AKRON, Ohio – FirstEnergy, the parent company of Met Ed, Jersey Central Power and Light and 8 other regulated distribution companies in the Midwest and Mid-Atlantic regions, announced revenue and profit increases for the fourth quarter and the year 2021.
However, the primary focus of FirstEnergy President and CEO Steven E. Strah’s comments to investment analysts was the ongoing transformation efforts within the firm.
FirstEnergy had to make big changes in response to its 2020 involvement in a bribery and racketeering scandal that also implicated the Speaker of the Ohio House. To settle the case, the company entered into a 3-year deferred prosecution agreement with the US Attorney’s Office for the Southern District of Ohio.
“This is a time of historic change for First Energy, change for the better,” Strah said.
The changes start at the very top.
On Thursday, FirstEnergy announced that, working with the board’s special litigation committee, the company has agreed to a settlement to resolve several shareholder lawsuits in Ohio. In addition to a payment to FirstEnergy of $180 million, less plaintiffs’ legal fees, paid by insurance, the settlement includes a series of corporate governance improvements.
Among them, 6 board members who have served for 5 years or more will not stand for re-election at the 2022 annual meeting of shareholders, and that a review of the current management team will be carried out by a committee. council special.
During this time, Strah and his management team have implemented a number of strategic and operational initiatives under the FE Forward banner and say they intend to transform the business inside and out. ‘outside.
“Our efforts in 2021 were the first step on a long journey to transform FirstEnergy into a more sustainable company centered on our core values and built for the long term,” Strah commented. He talked about creating a culture where everyone in the company feels valued and understands the importance of doing the right thing.
Steps taken to grow the culture include creating a more centralized and robust ethics and compliance program, creating multiple channels for reporting incidents, and thorough and objective processes to investigate and address incidents of misconduct, employee training and ongoing commitment to a more diverse, fair and inclusive work environment.
Acknowledging employee contributions, Strah noted, “Through all the tribulations of the past two years, our employees have risen to the challenge and shown true character. They have achieved solid results while demonstrating a passion for what they do and a passion for serving clients.
“Along with the Board of Directors and the entire management team, I am dedicated to restoring their pride by building a company founded on an unshakeable culture of compliance, ethics, integrity and accountability at all levels.”
Strah discussed a key operational change in which the company will use a five-state operating model with centralized best practices and processes rather than each transmission company working separately. The business will use data and analytics to make better decisions about its assets, sourcing, and inventory. To lead these efforts, Strah announced the hiring of a new chief information officer, Steve Fortune, a former group chief information officer at BP (British Petroleum).
FirstEnergy reported full-year 2021 GAAP (Generally Accepted Accounting Principles) earnings of $1.3 billion, or $2.35 per basic and diluted common share, on revenue of $11.1 billion. dollars. In 2020, the company reported GAAP earnings of $1.1 billion, or $1.99 per basic and diluted share of common stock, on revenue of $10.8 billion.
Operating profit (non-GAAP) was $2.60 per share in 2021, compared to $2.39 per share in 2020. FirstEnergy attributes this approximately 9% increase to its strategy of capital investment in its business regulated.
GAAP earnings were $427 million for the fourth quarter of 2021, or $0.77 per common share basic and diluted, on revenue of $2.7 billion. In the fourth quarter of 2020, the company reported GAAP earnings of $242 million, or $0.45 per basic and diluted share of common stock, on revenue of $2.5 billion.
Operating profit (non-GAAP) for the fourth quarter of 2021 was $0.51 per share, compared to $0.32 per share in the fourth quarter of 2020.
Sector results for the year 2021
In the Distribution business, operating profit increased for the full year 2021 compared to 2020, mainly due to higher customer demand, revenue from the implementation of new tariffs base and capital investment programs, and lower operating expenses.
Total distribution deliveries in 2021 increased by 2.4% compared to 2020, mainly reflecting higher weather-related utilization as well as an economic recovery in the commercial and industrial sector. Residential sales increased by 1.2%, while commercial and industrial deliveries increased by 2.3% and 3.8% respectively. Adjusted for the impact of weather conditions, total shipments increased by 1.5% due to higher demand from commercial and industrial customers, partially offset by a slight decline in usage from residential customers.
In the Regulated Transmission business, operating profit for the full year 2021 benefited from continued rate base growth, but this was offset by higher interest expense, previous year’s formula rate and other charges.
In Corporate/Other, 2021 operating results improved compared to 2020, primarily due to lower corporate support expenses and higher separate tax benefits associated with tax credits federal claims and the resolution of certain federal tax matters, partially offset by higher interest expense.
“I am very excited about the future of our business,” Strah said in a statement. “Our strategic plan reflects sustainable investments in our regulated businesses to strengthen the grid and lead the energy transition. This includes a capital investment program of around $3.3 billion in 2022 – a 15% increase from 2021 – with around 70% of that investment clawed back. through tariff formulas.
FirstEnergy updated its full-year 2022 GAAP earnings guidance range to $1.375 billion to $1.490 billion, or $2.41 to $2.61 per share, and confirmed its full-year 2022 earnings guidance range. operating (non-GAAP) for the year 2022 from $1.315 billion to $1.430 billion, or $2.30 to $2.30. $2.50 per share based on 571 million shares outstanding. The tips include the global settlement in Ohio to repay customers more than $300 million.
For the first quarter of 2022, FirstEnergy expects GAAP earnings of $285 million to $345 million, or $0.50 to $0.60 per share, and operating (non-GAAP) earnings of $0.55 at $0.65 per share.
“Strategic financing will meet all of our capital needs,” Strah also told analysts. In November, First Energy secured $3.4 billion in equity financing deals: $1 billion from Blackstone Infrastructural Partners for 25.6 million common shares at $39.08 per share and $2.4 billion from dollars from Brookfield Super-Core Infrastructure Partners for a 19.9% minority stake in the company. . First Energy plans to nominate a director nominee recommended by Blackstone to join its board of directors at the 2022 shareholders’ meeting.
About First Energy
Based in Akron, Ohio, FirstEnergy (NYSE: FE) includes one of the nation’s largest investor-owned power systems, more than 24,000 miles of transmission lines that connect the Midwest and Midwest regions. Atlantic, and a diversified generation fleet with a total capacity of more than 16,000 megawatts.