ETR Misses, Provides 2013 Outlook

RELATED QUOTES

SymbolPriceChange
EXC34.625+0.035
ETR78.47-0.44
ITC46.54-0.12

Before the bell, Entergy Corporation (ETR) reported its third quarter 2012 results. In the reported quarter, the company posted operational earnings per share (“EPS”) of $1.95, which missed the Zacks Consensus Estimate of $1.96. Earnings also came in much lower than the year-ago quarter’s $3.53.

On a reported basis, including one-time items, earnings per share came in at $1.89 for the reported quarter, compared with earnings of $3.53 per share in the year-ago quarter.

Operational Results

Revenue in the reported quarter fell 12.7% year over year to approximately $3.0 billion, falling short of the Zacks Consensus Estimate of $3.5 billion. Of this Electricity revenue was down 15.1% to $2.3 billion, Natural Gas was down 10.9% to $23.6 million, and Competitive Businesses was down 2.5% to $619.6 million.

Entergy overall reported a net income attributable to the company of $337.1 million versus net income of $628.1 million in the prior-year period.

Segment Results

Utility


In third quarter 2012, Utility earnings were $296.2 million on an as-reported basis and $306.8 million on an operational basis, compared with $524.1 million on both as-reported and operational bases in third quarter 2011. 

The year-over-year variance was due largely to the absence of the net earnings benefit from a 2011 IRS settlement that resulted in a significant reduction in income tax expense, and a decrease in net revenue attributable to a regulatory charge.

Overall, weather was warmer than normal during the reported quarter, but fell short of the significantly above-normal temperatures experienced in the third quarter of 2011. The decreases were largely offset by the net effect of regulatory actions in several jurisdictions and increased net revenue attributable to weather-adjusted volume. Although total weather-adjusted retail sales growth was essentially flat, net revenue increased from sales growth due to growth in the higher-margin residential and commercial segments.

Higher non-fuel operation and maintenance expense and higher depreciation expense also resulted in the quarter-over-quarter earnings decline. Those were partially offset by deferral or capitalization of Isaac storm restoration costs.

Residential sales in third quarter 2012, on a weather-adjusted basis, increased 1.4% year over year. Commercial and governmental sales, on a weather-adjusted basis, increased 0.9% quarter over quarter. Industrial sales in the third quarter decreased 2.5% over the prior year. Billed retail sales growth on a weather-adjusted basis was essentially flat quarter over quarter.

Growth in residential and commercial and governmental sales was offset by a decline in industrial sales. The industrial sales decrease was due partly to an outage at a large industrial customer.

Entergy Wholesale Commodities

Entergy Wholesale Commodities’ as-reported and operational earnings were $118.8 million for third quarter 2012, compared with $130.2 million for third quarter 2011. The decline was due largely to lower net revenue from the nuclear portfolio primarily on lower energy pricing.

The average realized revenue per megawatt hour for the nuclear fleet was approximately $52, down from approximately $56 in the same period last year. While nuclear generation declined due to an increase in refueling and unplanned outage days, the effect of outage days was partially offset by the exercise of re-supply options provided for in power purchase agreements.

Lower net revenue from Entergy Wholesale Commodities' nuclear fleet was partially offset by net revenue from the 583-megawatt Rhode Island State Energy Center, which was acquired in December 2011. Higher non-fuel operation and maintenance expense also led to the operational adjusted earnings decline, driven by higher compensation and benefits costs and the Rhode Island State Energy Center acquisition. These items were partially offset by lower depreciation expense and a lower effective income tax rate.

Parent & Other

Parent & Other reported a loss of $77.9 million on both as-reported and operational bases for third quarter 2012. This compares to a loss of $26.3 million on both as-reported and operational bases in third quarter 2011. Higher income tax expense was the primary factor driving the variance. Higher interest expense also contributed to the variance.

Financial Condition

Entergy in the reported quarter generated approximately $1.0 billion from operating activities compared with $1.2 billion in the year-ago period. Cash and cash equivalents at the end of the reported period were $749.7 million versus $694.4 million at year-end 2011. Long-term debt increased to approximately $11.7 billion from slightly above $10.0 billion at year-end 2011.

Guidance

Entergy updated its 2012 earnings guidance range to $3.44–$4.24 per share on an as-reported basis and reaffirmed operational guidance range of $4.85–$5.65 per share. The revised as-reported guidance range reflects special items recorded in the reported quarter for expenses in connection with the proposed spin-off and merger of Entergy's transmission business with ITC Holdings Corporation (ITC).  

Earlier, in December 2011, Entergy entered into a definitive agreement with ITC Holdings under which the former will divest its electric transmission business to the latter for gross cash of $1.775 billion. The divested business would be merged with the operations of ITC Holdings.

Entergy also provided 2013 earnings guidance in the range of $4.60–$5.40 per share on both an as-reported basis and an operational basis.

Outlook

New Orleans, Louisiana-based Entergy is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity and is the second-largest nuclear generator in the United States.

Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. The company is the second largest U.S. nuclear power generator after Exelon Corporation (EXC).

Entergy is also on track with its plan of divesting its electric transmission business to ITC Holdings. The transaction will require the consent from Entergy's retail regulators, the Federal Energy Regulatory Commission and ITC shareholders. The company expects the transaction to complete by 2013.

Post-merger, ITC will become one of the largest electricity transmission companies in the U.S. Its area of operations will stretch from the Great Lakes to the Gulf Coast, with more than 30,000 miles of transmission lines.

Per the agreement, Entergy will divest its electric transmission business to a newly formed entity known as Mid South TransCo LLC ("Transco") which will be distributed to Entergy’s shareholders in the form of a tax-free spin-off. Then, under an all-stock Reverse Morris Trust transaction, Transco will merge with and into a newly created merger subsidiary of ITC.

Post-merger, Entergy will have an approximately 50.1% stake in ITC in exchange for their shares in TransCo. The balance 49.9% stake of the combined company will be with the existing shareholders of ITC.

Entergy plans to utilize most of the cash proceeds from the transaction to redeem the debt at its utility operating companies and at the parent, Entergy. It expects the transaction to meet the criteria for tax-free treatment for U.S. federal income tax purposes.

The divestiture will provide more investment alternatives and enhance the credit quality of Entergy and its operating subsidiaries. It will allow the company to invest more in its generation operations. Moreover, the transaction will not affect its retail customers and they will continue to receive the same standard of service as before.

In the past, the company spent much effort to create its own independent grid. Currently, it is seeking to integrate its transmission operations into the Midwest Independent System Operator.

Entergy presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Read the Full Research Report on EXC

Read the Full Research Report on ETR

Read the Full Research Report on ITC

Zacks Investment Research



More From Zacks.com

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Sensors, other devices can help prevent hot car deaths
    Sensors, other devices can help prevent hot car deaths Associated Press - 5 minutes ago

    Hot cars are a danger to children, particularly in a sweltering summer like this one. There are some devices on the market — built into cars as well as child seats — that can help prevent kids from being ... … More »

  • Markets Right Now: US stocks edge lower at midday Associated Press - 10 minutes ago

    The latest on developments in global financial markets (all times local): 11:45 a.m. Stocks are moving slightly lower in midday trading on Wall Street as the market gives back a modest gain from the day ... … More »

  • Italy quake unlikely to trigger 200 mln euro cat-bond default
    Italy quake unlikely to trigger 200 mln euro cat-bond default Reuters - 15 minutes ago

    A powerful earthquake in Italy on Wednesday is unlikely to force UnipolSai's 200 million euro ($226 mln) catastrophe bond into default as the bond has low exposure to the affected region, the Italian insurer said. The earthquake devastated a string … More »

  • Syria rebels backed by Turkish tanks 'seize' IS-held town
    Syria rebels backed by Turkish tanks 'seize' IS-held town AFP News - 18 minutes ago

    Turkish tanks and hundreds of opposition fighters thrust deep inside Syrian territory Wednesday in a lightning operation that within hours ousted Islamic State jihadists from a key Syrian border town. The air and ground offensive -- the most … More »

  • U.S. crude down 3 percent after big stockpile build report
    U.S. crude down 3 percent after big stockpile build report Reuters - 21 minutes ago

    Oil prices tumbled on Wednesday, with U.S. crude falling more than 3 percent, after an unexpectedly large inventory build in the world's biggest oil consumer renewed worries about oversupply. The U.S. Energy Information Administration (EIA) … More »

  • TABLE-INDONESIA KPB NUSANTARA PALM OIL PRICES - Aug 24 Reuters - 25 minutes ago

    Aug 23 (Reuters) - Following are Indonesian prices for crude palm oil (CPO) quoted at an auction by PT KPB Nusantara (formerly known as the state marketing centre) on Monday. Buyer Volume Price Terms (tonnes) ... … More »

  • RUBBER-Tokyo futures prices after evening session Aug 24 Reuters - 25 minutes ago

    Following are prices for Tokyo rubber futures at the end of the Tokyo market's evening session on Aug 2016. Contract Day Volume Evening Volume * Aug 162.5 26 157.6 4 * Sep 160.2 33 158.5 1 * Oct 160.0 ... … More »

  • Wall Street hit as defensive stocks drop ahead of Fed
    Wall Street hit as defensive stocks drop ahead of Fed Reuters - 34 minutes ago

    Wall Street was lower on Wednesday, led by declines in technology and defensive stocks as investors weighed up the possibility of a rate hike in the coming months. The market is squarely focused on Federal Reserve Chair Janet Yellen's speech at … More »

  • Copper Drops to Erase Year’s Gains on LME as China Imports Slide Bloomberg - 35 minutes ago

    Glencore Plc, the top copper supplier, fell after reporting profit declined by two-thirds. Copper for delivery in three months fell for a fourth day, declining 1.4 percent to $4,641 a ton ($2.105 a pound) at 4:33 p.m. on the London Metal Exchange … More »

  • Nigeria's Central Bank bans 9 local banks from trading forex Associated Press - 48 minutes ago

    Nigeria's Central Bank has banned nine local banks from trading in foreign exchange, accusing them of withholding $2.1 billion in government funds and "round-tripping" to profit from a devalued ... … More »

  • Why has Turkey launched an operation against IS in Syria?
    Why has Turkey launched an operation against IS in Syria? AFP News - 57 minutes ago

    Turkey launched its most ambitious operation of the Syrian conflict on Wednesday with President Recep Tayyip Erdogan saying it targeted the double threat from Islamic State extremists and Syrian Kurdish militias. Turkey says the air and ground … More »

  • Oil down more than 2 percent after big U.S. crude stock build
    Oil down more than 2 percent after big U.S. crude stock build Reuters - 1 hour 15 minutes ago

    By Barani Krishnan NEW YORK (Reuters) - Oil prices extended their losses on Wednesday, with U.S. crude futures falling more than 2 percent, after an unexpected large build in U.S. crude stockpiles renewed ... … More »

  • Grain lower, livestock lower Associated Press - 1 hour 29 minutes ago

    Grain futures were lower Wednesday in early trading on the Chicago Board of Trade. Wheat for Sept. delivery was 3.25 cents lower at $4.0440 a bushel; Sept. corn was 1 cent higher at $3.2940 bushel; Sept. ... … More »

  • European equities mainly rise on German GDP
    European equities mainly rise on German GDP AFP News - 1 hour 36 minutes ago

    European stock markets mostly rose on Wednesday, shrugging off a largely downbeat session in Asia, with sentiment partly lifted by German economic growth data. … More »

  • Stocks edge lower as mining and materials companies slip
    Stocks edge lower as mining and materials companies slip Associated Press - 1 hour 45 minutes ago

    Stocks are edging lower in early trading on Wall Street Wednesday, led by declines in mining and materials companies, giving back a modest increase from the day before. The declines were light but broad ... … More »

  • US stocks mostly fall as oil shares pressured AFP - 1 hour 54 minutes ago

    Wall Street stocks mostly fell early Wednesday as petroleum-linked shares were under pressure ahead of a US oil inventory report. ExxonMobil and Schlumberger were among the oilfield equities to dip after ... … More »

  • Performance Sports ex-chairman may bid for hockey-gear maker Reuters - 1 hour 54 minutes ago

    TORONTO/NEW YORK (Reuters) - The former chairman of Performance Sports Group Ltd, Graeme Roustan, told Reuters he has hired investment banks Jefferies Group LLC and Canaccord Genuity to explore a possible bid for the troubled maker of hockey gear. … More »

  • Philippines' Duterte says willing to allow online gambling resumption
    Philippines' Duterte says willing to allow online gambling resumption Reuters - 2 hours 1 minute ago

    Philippine President Rodrigo Duterte said on Wednesday he's willing to allow a resumption of online gambling in the Southeast Asian nation if correct taxes are paid and gaming parlours are far from schools and churches. The new president added … More »

  • China Oil Giants Unmoved by Bull Rally After Worst-Ever Earnings Bloomberg - 2 hours 7 minutes ago

    PetroChina Co., the country’s biggest oil and gas company, and Cnooc Ltd., China’s main offshore explorer, reported the weakest earnings since they were both publicly listed. Oil has whipsawed this year, flipping five times between bear and bull … More »

  • New trade deal with Britain may take time, Norwegian minister says Reuters - 2 hours 11 minutes ago

    Norway wants to maintain a good relationship with Britain after it leaves the European Union but it may take a long time for a new trade agreement to be established, the EU affairs minister in Oslo said on Wednesday. Elisabeth Aspaker told a … More »

  • Kerry to meet Russia's Lavrov in Geneva on Friday
    Kerry to meet Russia's Lavrov in Geneva on Friday AFP News - 2 hours 14 minutes ago

    US Secretary of State John Kerry will meet his Russian counterpart Sergei Lavrov in Geneva on Friday for talks on Syria and Ukraine, his spokesman said Wednesday. Russian foreign ministry spokeswoman Maria Zakharova confirmed the meeting. Kerry, … More »

  • 'We only heard their cats': quake sorrow of Italian village
    'We only heard their cats': quake sorrow of Italian village AFP News - 2 hours 17 minutes ago

    Sitting with his brother on a bench in Illica, one of the Italian mountain villages devastated by a powerful earthquake on Wednesday, Guido Bordo clasps and unclasps his hands repeatedly. "We live quite far away but felt the quake, we rushed to get … More »

  • Australian carrier Qantas soars to record profits
    Australian carrier Qantas soars to record profits AFP News - 2 hours 21 minutes ago

    Australian carrier Qantas Wednesday posted record annual profits and announced its first payout to shareholders in seven years, staging a turnaround after axing jobs and selling aircraft in an aggressive restructuring. The results were also boosted … More »

  • US stocks flat as oil shares pressured AFP - 2 hours 28 minutes ago

    Petroleum-linked shares retreated Wednesday ahead of a US oil inventory report as Wall Street stocks opened little-changed in sluggish trade. Shares of Dow members ExxonMobil and Chevron dipped with oil ... … More »

  • Iran yet to decide on OPEC limits: ministry source AFP - 2 hours 49 minutes ago

    Iran has yet to take any decision on whether to set a ceiling on oil production or take part in a planned OPEC meeting in Algeria, an oil ministry source told AFP Wednesday. "It is too early to talk ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.1290.0000.00%
    N21.SI
    0.250.00-1.96%
    5ME.SI
    0.60+0.04+6.57%
    5TP.SI
    0.99-0.02-1.98%
    Y92.SI
    0.156+0.007+4.70%
    AFC.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.30+0.06+22.45%
    T18.SI
    0.15+0.02+15.38%
    5TI.SI
    0.225+0.025+12.50%
    Y35.SI
    0.51+0.05+12.09%
    BHU.SI
    0.162+0.017+11.72%
    QS9.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.011-0.115-91.27%
    QF6.SI
    0.23-0.17-42.50%
    AWI.SI
    0.205-0.055-21.15%
    I06.SI
    0.45-0.10-18.18%
    BFK.SI
    0.385-0.085-18.09%
    E8Z.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3546+0.0033+0.25%
    USDSGD=X
    1.5252-0.0018-0.12%
    EURSGD=X
    1.7939+0.0112+0.63%
    GBPSGD=X
    74.1330+0.024+0.03%
    SGDJPY=X
    5.7228-0.0127-0.22%
    SGDHKD=X
    2.9788+0.003+0.10%
    SGDMYR=X
    9,790.2783-26.4258-0.27%
    SGDIDR=X
    4.9098-0.0036-0.07%
    SGDCNY=X
    1.0304+0.0015+0.15%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,329.60-16.50-1.23%
    GCZ16.CMX
    18.56-0.37-1.94%
    SIU16.CMX
    98.86-5.03-4.84%
    ^XAU
    2.08-0.03-1.61%
    HGU16.CMX
    46.71-1.39-2.89%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.14-0.01
    ^FVX
    1.550.00
    ^TNX
    2.240.00
    ^TYX