FirstEnergy Corp ((FE)) has held its Q4 earnings call. Read on for the main highlights of the call.
FirstEnergy Corp’s recent earnings call presented a mixed sentiment, highlighting both significant achievements and challenges. The company celebrated regulatory approvals, substantial investments, and improved credit ratings. However, it also faced hurdles due to external factors such as weather-related sales declines and the impact of rising interest rates. Despite these challenges, FirstEnergy remains focused on maintaining financial discipline and driving future growth.
Record Earnings and Growth in Core Earnings
FirstEnergy reported 2024 GAAP earnings of $1.70 per share and operating earnings of $2.63 per share, aligning with their forecasted guidance range. The company experienced a 33% growth in core earnings from 2022 to 2024, underscoring the strength of their regulated operations.
Significant Regulatory Achievements
In the past 18 months, FirstEnergy completed rate reviews in four of its five states, resulting in a net annual revenue increase of approximately $450 million. A notable achievement was the Pennsylvania Commission’s approval of a $225 million base rate case settlement.
Investment and Infrastructure Advances
FirstEnergy invested $4.5 billion in 2024, surpassing their original plan by 5%. The company’s Energize365 program aims to invest $28 billion through 2029, which represents an 8% increase from their previous five-year plan.
Improved Credit Ratings
In 2024, FirstEnergy achieved a remarkable total of 40 ratings upgrades, more than doubling the number of upgrades in the entire U.S. electric utility sector in 2023. All of its subsidiaries are now investment grade.
Headwinds Impacting Earnings
The company faced earnings challenges due to lower sales volumes from mild weather and unusual storm activity, which did not meet deferral requirements. Additionally, Ohio revenues were below plan due to the ESP-5 order.
Interest Rate and Regulatory Challenges
Higher financing costs from increased interest rates and a 50-basis point reduction in ATSI transmission rates negatively impacted earnings. Furthermore, Ohio DCR revenue caps were frozen, affecting future earnings potential.
Volatility in Non-Core Earnings
FirstEnergy experienced a 59% decrease in non-core earnings from pension and Signal Peak from 2022 to 2024, highlighting volatility in these areas.
Forward-Looking Guidance
Looking ahead, FirstEnergy provided guidance for 2025, with a core earnings per share range of $2.40 to $2.60, reflecting a 5.5% growth from the previous year. The company plans to invest $5 billion in its regulated properties in 2025, marking an 11% increase over 2024, focusing on grid modernization and reliability enhancements. The Energize365 program anticipates a $28 billion investment through 2029, aiming for a 9% compounded annual rate-based growth. FirstEnergy’s strategy emphasizes financial discipline, regulatory commitments, and sustainable growth, with a forecasted core earnings compounded annual growth rate of 6% to 8% for the 2025-2029 period.
In conclusion, FirstEnergy’s earnings call highlighted a balanced narrative of achievements and challenges. While the company celebrated regulatory successes, investment advancements, and improved credit ratings, it also acknowledged the impact of external factors on earnings. Looking forward, FirstEnergy remains committed to strategic investments and sustainable growth, aiming to overcome challenges and capitalize on opportunities in the coming years.