10-QPeriod: Q2 FY2023

ENTERGY CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:ETR

Summary

Entergy Corporation's Q2 2023 10-Q filing indicates a mixed financial performance across its operating subsidiaries, with notable impacts from regulatory changes, storm cost recovery, and interest rate environments. Entergy Arkansas saw a modest increase in net income for the quarter due to higher retail prices, but a slight decrease year-to-date, influenced by lower volume and increased interest expenses. Entergy Louisiana's net income was significantly impacted by storm cost securitizations, showing a decrease in the second quarter due to prior year tax benefits but an increase year-to-date, also influenced by a regulatory charge to share benefits with customers. Entergy Mississippi and Entergy Texas experienced modest increases in earnings and net income respectively for the quarter, driven by higher retail prices and operational efficiencies, though both faced higher depreciation and interest expenses. System Energy Resources reported a substantial swing from a net loss in Q2 2022 to net income in Q2 2023, primarily due to a significant regulatory charge in the prior year related to FERC proceedings.

Financial Highlights

43 data points
Beta

Revenue

$2.85B

Net Income

$392.01M

13.8% Net Margin

EPS (Diluted)

$0.92

Total Assets

$59.72B

Cash & Equivalents

$1.19B

Free Cash Flow

$866.43M

Financial Statements
Beta
Revenue$2.85B
Operating Expenses$2.09B
Operating Income$755.93M
Interest Expense$261.35M
Net Income$392.01M
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)422.90M
Shares Outstanding (Diluted)424.40M

Key Highlights

  • 1Entergy Arkansas: Net income increased $3.8 million in Q2 2023 compared to Q2 2022, driven by higher retail electric prices and lower O&M expenses, partially offset by lower volumes and higher interest expense.
  • 2Entergy Louisiana: Net income decreased $53.4 million in Q2 2023 compared to Q2 2022, primarily due to the net effects of its storm cost securitization, including a large reduction in income tax expense in the prior year.
  • 3Entergy Mississippi: Earnings increased $12.9 million in Q2 2023 compared to Q2 2022, primarily due to higher retail electric prices and lower O&M expenses.
  • 4Entergy Texas: Net income decreased $9 million in Q2 2023 compared to Q2 2022, primarily due to the equity component of storm cost securitization from the prior year and lower volume/weather.
  • 5System Energy Resources: Reported net income of $25.8 million in Q2 2023, a significant improvement from a net loss of $380.1 million in Q2 2022, largely due to a large regulatory charge in the prior year.
  • 6Capital Expenditures: Entergy Arkansas increased its distribution and transmission construction expenditures for reliability and storm restoration.
  • 7Regulatory Filings: Entergy Arkansas filed its 2023 formula rate plan, proposing revenue changes, while Entergy Mississippi also made its 2023 formula rate plan filing, resulting in a stipulated revenue increase.

Frequently Asked Questions

Entergy Arkansas's net income increased by $3.8 million in the second quarter of 2023 compared to the same period in 2022. This increase was primarily driven by higher retail electric prices and lower other operation and maintenance expenses. These positive factors were partially offset by lower sales volume due to less favorable weather, higher interest expense, and increased depreciation and amortization expenses.

Entergy Louisiana's net income decreased by $53.4 million in the second quarter of 2023 compared to the prior year. This was primarily due to the net effects of its storm cost securitization in May 2022, which included a significant reduction in income tax expense in that prior period. Additionally, a regulatory charge was recorded in the current quarter to reflect Entergy Louisiana's obligation to share the benefits of the securitization with its customers.

System Energy Resources is involved in several ongoing litigation proceedings at the FERC, including challenges to its authorized return on equity, capital structure, sale-leaseback arrangement, and prudence of operations. These proceedings involve claims for refunds and rate adjustments. While management believes its current regulatory liability is adequate, the outcome of these proceedings could significantly impact System Energy's financial condition if adverse decisions requiring substantial refunds are made.

Entergy Mississippi filed its 2023 formula rate plan, proposing a revenue increase of $80.5 million for the projected year 2024 and a $49.8 million netting adjustment for the historical 2022 year. Due to a 4% revenue constraint, the proposed increase is limited to $88.6 million. Entergy Texas finalized a settlement in its base rate case, agreeing to a $54 million base rate increase effective retroactively to December 2022, which includes updated depreciation rates and a self-insured storm reserve.