Strong utility earnings boost Entergy Corp.’s 3Q financial results

by Wesley Brown ([email protected]) 303 views 

New Orleans-based Entergy Corp.’s third quarter earnings fell well short of year ago results but the parent of Arkansas’ largest electric provider still beat Wall Street estimates by posting robust profits in its regulated utility operations, the company announced Wednesday (Oct. 30).

For the period ended Sept. 30, Entergy Corp. reported third quarter earnings of $365 million, or $1.82 per share, compared to $536 million, or $2.92 cents per share, in the same period a year ago. Revenues were mostly flat at $3.14 billion in the three-month period, compared to $3.1 billion in the third quarter of 2018.
Accounting for adjustments, including one-time costs and expenses, third quarter earnings were $506 million, or $2.52 per share, compared to $431 million, or $2.35 per share in the third quarter of 2019. Wall Street analysts had expected the utility operator to report quarterly earnings of $2.29 per share on revenue of $3.43 billion, according to Thomson Reuters.

“With another successful quarter, we are increasing the midpoint of our 2019 guidance and narrowing the range,” said Entergy Chairman and CEO Leo Denault. “The fundamentals supporting our steady, predictable growth are strong and give us confidence in our financial outlooks.”

Entergy, which delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas, has spent the past 18 month exiting from the merchant power business and selling off most of its financially-strapped nuclear power fleet, which Denault said had been hampered by increased regulatory scrutiny and lower margins.

At the same time, the New Orleans based utility giant has moved forward with an ambitious new strategy to lower the company’s carbon footprint 50% by 2030 and assume a leadership role in the development of cleaner fuel choices. In March, Entergy Arkansas and NextEra Energy Resources LLC first announced plans to build a 100-megawatt solar energy facility in White County near Searcy. Pending approval by the Arkansas Public Service Commission, it would be the largest utility-owned solar facility in the state and feature a battery for storing solar power.

This will be Entergy’s third large-scale solar project in Arkansas, and with a combined capacity of 281 megawatts of solar energy, they can power about 45,000 homes. The Searcy solar facility is expected to begin operating by 2021.

In the third quarter, Entergy’s utility business was the main driver of the company’s earnings growth with reported earnings of $578 million, or $2.88 per share, compared to third quarter 2018 earnings of $505 million, or $2.75 per share. Company officials said rate activity at Entergy’s utility operations in Arkansas and three adjacent states, lower taxes and less dependence on nuclear fuel generation led to the strong profit margins through September.

Entergy’s Wholesale Commodities business unit, however, reported a loss of $141 million, or 70 cents per share, compared to earnings $105 million, or 57 cents per share, in the same period of 2018.  The decline in earnings were mostly related to tax items record a year ago and loss of revenue from the retirement of the Pilgrim nuclear plant on the East Coast, which resulted from an updated decommissioning study.

At Entergy’s corporate headquarters and parent operations in New Orleans, the utility giant also posted a loss of $72 million, or 36 cents per share, compared to a similar loss of $73 million, or 40 cents per share, in the previous year.

In Wednesday’s morning session in New York, Entergy’s shares (NYSE: ETR) were trending down 54 cents at $118.50. Over the past 52 weeks, the company’s shares have traded in the range of $81.02 as a low and $121.45 as a high.