ENTERGY CORPORATION NEW ORLEANS, Feb. 5, 2015 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) today reported fourth quarter 2014 as-reported earnings of $120.1 million, or 66 cents per share, compared with $146.9 million, or 82 cents per share, for fourth quarter 2013. On an operational basis, Entergy's fourth quarter 2014 earnings were $135.3 million, or 75 cents per share, compared with $179.3 million, or $1.00 per share, in fourth quarter 2013. For the year, Entergy's as-reported earnings were $940.7 million, or $5.22 per share, and operational earnings were $1,050 million, or $5.83 per share. These results compare with 2013 as-reported earnings of $711.9 million, or $3.99 per share, and operational earnings of $957.1 million, or $5.36 per share.
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"Entergy delivered on its plan in 2014," said Chairman and CEO Leo Denault. "At the Utility, we began the deployment of our capital program via the proposed purchase of the Union Power Station and the start of commercial operations at Ninemile 6, the Utility's first self-build plant in three decades. We resolved two important rate cases, in Mississippi and Texas. And we did all this while keeping our rates low - about 20 percent below the national average across all classes. At EWC, we improved plant operations and made progress in resolving uncertainty at Indian Point. And our risk management and hedging activities delivered substantial value for our owners, particularly during periods of market volatility. As a result, we realized operational EPS growth of nearly nine percent, well above original guidance. Importantly, we also captured a top-quartile position on total shareholder return."
He continued, "This year, despite some challenges, we can say with confidence that the fundamentals of our business are strong. We have a compelling capital plan to strengthen our operations, and to meet a very real opportunity. We fully expect to continue to deliver on this plan in 2015, and years to come."
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2014 vs. 2013
---------------------------------------------
(Per share in U.S. $)
Fourth Quarter Year-to-Date
-------------- ------------
2014 2013 Change 2014 2013 Change
---- ---- ------ ---- ---- ------
As-Reported
Earnings 0.66 0.82 (0.16) 5.22 3.99 1.23
Less Special
Items (0.09) (0.18) 0.09 (0.61) (1.37) 0.76
----- ----- ---- ----- ----- ----
Operational
Earnings 0.75 1.00 (0.25) 5.83 5.36 0.47
----------- ---- ---- ----- ---- ---- ----
*GAAP refers to United
States generally accepted
accounting principles.
Operational Earnings Highlights for Fourth Quarter 2014
-- Utility results were lower driven by increased non-fuel operation and
maintenance expense, a higher effective income tax rate and an asset
write-off; these decreases were partially offset by higher net revenue.
-- EWC earnings decreased due to a fourth quarter 2013 gain on sale of the
District Energy business and lower other income; these items were
partially offset by higher net revenue.
-- Parent & Other results improved due primarily to fourth quarter 2013
income tax expense associated with the EWC gain on sale.
Other business highlights include the following:
-- Entergy initiated 2015 operational EPS guidance at $5.10 to $5.90,
including updated assumptions for lower northeast power prices and
effective income tax rates.
-- The Utility announced two major investments - the Union combined cycle
gas turbine plant and the Lake Charles Transmission Project.
-- Ninemile 6, a 560 MW CCGT was place in service on December 24th. The
project was completed under budget and ahead of schedule.
-- A New York State appellate court ruled that Indian Point is
grandfathered under the state's Coastal Management Program; New York
State Department of State's motion for reargument or appeal is pending.
A teleconference will be held at 9 a.m. CST on Thursday, Feb. 5, 2015, to discuss Entergy's fourth quarter 2014 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 (855) 893-9849, conference ID 62430843, no more than 15 minutes prior to the start of the call. The presentation slides are 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 Feb. 12, 2015, by dialing (855) 859-2056, conference ID 62430843. This release and presentation slides are also available on the Entergy Investor Relations mobile web app at enter.gy/ir.
Utility
In fourth quarter 2014, Utility earnings were $109.3 million, or 60 cents per share, on an as-reported basis and $110.8 million, or 61 cents per share, on an operational basis, compared to $161.2 million, or 90 cents per share, on an as-reported basis and $153.7 million, or 86 cents per share, on an operational basis for fourth quarter 2013. The quarter-over-quarter decrease in operational EPS was driven by higher non-fuel O&M, a higher effective income tax rate and an asset write-off, partially offset by increased net revenue. Fourth quarter 2014 results included a write-off stemming from some regulatory uncertainty regarding the Waterford 3 steam generator replacement prudence review. That issue is still pending before the Louisiana Public Service Commission.
Non-fuel O&M was higher quarter-over-quarter reflecting increased nuclear and fossil generation spending, a portion of which was related to quarterly timing variances. Midcontinent Independent System Operator, Inc. regional transmission organization administration fees, energy efficiency spending and storm reserve accruals were also higher (these items had offsets in net revenue). These expense increases were partially offset by lower compensation and benefits expenses.
Utility net revenue was higher than the same quarter in the prior year. The effect of rate adjustments and weather-adjusted sales growth contributed to the increase. A portion of the variance attributable to rate adjustments was offset in other line items outside of net revenue, including non-fuel O&M. Weather had a positive effect in both periods, but was less favorable in fourth quarter 2014 than fourth quarter 2013.
Billed retail sales increased 2.4 percent on a weather-adjusted basis. The increase was attributable largely to 6.7 percent growth in the industrial customer class. The large chemicals segment drove approximately one-third of total industrial growth, due largely to the expansion of a chlor-alkali customer. Petroleum refining also saw solid quarter-over-quarter growth. Small industrials also contributed to the increase.
Residential sales in fourth quarter 2014, on a weather-adjusted basis, decreased 1.4 percent compared to fourth quarter 2013. Commercial and governmental sales, on a weather-adjusted basis, increased 0.3 percent and 0.5 percent, respectively, quarter over quarter. Industrial sales in the fourth quarter increased 6.7 percent compared to the same quarter of 2013.
For the year 2014, the Utility earned $829.1 million, or $4.60 per share, on an as-reported basis and $836.7 million, or $4.64 per share on an operational basis, compared to $828.9 million, or $4.64 per share, on an as-reported basis and $857.8 million, or $4.80 per share, on an operational basis in 2013. There were several key drivers for the year-over-year decrease. The effective income tax rate for the Utility was higher due largely to income tax items in 2013. Non-fuel O&M also increased in 2014 versus 2013. In addition to the Waterford 3 write-off noted above, third quarter 2014 results included a regulatory charge related to the settlement of Entergy Mississippi, Inc.'s general rate case. Higher interest and decommissioning expenses also contributed to the decline.
These decreases were partially offset by higher net revenue due largely to price and sales growth, including the effects of weather. A portion of the price variance was offset in other line items outside of net revenue, including non-fuel O&M.
For the year, billed retail sales increased 2.3 percent on a weather-adjusted basis. The increase was attributable largely to 5.0 percent growth in the industrial customer class. Three segments - chemicals, petroleum refining and pulp and paper - provided nearly 60 percent of the year's total industrial growth. The increases mostly came from existing customers, including expansions and the effects of outages. New customers accounted for approximately 7 percent of the total industrial increase.
Entergy Wholesale Commodities
EWC as-reported results were $57.1 million, or 31 cents per share, on an as-reported basis and $70.9 million, or 39 cents per share, on an operational basis for fourth quarter 2014, compared to fourth quarter 2013 as-reported earnings of $42.1 million, or 24 cents per share, and operational earnings of $85.6 million, or 48 cents per share. The decrease in operational earnings was driven by lower other income. Fourth quarter 2013 and 2014 results included realized decommissioning trust earnings, which are directly reinvested into the trust funds; the benefit in fourth quarter 2014 was less than the benefit in 2013.
This decrease was partially offset by higher operational adjusted earnings before interest, income taxes, depreciation and amortization, and interest and investment income excluding decommissioning expense, and other than temporary impairment losses on decommissioning trust fund assets.
For the year, EWC earnings were $292.3 million, or $1.62 per share, on an as-reported basis and $394.1 million, or $2.19 per share, on an operational basis, compared to as-reported earnings of $42.9 million, or 24 cents per share, and operational earnings of $262.7 million, or $1.47 per share, in 2013. The year-over-year increase in operational earnings was driven by higher operational adjusted EBITDA. Higher depreciation and decommissioning expenses, a higher effective income tax rate and lower other income provided a partial offset.
EWC operational adjusted EBITDA was $183 million in fourth quarter 2014, compared to $133 million in the same period a year ago. The quarter-over-quarter increase was due to higher net revenue partially offset by the gain on sale of the District Energy business in fourth quarter 2013.
The higher EWC net revenue reflected a 20 percent higher realized price for EWC's nuclear fleet, at $53 per MWh in fourth quarter 2014 compared to $44 per MWh in the prior period. The higher realized price was driven largely by mark-to-market activity, which was negative last year and positive in the current quarter. Quarter-over quarter, lower energy pricing and higher capacity pricing netted to a slight negative. Partially offsetting the price variance was lower nuclear production. The nuclear capacity factor decreased to 95 percent in the current quarter from 97 percent a year ago due to planned activities including the ramp-down of the Vermont Yankee Nuclear Power Station and seven refueling outage days at the James A. FitzPatrick Nuclear Power Plant compared to no refueling outages in fourth quarter 2013.
For the year, EWC operational adjusted EBITDA was $950 million compared to $553 million in 2013. Drivers for the year-over-year increase included higher net revenue and lower non-fuel O&M. Partially offsetting was the 2013 gain on sale of District Energy.
Net revenue in 2014 versus 2013 reflected benefits from EWC's asymmetric hedging strategy and focus on operational improvements. Energy and capacity pricing were higher, including significantly higher realized wholesale energy prices in first quarter 2014. Mark-to-market revenues from hedging activity also contributed. Nuclear volume also increased with a 91 percent capacity factor for the year compared to 89 percent in 2013, driven by approximately 90 fewer forced outage days, partially offset by an increase in refueling outage days and the planned ramp down for VY.
Parent & Other
Parent & Other reported a loss of $46.3 million, or 25 cents per share, on an as-reported and operational basis for fourth quarter 2014 compared to a fourth quarter 2013 as-reported loss of $56.3 million, or 32 cents per share, and an operational loss of $60.0 million, or 34 cents per share. The period-over-period increase in operational results was due to income tax expense on the fourth quarter 2013 EWC District Energy sale.
For the year, Parent & Other reported a loss of $180.8 million, or $1.00 per share, on an as-reported and an operational basis in 2014. This compared to a loss of $159.9 million, or 89 cents per share, on an as-reported basis and a loss of $163.5 million, or 91 cents per share on an operational basis in 2013. The year-over-year decrease in operational results was due largely to higher income tax expense, offset by the prior year tax on the EWC District Energy sale noted above. Effects of some intercompany transactions also contributed to the decrease.
Earnings Guidance
Entergy is initiating 2015 operational earnings guidance in the range of $5.10 to $5.90 per share.
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 10,000 megawatts of nuclear power, making it one of the nation's leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $12 billion and approximately 13,000 employees.
Additional information regarding Entergy's quarterly and annual results of operations, regulatory proceedings and other matters is available in Entergy's investor news release dated Feb. 5, 2015, a copy of which has been filed today with the SEC on Form 8-K, and Entergy's quarterly presentation slides. These are available on Entergy's Investor Relations website at www.entergy.com/investor_relations and on Entergy's Investor Relations mobile web app at enter.gy/ir.
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 2015 operational earnings guidance and other statements of Entergy's plans, beliefs or expectations included in 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 rate proceedings, formula rate plans and other cost recovery mechanisms; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory 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 VY or any of Entergy's other 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 proposed acquisition of the Union Power Station in El Dorado, Arkansas and the proposed combination of Entergy Louisiana and Entergy Gulf States Louisiana, 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, and (h) economic conditions and conditions in commodity and capital markets during the periods covered by the forward-looking statements.
Appendix A provides a reconciliation of GAAP consolidated as-reported earnings to non-GAAP consolidated operational earnings.
Table 1: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2014 vs. 2013
(Per share in U.S. $)
Fourth Quarter Year-to-Date
-------------- ------------
2014 2013 Change 2014 2013 Change
---- ---- ------ ---- ---- ------
As-Reported
Utility 0.60 0.90 (0.30) 4.60 4.64 (0.04)
Entergy Wholesale
Commodities 0.31 0.24 0.07 1.62 0.24 1.38
Parent & Other (0.25) (0.32) 0.07 (1.00) (0.89) (0.11)
----- ----- ---- ----- ----- -----
Consolidated As-
Reported Earnings 0.66 0.82 (0.16) 5.22 3.99 1.23
Less Special Items
Utility (0.01) 0.04 (0.05) (0.04) (0.16) 0.12
Entergy Wholesale
Commodities (0.08) (0.24) 0.16 (0.57) (1.23) 0.66
Parent & Other - 0.02 (0.02) - 0.02 (0.02)
--- ---- ----- --- ---- -----
Consolidated Special
Items (0.09) (0.18) 0.09 (0.61) (1.37) 0.76
Operational
Utility 0.61 0.86 (0.25) 4.64 4.80 (0.16)
Entergy Wholesale
Commodities 0.39 0.48 (0.09) 2.19 1.47 0.72
Parent & Other (0.25) (0.34) 0.09 (1.00) (0.91) (0.09)
----- ----- ---- ----- ----- -----
Consolidated
Operational Earnings 0.75 1.00 (0.25) 5.83 5.36 0.47
Appendix B provides a reconciliation of Entergy Wholesale Commodities GAAP net income to non-GAAP operational adjusted EBITDA.
Appendix B: Entergy Wholesale Commodities Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Fourth Quarter and Year-to-Date 2014 vs. 2013
---------------------------------------------
($ in millions)
Fourth Quarter Year-to-Date
-------------- ------------
2014 2013 Change 2014 2013 Change
---- ---- ------ ---- ---- ------
Net income 58 42 16 295 43 252
Add back: interest
expense 5 5 - 17 16 1
Add back: income tax
expense 36 (12) 48 177 (77) 254
Add back: depreciation
and amortization 63 61 2 276 216 60
Subtract: interest and
investment income 37 66 (29) 114 138 (24)
Add back: decommissioning
expense 38 33 5 142 125 17
--- --- --- --- --- ---
Adjusted EBITDA 162 63 99 792 185 607
Add back: special item
for HCM implementation
expenses (pre-tax) 1 19 (18) 3 24 (21)
Add back: special item
resulting from the
decision to close VY
(pre-tax) 20 52 (32) 154 343 (189)
---
Operational adjusted
EBITDA 183 133 50 950 553 397
Totals may not foot due
to rounding
Entergy Corporation
Consolidated Income Statement
Three Months Ended Dec. 31
(in thousands)
2014 2013
---- ----
(unaudited)
Operating Revenues:
Electric $2,167,542 $2,111,070
Natural gas 40,067 41,039
Competitive businesses 623,709 539,797
------- -------
Total 2,831,318 2,691,906
--------- ---------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 625,747 627,624
Purchased power 357,783 302,914
Nuclear refueling outage
expenses 69,987 64,861
Other operation and maintenance 917,946 894,027
Asset write-off, impairments,
and related charges 11,980 50,032
Decommissioning 71,203 62,762
Taxes other than income taxes 137,667 147,416
Depreciation and amortization 326,093 337,503
Other regulatory charges
(credits) - net (6,762) 22,683
------ ------
Total 2,511,644 2,509,822
--------- ---------
Gain on sale of investment - 43,569
--- ------
Operating Income 319,674 225,653
------- -------
Other Income (Deductions):
Allowance for equity funds used
during construction 18,148 19,378
Interest and investment income 38,646 97,023
Miscellaneous - net (8,991) (22,876)
------ -------
Total 47,803 93,525
------ ------
Interest Expense:
Interest expense 169,724 163,114
Allowance for borrowed funds
used during construction (9,377) (7,068)
Total 160,347 156,046
------- -------
Income Before Income Taxes 207,130 163,132
Income Taxes 82,124 11,780
------ ------
Consolidated Net Income 125,006 151,352
Preferred Dividend Requirements
of Subsidiaries 4,879 4,423
----- -----
Net Income Attributable to
Entergy Corporation $120,127 $146,929
======== ========
Earnings Per Average Common Share
Basic $0.67 $0.82
Diluted $0.66 $0.82
Average Number of Common Shares
Outstanding - Basic 180,245,555 178,332,416
Average Number of Common Shares
Outstanding - Diluted 181,603,441 178,751,436
Entergy Corporation
Consolidated Income Statement
Twelve Months Ended Dec. 31
(in thousands)
2014 2013
---- ----
(unaudited)
Operating Revenues:
Electric $9,591,902 $8,942,360
Natural gas 181,794 154,353
Competitive businesses 2,721,225 2,294,234
--------- ---------
Total 12,494,921 11,390,947
---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 2,632,558 2,445,818
Purchased power 1,915,414 1,554,332
Nuclear refueling outage
expenses 267,679 256,801
Other operation and maintenance 3,310,536 3,331,934
Asset write-off, impairments,
and related charges 179,752 341,537
Decommissioning 272,621 242,104
Taxes other than income taxes 604,606 600,350
Depreciation and amortization 1,318,638 1,261,044
Other regulatory charges
(credits) - net (13,772) 45,597
------- ------
Total 10,488,032 10,079,517
---------- ----------
Gain on sale of investment - 43,569
--- ------
Operating Income 2,006,889 1,354,999
--------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 64,802 66,053
Interest and investment income 147,686 199,300
Miscellaneous - net (42,016) (59,762)
------- -------
Total 170,472 205,591
------- -------
Interest Expense:
Interest expense 661,083 629,537
Allowance for borrowed funds
used during construction (33,576) (25,500)
Total 627,507 604,037
------- -------
Income Before Income Taxes 1,549,854 956,553
Income Taxes 589,597 225,981
------- -------
Consolidated Net Income 960,257 730,572
Preferred Dividend Requirements
of Subsidiaries 19,536 18,670
------ ------
Net Income Attributable to
Entergy Corporation $940,721 $711,902
======== ========
Earnings Per Average Common Share
Basic $5.24 $3.99
Diluted $5.22 $3.99
Average Number of Common Shares
Outstanding - Basic 179,506,151 178,211,192
Average Number of Common Shares
Outstanding - Diluted 180,296,885 178,570,400
Entergy Corporation
Utility Electric Energy Sales & Customers
Three Months Ended Dec. 31
--------------------------
2014 2013 % %
Change Weather-Adjusted
------
(Millions of kWh)
Electric Energy Sales:
Residential 7,770 8,089 (3.9) (1.4)
Commercial 6,984 7,049 (0.9) 0.3
Governmental 599 598 0.2 0.5
Industrial 11,087 10,389 6.7 6.7
Total to Ultimate Customers 26,440 26,125 1.2 2.4
Wholesale 3,105 1,133 174.1
----- -----
Total Sales 29,545 27,258 8.4
====== ======
Twelve Months Ended Dec. 31
---------------------------
2014 2013 % %
Change Weather-Adjusted
------
(Millions of kWh)
Electric Energy Sales:
Residential 35,932 35,169 2.2 0.1
Commercial 28,827 28,547 1.0 1.2
Governmental 2,428 2,412 0.7 0.7
Industrial 43,723 41,653 5.0 5.0
Total to Ultimate Customers 110,910 107,781 2.9 2.3
Wholesale 9,462 3,020 213.3
----- -----
Total Sales 120,372 110,801 8.6
======= =======
Dec. 31
-------
2014 2013 %
Change
------
Electric Customers (End of period):
Residential 2,409,732 2,395,267 0.6
Commercial 345,008 341,972 0.9
Governmental 17,373 17,168 1.2
Industrial 46,177 45,789 0.8
------ ------
Total Ultimate Customers 2,818,290 2,800,196 0.6
Wholesale 10 44 (77.3)
--- ---
Total Customers 2,818,300 2,800,240 0.6
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SOURCE Entergy Corporation
