Exelon Corporation · NASDAQ:EXC
Exelon — Investor Presentation (October 2019)
53 slides from Exelon's investor presentation, October 2019
Slide 1: Fall & Winter 2019 Investor Meetings
Fall & Winter 2019 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 212 TWH 32,500 Customerload Megawatts of $23B $51 In 2018, Exelon gave= | Being invested approx. $51 million served total power in utilities to chafitable and #1 generation through 2022 community causes ee Res capacity energy fi provider i ral in America Naum avs (Approx.y
Slide 6: Exelon is an Industry Leader
Exelon is an Industry Leader US Utility Customers (millions) 10.0 9.9 9.3 8.9 8.3 7.5 6.0 5.7 5.4 5.1 5.0 4.1 3.1 EXC PCG DUK SO SRE D FE XEL AEP EIX ED PEG ETR Total Capital Expenditures 2019-2021 ($B)(1) 31.3 24.0 22.6 19.8 19.7 16.6 14.0 13.6 12.7 12.1 11.7 10.0 8.7 DUK SO EXC(2) PCG AEP SRE D EI
Slide 7: Exelon is an Industry Leader (Cont'd)
Exelon is an Industry Leader (Cont’d) Total Generation Output (TWh)(1) 221.4 194.7 192.5 185.1 121.7 117.3 102.2 102.0 97.4 94.2 89.2 76.2 71.8 52.3 41.1 DUK EXC(3) SO NEE ETR DYN D AEP NRG CPN VST FE XEL PEG AEE Carbon Intensity (lb/MWh)(1) 1,520 1,557 1,563 1,619 1,376 1,425 1,238 945 1,034 641 79
Slide 8: 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 9: 2018 Business Priorities and Commitments
2018 Business Priorities and Commitments ✓ Maintain industry leading operational excellence • First Quartile SAIFI performance at all utilities and First Quartile CAIDI performance at BGE, ComEd and PHI • Record nuclear output of 159 TWhs, best ever average refueling days, and capacity factor of 94.
Slide 10: 2019 Business Priorities and Commitments
2019 Business Priorities and Commitments Maintain industry leading operational excellence Meet or exceed our financial commitments Effectively deploy ~$5.3B of utility capex Advocate for policies to enable the utility of the future Advance PJM energy market price formation reforms Preserve authority
Slide 11: Exelon Utilities Overview
Exelon Utilities Overview 11
Slide 12: Operating Highlights
Operating Highlights At CEG Merger (2012) 2015 YTD 2019 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 Answer
Slide 13: 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 14: 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 $50 2019E
Slide 15: Our Capital Plan Drives Leading Rate Base Growth
Our Capital Plan Drives Leading Rate Base Growth Capital Expenditures ($M) Rate Base ($B)(1) 5,925 5,875 5,750 50.7 5,325 950 +7.8% 1,250 1,075 47.3 44.2 8.7 1,100 41.2 8.1 975 7.7 1,000 975 37.6 6.9 9.7 975 6.3 9.1 8.4 1,550 7.9 1,525 1,550 7.1 13.1 1,375 12.1 11.4 10.8 10.0 2,425 2,150 2,175 18.0
Slide 16: Mechanisms Cover Bulk of Rate Base Growth
Mechanisms Cover Bulk of Rate Base Growth Rate Base Growth Breakout 2019–2022 ($B) 3.5 13.1 Base Rate Case 1.1 Tracker/Formula Rate 2.4 4.8 3.0 1.2 1.9 3.0 1.1 1.9 3.6 8.3 1.4 2.1 2019E 2020E 2021E 2022E Total Of the ~$13.1B of rate base growth Exelon Utilities forecasts over the next 4 years, ~63%
Slide 17: Utility Adjusted Operating Earnings
Exelon Utilities EPS* Growth of 6-8% to 2022 Exelon Utilities Operating Earnings* $2.50 $2.45 $2.40 $2.30 $2.25 $2.20 $2.15 Utility Adjusted Operating Earnings* $2.15 $2.10 $2.05 $2.00 $1.90 $1.95 $1.80 $1.85 $1.80 $1.70 $1.74 $1.75 $1.60 $1.50 $1.50 $0.00 2018A 2019E 2020E 2021E 2022E Rate base gro
Slide 18: Exelon Generation Overview
Exelon Generation Overview 18
Slide 19: Constellation Overview
Constellation Overview 2,400 Employees ———_ =+#1 Retail N= Electricity 1.6 TCE A= inthe U.S E 8 Mi i Among the Gas Delivered Approxj= —top 10 largest as providers in Customers Served le i S. . In 2018, procured 8 million RECs for customers, \ BP: enabling them to avoidjaAy— approximately A \ .6 mill
Slide 20: Best in Class at ExGen and Constellation
Best in Class at ExGen and Constellation Exelon Generation Operational Metrics Constellation Metrics • Continued best in class performance across our Nuclear fleet:(1) 78% retail power 30% power new customer renewal − Capacity factor for Exelon (owned and customer win rate rate operated units) was 9
Slide 21: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin* Update September 30, 2019 Change from June 30, 2019 (1) Gross Margin Category ($M) 2019 2020 2021 2019 2020 2021 Open Gross Margin*(2,5) $3,800 $4,000 $3,550 $200 $450 $250 (including South, West, New England, Canada hedged gross margin) Capacity and ZEC Revenues(2,5
Slide 22: Capacity Market: PJM
Capacity Market: PJM ComEd Cleared Volumes (MW) EMAAC Cleared Volumes (MW) 9,950 9,975 8,650 8,075 7,450 7,575 6,975 6,675 5,800 6,025 5,175 3,975 16/17 17/18 18/19 19/20 20/21 21/22 16/17 17/18 18/19 19/20 20/21 21/22 Auction Year Auction Year SWMAAC Cleared Volumes (MW) MAAC, BGE, and Rest of RTO
Slide 23: Driving Costs and Capital Out of the Generation Business
Driving Costs and Capital Out of the Generation Business Adjusted O&M* ($M)(1) Capital Expenditures ($M)(1,2,3) 1,900 1,925 -1.0% 4,325 150 200 1,750 4,250 4,200 4,200 150 1,525 125 900 900 775 625 875 825 825 775 2019E 2020E 2021E 2022E 2019E 2020E 2021E 2022E Committed Growth Nuclear Fuel Base Cos
Slide 24: Historical Nuclear Capital Investment
Historical Nuclear Capital Investment Nuclear Non-Fuel Capital Expenditures(1) ($M) Nuclear Baseline CAGR Cancelled Growth Fukushima Growth(4) Nuclear Baseline (excluding Fuel) (2,3) 1,000 975 -1.2% 50 50 925 825 850 775 25 150 325 250 175 175 650 50 25 675 25 100 175 25 600 600 550 550 50 75 625 65
Slide 25: Financial Overview
Financial Overview 25 = = Exelon.
Slide 26: 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 27: 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 28: 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 $125M in 2019 (Q3 2016 Earnings Call) Cos
Slide 29: ExGen's Strong Available Cash Flow Supports Utility Growth and Debt Reduction
ExGen’s Strong Available Cash Flow* Supports Utility Growth and Debt Reduction 2019-2022 Exelon Generation Available Cash*(1) and Uses of Cash ($B) ~$7.8 ~($0.6) ($4.0-$4.4) ($0.3-$0.5) ($2.2-$2.8) ExGen Cumulative Committed ExGen Utility Investment External Dividend Debt Reduction Available Cash* G
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 %*(1,2) 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 31: 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 $1.31 2017A 2018A 2019E 2020E Assuming a steady 70% payout ratio on Utility less HoldCo earnings, ExGen’s contribution to th
Slide 32: Exelon Recognition and Partnerships
Exelon Recognition and Partnerships SUSTAINABILITY DIVERSITY & INCLUSION Sustainability Diversity and Inclusion Dow Jones Sustainability Index HeforShe Exelon named to Dow Jones Sustainability Index for 13th consecutive Exelon joined U.N. Women’s HeForShe campaign, which is focused on year. gender e
Slide 33: Exelon is Ideally Situated to Help Meet Climate Goals
Exelon is Ideally Situated to Help Meet Climate Goals Deliberately Built Clean Fleet Carbon Reduction Goals Exelon Generation is the largest zero-carbon generator Despite having the lowest carbon intensive – producing 1 out of every 9 zero-carbon MWhs in the generation, we have set a goal of an US –
Slide 34: Appendix
Appendix 34 = = Exelon.
Slide 35: 2019 Projected Sources and Uses of Cash
2019 Projected Sources and Uses of Cash Total Cash ($M)(1) BGE ComEd PECO PHI ExGen Corp(8) Exelon Utilities Balance (1) All amounts rounded to the nearest $25M. Figures may not add due to Beginning Cash Balance(2) 1,825 rounding. Adjusted Cash Flow from Operations (2) 750 1,375 775 1,025 3,925 3,80
Slide 36: Exelon Debt Maturity Profile
Exelon Debt Maturity Profile(1) As of 12/31/18 ($M) LT Debt Balances (as of 12/31/18) (1,2) BGE 2.9B 500 ComEd 8.3B PECO 3.3B PHI 6.3B ExGen recourse 6.7B ExGen non-recourse 2.1B 910 HoldCo 6.3B Consolidated 35.8B 2,512 1,023 1,225 850 500 600 700 1,189 175 1,850 312 1,430 1,400 1,150 997 975 900 90
Slide 37: EPS Sensitivities
EPS Sensitivities* 2019E 2020E 2021E Henry Hub Natural Gas + $1/MMBtu $0.00 $0.12 $0.35 - $1/MMBtu ($0.01) ($0.11) ($0.33) ExGen EPS Impact* (1) NiHub ATC Energy Price + $5/MWh $0.00 $0.04 $0.16 - $5/MWh $0.00 ($0.04) ($0.16) PJM-W ATC Energy Price + $5/MWh $0.00 $0.01 $0.06 - $5/MWh $0.00 ($0.01) (
Slide 38: Exelon Generation Disclosures
Exelon Generation Disclosures Data as of September 30, 2019 These disclosures were presented on October 31, 2019, and are not being updated at this time 38
Slide 39: Portfolio Management Strategy
Portfolio Management Strategy Align Hedging & Financials Portfolio Management Over Time Exercising Market Views Establishing Minimum Hedge Targets % Hedged High End of Profit % Hedged Low End of Profit Purely ratable Capital Credit Rating Structure Actual hedge % Capital & Market views on timing, pr
Slide 40: Components of Gross Margin Categories
Components of Gross Margin* Categories Gross margin* from Gross margin* linked to power production and sales other business activities Open Gross Capacity and ZEC MtM of “Power” New “Non Power” “Non Power” Margin* Revenues Hedges(2) Business Executed New Business •Generation Gross •Expected capacity
Slide 41: ExGen Disclosures
ExGen Disclosures September 30, 2019 (1) Gross Margin Category ($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 $250 Power New Busin
Slide 42: ExGen Disclosures
ExGen Disclosures September 30, 2019 Generation and Hedges 2019 2020 2021 Exp. Gen (GWh)(1) 188,200 185,700 181,600 Midwest 97,500 96,500 95,600 (2,6) Mid-Atlantic 54,100 47,600 48,300 ERCOT 19,900 25,900 21,100 New York(2) 16,700 15,700 16,600 % of Expected Generation Hedged (3) 96%-99% 84%-87% 54%
Slide 43: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with existing hedges) 2019 2020 2021 Henry Hub Natural Gas ($/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 44: 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 45: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 45
Slide 46: 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 47: 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) $0.76 Mark-to-market impact of economic hedging activities - - - - (0.07) 0.01 (0.06) Unrealized gains rela
Slide 48: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2019 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities; − Unrealized gains and losses from NDT funds to the extent not offset by contractual
Slide 49: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - Interest Expense +/- Cash Taxes + Nuclear Fuel Amortization +/- Mark-to-Market Adjustments (Economic Hedges) +/- Other S&P Adju
Slide 50: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 51: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2019 Adjusted Cash from Ops Calculation ($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) - ($275) Counterparty collate
Slide 52: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy EXC Q3 2019 Operating TTM ROE Reconciliation ($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 $20,511 Operating TTM RO
Slide 53: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ExGen Adjusted O&M Reconciliation ($M)(1) 2019 2020 2021 2022 GAAP O&M $4,875 $4,925 $4,825 $4,850 Decommissioning(2) 200 50 50 50 Direct cost of sales incurred to generate revenues for certain Constellation and Power (250) (250) (250) (275) businesses(3) O&M for man