Earnings Release Highlights
CHICAGO — Exelon Corporation (Nasdaq: EXC) today reported its financial results for the second quarter of 2021.
“Ongoing investments in technology and infrastructure continue to drive high reliability and customer satisfaction across our six utilities, and today we announced a new ‘path to clean’ goal that will put Exelon utilities on course to achieve net-zero emissions from operations by 2050,” said Christopher Crane, president and CEO of Exelon. “We also are encouraged to see growing support at the federal level for policies that would value the clean energy from our nuclear fleet, but passage of legislation remains uncertain and, regardless, will come too late to save our Byron and Dresden plants from early retirement this fall. While we remain hopeful that a state solution will pass in time to save the plants, clean energy legislation in Illinois remains caught in negotiations over unrelated policy matters, leaving us no choice but to continue down the path of closing the plants. Looking ahead, we continue to execute our plan to separate our utility and generation businesses into two financially strong, independent companies, and we remain on track to close in the first quarter of 2022.”
“Adjusted (non-GAAP) Operating Earnings of $0.89 per share in the second quarter was $0.34 ahead of the same period last year, driven in part by the absence of storm costs at Exelon utilities and the recovery of costs associated with ongoing investments to improve reliability and service for customers,” said Joseph Nigro, senior executive vice president and CFO of Exelon. “Exelon Generation also had a strong quarter, with year-over-year earnings up $0.14 per share due to unrealized and realized gains on Constellation’s Technology Venture investments, fewer planned nuclear outage days and realized gains in our nuclear decommissioning trust funds. As a result of these and other factors, we are reaffirming our full-year Adjusted (non-GAAP) Operating Earnings guidance range of $2.60-$3.00 per share.”
Exelon's GAAP Net Income for the second quarter of 2021 decreased to $0.41 per share from $0.53 GAAP Net Income per share in the second quarter of 2020. Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $0.89 per share from $0.55 per share in the second quarter of 2020. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 5.
Adjusted (non-GAAP) Operating Earnings in the second quarter of 2021 primarily reflect:
ComEd
ComEd's second quarter of 2021 GAAP Net Income increased to $192 million from a GAAP Net Loss of $(61) million in the second quarter of 2020. ComEd's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $195 million from $150 million in the second quarter of 2020, primarily due to higher electric distribution earnings from higher rate base and higher allowed ROE due to an increase in treasury rates. Due to revenue decoupling, ComEd's distribution earnings are not affected by actual weather or customer usage patterns.
PECO
PECO’s second quarter of 2021 GAAP Net Income increased to $104 million from $39 million in the second quarter of 2020. PECO's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $107 million from $44 million in the second quarter of 2020, primarily due to lower storm costs due to the absence of the June 2020 storms and favorable volume.
BGE
BGE’s second quarter of 2021 GAAP Net Income increased to $45 million from $39 million in the second quarter of 2020. BGE's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $48 million from $43 million in the second quarter of 2020, primarily due to the favorable impacts of the multi-year plan. Due to revenue decoupling, BGE's distribution earnings are not affected by actual weather or customer usage patterns.
PHI
PHI’s second quarter of 2021 GAAP Net Income increased to $141 million from $94 million in the second quarter of 2020. PHI’s Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $144 million from $98 million in the second quarter of 2020, primarily due to distribution and transmission rate increases at DPL and ACE, favorable volume at ACE, and lower credit loss expense in 2021 due to an increase in 2020 as a result of COVID-19. Due to revenue decoupling, PHI's distribution earnings related to Pepco Maryland, DPL Maryland and Pepco District of Columbia are not affected by actual weather or customer usage patterns.
Generation
Generation had a GAAP Net Loss of $(61) million in the second quarter of 2021 compared with GAAP Net Income of $476 million in the second quarter of 2020. Generation's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $393 million from $252 million in the second quarter of 2020, primarily due to net unrealized and realized gains on equity investments, higher realized gains on NDT funds, and decreased nuclear outage days.
As of June 30, 2021, the percentage of expected generation hedged is 98%-101% for 2021.
Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) | Exelon Earnings per | Exelon | ComEd | PECO | BGE | PHI | Generation |
---|---|---|---|---|---|---|---|
2021 GAAP Net Income (Loss) | $0.41 | $401 | $192 | $104 | $45 | $141 | $61 |
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $79) | (0.24) | (231) | - | - | - | - | (234) |
Unrealized Gains Related to NDT Fund Investments (net of taxes of $134) | (0.13) | (130) | - | - | - | - | (130) |
Asset Impairments (net of taxes of $124) | 0.30 | 368 | - | - | - | - | 368 |
Plant Retirements and Divestitures (net of taxes of $116) | 0.35 | 355 | - | - | - | - | 344 |
Cost Management Program (net of taxes of $1) | - | 2 | - | - | - | - | 5 |
COVID-19 Direct Costs (net of taxes of $3, $0, $0, $1, and $2, respectively) | 0.01 | 9 | - | 1 | 1 | 2 | 5 |
Acquisition Related Costs (net of taxes of $1) | - | 2 | - | - | - | - | 2 |
ERP System Implementation Costs (net of taxes of $1) | - | 2 | - | - | - | - | 2 |
Planned Separation Costs (net of taxes of $7, $1, $1, $1, $1, and $2, respectively) | 0.001 | 13 | 2 | 1 | 1 | 2 | 5 |
Costs Related to Suspension of Contractual Offset (net of taxes of $12) | 0.04 | 41 | - | - | - | - | 41 |
Income Tax-Related Adjustments (entire amount represents tax expense) | - | (2) | - | - | - | - | - |
Noncontrolling Interests (net of taxes of $8) | 0.05 | 50 | - | - | - | - | 50 |
2021 Adjusted (non-GAAP) Operating Earnings | 0.89 | $869 | $195 | $107 | $48 | $144 | $393 |
Adjusted (non-GAAP) Operating Earnings for the second quarter of 2020 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) | Exelon Earnings per | Exelon | ComEd | PECO | BGE | PHI | Generation |
---|---|---|---|---|---|---|---|
2020 GAAP Net Income (Loss) | $0.53 | $521 | $(61) | $39 | $39 | $94 | $476 |
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $18 and $20, respectively) | (0.05) | (51) | - | - | - | - | (60) |
Unrealized Gains Related to NDT Fund Investments (net of taxes of $275) | (0.31) | (305) | - | - | - | - | (305) |
Asset Impairments (net of taxes of $7, $4, and $3, respectively) | 0.02 | 19 | 11 | - | - | - | 7 |
Plant Retirements and Divestitures (net of taxes of $2) | 0.01 | 7 | - | - | - | - | 7 |
Cost Management Program (net of taxes of $3, $1, and $2, respectively) | 0.01 | 6 | - | - | - | 1 | 5 |
Change in Environmental Liabilities (net of taxes of $0) | - | 1 | - | - | - | - | 1 |
COVID-19 Direct Costs (net of taxes of $10, $2, $1, $1, and $6, respectively) | 0.03 | 27 | - | 5 | 4 | 3 | 16 |
Deferred Prosecution Agreement Payments (net of taxes of $0) | 0.20 | 200 | 200 | - | - | - | - |
Income Tax-Related Adjustments (entire amount represents tax expense) | 0.01 | 5 | - | - | - | - | - |
Noncontrolling Interests (net of taxes of $20) | 0.11 | 104 | - | - | - | - | 104 |
2020 Adjusted (non-GAAP) Operating Earnings | $0.55 | $536 | $150 | $44 | $43 | $93 | $252 |
Note: Amounts may not sum due to rounding. Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income (Loss) 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 except the unrealized gains and losses related to NDT fund investments, the marginal statutory income tax rates for 2021 and 2020 ranged from 25.0% to 29.0%. Under IRS regulations, NDT fund investment returns are taxed at different rates for investments if they are in qualified or non-qualified funds. The effective tax rates for the unrealized losses related to NDT fund investments were 50.6% and 47.4% for the three months ended June 30, 2021 and 2020, respectively.
Exelon will discuss second quarter 2021 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.
Exelon Corporation (Nasdaq: EXC) is a Fortune 100 energy company with the largest number of electricity and natural gas customers in the U.S. Exelon does business in 48 states, the District of Columbia, and Canada and had 2020 revenue of $33 billion. Exelon serves approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey, and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO, and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 31,000 megawatts of nuclear, gas, wind, solar and hydroelectric generating 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 2 million residential, public sector, and business customers, including three fourths of the Fortune 100. Follow Exelon on Twitter @Exelon.
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. The Company 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 Aug. 4, 2021.
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 including, among others, those related to the timing, manner, tax-free nature, and expected benefits associated with the potential separation of Exelon’s competitive power generation and customer-facing energy business from its six regulated electric and gas utilities. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” 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, Exelon Generation Company, LLC, 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' 2020 Annual Report on Form 10-K in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 19, Commitments and Contingencies; (2) the Registrants' Second Quarter 2021 Quarterly Report on Form 10-Q (to be filed on Aug. 4, 2021) 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 15, Commitments and Contingencies; and (3) 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.
1Exelon’s five 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; 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; and Generation, which 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 and risk management services.
Get Instant updates when Exelon has news