Boston, MA 05/28/2014 (wallstreetpr) – FirstEnergy Corp. (NYSE:FE) reported 1Q2014 results with non-GAAP operating earnings of $0.39 per share compared to $0.76 in 1Q2013. The decline was primarily due to the factors such as lower commodity margin of FirstEnergy’s Competitive business and higher operating expenses related to distribution.
However, higher distribution deliveries and transmission revenues not only raised the total revenues by 13.5% YoY to $4.2 billion, but it also improved the operating earnings. In addition, the Company benefitted from lower deactivated unit expenses, lower tax rate and the impact of the West Virginia asset swap.
Earnings pressure continues
Colder climates at the beginning of 2014 mostly drove FirstEnergy Corp. (NYSE:FE)’s distribution deliveries. It increased by 6% YoY due to increasing demand among residential (+11%), commercial (+6%) and industrial (+1%) customers.
Therefore, it increased the segment non-GAAP operating earnings by $0.09 per share; however, increased maintenance and operating expenses reduced the earnings by $0.06 per share. As a result, the segment non-GAAP operating earnings during 1Q2014 were $0.53 per share (1Q2013: $0.52).
But, during the period, the transmission business’s non-GAAP operating earnings remained flat at $0.12 per share (1Q2013: $0.12). It happened due to increased operating expenses and higher tax that was partially offset by higher revenues generated during the quarter.
In Competitive Energy Services segment, contract sales increased by 5% YoY as a result of increased customer demand during the winter, however, commodity margin decreased considerably due to higher unit prices, higher purchase power costs and increased PJM ancillary service charges. As a result, the non-GAAP operating loss was $0.22 per shares compared to the loss of $0.09 per share during 1Q2013.
Guidance for 2014 earnings
FirstEnergy’s Competitive business continues to create a challenging environment to sustain its non-GAAP operating earnings. But, the ongoing positive trend over distribution and transmission businesses, FirstEnergy Corp. (NYSE:FE) revised the guidance for non-GAAP operating earnings from $2.45 to $2.85 per share to $2.40 – $2.60 per basic share in FY2014.
