Firstenergy Corp. · NYSE:FE
Firstenergy — Q2 2021 Earnings Presentation
31 slides from Firstenergy's earnings presentation, Jul 22, 2021
Slide 1: Focused on Our Future: 2Q 2021 Strategic & Financial Highlights
Focused on Our Future 2Q 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 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 uncertainties and readers are cautioned
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, Adjusted Equity, Adjusted Debt, Adjusted Capitalization, Funds from
Slide 4: 2Q 2021 Strategic & Financial Highlights
2Q 2021 Strategic & Financial Highlights Steve Strah, President and CEO Strategic & Financial Highlights – Published July 22, 20214 ■ Update on DOJ and Other Investigations Related to House Bill 6 ■ Board Activity ■ Progress of Our Compliance Program ■ Recent Business Developments ■ 2Q21 Results and
Slide 5: DOJ Update
DOJ Update Steve Strah, President and CEO Strategic & Financial Highlights – Published July 22, 20215 ■ Announced that we’ve entered into an agreement with the U.S. Attorney’s Office for the Southern District of Ohio to resolve the DOJ investigation into FirstEnergy – Under the 3-year Deferred Prose
Slide 6: Strategic Overview
Strategic Overview Steve Strah, President and CEO Strategic & Financial Highlights – Published July 22, 20216 ■ In May, held our first town hall with employees to discuss what compliance, ethics and integrity mean at FirstEnergy and the importance of building a culture of trust ■ Next week, we plan
Slide 7: Board Activity
Board Activity John Somerhalder II, Vice-Chairperson and Executive Director ■ Jesse, Melvin, Lisa and Paul comprise our new Special Litigation Committee – This committee has full and binding authority to determine the company’s actions with respect to the pending shareholder derivative litigation –
Slide 8: Compliance Updates
Compliance Updates John Somerhalder II, Vice-Chairperson and Executive Director ■ We continue to make timely progress in our ethics and compliance program ■ Published our updated internal Code of Business Conduct; The Power of Integrity – Supported by ongoing education around behaviors and importanc
Slide 9: FE Forward Update
FE Forward Update Steve Strah, President and CEO ■ Included ethics and compliance into FE Forward ■ Entered third phase; a full-scale effort to execute our implementation plans ■ Expected to deliver immediate value and resilience – Cumulative free cash flow improvements of ~$800M from 2021 through 2
Slide 10: Regulatory Updates
Regulatory Updates Steve Strah, President and CEO ■ In July, PUCO approved our filing to return ~$27 million to our Ohio utility customers, representing all revenues that were previously collected through the decoupling mechanism, plus interest ■ We remain committed to working with a broad range of
Slide 11: 2Q 2021 Earnings Summary
2Q 2021 Earnings Summary Jon Taylor, SVP and CFO Strategic & Financial Highlights – Published July 22, 202111 ■ Reported 2Q 2021 GAAP earnings of $0.11 per share vs. $0.57 per share in 2Q 2020 – 2Q 2021 results include ($0.48) of special items, including investigation and other related costs ($0.45)
Slide 12: YTD June 2021 Earnings Summary
YTD June 2021 Earnings Summary Jon Taylor, SVP and CFO Strategic & Financial Highlights – Published July 22, 202112 RD: $1.01 RT: $0.43 Corp: ($0.21) RD: $1.12 RT: $0.42 Corp: ($0.26) Includes ($0.03) from RCF Borrowings ■ Reported YTD 2021 GAAP earnings of $0.72 per share vs. $0.71 per share in YTD
Slide 13: Financial Updates
Financial Updates Jon Taylor, SVP and CFO ■ Weather-adjusted Residential sales consistently higher than pre-pandemic levels – Industrial sales are improving towards pre-pandemic levels; Commercial sales continue to lag ■ Our continued focus on financial discipline, and strong financial results, resu
Slide 14: Financial Updates (Continued)
Financial Updates (Continued) Jon Taylor, SVP and CFO ■ Met our commitment to reduce short-term borrowings in 2021 by repaying all borrowings under our revolving credit facilities; plan to operate normal course moving forward – Repaid $950M in 2Q21 and the remaining $500M on Wednesday, July 21 – Whi
Slide 15: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community Strategic & Financial Highlights – Published July 22, 202115 16. 2Q Earnings Summary and Reconciliation 17. 2Q Earnings Drivers by Segment 18. YTD Earnings Summary and Reconciliation 19. YTD Earnings Drivers by Segment 20. Special Items Descriptions 21.
Slide 16: EPS Variance Analysis
EPS Variance Analysis Regulated Regulated Corporate / FirstEnergy Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 2Q 2020 Net Income (Loss) (GAAP) $251 $114 $(56) $309 2Q 2020 Basic Earnings (Loss) Per Share (avg. shares outstanding 542M) $0.47 $0.21 $(0.11
Slide 17: Earnings Drivers: 2Q 2021 vs. 2Q 2020
Earnings Drivers: 2Q 2021 vs. 2Q 2020 Regulated Distribution (RD) ▪ Distribution - Rates & Riders: Higher rider revenues from capital investment programs in OH and PA, and the implementation of the NJ distribution base rate case, increased earnings by $0.02 per share. ▪ Distribution Revenues - Weath
Slide 18: FirstEnergy EPS Variance Analysis (YTD)
FirstEnergy EPS Variance Analysis Regulated Regulated Corporate / Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 2020 Net Income (Loss) (GAAP) $387 $231 $(235) $383 2020 Basic Earnings (Loss) Per Share (avg. shares outstanding 541M) $0.72 $0.43 $(0.44) $0.
Slide 19: Earnings Drivers: YTD June 2021 vs. YTD June 2020
Earnings Drivers: YTD June 2021 vs. YTD June 2020 Regulated Distribution (RD) ▪ Distribution - Rates & Riders: Higher rider revenues from capital investment programs in OH and PA, and the implementation of the NJ distribution base rate case, increased earnings by $0.06 per share. ▪ Distribution Reve
Slide 20: 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 21: 2nd Quarter 2021 Earnings Results
2nd 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 $ 2,209 $ 411 $ (36) $ 2,584 $ 1 (a) $ — $ — $ 1 $ 2,210 $ 411 $ (36) $ 2,585 (2) Other 49 8 (19) 38 — — — — 49 8 (19) 38 (3) Total Revenu
Slide 22: 2nd Quarter 2020 Earnings Results
2nd 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 $ 2,132 $ 380 $ (35) $ 2,477 $ — $ — $ — $ — $ 2,132 $ 380 $ (35) $ 2,477 (2) Other 56 4 (15) 45 — — — — 56 4 (15) 45 (3) Total Revenues 2
Slide 23: 2nd Quarter 2021 vs 2nd Quarter 2020
2nd Quarter 2021 vs 2nd 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 $ 77 $ 31 $ (1) $ 107 $ 1 $ — $ — $ 1 $ 78 $ 31 $ (1) $ 108 (2) Other (7) 4 (4) (7) — — — — (7) 4 (4) (7) (3) Total Re
Slide 24: YTD June 2021 Earnings Results
YTD June 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 $ 4,525 $ 812 $ (70) $ 5,267 $ 27 (a) $ — $ — $ 27 $ 4,552 $ 812 $ (70) $ 5,294 (2) Other 103 12 (34) 81 — — — — 103 12 (34) 81 (3) Total Rev
Slide 25: YTD June 2020 Earnings Results
YTD June 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 $ 4,431 $ 777 $ (70) $ 5,138 $ — $ — $ — $ — $ 4,431 $ 777 $ (70) $ 5,138 (2) Other 115 8 (30) 93 — — — — 115 8 (30) 93 (3) Total Revenues 4,
Slide 26: YTD June 2021 vs YTD June 2020
YTD June 2021 vs YTD June 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 $ 94 $ 35 $ — $ 129 $ 27 $ — $ — $ 27 $ 121 $ 35 $ — $ 156 (2) Other (12) 4 (4) (12) — — — — (12) 4 (4) (12) (3) Total Reven
Slide 27: 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
Slide 28: Quarterly Appendix Information
Quarterly Appendix Information Strategic & Financial Highlights – Published July 22, 202128 SALES INFORMATION 29. TTM Actual Sales by Class 30. TTM Weather-Adjusted Sales 31. TTM Weather Impacts TABLE OF CONTENTS (Slide) Irene M. Prezelj, Vice President prezelji@firstenergycorp.com 330.384.3859 Gina
Slide 29: TTM Actual Sales by Class
(MWh in thousands) 3Q19 3Q20 4Q19 4Q20 1Q20 1Q21 2Q20 2Q21 TTM 2Q20 TTM 2Q21 Residential 15,306 16,091 12,850 12,919 13,204 14,890 12,764 12,347 54,124 56,247 Commercial 10,148 9,589 8,980 8,496 8,901 8,631 7,825 8,590 35,854 35,306 Industrial 14,477 13,560 13,618 12,917 13,548 13,257 12,009 13,384
Slide 30: Weather-Adjusted Sales by Class
Weather-Adjusted Sales by Class Percent change vs. prior year Strategic & Financial Highlights – Published July 22, 202130 (MWh in thousands) 3Q19 3Q20 4Q19 4Q20 1Q20 1Q21 2Q20 2Q21 TTM 2Q20 TTM 2Q21 Residential 14,387 15,157 12,921 13,418 14,899 15,397 12,669 11,861 54,876 55,833 Commercial 9,903 9
Slide 31: Weather Impacts
Weather Impacts Strategic & Financial Highlights – Published July 22, 202131 OH PA NJ WV MD Total Days % Days % Days % Days % Days % Days % 2Q21 HDD vs Normal 8 1% 41 7% -46 -9% 96 20% 4 1% 17 3% HDD vs 2Q20 -138 -17% -133 -18% -167 -27% -54 -9% -143 -23% -134 -18% CDD vs Normal 89 37% 46 18% 84 25%