ENTERGY CORP /DE/ Q4 FY2024 earnings call

• 2024 was a transformational year with adjusted EPS of $3.65, in the top half of guidance range. Raising capital and outlook beyond 2025, with long-term growth rate through 2028 greater than 8%.
• Strong growth in industrial segment: industrial sales up 8% year and 15% in Q4; compound annual growth 12%-13% from 2024-2028 for combined utility.
• Added two large hyperscale data centers in 2024, announced new electric service agreement in Mississippi and anticipate ESA with Meta. Data center opportunity of 5 to 10 gigawatts in pipeline.
• Completed several regulatory processes including final approvals of SERI settlements, first phase approvals of over $2 billion resilience investment, LPSC and New Orleans City Council approval of gas LDC sale, rate actions across multiple jurisdictions.
• $37 billion capital plan over 2025-2028, including investment in renewables, gas plants (Orange County Advanced Power Station, Delta Blues facility under construction, pending regulatory approvals for others), nuclear upgrades and license extensions, and transmission investments.

In 2024, weather-adjusted retail sales grew approximately 4%, driven by strong industrial growth of more than 8%. Industrial sales were up 8% for the year and 15% for the fourth quarter, with large customers in the petroleum refining, chlor-alkali and technology segments driving this growth. The industrial segment contributed significantly to the overall financial performance, with compound annual growth at 12% to 13% from 2024 through 2028 expected.

• 2025 adjusted EPS guidance unchanged. Long-term growth rate through 2028 now well above 8%.
• 2025 weather-adjusted retail sales growth expected at 6%, with industrial growth 11%-12% driven by large customers.
• Four-year $37 billion capital plan, $2.7 billion higher than previous, including dispatchable and renewable generation, distribution investments to support reliability and resilience.

• Regulatory process uncertainties that could impact growth and investment plans.
• Credit risk, with careful management needed for new nuclear investments.
• Weather-related risks such as hurricanes and winter weather events affecting restoration and operations.
• Gas turbine capacity and pricing risks affecting generation planning.

Q: Just to elaborate on the core drivers of the $3 billion CapEx update. It’s skewed to generation and renewables. So does that kind of imply you’re starting to trend towards the high end of that load growth especially as we think about the ramp-up for something like Hub 8, which I think is up to a $12 billion site?

A: Thanks, Shar. As you said in the capital plan, it is largely generation for both dispatchable and renewables, but it does have some distribution investment and there’s some incremental nuclear investments to support the reliability of those as well. All of that is baked into the outlook that we have here. And as you noted, we increased the outlook as we go out into the back end of that period, reflecting those investments and the earnings on those investments.

Q: you're not the only CEO that's talking about new nuclear, I'm just kind of curious if you just hone in on just specifically what you mean by new nuclear because one of your commissioners in Louisiana kind of highlighted large scale. And so I'm not sure if there's an appetite for SMRs in the state, and you seem to focus a little bit on the larger scale side. So is there room for large-scale reactors if there's ample risk sharing, either on the federal backstop, et cetera? Or when you mean new nuclear, are you really specific to SMRs?

A: Thanks, Shar. That's a good question. We actually are looking at all forms of new nuclear, the large scale, like an AP1000, which as you all know, there are some that exist now in our country and several under construction around the world and several more that are planned. So that is, in some sense, viable supply chain for new nuclear today. And so certainly, we would be looking at that because in a lot of ways, that could derisk entry into the new nuclear space. But we are also looking at SMRs. We have MOU with Holtec to investigate their new technology. And of course, we're looking at others like GE's technology and some of the other ones that are around. So we're not exclusive to any particular new nuclear technology at this point. We are primarily looking at what's going to give our stakeholders the best risk profile and the best value. Those are going to be the driving components for us.