New CEO Tierney Has Significant Utility Experience

Strategist

Andrew Bischof

Revenue segments as reported by the company.

Distribution services and retail generation

Transmission

Other

Revenue Segments

Revenue is the money generated from normal business operations. Gross Profit is revenue minus cost of goods sold. Operating Income is revenue minus cost of goods sold and other operating expenses.

Revenue

Operating Income

Revenue & Operating Income

Net Income, also called net earnings, is calculated as revenue minus cost of goods sold, operating expenses, depreciation, interest, taxes, and other expenses.

Net Income

Gross Profit, Operating Income, and Net Income as a percentage of Revenue

Operating Margin

Profit Margin

Margins

An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX.

Fuel

Purchased power

Other operating expenses

Provision for depreciation

Amortization (deferral) of regulatory assets, net

General taxes

DPA penalty

Gain on sale of Yards Creek

Operating Expenses

Year over year growth in Revenue and Operating Expenses.

Revenue Y/Y

OpEx Y/Y

Growth

Shares outstanding refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Outstanding Shares

Market Cap

Also known as Price/Sales Ratio. Calculated using Average market cap for the quarter / Annualized quarterly revenue.

Revenue Multiple

FirstEnergy is moving past the scandal that linked the company with funds used in the former Ohio House speaker's bribery scheme benefiting two nuclear plants FirstEnergy once owned as part of its former subsidiary, FirstEnergy Solutions.

In 2021, FirstEnergy reached an agreement with the Department of Justice to settle its involvement in the Ohio bribery scheme. The company continues to work through legal settlements and open regulatory proceedings in the state. Its three Ohio distribution utilities represent less than 20% of operating earnings.

The company's regulated utilities are focused on accelerating investments that should result in solid earnings growth. We expect the company to invest nearly $19 billion through 2027 supporting our expectations for the company to achieve the low end of management's 6% to 8% annual earnings growth target.

The company has raised significant funds in the past two years to support its investment program and shore up its balance sheet. In 2022, it raised $3.4 billion, including $2.4 billion from selling a 19.9% minority stake in subsidiary FirstEnergy Transmission and $1 billion from new market equity. In early 2023, the company agreed to sell another 30% stake in FirstEnergy Transmission for $3.5 billion. We expect the transaction to receive federal and state regulatory approval, like the initial transaction.

Proceeds from the transactions will be used to pay down debt and fund additional investment opportunities. FirstEnergy will look to strengthen the balance sheet and achieve its targeted 14%-15% funds from operations/debt ratio. Balance sheet strength has been a major focus for investors.

FirstEnergy hasn't increased its dividend since 2020. We forecast a dividend increase in 2023, consistent with management's goal to resume dividend growth later this year.

FirstEnergy recently announced that utility veteran Brian Tierney would become CEO effective June 1. Overall, we think Tierney's selection is a solid choice given his previous experience at American Electric Power, which included experience as the utilities' CFO and executive vice president of AEP Utilities East division.

Business Strategy & Outlook

We believe FirstEnergy has a narrow economic moat. The majority of FirstEnergy's earnings come from the company’s narrow moat Federal Energy Regulatory Commission-regulated electric transmission businesses and narrow moat utilities in Ohio, Pennsylvania and West Virginia. Offsetting these moaty businesses are Jersey Central Power & Light, a regulated utility in New Jersey that has struggled to earn its allowed returns in part due to a poor regulatory framework.

Electric transmission also has favorable regulatory framework under FERC. Rates are based on a formula that allows transmission companies to recover expenses and earn a return on investment. The formula-rate mechanism considers forecast expenses, investment base, revenue, and network load each year, then adjusts annually to true-up returns. FERC’s formula-based rate-setting framework is more investor-friendly than typical state regulation, which many times requires a utility to invest capital before adjusting customer rates to collect a return on and return of that capital. 

The company's state-regulated utilities in Ohio, Pennsylvania, and West Virginia benefit from mostly constructive rate regulation. Service territory monopolies and efficient scale advantages are the primary sources for the seven narrow-moat utilities in these three states. Regulated rates are the foundation for FirstEnergy to earn a fair return on and return of the capital it invests to build, operate, and maintain its infrastructure. Based on past regulatory decisions and the current framework, we have confidence that these utilities will earn above our estimate of their cost of capital for the next 15 years.

Although New Jersey-based JCP&L has moaty characteristics that include service territory monopolies and efficient-scale advantages, the regulatory framework has been a difficult jurisdiction for investors to consistently earn a material spread above our estimate of the cost of capital. The regulatory framework includes historical instead of forward-looking which usually results in ROEs being less than allowed, or regulatory lag.

Narrow

Economic Moat

FirstEnergy

FirstEnergy Corp. engages in the generation, transmission, and distribution of electricity as well as energy management and other energy-related services through its subsidiaries. It operates through the following business segments: Regulated Distribution, Regulated Transmission, and Corporate. The Regulated Distribution segment distributes electricity through FirstEnergy's utility operating companies, serving various customers. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by FirstEnergy's utilities. The Corporate segment reflects corporate support not charged to FE's subsidiaries, interest expense on FE’s holding company debt and other businesses that do not constitute an operating segment. The company was founded in 1996 and is headquartered in Akron, OH.

Earnings data Q2 2023

Cost of revenue

Gross profit

Operating expenses

SG&A

Operating income

EBITDA

Net income

Earnings per share

Total assets

Current assets

Cash & equivalents

Receivables

Inventory

Non-current assets

Net PPE

Intangibles

Total liabilities

Current liabilities

Short term debt

Income tax payable

Non-current liabilities

Long-term debt

Total equity

Stockholders equity

Minority interest

Total liabilities & equity

Total debt

Net debt

Book value per share

Cash from operations

Funds from operations

Change in working capital

Cash from investing

Capital expenditure

Purchase/sale of investments

Purchase/sale of business

Other sources

Cash from financing

Change in stock

Change in debt

Cash dividends paid

Cash from other sources

Net change in cash

Free cash flow

FirstEnergy Corp. engages in the generation, transmission, and distribution of electricity as well as energy management and other energy-related services through its subsidiaries. It operates through the following business segments: Regulated Distribution, Regulated Transmission, and Corporate or Other. The Regulated Distribution segment distributes electricity through FirstEnergy's utility operating companies, serving various customers. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by FirstEnergy's utilities. The Corporate or Other segment reflects corporate support and other costs not charged or attributable to the utilities or transmission companies. The company was founded in 1996 and is headquartered in Akron, OH.

Project is part of larger 64-mile line rebuild to enhance reliability AKRON, Ohio , June 2, 2023 /PRNewswire/ -- American Transmission Systems, Inc. (ATSI), a subsidiary of FirstEnergy Corp. (NYSE: FE), has upgraded nine miles of a high-voltage power line in Carroll and Harrison counties in Ohio to strengthen the regional transmission system. The second phase of a larger 64-mile transmission line project, the rebuilt segment will enhance service reliability for Ohio Edison customers, improve system resiliency and accommodate increasing customer demand for electricity in the future.

FirstEnergy Completes Nine-Mile Transmission Line Upgrade in Eastern Ohio

Proposed residential rates remain lowest among state's regulated electric utilities FAIRMONT, W.Va. , June 1, 2023 /PRNewswire/ -- Mon Power and Potomac Edison, subsidiaries of FirstEnergy Corp. (NYSE: FE), have requested a review of their base electric rates by the West Virginia Public Service Commission (PSC).

Mon Power and Potomac Edison File Rate Review to Support Continued Service Reliability and New Customer Advocacy Program in West Virginia

Board Chair, Interim President and CEO John W. Somerhalder addresses shareholders Company announces preliminary voting results Brian X.

FirstEnergy Holds 2023 Annual Meeting

Video available to schools, driver training programs and first responders to demonstrate safe accident response AKRON, Ohio , May 18, 2023 /PRNewswire/ -- As part of its on-going "Stop.Look.Live." public safety campaign, FirstEnergy Corp. (NYSE: FE) has produced a video to teach drivers, emergency responders and bystanders tips for staying safe when a vehicle accident involves electrical equipment.

FirstEnergy Offers Safety Tips for Vehicle Accidents Involving Utility Equipment

Project to benefit customers in Birmingham, Warriors Mark and nearby areas ERIE, Pa. , May 17, 2023 /PRNewswire/ -- Penelec, a subsidiary of FirstEnergy Corp. (NYSE: FE), is completing work to enhance its energy delivery system in Blair and Huntingdon counties to help prevent or minimize the length of service disruptions, particularly during severe weather.

Penelec Completing Upgrades to Electric System in Central Pennsylvania

EV drivers can voluntarily opt in to the new time-of-use rate WILLLIAMSPORT, Md., May 17, 2023 /PRNewswire/ -- Potomac Edison, a subsidiary of FirstEnergy Corp. (NYSE: FE), is now offering electric vehicle (EV) drivers the option to enroll in a program that can help them save money by charging their EV during off-peak hours.

Potomac Edison Incentivizes Electric Vehicle Charging During Off-Peak Hours to Save Residential Customers Money and Take Pressure Off the Electric Grid

MORRISTOWN, N.J. , May 16, 2023 /PRNewswire/ -- Jersey Central Power & Light (JCP&L), a subsidiary of FirstEnergy Corp. (NYSE: FE), is on track to plant more than 3,200 trees donated by FirstEnergy across its New Jersey service area this year, more than double the number of trees donated last year.

FirstEnergy to Donate and Plant More Than 3,200 Trees Across New Jersey in 2023

" Standard Offer Service" rate rising June 1 following higher competitive auction prices WILLIAMSPORT, Md. , May 10, 2023 /PRNewswire/ -- FirstEnergy Corp. (NYSE: FE) is encouraging Maryland customers of its subsidiary Potomac Edison to evaluate electric supply offers from competitive suppliers that fit their budget and protect against rising energy prices this summer.

Potomac Edison Encourages Maryland Customers to Review Options to Help Manage Summer Electric Bills

Bed Bath & Beyond Inc

Delta Air Lines

Con Ed

Mattel

MDU Resources Group

National Grid

Vanguard High Dividend Yield ETF

Warner Bros Discovery Inc

We don't buy stocks to look for a selling point as dividend investors. Our holding period is for life. However, as you become more experienced and learn from investing mistakes, there are times when you should sell a dividend stock.

Thoughts On When To Sell A Dividend Stock

Annaly Capital

Pioneer Natural Resources

The timeless adage “buy low, sell high” has attracted countless people to participate in the stock market. But as many discover the hard way, the strategy is easier said than done.

Looking For Passive Income? These Dividend Stocks Yield Up To 13.4% — And Wall Street Sees Major Upside In Them

FAIRMONT, W.Va. , May 3, 2023 /PRNewswire/ -- Employee volunteers from FirstEnergy's (NYSE:FE) subsidiary Mon Power are in the fast lane to protecting the environment, collecting more than 5,000 pounds of litter since 2021 along the road leading to its Harrison Power Station.

Mon Power Employees Remove More than 5,000 Pounds of Trash and Recyclables from Route 20 through Adopt-A-Highway Program

NEW CASTLE, Pa. , May 2, 2023 /PRNewswire/ -- In celebration of Earth and Arbor Days, FirstEnergy Corp. (NYSE: FE) has donated nearly 700 trees to organizations in Mercer County, Pennsylvania.

FirstEnergy Donates, Plants Nearly 700 Trees in Mercer County to Celebrate Earth and Arbor Days

Upgraded line will enhance reliability for thousands of Met-Ed customers GREENSBURG, Pa. , May 1, 2023 /PRNewswire/ -- Mid-Atlantic Interstate Transmission (MAIT), a subsidiary of FirstEnergy Corp. (NYSE: FE), has rebuilt a high-voltage power line in Lebanon County, Pennsylvania, to enhance electric system reliability.

FirstEnergy Transmission Subsidiary Upgrades High-Voltage Power Line in Lebanon Valley

JCP&L leader recognized for supporting career opportunities in diverse communities MORRISTOWN, N.J. , May 1, 2023 /PRNewswire/ -- Jim Fakult, president of New Jersey Operations for FirstEnergy Corp. (NYSE: FE) and its subsidiary Jersey Central Power & Light (JCP&L), has been honored with the Difference Maker Award by the Morris County chapter of the Urban League.

JCP&L President Jim Fakult Receives Difference Maker Award from Morris County Urban League

AKRON, Ohio , May 1, 2023 /PRNewswire/ -- FirstEnergy Corp. (NYSE: FE) ("FirstEnergy") announced today that it intends to offer, subject to market and other conditions, $1.0 billion aggregate principal amount of convertible senior notes due 2026 (the "convertible notes") in a private placement under the Securities Act of 1933, as amended (the "Securities Act"). FirstEnergy also intends to grant to each of the initial purchasers of the convertible notes an option to purchase, within a 13-day period from, and including, the date on which the convertible notes are first issued, up to an additional $150 million aggregate principal amount of the convertible notes.

FirstEnergy Announces Proposed Offering of $1.0 Billion of Convertible Senior Notes Due 2026

FirstEnergy Corp. (NYSE:FE ) Q1 2023 Earnings Conference Call April 28, 2023 10:00 AM ET Company Participants Irene Prezelj - Vice President, Investor Relations and Communications John Somerhalder - Board Chair, Interim President and Chief Executive Officer Jon Taylor - Senior Vice President and Chief Financial Officer Conference Call Participants Shar Pourreza - Guggenheim Partners Jeremy Tonet - JPMorgan Steve Fleishman - Wolfe Research David Arcaro - Morgan Stanley Angie Storozynski - Seaport Global Sophie Karp - KeyBanc Gregg Orrill - UBS Julien Dumolin-Smith - Bank of America Anthony Crowdell - Mizuho Andrew Weisel - Scotiabank Operator Greetings and welcome to the FirstEnergy Corp First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

FirstEnergy Corp. (FE) Q1 2023 Earnings Call Transcript

FirstEnergy's (FE) first-quarter earnings miss estimates, while revenues surpass the same.

FirstEnergy's (FE) Q1 Earnings Lag Estimates, Revenues Beat

FirstEnergy (FE) came out with quarterly earnings of $0.60 per share, missing the Zacks Consensus Estimate of $0.61 per share. This compares to earnings of $0.60 per share a year ago.

FirstEnergy (FE) Q1 Earnings Miss Estimates

Reports first quarter 2023 GAAP earnings of $0.51 per share and operating (non-GAAP) earnings of $0.60 per share Updates full-year GAAP forecast, affirms 2023 operating guidance and  provides outlook for the second quarter Affirms targeted 6-8% long-term annual operating earnings per share growth rate AKRON, Ohio , April 27, 2023 /PRNewswire/ -- FirstEnergy Corp. (NYSE: FE) today reported first quarter 2023 GAAP earnings of $292 million, or $0.51 per basic and diluted share, on revenue of $3.2 billion. In the first quarter of 2022, the company reported GAAP earnings of $288 million, or $0.51 per basic share of common stock ($0.50 diluted), on revenue of $3.0 billion.

FirstEnergy Announces First Quarter 2023 Financial Results

FirstEnergy's (FE) first-quarter results are expected to benefit from completion of service reliability projects, return from regulated investment, and lower operation and maintenance expenses.

FirstEnergy (FE) to Report Q1 Earnings: Here's What to Expect

AKRON, Ohio , April 21, 2023 /PRNewswire/ -- For the third consecutive year, FirstEnergy Corp. (NYSE: FE) will donate 300 trees to Mill Creek MetroParks in Mahoning County, Ohio, to celebrate Earth and Arbor days. A mixed variety of hardwood trees will be planted on Monday, April 25, by employees of FirstEnergy and its Ohio Edison electric company throughout the MetroParks' 402-acre farm in Canfield.

FirstEnergy to Donate, Plant 700 Trees Across Mahoning Valley to Celebrate Earth and Arbor Days

FirstEnergy (FE) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

FirstEnergy (FE) Earnings Expected to Grow: What to Know Ahead of Next Week's Release

"Price to compare" rising June 1 following higher competitive auction prices AKRON, Ohio , April 19, 2023 /PRNewswire/ -- FirstEnergy Corp. (NYSE: FE) is encouraging customers of its Ohio electric companies – Ohio Edison, The Illuminating Company and Toledo Edison – to evaluate electric supply offers from competitive suppliers that fit their budget and protect against rising energy prices this summer. Due to the results of recent competitive auctions, FirstEnergy customers who rely on their electric company for all aspects of service are expected to see an increase in the price they pay for electric generation beginning June 1.

FirstEnergy's Ohio Electric Companies Encourage Customers to Review Options to Help Manage Summer Electric Bills

FAIRMONT, W.Va. , April 18, 2023 /PRNewswire/ -- FirstEnergy (NYSE: FE) electric company Mon Power is now powering an electric vehicle charger with renewable energy generated by an array of solar panels outside of its headquarters building along I-79 in Fairmont.

Solar-Powered EV Charging Station in Service at Mon Power Headquarters

Project designed to enhance service reliability for rural customers READING, Pa. , April 18, 2023 /PRNewswire/ -- Met-Ed, a subsidiary of FirstEnergy Corp. (NYSE: FE), is upgrading its electric grid in southern York County, Pennsylvania, to help prevent service disruptions, particularly during severe weather.

News for FirstEnergy Stock (FE)