管理層發言
Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Entergy Corporation Second Quarter Earnings Call and Teleconference. All lines have been placed on mute to prevent any noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. I will now turn the call over to Liz Hunter, Vice President of Investor Relations for Entergy Corporation.
Good morning. Thank you, Greg, and thanks to everyone for joining this morning. We will begin today with comments from Entergy's Chair and CEO, Drew Marsh, and then Kimberly A. Fontan, our CFO, will review results. In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation and our SEC filings. Entergy does not assume any obligation to update these forward-looking statements. Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website. And now, I will turn the call over to Drew.
Thank you, Liz, and good morning, everyone. Today, we are reporting quarterly adjusted earnings per share of $1.03. We remain firmly on track to meet our 2026 adjusted EPS guidance and longer-term outlooks. Kimberly will review our financial results in more detail. Last month, we hosted our Investor Day in New York. I want to thank all of you who attended in person and listened online. We provided a comprehensive update on our business strategy that defines how every decision starts with the customer to create long-term value for our key stakeholders: our customers, employees, communities, and owners. You also heard directly from two of our customers, AWS and Meta, on how we are working together to benefit stakeholders. Our differentiated growth story driven by macro trends was a key theme. While the technology sector is the largest demand growth contributor in our five-year plan, we also have robust demand from our traditional industrial segments. Looking beyond our current outlooks, we continue to have 7 to 12 gigawatts of hyperscale potential in our pipeline as well as 3 to 5 gigawatts of interest from traditional industrial segments. Since Investor Day, interest in potential large-scale projects throughout our service area has continued to grow. We remain excited about the opportunities before us. We have highlighted our Fair Share Plus pledge, which is our commitment to ensure that customers benefit from data center growth. Starting with our first data center agreement in 2024, we partnered with our elected leaders and our hyperscale customers to ensure that data centers pay the full cost to serve them and their fair share of fixed costs. For agreements signed to date, we expect $7 billion in customer bill benefits. On top of that, these customers bring significant economic development, community support, and grid enhancements for the communities and states where they operate. Louisiana Governor Jeff Landry is also committed to protecting customers and communities. In late June, he signed an executive order ensuring that new data centers are committed to providing customer benefits, an order that we see as consistent with our Fair Share Plus pledge. The requirements include protecting Louisiana customers, investing in grid resilience and long-term reliability, providing meaningful community benefits, including workforce development, and maintaining transparency and accountability. Importantly, this new executive order moves beyond setting an expectation to now setting a standard required to qualify for state sales tax exemptions. We are proud to say that the governor held out Meta's investment in Richland Parish as a positive example, providing significant customer and community benefits that meet the executive order's requirements. Any future data centers in Louisiana must also meet that standard. Last week, we attended the White House's Rate Payer Protection Pledge event with Governor Landry, Meta President Dina Powell McCormick, and the Richland Parish School System superintendent, Sheldon Jones. We are honored to participate and highlight the work we all have done to benefit our existing customers and communities through data center investments. The White House's Rate Payer Protection Pledge, Governor Landry's recent executive order, and our Fair Share Plus Pledge are all aligned to ensure that we grow and support this transformational investment opportunity and that we do it in a way that creates benefits for all stakeholders. I have a few operational updates today. Beginning with resilience and reliability. So far this year, we have had two minor tropical storms that impacted our service area. Restoration costs were nominal, and no special cost recovery is needed. We were fully prepared even though they turned out not to be major storms. Severe weather preparation and readiness is a year-round effort focused on training, grid investments, inventory management, proactive maintenance such as vegetation management, and other activities. At Investor Day, we highlighted investments we are making in resilient infrastructure. As a recent example, Entergy Louisiana kicked off a project in Saint Bernard that is part of its Phase 1 Accelerated resilience program. Improvements include replacing or reinforcing approximately 640 distribution and transmission poles with infrastructure engineered to withstand wind speeds of up to 150 miles per hour. Another example this quarter: our power delivery team reached an important reliability milestone for our customers. Our self-healing network program, which began installations in 2021, is improving reliability for more than a half million customers through more than 400 self-healing networks now in service. Since the program began five years ago, we have avoided more than 700,000 customer interruptions and an estimated 80 million outage minutes. But we are not done. We recently provided notice in Louisiana that we plan to file for additional accelerated resilience investment in the third quarter of this year. We are calling our request Phase 1A, and it would bridge the end of the current program and the next phase. Phase 1A will be a smaller intermediate plan to help us continue resilience improvement and retain workforce continuity while managing customer affordability. In May, Louisiana implemented a rider to support an enhanced vegetation management program. This program provides for rider recovery of vegetation management expenses above the 2025 baseline spending level. In June, Entergy Texas closed on its $200 million Texas Energy Fund grant to strengthen electric resilience and reliability at no cost to customers. This brings Entergy Texas's accelerated resilience plan to $337 million. Investments like these will improve storm readiness and ensure faster restoration following extreme weather events. These improvements are also part of our long-term planning and work to modernize the grid and reduce the number and length of outages our customers experience. Turning to nuclear. River Bend Station was recently recognized for its 40 years of service and its importance to Louisiana's energy landscape, providing clean, reliable power during those four decades. Also, the Nuclear Energy Institute each year recognizes the nuclear industry's most innovative ideas with its top innovative practice awards, and this year Entergy's nuclear team is receiving four awards. Our customers will realize operational and affordability benefits as these innovations are implemented, and in some cases scaled across our fleet. One of the projects was a first-of-a-kind replacement of the reactor vessel head through the containment hatch. This work supports ANO's long-term operations and was part of the recent refueling outage, which successfully completed ahead of schedule on April 30. Moving to regulatory matters, putting our customers first remains a cornerstone of regulatory outcomes that benefit all stakeholders. Over the past quarter, we continued to move steadily through multiple proceedings. Entergy Texas updated its distribution cost recovery factor, or DCRF, to include distribution assets that benefit customers and were placed in service since our last filing. Entergy Texas also received approval for its first-ever capacity cost recovery rider. This mechanism is the result of legislation passed in 2025 that modernizes MISO capacity cost recovery consistent with our other jurisdictions. Entergy Arkansas has new rates in effect for the generating Arkansas Jobs Act rider. The rider supports Entergy Arkansas's ability to make large investments to benefit customers and provide economic development in the state. In July, Entergy Arkansas filed its 2025 FRP historical netting adjustment. This filing reflects a rate reduction for customers, which will partially offset the impact of the base rate case, which itself was already expected to be less than 1% for residential customers. In June, Entergy Mississippi's annual FRP filing was approved resulting in no rate change. In addition, Entergy Louisiana and Entergy New Orleans filed their annual FRPs. We expect new rates to be in effect in September for those jurisdictions. Both jurisdictions also filed to extend their current FRPs — Louisiana for one year and New Orleans for four. We continue to make progress on our other regulatory proceedings such as the EVEST filing to support additional service to Meta, the Arkansas rate case, the Cottonwood acquisition, and other investments. There is more information on these proceedings in the appendix to today's earnings call presentation. We engage our communities in many ways, but one of the most important is through economic development. Our four-state Gulf South corridor is benefiting from a massive construction and manufacturing boom that continues to expand. The strong economic growth in our states is having a positive effect, and the economic indicators are looking strong. For example, GDP and nonfarm payrolls are at 20-year highs. Population is also growing after years of declines in Louisiana and Mississippi. A strong economy is good for business, but it is also good for communities. For example, Northeast Arkansas is seeing new ancillary investments to support the growing steel industry. This kind of complementary activity creates an industry hub that lowers cost for all local participants and enhances regional competitiveness. Teachers in Richland Parish, Louisiana are benefiting from bonuses of up to $50,000 as a result of a growing tax base supported by Meta's data center investments — an example of significant new opportunity in rural communities. In Mississippi, a circuit breaker manufacturing facility is expanding to serve local and regional data center and other electric infrastructure needs, bringing more jobs and property taxes. And in Southeast Texas, with multiple new and expanding LNG facilities, the region is benefiting from new college and workforce development programs designed to help local residents gain skills that will support decades-long careers in the LNG industry. Beyond economic development, our commitment to supporting our communities continues to be recognized. Entergy was once again named as an honoree of The Civic 50, which identifies the nation's most community-minded companies. Entergy was also recognized as the utilities sector leader, highlighting our ongoing commitment to employee volunteerism and community engagement. By continuing to put our customers first, we remain focused on delivering premium value to each of our key stakeholders. In the first half of 2024, we made steady progress across customer, operational, regulatory, and financial fronts, and we remain solidly on track to achieve our objectives for 2026 and beyond. I will now turn the call over to Kimberly, who will review our financial results for the quarter.
Thank you, Drew. Good morning, everyone. I will now review our financial results and our outlook as well as activity in the quarter. Our results for the quarter were straightforward. Our adjusted EPS was $1.03 as shown on Slide 4. This was slightly lower than last year as weather was close to normal compared to warmer weather in 2025. Excluding weather, retail sales growth was positive, driven by 10% industrial sales growth as new and expansion projects continue to ramp up their operations. The effects of investments made for our customers was also a driver. This includes regulatory actions, higher depreciation expense, taxes other than income taxes, and financing costs. Other drivers for the quarter included higher other O&M, higher interest expense at parent, and a higher share count from settling equity forwards. Slide 5 summarizes our credit ratings and affirms that our credit metric outlooks remain better than rating agency thresholds. Our plan reflects FFO to debt at or above 15% throughout the outlook period for Moody's metric, giving us capacity to manage events in the business as they occur. Drew mentioned our storm preparedness, and that includes financial readiness. We have continued to stay ahead of our financing needs, giving us very strong liquidity, including cash on hand, revolver capacity, and unsettled equity forwards. We are ready to respond in the event of a storm. We are constantly finding ways to strengthen our balance sheet and support our financial health to create benefits for customers. That includes structuring large agreements to protect existing customers and our credit and working with regulators on mechanisms that support the best decisions for our customers. S&P Global Ratings recently published a report highlighting our commitment to our Fair Share Plus pledge to protect customers. They also noted that our credit profile appears positioned to benefit from data center expansion as a result of disciplined contracting and constructive regulatory tools to reduce contracting-associated risks. As you can see on Slide 6, our equity plan is unchanged from Investor Day. We continue to be proactive in addressing equity needs to provide certainty and flexibility, giving us ample time to raise capital. In early May, we completed a $2.175 billion offering for equity forwards. Approximately 60% of our five-year equity plan is contracted, satisfying needs into 2028. On June 22, we settled 8.7 million shares of equity forwards for net proceeds of $672 million. The proceeds will support our customer-centric investment plan and our credit. As shown on Slide 7, we are affirming our 2026 adjusted EPS guidance and our outlooks through 2030. This is the same five-year period that we showed at Investor Day. We expect our outlook period to continue to be through 2030 at EEI. For 2026, we are firmly on track and we remain confident that we will deliver on our guidance. Looking ahead to the third quarter, with other movements in our plan, we expect other O&M to be approximately $0.05 to $0.10 higher than the same quarter last year, driven by increases in expenses that are recovered through riders, offset elsewhere, as well as consideration for the LDCC sale last year. Assuming normal weather in the third quarter, we expect the majority of our year-over-year earnings increase to come through in the fourth quarter due to flex spending toward the end of the year. At Investor Day, we laid out our differentiated growth strategy that is delivering strong sustainable results. We are creating value for all our key stakeholders, including our owners. With that plan, we have clear line of sight to achieve our outlooks and we have significant opportunities before us. And now we are happy to take your questions.
分析師問答
And at this time, I would like to remind everyone, in order to ask a question, press star and then the number 1 on your telephone keypad. In the interest of time, we ask that you please limit your questions to one primary and one follow-up. Thank you. We will pause just a moment to compile the Q&A roster. It looks like our first question comes from the line of Shar Pourreza with Wells Fargo. Shar, please go ahead.
Hey, guys. Good morning. Drew, maybe just starting off on the recent federal and state announcements on nuclear advancement. Governor Landry and the DOE are advancing negotiations on nuclear life cycle innovation, which includes dense reactor deployment. Is that something Entergy is actively participating in? And are you seeing any incremental movement on the three legs of support for new reactor deployment between state regulators, federal backing, and hyperscaler support, especially as we are thinking about the Pac-10 formation? Thanks.
I appreciate the question, Shar. We have been in conversations with the state about their interest in new nuclear, and we are excited to get the news that the DOE has moved them to the next phase. The work they are doing with the DOE covers many components that would support new nuclear investments, and we are excited about that. That clearly would bring new jobs and opportunity in the state if Louisiana could be successful in winning that work. Our perspective on new nuclear deployment remains where it was at Investor Day. We are working with several parties to work through the various components of risk, while making sure that our customers are protected and that the balance sheets of our operating companies are managed and protected from new nuclear risk. That remains very important. We are making progress, but I do not think we are yet where we need to be to be successful in launching; we are continuing to have those conversations.
Is that a 2026 update, Drew, or 2027 update, do you think?
In terms of when that might be available or when we might announce something, we do not have a firm timeline. We are working through it, and I feel like we are making progress. At the end of the day, as we said before, it has to be customer-led. That customer-led component is what is going to determine the timeline.
Got it. Okay. Perfect. And then lastly, just on the terms of the Louisiana FRP extension — do you anticipate an extension, and what would be the alternatives in lieu of the FRP?
We have a long history of extending formula rate plans within Louisiana, so our expectation is that we would probably be able to extend. Of course, we have to work with the regulators, the staff, and other participants to make sure that it works for everybody. We have had success in the past, so we would think that is a good indicator for what we might be able to do going forward. Thanks, Shar.
Our next question comes from the line of Jeremy Tonet with JPMorgan. Jeremy, please go ahead.
Hi, good morning. I wanted to turn over to Mississippi if we could. We've had conversations recently with key stakeholders in the state, and there's a particularly positive tone toward incremental data center development. This might be the most receptive conversation we've had. Could you update us on the potential for incremental expansions in Mississippi and what size you think that could reach?
We continue to have very robust conversations in Mississippi. AWS has a significant investment there, AVAIO is also looking to invest with us, and there are other investments in other parts of the state. The state is clearly embracing the opportunity and the benefits that come along with these investments for existing customers and communities. The Fair Share Plus pledge originated with our first customer in Mississippi with AWS, and we have been applying those guidelines since. We believe there continues to be opportunity beyond the customers we've talked to historically; other customers may be interested in Mississippi as well. We do not have specific updates or details to give at this time.
Got it. That is very helpful. Thank you for turning to Louisiana again. Conversations with key stakeholders in Louisiana have pointed to Meta possibly reaching 12 gigawatts in the state. Could you provide thoughts on how big the opportunity set is you see in Louisiana?
I cannot speak to Meta's appetite specifically. As we've said in the past, every one of the customers we've been working with has been interested in expanding beyond where they are. We would continue to work with Meta to expand should that opportunity come about. The front end of our funnel continues to be very active. It is not yet at the point where we are ready to change our 7 to 12 gigawatt number, but it is very active and we are excited about what those opportunities could be.
Got it. Very helpful. I'll leave it there. Thank you.
Thank you, Jeremy. Our next question comes from the line of Richard Sunderland with Truist Securities. Actually, one moment. We had a technical difficulty. Richard, if you could queue back up, please. In the meantime, we will go to Paul Zimbardo with Jefferies for the next question. Paul, please go ahead.
Hi. Afternoon. Hope you can hear me okay.
Hey, Paul. We can hear you great.
Just wanted to check in. You noted that interest has grown since Investor Day. Is there any flavor or quantification you can put on that — whether it is extensions from existing customers, specific jurisdictions, anything would be helpful. Thank you.
This interest is in our existing jurisdictions — primarily the three jurisdictions — and it is significant. In our 7 to 12 gigawatt estimate, we already accounted for a lot of probability-weighted numbers because the queue size is much greater than that. This new interest is potentially adding significantly to that, but it is more like indications of interest at this point rather than full-fledged proposals that are ready to go. It is still early innings, but there is a lot of volume showing interest. Our existing portfolio of signed electric service agreements also started as indications of interest, so we think there could be opportunity here.
Okay. Great. Then the other one I want to touch on is Cottonwood. Are there any other options potentially involving large load customers to come up with a different configuration or otherwise reduce the bill impact on customers? Any color would be helpful.
We are working with stakeholders to think about how to mitigate the impact. Cottonwood is not the shiniest new plant out there, but it is the most economic opportunity for our existing customers and the non-data-center industrial growth we are seeing. That large load is coming on over the next few years, and the alternative — a new plant — would not be available for several years until the early part of the next decade. The cost of that would be much greater than acquiring Cottonwood, and you would also be at risk given the current tighter market environment. So we think Cottonwood is the best option to help with steel mills, LNG facilities, and petrochemical facilities that are continuing to grow in Louisiana. Having said that, we are working with stakeholders to come up with ways to mitigate some of the upfront timing-related impacts. The biggest issue is timing: the plant is for sale now, which is not ideal relative to when other customers are arriving. We are working through that and expect to find a workable solution through the normal regulatory process.
Awesome. Thank you. Best of luck.
We have Richard Sunderland back from Truist Securities. Richard, please go ahead.
Hey. Good morning. Can you hear me?
We can. Yes. We can.
I will pick up with a few more regulatory items. I know staff and intervenor testimony is just about to be filed in the Meta expansion docket. How are you thinking about that process and a possible settlement path to resolve that given the governor's executive order and Meta's work in the state?
The Meta project is bringing substantial benefit to the state of Louisiana; we've already seen a massive rise in tax collection in Richland Parish and surrounding parishes. The benefits associated with this investment are being seen in the communities. We continue to see a lot of support for data centers in Louisiana, Mississippi, and Arkansas. We believe we will find a way to manage through the regulatory process. The principles associated with the Fair Share Plus pledge — paying incremental costs during the life of the contract and paying a tariff rate which includes fixed cost and other items in the minimum bill — will be central to that conversation in the regulatory process. We have to allow the regulators to reach their decision, but we still see a lot of opportunity there.
I appreciate the color. Could you speak more about the upcoming accelerated resilience filing and the goals of Phase 1A versus Phase 2? Is this about staging some of the work to manage total bill impact, or are you thinking about the overall program differently?
It is more about staging to manage affordability questions than a fundamental change in the overall program. We do need to make these long-term investments to support resilience for our customers. Electricity becomes more important every day and we must have a more reliable and resilient grid to support that. This filing is a nod toward managing affordability concerns today. Ultimately, the work will be highly economic for customers, but near-term bills are always a challenge, so we are working with regulators to help manage that.
Great. I'll leave it there. Thank you.
Our next question comes from the line of Andrew Weisel with Scotiabank. Andrew, please go ahead.
Thank you. Good morning, everybody. You have had a lot of success with data centers and emphasized the support from state and local politicians. There's also a nationwide trend of pushback and NIMBYism. Are you seeing much of that, and if so, where? How are you reacting — alone or with hyperscalers and other stakeholders? Given the support you have, do you think the risk is more in terms of delays or cancellations and relocations, or holistically?
We see a lot of support in our jurisdictions, but there are pockets of concern that have appeared in various places. A good example is New Orleans, where there is currently a moratorium on data centers. That is similar to pushback we've seen for other technologies in the past, like gas plants, solar facilities, or batteries. Our approach is to work with stakeholders to make sure everyone understands the need, address concerns, and then move forward. For New Orleans, our hope is to work with the city to address their concerns and lift the moratorium because there are significant benefits that could come to customers and communities. This has been our typical approach — working across counties, parishes, and states to ensure the benefits are spread as widely as possible.
In today's prepared remarks, you emphasized resilience and vegetation management. What role do hyperscalers play in those efforts, if any? Are they treated like any other C&I customer, or, given the Fair Share Plus pledge, might there be opportunities for them to do more? Could data center investments be directly tied to resilience efforts going forward?
Hyperscalers are supporting resilience efforts, generally indirectly. In Louisiana, for example, Meta is a full-tariff customer and is treated like every other customer. They will pick up a portion of securitization charges for past storms and a piece of future resilience costs, lowering the burden on existing customers. Infrastructure built to serve them often results in more resilient infrastructure, such as looping existing lines, which makes the grid more robust. So their investments contribute in multiple ways and are a positive for resilience.
That is great. Thank you, Drew.
Our final question today comes from the line of Stephen D'Ambrisi with RBC Capital Markets. Stephen, please go ahead.
Andrew, thanks for taking my question. At Analyst Day you updated that you had additional plant island equipment contracts with exclusivity. In the 10-Q you had updated that you had three, and at Analyst Day you moved to six. Any additional near-term slots you have secured? Also, as load potentially increases into the 2035 period, any thought to locking in a larger exclusivity agreement that phases you further into the middle of the next decade?
Good morning, Stephen. We continue to stay ahead on opportunities. You will not see in the queue this quarter that we have added turbines or plant island equipment since Investor Day, but that is something we continue to watch and monitor. As you pointed out, we have about 7.5 gigawatts of plant island equipment, which is in the low end of our 10 to 17 gigawatt opportunity. As Drew mentioned, we are seeing a lot of interest on the front end of the funnel, and as we work through that we will be making sure we stay ahead on the power to support it. So no change at this point, but we are continuing to watch and keep ahead as we move through the year.
Okay. That's great. Thanks, Kimberly. One more unrelated question: on the MISO futures process, Tranche 1 and Tranche 2.1 have focused on northern MISO, but there's a lot of discussion about what needs to get done in MISO in the Southeast. Can you talk about where that process sits for you and how you expect Entergy to potentially participate?
We have been building a lot of transmission — over 1,000 miles — to support new customers and resilience investments, which is changing the nature of our grid quickly. The original formulation of MISO's long-range transmission planning assumed a more stable environment, but the landscape has changed over the last couple of years. Our work with MISO has focused more on load pockets within the southern part of our system, and we are working with them on those issues. We are already seeing a lot of transmission built just to serve our customers as economic activity continues to grow.
Great. Thanks, Drew. Appreciate the time.
That concludes our Q&A session today. I will now turn the call back over to Liz Hunter for closing comments.
Thank you, Greg, and thanks to everyone for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on August 10th and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also, as a reminder, we maintain a web page as part of Entergy's Investor Relations website called Regulatory and Other Information which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant information. This concludes our call. Thank you very much.
That concludes today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.