10-QPeriod: Q2 FY2023

FIRSTENERGY CORP Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 1, 2023For Securities:FE

Summary

FirstEnergy Corp. (FE) reported solid financial results for the second quarter and first half of 2023. Total revenues increased by 7% year-over-year for both the quarter and the first six months, driven by growth in both Regulated Distribution and Regulated Transmission segments. Net income attributable to FE saw a significant increase of 26% for the quarter and 11% for the first half, reflecting improved operational performance and effective cost management. The company is progressing on its strategic initiatives, including the consolidation of its Pennsylvania operating companies and the partial sale of its interest in FirstEnergy Transmission, LLC (FET) to Brookfield. These strategic moves are aimed at strengthening the balance sheet and focusing on core regulated utility operations. FirstEnergy continues to invest in grid modernization and reliability improvements across its service territories, positioning itself for future growth and the energy transition.

Financial Highlights

47 data points
Beta

Revenue

$3.01B

Net Income

$235.00M

7.8% Net Margin

EPS (Diluted)

$0.41

Total Assets

$47.06B

Cash & Equivalents

$171.00M

Free Cash Flow

-$101.00M

Financial Statements
Beta
Revenue$3.01B
Operating Expenses$2.52B
Operating Income$481.00M
Interest Expense$276.00M
Net Income$235.00M
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)573.00M
Shares Outstanding (Diluted)574.00M

Key Highlights

  • 1Total revenues increased by 7% to $3.01 billion for the quarter and to $6.24 billion for the first six months, driven by growth in both Regulated Distribution and Regulated Transmission segments.
  • 2Net income attributable to FE increased by 26% to $235 million for the quarter and by 11% to $527 million for the first six months, indicating improved profitability.
  • 3The company continues to advance its strategic plan, including the pending sale of a 30% equity interest in FirstEnergy Transmission, LLC (FET) to Brookfield, expected to close by early 2024.
  • 4FirstEnergy is consolidating its Pennsylvania operating companies into a single entity, FE PA, expected to close by early 2024, aiming for regulatory and administrative efficiencies.
  • 5Capital investments totaled $769 million for the quarter and $1.42 billion for the first six months, primarily directed towards Regulated Distribution and Regulated Transmission infrastructure improvements.
  • 6The company made a $750 million voluntary cash contribution to its qualified pension plan in May 2023, impacting operating cash flow but strengthening its long-term pension funding position.
  • 7FirstEnergy's cash and cash equivalents increased to $171 million as of June 30, 2023, from $160 million at the end of 2022, alongside a total available liquidity of $3.97 billion.

Frequently Asked Questions

For the second quarter of 2023, FirstEnergy reported total revenues of $3.01 billion, a 7% increase compared to the prior year. Net income attributable to FirstEnergy was $235 million, a significant 26% increase year-over-year. This improved performance was driven by growth in both its Regulated Distribution and Regulated Transmission segments, alongside effective operational cost management.

FirstEnergy entered into an agreement to sell an incremental 30% equity interest in FET to Brookfield for $3.5 billion. This transaction is expected to close by early 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, Brookfield's interest in FET will increase to 49.9%, while FirstEnergy will retain a 50.1% ownership.

In May 2023, FirstEnergy made a voluntary cash contribution of $750 million to its qualified pension plan. This contribution significantly strengthened its pension funding status, and based on current assumptions, the company does not anticipate required contributions through 2027. This action did impact operating cash flow for the period.

FirstEnergy's strategy is focused on its core regulated businesses: Regulated Distribution and Regulated Transmission. The company is investing over $9 billion in Regulated Distribution and $8 billion in Regulated Transmission from 2021 to 2025 to enhance reliability, modernize the grid, and support the energy transition. Key initiatives include advanced metering infrastructure, grid modernization, and investments in renewable energy integration.