10-QPeriod: Q2 FY2020

FIRSTENERGY CORP Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 17, 2020For Securities:FE

Summary

FirstEnergy Corp. reported financial results for the quarter and six months ended June 30, 2020. Total revenues remained relatively flat year-over-year for the quarter, but saw a slight decrease for the six-month period. Net income experienced a slight decrease in the quarter, and a more significant decrease for the six months, largely impacted by a substantial pension and OPEB mark-to-market adjustment in the first quarter of 2020 and other factors. The company's transition to a fully regulated utility is nearing completion with the emergence of FES Debtors from bankruptcy, which was a key strategic milestone. The company continues to focus on its regulated distribution and transmission segments, with ongoing investments in infrastructure to improve reliability and modernize its systems. FirstEnergy is also managing the impacts of the COVID-19 pandemic, including increased uncollectible customer receivables and implementing measures to protect employees and customers. Regulatory mechanisms are in place in several states to recover pandemic-related incremental costs. Despite the ongoing uncertainties related to the pandemic and a government investigation into Ohio House Bill 6, FirstEnergy maintains its focus on executing its regulated growth strategy and providing essential services.

Financial Highlights

44 data points
Beta

Revenue

$2.52B

Net Income

$309.00M

12.3% Net Margin

EPS (Diluted)

$0.57

Total Assets

$42.40B

Cash & Equivalents

$116.00M

Free Cash Flow

$710.00M

Financial Statements
Beta
Revenue$2.52B
Operating Expenses$2.01B
Operating Income$515.00M
Interest Expense$263.00M
Net Income$309.00M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)542.00M
Shares Outstanding (Diluted)543.00M

Key Highlights

  • 1Total revenues for the quarter ended June 30, 2020, were $2.52 billion, a slight increase of $6 million compared to $2.51 billion in the same period of 2019.
  • 2Net income for the quarter decreased slightly to $309 million from $312 million in the prior year's quarter.
  • 3Net income for the six months ended June 30, 2020, significantly decreased to $383 million from $632 million in the same period of 2019, impacted by a $423 million pension and OPEB mark-to-market adjustment.
  • 4The company is actively managing the impacts of COVID-19, including increased uncollectible customer receivables, with regulatory mechanisms in place to recover related costs in several states.
  • 5FirstEnergy completed the final step of its strategy to exit the competitive generation business with the emergence of FES Debtors from bankruptcy.
  • 6The company continues to invest in its Regulated Distribution and Transmission segments, with plans for significant capital investments to improve reliability and modernize infrastructure.
  • 7As of June 30, 2020, FirstEnergy had $116 million in cash and cash equivalents, and $3.6 billion in available liquidity.

Frequently Asked Questions

In the second quarter of 2020, FirstEnergy reported total revenues of $2.52 billion, a slight increase of $6 million compared to the second quarter of 2019. Net income for the quarter was $309 million, a slight decrease from $312 million in the prior year's quarter. The company noted increased residential sales due to COVID-19 stay-at-home orders, partially offset by lower commercial and industrial sales.

FirstEnergy has incurred incremental uncollectible and other COVID-19 related expenses, including additional costs for employee and customer protection. The company has also temporarily suspended customer disconnections for non-payment. Several states have issued orders allowing FirstEnergy to track and create regulatory assets for future recovery of these incremental costs.

The emergence of FES Debtors from bankruptcy on February 27, 2020, marks the final step in FirstEnergy's strategy to exit the competitive generation business. This transition is expected to result in a fully regulated utility company with stronger balance sheet, predictable earnings, and improved cash flows.

FirstEnergy is continuing to invest in its Regulated Distribution and Transmission segments. The company plans significant capital investments, with over $10 billion forecasted for Regulated Distribution and over $7 billion for Regulated Transmission from 2018 through 2023, aimed at improving reliability, modernizing the electric system, and strengthening grid security.

FirstEnergy is cooperating with a government investigation related to Ohio House Bill 6, which has led to the filing of several lawsuits. The company is unable to predict the outcome of this investigation and litigation, which could adversely affect its reputation, business, financial condition, results of operations, or cash flows. Additionally, the company is subject to various state and federal regulatory matters, including those related to environmental compliance and transmission rate methodologies.