Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.

Good morning and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Drew Marsh, and then Kimberly Fontan, our CFO, will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than two questions. 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. Entergy 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, Bill, and good morning everyone. Today, we are reporting strong results for another successful year. Our 2023 adjusted earnings per share was $6.77 and the top half of our guidance range, once again delivering steady, predictable results. Our strategy is rooted in creating value for our four key stakeholders: our customers, employees, communities, and owners, and it starts with understanding what our customers need from us to be successful. We build our investment plan to meet those needs, including new generation, transmission, and distribution investments to support customers' strong industrial growth and decarbonization goals, as well as to improve reliability and resilience, all the while prioritizing projects with affordability in mind. Our customer-centric approach has served us well and we are confident we'll continue to create meaningful value. Starting with the customer, 2023 was another strong year for growth. Last year, we signed 61 new electric service agreements. These contracts represent more than 1.3 gigawatts of generation capacity at about $250 million of annual adjusted gross margin. Our outlook anticipates most, but not all of these contracted volumes to come to fruition, and our forecast probability weights each prospect. Data centers are a hot topic. And as you know, we've seen interest in our service area. A few weeks ago, Mississippi's Governor Reeves called a special session to finalize the legislative package to bring a large Amazon Web Services or AWS project to Mississippi. AWS is investing $10 billion, the largest economic development project in the state's history, to build two hyperscale data center complexes that are expected to come online over a three-year period starting in 2025. The project will create at least 1,000 ongoing high-paying, high-tech jobs, as well as significant economic benefits to the state and local communities. In addition, the legislation provides the approval of Entergy Mississippi's investment in transmission and generation to serve the facility. It also permits Entergy Mississippi to recover carrying costs during construction, which lowers the total cost for customers and supports Entergy Mississippi's credit. In addition to the data centers, our growth story continues to develop and diversify. For example, two projects supporting production of electric vehicle batteries, as well as our lumber facility upgrade, were announced in the fourth quarter. We also signed up new customers in the LNG and blue hydrogen spaces. The developers for these projects expect sustainable, affordable, reliable, and resilient service from Entergy's utilities. The ongoing interest from potential customers informs and affirms our expectation for very strong growth. Customer affordability is a key area of focus. Some of the actions we are taking include pursuing loans and grants to offset the cost of much-needed investments. Several of our operating companies submitted Part one applications to the DOE's loan programs office, totaling $4.7 billion for a variety of projects related to the clean energy transition. Our utilities also submitted eight preliminary proposals for grid resilience and innovative partnerships or GRIP program funding. Additionally, some of our operating companies are partnering with their states to apply for funding from other federal sources. This is building off the successful efforts in 2023, including our Louisiana utilities' support for the state's HERO application, which resulted in a grant for Louisiana's $500 million strategic energy initiative, and our Texas utility support for the IIJA hydrogen hub application, which resulted in a $1.2 billion grant for high velocity. Operationally, Entergy's employees work every day to support our customers and deliver excellence. Everything they do starts with safety. When it comes to safety, our work is never done because we believe zero harm is possible. While focusing on safety, Entergy's generation fleet had an outstanding year. Even with challenges from record-breaking heat this past summer, we achieved our best forced outage rate since 2011. Not only did we meet our customers' demands, but we also exported power to other utilities in MISO at the moments that matter. That performance has continued into 2024. Winter Storm Heather hit our service area in January, and we set a new winter peak. Once again, our fleet performed very well, and we maintained reserve capacity comfortably above our customer demand. Our power delivery team has also made important strides this year, completing work that improves reliability and resilience, serves new customers, and helps attract new economic development to our region. In 2023, we improved our reliability performance with the lowest outage frequency in the last decade. Stakeholder engagement also continues to be a focus area. In 2023, we broadened our engagement efforts to expand our conversations with a wide group of stakeholders including customers, employees, elected leaders, community leaders, vendors, and of course, our regulators. In each of our jurisdictions, including at the federal level, we want to understand their perspective and ensure that we communicate clearly what we are trying to do, why we are doing it, and how it benefits customers and communities. By effectively engaging with stakeholders, we can foster constructive regulatory and policy environments, and our customers, communities, employees win while we also deliver on our commitment to provide steady, predictable earnings and dividend growth for our owners. Of course, the proof is in the outcomes and we made important progress on our regulatory objectives over the last few months. Starting at the federal level, in November, FERC issued notice of denial of the request for rehearing on the uncertain tax position and sale-leaseback case. FERC's order explicitly stated that the rehearing request would not be redressed in a future order. Both parties have filed appeals of the FERC, and the court could come to a decision later this year. Turning to the retail level, we have seen progress on accelerated resilience, which is extremely important for the security of all our stakeholders, and especially our coastal customers and communities. Entergy New Orleans shared polling results with the council members to show that the community supports efforts to accelerate resilience and they're willing to pay for it. The City Council's Climate and Sustainability Committee has taken the first step to move in this direction, recommending approval of the $110 million project that was granted 50% matching funds through the federal GRIP program. This is a good first step in improving resilience for one district in New Orleans, but it's far from the final step. The committee has asked Entergy New Orleans to shorten Phase 1 to a three-year period rather than the five years in our initial proposal to allow the council to evaluate progress sooner before moving to the next phases of the plan. The matter is on today's City Council agenda. Our three-year resilience plan will align with the previous filing with projects optimized to fit within the shorter time frame. We expect to submit the updated plan in the next few weeks. For Entergy Louisiana, the hearing was moved to early April to give staff an opportunity to ensure the plan is consistent with the latest thoughts on the forthcoming resilience rules. In the meantime, recent technical conferences have allowed parties to continue advancing the resilience conversation. Parties continued to be supportive of greater resilience, and we still expect an LPSC decision on this matter in the second quarter. The PUCT finalized the Texas Resilience Act rulemaking, which provides a framework that supports greater resilience investments and efficient recovery. We did not receive everything we wanted in the rulemaking, particularly around credit support for utilities already stretching to meet significant customer growth needs. Still, Entergy Texas intends to submit its plan later this quarter. The commission will have 180 days to act on this filing. We expect a decision in late summer of this year. In addition, Texas voters approved funding for the Texas Energy Fund. Of the $5 billion appropriated, $500 million has been designated for grants to non-ERCOT utilities, municipals, and co-ops. We intend to participate for the benefit of our customers and communities and expect more details in the coming months. In December, Entergy New Orleans received certification of Hurricane Ida costs. The council's order determined that all restoration costs were prudent. This approval fully resolves the recovery of all Ida costs. As a reminder, Entergy New Orleans received securitization funds in early 2023 in advance of the final certification. This follows a similar path where Entergy Louisiana received $1 billion of securitization funds for Ida well in advance of final cost certification. Financial resilience through fair and efficient storm cost recovery is critical for utility credit to ensure low borrowing costs for customers. Timely recovery of storm costs also avoids carrying costs and saves customers money. In addition to affordability, strong credit is important for storm response and making investments to support economic growth in our communities. Our gas LDC sale process is moving along nicely, and we made initial regulatory filings to request approval for the sale. We are targeting to close the transaction around the third quarter of next year after a transition period to allow the buyer to set up all support systems. The stakeholder engagement process has been going well, and the closing timeline could be accelerated if regulatory reviews are completed this year. In January, the Louisiana Public Service Commission approved two renewable resources, totaling 225 megawatts. Both projects are expected to come online in 2025. And Entergy Louisiana's request to streamline the acquisition of up to 3000 megawatts of new solar resources, all testimony has been filed and we are making progress in settlement negotiations. Parties filed a request to suspend the procedural schedule while discussions continue. Entergy Louisiana is optimistic it can achieve a constructive resolution of this case that will facilitate our ability to expand renewable resources to support customer needs. And finally, the unanimous settlement of Entergy Arkansas's annual FRP filing was approved, with new rates effective in January. Turning for a moment to the communities we serve. In 2023, we created more than $135 million in economic value for our communities. That includes $25 million of direct shareholder contributions, primarily for bill payment assistance as well as facilitation for LIHEAP assistance, employee volunteers supporting tax preparation, and many other activities. One current example is our employees helping our community celebrate Black History Month. We are very proud of the work of our employees and our corporate social responsibility team as they provide critical help to strengthen the communities we serve, and our efforts haven't gone unnoticed. Newsweek recently named Entergy as one of America's most responsible companies. We were also recognized as one of the nation's top 50 most community-minded corporations by the Points of Light Foundation and the highest ranked utility. And Entergy was once again included in the Dow Jones Sustainability Index North America Index. This is the 22nd consecutive year that we've been included on a selective DJSI index. These are just a few examples of the awards we've received that recognize our efforts to create value for our customers, employees, and communities. Looking ahead, in 2023, we continue to lay the foundation for long-term growth and customer benefits for Entergy and our stakeholders. As I mentioned at the start, our strategy begins with helping our customers achieve their goals, including the unique industrial growth opportunity in front of us. We plan to invest $20 billion over the next three years to make our fleet cleaner and to make our system more reliable and resilient. Just over half of our capital plan, $11 billion, is for transmission and distribution to improve reliability and resilience and to serve customer growth. This includes projects from MISO's annual transmission planning process that were approved in December. The 2023 MTAP identified 34 new projects in our service area, including major projects in Southeast Texas and South Louisiana to support strong growth in those regions. Our transmission and distribution investment plan includes $1 billion for accelerated resilience, which can be accomplished within our current regulatory frameworks and credit requirements. Just a reminder, this is less than our recommendation, but we can increase our resilience investment as we receive approvals from our regulators that include credit supportive recovery mechanisms. We are planning to invest $8 billion in generation. This includes roughly $2 billion for new owned solar as well as the remaining investment to complete the Orange County Advanced Power Station, which we expect to be in service in 2026. Of course, our customers are focused on clean energy. To that end, we are working closely with customers and vendor partners to make carbon capture and sequestration a reality. Our plan also balances customer affordability, which is a core tenet of sustainability. We are working to improve efficiencies and reduce costs, allowing us to offset the impact of growth and inflation and maintain a flat O&M outlook as well as become more efficient with our capital investment dollars. As I discussed earlier, we are pursuing federal and state grant and loan funding opportunities. Bringing new customers into our service area also spreads the cost of customer-centric investments over a larger customer base and improves local economies, which helps with affordability. And finally, other actions like managing our natural gas inventory and ensuring generator operations at moments that matter improves reliability and helps avoid unexpected spikes in fuel and purchase power costs for our customers. 2023 was another successful year for Entergy, and given the opportunity ahead of us, we still have a lot of work to do. Our proven track record gives us the confidence that we will continue to be successful. We are keenly focused on execution across key customer, operational, regulatory, and financial fronts. By continuing to put customers first, we will deliver premium value for each of our key stakeholders. Before I turn it over to Kimberly, I'm excited to announce that we will host an Analyst Day on June 6 and 7. And this year, we're returning to our home city, New Orleans. We will continue the conversation on the significant opportunities that we see ahead, including a five-year view as we've done in the past. And now, Kimberly will review our financial results for the year as well as our outlook.

Thank you, Drew. Good morning, everyone. As Drew said, 2023 was another successful year. We executed on key deliverables throughout the year and we are confident in our continued success. We are initiating our 2024 guidance and affirming our longer-term outlook consistent with what we provided at EEI. I will start by reviewing results for 2023 and then provide an overview of key business drivers for 2024. Starting on slide 3. Entergy's adjusted EPS for 2023 was $6.77, $0.35 higher than 2022. Key drivers are shown on slide 4. Our earnings growth reflected the effects of investments we made to deliver quality service that benefits our customers and communities. That includes regulatory actions as well as higher depreciation expense, taxes other than income taxes, and interest expense. O&M spending was lower compared to 2022. This was driven by lower compensation and benefits costs, lower non-nuclear and nuclear generation expenses, and the elimination of MISO generator service costs, which was largely offset by lower generator ancillary revenues. Weather was a benefit for the year, particularly in the third quarter with an exceptionally hot summer. Excluding weather, retail sales volume was relatively flat for the year, as industrial growth was offset by residential and commercial declines. Industrial sales growth was driven by new and expansion large industrial customers, mainly in the primary metals, industrial gases, and petrochemicals industries. Industrial sales were strong, but not as robust as anticipated going into the quarter due to outages at customer's facilities and slower ramp-ups from new and expansion customers. We continue to be confident in our industrial growth expectations, as sector margins and commodity spreads remain strong, and we continue to grow our backlog of signed electric service agreements. Full year operating cash flow shown on Slide 5 was nearly $4.3 billion, significantly higher than in 2022. Lower fuel and purchase power payments were the largest driver. Higher non-capital storm spending in 2022, and lower pension contributions also contributed to the increase. The receipt of New Orleans storm securitization proceeds and the effects of the EWC wind down in 2022 provided partial offsets. Moving to Slide 6. As we expected, we closed 2023 with solid credit metrics. Our book FFO to debt was 14.3%, and we believe our year-end Moody's result will be slightly above this, though Moody's will ultimately perform their own calculations. We expect to continue to be within the rating agency's expectations every year in our outlook period. Maintaining healthy credit is an ongoing focus given the capital investment needed to support our customer growth. We made good progress against our equity needs as shown on Slide 7. We contracted roughly $360 million using ATM forwards in the fourth quarter. We fully closed out our equity needs through 2024 by settling $80 million of these new forwards along with $50 million of previously contracted forwards. The remaining $280 million of forward contracted in the quarter will be applied against the $1.4 billion of equity needs for 2025 and 2026. In other words, as we enter 2024, we have already locked in 20% of our 2025 and 2026 equity needs. On Slide 8, we are initiating our 2024 adjusted EPS guidance and affirming outlook through 2026. Our adjusted EPS guidance range for 2024 is $7.05 to $7.35, with a midpoint of $7.20. We continue to expect to achieve steady, predictable 6% to 8% annual adjusted EPS growth. Slide 9 highlights the key drivers for 2024. On a weather-adjusted basis, we expect retail sales volumes to be 4% higher than 2023. Industrial sales growth is the largest driver and is expected to be very robust at 8%, driven by new and expansion large industrial customers primarily in technology, or Alkali and Industrial Gases segments. We expect residential sales growth of roughly 1%, primarily driven by customer growth and higher weather-adjusted usage per customer. The effects of customer-centric investments are also reflected in our guidance, including regulatory actions, depreciation expense, and taxes other than income taxes. AFUDC is also expected to increase with large long-term capital projects like the Orange County Advanced Power Station. Interest expense both at the utility and parent is expected to increase due to higher interest rates as well as higher debt balances to support our capital plan. Utility O&M is expected to return to more normal levels at approximately $2.7 billion. To achieve this, we expect lower spending for nuclear generation and power delivery. We're maintaining our focus on continuous improvement to manage our spending levels. To the extent other variables move throughout the year, our O&M may also move. Our goal is to deliver steady, predictable results, and we can achieve that by managing spending as needed. The appendix of the webcast presentation contains additional information on the specific drivers, including detailed quarterly considerations and earnings sensitivities. 2023 was another successful year for Entergy. Our adjusted EPS was once again in the top half of our guidance range, as we continue to deliver steady, predictable adjusted EPS and dividend growth. We continue to prioritize the needs of our customers to create value for our key stakeholders. We're excited about our prospects for the future and are well positioned to execute and deliver successful customer, operational, and regulatory outcomes. And now the Entergy team is available to answer questions.

And your first question comes from the line of Paul Zimbardo from Bank of America. Your line is open.

Hi. Good morning. Can you hear me now?

Yes, good morning, Paul.

Great. My first question is regarding the large tax item that was favorably adjusted out from your GAAP results. Did you receive the cash from that, and does it benefit shareholders? I know you have the $100 million for customers, but could you provide some insight on how that impacts both the company and the ratepayers?

Sure, Paul. Thanks for the question. The tax item was a resolution of the 2016 to 2018 audit. And as you noted on EPS, we adjusted those effects out of earnings. From a cash perspective, there's no real cash effect of that as the NOLs and the tax deposits had taken care of that. So no significant cash effect there.

Okay. Great. And then also, I noticed even just since the EEI update, it increased the sales expectations for 2024 pretty much across the customer classes. Just what are you seeing on the ground that made you more confident a change upward so recently?

Yes. Certainly, the EEI, our plan is preliminary. We continue to adjust and modify that. As I noted, the industrial customers, we expect them to be strong in 2024. You probably saw the announcement in Mississippi around a significant customer there that provides economic opportunities in Mississippi, but we continue to refine and modify our forecast as we move from EEI into quarter end.

Yeah. I would just add that for this year, we were a little lower than expected. Our outlook for 2023 hasn't changed as much as the big bump might suggest. However, some of the factors Kimberly mentioned for 2023, such as customers experiencing unplanned outages and slower ramp rates, are contributing to that number.

Okay. Okay. Great. And then if I can quickly follow up on that. Is there any initial estimate or a way to think about how much infrastructure you could need to build for that large Mississippi customer?

Yeah. We haven't broken that out specifically. You can see that we continue to refine our capital plan and have added some capital in Mississippi in order to support that and ensure that we have clean energy for our customers in Mississippi, but we haven't given specific estimates related to that customer.

Okay. Great. Thanks a lot team. Our next question comes from the line of Angie Storozynski from Seaport.

So just following up to Paul's question. So is this CapEx update still coming, meaning as we head into your Analyst Day, we should actually expect that this accelerating loan growth translates into higher CapEx?

Yes. Angie, at EEI, we laid out a capital plan that's pretty close to what's here. It's a couple of hundred million more here. And we continue to refine our capital plan, prioritize around customers that we're aware of. We also showed at EEI additional capital that could be added. There was additional transmission, additional clean energy to support customers and a couple of other areas. And so we continue to work to prioritize those. But I would think about this as our capital plan that we're planning for. We're continuing to prioritize it as we move into the analyst day. I'd expect we'd show you five years of capital. And so that would be the view that you would get at that point.

Some of the capital we discussed is being incorporated into this plan, and we are identifying ways to address all of our capital requirements. I believe this will be an important topic at the Analyst Day.

Okay. Changing topics on SERI and the resolution of SERI issues in both New Orleans and Louisiana, is there any timeline on those? And should we actually link any resolution of SERI-related issues to the Brazilian CapEx maybe as a way to pay for some of the spending?

Hi Angie, it's Rod. Good morning. You're addressing the core of the discussions in both Louisiana and New Orleans regarding SERI. There isn't a specific timeline for the parties to reach a resolution on SERI. However, the fact that FERC has already ruled on Louisiana's request for a rehearing means that our settlement with Arkansas and Mississippi has reduced risks associated with SERI. Ongoing conversations in New Orleans about the settlement are taking place. It's important to consider the related regulatory issues in both Louisiana and New Orleans that could be impacted by a SERI settlement. You're hitting on a critical point in the discussions: whether New Orleans or the state of Louisiana can offer advantages to its customers through a SERI settlement, similar to what Mississippi and Arkansas achieved. New Orleans is definitely looking at how the SERI settlement could impact customers' ability to invest in resiliency. None of these aspects are finalized, and I cannot disclose details about the negotiations. However, it's fair to say that our discussions are focused on how a SERI settlement could benefit customers in terms of resiliency.

Perfect. Good luck. Thank you.

Thanks, Angie.

Your next question comes from the line of Travis Miller from Morningstar. Your line is open.

Thank you. Good morning, everyone.

Good morning.

Just a couple of clarifying questions here. So if I could follow up on the load growth number. That 8% industrial for this year, if you could estimate, how would you break that down in terms of the recapture for, a lack of better word, of what you were expecting in 2023? And what's a good kind of go-forward two-year, three-year type of run rate on a core basis. Does that make sense?

Yes, Travis. What we've talked about going forward is a 6% to 7% CAGR through the 2026 outlook period. What you're seeing as you noted in 2024 is coming off of a base year of 2023. That low will be a little lumpy as it comes in over that period, but we expect a 6% to 7% growth rate on those industrials over that outlook period.

Okay.

As for the recapture aspect, we don't have an exact figure for that. It's likely around 1% or 2%, which is probably within that range.

Yes. Okay. Just doing the math there. Okay. Other one on the resilience. The new CapEx that you added in, is that part of the Louisiana and New Orleans plan that you've proposed? Or is that in addition to?

Yes. As Drew noted, we have just under $1 billion allocated for resilience spending in our capital plan during this period. Once decisions are finalized in Louisiana and New Orleans regarding the recovery mechanism and its pace, there may be additional capital. However, the amount in that capital plan is close to the $1 billion figure.

That $1 billion is included in the submitted plans.

That’s correct.

It's part of the plan. Okay. Okay. Got it. So that number would go down in terms of potential CapEx relative to what you've added in.

No, I don't think so. The filing just to be clear, the filing is more than what we've included. What we've included is what we can spend in our given mechanisms that we have. And as you probably know, we requested accelerated mechanisms in both Louisiana and New Orleans so that we can accelerate that spending. And so, depending on those mechanisms, that could provide additional opportunity for capital there.

Okay. Okay. Very good. And then one other quick clarifying point. The $2 billion of solar, how much of that is through the RFPs that are out right now? And how much is that through either traditional ratemaking or future RFPs that you anticipate?

I don't have a precise breakdown of that. We do have quite a bit, which isn't necessarily going through RFPs. It's certainly in Arkansas and Mississippi. And so, I think there's a good chunk of that, but I don't have a precise number for you.

Okay. No problem. Thanks a lot. That’s all I had.

Thank you.

And there are no further questions at this time. Mr. Abler, I will now turn the call back over to you.

Thank you Rob, and thanks everyone for participating this morning. Our annual report on Form 10-K is due to the SEC on February 29 and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-K filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also, as a reminder, we maintain a web page as part of Entergy's Investor Relations website called Regulatory and Other Information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much.