Entergy Corporation

Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's first quarter 2026 earnings call and teleconference. 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 would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. And if you would like to enjoy your question, press star one again. I will now turn the call over to Liz Hunter, Vice President of Investor Relations for Entergy Corporation. Liz?

Good morning. Thank you, John, 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. EnterD 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. We had a productive first quarter in which we delivered strong financial results. We launched our fair share plus pledge, and we advanced customer initiatives with the execution of several electric service agreements, including the one with Meta, that improve our financial outlook well into the future. Beginning with financial results, today we are reporting first quarter adjusted earnings per share of 86 cents. 2026 guidance remains on track, and we are increasing our already strong adjusted EPS outlooks driven by 8.5% retail sales growth. Now I'll cover the business updates in the quarter, and as always, I'll start with the customer. For several years, we've worked with stakeholders to recruit data centers and capture the transformative impact they can have on our communities through investment, jobs, and other support, while at the same time protecting and benefiting existing customers. Earlier this year, we formalized that commitment with the launch of our Fair Share Plus pledge. The Fair Share Plus pledge is a set of guiding principles that ensures that data centers pay their fair share for the power they consume, plus additional benefits for customers and communities. Our pledge aligns with the ratepayer protection pledge that our customers signed with the White House. Fair share is achieved in several ways. Minimum bills and contract length cover incremental costs. Termination provisions ensure current customers avoid unneeded costs. Clean energy terms support a potential future transition, and strong credit terms give us confidence in all of it. Fair share also means that data centers cover their portion of fixed costs that our current customers pay for today. The fair share portion alone is the source of the estimated $7 billion of benefits we have highlighted, and current customers' bills will be lower than they otherwise would have been because data centers are paying for the incremental infrastructure they need, as well as their share of fixed costs. The plus component is all of the community benefits originally envisioned by our state and local leaders, including well-paying jobs and targeted workforce development, a substantial influx of new support for schools, nonprofits, and other state and community needs, and multiplier effects from new businesses and employment opportunities that come about because of the data centers. The plus component also includes a stronger electric system with reliability and resilience benefits lower average fuel costs driven by more efficient generation, and specific customer benefits like low income or energy efficiency support. The plus component is clearly valuable, and it is in addition to our estimated $7 billion in customer benefits. We're proud that the framework we committed to more than two years ago is already providing significant benefits for our customers and communities, and those benefits will compound well into the future. I cannot say enough about the tremendous work our employees have done to create this transformative opportunity for our communities, while also providing so much value for our existing customers. And we aren't done yet. In late March, we announced a new electric service agreement with Meta for another data center in North Louisiana. The fair share value from this agreement alone is expected to be $2 billion, which is included in the $7 billion I mentioned. In the plus category, over the next 20 years, META has made other commitments. $140 million for energy efficiency programs and $60 million for our power to care program. Energy Louisiana will match power to care funding, bringing the increase to $120 million. For context, that is a five times annual increase for 2025 levels. that will meaningfully improve outcomes for our most vulnerable customers. Shortly after executing the agreement, Entergy Louisiana filed an application with the Louisiana Public Service Commission requesting approval for assets needed as a result of adding the new metadata center to the system. The investment includes seven new combined cycle units, transmission infrastructure, and battery storage facilities. The cost of the proposed facilities will be covered by payments from META, whether from their tariff or other contributions, yet all customers will realize reliability and resilience benefits and lower fuel costs from these investments. We also agreed to pursue another 2.5 gigawatts of renewables and further investigate CCS, nuclear upgrades, and new nuclear to support META's clean energy goals. will add projects to the plan as assets are identified. This month, the Commission affirmed that our request falls under their new Louisiana Lightning Initiative, and they directed that the procedural schedule should support a decision at the December B&E meeting. The Commission's Lightning Initiative is part of Governor Landry's Project Lightning Speed to support economic development to provide significant benefits to state and local communities. We are requesting approval for more than $15 billion in capital with about $14 billion in our four-year plan. As a result of the agreement and pending the approval request, we're also raising our sales and adjusted EPS outlooks. Kimberly will discuss in more detail. Beyond the meta-agreement, so far this year, we have signed ESAs totaling over 1,000 megawatts. These agreements were from multiple industries across all our operating companies, and they indicate that customer growth beyond data centers remains robust in our region. We also continue to receive data center interest within our service area. After all agreements signed to date, including the recent agreement with Meta, we still have a pipeline of 7 to 12 gigawatts of potential data center customers that are not in our plan. Moving beyond the customer growth update, I'd like to cover a few more items. Operational excellence remains a key focus area, and we will talk in more detail about that at Investor Day. For today, I'll share a couple of highlights. Orange County Advanced Power Station achieved its first fire milestone, bringing it one step closer to delivering reliable power for our customers in Texas. We expect the plan to be fully online in late summer. Recently, our power delivery team identified more than $30 million in capital savings on the Commodore to Churchill 230 kV project. Our engineers developed a solution which improved the design, lowered materials costs, and enabled faster customer delivery. Importantly, the improvement can be applied to future large transmission projects. This kind of innovative thinking, combined with the scale of our capital plan, will continue to lower costs for customers and unlock additional customer investment opportunities. Entergy Texas is working to expand its spending generation capacity to serve a growing customer base. Following the Commission's feedback, they issued an RFP in February for combined cycle capacity and energy. Across our system, we continue to expand our renewables portfolio, driven by our customers' desire for clean energy options. We have active RFPs for more than 1,600 megawatts of renewables and storage. And we have over 4,500 megawatts of renewables and storage in various stages of negotiation after selections from prior RFPs in Arkansas, Louisiana, and Mississippi. Roughly 2 thirds of the megawatts in negotiation would be owned. In addition, we are actively managing proposals through Louisiana's accelerated renewable review process. These are important tools to help us identify projects supporting customers clean energy goals. As we indicated on the previous earnings call, Energy Arkansas filed its base rate case in late February, requesting a $45 million rate change. which is less than 2%. Because bill impacts vary by customer type, the residential impact would be less than 1%. Some of the features that we requested include an optional time of use rate that provides residential customers with the opportunity to lower bills by shifting energy used to lower cost hours and low income rates that provide a 50% discount on the customer charge for households that qualify for LIHEAP assistance. We also elected to resume Entergy Arkansas' forward test year FRP after the rate case is resolved. Entergy Mississippi filed its annual formula rate plan with no change requested. Arkansas and Mississippi Both have mechanisms that provide cash allowance for funds used during construction for investments to support significant economic development projects. To that end, Intergy Arkansas filed its first annual Generating Arkansas Jobs Act Rider in March, and Intergy Mississippi updated its interim facilities rate adjustment in January. One additional comment about Mississippi The state recently passed legislation authorizing securitization of costs associated with Winter Storm Fern. Kimberly will provide additional details on that as well. Beyond Fair Share Plus, our employees continue to work every day for the benefit of the communities we serve. We recently participated in the industry's LIHEAP Action Day in Washington DC to advocate for energy affordability for our customers in need. Congress approved an appropriations package that includes a $20 million increase for LIHEAP, which reflects growing recognition of the program's importance. For more than 15 years, Entergy has also provided free tax preparation for low to moderate income customers at sites throughout Entergy's region. In 2025, we help customers receive $54 million in earned income tax credits, putting money directly into our customers' pockets. Finally, we are very excited about our upcoming Investor Day in June. We plan to walk through the clear line of sight for our multi-year strategy and outlooks in detail. And you'll hear directly from our leadership team on the opportunities ahead. Highlights will include a conversation with large customers on how we partner together to create better outcomes for our key stakeholders, a view into our operational strategy to successfully execute on the large build cycle ahead of us, a discussion of the work we are doing to unlock additional capital deployment opportunities, a review of our approach to maintaining financial discipline, and finally, a deeper dive into the significant near and long-term customer growth opportunities to sustain our strong growth well beyond our five-year outlook. We've had a productive start to 2026 with solid progress and execution across the business. And by continuing to put our customers first, we will deliver premium value to each of our key stakeholders. We look forward to discussing this in more detail with you at our Investor Day. I'll now turn the call over to Kimberly for the financial update.