Entergy 2Q earnings below estimates, company narrows full year earnings guidance

Second quarter profits for the parent company of Entergy Arkansas were down from a year ago as the New Orleans-based utility giant continues to lessen its dependence on coal-fired power and move to develop renewable and cleaner energy sources to fuel its operations.

For the period ended June 30, Entergy Corp. reported second quarter earnings of $236 million, or $1.22 per share, compared to $245 million, or $1.34 cents per share, in the same period a year ago. Revenues were mostly flat at $2.67 billion in the three-month period, compared $2.66 billion in the second quarter of 2018.

Accounting for adjustments, including one-time costs and expenses, second quarter earnings were $262 million, or $1.35 cents per share, compared to $259 million, or $1.42 million in the second quarter of 2019. Wall Street analysts had expected the utility operator with subsidiaries in Arkansas, Louisiana, Mississippi, Texas and New Orleans to report second quarter earnings of $1.37 per share on revenue of $2.91 billion, according to Thomson Reuters.

“Our results for the quarter keep us well-positioned to achieve our full-year financial guidance,” said Entergy Chairman and CEO Leo Denault. “With a track record of success, clarity in our vision, and confidence in our strategy going forward, we are raising our 2020 and 2021 adjusted EPS outlooks and narrowing our adjusted EPS ranges across our forecast period.”

During the second quarter, Entergy released a 54-page sustainability report acknowledging the impact of climate change as part of the utility giant’s strategy to lower the company’s carbon footprint by 50% by 2030 and assume a leadership role in the development of cleaner fuel choices.

The steps are outlined in Entergy Corp.’s Climate Scenario Analysis and Evaluation of Risks and Opportunities report in late April, which highlighted the company’s strategic plan and ongoing efforts to “manage risks, further reduce emissions, navigate climate policy uncertainty and plan for future investments that deliver value for the company’s customers, employees, communities and owners.”

In line with the company’s new strategic course, Entergy Arkansas officials announced in June that a new solar tariff will allow customers in the Natural State to subscribe to blocks of solar energy from a recently completed project in Stuttgart and from other sources as they come online.

Entergy first announced plans in March to build a 100-megawatt solar energy facility in White County near Searcy, which will  be the largest utility-owned solar facility in the state and feature battery storage. Entergy also purchases 81 megawatts of solar energy from the Stuttgart Solar Energy Center, a project completed in May 2018 with NextEra Energy under a 20-year purchase power agreement.

Through the new tariff, Entergy customers will be able to purchase up to half of the output from the Stuttgart facility, which can supply power for up to 13,000 homes. Entergy is also expected to purchase another 100-megawatts of solar energy from NextEra-led Chicot Solar project at Lake Village when it starts operating in 2020.

Entergy’s climate change policy stance came six months after Entergy Arkansas came to an historic agreement with the Sierra Club and other state environmental groups to shut down its coal-fired plants in the state. State Attorney General Leslie Rutledge, however, has asked state utility regulators to delay or halt that agreement, saying it may raise rates for 700,000 Entergy customers in Arkansas.

In the second quarter, Entergy said its utility businesses in four states reported earnings of $331 million, or $1.70 per share, down from the year ago results of $376 million, or $2.05 per share. Entergy’s parent operations in New Orleans reported a loss of $69 million, or 35 cents per share, compared to a similar loss of $73 million, or 40 cents, in the same period of 2018.

Entergy narrowed its full-year 2019 guidance to be in the range of $5.15 to $5.45, compared to the earlier forecast range of $5.10 to $5.50. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 10,000 megawatts of nuclear power. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas.

Following Wednesday’s opening bell, Entergy’s stock (NYSE: ETR) was trending higher in early trading at $105.04, up $1.2% or $1.12 per share. The utility’s shares have traded in the range of $78.99 and $107.35 in the past 52 weeks.