Exelon Corporation · NASDAQ:EXC
Exelon — Q2 2020 Earnings Presentation
50 slides from Exelon's earnings presentation, Aug 4, 2020
Slide 1: Earnings Conference Call Second Quarter 2020
Earnings Conference Call Second Quarter 2020 August 4, 2020
Slide 2: Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information This presentation contains certain written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties including among others those related to th
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: Second Quarter Results
Second Quarter Results Q2 2020 EPS Results(1) $0.55 • GAAP earnings were $0.53/share in $0.53 Q2 2020 vs. $0.50/share in Q2 2019 $0.26 • Adjusted operating earnings* were $0.55/share in Q2 2020 vs. ExGen $0.49 $0.60/share in Q2 2019, exceeding $0.04 our guidance range of $0.35- $0.05 $0.45/share $0.
Slide 6: Exelon's Continued Response to COVID-19
Exelon’s Continued Response to COVID-19 Safety and Well Being of Our Employees • New pandemic-related policies and practices incorporated into Management Model (e.g., pandemic personal protective equipment (PPE), Fit for Work, and contact tracing) • Piloting of temperature sensing, employee contact
Slide 7: Operating Highlights
Operating Highlights Exelon Utilities Operational Metrics Exelon Generation Operational Performance YTD 2020 (2) Operations Metric Exelon Nuclear Fleet BGE ComEd PECO PHI • Best in class performance across our Nuclear fleet: OSHA Recordable Rate ― Q2 2020 Nuclear Capacity Factor: 95.4% Electric 2.5
Slide 8: Exelon Generation: Leader in Zero-Carbon Electricity
Exelon Generation: Leader in Zero-Carbon Electricity Program Exelon produces 12% or 1 out of every 9 MWhs of Clean Electricity in the United States Largest U.S. generator of zero-carbon electricity Lowest carbon intensity among major (almost 2 times more than next largest producer) investor-owned ge
Slide 9: Second Quarter Adjusted Operating Earnings Drivers
Second Quarter Adjusted Operating Earnings* Drivers Q2 2020 Adjusted Operating EPS* Results Q2 2020 vs. Guidance of $0.35 - $0.45 $0.55 • Adjusted (non-GAAP) operating earnings drivers versus guidance: ExGen $0.26 Exelon Utilities – ComEd formula rate timing BGE $0.04 – Timing of O&M PECO $0.05 – St
Slide 10: Q2 2020 QTD Adjusted Operating Earnings Waterfall
Q2 2020 QTD Adjusted Operating Earnings* Waterfall ($0.04) Storm Costs(1) ($0.01) Credit Loss Expense(2) $0.01 Favorable Weather ($0.02) Other $0.60 $0.01 Other ($0.04) ($0.01) Credit Loss Expense(2) $0.55 ($0.06) $0.01 $0.05 ($0.01) ($0.01) ($0.02) Distribution Formula Rate Timing ($0.02) Other $0.
Slide 11: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing Twelve Month Earned ROEs* Exelon Utilities’ Consolidated Trailing Twelve Month Earned ROEs* 10.2% 10.2% 10.1% 10.0% 9.6% 9.6% 9.7% 9.4% 9.3% 9.4% 9.1% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Exelon Utilities’ Consolidated TTM
Slide 12: Exelon Utilities' Distribution Rate Case Updates
Exelon Utilities’ Distribution Rate Case Updates Rate Case Schedule and Key Terms Requested Revenue Expected Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar ROE / Requirement Order Equity Ratio DPL MD 9.60% / EH IB FO $11.7M(1) Jul 14, 2020 Electric 50.53% (1,2) Pepco DC $135.9M 9.70% / RT EH IB RB
Slide 13: Featured Utility Capital Investments
Featured Utility Capital Investments ACE’s Moss Mills – Moss Farm Transmission Line Rebuild • Forecasted project cost: − $69 million • In service date: − Rebuild to be completed in September 2021; Chestnut Neck substation to be retired and made Mobile-Ready in May 2022 • Project scope: − Rebuild ~15
Slide 14: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin* Update Change from June 30, 2020 March 31, 2020 Gross Margin Category ($M)(1) 2020 2021 2020 2021 Open Gross Margin*(2) $2,850 $3,550 - $200 (including South, West, New England, Canada hedged gross margin) Capacity and ZEC Revenues(2) $1,900 $1,800 - $(50) Mark-to-Ma
Slide 15: Constellation Business Update
Constellation Business UpdateBusiness Constellation (2) (1) COVID Load Impact(1) • • • - - - - • 15 40% 30% 20% 10% 0% shown areshown subject to change. Represents loadweekly trends throughthe end of meter June. intervalFinaldata is provided at lag, a and not availablefor potentiallyreflect customer
Slide 16: Maintaining Strong Investment Grade Credit Ratings
Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority Exelon S&P FFO/Debt %*(1) ExGen Debt/EBITDA Ratio*(2) 25% 4.0 19%-21% 20% 18% 3.0x 3.0 S&P Threshold 2.5x 15% 2.0x 2.0 Book 10% Excluding Non-Recourse 5% 1.0 0% 0.0 2020 Target 2020 Target 2020 Long-Term Financing Schedul
Slide 17: The Exelon Value Proposition
The Exelon Value Proposition ▪ Regulated Utility Growth targeting utility EPS rising 6-8% annually from 2019- 2023 and rate base growth of 7.3%, representing an expanding majority of earnings ▪ ExGen’s free cash generation will support utility growth, ExGen debt reduction, and the external dividend
Slide 18: Additional Disclosures
Additional Disclosures 18 Q2 2020 Earnings Release Slides
Slide 19: 2020 Adjusted Operating Earnings Guidance
2020 Adjusted Operating Earnings* Guidance $3.00 - $3.30(1) $2.80 - $3.10(2) ExGen $1.20 - $1.30 $1.10 - $1.20 BGE $0.30 - $0.40 $0.30 - $0.40 PECO $0.45 - $0.55 $0.40 - $0.50 PHI $0.50 - $0.60 $0.50 - $0.60 ComEd $0.65 - $0.75 $0.60 - $0.70 HoldCo ($0.20) ($0.20) 2020 Original Guidance 2020 Revised
Slide 20: Q2 2020 YTD Adjusted Operating Earnings Waterfall
Q2 2020 YTD Adjusted Operating Earnings* Waterfall (2) ($0.04) Storm Costs ($0.01) Unfavorable Weather ($0.03) Unfavorable Weather ($0.01) Credit Loss Expense(3) (3) ($0.01) Credit Loss Expense $0.02 Distribution and Transmission Rate Increases ($0.01) Other ($0.02) Other $1.47 ($0.02) $1.42 ($0.09)
Slide 21: Sensitivities
Sensitivities Utility Sensitivities Constellation Sensitivities Operating Net Operating Net (2) Balance of Year Sensitivities Income* ($M) Balance of Year Sensitivities Income* ($M) C&I Load Volumes (+/- 1%) +/- $4M C&I Load Volumes (+/- 1%) +/- $8M Residential Load Volumes (+/- 1%) +/- $4M Resident
Slide 22: 2020 Projected Sources and Uses of Cash
2020 Projected Sources and Uses of Cash Total Cash (1) All amounts rounded to the nearest ($M)(1) BGE ComEd PECO PHI ExGen Corp(9) Exelon $25M. Figures may not add due to Utilities Balance rounding. Beginning Cash Balance*(2) 1,500 (2) Gross of posted counterparty Adjusted Cash Flow from Operations(
Slide 23: Exelon Debt Maturity Profile
Exelon Debt Maturity Profile(1,2) As of 6/30/2020 LT Debt Balances (as of 6/30/20)(2) ($M) BGE 3.7B ComEd 9.7B PECO 3.9B PHI 6.9B ExGen recourse(3) 5.5B 910 ExGen non-recourse 1.9B HoldCo 7.4B Consolidated 39.0B 500 1,023 600 1,500 500 1,2251,200 900 850 600 2,150 1,190 175 1,550 1,430 1,400 1,250 1
Slide 24: Exelon Utilities
Exelon Utilities 24 Q2 2020 Earnings Release Slides
Slide 25: Delmarva MD (Electric) Distribution Rate Case Filing
Delmarva MD (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Case No. 9630 • December 5, 2019, Delmarva Power filed an application with the Maryland Public Service Test Year September 1, 2018 – August 31, 2019 Commission (MDPSC) seeking an increase in Test Period 12 months act
Slide 26: Pepco DC (Electric) Distribution Rate Case Filing Multi-Year Plan
Pepco DC (Electric) Distribution Rate Case Filing Multi-Year Plan Case Filing Details Notes Formal Case No. 1156 • May 30, 2019, Pepco DC filed a three year multi-year plan (MYP) request with the Public Test Year January 1 – December 31 Service Commission of the District of Columbia Test Period 2020
Slide 27: Delmarva DE (Gas) Distribution Rate Case Filing
Delmarva DE (Gas) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 20-0150 • February 21, 2020, Delmarva Power filed an application with the Delaware Public Service Test Year April 1, 2019 – March 31, 2020 Commission (DPSC) seeking an increase in gas Test Period 9 months actua
Slide 28: Delmarva DE (Electric) Distribution Rate Case Filing
Delmarva DE (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 20-0149 • March 6, 2020, Delmarva Power filed an application with the Delaware Public Service Test Year April 1, 2019 – March 31, 2020 Commission (DPSC) seeking an increase in Test Period 9 months actual +
Slide 29: ComEd Distribution Rate Case Filing
ComEd Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 20-0393 • April 16. 2020, ComEd filed its annual distribution formula rate update with the Illinois Test Year January 1, 2019 – December 31, 2019 Commerce Commission seeking a decrease to Test Period 2019 Actual Costs + 20
Slide 30: BGE Distribution Rate Case Filing Multi-Year Plan
BGE Distribution Rate Case Filing Multi-Year Plan Case Filing Details Notes Formal Case No. 9645 • May 15, 2020, BGE filed a three year multi-year plan (MYP) request with the Maryland Public Test Year January 1 – December 31 Service Commission (MDPSC) seeking an Test Period 2021, 2022, 2023 increase
Slide 31: Exelon Generation Disclosures June 30, 2020
Exelon Generation Disclosures June 30, 2020 31 Q2 2020 Earnings Release Slides
Slide 32: 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 Low End of Profit Purely ratable Capital Credit Rating Structure Actual hedge % % Hedged % Capital & Market views on timing,
Slide 33: Components of Gross Margin
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
Slide 34: ExGen Disclosures: Gross Margin
ExGen Disclosures June 30, 2020 Gross Margin Category ($M)(1) 2020 2021 Open Gross Margin (including South, West, New England & Canada hedged GM)(2) $2,850 $3,550 Capacity and ZEC Revenues(2) $1,900 $1,800 Mark-to-Market of Hedges(2,3) $1,600 $350 Power New Business / To Go $200 $600 Non-Power Margi
Slide 35: ExGen Disclosures: Generation and Hedges
ExGen Disclosures June 30, 2020 Generation and Hedges 2020 2021 Expected Generation (GWh)(1) 182,400 181,400 Midwest 97,600 95,500 Mid-Atlantic(2) 47,700 48,000 ERCOT 21,600 21,300 New York(2) 15,500 16,600 % of Expected Generation Hedged(3) 98%-101% 76%-79% Midwest 97%-100% 76%-79% Mid-Atlantic(2)
Slide 36: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities June 30, 2020 Gross Margin* Sensitivities (with existing hedges)(1,2) 2020 2021 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu $30 $330 - $1/MMBtu $(45) $(295) NiHub ATC Energy Price + $5/MWh $(20) $85 - $5/MWh $20 $(85) PJM-W ATC Energy Price + $5/MWh $(10) $40
Slide 37: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 8,500 8,000 (1) 7,500 $7,150 $7,050 7,000 $6,950 6,500 $6,550 6,000 5,500 Approximate Gross ($ Margin* million) Gross Approximate 5,000 4,500 2020 2021 (1) Represents an approximate range of expected gross margin*, taking into account hedges in place, between t
Slide 38: Illustrative Example of Modeling Exelon Generation 2021 Total Gross Margin
Illustrative Example of Modeling Exelon Generation 2021 Total Gross Margin* Row Item Midwest Mid-Atlantic ERCOT New York (A) Start with fleet-wide open gross margin $3.55 billion (B) Capacity and ZEC $1.8 billion (C) Expected Generation (TWh) 95.5 48.0 21.3 16.6 (D) Hedge % (assuming mid-point of ra
Slide 39: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2020 2021 Revenue Net of Purchased Power and Fuel Expense*(2,3) $7,375 $7,225 Other Revenues(4) $(150) $(150) Direct cost of sales incurred to generate revenues for certain $(225) $(275) Constellation and Power businesses To
Slide 40: Appendix: Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 40 Q2 2020 Earnings Release Slides
Slide 41: Q2 QTD GAAP EPS Reconciliation
Q2 QTD GAAP EPS Reconciliation Three Months Ended June 30, 2020 ComEd PECO BGE PHI ExGen Other Exelon 2020 GAAP Earnings (Loss) Per Share ($0.06) $0.04 $0.04 $0.10 $0.49 ($0.07) $0.53 Mark-to-market impact of economic hedging activities - - - - (0.06) 0.01 (0.05) Unrealized gains related to NDT fund
Slide 42: Q2 QTD GAAP EPS Reconciliation (continued)
Q2 QTD GAAP EPS Reconciliation (continued) Three Months Ended June 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.19 $0.10 $0.05 $0.11 $0.11 ($0.07) $0.50 Mark-to-market impact of economic hedging activities - - - - 0.07 - 0.07 Unrealized losses related to NDT
Slide 43: Q2 YTD GAAP EPS Reconciliation
Q2 YTD GAAP EPS Reconciliation Six Months Ended June 30, 2020 ComEd PECO BGE PHI ExGen Other Exelon 2020 GAAP Earnings (Loss) Per Share $0.11 $0.18 $0.22 $0.21 $0.53 ($0.13) $1.13 Mark-to-market impact of economic hedging activities - - - - (0.16) 0.01 (0.15) Unrealized losses related to NDT funds -
Slide 44: Q2 YTD GAAP EPS Reconciliation (continued)
Q2 YTD GAAP EPS Reconciliation (continued) Six Months Ended June 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.35 $0.28 $0.21 $0.23 $0.48 ($0.13) $1.43 Mark-to-market impact of economic hedging activities - - - - 0.09 0.01 0.10 Unrealized gains related to NDT
Slide 45: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2020 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities; − Unrealized gains and losses from NDT funds to the extent not offset by contractual
Slide 46: GAAP to Non-GAAP Reconciliations (FFO/Debt)
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - Interest Expense +/- Cash Taxes + Nuclear Fuel Amortization +/- Mark-to-Market Adjustments (Economic Hedges) +/- Other S&P Adju
Slide 47: GAAP to Non-GAAP Reconciliations (ExGen Debt/EBITDA)
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 48: GAAP to Non-GAAP Reconciliations (Operating TTM ROE)
GAAP to Non-GAAP Reconciliations Consolidated EU Operating TTM ROE Reconciliation ($M) Q2 2020 Q1 2020 Net Income (GAAP) $1,728 $2,060 Operating Exclusions $254 $31 Adjusted Operating Earnings $1,982 $2,091 Average Equity $21,885 $21,502 Operating (Non-GAAP) TTM ROE (Adjusted Operating Earnings/Aver
Slide 49: GAAP to Non-GAAP Reconciliations (Adjusted Cash from Ops)
GAAP to Non-GAAP Reconciliations 2020 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $625 $1,175 $650 $900 $4,775 ($375) $7,750 Other cash from investing activities - - - - ($250) - ($250) Counterparty collatera
Slide 50: GAAP to Non-GAAP Reconciliations (ExGen Adjusted O&M)
GAAP to Non-GAAP Reconciliations ExGen Adjusted O&M Reconciliation ($M)(1) 2020 2021 GAAP O&M $4,775 $4,750 Decommissioning(2) $75 $75 Direct cost of sales incurred to generate revenues for certain Constellation and Power businesses(3) ($225) ($275) O&M for managed plants that are partially owned ($