10-QPeriod: Q1 FY2015

ENTERGY CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 7, 2015For Securities:ETR

Summary

Entergy Corporation's subsidiaries, particularly Entergy Arkansas and Entergy Gulf States Louisiana, reported decreases in net income for the first quarter of 2015 compared to the same period in 2014, primarily driven by increased operation and maintenance expenses, higher taxes, and increased nuclear refueling outage costs. While net revenues saw some increases due to factors like energy efficiency riders and higher wholesale billings, these were offset by higher operating expenses. Several subsidiaries, including Entergy Arkansas and Entergy Louisiana, experienced significant shifts in cash flow from financing activities due to debt issuances and repayments in the prior year. Regulatory and strategic developments are also noteworthy. Entergy Arkansas faces increased NRC inspection activities at its ANO site, expected to add to operating costs. The proposed acquisition of Union Power Station by Entergy Arkansas, Entergy Gulf States Louisiana, and Entergy Texas remains contingent on various regulatory approvals, with significant testimony and reviews ongoing. Additionally, Entergy Louisiana and Entergy Gulf States Louisiana are seeking LPSC approval for a business combination, which is also undergoing review with potential customer benefits highlighted.

Financial Highlights

48 data points
Beta

Revenue

$2.92B

Net Income

$302.93M

10.4% Net Margin

EPS (Diluted)

$0.82

Total Assets

$46.38B

Cash & Equivalents

$1.18B

Free Cash Flow

$610.96M

Financial Statements
Beta
Revenue$2.92B
Operating Expenses$2.38B
Operating Income$542.77M
Interest Expense$166.34M
Net Income$302.93M
EPS (Basic)$0.83
EPS (Diluted)$0.82
Shares Outstanding (Basic)359.32M
Shares Outstanding (Diluted)360.96M

Key Highlights

  • 1Net income declined for Entergy Arkansas and Entergy Gulf States Louisiana year-over-year, primarily due to increased operating expenses like maintenance and nuclear refueling.
  • 2Entergy Arkansas expects increased operating costs due to significant additional NRC inspection activities at its ANO site following a "yellow with substantial safety significance" determination.
  • 3The proposed acquisition of Union Power Station by Entergy Arkansas, Entergy Gulf States Louisiana, and Entergy Texas is progressing through regulatory approvals, with several state agencies and the FERC reviewing the transaction.
  • 4Entergy Louisiana and Entergy Gulf States Louisiana are seeking approval for a business combination, with the LPSC reviewing potential customer benefits and cost shifting concerns.
  • 5Cash flow from operations decreased for Entergy Arkansas and System Energy Resources compared to the prior year, impacted by higher interest payments and income tax payments, and increased spending on nuclear refueling outages.
  • 6Entergy Mississippi received significant insurance proceeds in Q1 2015 related to the Baxter Wilson plant event, boosting its operating cash flow.
  • 7Entergy Texas reported a strong increase in operating cash flow, driven by higher fuel cost recovery and improved customer collections.

Frequently Asked Questions

The decrease in net income for Entergy Arkansas and Entergy Gulf States Louisiana was primarily due to higher other operation and maintenance expenses, increased taxes other than income taxes, and higher nuclear refueling outage expenses. For Entergy Arkansas, higher interest expense also contributed to the decline.

The NRC's decision to move ANO into the 'multiple/repetitive degraded cornerstone column' will require significant additional NRC inspection activities. Entergy Arkansas expects these activities to increase ANO's operating costs, estimating approximately $35 million in 2015 and $15 million in 2016 for NRC inspection costs, excluding remediation.

The acquisition of Union Power Station is contingent on obtaining necessary regulatory approvals, including cost recovery, from various federal and state agencies (APSC, LPSC, PUCT, FERC). The process is ongoing, with multiple filings, testimony, and reviews from regulatory bodies and intervenors. Closing is targeted for late 2015.

Applications for the business combination have been filed with the LPSC and FERC. The LPSC is considering potential customer benefits and concerns about fuel cost shifting, with hearings and decisions anticipated in mid-to-late 2015. FERC has approved certain aspects of the combination and an asset transfer.