Entergy Corporation

If you're standing by, and welcome to the Atra G Corporation's first quarter 2022 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. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Bill Abler, Vice President, Investor 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 asks questions, we request that each person ask no more than two questions. In today's call, Masterville 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, Bill, and good morning, everyone. Today, we are reporting first quarter adjusted earnings of $1.32 per share. a very good start for the year. With favorable weather and higher than planned retail sales, we are ahead of schedule and solidly on track to achieve our 2022 objectives. And we remain on track for our longer turnout outlooks. During the quarter, we continue to execute on both our near and long-term deliverables, just as we have over the last several years. We've made demonstrable progress on our operational, strategic, and financial objectives. Operationally, I'll start with some notable regulatory updates. We've continued to make meaningful progress on storm cost recovery. Texas is done, and Louisiana's securitization proceeds from the 2020 storms, plus $1 billion towards Ida, will be completed in the coming weeks. Entergy Louisiana's filing for the balance of Ida will be completed within the coming days, and the Entergy New Orleans filing will follow later this year. A financially strong utility is important for customers. Drew will discuss how securitization progress supports our balance sheet strength. As expected, Entergy Mississippi filed its annual formula rate plan, which enables continued customer-centric investment and supports our financial outlooks. We're continuing to drive progress on enhancing the resilience of our system, which benefits customers It supports local economic activity as well as our growth plan. Entergy, Louisiana completed an important transmission upgrade in the southern part of the state. This $86 million project replaced approximately 80 structures to increase resilience on several miles of critical path transmission in Lafourche Parish, an area that was severely affected by Hurricane Ida last year. To create a solid foundation, the new infrastructure was placed in steel casings. The line was built to withstand wind speeds of 150 miles per hour and will improve the resilience of the electric system. Energy Louisiana also completed a $100 million project in north Louisiana that positions the region for economic growth. The West Monroe Project will provide additional transmission capacity, improve reliability, and is built to withstand extreme weather events. What that means for customers is enhanced reliability and resilience, better integration of clean generating resources, and economic benefits through improved access to low-cost power. Bottom line is the energy team continues to focus on delivering operational excellence across all facets of our business. Strategically, I'll start with our merchant business wind down. The last step in our merchant nuclear exit is nearly complete. Palisades is on track to shut down at the end of May with a sale to Holtec following around mid-year. The Palisades team is finishing strong, and I would like to thank them for their dedicated service. We have worked to help employees with their career goals beyond the plant shutdown. Many will continue to work for Entergy at other locations. Some will continue to work for Holtec on decommissioning, and others are retiring. As you know, DOE recently announced a program to save nuclear plants that are about to shut down. Michigan's governor issued a letter encouraging utilization of this program keep Palisades open. We are supportive of federal initiatives to keep nuclear plants operating. However, we are five years into the Palisades shutdown process and we are far down the path. There are significant technical and commercial hurdles to changing course at this point. That said, alongside Halt Tech, we will work with any qualified party that wants to explore acquiring the plant and obtaining federal funding. But I do want to be very clear This does not change our strategy. Entergy is exiting the merchant nuclear business. In the event Palisades continues to operate, it will not be part of Entergy. Across all of our operating companies, we continue to be a critical partner to support strong economic development, bringing new businesses, new jobs, and new tax base to the communities we serve. For example, Entergy Arkansas, along with the Wynn Economic Development Corporation, announced completion of the Select Site Certification for a 37-acre industrial site. Certification streamlines the site selection process. Initiatives like this help track new businesses and new projects like the U.S. Steel expansion that was announced earlier this year. Over the past five years, our economic development team has helped bring to fruition close to 300 announced projects, $42 billion of capital investments, and more than 25,000 jobs. These outcomes have been critical to the economic health of our communities and have been a significant factor in the 9% cumulative industrial sales growth we have achieved over the past five years. And we continue to expect significant industrial expansion in the next several years. As we have discussed, the growth from our industrial customers has been driven in large part by cost, labor, logistics, and regulatory advantages of the Gulf Coast, as well as favorable commodity spreads, which continue to support expansion. Further, the current geopolitical state of the world makes the U.S. and the Gulf Coast in particular a top choice for stability. LNG exporters in the Gulf are being called on to expand production to help reduce Europe's reliance on Russian energy imports. This opportunity represents a win for our customers, communities, and owners, not to mention the global community. To help support our customers' growth and decarbonization objectives, we are driving progress to expand our renewables footprint. As of today, we have approximately 650 megawatts of renewable capacity in service, 625 megawatts of solar projects approved by regulators and in progress, 725 megawatts of announced projects, and up to 4,000 megawatts of RFPs. That's more than half of the 11,000 megawatts of renewable resources in our supply plan through 2030. We've made progress identifying new resources in active RFPs. Since our last call, Entity Texas concluded evaluations of its 2021 solar RFP. Several resources were selected totaling at least 400 megawatts from owned and contracted proposals. We also made selections from the Louisiana and Arkansas 2021 RFPs earlier in the year. We will provide additional details about the resources selected from these proposals once parties reach definitive agreements. We are also soliciting the next round of renewable proposals. Energy Arkansas recently issued its RFP seeking up to 500 megawatts of renewables to provide cost-effective clean energy, which furthers fuel diversity. Energy Louisiana also issued notice to proceed with renewable RFPs seeking up to 1,500 megawatts in Louisiana. Our customers' demand for decarbonization solutions, including green products, is not slowing down. The long-term solar market continues to look favorable based on an improving technology curve and higher natural gas price scenarios. However, we fully recognize the near-term cost and schedule pressures that solar projects are facing. Supply chain constraints have been exacerbated by the Department of Commerce investigation, which we expect will drive additional delays and the potential for further cost increases. These dynamics are affecting the entire U.S. solar industry, but we are continuing to work through these constraints and are executing on our solar expansion plans. It's important to note that not all of our projects are affected. Sunflower Solar in Mississippi are all the owned projects coming online this year. As its panel's on-site, the installation is nearly complete. Entergy's owned solar represents a relatively small portion of our three-year, $12 million capital plan. Roughly half of owned projects in the three-year horizon are not experiencing impacts of recent market constraints. A greater portion of our own projects are expected in the latter half of the decade which would be past the current market constraints. As we've said before, we have a large backlog of customer-centric investments and the ability to rotate capital into our plan if an opening presents itself. The bottom line is that we recognize the near and medium-term constraints and still see strong market fundamentals in the long term that supports our supply plan and customer objectives. On our last call, we told you about the new U.S. steel expansions. In support of this project and the customer's de-carbonization goals, Energy Arkansas filed for approval to acquire the 250-megawatt Driver Solar facility. Driver Solar is an example of how we can partner with customers to support their sustainability needs while accelerating the growth of our renewable portfolio within our regulated framework. It also highlights our unique growth strategy to help customers achieve the outcomes they desire which in turn drives outcomes for all energy stakeholders. Through more jobs and economic activity in our service area, increased capital deployment to support electrification, low growth offset costs, and higher rate of change towards societal decarbonization. Nuclear also plays a critical role in our customer decarbonization strategy. Entergy is one of the cleanest large-scale fleets in the nation due to our nuclear fleet. Customers are increasingly highlighting access to carbon-free resources as key to economic development. They are looking to reduce their carbon footprint, and many are indifferent to the type of carbon-free technology. We continue to see examples in the industry that reinforce the need to balance reliability, affordability, and environmental sustainability. Entergy's resource planning has always balanced these objectives. Our baseload newsletter plays a critical role. We have discussed the size of a long-term opportunity for energy to help our industrial customers to achieve their sustainability outcomes. We estimate an addressable market of approximately 30 terawatt hours by 2030. To put that into context, that's about 25% of our 2021 total retail sales. That's not to say that we won't capture the entire market, but we're working now to serve our customers' needs and maximize this opportunity. With many carbon reduction goals coming past 2030, we see even greater opportunities beyond the next 10 years. Realizing this growth will require significant investment that benefits all stakeholders. This will include meaningful transmission and distribution investment to reliably serve the load. Expansion of our renewable energy will go beyond the 11 gigawatts in our current 2030 resource plan. Financially, we continue to strengthen our balance sheet Beyond the securitization progress that I mentioned, we've also significantly reduced our remaining growth equities through 2020. Currently, only 25% of the original amount discussed at our 2020 analyst day remains. We're on track to achieve steady, predictable growth, adjusted EPS and dividends, and the opportunity to do even better. We're very excited about our upcoming analyst day on June 16th. We'll use that opportunity to provide a closer look into our multi-year strategy financial plans. That includes our plans to quickly advance resilience investment in our coastal region to lower storm risk for our system, our communities, and our customers, and to further expand our renewable support portfolio to support our customers' decarbonization goals. As I said, we've had a productive start to 2022. and we will continue to successfully achieve the milestones that keep us on track to deliver steady, predictable earnings and dividend growth, while maximizing operating efficiencies and investments to make our system the most resilient, reliable, clean, and affordable it can be. These are the outcomes our customers want by delivering them to create sustainable value for all our stakeholders. Before I conclude, I encourage you to read our recently released 2021 Integrated Report the future is on. Report lays out how we delivered results in 2021, discusses why we're optimistic and excited about energy's future. You can see how we integrate environmental, social and governance objectives to all we do. I'll turn the call over to Drew to review our first quarter results, as well as our financial strengths and outcomes.