10-KPeriod: FY2014

FIRSTENERGY CORP Annual Report, Year Ended Dec 31, 2014

Filed February 17, 2015For Securities:FE

Summary

FirstEnergy Corp. (FE) presented its 2014 annual report, highlighting a strategic shift towards reinvestment in its regulated transmission and distribution segments. This repositioning aims to enhance customer service, improve grid reliability, and strengthen cybersecurity. The company anticipates that focusing on these regulated operations will provide stability and growth over the coming years. Key initiatives include the "Energizing the Future" transmission expansion plan, significant investments in grid modernization, and proactive engagement in regulatory proceedings across its ten utility operating companies to ensure timely recovery of investments. The competitive energy services (CES) segment is being recalibrated to mitigate risk in a challenging market while preserving value and positioning for future opportunities. Financially, FirstEnergy reported net income available to common shareholders of $299 million, or $0.71 per diluted share, a decrease from $392 million ($0.94 per diluted share) in 2013. This decrease was largely influenced by a significant increase in pension and other post-employment benefit mark-to-market adjustments, partially offset by the absence of impairment charges recorded in the prior year. The company reaffirmed its commitment to its dividend, maintaining a quarterly payout of $0.36 per share, while also focusing on improving its balance sheet and maintaining investment-grade metrics across its business units. FirstEnergy's capital expenditure plan for 2015 is projected at approximately $2.9 billion, with a substantial portion allocated to the regulated transmission segment.

Financial Highlights

47 data points
Beta

Revenue

$15.05B

Net Income

$299.00M

2.0% Net Margin

EPS (Diluted)

$0.71

Total Assets

$51.55B

Cash & Equivalents

$85.00M

Free Cash Flow

$2.71B

Financial Statements
Beta
Revenue$15.05B
Operating Expenses$13.99B
Operating Income$1.06B
Interest Expense$1.08B
Net Income$299.00M
EPS (Basic)$0.71
EPS (Diluted)$0.71
Shares Outstanding (Basic)420.00M
Shares Outstanding (Diluted)421.00M

Key Highlights

  • 1FirstEnergy is strategically repositioning its business to focus on regulated transmission and distribution operations, targeting over 80% of earnings from these segments.
  • 2The company launched the "Energizing the Future" transmission expansion plan, with $4.2 billion in investments planned through 2017 to modernize its transmission system.
  • 3In 2014, FirstEnergy invested $1.4 billion across over 1,100 projects to enhance its transmission system's durability and flexibility.
  • 4The company is actively managing regulatory initiatives across its utility footprint, with rate case applications filed in West Virginia and Pennsylvania, and an ESP IV filing in Ohio.
  • 5FirstEnergy's competitive energy services (CES) segment is undergoing a strategic adjustment to reduce exposure to weather-sensitive load and focus on higher-margin sales.
  • 6Net income available to common shareholders decreased to $299 million ($0.71 per diluted share) in 2014 from $392 million ($0.94 per diluted share) in 2013, primarily due to increased pension and OPEB mark-to-market adjustments.
  • 7Capital expenditures for 2015 are planned at approximately $2.9 billion, with $970 million earmarked for the Regulated Transmission segment.

Frequently Asked Questions

FirstEnergy's primary strategic focus is on reinvesting in its regulated transmission and regulated distribution operations. This strategy aims to enhance customer service, improve grid reliability, strengthen cybersecurity, and add resilience and operating flexibility to its infrastructure, with the goal of deriving over 80% of its earnings from these regulated segments.

FirstEnergy is recalibrating its CES segment strategy to reduce exposure to weather-sensitive load, eliminate obligations that do not adequately cover risk premiums, and focus on higher-margin sales. The company is also seeking market reforms that would better value baseload generation, essential for grid reliability, while maintaining a portion of its generation to capture future market upside.

In 2014, FirstEnergy reported a decrease in net income available to common shareholders to $299 million ($0.71 per diluted share) compared to $392 million ($0.94 per diluted share) in 2013. This decline was largely due to increased pension and other post-employment benefit mark-to-market adjustments. The company maintained its quarterly dividend of $0.36 per share while also focusing on improving its balance sheet and maintaining strong liquidity.

FirstEnergy's capital expenditure plan for 2015 is projected at approximately $2.9 billion. A significant portion of this, $970 million, is allocated to the regulated transmission segment for its "Energizing the Future" initiative, which aims to modernize the transmission system. Over the period 2014-2017, the company plans to invest $4.2 billion in this transmission expansion program.