FirstEnergy Announces Second Quarter 2024 Financial Results

"Our second quarter financial results are in line with our expectations, reflecting the strength of our regulated investment strategies," said Brian X. Tierney, President and Chief Executive Officer. "In addition, we're achieving meaningful milestones in our journey to become a premier electric company. Earlier this year, we introduced a robust capital investment program that is supported by a transformed balance sheet. We've achieved constructive regulatory outcomes, and we've structured our operations to improve the customer experience and reliability. In addition, we reached an agreement in principle with SEC staff, which remains subject to the SEC's approval, and we are close to resolving legacy issues with the Ohio Attorney General's office. We are proud of the progress we've made and are committed to driving results through a culture focused on performance excellence and continuous improvement."

FirstEnergy provided a third quarter earnings guidance range of $490 million to $547 million, or $0.85 to $0.95 per share. The company also affirmed its 2024 operating (non-GAAP) earnings guidance range of $2.61 to $2.81 per share, and its long-term, 6% to 8% targeted annual operating earnings growth rate, which is based off the previous year's operating earnings guidance midpoint and supported by the company's refreshed and extended $26 billion, five-year capital investment plan, Energize365.

Second Quarter Results

Second quarter 2024 results increased $0.09 per share, or 19%, resulting from the company's Energize365 investment plan, including rate base growth in distribution and transmission formula rate programs, higher distribution sales and constructive regulatory outcomes in multiple jurisdictions. These drivers were partially offset by higher planned operating expenses and net financing costs.

On a weather-adjusted basis, total distribution deliveries increased 3% compared to the second quarter of 2023. Weather-adjusted usage increased 4% and 7% among residential and commercial customers, respectively.

Earlier this year, the company introduced new segment reporting to enhance transparency and align with its operating structure. Segment results for 2023 have been recast for comparative purposes.

Second quarter operating earnings in the Distribution segment decreased $0.02 per share compared to the second quarter of 2023 as higher revenues from rate base growth in formula rate investment programs and higher distribution customer demand were offset primarily by higher planned operating expenses in the second quarter of 2024.

In the Integrated segment, second quarter operating earnings increased $0.09 per share compared to the second quarter of 2023, primarily due to the impact of base rate adjustments, rate base growth in formula rate investment programs, and higher distribution customer demand. These items were partially offset, in part, by a higher effective income tax rate.

In the Stand-Alone Transmission segment, second quarter 2024 operating earnings decreased $0.04 per share. Results benefited from rate base growth in formula rate investment programs, however this was more than offset by the dilutive effect of the 30% interest sale in FirstEnergy Transmission, LLC, which closed on March 25.

Second quarter 2024 operating results improved in Corporate/Other by $0.06 per share due to lower interest costs from lower average debt levels, partially offset by lower earnings from the company's legacy investment in the Signal Peak coal mine.

First Half Results

For the first half of 2024, FirstEnergy reported GAAP earnings of $298 million, or $0.52 per basic and diluted share, on revenue of $6.6 billion. This compares to GAAP earnings of $527 million, or $0.92 per basic and diluted share, on revenue of $6.2 billion in the first half of 2023. GAAP results for both periods reflect the impact of special items listed below.

Operating (non-GAAP) earnings* for the first half of 2024 were $1.11 per share, compared to $1.06 per share in the first half of 2023.

Operating results for the first half of 2024 reflect continued growth from the company's regulated investment strategy and favorable distribution sales compared to the first half of 2023. These factors offset the impact of higher planned operating expenses and financing costs.

Non-GAAP Financial Measures

We refer to certain financial measures, including Operating earnings (loss) and Operating earnings (loss) per share (EPS), including by segment, as "non-GAAP financial measures," which are not calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and exclude the impact of "special items," on the following measures: Total revenues, Total operating expenses, Total other expense, and Earnings (loss) attributable to FirstEnergy Corp., as included in the table above. Management uses these non-GAAP financial measures to evaluate the company's and its segments' performance and manage its operations and frequently references these non-GAAP financial measures in its decision-making, using them to facilitate historical and ongoing performance comparisons. Management believes that the non-GAAP financial measures of Operating earnings (loss) and Operating EPS, including by segment, provide consistent and comparable measures of performance of its businesses on an ongoing basis. Management also believes that such measures are useful to shareholders and other interested parties to understand performance trends and evaluate the company against its peer group by presenting period-over-period operating results without the effect of certain special items that may not be consistent or comparable across periods or across the company's peer group. These non-GAAP financial measures are intended to complement, and are not considered as alternatives to, the most directly comparable GAAP financial measures, which for Operating EPS is EPS attributable to FirstEnergy Corp. (GAAP), as reconciled in the above table. Also, such non-GAAP financial measures may not be comparable to similarly titled measures used by other entities.

Special items represent charges incurred or benefits realized that management believes are not indicative of, or may obscure trends useful in evaluating the company's ongoing core activities and results of operations or otherwise warrant separate classification. Operating EPS is calculated by dividing Operating earnings (loss), which excludes special items as discussed above, for the periods presented by the weighted average number of common shares outstanding in the respective period. Special Items for the period can be found in more detail in the Company's Strategic and Financial Highlights, available at www.firstenergycorp.com/ir.

Forward-Looking Non-GAAP Measures

A reconciliation of forward-looking non-GAAP measures, including 2024 Operating EPS and long-term annual Operating EPS growth projections, to the most directly comparable GAAP measures is not provided because comparable GAAP measures for such measures are not reasonably available without unreasonable efforts due to the inherent difficulty in forecasting and quantifying measures that would be necessary for such reconciliation. Specifically, management cannot, without unreasonable effort, predict the impact of these special items in the context of Operating EPS guidance and long-term annual Operating EPS growth rate projections because these items, which could be significant, are difficult to predict and may be highly variable. In addition, the company believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors. These special items are uncertain, depend on various factors and may have a material impact on our future GAAP results.

Investor Materials and Teleconference

FirstEnergy's Strategic and Financial Highlights presentation is posted on the company's Investor Information website – www.firstenergycorp.com/ir. It can be accessed through the Second Quarter 2024 Financial Results link. Important information may be disseminated initially or exclusively via the company's Investor Information website; investors should consult the site to access this information.

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