ENTERGY CORP /DE/ (ETR) Q2 2023 Earnings Summary

Executive Summary

• Adjusted and as-reported EPS were $1.84, flat vs as-reported and up $0.06 YoY vs adjusted; management affirmed full-year 2023 adjusted EPS guidance of $6.55–$6.85, tracking to the midpoint .
• Utility segment delivered $2.42 EPS ($514M) on both GAAP and adjusted bases; Parent & Other posted a $(0.58) EPS loss ($(123)M); consolidated operating cash flow rose sharply YoY on lower fuel and purchased power payments .
• Regulatory momentum continued: Mississippi FRP implemented, Texas base rate settlement progressing with interim rates in June, and Texas Resiliency Act enabling near-term resiliency plan filings; SERI litigation remains a headline risk pending FERC actions .
• Operationally, nuclear fleet achieved a 99% capability factor in 1H23 (ex-refueling), and Entergy advanced renewables/self-build strategy with ~2,400 MW in active pipeline and plans for ~6,000 MW by 2026 .

What Went Well and What Went Wrong

What Went Well

• “We are affirming our guidance and our longer-term adjusted EPS outlook...tracking to the midpoint of our guidance range” (Kimberly Fontan) .
• Industrial growth pipeline strengthened; adjusted for cogeneration, industrial sales were up ~1% YoY, with notable small-industrial and large new/expansion contributions (≈+90 GWh and +100 GWh respectively) (Andrew “Drew” Marsh) .
• Nuclear operations excellence: outside refueling outages, fleet achieved a 99% capability factor in 1H23; River Bend and ANO Unit 2 completed successful refueling outages supporting long-term performance (Andrew “Drew” Marsh) .

What Went Wrong

• Weather was a YoY headwind (−$0.17 vs Q2’22); retail volumes were lower due to weather despite warmer-than-normal conditions vs the extraordinarily hot prior year .
• Higher operating expenses persisted (depreciation/amortization, taxes other than income, interest expense), partially offset by lower other O&M and regulatory actions .
• SERI litigation remains unresolved; May ALJ recommendation included ~$250M refunds largely tied to ADIT interest since 1996; management disputes conclusions and awaits FERC decisions (Andrew “Drew” Marsh) .

Financial Results

Notes:

• Q1 2023 as-reported EPS was not disclosed in the materials read; adjusted EPS shown per transcript .
• OCF increased $588M YoY in Q2 on lower fuel and purchased power payments .

Segment Breakdown (Earnings)

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our progress through the first half of the year keeps us firmly on track to achieve 2023 results in line with our guidance...well positioned to achieve our long-term 6% to 8% growth outlook.” — Andrew “Drew” Marsh .
• “We are affirming our guidance range...we now expect volume impacts on EPS to be neutral for the year...we are tracking to the midpoint.” — Kimberly Fontan .
• “Our nuclear units continue to provide clean, reliable baseload power...fleet achieved a 99% capability factor for the first half of 2023.” — Andrew “Drew” Marsh .
• “The Texas Resiliency Act allows utilities to submit a storm resiliency plan...Entergy Texas currently expects to have clarity...near the middle of next year.” — Andrew “Drew” Marsh .
• “We disagree with the ALJ's conclusions on ADIT...we continue to believe SERI's positions...are correct...next step is a ruling from FERC.” — Andrew “Drew” Marsh .

Q&A Highlights

• Louisiana regulatory posture and FRP renewal: management expects constructive engagement; parallel paths via rate case and FRP renewal to align recovery mechanisms with capital plan (Roderick West) .
• SERI exposure: reserve reflects Mississippi settlement; ALJ order pruned liabilities; awaiting FERC; focus on settlement to reduce uncertainty (Kimberly Fontan, Andrew “Drew” Marsh) .
• Texas legislation impact: resilience plan filing cadence; DCRF biannual filings reduce lag; executive compensation recovery clarifications; earnings outlook unchanged (Kimberly Fontan) .
• O&M flex and weather: lower O&M from nuclear/non-nuclear generation scopes; MISO market structure changes lowered costs (earnings neutral) .
• Stakeholder communications/outages: dedicated task force addressing system glitches; plan to restore performance ahead of future storms (Andrew “Drew” Marsh) .
• Credit metrics: ≥14% FFO/debt YE23 driven by Louisiana securitization closure and recovery of deferred fuel balances (Kimberly Fontan) .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2023 EPS and revenue was unavailable due to data access limits at the time of analysis; therefore, comparative beat/miss vs consensus cannot be provided. Values would normally be sourced from S&P Global; unavailable in this session.

Key Takeaways for Investors

• EPS cadence and guidance intact: $1.84 adjusted EPS in Q2 with FY23 guidance affirmed and midpoint tracking; weather normalization and O&M flex underpin stability .
• Regulatory tailwinds building: Mississippi FRP active; Texas settlement/incremental recovery mechanisms plus Resiliency Act provide improved cost recovery visibility .
• Operational discipline: nuclear fleet performance (99% capability factor) and O&M reductions (ex-MISO ≈$0.70 YoY) support margin resilience in a rising depreciation/interest environment .
• Industrial narrative strong but timing shifted: some projects slid from ’24 to ’25; pipeline remains robust with CCUS/hydrogen/LNG catalysts, implying stronger demand beyond 2025 .
• Litigation overhang: SERI matters continue until FERC clarifies; management reserves in place and seeks settlements to reduce uncertainty; monitor milestones for sentiment shifts .
• Cash flow and balance sheet improving: OCF up $588M YoY in Q2; net liquidity $4.7B; on track for Moody’s ≥14% FFO/debt YE23—supports defensive profile in higher-rate backdrop .
• Near-term trading implications: watch FERC/SERI headlines and Texas/Louisiana regulatory actions as catalysts; medium-term thesis anchored in regulated recoveries, renewables build-out, and industrial load growth .