8-KEarnings & ResultsOther EventsExhibits & Filings

FIRSTENERGY CORP 8-K Report, Financial Results (Nov 2, 2020)

Filed November 2, 2020For Securities:FE

Summary

FirstEnergy Corp. (FE) filed an 8-K on November 2, 2020, providing an update on its financial performance and outlook. The company issued earnings for the third quarter and first nine months of 2020, reaffirmed its operating (non-GAAP) earnings guidance for the full year 2020, and provided updated GAAP guidance. A significant portion of the filing addresses ongoing government investigations related to Ohio House Bill 6, including subpoenas from the U.S. Attorney's Office and the SEC. FirstEnergy is cooperating with these investigations and acknowledges that they, along with related litigation, could materially and adversely affect its reputation, business, financial condition, results of operations, liquidity, and cash flows, potentially leading to significant monetary damages or remedial actions. The company also detailed its use of non-GAAP financial measures, such as "Operating earnings" and "Operating earnings per share," to provide a clearer view of ongoing core business performance by excluding "special items." These measures are presented to complement, not replace, GAAP figures and are used by management for performance evaluation and decision-making. Investors are cautioned that these non-GAAP measures may not be comparable to those of other companies. The filing also highlights various risks, including those related to the COVID-19 pandemic, legislative and regulatory developments, and cyber-security threats, which could impact future results.

Key Highlights

  • 1FirstEnergy reaffirmed its full-year 2020 operating (non-GAAP) earnings guidance while also providing updated full-year GAAP guidance.
  • 2The company reported results for the three and nine months ended September 30, 2020.
  • 3FirstEnergy is cooperating with ongoing investigations by the U.S. Attorney's Office for the Southern District of Ohio and the SEC concerning Ohio House Bill 6.
  • 4Subpoenas have been received from both the U.S. Attorney's Office and the SEC, indicating potential securities law violation investigations.
  • 5The company disclosed that these investigations and related litigation could have a material adverse effect on its business, financial condition, and results of operations.
  • 6FirstEnergy explained its use of non-GAAP financial measures (e.g., Operating Earnings) to present core operational performance, excluding "special items."
  • 7The filing warns investors about significant risks, including those from the COVID-19 pandemic, regulatory actions, and cybersecurity threats.

Frequently Asked Questions

FirstEnergy provided its financial results for the third quarter and the first nine months of 2020. Additionally, the company reaffirmed its previously issued operating (non-GAAP) earnings guidance for the full year 2020 and also updated its GAAP guidance for the full year.

The most significant risk highlighted is the ongoing government investigations related to Ohio House Bill 6 by the U.S. Attorney's Office and the SEC. The company states these investigations and related litigation could materially and adversely impact its reputation, business, financial condition, results of operations, liquidity, and cash flows. Other risks mentioned include the impacts of COVID-19, legislative and regulatory developments, cybersecurity threats, and economic conditions.

FirstEnergy uses non-GAAP measures such as 'Operating Earnings' and 'Operating Earnings per Share' to provide investors with a view of the company's ongoing core business performance. These measures exclude "special items" which management believes can obscure trends useful in evaluating the company's regular operations. The company uses these metrics for internal performance evaluation and decision-making, and believes they offer comparable performance measures across periods and against peers.

FirstEnergy states that the outcome of the investigations and related litigation is uncertain. If resolved against the company, it could result in significant compensatory or punitive monetary damages, remedial corporate measures, or other relief that could adversely impact its operations, business, financial condition, and results of operations. The company is unable to predict the full scope, duration, or cost of these matters.