Good day, ladies and gentlemen, and welcome to the Entergy Corporation First Quarter 2018 Earnings Release and Teleconference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to turn the conference over to Entergy's Vice President of Investor Relations, David Borde. Please go ahead.

Thank you. Good morning and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Leo Denault; and then Drew Marsh, our CFO, will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than one question and one follow-up. In today's call, management will make certain forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Additional information concerning these risks and uncertainties is included in our earnings release, our slide presentation and the Company's 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 Leo.

Thank you, David, and good morning, everyone. Today, we are reporting solid first quarter results with Utility Parent & Other adjusted earnings of $0.71 per share and consolidated operational earnings of $1.16 per share. Drew will cover the financials in more detail, but the bottom line is that this quarter's results keep us on track to achieve our full year UP&O adjusted and consolidated operational guidance and our long term outlooks. This first quarter was a productive start to the year and we executed operationally with success on key projects and regulatory initiatives. The quarter's accomplishments continue our strategic execution on key deliverables dating back to the first quarter of 2015 when we initiated the concept of our quarterly to do less. Its 13 consecutive quarters where we've met essentially every goal we set out as critical to our broader overall strategy. Some of our goals were ambitious, but we're confident that we have the organization, focus and commitment to succeed. Our progress this quarter is an extension of those efforts. Specifically, we continue to move forward with our new build generation projects. The New Orleans power station was officially approved and we've issued full notice proceed with the engineering, procurement and construction contractor. This 128 megawatt reciprocating internal combustion engine facility will provide significant reliability and cost benefits to customers and it will be the only large scale generation located within in the city of New Orleans. The flexible design of this facility will also make it well suited to support intermittent renewable resources like solar. The Montgomery County power station in Texas is also under way. The EPC contractor has been released to start engineering and order major equipment and this summer we were issued full notice to proceed on that project. As for the St Charles and…

Thank you, Leo. Good morning everyone. As Leo said, the first quarter was a solid start to the year and the bottom line is that we're on track to meet our full year Utility Parent & Other adjusted and consolidated operational guidance in our long term outlook. Let's get straight to the numbers. Overall, operational earnings for Entergy consolidated and increased $0.17 quarter-over-quarter. Drivers included the lower tax rate favorable weather as well the unfavorable effects from the implementation ASU 2016-01 on our nuclear decommissioning trust fund the DWC. We drill down into the different segments starting with our core Utility Parent & Other business on Slide 5. Adjusted earnings were $0.12 lower than the prior year due to a few key drivers. Despite strong weather adjusted sales growth and positive rate actions in both Arkansas and Texas, unbilled sale volumes were lower. We also record regulatory provisions of both Entergy Louisiana and Entergy New Orleans to reflect regulatory agreements regarding implementation of the effective tax reform, combined, these drivers resulting in a decrease. Non-fuel O&M was higher largely from nuclear expenses, including nuclear payroll, which has increased as we continue to ramp up staffing pursuant to our plan. We don't expect nuclear to be a significant driver for the full year. In addition, because of ongoing capital about in our core business, we naturally see increases in Ad Valorem and franchise taxes, which are partly offset by AFUDC. Finally, the quarter reflected the lower federal tax rate. Even though our UPO adjusted results were lower quarter-over-quarter, our expectations for the full year did not change. We're now on track to meet our 2018 guidance through a combination of factors that will benefit us in the second half of the year, including rate actions and O&M timing. Rate actions included…

Thank you. [Operator Instructions] Our first question comes from Shar Pourezza with Guggenheim. Your line is now open.

Good morning, guys. So let me just ask - start off by asking on the performance of your decommissioning trust funds. Obviously the performance for the quarter was somewhat materially less than your expectations. So can you kind of one, elaborate what drove this and more importantly does your fundamental view point that you exit EWC in a cash flow positive position at all puts the question? Because what you saw - and do you sort of see any impact on the sales process with the performance?

Okay, Shar it's Drew. And your first question about the drivers, I think it's just the - it's the accounting change that reflected the equity market over the course of the quarter. And so of course last year we did not have the mark-to-market the equity field. We only saw the realized gains and losses associated with the trust and this year - and the rest of it was in other comprehensive income, this year all of it flowing through the income segment. And as part of that as we went to this accounting change, we actually moved about $600 million positive into retained earnings that didn't go to the income statement, it was just re-classed on the balance sheet from other comprehensive income. So those are the things that were going on there and of course we also had some of the portfolio management activity that we talked about last quarter, that we are de-risking our portfolio. So our overall loss was a very slight loss compared to may be an equity market loss a couple of percent over the quarter. And with regards to our EWC plans, it doesn't change anything overall for EWC plans or for our cash expectations towards the end of the - through 2022. So we still expect '17 to '22 to be neutral positive. In fact as we were thinking about this earlier this year, we were pressure testing these several things that could happen to make sure that we could sustain that statements through any volatility we might see in the market.

Okay, got it that's helpful. And then just appreciate the comments that you had on the equity, but your prior thoughts or language seem to point that you were more shifting towards something more market based verses initiation of an internal program. So is that sort of kind what you are tilting or should we assume sort of a combination of both given sort of the size of the potential offering? So sort of like how is your thought process generally revolving?

Yeah, so we still have all our options on the table because we are thinking about optimizing against the timing and the need with the market and the cost that we might incur associated with that. So all of those things are still on the table and will likely be later this year when we get into the market.

Okay, thanks guys.

Thank you, Shar.

Thank you. Our next question comes from Julien Dumoulin-Smith with Bank of America Merrill Lynch. Your line is now open.

Hey good morning.

Good morning Julien.

Hey, so I wanted to chat on transmission briefly, clearly there was an event in the quarter with respect of sort of North and South integration that transpired. Also, I suppose in the settlement itself in the Louisiana there is some discussion about capital spending. Can you discuss sort of the state of affairs and process with respect to MISO and your own capital budgeting plans around that and I acknowledge that it may preempt a little bit of the Analyst Day, but I wanted to delve into it if we could.

Julien this is Rod. One, we are staying in MISO and much of the capital planning for the utility business is consistent with the MTEP processes through '17 and certainly '18 and beyond. The significance of the settlement in Louisiana plays along with that. Part of that 995 reset in our Louisiana FRP includes an expectation of about $0.5 billion a year during the period in transmission alone. And so the capital plan is consistent with our expectations around our earnings opportunity and the growth in CapEx will be fueled in part by what comes out of the MTEP process with MISO.

Just to be clear about it, is there anything that's shifted in the MTEP process with respect to some of the limitations on the North South capacity I suppose this winter there some events.

No.

Okay, excellent and is the 0.5 billion consistent with the A25 as well?

When you say the 845?

The '18 to '20 average preliminary transmission capital plan.

Yes, thank you.

Excellent, thank you.

Thanks, Julien.

Thank you. Our next question comes from Jonathan Arnold with Deutsche Bank. Your line is now open.

Hi, good morning guys.

Good morning, Jonathan.

Just, I thought I heard you say - and I may have misheard this, apologies if so. As of March 31, the decommissioning funds were approximately $4 billion?

That's correct.

Could you help us - I'm guessing that might not be on the same basis as the Slide 29, where the escalated funding adds up to 5.8, at 1231. And the question is when you say escalated can you just remind us what that means?

That's using the 2% growth rate. But the - I think where you want to look, there's a different Slide in there that I believe has on Slide 25 in the appendix, has the NDT balances as of March 31, that's on Slide 25.

Okay, so that's the one.

Correct.

But that's not on the same basis right as the?

No, no the - the escalated, that's using the NRC funding formulas on the other page.

That's fine; not this really I just wanted to get that straight. Thank you.

No problem.

Thank you. Our next question comes from Praful Mehta with Citi Group. Your line is now open.

Hi guys thanks. So firstly just on earnings, in terms of where you are tracking relative to your guidance? I know there were some talk on you're not at the lower end, where exactly do you see yourself now given Q1 is kind of done it in terms of 2018 EPS guidance?

Yeah, that's a good question Praful. I think we are expecting to be about in the middle at this point. I mean it's early in the year, we have a lot of levels to manage this current volatility in the decommissioning trust and so we are expecting on operational basis to be about the middle when it falls that in time, [ph]. For Utility Parent & Other, we are right on track as of first quarter, so there wouldn't be any change there.

Okay great, that's helpful and then secondly on this unprotected DTL refunds, they look meaningful and clearly it looks like you are doing them sooner than you had originally planned. So just to understand the impacts of that from the cash flow side and the credit side, I'm assuming that's a negative, but you're seeing that you are going to recover from that pretty quickly, just touch on that a little bit. And then secondly, on the rate base side that will be probably be a positive helping your growth. If you can just help us understand the kind of implications of the decommissioning unprotected - I'm sorry of the deferred income tax refund impacts?

Sure, so in regards to the cash and the credit metrics and the pay, so we are anticipating when we talked last quarter a little slower pace on how fast the unprotected excess ADIT would be flowing back to customers and now it's a little faster. So the expectation is that - the way that that's going to work from an income statement perspective is there will be more effect, but we will be getting less revenue in the door which would be a cash item and we will be also be experiencing lower income tax expense, which would be a non cash item on the income statement, so that will offset the flow into the cash flow metrics and so the measures that we are talking about are the metrics like FFO to debt, last quarter we talked about 14% on a longer term basis. Now we are expecting it to be a little bit lower than that upfront, but will recover much quicker and so by 2020, we expect to be above that level because of the more ramp in return of the unprotected excess ADIT. And from a rate base perspective, we would expect that as - and we haven't finished this is in our regulatory process, but as we return back unprotected excess ADIT the customers on net rate base are to increase. And so on the last call we talked about the opportunity for about $1 billion of increased net rate base by 2020. We still expect that to be the case associated with the return of the excess ADIT, both protected and unprotected by the way for that.

Super helpful, thanks Drew.

Thank you, Praful.

Thank you. Our next question comes from Steve Fleishman with Wolfe Research. Your line is now open.

Yeah, thanks. I guess two clarifications, just on the comment on the middle order range for this year that you are tracking to, is that good for both the overall company and Utility Parent & Other?

Yes, I'll go ahead with that one for Steve, it is true. So yeah we have several levels and that we think we can pull to manage the operational spot, but as far as Utility Parent & Other, we're right on track to begin with.

Okay, and then just in terms of thinking about the comments on ADIT get back and the like. So, to a degree do you have this kind of lower upfront metrics, does that kind of incent you to get the equity issuance done sooner and then just to kind of manage the consistency. The metrics or is the fact that you get there by 1920, its fine for the agencies. They don't care if it's lower for one year?

Yeah, so this is Drew. So, in terms of the overall timing of the excess ADIT return it is moving forward and we were and are trying to match up our access of the equity capital markets to that in some way. So it's going to move it forward a little bit. But the rating agencies are certainly aware that we are going to access the equity capital markets there. Looking at that plus a number of other factors like our progress on changing our business risk profile at EWC and the positive regulatory environment within the Utility as that's improving. So we are taking a number of things into consideration, I think only one of which is making sure that we match up the timing of the equity with the return of those cash flows.

Okay and then just on the - kind of on a long term discussion the - I mean it sounds like the pioneer role is to kind of just continue with more of what you are already doing and then obviously having better regulatory structures in place to cover it. Is that kind of at a high level what the plan is? And obviously you are trying to get ahead on changes in the generation mix and customer experience and technology things like that.

Yes, Steve, the bottom line is that as we have been for really over 10 years now, we are in a major technological improvement. And the entire system started in generation worked its way into transmission and now it's getting more into distribution and I would say in some respects you start to see a molding of some of the distribution opportunities with the kind of generation opportunities we have. So we continue to have an ageing generation fleet that we are updating in terms of what we got going on right now at St. Charles, Lake Charles, Montgomery County, Washington Parish Energy Center and the New Orleans power station. The 1000 megawatts of renewables that I talked about are things that will come into play to both - on the one hand replace other ageing generation that we would deactivate as new generation comes in line. But they come in line as renewables because they are both a competitive with generation that they would replace, certainly the market and potentially as we go forward with other types of generation. But also some of them have distribution reliability opportunities as well, just have to be more localized with generations, so you are not necessarily avoiding a generation that best be avoiding a large transmission investment. So those kinds of technological improvements plus distribution automation and other things that we could pursue that will allow us to better operate the grade lower cost or customers improve their liability and get closer to them in solutions. All of that we see as just a continuation of the process we've been undergoing. From a regulatory front, you're right, what we've done over the course for the last five years in particular is we've taken the opportunity to outline the types of investments that we need to make for our regulators and allow us to shrink up that regulatory marvel to match the customer benefits that will provide into the investments. So for example, what we have done with transmission in Louisiana in the new FRP, lines up really well with what was a big source of regulatory lag and a big source of dollars for our customers in the transmission space. So we already had AMI and generation covered really well, now we've got transmission in the same bucket to get a little bit more closely aligned with the regulatory mix with the type of investments we're making. So you're right the future is just improved technological advancements on the system across all functions and trying to make sure that we and our regulators work to benefit our customers with the most efficient regulatory model that we can get.

Okay, great, thank you.

Thank you. [Operator Instructions] Our next question comes from Stephen Byrd with Morgan Stanley. Your line is now open.

Hi, good morning.

Good morning Stephen.

Wanted to touch base on just nuclear operations that are high level and just get your late response in terms of operational improvements, how you think about the trajectory of just really - co-operations and sort of the trajectory from here. You had could, the progress overtime in terms of the operation improvements [indiscernible].

Stephen, I'll start, I'll let Chris jump in, but the bottom-line is we are continuing to spend a significant of our resources and effort on our nuclear fleet and we are seeing progress in the areas we expected to see progress. As I think Chris outlined, when we first began, it's going to take a few years and a couple of outages in the new facility to get the equipment in the place that we need to get. But we hired a 1000 people last year in the nuclear fleet, so that we expected that Drew mentioned that we showed up in the first quarter. But at high level I would say that we are making progress in the way we expected.

Can I just follow-up to that Leo? This is Chris. We are where we expected to be in terms of the execution of the plan. As we did outline at the last investor day, we looking at the two to three year period before you start to see significant improvement, we believe we are on track with that. We've been using the opportunities with the fueling outages to improve the safety and the reliability modules of the plan. And from the regulatory relations perspective as you mentioned in your remarks Leo, we do expect to see and will return back to normal NOC over site at the end of the second quarter. So, we've been making good progress.

Okay, that's very helpful. And just shifting over to the other renewables there's been opportunity you mentioned in your prepared remarks. Without getting into the specifics around some of those projects, is it something where we should expect a fairly material filing where you are proposing on a number of projects with total quite didn't make a lot, you mentioned 1000MW possible potential opportunities? In other words is this likely to result in a fairly clunky filing a request or is it likely to be relatively smaller and just improving momentum over time as you get more projects develop, how should we sort of think if its progressing?

At this point I would say, fairly ratable at some point in time. But, right now, what we are in the midst of is a couple of RFPs that were out there in terms of negotiating some of those projects, got a couple that we've announced that are PPAs and obviously some of these are going to end up being owned as I mentioned on the last call. The majority of the dollars that you would see which show up kind of - when they do at the end or outside of the outlooks that we provided, as you might guess, we are in discussion with things most of which will show up in the 2020 and beyond time frame. Some of the projects could be a decent size, but it's our objective as I mentioned earlier to a last question is just that we continue to evaluate these on two fronts and one is as new generation resources, but also given the nature of how you can locate and then the speed with which they can be put together were they would make transmission sense as well. So, we are excited about the opportunity, lot of it has to do with how the cost curves move over the next few years as well.

That's all I have. Thank you.

Thank you.

Thank you. Our next question comes from Michael Lapides with Goldman Sachs. Your line is now open.

Hey guys, thanks for taking my questions. Real quickly on the nuclear, [indiscernible] Utility in general, do you anticipate in guidance, O&M and the Utility being up more than an inflationary level for 2018. And then how do you think about what the trajectory looks like, what's imbedded in the '19 and '20 guidance?

So Michael this is Drew. Yeah, so in the 2018 I think we are still consistent with our expectations. I mentioned earlier that we are looking at some opportunities to help close the gap on NDT performance through March 31. And so we are walking through some of that, but as of now in our guidance expectations I don't think there's really much of a change. Looking forward - well, I guess you had question specifically around nuclear, as Leo mentioned we hired a 1000 people over the last year, we're still going to hire some this year, the effect of that payroll changes most acute in the first quarter. And so the effect of it will lessen over the next few quarters, but we also have even though it's larger, we have some projects that we had last year that will even out the overall O&M spending for nuclear during the course of the year. So, it will be comparable to 2017 by the end of the year. Looking forward in terms of '19 and '20 I think we have overall under inflation expectations for O&M growth, nothing dramatic at this point.

Got it. And I want to make sure I understand coming back to the return of excess accumulated deferred income taxes, can you help me understand what the offset is? I get the cash outflow and kind of the accounting around the cash outflow, but can you walk me through what makes it, what kind of offsets that - it hurts near term FFO to debt, but can you walk me through how it might help longer term?

Sure, well I just after we finish giving the $1 billion back that effect will stop being in our FFO measure. So what you're seeing is lower net revenue, while we are giving that money back and to the extent that you lengthen that out, if you're going four, five years with that give back, you would see a depressed FFO number for that period of time. The way it's shaping up is we are going to be giving it back over the next 18 months. So the depressed FFO may be more so than we are planning, but by the time we get up the 2020, that effect for the unprotected fee should go away. So your FFO to debt measure should improve.

Got it and then one last one and I don't know to Leo or Rod question, but you guys have added four in the process of adding a lot of generation in both Louisiana and Texas, which makes a ton of sense giving the industrial pet-chem related demand that's occurring in the quarter. Just curious, if you look at Arkansas Mississippi, are there over the next few years or beyond opportunities for conventional generations either additions or repairing? And what I'm thinking to this, I'm thinking you know there are some higher cheap units in both states that may be aren't as sufficient as kind of newer technology, newer gas fire technologies are. You still have a sizeable coal unit in Arkansas with that significant pollution controls. I'm just trying to think about those two states as drivers of kind of future rate based growth after going through the cycle you are going through right now on the Louisiana and Texas.

If you think about what our generation moves have been over the course last ten years, Michael they actually have been generation that we've acquired in Mississippi and Arkansas. But it's all the same strategy. The majority of the generation hand has to do with age and the efficiencies you mentioned of the existing suite that we have. So as we deactivate those less sufficient, higher cost, less environmentally friendly units. We are replacing those with a combination of acquired units. What it would be Union [indiscernible] transferring, the long list of things that we already acquired or the new wells like St. Charles, Lake Charles, Montgomery County, Nine Mile 6 et cetera. So in those other jurisdictions that will be there as well, on the first - on the last quarter call we identified - I think somebody asked about the new generation dollars that didn't show up, those had shown up as one of those other jurisdictions because of that same need. And as you mentioned down the road we do have the coal plants that - certainly gas has become very, very competitive with coal and depending on what happens with environmental regulations et cetera, so you need the - the short answer is yes. We do see the need for new generating resources across all of our jurisdictions not just Louisiana and Texas. And in fact over the last decade you've seen us add generation in New Orleans, Mississippi and Arkansas as well. Going forward it will probably be a combination of looking at new gas, but also some of the projects have already been announced. For example project in Arkansas or PPA, that's a renewable resource. So we should start to see renewable battery storage those sorts of things show up at some point in time in that two as they become competitors. So, yes those leads are ageing as well and yeah we'll end up with new generating resources there.

Okay, got it. Thank you, Leo and much appreciated guys.

Thank you.

Thank you. Our next question comes from Paul Patterson from Glenrock Associates. Your line is now open.

Good morning, how are you? Just very quickly to follow-up on Shar and Jonathan's question on decommissioning, there was a letter that the NRC sent with respect to [indiscernible] basically indicating that they didn't believe that there was enough information to make them feel comfortable with the ability to decommission the plant. Given the information that you guys have provided today and just in general, it's a little surprising considering that everything else in terms of the decommissioning fund seem fine. So can you elaborate a little bit on what the issue there and how that's going to be resolved?

Hey Paul, it's Drew. That I think is part of the normal NRC processes, yeah, it requests for additional information. And our expectation is that we are - I guess in that case probably NorthStar responded to that and Vermont Yankee and so that is - I think it's just part of the normal back and forth we didn't see anything in particular in that we are concerned about at this point.

Okay, so, I mean just to clarify this, first of all longer than enough decommissioning funding, is it just because it's a transaction taking place and NorthStar has been giving that information. Is that what you are dealing with here I guess?

Well, in the normal course of business like the filings that you saw and the Jonathan referenced on page 29, those are more formulaic. And so when we go through a specific transaction they are not going to dig much deeper into the financials of the buyer and we totally expect that and understand why they are doing it. And so we will consider that, like I said its part of the normal process compared to normal annual filings which are very formulaic in nature.

Okay, thanks a lot.

No problem.

Thank you. And our final question comes from Charles Fishman with Morningstar Research. Your line is now open.

Thank you. Just one more question on slide 29, which I believe is a new slide. The site specific study, so one at Indian Point and also Vermont Yankee, that takes place after the unit is shut down and at that point you make a decision whether you pursue a NorthStar type solution or something else, is that the process?

Sure, so site specific studies can happen in a couple of ways. Like you said, if you're shutting down the plant you will give a site specific study to assess the overall cost of the facility and match that up against the trust and make sure that you're adequately funded. If you're having and this doesn't happen very often, but there are ways that you could also do it on an ongoing basis during the normal operations when you do these formulaic assessments if you didn't get all the funding you needed in the formulaic assessment, you can do a site specific study to see if you meet the NRC requirements. But typically I think as Paul was pointing out Charles, that I think you would do that at the end of the year or at the end of the life of the unit.

Okay and then also make the decision of what process to pursue, whether it's NorthStar or something else.

Sure, I mean I think you would do it relative to a safe store environment or an environment where you would more rapidly decommission the assets or if you - but if you're going to go through a sale process like we are with NorthStar, it's almost like a separate assessment than what you're seeing on page 29. Page 29 is more of the normal stuff.

Okay, got it. Thank you very much. That was helpful.

Thank you.

Thank you. That's our last question in queue, so I'd like to turn the conference back over to Mr. Borde for closing remarks.

Thank you, James and thanks to everyone for participating this morning. Before we close, we are reminding you to refer to our release and website for Safe Harbor and regulation G compliance statements. Our Annual Report on Form 10-Q is due to the SEC on May 10 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. Finally, as a remainder we maintain a web page as part of investor relations website called regulatory and other information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. Some of this information may be considered material information we should rely exclusively on this page for all relevant company information. And this concludes our call. Thank you.

Thank you. Ladies and gentlemen that does conclude today's conference. Thank you very much for participation. You may all disconnect. Have a wonderful day.