Entergy Corporation

Thank you for standing by, and welcome to the Energy Corporation First Quarter 2020 Earnings Release and Teleconference. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone, at which time we'll take one question and one follow-up. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, David Bord, Vice President in Best Relations. Please go ahead, sir.

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. I would also point out that our initial earnings release this morning contained a clerical error relating to the March 31st, 2020 balance sheet, and we have since posted a corrected version of the release on our website. And now, I will turn the call over to Leo.

Thank you, David, and good morning, everyone. We appreciate you all joining our call today, and I hope that you and your families are well. The past few months have presented extraordinary circumstances that have been difficult for everyone around the world. So many have stepped up to the plate to help people, communities, and our country in this time of need, and we truly appreciate all of their efforts. Providing safe and reliable power is essential, especially during times like these. That's why at Entergy, we plan and prepare for extraordinary events. Our robust, comprehensive, tried and tested incident response plan contemplates many, including storms, cyber attacks, emergency leadership succession, and pandemics. To ensure preparedness, we run drills routinely so that everyone knows their roles and responsibilities, and when activated, the plan runs smoothly. In 2007, we developed our pandemic response plan specifically to address events like the one we are facing today. For COVID-19, we mobilized our teams on January 16th, very early on. Our focus has been on four primary objectives, ensuring the safety and wellness of our employees, maintaining safe, reliable service for our customers, mitigating financial impacts, and ensuring our ability to continue to plan for the future, informed by lessons learned from the event, not only challenges to normal operations, but also improvements that can be made. Our response is working as designed. We are meeting the needs and expectations of our customers and communities. Our major projects remain on track, and our capital plan is unchanged. The actions of our employees in the midst of this pandemic have been exemplary. They have shown once again their dedication and resilience to work through hurdles, to safely keep the power and gas flowing for our customers. I cannot express how proud I am of our Entergy family. Entergy has a critical role to play, and this is the time that we must step forward, not back. Our customers and communities are depending on us more than ever to power their homes, as many work remotely or have responsibilities to care for children and loved ones at home. Businesses like grocery stores and pharmacies require reliable power to continue to operate and address essential needs. And our healthcare workers are relying on us to keep hospitals, clinics, and care facilities powered. In short, the services we provide are vital to helping our customers, our communities, our families, and our neighbors successfully manage this crisis. It's a great responsibility that we do not take lightly. Our capital investment plan is also a critical component for our economy and our communities. Our plan is designed to benefit our customers while also creating jobs and stimulating the economies in the states where we operate. We have taken specific actions for each of our stakeholders. For employees still working at plants and in the field, we've implemented preventative measures so they can focus on safety on and off the job. We're suspending disconnects for customers, which is important in times where many may not have a steady income. We are talking with regulators about the importance of keeping our capital plan on track to preserve the reliability and economic benefits for our customers and our communities. And we're talking to our largest customers to understand the issues they face and to determine how we can support them. Our supply chain team is working diligently with suppliers to ensure we have what we need to keep our operations and major projects on track. We're working with regulators to support timely resolution of both special and routine matters. We have received accounting orders to defer costs associated with COVID-19 in four of our jurisdictions. and we expect to receive a similar order for Entergy New Orleans in the near future. We're grateful for the leadership and partnership that our commissions have demonstrated. We are also supporting our communities through a COVID-19 response fund. Our charitable foundation, employees, and executive team have already committed more than $1.3 million to help community nonprofits and qualifying customers who are struggling with the financial impact of the pandemic. Looking ahead, uncertainty remains as to the depth and length of this pandemic. But today, we are affirming our guidance and outlooks as we see a path to achieve those results. The foundation that supports the strength and sustainability of our business remains in place. We have among the lowest retail rates in the country. Our capital plan benefits our customers and our local economies. We have constructive and progressive regulatory mechanisms. We are a leader in critical measures of sustainability. We have one of the cleanest large-scale generation fleets. And while we have seen some recent slowdown in industrial activity, our industrial base is among the most economically advantaged in the world, and we expect they will lead the recovery in their respective industries. The foundation that we've established over time remains firm, and we are committed to our objectives and our resolve to be the premier utility. This is what makes Entergy a compelling long-term investment. In April, our board of directors declared a quarterly dividend as planned. As part of that decision, the board considered our response to the current situation, scenario analysis regarding future uncertainty, and the strength of our business going forward. we are committed to creating sustainable value for all of our stakeholders, including our owners, and the dividend declaration is consistent with that objective. Now, I'll turn to our strategic execution. Today, we are reporting solid first quarter adjusted earnings per share of $1.14, and while the pandemic has affected the way we do business, it hasn't stopped us from making progress against our key deliverables. We placed Lake Charles Power Station in service in March, well ahead of schedule and on budget. This new resource is another milestone in our portfolio transformation strategy to replace older generation with cleaner, more efficient assets, and it will provide important benefits to our customers. We've also made good progress at the New Orleans Power Station. Commissioning of the plant is in progress, and we recently synchronized the units to the grid for the first time. We expect that project to come online in June. Our other major generation projects remain on track. We are not experiencing any significant equipment or staffing issues. This is a testament to the experience of our capital projects management team and the strength of our relationships with our suppliers and contractors. We continue to deploy automated meters as planned. We're more than one third of the way through our AMI project with 1.3 million meters installed. We are leveraging the data from these meters to understand changes in usage among our various customer segments. In April, we received approval for Sunflower Solar in Mississippi and Searcy Solar in Arkansas. These 100 megawatt resources will be the largest utility-owned solar projects in their states. Large-scale solar facilities provide the most cost-effective solar power for all customers, keeping rates low while delivering the best value for renewables. Both facilities are expected to be in service in 2021. As part of our firm commitment to provide our customers with greater renewable power options We expect to meet even more of our supply planning needs with renewables as technology and economics continue to improve. Since our last earnings call, we announced two new requests for proposals for generation assets. Entergy Texas is seeking proposals for 1,000 to 1,200 megawatt combined cycle gas turbine in mid 2025 to mid 2026. Entergy Texas will include a self-build option and submissions are due in August. Entergy Louisiana is seeking 250 megawatts of new built solar resources. The RFP will accept proposals for owned and contracted projects with targeting service dates of no later than the end of 2023. We continue to implement rate changes through our formula rate plans and riders. New rates recently were implemented in Mississippi and these included a new vegetation management rider. In Texas, we filed a new distribution rider. Energy Louisiana plans to request renewal or extension of its formula rate plan, and we will make our annual FRP filing in Arkansas this coming July. In April, we received an initial decision from the administrative law judge in one of System Energy's open dockets at FERC. I won't go through all the details. Feel free to call David if you need additional explanations. The bottom line is that we disagree with much of the initial decision, and we believe that it incorrectly seeks to resolve important policy issues that FERC ultimately must opine on. The actions we've taken create significant benefits for our retail customers, and we feel strongly that our positions on the law and the facts are correct. We will file our brief on exceptions in June, asking FERC to reject the adverse rulings in the initial decision, and we look forward to the FERC's review. There is no mandated deadline for the Commission's decision. At EWC, Indian Point Unit 2 was shut down on April 30th. This milestone brings us one step closer to fully exiting the merchant business. We remain committed to our employees, and all qualified employees who are willing to relocate have been offered positions. We look forward to them starting the next phase of their careers with us. As you can see, it's already been a very active and productive start to the year. COVID-19 is a global pandemic that is affecting lives around the world. At Entergy, we activated our response plan early, which positions us well to face the challenges head on. We were prepared, and we will remain diligent, focused, and flexible to ensure we make the right decisions at the right times to mitigate the impacts as best we can. While uncertainty remains for all of us, we have made progress against our key strategic deliverables while meeting the needs and expectations of our customers and communities in this critical time. Our major projects remain on track. Our capital plan is unchanged. And the foundation that supports the long-term strength of our business and makes Entergy a compelling investment remains in place. We are stepping forward, not back, to be leaders in our communities at a time when they need us the most. Recent events have not changed our objectives to create sustainable value for our stakeholders or weakened our resolve to be the premier utility. that can deliver on its commitments through economic cycles. Before I turn it over to Drew, I encourage you to read our recently released 2019 integrated report, Building the Premier Utility. The report outlines what we believe it takes to be the premier utility and why we're well on our way. I'm also happy to confirm that we still plan to host an analyst day this year because the situation of COVID-19 continues to be fluid, the event will be virtual. We also plan to delay the event until later in the year, most likely in late October. We look forward to continuing our conversation with you about our strategy to continue to grow our business for the long term. Stay tuned for more details. I will now turn the call over to Drew, who will review our first quarter results as well as our outlooks.