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Entergy Q2 Earnings Hit by Higher Tax

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Before the bell, Entergy Corp. (ETR - Free Report) reported second quarter 2013 results. In the reported quarter, the company posted operational earnings of $1.01 per share that came a penny below the Zacks Consensus Estimate and 52.1% short of the year-ago profit of $2.11 per share.

The downside mainly reflects higher income tax expenses at the Utility and Parent & Other segments. The company also indicated that earnings from Entergy Wholesale Commodities declined sequentially due to lower net revenue and higher decommissioning expense, partially offset by lower income taxes.

Operational Results

Revenue in the reported quarter boosted 8.7% year over year to $2,738.2 million. The top line surpassed the Zacks Consensus Estimate of $2,660.0 million.

Of this Electricity revenue was up 12.5% to $2,177.2 million and Natural Gas increased almost 42% to $33.9 million, while Competitive Business revenue dropped almost 6% to $527.1 million.

Segment Results


Utility's quarterly earnings were $196.2 million on an as-reported basis and $211.1 million on an operational basis, compared with $304.2 million on as-reported and $314.1 million on operational basis in the second quarter 2012. The year-over-year decrease was largely due to higher income tax expense.

Entergy Wholesale Commodities

Entergy Wholesale Commodities' as-reported and operational earnings were $11.5 million and $12.7 million for second quarter 2013, respectively. During the corresponding quarter last year, earnings on an as-reported as well as operational basis were $70.8 million. The drop was attributable to higher decommissioning expense.

Parent & Other

Parent & Other segment widened its loss in the reported quarter as higher income tax expense affected results. The unit reported a loss of $44.0 million on both as-reported basis and an operational basis for second quarter 2013. This compares to a loss of $10.0 million on an as-reported basis and $10.3 million on an operational basis in the second quarter 2012.

Financial Condition

The company generated $572.0 million of net cash from operating activities compared with $587.0 million in the second quarter 2012. Cash and cash equivalents at the end of the reported period were $311.0 million versus $533 million at year-end 2012. Long-term debt increased to $13,747 million from $13,473 million at year-end 2012.


Entergy maintained its 2013 earnings guidance in the range of $4.60 to $5.40 per share on an operational basis. The company’s as-reported earnings assumption is $4.56 to $5.36 per share.

Zacks Rank

Entergy − the second largest U.S. nuclear power generator after Exelon Corporation (EXC - Free Report) − has a Zacks Rank #3 (Hold). However, we would advise investors to focus on Zacks Ranked #1 (Strong Buy) Integrys Energy Group, Inc. and Zacks Ranked #2 (Buy) IdaCorp, Inc. (IDA - Free Report) .

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