01—Abstract
Summary
Summary of the 10-K filed February 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Entergy Corporation (NYSE: ETR) reported a strong 2023 under its combined Form 10-K filed February 23, 2024, with consolidated net income attributable to Entergy of $2.36 billiona ($11.10 diluted EPS), up from $1.10 billion ($5.37) in 2022.
The improvement was driven mainly by a $842 millionb income-tax benefit tied to the resolution of the 2016-2018 IRS audit, the Entergy Louisiana Hurricane Ida securitization, and the absence of the 2022 $551 million System Energy regulatory charge. Operating revenue was $12.1 billion, down from $13.8 billion, reflecting lower fuel and purchased-power pass-throughs, while the Utility segment earned $2.51 billion. Balance-sheet leverage improved: debt-to-capital fell to 63.8% from 66.9%, and the company issued equity through its at-the-market program.
Entergy plans capital expenditures of $5.9 billion in 2024, rising to $7.3 billionc in 2026, focused on generation (including solar additions), transmission, and distribution. Management expects to pay about $270 million into qualified pensions in 2024 and expects to issue roughly $1.4 billion of equity through 2026. Key risks include pending rate cases and formula-rate-plan proceedings, including Entergy Louisiana's 2023 rate-extension request, and a large set of FERC complaints against System Energy over Grand Gulf.
Aggregate refund claims in those proceedings exceed System Energy's net book value, so an adverse outcome could require new financing. The company also faces possible corporate alternative minimum tax exposure within two to four years and ongoing storm-cost and nuclear decommissioning and spent-fuel matters.
02—Key points
Key Highlights
- Net income attributable to Entergy rose to $2.36B ($11.10 diluted EPS) from $1.10B ($5.37) in 2022, aided by an $842M IRS-audit-related income tax benefit.
- Operating revenues declined to $12.15B from $13.76B, mainly from lower fuel and purchased-power pass-through revenues; Utility electric price increases partly offset this.
- Debt-to-capital ratio improved to 63.8% from 66.9%, and Entergy paid $918M in common dividends in 2023 ($4.34 per share declared).
- Planned 2024-2026 capital investment totals $5.9B, $6.5B, and $7.3B, weighted toward generation (including solar), transmission, and distribution.
- Significant FERC litigation against System Energy (Grand Gulf) claims refunds exceeding its net book value; System Energy's remaining regulatory liability for pending complaints is $178M.
- Entergy Louisiana storm-cost securitizations (March 2023 Hurricane Ida, $1.49B) and the $106M Hurricane Isaac regulatory liability reversal shaped 2023 results.
- Entergy expects to become subject to the IRA corporate alternative minimum tax within two to four years, and an agreement to sell the Entergy New Orleans and Entergy Louisiana gas distribution businesses (about $484M base price) is pending regulatory approval.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 23, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $12.15B$13.76B | −11.7% |
| Operating Expenses | $9.53B$11.71B | −18.6% |
| Operating Income | $2.62B$2.05B | +27.7% |
| Interest Expense | $1.05B$940.06M | +11.3% |
| Net Income | $2.36B$1.10B | +115.3% |
| EPS (Basic) | $5.57$2.70 | +106.3% |
| EPS (Diluted) | $5.55$2.68 | +107.1% |
| Shares Outstanding (Basic) | 423.14M408.90M | +3.5% |
| Shares Outstanding (Diluted) | 424.75M411.10M | +3.3% |
05—Questions
Frequently Asked Questions
What drove the large increase in 2023 net income?
Most of the increase came from income tax benefits: an $842M reduction from resolving the 2016-2018 IRS audit, plus about $129M from the Entergy Louisiana Hurricane Ida securitization. The 2022 results also included a $551M System Energy regulatory charge that did not recur. Core Utility earnings also improved on higher retail electric prices.
How is Entergy's balance sheet and financing position?
Debt-to-capital fell to 63.8% from 66.9%, helped by 2023 net income. About 19.6% of debt sits at the parent and 79.9% at the Utility. Entergy has a $3.5B credit facility with $3.5B available, and its $2B commercial paper program had $1.14B outstanding at year-end. The company expects to issue about $1.4B of equity through 2026 under its at-the-market program.
What are the main regulatory and litigation risks?
The largest is the FERC litigation over the Grand Gulf Unit Power Sales Agreement. Refund claims, after MPSC and APSC settlements, exceed System Energy's net book value, and an adverse ruling could require System Energy to raise new financing. Other items include Entergy Louisiana's pending rate extension and rate case, New Orleans and Louisiana storm-cost recovery, and the outcome of ANO and River Bend regulatory matters.
What is the capital spending outlook?
Planned construction and capital investments are $5.92B in 2024, $6.5B in 2025, and $7.335B in 2026. Major projects include the Orange County Advanced Power Station (expected in service mid-2026), several solar facilities such as Walnut Bend, West Memphis, and Driver Solar, and the Louisiana solar and resilience programs.
Does Entergy face any tax or cash-flow headwinds ahead?
Based on IRS guidance and internal forecasts, Entergy and its Registrant Subsidiaries may become subject to the corporate alternative minimum tax within two to four years. Entergy has not yet determined the full effect of the IRA's clean-energy credit transferability and direct-pay rules, and tax-benefit items from the IRS audit resolution were non-recurring.
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