Earnings Release Highlights
- GAAP Net Income of $0.60 per share and Adjusted (non-GAAP)
Operating Earnings of $0.87 per share for the first quarter of
2020
- Revising range for full year 2020 adjusted (non-GAAP) operating
earnings guidance to $2.80-$3.10 per share from original guidance
of $3.00-$3.30 per share
- Strong utility reliability performance - every utility achieved
top quartile in outage frequency and outage duration
- Generations’ nuclear fleet capacity factor was 93.9% for the
quarter, ahead of the industry average of 91% (based on full year
2019)
Exelon Corporation (Nasdaq: EXC) today reported its financial
results for the first quarter of 2020.
“We had another strong quarter, with each of our utilities
achieving high reliability performance and our nuclear fleet
completing seven of eight refueling outages - nearly all shorter
than planned,” said Christopher M. Crane, president and CEO of
Exelon. “The consistent performance of our frontline employees in
providing safe and reliable service has never been more evident as
we all confront the global pandemic and the devastating disruption
to our economy. In recognition of these extraordinary
circumstances, we are supporting customers experiencing financial
hardship by suspending disconnections, waiving new late charges and
reconnecting customers on request. We remain on track to invest $26
billion across our utilities to further improve reliability and
customer service, and we have contributed more than $5.9 million to
national and local organizations to provide immediate relief to
communities affected by COVID-19.”
“Despite experiencing one of the warmest winters on record and
significant erosion of demand as a result of the pandemic, we
reported solid adjusted (non-GAAP) earnings of 0.87 per share,
coming in just below the midpoint of our guidance range,” said
Joseph Nigro, senior executive vice president and CFO of Exelon.
“We identified an additional $250 million in cost savings and
lowered capital expenditures at Exelon Generation by $125 million.
However, even with these and other actions, the unprecedented
slowdown in economic activity and unpredictable nature of the
recovery has led us to lower our full-year earnings guidance from
$3.00-$3.30 per share to $2.80-$3.10 per share. We will continue to
look for ways to improve our earnings and cash flow this year.”
First Quarter 2020
Exelon's GAAP Net Income for the first quarter of 2020 decreased
to $0.60 per share from $0.93 per share in the first quarter of
2019. Adjusted (non-GAAP) Operating Earnings remained consistent at
$0.87 per share in both the first quarter of 2020 and 2019. For the
reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating
Earnings, refer to the tables beginning on page 5.
Adjusted (non-GAAP) Operating Earnings in the first quarter of
2020 primarily reflect:
- Lower utility earnings primarily due to unfavorable weather
conditions at PECO and PHI and lower allowed electric distribution
ROE due to a decrease in treasury rates at ComEd, partially offset
by regulatory rate increases at BGE and PHI and distribution
formula rate timing at ComEd; and
- Higher Generation earnings due to increased revenue from ZECs
in New Jersey, lower operating and maintenance expense, and an
income tax settlement, partially offset by lower realized energy
prices, lower capacity revenues and increased nuclear outage
days.
Operating Company Results1
ComEd
ComEd's first quarter of 2020 GAAP Net Income and Adjusted
(non-GAAP) Operating Earnings increased to $168 million from $157
million in the first quarter of 2019, primarily due to distribution
formula rate timing partially offset by lower allowed electric
distribution ROE due to a decrease in treasury rates. Due to
revenue decoupling, ComEd's distribution earnings are not affected
by actual weather or customer usage patterns.
PECO
PECO’s first quarter of 2020 GAAP Net Income decreased to $140
million from $168 million in the first quarter of 2019. PECO’s
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2020 decreased to $140 million from $169 million in the first
quarter of 2019, primarily due to unfavorable weather
conditions.
BGE
BGE’s first quarter of 2020 GAAP Net Income increased to $181
million from $160 million in the first quarter of 2019. BGE’s
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2020 increased to $182 million from $161 million compared with the
first quarter of 2019, primarily due to regulatory rate increases.
Due to revenue decoupling, BGE's distribution earnings are not
affected by actual weather or customer usage patterns.
PHI
PHI’s first quarter of 2020 GAAP Net Income decreased to $108
million from $117 million in the first quarter of 2019. PHI’s
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2020 decreased to $110 million from $118 million in the first
quarter of 2019, primarily due to unfavorable weather conditions in
Delaware and New Jersey, partially offset by regulatory rate
increases. Due to revenue decoupling, PHI's distribution earnings
related to Pepco Maryland, DPL Maryland and Pepco District of
Columbia are not affected by actual weather or customer usage
patterns.
___________
1Exelon’s five business units include ComEd, which consists of
electricity transmission and distribution operations in northern
Illinois; PECO, which consists of electricity transmission and
distribution operations and retail natural gas distribution
operations in southeastern Pennsylvania; BGE, which consists of
electricity transmission and distribution operations and retail
natural gas distribution operations in central Maryland; PHI, which
consists of electricity transmission and distribution operations in
the District of Columbia and portions of Maryland, Delaware, and
New Jersey and retail natural gas distribution operations in
northern Delaware; and Generation, which consists of owned and
contracted electric generating facilities and wholesale and retail
customer supply of electric and natural gas products and services,
including renewable energy products and risk management
services.
Generation
Generation's first quarter of 2020 GAAP Net Income decreased to
$45 million from $363 million in the first quarter of 2019.
Generation’s Adjusted (non-GAAP) Operating Earnings for the first
quarter of 2020 increased to $312 million from $294 million in the
first quarter of 2019, primarily due to increased revenue from ZECs
in New Jersey, lower operating and maintenance expense and an
income tax settlement, partially offset by lower realized energy
prices, lower capacity revenues and increased nuclear outage
days.
As of March 31, 2020, the percentage of expected Generation
hedged is 89%-92% and 70%-73% for 2020 and 2021, respectively.
Recent Developments and First Quarter Highlights
- COVID-19: Exelon is closely monitoring developments
related to the global outbreak (pandemic) of the 2019 novel
coronavirus (COVID-19) pandemic and is taking proactive measures to
protect the health and safety of employees, contractors and
customers. As a provider of critical resources, Exelon has robust
plans and contingencies in place to ensure business and operational
continuity across a wide range of potentially disruptive events,
including extensive preparedness for major public health crises.
Exelon and its operating companies are working in close
coordination with designated state and local emergency preparedness
and health officials, and at the federal level through the Electric
Subsector Coordinating Council. All Exelon employees have access to
up-to-date information and resources and are following Centers for
Disease Control guidelines to ensure safety. In addition, Exelon
utilities have established incident command centers to address
emergent customer and employee needs in real time. While there was
no material impact to Exelon’s financial statements for the first
quarter of 2020 due to COVID-19, PECO, DPL Delaware, ACE and
Generation expect a reduction in operating revenues for the nine
months ending December 31, 2020 due to expected reduction in
electric load. There remains significant uncertainty in the
economic forecast for the remainder of the year and its impact on
Exelon’s operating revenues. However, Exelon identified and is
pursuing approximately $250 million in cost savings across its
operating companies to offset part of the expected unfavorable
impacts on operating revenues.
- ComEd Distribution Formula Rate: On April 16, 2020,
ComEd filed its annual distribution formula rate update with the
Illinois Commerce Commission (ICC). The ICC approval is due by
December 2020 and the rates will take effect in January 2021. The
filing request includes a total decrease to the revenue requirement
of $11 million, reflecting an increase of $51 million for the
initial revenue requirement for 2020 and a decrease of $62 million
related to the annual reconciliation for 2019. The revenue
requirement for 2020 and annual reconciliation for 2019 provide for
a weighted average debt and equity return on distribution rate base
of 6.28% inclusive of a requested ROE of 8.38%.
- DPL Delaware Gas Base Rate Case: On Feb. 21, 2020, DPL
Delaware filed an application with the Delaware Public Service
Commission (DPSC) to increase its annual gas distribution rates by
$9 million, reflecting an ROE of 10.3%. DPL currently expects a
decision in the first quarter of 2021 but cannot predict if the
DPSC will approve the application as filed.
- DPL Delaware Electric Base Rate Case: On March 6, 2020,
DPL Delaware filed an application with the DPSC to increase its
annual electric distribution rates by $24 million, reflecting an
ROE of 10.3%. DPL currently expects a decision in the first quarter
of 2021 but cannot predict if the DPSC will approve the application
as filed.
- Nuclear Operations: Generation’s nuclear fleet,
including its owned output from the Salem Generating Station and
100% of the CENG units, produced 42,555 gigawatt-hours (GWhs) in
the first quarter of 2020, compared with 45,715 GWhs in the first
quarter of 2019. Excluding Salem, the Exelon-operated nuclear
plants at ownership achieved a 93.9% capacity factor for the first
quarter of 2020, compared with 97.1% for the first quarter of 2019.
The number of planned refueling outage days in the first quarter of
2020 totaled 94, compared with 74 in the first quarter of 2019.
There were 11 non-refueling outage days in the first quarter of
2020 and none in the first quarter of 2019.
- Fossil and Renewables Operations: The Dispatch Match
rate for Generation’s fossil and hydro fleet was 98.2% in the first
quarter of 2020, compared with 97.8% in the first quarter of 2019.
Energy Capture for the wind and solar fleet was 94.7% in the first
quarter of 2020, compared with 96.5% in the first quarter of
2019.
- Financing Activities:
- On April 1, 2020, Exelon Corporate issued notes for $1.25
billion at 4.05%, which are due in 2030 and notes for $750 million
at 4.70%, which are due in 2050. A portion of the net proceeds from
the sale of these notes, together with available cash balances,
will be used to repay Exelon Corporate notes maturing in June of
2020. The remainder of the net proceeds will be used for general
corporate purposes.
- On Feb. 25, 2020, ComEd issued $350 million of its First
Mortgage Bonds, 2.20% Series due March 1, 2030 and $650 million of
its First Mortgage Bonds, 3.00% Series due March 1, 2050. ComEd
used the proceeds to repay a portion of outstanding commercial
paper obligations and for general corporate purposes.
- On Feb. 25, 2020, Pepco issued $150 million of its First
Mortgage Bonds, 2.53% Series due Feb. 25, 2030. Pepco used the
proceeds to repay existing indebtedness and for general corporate
purposes.
- On March 19, 2020, Generation entered into a term loan
agreement for $200 million. The loan agreement has an expiration of
March 18, 2021. Pursuant to the loan agreement, loans made
thereunder bear interest at a variable rate equal to LIBOR plus
0.50% and all indebtedness thereunder is unsecured.
- On March 31, 2020, Generation entered into a term loan
agreement for $300 million. The loan agreement has an expiration of
March 30, 2021. Pursuant to the loan agreement, loans made
thereunder bear interest at a variable rate equal to LIBOR plus
0.75% and all indebtedness thereunder is unsecured.
- On April 8, 2020, NewEnergy Receivables LLC, a bankruptcy
remote, special purpose entity, which is wholly owned by
Generation, entered into an accounts receivable financing facility
with a number of financial institutions and a commercial paper
conduit to sell certain customer accounts receivables. Generation
received approximately $500 million of cash in accordance with the
initial sale of approximately $1.2 billion receivables.
GAAP/Adjusted (non-GAAP) Operating Earnings
Reconciliation
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2020 do not include the following items (after tax) that were
included in reported GAAP Net Income:
(in millions)
Exelon Earnings per Diluted
Share
Exelon
ComEd
PECO
BGE
PHI
Generation
2020 GAAP Net Income
$
0.60
$
582
$
168
$
140
$
181
$
108
$
45
Mark-to-Market Impact of Economic Hedging
Activities (net of taxes of $32 and $33, respectively)
(0.10
)
(94
)
—
—
—
—
(97
)
Unrealized Losses Related to Nuclear
Decommissioning Trust (NDT) Fund Investments (net of taxes of
$405)
0.50
485
—
—
—
—
485
Asset Impairments (net of taxes of $1)
—
2
—
—
—
—
2
Plant Retirements and Divestitures (net of
taxes of $4)
0.01
13
—
—
—
—
13
Cost Management Program (net of taxes of
$3, $0, $1 and $3, respectively)
0.01
9
—
—
1
2
8
Income Tax-Related Adjustments (entire
amount represents tax expense)
—
(2
)
—
—
—
—
—
Noncontrolling Interests (net of taxes of
$30)
(0.15
)
(144
)
—
—
—
—
(144
)
2020 Adjusted (non-GAAP) Operating
Earnings
$
0.87
$
851
$
168
$
140
$
182
$
110
$
312
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2019 do not include the following items (after tax) that were
included in reported GAAP Net Income:
(in millions)
Exelon Earnings per Diluted
Share
Exelon
ComEd
PECO
BGE
PHI
Generation
2019 GAAP Net Income
$
0.93
$
907
$
157
$
168
$
160
$
117
$
363
Mark-to-Market Impact of Economic Hedging
Activities (net of taxes of $12 and $10, respectively)
0.03
31
—
—
—
—
26
Unrealized Gains Related to NDT Fund
Investments (net of taxes of $161)
(0.20
)
(193
)
—
—
—
—
(193
)
Asset Impairments (net of taxes of $1)
—
4
—
—
—
—
4
Plant Retirements and Divestitures (net of
taxes of $6)
0.02
19
—
—
—
—
19
Cost Management Program (net of taxes of
$3, $0, $0, $0 and $3, respectively)
0.01
11
—
1
1
1
8
Noncontrolling Interests (net of taxes of
$13)
0.07
67
—
—
—
—
67
2019 Adjusted (non-GAAP) Operating
Earnings
$
0.87
$
846
$
157
$
169
$
161
$
118
$
294
Note: Amounts may not sum due to rounding. Unless otherwise
noted, the income tax impact of each reconciling item between GAAP
Net Income and Adjusted (non-GAAP) Operating Earnings is based on
the marginal statutory federal and state income tax rates for each
Registrant, taking into account whether the income or expense item
is taxable or deductible, respectively, in whole or in part. For
all items except the unrealized gains and losses related to NDT
fund investments, the marginal statutory income tax rates for 2020
and 2019 ranged from 26.0% to 29.0%. Under IRS regulations, NDT
fund investment returns are taxed at different rates for
investments if they are in qualified or non-qualified funds. The
effective tax rates for the unrealized gains and losses related to
NDT fund investments were 45.5% and 45.4% for the three months
ended March 31, 2020 and 2019, respectively.
Webcast Information
Exelon will discuss first quarter 2020 earnings in a one-hour
conference call scheduled for today at 9 a.m. Central Time (10 a.m.
Eastern Time). The webcast and associated materials can be accessed
at www.exeloncorp.com/investor-relations.
About Exelon
Exelon Corporation (Nasdaq: EXC) is a Fortune 100 energy company
with the largest number of electricity and natural gas customers in
the U.S. Exelon does business in 48 states, the District of
Columbia and Canada and had 2019 revenue of $34 billion. Exelon
serves approximately 10 million customers in Delaware, the District
of Columbia, Illinois, Maryland, New Jersey and Pennsylvania
through its Atlantic City Electric, BGE, ComEd, Delmarva Power,
PECO and Pepco subsidiaries. Exelon is one of the largest
competitive U.S. power generators, with more than 31,000 megawatts
of nuclear, gas, wind, solar and hydroelectric generating capacity
comprising one of the nation’s cleanest and lowest-cost power
generation fleets. The company’s Constellation business unit
provides energy products and services to approximately 2 million
residential, public sector and business customers, including three
fourths of the Fortune 100. Follow Exelon on Twitter @Exelon.
Non-GAAP Financial Measures
In addition to net income as determined under generally accepted
accounting principles in the United States (GAAP), Exelon evaluates
its operating performance using the measure of Adjusted (non-GAAP)
Operating Earnings because management believes it represents
earnings directly related to the ongoing operations of the
business. Adjusted (non-GAAP) Operating Earnings exclude certain
costs, expenses, gains and losses and other specified items. This
measure is intended to enhance an investor’s overall understanding
of period over period operating results and provide an indication
of Exelon’s baseline operating performance excluding items that are
considered by management to be not directly related to the ongoing
operations of the business. In addition, this measure is among the
primary indicators management uses as a basis for evaluating
performance, allocating resources, setting incentive compensation
targets and planning and forecasting of future periods. Adjusted
(non-GAAP) Operating Earnings is not a presentation defined under
GAAP and may not be comparable to other companies’ presentation.
The Company has provided the non-GAAP financial measure as
supplemental information and in addition to the financial measures
that are calculated and presented in accordance with GAAP. Adjusted
(non-GAAP) Operating Earnings should not be deemed more useful
than, a substitute for, or an alternative to the most comparable
GAAP Net Income measures provided in this earnings release and
attachments. This press release and earnings release attachments
provide reconciliations of Adjusted (non-GAAP) Operating Earnings
to the most directly comparable financial measures calculated and
presented in accordance with GAAP, are posted on Exelon’s website:
www.exeloncorp.com, and have been furnished to the Securities and
Exchange Commission on Form 8-K on May 8, 2020.
Cautionary Statements Regarding Forward-Looking
Information
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 that are subject to risks and uncertainties including among
others those related to the expected or potential impact of the
novel coronavirus (COVID-19) pandemic, and the related responses of
various governments and regulatory bodies, our customers, and the
company, on our business, financial condition and results of
operations; any such forward-looking statements, whether concerning
the COVID-19 pandemic or otherwise, involve risks, assumptions and
uncertainties. Words such as “could,” “may,” “expects,”
“anticipates,” “will,” “targets,” “goals,” “projects,” “intends,”
“plans,” “believes,” “seeks,” “estimates,” “predicts,” and
variations on such words, and similar expressions that reflect our
current views with respect to future events and operational,
economic and financial performance, are intended to identify such
forward-looking statements.
The factors that could cause actual results to differ materially
from the forward-looking statements made by Exelon Corporation,
Exelon Generation Company, LLC, Commonwealth Edison Company, PECO
Energy Company, Baltimore Gas and Electric Company, Pepco Holdings
LLC, Potomac Electric Power Company, Delmarva Power & Light
Company, and Atlantic City Electric Company (Registrants) include
those factors discussed herein, as well as the items discussed in
(1) the Registrants' 2019 Annual Report on Form 10-K in (a) Part I,
ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations and
(c) Part II, ITEM 8. Financial Statements and Supplementary Data:
Note 18, Commitments and Contingencies; (2) the Registrants' First
Quarter 2020 Quarterly Report on Form 10-Q (to be filed on May 8,
2020) in (a) Part II, ITEM 1A. Risk Factors; (b) Part I, ITEM 2.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations and (c) Part I, ITEM 1. Financial Statements:
Note 14, Commitments and Contingencies; and (3) other factors
discussed in filings with the SEC by the Registrants.
Investors are cautioned not to place undue reliance on these
forward-looking statements, whether written or oral, which apply
only as of the date of this press release. None of the Registrants
undertakes any obligation to publicly release any revision to its
forward-looking statements to reflect events or circumstances after
the date of this press release.
Exelon
GAAP Consolidated Statements
of Operations and
Adjusted (non-GAAP) Operating
Earnings Reconciling Adjustments
(unaudited)
(in millions, except per share
data)
Three Months Ended March 31,
2020
Three Months Ended March 31,
2019
GAAP (a)
Non-GAAP Adjustments
GAAP (a)
Non-GAAP Adjustments
Operating revenues
$
8,747
$
(179
)
(b)
$
9,477
$
52
(b)
Operating expenses
Purchased power and fuel
3,867
(48
)
(b)
4,553
20
(b),(c)
Operating and maintenance
2,204
(21
)
(c),(d),(e)
2,189
56
(c),(d),(e)
Depreciation and amortization
1,021
(10
)
(c)
1,075
(100
)
(c)
Taxes other than income
437
—
445
—
Total operating expenses
7,529
8,262
Gain on sales of assets and
businesses
2
—
3
—
Operating income
1,220
1,218
Other income and (deductions)
Interest expense, net
(410
)
16
(b)
(403
)
15
(b)
Other, net
(725
)
879
(b),(f)
467
(358
)
(c),(f)
Total other income and
(deductions)
(1,135
)
64
Income before income taxes
85
1,282
Income taxes
(294
)
382
(b),(c),(d),(e),(f),(g)
310
(139
)
(b),(c),(d),(e),(f),(g)
Equity in losses of unconsolidated
affiliates
(3
)
—
(6
)
—
Net income
376
966
Net income attributable to
noncontrolling interests
(206
)
144
(h)
59
(67
)
(h)
Net income attributable to common
shareholders
$
582
$
907
Effective tax rate(h)
(345.9
)%
24.2
%
Earnings per average common
share
Basic
$
0.60
$
0.93
Diluted
$
0.60
$
0.93
Average common shares
outstanding
Basic
975
971
Diluted
976
972
__________
(a)
Results reported in accordance with
accounting principles generally accepted in the United States
(GAAP).
(b)
Adjustment to exclude the mark-to-market
impact of Exelon’s economic hedging activities, net of intercompany
eliminations.
(c)
In 2020, adjustment to primarily exclude
accelerated depreciation and amortization expenses associated with
the early retirement of certain fossil sites. In 2019, adjustment
to primarily exclude accelerated depreciation and amortization
expenses associated with the early retirement of the TMI nuclear
facility and a benefit associated with a remeasurement of the TMI
ARO.
(d)
Adjustment to exclude certain asset
impairments.
(e)
Adjustment to exclude reorganization costs
related to cost management programs.
(f)
Adjustment to exclude the impact of net
unrealized gains and losses on Generation’s NDT fund investments
for Non-Regulatory and Regulatory Agreement Units. The impacts of
the Regulatory Agreement Units, including the associated income
taxes, are contractually eliminated, resulting in no earnings
impact.
(g)
The effective tax rate related to Adjusted
(non-GAAP) Operating Earnings is 10.0% and 16.8% for the three
months ended March 31, 2020 and March 31, 2019, respectively.
(h)
Adjustment to exclude elimination from
Generation’s results of the noncontrolling interests related to
certain exclusion items, primarily related to the impact of
unrealized gains and losses on NDT fund investments at CENG.
View source
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Paul Adams Corporate Communications 410-470-4167
Emily Duncan Investor Relations 312-394-2345
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