ENTERGY CORP /DE/ (ETR) Q3 2023 Earnings Summary

Executive Summary

• Adjusted EPS was $3.27, a significant beat vs consensus; strength was driven by extreme heat (+$0.64 EPS), favorable regulatory actions, and lower O&M; management raised the bottom of FY23 adjusted EPS guidance to $6.65–$6.85 and reaffirmed 6–8% CAGR through 2026 .
• Utility adjusted EPS was $3.82 while Parent & Other was $(0.55), with consolidated adjusted EPS $3.27; operating cash flow rose to $1.405B; net liquidity was $4.9B, and credit metrics expected to be at/above targets by year-end .
• Regulatory/legal catalysts: SERI achieved a $142M settlement in principle with APSC (resolving ~64% of SERI litigation risk); Entergy Arkansas wrote off $68.9M deferred fuel and $9.5M undepreciated capital from the ANO stator incident, excluded from adjusted EPS .
• Strategic moves: agreement to sell the gas distribution business for ~$484M to reduce debt and support capital needs; board raised the quarterly dividend 6% to $1.13 ($4.52 annual) .

What Went Well and What Went Wrong

What Went Well

• Record heat supported outsized earnings; “We experienced record temperatures with an estimated impact of $0.64” EPS, enabling “flex spending” to invest in reliability, resilience, and derisk 2024 .
• Operational excellence: nuclear fleet was online “throughout the quarter” with a 99% capability factor; generation and delivery systems met record demand (13 peak days exceeded prior records) .
• Regulatory progress: SERI–APSC settlement in principle ($142M) and compliance filing recouping $40M previously paid to E-NO/E-LA; management believes this clarity will help resolve remaining SERI matters constructively .

What Went Wrong

• Customer mix and cogeneration headwinds: excluding weather, retail volumes declined ~1%; cogeneration sales reverted from elevated 2022 levels; outage timing at large industrials weighed on sales .
• Higher depreciation and interest costs from customer-centric investments partially offset gains; ongoing inflation and capital spending require continuous improvement to keep O&M generally flat .
• Arkansas ANO incident write-offs: Entergy Arkansas wrote off $68.9M deferred fuel and $9.5M undepreciated capital due to forgoing recovery, depressing GAAP results (excluded in adjusted EPS) .

Financial Results

EPS and Cash Flow vs prior periods and estimates

Notes:

• Adjusted EPS beat LSEG consensus by $0.25–$0.27; bold beat driven by weather, regulatory actions, and lower O&M; partially offset by higher D&A/interest and ANO write-offs excluded from adjusted EPS .
• The company did not disclose consolidated revenue in the Q3 slides/transcript we reviewed; see KPIs and segment data below. S&P Global revenue estimates were unavailable due to API limits.

Segment earnings per share (Adjusted) and consolidation

Key Performance Indicators

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our adjusted earnings per share was $3.27. We experienced record temperatures with an estimated impact of $0.64… With our results to date… we are raising the bottom of the guidance range by $0.10 per share.” — Andrew (Drew) Marsh, CEO .
• “Our nuclear fleet was online throughout the quarter with a fleet capability factor of 99%.” — Andrew Marsh .
• “We are actively pursuing… technologies like artificial intelligence and robotic process automation, to help us maintain a generally flat O&M trajectory despite the inflationary environment.” — Andrew Marsh .

Q&A Highlights

• O&M and 2024 derisking: Weather-enabled “pull-forward” of vegetation management and T&D maintenance to improve reliability and derisk 2024 .
• Financing and equity: Gas sale proceeds support incremental capital; equity needs through 2024 unchanged and within ATM capacity .
• SERI path forward: Arkansas settlement timing aided by August FERC order; active pursuit of similar settlements with Louisiana/New Orleans .
• Resilience filings: Scope/pace/cost and affordability are key lanes; objective is recovery mechanisms that support credit and access to capital .
• Credit metrics: On track to be at/above targets by year-end; debt roll-off and securitization effects drive metrics improvement .

Estimates Context

• EPS: Adjusted EPS of $3.27 beat LSEG consensus of $3.02; bold beat driven by extreme heat, regulatory actions, and lower O&M; S&P Global consensus estimates were unavailable at the time of this analysis due to API limits .
• Revenue: Company materials reviewed did not disclose consolidated revenue for Q3 2023; S&P Global revenue estimates were unavailable due to API limits. If S&P data is required, I can re-run once access is restored.

Key Takeaways for Investors

• Earnings strength was weather-driven but used prudently to pull forward reliability spend, derisking 2024; expect O&M to normalize, but continuous improvement and AI/RPA should help margin resilience .
• Regulatory de-risking is real: SERI settlements (MS, AR) plus favorable FERC developments materially reduce exposure; Louisiana/New Orleans remain key watch items, but settlement framework now clearer .
• Balance sheet and liquidity solid: Net liquidity $4.9B; credit metrics expected at/above targets by YE; equity needs minimal and covered via ATM .
• Dividend growth continues: 6% increase to $1.13 quarterly; management reaffirmed 6–8% adjusted EPS CAGR through 2026 .
• Strategic portfolio optimization: $484M gas distribution sale supports debt reduction and capital needs amid rising resilience/renewables capex .
• Growth narrative intact: Gulf Coast macro tailwinds, IRA incentives, and rising industrial pipeline support multi-year load growth; watch timing shifts of mega projects .
• Near-term trading: Bold EPS beat and guidance raise likely supportive; monitor resilience approvals (E-LA/E-NO) and SERI settlement progress in LA/NO for catalysts.

Sources

• Q3 2023 earnings call transcript (Nov 1, 2023): .
• Q3 2023 earnings slides (Nov 1, 2023): adjusted EPS, OCF, liquidity, guidance, credit metrics, segment earnings .
• 8-K 2.02 and 8-K Other Events (Oct 30, 2023): ANO incident write-offs and Regulation FD outlook .
• Press and external: Reuters/LSEG EPS consensus and retail volume ; PR Newswire earnings release (EPS/guidance, adjustments) [entergy-3q23-earnings-release.pdf].