Firstenergy Corp. · NYSE:FE
Firstenergy — Q3 2020 Earnings Presentation
26 slides from Firstenergy's earnings presentation, Nov 2, 2020
Slide 1: 3Q 2020 Strategic & Financial Highlights
3Q 2020 Strategic & Financial Highlights Chris Pappas, Executive Director Steven E. Strah, President and Acting CEO K. Jon Taylor, SVP and CFO November 2, 2020
Slide 2: 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 and Operating earnings (loss) per share by segment. Generally, a non-GAAP financial measure is a numerical measure o
Slide 3: Leadership Transition Update
Leadership Transition Update Chris Pappas, Executive Director Recent Actions ■ The DOJ investigation prompted a number of shareholder and customer lawsuits, and we are also responding to a subpoena we received from the SEC on September 2nd ■ During the course of our internal review related to the on
Slide 4: Business Updates
Business Updates Steve Strah, President and Acting CEO Leadership Transition ■ The management team is committed to working with the Board to assess and implement potential changes, as appropriate, with the Company’s compliance program ■ In my 36 years with the company, we have faced challenges and c
Slide 5: Business Updates (Continued): Guidance Updates
Business Updates (Continued) Guidance Updates ■ Revising 2020 GAAP earnings forecast to $700M - $1,160M, or $1.29 - $2.14 per share – Includes the impact from the 1Q and projected 4Q remeasurements of Pension/OPEB plans ■ Affirming 2020 Operating (non-GAAP) earnings guidance to $2.40 - $2.60 per sha
Slide 6: Business Updates (Continued): New Jersey Updates
Business Updates (Continued) New Jersey Updates ■ In August, JCP&L filed AMI implementation plans with the BPU ■ On October 28, 2020, BPU approved JCP&L’s distribution base rate case settlement – $94M annual increase in distribution revenues beginning January 1, 2021 Settlement Overview – Agrees to
Slide 7: 3Q 2020 Earnings Results
(GAAP) (Non-GAAP) 3Q20 vs. 3Q19 EPS Variance Basic EPS Operating EPS(1) Regulated Distribution $0.07 $0.07 3Q 2020 Earnings Results Regulated Transmission $0.00 $0.00 (1) Quarter-over-Quarter: Basic EPS / Operating EPS Corporate / Other $0.04 $0.01 Jon Taylor, SVP and CFO FE Consolidated $0.11 $0.08
Slide 8: Financial Updates: Pension Update
Financial Updates Pension Update ■ At year-end, we will recognize our annual Pension/OPEB mark-to-market (non-cash) adjustment ■ Based on asset returns through September 30 and a discount rate range of 2.7% - 3.0%, we estimate the after-tax adjustment will range from ($330M loss) – $40M gain – YTD a
Slide 9: Financial Updates (Continued): Rating Agency Updates
Financial Updates (Continued) Rating Agency Updates ■ We proactively reached out to the three rating agencies last week to discuss the leadership transition and our path forward – While we believe the fundamentals of our businesses remain strong, we understand there are certain management and govern
Slide 10: Financial Updates (Continued): Preserving Flexibility
Financial Updates (Continued) Preserving Flexibility ■ Continue to have access to $3.5B of credit facilities committed through December 2022 – These facilities are substantially undrawn, with only $150 million borrowed – Remain in compliance with all covenants and can make the necessary representati
Slide 11: Closing Remarks
Closing Remarks Chris Pappas, Executive Director In Closing ■ The investigation and related matters are ongoing; therefore we will not answer any questions related to this other than to refer to our earlier prepared remarks ■ The Board and Management view this is a serious and important matter – Our
Slide 12: Earnings Supplement to the Financial Community
Earnings Supplement to the Financial Community TABLE OF CONTENTS (Slide) 13. 3Q Earnings Summary and Reconciliation 14. YTD Earnings Summary and Reconciliation 15. 3Q Earnings Drivers by Segment 16. Special Items Descriptions 17. 3Q 2020 Earnings Results 18. 3Q 2019 Earnings Results 19. Quarter-over
Slide 13: Quarterly Summary
Quarterly Summary 3Q 2020 3Q 2019 Change GAAP Earnings Per Basic Share $0.84 $0.73 $0.11 Special Items $— $0.03 $(0.03) Operating (Non-GAAP) Earnings Per Share $0.84 $0.76 $0.08 Quarterly Reconciliation FirstEnergy EPS Variance Analysis Regulated Regulated Corporate / Corp. (in millions, except per
Slide 14: Year-to-Date Summary
Year-to-Date Summary 2020 2019 Change GAAP Earnings Per Basic Share $1.54 $1.90 $(0.36) Special Items $0.53 $0.14 $0.39 Operating (Non-GAAP) Earnings Per Share $2.07 $2.04 $0.03 Year-to-Date Reconciliation FirstEnergy EPS Variance Analysis Regulated Regulated Corporate / Corp. (in millions, except p
Slide 15: Earnings Drivers: 3Q 2020 vs. 3Q 2019
Earnings Drivers: 3Q 2020 vs. 3Q 2019 Regulated Distribution (RD) ▪ Distribution Revenues: Distribution revenues increased earnings $0.08 per share, due to $0.04 per share from incremental rider revenues in Ohio and Pennsylvania, $0.03 per share benefit from a favorable mix of weather-adjusted sales
Slide 16: Special Items Descriptions
Special Items Descriptions ▪ Regulatory charges: Primarily reflects the impact of regulatory agreements or orders requiring certain commitments and/or disallowing the recoverability of costs, net of related credits. ▪ Exit of competitive generation: Primarily reflects charges or credits resulting fr
Slide 17: 3rd Quarter 2020
3rd 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 $ 2,600 $ 408 $ (35) $ 2,973 $ — $ — $ — $ — $ 2,600 $ 408 $ (35) $ 2,973 (2) Other 61 5 (17) 49 — — — — 61 5 (17) 49 (3) Total Revenues 2
Slide 18: 3rd Quarter 2019
3rd Quarter 2019 (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 $ 2,571 $ 371 $ (33) $ 2,909 $ — $ — $ — $ — $ 2,571 $ 371 $ (33) $ 2,909 (2) Other 65 4 (15) 54 — — — — 65 4 (15) 54 (3) Total Revenues 2
Slide 19: 3rd Quarter 2020 vs 3rd Quarter 2019
3rd Quarter 2020 vs 3rd Quarter 2019 (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 $ 29 $ 37 $ (2) $ 64 $ — $ — $ — $ — $ 29 $ 37 $ (2) $ 64 (2) Other (4) 1 (2) (5) — — — — (4) 1 (2) (5) (3) Total Reve
Slide 20: YTD September 2020
YTD September 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 $ 7,031 $ 1,185 $ (105) $ 8,111 $ — $ — $ — $ — $ 7,031 $ 1,185 $ (105) $ 8,111 (2) Other 176 13 (47) 142 — — — — 176 13 (47) 142 (3) To
Slide 21: YTD September 2019
YTD September 2019 (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 $ 7,214 $ 1,090 $ (96) $ 8,208 $ — $ — $ — $ — $ 7,214 $ 1,090 $ (96) $ 8,208 (2) Other 187 13 (46) 154 — — — — 187 13 (46) 154 (3) Tota
Slide 22: YTD September 2020 vs YTD September 2019
YTD September 2020 vs YTD September 2019 (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 $ (183) $ 95 $ (9) $ (97) $ — $ — $ — $ — $ (183) $ 95 $ (9) $ (97) (2) Other (11) — (1) (12) — — — — (11) — (1) (
Slide 23: Condensed Consolidated Balance Sheets (GAAP)
Condensed Consolidated Balance Sheets (GAAP) (in millions) September 30, December 31, Assets 2020 2019 Current Assets: Cash, cash equivalents and restricted cash $ 296 $ 679 Receivables 1,340 1,294 Other 526 438 Current assets - discontinued operations — 33 Total Current Assets 2,162 2,444 Property
Slide 24: Condensed Consolidated Statements of Cash Flows (GAAP)
Condensed Consolidated Statements of Cash Flows (GAAP) (in millions) For the Nine Months Ended September 30, 2020 2019 Cash Flow from Operating Activities: Net Income $ 837 $ 1,023 Adjustments to reconcile net income to net cash from operating activities: Loss (gain) on disposal, net of tax (46) 16
Slide 25: 2020F GAAP to Operating (Non-GAAP) Earnings Reconciliation
2020F GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation 2020 Forecast (In $M, except per share amounts) RD RT Corp FE 2020F Net Income (Loss) attributable to Common Stockholders (GAAP) $755 - $1,065 $460 - $485 ($515) - ($390) $700 - $1,160 2020F Earnings (Loss) Per Share (542M shares) $1.39 -
Slide 26: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements: This presentation includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties and readers are cautioned not to place undue reliance on these forward-l