earnings
(GAAP and Non-GAAP Measures)
Fourth Quarter and
Year-to-Date 2019 vs. 2018 (See Appendix A for reconciliation of
GAAP to non-GAAP measures and description of
adjustments)
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(After-tax, $ in
millions)
|
|
|
|
|
|
|
As-reported
earnings
|
385
|
(66)
|
451
|
1,241
|
849
|
393
|
Less
adjustments
|
248
|
(194)
|
442
|
177
|
(121)
|
298
|
Adjusted earnings
(non-GAAP)
|
137
|
128
|
9
|
1,064
|
970
|
94
|
Estimated
weather in billed sales
|
45
|
25
|
20
|
46
|
67
|
(21)
|
|
|
|
|
|
|
|
(After-tax, per share
in $)
|
|
|
|
|
|
|
As-reported
earnings
|
1.92
|
(0.36)
|
2.28
|
6.30
|
4.63
|
1.67
|
Less
adjustments
|
1.24
|
(1.06)
|
2.30
|
0.90
|
(0.66)
|
1.56
|
Adjusted earnings
(non-GAAP)
|
0.68
|
0.70
|
(0.02)
|
5.40
|
5.29
|
0.11
|
Estimated
weather in billed sales
|
0.22
|
0.13
|
0.09
|
0.23
|
0.37
|
(0.14)
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
|
Consolidated Results
For fourth quarter 2019, the company reported earnings of
$385 million, or $1.92 per share, on an as-reported basis, and
earnings of $137 million, or
68 cents per share, on an adjusted
basis. This compared to a fourth quarter 2018 loss of $(66 million), or (36)
cents per share, on an as-reported basis, and earnings of
$128 million, or 70 cents per share, on an adjusted basis.
For the full year, the company reported earnings of $1,241 million, or $6.30 per share, on an as-reported basis, and
earnings of $1,064 million, or
$5.40 per share, on an adjusted
basis. This compared to 2018 earnings of $849 million, or $4.63 per share, on an as-reported basis, and
earnings of $970 million, or
$5.29 per share, on an adjusted
basis.
Summary discussions by business are below. Additional details,
including information on OCF by business, are provided in Appendix
A. An analysis of quarterly and year-to-date variances by business
is provided in Appendix B.
Business Segment Results
Utility
For fourth quarter 2019, the Utility business reported earnings
attributable to Entergy Corporation of $271 million, or
$1.35 per share, on an as-reported
basis, and earnings of $229 million, or $1.14 per share, on an adjusted basis. This
compared to fourth quarter 2018 earnings of $388 million, or $2.12 per share, on an as-reported basis, and
earnings of $209 million, or $1.14 per share, on an adjusted basis.
Drivers for the quarter included:
- rate activity at E-AR, E-LA, E-MS, and E-TX;
- regulatory charges and provisions in fourth quarter 2018;
and
- a fourth quarter 2019 favorable income tax item (considered an
adjustment and excluded from adjusted earnings).
These drivers were partially offset by:
- lower retail sales volume;
- higher operating expenses (primarily depreciation and other
O&M);
- higher interest expense;
- a fourth quarter 2018 favorable income tax item, net of
customer sharing (considered an adjustment and excluded from
adjusted earnings); and
- a fourth quarter 2018 reversal of a tax reform accrual
(considered an adjustment and excluded from adjusted
earnings).
For full year 2019, the Utility business reported
earnings attributable to Entergy Corporation of
$1,411 million, or $7.16 per share, on an as-reported basis, and
earnings of $1,369 million, or
$6.95 per share, on an adjusted
basis. This compared to full year 2018 earnings of $1,483 million, or $8.09 per share, on an as-reported basis, and
$1,262 million, or $6.88 per share, on an adjusted basis. Drivers
for the full year included:
- rate activity at E-AR, E-LA, E-MS, and E-TX;
- regulatory charges and provisions in 2018; and
- a fourth quarter 2019 favorable income tax item (considered an
adjustment and excluded from adjusted earnings).
These drivers were partially offset by:
- lower retail sales volume, including less favorable
weather;
- higher operating expenses (primarily depreciation and other
O&M);
- higher interest expense;
- second and fourth quarter 2018 favorable income tax items, net
of customer sharing, (considered adjustments and excluded from
adjusted earnings); and
- a fourth quarter 2018 reversal of a tax reform accrual
(considered an adjustment and excluded from adjusted
earnings).
On a per share basis, both fourth quarter and full year 2019
results reflected higher common shares outstanding.
Appendix C contains additional details on Utility financial and
operating measures.
Parent & Other
For fourth quarter 2019, Parent & Other reported a
loss attributable to Entergy Corporation of $(103 million), or (51)
cents per share, on an as-reported basis, and a loss of
$(92 million), or (46) cents per share, on an adjusted basis. This
compared to a loss of $(81 million),
or (44) cents per share, on both an
as-reported and an adjusted basis in fourth quarter 2018. Drivers
for the quarter included:
- lower other income (deductions)–other due to the timing of a
charitable contribution; and
- a fourth quarter 2019 income tax item related to a valuation
allowance recorded on an interest expense deduction (the amount
related to the 2018 tax year was considered an adjustment and
excluded from adjusted earnings).
For the full year, Parent & Other reported a
loss attributable to Entergy Corporation of $(316 million), or $(1.60) per share, on an as-reported basis, and a
loss of $(305 million), or
$(1.55) per share, on an adjusted
basis. This compared to a full year 2018 loss of $(292 million), or $(1.59) per share, on both an as-reported and an
adjusted basis. The drivers for fourth quarter 2019 discussed above
were also the drivers for the full year.
On a per share basis, both fourth quarter and full year 2019
results reflected higher common shares outstanding.
Entergy Wholesale Commodities
For fourth quarter 2019, EWC reported earnings attributable
to Entergy Corporation of $217
million, or $1.08 per share,
on an as-reported basis. This compared to a fourth quarter 2018
loss attributable to Entergy Corporation of $(373 million), or $(2.04) per share, on an as-reported basis.
Drivers for the quarter included:
- higher gains on decommissioning trust funds;
- favorable income tax items recorded in fourth quarter
2019;
- lower asset write-offs, impairments and related charges as
compared to a year ago; and
- lower severance and retention expense, as well as lower O&M
expense due to the shutdown of Pilgrim.
These drivers were partially offset by lower revenue primarily
due to the shutdown of Pilgrim.
For the full year, EWC reported earnings attributable to
Entergy Corporation of $147 million,
or 74 cents per share, on an
as-reported basis. This compared to a full year 2018 loss
attributable to Entergy Corporation of $(343
million), or $(1.87) per
share, on an as-reported basis. Drivers for the year included:
- higher gains on decommissioning trust funds;
- lower asset write-offs, impairments and related charges as
compared to a year ago;
- lower severance and retention expense, as well as lower O&M
expense due to the shutdown of Pilgrim; and
- favorable income tax items in 2019 as compared to 2018.
These drivers were partially offset by lower revenue primarily
due to the shutdown of Pilgrim and higher nuclear refueling outage
expense.
On a per share basis, both fourth quarter and full year 2019
results reflected higher common shares outstanding.
Appendix D contains additional details on EWC financial and
operating measures, including reconciliation for non-GAAP EWC
adjusted EBITDA.
Earnings per Share Guidance
Entergy initiated its 2020 adjusted EPS guidance range of
$5.45 to $5.75. See webcast presentation slides for
additional details.
The company has provided 2020 earnings guidance with regard to
the non-GAAP measure of Entergy adjusted EPS. This measure excludes
from the corresponding GAAP financial measure the effect of
adjustments 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 adjustments that may occur during the periods. One such
adjustment will be the exclusion of EWC earnings from Entergy
adjusted EPS. We currently estimate that the contribution of EWC to
Entergy's as-reported EPS will be approximately (40) cents in 2020. These estimates are
subject to substantial uncertainty due to, among other things, the
potential effects of exiting the EWC business.
Earnings Teleconference
A teleconference will be held at 10:00
a.m. Central Time on Wednesday, February 19, 2020, 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 1253867, 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 news 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 February 26, 2020, by dialing 855-859-2056,
conference ID 1253867.
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 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
$11 billion and approximately 13,600
employees.
Entergy Corporation's common stock is listed on the New York
Stock Exchange and NYSE Chicago 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.
Entergy maintains a web page as part of its Investor Relations
website, entitled Regulatory and Other Information, which
provides investors with key updates of certain regulatory
proceedings and important milestones on the execution of its
strategy. While some of this information may be considered material
information, investors should not rely exclusively on this page for
all relevant company information.
For definitions of certain operating measures, as well as GAAP
and non-GAAP financial measures and abbreviations and acronyms used
in the earnings release materials, see Appendix F.
Non-GAAP Financial Measures
This news release contains non-GAAP financial measures, which
are generally numerical measures of a company's performance,
financial position, or cash flows that either exclude or include
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 news release of the non-GAAP financial measures to the most
directly comparable GAAP financial measures.
Entergy reports earnings using the non-GAAP measure of Entergy
adjusted earnings, which excludes the effect of certain
"adjustments," including the removal of the Entergy Wholesale
Commodities segment in light of the company's decision to exit the
merchant power business. Adjustments are unusual or non-recurring
items or events or other items or events that management believes
do not reflect the ongoing business of Entergy, such as the results
of the EWC segment, significant tax items, and other items such as
certain costs, expenses, or other specified items. In addition to
reporting GAAP consolidated earnings on a per share basis, Entergy
reports its adjusted earnings on a per share basis. These per share
measures represent the applicable earnings amount divided by the
diluted average number of common shares outstanding for the
period.
Management uses the non-GAAP financial measures of adjusted
earnings and adjusted earnings per share for, among other things,
financial planning and analysis; reporting financial results to the
board of directors, employees, stockholders, analysts, and
investors; and internal evaluation of financial performance.
Entergy believes that these non-GAAP financial measures provide
useful information to investors in evaluating the ongoing results
of Entergy's business, comparing period to period results, and
comparing Entergy's financial performance to the financial
performance of other companies in the utility sector.
Other non-GAAP measures, including adjusted EBITDA; adjusted
ROE; adjusted ROIC; gross liquidity; debt to capital, excluding
securitization debt; net debt to net capital, excluding
securitization debt; parent debt to total debt, excluding
securitization debt; FFO; FFO to debt, excluding securitization
debt; and FFO to debt, excluding securitization debt, return of
unprotected excess ADIT, and severance and retention payments
associated with exit of EWC, are measures Entergy uses internally
for management and board discussions and 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. In addition, other
financial measures including net income (or earnings), adjusted for
preferred dividends and tax-effected interest expense; return on
average invested capital; and return on average common equity are
included on both an adjusted and an as-reported basis. In each
case, the metrics defined as "adjusted" (other than EWC's adjusted
EBITDA) excludes the effect of adjustments as defined above. EWC's
adjusted EBITDA represents EWC's earnings before interest, taxes,
and depreciation and amortization, and also excludes
decommissioning expense.
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.
These non-GAAP financial measures should not be used to the
exclusion of GAAP financial measures. Investors are strongly
encouraged to review Entergy's consolidated financial statements
and publicly filed reports in their entirety and not to rely on any
single financial measure. Although certain of these measures
are intended to assist investors in comparing Entergy's performance
to other companies in the utility sector, 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
2020 earnings guidance; its current financial and operational
outlooks; 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) risks associated with
operating nuclear facilities, including plant relicensing,
operating, and regulatory costs and risks; (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; (i) the effects of
technological changes and changes in commodity markets, capital
markets, or economic conditions; and (j) impacts from a terrorist
attack, cybersecurity threats, data security breaches or other
attempts to disrupt Entergy's business or operations, and other
catastrophic events.
Fourth Quarter 2019 Earnings Release
Appendices and Financial Statements
Appendices
Appendices are presented in this section as
follows:
- A: Consolidated Results and Adjustments
- B: Earnings Variance Analysis
- C: Utility Financial and Operating Measures
- D: EWC Financial and Operating Measures
- E: Consolidated Financial Measures
- F: Definitions and Abbreviations and Acronyms
- G: Other GAAP to Non-GAAP Reconciliations
Financial Statements
Financial statements are
presented in this section.
A: Consolidated Results and Adjustments
Appendix A-1
provides a comparative summary of consolidated earnings, including
a reconciliation of as-reported earnings (GAAP) to adjusted
earnings (non-GAAP).
Appendix A-1:
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP
Measures
Fourth Quarter and
Year-to-Date 2019 vs. 2018 (See Appendix A-3 and Appendix A-4 for
details on adjustments)
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(After-tax, $ in
millions)
|
|
|
|
|
|
|
Earnings
(loss)
|
|
|
|
|
|
|
Utility
|
271
|
388
|
(117)
|
1,411
|
1,483
|
(73)
|
Parent &
Other
|
(103)
|
(81)
|
(22)
|
(316)
|
(292)
|
(24)
|
EWC
|
217
|
(373)
|
590
|
147
|
(343)
|
490
|
Consolidated
|
385
|
(66)
|
451
|
1,241
|
849
|
393
|
|
|
|
|
|
|
|
Less
adjustments
|
|
|
|
|
|
|
Utility
|
41
|
179
|
(137)
|
41
|
222
|
(180)
|
Parent &
Other
|
(11)
|
-
|
(11)
|
(11)
|
-
|
(11)
|
EWC
|
217
|
(373)
|
590
|
147
|
(343)
|
490
|
Consolidated
|
248
|
(194)
|
442
|
177
|
(121)
|
298
|
|
|
|
|
|
|
|
Adjusted earnings
(loss) (non-GAAP)
|
|
|
|
|
|
|
Utility
|
229
|
209
|
20
|
1,369
|
1,262
|
108
|
Parent &
Other
|
(92)
|
(81)
|
(11)
|
(305)
|
(292)
|
(14)
|
EWC
|
-
|
-
|
-
|
-
|
-
|
-
|
Consolidated
|
137
|
128
|
9
|
1,064
|
970
|
94
|
Estimated weather
in billed sales
|
45
|
25
|
20
|
46
|
67
|
(21)
|
|
|
|
|
|
|
|
Diluted average
number of common shares outstanding (in millions)
|
201
|
183
|
|
197
|
183
|
|
|
|
|
|
|
|
|
(After-tax, per share
in $) (a)
|
|
|
|
|
|
|
Earnings
(loss)
|
|
|
|
|
|
|
Utility
|
1.35
|
2.12
|
(0.77)
|
7.16
|
8.09
|
(0.93)
|
Parent &
Other
|
(0.51)
|
(0.44)
|
(0.07)
|
(1.60)
|
(1.59)
|
(0.01)
|
EWC
|
1.08
|
(2.04)
|
3.12
|
0.74
|
(1.87)
|
2.61
|
Consolidated
|
1.92
|
(0.36)
|
2.28
|
6.30
|
4.63
|
1.67
|
|
|
|
|
|
|
|
Less
adjustments
|
|
|
|
|
|
|
Utility
|
0.21
|
0.98
|
(0.77)
|
0.21
|
1.21
|
(1.00)
|
Parent &
Other
|
(0.05)
|
-
|
(0.05)
|
(0.05)
|
-
|
(0.05)
|
EWC
|
1.08
|
(2.04)
|
3.12
|
0.74
|
(1.87)
|
2.61
|
Consolidated
|
1.24
|
(1.06)
|
2.30
|
0.90
|
(0.66)
|
1.56
|
|
|
|
|
|
|
|
Adjusted earnings
(loss) (non-GAAP)
|
|
|
|
|
|
|
Utility
|
1.14
|
1.14
|
-
|
6.95
|
6.88
|
0.07
|
Parent &
Other
|
(0.46)
|
(0.44)
|
(0.02)
|
(1.55)
|
(1.59)
|
0.04
|
EWC
|
-
|
-
|
-
|
-
|
-
|
-
|
Consolidated
|
0.68
|
0.70
|
(0.02)
|
5.40
|
5.29
|
0.11
|
Estimated weather
in billed sales
|
0.22
|
0.13
|
0.09
|
0.23
|
0.37
|
(0.14)
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
(a)
|
Per share amounts are
calculated by dividing the corresponding earnings (loss) by the
diluted average number of common shares outstanding for the
period.
|
See Appendix B for detailed earnings variance analysis.
Appendix A-2 provides a comparative summary of OCF, by
business.
Appendix A-2:
Consolidated Operating Cash Flow
|
Fourth Quarter and
Year-to-Date 2019 vs. 2018
|
($ in
millions)
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Utility
|
677
|
699
|
(22)
|
2,974
|
2,693
|
281
|
Parent &
Other
|
(21)
|
(20)
|
(1)
|
(237)
|
(234)
|
(3)
|
EWC
|
43
|
(153)
|
196
|
80
|
(74)
|
154
|
Consolidated
|
699
|
526
|
173
|
2,817
|
2,385
|
432
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
|
OCF increased quarter-over-quarter due primarily to a lower
amount of unprotected excess ADIT returned to customers at the
Utility, as well as lower nuclear refueling outage spending and
severance and retention payments at EWC. Higher pension
contributions, largely at the Utility, partially offset the
quarterly increase.
OCF increased year-over-year due primarily to a lower amount of
unprotected excess ADIT returned to customers and increased
collections for fuel and purchased power cost recovery at the
Utility, as well as lower nuclear spending and asset retirement
obligation spending at EWC. Lower revenues and higher severance and
retention payments at EWC partially offset the annual increase.
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 adjustments by business.
Amounts are shown on both an earnings and an EPS basis. Adjustments
are included in as-reported earnings consistent with GAAP but are
excluded from adjusted earnings. As a result, adjusted earnings is
considered a non-GAAP measure.
Appendix A-3:
Adjustments by Driver (shown as positive/(negative) impact on
earnings or EPS)
|
Fourth Quarter and
Year-to-Date 2019 vs. 2018
|
(Pre-tax except for
Income taxes, Preferred dividend requirements of subsidiaries, and
Total; $ in millions)
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
(Pre-tax except for
income taxes, preferred dividend requirements of subsidiaries, and
totals; $ in millions)
|
|
|
|
|
|
|
Utility
|
|
|
|
|
|
|
Customer sharing
associated with internal restructuring
|
-
|
(40)
|
40
|
-
|
(40)
|
40
|
Income tax effect on
Utility adjustment above
|
-
|
10
|
(10)
|
-
|
10
|
(10)
|
Income tax benefit
from 2012 / 2013 IRS settlement
|
-
|
-
|
-
|
-
|
43
|
(43)
|
Income tax benefit
from internal restructuring
|
-
|
170
|
(170)
|
-
|
170
|
(170)
|
Tax reform
|
-
|
38
|
(38)
|
-
|
38
|
(38)
|
Reversal of income tax
valuation allowance
|
41
|
-
|
41
|
41
|
-
|
41
|
Total Utility
|
41
|
179
|
(137)
|
41
|
222
|
(180)
|
Parent &
Other
|
|
|
|
|
|
|
Income tax item
related to a valuation allowance for interest
deductibility
|
(11)
|
-
|
(11)
|
(11)
|
-
|
(11)
|
Total Parent & Other
|
(11)
|
-
|
(11)
|
(11)
|
-
|
(11)
|
EWC
|
|
|
|
|
|
|
Income before income
taxes
|
31
|
(474)
|
505
|
(12)
|
(610)
|
597
|
Income
taxes
|
187
|
102
|
85
|
161
|
269
|
(108)
|
Preferred dividend
requirements of subsidiaries
|
(1)
|
(1)
|
-
|
(2)
|
(2)
|
-
|
Total EWC
|
217
|
(373)
|
590
|
147
|
(343)
|
490
|
|
|
|
|
|
|
|
Total
adjustments
|
248
|
(194)
|
442
|
177
|
(121)
|
298
|
|
|
|
|
|
|
|
(After-tax, per share
in $) (b)
|
|
|
|
|
|
|
Utility
|
|
|
|
|
|
|
Customer sharing
associated with internal restructuring
|
-
|
(0.16)
|
0.16
|
-
|
(0.16)
|
0.16
|
Income tax benefit
from 2012 / 2013 IRS settlement
|
-
|
-
|
-
|
-
|
0.23
|
(0.23)
|
Income tax benefit
from internal restructuring
|
-
|
0.93
|
(0.93)
|
-
|
0.93
|
(0.93)
|
Tax reform
|
-
|
0.21
|
(0.21)
|
-
|
0.21
|
(0.21)
|
Reversal of income tax
valuation allowance
|
0.21
|
-
|
0.21
|
0.21
|
-
|
0.21
|
Total Utility
|
0.21
|
0.98
|
(0.77)
|
0.21
|
1.21
|
(1.00)
|
Parent &
Other
|
|
|
|
|
|
|
Income tax item
related to a valuation allowance for interest
deductibility
|
(0.05)
|
-
|
(0.05)
|
(0.05)
|
-
|
(0.05)
|
Total Parent & Other
|
(0.05)
|
-
|
(0.05)
|
(0.05)
|
-
|
(0.05)
|
EWC
|
|
|
|
|
|
|
Total EWC
|
1.08
|
(2.04)
|
3.12
|
0.74
|
(1.87)
|
2.61
|
|
|
|
|
|
|
|
Total
adjustments
|
1.24
|
(1.06)
|
2.30
|
0.90
|
(0.66)
|
1.56
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
(b)
|
Per share amounts are
calculated by dividing the corresponding earnings (loss) by the
diluted average number of common shares outstanding for the
period.
|
Appendix A-4:
Adjustments by Income Statement Line Item (shown as
positive/(negative) impact on earnings)
|
Fourth Quarter and
Year-to-Date 2019 vs. 2018
|
(Pre-tax except for
Income taxes, Preferred dividend, and totals; $ in
millions)
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Utility
|
|
|
|
|
|
|
Other regulatory
charges
|
-
|
(40)
|
40
|
-
|
(40)
|
40
|
Income
taxes
|
41
|
219
|
(177)
|
41
|
261
|
(220)
|
Total
Utility
|
41
|
179
|
(137)
|
41
|
222
|
(180)
|
Parent &
Other
|
|
|
|
|
|
|
Income
taxes
|
(11)
|
-
|
(11)
|
(11)
|
-
|
(11)
|
Total Parent
& Other
|
(11)
|
-
|
(11)
|
(11)
|
-
|
(11)
|
EWC
|
|
|
|
|
|
|
Operating
revenues
|
271
|
361
|
(90)
|
1,295
|
1,469
|
(174)
|
Fuel and fuel-related
expenses
|
(22)
|
(19)
|
(2)
|
(98)
|
(77)
|
(21)
|
Purchased
power
|
(10)
|
(61)
|
51
|
(59)
|
(115)
|
57
|
Nuclear refueling
outage expense
|
(12)
|
(1)
|
(12)
|
(49)
|
(4)
|
(45)
|
Other
O&M
|
(165)
|
(208)
|
43
|
(678)
|
(808)
|
130
|
Asset write-off and
impairments
|
(2)
|
(235)
|
234
|
(290)
|
(532)
|
242
|
Decommissioning
expense
|
(49)
|
(64)
|
15
|
(237)
|
(239)
|
2
|
Taxes other than
income taxes
|
(15)
|
(21)
|
6
|
(60)
|
(78)
|
18
|
Depreciation/amortization exp.
|
(34)
|
(34)
|
(1)
|
(148)
|
(150)
|
2
|
Other income
(deductions)–other
|
74
|
(185)
|
259
|
340
|
(42)
|
382
|
Interest exp. and
other charges
|
(5)
|
(8)
|
3
|
(29)
|
(34)
|
5
|
Income
taxes
|
187
|
102
|
85
|
161
|
269
|
(108)
|
Preferred
dividend
|
(1)
|
(1)
|
-
|
(2)
|
(2)
|
-
|
Total
EWC
|
217
|
(373)
|
590
|
147
|
(343)
|
490
|
|
|
|
|
|
|
|
Total
adjustments
|
248
|
(194)
|
442
|
177
|
(121)
|
298
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
|
B: Earnings Variance Analysis
Appendix B-1 and
Appendix B-2 provide details of current quarter and year-to-date
2019 versus 2018 as-reported and adjusted earnings variance
analysis for Utility, Parent & Other, and EWC.
Appendix B-1:
As-Reported and Adjusted Earnings Variance Analysis (c),
(d)
|
Fourth Quarter 2019
vs. 2018
|
(After-tax, per share
in $)
|
|
Utility
|
|
Parent &
Other
|
|
EWC
|
|
Consolidated
|
|
As-
Reported
|
Adjusted
|
|
As-
Reported
|
Adjusted
|
|
As-
Reported
|
|
As-
Reported
|
Adjusted
|
2018
earnings
|
2.12
|
1.14
|
|
(0.44)
|
(0.44)
|
|
(2.04)
|
|
(0.36)
|
0.70
|
Operating revenue
less:
Fuel,
fuel-related expenses and
gas purchased
for resale,
Purchased
power, and
Regulatory
charges (credits)
|
0.54
|
0.38
|
(e)
|
-
|
-
|
|
(0.18)
|
(f)
|
0.36
|
0.38
|
Nuclear refueling
outage expense
|
(0.01)
|
(0.01)
|
|
-
|
-
|
|
(0.05)
|
(g)
|
(0.06)
|
(0.01)
|
Other
O&M
|
(0.06)
|
(0.06)
|
(h)
|
0.01
|
0.01
|
|
0.18
|
(i)
|
0.13
|
(0.05)
|
Asset write-offs and
impairments
|
-
|
-
|
|
-
|
-
|
|
1.01
|
(j)
|
1.01
|
-
|
Decommissioning
expense
|
(0.02)
|
(0.02)
|
|
-
|
-
|
|
0.07
|
(k)
|
0.05
|
(0.02)
|
Taxes other than
income taxes
|
(0.02)
|
(0.02)
|
|
-
|
-
|
|
0.03
|
|
0.01
|
(0.02)
|
Depreciation/amortization exp.
|
(0.13)
|
(0.13)
|
(l)
|
-
|
-
|
|
-
|
|
(0.13)
|
(0.13)
|
Other income
(deductions)–other
|
0.05
|
0.05
|
(m)
|
(0.06)
|
(0.06)
|
(n)
|
1.11
|
(o)
|
1.10
|
(0.01)
|
Interest exp. and
other charges
|
(0.06)
|
(0.06)
|
(p)
|
0.01
|
0.01
|
|
0.01
|
|
(0.04)
|
(0.05)
|
Income
taxes–other
|
(0.92)
|
0.01
|
(q)
|
(0.08)
|
(0.03)
|
(r)
|
1.04
|
(s)
|
0.04
|
(0.02)
|
Preferred dividend
requirements
|
(0.01)
|
(0.01)
|
|
-
|
-
|
|
-
|
|
(0.01)
|
(0.01)
|
Share
effect
|
(0.13)
|
(0.13)
|
(t)
|
0.05
|
0.05
|
(t)
|
(0.10)
|
(t)
|
(0.18)
|
(0.18)
|
2019
earnings
|
1.35
|
1.14
|
|
(0.51)
|
(0.46)
|
|
1.08
|
|
1.92
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
Appendix B-2:
As-Reported and Adjusted Earnings Variance Analysis (c),
(d)
|
|
Year-to-Date 2019 vs.
2018
|
|
(After-tax, per share
in $)
|
|
|
Utility
|
|
Parent &
Other
|
|
EWC
|
|
Consolidated
|
|
As-
Reported
|
Adjusted
|
|
As-
Reported
|
Adjusted
|
|
As-
Reported
|
|
As-
Reported
|
Adjusted
|
2018
earnings
|
8.09
|
6.88
|
|
(1.59)
|
(1.59)
|
|
(1.87)
|
|
4.63
|
5.29
|
Operating revenue
less:
Fuel,
fuel-related expenses and
gas purchased
for resale,
Purchased
power, and
Regulatory
charges (credits)
|
1.70
|
1.54
|
(e)
|
-
|
-
|
|
(0.60)
|
(f)
|
1.10
|
1.54
|
Nuclear refueling
outage expense
|
(0.03)
|
(0.03)
|
|
-
|
-
|
|
(0.19)
|
(g)
|
(0.22)
|
(0.03)
|
Other
O&M
|
(0.25)
|
(0.25)
|
(h)
|
0.02
|
0.02
|
|
0.56
|
(i)
|
0.33
|
(0.23)
|
Asset write-offs and
impairments
|
-
|
-
|
|
-
|
-
|
|
1.04
|
(j)
|
1.04
|
-
|
Decommissioning
expense
|
(0.06)
|
(0.06)
|
(u)
|
-
|
-
|
|
0.01
|
|
(0.05)
|
(0.06)
|
Taxes other than
income taxes
|
(0.08)
|
(0.08)
|
(v)
|
0.01
|
0.01
|
|
0.07
|
(w)
|
-
|
(0.07)
|
Depreciation/amortization exp.
|
(0.45)
|
(0.45)
|
(l)
|
(0.01)
|
(0.01)
|
|
0.01
|
|
(0.45)
|
(0.46)
|
Other income
(deductions)–other
|
0.05
|
0.05
|
(m)
|
(0.08)
|
(0.08)
|
(n)
|
1.65
|
(o)
|
1.62
|
(0.03)
|
Interest exp. and
other charges
|
(0.15)
|
(0.15)
|
(p)
|
(0.01)
|
(0.01)
|
|
0.02
|
|
(0.14)
|
(0.16)
|
Income
taxes–other
|
(1.11)
|
0.05
|
(q)
|
(0.06)
|
(0.01)
|
(r)
|
0.10
|
(s)
|
(1.07)
|
0.04
|
Preferred dividend
requirements
|
(0.02)
|
(0.02)
|
|
-
|
-
|
|
-
|
|
(0.02)
|
(0.02)
|
Share
effect
|
(0.53)
|
(0.53)
|
(t)
|
0.12
|
0.12
|
(t)
|
(0.06)
|
(t)
|
(0.47)
|
(0.41)
|
2019
earnings
|
7.16
|
6.95
|
|
(1.60)
|
(1.55)
|
|
0.74
|
|
6.30
|
5.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
|
|
(c)
|
Utility
operating revenue, Utility other O&M and
Utility income taxes exclude $52 million, $3 million, and
$55 million respectively in fourth quarter 2019 and $215 million,
$0 million, and $215 million respectively in fourth quarter 2018
for the return of unprotected excess ADIT to customers (net effect
is neutral to earnings). On a year-to-date basis, Utility
operating revenue, Utility other
O&M and Utility income taxes exclude $268
million, $6 million, and $274 million respectively in 2019 and $770
million, $6 million, and $776 million respectively in 2018 (net
effect is neutral to earnings).
|
(d)
|
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 prior period;
income taxes–other represents income tax differences other than the
tax effect of individual line items.
|
(e)
|
The fourth quarter
and year-to-date earnings increases were primarily driven by rate
activity from E-AR's FRP; E-LA's FRP, including recovery of the St.
Charles Power Station; E-LA's AMI rider; E-MS's FRP; the recovery
of the Choctaw Generating Station; and E-TX's base rate case. The
variance also reflected three regulatory charges in fourth quarter
2018: first, a regulatory charge at E-TX to return the benefit of
the lower federal tax rate to customers, second, regulatory
provisions that lowered earnings into the allowed ranges at E-AR
and E-MS as required by their FRPs, and third, a regulatory
liability for tax sharing with E-AR customers (this partially
offsets the income tax item discussed in footnote q). These
increases were partially offset by the net effect of
volume/weather. Fourth quarter 2019 results also reflected an
accrual for the E-NO rate case decision, which is being appealed.
The year-to-date increase also reflected 2018 regulatory charges at
E-LA to return the benefit of the lower tax rate to
customers.
|
(f)
|
The fourth quarter
and year-to-date earnings decreases were due largely to lower
revenues from the shutdown of Pilgrim in May 2019, lower capacity
prices, and impacts on fuel expense from EWC plant impairments.
These were partially offset by higher energy volume from EWC's
other nuclear plants.
|
(g)
|
The fourth quarter
and year-to-date earnings decreases from higher EWC nuclear
refueling outage expense were due primarily to increased outage
amortization at Palisades due to the plant no longer being
impaired.
|
(h)
|
The fourth quarter
and year-to-date earnings decreases from higher Utility other
O&M reflected higher spending on information technology,
initiatives to explore new customer products and services, and
compensation and benefits. Also contributing was the gain on a sale
of an asset in fourth quarter 2018. This was partially offset by
lower nuclear generation spending and from litigation awards from
the DOE in connection with spent nuclear fuel storage
costs.
|
(i)
|
The fourth quarter
and year-to-date earnings increases from lower EWC other
O&M were due largely to a decrease in severance and
retention expense, as well as the Pilgrim plant shutdown in May
2019.
|
(j)
|
The fourth quarter
and year-to-date earnings increases from lower EWC asset
write-offs and impairments were due primarily to a revision of
Vermont Yankee's ARO, partially offset by a gain on proceeds from
the settlement of spent fuel litigation at Pilgrim, both in fourth
quarter 2018.
|
(k)
|
The fourth quarter
earnings increase from lower EWC decommissioning expense was
due to the Pilgrim plant sale in 2019.
|
(l)
|
The fourth quarter
and year-to-date earnings decreases from higher Utility
depreciation expense were due primarily to higher plant in
service, including the St. Charles Power Station, as well as higher
new depreciation rates at E-MS and E-TX, partially offset by
updated depreciation rates at SERI (offset in operating revenue).
The year-to-date decrease also reflected a depreciation adjustment
at SERI in the third quarter 2018 (offset in operating
revenue).
|
(m)
|
The fourth quarter
earnings increase from higher Utility other income
(deductions)–other was due largely to differences in
decommissioning trust fund returns. Based on regulatory treatment,
decommissioning-related variances are largely earnings neutral. The
year-to-date earnings increase was due largely to an increase in
the allowance for equity funds used during construction due to
higher construction work in progress in 2019, which included the
Lake Charles Power Station, Montgomery County Power Station, and
New Orleans Power Station projects.
|
(n)
|
The fourth quarter
and year-to-date earnings decreases from lower Parent & Other
other income (deductions)–other were due to the
timing of a charitable contribution.
|
(o)
|
The fourth quarter
and year-to-date earnings increases from higher EWC other income
(deductions)–other were due largely to higher gains on the
decommissioning trust fund investments in 2019 as compared to 2018.
The year-to-date increase was partially offset by a pension
settlement charge in third quarter 2019 related to the exit of the
EWC business.
|
(p)
|
The fourth quarter
and year-to-date earnings decreases from higher Utility interest
expense were due primarily to higher debt balances at E-LA and
E-AR.
|
(q)
|
The fourth quarter
and year-to-date as-reported earnings decreases from higher Utility
income taxes reflected two fourth quarter 2018 tax items and
one fourth quarter 2019 tax item, all classified as adjustments. In
fourth quarter 2018, approximately $170 million resulting from the
restructuring of E-AR (partly offset by customer sharing recorded
as a regulatory charge) and $38 million related to the reversal of
a tax accrual at E-TX were recorded. In the fourth quarter 2019, a
$41 million income tax item was generated through the reversal of a
valuation allowance generated as part of the 2018 internal
restructuring. The year-to-date earnings decrease also
reflected a $43 million income tax benefit which resulted from the
settlement of the 2012 / 2013 IRS audit in second quarter
2018.
|
(r)
|
The fourth quarter
and year-to-date as-reported earnings decreases from higher Parent
& Other income taxes related to a valuation allowance
recorded on the expected interest limitation carryover.
Approximately $11 million related to tax year 2018 (classified as
an adjustment) and approximately $11 million related to tax year
2019.
|
(s)
|
The fourth quarter
and year-to-date earnings increases from lower EWC income
taxes reflected three items from fourth quarter 2019. First, a
restructuring within the EWC business resulted in a reduction in
income tax expense of $156 million. Second, a donation to the State
University of New York triggered the recognition of an associated
tax deduction, resulting in a decrease to tax expense of $19
million. Third, an EWC subsidiary recognized a reduction in tax
expense of $18 million. The year-to-date earnings increase
was largely offset by three items from 2018 and one from
2019. First, there was $13 million in tax benefits from the
settlement of the 2012 / 2013 IRS audit in second quarter 2018.
Second, a restructuring of an interest in an EWC decommissioning
trust fund resulted in a reduction in income tax expense of $107
million in third quarter 2018. Third, the conclusion of a state
income tax audit resulted in a benefit of $23 million in third
quarter 2018. Lastly, an accrual of $29 million of tax expense,
which resulted from the sale of Vermont Yankee in January 2019
contributed to the year-to-date variance.
|
(t)
|
The fourth quarter
and year-to-date earnings per share impacts from share
effect were due to settlement of the equity forward (6.8
million shares settled in December 2018 and 8.4 million shares
settled in May 2019).
|
(u)
|
The year-to-date
earnings decrease from higher Utility decommissioning
expense related to revisions to estimated decommissioning costs
liabilities resulting from updated decommissioning cost studies at
certain Utility nuclear plants. Based on regulatory treatment,
decommissioning-related variances are largely earnings
neutral.
|
(v)
|
The year-to date
earnings decrease from higher Utility taxes other than income
taxes was primarily due to higher ad valorem taxes at E-AR and
E-LA.
|
(w)
|
The year-to-date
earnings increase from lower EWC taxes other than income
taxes was primarily due to lower ad valorem taxes due to a
lower assessment at Palisades.
|
Utility
as-reported operating revenue less fuel, fuel-
related expenses and gas purchased for resale;
purchased power; and regulatory charges (credits)
variance analysis
2019 vs. 2018 ($
EPS)
|
|
4Q
|
YTD
|
Volume/weather
|
(0.16)
|
(0.30)
|
Retail electric
price
Reg. charges for
lower tax rate
|
0.36
0.10
|
1.22
0.40
|
Reg. provisions for
E-AR and E-MS FRPs
|
0.18
|
0.18
|
Reg. liability for
tax sharing
|
0.16
|
0.16
|
Other, including
Grand Gulf recovery
|
(0.10)
|
0.03
|
Total
|
0.54
|
1.70
|
C: Utility Financial and Operating Measures
Appendix
C-1 provides comparative summaries of Utility operating and
financial measures.
Appendix C-1: Utility
Operating and Financial Measures
|
Fourth Quarter and
Year-to-Date 2019 vs. 2018
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
%
Change
|
% Weather
Adjusted (x)
|
2019
|
2018
|
%
Change
|
% Weather
Adjusted (x)
|
GWh billed
|
|
|
|
|
|
|
|
|
Residential
|
8,344
|
8,250
|
1.1
|
(1.2)
|
36,094
|
37,107
|
(2.7)
|
(1.2)
|
Commercial
|
6,991
|
7,026
|
(0.5)
|
(2.2)
|
28,755
|
29,426
|
(2.3)
|
(1.9)
|
Governmental
|
647
|
646
|
0.2
|
(0.3)
|
2,579
|
2,581
|
(0.1)
|
(0.2)
|
Industrial
|
11,974
|
11,882
|
0.8
|
0.8
|
48,483
|
48,384
|
0.2
|
0.2
|
Total
retail sales
|
27,956
|
27,804
|
0.5
|
(0.6)
|
115,911
|
117,498
|
(1.4)
|
(0.8)
|
Wholesale
|
3,201
|
2,927
|
9.4
|
|
13,210
|
11,715
|
12.8
|
|
Total
sales
|
31,157
|
30,731
|
1.4
|
|
129,121
|
129,213
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
Number of electric
retail customers
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
2,500,736
|
2,481,027
|
0.8
|
|
Commercial
|
|
|
|
|
359,395
|
356,618
|
0.8
|
|
Governmental
|
|
|
|
|
17,768
|
17,839
|
(0.4)
|
|
Industrial
|
|
|
|
|
45,320
|
45,790
|
(1.0)
|
|
Total
retail customers
|
|
|
|
|
2,923,219
|
2,901,274
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Other O&M and
refueling outage expense per MWh
|
22.70
|
22.36
|
1.5
|
|
21.06
|
20.52
|
2.6
|
|
|
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
(x)
|
The effects of
weather were estimated using heating degree days and cooling degree
days for the billing cycles 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 are subject to change.
|
On a weather-adjusted basis for fourth quarter 2019, retail
billed sales decreased (0.6) percent. Residential billed sales
decreased (1.2) percent primarily due to fewer days billed compared
to a year ago. Commercial billed sales decreased (2.2) percent
driven by the continued impact of energy efficiency. Industrial
billed sales volume increased 0.8 percent driven by continued
growth from new/expansion customers, partially offset by lower
sales to cogeneration customers.
On a weather-adjusted basis for full year 2019, retail billed
sales decreased (0.8) percent. Residential and commercial billed
sales decreased (1.2) and (1.9) percent respectively, driven by the
continued impact of energy efficiency. Fewer days billed also
contributed to the residential billed sales decrease. Industrial
billed sales volume increased 0.2 percent driven by continued
growth from new/expansion customers, partially offset by lower
sales to cogeneration customers.
D: EWC Financial and Operating Measures
Appendix D-1
provides a comparative summary of EWC adjusted EBITDA
(non-GAAP).
Appendix D-1: EWC
Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP
Measures
Fourth Quarter and
Year-to-Date 2019 vs. 2018
|
($ in
millions)
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Net income
(loss)
|
218
|
(372)
|
590
|
149
|
(341)
|
490
|
Add back: interest
expense
|
5
|
8
|
(3)
|
29
|
34
|
(5)
|
Add back: income
taxes
|
(187)
|
(102)
|
(85)
|
(161)
|
(269)
|
108
|
Add back:
depreciation and amortization
|
34
|
34
|
-
|
148
|
150
|
(2)
|
Subtract: interest
and investment income
|
99
|
(169)
|
268
|
415
|
15
|
400
|
Add back:
decommissioning expense
|
49
|
64
|
(15)
|
237
|
239
|
(2)
|
Adjusted EBITDA
(non-GAAP)
|
20
|
(199)
|
219
|
(13)
|
(202)
|
189
|
|
|
|
|
|
|
|
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 2019 vs. 2018
|
|
Fourth
Quarter
|
Year-to-Date
|
|
2019
|
2018
|
% Change
|
2019
|
2018
|
% Change
|
Owned capacity (MW)
(y)
|
3,274
|
3,962
|
(17.4)
|
3,274
|
3,962
|
(17.4)
|
GWh billed
|
6,780
|
8,022
|
(15.5)
|
28,088
|
29,875
|
(6.0)
|
|
|
|
|
|
|
|
EWC Nuclear
Fleet
|
|
|
|
|
|
|
Capacity
factor
|
99%
|
78%
|
26.9
|
93%
|
84%
|
10.7
|
GWh billed
|
6,326
|
7,520
|
(15.9)
|
25,928
|
27,617
|
(6.1)
|
Production cost per
MWh
|
$17.71
|
$18.79
|
(5.7)
|
$18.29
|
$17.68
|
3.5
|
Average
energy/capacity revenue per MWh
|
$35.73
|
$48.97
|
(27.0)
|
$43.88
|
$49.13
|
(10.7)
|
Refueling outage
days
|
|
|
|
|
|
|
Indian Point
2
|
-
|
-
|
|
-
|
33
|
|
Indian Point
3
|
-
|
-
|
|
29
|
-
|
|
Palisades
|
-
|
61
|
|
-
|
61
|
|
|
|
|
|
|
|
|
Calculations may
differ due to rounding
|
(y)
|
Fourth quarter and
year-to-date 2019 exclude Pilgrim (688MW), which was shut down May
31, 2019 and sold August 26, 2019.
|
See the appendix in the webcast slide presentation for EWC
hedging and price disclosures.
E: Consolidated Financial Measures
Appendix E provides
comparative financial measures. Financial measures in this table
include those calculated and presented in accordance with GAAP, as
well as those that are considered non-GAAP financial measures.
Appendix E: GAAP
and Non-GAAP Financial Measures
|
Fourth Quarter 2019
vs. 2018 (See Appendix G for reconciliation of GAAP to non-GAAP
financial measures)
|
|
|
For 12 months ending
December 31
|
2019
|
2018
|
Change
|
GAAP
Measures
|
|
|
|
As-reported
ROIC
|
6.3%
|
5.3%
|
1.0%
|
As-reported
ROE
|
13.0%
|
10.1%
|
2.9%
|
|
|
|
|
Non-GAAP
Measures
|
|
|
|
Adjusted
ROIC
|
5.6%
|
5.7%
|
(0.1)%
|
Adjusted ROE
|
11.2%
|
11.5%
|
(0.3)%
|
|
|
|
|
As of December 31 ($
in millions)
|
2019
|
2018
|
Change
|
GAAP
Measures
|
|
|
|
Cash and
cash equivalents
|
426
|
481
|
(55)
|
Revolver
capacity
|
3,810
|
4,056
|
(246)
|
Commercial
paper
|
1,947
|
1,942
|
5
|
Total debt
|
19,885
|
18,133
|
1,752
|
Securitization
debt
|
298
|
424
|
(126)
|
Debt to
capital
|
65.5%
|
66.7%
|
(1.2)%
|
Off-balance sheet
liabilities:
|
|
|
|
Debt of
joint ventures – Entergy's share
|
54
|
61
|
(7)
|
Leases
– Entergy's share (z)
|
-
|
448
|
(448)
|
Power
purchase agreements accounted for as leases (z)
|
-
|
106
|
(106)
|
Total off-balance
sheet liabilities
|
54
|
615
|
(561)
|
|
|
|
|
Non-GAAP
Measures
|
|
|
|
Debt to capital,
excluding securitization debt
|
65.1%
|
66.1%
|
(1.0)%
|
Gross
liquidity
|
4,236
|
4,537
|
(301)
|
Net debt to net
capital, excluding securitization debt
|
64.6%
|
65.5%
|
(0.9)%
|
Parent debt to total
debt, excluding securitization debt
|
21.6%
|
22.6%
|
(1.0)%
|
FFO to debt, excluding
securitization debt
|
14.6%
|
11.7%
|
2.9%
|
FFO to debt, excluding
securitization debt, return of unprotected excess ADIT, and
severance and retention payments associated with exit of
EWC
|
16.8%
|
15.3%
|
1.5%
|
|
|
|
|
Calculations may
differ due to rounding
|
(z)
|
As of January 1,
2019, Entergy adopted Financial Accounting Standards Board
Accounting Standards Codification 842, the new lease accounting
standard. As a result, Entergy re-evaluated all agreements and put
all agreements that qualified as operating leases on the balance
sheet, and there are no longer any off-balance sheet liabilities
for leases.
|
F: Definitions and Abbreviations and Acronyms
Appendix
F-1 provides definitions of certain operating measures, as well as
GAAP and non-GAAP financial measures.
Appendix F-1:
Definitions
|
Utility Financial
and Operating Measures
|
GWh billed
|
Total number of GWh
billed to retail and wholesale customers
|
Other O&M and
refueling outage expense per MWh
|
Other operation and
maintenance expense plus nuclear refueling outage expense per MWh
of billed sales
|
Number of electric
retail customers
|
Number of electric
customers at the end of the period
|
|
|
EWC Financial and
Operating Measures
|
Adjusted EBITDA
(non-GAAP)
|
Earnings before
interest, income taxes, and depreciation and amortization, and
excluding decommissioning expense
|
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 positive or
negative basis differentials 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 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
positive or negative basis differentials 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
|
|
|
Appendix F-1:
Definitions (continued)
|
EWC Financial and
Operating Measures (continued)
|
GWh billed
|
Total number of GWh
billed to customers and financially-settled instruments
|
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 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 Indian Point 2 (April 30, 2020), Indian Point 3 (April 30,
2021), and Palisades (May 31, 2022)
|
Production cost per
MWh
|
Fuel and other
O&M expenses according to accounting standards that directly
relate to the production of electricity per MWh (based on net
generation)
|
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
|
As-reported
ROE
|
12-months rolling net
income attributable to Entergy Corporation divided by average
common equity
|
As-reported
ROIC
|
12-months rolling net
income attributable to Entergy Corporation adjusted for preferred
dividends and tax-effected interest expense divided by average
invested capital
|
Debt of joint
ventures – Entergy's share
|
Entergy's share of
debt issued by business joint ventures at EWC
|
Debt to
capital
|
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
|
Securitization
debt
|
Debt on the balance
sheet associated with securitization bonds that is secured by
certain future customer collections
|
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 (continued)
|
Financial Measures -
Non-GAAP
|
Adjusted
EPS
|
As-reported EPS
excluding adjustments
|
Adjusted
ROE
|
12-months rolling
adjusted net income attributable to Entergy Corporation divided by
average common equity
|
Adjusted
ROIC
|
12-months rolling
adjusted net income attributable to Entergy Corporation adjusted
for preferred dividends and tax-effected interest expense divided
by average invested capital
|
Adjustments
|
Unusual or
non-recurring items or events or other items or events that
management believes do not reflect the ongoing business of Entergy,
such as the results of the EWC segment, significant tax items, and
other items such as certain costs, expenses, or other specified
items
|
Debt to capital,
excluding securitization debt
|
Total debt divided by
total capitalization, excluding securitization debt
|
FFO
|
OCF less
AFUDC-borrowed funds, working capital items in OCF (receivables,
fuel inventory, accounts payable, taxes accrued, interest accrued,
and other working capital accounts), and securitization regulatory
charges
|
FFO to debt,
excluding securitization debt
|
12-months rolling
adjusted FFO as a percentage of end of period total debt excluding
securitization debt
|
FFO to debt,
excluding securitization debt, return of unprotected excess ADIT,
and severance and retention payments associated with exit of
EWC
|
12-months rolling
adjusted FFO excluding return of unprotected excess ADIT and
severance and retention payments associated with exit of
EWC as a percentage of end of period total debt excluding
securitization debt
|
Gross
liquidity
|
Sum of cash and
revolver capacity
|
Net debt to net
capital, excluding securitization debt
|
Total debt less cash
and cash equivalents divided by total capitalization less cash and
cash equivalents, excluding securitization debt
|
Parent debt to total
debt, 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
|
|
|
Appendix F-2 explains abbreviations and acronyms used in the
quarterly earnings materials.
Appendix F-2:
Abbreviations and Acronyms
|
ADIT
|
Accumulated deferred
income taxes
|
ISO
|
Independent system
operator
|
AFUDC –
borrowed funds
|
Allowance for
borrowed funds used during construction
|
LCPS
|
Lake Charles Power
Station (CCGT)
|
ALJ
|
Administrative law
judge
|
LPSC
|
Louisiana Public
Service Commission
|
AMI
|
Advanced metering
infrastructure
|
LTM
|
Last twelve
months
|
ANO
|
Units 1 and 2 of
Arkansas Nuclear One owned by E-AR (nuclear)
|
MCPS
|
Montgomery County
Power Station (CCGT)
|
APSC
|
Arkansas Public
Service Commission
|
MISO
|
Midcontinent
Independent System Operator, Inc.
|
ARO
|
Asset retirement
obligation
|
Moody's
|
Moody's Investor
Service
|
bps
|
Basis
points
|
MPSC
|
Mississippi Public
Service Commission
|
CCGT
|
Combined cycle gas
turbine
|
MTEP
|
MISO Transmission
Expansion Plan
|
CCN
|
Certificate of
convenience and necessity
|
Nelson 6
|
Unit 6 of Roy S.
Nelson plant (coal)
|
CCNO
|
Council of the City
of New Orleans
|
NDT
|
Nuclear
decommissioning trust
|
Choctaw
|
Choctaw County
Generating Station (CCGT)
|
NOPS
|
New Orleans Power
Station
|
COD
|
Commercial operation
date
|
NRC
|
U.S. Nuclear
Regulatory Commission
|
CT
|
Simple cycle
combustion turbine
|
NY PSC
|
New York Public
Service Commission
|
CWIP
|
Construction work in
progress
|
NYISO
|
New York Independent
System Operator, Inc.
|
DCRF
|
Distribution cost
recovery factor
|
NYSE
|
New York Stock
Exchange
|
DOE
|
U.S. Department of
Energy
|
OCF
|
Net cash flow
provided by operating activities
|
E-AR
|
Entergy Arkansas,
LLC
|
OpCo
|
Utility operating
company
|
E-LA
|
Entergy Louisiana,
LLC
|
OPEB
|
Other post-employment
benefits
|
E-MS
|
Entergy Mississippi,
LLC
|
Other
O&M
|
Other non-fuel
operation and maintenance expense
|
E-NO
|
Entergy New Orleans,
LLC
|
P&O
|
Parent &
Other
|
E-TX
|
Entergy Texas,
Inc.
|
Palisades
|
Palisades Power Plant
(nuclear)
|
EBITDA
|
Earnings before
interest, income taxes, and depreciation and
amortization
|
Pilgrim
|
Pilgrim Nuclear Power
Station (nuclear, sold August 26, 2019)
|
ENP
|
Entergy Nuclear
Palisades, LLC
|
PMR
|
Performance
Management Rider
|
EPS
|
Earnings per
share
|
PPA
|
Power purchase
agreement or purchased power agreement
|
ETR
|
Entergy
Corporation
|
PSC
|
Public service
commission
|
EWC
|
Entergy Wholesale
Commodities
|
PUCT
|
Public Utility
Commission of Texas
|
FERC
|
Federal Energy
Regulatory Commission
|
RICE
|
Reciprocating
internal combustion engine
|
FFO
|
Funds from
operations
|
RFP
|
Request for
proposals
|
FRP
|
Formula rate
plan
|
ROE
|
Return on
equity
|
GAAP
|
U.S. generally
accepted accounting principles
|
ROIC
|
Return on invested
capital
|
Grand Gulf or
GGNS
|
Unit 1 of Grand Gulf
Nuclear Station (nuclear), 90% owned or leased by SERI
|
RS Cogen
|
RS Cogen facility
(CCGT cogeneration)
|
Indian Point
1
|
Indian Point Energy
Center Unit 1 (nuclear)
(shut down in 1974)
|
RSP
|
Rate Stabilization
Plan (E-LA Gas)
|
Indian Point 2
or IP2
|
Indian Point Energy
Center Unit 2 (nuclear)
|
S&P
|
Standard &
Poor's
|
Indian Point 3
or IP3
|
Indian Point Energy
Center Unit 3 (nuclear)
|
SCPS
|
St. Charles Power
Station (CCGT)
|
IPEC
|
Indian Point Energy
Center (nuclear)
|
SEC
|
U.S. Securities and
Exchange Commission
|
ISES 2
|
Unit 2 of
Independence Steam Electric Station
(coal)
|
SERI
|
System Energy
Resources, Inc.
|
IRS
|
Internal Revenue
Service
|
TCRF
|
Transmission cost
recovery factor
|
|
|
UPSA
|
Unit Power Sales
Agreement
|
|
|
Vermont
Yankee
|
Vermont Yankee
Nuclear Power Station (nuclear, sold January 11, 2019)
|
|
|
WACC
|
Weighted-average cost
of capital
|
|
|
WPEC
|
Washington Parish
Energy Center
|
G: Other GAAP to Non-GAAP Reconciliations
Appendix G-1
and Appendix G-2 provide reconciliations of various non-GAAP
financial measures disclosed in this news release to their most
comparable GAAP measure.
Appendix G-1:
Reconciliation of GAAP to Non-GAAP Financial Measures - ROIC,
ROE
|
($ in millions except
where noted)
|
|
Fourth
Quarter
|
|
|
2019
|
2018
|
As-reported net
income (loss) attributable to Entergy Corporation, rolling 12
months
|
(A)
|
1,241
|
849
|
Preferred
dividends
|
|
17
|
14
|
Tax-effected interest
expense
|
|
554
|
527
|
As-reported net
income (loss) attributable to Entergy Corporation, rolling 12
months adjusted for preferred dividends and tax-effected interest
expense
|
(B)
|
1,812
|
1,390
|
|
|
|
|
Adjustments in prior
three quarters
|
|
(70)
|
73
|
|
|
|
|
Adjustments in
current quarter
|
|
248
|
(194)
|
Total
adjustments, last 12 months
|
(C)
|
177
|
(121)
|
|
|
|
|
EWC preferred
dividends and tax-effected interest expense, rolling 12
months
|
|
25
|
29
|
|
|
|
|
Total adjustments,
adding back EWC preferred dividends and tax-effected interest
expense (non-GAAP)
|
(D)
|
202
|
(92)
|
|
|
|
|
Adjusted earnings,
rolling 12 months (non-GAAP)
|
(A-C)
|
1,064
|
970
|
Adjusted earnings,
rolling 12 months including preferred dividends and tax- effected
interest expense (non-GAAP)
|
(B-D)
|
1,610
|
1,482
|
|
|
|
|
Average invested
capital
|
(E)
|
28,780
|
26,032
|
|
|
|
|
Average common
equity
|
(F)
|
9,534
|
8,418
|
|
|
|
|
As-reported
ROIC
|
(B/E)
|
6.3%
|
5.3%
|
Adjusted ROIC
(non-GAAP)
|
[(B-D)/E]
|
5.6%
|
5.7%
|
As-reported
ROE
|
(A/F)
|
13.0%
|
10.1%
|
Adjusted ROE
(non-GAAP)
|
[(A-C)/F]
|
11.2%
|
11.5%
|
|
|
|
|
Calculations may
differ due to rounding
|
|
Appendix G-2:
Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios
excluding Securitization Debt; Gross Liquidity; FFO to Debt,
excluding Securitization Debt; FFO to Debt, excluding
Securitization Debt, Return of Unprotected Excess ADIT, and
Severance and Retention Payments Associated with Exit of
EWC
|
($ in millions except
where noted)
|
|
Fourth
Quarter
|
|
|
2019
|
2018
|
Total debt
|
(A)
|
19,885
|
18,133
|
Less securitization
debt
|
(B)
|
298
|
424
|
Total debt, excluding
securitization debt
|
(C)
|
19,587
|
17,709
|
Less cash and cash
equivalents
|
(D)
|
426
|
481
|
Net debt, excluding
securitization debt
|
(E)
|
19,161
|
17,228
|
|
|
|
|
Total
capitalization
|
(F)
|
30,363
|
27,196
|
Less securitization
debt
|
(B)
|
298
|
424
|
Total capitalization,
excluding securitization debt
|
(G)
|
30,065
|
26,772
|
Less cash and cash
equivalents
|
(D)
|
426
|
481
|
Net capital,
excluding securitization debt
|
(H)
|
29,639
|
26,291
|
|
|
|
|
Debt to
capital
|
(A/F)
|
65.5%
|
66.7%
|
Debt to capital,
excluding securitization debt (non-GAAP)
|
(C/G)
|
65.1%
|
66.1%
|
Net debt to net
capital, excluding securitization debt (non-GAAP)
|
(E/H)
|
64.6%
|
65.5%
|
|
|
|
|
Revolver
capacity
|
(I)
|
3,810
|
4,056
|
|
|
|
|
Gross liquidity
(non-GAAP)
|
(D+I)
|
4,236
|
4,537
|
|
|
|
|
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)
|
440
|
220
|
Commercial
paper
|
(L)
|
1,947
|
1,942
|
Unamortized debt
issuance costs and discounts
|
(M)
|
(8)
|
(10)
|
Total parent
debt
|
(J+K+L+M)
|
4,229
|
4,002
|
|
|
|
|
Parent debt to total
debt, excluding securitization debt (non-GAAP)
|
[(J+K+L+M)/C]
|
21.6%
|
22.6%
|
|
|
|
|
Calculations may
differ due to rounding
|
|
Appendix G-2:
Reconciliation of GAAP to Non-GAAP Financial Measures – Debt Ratios
excluding Securitization Debt; Gross Liquidity; FFO to Debt,
excluding Securitization Debt; FFO to Debt, excluding
Securitization Debt, Return of Unprotected Excess ADIT, and
Severance and Retention Payments Associated with Exit of EWC
(continued)
|
($ in millions except
where noted)
|
|
Fourth
Quarter
|
|
|
2019
|
2018
|
Total debt
|
(A)
|
19,885
|
18,133
|
Less securitization
debt
|
(B)
|
298
|
424
|
Total debt, excluding
securitization debt
|
(C)
|
19,587
|
17,709
|
|
|
|
|
Net cash flow
provided by operating activities, rolling 12 months
|
(D)
|
2,817
|
2,385
|
|
|
|
|
AFUDC – borrowed
funds, rolling 12 months
|
(E)
|
(65)
|
(61)
|
|
|
|
|
Working capital items
in net cash flow provided by operating activities (rolling 12
months):
|
|
|
|
Receivables
|
|
(101)
|
99
|
Fuel
inventory
|
|
(28)
|
46
|
Accounts
payable
|
|
(72)
|
97
|
Taxes
accrued
|
|
(21)
|
39
|
Interest
accrued
|
|
1
|
5
|
Other working capital
accounts
|
|
(3)
|
(164)
|
Securitization
regulatory charges
|
|
122
|
124
|
Total
|
(F)
|
(102)
|
246
|
|
|
|
|
FFO, rolling 12
months (non-GAAP)
|
(G)=(D+E-F)
|
2,854
|
2,079
|
|
|
|
|
FFO to debt,
excluding securitization debt (non-GAAP)
|
(G/C)
|
14.6%
|
11.7%
|
|
|
|
|
Estimated return of
unprotected excess ADIT (rolling 12 months)
|
(H)
|
301
|
592
|
Severance and
retention payments associated with exit of EWC (rolling 12 months
pre-tax)
|
(I)
|
141
|
43
|
|
|
|
|
FFO to debt,
excluding securitization debt, return of unprotected excess ADIT,
and severance and retention payments associated with exit of EWC
(non-GAAP)
|
[(G+H+I)/(C)]
|
16.8%
|
15.3%
|
|
|
|
|
Calculations may
differ due to rounding
|
|
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SOURCE Entergy Corporation