Exelon Corporation · NASDAQ:EXC
Exelon — Q3 2016 Earnings Presentation
42 slides from Exelon's earnings presentation, Oct 26, 2016
Slide 1: Earnings Conference Call 3rd Quarter 2016
Earnings Conference Call 3rd Quarter 2016 October 26, 2016 Exhibit 99.2
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 a
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: Strong 3rd Quarter Results
Refer to the Earnings Release Attachments for additional details and to the Appendix for a reconciliation of adjusted (non-GAAP) operating EPS to GAAP EPS Amounts may not add due to rounding $(0.03) Strong 3rd Quarter Results $0.53 Q3 EPS Results(1,2) GAAP earnings were $0.53/share in Q3 2016 vs. $0
Slide 6: Best in Class Operations
Best in Class Operations Exelon Generation Operational Metrics Continued best in class performance across our Nuclear fleet: Q3 Capacity Factor of 96.3% Most MWhs ever produced in a quarter No unplanned outages in Q3 Strong performance across our Fossil and Renewable fleet: Q3 Renewables energy capt
Slide 7: Exelon Utilities Distribution Rate Case Summary
Exelon Utilities Distribution Rate Case Summary ACE Electric Settlement Pepco MD Filing Requested Revenue Requirement Increase(1) $102.8M Requested ROE 10.60% Requested Common Equity Ratio 49.60% Order Expected 11/15/16 Delmarva DE Electric Filing Requested Revenue Requirement Increase(1) $62.8M Req
Slide 8: Status of New York and Illinois Nuclear Plants
Status of New York and Illinois Nuclear Plants (1) $350M is solely from implementation of CES program and does not include additional cash benefits from CENG loan repayment and special distribution (2) Impacts based on February 29, 2016 pricing and excludes decommissioning costs (3) Estimates are su
Slide 9: Q3 Adjusted Operating EPS Results
Refer to the Earnings Release Attachments for additional details and to the Appendix for a reconciliation of adjusted (non-GAAP) operating EPS to GAAP EPS Amounts may not add due to rounding $(0.03) Q3 Adjusted Operating EPS Results(1,2) Exelon Utilities Favorable weather Reduced Storm Activity Lowe
Slide 10: 3rd Quarter Adjusted Operating Earnings Waterfall
3rd Quarter Adjusted Operating Earnings Waterfall (1,2) $0.91 ($0.06) Taxes, primarily DPAD ($0.02) Capacity prices ($0.01) Decommissioning ($0.01) Share differential ($0.03) Other $0.02 Rate Base $0.02 Weather ($0.01) ROE (US Treasuries) $0.02 Increased rates $0.02 Weather ($0.01) O&M Refer to the
Slide 11: YTD Adjusted Operating Earnings Waterfall
YTD Adjusted Operating Earnings Waterfall (1,2) $2.24 ($0.06) Increased D&A primarily driven by Decommissioning ($0.05) Share differential ($0.05) Taxes, primarily DPAD $0.06 Rate Base $0.03 Weather ($0.02) ROE (US Treasuries) $0.02 Other $0.06 Increased rates $0.02 Tax repairs ($0.03) Weather ($0.0
Slide 12: 2016 Adjusted Operating Earnings Guidance
2016 Adjusted Operating Earnings $2.55 - $2.75(1,2,3) ($0.10) – ($0.20) $0.55 - $0.65 $0.40 - $0.50 $0.15 - $0.25 $0.25 - $0.35 $1.20 - $1.30 $2.40 - $2.70(2,3) ($0.10) – ($0.20) $0.50 - $0.60 $0.40 - $0.50 $0.10 - $0.20 $0.25 - $0.35 $1.20 - $1.30 ComEd ROE based on 30-year average Treasury yield o
Slide 13: Exelon Utilities Distribution Rate Case Schedule
10/16 11/16 12/16 ComEd Electric Distribution Formula Rate 1/17 Pepco Electric Distribution Rates - DC Delmarva Electric Distribution Rates - DE Delmarva Electric Distribution Rates - MD Pepco Electric Distribution Rates - MD Exelon Utilities Distribution Rate Case Schedule 2/17 Final Order Expected
Slide 14: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update Gross margin categories rounded to nearest $50M Total Gross Margin (Non-GAAP) is defined as operating revenues less purchased power and fuel expense, excluding revenue related to decommissioning, gross receipts tax, Exelon Nuclear Partners, operating services a
Slide 15: Further Reducing O&M at ExGen
Further Reducing O&M at ExGen(1,2) Analyst Day Q3 2016(3) Finding additional savings at ExGen -- O&M down $100M in 2018 and $125M in 2019 O&M reflects the retirement of Clinton and Quad Cities. In addition, the run rate of D&A and TOTI declines by $100M with the retirements. O&M does not include cos
Slide 16: 2016 Projected Sources and Uses of Cash
2016 Projected Sources and Uses of Cash All amounts rounded to the nearest $25M. Figures may not add due to rounding. Gross of posted counterparty collateral Excludes counterparty collateral activity Adjusted Cash Flow from Operations (non-GAAP) primarily includes net cash flows from operating activ
Slide 17: The Exelon Value Proposition
The Exelon Value Proposition Regulated Utility Growth with utility EPS rising 7-9% annually from 2016-2020 and rate base growth of 6.1%, 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 5 yea
Slide 18: Exelon Generation Disclosures
Exelon Generation Disclosures September 30, 2016
Slide 19: Portfolio Management Strategy
Portfolio Management Strategy Protect Balance Sheet Ensure Earnings Stability Create Value Exercising Market Views % Hedged Purely ratable Actual hedge % Market views on timing, product allocation and regional spreads reflected in actual hedge % High End of Profit Low End of Profit % Hedged Open Gen
Slide 20: Components of Gross Margin Categories
Components of Gross Margin Categories Margins move from new business to MtM of hedges over the course of the year as sales are executed(5) Margins move from “Non power new business” to “Non power executed” over the course of the year Gross margin linked to power production and sales Gross margin fro
Slide 21: ExGen Disclosures
ExGen Disclosures Gross margin categories rounded to nearest $50M Total Gross Margin (Non-GAAP) is defined as operating revenues less purchased power and fuel expense, excluding revenue related to decommissioning, gross receipts tax, Exelon Nuclear Partners, operating services agreement with Fort Ca
Slide 22: ExGen Disclosures
ExGen Disclosures Expected generation is the volume of energy that best represents our commodity position in energy markets from owned or contracted for capacity based upon a simulated dispatch model that makes assumptions regarding future market conditions, which are calibrated to market quotes for
Slide 23: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin Sensitivities Based on September 30, 2016 market conditions and hedged position; Gas price sensitivities are based on an assumed gas-power relationship derived from an internal model that is updated periodically; Power price sensitivities are derived by adjusting the power
Slide 24: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin Upside/Risk Approximate Gross Margin ($ million)(1,2,3,4) $7,900 $7,800 $7,900 $7,150 Represents an approximate range of expected gross margin, taking into account hedges in place, between the 5th and 95th percent confidence levels assuming all unhedged supply is sold into
Slide 25: Illustrative Example of Modeling Exelon Generation 2017 Gross Margin
Illustrative Example of Modeling Exelon Generation 2017 Gross Margin Mark-to-market rounded to the nearest $5 million Total Gross Margin (Non-GAAP) is defined as operating revenues less purchased power and fuel expense, excluding revenue related to decommissioning, gross receipts tax, Exelon Nuclear
Slide 26: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2016 2017 2018 2019 Revenue Net of Purchased Power and Fuel Expense(2)(3) $8,625 $8,200 $7,975 $7,525 Other Revenues(4) $(300) $(300) $(300) $(300) Direct cost of sales incurred to generate revenues for certain Constellation
Slide 27: Additional Disclosures
Additional Disclosures 27 Q3 2016 Earnings Release Slides = Exelon
Slide 28: ComEd April 2016 Distribution Formula Rate
ComEd April 2016 Distribution Formula Rate Docket # 16-0259 Filing Year 2015 Calendar Year Actual Costs and 2016 Projected Net Plant Additions are used to set the rates for calendar year 2017. Rates currently in effect (docket 15-0287) for calendar year 2016 were based on 2014 actual costs and 2015
Slide 29: Pepco MD Electric Distribution Rate Case
Pepco MD Electric Distribution Rate Case Case No. 9418 Test Year 2015 Calendar Year Test Period 12 months actual Requested Common Equity Ratio 49.6% Requested Rate of Return ROE: 10.60%; ROR: 8.01% Proposed Rate Base (Adjusted) $1.7B Requested Revenue Requirement Increase (Updated on September 8, 20
Slide 30: DPL DE (Electric) Distribution Rate Case
DPL DE (Electric) Distribution Rate Case Docket # 16-0649 Test Year 2015 Calendar Year Test Period 12 months actual Requested Common Equity Ratio 49.4% Requested Rate of Return ROE: 10.60%; ROR: 7.19% Proposed Rate Base (Adjusted) $846M Requested Revenue Requirement Increase $62.8M(1)(2) Residential
Slide 31: DPL DE (Gas) Distribution Rate Case
DPL DE (Gas) Distribution Rate Case Docket # 16-0650 Test Year 2015 Calendar Year Test Period 12 months actual Requested Common Equity Ratio 49.4% Requested Rate of Return ROE: 10.60%; ROR: 7.19% Proposed Rate Base (Adjusted) $362M Requested Revenue Requirement Increase $21.5M(1)(2) Residential Tota
Slide 32: Pepco DC Distribution Rate Case
Pepco DC Distribution Rate Case Formal Case No. 1139 Test Year April 1, 2015 – March 31, 2016 Test Period 12 months actual Requested Common Equity Ratio 49.14% Requested Rate of Return ROE: 10.60%; ROR: 8.00% Proposed Rate Base (Adjusted) $1.7B Requested Revenue Requirement Increase (Updated on Octo
Slide 33: DPL MD Distribution Rate Case
DPL MD Distribution Rate Case Case No. 9424 Test Year April 1, 2015 – March 31, 2016 Test Period 12 months actual Requested Common Equity Ratio 49.1% Requested Rate of Return ROE: 10.60%; ROR: 7.24% Proposed Rate Base $727M Requested Revenue Requirement Increase (Updated on October 18, 2016) $57.0M
Slide 34: Exelon Utilities Load: BGE and PECO
BGE PECO Commercial & Industrial 2016 load growth is lower than 2015 driven by the impacts of energy efficiency partially offset by moderate customer growth Notes: Data is weather normalized and not adjusted for leap year. Source of economic outlook data is IHS and US Department of Labor (September
Slide 35: Exelon Utilities Load (cont'd)
Pepco Exelon Utilities Load (cont’d) Delmarva ACE 2016E 2015 2016 load is driven by the impacts of energy efficiency and distributed generation, partially offset by modest customer growth driven by improvements in economic conditions 2016 load is driven by the impacts of lower usage at significant i
Slide 36: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures
Slide 37: 3Q QTD GAAP EPS Reconciliation
3Q QTD GAAP EPS Reconciliation Three Months Ended September 30, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 GAAP Earnings (Loss) Per Share $0.25 $0.04 $0.13 $0.06 $0.18 ($0.13) $0.53 Mark-to-market impact of economic hedging activities (0.06) - - - - - (0.06) Unrealized gains related to NDT fund
Slide 38: 3Q YTD GAAP EPS Reconciliation
3Q YTD GAAP EPS Reconciliation NOTE: All amounts shown are per Exelon share and represent contributions to Exelon's EPS. Amounts may not add due to rounding. Nine Months Ended September 30, 2015 ExGen ComEd PECO BGE Other Exelon 2015 GAAP Earnings (Loss) Per Share $1.38 $0.38 $0.34 $0.23 $(0.11) $2.
Slide 39: 3Q YTD GAAP EPS Reconciliation (continued)
3Q YTD GAAP EPS Reconciliation (continued) Nine Months Ended September 30, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 GAAP Earnings (Loss) Per Share $0.58 $0.32 $0.37 $0.20 ($0.10) ($0.37) $1.00 Mark-to-market impact of economic hedging activities 0.07 - - - - - 0.07 Unrealized gains related to
Slide 40: GAAP to Operating Adjustments
GAAP to Operating Adjustments Exelon’s Q3 2016 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: Mark-to-market adjustments from economic hedging activities Unrealized gains and losses from NDT fund investments to the extent not offset by contractual accounting a
Slide 41: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2016 Adjusted Cash from Ops Calculation ($M)(1) ComEd PECO BGE PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $1,875 $775 $700 $800 $4,100 ($875) $7,375 Other cash from investing activities - - - ($25) ($125) - ($150) Intercompany recei
Slide 42: GAAP to Non-GAAP Reconciliations: ExGen Adjusted O&M
GAAP to Non-GAAP Reconciliations ExGen Adjusted O&M Reconciliation ($M)(1) 2016 2017 2018 2019 GAAP O&M $5,775 $5,225 $5,000 $4,975 Decommissioning(2) 125 200 125 50 Costs associated with early nuclear plant retirements (150) - - - Long-lived asset impairment costs (175) - - - Direct cost of sales i