01—Abstract
Summary
Summary of the 8-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
Exelon's Q4 and full-year 2023 results show GAAP EPS of $0.62a for the quarter and $2.34 for the year, against adjusted (non-GAAP) operating EPS of $0.60 and $2.38 respectively.
Full-year adjusted EPS landed at the top end of the narrowed guidance range, with the company citing strong utility performance despite mild weather affecting its non-decoupled jurisdictions. Full-year GAAP net income from continuing operations rose to $2,328 millionb from $2,054 million in 2022, and the adjusted figure rose to $2,377 million from $2,239 million. The forward-looking message matters most for investors.
Exelon introduced 2024 adjusted operating EPS guidance of $2.40c-$2.50, targets a 5-7% adjusted EPS CAGR from 2023 to 2027, and plans roughly $35 billion of capital investment over four years, which it says will drive about 7.5% rate base growth. The plan includes $1.3 billion of incremental equity (about 40% of $3.2 billion of added capex), a more balanced funding approach that introduces dilution risk. The dividend was declared at $0.38 per quarter, a 5.6% increase over the prior-year quarter.
The main risk flagged is regulatory uncertainty at ComEd. The Illinois Commerce Commission's December 2023 final order set an 8.905%d ROE and 50% equity ratio, and it rejected the Grid Plan. Exelon has filed for rehearing and an appeal, and it expects to refile a revised Grid Plan by March 13, 2024.
The company acknowledges that an unfavorable outcome could require adjustments to distribution capital investment, so the timing and outcome of the ComEd proceedings are key items to monitor. Sources for these figures are the earnings release and presentation furnished under Items 2.02 and 7.01 (Exhibits 99.1 and 99.2).
02—Key points
Key Highlights
- FY2023 GAAP EPS of $2.34 and adjusted operating EPS of $2.38, at the top end of narrowed guidance; Q4 GAAP EPS of $0.62 and adjusted EPS of $0.60
- 2024 adjusted operating EPS guidance of $2.40-$2.50, implying growth over 2023's $2.38
- Long-term outlook of 5-7% adjusted EPS CAGR from 2023-2027, with a target of midpoint or better, and ~$35B of capex over 2024-2027 driving ~7.5% rate base growth
- New $1.3B of incremental equity (about 40% of $3.2B added capex) signals more dilution than prior plans; $1.6B total equity planned 2024-2027
- Dividend of $0.38/share per quarter for Q1 2024 (5.6% above Q4 2023's $0.36); the company projects a 2024 annual dividend of $1.52 with a ~60% payout target
- ComEd regulatory overhang: the ICC's Dec 2023 MRP order (8.905% ROE, 50% equity) and rejection of the Grid Plan led to rehearing, an appeal, and a revised Grid Plan due March 13, 2024; long-term capex reduced by $1.25B in response
- Rate case wins in 2023-2024: BGE multi-year plan approved (9.50% electric ROE, 9.45% gas), ACE base rate case settled at $45M (9.6% ROE), with Pepco MD and DC multi-year plan orders pending in 2024
03—Questions
Frequently Asked Questions
How did Exelon perform in Q4 and full-year 2023 relative to guidance?
Full-year 2023 adjusted operating EPS was $2.38, in the top half of guidance, and GAAP EPS was $2.34. Q4 adjusted EPS was $0.60 versus $0.43 a year earlier, driven mainly by higher distribution rates, the BGE multi-year plan reconciliation, and ComEd's higher allowed ROE. Weather was a headwind in the non-decoupled jurisdictions.
What is Exelon's earnings outlook for 2024 and beyond?
The company guides 2024 adjusted operating EPS to $2.40-$2.50 and targets a 5-7% adjusted EPS CAGR from 2023 through 2027, with an expectation of landing at the midpoint or better. Growth depends on rate case outcomes and continued investment, and Exelon noted the ComEd regulatory situation could require flexibility in its plan.
Why is the equity issuance important to investors?
Exelon plans $1.3B of incremental equity beyond its prior commitment to fund about 40% of $3.2B of additional capital spending. Total planned equity issuance for 2024-2027 is about $1.6B, which will dilute existing shareholders but supports a balanced funding strategy that protects credit metrics. Credit metric cushion above downgrade thresholds is about 100 bps on average.
What regulatory risks should investors watch at ComEd?
The Illinois Commerce Commission's December 2023 final order set an 8.905% ROE and a 50% equity ratio, and it rejected the first Grid Plan. Exelon has requested rehearing (ruling expected by June 10, 2024) and has appealed aspects of the order to the Illinois Appellate Court. A revised Grid Plan is due March 13, 2024, and the outcome could reduce distribution capital investment and affect earnings and credit metrics.
Is the dividend growing, and is it sustainable?
The board declared a Q1 2024 dividend of $0.38 per share, up 5.6% from the Q4 2023 level of $0.36. Exelon projects a 2024 annual dividend of $1.52, about 5.5% above 2023's $1.44, and targets a payout ratio near 60% of adjusted operating EPS, with dividend growth tied to the 5-7% EPS growth target.
04—Continue