Sign in

    Entergy Corp (ETR)

    You might also like

    Business Description

    No business description found.

    Q2 2024 Summary

    Initial Price$52.76April 1, 2024
    Final Price$52.87July 1, 2024
    Price Change$0.11
    % Change+0.21%

    What went wrong

    • Entergy faces regulatory challenges in expanding right-of-ways for vegetation management, which could hamper efforts to improve grid resilience and reliability, especially in storm-prone areas.
    • Legislative hurdles may delay or limit necessary investments in resiliency projects, impacting Entergy's ability to enhance its infrastructure.
    • Significant storm restoration costs, such as the estimated $75 million to $85 million from Hurricane Beryl, could impact financial performance if cost recovery through normal mechanisms is not assured.

    Q&A Summary

    1. Regulatory Progress and CapEx Plans
      Q: Updates on Louisiana and FERC; impact on capital allocation and CapEx?
      A: Management reported progress in Louisiana and FERC processes, emphasizing that while work remains, they are pleased with the settlements coming together. These developments may set the stage for revisiting capital allocation and CapEx plans, with a full update expected at EEI in November.

    2. FRP and SERI Settlements Impact
      Q: How do FRP and SERI settlements affect earnings and cash flow forecasts?
      A: The settlements address the formula rate plan extension and resolve prior issues, effectively "clearing the deck" of major litigation. Management affirmed that these settlements are considered in their EPS and cash flow outlooks, which remain on track.

    3. Industrial Sales Growth Outlook
      Q: Status of industrial sales growth and long-term outlook?
      A: The company is on track to achieve about 4% industrial sales growth for the full year, with most growth coming late in Q4. A strong pipeline supports the long-term growth trajectory, and contracts with new customers provide bottom-line protection even if there are delays.

    4. Data Center Opportunities
      Q: Updates on data center opportunities and potential acceleration?
      A: Management is optimistic about data center growth beyond the existing AWS agreement, with a pipeline of 5 to 10 gigawatts under discussion with prospective customers. They highlight structural advantages like low energy rates and supportive regulatory environments, expecting to provide details when ready.

    5. Renewables RFP and Utility-Owned Assets
      Q: Could we see more utility-owned assets in renewables RFPs?
      A: The company plans for owned renewables as shared in their recent capital view. They will provide updates as RFPs progress, with a large RFP expected in the fall for Louisiana.

    6. Hardening Plans Post-Beryl
      Q: Any amendments to Texas hardening plans after storm Beryl?
      A: Post-Beryl, management is engaging stakeholders to potentially adjust the resiliency plan in Texas. There's an opportunity to revisit plans and possibly address items not included in previous legislation, with discussions open and a legislative session upcoming.

    7. Pension Lift Out Impact
      Q: How does the pension lift out reduce volatility; any more planned?
      A: The pension plan is now funded at 96%, reducing volatility. While another lift out is possible if conditions are favorable, management believes they are in a good place currently.

    8. AWS Facility Regulatory Approvals
      Q: What approvals are needed for the AWS facility; any CapEx details?
      A: The Mississippi Commission, supported by the legislature, has preapproved the CCN process, allowing rapid progress on the AWS facility. CapEx specifics have not been disclosed, but updates will be provided as projects are announced.

    9. Addressing Vegetation and Right-of-Ways
      Q: How to address vegetation issues affecting lines; expansion of right-of-ways?
      A: Management emphasizes proactive communication and investment to accelerate resiliency. Expanding right-of-ways would require commission approvals and is being discussed on a jurisdiction-by-jurisdiction basis.

    Guidance Changes

    Annual guidance for FY 2024:

    • Industrial Sales Growth: Expected to be about 4% for the full year (no prior guidance)
    • Operating and Maintenance (O&M) Savings: As much as 90% of remaining savings expected in Q4 2024 (no prior guidance)
    • Equity Needs: Completed approximately 60% of projected equity needs through 2026 (no prior guidance)
    • Sales Growth: Expected to be largely weighted to Q4 2024 (no prior guidance)

    Executive Team

    NamePositionStart DateShort Bio
    Andrew S. MarshChair of the Board and Chief Executive OfficerNovember 2022Andrew S. Marsh is the Chair of the Board and Chief Executive Officer of Entergy Corporation. He has been serving as the CEO since November 2022 and became the Chair of the Board in February 2023. He was previously the Executive Vice President and Chief Financial Officer from 2013 to 2022 .
    Kimberly A. FontanExecutive Vice President and Chief Financial OfficerNovember 1, 2022Kimberly A. Fontan is the Executive Vice President and Chief Financial Officer at Entergy Corporation. She assumed the role of Chief Financial Officer on November 1, 2022, succeeding Andrew S. Marsh .
    Marcus V. BrownExecutive Vice President and General CounselN/AMarcus V. Brown serves as the Executive Vice President and General Counsel at Entergy Corporation. He has been involved in signing various documents on behalf of the company, including a Post-Effective Amendment to a Registration Statement on January 2, 2024 . However, the documents do not provide specific information on his start date with the company.
    Peter S. Norgeot, Jr.Executive Vice President and Chief Operating Officer2023Peter S. Norgeot, Jr. serves as the Executive Vice President and Chief Operating Officer at Entergy Corporation. He was promoted to this position in 2023, and in connection with his promotion, he received relocation benefits as per the company's policy .
    Roderick K. WestGroup President, Utility OperationsN/ARoderick K. West serves as the Group President, Utility Operations at Entergy Corporation. However, the documents do not provide specific details regarding his start date in this position or his tenure with the company.

    Questions to Ask Management

    1. Given that 90% of your remaining O&M savings for 2024 are expected to be achieved in the fourth quarter, what risks do you face if these savings are not realized as planned, and how confident are you in meeting your earnings guidance under this back-end loaded cost savings schedule?
    2. With the $184 million in customer credits included in the Entergy Louisiana settlement, what impact do you anticipate this will have on your future earnings and credit metrics, and what steps are you taking to mitigate any potential negative effects?
    3. Regarding your Entergy Texas resiliency plan, since $200 million of the $335 million investment is contingent upon receiving a grant from the Texas Energy Fund, what are your contingency plans if the grant is not approved, and how will this affect your ability to enhance grid resilience in Texas?
    4. Your $2.2 billion investment in new hydrogen-capable generation resources depends on customer interest in purchasing clean attributes from carbon capture; how confident are you in securing enough customer commitment to justify these projects, and what risks could delay or impede their completion by 2028?
    5. With higher interest expenses due to increased debt balances and rising interest rates, how do you plan to manage your financing to ensure your significant capital investments, including the proposed renewables and resilience projects, do not adversely impact your financial health and shareholder returns?

    Past Guidance

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Adjusted EPS Guidance for 2024: $7.05 to $7.35, with a midpoint of $7.20 .
      2. Annual Adjusted EPS Growth: 6% to 8% .
      3. Retail Sales Volumes: Expected to be 4% higher than in 2023 .
      4. Industrial Sales Growth: Expected to be 8% .
      5. Residential Sales Growth: Expected to be roughly 1% .
      6. Utility O&M Spending: Expected to be approximately $2.7 billion .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Adjusted EPS: Reported first quarter adjusted EPS of $1.08 .
      2. Growth Outlook: Long-term 6% to 8% growth outlook .
      3. Operating and Maintenance (O&M) Expenses: Expected to balance out over the year .
      4. Equity Needs: Locked in more than 30% of equity need for 2025 and 2026 .
      5. Capital Expenditure (CapEx): $1.9 billion over five years, with about $1.5 billion in the same three-year period .
      6. Industrial Sales: Expected to benefit from additional industrial customers .
      7. Credit Metrics: Aim for an FFO-to-debt ratio of 14% or better .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Adjusted EPS: Reported strong quarterly adjusted EPS of $1.92 .
      2. Industrial Sales Growth: Expected to be about 4% for the full year .
      3. Operating and Maintenance (O&M) Savings: As much as 90% of remaining savings expected in Q4 2024 .
      4. Equity Needs: Completed approximately 60% of projected equity needs through 2026 .
      5. Sales Growth: Expected to be largely weighted to Q4 2024 .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: N/A
    • Guidance: The documents do not contain information from the Q3 2024 earnings call for Entergy Corporation (ETR), so I cannot provide the guidance metrics from that specific earnings call.