Entergy Corporation — Q1 2024 Form 10-Q
Business context and reporting period. This combined, unaudited filing covers Entergy Corporation and its utility subsidiaries for the three months ended March 31, 2024, compared with Q1 2023. Entergy operates primarily as a regulated electric utility across parts of Arkansas, Louisiana, Mississippi, and Texas, including New Orleans, with a smaller natural-gas distribution business. Results are seasonal; management cautions that interim results should not be used to estimate full-year performance.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Operating revenue | $2.795 billion | $2.981 billion | Down 6.3% |
| Operating income | $238.0 million | $462.1 million | Down 48.5% |
| Net income attributable to Entergy | $75.3 million | $310.9 million | Down 75.8% |
| Diluted earnings per share | $0.35 | $1.47 | Down $1.12 |
| Cash from operating activities | $521.1 million | $959.5 million | Down $438.5 million |
Revenue declined mainly as fuel, rider, and other pass-through revenues fell by $223 million, alongside $31 million less storm-restoration carrying-cost revenue; these items generally have corresponding expense effects. Retail electric pricing added $59 million, while volume and weather added $19 million. Total retail electric sales rose 1%; sales for resale declined 12%.
Earnings were affected by unusual regulatory items: Entergy Arkansas recorded a roughly $132 million pretax write-off of a regulatory asset after an adverse court decision, and Entergy New Orleans recorded a $78 million regulatory charge tied primarily to a settlement in principle to share additional tax benefits with customers. Q1 2023 included a $129 million reduction in income-tax expense associated with Hurricane Ida storm-cost securitization, which makes the year-over-year comparison less representative of underlying performance. The filing’s narratives give differing net-of-tax amounts for the Arkansas write-off; see investor verification items below.
Operating cash flow fell primarily because of lower customer collections, including the timing of deferred fuel collections, and vendor-payment timing. Investing activities used $1.288 billion, including an approximately $170 million initial payment for the Walnut Bend Solar facility. Financing provided $1.929 billion, including $2.206 billion of long-term debt proceeds and $775 million of net commercial-paper issuance. Cash and cash equivalents ended the quarter at $1.295 billion, versus $133 million at year-end 2023.
At March 31, total assets were $61.630 billion and shareholders’ equity was $14.458 billion. Balance-sheet debt comprised approximately $28.4 billion of current maturities, commercial paper and notes payable, and long-term debt. Debt to capital was 65.8% (65.6% excluding specified securitization bonds); net debt to net capital excluding those bonds was 64.5%, up from 63.4% at year-end. Entergy had $1.914 billion of commercial paper outstanding under a $2 billion program. Its $3.5 billion revolving credit facility had $3.496 billion available, and Entergy reported compliance with its credit-facility covenant.
Material changes, outlook, and risks
- Utility performance and investment: Retail price increases across several operating companies partly offset lower pass-through revenues and weaker usage in some commercial and industrial customer groups. Entergy Arkansas completed its initial $170 million payment for the approximately 100 MW Walnut Bend Solar facility; commercial operation was expected in Q2 2024, with an approximately $20 million completion payment expected.
- Regulatory developments: Entergy Louisiana’s proposed resilience plan was reduced from an initial approximately $5 billion Phase I proposal to an LPSC-approved framework for approximately $1.9 billion of investment over five years, with a cost-recovery rider. Entergy Mississippi sought a $63.4 million formula-rate increase and implemented a capped $32.6 million interim increase effective April 2024; final rates were expected later in 2024. Entergy Louisiana’s proposed process for up to 3 GW of solar resources had its hearing rescheduled to June 2024.
- Generation and resilience proposals: Entergy Louisiana sought approval for a 112 MW floating natural-gas facility and microgrid estimated to cost $411 million, with operation targeted by the end of 2028 subject to approvals. Entergy New Orleans filed a three-year, $168 million hardening plan; a separate resilience project is expected to receive $55 million in DOE matching support.
- Regulatory litigation: System Energy faces FERC proceedings concerning Grand Gulf costs, rate of return, capital structure, tax positions, and refunds under its Unit Power Sales Agreement. The FERC approved the APSC settlement in March 2024; an April 2024 City Council settlement in principle provides for a $116 million black-box refund to Entergy New Orleans, inclusive of amounts already received, and lower billing parameters beginning with the June 2024 service month. The settlement remained subject to filing and regulatory process. Further exposure and timing depend on unresolved proceedings and appeals.
- Other risks and commentary: Entergy reported an SEC Enforcement Division investigation into its materials-and-supplies inventory accounting and controls. The company is cooperating and discussing a possible resolution; management said it does not expect a material impact but cannot predict the outcome or terms. The EPA’s revised PM2.5 standard may create compliance obligations in parts of Entergy’s service area. River Bend returned to NRC Column 1 in March 2024 after completing supplemental inspections. The SEC climate-disclosure rules were stayed pending judicial review. No new full-year earnings guidance is stated in the provided filing text. The board declared a quarterly dividend of $1.13 per share in April 2024.
Most important facts for investors to verify
- Reconcile the Arkansas regulatory-asset write-off: the filing reports approximately $131.8 million pretax, but gives differing net-of-tax figures in separate sections ($99.1 million and approximately $97 million).
- Track appeals and final outcomes in the Arkansas opportunity-sales case, and any resulting recovery, refund, or additional regulatory accounting effects.
- Monitor FERC decisions and the approval and implementation of the System Energy settlements, including potential refunds, rate changes, and remaining litigation exposure.
- Assess liquidity and refinancing needs against the $1.914 billion commercial-paper balance, upcoming debt maturities, capital spending, and the reported 65.8% debt-to-capital ratio.
- Confirm progress and cost recovery for resilience, generation, and renewable projects, and the outcomes of pending formula-rate proceedings.
- Follow the SEC inventory-accounting investigation and any disclosed resolution, as well as regulatory developments that could affect environmental compliance costs.