Slide 1: Earnings Conference Call Third Quarter 2019
Earnings Conference Call Third Quarter 2019 October 31, 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: Third Quarter Results
Third Quarter Results EPS Results Key Developments $0.92 • Named to Dow Jones Sustainability Index for 14th consecutive year $0.79 $0.36 • Launched $20 million Climate Change Investment ExGen $0.26 Initiative BGE $0.06 $0.06 • Constructive final Order received in Pepco PECO $0.14 $0.14 Maryland dist
Slide 6: 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 Q3 2019 Nuclear Capacity Factor: 95.5% Electric 2.5 B
Slide 7: Third Quarter Adjusted Operating Earnings Drivers
Third Quarter Adjusted Operating Earnings* Drivers Q3 2019 Adjusted Operating EPS* Results Q3 2019 vs. Guidance of $0.80 - $0.90 $0.92 • Adjusted (non-GAAP) operating earnings drivers versus guidance: ExGen $0.36 Exelon Utilities – Timing of O&M BGE $0.06 – Favorable weather PECO $0.14 Exelon Genera
Slide 8: Q3 2019 QTD Adjusted Operating Earnings Waterfall
Q3 2019 QTD Adjusted Operating Earnings* Waterfall $0.03 Distribution Rate Increases $0.03 Distribution and ($0.01) Unfavorable Weather and Load Transmission Rate Increases ($0.01) Income Taxes ($0.01) Other ($0.02) Other $0.92 $0.88 $0.03 ($0.01) $0.01 $0.01 ($0.01) $0.01 $0.01 Other $0.01 Distribu
Slide 9: Narrowing 2019 Guidance Range
Narrowing 2019 Guidance Range $3.00 - $3.30(1) $3.05 - $3.20(1) ExGen $1.20 - $1.30 $1.20 - $1.30 ExGen BGE $0.30 - $0.40 $0.30 - $0.40 BGE PHI $0.45 - $0.55 $0.45 - $0.55 PHI PECO $0.45 - $0.55 $0.45 - $0.55 PECO ComEd $0.70 - $0.80 $0.65 - $0.75 ComEd HoldCo ~($0.20) ~($0.20) HoldCo 2019 Initial G
Slide 10: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing Twelve Month Earned ROEs* Q3 2019: Trailing Twelve Month Earned ROEs* 12.0% Legacy Exelon Utilities Consolidated Exelon Utilities PHI Utilities 10.0% $30.3/10.4% $10.9/9.4% $41.2/10.1% 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 11: Exelon Utilities' Distribution Rate Case Updates
Exelon Utilities’ Distribution Rate Case Updates Rate Case Schedule and Key Terms Requested Revenue Expected Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun ROE / Requirement Order Equity Ratio Pepco MD 9.60% / (1) Electric FO $10.3M 50.46% Aug 12, 2019 8.91% / (1,2) ComEd RT EH IB RB FO ($16.9M) 47
Slide 12: Featured Utility Capital Investments
Featured Utility Capital Investments BGE’s Key Crossing Reliability Initiative • Forecasted project cost: − $232 million • In service date: − Overhead construction and removal of the existing underground circuit and terminal stations are expected to be completed by year-end 2023 (subject to regulato
Slide 13: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin* Update September 30, 2019 Change from June 30, 2019 (1) Gross Margin Category ($M) 2019 2020 2021 2019 2020 2021 Open Gross Margin*(2,5) $3,800 $4,000 $3,550 $200 $450 $250 (including South, West, New England, Canada hedged gross margin) Capacity and ZEC Revenues(2,5
Slide 14: Exelon is Committed to Managing its Costs
Exelon is Committed to Managing its Costs Since 2015 Exelon has announced more than $1B of cost reductions 2015 2016 2017 2018 2019 2020 2021 2022 Announced Cost Reductions $350M Cost Management Program by 2018 (2015 EEI) Cost Reductions of $100M in 2018 and $125M in 2019 (Q3 2016 Earnings Call) Cos
Slide 15: 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 %*(1,2) ExGen Debt/EBITDA Ratio*(4) 25% 19%-21% 4.0 20% 20% 3.0x S&P Threshold 3.0 2.5x 15% 2.0x 2.0 Book 10% Excluding Non-Recourse 5% 1.0 0% 0.0 2019 Target 2019 Target Credit Ratings by Operating Co
Slide 16: 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 17: Additional Disclosures
Additional Disclosures 17 Q3 2019 Earnings Release Slides
Slide 18: Q3 2019 YTD Adjusted Operating Earnings Waterfall
Q3 2019 YTD Adjusted Operating Earnings* Waterfall $0.07 Distribution Rate Increases $0.10 Distribution and Transmission ($0.01) Transmission Revenues Rate Increases ($0.05) Income Taxes $0.03 Decreased Storm Costs(1) ($0.01) Other ($0.01) Interest Expense ($0.02) Unfavorable Weather and Load ($0.01
Slide 19: 2019 Projected Sources and Uses of Cash
2019 Projected Sources and Uses of Cash Total Cash ($M)(1) BGE ComEd PECO PHI ExGen Corp(8) Exelon Utilities Balance (1) All amounts rounded to the nearest $25M. Figures may not add due to Beginning Cash Balance(2) 1,825 rounding. Adjusted Cash Flow from Operations (2) 750 1,375 775 1,025 3,925 3,80
Slide 20: Exelon Utilities
Exelon Utilities 20 Q3 2019 Earnings Release Slides
Slide 21: 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 22: 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 23: BGE Distribution Rate Case Filing
BGE Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. Case No. 9610 • Case originally filed on May 24, 2019 seeking an increase in electric and gas distribution revenues Test Year August 1, 2018 – July 31, 2019 • October 25, 2019, BGE filed a settlement Test Period agreement wi
Slide 24: Pepco DC (Electric) Distribution Rate Case Filing
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 25: Exelon Generation Disclosures
Exelon Generation Disclosures September 30, 2019 25 Q3 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
Slide 28: ExGen Disclosures
ExGen Disclosures September 30, 2019 (1) Gross Margin Category ($M) 2019 2020 2021 (2,5) Open Gross Margin (including South, West, New England & Canada hedged GM) $3,800 $4,000 $3,550 (2,5) Capacity and ZEC Revenues $2,050 $1,900 $1,850 (2,3) Mark-to-Market of Hedges $1,150 $400 $250 Power New Busin
Slide 29: ExGen Disclosures
ExGen Disclosures September 30, 2019 Generation and Hedges 2019 2020 2021 Exp. Gen (GWh)(1) 188,200 185,700 181,600 Midwest 97,500 96,500 95,600 (2,6) Mid-Atlantic 54,100 47,600 48,300 ERCOT 19,900 25,900 21,100 New York(2) 16,700 15,700 16,600 % of Expected Generation Hedged (3) 96%-99% 84%-87% 54%
Slide 30: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with existing hedges) 2019 2020 2021 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu - $155 $465 - $1/MMBtu $(10) $(150) $(440) NiHub ATC Energy Price + $5/MWh - $50 $210 - $5/MWh - $(50) $(210) PJM-W ATC Energy Price + $5/MWh - $1
Slide 31: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 9,000 8,500 8,000 Approximate Gross Margin* ($ million)(1) $7,700 7,500 $7,450 $7,400 $7,600 7,000 $7,100 6,500 $6,550 6,000 5,500 5,000 4,500 4,000 2019 2020 2021 (1) Represents an approximate range of expected gross margin*, taking into account hedges in plac
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 billion (B) Capacity and ZEC $1.9 billion (C) Expected Generation (TWh) 96.5 47.6 25.9 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 $7,725 $7,375 Other Revenues(4) $(150) $(200) $(200) Direct cost of sales incurred to generate revenues for certain $(275) $(225) $(275) Constellati
Slide 34: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 34 Q3 2019 Earnings Release Slides
Slide 35: Q3 QTD GAAP EPS Reconciliation
Q3 QTD GAAP EPS Reconciliation Three Months Ended September 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.21 $0.14 $0.06 $0.19 $0.26 ($0.07) $0.79 Mark-to-market impact of economic hedging activities - - - - (0.01) 0.01 - Unrealized gains related to NDT funds
Slide 36: Q3 QTD GAAP EPS Reconciliation (continued)
Q3 QTD GAAP EPS Reconciliation (continued) Three Months Ended September 30, 2018 ComEd PECO BGE PHI ExGen Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.20 $0.13 $0.06 $0.19 $0.24 ($0.07) $0.76 Mark-to-market impact of economic hedging activities - - - - (0.07) 0.01 (0.06) Unrealized gains rela
Slide 37: Q3 YTD GAAP EPS Reconciliation
Q3 YTD GAAP EPS Reconciliation Nine Months Ended September 30, 2019 ComEd PECO BGE PHI ExGen Other Exelon 2019 GAAP Earnings (Loss) Per Share $0.56 $0.42 $0.27 $0.42 $0.75 ($0.20) $2.22 Mark-to-market impact of economic hedging activities - - - - 0.08 0.02 0.10 Unrealized gains related to NDT funds
Slide 38: Q3 YTD GAAP EPS Reconciliation (continued)
Q3 YTD GAAP EPS Reconciliation (continued) Nine Months Ended September 30, 2018 ComEd PECO BGE PHI ExGen Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.54 $0.35 $0.25 $0.35 $0.56 ($0.13) $1.92 Mark-to-market impact of economic hedging activities - - - - 0.07 0.01 0.08 Unrealized losses related
Slide 39: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2019 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities; − Unrealized gains and losses from NDT funds to the extent not offset by contractual
Slide 40: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - Interest Expense +/- Cash Taxes + Nuclear Fuel Amortization +/- Mark-to-Market Adjustments (Economic Hedges) +/- Other S&P Adju
Slide 41: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 42: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy EXC Q3 2019 Operating TTM ROE Reconciliation ($M) PHI Utilities Consolidated EU Utilities Net Income (GAAP) $485 $1,551 $2,036 Operating Exclusions $27 $6 $33 Adjusted Operating Earnings $512 $1,557 $2,070 Average Equity $5,477 $15,034 $20,511 Operating TTM RO
Slide 43: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2019 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $750 $1,375 $775 $1,025 $3,675 ($350) $7,250 Other cash from investing activities - - - - ($275) - ($275) Counterparty collate