Why did Entergy's year-to-date reported earnings drop so sharply compared with 2023?

Year-to-date as-reported EPS fell to $3.58 from $6.45, mainly because of adjustments totaling $(2.41) per share in 2024 versus $0.20 in 2023. The largest items were a second-quarter $317M pre-tax pension settlement charge ($1.17 per share at Parent & Other), a $151M E-LA regulatory charge for customer credits tied to a global agreement ($0.52 per share), and a $132M first-quarter E-AR regulatory asset write-off ($0.45 per share). Adjusted EPS, which excludes these items, declined only modestly to $5.99 from $6.25.

What does the narrowed 2024 guidance imply for the remainder of the year?

The adjusted EPS guidance range of $7.15 to $7.35 (pre-split) implies that Q4 2024 adjusted EPS would fall roughly in the $1.16 to $1.36 range, based on year-to-date adjusted EPS of $5.99. The company has not provided a GAAP reconciliation, because it cannot predict future adjustments such as regulatory charges or significant tax items. Investors should therefore treat guidance as an adjusted, non-GAAP figure that could differ materially from reported results.

How will the two-for-one stock split affect shareholders?

Shareholders of record at the close of market on December 5, 2024 will receive one additional share for each share held, distributed after market close on December 12, 2024. Trading will be on a split-adjusted basis starting December 13, 2024. The split is a mechanical change that does not alter the total value of a shareholder's position. It does reduce the per-share price and roughly halves per-share metrics such as EPS and the dividend, which is why the guidance is quoted on a pre-split basis.

Is Entergy's balance sheet and liquidity position improving?

On several measures, yes. Debt to capitalization improved to 65% from 66%, adjusted debt to adjusted capitalization improved to 64% from 66%, and FFO to adjusted debt rose to 13.5% from 12.4%. Net liquidity increased to $6.36 billion from $4.98 billion, aided by $1.39 billion of equity sold forward but not yet settled. Total debt rose to $29.1 billion from $27.6 billion, however, including $1.2 billion of junior subordinated debentures issued in May 2024, which increased Parent & Other interest expense.

What are the main growth drivers and risks highlighted in the release?

Growth drivers include strong industrial demand (weather-adjusted industrial sales up 9.9%, largely from refineries), a large new customer in Louisiana requiring new transmission and generation, a plan for a new natural gas plant in Mississippi, solar additions in Arkansas and a Louisiana solar RFP for 3 GW, and a $100M New Orleans resilience investment. Key risks include weather volatility (Q3 weather impact fell to $0.19 per share from $0.64), regulatory outcomes and cost recovery timing, the possibility of further regulatory charges, rising interest costs, and the execution of the Grand Gulf divestiture, which still requires MPSC and FERC approval.

ETR 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.

Entergy reported third quarter 2024 earnings of $2.99^a per share on both an as-reported and adjusted basis, down from $3.14 (as-reported) and $3.27 (adjusted) in third quarter 2023.

The decline was driven by Parent & Other, which posted a $(0.66) per share loss versus $(0.40) as-reported a year earlier, while the Utility segment improved to $3.65^b per share as-reported from $3.54. Year-to-date results were heavily affected by one-time items: as-reported EPS fell to $3.58 from $6.45, and adjusted EPS fell to $5.99 from $6.25. The largest adjustments were a $317 million pre-tax pension settlement charge in second quarter 2024 and a $151 million E-LA regulatory charge tied to a customer credit agreement.

Management narrowed its 2024 adjusted EPS guidance to $7.15 to $7.35^c on a pre-split basis. The company also raised its quarterly dividend 6% to $1.20 per share and approved a two-for-one stock split, with split-adjusted trading beginning December 13, 2024. Operationally, weather-adjusted retail sales grew 5.0% in the quarter, led by a 9.9% increase in industrial sales, mainly to petroleum refiners.

Entergy also advanced several growth and resilience initiatives, including new transmission and generation filings in Louisiana, plans for its first new natural gas plant in 50 years in Mississippi, and the divestment of its share of Grand Gulf to Entergy Mississippi. Balance sheet metrics are mixed. Debt to capitalization was 65%^d, improving from 66%, and FFO to adjusted debt improved to 13.5% from 12.4%.

Net liquidity rose to $6.36 billion from $4.98 billion, although gross liquidity was roughly flat at $5.76 billion. Investors should weigh the quality of earnings given the large year-to-date adjustments, the higher interest expense from the $1.2 billion junior subordinated debenture issuance, and the ongoing sensitivity of results to weather and regulatory outcomes.

02—Key points

Key Highlights

Q3 2024 EPS was $2.99 on both an as-reported and adjusted basis, versus $3.14 as-reported and $3.27 adjusted in Q3 2023; the Utility segment earned $3.65 per share, up from $3.54 as-reported.
Year-to-date as-reported EPS fell to $3.58 from $6.45, while adjusted EPS fell to $5.99 from $6.25, reflecting a $317M pre-tax pension settlement charge and a $151M E-LA customer credit charge.
2024 adjusted EPS guidance was narrowed to $7.15 to $7.35 on a pre-split basis.
The quarterly dividend was raised 6% to $1.20 per share, and a two-for-one stock split takes effect with trading starting December 13, 2024 (record date December 5, distribution December 12).
Weather-adjusted retail sales rose 5.0% in Q3, with industrial sales up 9.9% on higher petroleum refining demand, although Parent & Other losses widened to $(0.66) per share from $(0.40).
Credit metrics improved: debt to capitalization fell to 65% from 66%, FFO to adjusted debt rose to 13.5% from 12.4%, and net liquidity increased to $6.36 billion from $4.98 billion.
Growth and resilience activity continued, including E-LA's filing for transmission and generation to serve a new large customer, E-MS's plan for its first new gas plant in 50 years, and the Grand Gulf divestiture to E-MS.

03—Questions

Frequently Asked Questions

Why did Entergy's year-to-date reported earnings drop so sharply compared with 2023?
Year-to-date as-reported EPS fell to $3.58 from $6.45, mainly because of adjustments totaling $(2.41) per share in 2024 versus $0.20 in 2023. The largest items were a second-quarter $317M pre-tax pension settlement charge ($1.17 per share at Parent & Other), a $151M E-LA regulatory charge for customer credits tied to a global agreement ($0.52 per share), and a $132M first-quarter E-AR regulatory asset write-off ($0.45 per share). Adjusted EPS, which excludes these items, declined only modestly to $5.99 from $6.25.
What does the narrowed 2024 guidance imply for the remainder of the year?
The adjusted EPS guidance range of $7.15 to $7.35 (pre-split) implies that Q4 2024 adjusted EPS would fall roughly in the $1.16 to $1.36 range, based on year-to-date adjusted EPS of $5.99. The company has not provided a GAAP reconciliation, because it cannot predict future adjustments such as regulatory charges or significant tax items. Investors should therefore treat guidance as an adjusted, non-GAAP figure that could differ materially from reported results.
How will the two-for-one stock split affect shareholders?
Shareholders of record at the close of market on December 5, 2024 will receive one additional share for each share held, distributed after market close on December 12, 2024. Trading will be on a split-adjusted basis starting December 13, 2024. The split is a mechanical change that does not alter the total value of a shareholder's position. It does reduce the per-share price and roughly halves per-share metrics such as EPS and the dividend, which is why the guidance is quoted on a pre-split basis.
Is Entergy's balance sheet and liquidity position improving?
On several measures, yes. Debt to capitalization improved to 65% from 66%, adjusted debt to adjusted capitalization improved to 64% from 66%, and FFO to adjusted debt rose to 13.5% from 12.4%. Net liquidity increased to $6.36 billion from $4.98 billion, aided by $1.39 billion of equity sold forward but not yet settled. Total debt rose to $29.1 billion from $27.6 billion, however, including $1.2 billion of junior subordinated debentures issued in May 2024, which increased Parent & Other interest expense.
What are the main growth drivers and risks highlighted in the release?
Growth drivers include strong industrial demand (weather-adjusted industrial sales up 9.9%, largely from refineries), a large new customer in Louisiana requiring new transmission and generation, a plan for a new natural gas plant in Mississippi, solar additions in Arkansas and a Louisiana solar RFP for 3 GW, and a $100M New Orleans resilience investment. Key risks include weather volatility (Q3 weather impact fell to $0.19 per share from $0.64), regulatory outcomes and cost recovery timing, the possibility of further regulatory charges, rising interest costs, and the execution of the Grand Gulf divestiture, which still requires MPSC and FERC approval.

04—Continue

← View all 8-K filings