Reports second quarter 2022 GAAP earnings of
$0.33 per share and operating
(non-GAAP) earnings of $0.53 per
share, in top end of guidance range
Closed on minority sale of FET LLC, raising
$2.4 billion at historic premium
valuation
Solid execution to improve the balance sheet
with over $2.5 billion of debt
retired year-to-date
Anticipates achieving targeted FFO/Debt of
~13% in 2023, ahead of schedule
Updates and affirms full-year GAAP and
operating guidance and provides outlook for third quarter
AKRON,
Ohio, July 26, 2022 /PRNewswire/ -- FirstEnergy
Corp. (NYSE: FE) today reported second quarter 2022 GAAP earnings
of $187 million, or $0.33 per basic and diluted share, on revenue of
$2.8 billion. In the second quarter
of 2021, the company reported GAAP earnings of $58 million, or $0.11 per basic and diluted share, on revenue of
$2.6 billion. GAAP results include
special items listed below.
Operating (non-GAAP) earnings* were $0.53 per share for the second quarter of 2022,
in the upper end of the company's guidance range. In the second
quarter of 2021, operating (non-GAAP) earnings were $0.59 per share and $0.47 per share on a pro forma basis when
adjusting for the company's previously announced accounting policy
changes, Ohio rate credits and
equity financing transactions.
"Through the first half of 2022, we've made tremendous progress
to strengthen our culture, optimize our operations and bolster our
financial position, supporting our mission to become a more
customer-focused and sustainable company," said Steven E. Strah, FirstEnergy president and chief
executive officer. "We made substantial progress to improve the
balance sheet by utilizing the proceeds from our historic equity
raises to retire over $2.5 billion of
debt and fund our regulated capital investment programs that
generate strong earnings and cash flow," he added. "We now believe
we are on the path to achieve solid investment grade credit metrics
of approximately 13% Funds from Operations to Debt in 2023 – one
year ahead of schedule."
For the third quarter of 2022, the company is providing a GAAP
and operating (non-GAAP) forecast range of $400 million to $455
million, or $0.70 to
$0.80 per share based on 571 million
shares outstanding.
FirstEnergy updated its full-year 2022 GAAP earnings forecast
range to $1,240 million to
$1,355 million, or $2.17 to $2.37 per
share based on 571 million shares outstanding. The company
also affirmed its full-year 2022 operating (non-GAAP) earnings
guidance range of $1,315 million to
$1,430 million, or $2.30 to $2.50 per
share based on 571 million shares outstanding.
Second Quarter Results
Second quarter and
year-to-date 2022 results reflect the impacts of certain accounting
policy changes, rate credits that were provided to Ohio customers under the company's previously
approved stipulation, and dilution related to the common equity
financing transaction that closed at the end of 2021 and the sale
of a minority interest in FirstEnergy Transmission, LLC that closed
on May 31, 2022.
Excluding the impact of these items, second quarter operating
results in the Regulated Distribution business declined slightly as
a result of lower residential customer usage and higher planned
expenses. This was partially offset by higher revenues related to
capital investment programs in Ohio, Pennsylvania and New
Jersey.
Total distribution deliveries increased 0.7% compared to the
second quarter of 2021. Residential sales decreased 1.6%, largely
due to milder weather, while Commercial deliveries increased
1.5% and sales to industrial customers increased 2.4%, reflecting a
recovery from pandemic conditions. When adjusted for the
impact of weather, total deliveries rose 1.3%, driven by a 2%
increase in demand from commercial and industrial customers.
In the Regulated Transmission business, second quarter 2022
operating results benefited from the company's ongoing Energizing
the Future capital investment program and lower revolver
borrowings.
In the Corporate/Other segment, second quarter 2022 operating
results improved as compared to the second quarter of 2021 due to
higher returns on legacy, commodity-based investments, lower
interest expense due to recent early debt redemptions and higher
discrete tax benefits.
First Half Results
For the first half of 2022,
FirstEnergy reported GAAP earnings of $475
million, or $0.83 per basic
and diluted share, on revenue of $5.8
billion. This compares to GAAP earnings of $393 million, or $0.72 per basic and diluted share, on revenue of
$5.3 billion in the first half of
2021. Results for both periods reflect the impact of special items
listed below.
Operating (non-GAAP) earnings* for the first half of 2022 were
on target at $1.12 per share,
compared to $1.28 per share in the
first half of 2021 and $1.06 per
share on a pro forma basis in the first half of 2021, when
adjusting for the impacts of accounting policy changes,
Ohio rate credits and equity
financing transactions described above.
Results for the first half of 2022, as compared to the same
period of last year, primarily reflect the impact from higher
investments and lower interest expense, partially offset by higher
planned operating expenses.
|
|
Consolidated GAAP
Earnings to Operating (Non-GAAP) EPS*
and 2021 Pro Forma EPS Reconciliation
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2022
Estimates
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
Third
Quarter
|
Full
Year
|
|
|
Earnings
Attributable to FirstEnergy Corp. (GAAP) - $M
|
$187
|
$58
|
|
$475
|
$393
|
|
$400 - $455
|
$1,240 -
$1,355
|
|
|
Basic EPS
(GAAP)
|
$0.33
|
$0.11
|
|
$0.83
|
$0.72
|
|
$0.70 -
$0.80
|
$2.17 -
$2.37
|
|
|
Excluding Special
Items*:
|
|
|
|
|
|
|
|
|
|
|
Regulatory
charges
|
—
|
0.01
|
|
0.01
|
0.05
|
|
—
|
0.01
|
|
|
Debt related
costs
|
0.17
|
—
|
|
0.23
|
—
|
|
—
|
0.23
|
|
|
Strategic transaction
charges
|
—
|
—
|
|
0.01
|
—
|
|
—
|
0.01
|
|
|
FE Forward cost to
achieve
|
0.01
|
—
|
|
0.01
|
—
|
|
—
|
0.01
|
|
|
Investigation and
related costs (credits)
|
0.02
|
0.45
|
|
0.03
|
0.49
|
|
—
|
(0.13)
|
|
|
State tax legislative
changes
|
—
|
0.02
|
|
—
|
0.02
|
|
—
|
—
|
|
|
Total Special Items*
|
0.20
|
0.48
|
|
0.29
|
0.56
|
|
—
|
0.13
|
|
|
Operating EPS
(non-GAAP)
|
$0.53
|
$0.59
|
|
$1.12
|
$1.28
|
|
$0.70 -
$0.80
|
$2.30 -
$2.50
|
|
|
Accounting policy
changes
|
—
|
(0.05)
|
|
—
|
(0.10)
|
|
—
|
—
|
|
|
Ohio rate
credits
|
—
|
(0.03)
|
|
—
|
(0.05)
|
|
—
|
—
|
|
|
Equity financing
transactions
|
—
|
(0.04)
|
|
—
|
(0.07)
|
|
—
|
—
|
|
|
2021 Pro Forma
EPS (non-GAAP)
|
—
|
$0.47
|
|
—
|
$1.06
|
|
—
|
—
|
|
|
|
|
|
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 rates range from 21% to 29%.
Basic EPS (GAAP) and Operating EPS (Non-GAAP) is based on 571
million shares for the second quarter, first six months, third
quarter and full year of 2022 and 544 million shares for the second
quarter and first six months of 2021.
|
|
Non-GAAP financial measures
* Operating
earnings (loss) excludes "special items" as described below, and is
a non-GAAP financial measure. 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. Special items are not
necessarily non-recurring. Management uses Operating earnings
(loss) and Operating earnings (loss) per share to evaluate the
Company's 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. Additionally, management uses Operating earnings
(loss) per share by segment to further evaluate the Company's
performance by segment and references this non-GAAP financial
measure in its decision making. Operating earnings (loss) per share
and Operating earnings (loss) per share for each segment is
calculated by dividing Operating earnings (loss), which excludes
special items as discussed herein, for the periods presented by the
number of shares outstanding. Basic EPS (GAAP) and Operating EPS
(Non-GAAP), as well as Basic EPS (GAAP) and Operating EPS
(Non-GAAP) for each segment, are based on 571 million shares
for the second quarter, first half, third quarter and full year of
2022 and 544 million for the second quarter and first six months of
2021. Furthermore, pro forma earnings per share are also a non-GAAP
financial measure and adjust the 2021 operating earnings (loss) per
share for the three and six months ended June 30, 2021, for certain accounting policy
changes, rate credits and equity financing transactions that took
effect or began to impact in 2022, which management believes
provides for a more consistent and comparable measure of
performance of its businesses period-over-period. Management
believes that the non-GAAP financial measures of Operating earnings
(loss) and Operating earnings (loss) per share, Operating earnings
(loss) per share by segment, and pro forma earnings per share
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 charges or benefits that may not be
consistent or comparable across periods or across the Company's
peer group. Generally, a non-GAAP financial measure is a numerical
measure of a company's historical or future financial performance,
financial position, or cash flows that either excludes or includes
amounts that are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance
with accounting principles generally accepted in the United States (GAAP). These non-GAAP
financial measures are intended to complement, and are not
considered as alternatives to, the most directly comparable GAAP
financial measures. Also, the non-GAAP financial measures may not
be comparable to similarly titled measures used by other entities.
Pursuant to the requirements of Regulation G, FirstEnergy has
provided, where possible without unreasonable effort, quantitative
reconciliations within this presentation of the non-GAAP financial
measures to the most directly comparable GAAP financial
measures.
Investor Materials and Teleconference
FirstEnergy's
Strategic and Financial Highlights is posted on the
company's Investor Information website –
www.firstenergycorp.com/ir. To access the report, click on the
Second Quarter 2022 Financial Results link.
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 11:00 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 website by selecting the
Second Quarter 2022 Earnings Webcast link. The webcast and
presentation will be archived on the website.
FirstEnergy is dedicated to integrity, safety, reliability and
operational excellence. Its 10 electric distribution companies form
one of the nation's largest investor-owned electric systems,
serving customers in Ohio,
Pennsylvania, New Jersey, West
Virginia, Maryland and
New York. The company's
transmission subsidiaries operate approximately 24,000 miles of
transmission lines that connect the Midwest and Mid-Atlantic
regions. Follow FirstEnergy on Twitter @FirstEnergyCorp or
online at www.firstenergycorp.com.
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 on 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 court approval of the settlement
agreement in the derivative shareholder lawsuits; changes in
national and regional economic conditions, including recession and
inflationary pressure, affecting us and/or our customers and those
vendors with which we do business; weather conditions, such as
temperature variations and severe weather conditions, or 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,
cybersecurity, and climate change; the ability to accomplish or
realize anticipated benefits from our FE Forward initiative and our
other strategic and financial goals, including, but not limited to,
overcoming current uncertainties and challenges associated with the
ongoing government investigations, executing our transmission and
distribution investment plans, greenhouse gas reduction goals,
controlling costs, improving our credit metrics, growing earnings
and strengthening our balance sheet; changing market conditions
affecting the measurement of certain liabilities and the value of
assets held in our pension trusts may negatively impact our results
of operations and related guidance, and may also cause us to make
contributions to our pension sooner or in amounts that are larger
than currently anticipated; the risks associated with 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; mitigating
exposure for remedial activities associated with retired and
formerly owned electric generation assets; 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; the extent and duration of the COVID-19 pandemic and the
related impacts to our business, operations and financial condition
resulting from the outbreak of COVID-19 including, but not limited
to, disruption of businesses in our territories, supply chain
disruptions, additional costs, workforce impacts and governmental
and regulatory responses to the pandemic, such as the moratoriums
on utility disconnections and workforce vaccination mandates
imposed at varying points throughout the pandemic; actions that may
be 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; changes in customers' demand
for power, including, but not limited to, economic conditions, the
impact of climate change, or energy efficiency and peak demand
reduction mandates; 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; changes to environmental laws and
regulations, including, but not limited to, those related to
climate change; labor disruptions by our unionized workforce;
changes to significant accounting policies; any changes in tax laws
or regulations, or adverse tax audit results or rulings; 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 filings with the
SEC, including, but not limited to, the most recent Annual Report
on Form 10-K and Quarterly Report on Form 10-Q, and any subsequent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 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.