10-QPeriod: Q2 FY2022

FIRSTENERGY CORP Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 26, 2022For Securities:FE

Summary

FirstEnergy Corp. reported a significant increase in net income for the six months ended June 30, 2022, reaching $480 million compared to $393 million in the same period of 2021. This growth was driven by a substantial rise in revenues, up 9% to $5.81 billion, supported by improvements in both regulated distribution and transmission segments. The company also saw a notable increase in operating income, reflecting improved operational efficiencies and favorable rate adjustments. Financially, FirstEnergy made progress in managing its debt, with total long-term debt decreasing. The company also completed a significant transaction with Brookfield, selling a minority interest in FirstEnergy Transmission, LLC (FET) for $2.375 billion, which closed in May 2022. This transaction, along with a $1 billion investment from Blackstone, strengthens the company's balance sheet and provides capital for strategic investments. Despite ongoing legal and regulatory scrutiny related to past activities, the company continues to focus on its strategic priorities of grid modernization and clean energy transition.

Financial Highlights

44 data points
Beta

Revenue

$2.82B

Net Income

$187.00M

6.6% Net Margin

EPS (Diluted)

$0.33

Total Assets

$45.12B

Cash & Equivalents

$478.00M

Free Cash Flow

$928.00M

Financial Statements
Beta
Revenue$2.82B
Operating Expenses$2.37B
Operating Income$447.00M
Interest Expense$265.00M
Net Income$187.00M
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Basic)571.00M
Shares Outstanding (Diluted)572.00M

Key Highlights

  • 1Net income attributable to FirstEnergy Corp. increased by 21% to $475 million for the first six months of 2022, compared to $393 million in the prior year.
  • 2Total revenues for the first six months of 2022 rose by 9% to $5.81 billion, driven by growth in both Regulated Distribution and Regulated Transmission segments.
  • 3Operating income improved by 15% to $1.01 billion for the first six months of 2022.
  • 4The company completed the sale of a 19.9% minority interest in FirstEnergy Transmission, LLC (FET) to Brookfield for $2.375 billion, closing on May 31, 2022.
  • 5FirstEnergy received a $1 billion investment from Blackstone Infrastructure Partners L.P. in December 2021, with a representative from Blackstone joining the FE Board.
  • 6The company's financial position was strengthened by significant debt redemptions and refinancing activities during the period.
  • 7FirstEnergy continues to invest in its regulated businesses, with planned investments of approximately $9 billion in Regulated Distribution and $8 billion in Regulated Transmission from 2021 to 2025.

Frequently Asked Questions

In the first six months of 2022, FirstEnergy reported a net income attributable to the company of $475 million, a 21% increase from $393 million in the same period of 2021. Total revenues increased by 9% to $5.81 billion, and operating income saw a 15% rise to $1.01 billion, indicating improved operational and financial health.

Key transactions included the closing of the sale of a 19.9% minority interest in FirstEnergy Transmission, LLC (FET) to Brookfield for $2.375 billion on May 31, 2022, and a $1 billion investment from Blackstone Infrastructure Partners L.P. in December 2021. These transactions strengthened the company's financial position and provided capital for strategic growth initiatives.

FirstEnergy has been actively managing its debt through redemptions and refinancing. The company also benefited from equity infusions, enhancing its balance sheet strength. Its strategy focuses on maintaining financial flexibility to support planned investments in its regulated distribution and transmission businesses.

FirstEnergy plans to invest significantly in its regulated businesses. Approximately $9 billion is allocated for Regulated Distribution and $8 billion for Regulated Transmission from 2021 to 2025. These investments will focus on grid modernization, advancing metering infrastructure, electric vehicle charging, and enhancing grid reliability and resilience.

FirstEnergy is involved in various legal proceedings and regulatory matters, including those related to past lobbying activities concerning HB 6, which resulted in a deferred prosecution agreement and a $230 million penalty. The company is also subject to ongoing investigations by the SEC and FERC, as well as numerous shareholder and customer lawsuits. While the company has taken steps to improve its compliance culture and governance, the outcomes of these matters remain uncertain and could materially impact its financial condition.