FirstEnergy Turns To Profit In Q2, Results Beat View; Backs 2014 Outlook

(RTTNews) - FirstEnergy Corp. (FE) on Tuesday reported a turnaround to profit in the second quarter as slightly lower revenues were more than offset by a decline in expenses.

Both revenue and adjusted earnings per share for the quarter beat analysts' estimates. Looking ahead, the utility company affirmed its operating earnings outlook for fiscal 2014.

Anthony Alexander, President and CEO of FirstEnergy said, "Through the second quarter, our regulated distribution and transmission businesses have produced solid results that are in line with our expectations."

The Akron, Ohio-based company's net income for the second quarter was $64 million or $0.15 per share, compared to net loss of $164 million or $0.39 per share in the prior-year quarter.

Excluding items, operating earnings for the quarter were $204 million or $0.49 per share, compared to $247 million or $0.59 per share in the year-ago quarter. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that adjusted results for the latest quarter reflect lower commodity margin at the competitive business, higher operating expenses, principally in the Regulated Distribution segment, and higher expenses related to benefits, depreciation and interest.

However, these factors were partially offset by higher transmission revenues, investment income, capitalized financing costs, a lower effective tax rate, and a benefit from the impact of the West Virginia asset swap.

Total revenues for the quarter declined less than 1 percent to $3.50 billion from $3.51 billion in the same quarter last year and beat analysts' consensus estimate of $3.32 billion.

Total electric distribution deliveries for the quarter rose less than 1 percent from last year, largely due to milder temperatures. Sales to residential customers decreased 2 percent, while deliveries to commercial customers grew 1 percent and sales to industrial customers increased by 2 percent from the prior-year period.

Operating earnings from the transmission business increased as a result of higher revenues and capitalized financing costs related to the company's 'Energizing the Future' transmission investment program.

Contract sales at the company's competitive segment declined 6 percent from ast year and the total number of retail customers decreased slightly, reflecting the company's more selective retail strategy.

Commodity margin decreased due to lower lower energy prices at the time the sales were committed, as well as lower contract and wholesale sales volumes.

The company's total expenses for the quarter declined 8 percent to $3.20 billion from $3.47 billion in the year-ago quarter.

Looking ahead to fiscal 2014, FirstEnergy maintained its outlook for operating earnings in a range of $2.40 to $2.60 per share. Analysts expect the company to report earnings of $2.47 per share for the year.

FE is currently trading at $30.94, up $0.24 or 0.78 percent on a volume of 1.56 million shares.