Entergy Corporation

Good morning. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. And if you'd like to withdraw your question, press star one again. Thank you. I will now turn the call over to Liz Hunter, Vice President of Investor Relations for Entergy Corporation. Liz?

Good morning. Thank you, Greg, and thanks to everyone for joining this morning. We will begin today with comments from Entergy's Chair and CEO, Drew Marsh, and then Kimberly Fontan, our CFO, will review results. 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 Drew.

Thank you, Liz. Good morning, everyone. Today we are reporting second quarter adjusted earnings per share of $1.05. Our progress through the first half of the year keeps us firmly on track to achieve 2025 results in line with our guidance. and we are raising our outlooks driven by our higher capital plan to meet customer expectations. We aspire to be the premier utility and to create sustainable value for each of our key stakeholders, our customers, employees, communities, and owners. Our customers are listed first, so I'll start there. We have over 3 million customers, and most of them are residential. For the first time since we began tracking Net Promoter Score, We achieved a result that ranks in the first quartile for utility residential service over the past 12 months across our enterprise and using JD Power data. We are not first quartile in every jurisdiction or in every category. Still, we are excited about our progress and we are energized by the opportunity ahead to further improve our service to our customers. Our industrial growth opportunities remain robust. We continue to work with state and local leaders to attract businesses to our service area with our economic development model driven by our vertically integrated customer-focused electric company with welcoming communities and the economic advantages of the Gulf Sound. We provide one-stop shop technical solutions while we bring key parties together to rapidly meet the needs of new customers. At the same time, we ensure strong protections for our existing 3 million customers and maintain our credit. Today we are pleased to announce that we have secured significant new growth in Arkansas that will bring benefits to existing customers as well as communities in the state itself. With this addition, we expect our four year industrial sales growth rate to be approximately 13%. Consistent with our practice, we aren't commenting further on specifics or customers, although we anticipate making regulatory filings soon, which will include additional details. we are updating our four-year capital plan to $40 billion, which will enable us to serve increased load and grow our renewable portfolio across our jurisdictions. As a point of reference, we have signed roughly eight gigawatts of electric service agreements since the beginning of last year. As a result, our four-year capital plan includes significant investment for customer-driven generation, including approximately 3 gigawatts of solar, 1.4 gigawatts of battery storage, and 8 gigawatts of highly efficient gas units. Some of these resources are planned to come online beyond our four-year plan period. During the last quarter, we disclosed that we entered into an exclusivity agreement for Power Island equipment, including 15 combined-cycle combustion turbines and two simple-cycle combustion turbines. That is in addition to the Orange County Delta Blues and Legend projects. Collectively, these turbines provide 15 gigawatts of capacity. That leaves 7 gigawatts for future customer growth needs with deliveries for commercial operations between 2029 and 2031. Our strategy to use standardized equipment and designs helps us effectively manage cost and schedule for our customers. Our customer pipeline continues to be robust, including our data center pipeline, which remains in the 5 to 10 gigawatt range. And significant interest remains in our traditional industrial segments as well. Our economic development model attracts large new customers that contribute to our community's growing jobs and tax base. They also share in costs that would otherwise be covered by existing customers. The economic impact of these projects on our communities is substantial and yet another sign to existing customers and potential customers that great things are happening in Entergy's service area. While we've made progress on our customer service, storms create moments that matter. We spoke to you and our analyst day last summer about our plans to better manage storms. When you're removed from that conversation and in the heart of storm season, take a moment to review our progress. To start, We are executing phase one of our accelerated resilience program. We have more than $2 billion approved, mostly in Entergy, Louisiana. Today, we've invested roughly $400 million, and that includes energizing nine new substations designed to sustain both flooding and hurricane force winds, installing over 8,000 hardened poles, while another 10,000 pole upgrades are in process, which is on top of the average annual run rate of 75,000 poles replaced system-wide. And in the coastal region of Texas, we've rebuilt two short transmission lines to harden standards. Earlier this month, Entergy Texas submitted its application for the Texas Energy Fund to support $200 million of resilience projects. We expect to complete about 30% of our phase one projects by year end. As a reminder, we prioritize projects with the highest benefits, so these earlier projects will have a relatively higher impact. plan to file later this year for the next phase of accelerated resilience to support continued progress. In addition to our accelerated resilience program, new transmission investments built to today's more stringent standards also improve the resilience of our grid. For example, we have several large 500 kV transmission projects in front of regulators in Louisiana and Texas that will provide resilience benefits while also supporting growth. the Mount Olive to Sarepta Line in north Louisiana, a line along the west bank of the Mississippi River in Louisiana through a growing industrial corridor, the Southeast Texas Area Reliability Project, or CTECS, and the Cypress to Legend Line that will support strong growth in the Port Arthur area. These projects and the Babel to Weber Line in Louisiana to be filed later this year total 460 miles and will represent about 2,000 20% of our 500 kV system once completed. These projects will also loop existing transmission lines such that if an event occurs at any point in the loop, power will be automatically diverted in another direction, avoiding customer outages. Altogether, we are planning $8 billion of transmission investment in our four-year capital plan, including $5.6 billion reviewed through MITO's MTEP process. In addition to system improvements, we ensure that we are prepared for storms through planning, drills, and vegetation maintenance. Technology is also part of the journey, and we've been experimenting with cameras and information systems on planes and drones and soon helicopters that fly power lines to gather data with a plan to ultimately feed AI, more quickly assess damage, and optimize the productivity of our teams on the ground. Capital deployment is critical, but it takes more than that to be premiered. To that end, our power delivery team is launching PD Strong, short for Power Delivery Strong, to transform our power delivery team. This includes everything from work management and capability building to behaviors and culture, all with an eye towards better serving our customers every day, but especially in moments that matter, like storms. Our regulators are also supporting our storm response improvement efforts. In addition to approving resilience investment, Louisiana and Texas implemented new processes to expedite storm securitization, allowing operating companies to request recovery based on estimated storm costs and accelerated commission timelines for decisions. Those commissions, of course, retain their authority to determine the prudence of utility storm costs, and estimated costs would be trued up to actual costs once available. Louisiana's expedited process for 2025 storm costs includes a commitment to review the storm cost-related financing order request at the subsequent Commission meeting after the utility's filing. Accelerating storm cost recovery reduces carrying costs for our customers and supports the operating company's credit, which also keeps the cost for capital lower for our customers. This new process also gives confidence to vendors and mutual assistance partners to support storm recovery. Finally, as we deploy our capital plan throughout our service area, a smaller and smaller percentage of our infrastructure is exposed to storms along the coast, reducing our relative financial risk, which benefits our customers as well as our owners. These actions continue to build on our improved balance sheet and strong liquidity. We have made good progress over the last year, reducing storm risk through accelerated resilience, hardening of our grid, financial readiness, and regulatory changes to improve outcomes for customers. And we have more plans for improvements still ahead. Meanwhile, we stand ready to respond for anything that comes our way. We have some other operational achievements that I'd like to also highlight. On July 1st, we completed the sale of our gas LDC businesses to Delta Utilities. The transition for customers was smooth because of the hard work and planning by many employees, including those who have moved to Delta Utilities. We are extremely grateful for their efforts. The sale of that business allows us to focus on our core electric business. Safe and effective nuclear operations also remain a cornerstone for all stakeholders. This year, Waterford III and Grand Gulf are proudly celebrating 40 years of operations. The Waterford III refueling outage wrapped up in June on time and on budget. Work included replacement of all three low pressure turbines, which will improve reliability and pave the way to increase the capacity of the unit by an estimated 40 megawatts in the fall of 2026. We've already filed the upgrade request with the LPSC. Additionally, planned turbine road replacements in AN01 in the fall of this year will set us up for future upgrades there. We continue to engage with customers, regulators, vendors, and others regarding new nuclear, though we don't have any updates to report at this time. Turning to regulatory, we are making progress on important matters to meet customers' growing needs and drive improved customer outcomes. In early July, we reached a stipulated settlement with the Louisiana Public Service Commission staff and a number of parties recommending approval of our request to invest in assets of support adding Meta's transformational Hyperion data center to our system. The hearing was held in mid-July, and we presented extensive evidence on the significant benefits to our customers and communities from making these investments, as well as through bringing Meta online as a customer. These benefits are in addition to the transformative benefits that META will create through its billions of dollars of investment in Louisiana and the high-paying, good-quality jobs it will provide. The procedural schedule supports a Commission decision no later than October of this year. The Mississippi Public Service Commission approved Intergy Mississippi's form of the rate plan settlement, which did not result in a rate change. Also, Entergy Louisiana and Entergy New Orleans filed their annual formula rate plans, and new rates are expected in September. Entergy Arkansas filed its annual formula rate plan with new rates expected to be in place at the beginning of next year. This is the 10th and final projected year in the current cycle. And in February 26th, we will file a base rate case, which will include a proposal for a new formula rate plan tariff. At the federal level, FERC approved MISO's Expedited Resource Addition Study, or ERAS, proposal last week. We appreciate FERC's work to temporarily facilitate customer growth across MISO, and we all work together to improve MISO's existing Q processes. Last quarter, we covered Arkansas legislation that allows for a rider to support investment for economic development. This quarter, the Texas legislature passed and the governor signed three bills that provide benefits to our customers and communities. One accelerates storm securitization, which I mentioned earlier. Another allows rider recovery of MISO-related capacity costs that are currently included in base rates. The rider may be filed annually beginning in 2026. The third is a wildfire bill that provides a potential path to improve wildfire liability. While our likelihood of experiencing wildfires is lower than in other parts of the state, we take the risk seriously and intend to use the new tools that are available. Finally, our communities are a key stakeholder, and actively supporting them beyond economic development is an important part of our strategy. Entergy has once again been named a top 50 most community-minded company the leader in the utility sector by the civic 50 an initiative of points of light in 2024 our employees and retirees contributed more than 122 000 volunteer hours across our service area valued at over four million dollars before i wrap up i'd like to highlight that lewis roth has been elected to our board of directors a louisiana native Louis brings extensive investment experience from his years of work at Barrow-Hanley, historically one of our largest active investors. At Barrow-Hanley, he worked as their lead equity portfolio manager and also served on the executive committee. Combined with his prior work experience, Louis has tremendous familiarity with utilities as well as industrial companies, many of which are part of our customer base. We are very excited to have Louis join our board. been an exciting quarter and continue to make progress on creating value for our customers, communities, employees, and owners. Our teams are working very hard to foster community and economic growth and customer growth in our state, while also delivering on commitments made to improve resilience and reliability. I'll now turn the call over to Kimberly, who will review our financial results for the quarter.