FirstEnergy Corp.

Greetings and welcome to the First Energy Corp Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, you may press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Irene Prezel, Vice President of Investor Relations. Thank you. You may begin.

Thanks, Donna. Welcome to our second quarter earnings call. Today we will make various forward-looking statements regarding revenues, earnings, performance, strategies, and prospects. These statements are based on current expectations and are subject to risk and uncertainties. Factors that could cause actual results to differ materially from those indicated by such statements can be found on the investor section of our website under the earnings information link and in our SEC filings. We will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures can be found on the First Energy Investor Relations website along with the presentation which supports today's discussion. Participants in today's call include our Chief Executive Officer Chuck Jones, President Steve Straw, and Senior Vice President and Chief Financial Officer John Taylor. We also have several other executives available to join us for the Q&A session. Now I'll turn the call over to Chuck.

Thank you, Irene, and good morning, everyone. Thanks for joining us. As Irene indicated, we have a new lineup of speakers today reflecting the management changes that were put in place in May. Steve Straw, in his new role as President of First Energy, We'll discuss the operational and regulatory updates on today's call. And John Taylor, returning to the financial realm in his new role as CFO, will review our results. As we've discussed, these changes are the result of extensive succession planning with our board and a thoughtful and proactive plan to ensure we are prepared for a smooth transition in the leadership of our company. Let's begin by addressing the issue that's been in the news recently. As you know, the Ohio Speaker of the House and four others were arrested on Tuesday on federal criminal charges. The case involves political activity related to Ohio House Bill 6, which recognizes the value of the nuclear power plants operated by our former subsidiary, First Energy Solutions, now known as Energy Harbor. Also on Tuesday, First Energy Corp., our First Energy Services Company subsidiary, and our Political Action Committee were served subpoenas related to this matter. We are having discussions with the Department of Justice lawyers and will fully comply with the subpoenas. I believe that First Energy acted properly in this matter and we intend to cooperate fully with the investigation. to, among other things, ensure our company and our role in supporting House Bill 6 is understood as accurately as possible. In the meantime, we wanted to share our preliminary perspective on this issue and reinforce the values with which we operate our company. This is a serious and disturbing situation. Ethical behavior and upholding the highest standards of conduct are foundational values for the entire First Energy family and me personally. These high standards have fostered the trust of our employees, our customers, and the financial community. We strive to apply these standards in all business dealings including our participation in the political process. As you know, we have supported keeping Ohio's two nuclear plants in operation. We believe in supporting the thousands of families, former First Energy families, who rely on the jobs those plants provide. These are good, tax-paying jobs that we believe are critical to Ohio's economic development efforts. We also believe that it is in the best interest of all Ohioans and our nation to maintain these sources of zero-carbon, clean, affordable, and reliable energy. So as we discussed on previous earnings calls, we supported legislative solutions for the nuclear plants even after we stopped operating them. We were strong supporters of House Bill 6 and opposed the referendum effort to repeal it. We gave our support because First Energy has the obligation to serve 2 million customers in the state of Ohio, including looking out for their long-term energy supply, even though we are no longer in the competitive generation business and would not get a single dollar of the House Bill 6 funding for those plants. In addition, that passage of House Bill 6 resulted in a rate decrease for Ohio customers, despite the nuclear surcharges. But let me be clear. At no time does our support for nuclear plants in Ohio interfere or supersede our ethical obligations to conduct our business properly. The facts will become clear as the investigation progresses, and we support bringing the facts forward. Our leadership team will remain focused on executing our strategy and running our business in the same conscientious manner that you've come to expect. With that, let's talk about the other developments since our last call. I know the impact of the pandemic and economic slowdown remains on everyone's mind. Our business strategy remains resilient, and we are well positioned to continue managing through the COVID-19 crisis. We continue making our planned investments and deploying capital across our system, and we not experienced any significant disruptions in our supply chain or workforce. To protect the health and safety of our employees, their families, and our customers, we made adjustments to our work procedures early in the pandemic, and we've continued refining those practices over the last several months. Our employees, both those in the field and the 7,000 who transitioned to working from home in March, haven't missed a beat. Our team has rallied together in the face of this challenge. We've established a workplace return plan for our employees who are working from home, but given their strong performance during the past few months, we're in no rush to get them back to the office. Likewise, I'm extremely proud of our physical workforce for the great job they've done. They have adopted new protocols to keep each other safe while continuing to provide the electricity our customers need. We continue following all established precautions for preventing the spread of this virus. That includes cleaning and disinfecting measures, temperature checks, masks, and adjustments to reporting locations, work schedules, and crew sizes. I'm pleased to note that this increased focus on protections from COVID has extended beyond the virus and helped drive a stronger overall safety performance for our company through the first six months of this year. At First Energy, safety is an unwavering core value, and we will continue to provide employees with a safe working environment as we do our part to stop the spread of this disease. As I said during our last call, one of the silver linings of this crisis is the First Energy team is coming together to work smarter, more creatively, and more efficiently than ever before. Other events in our country, namely the outcry over inequality and social injustice faced by people of color, have also brought us together with a deeper sense of urgency and a renewed focus on the areas of diversity and inclusion. This is an issue we had already been working to address within First Energy for a number of years, and we are actively taking steps across the company to help drive positive changes and promote equality within our workforce and our communities. Let's move to our second quarter results. Yesterday, after market closed, we reported earnings of $0.57 per share on both the GAAP and operating earnings basis. This was at the upper end of the earnings guidance we provided for the quarter. While John will discuss the drivers in more detail later in the call, I'll point out that, as we expected, our business model and rate structure provided a measure of stability during this period of pandemic and economic slowdown. As we discussed in April, about two-thirds of our base distribution revenues come from residential sales, with 28% from commercial customers and about 7% from the industrial sector. In addition, about 80% of commercial rates and 90% of industrial rates are made up of customer and demand charges. As a result, what we told you in April has borne out through this quarter. While weather adjusted load dropped by almost 4% system-wide compared to the second quarter of 2019, The increase in residential revenues related to the stay-at-home orders in our service territory more than offset the decreases in the commercial and industrial sectors. While I don't think anyone is in a position to predict what the future might bring in terms of continued reopening or reclosing of the economy, we are taking a conservative view of what the next few months might bring. Nevertheless, we remain very positive that we are well-positioned to continue managing the impact of the pandemic and the economic slowdown. And we believe our distribution and transmission investments will continue to provide stable and predictable earnings. We're affirming our 2020 operating earnings guidance range of $2.40 to $2.60 per share. We're also affirming our expected CAGR of 6% to 8% through 2021-2022. and 5% to 7% extending through 2023, as well as our plan to issue up to a total of $600 million in equity in 2022 and 2023. Also, for the third quarter of 2020, we are introducing an earnings guidance range of $0.73 to $0.83 per share. Thank you. Now I'll turn the call over to Steve Straw.