October 30, 2013

 Exelon Announces Solid Third Quarter 2013 Results, Narrows Full Year Earnings Expectation 

 Financial performance exceeded quarterly guidance range 

 

CHICAGO (Oct. 30, 2013) — Exelon Corporation (NYSE: EXC) announced third quarter 2013 consolidated earnings as follows:

Third Quarter

2013

2012

Adjusted (non-GAAP) Operating Results:

Net Income (Loss) ($ millions)

$667

$658

Diluted Earnings per Share

$0.78

$0.77

GAAP Results:

Net Income (Loss) ($ millions)

$738

$296

Diluted Earnings per Share

$0.86

$0.35

“Exelon delivered strong financial performance during the third quarter and exceeded our quarterly guidance range, thanks to contributions from all of our operating units,” said Christopher M. Crane, Exelon’s president and CEO.  “Despite the impact of low energy margins, our earnings increased by $0.01 year-over-year, driven by investment in our business and strong operational performance at our generating plants. Based on our results through September and our outlook for the fourth quarter, we are narrowing our full-year operating earnings guidance range to $2.40 to $2.60 per share.”

Third Quarter Operating Results

As shown in the table above, Exelon’s adjusted (non-GAAP) operating earnings increased to $0.78 per share in the third quarter of 2013 from $0.77 per share in the third quarter of 2012. Earnings in third quarter 2013 primarily reflected the following positive factors:

• Increased capacity prices related to the Reliability Pricing Model (RPM) for the PJM Interconnection, LLC market (PJM);

• Merger O&M synergies;

• Increased nuclear volumes as a result of achieving a 94.8 percent capacity factor for the third quarter of 2013, compared with 90.7 percent for the third quarter of 2012;

• Increased distribution revenue:

At ComEd, due to higher allowed ROE and recovery of capital investment pursuant to the formula rate under the Energy Infrastructure Modernization Act (EIMA);

- At BGE, due to the 2012 rate case order for electric and natural gas;

• Decreased storms costs at BGE due to the derecho in the third quarter of 2012; and

• Decreased income taxes primarily from an increase in investment tax credit benefits related to the AVSR solar project.

These factors were offset by:

• Lower realized market prices for the sale of energy across all regions and higher nuclear fuel costs;

• Less favorable weather in the ComEd and PECO territories; and

• Increased depreciation and amortization expenses, primarily from an increase in capital expenditures across the operating companies.

Adjusted (non-GAAP) operating earnings for the third quarter of 2013 do not include the
following items (after tax) that were included in reported GAAP earnings:

(in millions)

(per diluted share)

Exelon Adjusted (non-GAAP) Operating Earnings

$667

$0.78

Mark-to-Market Impact of Economic Hedging Activities

148

0.17

Unrealized Losses Related to Nuclear

Decommissioning Trust (NDT) Fund Investments

24

0.03

Asset Retirement Obligation (6) (0.01)

Constellation Merger and Integration Costs

(26)

(0.03)

Amortization of Commodity Contract Intangibles

(41)

(0.05)

Long-Lived Asset Impairment

(28)

(0.03)

Exelon GAAP Net Income (Loss)

$738

$0.86

Adjusted (non-GAAP) operating earnings for the third quarter of 2012 do not include the
following items (after tax) that were included in reported GAAP earnings:

(in millions)

(per diluted share)

Exelon Adjusted (non-GAAP) Operating Earnings

$658

$0.77

Mark-to-Market Impact of Economic Hedging Activities

19

0.02

Unrealized Gains Related to Nuclear

Decommissioning Trust (NDT) Fund Investments

38

0.04

Plant Retirements and Divestitures

(193)

(0.22)

Asset Retirement Obligation (6) (0.01)

Constellation Merger and Integration Costs

(36)

(0.04)

Amortization of Commodity Contract Intangibles

(187)

(0.21)

Amortization of the Fair Value of Certain Debt

3

-

Exelon GAAP Net Income (Loss)

$296

$0.35

Third Quarter and Recent Highlights

 Nuclear Operations:  Generation’s nuclear fleet, including its owned output from the Salem Generating Station, produced 36,165 gigawatt-hours (GWh) in the third quarter of 2013, compared with 34,581 GWh in the third quarter of 2012. The output data excludes the units owned by Constellation Energy Nuclear Group LLC (CENG).  Excluding Salem and the units owned by CENG, the Exelon-operated nuclear plants achieved a 94.8 percent capacity factor for the third quarter of 2013, compared with 90.7 percent for the third quarter of 2012. The number of planned refueling outage days totaled 43 in the third quarter of 2013 and in the third quarter of 2012. There were five non-refueling outage days in the third quarter of 2013, compared with 40 days in the third quarter of 2012.

• Fossil and Renewables Operations:  The dispatch match rate for Generation’s fossil and hydro fleet was 99.1 percent in the third quarter of 2013, compared with 95.9 percent in the third quarter of 2012.  The performance in 2012 was driven by a higher rate of forced outages across the fleet. Energy capture for the wind and solar fleet was 92.9 percent in the third quarter of 2013, compared with 94.6 percent in the third quarter of 2012. Energy capture in the third quarter of 2013 was affected by curtailment and dispatch issues.

 Integration of Constellation Energy Nuclear Group: On July 30, 2013, Exelon announced that the three commercial nuclear power plants operated by Constellation Energy Nuclear Group (CENG) in New York and Maryland will be operationally integrated into the Exelon Generation nuclear fleet. Under the terms of the agreement, the CENG plant operating licenses will be transferred to Exelon; Exelon will integrate the CENG fleet under its management model; Exelon will lend $400 million to CENG to support a special dividend to EDF; and EDF will retain an option to sell its CENG stake to Exelon at fair market value between 2016 and 2022. Exelon believes it can achieve $50 to $70 million in synergies from this integration. This transaction is expected to close in the first half of 2014.

 Financing Activities:

o On Sept. 30, 2013, Exelon’s indirect subsidiary, Continental Wind, LLC, closed a non-recourse project financing of $613 million in 6.00 percent senior secured notes due Feb. 28, 2033. Continental Wind, LLC, will distribute the net proceeds to Generation for its general corporate purposes. Continental Wind, LLC, owns and operates a portfolio of wind farms in Idaho, Kansas, Michigan, Oregon, New Mexico and Texas with a net capacity of 667 megawatts.

o On Aug. 19, 2013, ComEd issued $350 million aggregate principal amount of its First Mortgage 4.60 percent Bonds, Series 114, due Aug. 15, 2043.

o On Sept. 23, 2013, PECO issued $300 million aggregate principal amount of its First and Refunding Mortgage Bonds, 1.20 percent Series due Oct. 15, 2016, and $250 million aggregate principal amount of its First and Refunding Mortgage Bonds, 4.80 percent Series due Oct. 15, 2043.

o On Aug. 10, 2013, Exelon, Generation, PECO and BGE extended the maturity of each of their unsecured revolving credit facilities with aggregate bank commitments of $500 million, $5.3 billion, $600 million and $600 million, respectively, for an additional year to Aug. 10, 2018.

 Hedging Update:  Exelon’s hedging program involves the hedging of commodity risk for Exelon’s expected generation, typically on a ratable basis over a three-year period.  Expected generation represents the amount of energy estimated to be generated or purchased through owned or contracted-for capacity.  The proportion of expected generation hedged as of Sept. 30, 2013, is 97 percent to 100 percent for 2013, 84 percent to 87 percent for 2014, and 48 percent to 51 percent for 2015. The primary objective of Exelon’s hedging program is to manage market risks and protect the value of its generation and its investment-grade balance sheet, while preserving its ability to participate in improving long-term market fundamentals.

Operating Company Results

Generation consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products, risk management services and natural gas exploration and production activities.

Third quarter 2013 GAAP net income was $490 million, compared with net income of $91 million in the third quarter of 2012. Adjusted (non-GAAP) operating earnings for the third quarter of 2013 and 2012 do not include various items (after tax) that were included in reported GAAP earnings.   A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is in the table below:

($ millions)

3Q13

3Q12

Generation Adjusted (non-GAAP) Operating Earnings

$411

$458

Mark-to-Market Impact of Economic Hedging Activities

151

9

Unrealized Losses Related to NDT Fund Investments

23

38

Plant Retirements and Divestitures

-

(193)

Asset Retirement Obligation (7) (6)

Constellation Merger and Integration Costs

(20)

(31)

Amortization of Commodity Contract Intangibles

(40)

(187)

Amortization of the Fair Value of Certain Debt

-

3

Long-Lived Asset Impairment

(28)

-

Generation GAAP Net Income (Loss)

$490

$91

Generation’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2013 decreased $47 million compared with the same quarter in 2012. This decrease primarily reflected:

• Lower realized market prices for the sale of energy across all regions and higher nuclear fuel costs and

• Increased depreciation and amortization expense due to ongoing capital expenditures.
These items were partially offset by favorable capacity pricing related to RPM for the PJM market, favorable O&M expense primarily driven by merger synergies and favorable income taxes driven by an increase in ITC benefits related to the AVSR solar project.

Generation’s average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $26.19 per megawatt-hour (MWh) in the third quarter of 2013, compared with $25.96 per MWh in the third quarter of 2012.

ComEd consists of electricity transmission and distribution operations in northern Illinois. 

ComEd recorded GAAP net income of $126 million in the third quarter of 2013, compared with net income of $90 million in the third quarter of 2012. Adjusted (non-GAAP) operating earnings for the third quarter of 2012 and 2013 do not include various items (after tax) that were included in reported GAAP earnings.   A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is in the table below:

($ millions)

3Q13

3Q12

ComEd Adjusted (non-GAAP) Operating Earnings

$127

$90

Constellation Merger and Integration Costs

(1)

-

ComEd GAAP Net Income (Loss)

$126

$90

ComEd’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2013 were up $37 million from the same quarter in 2012, primarily due to increased distribution revenue due to higher allowed ROE and  recovery of capital investment pursuant to the formula rate under EIMA.

For the third quarter of 2013, cooling degree-days in the ComEd service territory were down 22.2 percent relative to the same period in 2012 and were 9.0 percent above normal.  For the third quarter of 2013, heating degree-days in the ComEd service territory were down 26.2 percent relative to the same period in 2012 and were 33.6 percent below normal.  Total retail electric deliveries decreased 5.6 percent 3Q13 over 3Q12.

Weather-normalized retail electric deliveries decreased 0.8 percent in the third quarter of 2013 relative to 2012, reflecting decreases mainly in deliveries to the residential sector.

For ComEd, weather had unfavorable after-tax effect of $16 million on third quarter 2013 earnings relative to 2012 and a favorable after-tax effect of $4 million relative to normal weather. 

PECO consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania.

PECO’s GAAP net income in the third quarter of 2013 was $92 million, compared with $122 million in the third quarter of 2012. Adjusted (non-GAAP) Operating Earnings for the third quarter of 2013 and 2012 do not include various items (after tax) that were included in reported GAAP earnings.   A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is in the table below:

($ millions)

3Q13

3Q12

PECO Adjusted (non-GAAP) Operating Earnings

$93

$124

Constellation Merger and Integration Costs

(1)

(2)

PECO GAAP Net Income (Loss)

$92

$122

PECO’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2013 decreased $31 million from the same quarter in 2012, primarily due to favorable income taxes in the third quarter of 2012 and unfavorable weather.

For the third quarter of 2013, heating degree-days in the PECO service territory were up 157.1 percent relative to the same period in 2012 and were 2.9 percent above normal. For the third quarter of 2013, cooling degree-days in the PECO service territory were down 18.5 percent relative to the same period in 2012 and were 0.6 percent below normal. Total retail electric deliveries were down 3.4 percent compared with the third quarter of 2012. On the gas side, deliveries in the third quarter of 2013 were up 1.4 percent compared with the third quarter of 2012.   

Weather-normalized retail electric deliveries increased 0.8 percent in the third quarter of 2013 relative to 2012, reflecting an increase in deliveries to both residential and large C&I customers offset by a decrease in deliveries to small C&I customers. Weather-normalized gas deliveries was up 0.2 percent in the third quarter of 2013. For PECO, weather had an unfavorable after-tax effect of $14.1 million on third quarter 2013 earnings relative to 2012 and a favorable after-tax effect of $0.3 million relative to normal weather.

BGE consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland.

BGE’s GAAP net income in the third quarter of 2013 was $50 million, compared with $(4) million loss in the third quarter of 2012. Adjusted (non-GAAP) Operating Earnings (Loss) for the third quarter of 2013 and 2012 do not include various items (after tax) that were included in reported GAAP earnings.   A reconciliation of Adjusted (non-GAAP) Operating Earnings (Loss) to GAAP Net Income (loss) is in the table below:

($ millions)

3Q13

3Q12

BGE Adjusted (non-GAAP) Operating Earnings (Loss)

$51

$(3)

Constellation Merger and Integration Costs

(1)

(1)

BGE GAAP Net Income (Loss)

$50

$(4)

BGE’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2013 increased $54 million from the same quarter in 2012, primarily due to higher electric and gas distribution rates and decreased storm costs partially offset by higher depreciation and amortization expense. Due to revenue decoupling, BGE is not affected by actual weather with the exception of major storms.

Adjusted (non-GAAP) Operating Earnings

Adjusted (non-GAAP) operating earnings, which generally exclude significant one-time charges or credits that are not normally associated with ongoing operations, mark-to-market adjustments from economic hedging activities and unrealized gains and losses from NDT fund investments, are provided as a supplement to results reported in accordance with GAAP. Management uses such adjusted (non-GAAP) operating earnings measures internally to evaluate the company’s performance and manage its operations. Reconciliation of GAAP to adjusted (non-GAAP) operating earnings for historical periods is attached. Additional earnings release attachments, which include the reconciliation on page 8 are posted on Exelon’s Web site: (download attachment) and have been furnished to the Securities and Exchange Commission on Form 8-K on July 31, 2013.  

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 materially from the forward-looking statements made by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company and Exelon Generation Company, LLC (Registrants) include those factors discussed herein, as well as the items discussed in (1)  Exelon’s 2012 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 19; (2) Exelon’s Second Quarter 2013 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 18; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this presentation.

###

 

About Exelon

Exelon Corporation (NYSE: EXC) is the nation’s leading competitive energy provider, with 2012 revenues of approximately $23.5 billion. Headquartered in Chicago, Exelon has operations and business activities in 47 states, the District of Columbia and Canada. Exelon is one of the largest competitive U.S. power generators, with approximately 35,000 megawatts of owned capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 100,000 business and public sector customers and approximately 1 million residential customers. Exelon’s utilities deliver electricity and natural gas to more than 6.6 million customers in central Maryland (BGE), northern Illinois (ComEd) and southeastern Pennsylvania (PECO).

Contacts

Ravi Ganti Investor Relations
312.394.2348
Paul Adams Exelon Corporate Communications
410.470.4167
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