Reports third quarter 2023 GAAP earnings from
continuing operations of $0.74 per
share and operating (non-GAAP) earnings of $0.88 per share
Narrows 2023 operating guidance around
midpoint and provides outlook for the fourth quarter
Affirms targeted 6-8% long-term annual
operating earnings per share growth rate
AKRON,
Ohio, Oct. 26, 2023 /PRNewswire/ -- –
FirstEnergy Corp. (NYSE: FE) today reported third quarter 2023 GAAP
earnings from continuing operations of $421
million, or $0.74 per basic
share ($0.73 diluted), on revenue of
$3.5 billion. In the third quarter of
2022, the company reported GAAP earnings from continuing operations
of $334 million, or $0.58 per basic and diluted share, on revenue of
$3.5 billion. Results for both
periods include the special items listed below.
Operating (non-GAAP) earnings* were $0.88 per share in the third quarter of 2023, in
the upper end of the company's guidance range. Operating (non-GAAP)
earnings in the third quarter of 2022 were $0.79 per share.
Lower operating expenses, continued growth from regulated
investments, stronger weather-adjusted sales and tax
benefits from the expected use of state net operating loss
carryforwards were positive earnings drivers in the third quarter
of 2023 compared to the same period of 2022. Together, they
offset the impact of mild temperatures on Regulated Distribution
sales, which reduced earnings by $0.06 per share compared to the third quarter of
2022, as well as lower pension credits and higher financing costs,
which were associated with higher debt issuances to support the
company's capital program.
"FirstEnergy is focused on investing in our regulated
businesses, our employees and our systems to enhance the customer
experience, support our communities and create new opportunities
from the energy transition," said Brian X.
Tierney, president and chief executive officer. "We are
executing on this strategy, delivering strong operational and
financial performance, and building our momentum for the
future."
FirstEnergy narrowed its full-year 2023 operating (non-GAAP)
earnings guidance range to $2.49 to
$2.59 per share based on 573 million
shares outstanding, from its original range of $2.44 to $2.64 per
share. In addition, the company is providing a guidance range of
$315 million to $375 million, or $0.55 to $0.65 per
share for the fourth quarter of 2023, based on 574 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.
Third Quarter Segment Results
In the Regulated Distribution business, lower operating
expenses, higher revenues related to utility investment programs
and higher weather-adjusted load compared to the third quarter of
2022 were offset by lower weather-related demand resulting from
mild summer temperatures across the company's service footprint, as
well as lower pension credits and higher interest expense from
higher debt balances to fund the company's capital programs.
Total weather-adjusted distribution deliveries increased 1.2%
compared to the third quarter of 2022. Weather-adjusted sales to
residential and commercial customers increased 2.3% and 1.2%,
respectively, while industrial sales were unchanged.
Total distribution deliveries decreased 1.7% compared to the
third quarter of 2022 primarily due to cooling degree days that
were 6% below normal and 17% below last year. Usage decreased 3.5%
among residential customers and 1.2% in the commercial sector,
while industrial sales were flat.
In the Regulated Transmission business, third quarter 2023
operating results benefited from the company's ongoing Energizing
the Future investment program. Rate base increased by more than 8%
from the third quarter of 2022.
In Corporate/Other, third quarter 2023 operating results
improved compared to the third quarter of 2022 as a result of
income tax benefits and lower operating expenses.
Year-to-Date Results
For the first nine months of 2023, FirstEnergy reported GAAP
earnings from continuing operations of $948
million, or $1.66 per basic
share ($1.65 diluted), on revenue of
$9.7 billion. This compares to GAAP
earnings of $809 million, or
$1.42 per basic share ($1.41 diluted), on revenue from continuing
operations of $9.3 billion in the
first nine months of 2022. Results for both periods reflect the
impact of special items listed below.
Operating (non-GAAP) earnings* for the first nine months of 2023
were $1.94 per share, compared to
$1.91 per share in the first nine
months of 2022.
Year-to-date results for 2023 reflect lower operating expenses,
continued growth from the company's regulated investment strategy,
stronger weather-adjusted load and tax benefits. These offset the
impact of lower weather-related demand, which reduced earnings by
$0.24 per share compared to the first
nine months of 2022, and lower pension credits.
Through the first nine months, heating degree days were 17%
below normal and 16% below last year, while cooling degree days
were 16% and 25% below normal and last year,
respectively.
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Consolidated GAAP
Earnings from Continuing Operations Per Share (EPS) to Operating
(Non-GAAP) EPS*
Reconciliation
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Three Months Ended
Sept 30
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Nine Months Ended
Sept 30
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2023
|
2022
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2023
|
2022
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Earnings
Attributable to FirstEnergy Corp. from
Continuing
Operations (GAAP) - $M
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$421
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$334
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$948
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$809
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Basic – Continuing
Operations EPS (GAAP)
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$0.74
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$0.58
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$1.66
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$1.42
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Excluding Special
Items*:
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|
|
|
|
|
|
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Debt-related
costs
|
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—
|
—
|
|
0.05
|
0.22
|
|
|
|
Enhanced employee
retirement and other related costs
|
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0.07
|
—
|
|
0.10
|
—
|
|
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FE Forward cost to
achieve
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0.01
|
—
|
|
0.07
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0.01
|
|
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Investigation and other
related costs
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|
0.03
|
0.03
|
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0.07
|
0.04
|
|
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Mark-to-market
adjustments – Pension/OPEB actuarial
assumptions
|
|
—
|
—
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|
(0.06)
|
—
|
|
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Strategic transaction
costs
|
|
—
|
—
|
|
—
|
0.01
|
|
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Regulatory
charges
|
|
0.02
|
0.16
|
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0.03
|
0.18
|
|
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State tax legislative
changes
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|
—
|
0.01
|
|
—
|
0.01
|
|
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Exit of
generation
|
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0.01
|
0.01
|
|
0.02
|
0.02
|
|
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Total Special
Items*
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0.14
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0.21
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0.28
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0.49
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Operating EPS
(Non-GAAP)
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$0.88
|
$0.79
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$1.94
|
$1.91
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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 continuing
operations EPS (GAAP) and Operating EPS (Non-GAAP)
is based on 571 million
shares for the Third Quarter and First Nine Months 2022 and 573
million shares for the Third Quarter and First Nine
Months
2023.
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Non-GAAP financial measures
* Certain financial
measures, including Operating earnings (loss), Operating earnings
(loss) per share ("EPS"), including by segment, are not calculated
in accordance with GAAP to the extent they exclude the impact of
"special items."
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 earnings (loss), Operating EPS, including
by segment, also exclude the impact of Discontinued Operations.
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. 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, which is 571 million shares
for the third quarter, first nine months, and full year 2022, 573
million shares for the third quarter, first nine months of 2023,
and full year 2023, and 574 million shares for the fourth quarter
of 2023. Intercompany money pool 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, including by segment,
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, 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 Third 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 9:00 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
Third 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,
rising interest rates, 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 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 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, 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 in the
Quarterly Report on Form 10-Q regarding our Climate Strategy,
including our GHG 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 GHG 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.