Yahoo Finance Entergy Corp (ETR) Q1 2024 Earnings Call Transcript Highlights: Key Financial Outcomes and ...
Adjusted Earnings Per Share (EPS): Reported at $1.08 for the first quarter.
Annual Adjusted Gross Margin: Approximately $150 million from new electric service agreements.
Operating Cash Flow: $521 million for the quarter, influenced by customer receipts and deferred fuel collections.
Industrial Sales: Decreased by 0.6% quarter-over-quarter, primarily due to lower sales to cogeneration customers.
Regulatory Charge: Entergy New Orleans recorded a $0.27 regulatory charge related to IRS audit resolution benefits.
Impairment: Entergy Arkansas recorded a $0.46 impairment of a regulatory asset following a court decision.
Resilience and Grid Hardening Investments: Approved plan includes 2,100 projects totaling $1.9 billion over 5 years in Louisiana.
Equity Needs: Progress against 2025 and 2026 equity needs, with over 30% secured through ATM forward as of the end of the quarter.
Guidance Affirmation: Maintains full-year and longer-term adjusted EPS outlook despite early headwinds.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can we start on the updated thoughts around the CapEx plan given the data points around resiliency and additional industrial customers? A: (Kimberly A. Fontan - Executive VP & CFO, Entergy Corporation) Yes, from a capital plan, we did get $1.9 billion approved. We had $900 million through this outlook period. Of the $1.9 billion approved, about $1.5 billion of that is in that same 3-year period. So that's an increment of about $700 million for Louisiana. The Louisiana portion of that $900 million was $800 million. So that's an incremental $700 million. How that rolls out through the capital plan, we'll update all that at the Analyst Day along with the effects of the rider and any other changes to our capital and our financing plan.
Q: Can you help us reconcile some of the charges taken in the quarter and how the refunds may impact cash and financing needs in the near term? A: (Kimberly A. Fontan - Executive VP & CFO, Entergy Corporation) We don't see any needed change in equity. We had already reserved a substantial portion of the income tax or the deferred tax effect for New Orleans. We did increase that, but the return period is a pretty long period, and so there's no material effect on the outlook period.
Q: Do you have any updated thoughts around the FRP process and rate case process in Louisiana? A: (Roderick K. West - Group President of Utility Operations, Entergy Corporation) It's Rod. I think I can say, look, 5 weeks ago, we suspended the procedural schedule to facilitate settlement. If you think about the date of May 21, when staff and intervenor testimonies do, in the next 3 weeks, I think it's reasonable to assume that 1 of 3 things will happen. We'll either announce the settlement, we'll mutually agree to extend the dates procedurally to facilitate settlement, or pivot back to a procedural schedule. With the resiliency docket addressed last week, I think the next 3 weeks will be telling about the progress we'll make. But we're comfortable that the stakeholders in Louisiana are now focused on settlement discussions.
Q: I just wanted to dig in a little bit more on plus $0.15 revised weather-normal sales, just a stronger industrial sales outlook as you put out there. A: (Roderick K. West - Group President of Utility Operations, Entergy Corporation) This is Rod. I can touch on that and certainly Kimberly can follow. But beyond the AWS transaction in Mississippi, we're continuing to see significant interest in the data center sectors, both hyperscale as well as colocation in Arkansas, Louisiana and Mississippi. But we continue to see strong interest from the metal sector as well, specifically aluminum and steel. With projects in various stages of development, you can add in there with the RRA, developments showing up in blue ammonia in addition to the conversations around carbon capture. And that's not to exclude what we would consider to be our traditional sectors of growth in the service territory around refining and petrochemicals. We plan to give more color, of course, at Analyst Day, but I didn't want to suggest that there was one specific sector. There's a fair amount of diversity in our backlog and growth outlook.
Q: Going back to the data center discussion, just you gave the stat on 1.1 gigawatts of new load, is going to be about $150 million of new gross margin, and this relates to the Mississippi Center. But just thinking about how that drops to the bottom line when you're kind of taking the financing costs or other items there. A: (Kimberly A. Fontan - Executive VP & CFO, Entergy Corporation) Yes. Thanks for the question, Nick. When you think about the Mississippi Data Center, it ramps up over time. So you're not going to see a lot of that in the 3-year outlook period. We can talk more about what that means over the 5 years that Drew referenced at the Analyst Day. But you're right, when you think about AGM on that sort of customer, you are also putting in infrastructure to support it. So you saw a shift in spending in the fourth quarter update, where we added incremental renewables, for example, in Mississippi, because those investments and the associated costs associated with those investments will offset some of that from a bottom line perspective and then financing costs for those type of things as well. But again, you'll see most of that effect outside the 3-year outlook period.
Q: I was wondering if you could provide a preview of your planned resiliency filing in Texas. You laid out a cadence of spending for Texas at the EEI conference. And I was just wondering if the Texas Resiliency Act since then has changed how you're thinking about it in terms of the amount and timing of planned investments? A: (Roderick K. West - Group President of Utility Operations, Entergy Corporation) Yes. It's Rod again. We're going to make that filing in the second quarter. And some of the considerations around the amount will be influenced by how we think about the contribution to the resilient spend from the state grant program, not to mention, to your earlier point, how the capital would flow through the recovery mechanisms affecting both affordability and credit. But we'll make that filing before the end of second quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
