10-QPeriod: Q2 FY2018

EXELON CORP Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 2, 2018For Securities:EXC

Summary

Exelon Corporation reported strong financial performance for the six months ended June 30, 2018, with net income attributable to common shareholders increasing to $1,125 million from $1,086 million in the prior year period. Diluted earnings per share remained stable at $1.16. The company's regulated utility businesses provided a stable earnings foundation, while its competitive generation segment, driven by favorable market conditions and improved operational performance, contributed significantly to the overall financial results. Key operational highlights include positive impacts from new regulatory initiatives in Illinois (Zero Emission Credits) and favorable weather conditions in several utility service territories which boosted revenues. The company continues to execute on its cost management program, achieving significant savings and reinvesting in infrastructure improvements across its utilities. Management remains focused on delivering shareholder value through dividends and strategic capital allocation, while navigating evolving industry dynamics and regulatory landscapes.

Financial Highlights

52 data points
Beta

Revenue

$8.07B

Net Income

$537.00M

6.7% Net Margin

EPS (Diluted)

$0.55

Total Assets

$117.25B

Cash & Equivalents

$694.00M

Free Cash Flow

$440.00M

Financial Statements
Beta
Revenue$8.07B
Operating Expenses$7.14B
Operating Income$940.00M
Interest Expense$367.00M
Net Income$537.00M
EPS (Basic)$0.56
EPS (Diluted)$0.55
Shares Outstanding (Basic)967.00M
Shares Outstanding (Diluted)969.00M

Key Highlights

  • 1Net income attributable to common shareholders increased to $1,125 million for the first six months of 2018, up from $1,086 million in the same period of 2017.
  • 2Diluted earnings per common share remained stable at $1.16 for both the six-month periods.
  • 3Total operating revenues increased to $17,769 million for the first six months of 2018, up from $16,413 million in the prior year.
  • 4Operating income saw a significant increase to $2,043 million from $1,608 million in the first six months of 2017.
  • 5The company benefited from favorable regulatory changes, such as the Illinois Zero Emission Standard (ZES) program, which contributed to Generation's revenue.
  • 6Operating and maintenance expenses decreased by $692 million for the first six months of 2018 compared to 2017, largely due to lower long-lived asset impairments and nuclear refueling outage costs.
  • 7Capital expenditures remained substantial, with $3,869 million invested in property, plant and equipment for the first six months of 2018.

Frequently Asked Questions

Exelon reported net income attributable to common shareholders of $1,125 million for the first six months of 2018, resulting in diluted earnings per average common share of $1.16. This is a slight increase from the $1,086 million net income and $1.17 diluted earnings per share reported for the same period in 2017.

The TCJA's reduction in the federal corporate tax rate from 35% to 21% resulted in a significant decrease in deferred income tax liabilities and a tax benefit for Exelon and its subsidiaries. For Exelon, this translated to a $1,309 million deferred income tax benefit recorded in the period. However, for the utility subsidiaries, these tax savings are being passed back to customers through rate adjustments, largely offsetting the direct impact on net income.

The increase in operating income was driven by several factors. Higher revenues net of purchased power and fuel expense at Generation, primarily due to mark-to-market gains on economic hedging activities and favorable impacts from the Illinois ZES and New York CES programs, contributed significantly. Additionally, lower operating and maintenance expenses, particularly at Generation due to reduced asset impairments and lower nuclear refueling costs, along with lower merger and integration costs, also boosted operating income.

Generation's performance was a key driver of Exelon's financial results. Higher revenues net of purchased power and fuel expense, driven by mark-to-market gains, improved capacity prices, and benefits from ZEC programs, significantly boosted Generation's contribution. Lower operating and maintenance expenses, including reduced impairment charges and outage costs, further strengthened Generation's results.