Earnings Release Highlights
CHICAGO — Exelon Corporation (Nasdaq: EXC) today reported its financial results for the fourth quarter and full year 2022.
“In 2022, Exelon showcased our ability as a pure transmission and distribution company to deliver on our financial and operational commitments. Because of the partnership with our customers and communities, Exelon is ready to lead the energy transition to a cleaner and brighter future,” said Calvin Butler, Exelon president and CEO. “Our teams are focused on the things that matter to our customers: safety, reliability, sustainability and affordability, while ensuring our actions are grounded in taking an equitable and inclusive approach to the communities we serve. It’s a strong foundation for 2023 and beyond.”
“We delivered strong financial results in our first year as a new company,” said Jeanne Jones, executive vice president and CFO. “For the full year 2022, we earned $2.08 per share on a GAAP basis and $2.27 on a non-GAAP basis, results that are in the upper half of our guidance range. Over the next four years, Exelon will invest $31 billion to support our jurisdictions’ energy transitions, growing the rate base by 7.9%, and results in our expectations for 6% to 8% annualized growth in operating earnings per share through 2026, off the midpoint of our 2022 guidance. We expect adjusted (non-GAAP) earnings for 2023 of $2.30 - $2.42 per share, in line with the direction provided in our third-quarter earnings call.”
Exelon's GAAP Net Income from Continuing Operations for the fourth quarter of 2022 increased to $0.43 per share from $0.31 GAAP Net Income from Continuing Operations per share in the fourth quarter of 2021. Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2022 increased to $0.43 per share from $0.39 per share in the fourth quarterof 2021. For the reconciliations of GAAP Net Income from Continuing Operations to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 5.
Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2022 primarily reflect:
Exelon's GAAP Net Income from Continuing Operations for 2022 increased to $2.08 per share from $1.65 GAAP Net Income from Continuing Operations per share in 2021. Adjusted (non-GAAP) Operating Earnings for 2022 increased to $2.27 per share from $1.83 per share in 2021.
Adjusted (non-GAAP) Operating Earnings for the full year 2022 primarily reflect:
ComEd
ComEd's fourth quarter of 2022 GAAP Net Income increased to $211 million from $133 million in the fourth quarter of 2021. ComEd's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2022 increased to $211 million from $138 million in the fourth quarter of 2021, primarily due to increases in electric distribution formula rate earnings (reflecting higher allowed electric distribution ROE due to an increase in treasury rates and the impacts of higher rate base). Due to revenue decoupling, ComEd's distribution earnings are not affected by actual weather or customer usage patterns.
PECO
PECO’s fourth quarter of 2022 GAAP Net Income decreased to $102 million from $122 million in the fourth quarter of 2021. PECO's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2022 decreased to $102 million from $125 million in the fourth quarter of 2021, primarily due to increases in depreciation expense, credit loss expense, and interest expense, partially offset by distribution rate increases.
BGE
BGE’s fourth quarter of 2022 GAAP Net Income decreased to $113 million from $117 million in the fourth quarter of 2021. BGE's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2022 decreased to $114 million from $121 million in the fourth quarter of 2021, primarily due to an increase in various expenses, offset by favorable impacts of the multi-year plans. Due to revenue decoupling, BGE's distribution earnings are not affected by actual weather or customer usage patterns.
PHI
PHI’s fourth quarter of 2022 GAAP Net Income increased to $90 million from $26 million in the fourth quarter of 2021. PHI’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2022 increased to $90 million from $64 millionin the fourth quarter of 2021, primarily due to distribution rate increases, lower contracting costs, and timing of excess deferred tax amortization, partially offset by increases in depreciation expense and credit loss expense. Due to revenue decoupling, PHI's distribution earnings related to Pepco Maryland, DPL Maryland, Pepco District of Columbia, and ACE are not affected by actual weather or customer usage patterns.
Exelon introduced a guidance range for 2023 Adjusted (non-GAAP) Operating Earnings of $2.30-$2.42 per share. The outlook for 2023 Adjusted (non-GAAP) Operating Earnings for Exelon and its subsidiaries excludes costs related to the separation.
1Exelon’s four business units include ComEd, which consists of electricity transmission and distribution operations in northern Illinois; PECO, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania; BGE, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland; and PHI, which consists of electricity transmission and distribution operations in the District of Columbia and portions of Maryland, Delaware, and New Jersey and retail natural gas distribution operations in northern Delaware.
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2022 do not include the following items (after tax) that were included in reported GAAP Net Income from Continuing Operations:
(in millions, except per share amounts) | Exelon Earnings per
Diluted
Share
| Exelon | ComEd | PECO | BGE | PHI |
2022 GAAP Net Income (Loss) from Continuing Operations | $0.43 | $432 | $211 | $102 | $113 | $90 |
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $1) | — | 4 | — | — | — | — |
Asset Impairments (net of taxes of $0) | — | 1 | — | — | 1 | — |
Separation Costs (net of taxes of $0) | — | (1) | — | — | — | — |
Income Tax-Related Adjustments (entire amount represents tax expense) | (0.01) | (8) | — | — | — | — |
2022 Adjusted (non-GAAP) Operating Earnings | $0.43 | $428 | $211 | $102 | $114 | $90 |
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2021 do not include the following items (after tax) that were included in reported GAAP Net Income from Continuing Operations:
(in millions, except per share amounts) | Exelon Earnings per
Diluted
Share
| Exelon | ComEd | PECO | BGE | PHI |
2021 GAAP Net Income (Loss) from Continuing Operations | $0.31 | $309 | $133 | $122 | $117 | $26 |
COVID-19 Direct Costs (net of taxes of $2, $0, $0, and $1, respectively) | 0.01 | 7 | — | 1 | 1 | 2 |
ERP System Implementation Costs (net of taxes of $1) | — | 3 | — | — | — | — |
Separation Costs (net of taxes of $8, $2, $1, $1, and $1, respectively) | 0.03 | 27 | 5 | 2 | 3 | 4 |
Income Tax-Related Adjustments (entire amount represents tax expense) | 0.04 | 39 | — | — | — | 32 |
2021 Adjusted (non-GAAP) Operating Earnings | $0.39 | $385 | $138 | $125 | $121 | $64 |
Adjusted (non-GAAP) Operating Earnings for the full year of 2022 do not include the following items (after tax) that were included in reported GAAP Net Income from Continuing Operations:
(in millions, except per share amounts) | Exelon Earnings per
Diluted
Share
| Exelon | ComEd | PECO | BGE | PHI |
2022 GAAP Net Income (Loss) from Continuing Operations | $2.08 | $2,054 | $917 | $576 | $380 | $608 |
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $1) | — | 4 | — | — | — | — |
Asset Retirement Obligation (net of taxes of $2) | — | (4) | — | — | — | (4) |
Asset Impairments (net of taxes of $10) | 0.04 | 38 | — | — | 38 | — |
ERP System Implementation Costs (net of taxes of $0) | — | 1 | — | — | — | — |
Separation Costs (net of taxes of $10, $4, $2, $2, and $3, respectively) | 0.02 | 24 | 9 | 4 | 4 | 7 |
Income Tax-Related Adjustments (entire amount represents tax expense) | 0.12 | 122 | — | 38 | — | 3 |
2022 Adjusted (non-GAAP) Operating Earnings | $2.27 | $2,239 | $926 | $619 | $423 | $614 |
Adjusted (non-GAAP) Operating Earnings for the full year of 2021 do not include the following items (after tax) that were included in reported GAAP Net Income from Continuing Operations:
(in millions, except per share amounts) | Exelon Earnings per
Diluted
Share
| Exelon | ComEd | PECO | BGE | PHI |
2021 GAAP Net Income (Loss) from Continuing Operations | $1.65 | $1,616 | $742 | $504 | $408 | $561 |
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $3) | — | 4 | — | — | — | — |
Cost Management Program (net of taxes of $1, $0, $0, and $0) | 0.01 | 6 | — | 1 | 1 | 1 |
COVID-19 Direct Costs (net of taxes of $6, $2, $1, and $2, respectively) | 0.01 | 14 | — | 4 | 3 | 4 |
Asset Retirement Obligation (net of taxes of $1) | — | 2 | — | — | — | 2 |
Acquisition Related Costs (net of taxes of $5) | 0.02 | 15 | — | — | — | — |
ERP System Implementation Costs (net of taxes of $4, $0, $0, and $0) | 0.01 | 13 | — | 1 | 1 | 1 |
Separation Costs (net of taxes of $21, $5, $2, $3, and $3, respectively) | 0.06 | 58 | 12 | 6 | 7 | 9 |
Income Tax-Related Adjustments (entire amount represents tax expense) | 0.06 | 62 | — | — | — | 32 |
2021 Adjusted (non-GAAP) Operating Earnings | $1.83 | $1,791 | $754 | $516 | $419 | $609 |
Note:
Amounts may not sum due to rounding.
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income (Loss) from Continuing Operations and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items, the marginal statutory income tax rates for 2022 and 2021 ranged from 24.0% to 29.0%.
Webcast Information
Exelon will discuss fourth quarter 2022 earnings in a conference call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time). The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.
About Exelon
Exelon (Nasdaq: EXC) is a Fortune 200 company and the nation’s largest energy delivery company, serving more than 10 million customers through six fully regulated transmission and distribution utilities — Atlantic City Electric (ACE), Baltimore Gas and Electric (BGE), Commonwealth Edison (ComEd), Delmarva Power & Light (DPL), PECO Energy Company (PECO), and Potomac Electric Power Company (Pepco). More than 18,000 Exelon employees dedicate their time and expertise to powering a cleaner and brighter future for our customers and communities through reliable, affordable and efficient energy delivery, workforce development, equity, economic development and volunteerism. Follow Exelon on Twitter @Exelon.
non-GAAP Financial Measures
In addition to net income as determined under generally accepted accounting principles in the United States (GAAP), Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) Operating Earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) Operating Earnings exclude certain costs, expenses, gains and losses, and other specified items. This measure is intended to enhance an investor’s overall understanding of period over period operating results and provide an indication of Exelon’s baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this measure is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting of future periods. Adjusted (non-GAAP) Operating Earnings is not a presentation defined under GAAP and may not be comparable to other companies’ presentation. Exelon has provided the non-GAAP financial measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) Operating Earnings should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP Net Income measures provided in this earnings release and attachments. This press release and earnings release attachments provide reconciliations of Adjusted (non-GAAP) Operating Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, are posted on Exelon’s website: www.exeloncorp.com, and have been furnished to the Securities and Exchange Commission on Form 8-K on Feb. 14, 2023.
Cautionary Statements Regarding Forward-Looking Information
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” “should,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic, and financial performance, are intended to identify such forward-looking statements.
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, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) the Registrants' 2021 Annual Report on Form 10-K filed with the SEC on February 25, 2022 in Part I, ITEM 1A. Risk Factors; (2) the Registrants' Current Report on Form 8-K filed with the SEC on June 30, 2022 to recast Exelon's consolidated financial statements and certain other financial information originally included in the 2021 Form 10-K in (a) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (b) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 17, Commitments and Contingencies; (3) the Registrants' Third Quarter 2022 Quarterly Report on Form 10-Q (filed on Nov. 3, 2022) in (a) Part II, ITEM 1A. Risk Factors, (b) Part I, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part I, ITEM 1. Financial Statements: Note 13, Commitments and Contingencies; and (4) other factors discussed in filings with the SEC by the Registrants.
Investors are cautioned not to place undue reliance on these forward-looking statements, whether written or oral, which apply only as of the date of this press release. 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 press release.
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