Slide 1: Earnings Conference Call 1st Quarter 2019
Earnings Conference Call 1st Quarter 2019 May 2, 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: PHI Merger is Delivering on Its Promises
PHI Merger is Delivering on Its Promises Operational Performance •ACE: Frequency of outages reduced by 22%, restoration times improved by 17% •Delmarva: Frequency of outages reduced by 34%, restoration times improved by 2% •Pepco: Frequency of outages reduced by 30%, restoration times improved by 28
Slide 6: 1st Quarter Results
1st Quarter Results Q1 2019 EPS Results(1) $0.93 $0.87 • GAAP earnings were $0.93/share in Q1 2019 vs. $0.60/share in Q1 ExGen $0.37 $0.30 2018 • Adjusted operating earnings* were BGE $0.17 $0.17 $0.87/share in Q1 2019 vs. $0.96/share in Q1 2018, which was PECO $0.17 $0.17 above the midpoint of our
Slide 7: 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 Q1 2019 Nuclear Capacity Factor: 97.1% Electric 2.5 B
Slide 8: Key Policy Updates
Key Policy Updates Illinois Pennsylvania ZEC Litigation: ZEC Legislation (HB11/SB510): • On April 15, the U.S. Supreme Court denied certiorari • Bipartisan, bicameral legislation that amends the upholding the ZEC programs Pennsylvania Alternative Portfolio Standard (AEPS) to add a third tier for zer
Slide 9: Exelon is Ideally Situated to Help Meet Climate Goals
Exelon is Ideally Situated to Help Meet Climate Goals Deliberately Built Clean Fleet Carbon Reduction Goals Exelon Generation is the largest zero-carbon generator Despite being the lowest carbon intensive – producing 1 out of every 9 zero-carbon MWhs in the generation, we have set a goal of an US –
Slide 10: 1st Quarter Adjusted Operating Earnings Drivers
1st Quarter Adjusted Operating Earnings* Drivers Q1 2019 Adjusted Operating EPS* Results Q1 2019 vs. Guidance of $0.80 - $0.90 $0.87 • Adjusted (non-GAAP) operating ExGen $0.30 earnings drivers versus guidance: Exelon Utilities – Timing of O&M BGE $0.17 Exelon Generation PECO $0.17 – Timing of O&M $
Slide 11: Q1 2019 Adjusted Operating Earnings Waterfall
Q1 2019 Adjusted Operating Earnings* Waterfall $0.04 Distribution and Transmission Rate Increases $0.04 Decreased Storm Costs(1) $0.01 Decreased Storm Costs $0.02 Distribution Rate Increases ($0.01) Other $0.05 ($0.01) Interest Expense $0.04 ($0.19) ($0.03) Other $0.96 $0.05 ($0.01) $0.02 Distributi
Slide 12: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing Twelve Month Earned ROEs* Q1 2019: Trailing Twelve Month Earned ROEs* 12.0% Legacy Exelon Utilities Consolidated Exelon Utilities PHI Utilities 10.0% $30.4/10.5% $10.8/9.3% $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 13: Exelon Utilities' Distribution Rate Case Updates
Exelon Utilities’ Distribution Rate Case Updates Rate Case Schedule and Key Terms Requested Revenue Expected Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ROE / Requirement Order Equity Ratio BGE FO (2) 9.80% / $64.9M (2) Jan 4, 2019 Gas 52.85% (1) 9.60% / ACE(3) SA FO $70.0M Mar 13, 2019 49.94% P
Slide 14: Utility CapEx Update
Utility CapEx Update Pepco’s Harrison Substation Modernization • Forecasted project cost: − $190 million • In service date: − In service by end of Q4 2019; remediation and removal of temporary substation completed by Q4 2020 • Project scope: − Rebuild existing substation from a 56MVA (34/4kV & 34/13
Slide 15: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update March 31, 2019 Change from December 31, 2018 (1) Gross Margin Category ($M) 2019 2020 2021 2019 2020 2021 (2,5) Open Gross Margin $4,200 $4,100 $3,800 $(150) $50 $50 (including South, West, New England, Canada hedged gross margin) Capacity and ZEC Revenues(2,5)
Slide 16: 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% 19%-21% 4.0 20% 20% 3.0x S&P Threshold 3.0 15% 2.4x 2.0 1.9x 10% Book Excluding Non-Recourse 5% 1.0 0% 0.0 2019 Target 2019 Target Credit Ratings by Operating Co
Slide 17: 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 ~$2.5B over the n
Slide 18: Additional Disclosures
Additional Disclosures 18 Q1 2019 Earnings Release Slides
Slide 19: 2019 Projected Sources and Uses of Cash
2019 Projected Sources and Uses of Cash Total Cash ($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 650 1,400 725 1,025 3,825 4,000 (300) 7,
Slide 20: Exelon Utilities
Exelon Utilities 20 Q1 2019 Earnings Release Slides
Slide 21: BGE (Gas) Distribution Rate Case Filing
BGE (Gas) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. Case No. 9484 • Case filed on June 8, 2018 seeking an increase in gas distribution revenues only Test Year August 1, 2017 – July 31, 2018 • The increase is primarily driven by infrastructure Test Period investments sin
Slide 22: ACE Distribution Rate Case Filing
ACE Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. ER-18080925 • August 21, 2018, ACE filed a distribution base rate case with the New Jersey Board of Public Utilities Test Year January 1, 2018 – December 31, 2018 (BPU) to increase distribution base rates Test Period 12 mont
Slide 23: 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 24: 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 25: Exelon Generation Disclosures
Exelon Generation Disclosures March 31, 2019 25 Q1 2019 Earnings Release Slides
Slide 26: 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 27: 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 28: 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) $4,200 $4,100 $3,800 (2,5) Capacity and ZEC Revenues $2,050 $1,900 $1,850 (2,3) Mark-to-Market of Hedges $550 $250 $100 Power New Business / To Go $350 $650
Slide 29: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2019 2020 2021 (1) Exp. Gen (GWh) 191,400 184,400 180,000 Midwest 97,000 96,400 95,300 Mid-Atlantic(2,6) 53,900 48,100 48,500 ERCOT 23,800 24,200 19,600 (2) New York 16,700 15,700 16,600 (3) % of Expected Generation Hedged 90%-93% 64%-67% 38%-41% Midwest 90%-9
Slide 30: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with existing hedges) 2019 2020 2021 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu $90 $305 $485 - $1/MMBtu $(65) $(265) $(430) NiHub ATC Energy Price + $5/MWh $25 $155 $320 - $5/MWh $(20) $(155) $(320) PJM-W ATC Energy Price + $
Slide 31: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 9,000 8,500 Approximate Gross Margin* ($ million)(1) 8,000 $8,000 $7,800 $7,750 7,500 $7,450 7,000 $7,100 6,500 $6,650 6,000 2019 2020 2021 (1) Represents an approximate range of expected gross margin, taking into account hedges in place, between the 5th and 95
Slide 32: 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 $4.1 billion (B) Capacity and ZEC $1.9 billion (C) Expected Generation (TWh) 96.4 48.1 24.2 15.7 (D) Hedge %
Slide 33: 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 $7,825 $7,550 Other Revenues(4) $(175) $(175) $(150) Direct cost of sales incurred to generate revenues for certain $(250) $(250) $(250) Constellati
Slide 34: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 34 Q1 2019 Earnings Release Slides
Slide 35: Q1 QTD GAAP EPS Reconciliation
Q1 QTD GAAP EPS Reconciliation Three Months Ended March 31, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.16 $0.17 $0.17 $0.12 $0.37 $(0.06) $0.93 Mark-to-market impact of economic hedging activities - - - - 0.03 - 0.03 Unrealized gains related to NDT funds - - -
Slide 36: Q1 QTD GAAP EPS Reconciliation (continued)
Q1 QTD GAAP EPS Reconciliation (continued) Three Months Ended March 31, 2018 ComEd PECO BGE PHI ExGen Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.17 $0.12 $0.13 $0.07 $0.14 ($0.02) $0.60 Mark-to-market impact of economic hedging activities - - - - 0.20 - 0.20 Unrealized losses related to NDT
Slide 37: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2019 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities; − Unrealized gains and losses from NDT funds to the extent not offset by contractual
Slide 38: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - GAAP Interest Expense +/- GAAP Current Income Tax (Expense)/Benefit + Nuclear Fuel Amortization +/- GAAP to Operating Adjustmen
Slide 39: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 40: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy EXC Consolidated Q1 2019 Operating ROE Reconciliation ($M) PHI Utilities Utilities EU Net Income (GAAP) $454 $1,516 $1,970 Operating Exclusions $26 $7 $33 Adjusted Operating Earnings $479 $1,523 $2,003 Average Equity $5,171 $14,477 $19,648 Operating ROE (Adjus
Slide 41: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2019 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $650 $1,400 $725 $1,025 $4,200 ($300) $7,725 Other cash from investing activities - - - - ($275) - ($275) Counterparty collate