FirstEnergy Beats Q2 Earnings Estimates, Maintains Guidance

Zacks

Diversified energy company FirstEnergy Corp.’s  (FE) second-quarter 2014 operating earnings of 48 cents per share beat the Zacks Consensus Estimate of 45 cents by nearly 6.7%  but lagged the year-ago earnings of 59 cents by 18.6%.

The year-over-year decline reflects an extremely challenging competitive business, which more than offset the strong performance of its distribution and transmission business. In addition, higher operating expenses had an unfavorable impact on year-over-year comparisons.
 

Including one-time charges of 33 cents per share, GAAP earnings per share were 15 cents versus 39 cents in the prior-year quarter.

Total Revenue

FirstEnergy generated total revenues of $3,497 million in the second quarter, down marginally by 0.5% year over year.

The top line of the company surpassed the Zacks Consensus Estimate of $3,282 million by nearly 6.6%.

Highlights of the Release

FirstEnergy's total electric regulated distribution deliveries in the reported quarter increased less than 1% year over year. Demand from industrial and commercial customers increased 2% and 1% respectively while demand from residential customers saw a 1% drop from the prior year due to milder weather conditions.

Total expenses in the reported quarter were $2,995 million, up 3.1% from the year-ago level, primarily due to a 25.3% increase in purchased power.

Interest expenses in the reported quarter were $262 million, up 2.3% year over year. The increase in interest expenses was primarily due to the issue of new long-term debts.

Financial Update

FirstEnergy's cash on hand as of Jun 30, 2014, was $76 million versus $218 million as of Dec 31, 2013.

Cash from/(used in) operating activities in the first half of 2014 was $622 million versus $493 million in the year-ago period.

Long-term debt and other obligations as of Jun 30, 2014, were $18.4 billion versus $15.8 billion as of Dec 31, 2013.

Guidance

FirstEnergy reiterated its earnings per share guidance for 2014 in the range of $2.40 to $2.60.

Other Company Releases

American Electric Power Company Inc. (AEP) reported second quarter 2014 operating earnings of 80 cents per share, beating the Zacks Consensus Estimate of 75 cents by 6.7%.

CMS Energy Corporation (CMS) reported second-quarter 2014 earnings per share of 30 cents, beating the Zacks Consensus Estimate of 26 cents by 15.4%.

Edison International (EIX) reported solid second quarter 2014 results with its adjusted earnings of $1.08 per share well ahead of the Zacks Consensus Estimate of 83 cents by 30.1%.

Zacks Rank

FirstEnergy currently has a Zacks Rank #3 (Hold).

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