FirstEnergy Misses Earnings Estimates - Analyst Blog

Diversified energy company FirstEnergy Corp. FE announced first-quarter 2014 operating earnings of 39 cents per share, lagging the Zacks Consensus Estimate of 41 cents by 4.9% and the year-ago earnings of 76 cents by 48.7%.

FirstEnergy's earnings in the reported quarter were within its guidance range of 35 cents to 45 cents.

The year-over-year decline reflects an extremely challenging competitive business, which more than offset the strong performance of its distribution and transmission business.

Including one-time charges and gains of 11 cents per share, GAAP earnings per share were 50 cents versus 47 cents in the prior-year quarter.

Total Revenue

FirstEnergy generated total revenues of $4.2 billion in the first quarter, up 13.5% year over year.

The top line of the company also surpassed the Zacks Consensus Estimate of $3.3 billion by 27.3%.

Highlights of the Release

FirstEnergy's total electric regulated distribution deliveries in the reported quarter increased 5.9% year over year. Demand from residential and commercial customers increased 6% and 11% respectively due to a harsh winter. Demand from industrial customers saw a 1% rise from the prior year.

Total expenses in the reported quarter were $3.79 billion, up 23.3% from the year-ago level, primarily due to a 53.8% increase in purchased power expenses and a 34% increase in other operating expenses.

Interest expenses in the reported quarter were $0.26 billion, up 2.7% 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 Mar 31, 2014, was $0.11 billion versus $0.21 billion as of Dec 31, 2013.

Cash from/(used in) operating activities in first quarter 2014 was ($92) million versus $50 million in the year-ago period.

Long-term debt and other obligations as of Mar 31, 2014, were $16.8 billion versus $15.8 billion as of Dec 31, 2013.

Guidance

Taking into consideration its performance in the first quarter 2014, FirstEnergy lowered its earnings per share guidance for 2014 to the range of $2.40 to $2.60 from $2.45 to $2.85 per share provided earlier.

GAAP earnings for 2014 are expected in the range of $2.27 to $2.49 per share, down from the prior forecast of $2.38 to $2.82 per share.

Other Company Releases

American Electric Power Company Inc. AEP reported first quarter 2014 operating earnings of $1.15 per share, beating the Zacks Consensus Estimate of 91 cents by 26.4%.

Brookfield Infrastructure Partners L.P. BIP announced first-quarter 2014 earnings of 89 cents per unit, a penny higher than the Zacks Consensus Estimate.

NRG Energy Inc. NRG reported a first quarter 2014 operating loss of 18 cents per share, wider than the Zacks Consensus Estimate of 12 cents.

Zacks Rank

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