Diversified energy company FirstEnergy Corp.’s (FE) third-quarter 2014 operating earnings of 89 cents per share beat the Zacks Consensus Estimate of 88 cents by a penny but lagged the year-ago earnings of 94 cents by 5.3%.
The year-over-year decline reflects lower commodity margin at its competitive business, lower distribution deliveries and higher interest expense. These were partially offset by lower operating expenses in the competitive business and a lower effective tax rate.
Including one-time charges of 10 cents per share, GAAP earnings per share were 79 cents compared with 52 cents in the prior-year quarter.
Total Revenue
FirstEnergy generated total revenues of $3.9 billion in the third quarter, down 3.1% year over year.
The top line also missed the Zacks Consensus Estimate of $4.7 billion by nearly 17.1%.
Highlights of the Release
FirstEnergy's total electric regulated distribution deliveries in the reported quarter decreased 1.5% year over year. The mild summer weather impacted demand with commercial and residential customer sales decreasing 2% and 6%, respectively, while demand from industrial customers saw a 3% increase from the prior year.
Total expenses in the reported quarter were $3.12 billion, down 3.4% from the year-ago level, primarily due to a decline in fuel and other operating expenses.
Interest expenses in the reported quarter were $275 million, up 7.0% 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 Sep 30, 2014, was $109 million compared with $218 million as of Dec 31, 2013.
Cash from operating activities in the first nine month of 2014 was $1.7 billion compared with $1.67 billion in the year-ago period.
Long-term debt and other obligations as of Sep 30, 2014, increased to $18.5 billion from $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. However, the company adjusted the earnings expectation from its different business segments.
For regulated distribution, earnings per share were adjusted from $1.98-$2.04 per basic share to $1.90-$1.96; for Competitive Energy Services, earnings were adjusted from 12-22 cents per basic share to 15-25 cents; while for Corporate/Other, loss was narrowed to 17 cents from a loss of 22 cents expected earlier.
The company reaffirmed its earnings guidance for regulated transmission in the range of 52-56 cents per share.
Other Company Releases
American Electric Power Company Inc. (AEP) reported third-quarter 2014 operating earnings of $1.01 per share, missing the Zacks Consensus Estimate of $1.03 by 1.9%.
CMS Energy Corp. (CMS) reported third-quarter 2014 earnings per share of 37 cents, lagging the Zacks Consensus Estimate of 42 cents by 11.9%.
Edison International (EIX) reported solid third-quarter 2014 results, wherein its adjusted earnings of $1.52 per share came in ahead of the Zacks Consensus Estimate of $1.35 by 12.6%
Zacks Rank
FirstEnergy currently has a Zacks Rank #3 (Hold).
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