FirstEnergy(US:FE)2020-04-24 20:11Financial Data and Key Metrics Changes - FirstEnergy reported GAAP earnings of $0.14 per share and operating earnings of $0.66 per share for Q1 2020, which is $0.01 above the midpoint of guidance [23] - The company affirmed its 2020 earnings guidance of $2.40 to $2.60 per share and a compound annual growth rate (CAGR) of 6% to 8% through 2021 and 5% to 7% extending through 2023 [24][25] - The company has a liquidity position of approximately $3.5 billion, with strong access to capital markets [25][42] Business Line Data and Key Metrics Changes - Distribution earnings decreased compared to Q1 2019 due to lower revenues from mild weather, offset by Ohio decoupling revenues and incremental rider revenue in Ohio and Pennsylvania [32] - Residential sales decreased by 12.6% compared to Q1 2019, while weather-adjusted residential sales decreased by 1.3% [33][34] - Commercial sales decreased by 7.5% on an actual basis and 1.6% when adjusted for weather compared to Q1 2019 [34] - Industrial load decreased by 3% compared to the same period last year, with growth only in the shale gas sector [35] Market Data and Key Metrics Changes - System-wide weather-adjusted load dropped by almost 6% from mid-March to mid-April compared to the same timeframe last year [15] - Residential customer usage increased by more than 6% in Pennsylvania due to stay-at-home orders, with expectations of similar increases across other service territories [16] - Approximately two-thirds of base distribution revenues come from residential sales, while 28% are from commercial customers and about 7% from the industrial sector [17] Company Strategy and Development Direction - The company emphasizes its resilience during the COVID-19 pandemic, highlighting the diversity and scale of its operations across five states [8][13] - FirstEnergy plans to continue deploying capital throughout its system, with a focus on maintaining essential services and investments in infrastructure [14][46] - The company has a long pipeline of regulated capital expenditures, with over 60% of investments under formula rates and riders to minimize regulatory lag [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through the economic slowdown, citing stable and predictable earnings from distribution and transmission investments [13][44] - The management team is closely monitoring the impact of the pandemic on customer usage trends and is prepared to adapt to changing conditions [15][70] - The company does not anticipate significant disruptions in its supply chain and has implemented measures to protect employee health and safety [9][10] Other Important Information - The company has received regulatory support in Maryland for deferring COVID-19 related costs, demonstrating strong regulatory relationships [19] - FirstEnergy's pension plan has outperformed in volatile market conditions, with a funded status of 77% as of the latest remeasurement [38] Q&A Session Summary Question: Operational handling of the pandemic and capital expenditure plans - Management highlighted the successful transition of over 7,000 employees to remote work and the implementation of safety measures for on-site workers, ensuring operational continuity [51][53] - The company does not foresee any supply chain interruptions affecting capital expenditure plans [55] Question: Rate case and regulatory updates in New Jersey - The rate case has been delayed but is expected to get back on track soon, with no significant impact anticipated in 2020 [60] Question: Customer count trends and economic downturn impacts - Management noted a growth in residential customer counts, while industrial customer counts have been affected by the economic downturn [84] Question: Bad debt expense and recovery mechanisms - Management emphasized that not all customers unable to pay their bills will result in bad debt, and recovery mechanisms are in place in Ohio and New Jersey [98]