8-KRegulation FDOther Events

ENTERGY CORP /DE/ 8-K Report, Regulation FD Disclosure (May 24, 2024)

Filed May 24, 2024For Securities:ETR

Summary

Entergy Corporation (ETR) has announced a significant de-risking initiative related to its pension liabilities. On May 23, 2024, the company entered into an agreement for its pension plans to purchase a group annuity contract from Metropolitan Life Insurance Company (MetLife). This contract will settle approximately $1.157 billion in benefit liabilities for a specific group of 3,447 retirees and beneficiaries whose benefits commenced on or before March 1, 2024. MetLife will assume the sole obligation for making these future pension payments, starting September 1, 2024. The company emphasizes that this transaction is part of its ongoing pension de-risking strategy and aims to eliminate the risk and volatility associated with these transferred pension liabilities, which are fully funded. Importantly, Entergy states that this transaction will result in a one-time, non-cash pension settlement charge impacting GAAP net income but will not affect its non-GAAP adjusted earnings per share (EPS) or its previously affirmed adjusted EPS and credit outlooks, indicating a minimal impact on ongoing financial performance and creditworthiness.

Key Highlights

  • 1Entergy is settling approximately $1.157 billion of pension liabilities through the purchase of a group annuity contract from MetLife.
  • 2The transaction covers 3,447 retirees and beneficiaries whose pension benefits began on or before March 1, 2024.
  • 3MetLife will fully assume responsibility for making future pension payments to affected participants, with direct payments starting September 1, 2024.
  • 4The pension plans involved are fully funded, requiring no additional funding from Entergy prior to the settlement.
  • 5Entergy anticipates a one-time, non-cash pension settlement charge of $305 million to $335 million (pre-tax) in Q2 2024.
  • 6This settlement charge is considered an 'adjustment' and will not impact Entergy's adjusted earnings per share (non-GAAP).
  • 7The company affirms its adjusted EPS and credit outlooks, indicating immaterial impact on ongoing earnings and credit.

Frequently Asked Questions

Entergy is executing a pension de-risking strategy by settling a portion of its pension liabilities. This transaction aims to eliminate the risk and volatility associated with these specific pension obligations by transferring the payment responsibility to MetLife.

If your pension benefits commenced on or before March 1, 2024, and you are among the 3,447 covered participants, MetLife will begin making your payments directly starting September 1, 2024. Your payment amount will remain the same. Participants whose benefits commence after March 1, 2024, or certain excluded participants, are not affected by this transaction.

Entergy expects to record a one-time, non-cash pension settlement charge between $305 million and $335 million (pre-tax) in the second quarter of 2024. However, this charge is treated as an 'adjustment' and will not affect Entergy's non-GAAP adjusted earnings per share (EPS). The company also affirmed its adjusted EPS and credit outlooks, suggesting no material impact on its ongoing financial performance or credit standing.

No, the company states that the pension liability being transferred was fully funded. The purchase of the group annuity contract is funded directly by the assets of the Pension Plans, and no additional funding is required from Entergy prior to the transfer.