Exelon Corporation · NASDAQ:EXC
Exelon — Q3 2020 Earnings Presentation
47 slides from Exelon's earnings presentation, Nov 3, 2020
Slide 1: Earnings Conference Call Third Quarter 2020
Earnings Conference Call Third Quarter 2020 November 3, 2020
Slide 2: Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information This presentation contains certain written and oral 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 th
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: Third Quarter Results
Third Quarter Results Q3 2020 EPS Results(1) Q3 2020 Highlights/Key Developments $1.04 • Active summer storm season, including Tropical Storm Isaias $0.47 • Named 30 suppliers and professional services firms to Exelon $0.51 ExGen $0.05 Diversity and Inclusion Honor Roll BGE $0.05 $0.06 • Selected 10
Slide 6: Operating Highlights
Operating Highlights Exelon Utilities Operational Metrics Exelon Generation Operational Performance YTD 2020 (2) Operations Metric Exelon Nuclear Fleet BGE ComEd PECO PHI • Best in class performance across our Nuclear fleet: OSHA Recordable Rate ― Q3 2020 Nuclear Capacity Factor: 96.0% Electric 2.5
Slide 7: Third Quarter Adjusted Operating Earnings Drivers
Third Quarter Adjusted Operating Earnings* Drivers Q3 2020 Adjusted Operating EPS* Results Q3 2020 vs. Guidance of $0.80 - $0.90 $1.04 • Adjusted (non-GAAP) operating earnings drivers versus guidance: ExGen $0.47 Exelon Utilities – Favorable O&M and taxes BGE $0.06 – Earlier recognition of bad debt
Slide 8: Q3 2020 QTD Adjusted Operating Earnings Waterfall
Q3 2020 QTD Adjusted Operating Earnings* Waterfall $0.02 Distribution and Transmission Rate Increases ($0.01) Storm Costs(1) $0.01 Other $0.01 Favorable Weather $0.01 Other ($0.01) Storm Costs(1) $1.04 $0.01 $0.92 $0.11 ($0.01) $0.00 $0.00 $0.02 $0.05 Lower Operating and Maintenance Expense(2) ($0.0
Slide 9: Raising 2020 Adjusted Operating Earnings Guidance
Raising 2020 Adjusted Operating Earnings* Guidance $3.00 - $3.20(2) $2.80 - $3.10(1) $1.25 - $1.35 ExGen $1.10 - $1.20 BGE $0.30 - $0.40 $0.30 - $0.40 PECO $0.40 - $0.50 $0.40 - $0.50 PHI $0.50 - $0.60 $0.50 - $0.60 ComEd $0.60 - $0.70 $0.60 - $0.70 HoldCo ($0.20) ($0.20) 2020 Q1 Revised Guidance 20
Slide 10: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing Twelve Month Earned ROEs* Exelon Utilities’ Consolidated Trailing Twelve Month Earned ROEs* 10.2% 10.2% 10.1% 10.0% 9.6% 9.6% 9.7% 9.4% 9.3% 9.4% 9.1% 8.9% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Exelon Utilities’ Cons
Slide 11: Exelon Utilities' Distribution Rate Case Updates
Exelon Utilities’ Distribution Rate Case Updates Rate Case Schedule and Key Terms Requested Revenue Expected Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun ROE / Requirement Order Equity Ratio (1,2) 8.38% / ComEd RT EH IB RB FO ($13.6M) Dec 2020 48.16% (1,3) $228.1M 10.10% / BGE IT RT EH IB RB FO D
Slide 12: Featured Utility Capital Investments
Featured Utility Capital Investments Pepco’s Streetlight Modernization Project in Maryland • Forecasted project cost: − $53 million • In service date: − Expected installation in Q1 2022 – Q4 2026 • Project scope: − Conversion of ~66,000 Maryland streetlights to Smart LEDs and integration of a Centra
Slide 13: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin* Update Change from September 30, 2020 June 30, 2020 Gross Margin Category ($M)(1) 2020 2021 2020 2021 Open Gross Margin*(2,5) $2,750 $3,550 $(100) - (including South, West, New England, Canada hedged gross margin) Capacity and ZEC Revenues(2) $1,900 $1,800 - - Mark-t
Slide 14: 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) ExGen Debt/EBITDA Ratio*(2) 25% 4.0 19%-21% 20% 18% 3.0x S&P Threshold 3.0 15% 2.3x 1.9x 2.0 Book 10% Excluding Non-Recourse 5% 1.0 0% 0.0 2020 Target 2020 Target Credit Ratings by Operating Comp
Slide 15: The Exelon Value Proposition
The Exelon Value Proposition ▪ Regulated Utility Growth targeting utility EPS rising 6-8% annually from 2019- 2023 and rate base growth of 7.3%, representing an expanding majority of earnings ▪ ExGen’s free cash generation will support utility growth, ExGen debt reduction, and the external dividend
Slide 16: Additional Disclosures
Additional Disclosures 16 Q3 2020 Earnings Release Slides
Slide 17: Q3 2020 YTD Adjusted Operating Earnings Waterfall
Q3 2020 YTD Adjusted Operating Earnings* Waterfall ($0.01) Unfavorable Weather ($0.05) Storm Costs(2) ($0.01) Storm Costs(2) ($0.02) Unfavorable Weather ($0.02) Depreciation & Amortization $0.01 Other ($0.01) Depreciation & Amortization $0.05 Distribution and Transmission Rate Increases ($0.01) Othe
Slide 18: 2020 Projected Sources and Uses of Cash
2020 Projected Sources and Uses of Cash (1) All amounts rounded to the nearest Total Cash ($M)(1) BGE ComEd PECO PHI ExGen Corp(9) Exelon $25M. Figures may not sum due to Utilities Balance rounding. Beginning Cash Balance*(2) 1,500 (2) Gross of posted counterparty Adjusted Cash Flow from Operations(
Slide 19: Exelon Debt Maturity Profile
Exelon Debt Maturity Profile(1,2) As of 9/30/2020 LT Debt Balances (as of 9/30/20)(1,2) ($M) BGE 3.7B ComEd 9.2B PECO 3.9B PHI 7.0B ExGen recourse(3) 4.9B ExGen non-recourse 1.8B 910 HoldCo 7.4B Consolidated 38.0B 500 1,023 600 1,650 1,2251,200 900 850 600 2,150 1,190 175 1,550 1,430 1,400 1,250 1,2
Slide 20: Exelon Utilities
Exelon Utilities 20 Q3 2020 Earnings Release Slides
Slide 21: ComEd Distribution Rate Case Filing
ComEd Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 20-0393 • April 16, 2020, ComEd filed its annual distribution formula rate update with the Illinois Test Year January 1, 2019 – December 31, 2019 Commerce Commission seeking a decrease to Test Period 2019 Actual Costs + 20
Slide 22: BGE Distribution Rate Case Filing
BGE Distribution Rate Case Filing Multi-Year Plan Case Filing Details Notes Formal Case No. 9645 • May 15, 2020, BGE filed a three year multi-year plan (MYP) request with the Maryland Public Test Year January 1 – December 31 Service Commission (MDPSC) seeking an Test Period 2021, 2022, 2023 increase
Slide 23: Pepco DC Distribution Rate Case Filing
Pepco DC Distribution Rate Case Filing Multi-Year Plan Case Filing Details Notes Formal 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, 202
Slide 24: Delmarva DE (Gas) Distribution Rate Case Filing
Delmarva DE (Gas) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 20-0150 • February 21, 2020, Delmarva Power filed an application with the Delaware Public Service Test Year April 1, 2019 – March 31, 2020 Commission (DPSC) seeking an increase in gas Test Period 9 months actua
Slide 25: Delmarva DE (Electric) Distribution Rate Case Filing
Delmarva DE (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 20-0149 • March 6, 2020, Delmarva Power filed an application with the Delaware Public Service Test Year April 1, 2019 – March 31, 2020 Commission (DPSC) seeking an increase in Test Period 9 months actual +
Slide 26: Pepco MD Distribution Rate Case Filing
Pepco MD Distribution Rate Case Filing Multi-Year Plan Case Filing Details Notes Formal Case No. 9655 • October 26, 2020, Pepco MD filed a three-year multi-year plan (MYP) request with the Maryland Test Year April 1 – March 31 Public Service Commission (MDPSC) seeking an Test Period 2022, 2023, 2024
Slide 27: PECO (Gas) Distribution Rate Case Filing
PECO (Gas) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. R-2020-3018929 • On September 30, 2020, PECO filed a general base rate filing with the Pennsylvania Public Test Year July 1, 2021 – June 30, 2022 Utility Commission (PAPUC) seeking an increase Test Period 12 Months Bu
Slide 28: Exelon Generation Disclosures September 30, 2020
Exelon Generation Disclosures September 30, 2020 28 Q3 2020 Earnings Release Slides
Slide 29: 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 Low End of Profit Purely ratable Capital Credit Rating Structure Actual hedge % % Hedged % Capital & Market views on timing,
Slide 30: Components of Gross Margin
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
Slide 31: ExGen Disclosures: Gross Margin
ExGen Disclosures September 30, 2020 Gross Margin Category ($M)(1) 2020 2021 Open Gross Margin (including South, West, New England & Canada hedged GM)*(2,5) $2,750 $3,550 Capacity and ZEC Revenues(2) $1,900 $1,800 Mark-to-Market of Hedges(2,3) $1,850 $250 Power New Business / To Go $100 $550 Non-Pow
Slide 32: ExGen Disclosures: Generation and Hedges
ExGen Disclosures September 30, 2020 Generation and Hedges 2020 2021 Expected Generation (GWh)(1) 179,500 173,000 Midwest(6) 97,900 87,900 Mid-Atlantic(2) 47,900 47,900 ERCOT 18,100 20,600 New York(2) 15,600 16,600 % of Expected Generation Hedged(3) 97%-100% 87%-90% Midwest(6) 97%-100% 88%-91% Mid-A
Slide 33: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities September 30, 2020 Gross Margin* Sensitivities (with existing hedges)(1,2) 2020 2021 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu $40 $235 - $1/MMBtu $(35) $(170) NiHub ATC Energy Price + $5/MWh - $40 - $5/MWh - $(40) PJM-W ATC Energy Price + $5/MWh $5 $35 - $5
Slide 34: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 8,000 7,500 (1) $7,100 7,000 $6,950 $7,000 6,500 $6,400 6,000 Approximate Gross ($ Margin* million) Gross Approximate 5,500 5,000 2020 2021 (1) Represents an approximate range of expected gross margin*, taking into account hedges in place, between the 5th and 9
Slide 35: Illustrative Example of Modeling Exelon Generation 2021 Total Gross Margin
Illustrative Example of Modeling Exelon Generation 2021 Total Gross Margin* Row Item Midwest Mid-Atlantic ERCOT New York (A) Start with fleet-wide open gross margin* $3.55 billion (B) Capacity and ZEC $1.8 billion (C) Expected Generation (TWh) 87.9 47.9 20.6 16.6 (D) Hedge % (assuming mid-point of r
Slide 36: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2020 2021 Revenue Net of Purchased Power and Fuel Expense*(2,3) $7,450 $7,075 Other Revenues(4) $(175) $(150) Direct cost of sales incurred to generate revenues for certain $(225) $(275) Constellation and Power businesses To
Slide 37: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 37 Q3 2020 Earnings Release Slides
Slide 38: Q3 QTD GAAP EPS Reconciliation
Q3 QTD GAAP EPS Reconciliation Three Months Ended September 30, 2020 ComEd PECO BGE PHI ExGen Other Exelon 2020 GAAP Earnings (Loss) Per Share $0.20 $0.14 $0.05 $0.22 $0.05 ($0.16) $0.51 Mark-to-market impact of economic hedging activities - - - - (0.20) 0.01 (0.19) Unrealized gains related to NDT f
Slide 39: Q3 QTD GAAP EPS Reconciliation (continued)
Q3 QTD GAAP EPS Reconciliation (continued) Three Months Ended September 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.21 $0.14 $0.06 $0.19 $0.26 ($0.07) $0.79 Mark-to-market impact of economic hedging activities - - - - (0.01) 0.01 - Unrealized gains related t
Slide 40: Q3 YTD GAAP EPS Reconciliation
Q3 YTD GAAP EPS Reconciliation Nine Months Ended September 30, 2020 ComEd PECO BGE PHI ExGen Other Exelon 2020 GAAP Earnings (Loss) Per Share $0.31 $0.32 $0.28 $0.43 $0.58 ($0.28) $1.64 Mark-to-market impact of economic hedging activities - - - - (0.36) 0.02 (0.34) Unrealized losses related to NDT f
Slide 41: Q3 YTD GAAP EPS Reconciliation (continued)
Q3 YTD GAAP EPS Reconciliation (continued) Nine Months Ended September 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.56 $0.42 $0.27 $0.42 $0.75 ($0.20) $2.22 Mark-to-market impact of economic hedging activities - - - - 0.08 0.02 0.10 Unrealized gains related t
Slide 42: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2020 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities; − Unrealized gains and losses from NDT funds to the extent not offset by contractual
Slide 43: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - Interest Expense +/- Cash Taxes + Nuclear Fuel Amortization +/- Mark-to-Market Adjustments (Economic Hedges) +/- Other S&P Adju
Slide 44: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 45: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Consolidated EU Operating TTM ROE Reconciliation ($M) Q3 2020 Q2 2020 Q1 2020 Net Income (GAAP) 1,747 $1,728 $2,060 Operating Exclusions 243 $254 $31 Adjusted Operating Earnings 1,990 $1,982 $2,091 Average Equity 22,329 $21,885 $21,502 Operating (Non-GAAP) TTM ROE (A
Slide 46: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2020 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $800 $1,250 $850 $900 $2,425 ($350) $5,875 Other cash from investing activities - - - - ($250) - ($250) Counterparty collatera
Slide 47: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ExGen Adjusted O&M Reconciliation ($M)(1) 2020 2021 GAAP O&M $5,100 $4,700 Decommissioning(2) $75 $75 Byron, Dresden and Mystic 8/9 Retirements(3) ($425) ($25) Direct cost of sales incurred to generate revenues for certain Constellation and Power businesses(4) ($225)