Entergy (ETR) Prelim. Q2 EPS Misses Views

Entergy (NYSE: ETR) indicated that it expects second quarter 2014 as-reported earnings of approximately $1.04 per share and operational earnings of approximately $1.10 per share. Results for second quarter 2013 were $0.92 per share on an as-reported basis and $1.01 per share on an operational basis. The increase in earnings reflected top line growth, particularly at Entergy Wholesale Commodities, the wholesale generation business, where both higher volume and prices contributed. Entergy also affirmed its 2014 operational earnings guidance range of $5.55 to $6.75 per share.

*** The Street sees Q2 EPS of $1.16 and FY14 EPS of $6.17.

As-reported results are prepared in accordance with generally accepted accounting principles and comprise operational earnings and special items. Special items in second quarter 2014 were related to the planned closure of the Vermont Yankee Nuclear Power Station later this year and the human capital management strategic imperative. Second quarter 2013 included special items for the proposed transmission spin-merge transaction and for expenses associated with the implementation of the human capital management strategic imperative.

The second quarter 2014 operational earnings improvement was due to higher earnings at Entergy Wholesale Commodities. Operational results for Utility and Parent & Other largely matched the prior period. On a consolidated basis, the preliminary estimate for the effective income tax rate for operational earnings in second quarter 2014 increased to approximately 40 percent.

Entergy Wholesale Commodities

The quarter-over-quarter operational earnings increase for Entergy Wholesale Commodities was attributable to increased net revenue. Nuclear sales volume was higher due to a lack of refueling outages and reductions in unplanned outages compared to second quarter 2013. Higher power prices for the nuclear fleet also contributed. Increased depreciation and income tax expenses partially offset these items.

Utility

At Utility, net revenue increased due primarily to price factors related to rate actions. On a volume basis, higher weather-adjusted sales, particularly in sales to industrial customers, was offset by milder weather. Utility results also included lower non-fuel operation and maintenance expense. Offsetting factors included an increase in depreciation expense and a higher effective income tax rate, resulting in operational earnings largely unchanged from second quarter 2013.

Parent & Other

Parent & Other's operational results were essentially flat versus the second quarter of last year. No individual item was significant.

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