Exelon Corporation · NASDAQ:EXC
Exelon — EEI Fall/Winter 2018 Investor Meetings
49 slides from Exelon's conference presentation, November 2018
Slide 1: Fall/Winter 2018 Investor Meetings
Fall/Winter 2018 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 2017 5
Slide 6: The Exelon Value Proposition
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 reducing debt by ~$3B over the next
Slide 7: 2018 Business Priorities and Commitments
2018 Business Priorities and Commitments Maintain industry leading operational excellence Effectively deploy ~$5.4B of 2018 utility capex Advance PJM power price formation changes in 2018 Prevail on legal challenges to the NY and IL ZEC programs Seek fair compensation for at-risk plants in NJ and PA
Slide 8: Key Updates
Key Updates Cost ZECReductions Updates FERC Capacity ZECS Order Market Reforms Committing to $200M in Seventh and Second Circuit Court FERC Capacity Market additional cost reductions with a of Appeals Uphold ZEC Programs: Proceeding: targeted run-rate date of 2021: • On September 13, the Seventh • O
Slide 9: Exelon Utilities Overview
Exelon Utilities Overview Note: All numbers reflect year-end 2017 9
Slide 10: Exelon Utilities are an Industry Leader
Exelon Utilities are an Industry Leader US Utility Customers (millions) 10.0 9.9 9.3 9.1 8.3 6.0 6.0 5.4 5.1 5.0 4.0 3.7 2.9 EXC PCG SO DUK SRE FE D AEP XEL EIX PEG ED ETR Total Capital Expenditures 2018-2020 ($B)(1) 31.0 23.0 21.7 18.1 17.7 13.7 13.0 12.3 11.5 11.1 10.9 10.2 3.6 DUK SO EXC(2) PCG A
Slide 11: Our Capital Plan Drives Leading Rate Base Growth
Our Capital Plan Drives Leading Rate Base Growth Capital Expenditures ($M) Rate Base ($B)(1) 5,400 +7.4% 46.0 5,225 5,150 43.5 5,100 40.7 1,500 37.8 12.0 1,400 1,500 1,500 11.3 34.6 10.6 9.9 800 9.2 8.6 850 825 825 8.0 7.6 7.1 1,000 6.6 8.0 1,050 1,000 7.6 1,100 6.9 6.4 5.7 2,125 16.6 17.4 1,725 1,8
Slide 12: Mechanisms Cover Bulk of Rate Base Growth
Mechanisms Cover Bulk of Rate Base Growth Rate Base Growth Breakout 2018-2021 ($B) 2.5 11.5 1.1 Base Rate Case Tracker/Formula Rate 1.5 3.4 2.8 1.0 1.8 2.9 1.1 11.5 1.8 8.0 3.2 0.2 3.0 2018E 2019E 2020E 2021E Total Of the approximately $11.5 billion of rate base growth Exelon Utilities forecasts ove
Slide 13: Operating Highlights
Operating Highlights At CEG Merger (2012) 2015 Q3 2018 Operations Metric BGE ComEd PECO PHI BGE ComEd PECO PHI OSHA Recordable Rate Electric 2.5 Beta SAIFI (Outage Operations Frequency)(1) 2.5 Beta CAIDI (Outage Duration) Customer Satisfaction N/A Customer Service Level % of Calls Operations Answere
Slide 14: Trailing Twelve Month Earned ROEs vs Allowed ROE
Trailing Twelve Month Earned ROEs* vs Allowed ROE Trailing Twelve Month Earned ROEs* Allowed ROE Q2 2018 TTM Earned ROE Q3 2018 TTM Earned ROE 9.9% 9.9% 9.7% 10.3% 10.2% 9.6% 9.4% 8.3% 7.7% 7.7% 7.7% 7.4% 5.4% ACE Delmarva Pepco Legacy Exelon Consolidated Utilities Exelon Utilities Note: Represents
Slide 15: Utility Adjusted Operating Earnings
Exelon Utilities EPS* Growth of 6-8% to 2021 Exelon Utilities Operating Earnings* 2018-2021 $2.20 $2.20 $2.10 $2.10 $2.00 $2.00 Utility Adjusted Operating Earnings* $1.90 $1.90 $1.80 $1.80 $1.80 $1.70 $1.70 $1.60 $1.50 $1.50 $0.00 2018E 2019E 2020E 2021E Rate base growth combined with PHI ROE improv
Slide 16: 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 (1,8) 8.69% / ComEd RT EH IB RB FO ($24.1M) Dec 2018 47.11% Delmarva (1,3) 9.70% / August 21, FO ($6.9M) E
Slide 17: Exelon Generation Overview
Exelon Generation Overview Note: All numbers reflect year-end 2017 (1) Capacity factor excludes impacts of Salem 17
Slide 18: Constellation Overview
Constellation Overview Note: All numbers reflect year-end 2017 (1) As calculated based on the national average generation supply mix used in EPA eGRID2014. 18
Slide 19: Best in Class at ExGen and Constellation
Best in Class at ExGen and Constellation Exelon Generation Operational Metrics Constellation Metrics • Continued best in class performance across our Nuclear fleet: − Capacity factor for Exelon owned and 74% retail power 24% power new operated units was 94.1%(1) customer renewal customer win rate ra
Slide 20: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update September 30, 2018 Change from June 30, 2018 Gross Margin Category ($M)(1) 2018 2019 2020 2018 2019 2020 (2,5) Open Gross Margin $4,800 $4,300 $3,900 $100 $250 $100 (including South, West, Canada hedged gross margin) (2,5,6) Capacity and ZEC Revenues $2,300 $2,
Slide 21: Capacity Market: PJM
Capacity Market: PJM ComEd Cleared Volumes (MW) EMAAC Cleared Volumes (MW) 9,950 9,975 8,650 8,075 7,450 7,575 6,975 6,675 5,800 6,025 5,175 3,975 16/17 17/18 18/19 19/20 20/21 21/22 16/17 17/18 18/19 19/20 20/21 21/22 Auction Year Auction Year SWMAAC Cleared Volumes (MW) MAAC, BGE, and Rest of RTO
Slide 22: Driving Costs and Capital Out of the Generation Business
Driving Costs and Capital Out of the Generation Business Adjusted O&M* ($M)(1,2) Capital Expenditures ($M)(1,3,4) 2,275 2,225 4,800 -3.7% 4,625 325 375 4,250 4,175 1,850 1,825 1,825 4,125 75 125 175 900 950 900 825 800 1,000 950 875 875 850 2017A 2018E 2019E 2020E 2021E 2017A 2018E 2019E 2020E 2021E
Slide 23: Historical Nuclear Capital Investment
Historical Nuclear Capital Investment Nuclear Non-Fuel Capital Expenditures(1) ($M) Nuclear Baseline CAGR Cancelled Growth Fukushima -0.8% Growth(4) Nuclear Baseline (excluding Fuel) (2,3) 1,000 975 900 50 50 925 25 825 850 25 150 775 325 250 175 250 175 650 50 25 650 25 175 600 600 50 100 25 575 75
Slide 24: Financial Overview
Financial Overview 24 = Exelon.
Slide 25: Raising Lower End of 2018 Guidance Range
Raising Lower End of 2018 Guidance Range $2.90 - $3.20(1) $3.05 - $3.20(1) ExGen $1.35 - $1.45 $1.35 - $1.45 ExGen BGE $0.25 - $0.35 $0.25 - $0.35 BGE PHI $0.40 - $0.50 $0.40 - $0.50 PHI PECO $0.40 - $0.50 $0.40 - $0.50 PECO ComEd $0.60 - $0.70 $0.65 - $0.75 ComEd HoldCo ~($0.20) ~($0.20) HoldCo 201
Slide 26: Cost Management is Integral to Our Business Strategy
Cost Management is Integral to Our Business Strategy ExGen and BSC Cost Reductions Since Constellation Merger 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 CEG Merger Synergies of $170M in 2012, $350M in 2013, Announced Cost Reductions and $500M Run-Rate beginning in 2014 CENG Service Agreement
Slide 27: ExGen's Strong Available Cash Flow Supports Utility Growth and Debt Reduction
ExGen’s Strong Available Cash Flow* Supports Utility Growth and Debt Reduction 2018-2021 Exelon Generation Available Cash Flow and Uses of Cash* ($B) ~$7.6 (~$0.7) ($3.3-$3.7) (~$0.4-$0.6) ($2.7-$3.3) ExGen Cumulative Committed ExGen Utility Investment External Dividend ExGen/HoldCo Available Cash G
Slide 28: 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% 22% 4.0 18%-20% 20% 3.0 3.0x 2.5x 15% S&P Threshold 2.0x 2.0 Book 10% Excluding Non-Recourse 5% 1.0 0% 0.0 2018 Target 2018 Target Credit Ratings by Operating Co
Slide 29: Raising Dividend Growth Rate to 5% Annually through 2020
Raising Dividend Growth Rate to 5% Annually through 2020 Dividends per Share(1) Implied Exelon Utilities less HoldCo(2) Dividend Implied ExGen(2) Dividend 5% $1.53 $1.45 $1.38 $1.31 2017A 2018E 2019E 2020E Assuming a steady 70% payout ratio on Utility less HoldCo earnings, ExGen’s contribution to th
Slide 30: Exelon Recognition and Partnerships
Exelon Recognition and Partnerships SUSTAINABILITY Sustainability DIVERSITY & INCLUSION Diversity and Inclusion Dow Jones Sustainability Index HeforShe Exelon named to Dow Jones Sustainability Index for 13th consecutive Exelon joined U.N. Women’s HeForShe campaign, which is focused on year. gender e
Slide 31: Climate Leadership Council - Founding Members
Climate Leadership Council - Founding Members Exelon is a founding member of the Climate Leadership Council (CLC) – an effort to promote a carbon fee-and-dividend program. The Four Pillars of a Carbon Dividends Plan: • Gradually Increasing Carbon Tax: Fee would be applied at the point where fossil f
Slide 32: Appendix
Appendix 32 = Exelon.
Slide 33: 2018 Projected Sources and Uses of Cash
2018 Projected Sources and Uses of Cash Total Exelon Cash (1) All amounts rounded to the nearest ($M)(1) BGE ComEd PECO PHI ExGen Corp(8) $25M. Figures may not add due to Utilities 2018E Balance rounding. Beginning Cash Balance* (2) 1,450 (2) Gross of posted counterparty Adjusted Cash Flow from Oper
Slide 34: Exelon Debt Maturity Profile
Exelon Debt Maturity Profile(1) As of 9/30/18 LT Debt Balances (as of 9/30/18) (1,2) ($M) 500 BGE 2.9B ComEd 8.3B PECO 3.3B PHI 6.1B ExGen recourse 6.7B 900 ExGen non-recourse 2.1B HoldCo 6.3B Consolidated 35.7B 910 1,150 1,225 1,200 2,512 850 500 600 2,050 1,189 175 312 1,430 1,400 1,275 1,023 900
Slide 35: EPS Sensitivities
EPS Sensitivities 2018 2019 2020 Henry Hub Natural Gas + $1/MMBtu ($0.01) $0.15 $0.34 ExGen EPS Impact* (1) - $1/MMBtu $0.02 ($0.11) ($0.30) NiHub ATC Energy Price + $5/MWh $0.00 $0.08 $0.20 - $5/MWh $0.00 ($0.08) ($0.20) PJM-W ATC Energy Price + $5/MWh ($0.00) $0.02 $0.07 - $5/MWh $0.00 $0.00 ($0.0
Slide 36: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing Twelve Month Earned ROEs* Q3 2018: Trailing Twelve Month Earned ROEs* 12.0% Legacy Exelon Utilities Consolidated Exelon Utilities 11.0% 10.0% Pepco 9.0% Delmarva $4.7/8.3% $2.9/7.7% $28.0/10.2% 8.0% $37.8/9.6% Earned ROE (%) 7.0% ACE $2.2/7.7% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0%
Slide 37: Exelon Generation Disclosures
Exelon Generation Disclosures Data as of September 30, 2018 These disclosures were presented on November 1, 2018, and are not being updated at this time 37
Slide 38: Portfolio Management Strategy
Portfolio Management Strategy Align Hedging & Financials Portfolio Management Over Time Exercising Market Views Establishing Minimum Hedge Targets % Hedged High End of Profit % Hedged Low End of Profit Purely ratable Capital Credit Rating Structure Actual hedge % Capital & Market views on timing, pr
Slide 39: ExGen Disclosures
ExGen Disclosures Gross Margin Category ($M)(1) 2018 2019 2020 (2,5) Open Gross Margin (including South, West & Canada hedged GM) $4,800 $4,300 $3,900 (2,5,6) Capacity and ZEC Revenues $2,300 $2,050 $1,900 (2,3) Mark-to-Market of Hedges $350 $250 $250 Power New Business / To Go $100 $550 $800 Non-Po
Slide 40: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2018 2019 2020 Exp. Gen (GWh)(1) 196,300 201,900 192,900 Midwest 96,600 97,000 96,500 (2,6) Mid-Atlantic 60,300 54,000 48,500 ERCOT 16,900 25,500 23,700 New York(2,6) 16,200 16,600 15,600 New England 6,300 8,800 8,600 % of Expected Generation Hedged (3) 98%-10
Slide 41: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with existing hedges) 2018 2019 2020 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu $(10) $190 $445 - $1/MMBtu $20 $(145) $(395) NiHub ATC Energy Price + $5/MWh - $100 $265 - $5/MWh - $(100) $(265) PJM-W ATC Energy Price + $5/MWh
Slide 42: Additional ExGen Modeling Data
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 $8,125 $7,800 Other Revenues(4) $(200) $(175) $(200) Direct cost of sales incurred to generate revenues for certain $(275) $(300) $(250) Constellati
Slide 43: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 43
Slide 44: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2018 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains and losses from NDT fund investments − Impairments of certain wind
Slide 45: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - GAAP Interest Expense +/- GAAP Current Income Tax (Expense)/Benefit + Nuclear Fuel Amortization +/- GAAP to Operating Adjustmen
Slide 46: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 47: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2018 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $750 $1,650 $650 $1,100 $4,250 $175 $8,600 Other cash from investing activities - - - - ($275) - ($275) Counterparty collatera
Slide 48: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy Consolidated Q3 2018 Operating ROE Reconciliation ($M) ACE Delmarva Pepco EXC EU Net Income (GAAP) $77 $103 $191 $1,407 $1,778 Operating Exclusions $5 $8 $24 $2 $40 Adjusted Operating Earnings $82 $111 $215 $1,409 $1,817 Average Equity $1,065 $1,434 $2,590 $13
Slide 49: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ExGen Adjusted O&M Reconciliation ($M)(1) 2017 2018 2019 2020 2021 GAAP O&M $6,350 $5,475 $4,925 $4,825 $4,750 Decommissioning(2) 25 50 50 50 50 TMI Retirement (100) - - - - EGTP Impairment (450) - - - - Oyster Creek Retirement(5) - (100) - - - Direct cost of sales i