Slide 1: Focused on Our Future: 1Q 2022 Strategic & Financial Highlights
Focused on Our Future 1Q 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: Moving FirstEnergy Forward
Moving FirstEnergy Forward Steve Strah, President and CEO Strategic & Financial Highlights – Published April 21, 20224 Reported 1Q22 GAAP EPS of $0.51 and Operating (non-GAAP) EPS of $0.60 Updating 2022 GAAP EPS forecast to $2.37-$2.57 Reaffirming 2022 Operating (non-GAAP) EPS guidance of $2.30-$2.5
Slide 5: Continuing our Transformation
Continuing our Transformation A strong foundation, an unrelenting customer focus, and a leader in the energy transition Strategic & Financial Highlights – Published April 21, 20225 ■ Formed a cross-functional Culture Transformation working group to consolidate, coordinate and streamline numerous ini
Slide 6: Enhancing the Customer Experience
Enhancing the Customer Experience Strategic & Financial Highlights – Published April 21, 20226 ■ Launched an enhanced campaign to engage residential customers who may be facing financial hardships with the goal of inviting customers to come to us for help ■ Through March 2022, 250K+ enrolled custome
Slide 7: FE Forward Updates
FE Forward Updates Business Updates Strategic & Financial Highlights – Published April 21, 20227 ■ Realigned our utility operations into a five-state model to enhance collaboration, streamline processes and maximize efficiency ■ Longer-term review to consider the possible benefits of combining our O
Slide 8: 1Q 2022 Earnings Summary
1Q 2022 Earnings Summary Jon Taylor, SVP, CFO and Strategy ■ Reported 1Q 2022 GAAP earnings of $0.51 per share vs. $0.62 per share in 1Q21 – 1Q 2022 results include $0.09 of special items, including debt related costs ($0.06), regulatory charges ($0.01), strategic transaction charges ($0.01) and inv
Slide 9: Financial Updates
Financial Updates Strategic & Financial Highlights – Published April 21, 20229 We’re off to a solid start this year, and we’ve got an excellent transformation plan to continue becoming an industry-leading company focused on long-term value for all stakeholders ■ Met with Moody’s, S&P and Fitch in Ap
Slide 10: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community Strategic & Financial Highlights – Published April 21, 2022 11. 1Q Earnings Summary and Reconciliation 12. 1Q Earnings Drivers by Segment 13. Special Items Descriptions 14. 1Q 2022 Earnings Results 15. 1Q 2021 Earnings Results 16. Quarter-over-Quarter E
Slide 11: EPS Variance Analysis
EPS Variance Analysis FirstEnergy Regulated Regulated Corporate / Corp. (in millions, except per share amounts) Distribution Transmission Other Consolidated 2021 Net Income (Loss) (GAAP) $313 $109 $(87) $335 2021 Basic Earnings (Loss) Per Share (avg. shares outstanding 543M) $0.58 $0.20 $(0.16) $0.6
Slide 12: Earnings Drivers: 1Q 2022 vs. 1Q 2021
Earnings Drivers: 1Q 2022 vs. 1Q 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 13: 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 14: 1Q 2022 Earnings Results
1Q 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 $ 2,532 $ 451 $ (39) $ 2,944 $ — $ 2 (a) $ — $ 2 $ 2,532 $ 453 $ (39) $ 2,946 (2) Other 57 2 (14) 45 — — — — 57 2 (14) 45 (3) Total Revenues 2,589
Slide 15: 1Q 2021 Earnings Results
1Q 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 Revenues 2,37
Slide 16: 1Q 2022 vs 1Q 2021
1Q 2022 vs 1Q 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 $ 216 $ 50 $ (5) $ 261 $ (26) $ 2 $ — $ (24) $ 190 $ 52 $ (5) $ 237 (2) Other 3 (2) 1 2 — — — — 3 (2) 1 2 (3) Total Revenues 219 48 (4)
Slide 17: Quarterly Support & Guidance
Quarterly Support & Guidance Strategic & Financial Highlights – Published April 21, 2022 18. 2022 Key Priorities 19. 2022 Regulatory Calendar 20. TTM RD ROEs – by State 21. TTM Actual Sales by Class 22. TTM Weather-Adjusted Sales 23. TTM Weather Impacts 24. Credit Ratings Summary 25. Credit Profile
Slide 18: 2022 Key Priorities
2022 Key Priorities Strategic & Financial Highlights – Published April 21, 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 performanc
Slide 19: 2022 Regulatory Calendar
2022 Regulatory Calendar Select Proceedings Strategic & Financial Highlights – Published April 21, 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 Spen
Slide 20: RD Segment – State ROEs
RD Segment – State ROEs TTM 3/31/2022 Strategic & Financial Highlights – Published April 21, 202220 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 expen
Slide 21: TTM Actual Sales by Class
(MWh in thousands) 2Q20 2Q21 3Q20 3Q21 4Q20 4Q21 1Q21 1Q22 TTM 1Q21 TTM 1Q22 Residential 12,764 12,347 16,091 15,652 12,919 12,735 14,890 15,213 56,664 55,947 Commercial 7,824 8,590 9,589 9,785 8,495 8,594 8,631 9,291 34,539 36,260 Industrial 12,010 13,384 13,560 14,018 12,916 13,368 13,257 13,583 5
Slide 22: TTM Weather-Adjusted Sales by Class
(MWh in thousands) 2Q20 2Q21 3Q20 3Q21 4Q20 4Q21 1Q21 1Q22 TTM 1Q21 TTM 1Q22 Residential 12,669 11,861 15,157 15,200 13,418 13,220 15,397 15,170 56,641 55,451 Commercial 7,823 8,466 9,360 9,672 8,631 8,753 8,853 9,265 34,667 36,156 Industrial 12,007 13,384 13,533 14,018 12,942 13,368 13,258 13,583 5
Slide 23: Weather Impacts
Weather Impacts Strategic & Financial Highlights – Published April 21, 202223 0 100 200 300 400 500 1,250 1,000 750 500 250 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 HDD CDD HDD Norm CDD Norm OH PA NJ WV MD Total Days % Days % Days % Days % Days % Days % 1Q2
Slide 24: Credit Ratings Summary
■ 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 issued one- notch upgrade for FE and all subsidiaries • Outlook changed on FE, FET, and all subsidiaries to Stable from CreditWatch Positive ■ On Nov
Slide 25: Credit Profile
Credit Profile As of April 18, 2022 Strategic & Financial Highlights – Published April 21, 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 consistently above 12% or if the company improves management and governance. This could oc
Slide 26: Consolidated Long-Term Debt Maturities
Consolidated Long-Term Debt Maturities As of March 31, 2022 Strategic & Financial Highlights – Published April 21, 2022 $22.4B FACE VALUE AVG RATES FEU FET CORP 4.54% 4.01% 4.47% AVG LENGTH FEU FET CORP 12yrs 11yrs 12yrs $M Excludes securitization bonds 26 2 0 0 3 0 0 1 ,2 0 0 4 5 0 6 5 0 4 5 0 7 7
Slide 27: 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 (by 2024) LONG-TERM GUIDANCE 1.56/SH $2.30 - $2.50/sh 2022 Operating EPS Guidance(2) 2022 Investment
Slide 28: 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 29: 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 30: 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 31: 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 32: 2022 Operating EPS Guidance
2022 Operating EPS(1) Guidance 2021A Operating EPS(2) (545M shares) 2022 Guidance Range: $2.30 - $2.50 2022F Operating EPS Midpoint(2) (571M shares) (1) See Slide 3 for information on Non-GAAP Financial Matters (2) See Slides 38-39 for GAAP to Non-GAAP earnings reconciliation (3) Includes impact of
Slide 33: 2021-2025 Financing Plan
2021-2025 Financing Plan ($B) During this period, ~$5.5B of cash available for common dividend growth, minority interest distributions, and other deployment ~30% of investments funded with debt; allows for improved utility capital structures and stronger credit profiles prior to more active rate pro
Slide 34: 2021-2025 Cash Flow & Debt Projections
2021-2025 Cash Flow & Debt Projections ($B) Investment-grade credit profile supports ~$17B investment plan and sustainable earnings growth; targeting ~13% FFO/Debt by 2024 Cash From Operations growth is primarily driven by continued formula investments and in line with earnings growth $1.4 $2.8 $2.8
Slide 35: 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 36: 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 37: 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 38: 2021 GAAP to Operating (Non-GAAP) Earnings Reconciliation
2021 GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation Strategic & Financial Highlights – Published April 21, 202238 (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 39: 2022F GAAP to Operating (Non-GAAP) Earnings Reconciliation
2022F GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation Strategic & Financial Highlights – Published April 21, 202239 (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 a
Slide 40: 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