Entergy Corporation

Good day, ladies and gentlemen, and welcome to the Energy Corporation's second quarter 2019 earnings teleconference. At this time, all participants are on the listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require operator assistance, please press star then zero on your touch-tone telephone. As a reminder, this conference may be recorded. I would now like to turn the conference over to David Board, Vice President of Investor Relations. You may begin.

Good morning, and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Leo Denault, and then Drew Marsh, our CFO, will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than one question and one follow-up. In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors which are set forth in our earnings release, our slide presentation, and our SEC filings. NTG does not assume any obligation to update these forward-looking statements. Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the investor relations section of our website. And now, I will turn the call over to Leo.

Leo Marino- Thank you, David, and good morning, everyone. We had a productive quarter, and today we are reporting adjusted earnings of $1.35 per share. Drew will go over the details, but the bottom line is that these are strong results that keep us firmly on track to achieve our 2019 guidance. With our success over the past three years and our confidence in our strategy going forward, I'm pleased to announce that we are increasing our three-year investment plan for the benefit of our customers. As a result, we are also raising our earnings outlook midpoints in 2020 and 2021, narrowing our guidance and outlook ranges and providing clarity on our dividend with an expectation to align the dividend growth rate with our earnings growth rate by the end of 2021. This is possible because we are finding ways to optimize our operating costs through automation and other continuous improvement efforts. With this new plan, we are investing to enhance our level of service, and the lower O&M creates headroom to help us manage the effects on our customers' bills. Today, we are a world-class utility with a proven track record of successful execution, a solid investment plan, and an outlook that will deliver the earnings and dividend growth that investors expect of a premier utility. Beyond our three-year horizon, we see no shortage of investment opportunities to benefit our customers and maintain our growth aspirations well into the future. For example, we currently plan to add 7,000 to 8,000 megawatts of new generation from 2022 through 2030. This is necessary to continue to modernize our infrastructure, serve load growth, and achieve our environmental commitments. We anticipate that up to half of this new generation would be renewables, primarily solar, with the balance being highly efficient gas generation. While the specifics could change as technology and economics evolve, of course, we'll work with our regulators and other stakeholders to determine the best strategy to meet customer needs for reliability and affordable bills while achieving our sustainability goals. We will also continue to invest in transmission infrastructure, to integrate new generation technology, connect new customers, enable future economic development, and enhance system reliability, efficiency, and resiliency. We believe that our largest opportunity for long-term growth is in distribution. We are already making major investments in AMI, enterprise asset management systems, workforce management systems, customer relationship management systems, a new and improved customer engagement portal, distribution automation, distribution and outage management systems, and geospatial information systems. Beyond these initiatives, we expect to invest in technologies to harden our grid and enable the optimization of distributed resources, like residential and utility-scale solar, battery storage, backup generators, microgrids, and electric vehicle infrastructure. This is our expectation today, but ultimately our final resource decisions will be informed by many factors, including our customers' evolving preferences and expectations. As a vertically integrated utility, we are agnostic to the specific solution, whether generation, transmission, or distribution, as long as it's the best solution. As a result, we see sufficient customer-centric investment opportunities to enable us to continue to achieve our current rate-based growth beyond 2021. Physical assets aren't the only things that matter. We're also investing in our employees. We've created an innovation hub to help us lead in a rapidly evolving industry and to help us develop solutions to address customer needs. We're also enhancing our leadership training to give our employees the tools to lead their organizations through the changes ahead. Organizational health and diversity and belonging efforts are also integral to our success. These programs will ensure that our employees will grow as the company grows. With our increased earnings outlooks, clarity on our dividend growth, and excellent prospects for continued growth, we are as excited about our future as we have ever been. We achieve our success one step at a time, and this quarter is a continuation of our journey. In May, we completed the St. Charles Power Station. This modern CCGT went into service ahead of schedule and on budget. It will supply reliable clean energy to Louisiana's customers to help support the growth the state is experiencing. In Mississippi, we are wrapping up due diligence for the Choctaw acquisition. We're on a path to resolve the mechanical issue identified earlier this year, and we plan to close the transaction by year end or early next year. On the renewables front, we've had several developments. In New Orleans, we received approval from the City Council to proceed with the 90 megawatt solar portfolio previously proposed. Entergy New Orleans is also piloting a new program that puts solar panels on low-income customers' homes. Through partnerships with local vendors, we will install a rooftop solar system at no cost to the customers and give them a credit on monthly bills. In Arkansas, we're partnering with commercial and industrial customers to meet their energy and sustainability goals. We are offering a community solar tariff to allow them to subscribe to blocks of solar resources. For our customers, this is a cost-effective way to meet their renewable energy goals without them having to make an upfront capital investment. These are just some of the innovative programs we are implementing to deliver renewable energy solutions. We will continue to engage with our regulators and stakeholders to expand the use of renewables under a framework which ensures that we build the most economic system, balancing reliability, price, and sustainability. In Texas, two large transmission projects, including phase one of the Western Region Economic Transmission Line, were placed into service. These assets will help Entergy Texas support growth in that area. We're also making significant distribution investments over the next three years with the emergence of new technologies. We continue to install advanced meters with plans for 1 million new meters in 2019. We also deployed the first release of Salesforce capabilities to our call centers. This is part of a larger effort to build a new website with mobile functionality, a customer relationship management system, and interactive voice response to transform our customer experience. We benefit from constructive, collaborative relationships with our regulators and progressive regulatory constructs that give us the opportunity to align cost recovery with when our customers receive the benefits. Our regulatory frameworks provide clarity to our plan and give us confidence in our financial commitments. We continue to make strides in this area. In May, Texas enacted legislation empowering the Public Utility Commission to allow for faster recovery of generation investments. This legislation is a step in the right direction and will help us earn closer to our allowed return. More timely recovery will help us create value for our stakeholders in Texas and ensure that the communities we serve remain economically competitive. Also in the quarter, Entergy Mississippi received approval of its annual formula rate plan filing, and we submitted annual FRP filings in Louisiana and Arkansas. A request in Arkansas was for a rate change of $15 million, less than 1% of total revenue, well below the 4% cap. This includes placing approximately $700 million of new assets into service in 2020 for the benefit of our customers. As many of you know, Hurricane Barry made landfall in our service area earlier this month. The storm created significant flooding and accessibility issues, but thankfully we did not see extensive and widespread damage to our system. We activated our emergency response plans and we were fully prepared for the event. And as always, our employees stepped up. We'd also like to thank our neighboring utilities that provided mutual assistance to help us get our customers back online as quickly and safely as possible. Mutual assistance is a hallmark of our industry. We are proud that once again, the Edison Electric Institute has awarded Entergy with its Emergency Assistance Award for the company's outstanding power restoration efforts. At EWC, all of the pieces are now in place to fully exit the merchant business, and we continue to systematically reduce risks. We have commercial agreements to sell the last three nuclear assets to a counterparty that the NRC has already approved in a similar transaction. We are proud to have led the industry in the unprecedented strategy to sell non-operating nuclear assets. a strategy that fully transfers the plant's decommissioning liability to the new owners while accelerating the decommissioning timeline. As we predicted, this market has grown in a short period of time as three operators have announced plans with three different buyers. We are becoming a better, stronger company than a premier regulated utility, creating sustainable value for all of our stakeholders. The fundamentals of our business are strong, as reflected by the increase in our earnings outlooks, supported by our robust capital plan. We're expecting 5 to 7 percent adjusted EPS growth off of our 2019 guidance. And by the end of 2021, we expect to increase our dividend growth rate to align with our earnings growth. We have among the lowest retail rates in the country. We operate in a region that benefits from strong industrial growth. We are an industry leader in critical measures of sustainability. We are making significant investments in our system and our culture to benefit customers. And our aspirations for our customers are aligned with their evolving expectations, as well as the goals of our regulators. These are just some of the reasons why Entergy is a compelling long-term investment today. This is the foundation on which we will grow, innovate, and expand our investment profile to continue to deliver on our commitments tomorrow. We are excited about our future. I will now turn the call over to Drew to provide more detail on our results, our expectations for 2019, and our updated outlooks.