Entergy’s 3Q profits jump 35%, ups yearly earnings forecast

The parent company of Entergy Arkansas on Wednesday (Oct. 31) upped the company’s yearly earnings forecast as the utility giant’s profits in the third quarter jumped nearly 35% from a year ago. Even though Entergy Corp.’s quarterly earnings fell short of Wall Street expectations, the company’s stock was trending higher in the volatile Halloween Day session on the Nasdaq Stock exchange.

For the period ended Sept. 30, New Orleans-based Entergy Corp. reported third quarter earnings of $536 million, or $2.92 per share, compared to third quarter 2017 earnings of $398 million, or $2.21 per share. Revenues for the three-month period fell to $3.1 billion, compared to $3.24 billion a year ago.

Wall Street had expected the four-state utility operator to report third quarter earnings of $2.94 per share on revenue of $3.34 billion, according to Thomson Reuters. Entergy’s mixed third quarter performance comes as the Entergy Arkansas parent has continued to move to position itself as a pure-play power utility by selling off two shuttered nuclear plants and producing strong profits in its regulated utility business.

“We are on track to meet our strategic, operational and financial objectives, and our accomplishments this year include major milestones in our transition to a pure-play utility,” said Entergy Chairman and CEO Leo Denault. “With strong results to date, we are affirming our core business UP&O adjusted guidance for the year, and we are raising our consolidated operational guidance.”

As noted, Entergy updated its 2018 consolidated operational earnings guidance range to $6.75 to $7.25 per share and affirmed its Utility, Parent & Other adjusted guidance range of $4.50 to $4.90 per share. The updated operational guidance range reflects a midpoint increase of 45 cents and a narrowing of the range from 60 cents to 50 cents.

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

Over the past three years, Entergy has announced the shutdown and decommissioning of the Buchanan, N.Y.-based Indian Point and (Vernon) Vermont Yankee nuclear plants, as well as the March 2017 sale of the James A. FitzPatrick Nuclear power plant to Exelon Generation in upstate New York State. Entergy has also agreed to sell the subsidiaries that own the Pilgrim Nuclear Power Station in Plymouth, Mass., and the Palisades Power Plant in Covert, Mich., after their shutdowns and reactor de-fuelings.

At the same time, Denault has shuffled some of the company’s top executive positions and decided to invest $11.2 billion through 2020 mostly in the company’s generation and transition businesses. In the previous quarter, Entergy also promoted Laura Landreaux to lead Entergy Arkansas, making the Little Rock native the first woman to head Arkansas’ largest electric utility. Former Entergy Arkansas CEO Rick Riley was promoted to a new position as senior VP of distribution operations and asset management within the parent company in New Orleans.

In the third quarter, Entergy’s utility business reported earnings of $505 million, or $2.75 per share, compared to $401 million, or $2.22 per share, a year ago. Drivers for the quarterly increase included favorable weather and the lower federal income tax rate, partially offset by higher non-fuel costs, company officials said. In December 2017, Entergy Arkansas filed a partial settlement agreement in its rate case before the state Public Service Commission.

Entergy’s Wholesale Commodities business unit produced earnings of $105 million, or 57 cents per share, in the third quarter, compared to third quarter 2017 earnings of $55 million, or 31 cents per share, in the same period of 2017. Those improved earnings included an upward revision to charges associated with the retirement of the Pilgrim nuclear plant, which resulted from an updated decommissioning study.

In Wednesday’s trading session in New York, Entergy’s shares were up 11 cents at $83.05, recovering from losses in earlier trading. Over the past 52 weeks, the company’s shares have traded in the range of $71.95 as a low and $87.95 as a high.