By Tom Kleckner
Entergy reported an 80% drop in 2016 fourth-quarter earnings, but the company soothed investors by beating analysts’ expectations and focusing on the wind-down of its merchant nuclear energy business.
The New Orleans-based corporation said Wednesday its fourth-quarter operational earnings were $55.5 million ($0.31/share), as compared to $282.6 million ($1.58/share) in 2015. That still beat analysts’ projections of 11 to 13 cents/share.
Entergy’s CFO Drew Marsh attributed the as-reported $9.88/share loss to previously disclosed impairment charges and “special items” related to the sale or closing of Entergy Wholesale Commodities’ (EWC) nuclear plants. In recent months, the corporation has announced plans to close or sell the business’s five nuclear units. (See Entergy, Consumers Announce Closure of Palisades Nuke and Entergy to Shut Down Indian Point by 2021.)
Marsh also reminded financial analysts during a conference call that 2015’s quarterly earnings results included “significant” income tax benefits related to the combination of two Louisiana operating companies.
Entergy CEO Leo Denault called 2016 a “pivotal year for our company,” saying it had achieved a “critical milestone” in shutting down EWC and eliminating “the risk associated with the merchant power business,” which has been hurt by low energy prices and increased operating costs.
“We have finalized plans … through a deliberate, planned and orderly process to cease all merchant nuclear operations by 2021,” Denault said. “I think this year will probably be a negative cash flow year because we have three refueling outages in the business.”
Denault said as its merchant nuclear plants “sequentially go away,” Entergy will continue “rightsizing” the organization, which began with its decision to shut down Vermont Yankee in 2014.
The company noted Moody’s had placed the corporation under review for a potential credit upgrade and that Standard & Poor’s had revised its outlook to “positive” from “stable.”
Entergy also reported year-end earnings of $1.27 billion ($7.11/share), beating Zacks’ consensus estimate of $6.83/share. Investors responded by driving Entergy’s share price to $73.55 at Friday’s close, up $2.59/share since Wednesday’s open.
The company affirmed its guidance for 2017 at $4.75 to $5.35/share, saying it expects positive rate cases for its various operating companies.
