Entergy Corporation · NYSE:ETR
Entergy — Q4 2023 Earnings Presentation
54 slides from Entergy's earnings presentation, Feb 22, 2024
Slide 1: Pathway to Premier
Pathway to Premier Entergy Corporation Fourth quarter 2023 earnings call February 22, 2024 Customer service Resilient infrastructure 0 Clean energy Industrial growth
Slide 2: Caution regarding forward-looking statements and Regulation G compliance
Caution regarding forward-looking statements and Regulation G compliance In this presentation, 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, am
Slide 3: Table of contents
Table of contents Section Slides Business discussion 3 – 10 Appendix Sustainability highlights 12–13 2023 planned activities 14 2024 regulatory milestones 15 Utility 16 – 38 Financial disclosures 40 – 47 Financial summaries and Regulation G reconciliations 49 – 52 2
Slide 4: Strong results in 2023
Strong results in 2023 Entergy adjusted EPS; $ 0.72 (0.38) • Results in top half of guidance range for the 8th consecutive year • Results driven by continued customer- 6.42 6.77 centric investment (regulatory actions, operating expenses, financing costs) 2022 Utility P&O 2023 Calculations may differ
Slide 5: 2023 adjusted EPS
2023 adjusted EPS Entergy adjusted EPS; $ 0.22 0.12 0.02 0.85 (0.44) (0.19) (0.23) 6.42 6.77 4 2022 Utility Utility Utility Utility P&O Other 1, 2 Share effect 2023 operating other other net interest 4 rev. less fuel, O&M operating purch. power, expenses3 and reg. chgs.1,2 Calculations may differ du
Slide 6: 2023 operating cash flow
2023 operating cash flow Consolidated OCF; $M Key drivers (+) Utility fuel and purchased power payments (+) Non-capital storm restoration spending (higher in 2022) 4,294 (+) Pension contributions 2,585 (-) Utility customer receipts (primarily lower fuel revenue) (-) Receipt of E-NO storm securitizat
Slide 7: Credit and cash flow
Credit and cash flow As expected, achieved targeted metrics as of 12/31/23 Agency Outlook: Key ETR credit metrics expectation in range or better1 Moody’s Cumulative OCF outlook; $B CFO pre-working capital to debt >14% Parent debt to total debt <25% Standard & Poor’s FFO to debt 14% – 17% ~$14B
Slide 8: Equity needs
Equity needs Fulfilled through 2024; 20% sold for 2025–2026 Estimated 2021–2024 equity need; $B Estimated 2025–2026 equity need; $B Not yet settled 0.28 1.40 1.20 1.20 1.12 Equity need Completed as of Equity need ATM completed Remainder to be 2021–2024 12/31/231 2025–2026 through sourced 1 12/31/23
Slide 9: Adjusted EPS guidance and outlooks
Adjusted EPS guidance and outlooks Targeting 60% – 65% dividend payout Entergy adjusted EPS; $ 8.05–8.45 7.50–7.90 6.77 7.05–7.35 $6.70 original guidance midpoint 23 24E guidance 25E outlook 26E outlook As-reported 11.10 8 1. Based on original 2023 guidance midpoint of $6.70
Slide 10: 2024 adjusted EPS guidance drivers
2024 adjusted EPS guidance drivers Entergy adjusted EPS; $ Illustrative 7.05 – 6.77 7.35 2023 Utility Utility Utility Utility Utility Parent & Income tax rate 2024 operating rev. other O&M other interest exp. other Other2 and Share guidance less fuel, operating income2 effect purch. power, expenses1
Slide 11: Save the date
Save the date Analyst day June 6–7, 2024 New Orleans, Louisiana 10
Slide 12: Appendix
11 Appendix eS) entergy
Slide 13: A focus on sustainability leadership
A focus on sustainability leadership Environmental Social Robust stewardship responsibility governance For a Promoting safety, Managing risks cleaner world opportunity, and equity and opportunities • Among the cleanest large-scale • Live safe all day, every day • Diverse board with an effective mix
Slide 14: Extensive and transparent sustainability reporting
Extensive and transparent sustainability reporting Visit entergy.com/sustainability Select disclosures Integrated Report Human Rights Statement TCFD-aligned Climate Report / 2022 Update Climate Policy Priorities and Advocacy CDP Climate Change Questionnaire Diversity, inclusion and belonging strateg
Slide 15: 2023 planned activities
2023 planned activities 1Q 2Q 3Q 4Q E-AR FRP rates • Filing for E-TX 2021 renewable E-AR 2021 renewable MTEP 2023 approval effective RFP selections (now expected 2Q24) RFP decision (APSC) E-LA renewable RFP Filing for E-AR 2021 Announcement of E-TX 2022 E-MS 2022 renewable decision (LP
Slide 16: 2024 regulatory milestones
2024 regulatory milestones 1Q 2Q 3Q 4Q E-AR FRP rates effective • E-LA resilience and grid hardening • E-NO gas LDC sale • MTEP 2024 approval E-LA Sterlington and plan decision (requested) (LPSC) decision (requested) (MISO) Coastal Prairie Solar • E-NO resilience and grid hardening (CCNO) • E-TX
Slide 17: Utility overview
Utility overview E-AR E-LA1 E-MS E-NO1 E-TX • Electric utility – • Electric and gas utility • Electric utility – • Electric and gas utility • Electric utility – 730,000 customers – 1,105,000 electric 459,000 customers – 208,000 electric 512,000 customers • Authorized ROE: customers • Authorized ROE:
Slide 18: Utility 2023 weather-adjusted electric retail sales
Utility 2023 weather-adjusted electric retail sales Governmental E-TX E-AR 2% 17% 19% Residential 30% E-NO 5% By Industrial 45% By operating segment E-MS company 11% Commercial E-LA 23% 48% 17
Slide 19: Utility generation overview
Utility generation overview Renewables 1 Renewables 2% Coal 1% 8% Purchases CT / CCGT 17% 44% CT / CCGT Coal Nuclear 43% 4% 22% Owned and 2023 sources of energy leased capability as of 12/31/23 Nuclear 27% Legacy gas / oil Legacy gas 25% 7% 18 1. Includes generation from both owned and purchased pow
Slide 20: Jurisdictional base rate filing frameworks
Jurisdictional base rate filing frameworks E-AR E-LA E-MS E-NO E-TX1 SERI Latest filing 7/7/23 (FRP) 5/31/23 (FRP) 3/1/23 (FRP) 4/28/23 (FRP) 7/1/22 Monthly cost of date (rate case) service Rate effective Jan. following Sept. following filing April following Sept. following filing 35 days after Imme
Slide 21: Industrial customer metrics remain supportive
Industrial customer metrics remain supportive Refining margins, Light Louisiana Chlor-alkali, polyvinyl chloride U.S. ammonia exports; 000s tons Sweet crude; 321 crack spread margins, $ per metric ton 2023 2022 5-year average Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan
Slide 22: Long-term LNG fundamentals remain strong
Long-term LNG fundamentals remain strong No near-term impacts from permit moratorium Has DOE permit U.S. LNG export capacity; Bcf/d Needs DOE permit LNG export permit moratorium Non-ETR • No projects through 2026 in service affected by additions ETR moratorium ~14 Bcf/d through 2022 additions • Expe
Slide 23: Actively expanding renewable footprint
Actively expanding renewable footprint 935 MW of renewables in service Regulatory items pending Approved / in progress Owned / Est. in Owned / Est. in Project MW PPA service1 Project MW PPA service1 ETR OpCo filings: Driver Solar (E-AR) 250 Owned 2024 Mondu Solar (E-LA) 100 PPA 2026 West Memphis Sol
Slide 24: Entergy Arkansas
Entergy Arkansas E-AR (currently in rates) Metric Detail Authorized ROE 9.15% – 10.15% Rate base $10.1B retail rate base (2024 test year) WACC (after-tax) 5.62% Equity ratio 38.7% (47.0% excluding $1.9B ADIT at 0% rate) Regulatory construct Forward test year FRP; result outside ROE band reset to mid
Slide 25: Entergy Louisiana
Entergy Louisiana E-LA (currently in rates) Metric Detail – electric1 Detail – gas2 Authorized ROE 9.0% – 10.0% 9.3% – 10.3% Rate base $15.7B (12/31/22 test year)3 $0.15B + $0.3B TRM rider + $0.2B DRM rider – $(0.4B) tax (9/30/22 test year) reform rider WACC (after-tax) 6.66% 6.93% Equity ratio 49.5
Slide 26: E-LA recommends modifying and extending FRP
E-LA recommends modifying and extending FRP Also filed full rate case FRP and rate case summaries (docket U-36959) Proposed FRP modifications Rate case1 FRP2 • Remove cap on distribution recovery mechanism Rate effective years 2024 2024–2026 • Amortization of production tax credits over the remainin
Slide 27: E-LA resilience and grid hardening filing
E-LA resilience and grid hardening filing Resilience and grid hardening filing highlights (docket U-36625) • Plan includes $9.6B investment over 10 years • Phase I seeks approval of $5B of projects over the first five years • Proposed recovery via forward-looking rider with semi-annual true-ups Key
Slide 28: E-LA enhanced renewable RFP process
E-LA enhanced renewable RFP process For up to 3,000 megawatts of solar Filing highlights (docket U-36697) • Requests: ‒ Approval of alternative process to secure up to 3,000 MW of solar resources ‒ Expansion of the Geaux Green Option tariff ‒ Approval of new Geaux Zero tariff ‒ Proposed recovery via
Slide 29: E-LA natural gas LDC business sale
E-LA natural gas LDC business sale Filing highlights (docket S-37079) • E-NO and E-LA entered into separate purchase and sale agreements to sell their natural gas LDC businesses to affiliates of Bernhard Capital Partners • The transactions will include a transition period following regulatory approv
Slide 30: Entergy Mississippi
Entergy Mississippi E-MS (currently in rates) Metric Detail Authorized ROE 10.81% performance-adjusted midpoint (10.40% + 0.41% performance factor); 9.74% – 11.88% range (annual redetermination based on formula) Rate base $4.2B (2023 forward test year) WACC (after-tax) 7.06% Equity ratio 46.76% Regu
Slide 31: Entergy New Orleans
Entergy New Orleans E-NO (currently in rates) Metric Detail – electric Detail – gas1 Authorized ROE 8.85% – 9.85% (9.35% midpoint) Rate base $1.2B $0.2B (12/31/22 test year plus known and measurables through 12/31/23) WACC (after-tax) 6.86% Equity ratio 51% Regulatory FRP with forward-looking featur
Slide 32: E-NO resilience and grid hardening filing
E-NO resilience and grid hardening filing Resilience and grid hardening filing highlights (docket UD 21-03) • Full plan includes $1B investment over 10 years • Originally requested approval for Phase I, $0.6B for the first five years • Proposed recovery via forward-looking rider • Recent development
Slide 33: E-NO natural gas LDC business sale
E-NO natural gas LDC business sale Filing highlights (docket R-24-49) • E-NO and E-LA entered into separate purchase and sale agreements to sell their natural gas LDC businesses to affiliates of Bernhard Capital Partners • The transactions will include a transition period following regulatory approv
Slide 34: Entergy Texas
Entergy Texas E-TX (currently in rates) Metric Detail Authorized ROE 9.57% Rate base $4.4B (12/31/21 test year) WACC (after-tax) 6.61% Equity ratio 51.2% Regulatory construct Historical test year rate case1; Interim rate base riders: TCRF, DCRF, and GCRR Key rate changes in $54M base rate change (6/
Slide 35: System Energy Resources
System Energy Resources Grand Gulf Nuclear Station Energy and capacity allocation1 SERI (most recent monthly bill)2,3 Metric Detail E-NO Principal asset An ownership and leasehold interest in Grand 17% E-AR 36% Gulf Nuclear Station Authorized ROE 10.94%4 Last calculated rate base $1.76B WACC (after-
Slide 36: SERI global settlements with MPSC, APSC
SERI global settlements with MPSC, APSC 64% of SERI litigation risk resolved Highlights of SERI / MPSC global settlement • In Nov. 2022, SERI refunded $235M to E-MS resolving all disputes between SERI and the MPSC in FERC dockets described on slides that follow • The settlement also specified a 9.65
Slide 37: SERI FERC cases
SERI FERC cases LPSC complaint regarding GGNS sale-leaseback renewal and uncertain tax position (docket EL18-152) • Complaint alleging (1) SERI is double-recovering costs by including lease payments and capital additions in UPSA billings and (2) SERI incorrectly excluded FIN 48 liabilities associate
Slide 38: SERI FERC cases
SERI FERC cases ROE complaints and equity complaint (consolidated dockets EL17-41, EL18-142, EL18-204) • APSC, MPSC, and LPSC filed ROE complaints; LPSC also alleged that SERI’s equity component was unjust and unreasonable (complaints consolidated) • 3/24/21: ALJ initial decision issued Next steps D
Slide 39: SERI FERC cases
SERI FERC cases Prudence complaint (docket EL21-56) • LPSC, APSC, and CCNO filed a complaint alleging operational prudence claims, primarily: the performance and/or management of the 2012 extended power uprate of Grand Gulf was imprudent and SERI imprudently operated Grand Gulf during the period 201
Slide 40: Financial disclosures
39 Financial disclosures eS) entergy
Slide 41: Key guidance drivers
Key guidance drivers 2024 adjusted EPS guidance range $7.05 – $7.35 Driver74 Assumption Regulatory proceedings Full year of 2023 rate actions and planned 2024 rate actions (see individual OpCo slides and Adjusted EPS – quarterly considerations slides) Retail sales volume ~$0.20 YoY change • Weather-
Slide 42: Key guidance drivers (continued)
Key guidance drivers (continued) 2024 adjusted EPS guidance range $7.05 – $7.35 Driver Assumption P&O excl. inc. tax rate, share ~$(0.30) YoY change 1,2 effect, and affiliate preferred • Primarily Parent interest expense (higher interest rates and higher debt balances) • Lower pension credits from E
Slide 43: Adjusted EPS – quarterly considerations
Adjusted EPS – quarterly considerations 2023 items of note (EPS, unless otherwise noted) 1Q 2Q 3Q 4Q ETR as-reported EPS 1.47 1.84 3.14 4.64 Adjustments EPS 0.32 - (0.13) 4.12 ETR adjusted EPS 1.14 1.84 3.27 0.52 Diluted average number of common shares outstanding (in millions) 212 212 212 213 2023
Slide 44: Adjusted EPS – quarterly considerations (continued)
Adjusted EPS – quarterly considerations (continued) 2024 items of note (EPS, unless otherwise noted) 1Q 2Q 3Q 4Q Items of note: Timing of retail sales growth New/expansion industrial growth weighted to 4Q (largely ramp-up of primary metals in 4Q) Utility other O&M 2023 flex spending increases largel
Slide 45: 2024–2026 Utility three-year capital plan
2024–2026 Utility three-year capital plan $M E-AR 2024E 2025E 2026E Total E-TX 2024E 2025E 2026E Total Generation 1,090 355 240 1,685 Generation 445 935 1,205 2,585 Transmission 135 85 80 300 Transmission 320 305 370 995 Distribution 415 535 480 1,430 Distribution 475 365 315 1,155 Utility Support 6
Slide 46: Debt maturity schedule
Debt maturity schedule Debt maturity schedule as of 12/31/231; $M Company 1Q24 2Q24 3Q24 4Q24 2025 2026 E-AR 375 70 690 E-LA 1,400 376 720 E-MS 100 E-NO 85 78 85 E-TX 130 SERI 222 Total Utility - 460 100 1,400 746 1,625 ETR Corp. 800 750 Total - 460 100 1,400 1,546 2,375 Calculations may differ due
Slide 47: Planned financing and interest rate assumptions
Planned financing and interest rate assumptions Financing plan1; $M Company 2024E 2025E 2026E Long-term debt E-AR 845 270 600 E-LA 1,835 870 1,475 E-MS 205 520 605 E-NO 160 85 - E-TX 300 600 845 SERI 300 190 - Total Utility debt 3,645 2,535 3,525 Wtd. avg. rate assumption ~6% ~6.5% ~6% ETR equity (p
Slide 48: 2024 ETR adjusted EPS sensitivities
2024 ETR adjusted EPS sensitivities Estimated annual Variable Description of sensitivity EPS impact Utility Retail sales growth 1% change in residential MWh sold +/- 0.09 1% change in commercial MWh sold +/- 0.05 1% change in industrial MWh sold +/- 0.02 Other O&M 1% change in expense +/- 0.10 Rate
Slide 49: Financial summaries and Regulation G reconciliations
Financial summaries and Regulation G reconciliations 48
Slide 50: Earnings summary
Earnings summary Table 1: Full year earnings summary $ in millions Per share in $ 2023 2022 2023 2022 As-reported (after-tax) Utility 2,507 1,407 11.81 6.84 Parent & Other 2022 EWC - 63 - 0.31 All other (151) (366) (0.71) (1.78) Total Parent & Other (151) (303) (0.71) (1.48) Consolidated 2,357 1,103
Slide 51: Regulation G reconciliations
Regulation G reconciliations Table 2: ETR adjusted earnings Reconciliation of GAAP to non-GAAP measures (Pre-tax except for income taxes and totals; $ in millions) 2023 2022 Net income (loss) attributable to ETR Corp. 2,357 1,103 Less adjustments: Utility - Customer-sharing of tax benefits as a resu
Slide 52: Regulation G reconciliations
Regulation G reconciliations Table 2: ETR adjusted earnings (continued) Reconciliation of GAAP to non-GAAP measures (After-tax, per share in $) 2022 2021 Net income (loss) attributable to ETR Corp. 11.10 5.37 Less adjustments: Utility - Customer-sharing of tax benefits as a result of the 2016-2018 I
Slide 53: Utility book ROEs
Utility book ROEs Table 3: Utility book ROE summary LTM ending December 31, 2023 ($ in millions) E-AR E-LA E-MS E-NO E-TX Utility1 As-reported earnings available to common stock (a) 402 1,270 192 229 289 2,507 Less adjustments: E-LA true-up for carrying costs for Ida storms (prior year portion) 31 3
Slide 54: ETR
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