Entergy reports 2021 financial results, initiates 2022 earnings guidance

NEW ORLEANS, Feb. 23, 2022 /PRNewswire/ -- Entergy Corporation (NYSE: ETR) reported fourth quarter 2021 earnings per share of $1.28 on an as-reported basis and earnings per share of 76 cents on an adjusted basis (non-GAAP). For the full year, the company reported 2021 earnings per share of $5.54 on an as-reported basis and $6.02 on an adjusted basis.

"Despite the unique challenges presented in 2021, we continued to deliver on our commitments and exceeded the midpoint of our guidance range," said Leo Denault, Entergy Chairman and Chief Executive Officer. "These results are a testimony to the effectiveness of our strategy, flexibility of our business, and the dedication of our employees. Looking ahead, we have a solid foundation upon which to further invest in customer solutions, accelerate resilience efforts, increase our renewable portfolio, and promote clean electrification."

Business highlights included the following:

• E-AR's Searcy Solar came online.
• U.S. Steel selected Osceola, AR as the home for its advanced steelmaking facility, citing E-AR's growing renewable and clean power portfolio as a key driver.
• E-LA entered into an MOU with Sempra Infrastructure to accelerate the deployment of renewable energy to power Sempra Infrastructure's facilities in Louisiana.
• E-MS announced plans to add 1,000 megawatts of solar capacity over the next five years, to replace older generation and support Mississippi's economic development.
• E-LA announced selections totaling 600 megawatts from its 2021 Renewable RFP.
• The APSC approved E-AR's 2022 FRP.
• The PUCT approved storm recovery and financing for E-TX's 2020 storm costs.
• The NRC approved the transfer of Palisades' licenses to Holtec.
• Entergy was included, once again, on a DJSI sustainability index.
• Entergy was named to the JUST 100 ranking, recognizing the company's strong performance on issues such as fair wages, job creation, workforce training, workplace diversity and inclusion, and a sustained commitment to ESG.
• EEI awarded Entergy its Emergency Response Award for the company's recovery efforts following Hurricane Ida.

Consolidated Results

For fourth quarter 2021, the company reported earnings of $259 million, or $1.28 per share, on an as-reported basis, and earnings of $155 million, or 76 cents per share, on an adjusted basis. This compared to fourth quarter 2020 earnings of $388 million, or $1.93 per share, on an as-reported basis, and earnings of $142 million, or 71 cents per share, on an adjusted basis.

For full year 2021, the company reported earnings of $1,118 million, or $5.54 per share, on an as-reported basis, and earnings of $1,215 million, or $6.02 per share, on an adjusted basis. This compared to 2020 earnings of $1,388 million, or $6.90 per share, on an as-reported basis, and earnings of $1,138 million, or $5.66 per share, on an adjusted basis.

Summary discussions by business follow. Additional details, including information on OCF by business, are provided in Appendix A. An analysis of quarterly and full year variances by business is provided in Appendix B.

Business Segment Results

Utility

For full year 2021, the Utility business reported earnings attributable to Entergy Corporation of $1,490 million, or $7.38 per share, on an as-reported basis, and earnings of $1,464 million, or $7.25 per share, on an adjusted basis. This compared to full year 2020 earnings of $1,800 million, or $8.95 per share, on an as-reported basis, and earnings of $1,424 million, or $7.08 per share, on an adjusted basis. Drivers for the full year included:

• the net effect of regulatory actions across the operating companies;
• higher retail sales volume;
• various regulatory provisions;
• higher operating expenses including other O&M, depreciation expense, and taxes other than income taxes;
• higher interest expense, including lower AFUDC; and
• higher effective income tax rate (certain income tax items were considered adjustments and excluded from adjusted earnings).

On a per share basis, full year 2021 results reflected higher common shares outstanding.

Appendix C contains additional details on Utility operating and financial measures.

Parent & Other

For full year 2021, Parent & Other reported a loss attributable to Entergy Corporation of $(249 million), or $(1.23) per share, on an as-reported basis, and a loss of $(248 million), or $(1.23) per share, on an adjusted basis. This compared to a full year 2020 loss of $(347 million), or $(1.73) per share, on an as-reported basis, and a loss of $(286 million), or $(1.42) per share, on an adjusted basis. A primary driver for the full year change was income tax expense (certain income tax items were considered adjustments and excluded from adjusted earnings). This was partially offset by higher interest expense.

On a per share basis, full year 2021 results reflected higher common shares outstanding.

Entergy Wholesale Commodities

For full year 2021, EWC reported a loss attributable to Entergy Corporation of $(123 million), or (61) cents per share, on an as-reported basis. This compared to full year 2020 loss attributable to Entergy Corporation of $(65 million), or (32) cents per share, on an as-reported basis. Drivers for the year included:

• lower revenue primarily due to the shutdown of Indian Point 2 and Indian Point 3;
• higher asset write-offs and impairments due primarily to the loss on the sale of IPEC, partially offset by a gain from the settlement of spent fuel litigation at Indian Point; and
• absence of earnings on NDTs as a result of the transfer of the IPEC NDTs and decommissioning liabilities to Holtec.

These drivers were partially offset by:

• income tax items in 2021 and 2020; and
• lower operating expenses due to the shutdown of Indian Point 2 and Indian Point 3.

Appendix D contains additional details on EWC operating and financial measures, including reconciliation for non-GAAP EWC adjusted EBITDA.

Earnings Per Share Guidance

Entergy initiated its 2022 adjusted EPS guidance range of $6.15 to $6.45. See webcast presentation for additional details.

The company has provided 2022 earnings guidance with regard to the non-GAAP measure of Entergy adjusted EPS. This measure excludes from the corresponding GAAP financial measure the effect of adjustments as described below under "Non-GAAP Financial Measures." The company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify with a reasonable degree of confidence all of the adjustments that may occur during the period. One such adjustment will be the exclusion of EWC earnings from Entergy adjusted EPS. We currently estimate that the contribution of EWC to Entergy's as-reported EPS will be approximately 15 cents in 2022. This estimate is subject to substantial uncertainty due to, among other things, the potential effects of exiting the EWC business.

Earnings Teleconference

A teleconference will be held at 10:00 a.m. Central Time on Wednesday, February 23, 2022, to discuss Entergy's quarterly earnings announcement and the company's financial performance. The teleconference may be accessed by visiting Entergy's website at www.entergy.com or by dialing 844-309-6569, conference ID 9045016, no more than 15 minutes prior to the start of the call. The webcast presentation is also being posted to Entergy's website concurrent with this news release. A replay of the teleconference will be available on Entergy's website at www.entergy.com and by telephone. The telephone replay will be available through March 2, 2022, by dialing 855-859-2056, conference ID 9045016.

Entergy Corporation, a Fortune 500 company headquartered in New Orleans, powers life for 3 million customers across Arkansas, Louisiana, Mississippi and Texas. Entergy is creating a cleaner, more resilient energy future for everyone with our diverse power generation portfolio, including increasingly carbon-free energy sources. With roots in the Gulf South region for more than a century, Entergy is a recognized leader in corporate citizenship, delivering more than $100 million in economic benefits to local communities through philanthropy and advocacy efforts annually over the last several years. Our approximately 12,500 employees are dedicated to powering life today and for future generations.

Entergy Corporation's common stock is listed on the New York Stock Exchange and NYSE Chicago under the symbol "ETR".

Details regarding Entergy's results of operations, regulatory proceedings, and other matters are available in this earnings release, a copy of which will be filed with the SEC, and the webcast presentation. Both documents are available on Entergy's Investor Relations website at www.entergy.com/investor_relations.

Entergy maintains a web page as part of its Investor Relations website, entitled Regulatory and Other Information, which provides investors with key updates on certain regulatory proceedings and important milestones on the execution of its strategy. While some of this information may be considered material information, investors should not rely exclusively on this page for all relevant company information.

For definitions of certain operating measures, as well as GAAP and non-GAAP financial measures and abbreviations and acronyms used in the earnings release materials, see Appendix F.

Non-GAAP Financial Measures

This news release contains non-GAAP financial measures, which are generally numerical measures of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Entergy has provided quantitative reconciliations within this news release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Entergy reports earnings using the non-GAAP measure of Entergy adjusted earnings, which excludes the effect of certain "adjustments," including the removal of the Entergy Wholesale Commodities segment in light of the company's exit from the merchant power business. Adjustments are unusual or non-recurring items or events or other items or events that management believes do not reflect the ongoing business of Entergy, such as the results of the EWC segment, significant tax items, and other items such as certain costs, expenses, or other specified items. In addition to reporting GAAP consolidated earnings on a per share basis, Entergy reports its adjusted earnings on a per share basis. These per share measures represent the applicable earnings amount divided by the diluted average number of common shares outstanding for the period.

Management uses the non-GAAP financial measures of adjusted earnings and adjusted earnings per share for, among other things, financial planning and analysis; reporting financial results to the board of directors, employees, stockholders, analysts, and investors; and internal evaluation of financial performance. Entergy believes that these non-GAAP financial measures provide useful information to investors in evaluating the ongoing results of Entergy's business, comparing period to period results, and comparing Entergy's financial performance to the financial performance of other companies in the utility sector.

Other non-GAAP measures, including adjusted EBITDA; adjusted ROE; adjusted ROE, excluding affiliate preferred; gross liquidity; net liquidity; net liquidity, including storm escrows; debt to capital, excluding securitization debt; net debt to net capital, excluding securitization debt; parent debt to total debt, excluding securitization debt; FFO to debt, excluding securitization debt; and FFO to debt, excluding securitization debt, return of unprotected excess ADIT, and severance and retention payments associated with exit of EWC, are measures Entergy uses internally for management and board discussions and to gauge the overall strength of its business. Entergy believes the above data provides useful information to investors in evaluating Entergy's ongoing financial results and flexibility, and assists investors in comparing Entergy's credit and liquidity to the credit and liquidity of others in the utility sector. In addition, other financial measures including FFO are included on both an adjusted and an as-reported basis. In each case, the metrics defined as "adjusted" (other than EWC's adjusted EBITDA) exclude the effect of adjustments as defined above. EWC's adjusted EBITDA represents EWC's earnings before interest, taxes, and depreciation and amortization, and also excludes decommissioning expense.

These non-GAAP financial measures reflect an additional way of viewing aspects of Entergy's operations that, when viewed with Entergy's GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Entergy's business. These non-GAAP financial measures should not be used to the exclusion of GAAP financial measures. Investors are strongly encouraged to review Entergy's consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. Although certain of these measures are intended to assist investors in comparing Entergy's performance to other companies in the utility sector, non-GAAP financial measures are not standardized; therefore, it might not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Cautionary Note Regarding Forward-Looking Statements

In this news release, and from time to time, Entergy Corporation makes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, statements regarding Entergy's 2022 earnings guidance; its current financial and operational outlooks; and other statements of Entergy's plans, beliefs, or expectations included in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements are subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this news release and in Entergy's most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q, and Entergy's other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with (1) rate proceedings, formula rate plans, and other cost recovery mechanisms, including the risk that costs may not be recoverable to the extent or on the timeline anticipated by the utilities and (2) implementation of the ratemaking effects of changes in law; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) risks associated with operating nuclear facilities, including plant relicensing, operating, and regulatory costs and risks; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Entergy's nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with executing on business strategies, including strategic transactions that Entergy or its subsidiaries may undertake and the risk that any such transaction may not be completed as and when expected and the risk that the anticipated benefits of the transaction may not be realized; (h) effects of changes in federal, state, or local laws and regulations and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental, or energy policies; (i) the effects of changes in commodity markets, capital markets, or economic conditions; (j) impacts from a terrorist attack, cybersecurity threats, data security breaches, or other attempts to disrupt Entergy's business or operations, and/or other catastrophic events; (k) the direct and indirect impacts of the COVID-19 pandemic on Entergy and its customers; and (l) the effects of technological change, including the costs, pace of development and commercialization of new and emerging technologies.

Fourth Quarter 2021 Earnings Release Appendices and Financial Statements

Appendices

A: Consolidated Results and Adjustments
B: Earnings Variance Analysis
C: Utility Operating and Financial Measures
D: EWC Operating and Financial Measures
E: Consolidated Financial Measures
F: Definitions and Abbreviations and Acronyms
G: Other GAAP to Non-GAAP Reconciliations

Financial Statements

Consolidating Balance Sheets
Consolidating Income Statements
Consolidated Cash Flow Statements

A: Consolidated Results and Adjustments
Appendix A-1 provides a comparative summary of consolidated earnings, including a reconciliation of as-reported earnings (GAAP) to adjusted earnings (non-GAAP).

See Appendix B for detailed earnings variance analysis.

Appendix A-2 and Appendix A-3 list adjustments by business. Adjustments are included in as-reported earnings consistent with GAAP but are excluded from adjusted earnings. As a result, adjusted earnings is considered a non-GAAP measure.

Appendix A-4 provides a comparative summary of OCF by business.

OCF decreased quarter-over-quarter due primarily to higher fuel and purchased power payments at the Utility and higher income tax payments. The decrease was partially offset by higher collections from Utility customers and lower pension contributions.

OCF decreased year-over-year due primarily to higher fuel and purchased power payments, non-capital storm restoration spending, higher income tax payments, lower EWC revenues, higher EWC severance and retention payments, the non-capital portion of proceeds from the DOE regarding spent fuel litigation, and higher pension contributions. The decrease was partially offset by higher collections from Utility customers and lower spending on nuclear refueling outages.

For the quarter and the full year, intercompany income tax payments contributed to the line of business variances.

B: Earnings Variance Analysis
Appendix B-1 and Appendix B-2 provide details of current quarter and full year 2021 versus 2020 as-reported and adjusted earnings per share variances for Utility, Parent & Other, and EWC.

C: Utility Operating and Financial Measures
Appendix C provides comparative summaries of Utility operating and financial measures.

On a weather-adjusted basis for fourth quarter 2021, retail billed sales increased 3.0 percent, including estimated hurricane impacts of (0.8) percent. Residential billed sales decreased (3.8) percent and commercial billed sales increased 1.1 percent. Industrial billed sales increased 8.9 percent primarily reflecting growth from new customers, new/expansion projects, and an increase in demand from cogeneration customers.

On a weather-adjusted basis for full year 2021, retail billed sales increased 2.0 percent, including the impacts from COVID-19 and hurricanes. Residential billed sales decreased (1.8) percent and commercial billed sales increased 0.9 percent. Industrial billed sales volume increased 5.7 percent reflecting an increase in demand from new/expansion projects - primarily in the metals, transportation, and chemicals industries - and an increase in demand from cogeneration customers.

D: EWC Operating and Financial Measures
Appendix D-1 provides a comparative summary of EWC operating and financial measures.

Appendix D-2 provides a comparative summary of EWC adjusted EBITDA (non-GAAP).

See the appendix in the webcast presentation for EWC hedging and price disclosures.

E: Consolidated Financial Measures
Appendix E provides comparative financial measures. Financial measures in this table include those calculated and presented in accordance with GAAP, as well as those that are considered non-GAAP financial measures.

F: Definitions and Abbreviations and Acronyms
Appendix F-1 provides definitions of certain operating measures, as well as GAAP and non-GAAP financial measures.

Appendix F-2 explains abbreviations and acronyms used in the quarterly earnings materials.

G: Other GAAP to Non-GAAP Reconciliations
Appendix G-1, Appendix G-2, and Appendix G-3 provide reconciliations of various non-GAAP financial measures disclosed in this news release to their most comparable GAAP measure.

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SOURCE Entergy Corporation