AKRON, Ohio, July 22, 2021 /PRNewswire/ -- FirstEnergy
Corp. (NYSE: FE) today reported second quarter 2021 GAAP earnings
of $58 million, or $0.11 per basic and diluted share of common
stock, on revenue of $2.6 billion. In
the second quarter of 2020, the company reported GAAP earnings of
$309 million, or $0.57 per basic and diluted share of common
stock, on revenue of $2.5 billion.
GAAP results for the second quarter of 2021 include a charge
related to the company's recently announced Deferred Prosecution
Agreement to resolve the Department of Justice investigation, as
well as other special items listed below.
Operating (non-GAAP) earnings* were $0.59 for the second quarter of 2021, above the
top end of the company's guidance range. In the second quarter of
2020 operating (non-GAAP) earnings were $0.57 per share.
"In addition to our strong performance, we are making
substantial progress to transform FirstEnergy and deliver long-term
value to all stakeholders," said Steven E.
Strah, FirstEnergy president and chief executive officer.
"We remain focused on executing on our strategies and building
positive momentum across our company."
For the third quarter of 2021, FirstEnergy is providing a GAAP
and operating (non-GAAP) forecast range of $380 million to $435
million, or $0.70 to
$0.80 per share based on 544 million
shares outstanding.
The company updated its full-year 2021 GAAP earnings forecast
range to
$1,000 million to $1,110 million, or $1.84 to $2.04 per
share based on 544 million shares outstanding. It reaffirmed its
full-year 2021 operating (non-GAAP) earnings guidance of
$2.40 to $2.60 per share, with expectations to be in the
top half of that range.
Second Quarter
Results
In FirstEnergy's Regulated Distribution business, second quarter
2021 operating results benefited from higher revenues related to
capital investment programs in Ohio and Pennsylvania, the implementation of the base
distribution rate case in New
Jersey, and lower expenses. These factors were offset by the
absence of Ohio lost distribution
revenues and higher interest expense compared to the second quarter
of 2020.
Total distribution deliveries increased 5.3% compared to the
second quarter of 2020, when many pandemic-related restrictions
were in full effect. Residential sales decreased 3.3%
compared to the second quarter of 2020, while Commercial
deliveries increased 9.8%, and sales to industrial customers
increased 11.4%, primarily reflecting a return to more normal
activity.
In the Regulated Transmission business, second quarter 2021
operating results increased over the second quarter of 2020
primarily due to the impact of the company's investments in its
Energizing the Future transmission program, partially offset by
higher interest expense.
In the Corporate/Other segment, second quarter 2021 operating
results declined as compared to last year, reflecting the absence
of tax benefits recognized in the second quarter of 2020.
For the first half of 2021, FirstEnergy reported GAAP earnings
of $393 million, or
$0.72 per basic and diluted share of
common stock, on revenue of $5.3
billion. This compares to GAAP earnings of $383 million, or $0.71 per basic and diluted share of common
stock, on revenue of $5.2 billion in
the first half of 2020. Results for both periods reflect the impact
of special items listed below.
Operating (non-GAAP) earnings* for the first half of 2021 were
$1.28 per share, compared to
$1.23 per share in the first half of
2020. Results for the first half of 2021 as compared to the same
period of last year reflect higher revenues from capital investment
programs and implementation of new rates, the impact of higher
weather-related demand and lower expenses, partially offset by
higher interest expense and the absence of decoupling and lost
distribution revenues in Ohio.
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|
Consolidated GAAP
Earnings 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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2021
Estimates
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|
|
|
2021
|
2020
|
|
2021
|
2020
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|
Third
Quarter
|
Full
Year
|
|
|
Net Income (GAAP)
- $M
|
$58
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$309
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$393
|
$383
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|
$380 - $435
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$1,000 -
$1,110
|
|
|
Basic EPS
(GAAP)
|
$0.11
|
$0.57
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|
$0.72
|
$0.71
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$0.70 -
$0.80
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$1.84 -
$2.04
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|
Excluding Special
Items*:
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|
|
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|
|
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Mark-to-market
adjustments –
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|
|
|
|
|
|
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Pension/OPEB
actuarial assumptions
|
—
|
—
|
|
—
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0.59
|
|
—
|
—
|
|
|
Regulatory
charges
|
0.01
|
—
|
|
0.05
|
0.01
|
|
—
|
0.05
|
|
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Investigation and other
related costs
|
0.45
|
—
|
|
0.49
|
—
|
|
—
|
0.49
|
|
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State tax legislative
changes
|
0.02
|
—
|
|
0.02
|
—
|
|
—
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0.02
|
|
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Exit of generation
credits
|
—
|
—
|
|
—
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(0.08)
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|
—
|
—
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Total Special Items*
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0.48
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—
|
|
0.56
|
0.52
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|
—
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0.56
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Operating EPS
(non-GAAP)
|
$0.59
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$0.57
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$1.28
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$1.23
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$0.70 -
$0.80
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$2.40 -
$2.60
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|
|
|
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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 rates range from 21% to 29%.
Basic EPS (GAAP) and Operating EPS (Non-GAAP) is based on 544
million shares for the second quarter, first six months and full
year 2021, 542 million shares for the second quarter and full year
2020 and 541 million shares for the first six months of
2020.
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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 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) are based on 544 million shares for the second
quarter, first six months and full year 2021, 542 million shares
for the second quarter and full year 2020 and 541 million shares
for the first six months of 2020. Management believes that the
non-GAAP financial measures of Operating earnings (loss) and
Operating earnings (loss) per share and Operating earnings (loss)
per share 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. 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 and
Investor Factbook are posted on the company's Investor
Information website – www.firstenergycorp.com/ir. To access the
report, click on the Second Quarter 2021 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 2021 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 governmental
investigations and agreements, including those associated with
compliance with or failure to comply with the Deferred Prosecution
Agreement with the U.S. Attorney's Office for the S.D. Ohio; the results of the internal
investigation and evaluation of our controls framework and
remediation of our material weakness in internal control over
financial reporting; the risks and uncertainties associated with
government investigations regarding Ohio House Bill 6 and related
matters including potential adverse impacts on federal or state
regulatory matters including, but not limited to, matters relating
to rates; the potential of non-compliance with debt covenants in
our credit facilities due to matters associated with the government
investigations regarding Ohio House Bill 6 and related matters; the
risks and uncertainties associated with litigation, arbitration,
mediation and similar proceedings; legislative and regulatory
developments, including, but not limited to, matters related to
rates, compliance and enforcement activity; 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, maintaining financial flexibility, 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, strengthening our
balance sheet and growing earnings; economic and weather conditions
affecting future operating results, such as a recession,
significant weather events and other natural disasters, and
associated regulatory events or actions in response to such
conditions; 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 COVID-19 and the
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 and governmental
and regulatory responses to the pandemic; the effectiveness of our
pandemic and business continuity plans, the precautionary measures
we are taking on behalf of our customers, contractors and
employees, our customers' ability to make their utility payment and
the potential for supply-chain disruptions; 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 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, the impact of climate change or
energy efficiency and peak demand reduction mandates; changes in
national and regional economic conditions affecting us and/or our
major industrial and commercial customers or others with which we
do business; the risks associated with cyber-attacks and other
disruptions to our 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 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;
changing market conditions affecting the measurement of certain
liabilities and the value of assets held in our pension trusts and
other trust funds, or causing us to make contributions sooner, or
in amounts that are larger, than currently anticipated; 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; and the risks and other
factors discussed from time to time in our 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, 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.