FirstEnergy (FE) Q4 2011 earnings summary

Executive summary

• 2011 revenue was $16.258B and earnings available to shareholders were $885M, or $2.22 basic EPS, versus $13.339B, $742M and $2.44 in 2010; the 2011 period included ten months of Allegheny results.

• Net income increased to $869M from $718M, while operating income declined to $1.698B from $1.743B; results included a $569M pre-tax gain on the partial Signal Peak sale and $334M of plant-retirement impairments.

Financial highlights

• Revenue rose to $16.258B from $13.339B, including $3.966B of Allegheny revenue from the February 25, 2011 merger date through year-end.

• Net income was $869M versus $718M; earnings available to shareholders were $885M versus $742M, while basic EPS was $2.22 versus $2.44.

• Operating income was $1.698B versus $1.743B; operating expenses increased to $14.560B from $11.596B, reflecting merger inclusion, pension mark-to-market charges and impairments.

• Net cash from operations was $3.063B, property additions were $2.278B and cash dividends paid were $881M in 2011.

Outlook and guidance

• 2012 capital spending was forecast at $2.1B excluding nuclear fuel; 2013 baseline capital spending was estimated at $2.0B, excluding potential strategic, mandated, efficiency and MATS-related spending.

• 2012 nuclear fuel investment was expected at $280M, followed by $219M in 2013.

• 2012 positive drivers included a full-year Allegheny contribution, competitive retail growth, lower fuel and O&M costs from retirements and debt-redemption savings; pressures included depressed power and capacity prices, higher Pennsylvania gross receipts taxes and depreciation.

• Remaining-unit environmental compliance was estimated at $1.3B–$1.7B; retirements of nine coal plants by September 1, 2012 remained subject to PJM reliability review.