10-QPeriod: Q1 FY2014

FIRSTENERGY CORP Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 6, 2014For Securities:FE

Summary

FirstEnergy Corp. (FE) reported a net income of $208 million for the first quarter of 2014, an increase from $196 million in the same period of 2013. This improvement was driven by higher distribution deliveries across customer classes, particularly in the residential and commercial segments, attributed to colder weather. The Regulated Distribution segment saw an increase in revenues due to higher deliveries and new distribution rider revenues, although offset by higher operational and maintenance expenses and increased depreciation. The company is strategically shifting its focus towards regulated businesses, with a $4.2 billion "Energizing the Future" investment plan for transmission system upgrades planned from 2014 to 2017. This initiative aims to enhance system performance and expand capacity, funded through a mix of debt, equity, and cash. The Competitive Energy Services segment faced challenges from weak demand and volatile market dynamics, leading FirstEnergy to reposition this business for potential recovery while prioritizing regulated growth opportunities.

Financial Highlights

45 data points
Beta

Revenue

$4.18B

Net Income

$208.00M

5.0% Net Margin

EPS (Diluted)

$0.49

Total Assets

$51.23B

Cash & Equivalents

$109.00M

Free Cash Flow

-$92.00M

Financial Statements
Beta
Revenue$4.18B
Operating Expenses$3.79B
Operating Income$391.00M
Interest Expense$265.00M
Net Income$208.00M
EPS (Basic)$0.50
EPS (Diluted)$0.49
Shares Outstanding (Basic)419.00M
Shares Outstanding (Diluted)420.00M

Key Highlights

  • 1Net income increased to $208 million in Q1 2014 from $196 million in Q1 2013, driven by improved performance in the Regulated Distribution segment.
  • 2The Regulated Distribution segment benefited from a 5.9% increase in electricity distribution deliveries, largely due to colder weather boosting residential and commercial usage.
  • 3FirstEnergy is executing a $4.2 billion "Energizing the Future" investment plan for transmission system upgrades through 2017, signaling a strategic shift towards regulated growth.
  • 4The Competitive Energy Services segment experienced challenges due to weak market conditions, with the company actively participating in market rule discussions at PJM and FERC.
  • 5The company completed the sale of hydroelectric assets for approximately $394 million in February 2014, contributing to a gain on discontinued operations.
  • 6Short-term borrowings decreased to $3,085 million as of March 31, 2014, from $3,404 million as of December 31, 2013.
  • 7FirstEnergy amended and extended its syndicated revolving credit facilities, increasing the primary facility's commitment to $3.5 billion.

Frequently Asked Questions

FirstEnergy reported a net income of $208 million for the first quarter of 2014, compared to $196 million for the same period in 2013. Earnings per diluted share were $0.49 for Q1 2014, up from $0.47 in Q1 2013.

FirstEnergy is strategically shifting its growth focus towards its regulated businesses, particularly transmission and distribution. This includes a significant investment plan to upgrade its transmission system, while aiming to maintain value in its competitive energy services segment.

The extreme weather led to higher customer usage, increasing revenues in the Regulated Distribution segment. However, it also resulted in higher purchased power costs and ancillary service charges in the Competitive Energy Services segment, with some of these costs being passed through to commercial and industrial customers.

FirstEnergy's liquidity remains sufficient. The company amended and extended its revolving credit facilities, increasing commitments under the main facility to $3.5 billion. Short-term borrowings decreased, and the company continues to access capital markets for long-term funding needs.