The operator welcomes everyone to Entergy's Fourth Quarter 2023 Earnings Conference Call and introduces the speakers. Bill Abler, Vice President of Investor Relations, will begin with comments from Entergy's Chairman and CEO, Drew Marsh. Kimberly Fontan, CFO, will then review results. Management will make forward-looking statements and discuss non-GAAP financial information. Drew Marsh discusses the company's successful year and their strategy to create value for customers, employees, communities, and owners.

The company has a customer-centric approach to building their investment plan, focusing on meeting customers' needs for industrial growth and decarbonization while prioritizing affordability. They have signed contracts for 1.3 gigawatts of generation capacity and are expecting further growth, including a large data center project that will create high-paying jobs and economic benefits for the state. The company's growth story is also diversifying with projects related to electric vehicle batteries and lumber facility upgrades.

Entergy has signed up new customers in the LNG and blue hydrogen sectors, with a focus on providing sustainable, affordable, reliable, and resilient service. They are pursuing loans and grants to offset costs and have submitted applications for federal funding for clean energy projects. Safety is a top priority for the company and their generation fleet had a successful year with a low forced outage rate. They also performed well during Winter Storm Heather in January.

The company's fleet and power delivery team performed well in 2023, with improved reliability and increased stakeholder engagement. They have made progress on regulatory objectives, including a denial of a rehearing request at the federal level, and have seen progress on resilience measures at the retail level. These efforts aim to provide steady earnings and dividend growth for owners while benefiting customers and communities. Appeals have been filed in certain cases and the company is committed to ensuring the security of all stakeholders, particularly those in coastal areas.

The City Council's Climate and Sustainability Committee has recommended approval of a $110 million project to improve resilience in one district of New Orleans. Entergy New Orleans has been asked to shorten the initial proposal to a three-year period and expects to submit an updated plan soon. Entergy Louisiana's hearing has been moved to early April to ensure consistency with forthcoming resilience rules. The PUCT has finalized the Texas Resilience Act rule making, and Entergy Texas intends to submit its plan later this quarter. Texas voters have also approved funding for the Texas Energy Fund.

Entergy New Orleans has received certification for Hurricane Ida costs and intends to participate in the $500 million grant designated for non-ERCOT utilities. The company is also making progress in the sale of its gas LDC and has received approval for two renewable resources. Additionally, Entergy Louisiana is seeking to acquire 3000 megawatts of new solar resources and is currently in settlement negotiations.

Entergy Louisiana is hopeful for a positive resolution in a current case, and Entergy Arkansas's annual FRP filing was approved. The company is proud of its contributions to the community, including economic value and recognition for its corporate social responsibility efforts. Entergy plans to invest $20 billion over the next three years to improve its fleet and system for the benefit of customers and stakeholders.

The company's capital plan includes $11 billion for transmission and distribution to improve reliability and serve customer growth, with $1 billion specifically for resilience. $8 billion will be invested in generation, including $2 billion for new solar and completing the Orange County Advanced Power Station. The company is also focused on clean energy and is working on carbon capture and sequestration. They are balancing customer affordability and working to improve efficiency and reduce costs. They are also pursuing funding opportunities and bringing in new customers to help with affordability.

In 2023, Entergy saw success in managing their natural gas inventory and ensuring generator operations, which improved reliability and avoided unexpected spikes in fuel and purchase power costs for customers. They have a proven track record and are focused on execution across various fronts. They will be hosting an Analyst Day in June to discuss future opportunities. In terms of financial results, Entergy's adjusted EPS for 2023 was $6.77, $0.35 higher than the previous year, driven by investments in customer service and regulatory actions. O&M spending was lower compared to 2022.

In 2023, the company saw lower expenses and higher sales due to hot weather, with industrial growth being offset by declines in residential and commercial sales. The company remains confident in its industrial growth expectations and saw significantly higher operating cash flow compared to the previous year. Solid credit metrics were achieved, with a book FFO to debt ratio of 14.3%, and the company expects to maintain healthy credit in the future. Progress was made towards meeting equity needs.

In the fourth quarter, we contracted $360 million using ATM forwards and closed out our equity needs through 2024. The remaining $280 million will be applied towards our 2025 and 2026 equity needs. We have already locked in 20% of our 2025 and 2026 equity needs. Our 2024 adjusted EPS guidance range is $7.05 to $7.35, with a midpoint of $7.20. We expect 6% to 8% annual adjusted EPS growth. Key drivers for 2024 include 4% higher retail sales volumes, 8% industrial sales growth, 1% residential sales growth, and customer-centric investments. AFUDC will increase with long-term capital projects, while interest expense and utility O&M will also increase. We are focused on continuous improvement to manage our spending levels.

The goal of Entergy is to deliver steady and predictable results by managing spending. The company had a successful year in 2023, with adjusted EPS in the top half of their guidance range. They prioritize the needs of their customers and are well positioned for future success. During a Q&A session, they were asked about a large tax item from a tax audit, which they adjusted out of earnings. This had no significant cash effect. The company also recently increased their sales expectations for 2024 across customer classes.

The EEI's preliminary plan is subject to change as they continue to adjust and modify their forecast. The industrial customers are expected to be strong in 2024, with a recent announcement in Mississippi providing economic opportunities. The outlook for 2023 has not changed much, but there may be a need for additional infrastructure to support the large Mississippi customer. A more detailed capital plan will be provided at the upcoming Analyst Day.

The company has shown additional capital that could be added at EEI, including transmission and clean energy. They are continuing to prioritize these investments and plan to show five years of capital at the upcoming Analyst Day. There is no specific timeline for resolving SERI-related issues in New Orleans and Louisiana, but discussions are ongoing and a settlement could potentially be linked to the Brazilian CapEx. The settlement with Arkansas and Mississippi has reduced the risk of SERI, and there is potential for New Orleans and Louisiana to provide benefits to customers through a settlement.

The speaker discusses how New Orleans is considering the potential impact of a SERI settlement on customers' ability to pay for resilience investments. They cannot disclose any details of the negotiations, but it is likely that the conversations are exploring how a SERI supplement could benefit customers in terms of resilience. The next question is regarding load growth, and the speaker clarifies that they expect a 6-7% CAGR through 2026, with a slight dip in 2024 due to recapturing lost growth. The final question is about the $1 billion resilience spending in the capital plan, which the speaker confirms is included in the plan.

The company is planning to spend close to $1 billion on capital, with the potential for additional spending depending on recovery mechanisms in Louisiana and New Orleans. This amount is included in their filed plans. The company has also requested accelerated mechanisms to speed up spending. The $2 billion in solar investments includes both RFPs and traditional ratemaking in Arkansas and Mississippi. The annual report on Form 10-K will provide more information about the company's financial statements.

The financial statements will reflect events that occurred before the filing date and the company's website provides updates on regulatory proceedings and strategic milestones, but it should not be relied on as the sole source of company information. The call is now over.

This summary was generated with AI and may contain some inaccuracies.