Firstenergy Corp. · NYSE:FE
Firstenergy — Q2 2024 Earnings Presentation
35 slides from Firstenergy's earnings presentation, Jul 31, 2024
Slide 1: Focused on Our Future: 2Q 2024 Strategic & Financial Highlights
Focused on Our Future 2Q 2024 Strategic & Financial Highlights Published July 30, 2024
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 certain financial measures including Operating earnings (loss) and Operating earnings (loss) per share (“EPS”), including by segment and the impact of special items on the following measures: Total revenues, Total operating expenses
Slide 4: Focus of Today's Call
Focus of Today’s Call Brian X. Tierney – President and Chief Executive Officer ■ Delivered on 2Q financial objectives and on track to meet our goals ■ Key accomplishments to position FE for the future ■ Updates on regulatory proceedings, data center activity, and legacy issues K. Jon Taylor – Senior
Slide 5: Financial Overview
Financial Overview Key Highlights 2024 vs 2023 EPS Results Delivered 2Q24 Operating EPS of $0.56, $0.01 above Second Quarter guidance midpoint and $0.09 above 2Q23 results YTD June $1.11 $1.06 Delivered YTD24 Operating EPS of $1.11, $0.05 above $0.92 $0.56 YTD23 results $0.47 $0.55 $0.41 $0.52 2Q24
Slide 6: Simplified Segments with a New Operating Model
Simplified Segments with a New Operating Model Energize365 Distribution Integrated Stand-Alone Corp/Other Investment Plan Segment Transmission (FE Parent Debt & $26B Reporting OH PA NJ WV & MD Other Obligations) OE CEI TE FE PA JCP&L MP PE FET, LLC KATCo (2024-2028) Leadership Brian Tierney ▪ Focuse
Slide 7: Active Regulatory Plan
Active Regulatory Plan ESP V PUCO order issued May 15th; Application for Rehearing filed June 14th Grid Mod II Settlement agreement filed in April; Hearings concluded on July 2nd Base Rate Case Filed in late May requesting ~$94M rate adjustment, 10.8% ROE, ~55% Equity ratio Base Rate Case Filed in e
Slide 8: Transformational Balance Sheet Improvement
Transformational Balance Sheet Improvement ■ Total equity proceeds of ~$7B since late 2021, equivalent to issuing common equity at $87/sh ■ Reduced FE Corp. long-term debt by $1.7B (22%) since September 2021 (from $7.8B to $6.1B) ■ FE Corp. and all subsidiaries are investment grade at all three rati
Slide 9: Data Center Overview
Data Center Overview Economic Activity Resource Adequacy ▪ Developers focused on all FirstEnergy states ▪ Load growth and baseload retirements could outpace dispatchable generating resource additions ▪ Large load studies (>500 MW) more than doubled in 2024 ▪ FirstEnergy is engaging with our customer
Slide 10: Progress Addressing Legacy Issues
Progress Addressing Legacy Issues OOCIC / PUCO U.S. Department of Justice SEC Investigation Ohio AG Audits ▪ On July 21, the U.S. Attorney’s Office for the ▪ Agreement-in-principle ▪ Progress in resolving ▪ Political and Southern District of Ohio filed a status report with SEC Staff both OOCIC Chari
Slide 11: Shareholder Value Proposition
Shareholder Value Proposition Compelling Total Strong Growth Outlook Attractive Risk Profile Shareholder Return 6-8% long-term annual Operating EPS Targeted 14-15% FFO/Debt over plan Attractive total shareholder return of growth(1) horizon 10-12%+ with potential for upside (6-8% Operating EPS growth
Slide 12: Delivering Financial Results: 2Q 2024 Segment View
Delivering Financial Results 2Q 2024 Earnings Summary – Segment View Our focus on efficient operations and financial discipline allowed us to deliver operating results above the mid-point of 2Q Guidance and $0.09/sh above 2Q23 ▪ Distribution -$0.02: planned increase in Quarter-over-Quarter Operating
Slide 13: Delivering Financial Results: YTD 2024 Segment View
Delivering Financial Results YTD 2024 Earnings Summary – Segment View We remain on track in 2024 due to strong execution on our Energize365 capital investment program, solid financial discipline, and a culture of continuous improvement ▪ Distribution -$0.05: planned increase in YTD Operating EPS Wal
Slide 14: Economic, Load, and Financial Updates
Economic, Load, and Financial Updates Economic and Load Activity Financing Updates GDP Growth ▪ 30% FET interest sale to Brookfield Employment Growth 4.0% 3.0% ✓ Received remaining $1.2B of $3.5B in July 3.5% 2.9% 3.1% 2.9% 2.8% 2.5% 2.5% (received $2.3B in cash at March ’24 close) Growth vs. Prior
Slide 15: Recent Regulatory Activity
Recent Regulatory Activity Ohio Pennsylvania New Jersey Base Rate Case: Update filing due LTIIP III: Filed in July for 5-year, $1.6B of EnergizeNJ: Settlement negotiations July 31 capital investments in progress ▪ Filed May 31 for ~$94M revenue increase on ▪ Builds on LTIIP I (2016-2019) & LTIIP II
Slide 16: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community TABLE OF CONTENTS (Slide) 17. 2Q Earnings Summary and Reconciliation 18. 2Q Earnings Drivers by Segment 19. YTD Summary and Reconciliation 20. YTD Earnings Drivers by Segment 21. Special Items Descriptions 22. 2Q 2024 Earnings Results 23. 2Q 2023 Earnin
Slide 17: 2Q Earnings Summary and Reconciliation
2Q Earnings Summary and Reconciliation Quarterly Summary 2Q 2024 2Q 2023 Change GAAP Earnings Per Basic Share $0.08 $0.41 $(0.33) Special Items $0.48 $0.06 $0.42 Note: Refer to slide 3 for information Operating (Non-GAAP) Earnings Per Share $0.56 $0.47 $0.09 on Non-GAAP Financial Matters. Quarterly
Slide 18: 2Q Earnings Drivers by Segment
2Q Earnings Drivers by Segment Descriptions: 2Q 2024 vs. 2Q 2023 Distribution Integrated Stand-Alone Transmission Corp / Other $0.08: Rates & $0.02: Implementation of base rate cases, $0.03: Investments Formula Dx investment programs Formula Tx investment programs - and lower OH rate credit formula
Slide 19: YTD Earnings Summary and Reconciliation
YTD Earnings Summary and Reconciliation YTD June Summary 2024 2023 Change GAAP Earnings Per Basic Share $0.52 $0.92 $(0.40) Special Items $0.59 $0.14 $0.45 Operating (Non-GAAP) Earnings Per Share $1.11 $1.06 $0.05 Note: Refer to slide 3 for information on Non-GAAP Financial Matters. YTD June Reconci
Slide 20: YTD Earnings Drivers by Segment
YTD Earnings Drivers by Segment Descriptions: YTD24 vs. YTD23 Distribution Integrated Stand-Alone Transmission Corp / Other $0.14: Rates & $0.03: Implementation of base rate cases, $0.05: Investments Formula Dx investment programs Formula Tx investment programs - and lower OH rate credit formula Dx
Slide 21: Special Items Descriptions
Special Items Descriptions ▪ ARO regulatory change: Primarily related to an increase in asset retirement obligations associated with AE Supply’s evaluation of closure options for McElroy’s Run, including the potential transfer of the site and remediation obligations to a third-party, and other inter
Slide 22: 2Q 2024 Earnings Results
2Q 2024 Earnings Results 2nd Quarter 2024 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) Dx Int Tx Corp FE Dx Int Tx Corp FE Dx Int Tx Corp FE (1) Electric sales $ 1,610 $ 1,162 $ 463 $ 1 $ 3,236 $ — $ — $ — $ — $ — $ 1,610 $ 1,162 $ 463 $ 1 $ 3,236 (2) Other 38
Slide 23: 2Q 2023 Earnings Results
2Q 2023 Earnings Results 2nd Quarter 2023 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) Dx Int Tx Corp FE Dx Int Tx Corp FE Dx Int Tx Corp FE (1) Electric sales $ 1,582 $ 940 $ 432 $ 3 $ 2,957 $ — $ — $ — $ — $ — $ 1,582 $ 940 $ 432 $ 3 $ 2,957 (2) Other 45 16 4
Slide 24: Quarter-over-Quarter Earnings Comparison
Quarter-over-Quarter Earnings Comparison 2nd Quarter 2024 vs 2nd Quarter 2023 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) Dx Int Tx Corp FE Dx Int Tx Corp FE Dx Int Tx Corp FE (1) Electric sales $ 28 $ 222 $ 31 $ (2) $ 279 $ — $ — $ — $ — $ — $ 28 $ 222 $ 31 $
Slide 25: YTD 2024 Earnings Results
YTD 2024 Earnings Results YTD June 2024 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) Dx Int Tx Corp FE Dx Int Tx Corp FE Dx Int Tx Corp FE (1) Electric sales $ 3,335 $ 2,244 $ 897 $ 4 $ 6,480 $ — $ — $ — $ — $ — $ 3,335 $ 2,244 $ 897 $ 4 $ 6,480 (2) Other 80 29
Slide 26: YTD 2023 Earnings Results
YTD 2023 Earnings Results YTD June 2023 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) Dx Int Tx Corp FE Dx Int Tx Corp FE Dx Int Tx Corp FE (1) Electric sales $ 3,361 $ 1,952 $ 828 $ 5 $ 6,146 $ — $ 6 (g) $ 1 (g) $ — $ 7 $ 3,361 $ 1,958 $ 829 $ 5 $ 6,153 (2) Oth
Slide 27: YTD Year-over-Year Comparison
YTD Year-over-Year Comparison YTD June 2024 vs YTD June 2023 (in millions, except for per share amounts) GAAP Special Items Operating (Non-GAAP) Dx Int Tx Corp FE Dx Int Tx Corp FE Dx Int Tx Corp FE (1) Electric sales $ (26) $ 292 $ 69 $ (1) $ 334 $ — $ (6) $ (1) $ — $ (1) $ (26) $ 286 $ 68 $ (1) $
Slide 28: Quarterly Support
Quarterly Support TABLE OF CONTENTS (Slide) Strategic & Regulatory Quarterly Support 29. Regulatory Calendar 32. TTM Actual Sales by Class 30. Earned ROE Summary 33. TTM Weather-Adjusted Sales 31. Earnings ROEs Detail by Jurisdiction 34. TTM Weather Impacts 35. Credit Ratings Summary 28 Strategic &
Slide 29: Regulatory Calendar
Regulatory Calendar Select Proceedings Jurisdiction Regulatory Matter Key Dates ▪ Base Rate Case ▪ Filed base rate request for approximately $94M on 5/31/24, Update filing due 7/31/24 ▪ Grid Mod II ▪ Settlement agreement filed 4/12/24; hearings concluded 7/2/24 Ohio ▪ Electric Security Plan (ESP V)
Slide 30: Earned ROE Summary
Earned ROE Summary TTM 6/30/2024 (see slide 31 for details by jurisdiction) Distribution Integrated Stand-Alone Transmission As filed in pending As filed in pending 10% rate case rate case Earned ROE 5% 10.7% 10.45% (Weighted Avg) 7.7% 7.8% 7.1% 6.8% 0% 2.5% (1) (1) (2) (2) (2) (3) OH PA NJ WV MD FE
Slide 31: Earned ROE Detail by Jurisdiction
Earned ROE Detail by Jurisdiction TTM 6/30/2024 Test Allowed Earned Rate Equity Notes & Key Regulatory Adjustments(3) Year ROE ROE Base(1) %(2) 2024 10.8% 7.7% $4.3B 55% OH Dx ▪ See Regulatory Corner for key filing parameters and adjustments (proj.) (filed) (filed) (filed) (filed) Distribution 2025
Slide 32: Actual Sales by Class
Actual Sales by Class Percent change vs. prior year 3Q23 4Q23 1Q24 2Q24 TTM 15.7% 11.8% 7.9% 3.1% 2.0% 1.5% 2.1% 1.4% 1.0% 1.2% 1.1% 0.0% -0.2% -0.5% -1.3% -1.7% -1.1% -1.3% -3.5% -4.9% Residential Commercial Industrial Total (MWh in 3Q22 3Q23 4Q22 4Q23 1Q23 1Q24 2Q23 2Q24 TTM 2Q23 TTM 2Q24 thousand
Slide 33: Actual Weather-Adjusted Sales by Class
Actual Weather-Adjusted Sales by Class Percent change vs. prior year 3Q23 4Q23 1Q24 2Q24 TTM 7.2% 4.2% 3.1% 3.0% 2.3% 2.0% 2.0% 1.2% 1.2% 1.1% 1.3% 1.1% 0.9% 0.4% 0.0% -0.4% -0.5% -1.5% -3.5% -4.6% Residential Commercial Industrial Total (MWh in 3Q22 3Q23 4Q22 4Q23 1Q23 1Q24 2Q23 2Q24 TTM 2Q23 TTM 2
Slide 34: Weather Impacts
Weather Impacts 500 400 300 200 100 0 150 400 650 900 KWh 1,150 1,400 HDD CDD HDD Norm CDD Norm Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 OH PA NJ WV MD Total Total EPS Impact Days % Days % Days % Days % Days % Days % 2Q YTD Weather vs W
Slide 35: Credit Ratings
Credit Ratings As of July 29, 2024 Issuer/Corporate Family Senior Secured Senior Unsecured Outlook/Watch Most Recent Ratings Actions S&P Moody's Fitch S&P Moody's Fitch S&P Moody's Fitch S&P Moody's Fitch ▪ On July 22, 2024, S&P FirstEnergy Corp.* BBB Baa3 BBB- BBB- Baa3 BBB- P S P upgraded FET, LLC