• GAAP Earnings: $1.70 per share for 2024.
• Operating Earnings: $2.63 per share, within the forecasted guidance range.
• Net Annual Revenue Increase: Approximately $450 million from approved rate cases in Maryland, West Virginia, New Jersey, and Pennsylvania.
• Capital Investments: $4.5 billion in 2024, surpassing the original plan by 5% and a 20% increase compared to 2023.
• Dividend Declarations: $1.70 per share in 2024, an increase of over 6% from 2023.
• Core Earnings Growth: 33% growth from 2022 to 2024.
• 2025 Core Earnings Guidance: $2.40 to $2.60 per share.
• 2025 Capital Investment Plan: $5 billion, an 11% increase over 2024.
• Rate Base Growth: 9% compounded annual growth rate through 2029.
• Return on Equity (ROE): 9.4% on a rate base of $25.9 billion for 2024.
• Debt Financing Plan for 2025: Eight transactions approximating $3.6 billion.
• Dividend Guidance for 2025: Anticipated annual declarations totaling $1.78 per share.

• Warning! GuruFocus has detected 9 Warning Signs with FE.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• FirstEnergy Corp (NYSE:FE) achieved a significant de-risking of its business from financial and regulatory perspectives in 2024.
• The company delivered 2024 GAAP earnings of $1.70 per share and operating earnings of $2.63 per share, within the forecasted guidance range.
• FirstEnergy Corp (NYSE:FE) completed rate reviews in four of its five states, de-risking 83% of its rate base.
• The company successfully closed a transformative transaction, improving its balance sheet and achieving investment-grade status across all subsidiaries.
• FirstEnergy Corp (NYSE:FE) introduced core earnings to better reflect the performance of its regulated utilities, showing a 33% growth from 2022 to 2024.

Negative Points

• FirstEnergy Corp (NYSE:FE) faced headwinds from lower sales volumes due to mild weather and storm activity that did not meet regulatory deferral requirements.
• Ohio revenues were below plan due to the ESP V order, impacting financial performance.
• Higher-than-anticipated financing costs, including significantly higher interest rates, affected the 2025 guidance.
• The removal of a 50 basis point incentive from ATSI transmission rates and Ohio DCR revenue caps posed challenges.
• The company experienced volatility in non-core earnings from pension and Signal Peak mine, leading to a shift in reporting to core earnings.

Q & A Highlights

Q: Can you provide more details on the 2025 guidance reset and the factors influencing it? A: Brian Tierney, CEO, explained that the 2025 guidance reflects a 6% to 8% growth range, with a focus on maintaining O&M discipline. The guidance accounts for increased O&M in Pennsylvania due to a base rate case settlement, while keeping O&M flat in other regions. The company aims to be at the upper end of the growth range, driven by disciplined spending and strategic initiatives.

Q: How does the recent Ohio audit report impact your regulatory strategy, particularly regarding ESP VI? A: Brian Tierney, CEO, noted that the audit report suggested a lower revenue requirement and ROE, but these are consistent with other Ohio companies. The company plans to address these issues in its response to the audit report and remains focused on achieving a constructive regulatory outcome.

Q: What is the path to achieving the 14% FFO to debt target, and is it sustainable? A: Jon Taylor, CFO, stated that excluding unique 2024 payments, the company is close to the 14% target for 2025. The Pennsylvania rate case and new rates effective January 1 will support achieving and sustaining this target.

Q: Are the PJM-selected transmission projects included in your current plan, and how will they be financed? A: Brian Tierney, CEO, mentioned that the company's share of the projects is about $675 million, with most in FET. The CapEx for FirstEnergy companies is included in the plan, while the JV will be off-balance sheet, financed separately.

Q: Can you discuss the potential for dispatchable generation in West Virginia and its impact on your investment plan? A: Brian Tierney, CEO, highlighted the potential for $4 billion to $6 billion in investment over 12 to 15 years to replace retiring coal-fired generation. This would support economic development and align with the company's long-term strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.