FIRSTENERGY CORP Q1 FY2025 earnings call

• Financial Performance: GAAP earnings for Q1 2025 were $0.62 per share, up from $0.44 per share in 2024; core earnings were $0.67 per share, a significant improvement from $0.49 per share in Q1 2024. • Regulatory and Legislative: In Ohio, base rate case is progressing with settlement discussions underway; in New Jersey, the Energize New Jersey infrastructure investment program settlement was approved by the BPU. • Investment Program: Over $1 billion was invested in Q1 through the Energize 365 capital program, on track for $5 billion in 2025 and $28 billion through 2029. • Dividend: The board approved a 4.7% increase in the quarterly dividend to 44.5¢ per share, annualizing to $1.78 per share. • Data Centers: Received 15 large load study requests for data centers in Q1, with Meta announcing a Toledo data center. • ValleyLink: PJM board approved approximately $3 billion for the ValleyLink joint venture, with FirstEnergy filing for a forward-looking transmission rate at FERC.

In the first quarter, the distribution business core earnings increased $0.10 per share, driven by new rates in Pennsylvania and stronger customer demand. The integrated segment core earnings also rose by $0.10 per share, resulting from approved base rates in New Jersey and West Virginia, strong rate base growth in formula rate transmission programs, higher customer demand, and lower operating expenses. The standalone transmission business saw core earnings of $0.14 per share, down from $0.18 per share in 2024, with rate base up 10% year over year but offset by dilution from the sale of FirstEnergy Transmission. The corporate segment results improved by $0.02 per share compared to Q1 2024, due to lower financing costs associated with reduced holding company debt and revolver borrowings.

• Reaffirmed 2025 core EPS guidance range of $2.40 to $2.60 per share, targeting the top half of the range. • Reaffirmed a 6% to 8% core earnings compound annual growth rate based on the $28 billion capital investment program through 2029.

• Regulatory uncertainties in Ohio and other states related to base rate cases and legislative changes. • Macroeconomic impacts on industrial customers, including potential slowdowns in steel and automotive sectors. • Supply chain risks, although proactive management has diversified the supplier base, with most O&M expenses being labor with no tariff exposure.

Q: How would you characterize settlement discussions in Ohio and key areas up for debate?

A: Brian Tierney stated that settlement discussions are productive and constructive, focusing on aspects like cap structure and ROE, with hearings for the base rate case starting May 5.

Q: What's the upside to data center incremental CapEx?

A: Brian Tierney said the upside remains consistent with prior disclosures, with no slowdown in data center interest in the service territory.

Q: Ohio legislation progress and bill favorability?

A: Brian Tierney mentioned that Ohio bills are moving forward, key provisions include multiyear rate plans, and the focus is on a smooth transition to the new regulatory framework.

Q: New Jersey commission efforts on cost efficiencies?

A: Brian Tierney noted that commissions are concerned about capacity auction price increases not bringing new capacity, and working to mitigate the impact on customers.

Q: Macro environment impact on industrial customers?

A: Brian Tierney said industrial load is a smaller margin portion, with no significant near-term income impact but watching trends in steel and automotive sectors.

Q: West Virginia IRP and capital plan?

A: Brian Tierney discussed West Virginia's integrated resource plan, potential for new combined cycle generation, and economic development opportunities associated with such investments.