Reports first quarter 2024 GAAP earnings of
$0.44 per share and operating
(non-GAAP) earnings of $0.55 per
share, above the midpoint of guidance
Affirms targeted 6-8% long-term annual
operating earnings per share growth
Increased total equity on balance sheet by 25%
with closing on $3.5 billion FET LLC
transaction; deployed $2.3
billion of proceeds; expects to receive remaining
$1.2 billion later this year
AKRON,
Ohio, April 25, 2024 /PRNewswire/ -- FirstEnergy
Corp. (NYSE: FE) today reported first quarter 2024 GAAP earnings of
$253 million, or $0.44 per basic and diluted share, on revenue of
$3.3 billion. This compares to first
quarter 2023 GAAP earnings of $292
million, or $0.51 per basic
and diluted share, on revenue of $3.2
billion. GAAP results include the impact of special items
listed below.
Operating (non-GAAP) earnings for the first quarter of 2024 were
$0.55 per share, in the upper half of
the company's guidance. In the first quarter of 2023 operating
(non-GAAP) earnings were $0.60 per
share.
"Despite a mild winter, we're off to a solid start in 2024. Our
first quarter financial results are above the midpoint of our
guidance, reflecting strong execution across each of our
businesses," said Brian X. Tierney,
President and Chief Executive Officer. "We also completed a pivotal
milestone in the company's transformation as we significantly
strengthened our balance sheet, supporting long-term organic
investments in our fully regulated businesses to enhance
reliability and the customer experience. As a result of this
progress, we were pleased to receive upgrades to investment grade
ratings from both Moody's and S&P."
FirstEnergy provided a second quarter earnings guidance range of
$290 million to
$345 million, or $0.50 to $0.60 per
share based on 576 million shares outstanding. The company also
affirmed its 2024 operating (non-GAAP) earnings guidance range of
$2.61 to $2.81 per share based on 576 million shares
outstanding, and its long-term, 6% to 8% targeted annual operating
earnings growth rate, which is based off the previous year's
operating earnings guidance midpoint and supported by the company's
refreshed and extended $26 billion,
five-year capital investment plan, Energize365.
First Quarter Results
First quarter 2024 results primarily reflect the impact of
recently approved base rate cases in Maryland, New
Jersey and West Virginia,
distribution capital investment riders and transmission rate base
growth, and improved weather-related demand. These drivers were
more than offset by higher planned operating expenses and financing
costs.
Total distribution deliveries increased 1.5% compared to the
first quarter of 2023. While heating degree days were 5% higher
than the historically mild first quarter of 2023, they remained 14%
below normal. Usage increased 1% among residential customers and
industrial sales increased 3%, while sales were essentially flat in
the commercial sector.
As previously announced, the company is introducing new segment
reporting in 2024 to enhance transparency and align with its
operating structure. Segment results for 2023 have been recast for
comparative purposes. A full reconciliation is available in the
company's Strategic and Financial Highlights document,
available online at www.firstenergycorp.com/ir.
FirstEnergy's Distribution segment includes its Ohio and Pennsylvania pure-play distribution-only
companies. It represents $10.9
billion in 2023 rate base, serves 4.2 million customers, and
accounts for about 45% of FirstEnergy's forecasted 2024 operating
earnings.
First quarter operating earnings in the Distribution segment
decreased compared to the first quarter of 2023 as higher revenues
from capital investment programs and weather-related demand
were offset by higher planned operating expenses incurred during
2024.
The Integrated segment includes FirstEnergy's Jersey Central
Power & Light subsidiary, which operates distribution and
transmission assets in New Jersey;
Potomac Edison, which operates distribution and transmission in
Maryland and West Virginia; and Monongahela Power, which
operates distribution, transmission and generation in West Virginia. This segment represents
$8.7 billion in 2023 rate base,
serves 2 million customers, and accounts for about 35% of
FirstEnergy's forecasted 2024 operating earnings.
First quarter operating earnings in the Integrated segment
increased compared to the first quarter of 2023, primarily due to
the approval of recent base rate cases in Maryland, New
Jersey and West Virginia,
investments in formula rate capital programs, and higher
weather-related demand. These items were offset, in part, by higher
planned operating expenses.
The Stand-Alone Transmission segment includes FirstEnergy's
transmission-only subsidiaries, consisting of its ownership
interest in FirstEnergy Transmission, LLC, as well as Keystone
Appalachian Transmission Company. This segment represents
$7.7 billion in 2023 rate base and
accounts for about 20% of forecasted 2024 operating earnings.
First quarter operating earnings in the Stand-Alone Transmission
segment increased compared to the first quarter of 2023, primarily
due to rate base growth in formula rates from its capital
investment program.
Finally, Corporate/Other primarily represents holding company
interest, legacy investment in the Signal Peak coal mine, and
retained pension and other postemployment benefits associated with
former subsidiaries.
First quarter results in Corporate/Other primarily reflect the
expected lower earnings contribution from Signal Peak and higher
interest costs associated with the $1.5
billion, May 2023 low-cost
convertible debt issuance, partially offset by higher discrete
income tax benefits.
|
|
Consolidated GAAP
Earnings Per Share (EPS) to Operating (Non-GAAP) EPS
Reconciliation
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2024
|
2023
|
|
|
Earnings
Attributable to FirstEnergy Corp. (GAAP) - $M
|
|
$253
|
$292
|
|
|
Basic –EPS
(GAAP)
|
|
$0.44
|
$0.51
|
|
|
Excluding Special
Items:
|
|
|
|
|
|
|
FE Forward cost to
achieve
|
|
0.01
|
0.05
|
|
|
|
Investigation and other
related costs
|
|
0.03
|
0.03
|
|
|
|
Regulatory charges
(credits)
|
|
(0.01)
|
0.01
|
|
|
|
Strategic transaction
charges
|
|
0.08
|
–
|
|
|
|
Total Special
Items
|
|
0.11
|
0.09
|
|
|
Operating EPS
(Non-GAAP)
|
|
$0.55
|
$0.60
|
|
|
Per share amounts for
the special items above are based on the after-tax effect of each
item divided by the number of shares outstanding for the period.
The current and deferred income tax effect was calculated by
applying the subsidiaries' statutory tax rate to the pre-tax amount
if deductible/taxable. The income
tax rate ranges from 21% to 29%. Basic EPS (GAAP) and Operating EPS (Non-GAAP) is
based on 574 million shares outstanding for the first quarter 2024
and 572 million shares outstanding for the first quarter of
2023.
|
Non-GAAP Financial Measures
We refer to certain financial measures, including Baseline
O&M, Operating earnings (loss) and Operating earnings (loss)
per share ("EPS"), including by segment, as "non-GAAP financial
measures," which are not calculated in accordance with U.S.
Generally Accepted Accounting Principles (GAAP) and exclude the
impact of "special items," on the following measures: Total
revenues, Total operating expenses, Total other expense, and
Earnings (loss) attributable to FirstEnergy Corp, as included in
the table above. Management uses these non-GAAP financial measures
to evaluate the company's and its segments' performance and manage
its operations and frequently references these non-GAAP financial
measures in its decision-making, using them to facilitate
historical and ongoing performance comparisons. Management believes
that the non-GAAP financial measures of Operating earnings (loss)
and Operating EPS, including by segment, and Baseline O&M,
provide consistent and comparable measures of performance of its
businesses on an ongoing basis. Management also believes that such
measures are useful to shareholders and other interested parties to
understand performance trends and evaluate the company against its
peer group by presenting period-over-period operating results
without the effect of certain special items that may not be
consistent or comparable across periods or across the company's
peer group. These non-GAAP financial measures are intended to
complement, and are not considered as alternatives to, the most
directly comparable GAAP financial measures, which for Operating
EPS is EPS attributable to FirstEnergy Corp. (GAAP), as reconciled
in the above table. Also, such non-GAAP financial measures may not
be comparable to similarly titled measures used by other
entities.
Special items represent charges incurred or benefits realized
that management believes are not indicative of, or may obscure
trends useful in evaluating the company's ongoing core activities
and results of operations or otherwise warrant separate
classification. Operating EPS is calculated by dividing Operating
earnings (loss), which excludes special items as discussed above,
for the periods presented by the weighted average number of common
shares outstanding in the respective period. Baseline O&M is
calculated by excluding special items and other adjustments that
are generally pass-through costs or recoverable under riders or
other similar programs. Special Items for the period can be found
in more detail in the Company's Strategic and Financial Highlights,
available at www.firstenergycorp.com/ir.
Forward-Looking Non-GAAP Measures
A reconciliation of forward-looking non-GAAP measures, including
2024 Operating EPS, long-term annual Operating EPS growth
projections and Baseline O&M forecasts, to the most directly
comparable GAAP measures is not provided because comparable GAAP
measures for such measures are not reasonably available without
unreasonable efforts due to the inherent difficulty in forecasting
and quantifying measures that would be necessary for such
reconciliation. Specifically, management cannot, without
unreasonable effort, predict the impact of these special items in
the context of Operating EPS guidance, long-term annual Operating
EPS growth rate projections and Baseline O&M forecasts because
these items, which could be significant, are difficult to predict
and may be highly variable. In addition, the company believes such
a reconciliation would imply a degree of precision and certainty
that could be confusing to investors. These special items are
uncertain, depend on various factors and may have a material impact
on our future GAAP results.
Investor Materials and Teleconference
FirstEnergy's Strategic and Financial Highlights
presentation is posted on the company's Investor Information
website – www.firstenergycorp.com/ir. It can be accessed through
the First Quarter 2024 Financial Results link. Important
information may be disseminated initially or exclusively via the
company's Investor Information website; investors should consult
the site to access this information.
The company invites investors, customers and other interested
parties to listen to a live webcast of its teleconference for
financial analysts and view presentation slides at 10:00 a.m. EDT tomorrow. FirstEnergy management
will present an overview of the company's financial results
followed by a question-and-answer session. The teleconference and
presentation can be accessed on the Investor Information website by
selecting the First Quarter 2024 Earnings Webcast link. The
webcast and presentation will be archived on the website.
FirstEnergy is dedicated to integrity, safety, reliability and
operational excellence. Its electric distribution companies form
one of the nation's largest investor-owned electric systems,
serving more than six million customers in Ohio, Pennsylvania, New
Jersey, West Virginia,
Maryland and New York. The company's transmission
subsidiaries operate more than 24,000 miles of transmission lines
that connect the Midwest and Mid-Atlantic regions. Follow
FirstEnergy online at www.firstenergycorp.com and on X,
formerly known as Twitter, @FirstEnergyCorp.
Forward-Looking Statements: This news release
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 based on
information currently available to management. Such statements are
subject to certain risks and uncertainties and readers are
cautioned not to place undue reliance on these forward-looking
statements. These statements include declarations regarding
management's intents, beliefs and current expectations. These
statements typically contain, but are not limited to, the terms
"anticipate," "potential," "expect," "forecast," "target," "will,"
"intend," "believe," "project," "estimate," "plan" and similar
words. Forward-looking statements involve estimates, assumptions,
known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements, which may
include the following: the potential liabilities, increased costs
and unanticipated developments resulting from government
investigations and agreements, including those associated with
compliance with or failure to comply with the Deferred Prosecution
Agreement entered into July 21, 2021
with the U.S. Attorney's Office for the Southern District of
Ohio; the risks and uncertainties
associated with government investigations and audits regarding Ohio
House Bill 6, as passed by Ohio's
133rd General Assembly ("HB 6") and related matters, including
potential adverse impacts on federal or state regulatory matters,
including, but not limited to, matters relating to rates; the risks
and uncertainties associated with litigation, arbitration,
mediation, and similar proceedings, particularly regarding HB 6
related matters, including risks associated with obtaining
dismissal of the derivative shareholder lawsuits; changes in
national and regional economic conditions, including recession,
volatile interest rates, inflationary pressure, supply chain
disruptions, higher fuel costs, and workforce impacts, affecting us
and/or our customers and those vendors with which we do business;
variations in weather, such as mild seasonal weather variations and
severe weather conditions (including events caused, or exacerbated
by climate changes, such as wildfires, hurricanes, flooding,
droughts, high wind events and extreme heat events) and other
natural disasters affecting future operating results and associated
regulatory actions or outcomes in response to such conditions;
legislative and regulatory developments, including, but not limited
to, matters related to rates, compliance and enforcement activity,
cyber security, and climate change; the risks associated with
physical attacks, such as acts of war, terrorism, sabotage or other
acts of violence, and cyber-attacks and other disruptions to our,
or our vendors', information technology system, which may
compromise our operations, and data security breaches of sensitive
data, intellectual property and proprietary or personally
identifiable information; the ability to meet our goals relating to
employee, environmental, social and corporate governance
opportunities, improvements, and efficiencies, including our
greenhouse gas ("GHG") reduction goals; the ability to accomplish
or realize anticipated benefits through establishing a culture of
continuous improvement and our other strategic and financial goals,
including, but not limited to, overcoming current uncertainties and
challenges associated with the ongoing government investigations,
executing Energize365, our transmission and distribution investment
plan, executing on our rate filing strategy, controlling costs,
improving credit metrics, maintaining investment grade ratings, and
growing earnings, changing market conditions affecting the
measurement of certain liabilities and the value of assets held in
our pension trusts may negatively impact our forecasted growth
rate, results of operations, and may also cause us to make
contributions to our pension sooner or in amounts that are larger
than currently anticipated; mitigating exposure for remedial
activities associated with retired and formerly owned electric
generation assets; changes to environmental laws and regulations,
including but not limited to those related to climate change;
changes in customers' demand for power, including but not limited
to, economic conditions, the impact of climate change, emerging
technology, particularly with respect to electrification, energy
storage and distributed sources of generation; the ability to
access the public securities and other capital and credit markets
in accordance with our financial plans, the cost of such capital
and overall condition of the capital and credit markets affecting
us, including the increasing number of financial institutions
evaluating the impact of climate change on their investment
decisions; future actions taken by credit rating agencies that
could negatively affect either our access to or terms of financing
or our financial condition and liquidity; changes in assumptions
regarding factors such as economic conditions within our
territories, the reliability of our transmission and distribution
system, or the availability of capital or other resources
supporting identified transmission and distribution investment
opportunities; the potential of non-compliance with debt covenants
in our credit facilities; the ability to comply with applicable
reliability standards and energy efficiency and peak demand
reduction mandates; human capital management challenges, including
among other things, attracting and retaining appropriately trained
and qualified employees and labor disruptions by our unionized
workforce; changes to significant accounting policies; any changes
in tax laws or regulations, including, but not limited to, the
Inflation Reduction Act of 2022, or adverse tax audit results or
rulings; and the risks and other factors discussed from time to
time in our Securities and Exchange Commission ("SEC") filings.
Dividends declared from time to time on FirstEnergy Corp.'s common
stock during any period may in the aggregate vary from prior
periods due to circumstances considered by FirstEnergy Corp.'s
Board of Directors at the time of the actual declarations. A
security rating is not a recommendation to buy or hold securities
and is subject to revision or withdrawal at any time by the
assigning rating agency. Each rating should be evaluated
independently of any other rating. These forward-looking
statements are also qualified by, and should be read together with,
the risk factors included in FirstEnergy Corp.'s (a) Item 1A. Risk
Factors, (b) Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations, and (c) other
factors discussed herein and in FirstEnergy's other filings with
the SEC. The foregoing review of factors also should not be
construed as exhaustive. New factors emerge from time to time, and
it is not possible for management to predict all such factors, nor
assess the impact of any such factor on FirstEnergy Corp.'s
business or the extent to which any factor, or combination of
factors, may cause results to differ materially from those
contained in any forward-looking statements. FirstEnergy Corp.
expressly disclaims any obligation to update or revise, except as
required by law, any forward-looking statements contained herein or
in the information incorporated by reference as a result of new
information, future events or otherwise.
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SOURCE FirstEnergy Corp.