FE - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the FirstEnergy Corp.

Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Irene Prezelj, Vice President of Investor Relations for FirstEnergy Corp. Thank you, Ms. Prezelj.

begin. may You

Irene Prezelj

that actual Earnings of on to will section filings. Welcome uncertainties. our performance, quarter call. are indicated earnings prospects under to differ are Thank the those risks link various our results forward-looking we based statements These make other earnings, our materially expectations and statements Today, and SEC Investors Factors and subject and you. matters. second current regarding strategies, these on statements the to from Information in by can could cause be found website revenues,

in Officer. certain of We Senior about Strategic section will information our Strah, today's Jon and document Investors Highlights call also today's between website. President financial and Q&A be discuss begin that session. Vice from and and other Taylor, our measures, discussion non-GAAP with the financial Officer; quarter and Financial the Steve presentations supports Financial the available presentation the GAAP for Chief found on Several non-GAAP and and detailed our Reconciliations year other measures. executives be the Executive will President We'll Chief can

the turn to Steve. call over I'll Now

Steven Strah

our guidance and operating we range. $X.XX operating XXXX share. could glad everyone. to morning, us today. guidance Today, $X.XX per earnings our join of earnings we $X.XX reaffirming earnings upper Yesterday, Thank I'm of per the $X.XX Irene, reported you, end GAAP good quarter and are second you of of share per at share

by to from metrics mid-teens also of of growth thereafter. accelerating targeted FFO-to-debt rate X% year in affirming to operating XXXX XX% and are our our earnings with the We X% target XXXX annual long-term X

get in our strong discuss strategically ahead later, flexibility of we work. activities provides long-term planned and further tremendous given in distribution in As maintenance performance, This plan. improve begun year-to-date reliability our to Jon future will our have businesses investing

the our customer-focused the outlook on to launched our campaign our safety, remainder momentum each Through the half excellence and continuing recently strengthen core to culture, these inclusion, we've continuing operations, will first of expenses utility. We communication our our amplify of second integrity, values XXXX, the strong Across to to half financial support continue during they year. a and operating of the we're drive stewardship. our values on diversity, and employee company, progress the the how and sustainable of for a optimize more equity based to accelerate and become focus grid of these significant future, the position performance new made bolster success. We've

Director. the I leadership Board Somerhalder than and sessions employees and an Chair engagement welcome our proud Electronics. as these the with longer Kimball Croom Lead I Lisa across support from addition, of and valuable employees Klimczak and who culture Sean them of of I'd hear Independent was the employees May. it's Winston company. a employees In We've Meeting welcome March, In X their sessions serves personally do very lot with in-person for our to core more to had take in during of the incredibly plan and executing our company. on of the related was elected like our new also company we're to creating what values to listening to we from connected and were XX held together. moment about to developments, several I've guidance, with as Hicks virtual over elected discuss to on elected Since no Blackstone can and Annual interact thousands get at better FirstEnergy. of a me I'm Jana past the are and a how and months directly John directors refreshed executive our X,XXX of Board And feedback. Board. get great been

to turn accomplishments quarter. key let's the in Now some

in sale XX.X% this improve profile May, our as December are we LLC historic Blackstone that with the and the investment of transaction, been the capital this in the paying fund together progress in our company. have approximately from we minority sheet billion. $X of and to driving plan stake over regulated $X.X will completed discuss more $X.X year, ahead by our FirstEnergy And for down original detail are billion proceeds First, the strengthen investments. balance Transmission, in closed equity Jon credit The Brookfield in meaningful deployed later, to debt to billion of long-term

be business continues points the of focal of one to transmission Our our strategy.

Future has We And to in territory on our have a relentless XXXX. on in program the this began in and the caused reduction the expand and Energizing ATSI striving for since program success continue line within reliability protection customers. in decrease improvement we by transmission investment across we region seen our program. time, transmission interruptions outages XX% outages, ATSI We're that systems. a customers improvements as focus to XX% a this an the Our investment of build to our XX%

So flexibility, across far and of our equipment lines, security. improve projects network, substations, this performance. the transmission enhance year, These enhance transformers replace we've reconfigure upgrade physical several rebuild cyber and operational system footprint completed to and important work condition

our builds program, help a side progress to opportunities lower I of the transmission right grid In we modern of the this have X-year our million Grid Ohio, business distribution in enhance the since Mod II reliable of to second and of to offering $XXX in Mod plan approved aggressive investment our the PUCO business. emerging power, customer system XXXX. our also Grid the completed the to experiences earlier proposes program strategies are The for Grid on upgrades We're in advance Our technologies growth designed we to expand sustainable filed goals the capital month, ensure for technologies safe, which state off new delivery achievable bills. our customer-focused, place making promote modernization the and Mod customers, our we've deployment success. for strategies yet continued phase provide

nearly that equipment nearly by the electric XXX restore quickly program outage on distribution that The Energy-saving customers And the data second that problems, of energy an and impacted more generated down installing must with of our includes amount voltage-regulating and phase systems. be line. circuits can number service. of equipment can Grid evenly additional XXX,XXX isolate the automated minimize reduce XXX infrastructure on Mod an power and meters management circuits distribute along electricity supporting communications a smart

EV to programs customers utility-managed who storage adoption support our in program offering installing across battery charging charging enhanced a their and reliability, energy of filing electric and participate efficiency pilot and In supporting addition, by the grid vehicles expected Turnpike These products innovative load Ohio services and the Mod dollars. residential estimate of of to include commercial to along opportunities designed in the In our nearly the aggregate, reliability. we Ohio enhanced EVs enhanced territory includes exceed the today's the benefits cost that's the by incentives increased $XXX the of benefits. several million customer system to customers provide Ohio and II service to Grid

XX% commercial full-scale build on And Power approval to final In We're of conditional and and our began will subscribe at a progress approval generation order, XX% to begin commitments state construction customers solar before construction. residential, Moving April, In making accepting their for provided at balance the to Edison cover our Edison RECs Commission cost seek Service tariff in at threshold. costs We solar the requested the of beginning May. approximately to to the the utility-scale MW meet PSC Mon surcharge facilities. these from Public Potomac time, $XXX and a the purchase Power that required of of total output commission project Mon a to from industrial subsidiaries the Virginia. of the least and XX million. in West Potomac of

generation be than We the in service first end no XXXX. XXXX, with of the later site expect by to end of completed at the the other sites solar construction X the

Counsel with approved others Finally, without the New reached June. electric on and in New was program which settlement JCP&L modifications vehicle staff, by Jersey, Jersey a BPU Rate our in BPU

accelerate program X.X% with that service and with Our of X-year EV JCP&L is the of be our development a the $XX deferred cost of in EV-driven electric designed structures recovery costs a will throughout support incentives territory. into to to vehicles of the adoption JCP&L's infrastructure regulatory million rate continue return of rate charging determined program will earn case. The those base costs asset. Capital next light-duty

and and over our Jon, interest to We're significant call on current this year is our recognize being pension informed to we we'll and the Before of pass you rising our in performance committed there progresses. flexible on expectations market. issue, bear light the the plan keep interest plan and rates as transparent I in

call, investors, will new pleased committed document. on provides we've an of provide that In industry-leading published I'm communities. employees also to highlights throughout details remain to the our addition today's progress customers, utility We and to topic this with our Jon X continuing half the our becoming first slides transformation year. in on very this and value our

call the turn I'll Now to over Jon.

Jon Taylor

some XX our earnings then Thanks Thanks, on here. discussion the Steve, we'll put volatility resulted context, additional of in that in everyone. and factors matters. and haven't I'll Ukraine inflation and pandemic, in perspective the in start over other and financial morning, of into war for pension, years. all with has good the the this market macroeconomic move seen being we a impact To other extreme

as lot measures that trust of with recognize to year, the that approximately down the equity of asset with of markets end significantly the the globe consider have were from that first this but a we down that obligation company. XX% rate proposition approximately through performance this increased X.X% an at a we pension the in of end our Through across topic issue of June. is of our has impacts don't today, interest discount X% long-term XXXX significantly rates Likewise, value the so And increasing attention the June. half pension this

$X.XX headwind this to XXXX of estimated of in per share the XX% which XX% per Although approximately estimated at our end the qualified beginning status $X.XX funded end in XXXX, XXXX, the to an noncash pension per improved in earnings at June. XXXX reduces share benefit from plan from the $X.XX in results has an share of of the pension from

we time, impact term near environment from over presents will earnings recognize earnings with a pension in that the believe we normalize the perspective. challenge market Although an historic the the associated

let minute this. address to me And a so take

as our working capital First, to program expenses. capital we rates formula continues while strategy strong of our lower operating returns real-time to investment more base our with transition and to be regulated investments

billion earned returns. Our $X.X billion in of base solid formula in that XXXX and $X.X investments rate includes approximately plan XXXX

higher-than-anticipated and the strong for company optimize to is Forward for investments. mentioned, future completed offer provide be June our continues FE expenses income year. these with outlook tender combination, legacy, XXXX In Steve as commodity-based XXXX from financial allowing our be our our allow us successful years costs. addition, future at plan, that with commitments our planned program in and our part very maintenance meeting In And the to given accelerate to in holding strategic cost more items will work operating us into operating while structure flexibility this of

base address perspective, other in moving from in We in volatility be likely we as impacts of investments pension debt changes each to estate plans, from seeing regulatory reducing to But exploring customer our real moderate years, between time have steps future XXXX next a the includes this costs and market financing additional rate as are improvements corporate few will $X also well cases. which to anticipated of our rate will rate as continued capital accelerating These optimizing financings some arrears. executed benefits take we pension are for identified From headwind. file and cases footprint treatment include a over jurisdiction to we number proposed our years. of billion planned the

conclude complicated clear do And lining. a so this. silver say the this near-term the impact we is discussion potential believe I'll and the We company. there earnings But is recognize pension to realize to

key and the situation Corp we strengthen reduced As the interest the note able volatile early in progress holdco Brookfield the markets offer to completion to successful And of $X original repurchase a retiring improve we $XXX Fitch of costs percentage high take of the FET year, an a with billion Utilizing profile $XXX of equity upgraded rates FFO-to-debt our flat year to credit FirstEnergy in company this based million to fund our pension debt in from investment in liability the for debt we plan FE debt to of these our our first and XX% above the balance result, Ohio regulatory our sheet total rising approximately $X.X transactions, and includes XXXX. and pay January, a This debt successful FirstEnergy. plan. interest rates reflecting high well on at by the our brings last and key note credit our and earlier, and as FirstEnergy utilities coupon FE annual by equates debt upgraded just those million forecast the million. strengthening in metrics, basis. matters. use significant month. to and eliminated improvements saved And FFO-to-debt $XXX be reduction grade time, of Corp original mentioned to on from retirement and of amounts half were increased, This settlement end are XXXX interest an FE Steve our the under tender XX% XX% as rating, became the same a expected Last proceeds a Blackstone advantage ahead XX% year, issues through notes at and of targeted. made enhancements, as of of down of on the XXXX, June the our our in our through address and X holdco first which BBB holding to in surpasses proceeds what million we current months billion governance plan transactions, to of debt $XXX we of company meaningful week, tracking initially At

financial FET quarter. in the and discussion the We are value improve the businesses increase made. the let's premium saw progress for a shareholders. of give And for our proud balance sector as with of transaction, our significant us private turn we to valuations sheet And to of we the further now performance optionality

interest facilities our was Ohio quarter but a The at compared charge operating base X% we the share items approximately accelerated well share planned of as Corp with to stronger $X.XX credits residential and distribution Second conditions, year-to-date to the sales residential and first mentioned a primarily for notes equity the from are were special significant compared sectors, by planned weather-adjusted results. it slightly of with customer costs metals, GAAP levels. basis, in provided as the half of has from a compared investment quarter Historically, a social and to plan XX% continued of improve basis mentioned sales basis, to share. our and weather-adjusted quarter supply the legacy changes, to steel, XXXXs or the been earnings working do operating our basis to X% from improvement in largely of of finally, mining corporate to Ohio weather we have year. and last XXXX. guidance quarter share our growth. XXXX. and on the per include earlier. recovery the sales per redemption second forma close changes, quarter normal a customers. business, with demand GAAP X.X% to around albeit Future X.X% operating by and as by or not impact ongoing program versus the On reliability share Total share a and programs the of segment, offset discussed note, many including XX% of expenses to reflecting O&M pro transactions, in across and currently earnings our accounting with first more our result our in increased work where the approximately been a investment And impact Results decreased higher second be challenges improving of policy our sheet strong Energizing in in compared in investment as impacts for despite and I X.X% we share FE and our maintenance increased Montana by sales to class the increased per maintenance industrial to the weather-adjusted driver and than higher dilution, basis, $X.XX second with we've for growth by $X.XX improved our customers $X.XX with generation X,XXX second transmission acute benefited in plan, invest Pennsylvania, a Again, and $X.XX impacted or usage fabricated track to slightly and we of this customers, Deliveries deliveries strong results per underway earnings earnings compared financing our X.X% industrial footprint, per our system Residential reflecting year. quarter billion of the a credits is associated minority earnings year. XXXX discipline. results as reported legacy New The $X.XX strong from XXXX are pre-pandemic chain share of XXXX, work for a operating consistent last this retirement to XXXX, earnings the year-over-year to quarter due accounting distribution early year-to-date earlier. this versus want growth moment, food the of earlier. in range. discuss profits our financial operating decreased more as manufacturing. in demand, decreased due a end quarter reflecting our On a $X.X earnings a conditions On our as on inflationary expenses the shift to of of commercial than operation business quarter investments our $X.XX commercial within were excluding well facility. second pre-pandemic customers on second X%, increased $X.XX rate activities, rate late lower base levels a the from continue The remain through I to adjusting for per investor slightly year-over-year in I'll customers upper Jersey successful that compared represents $X.XX transmission elevated positive industrial and And of projects including our balance higher were operating versus our Ohio associated We of expectations. rate impact time, remain the to per the outages our in to automotive consistent lower of efforts In milder

higher distributions, earnings flexibility is I which us for business. accelerate before, cash distribution both prices, mentioned given the However, our significant work to mine and expectations provides our and reliability commodity outperforming with XXXX as in maintenance

the not We're in years, the plan first for XXXX. Although from strong our with year a include beyond original half. off future the second investment continue contribution a any outlook this of the earnings to earnings may start for did half solid

our As confirming guidance $X.XX share. operating per Steve third to to of $X.XX $X.XX guidance providing and range of XXXX are are earnings earnings we mentioned, quarter also share per $X.XX

go we to the place our us years clear questions. strategy footing perform well the quarter confident fronts, we're that, since relative assets and we'll stock last call, and your ahead open in performance over price on our strong line we're the the progress that future. disappointed first With many While for in on have superior our made given

and for in always, time interest As thank FirstEnergy. your you your

Operator

Instructions]. [Operator

of from Shar Partners. Guggenheim Our come with the first questions Pourreza line

Shahriar Pourreza

be like some could a pension of changes in MTM I I proposed going maybe with the smoothing on this losses here, do, the would moderate of to accounting I'm I away with for whether look exploring mean method approach. consider your of or then if towards of a you ahead dialogues from question between any what no some the sort pension other What rate the quarter start commissions you that to volatility cases? like? and just peers So that surprise, guess as have the treatment would started filings? gains of to And moving you of sort sort actual and your follow-up, may. that's

Jon Taylor

Shar, this is John.

So discussions about I some think we've this. internal had

from to this. volatility that trying regulatory is any protect can the have we're But We that we're talked about to at, today. something the commissions of seeing we're mechanisms figure the looking that not and out it company

we set for of back back that some to necessarily but when I or mark-to-market nothing XXXX/'XX tracking that looking preferred seeing. so could a question, to so frame, can't stone, we like then type volatility mechanism accounting, And go think time that and the And was utilities mechanisms the of second protect the in in your deferral adopted method accounting, another method. from we're the

Shahriar Pourreza

Got it.

Okay. headwinds. you $X.XX to and obviously, then growth material X% know, That's to laid lastly, have drag mitigate see in near we and helpful. X% term. rate, reiterated But strategy just out the the clearly And guys somewhat I you pension-driven try the still the is

ends else you these guess, of all knowing X% at front I equal, the least end could at to that up deploying? the if put be some final being X%, of that you of kind where terms mitigation Just would $X.XX in measures the number,

Steven Strah

to fluid comments, situation acknowledge an before it's on very just a Jon for turn over Shar, it wanted for us. overall I just a basis, couple I of to,

that it. to and up it's plan together outlined work Jon a put prepared have We to in remarks, his us

very about quarter call, transparent We continue clear to challenge. in first our And we the the very and during were be disclosures. straightforward and upfront

to are we're on outside forward. way our continue the path plan some control, control. of find some very a transparent our We also things within are a found to our to within have There going be that And issue.

to reasonable but careful and not the company And As committed do impact unduly our our that be said, experience I get track. gap, us to going customers' to we're fluid. going with we're off to be address what's it's look,

back those I over just turn before introductory I make wanted it to to Jon. comments So

Jon Taylor

But very end is end Yes. tell or to And a this, situation. Shar, low what X%. it's volatile I'm you to the not commit high X% would obviously going I of to

there's the with time, some just July, you status headwind given pension are the the month been same the earnings funded interest the of rates. through up, if markets associated At in improved. fact, our has broader improved. The softening also look In has

it's very environment that volatile close staying a we're So to. something and

about -- me a minute and I take this X maybe in let ways. think talk

if to know First, it place on we the and starts in investments relative what based we formula growth from growth. at as pension, with you rate settlement regulatory that earnings year-over-year the transmission regulatory just Ohio strategy, the our earnings as strong across distribution SEET well structures have look rate provides really strong

you'll new operation from mining side, plan. going as giving earnings. mining not the year-over-year have Next $X.XX that full and I flow for corporate well savings next and as but reduction about of optionality year, our on would footprint. is as next spectrum external also earnings pull estate the of this offset a investments we year start annually. the flexibility will us will see the where communication operation then across including be increased operating a efficiencies that's have corporate and support uplift transaction Obviously, years. on year it's interest the to And year system, from start instance, That branding the remainder cost And real from we FE through reducing debt holdco work future it the might reductions share investment maintenance addressed ahead well year. our consider initiatives, initiatives, costs, in partially And by debt the the by the from the that's to be even which to transmission Forward from planned beginning some benefit as to as broad we will be of issue the permanent capital then a on mentioned, planned issuances, tender benefits then to

of $X.XX say the be what's way costs by around. be you the X/X the we're I our most operating at that remaining and changes be maybe financing XX% kind will to associated And with look important to because headwind I addressed now relative the is changed to expenses headwind capital And way. About headwind? it our plan it can think I the corporate mentioned deal making frame XX% earlier. this moves to new So in of through I will the the think then move of addressed in plan. reductions investments that with will

Operator

question line next Our Fleishman Steve Wolfe of from the with has come Research.

Steven Fleishman

follow-up the gave to the answer offsets, Jon, kind kind to enough just offsets last of of question. buckets but that be implied the kind you of of those So of it might that that Or to is the number of right in that that... be the that. maybe degree least I know because at most offset stone won't that $X.XX set to number Is correct? is

Jon Taylor

costs, the about Yes. investments, mentioned the financing that in know feel right reductions correct. as well support arrears, around corporate in I in in we I that earlier, customer the mean plan, the good place items seeing, we what have the $X.XX. capital and that everything That's increasing our permanent now, improvement feel very uncollectible comfortable. changes expense we as on Based we we're

Steven Fleishman

year flex to then manage don't finding that these, $X.XX issue And if far. by obviously, of but ways so you'll as much do end, Okay. kind maybe smaller you you're this becomes

Jon Taylor

Yes.

Steven Fleishman

you And to comment relative public is the second private Could Good. market. the give highlighted what the thinking slide on Okay. then might question market and of that color value a values you there? you of deck on be kind little why maybe in more

Steven Strah

based new a basis. part ongoing valuations at our some examine very of going just of the is where just those Steve, look It's right on to we it's optionality, it process. just shareholder the opportunity to to FET much really if transaction. makes create with around value. to And do routine considering sense. And And continue Step it's valuations that something planning we now. this ways one is on we all the And creating value and had given we're that success potential we are Steven. have believe, understand

Jon Taylor

going Yes, Steve, to continue I be options asset we're to you ways advantage be there that, that to consider various the -- would value. would difference sector look opportunistic just in between at market I public create take if valuations that. to add and of And on are private the utility to strong. are we valuations, tell to private valuations that And continually

Steven Fleishman

investment then -- And question of happening you consider maybe And again? of any might that agencies helpful. Could mentioned also and growing then of when going Fitch kind has sooner. on dividend whether my is the Okay. you the other the implications last to the the FFO-to-debt timing talk that's just timing the to of improvement -- on kind grade, you

Jon Taylor

Yes.

as upgrade. feel talked execute. Moody's provided So that us against our going which ensure to maybe changes the mitigating transaction, pension. to to that I'm really not XX% financing year on clearly agencies. take going with positive to I'll But execute comfortable well that as that plan for execute shows reflects get our offset we're them we're as plan to the plan, up take has about plan. our new they with rating the the actions that next to the us made agencies. speak the as the It's discussion it to We've rating for we it's moving to us we to to outlook. tender going But we've an with against And important in them,

it's I obviously, mean, X that years dividend, yes, realize -- a for I been dividend focused mean growth. we're we on flat the On now. couple

And so we continue grow, consider dividend will earnings to to growth. start as

Operator

line Crédit with come has the Campanella Nicholas of from question next Our Suisse.

Nicholas Campanella

versus comments. private again ask the to wanted on just public I

do kind this a FET for have record the level. of You at already doing track

details this similar kind curious another to just that review? you there, you're to us like Is something entire give transaction of portfolio Can that see if So more please? exploring?

Jon Taylor

Nick. Yes,

We're from we at that. time. that if at assets all we going targeting that take is just not time. in And a shareholders But each set then said, create look look I at value there's, these necessarily to assets different to high something So it options a the time and point like to takes consider advantage for every this year, valuations, of that of at private we're options have. we looking

Nicholas Campanella

Got it. the efforts on And then just here. pension back

kind smooth the level. at You to kind of mentioned of these working regulatory

it Or review is ultimate Ohio there. Ohio just then more really impact for item watch? an it states rate give Just be XXXX what a you most of have maybe clarity the to can like And like us meaningful kind and offset? would

Jon Taylor

serve Well, that I territory number on good. based those it probably, of service could mean, states, customers in the size of mirrors probably states, we I the think and our pretty you the

to do So we've the by recent states, but the have had traditional. some certain trust. able able Pennsylvania, we Maryland, to Virginia and recover I Pennsylvania different Ohio Ohio, breakout cost where get and In on cases, it's in only. we've service been cash state, treatment been were don't some pension New and based Jersey, is to contributions things rate West more we there.

utilities those to So or do the of exposure probably, is you really for number can each year. have those of protect from this try that each just rata have. on company we're what the seeing, of based looking to pro the customers we're kind of it instance, But the states volatility

Operator

Our with next from of Sachs. the question has Michael Goldman come Lapides line

Michael Lapides

A couple.

slide capital deck, the spend noticed the back I forecast. all, in you First your not change of did of

you into talking about are pulling pulling the Or forward O&M XXXX? you'll make what pull forward is of spend, you forward capital you're Some over both? or commentary saying the about

Steven Strah

calls now, of Right plan O&M primarily. pulling our forward Michael, for the

Michael Lapides

Okay.

highlight regulatory file question you plans you year other everywhere Ohio your are you're fix to is you all -- because those think to still except filing cases in next X Or rate those and section cases those earning in rate states. of design? Ohio, XXXX. you under Do The are cases filing

Jon Taylor

for we ROE at that as West Well, the they're LTM. Virginia I Jersey, think QX sub-X% all if Maryland, you New of and look published

tell at earning a this would point that reasonable we're I not return in feel So time. I like you

little that -- this structure design investments. mostly of or plan reasonable obviously, rate mean return I on point. to of earn for prepare this I'm rate have we to aware at that So I gets think is nothing a bit But a and that. there's our to time

Michael Lapides

rate test which aren't year? it. are there for is the of the can anything And making of improve those fix states And or that to forward-looking the ones years have you you test do a historical remind Got me more can and those on ones historical? design which

Jon Taylor

Yes.

So think, West test are years. historical Virginia and Maryland, I

use So test we'll as year. XXXX likely the

use certain you can historical, Jersey things New of you some a future. into project a think bit hybrid but the project is where I for and little

that that kind this are a can states, change but there's of point. don't we we I where at lot to think So that's do in those

Michael Lapides

you Pennsylvania, though DISC And DISC or under-earning turned utilizing in do on? even the are you're you have the not

Jon Taylor

DISC turned have the companies have the We operating on -- of on. all our DISC turned

haven't published, a flowed changes over the So pro will forma includes at least through results the yet, were on full actual which of but accounting time. what year about we that according we X.X% basis, earning to

Operator

line come has question with Jeremy of next JPMorgan. Our Tonet the from

Jeremy Tonet

pension quickly, Just back could. real to want the to situation I if come

a Is Just you to needed fair the about offset headwind stands bow all. to that put right the you fully have way it? now. $X.XX like believe as a think sounds It to it all on guys it tools

Jon Taylor

keep you, that's Yes. -- from have And And on headwind. what to I on headwind. the and with we've address time know just we as going transparent on feel just today, based where this offset Jeremy, identified fluid, to close $X.XX just can be a you Based going know to like eye right? we exactly to time, in we going we're the what we on to it. need would to point we But it's are. everything remind change so $X.XX be time, we of we'll to

Jeremy Tonet

review to could. That's just very circle I then helpful. And to if the process, wanted back management

Do wondering resolution we just complete this conclusion in there. need at the court? more? Federal hear Or to items Just actions we wondering would what's time When all to point? of line gating

Steven Strah

Board work as Jeremy, as we the of part is review and underway. our of was management previously committee there Directors a created disclosed,

be off by review. a would following the So I clock it's around thinking complete I that and XX-day would process, the I Board their And time completed. to the sets can't that. mid-September is And beyond say comment really

Operator

line question with from Bank of Julien next the Our America. of Dumoulin-Smith has come the

Julien Dumoulin-Smith

couple a here. clarifications Sorry, of

$X.XX things I be the but know are are to Just said approximately you number guiding right? to fluid, to still And 'XX confirm, for 'XX, you $X.XX specifically here.

Jon Taylor

That's right.

Julien Dumoulin-Smith

I be here? do Got and just can curious, more obviously, of to mark-to-market pension coal about Pennsylvania the the what Also, moving to rate And it. being Just offset I the elements mean some PRB And if Are fluid? contribution, if here. that talk the when uplift how you you could say fluid? tax suppose, you around, mean, kind repeat fluid those I'd fluid. abating structural seem there, things think are is then fluid, two. of is components you offsets prices I be a of the are

Jon Taylor

terms fluid. be offsets mining accelerate from of of we want is operation increased some with we to place. is somewhat flexible how of years future into transmission to that some the put There The expenses in year. ability this level spend The in

today, there we So was could of $X.XX markets to be pension fluidness volatile, is could this. the all on mostly Friday. $X.XX gotten it of better are -- as lower, a bit little the And But My know the point higher. be right? around some it's last

we're And just we about eye pretty keep to good today, feel are. we based on going But so an where to have on what it. know we

Julien Dumoulin-Smith

Right.

here, is side you're Because to at tax Pennsylvania least that are be benefit maybe clarify next dynamics of moving case. what into fluid, How if offset could I can or this. structural costs just right? mean, about get I And fluidity you that? other step. the But that pension the rate is the the around. that's rate the maybe structural of so though, $X.XX think

Jon Taylor

going tax quickly flow now. The back to structural. That's to rate, real twice you -- So it not to that's Pennsylvania not mentioned customers. going just because that's

is to be going going arrears things reducing make. that won't estate of we're doing that fluid, mine operation, that But of the to that that prices it depends uncollectible improvement a mining of lot around a impact corporate to for us able on real changes The against lot our footprint, in an and probably support reduce we're the commodity forward. contribution structural So could to earnings costs, from that's because the execute expense, plan. level being right, their ability and be and the customer structural. The

of there's here. lot So moving a pieces

Operator

from with the question next has David Our Arcaro Morgan come of Stanley. line

David Arcaro

that or I if how you little weakness or up this you're there recession growth about risks was particularly quarter. you any load up, growth sales I'm coming that the good industrial shaping things And a wondering around see talk pretty of are there? seeing, wondering pockets bit are from could if the

Jon Taylor

Yes.

So average, you tell I growth are grown quarter-over-quarter. sectors quarter. in than last industrial I if the would of anywhere And first at seeing the the many on in or the would good the X pretty saw it's seeing to X%. on tell industrial second we're you quarter. look you, that's in sector X the we're from I what mean that in David, the side, we X% what trends better quarters,

versus was in X% Auto was quarter-over-quarter in XX% X% steel instance, For up versus up X% QX. QX.

on different is feel lot trends what about. saw So which industrial a we're industries. first the seeing XXXX. move across since the a the we this And was fact, direction, better lot load prepared in seen And was of than our we remarks, of that in right that in the we've pandemic as mentioned good we quarter

David Arcaro

Got it.

one Just clarifying question on the pension.

you pension Is benefit. goes mentioned of $X.XX transitory goes you it passed $X.XX pension a and of in at know that the to the obviously, wondering that term to noncash had the with do $X.XX is of I along? how I benefit rate if forward, and -- time? sensitive down You kind fluctuate, get going cases it's $X.XX markets. the with to was kind the But benefit? over does near look away kind going

Jon Taylor

has So different each jurisdiction customers. for treatments rate

in we be level. file year $X.XX as use at so file that 'XX in where will the year, a -- And states test that next we'll we'll it

to share a they see the year. next change so the won't $X.XX And

Operator

with of come Gregg Our line next question Orrill UBS. has from the

Gregg Orrill

on pull the up Just follow a forward. O&M

you if address and chain challenges labor Just issues. need? you thought and sort about inflation supply have of how Do could you've labor the you

Jon Taylor

work say would we've the on. already to execute a Gregg, of lot Yes, I started

contractors years. times, with supply a and have to not work challenges in specifically support and number 'XX equipment, have across is to planned schedule that all transformers, as more don't lot this around we ahead that. labor lead future seeing just the of extended But the around We're That's have opposed a we chain. different And of breakers, getting categories, so lead maintenance times. to done impacts, of say regulators, around

issue. So contract necessarily a it's labor not a or

Operator

come Barclays. next with the from of Our questions Banerjee Srinjoy line

Srinjoy Banerjee

on congratulations the upgrade. Fitch obviously, So

Moody's sort the you're For management And XX%, clarify, add number review the mentioned they're the think back any Board one. of FFO-to-debt you for? just think pensions? I agencies, catalysts giving, other rating that specific does level waiting is to

Jon Taylor

specifically obligation either Well, But correct. at the respect that that XX% not the in the anything that's them. with supports looking That's pension Moody's their to are which they'll aware for. catalyst, use provided of I'm of end we metrics, S&P 'XX, or

for recommendations to just our how ethics around came executing the and on investigation will the compliance upgrade it's All well. of. continue those is execution out changes that against But seeing as we're changes and plan a how specifically I'm we're executing catalyst of the be that on. think that the the and important continued progress, that they've cultural nothing said I aware

Srinjoy Banerjee

and FET was And sale the equity new around billion, minority both just various $X.X from proceeds think in terms of use of the the total as I the transactions, the stake so well.

gone you did mention thinking You about How billion? $X billion, the remaining $X.X to holdco course, are debt reduction. of

Jon Taylor

to operating to capital structures their the level capital programs. strengthen company fund will be It Yes. deployed at

the plan. that's So

Srinjoy Banerjee

needs And of sort of accelerated should repayment that debt think opcos debt upcoming sort more issuance of we there? any those as it. of or does in it Got just reduce

Jon Taylor

Yes. upcoming The issuances. latter, debt

Srinjoy Banerjee

then Got one. And just X final it.

sales of thinking use minority in about You the or would what that stake are asset you of potential How terms there? the for drive mentioned future sales. proceeds

Jon Taylor

would it. coupon to if I cross continue mean, you, tell that our I some think very of holding attractive to Well, company, is maybe I we'd could. the today, we to when get further given delever But you debt high where trading bridge it's

Operator

line comes question KeyBanc. Karp with Sophie from of next Our the

Sophie Karp

mining Montana A the quick quarter. that operation on this highlighted question you

of or that plan dispose investment? the in in not you not factoring asset it's that mentioned there? Or simply beyond from that planning XXXX. contributions to that Is just You the are

Jon Taylor

Yes.

year. this announced in our or and the in, in it's just modest We amount plan in just 'XX Sophie, and our that didn't February a of in 'XX, original contribution from this we beyond. in exceeding we November mine year, earnings had factored assume expectations back

Sophie Karp

continue plan the hold is to So to that investment?

Jon Taylor

Well, I transition at over we looked tell time. we've you, out how that exploring facility of would

given to with it's that, But owners. like we at other the challenge time and the from imagine, do can something it As discussions have to time, you is just something that look situation. we'll a

Sophie Karp

Mod, watching then Grid should the Can us the right, we in you federal? as be it. cadence of or Mod remind and And plan Ohio. regulatory dates What far the you with as Got on Grid filed that? discussions regulators

Jon Taylor

Yes.

be So say, to determined. I would

set to time. a the this give I at I and can't schedule. the point commission sense you schedule. need drive how a staff think that go, in depending will the And things of on the will time line

Sophie Karp

last strictly but smooth right, later accounting might pursue cannot just And just there the dead it. I that not of to from you the Got why if when get it. treatment regulatory this you standpoint? a Is missed with maybe beat pension reason you may, volatility pension, out different kind remarks. on, horse impact of of I the Absence

Jon Taylor

on -- year-end because look pension conditions. the is at and the marks pension -- the just mean, you I market mark expense your pure the based No. accounting, the sets pension just pension if to market pension I -- everybody you mean,

And what really sets so that's expense. pension

just are if in component, then at the down you're And interest rates. XX%. increases look so the And you interest assets seeing significant

other for in call volatility the and, what the, creates that companies. for exposure so And frankly, pension us I'll the quite normal

Operator

to this closing at would There for are like comments. any no over time. to turn back Strah further Mr. the I floor questions

Steven Strah

you and talk your Thank Thank you I and continued support, we'll to very just joining today much. soon. to great. for us everyone you. take for moment a wanted to Well, thank

Operator

teleconference. today's does This conclude

You lines for day. your time. Thank you participation, at this of may your and disconnect the your rest enjoy

FirstEnergy (FE) 27 Jul 222022 Q2 Earnings call transcript