Core Viewpoint - FirstEnergy Corporation's subsidiary, Jersey Central Power & Light, is undertaking a $5.1 million project to upgrade electric service lines in Sussex County, expected to enhance reliability for approximately 1,700 customers by November this year [1][2]. Group 1: Project Details - The construction involves upgrading overhead lines and installing nearly 2,000 feet of underground wires in Roxbury Township [3]. - The project includes enhanced tree trimming, stronger poles, and overhead wires to improve resilience during storms [3]. - Additional protective devices and reclosers will be installed to minimize customer impact during outages [4]. Group 2: Reliability Improvement Initiative - This project is part of JCP&L's New Jersey Reliability Improvement Project, which has a total investment of at least $95 million over three years [5]. - The initiative aims to improve service reliability based on historical outage data [5]. Group 3: Financial and Operational Benefits - The upgrades are expected to lead to fewer outages during storms, reducing repair and maintenance costs for the company [7]. - Enhanced infrastructure will allow the company to better meet current and future energy needs, potentially improving financial performance [6]. Group 4: Broader Industry Context - FirstEnergy's project is part of a larger grid evolution program, Energize365, which plans to invest $28 billion from 2025 to 2029 to create a smarter, more secure grid [8]. - Other utilities, such as Dominion Energy, Exelon Corporation, and Entergy Corporation, are also investing significantly in infrastructure upgrades to enhance reliability [9][10].

Core Insights - FirstEnergy is investing in infrastructure upgrades to enhance service reliability for customers in New Jersey, specifically benefiting 1,700 customers in Roxbury, Mount Arlington, and Hopatcong [1][2] - The New Jersey Reliability Improvement Project is a two-phase initiative with a minimum investment of $95 million over three years, focusing on high-priority lines based on historical outage data [2][3] - The Energize365 program aims to invest $26 billion from 2024 to 2028 across six states to create a smarter and more secure electric grid [3] Company Overview - JCP&L serves approximately 1.1 million customers across various counties in New Jersey [4] - FirstEnergy operates one of the largest investor-owned electric systems in the U.S., serving over six million customers across multiple states [5] Project Details - The project includes installing about 2,000 feet of underground wires in Roxbury Township and upgrading existing infrastructure with stronger poles and overhead wires [7] - Additional upgrades involve increasing protective devices and reclosers to minimize customer impact during outages [7] - The installation of TripSaver devices will allow for automatic reenergization of power lines after temporary abnormalities, reducing the need for crew dispatch [7]

Financial Performance - Total revenues for 2024 reached $13,472 million, an increase of 4.7% from $12,870 million in 2023[521]. - Operating income for 2024 was $2,375 million, up 4.8% compared to $2,266 million in 2023[521]. - Net income attributable to FirstEnergy Corp. for 2024 was $978 million, a decrease of 11.3% from $1,102 million in 2023[521]. - Earnings per share for continuing operations in 2024 was $1.70, down from $1.96 in 2023[521]. - Comprehensive income for 2024 was $1,130 million, slightly down from $1,173 million in 2023[523]. - Total operating expenses for 2024 were $11,097 million, an increase of 4.6% from $10,604 million in 2023[521]. - Interest expense for 2024 was $1,144 million, compared to $1,124 million in 2023[521]. - Cash flows from operating activities rose significantly to $2,891 million in 2024, compared to $1,387 million in 2023, marking an increase of 108.4%[532]. - Capital investments in 2024 totaled $4,030 million, an increase from $3,356 million in 2023, reflecting a growth of 20%[532]. - The company declared cash dividends of $1.70 per share in 2024, compared to $1.60 in 2023, indicating a 6.25% increase[529]. Assets and Liabilities - Total assets increased to $52,044 million in 2024, up from $48,767 million in 2023, representing a growth of 4.6%[526]. - As of December 31, 2024, regulatory assets amounted to $617 million and regulatory liabilities were $995 million[515]. - The total liabilities increased to $38,324 million in 2024 from $37,851 million in 2023, a rise of 1.2%[526]. - Long-term debt decreased to $22,496 million in 2024 from $22,885 million in 2023, a reduction of 1.7%[526]. - Common stockholders' equity increased to $12,455 million in 2024, up from $10,437 million in 2023, representing a growth of 19.4%[526]. Employee and Corporate Structure - FirstEnergy's total employee count as of December 31, 2024, was 12,294, with approximately 40% represented by unions[64][65]. - The company continues to focus on employee development through various programs, including leadership training and educational opportunities[61][62]. - FirstEnergy's safety metrics are regularly monitored and included in the annual incentive compensation program to promote a safe work environment[59][60]. - The company has consolidated its Pennsylvania Companies into FE PA as of January 1, 2024, creating a new single operating entity[53][66]. Regulatory and Compliance - The imposition of new tariffs could adversely affect FirstEnergy's results of operations and financial condition, as the situation remains dynamic[50]. - FirstEnergy's default service obligations vary by state, with competitive procurement processes in place for securing power supply[51]. - The company maintained effective internal control over financial reporting as of December 31, 2024[507]. Market and Customer Metrics - FirstEnergy serves over six million customers across the Midwest and Mid-Atlantic regions, comprising one of the largest investor-owned electric systems in the nation[541]. - Total customer receivables as of December 31, 2024, amounted to $1,530 million, compared to $1,318 million in 2023, reflecting an increase of 16.0%[601]. - Unbilled customer receivables increased to $718 million in 2024 from $665 million in 2023, indicating a growth of 7.9%[601]. - Retail generation and distribution services for residential customers in the Distribution segment reached $4,514 million in 2024, a 3.9% increase from $4,344 million in 2023[593]. Pension and Benefits - FirstEnergy expects to make a voluntary contribution to its pension plan, with an estimated amount of approximately $300 million anticipated in 2027[613]. - The discount rate for pension obligations increased to 5.72% in 2024 from 5.05% in 2023[618]. - The benefit obligation as of December 31, 2024, decreased to $7,824 million from $8,363 million in 2023, a decline of approximately 6.4%[626]. - The actual return on plan assets for 2024 was a loss of $62 million, contrasting sharply with a gain of $682 million in 2023[626]. Taxation - FirstEnergy's total income taxes on income from continuing operations for 2024 amounted to $377 million, with an effective income tax rate of 25.1%[656]. - The net accumulated deferred income tax liability as of December 31, 2024, was $5.613 billion, an increase from $4.530 billion in 2023[658]. - FirstEnergy recognized a net tax charge of approximately $46 million in the first quarter of 2024 related to deferred tax liabilities[653]. Capital and Investments - The company completed the sale of a 30% equity interest in FirstEnergy Transmission, LLC to Brookfield for a purchase price of $3.5 billion, with $2.3 billion paid in cash at closing[549]. - FirstEnergy's equity ownership in FET is 50.1% as of December 31, 2024, following the sale of an incremental 30% equity interest to Brookfield[678].

Core Points - FirstEnergy Transmission LLC (FET) has been awarded multiple transmission projects by PJM Interconnection, amounting to approximately $1.25 billion in investments aimed at enhancing the electric grid and supporting regional economic growth [1][2][3] - The projects include a joint venture with Dominion Energy and American Electric Power Company, as well as individual projects within FET's service territory [1][4] - FirstEnergy's subsidiaries, including Potomac Edison, JCP&L, and Keystone Appalachian Transmission Company, will invest an additional $46 million for equipment upgrades and transmission line reconfigurations in Maryland, New Jersey, and Pennsylvania [2][3] Investment Details - The approved projects were proposed through PJM's 2024 Regional Transmission Expansion Plan and were approved on February 26, 2025 [3] - FET's investment includes approximately $1 billion for the Valley Link joint venture, which involves building around 260 miles of 765-kilovolt transmission lines and two substations between West Virginia and Maryland, and 155 miles of 765-kilovolt transmission lines in Virginia [7] - In Ohio, FET plans to invest $217 million to rebuild approximately 59 miles of 138-kilovolt transmission lines, and in Pennsylvania, $33 million will be allocated for rebuilding and reconfiguring two 115-kilovolt substations [7] Company Overview - FET is jointly owned by FirstEnergy Corp. and Brookfield Super-Core Infrastructure Partners, and operates American Transmission Systems Inc., Mid-Atlantic Interstate Transmission LLC, and Trans-Allegheny Interstate Line Company [5] - FirstEnergy operates one of the largest investor-owned electric systems in the U.S., serving customers across several states including Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York [5]

FirstEnergy Corp. (NYSE:FE) Q4 2024 Earnings Conference Call February 27, 2025 8:00 AM ET Company Participants Karen Sagot - VP of IR Brian Tierney - President CEO and Chairman Jon Taylor - SVP Strategy and CFO Conference Call Participants Shar Pourreza - Guggenheim Securities Carly Davenport - Goldman Sachs Nick Campanella - Barclays Michael Lonegan - Evercore ISI Jeremy Tonet - JPMorgan Steve Fleishman - Wolfe Research Andrew Weisel - Scotiabank Anthony Crowdell - Mizuho Securities Operator Hello, and wel ...

Financial Performance and Key Metrics - FirstEnergy reported 2024 GAAP earnings of $1.70 per share, with operating earnings at $2.63 per share, benefiting from new rates and investments in regulated businesses [9][10] - The company faced headwinds including lower sales volumes due to mild weather and storm activity, impacting overall performance [10][11] - The financial and regulatory milestones achieved in 2024 have strengthened the company's foundation and reduced its risk profile [12][18] Business Line Performance - In the distribution segment, earnings increased by $0.04 per share year-over-year, driven by higher weather-related distribution sales and lower Ohio rate credits [45] - The integrated segment saw earnings rise by $0.29 per share, primarily due to new base rates in New Jersey, West Virginia, and Maryland [46] - Standalone transmission business earnings declined by $0.12 per share, impacted by dilution from the sale of a 30% interest in FirstEnergy Transmission [47] Market Data and Key Metrics - The company achieved a consolidated return on equity of 9.4% on a rate base of $25.9 billion, an increase from 8.8% in 2023 [54] - The Pennsylvania Commission approved a $225 million base rate case settlement, effective January 1, 2025, enhancing service reliability [14] - The company anticipates investing $5 billion in regulated properties in 2025, an increase of approximately 11% over 2024 [36] Company Strategy and Industry Competition - FirstEnergy's strategy focuses on modernizing electric infrastructure and enhancing customer experience while maintaining financial discipline [61] - The Energize365 capital investment program is set at $28 billion through 2029, representing an 8% increase from the previous five-year plan [37][51] - The company aims to maintain its investment-grade credit ratings while exploring a range of financing options for future investments [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a core earnings growth rate of 6% to 8% through 2029, with a focus on regulatory outcomes and operational efficiency [37][58] - The company is addressing challenges related to higher financing costs and regulatory changes, which may impact future earnings guidance [33][57] - Management emphasized the importance of maintaining affordability for customers while investing in infrastructure [120] Other Important Information - The company introduced core earnings as a measure to better reflect the performance of its regulated utilities, excluding volatile components [29][41] - FirstEnergy's pension plan ended the year at approximately 84% funded, with ongoing efforts to mitigate associated risks [126] - The company is actively pursuing opportunities in data center demand, which is expected to contribute significantly to future growth [56] Q&A Session Summary Question: Insights on 2025 guidance and O&M pressures - Management anticipates being within the 6% to 8% growth range for core earnings, with O&M changes primarily related to the Pennsylvania base rate case [72][74] Question: Balance sheet and FFO to debt targets - The company aims to return to a 14% FFO to debt ratio by stripping out unique items from 2024 and benefiting from new rates in Pennsylvania [82][83] Question: Ohio rate case and potential settlements - Management is open to settling cases but anticipates the current Ohio rate case will be fully adjudicated due to its complexity [91][92] Question: ROE assumptions in earnings growth - The forecast assumes a consolidated ROE of 9.5% to 10%, with Ohio expected to contribute similarly [102] Question: Dispatchable generation opportunities in West Virginia - Potential investments in dispatchable generation could range from $3 billion to $6 billion over the next 12 to 15 years [106] Question: Pension funding status - The pension plan ended the year at about 84% funded, with rates expected to positively impact future funding [126]

Core Viewpoint - FirstEnergy reported mixed financial results for the fourth quarter of 2024, with operating earnings missing estimates but showing year-over-year growth in both earnings and revenues [1][2][4]. Financial Performance - Fourth-quarter operating earnings were 67 cents per share, missing the Zacks Consensus Estimate of 70 cents by 4.3% [1]. - The bottom line increased by 8.1% from 62 cents in the same quarter last year, driven by rate base growth in distribution and transmission programs [2]. - GAAP earnings for the fourth quarter were 45 cents per share, up from 30 cents in the fourth quarter of 2023 [3]. - Total revenues for the fourth quarter were $3.18 billion, missing the Zacks Consensus Estimate of $3.67 billion by 13.5%, but increased by 1% from $3.15 billion in the prior year [4]. Annual Performance - For the full year 2024, FirstEnergy reported total revenues of $13.47 billion, reflecting a year-over-year increase of 4.7% from $12.87 billion in 2023 [4]. - Total operating expenses for 2024 were $11.1 billion, up 4.6% from $10.6 billion in the previous year [5]. - Operating income for 2024 totaled $2.38 billion, an increase of 4.8% from $2.27 billion in 2023 [5]. Distribution and Deliveries - Total distribution deliveries increased by 2.8% in 2024 compared to 2023, attributed to cooling degree days being 37% above the previous year [6]. Future Guidance - FirstEnergy expects 2025 earnings per share in the range of $2.40-$2.60, indicating a 5.5% increase over the 2024 guidance [7]. - The Zacks Consensus Estimate for 2025 is $2.89 per share, which is higher than the company's guidance [7]. - The company plans a capital investment of $5 billion in 2025, up from $4.5 billion in 2024, reflecting an 11% year-over-year increase [8]. Zacks Rank - FirstEnergy currently holds a Zacks Rank of 4 (Sell) [9].

Group 1 - FirstEnergy reported quarterly earnings of $0.67 per share, missing the Zacks Consensus Estimate of $0.70 per share, but showing an increase from $0.62 per share a year ago, resulting in an earnings surprise of -4.29% [1] - The company posted revenues of $3.18 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 13.52%, and showing a slight increase from $3.15 billion year-over-year [2] - Over the last four quarters, FirstEnergy has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [2] Group 2 - FirstEnergy shares have increased approximately 9.4% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The trend for estimate revisions for FirstEnergy is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3 - The current consensus EPS estimate for the upcoming quarter is $0.60 on revenues of $3.64 billion, and for the current fiscal year, it is $2.89 on revenues of $15.53 billion [7] - The Utility - Electric Power industry, to which FirstEnergy belongs, is currently ranked in the bottom 49% of over 250 Zacks industries, which may negatively impact stock performance [8]

Financial Overview - Total assets of FirstEnergy are $52 billion, serving over 6 million customers across a service territory of 65,000 square miles[9]. - FirstEnergy achieved $450 million in annual revenue increases from base rate cases approved since Q4 2023, representing a $14 billion rate base[17]. - The company has resolved several legacy issues and completed obligations under a Deferred Prosecution Agreement with the U.S. Department of Justice[17]. - The company anticipates a load growth of 2.4% CAGR from 2025 to 2029, with residential sales growth driven by electrification and EV adoption[38]. - The company is focused on executing its Energize365 transmission and distribution investment plan to enhance operational efficiency[146]. Earnings Guidance - Core EPS guidance for 2025 is projected to be between $2.40 and $2.60, with a 6-8% CAGR expected from 2025 to 2029[21]. - 2025 Core EPS guidance is projected to be between $2.40 and $2.60, with segment distributions of $1.29-$1.37 for Integrated, $0.91-$0.97 for Stand-Alone Transmission, and $0.57-$0.59 for Corp/Other[36]. - The 2024 operating earnings per share (Non-GAAP) for FirstEnergy is projected at $2.63, excluding special items[136]. - The 2023 operating earnings per share (Non-GAAP) for FirstEnergy is reported at $1.20, excluding special items[138]. - The 2022 core earnings per share (Non-GAAP) for FirstEnergy was $1.78, after adjustments for special items[140]. Investment Plans - The company plans a $28 billion base investment plan from 2025 to 2029, with 75% allocated to formula rate investments[24]. - The investment plan includes $7.4 billion for distribution, $10.9 billion for integrated operations, and $9.5 billion for stand-alone transmission[24]. - The investment plan totals $10.8 billion for the 2025-2029 period, with approximately 45% allocated to transmission investments[92]. - The company plans to invest $900 million in transmission projects from 2025 to 2029 to meet growing data center demand[43]. - FirstEnergy's distribution segment is focused on enhancing customer experience and reliability, with a rate base investment plan of $4.4 billion in Ohio[67]. Dividend Policy - The company has committed to a dividend payout ratio of 60-70% of Core EPS, with a targeted total return opportunity of 10-12%[14]. - Annual dividends per share are targeted to grow by approximately 5%, with a declared dividend of $1.70 per share and a payout ratio of 72% in 2024[35]. - The dividend yield is currently at 4%, with plans for continued growth subject to board approval[35]. Financial Discipline - FirstEnergy's financial discipline is reflected in a target of ~14%+ FFO/Debt and a commitment to maintaining a BBB credit profile[14]. - FirstEnergy Corp. maintains an investment-grade credit profile with ratings of BBB- from S&P, Baa3 from Moody's, and BBB from Fitch[58]. - The company is committed to maintaining a balance sheet with a target FFO/Debt ratio of 15% by 2023[59]. Rate Base and Growth - Rate base growth is expected to be 9% CAGR from 2025 to 2029, with a total rate base of $31.8 billion projected for 2025[29]. - The average rate base is expected to grow at a CAGR of 11% from 2025 to 2029, with a 24% CAGR specifically for transmission[93]. - The projected rate base for 2025 is $6.9 billion, with a 6% CAGR growth expected from 2025 to 2029[72]. Operating Expenses - Total Operating Expenses (GAAP) for 2023 are reported at $3,594 million, projected to increase to $4,159 million in 2024[145]. - Special items for 2023 total $247 million, expected to rise to $433 million in 2024, impacting overall financial performance[145]. - Baseline O&M (non-GAAP) remains relatively stable, with $1,280 million in 2023 and a slight increase to $1,283 million in 2024[145]. Regulatory and Compliance - The allowed return on equity (ROE) for Ohio operations is filed at 10.8%, with a debt/equity ratio of approximately 45%/55%[74]. - The allowed return on equity (ROE) for transmission investments is set at 9.6%[98]. - Forward-looking statements indicate potential risks from government investigations and regulatory changes that could impact financial performance[146]. Revenue Increases - A net annual revenue increase of $85 million was approved in the New Jersey base rate case settlement on February 14, 2024[94]. - The West Virginia base rate case settlement approved on March 26, 2024, will result in a net annual revenue increase of $105 million[101].

Core Insights - FirstEnergy Corp. reported full year 2024 GAAP earnings of $1.70 per share, down from $1.96 in 2023, with operating (non-GAAP) earnings of $2.63 per share, slightly up from $2.56 in 2023 [1][9] - The company plans to invest $4.5 billion in customer-focused capital investments in 2024, a 20% increase over 2023, to enhance grid reliability and support energy transition [1][7] - FirstEnergy is extending its Energize365 capital investment program through 2029, with planned investments of $28 billion, an 8% increase from the previous five-year plan, aiming for a 9% rate base growth [1][8] Financial Performance - For the fourth quarter of 2024, GAAP earnings were $261 million, or $0.45 per share, compared to $175 million, or $0.30 per share in the fourth quarter of 2023 [9][10] - Core (non-GAAP) earnings for the fourth quarter of 2024 were $0.61 per share, up from $0.52 per share in the same quarter of 2023, driven by rate base growth and lower operating expenses [10][12] - Full-year 2024 earnings reflect growth from regulated investment strategies, increased customer demand, and new base rates, despite challenges from higher storm restoration costs and lower revenues in Ohio [15][16] Strategic Initiatives - The company has redesigned its operating model to enhance local service delivery and has established a strong leadership team to support its strategic goals [2][3] - FirstEnergy has completed rate reviews for 83% of its rate base since 2023, addressing several legacy issues to strengthen its financial profile [3][4] - The introduction of a 2025 Core earnings guidance range of $1.4 billion to $1.5 billion, or $2.40 to $2.60 per share, indicates a targeted growth rate of 6-8% compounded annually through the five-year planning period [6][8]