FirstEnergy (FE) Q4 2022 earnings summary

Executive summary

• 2022 revenue increased to $12.459B from $11.132B; reported net income fell to $439M from $1.283B and diluted EPS to $0.71 from $2.35.

• Results reflected a $752M deferred-tax charge tied to the 2022 sale of a 19.9% transmission interest, debt-redemption costs, and higher distribution costs; regulated transmission earnings remained comparatively stable.

• Strategy centers on regulated distribution and transmission investment, grid reliability and modernization, and a planned additional sale of a 30% transmission interest to Brookfield.

Financial highlights

• Revenue rose $1.327B YoY to $12.459B; operating income increased to $1.910B from $1.726B.

• Net income was $439M versus $1.283B; income from continuing operations was $439M versus $1.239B, and diluted EPS was $0.71 versus $2.35.

• Operating cash flow was $2.683B, down from $2.811B; investing cash use was $3.076B versus $2.559B, mainly reflecting capital investment and the absence of Yards Creek sale proceeds.

• Revenue growth reflected higher generation sales and transmission revenue; customer rate credits and reduced regulatory-asset amortization affected distribution results.

Outlook and guidance

• Planned 2021–2025 investment totals approximately $18B; 2023–2025 investment forecasts are $3.410B, $3.875B and $4.095B, respectively.

• Distribution base-rate cases were expected in Maryland, New Jersey and West Virginia in 2023 and Ohio in 2024; the Pennsylvania consolidation was targeted for early 2024, subject to approvals.

• The additional 30% transmission-interest sale to Brookfield is expected to close by early 2024, subject to regulatory and other approvals; proceeds comprise $1.75B cash and an expected $1.75B note.

• A 15% corporate AMT takes effect in 2023 for qualifying corporations; interim Treasury guidance indicated the tax may apply, but final liability remained uncertain.