01—Abstract
Summary
Summary of the 10-K filed February 10, 2020. Cited figures are marked; the original filing is the authoritative source.
FirstEnergy Corp. (FE) operates as a diversified electric utility company, primarily engaged in the transmission and distribution of electricity to over six million customers across the Midwest and Mid-Atlantic regions.
The company's business is structured around two main reportable segments: Regulated Distribution and Regulated Transmission. In 2019, FirstEnergy continued to advance its strategy of focusing on its regulated utility operations, marked by several key regulatory approvals and a strengthened balance sheet through equity issuances. The company's financial performance in 2019 showed a slight decrease in net income from continuing operations compared to 2018, primarily due to the cessation of Rider DMR collection following a Supreme Court ruling, higher pension and OPEB mark-to-market adjustments, and lower weather-related customer usage.
However, the Regulated Transmission segment demonstrated growth, driven by higher rate bases. FirstEnergy's capital expenditures remain significant, with substantial investments planned for both distribution and transmission infrastructure to enhance reliability and modernize the grid.
02—Key points
Key Highlights
- FirstEnergy is a fully regulated electric utility focused on its Regulated Distribution and Regulated Transmission segments, serving over six million customers across nine states.
- In 2019, the company made significant progress on its regulated growth plans, with key regulatory approvals obtained in Maryland, New Jersey, Ohio, and West Virginia.
- FirstEnergy's capital expenditure plan includes over $10 billion for Regulated Distribution and over $7 billion for Regulated Transmission from 2018-2023, with expected rate base compound annual growth rates of 4% and 10%, respectively.
- The company announced a 3% increase in its quarterly dividend payable in March 2020, demonstrating a commitment to shareholder returns while maintaining significant regulated investments.
- FirstEnergy continues to strengthen its balance sheet and improve credit metrics following a substantial equity issuance in 2018, which is expected to support investment-grade credit metrics.
- The company is actively involved in environmental sustainability efforts, including progress on CO2 reduction goals and modernization of its transmission and distribution systems.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 10, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $11.04B$11.26B | −2.0% |
| Operating Expenses | $8.53B$8.76B | −2.7% |
| Operating Income | $2.51B$2.50B | +0.3% |
| Interest Expense | $1.03B$1.12B | −7.4% |
| Net Income | $912.00M$1.35B | −32.3% |
| EPS (Basic) | $1.70$1.99 | −14.6% |
| EPS (Diluted) | $1.68$1.99 | −15.6% |
| Shares Outstanding (Basic) | 535.00M492.00M | +8.7% |
| Shares Outstanding (Diluted) | 542.00M494.00M | +9.7% |
05—Questions
Frequently Asked Questions
What is FirstEnergy's primary business strategy?
FirstEnergy's primary business strategy is to operate and grow as a fully regulated electric utility, focusing on its Regulated Distribution and Regulated Transmission segments. This strategy emphasizes delivering enhanced customer service and reliability to support stable and predictable earnings and cash flow, which in turn supports the company's dividend.
How did FirstEnergy perform financially in 2019?
In 2019, FirstEnergy's net income from continuing operations decreased slightly compared to 2018, primarily due to a Supreme Court ruling impacting Rider DMR collection, higher pension and OPEB mark-to-market adjustments, and reduced customer usage due to less extreme weather. However, the Regulated Transmission segment showed growth, and the company made progress on its regulatory and investment plans across its service territories.
What are FirstEnergy's key investment areas for the coming years?
FirstEnergy plans significant capital investments in both its Regulated Distribution and Regulated Transmission segments. These investments, totaling over $10 billion for Distribution and over $7 billion for Transmission from 2018 through 2023, are aimed at improving reliability, modernizing infrastructure, enhancing grid security, and increasing operational flexibility.
What is the status of FirstEnergy's dividend policy?
FirstEnergy's Board of Directors approved a dividend policy that includes a targeted payout ratio. The company increased its quarterly dividend by 3% in November 2019, payable in March 2020, to $0.39 per share. This modest dividend growth allows for continued regulated investments while enhancing shareholder returns.
06—Continue