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Apr-25-2008Entergy profit up 46%, sets Enexus spin-off(topic overview)
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The power provider reported earnings of $308.7 million, or $1.56 a share, on revenue of $2.86 billion. That compared with earnings of $212.2 million, or $1.03 a share, on revenue of $2.69 billion, for the first three months of 2007. Entergy's chairman and chief executive, J. Wayne Leonard, said his company is "on track for a year of solid accomplishments." Entergy also said it has picked Enexus Energy Corp. as the name for the independent, publicly traded nuclear power company it plans to spin off later this year. It has chosen EquaGen LLC as the name of the joint venture between Entergy and Enexus that will run the six nuclear reactors slated to be spun off. Entergy last fall said it wanted to separate its non-utility nuclear business from its rate-regulated utility business, in an effort to boost that business' profitability. [1] Entergy Inc.' s (ETR) first-quarter net income rose 46% to $308.7 million, or $1.56 a share, from $212.2 million, or $1.03 a share, a year ago. The company plans to spin off its non-utility nuclear business as Enexus Energy Corp. in the third quarter.[2]
NEW ORLEANS, April 25 /PRNewswire-FirstCall/ -- Entergy Corporation (NYSE: ETR ) today reported first quarter 2008 as-reported and operational earnings of $308.7 million, or $1.56 per share, compared with $212.2 million, or $1.03 per share, for first quarter 2007.[3] Entergy Nuclear's earnings increased as a result of higher power prices and additional production from the Palisades plant acquired in second quarter 2007 and fewer outage days. These items were partially offset by higher expense primarily associated with including Palisades in the portfolio. Non-Nuclear Wholesale Assets Entergy's Non-Nuclear Wholesale Assets business incurred a loss of $8.2 million, or 4 cents per share, on both as-reported and operational bases in first quarter 2008 compared to a loss of $5.5 million, or 3 cents per share, on as-reported and operational bases in first quarter 2007. Outlook Entergy is reaffirming 2008 earnings guidance in the range of $6.50 to $6.90 per share on both as-reported and operational bases on a business-as-usual basis. Guidance for 2008 does not include a special item for expenses anticipated in connection with the plan to pursue separation of Entergy's non-utility nuclear business and to enter into a nuclear services joint venture, both discussed below.[3] Entergy said nuclear earnings grew to $221.7 million, or $1.12 per share, from $128.2 million, or 62 cents per share, due to increased power prices and additional production gained from a plant acquired in the 2007 second quarter. The company plans to spin off its non-utility nuclear business by the third quarter.[4]
Entergy Nuclear earnings increased to $221.7 million or $1.12 per share from $128.2 million or $0.62 per share a year ago, helped by higher power prices and additional production from the Palisades plant acquired in second quarter 2007 and fewer outage days, partially offset by higher expense mainly due to including Palisades in the portfolio.[5]
Entergy's Non-Nuclear Wholesale Assets business incurred a wider loss of $8.2 million or $0.04 per share, compared to prior year's loss of $5.5 million or $0.03 per share. On April 16, Entergy had noted that it expects higher operational earnings per share in the first quarter of 2008, helped by strong results at its nuclear division and positive effect from its share repurchase program.[5] The analyst meeting webcast is scheduled to begin at 7:30 a.m. CDT, and will conclude with Denault's presentation scheduled for approximately 11 a.m. CDT. The webcast and presentation slides can be accessed via Entergy's Web site at http://www.entergy.com ]] http://www.entergy.com. Utility, Parent & Other In first quarter 2008, Utility, Parent & Other had earnings of $95.3 million, or 48 cents per share, on as-reported and operational bases, compared to $89.5 million, or 44 cents per share, in as-reported earnings and operational earnings in first quarter 2007. Earnings for Utility, Parent & Other in first quarter 2008 reflect higher revenues from sales growth and the absence of a regulatory charge taken in first quarter 2007, partially offset by higher operation and maintenance expense.[3]
On average, 11 analysts polled by First Call/Thomson Financial expected the company to report earnings of $1.51 per share for the quarter. Utility, Parent & Other recorded earnings of $95.3 million or $0.48 per share, higher than $89.5 million or $0.44 per share in the previous year.[5]
Earnings at the second-largest U.S. nuclear power generator rose to $308.7 million, or $1.56 per share, from $212.2 million, or $1.03 per share, a year earlier.[6] The nation's second-largest nuclear generator after Exelon Corp. posted net income of $308.7 million, or $1.56 a share, up from $212.2 million, or $1.03 a share, a year earlier.[7] Net income climbed to $308.7 million, or $1.56 a share, from $212.2 million, or $1.03, a year earlier, New Orleans-based Entergy said today in a statement.[8] For the period ended March 31, net income climbed to $308.7 million, or $1.56 per share, from $212.2 million, or $1.03 per share, in the prior-year period.[4]
On a per share basis, earnings surged to $1.56, based on 198 million shares, from last year's $1.03, based on 206 million shares.[5] In the sequential fourth quarter, the company's reported earnings were $193.9 million or $0.96 per share, and operating earnings were $225.9 million or $1.12 per share, on operating revenues of $2.7 billion.[5] Analysts expected earnings of $1.51 per share on revenue of $2.99 billion, according to a Thomson Financial survey.[4]
Four Wall Street analysts expect earnings of $0.40 per share in the quarter. Southern Co. (SO) will also report its first quarter results on April 30.[5] Wall Street analysts estimate earnings of $6.82 per share for the year, with expectations ranging between $6.60 and $7.03 per share. 'We have established aggressive goals for 2008 and while it's early in the year, we are on track for a year of solid accomplishments,' said Wayne Leonard.[5]
Five Street analysts expect earnings of $0.42 per share for the period. Looking ahead to fiscal 2008, Entergy reaffirmed its earnings guidance in the range of $6.50 - $6.90 per share on both as-reported and operational bases on a business-as-usual basis.[5] ANALYST TAKE: Banc of America Securities analyst Shelby G. Tucker expects Entergy to post first-quarter earnings per share of $1.55.[9]
The company was looking for first-quarter earnings of about $1.55 per share.[5]
Ongoing earnings, excluding special items, came in at $410 million, or $1.02 per share, higher than $271 million or $0.68 per share a year ago.[5] The first-quarter net income was $573 million or $1.43 per share, higher than $271 million or $0.68 per share, in the prior year.[5]
Entergy, which owns 11 nuclear power plants, saw its income increase 45% as the cost of its atomic power started looking cheap compared to rising price of coal and natural gas-fired electric generating plants. The company made a whopping $221.7 million on sales of power from its nuclear power plants, up 73% from a year earlier, according to Bloomberg. People living in the shadow of nuclear power plants, who in many places want to see plants shut down such as in New York's Hudson Valley, where the aging Indian Point plant sits will have to get used to a new corporate name. Entergy plans to spin off a separate company, named Enexus, to run its nuclear power plant fleet.[10] Enexus, EquaGen offer companies a new identity NEW ORLEANS, April 25 /PRNewswire-FirstCall/ -- Entergy Corporation announced today it has selected Enexus Energy Corporation as the new name of the independent, publicly traded nuclear power company it plans to spin off later this year, and EquaGen L.L.C. as the name of the new joint venture Entergy and Enexus will co-own and which will operate the six nuclear reactors to be spun off. (Logo: http://www.newscom.com/cgi-bin/prnh/20080425/LAF503LOGO ]] http://www.newscom.com/cgi-bin/prnh/20080425/LAF503LOGO ]] http://www.newscom.com/cgi-bin/prnh/20080425/LAF503LOGO ) The naming of Enexus and EquaGen is the latest milestone in a process that began last November 5 when Entergy announced plans to pursue a separation of the non-utility nuclear business from Entergy's rate-regulated utility business through a tax-free spin-off of the non-utility nuclear business. Until now the spin-off company, Enexus Energy Corporation, has been known internally and in required government filings by temporary names such as "SpinCo" or "NewCo." EquaGen has until its naming been called simply the "JV" for joint venture. After the spin-off, Enexus -- which will be headquartered in Jackson, Miss. -- will own six wholesale reactors that have been part of Entergy's 11-reactor fleet, including two at the Indian Point Energy Center in Buchanan, N.Y., and one each at Vermont Yankee in Vernon, Vt.; Pilgrim Station in Plymouth, Mass.; the James A. FitzPatrick plant near Oswego, N.Y.; and the Palisades plant in Covert, Mich. It also will include various related nuclear businesses that are now part of Entergy.[11] "While EquaGen will have an obvious focus on the operational success of Entergy and Enexus plants, future growth of the joint venture will also stem from our ability to leverage that proven expertise into new business with other companies as a nuclear services provider," explained Michael Kansler, who will remain Entergy's chief nuclear officer after the spin-off but will also assume the role of EquaGen chief executive officer.[11]
Late last year, Entergy announced that it would spin off six nuclear plants into a new company in a bid to capitalize on rising power prices. It said it would form a 50-50 joint venture with the new company to run and operate the nuclear plants, whose prices are not regulated the way those of other power plants are.[6] The company said April 16 that per-share profit increased 50 percent to about $1.55, 10 cents higher than the average of seven analyst estimates compiled by Bloomberg. Entergy benefited from its acquisition last year of the Palisades nuclear plant in Michigan. Fewer days with shutdowns and higher prices also helped the nuclear unit's performance. "They're doing exactly what you'd expect of a company in a high-cost energy environment where the nukes dominate in terms of pricing ability,'' Jim Halloran, an analyst with National City Private Client Group in Cleveland, said today in a telephone interview. He helps manage $35 billion, including about 10,000 Entergy shares.[8] Profit from the sale of electricity from Entergy's nuclear power plants jumped 73 percent from a year earlier to $221.7 million in the quarter.[8] The following is a summary of key developments and analyst opinion related to the period. OVERVIEW: Entergy has utility units that operate in Louisiana, Mississippi, Arkansas and Texas, as well as nuclear power plants in the northern U.S. The company is benefiting from higher margins from its nuclear power plants. Earlier this month, Entergy announced the purchase of the Calcasieu Generating Facility, a 322-megawatt peaking plant in Louisiana, from Dynegy Inc. for $57 million.[9]
GAAP refers to United States generally accepted accounting principles. Operational Earnings Highlights for First Quarter 2008 -- Utility, Parent & Other had higher earnings due primarily to increased revenues. -- Entergy Nuclear earnings increased as a result of higher power prices and additional production from the Palisades plant acquired in second quarter 2007. -- Entergy's Non-Nuclear Wholesale Assets business reported results approximately the same as first quarter 2007. "We have established aggressive goals for 2008 and while it's early in the year, we are on track for a year of solid accomplishments," said J. Wayne Leonard, Entergy's chairman and chief executive officer.[3] U.S. nuclear plants generated power in the first quarter for as little as $18 per megawatt-hour, 74 percent less than the cost for the most efficient natural-gas-fueled plants, according to Jeremy Sussman, an analyst at Natixis Bleichroeder in New York.[8] The steering committee's focus shifted from overall framework setting to spin-off implementation during the first quarter -- The project management office, with a cross-section of organizational functions, continues to coordinate detailed activities necessary to execute the spin-off so that Enexus and EquaGen are fully prepared to commence independent operations post spin -- Regulatory proceedings continued to advance in connection with filings at the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, the Internal Revenue Service and in the states of Vermont and New York.[3] Gas futures in New York rose about 22 percent in the quarter compared with a year earlier. The company in November announced plans to spin off six reactors that aren't owned by its regulated utilities, including those in New York, Massachusetts, Vermont and Michigan. The new entity, to be called Enexus Energy Corp., would be based in Jackson, Mississippi, and Entergy would keep New Orleans as its home.[8] Entergy rose 64 cents to $114.36 as of 9:52 a.m. in New York Stock Exchange composite trading. Before today, the stock, which has nine "buy'' and seven "hold'' ratings from analysts, had dropped 4.9 percent this year.[8]
Entergy's Indian Point and FitzPatrick plants are in New York. New York Attorney General Andrew Cuomo this month asked the state's Public Service Commission to reject the spinoff, saying it may saddle the new company with $6.5 billion in debt, including up to $2 billion in revolving credit.[8] "The company may face an extensive review and hearings by the New York PSC, especially given recent opposition expressed by the State Attorney General and Westchester County." He also said he expects approval of the proposed spin-off of Entergy's non-regulated nuclear power plants into a separate company.[9]
"Operating results for the quarter reflect strong business performance even as we resource considerable tasks necessary to create a new public company required by the spin-off of our non-utility nuclear business." Other Highlights -- The CRO (Corporate Responsibility Officer) magazine named Entergy Corporation to its 100 Best Corporate Citizen's list for 2008 for its corporate responsibility efforts in eight categories including climate change, employee relations, environment, financial, governance, human rights, lobbying and philanthropy. -- Entergy was again among America's Most Trustworthy Companies, according to Forbes.com's annual listing, making the list for its accounting transparency and governance practices. -- Entergy Gulf States Louisiana, L.L.C. completed the acquisition of the Calcasieu facility, two simple cycle gas-fired units that add 322 megawatts of quick-start capacity for Entergy's WOTAB (West of the Atchafalaya Basin) region. Entergy's senior management will host its 2008 Analyst Conference on April 25, 2008, in New Orleans to discuss quarterly results and other business matters with investors. Entergy will webcast its analyst meeting including a presentation by Chief Financial Officer Leo Denault, who will review quarterly results in his presentation.[3] Total operating expenses showed a slight increase in the quarter to $2.259 billion from $2.256 billion in 2007. Entergy said it is targeting to complete the earlier announced spin- off transaction of its non-utility nuclear business from Entergy's regulated utility business around third quarter 2008.[5] Business Separation On Nov. 3, 2007, Entergy's Board of Directors approved a plan to pursue a separation of the non-utility nuclear business from Entergy's regulated utility business through a tax-free spin-off of the non-utility nuclear business.[3]
NEW ORLEANS -- Power plant operator Entergy Corp. said Friday its first-quarter profit rose 46 percent, helped by increased earnings from its nuclear unit. [4] NEW ORLEANS ' Entergy Corp., citing higher revenue, production and power prices, reported an increase in first-quarter earnings Friday.[1] NEW YORK (Reuters) - Entergy Corp (ETR.N: Quote, Profile, Research ) reported a 45 percent jump in first-quarter earnings on Friday, beating Wall Street expectations, as it benefited from higher power prices and rising production.[6]
NEW YORK -- Electric utility company Entergy Corp. reports earnings for the first quarter on Friday.[9] Enexus Energy Corp., formerly referred to as SpinCo, will be a new, independent publicly traded company, the company noted. Among peers, Columbus, Ohio-based electric utility company American Electric Power Co. Inc. (AEP) on Thursday posted higher profit in its first quarter, mainly due to the settlement of a legal dispute and the recovery of Oklahoma ice storm costs.[5]
Entergy also said the independent, publicly traded nuclear power company it is setting up will be named Enexus Energy Corp.[6] "We wanted a name that spoke to nuclear power's ability to meet the energy demands of today and tomorrow with safe, reliable and environmentally-friendly electricity," said Richard J. Smith, who currently is president of Entergy but who will become president and chief executive officer of Enexus.[11] An initial list of more than 1,500 names was narrowed down to a short list of approximately two dozen finalists from which the final selections were made. The objective in choosing a name for the spin-off company -- which will have its own board of directors and be publicly traded -- was to capture the appeal of reliable nuclear power, which is virtually emissions-free and supports U.S. energy independence, while preparing for future energy demands.[11]
The New Orleans, Louisiana-based integrated energy company's quarterly earnings per share grew 51.5%, and surpassed the Street estimate by five cents. [5] The 6.3% growth in operating revenues benefited from improved performance in competitive businesses, despite lower domestic electric results. The company backed its fiscal 2008 earnings per share forecast.[5]
Megawatt-hour sales in the residential sector rose 3 percent on a weather-adjusted basis, while commercial and governmental sales rose 2 percent. Entergy repeated its 2008 earnings forecast of $6.50 to $6.90 a share.[6] On average, analysts polled by Thomson Reuters expected earnings of $1.51 a share. Entergy reaffirmed its full-year forecast for earnings excluding items of $6.50 to $6.90 a share.[2] Last week, Entergy said it expected earnings to come in at $1.55 a share, above analysts' estimates at the time.[7]
Analysts on average were expecting $1.50 per share, according to Reuters Estimates.[6]
ETR closed Thursday's regular trading session at $113.72, down $2.20, on a volume of 1.3 million shares.[5]
Earnings from utilities and parent- company operations rose 6.5 percent to $95.3 million.[8] The company's total operating income climbed 38.2% to $606.23 million from prior year's $438.59 million. Other income fell 27.7% to $51.08 million from $70.67 million last year.[5] The company's first-quarter net income climbed to $308.75 million from $212.20 million in the previous year.[5]
Entergy Corp. reported a 46% rise in first-quarter net income, driven by strong growth from the energy company's nuclear segment that more than offset a widening loss in its non-nuclear wholesale-assets unit.[7]
EquaGen will be headquartered in Jackson, Miss. Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations.[11] EquaGen L.L.C. is expected to have operating responsibility for the Enexus fleet, to provide nuclear management and technical services to Entergy's nuclear plants and to continue to supply contracted services to the Nebraska Public Power District for the Cooper Nuclear Station.[11] Entergy and Enexus will also form a nuclear services joint venture, EquaGen L.L.C.[2] Entergy and Enexus intend to enter into a nuclear services joint venture, with equal ownership.[3]
Entergy and Enexus also would have a nuclear-services joint venture called EquaGen LLC. Halloran said he expects the spinoff to occur, although the timing may shift. He said such deals are like airplanes, which "more often land late than early.''[8]
The goal for the joint venture naming was to capture an identity that would stress the company's track record of safe nuclear operations and its expertise in leading the industry in a new direction. EquaGen (ekwa-jen) gets its origins from the words "equity" and "generation."[11]
"In solving America's need for electricity, leading nuclear operators like EquaGen must be part of the equation." Entergy also unveiled new logos for both companies.[11] Jeffries & Co. analyst Debra E. Bromberg has a "Hold" rating on the stock and thinks that it is fairly valued. WHAT'S AHEAD: Entergy is applying for new 20-year licenses for both its nuclear plants.[9] For the first time in a generation, companies are applying to build new nuclear power plants. These, as well as their older sisters, still face fierce opposition from local residents and some national advocacy groups.[10] Environmentalists have long opposed nuclear power out of concern over safety near plants, and a recognition that there's no great way to store radioactive waste that remains dangerous for thousands of years.[10]
Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States.[3]
"The fact that Entergy and Enexus share the first two letters is also tribute to Entergy's legacy of owning and managing a successful nuclear fleet that Enexus is determined to carry on."[11] The higher expense reflects the timing of fossil outages and storm damages expensed at Entergy Arkansas, Inc. Megawatt-hour sales in the residential sector in first quarter 2008, on a weather-adjusted basis, showed a 3 percent increase compared to first quarter 2007.[3] Commercial and governmental sales, after adjusting for weather, were up 2 percent compared to first quarter of last year.[3]
Operating revenues in the first quarter grew 6.3% to $2.87 billion from $2.69 billion in the same quarter of last year.[5] Among divisions, Domestic electric revenues declined 3.1% in the first quarter to $2.05 billion from $2.11 billion last year.[5]
Quarterly revenues rose to $3.5 billion from $3.2 billion last year. Another rival, Centerpoint Energy Inc. (CNP) is slated to release its first-quarter results on Wednesday, April 30.[5]
Natural gas revenues rose 5.2% to $89.40 million from $84.95 million a year earlier.[5]
Revenues from Competitive businesses surged 46.5% to $729.11 million from $497.65 million in 2007.[5]
Entergy has annual revenues of more than $11 billion and approximately 14,300 employees.[3]
STOCK PERFORMANCE: The stock fell 9 percent during the first quarter to $109.08. It has risen since, closing Wednesday at $115.92. [9] Benchmark power prices in PJM Interconnection LLC, the biggest U.S. wholesale power market, rose 19 percent from the year-earlier first quarter, according to data compiled by Bloomberg.[8]
Sales in the industrial sector for first quarter 2008 increased compared to the same quarter of 2007.[3] Industrial sales in the current quarter were up 1 percent compared to the same period one year ago.[3]
The residential sales sector showed an increase quarter-to-quarter with the most significant increase at Entergy New Orleans, Inc., where post-storm recovery continues. [3] Entergy's senior executive leadership has been working with an international brand architect, the California-based RiechesBaird Company, for the past three months to create names and corporate identities for each new company that would do the best job of positioning the company and projecting what it should emphasize.[11] Enexus Energy Corporation, formerly referred to as SpinCo, will be a new, independent publicly traded company.[3]
New York state officials and non-governmental groups who claim the reactors are unsafe and a terrorist target oppose the application. Goldman Sachs analyst Michael Lapides said he thinks that the utility will eventually prevail in its bid to get the 20-year licenses.[9]
EquaGen is expected to be uniquely positioned to grow through offerings of nuclear operating expertise, as well as ancillary nuclear services to third parties, including plant decommissioning and relicensing. [11]
SOURCES
1. Higher prices send Entergy profits up | Chron.com - Houston Chronicle
2. Entergy 1Q Net Rises 46% To $208.7 Million; Plans 3Q Spinoff
3. Entergy Reports First Quarter Earnings
4. Entergy 1Q profit rises on higher nuclear unit results | Chron.com - Houston Chronicle
5. Entergy Q1 Profit Up 45.5%; Backs FY08 EPS Outlook - Update [ETR] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
6. High power prices boost Entergy results | Reuters
7. Free Preview - WSJ.com
8. Bloomberg.com: U.S.
9. Earnings Preview: Higher prices to benefit Entergy in 1Q | Chron.com - Houston Chronicle
10. Entergy Profits Up 46% on Nuclear Power Boom - thedailygreen.com
11. What's in a Name? Entergy Announces Names, Logos for SpinCo, JV
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