Q3 2024 Earnings Summary
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EPS | FY 2024 | reaffirmed | bottom of range raised by $0.10 | raised |
Industrial Sales Growth | Through 2028 | 8% to 9% | 11% to 12% | raised |
Adjusted EPS | FY 2025 | no prior guidance | maintained | no prior guidance |
Capital Plan | 2024–2028 | no prior guidance | increased by $7B | no prior guidance |
Dividend Growth | 2024–2028 | no prior guidance | 6% increase | no prior guidance |
Stock Split | FY 2024 | no prior guidance | 2-for-1 stock split | no prior guidance |
Credit Metrics | 2024–2028 | no prior guidance | building to 15%, currently >14% | no prior guidance |
Storm Cost Recovery | FY 2024 | no prior guidance | $220M–$240M | no prior guidance |
DOE Loan Applications | N/A | no prior guidance | $2.4B in second phase | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Industrial sales growth | Q2 2024: 4% growth for 2024. Q1 2024: $0.15 EPS benefit from industrial load. Q4 2023: 6%–7% CAGR outlook. | Projected 11%–12% CAGR through 2028, driven by a large new customer. | Growth outlook has increased, reflecting more optimistic forecasts |
Large new customers | Q2 2024: Several large industrial customers expected in late 2024. Q1 2024: 8 new electric service agreements (1.1 GW). Q4 2023: Multiple deals (e.g., AWS in Mississippi). | One major undisclosed customer in Louisiana boosting sales and capital plan. | Continues to drive growth, with a new focus on one particularly large load |
Regulatory progress and settlements | Q2 2024: LPSC settlement for Formula Rate Plan extension; SERI settlement in principle. Q1 2024: 85% of System Energy litigation resolved; major resilience approvals. Q4 2023: Focus on resilience filings and progress with SERI negotiations. | New Orleans City Council approved $100M of investments; Entergy Texas Resilience Plan settlement reached. S&P upgraded SERI’s senior secured rating. | Ongoing regulatory wins, providing clarity for new investments |
Capital expenditure for clean energy and infrastructure | Q2 2024: Joint development agreement for up to 4.5 GW solar; streamlined LPSC RFP for 3,000 MW. Q1 2024: $1.9B approved for resilience in Louisiana; floating power station plan. Q4 2023: < $1B for resilience, $2B for solar projects. | Increased capex by $7B since Analyst Day, emphasizing renewables and transmission. | Significant expansion in clean energy and grid projects |
Credit metrics (FFO to debt ratio) | Q2 2024: No specific FFO/debt updates. Q1 2024: Strong metrics 14%, targeting 15%. Q4 2023: 14.3% book FFO to debt at year-end. | At or above 14%, aiming for 15%. Nuclear PTCs not yet included in forecasts. | Remains healthy, with further upside from potential PTC inclusion |
Waterford 3 nuclear plant capacity issues | Q1 2024: Transformer failure forced operation at 90% capacity. Q4 2023: No mention [—]. | No mention in Q3 2024. | Not discussed recently, status unclear |
Floating power stations | Q1 2024: $411M floating station for resilience in Louisiana. Q4 2023: No mention [—]. | No mention in Q3 2024. | Likely on hold or not a current focus |
Dividend growth plan (6% growth rate) | Q2 2024: No direct mention [—]. Q1 2024: Long-term 6%–8% EPS growth cited. Q4 2023: Emphasized steady dividend growth, linked to 6%–8% EPS growth. | Reiterated 6% target, with payout ratio moving below 60%. | Maintained guidance, providing clearer payout commentary |
Equity issuance from 2026 to 2028 | Q2 2024 / Q1 2024 / Q4 2023: No specific details on equity needs beyond 2026. | $3B needed, with over 80% planned in 2027–2028. | Newly disclosed guidance for later-period financing |
Uncertainty around nuclear production tax credits | Q2 2024 / Q1 2024 / Q4 2023: No mention [—]. | Not included in forecasts but viewed as credit positive once realized. | New consideration, providing potential future upside |
Reliance on a single undisclosed industrial customer | Q2 2024 / Q1 2024 / Q4 2023: No direct reference to a single unnamed customer [—]. | Major growth driver; capital plan not solely dependent on it. | Recently highlighted, potentially a concentrated load risk |
Potential large future impact (onshoring, electrification, data centers) | Q2 2024: 5–10 GW of potential data center projects. Q1 2024: Growing data center interest (1.1 GW in MS). Q4 2023: AWS in MS, large industrial expansions. | Bullish on onshoring and data center loads, with 11%–12% CAGR through 2028. | Consistent theme, remains a key driver of long-term demand |
-
2026 EPS Growth Drivers
Q: What's driving the 8%-9% EPS growth in 2026?
A: Management explained that the step-up in 2026 EPS growth to 8%-9% is supported by incremental capital investments that support significant customer growth. They have a significant amount of growth already baked into their plan, including new customer deals and expected energy sales agreements. The investments are expected to be fully recoverable under existing rate mechanisms. -
Sustainability of EPS Growth Post-2026
Q: Is the 8%-9% EPS growth sustainable after 2026?
A: Management believes that the 8%-9% EPS growth rate is sustainable beyond 2026. Long-term drivers include onshoring, clean energy initiatives, electrification, and technology advancements. They expect increased demand from customers seeking to decarbonize, and they are having ongoing conversations with large potential high-load-factor customers in various industries. -
CapEx and Sales Guidance Changes
Q: Is the CapEx and sales guidance change due to one customer?
A: The CapEx and sales guidance increase is not solely due to one customer. While a significant portion is related to a large new customer, there is also substantial additional solar investment and incremental transmission investment to support customer growth. The capital investments reflect a blend of supporting new and existing customer needs. -
Balance Sheet and Equity Needs
Q: How will the increased CapEx impact equity needs?
A: The incremental equity needed to fund the increased CapEx is relatively modest. The structure of customer additions and funding of capital, including renewable projects under green tariffs, enables incremental cash flow that supports financing. This approach helps to moderate the amount of additional equity required. -
Advanced Nuclear Initiatives
Q: Are there plans for ownership in advanced nuclear projects?
A: Management is exploring various structures for advanced nuclear projects, including ownership. They recognize the size and risk of nuclear projects relative to their operating companies. Ownership is an expectation, as they are experienced in this area and want to manage credit implications. -
Attracting Large Customers
Q: Will you continue attracting large transformational customers?
A: Management does not believe recent large customer additions are isolated events. They have ongoing conversations with potential customers and foresee opportunities amounting to multiple gigawatts across several sectors. These discussions are based on actual customer interest, not just internal projections. -
Replicability of Tariff Framework
Q: Is the tariff framework for the new customer replicable?
A: The framework ensuring new customers support their fair share is replicable. Management emphasizes that this approach works well with stakeholder engagement and can be applied to future customer arrangements. -
Impact on Customer Bills
Q: How will new investments affect customer bills?
A: The bill trajectory has actually improved, decreasing to about 3.5% from the previous 4% outlook. The addition of sales growth spreads fixed costs over more sales, helping to moderate bill impacts. -
Nuclear Uprates Evaluation
Q: How long will nuclear uprate evaluations take?
A: The timeline for nuclear uprates depends on the plant and the specific upgrade. Some upgrades are straightforward and already underway, while others are more complex and expensive, requiring additional customer support. -
Transfer of SERI Share
Q: Does Mississippi need to approve the SERI transfer?
A: Yes, Mississippi must approve the transfer of the Louisiana share of SERI to Mississippi, along with approval from FERC. Management expects both approvals by the end of the year.
Research analysts covering ENTERGY CORP /DE/.