FirstEnergy (FE) Q4 2013 earnings summary

Executive summary

• 2013 earnings available were $392 million, or $0.94 diluted EPS, versus $770 million and $1.84 in 2012; persistent low power and capacity prices pressured competitive operations.

• Strategic repositioning shifted generation capacity toward regulated distribution and transmission, including a 1,476 MW transfer to regulated operations and plans for substantial transmission expansion.

Financial highlights

• Revenue was $14.917 billion in 2013 versus $15.273 billion in 2012; operating income was $1.607 billion versus $2.152 billion.

• Net income was $392 million versus $771 million; continuing-operations income was $375 million versus $755 million, and diluted EPS was $0.94 versus $1.84.

• Operating cash flow rose to $2.662 billion from $2.320 billion, chiefly because the prior-year $600 million pension contribution did not recur.

• Non-recurring and unusual charges included $795 million of long-lived asset impairments, $254 million of regulatory asset impairment, and $51 million of Ohio renewable-credit charges.

Outlook and guidance

• 2014 capital expenditures are expected to be $3.3 billion, excluding nuclear fuel; transmission expansion is a primary driver, and transmission investment is projected at $4.2 billion over 2014–2017.

• 2014 load growth is forecast at 0.6%; projected distribution sales are 148.8 million MWh versus 147.9 million MWh in 2013.

• 2014 expectations include higher regulated generation margin after the West Virginia asset transfer, reduced competitive commodity margin, higher financing costs, and two nuclear refueling outages, including an extended Davis-Besse outage.

• The indicated annual dividend was reduced from $2.20 to $1.44 per share; the action is expected to preserve $320 million of cash annually.