Exelon Corporation · NASDAQ:EXC
Exelon — Q1 2018 Earnings Presentation
44 slides from Exelon's earnings presentation, May 2, 2018
Slide 1: Earnings Conference Call 1st Quarter 2018
Earnings Conference Call 1st Quarter 2018 May 2, 2018
Slide 2: Cautionary Statements Regarding Forward-Looking Information
2 Q1 2018 Earnings Release Slides 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
Slide 3: Non-GAAP Financial Measures
3 Q1 2018 Earnings Release Slides 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-GA
Slide 4: Non-GAAP Financial Measures Continued
4 Q1 2018 Earnings Release Slides 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 m
Slide 5: 1st Quarter Results
5 Q1 2018 Earnings Release Slides 1st Quarter Results $0.17 $0.17 $0.12 $0.12 $0.07 $0.07 $0.13 $0.13 $0.14 $0.49 PECO PHI ComEd HoldCo BGE ExGen $0.96 ($0.02) Adjusted Operating Earnings* GAAP Earnings $0.60 ($0.02) Q1 2018 EPS Results(1,2) • GAAP earnings were $0.60/share in Q1 2018 vs. $1.06/shar
Slide 6: Operating Highlights
6 Q1 2018 Earnings Release Slides Operating Highlights Q1 Q2 Q3 Q4 (1) 2.5 Beta SAIFI is YE projection (2) Excludes Salem (3) Excludes EDF’s equity ownership share of the CENG Joint Venture Exelon Utilities Operational Metrics Exelon Generation Operational Performance • Continued best in class perfo
Slide 7: Our Scale Benefitted Customers Through Winter Storms
7 Q1 2018 Earnings Release Slides Our Scale Benefitted Customers Through Winter Storms Three Nor’easters – Riley, Quinn and Toby – in March 2018 were the most damaging storms to hit the mid-Atlantic in the last six years − Our East Cost utilities – ACE, BGE, DPL, Pepco and PECO – faced widespread
Slide 8: Tax Reform Yields Significant Customer Bill Savings
8 Q1 2018 Earnings Release Slides Tax Reform Yields Significant Customer Bill Savings $509M in Customer Savings • Pepco has filed a request with the DC & MD PSC to provide $70M in annual tax savings to customers • Pepco has filed settlements which include these savings as adjusted in its proposals t
Slide 9: ZEC & Policy Updates
9 Q1 2018 Earnings Release Slides ZEC & Policy Updates PJM Price Formation Illinois: • Oral arguments for the 7th Circuit occurred on January 3, 2018 – Judge requested supplemental briefings from parties • Supplemental briefings were filed on January 26, 2018 • Court issued order on February 21, 201
Slide 10: 1st Quarter Adjusted Operating Earnings Drivers
10 Q1 2018 Earnings Release Slides Note: Amounts may not sum due to rounding $0.17 $0.12 $0.07 $0.13 $0.49 Q1 2018 ExGen PHI BGE PECO ComEd HoldCo $0.96 ($0.02) Q1 2018 Adjusted Operating EPS* Results Exelon Utilities – Storm costs – ComEd ROE Exelon Generation – Favorable O&M – Generation performan
Slide 11: QTD Adjusted Operating Earnings Waterfall
11 Q1 2018 Earnings Release Slides QTD Adjusted Operating Earnings* Waterfall $0.96 $0.32 $0.64 PECO ComEd $0.02 ExGen(5) Corp PHI ($0.02) ($0.02) Q1 2018 $0.03 BGE ($0.01) Q1 2017(4) $0.24 Zero Emission Credit Revenue(1) $0.06 Capacity Pricing $0.05 Nuclear Outages(2) ($0.03) Market and Portfolio C
Slide 12: Trailing Twelve Month ROEs vs Allowed ROE
12 Q1 2018 Earnings Release Slides Trailing 12 Month ROEs* vs Allowed ROE Trailing Twelve Month Earned ROEs* 9.9% 9.9% 9.7% Consolidated Exelon Utilities Pepco Delmarva ACE Legacy Exelon Utilities Note: Represents the 12-month periods ending 3/31/2017 and 3/31/2018, respectively. ROEs* represent wei
Slide 13: Exelon Utilities' Distribution Rate Case Updates
13 Q1 2018 Earnings Release Slides Rate case filed Rebuttal testimony Initial briefs Final commission order Intervenor direct testimony Evidentiary hearings Reply briefs Settlement Agreement Exelon Utilities’ Distribution Rate Case Updates Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Revenue Requ
Slide 14: Utility CapEx Update
14 Q1 2018 Earnings Release Slides Utility CapEx Update ComEd’s New Substation to Meet Data Center Growth • Forecasted project cost: − $90 million • In service date: − Q3 2021 • Project scope: − New green-field substation serving transmission and distribution loads; project to add over 300 MW of add
Slide 15: Exelon Generation: Gross Margin Update
15 Q1 2018 Earnings Release Slides Exelon Generation: Gross Margin Update • Open Gross Margin is up in all years due to strengthening ERCOT spark spreads, partly offset by lower NiHub prices • Mark-to-Market of Hedges is down in all years due to higher prices, mostly offset by the execution of Power
Slide 16: Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority
16 Q1 2018 Earnings Release Slides Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority Current Ratings (2,3) ExCorp ExGen ComEd PECO BGE ACE DPL Pepco Moody’s Baa2 Baa2 A1 Aa3 A3 A3 A2 A2 S&P BBB- BBB A- A- A- A A A Fitch BBB BBB A A A- A- A A- (1) Due to ring-fencing, S&P
Slide 17: The Exelon Value Proposition
17 Q1 2018 Earnings Release Slides The Exelon Value Proposition Regulated Utility Growth with utility EPS rising 6-8% annually from 2017- 2021 and rate base growth of 7.4%, representing an expanding majority of earnings ExGen’s strong free cash generation will support utility growth while also r
Slide 18: Additional Disclosures
18 Q1 2018 Earnings Release Slides Additional Disclosures
Slide 19: 2018 Adjusted Operating Earnings Guidance
19 Q1 2018 Earnings Release Slides ($0.19) $0.62 $0.36 $0.45 $0.33 BGE ExGen HoldCo PHI ExGen $0.25 - $0.35 2017 Actual $1.03 $2.60(1) PECO BGE PHI ComEd PECO ComEd $2.90 - $3.20(2) 2018 Guidance ~($0.20) $1.35 - $1.45 $0.40 - $0.50 HoldCo $0.60 - $0.70 $0.40 - $0.50 2018 Adjusted Operating Earnings
Slide 20: 2018 Projected Sources and Uses of Cash
20 Q1 2018 Earnings Release Slides 2018 Projected Sources and Uses of Cash Consistent and reliable free cash flows Enable growth & value creation Supported by a strong balance sheet Strong balance sheet enables flexibility to raise and deploy capital for growth $1.4B of long-term debt at the utili
Slide 21: Exelon Utilities
21 Q1 2018 Earnings Release Slides Exelon Utilities
Slide 22: ComEd Distribution Rate Case Filing Details
22 Q1 2018 Earnings Release Slides Rate Case Filing Details Notes Docket No. 18-0808 • April 16, 2018, ComEd filed its annual Distribution formula rate update with the Illinois Commerce Commission seeking a decrease to distribution base rates • The decrease is primarily driven by an adjustment for f
Slide 23: Delmarva DE Electric Distribution Rate Case Filing
23 Q1 2018 Earnings Release Slides Rate Case Filing Details Notes Docket No. 17-0977 • August 17, 2017, Delmarva DE filed an application with Delaware Public Service Commission (DPSC) seeking an increase in electric distribution base rates • Size of ask is driven by continued investments in electric
Slide 24: Delmarva DE Gas Distribution Rate Case Filing
24 Q1 2018 Earnings Release Slides Rate Case Filing Details Notes Docket No. 17-0978 • August 17, 2017, Delmarva DE filed an application with Delaware Public Service Commission (DPSC) seeking an increase in gas distribution base rates • Size of ask is driven by continued investments in gas distribut
Slide 25: Pepco DC Rate Case Filing Details
25 Q1 2018 Earnings Release Slides Rate Case Filing Details Notes Docket No. 1150 & 1151 • December 19, 2017, Pepco DC filed an application with Public Service Commission of the District of Columbia (PSCDC) seeking an increase in electric distribution base rates • Size of ask is driven by continued
Slide 26: Pepco MD Rate Case Filing Details
26 Q1 2018 Earnings Release Slides Rate Case Filing Details Notes Docket No. 9472 • January 2, 2018, Pepco MD filed an application with Maryland Public Service Commission (MDPSC) seeking an increase in electric distribution base rates • Size of ask is driven by continued investments in electric dist
Slide 27: PECO Distribution Rate Case Filing
27 Q1 2018 Earnings Release Slides Rate Case Filing Details Notes Docket No. R-2018-3000164 • PECO filed an electric distribution base rate case on March 29, 2018 • Since January 1, 2016, through the Fully Projected Future Test Year (2019): − Relatively flat load growth − Operating expenses essentia
Slide 28: Exelon Generation Disclosures March 31, 2018
28 Q1 2018 Earnings Release Slides Exelon Generation Disclosures March 31, 2018
Slide 29: Portfolio Management Strategy
29 Q1 2018 Earnings Release Slides Portfolio Management Strategy Protect Balance Sheet Ensure Earnings Stability Create Value Exercising Market Views % H e d ge d Purely ratable Actual hedge % Market views on timing, product allocation and regional spreads reflected in actual hedge % High End of Pro
Slide 30: Components of Gross Margin Categories
30 Q1 2018 Earnings Release Slides Components of Gross Margin Categories Open Gross Margin •Generation Gross Margin at current market prices, including ancillary revenues, nuclear fuel amortization and fossils fuels expense •Power Purchase Agreement (PPA) Costs and Revenues •Provided at a consolidat
Slide 31: ExGen Disclosures
31 Q1 2018 Earnings Release Slides ExGen Disclosures (1) Gross margin categories rounded to nearest $50M (2) Excludes EDF’s equity ownership share of the CENG Joint Venture (3) Mark-to-Market of Hedges assumes mid-point of hedge percentages (4) Based on March 31, 2018, market conditions (5) Reflects
Slide 32: ExGen Disclosures
32 Q1 2018 Earnings Release Slides ExGen Disclosures (1) 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, wh
Slide 33: ExGen Hedged Gross Margin Sensitivities
33 Q1 2018 Earnings Release Slides ExGen Hedged Gross Margin* Sensitivities (1) Based on March 31, 2018, 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 sensitivitie
Slide 34: ExGen Hedged Gross Margin Upside/Risk
34 Q1 2018 Earnings Release Slides ExGen Hedged Gross Margin* Upside/Risk 6,000 6,500 7,000 7,500 8,000 8,500 9,000 2018 2019 2020 A p p ro xima te G ro ss Margin* ( $ m illion )( 1 ) $8,250 $7,900 $7,950 $7,200 (1) Represents an approximate range of expected gross margin, taking into account hedges
Slide 35: Illustrative Example of Modeling Gross Margin
35 Q1 2018 Earnings Release Slides Row Item Midwest Mid- Atlantic ERCOT New York New England South, West & Canada (A) Start with fleet-wide open gross margin (B) Capacity and ZEC (C) Expected Generation (TWh) 97.2 54.3 26.4 16.6 8.8 (D) Hedge % (assuming mid-point of range) 59.5% 75.5% 62.5% 74.5% 3
Slide 36: Additional ExGen Modeling Data
36 Q1 2018 Earnings Release Slides Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2018 2019 2020 Revenue Net of Purchased Power and Fuel Expense*(2,3) $8,525 $8,025 $7,700 Other Revenues(4) $(200) $(175) $(200) Direct cost of sales incurred to generate revenues for certa
Slide 37: Appendix Reconciliation of Non-GAAP Measures
37 Q1 2018 Earnings Release Slides Appendix Reconciliation of Non-GAAP Measures
Slide 38: Q1 QTD GAAP EPS Reconciliation
38 Q1 2018 Earnings Release Slides Q1 QTD 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. (1) Certain immaterial prior year amounts in the Registrants' Consolidated Statements of Operations and Com
Slide 39: Q1 QTD GAAP EPS Reconciliation (continued)
39 Q1 2018 Earnings Release Slides Q1 QTD GAAP EPS Reconciliation (continued) Three Months Ended March 31, 2018 ExGen ComEd PECO BGE PHI Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.14 $0.17 $0.12 $0.13 $0.07 ($0.02) $0.60 Mark-to-market impact of economic hedging activities 0.20 - - - - - 0.
Slide 40: Projected GAAP to Operating Adjustments
40 Q1 2018 Earnings Release Slides Projected GAAP to Operating Adjustments • Exelon’s projected 2018 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains and losses from NDT fund invest
Slide 41: YE 2018 Exelon FFO Calculation
41 Q1 2018 Earnings Release Slides YE 2018 Exelon FFO Calculation ($M) (1,2) GAAP Operating Income $3,525 Depreciation & Amortization $3,850 EBITDA $7,375 +/- Non-operating activities and nonrecurring items(3) $275 - Interest Expense ($1,400) + Current Income Tax (Expense)/Benefit $50 + Nuclear Fuel
Slide 42: YE 2018 ExGen Net Debt Calculation
42 Q1 2018 Earnings Release Slides YE 2018 ExGen Net Debt Calculation ($M) (1,2) Long-Term Debt (including current maturities) $8,850 Short-Term Debt $0 - Surplus Cash Adjustment ($900) = Net Debt (a) $7,950 YE 2018 Book Debt / EBITDA Net Debt (a) = 2.5x Operating EBITDA (b) (1) All amounts rounded
Slide 43: GAAP to Non-GAAP Reconciliations
43 Q1 2018 Earnings Release Slides GAAP to Non-GAAP Reconciliations (1) All amounts rounded to the nearest $25M. Items may not sum due to rounding. (2) Reflects earnings neutral O&M (3) Reflects the direct cost of sales of certain businesses, which are included in Total Gross Margin* Q1 2018 Operati
Slide 44: GAAP to Non-GAAP Reconciliations
44 Q1 2018 Earnings Release Slides GAAP to Non-GAAP Reconciliations 2018 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $675 $1,550 $625 $1,225 $4,075 $200 $8,325 Other cash from investing activities - - - - ($2