Reports second quarter 2023 GAAP earnings of
$0.41 per share and operating
(non-GAAP) earnings of $0.47 per
share
Affirms 2023 operating guidance and provides
outlook for the third quarter
Affirms targeted 6-8% long-term annual
operating earnings per share growth rate
AKRON,
Ohio, Aug. 1, 2023 /PRNewswire/ -- FirstEnergy
Corp. (NYSE: FE) today reported second quarter 2023 GAAP earnings
of $235 million, or $0.41 per basic and diluted share, on revenue of
$3.0 billion. In the second quarter
of 2022, the company reported GAAP earnings of $187 million, or $0.33 per basic and diluted share of common
stock, on revenue of $2.8
billion.
Operating (non-GAAP) earnings* were $0.47 per share in the second quarter of 2023, in
the upper end of the company's guidance range, and were
$0.53 per share in the second quarter
of 2022. Results for both periods exclude special items listed
below.
Continued growth from regulated investments and lower operating
expenses were positive earnings drivers in the second quarter of
2023 compared to the same period of 2022. Together, they partially
offset higher financing costs and lower pension credits, as well as
lower distribution sales that reduced earnings by $0.07 per share compared to the second quarter of
2022, primarily resulting from the impact of mild temperatures.
"FirstEnergy is focused on driving sustainable growth through
capital investments that enable the energy transition, improve the
reliability and resiliency of the electric grid, and support
economic activity and innovation in our communities," said
Brian X. Tierney, president and
chief executive officer. "These capital investments, together with
the sound strategies that are already underway to strengthen our
financial position and enhance our operations, support our goal of
becoming a premier electric utility company, and our mission of
delivering safe, reliable and affordable power to our customers and
communities," he said.
FirstEnergy reaffirmed its full-year 2023 operating (non-GAAP)
earnings guidance range of $2.44 to
$2.64 per share based on 574 million
shares outstanding. In addition, the company is providing an
operating (non-GAAP) earnings guidance range of $455 million to $515
million, or $0.80 to
$0.90 per share for the third quarter
of 2023, based on 573 million shares outstanding.
The company also affirmed its long-term, 6% to 8% targeted
annual operating earnings per share growth rate, which is based off
the previous year's operating earnings guidance midpoint.
Second Quarter Segment Results
In the Regulated Distribution business, higher revenues related
to utility investment programs and lower operating expenses
compared to the second quarter of 2022 were offset by lower
customer usage, primarily related to mild temperatures across the
company's service footprint, as well as lower pension credits and
higher interest expense.
Total distribution deliveries decreased 4.9% compared to the
second quarter of 2022, primarily due to cooling degree days that
were 40% below normal and 48% below last year. Load was down 1.1%
on a weather-adjusted basis.
In the Regulated Transmission business, second quarter 2023
operating results primarily benefited from the company's ongoing
Energizing the Future investment program. Rate base increased 8.2%,
or more than $700 million, from the
second quarter of 2022.
In Corporate/Other, second quarter 2023 operating results were
essentially flat compared to the second quarter of 2022.
Significant drivers include lower operating expenses and lower
interest expense, which were offset primarily by a lower earnings
contribution from the company's legacy investment in Signal Peak.
First Half Results
For the first half of 2023, FirstEnergy reported GAAP earnings
of $527 million, or $0.92 per basic and diluted share, on revenue of
$6.2 billion. This compares to GAAP
earnings of $475 million, or
$0.83 per basic and diluted share, on
revenue of $5.8 billion in the first
half of 2022. Results for both periods reflect the impact of
special items listed below.
Operating (non-GAAP) earnings* for the first half of 2023 were
$1.06 per share, compared to
$1.12 per share in the first half of
2022.
Results for the first half of 2023 reflect continued growth from
the company's regulated investment strategy and lower operating
expenses. These factors partially offset the impact of lower
pension credits, as well as lower distribution sales that reduced
earnings by $0.18 per share compared
to the first half of 2022, primarily resulting from the impact of
extremely mild weather.
Through the first six months, heating degree days were 17% below
normal and 16% below last year, while cooling degree days were 40%
and 47% below normal and last year, respectively.
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Consolidated GAAP
Earnings Per Share (EPS) to Operating (Non-GAAP) EPS*
Reconciliation
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Three Months Ended
June 30
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Six Months Ended
June 30
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2023
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2022
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2023
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2022
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Earnings
Attributable to FirstEnergy Corp.
(GAAP) - $M
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$235
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$187
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$527
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$475
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Basic EPS
(GAAP)
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$0.41
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$0.33
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$0.92
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$0.83
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Excluding Special
Items*:
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Debt-related
costs
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0.05
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0.17
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0.05
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0.23
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Enhanced employee
retirement and other related costs
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0.04
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—
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0.04
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—
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FE Forward cost to
achieve
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—
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0.01
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0.06
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0.01
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Investigation and other
related costs
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0.03
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0.02
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0.04
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0.03
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Mark-to-market
adjustments – Pension/OPEB actuarial assumptions
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(0.06)
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—
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(0.06)
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—
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Strategic transaction
costs
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—
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—
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—
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0.01
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Regulatory
charges
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—
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—
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0.01
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0.01
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Total Special
Items*
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0.06
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0.20
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0.14
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0.29
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Operating EPS
(Non-GAAP)
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$0.47
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$0.53
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$1.06
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$1.12
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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 571 million shares for the Second Quarter and First Half
2022, 573 million shares for the Second Quarter and First Half
2023.
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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 cannot estimate
on a forward-looking basis the impact of these items in the context
of long-term annual operating EPS growth rate projections because
these items, which could be significant, are difficult to predict
and may be highly variable. Consequently, the Company is unable to
reconcile operating earnings guidance and long-term annual
operating EPS growth projections to a GAAP measure without
unreasonable effort. Basic (GAAP) EPS and Operating EPS and Basic
(GAAP) EPS and Operating EPS for each segment are calculated by
dividing Operating earnings (loss), which excludes special items as
discussed above, for the periods presented by 571 million shares
for the second quarter, first six months, and full year 2022, 573
million shares for the second quarter, first six months and third
quarter of 2023, and 574 million shares for full year 2023.
Intercompany interest expense/income between Regulated
Transmission and Corporate/Other associated with the proceeds from
the FET 19.9% minority interest transaction received on
May 31, 2022, has been eliminated for
segment reporting purposes which is consistent with the methodology
used in the fourth quarter and full year 2022 reporting. Management
uses non-GAAP financial measures such as Operating earnings (loss),
and Operating EPS 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 EPS by segment to further evaluate the
Company's performance by segment and references this non-GAAP
financial measure in its decision-making. Management believes that
the non-GAAP financial measures of Operating earnings (loss),
Operating EPS, and Operating EPS by segment, 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. All
of 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, FE
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
presentation is posted on the company's Investor Information
website – www.firstenergycorp.com/ir. It can be accessed through
the Second Quarter 2023 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 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 website by selecting the
Second Quarter 2023 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 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,
inflationary pressure, supply chain disruptions, higher energy
costs, and workforce impacts, 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 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; 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, executing on
our rate filing strategy, controlling costs, greenhouse gas
reduction goals, improving our credit metrics, growing earnings,
strengthening our balance sheet, and satisfying the conditions
necessary to close the sale of additional membership interests of
FirstEnergy Transmission, LLC; 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 or energy
efficiency and peak demand reduction mandates; 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 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. Forward-looking and other statements regarding
our climate strategy, including our greenhouse gas emission
reduction goals, are not an indication that these statements are
necessarily material to investors or required to be disclosed in
our filings with the SEC. In addition, historical, current and
forward-looking statements regarding climate matters, including
greenhouse gas emissions, may be based on standards for measuring
progress that are still developing, internal controls and processes
that continue to evolve and assumptions that are subject to change
in the future.
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SOURCE FirstEnergy Corp.