Slide 1: Focused on Our Future: 3Q 2022 Strategic & Financial Highlights
Focused on Our Future 3Q 2022 Strategic & Financial Highlights John Somerhalder II, Interim President & CEO K. Jon Taylor, SVP & 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 (“EPS”), and Operating EPS by segment. Generally, a non-GAAP financial measure is a numerical measure of a company’s
Slide 4: Strong Future for FirstEnergy
Strategic & Financial Highlights – Published October 25, 20224 Reported 3Q22 GAAP EPS of $0.58 and Operating (non-GAAP) EPS of $0.79, at high end of 3Q range Updating 2022 GAAP EPS forecast to $2.01-$2.21 Reaffirming 2022 Operating (non-GAAP) EPS guidance of $2.30-$2.50; expect results in top half o
Slide 5: Focused on Our Future
Focused on Our Future Strategic & Financial Highlights – Published October 25, 20225 ■ The Board’s external search for a new CEO is underway and we anticipate an announcement in late 2022 or early 2023 ■ The Board is excited about the future of the Company and is confident in the leadership team and
Slide 6: Regulatory and Business Updates
Regulatory and Business Updates Jon Taylor, SVP & CFO Strategic & Financial Highlights – Published October 25, 20226 West Virginia ■ In September, PSC approved a settlement agreement to recover the capital investment required to operate our two coal plants beyond 2028 ■ 50 MW of utility scale solar
Slide 7: Financial Updates
Financial Updates Strategic & Financial Highlights – Published October 25, 20227 ■ Interest expense remains manageable through 2024; minimal new money requirements and high coupon debt maturities – Upcoming distribution base rate case filings will allow us to address the increased cost of debt ■ We
Slide 8: Financial Updates – Pension
Financial Updates – Pension Strategic & Financial Highlights – Published October 25, 20228 ■ With extreme volatility in both interest rates and global equity markets continuing, our approach to addressing the pension headwind remains consistent with what we laid out in July ■ The potential 2023 EPS
Slide 9: 3Q 2022 Earnings Summary
3Q 2022 Earnings Summary Strategic & Financial Highlights – Published October 25, 20229 ■ Reported 3Q 2022 GAAP earnings of $0.58 per share vs. $0.85 per share in 3Q21 – 3Q 2022 results include $0.21 of special items, including regulatory charges ($0.16), investigation and other related costs ($0.03
Slide 10: YTD September 2022 Earnings Summary
YTD September 2022 Earnings Summary Strategic & Financial Highlights – Published October 25, 202210 ■ Reported YTD 2022 GAAP earnings of $1.42 per share vs. $1.57 per share in YTD 2021 – YTD 2022 results include $0.49 of special items, including debt-related costs ($0.22), regulatory charges ($0.18)
Slide 11: Guidance Updates
Guidance Updates ▪ Remain committed to meeting 2022 financial commitments – Updating 2022 GAAP EPS forecast to $2.01-$2.21 – Expect results in top half of 2022 Operating (non-GAAP) EPS guidance range of $2.30-$2.50, assuming normal weather Strategic & Financial Highlights – Published October 25, 202
Slide 12: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community Strategic & Financial Highlights – Published October 25, 2022 13. 3Q Earnings Summary and Reconciliation 14. 3Q Earnings Drivers by Segment 15. YTD Earnings Summary and Reconciliation 16. YTD Earnings Drivers by Segment 17. Special Items Descriptions 18
Slide 13: EPS Variance Analysis (3Q)
EPS Variance Analysis Regulated Regulated Corporate / FirstEnergy Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 3Q 2021 Earnings (Loss) Attributable to FirstEnergy Corp. (GAAP) $416 $70 $(23) $463 3Q 2021 Basic Earnings (Loss) Per Share (avg. shares outst
Slide 14: Earnings Drivers: 3Q 2022 vs. 3Q 2021
Earnings Drivers: 3Q 2022 vs. 3Q 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 15: 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) $1,003 $295 $(442) $856 2021 Basic Earnings (Loss) Per Share (avg. shares outstan
Slide 16: Earnings Drivers: YTD September 2022 vs. YTD September 2021
Earnings Drivers: YTD September 2022 vs. YTD September 2021 Regulated Distribution (RD) ▪ Accounting policy changes ($0.15): Due to lower capitalization of vegetation management spend ($0.09) and corporate support costs ($0.06) ▪ Ohio rate credits ($0.08): Resulting from the 4Q21 unanimous settlemen
Slide 17: 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 18: 3rd Quarter 2022 Results
3rd 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 $ 2,972 $ 502 $ (39) $ 3,435 $ — $ 58 (a) $ — $ 58 $ 2,972 $ 560 $ (39) $ 3,493 (2) Other 51 1 (12) 40 — — — — 51 1 (12) 40 (3) Total Reve
Slide 19: 3rd Quarter 2021 Results
3rd 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 $ 2,705 $ 411 $ (33) $ 3,083 $ 1 (a) $ — $ — $ 1 $ 2,706 $ 411 $ (33) $ 3,084 (2) Other 54 4 (17) 41 — — — — 54 4 (17) 41 (3) Total Revenu
Slide 20: 3rd Quarter 2022 vs 3rd Quarter 2021
3rd Quarter 2022 vs 3rd 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 $ 267 $ 91 $ (6) $ 352 $ (1) $ 58 $ — $ 57 $ 266 $ 149 $ (6) $ 409 (2) Other (3) (3) 5 (1) — — — — (3) (3) 5 (1) (3) T
Slide 21: YTD September 2022 Results
YTD September 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 $ 7,878 $ 1,393 $ (115) $ 9,156 $ — $ 61 (a) $ — $ 61 $ 7,878 $ 1,454 $ (115) $ 9,217 (2) Other 160 4 (38) 126 — — — — 160 4 (38) 126 (3
Slide 22: YTD September 2021 Results
YTD September 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 $ 7,230 $ 1,223 $ (103) $ 8,350 $ 28 (a) $ — $ — $ 28 $ 7,258 $ 1,223 $ (103) $ 8,378 (2) Other 157 10 (45) 122 — — — — 157 10 (45) 122
Slide 23: YTD September 2022 vs YTD September 2021
YTD September 2022 vs YTD September 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 $ 648 $ 170 $ (12) $ 806 $ (28) $ 61 $ — $ 33 $ 620 $ 231 $ (12) $ 839 (2) Other 3 (6) 7 4 — — — — 3 (6) 7 4 (3) T
Slide 24: Quarterly Support & Guidance
Quarterly Support & Guidance Strategic & Financial Highlights – Published October 25, 2022 25. 2022 Key Priorities 26. 2022 Regulatory Calendar 27. TTM RD ROEs – by State 28. TTM Actual Sales by Class 29. TTM Weather-Adjusted Sales 30. TTM Weather Impacts 31. Credit Ratings Summary 32. Credit Profil
Slide 25: 2022 Key Priorities
2022 Key Priorities Strategic & Financial Highlights – Published October 25, 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 performa
Slide 26: 2022 Regulatory Calendar
Jurisdiction Key Dates Ohio • HB6 Related Investigations • DCR Audit (includes vendor payments, naming rights and agreement disclosure review(1)) • Corporate Separation Audit • DMR Review Audit • Political and Charitable Spend Audit • OH Grid Mod II • On 8/24/22, PUCO granted 6-month stay in HB6 rel
Slide 27: RD Segment – State ROEs
RD Segment – State ROEs TTM 9/30/2022 Strategic & Financial Highlights – Published October 25, 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.
Slide 28: TTM Actual Sales by Class
(MWh in thousands) 4Q20 4Q21 1Q21 1Q22 2Q21 2Q22 3Q21 3Q22 TTM 3Q21 TTM 3Q22 Residential 12,919 12,735 14,890 15,213 12,347 12,146 15,652 15,500 55,808 55,594 Commercial 8,495 8,594 8,631 9,291 8,590 8,716 9,785 9,662 35,501 36,263 Industrial 12,916 13,368 13,257 13,583 13,384 13,711 14,018 14,274 5
Slide 29: Weather-Adjusted Sales by Class
(MWh in thousands) 4Q20 4Q21 1Q21 1Q22 2Q21 2Q22 3Q21 3Q22 TTM 3Q21 TTM 3Q22 Residential 13,418 13,220 15,397 15,170 11,861 11,796 15,200 14,945 55,876 55,131 Commercial 8,631 8,753 8,853 9,265 8,466 8,627 9,672 9,514 35,622 36,159 Industrial 12,942 13,368 13,258 13,583 13,384 13,711 14,018 14,274 5
Slide 30: Weather Impacts
Weather Impacts Strategic & Financial Highlights – Published October 25, 2022 0 100 200 300 400 500 1,400 1,150 900 650 400 150 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 HDD CDD HDD Norm CDD Norm OH PA NJ WV MD Total Days % Days % Days % Days % Days % Days %
Slide 31: Credit Ratings
■ On September 13, 2022, Moody’s issued one-notch downgrades for CEI and TE and changed their outlook to Stable ■ 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 Credit Ratings As of October 24, 2022 S
Slide 32: Credit Profile
Credit Profile As of October 24, 2022 Strategic & Financial Highlights – Published October 25, 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
Slide 33: Consolidated Long-Term Debt Maturities
Consolidated Long-Term Debt Maturities As of September 30, 2022 Strategic & Financial Highlights – Published October 25, 202233 $20.9B FACE VALUE AVG RATES FEU FET CORP 4.57% 4.01% 4.11% AVG LENGTH FEU FET CORP 11yrs 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
Slide 34: Financial Guidance Overview
6% 55-65% 13%6-8% (1) Financial Guidance Overview Long-Term Operating EPS Growth (Average Annual) Rate Base Growth through 2025 (Average Annual) Dividend Policy: Targeted Payout Ratio 2023 FFO/Debt Target (2) LONG-TERM GUIDANCE 1.56/SH $2.30 - $2.50/sh 2022 Operating EPS Guidance(4) 2022 Investment
Slide 35: 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 36: 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 37: 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 RT rate base amounts do not currently reflect the completion of the time study in 3Q22, whi
Slide 38: 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(1) (asset performance & interest rates) ▪ Economic factors (GDP, inflati
Slide 39: 2022 Operating EPS Guidance
2022 Operating EPS(1) Guidance Strategic & Financial Highlights – Published October 25, 202239 ($0.25) $0.85 $1.80 ($0.30) $0.80 $1.90 2021A Operating EPS(2) (545M shares) 2022F Operating EPS Midpoint(2) (571M shares) (1) See Slide 3 for information on Non-GAAP Financial Matters (2) See Slides 45-46
Slide 40: 2021-2025 Financing Plan
2021-2025 Financing Plan ($B) Strategic & Financial Highlights – Published October 25, 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) $1B commo
Slide 41: 2021-2025 Cash Flow & Debt Projections
2021-2025 Cash Flow & Debt Projections ($B) Strategic & Financial Highlights – Published October 25, 2022 Investment-grade credit profile supports ~$17B investment plan and sustainable earnings growth Cash From Operations growth is primarily driven by continued formula investments and in line with e
Slide 42: 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 43: 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 44: 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 45: 2021 GAAP to Operating (Non-GAAP) Earnings Reconciliation
2021 GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation Strategic & Financial Highlights – Published October 25, 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 ar
Slide 46: 2022F GAAP to Operating (Non-GAAP) Earnings Reconciliation
2022F GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation Strategic & Financial Highlights – Published October 25, 2022 (1) Operating earnings exclude special items as described in the reconciliation table above and is a non-GAAP financial measure. (2) Estimating the final discount rate and retu
Slide 47: 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