Slide 1: Earnings Conference Call Second Quarter 2019
Earnings Conference Call Second Quarter 2019 August 1, 2019
Slide 2: Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ mat
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Exelon reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). Exelon supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including:
Slide 4: Non-GAAP Financial Measures Continued
Non-GAAP Financial Measures Continued This information is intended to enhance an investor’s overall understanding of period over period financial results and provide an indication of Exelon’s baseline operating performance by excluding items that are considered by management to be not directly relat
Slide 5: Second Quarter Results
Second Quarter Results Q2 2019 EPS Results(1) $0.60 $0.50 • GAAP earnings were $0.50/share in $0.21 ExGen $0.11 Q2 2019 vs. $0.56/share in Q2 2018 BGE $0.05 $0.05 PECO $0.10 $0.11 • Adjusted operating earnings* were $0.60/share in Q2 2019 vs. PHI $0.11 $0.11 $0.71/share in Q2 2018, which was at the
Slide 6: Operating Highlights
Operating Highlights Exelon Utilities Operational Metrics Exelon Generation Operational Performance Operations Metric YTD 2019 Exelon Nuclear Fleet(2) BGE ComEd PECO PHI • Best in class performance across our Nuclear fleet: OSHA Recordable Rate o Q2 2019 Nuclear Capacity Factor: 95.1% Electric 2.5 B
Slide 7: Second Quarter Adjusted Operating Earnings Drivers
Second Quarter Adjusted Operating Earnings* Drivers Q2 2019 Adjusted Operating EPS* Results Q2 2019 vs. Guidance of $0.55 - $0.65 $0.60 • Adjusted (non-GAAP) operating ExGen $0.21 earnings drivers versus guidance: Exelon Utilities BGE $0.05 – Timing of O&M PECO $0.11 – Unfavorable weather PHI $0.11
Slide 8: Q2 2019 QTD Adjusted Operating Earnings Waterfall
Q2 2019 QTD Adjusted Operating Earnings* Waterfall $0.03 Distribution and Transmission $0.03 Distribution Rate Increases Rate Increases ($0.01) Unfavorable Weather ($0.01) Other ($0.01) Other $0.71 $0.01 $0.00 $0.02 $0.02 ($0.01) Interest Expense ($0.13) $0.01 Distribution Rate Increases $0.60 $0.01
Slide 9: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing Twelve Month Earned ROEs* Q2 2019: Trailing Twelve Month Earned ROEs* 12.0% Legacy Exelon Utilities Consolidated Exelon Utilities 10.0% PHI Utilities $30.4/10.5% $10.8/9.1% $41.2/10.2% 8.0% Earned ROE* (%) 6.0% 4.0% 2.0% 0.0% $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 2019E
Slide 10: Exelon Utilities' Distribution Rate Case Updates
Exelon Utilities’ Distribution Rate Case Updates Rate Case Schedule and Key Terms Requested Revenue Expected Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar ROE / Requirement Order Equity Ratio (6) Pepco MD (1,6) 9.60% / Electric IT RT EH IB FO $10.3M Aug 13, 2019 50.46% (1,2) 8.91% / ComEd CF IT RT
Slide 11: Featured Utility Capital Investments
Featured Utility Capital Investments DC Power Line Undergrounding (DC PLUG) Pepco Partnership • Forecasted project cost: − Total project cost of $500 million to be shared equally with District Department of Transportation (DDOT) • In service date: − Multiple in service dates contingent on DC PSC app
Slide 12: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update June 30, 2019 Change from March 31, 2019 (1) Gross Margin Category ($M) 2019 2020 2021 2019 2020 2021 Open Gross Margin (2,5) $3,600 $3,550 $3,300 $(600) $(550) $(500) (including South, West, New England, Canada hedged gross margin) Capacity and ZEC Revenues(2,
Slide 13: Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority
Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority Exelon S&P FFO/Debt %*(1,4) ExGen Debt/EBITDA Ratio*(5) 25% 21% 19%-21% 4.0 20% 3.0x S&P Threshold 3.0 15% 2.5x 2.0x 2.0 Book 10% Excluding Non-Recourse 5% 1.0 0% 0.0 2019 Target 2019 Target Credit Ratings by Operating Co
Slide 14: The Exelon Value Proposition
The Exelon Value Proposition ▪ Regulated Utility Growth with utility EPS rising 6-8% annually from 2018- 2022 and rate base growth of 7.8%, representing an expanding majority of earnings ▪ ExGen’s strong free cash generation will provide ~$4.2B for utility growth and reduce debt by ~$2.5B over the n
Slide 15: Additional Disclosures
Additional Disclosures 15 Q2 2019 Earnings Release Slides
Slide 16: 2019 Adjusted Operating Earnings Guidance
2019 Adjusted Operating Earnings* Guidance $3.12(1) $3.00 - $3.30(2) Key Year-Over-Year Drivers • ExGen: Lower realized energy prices and absence of IL ZEC timing, partially offset by NJ ZEC uplift $1.20 - $1.30 $1.39 • BGE: Higher distribution and transmission revenue, partially offset by higher de
Slide 17: Q2 2019 YTD Adjusted Operating Earnings Waterfall
Q2 2019 YTD Adjusted Operating Earnings* Waterfall $0.04 Distribution Rate Increases $0.06 Distribution and $0.04 Decreased Storm Costs(1) Transmission Rate Increases ($0.01) Unfavorable Weather $0.01 Decreased Storm Costs ($0.01) Other $0.07 ($0.02) Interest Expense $1.66 $0.02 ($0.03) Other $0.01
Slide 18: 2019 Projected Sources and Uses of Cash
2019 Projected Sources and Uses of Cash Total Cash ($M)(1) BGE ComEd PECO PHI ExGen Corp(8) Exelon Utilities Balance (1) All amounts rounded to the nearest Beginning Cash Balance(2) 1,825 $25M. Figures may not add due to (2) Adjusted Cash Flow from Operations 675 1,325 750 1,050 3,800 3,950 (275) 7,
Slide 19: Exelon Utilities
Exelon Utilities 19 Q2 2019 Earnings Release Slides
Slide 20: BGE Distribution Rate Case Filing
BGE Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. Case No. 9610 • Case filed on May 24, 2019 seeking an increase in electric and gas distribution revenues Test Year August 1, 2018 – July 31, 2019 • The increase is primarily driven by the ongoing need Test Period for capital
Slide 21: Pepco DC (Electric) Distribution Rate Case Filing
Pepco DC (Electric) Distribution Rate Case Filing Multi-Year Plan Case Filing Details Notes Case No. 1156 • May 30, 2019, Pepco DC filed a three year multi-year plan (MYP) request with the Public Test Year January 1 – December 31 Service Commission of the District of Columbia Test Period 2020, 2021,
Slide 22: Pepco MD (Electric) Distribution Rate Case Filing
Pepco MD (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Case No. 9602 • Pepco MD filed an application with the Maryland Public Service Commission (MDPSC) Test Year February 1, 2018 – January 31, 2019 on January 15, 2019, seeking an increase in Test Period 12 months actual el
Slide 23: ComEd Distribution Rate Case Filing
ComEd Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 19-0387 • April 8, 2019, ComEd filed its annual distribution formula rate update with the Illinois Test Year January 1, 2018 – December 31, 2018 Commerce Commission seeking a decrease to Test Period 2018 Actual Costs + 201
Slide 24: Exelon Generation Disclosures
Exelon Generation Disclosures June 30, 2019 24 Q2 2019 Earnings Release Slides
Slide 25: Portfolio Management Strategy
Portfolio Management Strategy Align Hedging & Financials Portfolio Management Over Time Exercising Market Views Establishing Minimum Hedge Targets % Hedged High End of Profit % Hedged Low End of Profit Purely ratable Capital Credit Rating Structure Actual hedge % Capital & Market views on timing, pr
Slide 26: Components of Gross Margin Categories
Components of Gross Margin* Categories Gross margin from Gross margin linked to power production and sales other business activities Open Gross Capacity and ZEC MtM of “Power” New “Non Power” “Non Power” Margin Revenues Hedges(2) Business Executed New Business •Generation Gross •Expected capacity •M
Slide 27: ExGen Disclosures
ExGen Disclosures (1) Gross Margin Category ($M) 2019 2020 2021 (2,5) Open Gross Margin (including South, West, New England & Canada hedged GM) $3,600 $3,550 $3,300 (2,5) Capacity and ZEC Revenues $2,050 $1,900 $1,850 (2,3) Mark-to-Market of Hedges $1,250 $750 $400 Power New Business / To Go $250 $6
Slide 28: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2019 2020 2021 (1) Exp. Gen (GWh) 189,800 185,300 181,200 Midwest 97,600 96,500 95,600 Mid-Atlantic(2,6) 53,800 48,000 48,300 ERCOT 21,800 25,100 20,700 New York(2) 16,600 15,700 16,600 (3) % of Expected Generation Hedged 92%-95% 70%-73% 40%-43% Midwest 93%-96
Slide 29: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with existing hedges) 2019 2020 2021 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu $50 $290 $510 - $1/MMBtu $(70) $(265) $(500) NiHub ATC Energy Price + $5/MWh $10 $120 $290 - $5/MWh $(10) $(120) $(290) PJM-W ATC Energy Price + $
Slide 30: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 9,000 8,500 8,000 Approximate Gross Margin* ($ million)(1) $7,700 $7,650 $7,600 7,500 $7,550 7,000 $7,100 6,500 $6,500 6,000 5,500 5,000 4,500 4,000 2019 2020 2021 (1) Represents an approximate range of expected gross margin, taking into account hedges in place
Slide 31: Illustrative Example of Modeling Exelon Generation 2020 Total Gross Margin
Illustrative Example of Modeling Exelon Generation 2020 Total Gross Margin* South, Mid- Row Item Midwest ERCOT New York West, NE & Atlantic Canada (A) Start with fleet-wide open gross margin $3.55 billion (B) Capacity and ZEC $1.9 billion (C) Expected Generation (TWh) 96.5 48.0 25.1 15.7 (D) Hedge %
Slide 32: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2019 2020 2021 Revenue Net of Purchased Power and Fuel Expense*(2,3) $8,075 $7,725 $7,300 Other Revenues(4) $(175) $(175) $(150) Direct cost of sales incurred to generate revenues for certain $(250) $(250) $(250) Constellati
Slide 33: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 33 Q2 2019 Earnings Release Slides
Slide 34: Q2 QTD GAAP EPS Reconciliation
Q2 QTD GAAP EPS Reconciliation Three Months Ended June 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.19 $0.10 $0.05 $0.11 $0.11 ($0.07) $0.50 Mark-to-market impact of economic hedging activities - - - - 0.07 - 0.07 Unrealized losses related to NDT funds - - -
Slide 35: Q2 QTD GAAP EPS Reconciliation (continued)
Q2 QTD GAAP EPS Reconciliation (continued) Three Months Ended June 30, 2018 ComEd PECO BGE PHI ExGen Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.17 $0.10 $0.05 $0.09 $0.18 ($0.04) $0.56 Mark-to-market impact of economic hedging activities - - - - (0.07) - (0.07) Unrealized losses related to
Slide 36: Q2 YTD GAAP EPS Reconciliation
Q2 YTD GAAP EPS Reconciliation Six Months Ended June 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.35 $0.28 $0.21 $0.23 $0.48 ($0.13) $1.43 Mark-to-market impact of economic hedging activities - - - - 0.09 0.01 0.10 Unrealized gains related to NDT funds - - -
Slide 37: Q2 YTD GAAP EPS Reconciliation (continued)
Q2 YTD GAAP EPS Reconciliation (continued) Six Months Ended June 30, 2018 ComEd PECO BGE PHI ExGen Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.34 $0.22 $0.18 $0.15 $0.32 ($0.06) $1.16 Mark-to-market impact of economic hedging activities - - - - 0.13 - 0.13 Unrealized losses related to NDT fu
Slide 38: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2019 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities; − Unrealized gains and losses from NDT funds to the extent not offset by contractual
Slide 39: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - GAAP Interest Expense +/- GAAP Current Income Tax (Expense)/Benefit + Nuclear Fuel Amortization +/- GAAP to Operating Adjustmen
Slide 40: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 41: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy EXC Q2 2019 Operating ROE Reconciliation ($M) PHI Utilities Consolidated EU Utilities Net Income (GAAP) $473 $1,539 $2,012 Operating Exclusions $25 $6 $31 Adjusted Operating Earnings $499 $1,545 $2,043 Average Equity $5,457 $14,665 $20,122 Operating ROE (Adjus
Slide 42: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2019 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $675 $1,325 $750 $1,050 $4,000 ($275) $7,525 Other cash from investing activities - - - - ($275) - ($275) Counterparty collate