Summary
FirstEnergy Corp. (FE) reported financial results for the quarter ending March 31, 2020. The company experienced a significant decrease in net income, primarily driven by a large pension and OPEB mark-to-market adjustment. Revenues also declined year-over-year, reflecting lower customer usage and the absence of certain regulatory revenues. Despite these challenges, FirstEnergy continues to execute its strategy of transitioning to a fully regulated utility, with a focus on its Regulated Distribution and Transmission segments. The company also highlighted its ongoing efforts to manage the impacts of the COVID-19 pandemic, including measures to support customers and maintain operational stability.
Financial Highlights
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Financial Statements
Beta
| Revenue | $2.71B |
| Operating Expenses | $2.18B |
| Operating Income | $532.00M |
| Interest Expense | $263.00M |
| Net Income | $74.00M |
| EPS (Basic) | $0.14 |
| EPS (Diluted) | $0.14 |
| Shares Outstanding (Basic) | 541.00M |
| Shares Outstanding (Diluted) | 543.00M |
Key Highlights
- 1Net income attributable to common stockholders decreased significantly to $74 million ($0.14 per diluted share) from $315 million ($0.59 per diluted share) in the prior year's quarter.
- 2A substantial pension and OPEB mark-to-market adjustment of $423 million negatively impacted other income/(expense).
- 3Total revenues decreased by 6% to $2,709 million, primarily due to lower distribution services and retail generation revenue.
- 4Operating income declined by 15% to $532 million.
- 5The company completed the final step of its strategy to exit the competitive generation business with the emergence of FES Debtors from bankruptcy.
- 6FirstEnergy is actively managing the impacts of the COVID-19 pandemic, including measures to support customers and maintain liquidity, with $3.5 billion in available liquidity as of April 20, 2020.
- 7Capital expenditures for property additions were $616 million in the quarter, primarily for Regulated Distribution and Transmission improvements.
Frequently Asked Questions
The primary driver of the significant decrease in net income was a large, non-cash pension and OPEB mark-to-market adjustment of $423 million, which negatively impacted other income/(expense). This adjustment was triggered by the FES Debtors' emergence from bankruptcy and subsequent remeasurement of affected pension and OPEB plans.
FirstEnergy is managing the pandemic by prioritizing employee and customer safety, continuing critical services, and monitoring supply chains. They have discontinued customer power shutoffs and waived late fees, with provisions to recover incremental uncollectible expenses through regulatory mechanisms. The company has ample liquidity ($3.5 billion) to navigate the economic slowdown.
FirstEnergy is focused on its fully regulated business units: Regulated Distribution and Regulated Transmission. The company has completed its strategy to exit the competitive generation business. Investments are concentrated in these regulated segments to improve reliability and modernize infrastructure, supporting stable and predictable earnings.
FirstEnergy plans significant capital investments in its regulated segments, with Regulated Distribution's rate base expected to grow at a compounded annual growth rate of approximately 4% and Regulated Transmission at approximately 10% from 2018 through 2023. The company continues to support shareholder returns through a modest dividend growth policy, with the Board having declared a $0.01 increase to the common dividend in November 2019.