AKRON, Ohio, July 22, 2021 /PRNewswire/ -- FirstEnergy Corp. (NYSE: FE) today reported second quarter 2021 GAAP earnings of $58 million, or $0.11 per basic and diluted share of common stock, on revenue of $2.6 billion. In the second quarter of 2020, the company reported GAAP earnings of $309 million, or $0.57 per basic and diluted share of common stock, on revenue of $2.5 billion. GAAP results for the second quarter of 2021 include a charge related to the company's recently announced Deferred Prosecution Agreement to resolve the Department of Justice investigation, as well as other special items listed below.
Operating (non-GAAP) earnings* were $0.59 for the second quarter of 2021, above the top end of the company's guidance range. In the second quarter of 2020 operating (non-GAAP) earnings were $0.57 per share.
"In addition to our strong performance, we are making substantial progress to transform FirstEnergy and deliver long-term value to all stakeholders," said Steven E. Strah, FirstEnergy president and chief executive officer. "We remain focused on executing on our strategies and building positive momentum across our company."
For the third quarter of 2021, FirstEnergy is providing a GAAP and operating (non-GAAP) forecast range of $380 million to $435 million, or $0.70 to $0.80 per share based on 544 million shares outstanding.
The company updated its full-year 2021 GAAP earnings forecast range to
$1,000 million to $1,110 million, or $1.84 to $2.04 per share based on 544 million shares outstanding. It reaffirmed its full-year 2021 operating (non-GAAP) earnings guidance of $2.40 to $2.60 per share, with expectations to be in the top half of that range.
Second Quarter Results
In FirstEnergy's Regulated Distribution business, second quarter 2021 operating results benefited from higher revenues related to capital investment programs in Ohio and Pennsylvania, the implementation of the base distribution rate case in New Jersey, and lower expenses. These factors were offset by the absence of Ohio lost distribution revenues and higher interest expense compared to the second quarter of 2020.
Total distribution deliveries increased 5.3% compared to the second quarter of 2020, when many pandemic-related restrictions were in full effect. Residential sales decreased 3.3% compared to the second quarter of 2020, while Commercial deliveries increased 9.8%, and sales to industrial customers increased 11.4%, primarily reflecting a return to more normal activity.
In the Regulated Transmission business, second quarter 2021 operating results increased over the second quarter of 2020 primarily due to the impact of the company's investments in its Energizing the Future transmission program, partially offset by higher interest expense.
In the Corporate/Other segment, second quarter 2021 operating results declined as compared to last year, reflecting the absence of tax benefits recognized in the second quarter of 2020.
For the first half of 2021, FirstEnergy reported GAAP earnings of $393 million, or
$0.72 per basic and diluted share of common stock, on revenue of $5.3 billion. This compares to GAAP earnings of $383 million, or $0.71 per basic and diluted share of common stock, on revenue of $5.2 billion in the first half of 2020. Results for both periods reflect the impact of special items listed below.
Operating (non-GAAP) earnings* for the first half of 2021 were $1.28 per share, compared to $1.23 per share in the first half of 2020. Results for the first half of 2021 as compared to the same period of last year reflect higher revenues from capital investment programs and implementation of new rates, the impact of higher weather-related demand and lower expenses, partially offset by higher interest expense and the absence of decoupling and lost distribution revenues in Ohio.
Consolidated GAAP Earnings to Operating (Non-GAAP) EPS* Reconciliation
Net Income (GAAP) - $M
$380 - $435
$1,000 - $1,110
Basic EPS (GAAP)
$0.70 - $0.80
$1.84 - $2.04
Excluding Special Items*:
Mark-to-market adjustments –
Pension/OPEB actuarial assumptions
Investigation and other related costs
State tax legislative changes
Exit of generation credits
Total Special Items*
Operating EPS (non-GAAP)
$0.70 - $0.80
$2.40 - $2.60
Per share amounts for the special items above are based on the after-tax effect of each item divided by the number of shares outstanding for the period. The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount if deductible/taxable. The income tax rates range from 21% to 29%. Basic EPS (GAAP) and Operating EPS (Non-GAAP) is based on 544 million shares for the second quarter, first six months and full year 2021, 542 million shares for the second quarter and full year 2020 and 541 million shares for the first six months of 2020.
Non-GAAP financial measures
* Operating earnings (loss) excludes "special items" as described below, and is a non-GAAP financial measure. 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. Special items are not necessarily non-recurring. Management uses Operating earnings (loss) and Operating earnings (loss) per share to evaluate the Company's performance and manage its operations and frequently references these non-GAAP financial measures in its decision making, using them to facilitate historical and ongoing performance comparisons. Additionally, management uses Operating earnings (loss) per share by segment to further evaluate the Company's performance by segment and references this non-GAAP financial measure in its decision making. Operating earnings (loss) per share and Operating earnings (loss) per share for each segment is calculated by dividing Operating earnings (loss), which excludes special items as discussed herein, for the periods presented by the number of shares outstanding. Basic EPS (GAAP) and Operating EPS (Non-GAAP) are based on 544 million shares for the second quarter, first six months and full year 2021, 542 million shares for the second quarter and full year 2020 and 541 million shares for the first six months of 2020. Management believes that the non-GAAP financial measures of Operating earnings (loss) and Operating earnings (loss) per share and Operating earnings (loss) per share by segment provide consistent and comparable measures of performance of its businesses on an ongoing basis. Management also believes that such measures are useful to shareholders and other interested parties to understand performance trends and evaluate the Company against its peer group by presenting period-over-period operating results without the effect of certain charges or benefits that may not be consistent or comparable across periods or across the Company's peer group. Generally, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). These non-GAAP financial measures are intended to complement, and are not considered as alternatives to, the most directly comparable GAAP financial measures. Also, the non-GAAP financial measures may not be comparable to similarly titled measures used by other entities. Pursuant to the requirements of Regulation G, FirstEnergy has provided, where possible without unreasonable effort, quantitative reconciliations within this presentation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Investor Materials and Teleconference
FirstEnergy's Strategic and Financial Highlights and Investor Factbook are posted on the company's Investor Information website – www.firstenergycorp.com/ir. To access the report, click on the Second Quarter 2021 Financial Results link.
The company invites investors, customers and other interested parties to listen to a live webcast of its teleconference for financial analysts and view presentation slides at 10:00 a.m. EDT tomorrow. FirstEnergy management will present an overview of the company's financial results, followed by a question-and-answer session. The teleconference and presentation can be accessed on the website by selecting the Second Quarter 2021 Earnings Webcast link. The webcast and presentation will be archived on the website.
FirstEnergy is dedicated to integrity, safety, reliability and operational excellence. Its 10 electric distribution companies form one of the nation's largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. The company's transmission subsidiaries operate approximately 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions. Follow FirstEnergy on Twitter @FirstEnergyCorp or online at www.firstenergycorp.com.
Forward-Looking Statements: This news release 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 not to place undue reliance on these forward-looking statements. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "forecast," "target," "will," "intend," "believe," "project," "estimate," "plan" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the potential liabilities, increased costs and unanticipated developments resulting from governmental investigations and agreements, including those associated with compliance with or failure to comply with the Deferred Prosecution Agreement with the U.S. Attorney's Office for the S.D. Ohio; the results of the internal investigation and evaluation of our controls framework and remediation of our material weakness in internal control over financial reporting; the risks and uncertainties associated with government investigations regarding Ohio House Bill 6 and related matters including potential adverse impacts on federal or state regulatory matters including, but not limited to, matters relating to rates; the potential of non-compliance with debt covenants in our credit facilities due to matters associated with the government investigations regarding Ohio House Bill 6 and related matters; the risks and uncertainties associated with litigation, arbitration, mediation and similar proceedings; legislative and regulatory developments, including, but not limited to, matters related to rates, compliance and enforcement activity; the ability to accomplish or realize anticipated benefits from our FE Forward initiative and our other strategic and financial goals, including, but not limited to, maintaining financial flexibility, overcoming current uncertainties and challenges associated with the ongoing government investigations, executing our transmission and distribution investment plans, greenhouse gas reduction goals, controlling costs, improving our credit metrics, strengthening our balance sheet and growing earnings; economic and weather conditions affecting future operating results, such as a recession, significant weather events and other natural disasters, and associated regulatory events or actions in response to such conditions; mitigating exposure for remedial activities associated with retired and formerly owned electric generation assets; the ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us, including the increasing number of financial institutions evaluating the impact of climate change on their investment decisions; the extent and duration of COVID-19 and the impacts to our business, operations and financial condition resulting from the outbreak of COVID-19 including, but not limited to, disruption of businesses in our territories and governmental and regulatory responses to the pandemic; the effectiveness of our pandemic and business continuity plans, the precautionary measures we are taking on behalf of our customers, contractors and employees, our customers' ability to make their utility payment and the potential for supply-chain disruptions; actions that may be taken by credit rating agencies that could negatively affect either our access to or terms of financing or our financial condition and liquidity; changes in assumptions regarding economic conditions within our territories, the reliability of our transmission and distribution system, or the availability of capital or other resources supporting identified transmission and distribution investment opportunities; changes in customers' demand for power, including, but not limited to, the impact of climate change or energy efficiency and peak demand reduction mandates; changes in national and regional economic conditions affecting us and/or our major industrial and commercial customers or others with which we do business; the risks associated with cyber-attacks and other disruptions to our information technology system, which may compromise our operations, and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information; the ability to comply with applicable reliability standards and energy efficiency and peak demand reduction mandates; changes to environmental laws and regulations, including, but not limited to, those related to climate change; changing market conditions affecting the measurement of certain liabilities and the value of assets held in our pension trusts and other trust funds, or causing us to make contributions sooner, or in amounts that are larger, than currently anticipated; labor disruptions by our unionized workforce; changes to significant accounting policies; any changes in tax laws or regulations, or adverse tax audit results or rulings; and the risks and other factors discussed from time to time in our SEC filings. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. These forward-looking statements are also qualified by, and should be read together with, the risk factors included in FirstEnergy Corp.'s filings with the SEC, including but not limited to the most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The foregoing review of factors also should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy Corp.'s business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy Corp. expressly disclaims any obligation to update or revise, except as required by law, any forward-looking statements contained herein or in the information incorporated by reference as a result of new information, future events or otherwise.
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SOURCE FirstEnergy Corp.