ENTERGY ARKANSAS, LLC (EAI)·Q1 2021 Earnings Summary

Executive Summary

• Q1 2021 consolidated performance: as-reported EPS $1.66 and adjusted EPS $1.47; total operating revenue $2.85B; Utility earnings rose on higher retail sales (weather/COVID benefits), favorable regulatory actions, and a reversal of an Entergy Arkansas (E-AR) regulatory provision linked to a 2019 netting adjustment originally recorded in Q4’20 .
• Operating cash flow fell sharply to $(50)M vs $659M in Q1’20, driven by timing of fuel/purchased power cost recovery (Winter Storm Uri), non-capital hurricane restoration payments, and higher pension funding; expect recovery timing to normalize through regulatory mechanisms .
• Guidance: 2021 adjusted EPS reaffirmed at $5.80–$6.10; estimated EWC (legacy merchant) contribution to as-reported EPS updated to approximately $(1.70) for 2021 (vs ~$(1.45) at 2/24/21), reflecting uncertainty as EWC exits; Entergy Arkansas extended its formula rate plan (FRP) five years, reducing risk and supporting long-term growth investment .
• Call tone: management emphasized regulatory settlements (including at E-AR), constructive outlook, and affirmed 2021 targets; renewables RFPs in Arkansas (300 MW) and the Electric Highway Coalition initiative underscore decarbonization/electrification positioning .

What Went Well and What Went Wrong

• What Went Well

  • Utility earnings increased to $357M ($1.77/share) vs $320M ($1.59/share) on both as-reported and adjusted bases, aided by higher retail sales (weather/COVID effects), favorable regulatory actions, and an E-AR regulatory provision reversal; consolidated adjusted EPS rose to $1.47 from $1.14 YoY .
  • “We had a strong first quarter... We reached settlements on several important issues, reducing risk... and solidifying a clear path for our future growth,” CEO Leo Denault (call + release) .
  • Strategic momentum: EAI issued an RFP for up to 300 MW of renewables; Entergy co-founded the Electric Highway Coalition to expand EV fast charging corridors—supporting growth in regulated investment opportunities .

• What Went Wrong

  • Operating cash flow swung to $(50)M from $659M YoY due to timing of fuel/power cost recovery (Winter Storm Uri), hurricane restoration payments (non-capital), and higher pension funding; underscores near-term cash headwinds despite regulatory recovery mechanisms .
  • Higher O&M (nuclear and non-nuclear generation), plus higher depreciation and interest, partially offset Utility earnings drivers .
  • EWC revenue declined due to the Indian Point 2 shutdown (partially offset by decommissioning trust performance and lower O&M); management increased the expected EWC drag on 2021 as-reported EPS to ~$(1.70) vs ~$(1.45) previously, reflecting uncertainty during exit .

Financial Results

• Consolidated Revenue and Profitability

• EPS Trend vs Prior Two Quarters

• Segment/Line-of-Business EPS Contribution (Per Share)

• KPIs and Cash Flow

Notes: Consolidated income statement detail provided in the Q1’21 8‑K exhibit (total revenues $2,844,838k; operating income $507,997k; EPS as shown above) . Q1’20 comparative figures from the same exhibit .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We had a strong first quarter and our team successfully executed on several fronts. We reached settlements on several important issues, reducing risk, providing long-term clarity, and solidifying a clear path for our future growth.” — CEO Leo Denault (news release) .
• “We are affirming our 2021 adjusted EPS guidance range of $5.80 to $6.10 as well as our longer-term outlook.” — Management, Q1’21 earnings call .
• Utility drivers: higher retail sales (weather/COVID), favorable regulatory actions, and the E-AR regulatory provision reversal; partially offset by higher O&M, depreciation, and interest .

Q&A Highlights

• Guidance confidence: Management reaffirmed the $5.80–$6.10 adjusted EPS range and reiterated the long-term outlook; tone constructive with visibility supported by regulatory settlements and FRP extensions (including E-AR) .
• Cost recovery/storms: Discussion focused on timing of fuel/purchased power cost recovery related to Winter Storm Uri; OCF timing impact expected to resolve through established regulatory mechanisms .
• Strategy/execution: Renewables RFPs (including EAI’s 300 MW) and EV infrastructure initiatives (Electric Highway Coalition) align with decarbonization and customer-focused investment opportunities .

Estimates Context

• Wall Street consensus (S&P Global) for Q1’21 EPS and revenue was unavailable at the time of this analysis due to an S&P Global API request limit. As a result, “vs. estimates” comparisons are not shown. Values retrieved from S&P Global could not be displayed due to access limits.

Key Takeaways for Investors

• Entergy delivered a clean Q1 with adjusted EPS of $1.47 and as-reported $1.66; Utility performance benefited from demand, regulatory outcomes, and an E-AR regulatory provision reversal, while consolidated OCF weakness reflects temporary timing from storm-related fuel costs .
• 2021 adjusted EPS guidance of $5.80–$6.10 was affirmed, underpinning near-term earnings visibility; regulatory settlements (including E-AR FRP extension) and ongoing RFPs support the capex runway and rate base growth .
• EWC exit dynamics remain a headwind to as-reported EPS (updated ~$(1.70) drag), but are excluded from adjusted EPS; decommissioning trust performance partially offset lower EWC revenue in the quarter .
• For EAI specifically, the five-year FRP extension and the reversal of the 2019 netting adjustment reduced risk and provided near-term earnings uplift—key for Arkansas jurisdictional stability .
• The Electric Highway Coalition and EAI’s renewables RFP position the company to capture electrification and decarbonization growth vectors within a constructive regulatory framework .
• Watch items: normalization of OCF as fuel cost recovery proceeds; O&M, depreciation, and interest cost discipline; and cadence of regulatory filings/settlements across jurisdictions, including Arkansas .

Citations

• Q1’21 8‑K 2.02 news release and exhibit excerpts:
• Entergy Q1’21 earnings call transcript (full):
• Entergy Q1’21 news release (web):
• Entergy Q4’20 news release/PDF:
• Entergy Q3’20 news release/PDF:
• 2021 guidance initiation (2/24/21):
• Electric Highway Coalition press release: