ENTERGY CORPORATION NEW ORLEANS, Oct. 24, 2017 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported third quarter 2017 earnings per share of $2.21 on an as-reported basis and $2.35 on an operational basis (non-GAAP), which excludes the effects of special items.
"Today we are reporting a strong third quarter, and we now expect to finish the year in the top half of our Utility, Parent & Other adjusted earnings guidance range," said Entergy Chairman and Chief Executive Officer Leo Denault. "We have completed most of our key deliverables for the year that support our strategy to achieve steady, predictable growth at the Utility, while managing risk and an orderly exit of our merchant power business. We are affirming our 2017 guidance and our longer-term outlooks."
Business highlights included the following:
-- Entergy Arkansas reached an unopposed settlement with the Arkansas
Attorney General and other intervenors on the recovery of nuclear costs
in its 2017 and 2018 test year FRP filings. The settlement is subject
to approval by the APSC.
-- Entergy Arkansas and Entergy Texas filed settlement agreements for their
AMI proceedings.
-- Entergy Louisiana filed its application to extend and modify its annual
formula rate plan.
-- The PUCT approved Entergy Texas' DCRF settlement agreement.
-- The utility companies successfully restored power to approximately
250,000 customers in the wake of Hurricane Harvey.
-- Entergy plans to operate Palisades Power Plant until no later than May
31, 2022, under the existing power purchase agreement with Consumers
Energy.
-- Entergy was named to the 2017 Dow Jones Sustainability North America
Index; this is the 16th consecutive year Entergy has appeared on the
World or North America Index or both.
Consolidated Earnings (GAAP and Non-GAAP Measures)
Third Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for reconciliation of GAAP to non-GAAP earnings and description of special items)
---------------------------------------------------------------------------------------------------------------------------------------------
Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
(After-tax, $ in millions)
As-reported
earnings 398.2 388.2 10.0 890.7 1,185.4 (294.7)
Less special
items (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
----- ----- --- ------ ----- ------
Operational
earnings (non-
GAAP) 423.7 415.6 8.1 1,162.6 1,216.2 (53.5)
Estimated
weather in
billed sales (44.7) 33.8 (78.5) (89.9) (8.0) (81.9)
(After-tax, per share in $)
As-reported
earnings 2.21 2.16 0.05 4.94 6.60 (1.66)
Less special
items (0.14) (0.15) 0.01 (1.51) (0.17) (1.34)
----- ----- ---- ----- ----- -----
Operational
earnings (non-
GAAP) 2.35 2.31 0.04 6.45 6.77 (0.32)
Estimated
weather in
billed sales (0.25) 0.18 (0.43) (0.50) (0.04) (0.46)
Calculations may differ due to
rounding
Consolidated Results
For third quarter 2017, the company reported earnings of $398 million, or $2.21 per share, on an as-reported basis and $424 million, or $2.35 per share, on an operational basis. This compared to third quarter 2016 earnings of $388 million, or $2.16 per share, on an as-reported basis and $416 million, or $2.31 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 third quarter 2017, the Utility business earned net income attributable to Entergy Corporation of $401 million, or $2.22 per share, compared to $443 million, or $2.47 per share, in third quarter 2016. Drivers for the quarterly decrease included lower net revenue and higher operating expenses.
Net revenue decreased quarter-over-quarter, driven by unfavorable weather in the current quarter compared to favorable weather a year ago. For third quarter 2017, cooling degree days were 16 percent below normal, compared to 14 percent above normal in third quarter 2016. Excluding the effects of weather, net revenue was higher reflecting weather-adjusted sales growth and new rate actions to recover investments that benefit customers.
On a weather-adjusted basis, billed sales increased 3.5 percent, including 3.8 percent and 2.5 percent for residential and commercial billed sales, respectively. Industrial billed sales volume increased 4.0 percent with higher sales to both new and expansion customers as well as existing customers. The increase was driven largely by the primary metals and chlor-alkali segments. Sales to petroleum refining and industrial gases customers were also higher.
Utility non-fuel O&M increased quarter-over-quarter, driven by higher spending on nuclear operations including nuclear refueling outage expenses. Depreciation and amortization as well as taxes other than income taxes were also higher. In addition, other income increased period-over-period due partly to higher AFUDC-equity funds.
Parent & Other recognized a loss of $(58) million, or (32) cents per share, for third quarter 2017, compared to a loss of $(63) million, or (35) cents per share, for third quarter 2016.
On a combined basis, Utility, Parent & Other (non-GAAP) contributed $1.90 to third quarter 2017 consolidated EPS and $2.12 to third quarter 2016 consolidated EPS. On an adjusted basis, normalizing weather and income taxes, Utility, Parent & Other (non-GAAP) contributed $2.15 per share in third quarter 2017 to consolidated EPS, compared to $1.98 in third quarter 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 third quarter 2017, EWC earned net income attributable to Entergy Corporation of $55 million, or 31 cents per share, compared to $8 million, or 4 cents per share, for third quarter 2016. On an operational basis, EWC earned $81 million, or 45 cents per share, in third quarter 2017, compared to $35 million, or 19 cents per share, in third quarter 2016.
The sale of FitzPatrick at the end of first quarter 2017 affected period-over-period variances for multiple line items. In third quarter 2016, the plant contributed a (15) cent loss to as-reported EPS and 2 cents to operational EPS.
Excluding FitzPatrick, revenue from nuclear plants increased due to higher capacity prices. Current period earnings also reflected the impacts of previous impairments, specifically lower fuel and refueling outage expenses. Other income increased largely from higher realized earnings on decommissioning trust funds. Partially offsetting the increases was higher decommissioning expense due in part to the agreement with NYPA to transfer the Indian Point Unit 3 decommissioning liability and associated trust to Entergy.
Appendix D contains additional details on EWC financial and operating measures, including the calculation of EWC operational adjusted EBITDA (non-GAAP).
Earnings Guidance
Entergy affirmed its 2017 operational earnings guidance range of $6.80 to $7.40 per share and its Utility, Parent & Other adjusted guidance range of $4.25 to $4.55 per share. See webcast presentation slides for additional details.
The company has provided 2017 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 2017. 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 $(2.10) per share.
Earnings Teleconference
A teleconference will be held from 10:00 a.m. to 10:40 a.m. Central Time on Tuesday, Oct. 24, 2017, 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 56951898, 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 Oct. 31, 2017, by dialing 855-859-2056, conference ID 56951898. 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 $10.8 billion and nearly 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. 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 over 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, excluding securitization debt; 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 2017 earnings guidance, its current financial and operational outlook, 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 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; (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.
Third Quarter 2017 Earnings Release Appendices and Financial Statements
Appendices
Appendices are presented in this section as follows:
-- A: Consolidated Results and Special Items
-- 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: GAAP to Non-GAAP Reconciliations
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
Third 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)
---------------------------------------------------------------------------------------------------------------------------------------------
Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
(After-tax, $ in millions)
Earnings
Utility 400.8 443.3 (42.5) 809.0 1,013.8 (204.8)
Parent & Other (57.9) (62.8) 4.9 (169.1) (165.4) (3.8)
EWC 55.2 7.7 47.5 250.8 337.0 (86.2)
---- --- ---- ----- ----- -----
Consolidated 398.2 388.2 10.0 890.7 1,185.4 (294.7)
Less special items
Utility - - - - - -
Parent & Other - - - - - -
EWC (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
----- ----- --- ------ ----- ------
Consolidated (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
Operational (non-GAAP)
Utility 400.8 443.3 (42.5) 809.0 1,013.8 (204.8)
Parent & Other (57.9) (62.8) 4.9 (169.1) (165.4) (3.8)
EWC 80.7 35.2 45.6 522.7 367.7 155.0
---- ---- ---- ----- ----- -----
Consolidated 423.7 415.6 8.1 1,162.6 1,216.2 (53.5)
Estimated weather in
billed sales (44.7) 33.8 (78.5) (89.9) (8.0) (81.9)
Diluted average
number of common
shares outstanding
(in millions) 180.5 180.0 180.2 179.5
(After-tax, per share in $) (a)
Earnings
Utility 2.22 2.47 (0.25) 4.49 5.64 (1.15)
Parent & Other (0.32) (0.35) 0.03 (0.94) (0.92) (0.02)
EWC 0.31 0.04 0.27 1.39 1.88 (0.49)
Consolidated 2.21 2.16 0.05 4.94 6.60 (1.66)
Less special items
Utility - - - - - -
Parent & Other - - - - - -
EWC (0.14) (0.15) 0.01 (1.51) (0.17) (1.34)
----- ----- ---- ----- ----- -----
Consolidated (0.14) (0.15) 0.01 (1.51) (0.17) (1.34)
Operational (non-GAAP)
Utility 2.22 2.47 (0.25) 4.49 5.64 (1.15)
Parent & Other (0.32) (0.35) 0.03 (0.94) (0.92) (0.02)
EWC 0.45 0.19 0.26 2.90 2.05 0.85
---- ---- ---- ---- ---- ----
Consolidated 2.35 2.31 0.04 6.45 6.77 (0.32)
Estimated weather in
billed sales (0.25) 0.18 (0.43) (0.50) (0.04) (0.46)
Calculations may differ due to rounding
(a) Per share amounts are calculated by
dividing the corresponding line
item in the chart above by the
diluted average number of common
shares outstanding over the
period.
See Appendix B for detailed earnings variance analysis. See Appendix A-3 for special items by driver.
Appendix A-2 provides the components of OCF contributed by each business.
Appendix A-2: Consolidated Operating Cash Flow
Third Quarter and Year-to-Date 2017 vs. 2016
--------------------------------------------
($ in millions)
Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Utility 878 929 (51) 2,005 2,078 (73)
Parent
&
Other (92) (53) (39) (318) (162) (156)
EWC 107 124 (17) 26 336 (310)
--- --- --- --- --- ----
Total
OCF 893 1,000 (107) 1,713 2,252 (540)
Calculations may differ due to
rounding
OCF decreased quarter-over-quarter, driven in part by the receipt of DOE litigation proceeds in third quarter 2016. Unfavorable weather in the quarter, compared to favorable weather a year ago, also contributed. Positive weather-adjusted sales growth partially offset the decrease.
Appendix A-3 and Appendix A-4 list special items by business. Amounts are shown on both a net income and per share basis. 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)
Third Quarter and Year-to-Date 2017 vs. 2016
--------------------------------------------
Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
(Pre-tax except for income tax effects and total, $ in millions)
EWC
Items associated
with decisions to
close or sell EWC
nuclear plants (39.3) (42.4) 3.2 (503.0) (81.3) (421.7)
Gain on the sale of
FitzPatrick - - - 16.3 - 16.3
DOE litigation
awards - - - - 33.8 (33.8)
Income tax effect on
adjustments above
(b) 13.7 15.0 (1.2) 170.4 16.8 153.6
Income tax benefit
resulting from
FitzPatrick
transaction - - - 44.5 - 44.5
Total EWC (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
Total special items (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
(After-tax, per share in $) (c)
EWC
Items associated
with decisions to
close or sell EWC
nuclear plants (0.14) (0.15) 0.01 (1.82) (0.29) (1.53)
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
Total EWC (0.14) (0.15) 0.01 (1.51) (0.17) (1.34)
Total special items (0.14) (0.15) 0.01 (1.51) (0.17) (1.34)
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.
Appendix A-4: Special Items by Income Statement Line Item (shown as positive/(negative) impact on earnings)
Third Quarter and Year-to-Date 2017 vs. 2016
--------------------------------------------
(Pre-tax except for Income taxes and total, $ in millions)
Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
EWC
Net revenue - 7.5 (7.5) 91.0 7.5 83.6
Non-fuel O&M (21.6) (29.3) 7.7 (179.0) (18.1) (160.9)
Taxes other than income
taxes (1.5) (1.8) 0.3 (8.1) (3.7) (4.3)
Asset write-off and
impairments (16.2) (18.8) 2.6 (421.6) (33.2) (388.4)
Gain on sale of assets - - - 16.3 - 16.3
Miscellaneous net (other
income) - - - 14.6 - 14.6
Income taxes (d) 13.7 15.0 (1.2) 214.8 16.8 198.0
---- ---- ---- ----- ---- -----
Total EWC (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
Total special items
(after-tax) (25.5) (27.5) 1.9 (271.9) (30.7) (241.2)
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. 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)
Third Quarter 2017 vs. 2016
---------------------------
(After-tax, per share in $, sorted in consolidated operational column, most to least favorable)
Utility Parent & Other EWC Consolidated
As- Opera- As- Opera- As- Opera- As- Opera-
Reported tional Reported tional tional
Reported Reported tional
2016 earnings 2.47 2.47 (0.35) (0.35) 0.04 0.19 2.16 2.31
Non-fuel O&M (0.06) (0.06) (f) (0.01) (0.01) 0.22 0.19 (g) 0.15 0.12
Other income (deductions)-other 0.07 0.07 (h) (0.01) (0.01) 0.06 0.06 (i) 0.12 0.12
Income taxes - other (0.01) (0.01) 0.05 0.05 (j) 0.02 0.02 0.06 0.06
Preferred dividend requirements 0.01 0.01 - - - - 0.01 0.01
Asset write-offs and impairments - - - - 0.01 - 0.01 -
Decommissioning expense 0.01 0.01 - - (0.04) (0.04) (0.03) (0.03)
Taxes other than income taxes (0.06) (0.06) (k) - - 0.02 0.02 (0.04) (0.04)
Depreciation/amortization exp. (0.05) (0.05) (l) - - - - (0.05) (0.05)
Net revenue (0.16) (0.16) (m) - - (0.02) 0.01 (0.18) (0.15)
2017 earnings 2.22 2.22 (0.32) (0.32) 0.31 0.45 2.21 2.35
---- ---- ----- ----- ---- ---- ---- ----
Appendix B-2: As-Reported and Operational EPS Variance Analysis (e)
Year-to-Date 2017 vs. 2016
--------------------------
(After-tax, per share in $, sorted in consolidated operational column, most to least favorable)
Utility Parent & Other EWC Consolidated
As- Opera- As- Opera- As- Opera- As- Opera-
Reported tional Reported tional tional
Reported Reported tional
------ ------
2016 earnings 5.64 5.64 (0.92) (0.92) 1.88 2.05 6.60 6.77
Other income (deductions)-other 0.16 0.16 (h) - - 0.26 0.21 (i) 0.42 0.37
Non-fuel O&M (0.35) (0.35) (f) (0.01) (0.01) (0.12) 0.46 (g) (0.48) 0.10
Interest exp. and other charges 0.05 0.05 (n) (0.02) (0.02) - - 0.03 0.03
Preferred dividend requirements 0.02 0.02 - - - - 0.02 0.02
Asset write-offs and impairments - - - - (1.40) - (o) (1.40) -
Gain on sale of assets - - - - 0.06 - (p) 0.06 -
Income taxes - other (0.79) (0.79) (q) 0.01 0.01 1.02 0.77 (r) 0.24 (0.01)
Taxes other than income taxes (0.12) (0.12) (k) - - 0.05 0.07 (s) (0.07) (0.05)
Depreciation/amortization exp. (0.14) (0.14) (l) - - (0.01) (0.01) (0.15) (0.15)
Decommissioning expense - - - - (0.28) (0.28) (t) (0.28) (0.28)
Net revenue 0.02 0.02 - - (0.07) (0.37) (u) (0.05) (0.35)
2017 earnings 4.49 4.49 (0.94) (0.94) 1.39 2.90 4.94 6.45
---- ---- ----- ----- ---- ---- ---- ----
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;
income taxes - other represents income
tax differences other than the tax
effect of individual line items.
(f) The current quarter decrease reflected a
reduction in third quarter 2016 expense
which resulted from final court
decisions in several lawsuits against
the DOE related to spent nuclear fuel
storage costs. For the quarter and year-
to-date, the increases in nuclear
generation and refueling outage expenses
were partly offset by lower fossil-
fueled generation expense. The year-to-
date decrease also reflected higher
transmission and distribution expenses
due to higher vegetation maintenance
costs, the first quarter 2016 $18
million (pre-tax) cost deferral at EAI
for previously-expensed costs related
to post Fukushima and flood barrier
compliance and increased compensation
and benefits expense due partly to a
revision to estimated incentive
compensation expense in first quarter
2016.
(g) The current quarter and year-to-date
variances reflected the sale of
FitzPatrick and lower refueling outage
expenses (due to impairments). The year-
to-date as-reported decrease reflected
higher severance and retention expenses
which resulted from decisions to close
or sell EWC's nuclear plants; the 2017
year-to-date period also included
costs associated with the agreement to
sell FitzPatrick. These expenses were
classified as special items. The year-
to-date variances also reflected a
second quarter 2016 reduction in expense
as a result of final court decisions in
litigation against the DOE for the
reimbursement of spent nuclear fuel
storage costs; a portion of the amount
(12 cents) was considered a special
item.
(h) The current quarter and year-to-date
increases reflected higher AFUDC-equity
funds due to increased construction work
in progress and higher realized gains on
decommissioning trust fund investments
(substantially offset in net revenue).
(i) 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).
(j) The current quarter increase was due to
an inter-company adjustment in third
quarter 2016 (offset at EWC).
(k) The current quarter and year-to-date
decreases were due largely to higher
franchise and ad valorem taxes.
(l) The current quarter and year-to-date
decreases were due partly to a third
quarter 2016 reduction in depreciation
expense which resulted from final court
decisions in several lawsuits against
the DOE related to spent nuclear fuel
storage costs. Additions to plant in
service also contributed.
Utility As-Reported Net Revenue
Variance Analysis
2017 vs. 2016 ($ EPS)
--------------------
Third Quarter Year-to-Date
------------- ------------
Estimated weather in
billed sales (0.43) (0.46)
Volume/unbilled 0.20 0.12
Retail electric price 0.06 0.21
Regulatory sharing - 0.06
Other 0.01 0.09
---- ----
Total (0.16) 0.02
----- ----- ----
(m) The current quarter decrease was driven by
weather, which was negative in third
quarter 2017 and positive in third
quarter 2016. Partially offsetting the
effects of weather, weather-adjusted
billed sales volume was higher for
residential, commercial and industrial
classes. Net revenue also reflected rate
changes including EAI's 2017 FRP, ETI's
TCRF and the timing of recovery of
purchased power capacity costs at ELL
through its FRP.
(n) The year-to-date increase was partly due
to the third quarter 2016 interest
expense recorded as a result of a FERC
order on EAI's opportunity sales case.
Higher AFUDC-borrowed funds due to
increased construction work in progress
also contributed.
(o) The year-to-date decrease was due to
nuclear fuel spending, nuclear refueling
outage spending and expenditures for
capital assets being charged to expense
as incurred as a result of the impaired
value of the EWC nuclear plants' long-
lived assets due to the significantly
reduced remaining estimated operating
lives (classified as special items).
(p) The year-to-date increase was due to a
gain on the sale of FitzPatrick
(classified as a special item).
(q) The year-to-date decrease was due to 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).
(r) The year-to-date increase was largely
due to 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
$238 million in second quarter 2016. The
as-reported increase also included a tax
benefit which resulted from the re-
determination of FitzPatrick's tax basis
as a result of the sale of the plant in
first quarter 2017 (classified as a
special item).
(s) The year-to-date increase was driven
largely by the sale of FitzPatrick.
(t) The year-to-date decrease resulted
partly from the establishment of
decommissioning liabilities at
FitzPatrick and Indian Point 3 in August
2016 from the agreement with NYPA to
transfer decommissioning liabilities and
associated trusts to Entergy. Revisions
to the estimated decommissioning
liabilities from the early shutdown
decisions for Indian Point and Palisades
in fourth quarter 2016 also contributed
to the decrease.
(u) The year-to-date decrease reflected
lower volume for nuclear assets,
including the absence of FitzPatrick
after it was sold in first quarter 2017,
partially offset by lower fuel expense.
The as-reported variance also reflected
cost reimbursements from the buyer
related to the FitzPatrick sale
(classified as a special item).
C: Utility Financial and Operating Measures
Appendix C-1 provides a comparative summary of Utility, Parent & Other adjusted earnings and EPS contribution, each of which excludes the effects of special items and normalizes weather and income tax expense.
Appendix C-1: Utility, Parent & Other Adjusted Earnings and EPS - Reconciliation of GAAP to Non-GAAP Measures
Third Quarter and Year-to-Date 2017 vs. 2016 (See Appendix A for details on special items)
-----------------------------------------------------------------------------------------
Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
($ in millions)
Utility earnings 400.8 443.3 (42.5) 809.0 1,013.8 (204.8)
Parent & Other
earnings (loss) (57.9) (62.8) 4.9 (169.1) (165.4) (3.8)
UP&O earnings 343.0 380.5 (37.5) 639.9 848.4 (208.5)
Less:
Special items - - - - - -
Estimated
weather (72.7) 55.0 (127.7) (146.1) (12.9) (133.2)
Tax effect of
estimated
weather (v) 28.0 (21.1) 49.1 56.3 5.0 51.3
---- ----- ---- ---- --- ----
Estimated
weather (after-
tax) (44.7) 33.8 (78.5) (89.9) (8.0) (81.9)
Customer sharing - - - - (16.1) 16.1
Tax effect of
customer
sharing (v) - - - - 6.2 (6.2)
Other income tax
items 0.2 (6.6) 6.8 (8.7) 131.8 (140.5)
--- ---- --- ---- ----- ------
Tax items, net
of customer
sharing 0.2 (6.6) 6.8 (8.7) 121.9 (130.6)
UP&O adjusted
earnings 387.5 353.2 34.3 738.4 734.4 4.0
(After-tax, per share
in $) (w)
Utility earnings 2.22 2.47 (0.25) 4.49 5.64 (1.15)
Parent & Other
earnings (loss) (0.32) (0.35) 0.03 (0.94) (0.92) (0.02)
----- ----- ---- ----- ----- -----
UP&O earnings 1.90 2.12 (0.22) 3.55 4.72 (1.17)
Less:
Special items - - - - - -
Estimated
weather (0.25) 0.18 (0.43) (0.50) (0.04) (0.46)
Other income tax
items, net of
customer
sharing - (0.04) 0.04 (0.05) 0.67 (0.72)
--- ----- ---- ----- ---- -----
UP&O adjusted
earnings 2.15 1.98 0.17 4.10 4.09 0.01
Calculations may differ due to rounding
(v) Income tax effect is calculated by
multiplying the pre-tax amount by
the estimated income tax rates
that are expected to apply to
those adjustments.
(w) Per share amounts are calculated by
dividing the corresponding line
item in the chart above by the
diluted average number of common
shares outstanding over the
period.
Appendix C-2 provides a comparative summary of Utility operating and financial measures.
Appendix C-2: Utility Operating and Financial Measures
Third Quarter and Year-to-Date 2017 vs. 2016
--------------------------------------------
Third Quarter Year-to-Date
------------- ------------
2017 2016% % Weather 2017 2016% % Weather
Adjusted (x) Adjusted (x)
Change Change
--- --- ---
GWh billed
Residential 10,833 11,817 (8.3) 3.8 25,810 27,035 (4.5) 1.1
Commercial 8,271 8,650 (4.4) 2.5 21,595 21,938 (1.6) 0.9
Governmental 682 703 (3.0) (0.8) 1,885 1,912 (1.4) (0.7)
Industrial 12,503 12,017 4.0 4.0 35,829 34,581 3.6 3.6
------ ------ --- --- ------ ------ --- ---
Total retail sales 32,289 33,187 (2.7) 3.5 85,119 85,466 (0.4) 2.0
Wholesale 3,387 2,733 23.9 8,255 9,452 (12.7)
----- ----- ---- ----- ----- -----
Total sales 35,676 35,920 (0.7) 93,374 94,918 (1.6)
Number of electric retail customers
Residential 2,472,199 2,454,761 0.7
Commercial 355,186 352,175 0.9
Governmental 17,803 17,662 0.8
Industrial 47,090 49,606 (5.1)
------ ------ ----
Total retail customers 2,892,278 2,874,204 0.6
Net revenue ($ in
millions) 1,811 1,859 (2.6) 4,765 4,758 0.1
Non-fuel O&M per MWh $17.94 $17.39 3.2 $20.22 $18.82 7.4
Calculations may differ due to
rounding
Appendix C-3 provides a summary of Utility retail sales on a twelve-months-ended basis.
Appendix C-3: Utility Retail Sales
Twelve Months Ended September 30 2017 vs. 2016
----------------------------------------------
Twelve months ended September 30
--------------------------------
2017 2016% % Weather
Adjusted (x)
Change
--- ---
GWh billed
Residential 33,887 34,420 (1.5) 1.2
Commercial 28,854 28,916 (0.2) 1.0
Governmental 2,520 2,540 (0.8) (0.2)
Industrial 46,987 45,733 2.7 2.7
Total retail sales 112,248 111,609 0.6 1.7
Calculations may differ due to
rounding
(x) The effects of weather were
estimated using monthly
heating degree days and
cooling degree days from
certain locations within
each jurisdiction and
comparing to "normal"
weather based on 20-year
historical data. The models
used to estimate weather are
updated periodically and
subject to change.
D: EWC Financial and Operating Measures
Appendix D-1 provides a comparative summary of EWC operational adjusted EBITDA (non-GAAP).
Appendix D-1: EWC Operational Adjusted EBITDA - Reconciliation of GAAP to Non-GAAP Measures
Third Quarter and Year-to-Date 2017 vs. 2016
--------------------------------------------
($ in millions) Third Quarter Year-to-Date
------------- ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Net income 56 8 48 252 339 (87)
Add back: interest expense 5 5 - 18 18 -
Add back: income taxes 26 6 20 (508) (177) (331)
Add back: depreciation and
amortization 52 53 (1) 157 155 2
Subtract: interest and
investment income 41 27 14 143 87 56
Add back: decommissioning
expense 60 47 13 195 117 78
--- --- --- --- --- ---
Adjusted EBITDA (non-GAAP) 158 93 65 (29) 365 (394)
Add back pre-tax special items for:
Items associated with
decisions to close or sell
EWC nuclear plants 39 42 (3) 503 81 422
Gain on the sale of
FitzPatrick - - - (16) - (16)
DOE litigation awards - - - - (34) 34
--- --- --- --- --- ---
Operational adjusted EBITDA
(non-GAAP) 197 135 62 458 412 46
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
Third Quarter and Year-to-Date 2017 vs. 2016 (See Appendix G for reconciliation of GAAP to non-GAAP measures)
------------------------------------------------------------------------------------------------------------
Third Quarter Year-to-Date
------------- ------------
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Owned capacity (MW) (y) 3,962 4,880 (18.8)
GWh billed 8,234 9,372 (12.1) 22,616 26,484 (14.6)
As-reported net
revenue ($ in
millions) 392 396 (1.0) 1,136 1,156 (1.7)
Operational net revenue
(non-GAAP) ($ in
millions) 392 389 0.8 1,045 1,148 (9.0)
EWC Nuclear Fleet
-----------------
Capacity factor 98% 90% 8.9 79% 85% (7.1)
GWh billed 7,633 8,674 (12.0) 20,861 24,670 (15.4)
Production cost per MWh $14.91 $23.77 (37.3) $18.68 $22.91 (18.5)
Average energy/
capacity revenue per
MWh (z) $48.82 $47.41 3.0 $51.82 $48.99 5.8
As-reported net
revenue ($ in
millions) 391 396 (1.3) 1,129 1,151 (1.9)
Operational net revenue
(non-GAAP) ($ in
millions) 391 389 0.5 1,038 1,143 (9.2)
Refueling outage days
FitzPatrick - - 42 -
Indian Point 2 - - - 102
Indian Point 3 - - 66 -
Palisades - - 27 -
Pilgrim - - 43 -
(y) FitzPatrick was sold on 3/31/17
and investments in wind
generation were sold in
November 2016.
(z) Average energy and capacity
revenue per MWh excluding
FitzPatrick was $49.24 in
third quarter 2017, $50.06 in
year-to-date 2017 and $53.73
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
Third Quarter 2017 vs. 2016 (See Appendix G for reconciliation of GAAP
to non-GAAP financial measures)
----------------------------------------------------------------------
For
12
months
ending
September
30 2017 2016 Change
---- ---- ------
GAAP Measures
ROIC
-
as-
reported (1.8%) 7.0% (8.8%)
ROE
-
as-
reported (9.4%) 13.4% (22.8%)
Book
value
per
share $48.38 $56.21 ($7.83)
End
of
period
shares
outstanding
(in
millions) 179.6 179.1 0.5
Non-GAAP Measures
ROIC
-
operational 6.5% 7.9% (1.4%)
ROE
-
operational 13.0% 15.6% (2.6%)
As
of
September
30
($
in
millions) 2017 2016 Change
---- ---- ------
GAAP Measures
Cash
and
cash
equivalents 546 1,307 (761)
Revolver
capacity 4,213 4,243 (30)
Commercial
paper 1,272 264 1,008
Total
debt 16,224 15,073 1,151
Securitization
debt 582 698 (116)
Debt
to
capital 64.6% 59.4% 5.2%
Off-balance sheet
liabilities:
Debt
of
joint
ventures
-
Entergy's
share 68 74 (6)
Leases
-
Entergy's
share 397 359 38
Power
purchase
agreements
accounted
for
as
leases 166 195 (29)
--- --- ---
Total
off-
balance
sheet
liabilities 631 628 3
Non-GAAP Financial
Measures
Debt
to
capital,
excluding
securitization
debt 63.8% 58.3% 5.5%
Gross
liquidity 4,759 5,550 (791)
Net
debt
to
net
capital,
excluding
securitization
debt 62.9% 55.9% 7.0%
Parent
debt
to
total
debt,
excluding
securitization
debt 20.9% 19.4% 1.5%
Debt
to
operational
adjusted
EBITDA,
excluding
securitization
debt 4.6x 4.2x 0.4x
Operational
FFO
to
debt,
excluding
securitization
debt 15.3% 21.1% (5.8%)
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 revenue 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 Revenue on a per unit basis at
contract per kW-month which capacity is expected to be
(applies to capacity sold to third parties, given
contracts only) existing contract prices and/or
auction awards
Average revenue per MWh on Revenue on a per unit basis at
contracted volumes 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 A contract for the sale of
contracts 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 energy and capacity revenue
total revenue per MWh 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 revenue 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 Percent of planned generation
under contract 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),
Palisades (not later than May 31,
2022), Indian Point 2 (April 30,
2020) and Indian Point 3 (April
30, 2021)
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),
Palisades (not later than May 31,
2022), Indian Point 2 (April 30,
2020) and Indian Point 3 (April
30, 2021)
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 Entergy's
share 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
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
ROE - as-reported 12-months
rolling net
income
attributable
to Entergy
Corporation
divided by
average
common equity
Securitization debt Debt
associated
with
securitization
bonds issued
to recover
storm costs
from
hurricanes
Rita, Ike and
Gustav at ETI
and Hurricane
Isaac at
ENOI; the
2009 ice
storm at EAI
and
investment
recovery of
costs
associated
with the
cancelled
Little Gypsy
repowering
project at
ELL
Appendix F-1: Definitions
-------------------------
Financial Measures - Non-GAAP
Total debt Sum of short-term and long-term debt,
notes payable and commercial paper and
capital leases on the balance sheet
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
Utility, Parent & Other Combines the Utility segment with Parent &
Other, which is all of Entergy excluding
the EWC segment
Adjusted EPS As-reported EPS excluding special items
and normalizing weather and income taxes
Debt to capital ratio, Total debt divided by total
excluding securitization capitalization, excluding securitization
debt debt
Debt to operational End of period total debt excluding
adjusted EBITDA, securitization debt divided by 12-months
excluding securitization rolling operational adjusted EBITDA
debt
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
Operational FFO to debt, 12-months rolling operational FFO as a
excluding securitization percentage of end of period total debt
debt excluding securitization debt
Gross liquidity Sum of cash and revolver capacity
Operational adjusted Adjusted EBITDA excluding effects of
EBITDA special items
Operational EPS As-reported EPS excluding special items
Operational FFO FFO excluding the effects of special items
Parent debt to total debt End of period Entergy Corporation debt,
ratio, excluding including amounts drawn on credit
securitization debt revolver and commercial paper facilities,
as a percent of consolidated total debt,
excluding securitization debt
Net debt to net capital Total debt less cash and cash equivalents
ratio, excluding divided by total capitalization less cash
securitization debt and cash equivalents, excluding
securitization debt
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
ROE - operational 12-months rolling operational net income
attributable to Entergy Corporation
divided by average common equity
Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.
Appendix F-2: Abbreviations and Acronyms
----------------------------------------
ADIT Accumulated deferred income taxes Michigan PSC Michigan Public Service Commission
AFUDC - Allowance for borrowed funds used Midcontinent Independent System Operator,
borrowed during construction Inc.
funds MISO
AFUDC - Allowance for equity funds used
equity during construction
funds Moody's Moody's Investor Service
ALJ Administrative Law Judge MPSC Mississippi Public Service Commission
AMI Advanced metering infrastructure MTEP MISO Transmission Expansion Planning
APSC Arkansas Public Service Commission Nelson 6 Unit 6 of Roy S. Nelson plant (coal)
ARO Asset retirement obligation NEPOOL New England Power Pool
CCGT Combined cycle gas turbine Ninemile 6 Ninemile Point Unit 6 (CCGT)
CCNO Council of the City of New Orleans,
Louisiana Non-fuel O&M Non-fuel operation and maintenance expense
COD Commercial operation date NDT Nuclear decommissioning trust
CT Simple cycle combustion turbine NRC Nuclear Regulatory Commission
CZM Coastal Zone Management NYISO New York Independent System Operator, Inc.
DCRF Distribution cost recovery factor NYPA New York Power Authority
DOE U.S. Department of Energy NYSE New York Stock Exchange
EAI Entergy Arkansas, Inc. O&M Operation and maintenance expense
EBITDA Earnings before interest, income Net cash flow provided by operating
taxes, depreciation and activities
amortization OCF
EEI Edison Electric Institute OpCo Operating Company
ELL Entergy Louisiana, LLC OPEB Other post-employment benefits
EMI Entergy Mississippi, Inc. Palisades Palisades Power Plant (nuclear)
ENOI Entergy New Orleans, Inc. PSDAR Post-Shutdown Decommissioning Activities
Report
ENVY Entergy Nuclear Vermont Yankee Pilgrim Pilgrim Nuclear Power Station (nuclear)
ESI Entergy Services, Inc. PPA Power purchase agreement or purchased
power agreement
EPS Earnings per share PUCT Public Utility Commission of Texas
ETI Entergy Texas, Inc. RFP Request for proposal
ETR Entergy Corporation RISEC Rhode Island State Energy Center (CCGT)
EWC Entergy Wholesale Commodities ROE Return on equity
FERC Federal Energy Regulatory
Commission ROIC Return on invested capital
FFO Funds from operations RPCE Rough production cost equalization
Firm LD Firm liquidated damages RS Cogen RS Cogen facility (CCGT cogen)
FitzPatrick James A. FitzPatrick Nuclear Power
Plant (nuclear, sold March 31,
2017) RSP Rate Stabilization Plan (ELL Gas)
FRP Formula rate plan S&P Standard & Poor's
GAAP U.S. generally accepted accounting
principles SEC U.S. Securities and Exchange Commission
Grand Gulf Unit 1 of Grand Gulf Nuclear
Station (nuclear), 90% owned or
leased by System Energy SERI System Energy Resources, Inc.
Indian Point Indian Point Energy Center Unit 1 SPDES State Pollutant Discharge Elimination
1 (nuclear) System
Indian Point Indian Point Energy Center Unit 2
2 (nuclear) TCRF Transmission cost recovery factor
Indian Point Indian Point Energy Center Unit 3
3 (nuclear) Top Deer Top Deer Wind Ventures, LLC
IPEC Indian Point Energy Center
(nuclear) Union Union Power Station (CCGT)
ISO Independent system operator UP&O Utility, Parent & Other
ISES Independence Steam Electric Station VY Vermont Yankee Nuclear Power Station
(coal) (nuclear)
LPSC Louisiana Public Service Commission WACC Weighted-average cost of capital
LTM Last twelve months WQC Water Quality Certification
YOY Year-over-year
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 - EWC Operational
Net Revenue
-------------------------------------------------------------------------------------
($ in
millions
except
where
noted) Third Quarter Year-to-Date
2017 2016 2017 2016
---- ---- ---- ----
As-
reported
net
revenue (A) 392 396 1,136 1,156
Special
items
included
in net
revenue:
Items
associated
with
decisions
to
close
or sell
EWC
nuclear
plants - 8 91 8
Total
special
items
included
in net
revenue (B) - 8 91 8
Operational
net
revenue
(non-
GAAP) (A-B) 392 389 1,045 1,148
EWC
Nuclear
--------
As-
reported
EWC
Nuclear
net
revenue (C) 391 396 1,129 1,151
Special
items
included
in EWC
Nuclear
net
revenue:
Items
associated
with
decisions
to
close
or sell
EWC
nuclear
plants - 8 91 8
Total
special
items
included
in EWC
nuclear
net
revenue (D) - 8 91 8
Operational
EWC
nuclear
net
revenue
(non-
GAAP) (C-D) 391 389 1,038 1,143
Calculations may differ due to
rounding
Appendix G-2: Reconciliation of GAAP to Non-GAAP Financial Measures - ROIC, ROE
($ in millions except
where noted) Third Quarter
-------------
2017 2016
---- ----
As-reported net
income (loss)
attributable to
Entergy Corporation,
rolling 12 months (A) (878) 1,285
Preferred dividends 14 21
Tax effected interest
expense 404 407
--- ---
As-reported net
income (loss)
attributable to
Entergy Corporation,
rolling 12 months
adjusted for
preferred dividends
and tax effected
interest expense (B) (460) 1,713
Special items in prior
quarters (2,071) (186)
Items associated with
decisions to close or
sell EWC nuclear
plants (25) (27)
Total special items,
rolling 12 months (C) (2,097) (212)
Operational earnings,
rolling 12 months
adjusted for
preferred dividends
and tax effected
interest expense
(non-GAAP) (B-C) 1,637 1,925
Operational earnings,
rolling 12 months
(non-GAAP) (A-C) 1,219 1,497
Average invested
capital (D) 25,246 24,443
Average common equity (E) 9,380 9,613
ROIC - as-reported (B/D) (1.8%) 7.0%
ROIC - operational [(B-C)/D] 6.5% 7.9%
ROE - as-reported (A/E) (9.4%) 13.4%
ROE - operational [(A-C)/E] 13.0% 15.6%
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) Third Quarter
-------------
2017 2016
---- ----
Total
debt (A) 16,224 15,073
Less
securitization
debt (B) 582 698
--- ---
Total
debt,
excluding
securitization
debt (C) 15,642 14,375
Less
cash
and
cash
equivalents (D) 546 1,307
--- -----
Net
debt,
excluding
securitization
debt (E) 15,096 13,068
Total
capitalization (F) 25,118 25,375
Less
securitization
debt (B) 582 698
--- ---
Total
capitalization,
excluding
securitization
debt (G) 24,536 24,677
Less
cash
and
cash
equivalents (D) 546 1,307
--- -----
Net
capital,
excluding
securitization
debt (H) 23,990 23,370
Debt to
capital (A/F) 64.6% 59.4%
Debt to
capital,
excluding
securitization
debt (C/G) 63.8% 58.3%
Net
debt
to net
capital,
excluding
securitization
debt (E/H) 62.9% 55.9%
Revolver
capacity (I) 4,213 4,243
Gross
liquidity (D+I) 4,759 5,550
Entergy
Corporation
notes:
Due
January
2017 - 500
Due
September
2020 450 450
Due
July
2022 650 650
Due
September
2026 750 750
Total
parent
long-
term
debt (J) 1,850 2,350
Revolver
draw (K) 150 180
Commercial
paper (L) 1,272 264
----- ---
Total
parent
debt (J)+(K)+(L) 3,272 2,794
Parent
debt
to
total
debt,
excluding
securitization
debt [((J)+(K)+(L))/(C)] 20.9% 19.4%
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) Third Quarter
-------------
2017 2016
---- ----
Total debt (A) 16,224 15,073
Less securitization debt (B) 582 698
--- ---
Total debt, excluding securitization
debt (C) 15,642 14,375
As-reported consolidated net income
(loss), rolling 12 months (864) 1,306
Add back (rolling 12 months):
Interest expense 656 661
Income taxes (1,054) (377)
Depreciation and amortization 1,389 1,340
Regulatory charges (credits) (21) 196
Decommissioning expense 407 303
Subtract (rolling 12 months):
Securitization proceeds 144 140
Interest and investment income 223 157
AFUDC-equity funds 85 62
Adjusted EBITDA, rolling 12 months
(non-GAAP) (D) 61 3,070
Add back special items (rolling 12
months pre-tax):
Items associated with decisions to
close or sell EWC nuclear plants 3,331 482
DOE litigation awards - (34)
Top Deer investment impairment - 37
Gain on the sale of RISEC - (154)
Gain on the sale of FitzPatrick (16) -
Operational adjusted EBITDA, rolling
12 months (non-GAAP) (E) 3,376 3,401
Debt to operational adjusted EBITDA,
excluding securitization debt (C)/(E) 4.6x 4.2x
Net cash flow provided by operating
activities, rolling 12 months (F) 2,459 3,194
AFUDC-borrowed funds, rolling 12
months (G) (41) (32)
Working capital items in net cash
flow provided by operating
activities (rolling 12 months):
Receivables (24) (10)
Fuel inventory 30 24
Accounts payable (1) 55
Prepaid taxes and taxes accrued 9 3
Interest accrued - 9
Other working capital accounts 28 (59)
Securitization regulatory charges 114 111
--- ---
Total (H) 156 133
FFO, rolling 12 months (F)+(G)-(H) 2,262 3,029
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) 2,388 3,035
Operational FFO to debt, excluding
securitization debt (I)/(C) 15.3% 21.1%
Calculations may differ due to
rounding
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SOURCE Entergy Corporation
