Slide 1: Focused on Our Future: 2Q 2022 Strategic & Financial Highlights
Focused on Our Future 2Q 2022 Strategic & Financial Highlights Steven E. Strah, President and CEO K. Jon Taylor, SVP, CFO & Strategy
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 (“EPS”), and Operating EPS by segment. Generally, a non-GAAP financial measure is a numerical measure of a company’s
Slide 4: Executing On Our Plan
Executing On Our Plan Steve Strah, President and CEO Strategic & Financial Highlights – Published July 26, 2022 Reported 2Q22 GAAP EPS of $0.33 and Operating (non-GAAP) EPS of $0.53 Updating 2022 GAAP EPS forecast to $2.17-$2.37 Reaffirming 2022 Operating (non-GAAP) EPS guidance of $2.30-$2.50 Reaff
Slide 5: Strategic Updates: Energizing the Future
Energizing the Future ■ Transmission continues to be one of the focal points of our strategy ■ Our Energizing the Future program has a relentless focus on reliability improvements for our customers ■ Building on this success within ATSI and across our territory as we continue expanding this program
Slide 6: Strategic Updates: Ohio Grid Modernization
Strategic Updates Ohio Grid Modernization Strategic & Financial Highlights – Published July 26, 2022 Pilot Programs ■ Providing managed electric vehicle charging incentive programs ■ Installing a battery storage system designed to support increased EV charging load along the Ohio Turnpike ■ Installi
Slide 7: Other Regulatory Updates
Other Regulatory Updates Strategic & Financial Highlights – Published July 26, 2022 NJ Light-Duty EV Driven Charging Program ■ In June, NJ BPU approved the settlement of our light-duty EV-driven program ■ Four-year, $40M program is designed to accelerate the adoption of light-duty EVs with incentive
Slide 8: Pension Update
Pension Update Jon Taylor, SVP, CFO and Strategy Strategic & Financial Highlights – Published July 26, 2022 ■ The impact of the pandemic, the war in Ukraine, and other macro-economic factors has resulted in extreme inflation and market volatility that we have not seen in 40+ years ■ We don’t believe
Slide 9: Pension Update (Continued)
Pension Update (Continued) Strategic & Financial Highlights – Published July 26, 2022 ■ We have identified specific steps to address the potential pension headwind – Transitioning more investments to formula rates with real-time returns, while working to lower base operating expenses – Accelerating
Slide 10: Financial Updates
Financial Updates Strategic & Financial Highlights – Published July 26, 2022 ■ Proud of the significant progress we’ve made to improve our balance sheet and strengthen the credit profile of FirstEnergy – Eliminated ~$2.4B in FE HoldCo debt in 1H 2022; ~$125M in annual interest costs savings – 26% FE
Slide 11: 2Q 2022 Earnings Summary
2Q 2022 Earnings Summary Strategic & Financial Highlights – Published July 26, 2022 ■ Reported 2Q 2022 GAAP earnings of $0.33 per share vs. $0.11 per share in 2Q21 – 2Q 2022 results include $0.20 of special items, including debt related costs ($0.17), investigation and other related costs ($0.02) an
Slide 12: YTD June 2022 Earnings Summary
YTD June 2022 Earnings Summary Strategic & Financial Highlights – Published July 26, 2022 ■ Reported YTD 2022 GAAP earnings of $0.83 per share vs. $0.72 per share in YTD 2021 – YTD 2022 results include $0.29 of special items, including debt related costs ($0.23), investigation and other related cost
Slide 13: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community Strategic & Financial Highlights – Published July 26, 2022 14. 2Q Earnings Summary and Reconciliation 15. 2Q Earnings Drivers by Segment 16. YTD Earnings Summary and Reconciliation 17. YTD Earnings Drivers by Segment 18. Special Items Descriptions 19. 2
Slide 14: EPS Variance Analysis (2Q)
EPS Variance Analysis Regulated Regulated Corporate / FirstEnergy Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 2Q 2021 Earnings (Loss) Attributable to FirstEnergy Corp. (GAAP) $274 $116 $(332) $58 2Q 2021 Basic Earnings (Loss) Per Share (avg. shares outs
Slide 15: Earnings Drivers: 2Q 2022 vs. 2Q 2021
Earnings Drivers: 2Q 2022 vs. 2Q 2021 Regulated Distribution (RD) ▪ Accounting policy changes ($0.05): Due to lower capitalization of vegetation management spend ($0.03) and corporate support costs ($0.02) ▪ Ohio rate credits ($0.03): Resulting from the 4Q21 unanimous settlement to provide FE's Ohio
Slide 16: EPS Variance Analysis (YTD)
EPS Variance Analysis Regulated Regulated Corporate / FirstEnergy Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 2021 Earnings (Loss) Attributable to FirstEnergy Corp. (GAAP) $587 $225 $(419) $393 2021 Basic Earnings (Loss) Per Share (avg. shares outstandi
Slide 17: Earnings Drivers: YTD June 2022 vs. YTD June 2021
Earnings Drivers: YTD June 2022 vs. YTD June 2021 Regulated Distribution (RD) ▪ Accounting policy changes ($0.10): Due to lower capitalization of vegetation management spend ($0.06) and corporate support costs ($0.04) ▪ Ohio rate credits ($0.05): Resulting from the 4Q21 unanimous settlement to provi
Slide 18: Special Items Descriptions
Special Items Descriptions ▪ Regulatory charges: Primarily reflects the impact of regulatory agreements, proceedings, audits, concessions or orders requiring certain commitments, refunds, and/or disallowing the recoverability of costs, net of related credits. ▪ Debt-related costs: Primarily reflects
Slide 19: 2nd Quarter 2022 Earnings Results
2nd Quarter 2022 (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 $ 2,374 $ 440 $ (37) $ 2,777 $ — $ 1 (a) $ — $ 1 $ 2,374 $ 441 $ (37) $ 2,778 (2) Other 52 1 (12) 41 — — — — 52 1 (12) 41 (3) Total Revenu
Slide 20: 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 21: 2nd Quarter 2022 vs 2nd Quarter 2021
2nd Quarter 2022 vs 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 $ 165 $ 29 $ (1) $ 193 $ (1) $ 1 $ — $ — $ 164 $ 30 $ (1) $ 193 (2) Other 3 (7) 7 3 — — — — 3 (7) 7 3 (3) Total Revenu
Slide 22: YTD June 2022 Earnings Results
YTD June 2022 (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 $ 4,906 $ 891 $ (76) $ 5,721 $ — $ 3 (a) $ — $ 3 $ 4,906 $ 894 $ (76) $ 5,724 (2) Other 109 3 (26) 86 — — — — 109 3 (26) 86 (3) Total Revenue
Slide 23: 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 24: YTD June 2022 vs YTD June 2021
YTD June 2022 vs 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 $ 381 $ 79 $ (6) $ 454 $ (27) $ 3 $ — $ (24) $ 354 $ 82 $ (6) $ 430 (2) Other 6 (9) 8 5 — — — — 6 (9) 8 5 (3) Total Revenues
Slide 25: Quarterly Support & Guidance
Quarterly Support & Guidance Strategic & Financial Highlights – Published July 26, 2022 26. 2022 Key Priorities 27. 2022 Regulatory Calendar 28. TTM RD ROEs – by State 29. TTM Actual Sales by Class 30. TTM Weather-Adjusted Sales 31. TTM Weather Impacts 32. Credit Ratings Summary 33. Credit Profile 3
Slide 26: 2022 Key Priorities
2022 Key Priorities Strategic & Financial Highlights – Published July 26, 2022 ■ Transform how we operate and enhance our organization – Simplify and implement best practices throughout our organization – Focus on customer experience – Improve organizational health and culture ■ Focus on performance
Slide 27: 2022 Regulatory Calendar
2022 Regulatory Calendar Select Proceedings Strategic & Financial Highlights – Published July 26, 2022 Jurisdiction Key Dates Ohio • DCR Audit (includes vendor payments, naming rights and agreement disclosure review(1)) • Corporate Separation Audit • DMR Review Audit • Political and Charitable Spend
Slide 28: RD Segment – State ROEs
RD Segment – State ROEs TTM 6/30/2022 Strategic & Financial Highlights – Published July 26, 2022 Key Common Regulatory Adjustments ■ Actual revenue, not weather normalized ■ Income taxes calculated using statutory rates, consistent with practice used in base rate case filings ■ Pension/OPEB (i.e., e
Slide 29: Sales by Class
(MWh in thousands) 3Q20 3Q21 4Q20 4Q21 1Q21 1Q22 2Q21 2Q22 TTM 2Q21 TTM 2Q22 Residential 16,091 15,652 12,919 12,735 14,890 15,213 12,347 12,146 56,247 55,746 Commercial 9,589 9,785 8,495 8,594 8,631 9,291 8,590 8,716 35,305 36,385 Industrial 13,560 14,018 12,916 13,368 13,257 13,583 13,384 13,711 5
Slide 30: Weather-Adjusted Sales by Class
(MWh in thousands) 3Q20 3Q21 4Q20 4Q21 1Q21 1Q22 2Q21 2Q22 TTM 2Q21 TTM 2Q22 Residential 15,157 15,200 13,418 13,220 15,397 15,170 11,861 11,796 55,833 55,386 Commercial 9,360 9,672 8,631 8,753 8,853 9,265 8,466 8,627 5,310 36,317 Industrial 13,533 14,018 12,942 13,368 13,258 13,583 13,384 13,711 53
Slide 31: Weather Impacts
Weather Impacts Strategic & Financial Highlights – Published July 26, 2022 0 100 200 300 400 500 1,400 1,150 900 650 400 150 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 HDD CDD HDD Norm CDD Norm OH PA NJ WV MD Total Days % Days % Days % Days % Days % Days % 2Q
Slide 32: Credit Ratings
■ On July 22, 2022, Fitch issued one-notch upgrades on FE, FET, and all subsidiaries. • All companies are now investment grade with a Stable outlook ■ On November 8, 2021, Moody’s changed FE’s outlook to Positive from Stable • Outlook changed at OE to Stable from Negative ■ On November 8, 2021, S&P
Slide 33: Credit Profile
Credit Profile As of July 25, 2022 Strategic & Financial Highlights – Published July 26, 2022 (1) S&P could raise the ratings on FE and its subsidiaries over the next 12-24 months if FE maintains FFO to debt of consistently above 12% or improves its management and governance. This could occur if FE
Slide 34: Consolidated Long-Term Debt Maturities
Consolidated Long-Term Debt Maturities As of June 30, 2022 Strategic & Financial Highlights – Published July 26, 2022 $20.7B FACE VALUE AVG RATES FEU FET CORP 4.54% 4.01% 4.15% AVG LENGTH FEU FET CORP 12yrs 11yrs 12yrs $M Excludes securitization bonds 3 0 0 1 ,2 0 0 4 5 0 6 5 0 4 5 0 7 7 5 1 ,0 0 5
Slide 35: Pension/OPEB Summary
Pension/OPEB Summary 2020-2022F Financial Impacts Strategic & Financial Highlights – Published July 26, 202235 Pre-Tax $M, except EPS 2020 2021 2022F Service Cost (post-capitalization) $99 $97 $100 Interest Cost 302 237 280 EROA (651) (688) (695) Amort. of Prior Cost (Credit) (34) (14) (5) Net Perio
Slide 36: Pension/OPEB Cost (Credit) Details
Pension/OPEB Cost (Credit) Details 2022F by Segment Strategic & Financial Highlights – Published July 26, 202236 $M RD RT Corp FE Cons Service Cost, post-capitalization $85 $5 $10 $100 Interest Cost 210 15 60 280 Expected Return on Assets (560) (35) (100) (695) Amort. of Prior Cost (Credit) / Other
Slide 37: Financial Guidance Overview
6 % 55-65% 13%6-8% Financial Guidance Overview Long-Term Operating EPS Growth (Average Annual) Rate Base Growth through 2025 (Average Annual) Dividend Policy: Targeted Payout Ratio FFO-to-Debt Target (expect in 2023) LONG-TERM GUIDANCE 1.56/SH $2.30 - $2.50/sh 2022 Operating EPS Guidance(2) 2022 Inv
Slide 38: Sustainable Investment Plan (2021-2025)
Sustainable Investment Plan (2021-2025) (1) Includes capital-like investments that earn a return (2) Subject to future regulatory approvals Note: Does not include JCP&L’s proposal to support NJ offshore wind projects To strengthen the grid and enable the energy transition Plan includes $10B+ of sust
Slide 39: Investment Plan Summary (2021-2025)
Investment Plan Summary (2021-2025) ~$17B investment plan to strengthen the grid and enable the energy transition Increasing the percentage of formula rate investments; Targeting ~75% in 2025 Plan includes higher RT investments and refocused RD spend through FE Forward Notes: Includes capital-like i
Slide 40: Rate Base Summary (2021-2025)
Rate Base Summary (2021-2025) Notes: Includes capital-like investments that earn a return We expect to update the forecast over the period for items such as regulatory filings and approvals, and other changes $B $16.2 $17.0 $17.6 $18.1 $18.7 $8.1 $8.9 $9.6 $10.6 $11.4 2021A 2022F 2023F 2024F 2025F R
Slide 41: Targeting 6-8% Annual Operating EPS Growth
Targeting 6-8% Annual Operating EPS Growth Key Drivers to consider over time ▪ Investments & new rates ▪ Optimized operating expenses ▪ Customer demand and load trends (economy, electrification, post-pandemic impacts) ▪ Pension (asset performance & interest rates) ▪ Economic factors (GDP, inflation,
Slide 42: 2022 Operating EPS Guidance
2022 Operating EPS(1) Guidance 2021A Operating EPS(2) (545M shares) 2022 Guidance Range: $2.30 - $2.50 2022F Operating EPS Midpoint(2) (571M shares) (1) See Slide 3 for information on Non-GAAP Financial Matters (2) See Slides 48-49 or GAAP to Non-GAAP earnings reconciliation (3) Includes impact of $
Slide 43: 2021-2025 Financing Plan
2021-2025 Financing Plan ($B) Strategic & Financial Highlights – Published July 26, 2022 ~30% of investments funded with debt; allows for improved utility capital structures and stronger credit profiles prior to more active rate proceedings $2.4B FET minority interest sale (closed 2Q22) $1B common e
Slide 44: 2021-2025 Cash Flow & Debt Projections
2021-2025 Cash Flow & Debt Projections ($B) Strategic & Financial Highlights – Published July 26, 2022 Investment-grade credit profile supports ~$17B investment plan and sustainable earnings growth; on track to meet ~13% FFO/Debt in 2023 Cash From Operations growth is primarily driven by continued f
Slide 45: Dividend Overview
Dividend Overview Dividend payments are subject to declaration by the Board of Directors, which will consider the risks and uncertainties of the government investigations, among other matters $1.44/sh $1.52/sh $1.56/sh $1.56/sh $1.56/sh 2014-2018 2019 2020 2021 2022F Annual Dividends Per Share Expec
Slide 46: Long-Term Load Forecast
Long-Term Load Forecast Weather-Adjusted; M MWHs (1) Commercial includes street lighting ’21A ‘22F ‘23F ‘24F ‘25F Total 145 148 148 150 149 Res 56 55 54 55 54 Com 36 37 36 36 36 Ind 54 57 58 59 59 Residential ’21A ‘22F% Chg 56 55 -1% 18 17 -2% 19 19 -1% 6 6 - 10 10 -2% 3 3 - Commercial(1) ’21A ‘22F%
Slide 47: 2022 Guidance Sensitivities
2022 Guidance Sensitivities RD Segment ■ ~80-90% of Commercial and Industrial revenues are based on fixed charges ■ Residential class is more sensitive to changes in volume due to a higher percentage of volume-based revenues Weather Impact on Residential/Commercial Sales Volumes + / - 80 HDD vs. nor
Slide 48: 2021 GAAP to Operating (Non-GAAP) Earnings Reconciliation
2021 GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation Strategic & Financial Highlights – Published July 26, 2022 (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 b
Slide 49: 2022F GAAP to Operating (Non-GAAP) Earnings Reconciliation
2022F GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation Strategic & Financial Highlights – Published July 26, 2022 (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
Slide 50: 2021-2022 Special Items
2021-2022 Special Items(1) (1) 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. Specia