Hello. Good morning. My name is Jeremy, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's Second Quarter 2023 Earnings Conference Call. I would now like to 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 those 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 second quarter adjusted earnings per share of $1.84. Our progress through the first half of the year keeps us firmly on track to achieve 2023 results in line with our guidance, and we remain well positioned to achieve our long-term 6% to 8% growth outlook. Creating sustainable value for our customers, employees, communities, and owners is at the center of everything we do. I'll start today with our work to meet our customers' demands. We're investing in resilience and reliability and working to expand our clean energy footprint. This work helps our current customers meet their goals while also attracting new customers to Entergy's service area. To that end, our power delivery team continues to upgrade legacy assets to new, more robust wind and flooding standards through new construction projects, storm restoration, and asset renewal. For example, in the second quarter, our new deployments included roughly 600 transmission structures, approximately 8,000 distribution poles, more than 200 miles of new distribution conductor, and 7 new substations. In addition, these improvements will support more than 120 megawatts of growth. Safe and effective nuclear operations are also important for our stakeholders. Our nuclear units continue to provide clean, reliable baseload power to our customers. In 2 of our plants, River Bend and ANO Unit 2 recently completed successful refueling outages, which included major projects to support long-term operational excellence. Overall, our nuclear plants are running very well. Outside of refueling outages, our fleet achieved a 99% capability factor for the first half of 2023. While our customers demand more reliability and clean energy from us, our unique and sizable long-term industrial sales growth opportunity continues to improve. Growing businesses support our communities, provide employment opportunities, and help with affordability. The inherent advantages of our geographic footprint remain solidly intact. We continue to see evidence of these advantages through recent project announcements in our service areas. For example, ExxonMobil announced a transformative CCUS project that will capture, transport, and store up to 800,000 metric tons of CO2 per year from the Nucor iron plant in Convent, Louisiana. The project is expected to start up in 2026. Paired with the recently announced acquisition of Denbury, ExxonMobil's actions clearly highlight the opportunities around CCUS in our region. Also, Shell Catalysts & Technologies announced its final investment decision on the $120 million expansion project in Port Allen, Louisiana. The facility is already the largest refining catalyst plant in the world, and the expansion will create even more manufacturing capacity. These are just a couple of the projects that have the potential to increase and extend our long-term growth rate. We are currently updating our annual industrial sales forecast, and we are accounting for recent trends. As many of you have noted, there has been some weakness in national industrial output indicators like the ISM Manufacturing Index. Despite this, we are seeing strength in our Gulf region. In the quarter, our total industrial sales declined, which had been expected due to higher cogeneration sales last year. Adjusting for Cogent, our industrial sales were up about 1%. For some highlights, sales to small industrial customers, which are typically more exposed to broader U.S. economic factors, grew nearly 90 gigawatt hours over last year. Sales to large, new, and expanding industrial customers grew nearly 100 gigawatt hours over last year. As we look forward, a few large industrial projects have adjusted their in-service dates from 2024 to 2025, which could lower our 2024 industrial growth expectation, but not to a degree that affects our outlook. Overall, our pipeline for projects continues to grow, supported by favorable commodity spreads and the IRA legislation. Early indications show demand in 2025 and beyond shaping up even stronger than our last forecast. As we typically do, we'll provide an update to our industrial growth expectations at EEI. To support this growth and to help our customers meet their sustainability needs, we are expanding our clean energy portfolio. Through 2026, we plan to add nearly 6,000 megawatts of renewable capacity. 2,400 of those megawatts are currently in construction, permitting, regulatory review, or negotiations. Approximately 30% of the 2,400 megawatts will be owned by Entergy. Last quarter, I mentioned that we are continuing to work on our self-build capabilities. Our recent self-build submissions have been extremely competitive in the RFP process. However, we have been limited by a smaller development pipeline. I'm pleased to report that we are making progress on that front, and going forward, I would expect Entergy to achieve at least 50% ownership through our competitive RFPs. Moving to regulatory items, we continue to make meaningful progress on important regulatory matters which support the credit required to meet customers' growing needs and drive improved customer outcomes. Beginning with Mississippi, the Public Service Commission approved Entergy Mississippi's formula rate plan settlement, providing full recovery of substantially all costs. Meanwhile, Entergy Louisiana, Entergy New Orleans, and Entergy Arkansas each filed their annual formula rate plans. New rates for Louisiana and New Orleans are expected to be effective in September, and Arkansas is expected to be effective at the first of next year. As we've discussed, Entergy Louisiana plans to file a base rate case this month, including a request for a new 3-year formula rate plan. We like the clarity and certainty that an FRP provides, which helps us make investments to benefit our customers. However, in recent years, Entergy Louisiana's earned returns have materially lagged its allowed returns. We are making significant investments to support customer growth and demand for greater resilience in cleaner energy in Louisiana. This investment is critical for the state as well as our local communities. It is important to have an opportunity for fair and timely recovery, which allows us to maintain Entergy Louisiana's credit and cost-effectively source capital to meet customers' expectations. Turning to Texas, Entergy Texas has an unopposed settlement before the commission, and we expect a decision at tomorrow's open meeting. Interim rates were implemented in June, and once the commission makes its decision, any change in revenue and depreciation expense will be retroactive to December of last year. In addition, the Texas legislative session wrapped up at the end of May, and the governor signed a new bill into law that is important to Texas customers and communities as well as to Entergy. I'll highlight a few. The Texas Resiliency Act allows utilities to submit a storm resiliency plan to improve customer outcomes. We expect the commission to complete their initial rulemaking of 180 days, which sets the deadline to establish a regulatory framework in mid-December. Entergy Texas will then file its resilience plan shortly after the rulemaking is complete, and the commission will have 180 days to review and act on the filing. Based on this, Entergy Texas currently expects to have clarity on its resilience plan in the middle of next year. The distribution cost recovery factor legislation allows for 2 annual filings, which provide more timely recovery of significant distribution investments that we plan to make in Texas to support customer growth and reliability. And the expedited transmission CCM will reduce the time for commission approval by half to approximately 6 months. This will enable Entergy Texas to complete projects to support customer growth and resilience sooner and with lower risk. Turning to federal matters, in May, we received an initial decision on the unit power sales agreement complaint against SIRI. The ALJ ruled against the complainants on several issues, but recommended approximately $250 million refunds, which is mostly interest primarily associated with accumulated deferred tax issues going as far back as 1996. We disagree with the ALJ's conclusions on ADIT, and we continue to believe that SIRI's positions on the law and the facts are correct and that its actions were prudent and taken for the benefit of customers. SIRI filed its briefs on exception in July, and the next step is a ruling from FERC. There is not a statutory deadline for FERC to issue an order. More broadly on SIRI, I would note that we are still awaiting FERC's response to our compliance filing related to the December 23rd quarter on the sale leaseback and uncertain tax position case. While there is not a procedural deadline, we expect to see this clarification soon, and we expect FERC to affirm that no additional refunds are due. FERC's response will provide clarity and will be an important step towards resolving the broader set of SIRI litigation. Our communities are one of our key stakeholders, and actively supporting them is an important part of our strategy. The Civic 50, an initiative of Points of Light, named Entergy a top 50 most community-minded company and this year's leader for the utility sector. Another example of our community commitment is our Beat the Heat campaign. In May, we launched a series of measures to help low-income and senior customers save on their utility bills during hot summer months. $4 million in contributions will support thousands of vulnerable customers through bill payment assistance, weatherization events, and distribution and energy efficiency kits. I'm also proud that Forbes Magazine has named Entergy as one of America's best employers for diversity. They recognized our commitment to fostering a diverse and inclusive workplace where employees feel valued and respected. Such confirmation is critical as we compete for talent from all corners of our community to best serve the diverse interests of our 3 million customers. Together, our employees are doing a great job of living our vision statement of We Power Life by meeting today's challenges and ensuring that we will create value for our stakeholders well into the future. As you can see, we continue to make progress on our strategy to deliver for all our key stakeholders. We are laser-focused on meeting our customers' demands through operational excellence, resilience, and clean energy investments. Meanwhile, we continue to maintain our financial discipline and work closely with our stakeholders to ensure we have the financial strength to drive economic development in our communities. Successfully executing across these dimensions will keep us on track to deliver steady, predictable earnings and dividend growth and move us toward our goal to be the premier utility. I'll now turn the call over to Kimberly, who will review our financial results for the quarter.

Thank you, Drew. Good morning, everyone. As Drew mentioned, our results this quarter keep us firmly on track, and we are affirming our guidance and our longer-term outlook and remain focused on delivering steady, predictable results. Slide 3 shows a high-level view of the quarter. Our adjusted earnings per share was $1.84, $0.06 higher than last year. We continue to see benefits from our customer-centric investments, including regulatory actions, along with higher depreciation, taxes other than income taxes, and interest expense. We also saw a significant reduction in other O&M, a portion of which was for items that do not have a bottom line impact. Slide 4 details the variances by line item. Regulatory actions support our investment program to benefit customers. There were a few updates in the quarter. Entergy Mississippi put its latest FRP rates into effect in April. In June, Entergy Texas implemented interim rates from its rate case settlement. The settlement is credit positive and largely neutral to earnings as the rate case included new higher depreciation rates. Weather was $0.17 lower than last year. While weather was warmer than normal this year, you may recall that temperatures last year were significantly above average. Excluding the effects of weather, retail sales growth for the quarter was down 0.9%. The residential segment had a slightly positive contribution from customer growth, partially offset by lower usage per customer. Commercial and industrial sales were lower. For industrial, lower sales to Cogent customers was the primary driver as Cogent sales returned to more normal levels this year. This decline was partially offset by growth from small industrials and new and expansion large industrial customers. O&M was also a driver. We had lower spending for nuclear and non-nuclear generation, primarily due to reduced scope of work. Other drivers included higher rebates associated with our prescription drug program, lower MISO cost, and lower pension expense, which were each about $0.05. MISO costs were lower as a result of MISO changing its ancillary services market structure. Because Entergy is a load-serving entity that owns generation, this change is largely neutral to earnings. Operating cash flow, summarized on Slide 5, was $588 million higher than last year. The increase was primarily due to lower payments for fuel and purchase power as natural gas prices were much higher last year. Moving to credit and liquidity on Slide 6. Our net liquidity remained strong at $4.7 billion, which includes $411 million of storm escrows. We expect to utilize a portion of the storm escrows of Louisiana and Mississippi for the storms earlier this year. We remain on track for our credit outlook, including achieving Moody's 14% FFO to debt metric by year-end. During the quarter, both S&P and Moody's downgraded SIRI. The ratings changes stem from SIRI's pending litigation. Left unchecked, this could ultimately result in higher costs for customers. These actions also highlight the cost of SIRI uncertainty and show that resolution would benefit multiple stakeholders. It is our goal to resolve all SIRI litigation in an expeditious manner. Slide 7 summarizes our progress against our equity needs through 2024. We utilized the ATM program this quarter when market conditions were supportive, selling forward approximately 468,000 shares. Around $80 million remains in our equity plan through 2024. As shown on Slide 8, we are affirming our guidance range and our longer-term adjusted EPS outlook. We've updated a few of our key assumptions that I'd like to highlight. We saw warmer-than-normal temperatures in the quarter, which contributed $0.07 to EPS. Our plan included conservative assumptions in revenue, and we've now updated our estimates to account for several small favorable items across our operating companies. We've updated our weather-adjusted sales growth estimates and now expect volume impacts on earnings per share to be neutral for the year. This is largely due to lower-than-expected residential sales in the back half of the year. We continue to see overall health in the residential space with increasing customer counts and declining usage per customer, both of which help affordability. We expect other O&M to be $0.85 lower than 2022 for the full year. This includes approximately $0.15 for the reduction in MISO cost that is offset by lower revenues. Excluding that, the full year O&M change would be closer to $0.70, in line with our previous estimates. Our spending plans may adjust based on weather or other factors between now and the end of the year as we continue to use our flex spending to deliver steady, predictable results. You may recall that the remaining EWC ownership interest in 2 non-nuclear generation facilities is included in parent and other. Power prices have been lower than planned due to low natural gas prices, which is driving the expected margin from those operations lower. Taking all of this into consideration, we are tracking to the midpoint of our guidance range. The bottom line is that we have a solid plan with good visibility, and we will continue to execute on the deliverables to achieve steady, predictable growth. And now the Entergy team is available to answer questions.

Just want to stick with Louisiana here a bit. And I think you touched on it a little bit, but want to see if you might be able to expand more. And how do you think the Louisiana resiliency process could unfold once the staff engineered report is filed this month? Any sense from the commission on how the commission would like to handle it and if this could be kind of rolled together, the resiliency, the RFP, and the rate case all get tied together?

It's Rod. The best response to your question is the proof of concept provided by the decisions made by the LPSC so far. After the election at the end of 2022, we received support for our securitization, the Lake Charles Transmission system, and our gas business rate decisions, all from the new commission. Therefore, I don't view this as a relationship issue. In fact, we are working collaboratively with the new commission. The addition of the newest commissioner, Davante Lewis, has allowed us to engage in a new way to educate him about the historical relationships between our company and its stakeholders, including not just the links between the commissioner and the company but also the customer impacts. I understand your question may be influenced by some comments from individual commissioners, but our response has remained consistent. As long as we focus on achieving positive customer outcomes—whether in terms of resiliency, renewables and clean energy, or affordability—we expect to remain aligned with the LPSC. We will proceed with our regulatory calendars, filing our rate case and FRP, alongside a strong renewables portfolio while continuing to support the state's growth. We anticipate the commission will support our positions, though there will be much discussion along the way, and we will keep working constructively with them.

And Constantine, regarding your question, we believe there is some ongoing support for formula rate plans within LPSC.

Right. And I guess just anything that you feel like you need incremental to narrow some of those are kind of earned ROE gaps?

From that perspective, there is not much of a change. Entergy is focused on ensuring that the regulatory mechanisms we are using, including the rate case filing and the planned FRP renewal, align with our capital plan. We are not disclosing any specific adjustments to the FRP at this time since we have not yet filed, but we anticipate the commission will be open to our arguments for why an FRP serves the long-term interests of customers. We are filing the rate case because it was part of the settlement from the last FRP renewal. We plan to continue advocating to the commission on why FRPs and certain modifications would benefit our stakeholders in the long run.

Sure. Thanks for the question. As it relates to SIRI in our financial plan, as you know, we recorded the reserve last year equal to the Mississippi settlement applied broadly across, and that is reflected in our financial plan. And then we assumed that we are able to continue to work with the parties to resolve the litigation and that Grand Gulf is an important asset to our fleet and continues to operate and contribute to our results.

I would like to mention that regarding capping the exposure, the ALJ order from May concerning the UPSA, although it included $250 million in requested refunds, did reduce some additional liability. Consequently, you can see that the liability amount continues to be reassessed as we progress. However, we are still in the process of addressing this matter. The current amount we believe we have reflects accurately in our records.

Just want to stick with Louisiana here a bit. And I think you touched on it a little bit, but want to see if you might be able to expand more. And how do you think the Louisiana resiliency process could unfold once the staff engineered report is filed this month? Any sense from the commission on how the commission would like to handle it and if this could be kind of rolled together, the resiliency, the RFP, the rate case all get tied together?

I completely understand your question. My hesitation comes from not wanting to jump ahead of the regulatory process. However, I believe your instincts are correct. Once we receive the initial feedback from the staff on the filing, we can evaluate the timing for potential settlement discussions. Our goal is to eliminate as much uncertainty as possible. Whenever we can avoid the costs associated with litigation by finding common ground, we aim to do so. Initially, we intend to make the compliance filings as expected by the commission. As soon as we do that, we will seek a path to settlement. I agree that your thoughts on how we approach the period leading up to the end of the year, including considering the resiliency filing along with discussions about the rate case and FRP, are accurate. That is ultimately our goal. We need to make the filing and receive feedback, particularly from the LPSC staff on the resiliency filing, and then we can proceed from there. You made a great point.

Yes, Jeremy, this is Drew. We have a team of over 100 people working on this issue in a large conference room in Texas. We believe we have a solid plan moving forward. Some performance issues with our systems after upgrades intended to improve them this past spring did not go as planned. We have addressed those issues and now have a good strategy in place, and we expect to be back on track for any future storms.

Sure, Jeremy. Really two key factors there. One is closing the Louisiana securitization, which we did in the first quarter. And as we go through the year, you'll see the debt associated with previously carrying that roll off. And the second is around the recovery of the higher deferred fuel balances that occurred last year with the higher gas prices and higher volumes we saw. You can see that the deferred fuel balances are down back to what I would consider more normal levels. And so, as those debt levels roll off, those two items will significantly help us and then just managing through our normal operations as we go through the end of the year puts us on target to be at or above that 14%.

I think, Drew, you alluded to some initiatives that you're pursuing on the renewable development side of things to make the organization more competitive in some of these RFPs and to give yourself a better fighting chance to do some more self-build. I was just wondering if you could elaborate on what types of initiatives that you've pursued there to lower costs and build the pipeline, it sounded like?

Yes. Thanks, David. That's a good question. We have been working on building the capability in the development space as I mentioned. And we have been actually successful for the projects that we have been able to put forward in competing in our RFPs. So I think we're making good progress in terms of what does it take to be competitive on the solar RFP front. The challenge we've had is we just haven't had a large pipeline of projects to support. So many of the projects that are even in the 30% that I mentioned earlier are build on transfer projects where a developer is constructing it and then moving it over to us just before the completion of COD. What I'm referring to when I say we're making progress is we are finding some success in building up our portfolio. So we have somewhere in the neighborhood of about 4 gigawatts of development pipeline that we have put forward at this point. Now, I wouldn't say that's all ready to go and RFP. We're still building out some of those projects. But it's a much larger portfolio, and we are expecting to add maybe another half gigawatt to that by the end of the year. And then beyond that point, we'd expect it to continue to grow, and that should be very strong given where we have been competitively; that should be very strong in the RFPs going forward. So that's what we've been seeing, and that's what we're focused on.

And the only thing that I'll add to Drew's comments is that part of the declogging, if you will, that pipeline, we've been securing additional sites for renewables development, including our generation sites and the transmission interconnects that are all part of the development process, and that's adding to our improved competitiveness to Drew's point.

Drew, I think you mentioned that although some projects might be shifting around the timing a little bit. You're not seeing stronger industrial growth in that 2025 period, '25 plus. Just could you give a little more color on that and kind of what that means for the plan? And if this is something you could roll into the plan within the EEI refresh?

Yes, it is expected to be part of the EEI refresh, and we can certainly provide more details. I would describe the shift from 2024 to 2025 as a typical adjustment seen with large industrial projects that are worth billions and tend to face delays. While I wouldn't say this was anticipated, I also wouldn't say we’re surprised; this isn’t new information. Looking ahead beyond 2024, we continue to observe a strong industrial sales pipeline with considerable interest from various parties, particularly in clean energy. I mentioned a specific CCUS project from ExxonMobil earlier, but there are other similar initiatives as well, including those involving hydrogen. We believe we are well positioned to capitalize on these opportunities and will share more details during the EEI.

Sure, Paul. Are you referencing out of the Texas legislation, specifically? Was that your question?

Correct. Yes, the legislation.

Yes, there were several favorable outcomes from the legislation. The resilience filing provides us a way to submit our resilience plan and seek recovery in a manner that enhances our system's resilience standards and supports our customers. The DCRF transitioned from an annual to a biannual filing, presenting us an opportunity to improve the timeline associated with investments. Overall, we haven't altered our outlook, but it certainly offers a better approach to recovering investments. The third point is regarding compensation, specifically for executive compensation related to recovery in a rate case. While it doesn't have a direct impact on us, it is beneficial from a precedential standpoint.

Okay. Is there a way to kind of quantify like ROE improvement or something from all of that?

Yes, I think it's too early to do that at this point. But certainly, there are positive tailwinds from our perspective that help us when we think about our overall outlook, but nothing changes in that regard.

Our first question comes from the line of Shar Pourreza.

Thanks, Jeremy, and thanks, everyone, for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on August 9 and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q 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.