1Q26 First Gen Corporation: Navigating Strategic Shifts and Renewable Growth

1Q2026 FGEN QUARTERLY REPORT

First Gen Corporation (FGEN) recently released its financial results for the first quarter of 2026, showcasing a company in the midst of a significant strategic transformation. Following the major divestment of its gas business in late 2025, the company is pivoting more heavily toward its renewable energy portfolio and new large-scale storage projects.

Income Statement: Revenue Growth vs. Strategic Deconsolidation

For the quarter ended March 31, 2026, First Gen reported a robust 32.2% increase in revenues from electricity sales, climbing to ₱15.3 billion from ₱11.6 billion in the same period last year. This growth was primarily driven by the Geothermal, Wind, and Solar platforms, which saw a 34.3% revenue jump due to higher average selling prices and new capacity coming online.

However, Consolidated Net Income decreased by 15.7% to ₱5.45 billion. This decline is a direct result of the strategic sale of a 60% stake in the company’s gas business in November 2025. While the gas business contributed ₱3.7 billion to net income in Q1 2025, its contribution (now recorded as equity in net earnings) was ₱1.45 billion in Q1 2026.

1Q2026 FGEN INCOME STATEMENT GUIDE

Balance Sheet: Strengthening the Asset Base

The company’s financial position remains strong, with Total Assets growing by 8.7% to ₱415.1 billion as of March 31, 2026, compared to year-end 2025. A major driver of this growth was the ₱94.4 billion investment in associates, which now includes the retained 40% interest in the gas business and new interests in pumped storage hydro projects.

Key balance sheet highlights include:

• Total Equity: Increased to ₱232.8 billion, supported by ₱3.6 billion in attributable earnings for the quarter.
• Long-Term Debt: Decreased by 11.6% to ₱103.4 billion, reflecting the company’s efforts to deleverage through the maturity and prepayment of various loans.

1Q2026 FGEN BALANCE SHEET GUIDE

Cash Flow: Strategic Investments in Future Capacity

The cash flow statement reflects a period of heavy reinvestment. While net cash from operations remained positive, the company reported a negative Free Cash Flow of ₱9.6 billion. This was primarily due to a significant outflow in investing activities, specifically the ₱12.5 billion payment for a 33% ownership interest in pumped storage hydroelectric projects (the Pakil and Wawa projects). These projects represent a combined 2,000 MW of future storage capacity.

1Q2026 CASH FLOW STATEMENT GUIDE

The Bull Case: Why to be Optimistic

• Renewable Energy Momentum: Revenues from geothermal and wind assets are surging, bolstered by the full operations of new Battery Energy Storage Systems (BESS) and higher spot market prices.
• Strategic Storage Entry: The investment in the Pakil and Wawa pumped storage projects positions First Gen as a leader in energy storage, a critical component for stabilizing the Philippine grid as more intermittent renewables are added.
• Improved Balance Sheet: The significant reduction in long-term debt and a healthy current ratio of 1.99x provide the company with the financial flexibility to fund future growth.

The Bear Case: Potential Risks

• Reduced Gas Earnings: The deconsolidation of the gas business means First Gen now only captures 40% of the earnings from these high-performing assets, which may lead to lower overall net income in the short term.
• Hydrology Risks: The Hydro platform remains vulnerable to weather patterns. In Q1 2026, the Casecnan plant (FRLC) swung to a net loss due to lower water inflows and higher interest expenses.
• Merchant Exposure: A portion of the company’s portfolio is exposed to the volatility of WESM spot prices, which can fluctuate based on fuel costs and transmission constraints.

Summary
First Gen’s Q1 2026 results reveal a company successfully transitioning its identity. While the bottom line felt the impact of the gas business divestment, the core renewable energy segments are performing at record levels. With a leaner debt profile and strategic entry into large-scale energy storage, First Gen is trading short-term consolidated income for long-term positioning in the Philippine green energy transition.

Source: PSE Edge