Firstenergy Corp. · NYSE:FE
Firstenergy — Q1 2021 Earnings Presentation
21 slides from Firstenergy's earnings presentation, Apr 22, 2021
Slide 1: Focused on Our Future: 1Q 2021 Strategic & Financial Highlights
Focused on Our Future 1Q 2021 Strategic & Financial Highlights John W. Somerhalder II, Vice-Chairperson and Executive Director Steven E. Strah, President and CEO K. Jon Taylor, SVP and CFO
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements: This presentation 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 uncertainti
Slide 3: Non-GAAP Financial Matters
Non-GAAP Financial Matters This presentation contains references to non-GAAP financial measures including, among others, Operating earnings (loss), Operating earnings (loss) per share, Operating earnings (loss) per share by segment, and Adjusted cash from operations. Generally, a non-GAAP financial
Slide 4: 1Q 2021 Strategic & Financial Highlights
1Q 2021 Strategic & Financial Highlights Steve Strah, President and CEO Strategic & Financial Highlights – Published April 22, 20214 Priorities ■ Building a world-class compliance function and culture ■ Commitment to strong underlying financials ■ FE Forward: Transformative effort to support near-te
Slide 5: Strategic Overview
Strategic Overview Steve Strah, President and CEO ■ Continuing to cooperate with the ongoing government investigations ■ Began discussions with the DOJ regarding the resolution of this matter, including the possibility of entering into a deferred prosecution agreement – We cannot currently predict t
Slide 6: Regulatory Updates
Regulatory Updates Steve Strah, President and CEO ■ Continue taking proactive steps to reduce regulatory uncertainty – Announced in March 2021, to return to Ohio utility customers all revenues, plus interest, previously collected through decoupling of ~$27M ■ Proactively updated testimony in the ESP
Slide 7: FE Forward Update
FE Forward Update Steve Strah, President and CEO ■ Evaluated FE’s processes, business practices and cultural norms to understand improvement areas ■ Identified more than 300 opportunities in many areas of the company to: – Enhance and automate processes – Utilize data and analytics to take a more st
Slide 8: Compliance Updates
Compliance Updates John Somerhalder II, Vice-Chairperson and Executive Director ■ Focused on advancing the company’s priorities, strengthening governance and compliance functions, and enhancing relationships with external stakeholders ■ The Board’s internal investigation has revealed no new material
Slide 9: Compliance Updates (Continued)
Compliance Updates (Continued) John Somerhalder II, Vice-Chairperson and Executive Director ■ Senior Vice President and Chief Legal Officer Hyun Park (January 2021) ■ Vice-Chairperson and Executive Director John Somerhalder II (March 2021) ■ Vice President and Chief Ethics and Compliance Officer Ant
Slide 10: Compliance Updates (Continued)
Compliance Updates (Continued) John Somerhalder II, Vice-Chairperson and Executive Director Strategic & Financial Highlights – Published April 22, 202110 ■ Continuing to build new, more centralized compliance organization under Antonio Fernández’s leadership ■ Enhancing processes, policies and contr
Slide 11: 1Q 2021 Earnings Summary
1Q 2021 Earnings Summary Jon Taylor, SVP and CFO Strategic & Financial Highlights – Published April 22, 202111 RD: $0.54 RT: $0.22 Corp: ($0.10) RD: $0.62 RT: $0.20 Corp: ($0.13) Includes ($0.02) from RCF Borrowings ■ Reported 1Q 2021 GAAP earnings of $0.62 per share vs. $0.14 in 1Q 2020 – 1Q 2021 r
Slide 12: Financial Updates
FET Senior Notes Issuance in March 2021 Issued $500M of 2.87% senior unsecured notes due 2028 Offering was oversubscribed and on par with an investment- grade deal Strong, well-supported bond offering, that showcased the strength of our transmission business Used proceeds to repay $500M in short-ter
Slide 13: Financial Updates (Continued)
Financial Updates (Continued) Jon Taylor, SVP and CFO ■ Continue to provide rating agencies with regular updates on our business, and working with them to develop clear outline of what is needed to return FE to investment-grade credit ratings ■ Targeting funds-from-operations to debt ratio of 12-13%
Slide 14: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community Strategic & Financial Highlights – Published April 22, 202114 15. 1Q Earnings Summary and Reconciliation 16. 1Q Earnings Drivers by Segment 17. Special Items Descriptions 18. 1Q 2021 Earnings Results 19. 1Q 2020 Earnings Results 20. Quarter-over-Quarter
Slide 15: EPS Variance Analysis
EPS Variance Analysis Regulated Regulated Corporate / FirstEnergy Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 1Q 2020 Net Income (Loss) (GAAP) $136 $117 $(179) $74 1Q 2020 Basic Earnings (Loss) Per Share (avg. shares outstanding 541M) $0.25 $0.22 $(0.33
Slide 16: Earnings Drivers: 1Q 2021 vs. 1Q 2020
Earnings Drivers: 1Q 2021 vs. 1Q 2020 Regulated Distribution (RD) ▪ Distribution - Rates & Riders: Incremental rider revenues in OH and PA, and the implementation of the NJ distribution base rate case, increased earnings by $0.05 per share. ▪ Distribution Revenues - Weather-Adjusted Demand: Higher w
Slide 17: Special Items Descriptions
Special Items Descriptions ▪ Regulatory charges: Primarily reflects the impact of regulatory agreements, concessions or orders requiring certain commitments and/or disallowing the recoverability of costs, net of related credits. ▪ Exit of generation credits: Primarily reflects charges or credits res
Slide 18: 1st Quarter 2021 Earnings Results
1st Quarter 2021 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) RD RT Corp FE RD RT Corp FE RD RT Corp FE (1) Electric sales $ 2,316 $ 401 $ (34) $ 2,683 $ 26 (a) $ — $ — $ 26 $ 2,342 $ 401 $ (34) $ 2,709 (2) Other 54 4 (15) 43 — — — — 54 4 (15) 43 (3) Total Reve
Slide 19: 1st Quarter 2020 Earnings Results
1st Quarter 2020 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) RD RT Corp FE RD RT Corp FE RD RT Corp FE (1) Electric sales $ 2,299 $ 397 $ (35) $ 2,661 $ — $ — $ — $ — $ 2,299 $ 397 $ (35) $ 2,661 (2) Other 59 4 (15) 48 — — — — 59 4 (15) 48 (3) Total Revenues 2
Slide 20: 1st Quarter 2021 vs 1st Quarter 2020
1st Quarter 2021 vs 1st Quarter 2020 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) RD RT Corp FE RD RT Corp FE RD RT Corp FE (1) Electric sales $ 17 $ 4 $ 1 $ 22 $ 26 $ — $ — $ 26 $ 43 $ 4 $ 1 $ 48 (2) Other (5) — — (5) — — — — (5) — — (5) (3) Total Revenues 12
Slide 21: 2021F GAAP to Operating (Non-GAAP) Earnings Reconciliation
2021F GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation (1) Operating earnings exclude special items as described in the reconciliation table above and is a non-GAAP financial measure. Per share amounts for the special items above are based on the after-tax effect of each item divided by the n