Why did Q4 2025 earnings decline year over year even though full-year results improved?

Q4 Adjusted operating EPS fell to $0.59 from $0.64. The decline reflects higher interest expense at the holding company and utilities, higher depreciation, contracting costs, an absence of PECO's prior-year storm cost deferral, and higher charitable and Customer Relief Fund contributions at the parent. These were partially offset by distribution and transmission rate increases and higher AFUDC at ComEd. Full-year results benefited from rate increases, favorable weather at PECO and lower storm costs at BGE, which outweighed these headwinds.

How does the 2026 guidance compare with the prior outlook, and what is the basis for it?

The 2026 guidance of $2.81-$2.91 is new and is based on expected average shares of about 1,031M. Management attributes growth primarily to incremental revenues from customer-focused infrastructure investment, partly offset by incremental financing costs at the holding company. The company says it aims to deliver at the midpoint or better, and it reports no adjustments between projected GAAP and Adjusted operating earnings for 2026.

What does the equity issuance plan mean for shareholders?

Exelon plans to fund about 40% of incremental capital with equity, totaling $3.4B through 2029, or roughly $850M per year. Management says annual issuances represent less than 2% of market capitalization and that 82% of 2026 needs are priced under forward contracts, which limits near-term price risk. Investors should still expect share count growth, which dilutes per-share earnings unless rate base growth outpaces it. The guidance already reflects this share count.

What are the main risks to the growth outlook?

Key risks include regulatory outcomes in pending cases, such as the Pepco Maryland request (decision expected August 2026) and the DPL Delaware electric case (decision expected Q3 2027); affordability pressure that could constrain future rate increases; rising PJM wholesale supply costs; and the pace and certainty of large-load and transmission projects. Financing risk also exists, as the plan depends on continued access to capital markets and on maintaining credit metrics about 100-200 basis points above rating-agency downgrade thresholds.

EXC 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed February 12, 2026. Cited figures are marked; the original filing is the authoritative source.

Exelon's Q4 and full-year 2025 results beat its own expectations.

Q4 GAAP EPS was $0.58^a and Adjusted operating EPS was $0.59, down from $0.64 in Q4 2024, mainly on higher interest expense, depreciation, contracting costs, and the absence of a PECO storm deferral. For full-year 2025, GAAP EPS rose to $2.73 from $2.45 and Adjusted operating EPS rose to $2.77 from $2.50, above the $2.64-$2.74 guidance range. Utility earnings growth was driven by distribution and transmission rate increases at ComEd, PECO, BGE and PHI, along with favorable weather at PECO.

Full-year Adjusted EPS grew about 11%, while Q4 Adjusted EPS fell slightly. Management initiated 2026 Adjusted operating EPS guidance of $2.81^b-$2.91, implying more than 6% growth over the 2025 guidance midpoint, and projects EPS compounded growth near the top of its 5-7% range through 2029. The company is backing this with a $41.3 billion four-year capital plan (2026-2029) that it expects to grow rate base 7.9%, with transmission accounting for roughly 70% of the plan-over-plan increase.

Equity needs of $3.4 billion^c through 2029 (about $850 million a year) are a key dilution consideration, with 82% of 2026 needs already priced under forwards. The company also declared a $0.42 quarterly dividend, unchanged from the prior quarter's rate, implying about 60% payout.

Key watch items for investors include the size of the capital plan and equity issuance, regulatory outcomes (notably pending Pepco Maryland and DPL Delaware electric rate cases), affordability pressure from rising bills and PJM wholesale supply costs, and the realization of large-load and transmission opportunities. Management reports 2026 GAAP and Adjusted earnings are currently expected to match, with no reconciling items.

02—Key points

Key Highlights

FY2025 Adjusted operating EPS of $2.77 beat the $2.64-$2.74 guidance range, up from $2.50 in 2024; GAAP EPS was $2.73 (vs. $2.45).
Q4 2025 Adjusted operating EPS was $0.59, down from $0.64 in Q4 2024, with the decline driven by interest expense, depreciation, contracting costs and the absence of a PECO storm deferral.
2026 Adjusted operating EPS guidance of $2.81-$2.91 (over 6% growth vs. 2025 guidance midpoint) on about 1,031M expected shares.
$41.3B four-year capital plan (2026-2029) supports 7.9% rate base growth, with about 70% of the plan-over-plan increase from transmission; long-term Adjusted EPS CAGR targeted near the top of 5-7% through 2029.
$3.4B of equity planned through 2029 (~$850M annually), with 82% of 2026 needs priced under forwards; $1B of 3.25% convertible notes issued in December 2025.
Quarterly dividend declared at $0.42 per share (payable March 13, 2026), consistent with a ~60% payout target and 5% annual dividend growth through 2029.
Regulatory activity includes ComEd's $243M reconciliation approval, BGE's $77M recovery, ACE's $54M base rate increase, and pending Pepco Maryland ($133.2M request, decision expected Aug 2026) and DPL Delaware electric ($44.6M request) cases.

03—Questions

Frequently Asked Questions

Why did Q4 2025 earnings decline year over year even though full-year results improved?
Q4 Adjusted operating EPS fell to $0.59 from $0.64. The decline reflects higher interest expense at the holding company and utilities, higher depreciation, contracting costs, an absence of PECO's prior-year storm cost deferral, and higher charitable and Customer Relief Fund contributions at the parent. These were partially offset by distribution and transmission rate increases and higher AFUDC at ComEd. Full-year results benefited from rate increases, favorable weather at PECO and lower storm costs at BGE, which outweighed these headwinds.
How does the 2026 guidance compare with the prior outlook, and what is the basis for it?
The 2026 guidance of $2.81-$2.91 is new and is based on expected average shares of about 1,031M. Management attributes growth primarily to incremental revenues from customer-focused infrastructure investment, partly offset by incremental financing costs at the holding company. The company says it aims to deliver at the midpoint or better, and it reports no adjustments between projected GAAP and Adjusted operating earnings for 2026.
What does the equity issuance plan mean for shareholders?
Exelon plans to fund about 40% of incremental capital with equity, totaling $3.4B through 2029, or roughly $850M per year. Management says annual issuances represent less than 2% of market capitalization and that 82% of 2026 needs are priced under forward contracts, which limits near-term price risk. Investors should still expect share count growth, which dilutes per-share earnings unless rate base growth outpaces it. The guidance already reflects this share count.
What are the main risks to the growth outlook?
Key risks include regulatory outcomes in pending cases, such as the Pepco Maryland request (decision expected August 2026) and the DPL Delaware electric case (decision expected Q3 2027); affordability pressure that could constrain future rate increases; rising PJM wholesale supply costs; and the pace and certainty of large-load and transmission projects. Financing risk also exists, as the plan depends on continued access to capital markets and on maintaining credit metrics about 100-200 basis points above rating-agency downgrade thresholds.

04—Continue

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