Entergy Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Entergy Corporation Third Quarter 2019 Earnings Release and Teleconference. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, David Board, Vice President, Investor Relations. Thank you. Please go ahead, sir.

Thank you. 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. Entergy 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.

Thank you, David, and good morning, everyone. We are pleased to report third quarter adjusted earnings per share of $2.52. Drew will go over the details, but the bottom line is that these are strong results that allow us to raise our 2019 guidance midpoint by five cents and narrow the range. We also remain firmly on track to achieve our longer-term outlooks. With three quarters behind us, we've completed many of our key deliverables for the year that keep us on track to achieve our goal to be the premier utility, including a few important milestones this quarter. Furthering our orderly exit from EWC, in late August, the NRC approved our license transfer application for Pilgrim Nuclear Power Station. And shortly after that, we completed the sale to a subsidiary of Holtec International. This is the second sale that we have successfully completed of a non-operating nuclear plant and the third in the industry. This is also the second time the NRC has determined that Holtec, has the financial and technical capabilities to decommission nuclear plants. As a reminder, we have agreements to sell our last two remaining merchant nuclear plants to Holtec. We've also had significant accomplishments at the utility. Providing added clarity to our investment plan, the Mississippi Public Service Commission approved our proposal to purchase the Chautau generation station. We expect to close the transaction soon. The Commission's order also included a stipulation supporting timely and full cost recovery of the asset. We expect the plant to be included in rates with minimal lag, similar to how we have recovered costs of past acquisitions in Mississippi. Purchasing this clean and modern 810 megawatt combined cycle natural gas turbine is a good outcome for our stakeholders, and is expected to result in approximately $100 million in net benefits for Entergy Mississippi's customers. We also have a solid track record of completing major generation projects on time and on budget, or better, supported by a solid capital projects management team. We are on track with Lake Charles Power Station and New Orleans Power Station, which are expected to come online next year. Montgomery County Power Station in Texas is also on schedule and expected to come online in mid-2021. On the renewables front, construction has begun on one of the largest solar facilities currently planned for Louisiana. Capital Region Solar is a 50-megawatt solar project being built in West Baton Rouge Parish. Once completed, the facility will offset the equivalent of nearly 19,000 passenger vehicles' emissions each year. we will purchase the output under a 20-year agreement. We are working with our regulators to expand and customize our portfolio of renewable energy solutions to meet our customers' expectations and to achieve our sustainability goals. Turning to regulatory proceedings, Entergy Louisiana's new rates became effective in September. The company's annual FRP evaluation provides a simpler process that aligns rates and costs better than traditional rate cases. In Arkansas, we have reached an unopposed settlement on the company's annual FRP, which we are filing today. The settlement is in line with our initial expectations. We anticipate a final decision from the Arkansas Commission by the end of the year. In New Orleans, the Council Utility Committee issued a resolution that, if adopted, would set a revenue requirement that is below what we believe to be just and reasonable for Entergy New Orleans and our customers. We continue to work with Council members to reach a fair outcome when the Council takes up the matter in early November. This continued progress on regulatory proceedings is an important component of our success as it improves clarity on the recoverability of our investments and solidifies our financial commitments. Another growing part of our company that we are excited about is our Innovation Center. This group is developing product and service concepts to meet the evolving expectations of our utility customers and the communities we serve. The team employs a rigorous work process focused on exploring customer frictions and feedback, product design, market opportunities, and more. For example, last quarter I highlighted Entergy New Orleans' new program that puts solar panels on low-income customers' homes. Under this program, Entergy will install the rooftop solar system at no cost to the customers and give them a credit on their monthly bills. That idea came out of our innovation team. Another concept developed that is now being implemented is a customer-sided backup generation solution for commercial and small industrial customers. The generators will be owned by Entergy and would allow those businesses to operate as usual during widespread outages. For example, retail businesses would be able to provide services to the general public during significant weather events. In other times, when needed, the resource can be deployed by the utility, which benefits all customers. Entergy-owned customer-sided generation is an innovative win-win solution. It provides an economic alternative to businesses to remain open when our communities need them most, and it provides us the utility and added resource when the system needs it. Entergy Texas recently announced a pilot of this concept in its service area, and Entergy Mississippi has a filing pending before the Public Service Commission. Our plan is to eventually implement this idea at all operating companies. Innovation and new technologies will be an important part of our business as we continue to explore solutions to improve our customers' everyday lives. As many of you know, there have been three significant storms in the last few months. Hurricane Dorian made landfall on the east coast in early September. Entergy sent nearly 500 workers to the Carolina coast to help with the restoration efforts. Then, a few weeks later, Tropical Storm Imelda made landfall in Texas, bringing 20 to 40 inches of rain over the impacted service area. We deployed more than 1,000 workers, both from Entergy and from other utilities. At the peak, we had approximately 38,000 customers without power. Service was restored to 95% of our customers within four days. Just this past weekend, Tropical Storm Olga moved through Louisiana. The storm brought heavy rain and winds in excess of 50 miles per hour. At its peak, Olga disrupted electric service to more than 92,000 customers. A storm team of more than 1,000 workers restored the vast majority of outages within two days. Entergy employees have a long history of working together after natural disasters. They work to restore power for our customers and to assist our communities after an event. They also help coworkers who are impacted. In addition to volunteer support, the company has established employee assistance funds to provide financial assistance for affected employees. Providing support in times of need, whether manpower or financial contributions, is important. Ongoing efforts that support our communities are also vital to our success. In September, for the 12th consecutive year, Site Selection Magazine named Entergy as one of the nation's top utilities in economic development. Entergy plays a vital role in economic development efforts across our service area, which brings business, jobs, and community support to our states. Sustainability is a key focus here at Entergy. Once again, we were named to the Dow Jones Sustainability North America Index. We are very proud of this achievement. DJSI is one of the most respected independent sustainability measures in the world. We are the only electric utility to receive this honor 18 years in a row, and for the past five years, we have made a perfect score in the climate strategy category. To be named to this respected list year after year is a clear acknowledgment of Entergy's commitment to implementing sustainability practices that serve our customers, employees, communities, and our owners. Last Friday, our Board of Directors declared a quarterly dividend of 93 cents per share. This is the fifth straight year of steady, predictable growth in our dividend. And with this declaration, we will pay a total of $3.66 per share in common dividends this year, just under 70% payout at our guidance midpoint. As we mentioned last quarter, we expect to grow our dividend each year and plan to increase the growth to be more in line with our earnings starting in 2021. This has been another successful quarter for our company and our stakeholders as we continue to execute on our path to be the premier utility in every aspect of our business. We have among the lowest retail rates in the country. The states we serve benefit from strong industrial growth. We are an industry leader in sustainability. We invest in our communities, and we invest in our employees and our culture. The fundamentals that underlie our steady, predictable growth are strong. First, we have a robust capital plan, which benefits our customers and supports the growth of the business and economic development in our communities. We have no shortage of investment opportunities beyond our current forecast period. As a utility with some of the lowest rates in the country, we always remain diligent in managing the cost impact to our customers and will continue to do so. Second, we have constructive regulatory mechanisms which give us the opportunity for fair and timely recovery of our capital plan. As we've noted in the past, We have a unique line of sight with approximately 90% of our capital plan ready for execution from a regulatory perspective and approximately 90% expected to be recovered through annual FRPs and riders. And third, we have a proven track record and ability to execute on major capital projects with cost and schedule certainty. This clear line of sight on our ability to execute our capital plan on time and on budget combined with the progressive regulatory mechanisms that ensure timely recovery of our investments, supports our outlooks today. And as we continue to identify sources of customer savings, including O&M and production cost efficiencies, energy efficiency, and industrial growth, we aspire to do even better. I will now turn the call over to Drew.