FirstEnergy Corp - $FE - Earnings Analysis: Strong progress in rate reviews, with 83% of rate base reviewed since 4Q23.
Business Model
FirstEnergy generates revenue primarily through the distribution, transmission, and generation of electricity. The company operates regulated utilities in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York. Revenue is derived from residential, commercial, and industrial customers.
Revenue Sources
- Electric sales to residential customers.
- Electric sales to commercial customers (includes street lighting).
- Electric sales to industrial customers (includes data centers).
- Revenue from transmission services.
- Other revenues, including regulated generation
Income Statement Analysis
- Revenue remained flat between Q4 2023 and Q4 2024
- Operating income increased by 49.14% in Q4 2024 compared to Q4 2023, primarily driven by lower operating expenses and higher revenues from base rate case orders.
- Net income increased by 49.14% in Q4 2024 compared to Q4 2023, aligned with the increase in operating income.
- Basic EPS from continuing operations increased by 50% in Q4 2024 compared to Q4 2023.
Capital Allocation
FirstEnergy is committed to investing in its regulated properties through Energize365, a capital investment program focused on enhancing system reliability and resilience. The company invested $4.5 billion in 2024 and expects to invest $5.0 billion in 2025. FirstEnergy plans to declare dividends totaling $1.78 per share in 2025, subject to Board approval. The company also redeemed debt to strengthen its balance sheet.
Management Commentary
In 2024, we implemented tremendous structural change to position FirstEnergy for long-term success as a premier electric company.
We redesigned our operating model to better support the impactful work we do at the local level and assembled a strong and experienced leadership team charged with delivering superior service to our 6 million customers.
We also put the power of our stronger financial position behind a comprehensive capital plan that can capture the immense opportunities to address customers’ needs, now and in the future.
The earnings contribution of these two items have declined significantly from our expectation, and this type of volatility is not sustainable and the reason for the change to reporting on core earnings
Overall Sentiment: Positive, emphasizing strategic transformation, growth in regulated operations, and financial discipline.
Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.