New Orleans, La. - Entergy
Corporation (NYSE:ETR) today issued 2010 earnings guidance assuming a business
as usual operation for the full year, as well as post-spin financial outlooks
for Entergy and Enexus Energy Corporation. In addition, Entergy outlined its
preliminary three-year capital expenditure plan for the period 2010 through
2012.
“We continue to take the actions
necessary to complete the planned non-utility nuclear spin-off,” said J. Wayne
Leonard, Entergy’s chairman and chief executive officer. “With line of sight on
ultimate resolution in 2010, the Entergy Board of Directors has granted
authority for an additional $750 million share repurchase program, following
completion of an initial $500 million authorization in third quarter 2009. While
it is expected the additional share repurchases under the new authorization will
occur following spin-off completion in the near-term, consistent with the $500
million authorization, the incremental $750 million of share repurchase capacity
is supported by the underlying business operations whether or not the spin-off
transaction is completed.”
Earnings Guidance
As the proposed spin-off date of
Entergy’s non-utility nuclear business is not yet known with certainty at this
time, Entergy is initiating 2010 earnings guidance in the range of $6.40 to
$7.20 per share on an operational basis, assuming a business as usual operation
for the full year. As-reported earnings per share guidance ranges from $6.15 to
$6.95 and reflects $(0.25) per share of projected dis-synergies associated with
the spin-off and plans to enter into a nuclear services joint venture. Guidance
for 2010 does not incorporate a special item for expenses, which were incurred
beginning in 2008 and are expected to continue in 2010, anticipated in
connection with outside services provided to pursue the spin-off. The level of
these charges in 2010 will vary depending upon resolution of the spin-off.
Post-Spin Long-term
Financial Aspirations
The companies continue to aspire to
deliver superior value to owners as measured by total shareholder return. The
companies believe top-quartile total shareholder returns are achieved by growing
earnings, delivering returns at or above the risk-adjusted cost of capital,
maintaining credit quality and flexibility, and deploying capital in a
disciplined manner, whether for new investments, share repurchases, dividends or
debt retirements. Financial aspirations for the period 2009 through 2014 include
the following:
Growing earnings:
-
Entergy: Double digit compound
annual earnings per share growth over the 2009 through 2014 horizon.
-
Enexus: Earnings growth achieved by
realizing $2.0 billion of Adjusted EBITDA in 2014 and / or through share
repurchases. Adjusted EBITDA, a non-GAAP financial measure, is defined as
earnings before interest, income taxes, depreciation and amortization and
interest and dividend income, excluding decommissioning expense and other than
temporary impairment losses on decommissioning trust fund assets. The Adjusted
EBITDA aspiration is expected to be achieved from power price increases on
open positions and / or deployment of capital resulting in additional EBITDA
potential. In addition, Enexus anticipates periodic return of capital in the
form of share repurchases, with current estimated Adjusted EBITDA levels
supporting such distributions.
Capital deployment:
-
Entergy: A balanced capital
investment / return program. As outlined in the Preliminary 2010 through 2012
Capital Expenditures discussion below, Entergy sees continued productive
investment opportunity at the Utility in the coming years. Entergy aspires to
fund this capital program without issuing equity, while maintaining a
competitive capital return program. Given the financial profile of its
vertically integrated utility operation, dividends are expected to be the
primary form of return of capital, with the aspiration to retain its current
dividend level (even after the spin-off of a substantial business) while
balancing future growth thereon with competing investment opportunities.
-
Enexus: A balanced capital
investment / return program. Enexus expects to generate ongoing free cash flow
that can be used for debt repayment, investment and / or distributions through
share repurchases. Given the financial profile of its merchant nuclear
operation, share repurchases are expected to be the primary form of return of
capital.
Credit quality and
flexibility to manage risk and act on opportunities:
Planned Capital
Expenditures – Preliminary
The preliminary capital plan from
2010 through 2012 anticipates $7.1 billion for investment, including $2.7
billion of maintenance capital. The remaining $4.4 billion is for specific
investments, as well as other initiatives.
Members of Entergy’s management will
attend the 44th Edison Electric Institute (EEI) Financial Conference and
participate in meetings on November 1-3, 2009, at which time the information
included in this release will be discussed. Additional information regarding
Entergy’s forward looking financial update is available in Entergy’s investor
news release dated Oct. 30, 2009 and accompanying handout material, copies of
which have been filed today with the Securities and Exchange Commission on Form
8-K and are available on Entergy’s investor relations Web site at
www.entergy.com.
Entergy Corporation is an integrated
energy company engaged primarily in electric power production and retail
distribution operations. Entergy owns and operates power plants with
approximately 30,000 megawatts of electric generating capacity, and it is the
second-largest nuclear generator in the United States. Entergy delivers
electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi
and Texas. Entergy has annual revenues of more than $13 billion and
approximately 14,700 employees.
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In this
news release, and from time to time, Entergy Corporation makes certain
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Except to the extent required by the federal
securities laws, Entergy undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events, or otherwise.
Forward-looking statements involve a number of risks and uncertainties. There
are factors that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements, including (a) those
factors discussed in (i) Entergy’s Form 10-K for the year ended December 31,
2008, (ii) Entergy’s Form 10-Q for the quarters ended March 31 and June 30,
2009, and (iii) Entergy’s other reports and filings made under the Securities
Exchange Act of 1934, (b) the uncertainties associated with efforts to remediate
the effects of Hurricanes Gustav and Ike and the January 2009 Arkansas ice storm
and recovery of costs associated with restoration, and (c) the following
transactional factors (in addition to others described elsewhere in this news
release and in subsequent securities filings): (i) risks inherent in the
contemplated spin-off, joint venture and related transactions (including the
level of debt to be incurred by Enexus Energy Corporation and the terms and
costs related thereto), (ii) legislative and regulatory actions, and (iii)
conditions of the capital markets during the periods covered by the
forward-looking statements. Entergy cannot provide any assurances that the
spin-off or any of the proposed transactions related thereto will be completed,
nor can it give assurances as to the terms on which such transactions will be
consummated. The transaction is subject to certain conditions precedent,
including regulatory approvals and the final approval by the Board of Directors
of Entergy.
