10-QPeriod: Q3 FY2009

EXELON CORP Quarterly Report for Q3 Ended Sep 30, 2009

Filed October 23, 2009For Securities:EXC

Summary

Exelon Corporation reported solid financial results for the third quarter and the first nine months of 2009, demonstrating year-over-year growth in net income and diluted earnings per share. This performance was primarily driven by favorable movements in nuclear decommissioning trust fund investments, increased regulated distribution revenues from rate case orders at ComEd and PECO, and lower allowance for uncollectible accounts expense at PECO. Despite these positives, the company faced headwinds including lower energy gross margins at its Generation segment due to unfavorable market conditions and reduced nuclear output, as well as decreased load at its utility operations (ComEd and PECO) impacted by adverse weather and the ongoing economic downturn. Looking ahead, Exelon is pursuing several growth initiatives, including planned nuclear plant power uprates, smart grid investments, and the establishment of a new transmission venture. The company also highlighted its focus on liquidity and cost management, evidenced by successful debt refinancing and a company-wide cost savings initiative aimed at realizing approximately $350 million in operations and maintenance savings for 2010. Regulatory matters, environmental legislation, and competitive market dynamics remain key areas of focus and potential impact for Exelon's future operations.

Financial Highlights

28 data points
Beta

Revenue

$4.34B

Net Income

$757.00M

17.4% Net Margin

EPS (Diluted)

$1.14

Cash & Equivalents

$2.37B

Free Cash Flow

$774.00M

Financial Statements
Beta
Revenue$4.34B
Operating Expenses$2.94B
Operating Income$1.40B
Interest Expense$170.00M
Net Income$757.00M
EPS (Basic)$1.15
EPS (Diluted)$1.14
Shares Outstanding (Basic)660.00M
Shares Outstanding (Diluted)662.00M

Key Highlights

  • 1Net income increased to $757 million ($1.14 EPS) for Q3 2009 from $700 million ($1.06 EPS) in Q3 2008. Year-to-date net income rose to $2,126 million ($3.21 EPS) from $2,030 million ($3.06 EPS) in the prior year.
  • 2Key drivers for improved net income included unrealized gains on nuclear decommissioning trust fund investments and increased regulated distribution revenues at ComEd and PECO.
  • 3Headwinds included lower energy gross margins at Generation due to market conditions and decreased load at ComEd and PECO impacted by economic and weather factors.
  • 4Exelon is investing in future growth through nuclear power uprates (1,300-1,500 MW capacity increase), smart grid initiatives with potential DOE funding, and a new transmission venture (Exelon Transmission Company).
  • 5The company is actively managing costs, with a company-wide initiative targeting $350 million in O&M savings for 2010, with half expected to be sustainable.
  • 6Exelon successfully refinanced $1.2 billion of debt maturing in 2011, reducing refinancing risk and lowering average debt costs.
  • 7The company made a $350 million discretionary contribution to its largest pension plan to improve its funded status.

Frequently Asked Questions

The increase in net income was primarily driven by unrealized gains on nuclear decommissioning trust fund investments (compared to losses in the prior year), higher regulated electric distribution revenue at ComEd and gas distribution revenue at PECO due to recent rate case orders, and a decrease in the allowance for uncollectible accounts expense at PECO. The establishment of a reserve for Lehman Brothers receivables in 2008 also contributed to the year-over-year improvement.

Exelon faced challenges including lower energy gross margins at its Generation segment, largely due to unfavorable portfolio and market conditions, and reduced nuclear output from more refueling outage days. Additionally, lower electric load at ComEd and PECO, driven by unfavorable weather and broader economic conditions, impacted results.

Exelon is pursuing growth through planned power uprates across its nuclear fleet to add 1,300-1,500 megawatts of capacity over eight years. They are also investing in smart meter and smart grid technologies with potential government funding and have established Exelon Transmission Company to capitalize on the growing transmission market. Additionally, Exelon is evaluating the development of a new nuclear plant, initially seeking an Early Site Permit.

Exelon believes it has sufficient liquidity, funded through operations, debt offerings, and credit facilities. They successfully refinanced $1.2 billion of debt maturing in 2011, reducing refinancing risk and lowering debt costs. A company-wide cost savings initiative is expected to yield approximately $350 million in O&M savings for 2010. Furthermore, a discretionary pension contribution of $350 million was made to bolster the pension plan's funded status.