What is Core EPS and why is FirstEnergy switching to it?

Core EPS is a non-GAAP measure covering the Distribution, Integrated, Stand-Alone Transmission, and Corporate segments. It excludes special items, the Signal Peak coal mine earnings, and net pension/OPEB credits. Management says it better reflects the regulated business and reduces volatility, which is why it will replace Operating EPS as the guidance and growth metric.

What does the 2025 guidance imply for investors?

The 2025 Core EPS guidance range is $2.40-$2.60 per share, with a midpoint representing about 5.5% growth over 2024 Core EPS of $2.37. Management cites higher financing costs, regulatory outcomes not in the plan, and higher O&M as reasons the outlook is more modest than the longer-term 6-8% CAGR target.

Does FirstEnergy need to issue new equity to fund its capital plan?

According to the filing, the $28 billion base investment plan for 2025-2029 requires no new equity beyond employee benefit programs of up to about $100 million annually. The company says it will consider a broader range of financing options if the plan grows, while remaining committed to investment-grade ratings.

What are the main risks to the growth outlook?

Key risks include regulatory outcomes such as removal of Ohio DCR cap increases and a 50 bps ROE reduction at ATSI, higher interest rates (the 10-year Treasury rose about 100 bps since October 2024), elevated O&M, and continued earnings volatility from pension mark-to-market adjustments and Signal Peak coal prices. The filing also notes the company's exposure to government investigations and HB 6-related matters.

FE 8-K: Earnings & Results & Regulation FD

Q: Why did GAAP EPS fall in 2024 even though operating earnings improved?

GAAP EPS declined to $1.70 from $1.96 mainly because of $0.93 per share of special items, including a $0.27 asset retirement obligation regulatory change and $0.14 of strategic transaction charges. Operating EPS still rose to $2.63 from $2.56, so the decline is largely driven by one-time or non-core items.

01—Abstract

Summary

Summary of the 8-K filed February 26, 2025. Cited figures are marked; the original filing is the authoritative source.

FirstEnergy (FE) reported full-year 2024 GAAP EPS from continuing operations of $1.70^a (net earnings of $978 million) versus $1.96 in 2023, while Operating (non-GAAP) EPS rose to $2.63 from $2.56, within guidance.

The gap is driven mainly by $0.93^b per share of special items, including a $0.27 asset retirement obligation regulatory change and $0.14 of strategic transaction charges. Management is shifting its headline earnings metric to Core (non-GAAP) EPS, which excludes the Signal Peak coal mine investment and net pension/OPEB credits. Core EPS was $2.37 in 2024, up 8% from $2.20, and the company introduced 2025 Core EPS guidance of $2.40-$2.60 (midpoint implying about 5.5% growth) with a targeted 6-8% Core EPS CAGR through 2029.

The longer-term story is capital investment. FirstEnergy expanded its Energize365 program to a $28 billion^c base plan for 2025-2029, an 8% increase over the prior five-year plan, supporting a targeted 9% rate base CAGR. Management states the base plan requires no equity beyond employee benefit programs, and about 75% of planned investment is recovered through formula rates, which reduces regulatory lag.

Credit metrics are a stated priority, with a targeted FFO/Debt of about 14%^d and a commitment to a BBB profile. The company also cited regulatory risks, including a removal of the Ohio DCR cap increases, a 50 bps reduction in ATSI's ROE, higher financing costs (10-year Treasury up about 100 bps since October 2024), and elevated O&M. For investors, the key takeaways are the reset to Core EPS as the reporting basis, a sizable capital plan funded without new equity in the base case, and 2025 guidance that reflects higher interest costs and regulatory headwinds.

Investors should weigh the non-GAAP framing against GAAP results, which remain volatile due to pension mark-to-market and special items. Forward-looking statements, including guidance and growth targets, carry material risk and are subject to the factors described in the filing.

02—Key points

Key Highlights

2024 GAAP EPS was $1.70 (vs. $1.96 in 2023), while Operating EPS rose to $2.63 (vs. $2.56), within the revised guidance range.
Core (non-GAAP) EPS, which excludes Signal Peak and pension/OPEB credits, grew 8% to $2.37 in 2024 from $2.20 in 2023.
2025 Core EPS guidance is $2.40-$2.60, implying about 5.5% growth at the midpoint, with a 6-8% Core EPS CAGR targeted through 2029.
Energize365 capital plan was extended to 2029 with a $28 billion base investment plan (up 8%), targeting a 9% FE-owned rate base CAGR and roughly 75% formula-rate investments.
No equity is needed for the base plan beyond employee benefit programs (up to about $100 million annually), and the company targets about 14%+ FFO/Debt with a BBB credit profile.
Special items totaled $0.93 per share in 2024, led by a $0.27 ARO regulatory change and $0.14 in strategic transaction charges, widening the gap between GAAP and non-GAAP results.
Headwinds include higher financing costs, removal of Ohio DCR cap increases, a 50 bps ATSI ROE reduction, and higher O&M, which drove the 2025 guidance update.

03—Questions

Frequently Asked Questions

Why did GAAP EPS fall in 2024 even though operating earnings improved?
GAAP EPS declined to $1.70 from $1.96 mainly because of $0.93 per share of special items, including a $0.27 asset retirement obligation regulatory change and $0.14 of strategic transaction charges. Operating EPS still rose to $2.63 from $2.56, so the decline is largely driven by one-time or non-core items.
What is Core EPS and why is FirstEnergy switching to it?
Core EPS is a non-GAAP measure covering the Distribution, Integrated, Stand-Alone Transmission, and Corporate segments. It excludes special items, the Signal Peak coal mine earnings, and net pension/OPEB credits. Management says it better reflects the regulated business and reduces volatility, which is why it will replace Operating EPS as the guidance and growth metric.
What does the 2025 guidance imply for investors?
The 2025 Core EPS guidance range is $2.40-$2.60 per share, with a midpoint representing about 5.5% growth over 2024 Core EPS of $2.37. Management cites higher financing costs, regulatory outcomes not in the plan, and higher O&M as reasons the outlook is more modest than the longer-term 6-8% CAGR target.
Does FirstEnergy need to issue new equity to fund its capital plan?
According to the filing, the $28 billion base investment plan for 2025-2029 requires no new equity beyond employee benefit programs of up to about $100 million annually. The company says it will consider a broader range of financing options if the plan grows, while remaining committed to investment-grade ratings.
What are the main risks to the growth outlook?
Key risks include regulatory outcomes such as removal of Ohio DCR cap increases and a 50 bps ROE reduction at ATSI, higher interest rates (the 10-year Treasury rose about 100 bps since October 2024), elevated O&M, and continued earnings volatility from pension mark-to-market adjustments and Signal Peak coal prices. The filing also notes the company's exposure to government investigations and HB 6-related matters.

04—Continue

← View all 8-K filings