Exelon Corporation · NASDAQ:EXC
Exelon — Barclays CEO Energy-Power Conference 2017
33 slides from Exelon's conference presentation, Sep 6, 2017
Slide 1: Barclays CEO Energy-Power Conference
Barclays CEO Energy-Power Conference September 6, 2017 Jack Thayer Senior Executive Vice President & Chief Financial Officer
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: Exelon: An Industry Leader
Exelon: An Industry Leader Note: All numbers reflect year-end 2016; revenue accounts for PHI as of the merger effective date of March 24, 2016 through December 31, 2016. 5 JP Morgan Energy Equity Conference
Slide 6: The Exelon Value Proposition
The Exelon Value Proposition Regulated Utility Growth with utility EPS rising 6-8% annually from 2017- 2020 and rate base growth of 6.5%, representing an expanding majority of earnings ExGen’s strong free cash generation will support utility growth while also reducing debt by ~$3B over the next
Slide 7: Exelon Utilities Overview
Exelon Utilities Overview Note: All numbers reflect year-end 2016; revenue number accounts for PHI revenue as of March 24, 2016 merger date. 7 JP Morgan Energy Equity Conference
Slide 8: Our Capital Plan Drives Stable Earnings Growth
Our Capital Plan Drives Stable Earnings Growth Capital Expenditures ($M) Rate Base ($B)(1) 5,275 5,175 +6.5% 40.8 38.6 4,775 4,825 36.6 1,375 34.4 10.5 1,400 9.9 31.7 1,350 1,425 9.4 8.9 775 8.3 800 7.8 7.4 775 750 7.0 6.6 925 6.2 950 6.9 6.5 975 875 6.1 5.7 5.3 2,200 2,025 15.5 1,775 13.2 14.0 14.8
Slide 9: Formulaic Mechanisms Cover Bulk of Rate Base Growth
Formulaic Mechanisms Cover Bulk of Rate Base Growth Rate Base Growth Breakout 2017-2020 ($B)(1) 2.1 9.0 Base Rate Case 0.8 Tracker/Formula Rate 1.3 2.3 2.0 0.9 2.1 1.1 9.0 2.3 2.8 6.7 (0.1) 0.7 2.1 2017E 2018E 2019E 2020E Total Of the approximately $9.0 billion of rate base growth Exelon Utilities f
Slide 10: Proven Track Record of Improving Operational Performance
Proven Track Record of Improving Operational Performance At CEG Merger (2012) 2015 Q2 2017 Operations Metric BGE ComEd PECO PHI BGE ComEd PECO PHI OSHA Recordable Rate Electric 2.5 Beta SAIFI (Outage Operations Frequency) 2.5 Beta CAIDI (Outage Duration) Customer Satisfaction N/A Customer Service Le
Slide 11: Exelon Utilities Distribution Rate Case Summary
Exelon Utilities Distribution Rate Case Summary Delmarva MD Order Pepco MD Filing Authorized Revenue Requirement Increase(1) $38.3M Requested Revenue Requirement Increase(1) $68.6M Authorized ROE 9.60% Requested ROE 10.10% Common Equity Ratio 49.10% Requested Common Equity Ratio 50.15% Order Receive
Slide 12: Trailing 12 Month ROE vs Allowed ROE
Trailing 12 Month ROE vs Allowed ROE Twelve Month Trailing Earned ROEs* Allowed ROE Earned ROE 10.7% 10.0% 9.9% 9.7% 9.7% 7.3% 7.3% 6.4% ACE Delmarva Pepco(1) Legacy EU Consolidated EU Note: Represents the period from 6/30/16 to 6/30/17 and reflects all lines of business (Electric Distribution, Gas
Slide 13: Utility Operating Earnings
Exelon Utilities EPS Growth of 6-8% to 2020 Exelon Utilities Operating Earnings 2017-2020 $2.10 $2.05 $2.00 $1.90 $1.90 $1.80 $1.80 $1.70 Utility Operating Earnings $1.70 $1.75 $1.60 $1.60 $1.50 $1.50 $1.40 $1.40 $0.00 2017E 2018E 2019E 2020E Rate base growth combined with PHI ROE improvement drives
Slide 14: Exelon Generation Overview
Exelon Generation Overview Note: All numbers reflect year-end 2016 14 JP Morgan Energy Equity Conference
Slide 15: Best in Class Performance at ExGen and Constellation
Best in Class Performance at ExGen and Constellation •Continued best in class performance across our Nuclear fleet: o Q2 Nuclear Capacity Factor: 90.9%(1) o Q2 average refueling outage duration of 24 days versus industry average of 36 days(2) o Shortest refueling outage duration record set for Nine
Slide 16: Key Market Policy Updates
Key Market Policy Updates New York ZEC Legal IL ZEC Legal DOE Report and PJM Challenges Challenges Reforms Federal Case: • Both cases dismissed and judgment DOE Energy Report • Case dismissed on July 25 and entered July 14 • On August 23, 2017, the DOE judgment entered on July 27 • “The ZEC program
Slide 17: ExGen's Strong Free Cash Flow Supports Utility Growth and Debt Reduction
ExGen’s Strong Free Cash Flow Supports Utility Growth and Debt Reduction 2017-2020 Exelon Generation Free Cash Flow* and Uses of Cash ($B) ~$6.8 (~$1.3) ($2.3 - $2.7) ($2.8 - $3.2) Cumulative ExGen Committed ExGen Growth CapEx Utility Investment ExGen/HoldCo Debt Reduction FCF 2017-2020(1) Redeployi
Slide 18: 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 %*(1,4,6) ExGen Debt/EBITDA Ratio*(5,6) 25% 21% 4.0 18%-20% 20% 3.0x 3.0 2.9x 2.5x 15% S&P Threshold 2.0 10% Book Excluding Non-Recourse 5% 1.0 0% 0.0 2017 Target 2017 Target Credit Ratings by Operatin
Slide 19: Theoretical Dividend Affordability from Utility less HoldCo
Theoretical Dividend Affordability from Utility less HoldCo(1,2) 95% Utility Earnings Payout Ratio (less HoldCo) Midpoint of Payout Ratio Range 90% 85% 84% 81% 80% 79% 75% 75% 70% 65% 60% 2017 2018 2019 2020 Utility less HoldCo payout ratio falling consistently even as dividend grows (1) Chart is il
Slide 20: The Exelon Value Proposition
The Exelon Value Proposition Regulated Utility Growth with utility EPS rising 6-8% annually from 2017- 2020 and rate base growth of 6.5%, representing an expanding majority of earnings ExGen’s strong free cash generation will support utility growth while also reducing debt by ~$3B over the next
Slide 21: Exelon Generation Disclosures
Exelon Generation Disclosures June 30, 2017 21 JP Morgan Energy Equity Conference
Slide 22: Portfolio Management Strategy
Portfolio Management Strategy Strategic Policy Alignment Three-Year Ratable Hedging Bull / Bear Program •Aligns hedging program with •Ensure stability in near-term cash •Ability to exercise fundamental financial policies and financial flows and earnings market views to create value within outlook •D
Slide 23: Components of Gross Margin Categories
Components of Gross Margin Categories Gross margin from Gross margin linked to power production and sales other business activities Open Gross Capacity and ZEC MtM of “Power” New “Non Power” “Non Power” Margin Revenues Hedges(2) Business Executed New Business •Generation Gross •Expected capacity •Ma
Slide 24: ExGen Disclosures
ExGen Disclosures (1) Gross Margin Category ($M) 2017 2018 2019 (2,5) Open Gross Margin (including South, West & Canada hedged GM) $3,750 $4,000 $3,800 (2,5) Capacity and ZEC Revenues $1,850 $2,200 $2,050 (2,3) Mark-to-Market of Hedges $1,900 $550 $400 Power New Business / To Go $200 $850 $950 Non-P
Slide 25: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2017 2018 2019 (1) 203,500 200,700 202,500 Exp. Gen (GWh) Midwest 96,000 96,000 97,000 Mid-Atlantic (2,6) 60,500 60,300 58,500 ERCOT 20,400 20,700 21,600 New York (2,6) 14,600 15,400 16,600 New England 12,000 8,300 8,800 % of Expected Generation Hedged (3) 96%
Slide 26: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with Existing Hedges) 2017 2018 2019 Henry Hub Natural Gas ($/Mmbtu) + $1/Mmbtu $25 $240 $555 - $1/Mmbtu $30 $(220) $(540) NiHub ATC Energy Price + $5/MWh - $145 $300 - $5/MWh - $(145) $(295) PJM-W ATC Energy Price + $5/MWh -
Slide 27: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 10,000 9,500 Approximate Gross Margin* ($ million)(1,2,3) 9,000 $8,800 8,500 $8,450 $8,200 8,000 $8,050 7,500 $7,750 7,000 $6,850 6,500 6,000 2017 2018 2019 (1) Represents an approximate range of expected gross margin, taking into account hedges in place, betwe
Slide 28: Illustrative Example of Modeling Exelon Generation 2018 Gross Margin
Illustrative Example of Modeling Exelon Generation 2018 Gross Margin* South, West & Row Item Midwest Mid-Atlantic ERCOT New York New England Canada (A) Start with fleet-wide open gross margin $4 billion (B) Capacity and ZEC $2.2 billion (C) Expected Generation (TWh) 96.0 60.3 20.7 15.4 8.3 (D) Hedge
Slide 29: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2017 2018 2019 Revenue Net of Purchased Power and Fuel Expense*(2,3) $8,675 $8,725 $8,300 Non-cash amortization of intangible assets, net, related to $50 - - commodity contracts recorded at fair value at merger date Other Re
Slide 30: Appendix: Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 30 JP Morgan Energy Equity Conference
Slide 31: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1,2) (1,2) YE 2017 Exelon FFO Calculation ($M) YE 2017 Exelon Adjusted Debt Calculation ($M) GAAP Operating Income $3,450 Long-Term Debt (including current maturities) $32,025 Depreciation & Amortization $3,375 Short-Term Debt $1,225 EBITDA $6,825 + PPA Imputed Debt
Slide 32: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) (1) YE 2017 ExGen Net Debt Calculation ($M) YE 2017 ExGen Net Debt Calculation ($M) Long-Term Debt (including current maturities) $8,875 Long-Term Debt (including current maturities) $8,875 Short-Term Debt $375 Short-Term Debt $375 - Surplus Cash Adjustment ($300
Slide 33: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy Consolidated Operating ROE Reconciliation ($M)(1) ACE Delmarva Pepco EXC EU (1) Net Income (GAAP) $91 $127 $203 $1,132 $1,548 Operating Exclusions ($25) ($32) ($29) $186 $105 (1) Adjusted Operating Earnings $66 $95 $174 $1,318 $1,653 Average Equity $1,039 $1,3