Entergy Corporation (ETR) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Quarterly Adjusted Earnings: Entergy reported strong quarterly adjusted earnings per share of $1.92, indicating the company is on track to meet its 2024 guidance.
• Agreements in Louisiana: Entergy Louisiana reached an agreement in principle with the LPSC staff and other parties on its FRP extension, resolving all outstanding base rate-making proceedings.
• Settlement with SERI: System Energy Resources reached an agreement in principle with the LPSC staff on long-standing litigation at FERC, substantially resolving major litigation.
• Hurricane Beryl Response: The company's effective response to Hurricane Beryl demonstrated the benefits of investments in resilience and growth, supporting timely power restoration.
• Growth and Clean Energy Initiatives: Entergy is advancing its Southeast Texas Energy Plan with filings for new generation resources and has signed a joint development agreement to accelerate the development of new solar generation and energy storage projects.

Pessimistic Highlights

• Settlement Charges: Entergy recorded a $1.17 settlement charge due to a pension plan lift out and reported expenses totaling $0.52 related to customer credits as part of the Entergy Louisiana settlement.
• Increased Costs: The company experienced increased costs to serve customers, primarily due to other O&M and depreciation, along with higher interest expenses.

Company Outlook

• 2024 Guidance Affirmed: Entergy remains firmly on track to achieve its adjusted EPS guidance for 2024, with expectations of higher sales growth and O&M savings to be realized mainly in the fourth quarter.
• Long-term Growth: The settlements with the Louisiana Public Service Commission and progress in regulatory proceedings support Entergy's long-term growth story and outlook.

Q & A Highlights

• Q: Any further updates on Louisiana and FERC regulatory progress? (Shar Pourreza, Guggenheim Partners)

  A: The SERI settlement is consistent with other commission settlements and clears major litigation. The LPSC is expected to take up the proposed settlement on August 14. (Roderick West)

• Q: Could the settlements be a catalyst to revisit capital allocation and CapEx plans? (Shar Pourreza, Guggenheim Partners)

  A: The company will provide a full update in November at EEI, as the settlements are considered in EPS and cash flow outlooks. (Kimberly Fontan)

• Q: Updates on the data center opportunity set? (Jeremy Tonet, JPMorgan)

  A: Entergy continues active engagement with potential customers for hyperscale data center development, leveraging the Gulf Coast's structural advantages. (Roderick West)

• Q: Scope and impact of the Louisiana FRP and SERI settlements on earnings projections? (David Arcaro, Morgan Stanley)

  A: The settlements are included in the company's EPS and cash flow outlooks, affirming the guidance provided. (Kimberly Fontan)

• Q: On addressing vegetation issues outside of right-of-ways post-Hurricane Beryl? (Ryan Levine, Citi)

  A: The strategy includes proactive communication and regulatory engagement to extend right-of-ways and incorporate more resilient infrastructure. (Roderick West, Andrew Marsh)

• Q: Regulatory approvals or filings related to the AWS facility? (Travis Miller, Morningstar)

  A: Pre-approval was obtained through the Mississippi Commission, facilitating the design and build-out to serve AWS. (Roderick West)