Exelon Corporation (EXC) announced third-quarter 2011 operating earnings of $1.12 per share, up from $1.11 per share in the year-ago quarter and ahead of the Zacks Consensus Estimate of $1.09. Results also exceeded the guided range of $1.00 to $1.10 per share.
The year-over-year growth in earnings was largely attributable to favorable effect at Exelon Generation Company, LLC (Generation) of higher energy margins due to the expiration of the power purchase agreement with PECO and favorable market and portfolio conditions in the South and favorable effect of new distribution rates at PECO Energy Company (PECO) and Commonwealth Edison Company (ComEd) effective January 1, 2011 and June 1, 2011,
GAAP earnings during the quarter were 90 cents per share, compared with $1.27 in the year-ago period. The difference between operating and GAAP earnings during the quarter was owing to the following one-time items: an impact of 3 cents related to Wolf Hollow acquisition, 8 cents impact form mark-to-market impact of economic hedging activities, Constellation acquisition costs of 2 cents, acquisition cost of 1 cent, asset retirement obligation of 2 cents and unrealized losses of 12 cents related to NDT fund investments
Total Revenue
Exelon's total operating revenue for third-quarter 2011 was $5.26 billion, down 0.6% from $5.29 billion in the year-ago period. Reported quarter revenue however failed to meet the Zacks Consensus Estimate of $5.38 billion.
Segment Update
Generation: The revenue generation from this segment during the quarter increased 7.8% to $2.86 billion from $2.66 billion in the prior-year quarter. Exelon Generation achieved a nuclear capacity factor of 95.8% in the third quarter of 2011.
Generation’s average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $39.19 per megawatt/hour (MWh) in the quarter, compared with $35.11 per MWh in the prior-year quarter.
Commonwealth Edison Company (ComEd): Revenues from this segment during the quarter were $1.78 billion versus $1.92 billion in the year-earlier period, reflecting a decline of 7.0%. ComEd's total retail electric deliveries decreased 2.9% quarter over quarter and the weather adjusted retail electric deliveries dipped 1.4% year over year due to a reduction in deliveries to all major customer classes.
PECO Energy Company (PECO): The segment recorded revenues of $946 million, down 36.7% from $1.50 billion in the prior-year quarter. Cooling degree-days in the PECO service territory dropped 8.5% year over year. Total retail electric deliveries went down 2.0% from last year.
Operational Update
Total operating expenses decreased 1.7% year over year.
Operating income during the quarter increased by 2.8% to $1.33 billion from $1.29 billion reported in the year-ago quarter.
Interest expenses increased $7 million year over year to $182 million in the reported quarter.
Financial Update
Exelon exited the quarter with cash and cash equivalents of $1.07 billion, lower than $1.61 billion at the end of 2010.
Long term debt at quarter end totaled $12.2 billion, higher from 2010 end level of $11.6 billion.
Cash from operations in the first nine months of 2011 decreased to $2.9 billion from $4.1 billion in the year ago period.
Capital expenditures incurred in the first nine months of 2011 were $2.97 billion versus $2.38 billion in the year ago period.
Guidance
Taking into account its strong performance during the nine months of 2011, management reiterated its expectation to deliver operating earnings for 2011 to a range of $4.05 to $4.25 per share.
Hedges
Exelon's hedging program involves the hedging of commodity risks for expected generation, typically on a ratable basis over a three-year period. The proportion of expected generation hedged as of September 30, 2011, is 97% – 100% for 2011, 85% – 88% for 2012 and 56% – 59% for 2013.
The quantitative Zacks # 3 Rank (short-term Hold rating) for Exelon Corporation indicates no clear directional pressure on the stock over the near term.
Chicago-based Exelon Corporation is an electric utility company operating through its subsidiaries – Generation, ComEd and PECO. The company competes with Ameren Corporation (AEE), Dynegy Inc. (DYN) and PPL Corporation (PPL).
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