FirstEnergy (NYSE:FE) on Thursday reported first-quarter adjusted earnings of $288 million ($0.51/share) on revenue of $3 billion, down 18% from first quarter 2021 adjusted earnings of $335 million ($0.62/share) on revenue of $2.7 billion.
Operating earnings, before adjustments for one-time charges, were 60 cents/share, the midpoint of the company’s earnings guidance for the quarter and down 9 cents from 2021.
During a call with analysts Friday, CEO Steven Strah argued that the results for the quarter were the midpoint of where the company said it would be during its fourth-quarter 2021 call in February.
“We’re off to a solid start in 2022 … in line with the midpoint of our guidance,” Strah said. “With our financial performance, operational momentum, portfolio of assets and robust long-term business model, we are in a strong position, and I’m optimistic and excited about the future.”
FirstEnergy’s share price fell $2.11 (4.38%), closing Friday afternoon at $46.01.
As in recent previous quarterly analyst calls, Strah spent time at the beginning of the session describing how the board of directors and new management team is working to reform the company in the months since it pleaded guilty to a deferred federal prosecution charge stemming from the $61 million bribery and racketeering investigation that so far has led to the indictment of the former speaker of the Ohio House of Representatives and four associates.
During those remarks, Strah said the company was “beginning a long-term review” of the possible benefits of combining the Ohio and Pennsylvania distribution companies “from a legal, financial, operational and branding perspective.”
In answer to a question from an analyst later, Strah explained that the “potential benefits are the potential for increased efficiencies in some of our administrative functions. And there is also a possibility that it could provide us better access to capital markets.”
CFO John Taylor said first-quarter results included several special items, the largest of which was a 6-cent/share charge associated with the redemption and early retirement of an $850 million note in January.
“The year-over-year change was primarily driven by a slight increase in operating and other expenses, primarily related to planned plant outages in West Virginia, and higher storm costs and employee benefits, partially offset by lower uncollectable expense,” he said.
“These costs were partially offset by higher customer demand and the continued economic recovery in the commercial and industrial segments.
“It’s important to note that our operating costs were in line with our forecast as discussed on the fourth-quarter call. … As customers continued resuming normal work and social activities, deliveries to commercial customers increased 7.6% … which is a significant increase in this customer class, while sales to industrial customers increased 2.5%, with many sectors including steel and automotive showing recovery from recessionary conditions.
“Overall customer demand continues to slowly return to pre-pandemic levels,” Taylor said. Residential sales were about 3% higher than 2019 levels, while commercial and industrial sales were about 4% and 2% below 2019.
Unmentioned during the call or even the earnings report was the retirement of Bob Mattiuz, chief FERC compliance officer. As reported by cleveland.com on April 15, FirstEnergy spokeswoman Jennifer Young said Mattiuz is retiring effective July 1 as FERC reviews “FirstEnergy’s analysis about how it’ll issue customer refunds with interest for improperly accounting for part of the approximately $71 million used” in the bribery scandal.
