Exelon Corporation · NASDAQ:EXC
Exelon — Non-Deal Roadshow (May 2017)
49 slides from Exelon's roadshow presentation, May 2017
Slide 1: May 2017 Investor Meetings
May 2017 Investor Meetings
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 May 2017 Investor Meetings
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 ~$3B over the next
Slide 7: Exelon Utilities Overview
Exelon Utilities Overview Note: All numbers reflect year-end 2016; revenue number accounts for PHI revenue as of March 24, 2016 merger date. 7 May 2017 Investor Meetings
Slide 8: Exelon Utilities are an Industry Leader
Exelon Utilities are an Industry Leader US Utility Customers (millions) 10.0 9.8 9.2 8.9 6.8 6.0 5.5 5.4 5.1 5.0 4.9 4.8 4.2 3.1 EXC PCG SO DUK SRE FE XEL AEP EIX D NEE ED PEG ETR Total Capital Expenditures 2017-2019 ($B)(1) 30.9 25.5 22.1 18.0 17.3 14.3 12.0 11.1 10.9 10.4 10.2 6.9 DUK SO EXC(2) PC
Slide 9: 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 10: Proven Track Record of Improving Operational Performance
Proven Track Record of Improving Operational Performance At CEG Merger (2012) 2015 Q1 2017 Operations Metric BGE PECO ComEd PHI BGE PECO ComEd 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: 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 12: Trailing 12 Month ROE vs Allowed ROE
Trailing 12 Month ROE vs Allowed ROE Twelve Month Trailing Earned ROEs* Allowed ROE Earned ROE 10.8% 10.0% 9.9% 9.7% 9.9% 8.2% 7.2% 6.5% ACE Delmarva Pepco Legacy EU Consolidated EU Note: Represents the period from 3/31/16 to 3/31/17 and reflects all lines of business (Electric Distribution, Gas Dis
Slide 13: 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 14: 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 $0.00 2017E 2018E 2019E 2020E Rate base growth combined with PHI ROE improvement drives
Slide 15: Exelon Generation Overview
Exelon Generation Overview Note: All numbers reflect year-end 2016 15 May 2017 Investor Meetings
Slide 16: Constellation Overview
Constellation Overview Note: All numbers reflect year-end 2016 (1) As calculated based on the national average generation supply mix used in EPA eGRID2014. 16 May 2017 Investor Meetings
Slide 17: Best in Class at ExGen and Constellation in 2016
Best in Class at ExGen and Constellation in 2016 Exelon Generation Operational Metrics Constellation Metrics • Continued best in class performance across our Nuclear fleet: o Capacity Factor of 94.6% is the highest 77% retail power 28% power new ever for Exelon customer customer win renewal rate rat
Slide 18: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update March 31, 2017 Change from Dec 31, 2016 (1) Gross Margin Category ($M) 2017 2018 2019 2017 2018 2019 (2) Open Gross Margin $3,850 $4,150 $3,950 $(250) $(50) $(100) (including South, West, Canada hedged gross margin) (2) Capacity and ZEC Revenues $1,850 $2,250 $
Slide 19: Driving Cost and Capital Out of the Generation Business
Driving Cost and Capital Out of the Generation Business Adjusted O&M* ($M)(1,2) Capital Expenditures ($M)(1,3) -0.5% 2,850 4,850 4,725 4,725 4,775 325 525 575 625 850 2,075 1,975 175 1,850 125 125 950 900 925 850 4,525 4,200 4,150 4,150 1,050 1,000 925 875 2017E 2018E 2019E 2020E 2017E 2018E 2019E 2
Slide 20: Historical Nuclear Capital Investment
Historical Nuclear Capital Investment Nuclear Non-Fuel Capital Expenditures(1) ($M) Nuclear Baseline CAGR Cancelled Growth Fukushima -0.5% Growth(4) Nuclear Baseline (excluding Fuel) (2,3,5) 1,000 975 900 50 50 925 25 800 850 150 775 325 250 25 250 175 650 75 25 675 25 175 175 25 625 600 100 25 25 7
Slide 21: Update on Key Ongoing Items
Update on Key Ongoing Items New York ZEC Legal IL ZEC Legal Capacity Market Challenges Challenges Update • Hearings on motion to • Plaintiffs filed for a • Transition to 100% Capacity dismiss held on March 29 preliminary injunction on Performance could lead to • Currently awaiting decision; March 31
Slide 22: Summary of Recent Key Transactions
Summary of Recent Key Transactions Exelon Generation FitzPatrick Nuclear ExGen Texas Power Mystic 8 & 9 Renewables JV Station •3,476 MW ERCOT •No longer pursuing • $400M of pre-tax • Acquisition completed conventional power sale of assets proceeds from on March 31, 2017 portfolio consisting of •No i
Slide 23: Exelon's Policy Priorities
Exelon’s Policy Priorities 23 May 2017 Investor Meetings
Slide 24: Exelon Policy Priorities
Exelon Policy Priorities Modernize Utility Ratemaking to Ensure Appropriate Recovery Invest in infrastructure that provides customer benefit through grid resiliency and efficiency Ensure fair rate structures to support new technologies Regulatory Secure Proper Policies to Enable Innovative and p
Slide 25: Our Carbon Policy Principles
Our Carbon Policy Principles • Exelon believes in our nation’s ability to transition the generation fleet to a zero-carbon future while maintaining affordable and reliable electric service for consumers • For the foreseeable future, the most cost-effective carbon solution for our customers will be t
Slide 26: Financial Overview
Financial Overview 26 May 2017 Investor Meetings
Slide 27: Strong 1st Quarter Results
Strong 1st Quarter Results Q1 2017 EPS Results $1.07 • GAAP earnings were $1.07/share in Q1 2017 vs. $0.19/share in Q1 $0.46 2016 $0.65 $0.18 • Adjusted operating earnings* $0.13 were $0.65/share in Q1 2017 vs. $0.14 $0.68/share in Q1 2016, at the $0.15 top of our guidance range of $0.09 $0.14 $0.55
Slide 28: Reaffirming 2017 Adjusted Operating Earnings Guidance
Reaffirming 2017 Adjusted Operating Earnings* Guidance $2.68(1) $2.50 - $2.80(2) Key Year-Over-Year Drivers • ExGen: Lower realized energy prices, partially offset by NY and ExGen $1.27 IL ZEC revenues $1.05 - $1.15 ExGen • BGE: Higher D&A, partially offset by normalization of one time items and dis
Slide 29: ExGen's Strong Free Cash Flow Supports Utility Growth and Debt Reduction
ExGen’s Strong Free Cash Flow Supports Utility Growth and Debt Reduction 2017-2020 Exelon Generation Free Cash Flow* and Uses of Cash ($B) ~$6.8 (~$1.3) ($2.3 - $2.7) ($2.8 - $3.2) Cumulative ExGen Committed ExGen Growth CapEx Utility Investment ExGen/HoldCo Debt Reduction FCF 2017-2020(1) Redeployi
Slide 30: Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority
Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority Exelon S&P FFO/Debt %*(1,4) ExGen Debt/EBITDA Ratio*(5) 25% 21% 4.0 18%-20% 20% 3.2x 3.0x 3.0 2.6x 15% S&P Threshold 2.0 Book 10% Excluding Non-Recourse 5% 1.0 0% 0.0 2017 Target 2017 Target Credit Ratings by Operating Co
Slide 31: Theoretical Dividend Affordability from Utility less HoldCo
Theoretical Dividend Affordability from Utility less HoldCo(1,2) 95% Utility Earnings Payout Ratio (less HoldCo) Midpoint of Payout Ratio Range 90% 85% 84% 81% 80% 79% 75% 75% 70% 65% 60% 2017 2018 2019 2020 Utility less HoldCo payout ratio falling consistently even as dividend grows (1) Chart is il
Slide 32: Exelon Employees Support Their Communities
Exelon Employees Support Their Communities 32 May 2017 Investor Meetings
Slide 33: Exelon Generation Disclosures
Exelon Generation Disclosures March 31, 2017 33 May 2017 Investor Meetings
Slide 34: Portfolio Management Strategy
Portfolio Management Strategy Strategic Policy Alignment Three-Year Ratable Hedging Bull / Bear Program •Aligns hedging program with •Ensure stability in near-term cash •Ability to exercise fundamental financial policies and financial flows and earnings market views to create value within outlook •D
Slide 35: Components of Gross Margin Categories
Components of Gross Margin Categories Gross margin from Gross margin linked to power production and sales other business activities Open Gross Capacity and ZEC MtM of “Power” New “Non Power” “Non Power” Margin Revenues Hedges(2) Business Executed New Business •Generation Gross •Expected capacity •Ma
Slide 36: ExGen Disclosures
ExGen Disclosures (1) Gross Margin Category ($M) 2017 2018 2019 (2) Open Gross Margin (including South, West & Canada hedged GM) $3,850 $4,150 $3,950 (2) Capacity and ZEC Revenues $1,850 $2,250 $2,050 (2,3) Mark-to-Market of Hedges $1,600 $500 $400 Power New Business / To Go $400 $850 $950 Non-Power
Slide 37: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2017 2018 2019 (1) 203,400 208,700 212,200 Exp. Gen (GWh) Midwest 95,700 96,000 97,000 Mid-Atlantic (2,6) 60,300 60,400 60,100 ERCOT 21,000 28,500 29,500 New York (2) 14,600 15,400 16,600 New England 11,800 8,400 9,000 % of Expected Generation Hedged (3) 97%-1
Slide 38: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin Sensitivities (with Existing Hedges) 2017 2018 2019 Henry Hub Natural Gas ($/Mmbtu) + $1/Mmbtu $15 $285 $520 - $1/Mmbtu $60 $(270) $(490) NiHub ATC Energy Price + $5/MWh $10 $200 $335 - $5/MWh $(10) $(200) $(330) PJM-W ATC Energy Price + $5/M
Slide 39: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 10,000 9,500 $9,150 Approximate Gross Margin* ($ million)(1,2,3) 9,000 $8,900 8,500 $8,250 8,000 $8,000 7,500 $7,750 7,000 $6,800 6,500 6,000 2017 2018 2019 (1) Represents an approximate range of expected gross margin, taking into account hedges in place, betwe
Slide 40: 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 $4.15 billion (B) Capacity and ZEC $2.25 billion (C) Expected Generation (TWh) 96.0 60.4 28.5 15.4 8.4 (D) H
Slide 41: 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) $8,725 $8,875 $8,450 Non-cash amortization of intangible assets, net, related to $50 - - commodity contracts recorded at fair value at merger date Other Re
Slide 42: Appendix: Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 42 May 2017 Investor Meetings
Slide 43: 1Q YTD GAAP EPS Reconciliation
1Q YTD GAAP EPS Reconciliation Three Months Ended March 31, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 GAAP Earnings (Loss) Per Share $0.34 $0.13 $0.14 $0.11 $(0.34) $(0.18) $0.19 Mark-to-market impact of economic hedging activities (0.07) - - - - - (0.07) Unrealized gains related to NDT fund i
Slide 44: 1Q YTD GAAP EPS Reconciliation (continued)
1Q YTD GAAP EPS Reconciliation (continued) Three Months Ended March 31, 2017 ExGen ComEd PECO BGE PHI Other Exelon 2017 GAAP Earnings (Loss) Per Share $0.46 $0.15 $0.14 $0.13 $0.15 $0.04 $1.07 Mark-to-market impact of economic hedging activities 0.03 - - - - - 0.03 Unrealized gains related to NDT fu
Slide 45: GAAP to Operating Adjustments
GAAP to Operating Adjustments • Exelon’s 2017 adjusted (non-GAAP) operating earnings exclude the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains from NDT fund investments to the extent not offset by contractual accounting as describ
Slide 46: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1,2) (1,2) YE 2017 Exelon FFO Calculation ($M) YE 2017 Exelon Adjusted Debt Calculation ($M) GAAP Operating Income $4,300 Long-Term Debt (including current maturities) $32,650 Depreciation & Amortization $3,200 Short-Term Debt $1,575 EBITDA $7,500 + PPA Imputed Debt
Slide 47: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) (1) YE 2017 ExGen Net Debt Calculation ($M) YE 2017 ExGen Net Debt Calculation ($M) Long-Term Debt (including current maturities) $9,550 Long-Term Debt (including current maturities) $9,550 Short-Term Debt $650 Short-Term Debt $650 - Surplus Cash Adjustment ($375
Slide 48: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ExGen Adjusted O&M Reconciliation ($M)(1) 2017 2018 2019 2020 GAAP O&M $5,775 $5,525 $5,500 $5,575 Decommissioning(2) 25 50 50 50 Costs associated with early nuclear plant retirements - - - - Long-lived asset impairment costs - - - - Direct cost of sales incurred to
Slide 49: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy Consolidated Operating ROE Reconciliation ($M)(1) ACE Delmarva Pepco EXC EU (1) Net Income (GAAP) $87 $120 $208 $1,156 $1,571 Operating Exclusions ($24) ($31) ($28) $160 $77 (1) Adjusted Operating Earnings $63 $89 $180 $1,316 $1,648 Average Equity $970 $1,240