10-QPeriod: Q3 FY2020

EXELON CORP Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 3, 2020For Securities:EXC

Summary

Exelon Corporation reported a decrease in net income attributable to common shareholders for the nine months ended September 30, 2020, to $1.604 billion from $2.164 billion in the prior year. This decline was primarily driven by significant one-time charges and accelerated depreciation related to early retirement decisions for several nuclear and fossil fuel power plants, an impairment charge for the New England asset group, and the impact of COVID-19, including reduced load and direct costs. These factors, coupled with lower net unrealized gains on Nuclear Decommissioning Trust (NDT) funds and increased expenses from various regulatory and storm-related matters, weighed on earnings. Despite these challenges, Exelon's regulated utility segments demonstrated resilience, with several subsidiaries reporting increases in net income. The company actively managed its capital structure, issuing $5.3 billion in long-term debt and maintaining sufficient liquidity through its credit facilities. Exelon also continues to navigate regulatory landscapes, with several base rate case proceedings underway and a focus on recovering costs related to COVID-19 impacts through regulatory assets.

Financial Highlights

49 data points
Beta

Revenue

$8.85B

Net Income

$569.00M

6.4% Net Margin

EPS (Diluted)

$0.51

Total Assets

$127.77B

Cash & Equivalents

$1.86B

Free Cash Flow

-$291.00M

Financial Statements
Beta
Revenue$8.85B
Operating Expenses$8.09B
Operating Income$769.00M
Interest Expense$398.00M
Net Income$569.00M
EPS (Basic)$0.51
EPS (Diluted)$0.51
Shares Outstanding (Basic)976.00M
Shares Outstanding (Diluted)977.00M

Key Highlights

  • 1Net income attributable to common shareholders decreased by $560 million for the nine months ended September 30, 2020, to $1.604 billion, driven by plant retirements, impairments, COVID-19 impacts, and regulatory matters.
  • 2Generation segment experienced a net income decrease of $158 million for the nine months ended September 30, 2020, largely due to plant retirements, an impairment charge in New England, and COVID-19 related impacts.
  • 3Commonwealth Edison (ComEd) reported a $240 million decrease in net income for the nine months ended September 30, 2020, significantly impacted by a $200 million Deferred Prosecution Agreement payment.
  • 4Exelon issued $5.3 billion in long-term debt during the first nine months of 2020 to manage its capital structure and liquidity.
  • 5The company is actively managing regulatory proceedings, with several base rate cases pending across its utility subsidiaries, and has recorded regulatory assets to track COVID-19 related costs.
  • 6Despite the decrease in net income, Exelon maintained strong operational performance in its nuclear fleet with a capacity factor of 95.1% for the nine months ended September 30, 2020.
  • 7The company is addressing the financial impacts of early plant retirements (Byron, Dresden, Mystic Units 8 & 9) through accelerated depreciation and amortization charges, impacting future periods.

Frequently Asked Questions

The decrease in net income for the nine months ended September 30, 2020, compared to the same period in 2019, was primarily due to significant one-time charges and accelerated depreciation related to early retirement decisions for several nuclear and fossil fuel power plants, an impairment charge for the New England asset group, the impact of COVID-19 (including reduced load and direct costs), a $200 million payment by ComEd under a Deferred Prosecution Agreement, lower net unrealized and realized gains on NDT funds, lower capacity revenue, higher nuclear outage days, and unfavorable regulatory and storm-related matters.

COVID-19 negatively impacted Exelon's results through reduced load at Generation, resulting in an estimated $140 million decrease in Generation's net income for the nine months ended September 30, 2020. Additionally, direct costs for personal protective equipment and cleaning supplies, as well as incremental credit loss expenses due to customer payment accommodations, were incurred. Regulatory assets were recorded to track and recover these costs, with an estimated impact of $65 million on the Utility Registrants' net income for the same period.

Exelon announced the early retirement of Byron and Dresden nuclear plants in 2021 and Mystic Units 8 and 9 in 2024. These decisions resulted in $500 million impairment of the New England asset group and significant one-time charges in the third quarter of 2020, including accelerated depreciation and amortization. These retirements will also lead to ongoing annual financial impacts from shortened useful lives, which are excluded from Adjusted Operating Earnings.

Exelon has actively managed its liquidity and capital structure. It issued $5.3 billion in long-term debt during the first nine months of 2020, accelerating planned issuances to ensure sufficient funding. The company also has access to $10.6 billion in aggregate commitments under its credit facilities and utilized a revolving credit facility to refinance commercial paper amidst market disruptions caused by COVID-19. Exelon continues to monitor its financial position and access to capital markets.