8-KEarnings & ResultsRegulation FDExhibits & Filings

FIRSTENERGY CORP 8-K Report, Financial Results (Feb 19, 2019)

Filed February 19, 2019For Securities:FE

Summary

FirstEnergy Corp. (FE) filed an 8-K on February 19, 2019, primarily to announce its financial results for the three months and year ended December 31, 2018, and to provide earnings guidance for 2019. The filing highlights the use of non-GAAP financial measures, such as "Operating earnings (loss)" and "Operating earnings (loss) per share," which management uses to assess the company's ongoing core activities by excluding "special items." These non-GAAP measures are presented to provide a consistent and comparable view of performance trends and to allow for comparison with industry peers, excluding items that may not be indicative of core operations or may obscure trends. The company also noted updates to its investor FactBook, available on its website, reflecting information as of the fourth quarter and year-end 2018. This report is crucial for investors to understand the company's operational performance beyond GAAP measures, its forward-looking guidance strategy, and the potential impact of various risks and uncertainties, including those related to the FirstEnergy Solutions Corp. (FES) bankruptcy proceedings and the company's strategic shift towards a fully regulated business model.

Key Highlights

  • 1FirstEnergy announced its financial results for the fourth quarter and full year ended December 31, 2018, along with 2019 earnings guidance.
  • 2The company relies heavily on non-GAAP financial measures, specifically "Operating earnings (loss)" and "Operating earnings (loss) per share," to report performance, excluding "special items."
  • 3Management believes these non-GAAP measures offer better insights into ongoing core business trends and facilitate peer comparisons.
  • 4Prior period disclosures for non-GAAP measures have been revised to reflect the reclassification of certain operations as discontinued operations.
  • 5The filing indicates the company is updating its investor FactBook with information as of year-end 2018 and will make it available on its website.
  • 6Significant forward-looking statements highlight risks and uncertainties, including the ongoing FES bankruptcy proceedings and the company's strategy to operate as a fully regulated business.

Frequently Asked Questions

FirstEnergy uses non-GAAP financial measures such as "Operating earnings (loss)" and "Operating earnings (loss) per share" to report financial performance. Management uses these measures because they exclude "special items" which are defined as charges or benefits that management believes are not indicative of or may obscure trends useful in evaluating the company's ongoing core activities and results of operations. They are intended to provide a more consistent and comparable view of performance trends and facilitate comparison with industry peers.

The FES bankruptcy proceedings are a significant risk factor highlighted in the filing. The outcome of these proceedings, including the potential for litigation and payment demands against FirstEnergy, could adversely affect the company's liquidity and results of operations. The company also notes that conditions to its settlement agreement with respect to the FES bankruptcy may not be met.

The filing indicates FirstEnergy's strategic goal to operate and grow as a fully regulated business. This includes executing plans for transmission and distribution investments, reducing costs through initiatives like 'FE Tomorrow,' improving credit metrics, strengthening the balance sheet, and growing earnings. The company is also managing risks associated with exiting commodity-based generation.

Investors can find updated information as of the fourth quarter and year ended December 31, 2018, in FirstEnergy's latest investor FactBook, which is expected to be posted on their website at www.firstenergycorp.com/ir. The 8-K itself attaches a Press Release (Exhibit 99.1) and a Consolidated Report to the Financial Community (Exhibit 99.2) that contain more detailed financial information and reconciliations.