Exelon Corporation (EXC) announced fourth-quarter 2011 operating earnings of 82 cents per share compared with 96 cents per share in the year-ago quarter. The results of the company missed the Zacks Consensus Estimate of 88 cents by 6 cents.
GAAP earnings of Exelon during the quarter were 91 cents, compared with 79 cents in the year-ago period.
In the reported quarter, the variation between operating and GAAP earnings was owing to the following one-time items: an impact of 3 cents for the proposed merger with Constellation Energy Group, Inc. (Constellation), 1 cent for the retirement of certain Generation fossil generating units and 1 cent associated with non-cash annual remeasurement of state deferred income taxes. The company gained 7 cents related to nuclear decommissioning trust (“NDT”) fund investments and 7 cents for the mark-to-market gain.
Exelon’s 2011 operating earnings were $4.16 per share compared with $4.06 per share reported in 2010. However, the results of the company missed the Zacks Consensus Estimate of $4.20 per share by 4 cents.
Total Revenue
Exelon’s total operating revenue for fourth-quarter 2011 was $4,251 million versus $4,494 million reported in the year-ago period reflecting a decline of 5.4%. Reported quarter revenue missed the Zacks Consensus Estimate of $5,091 million by $840 million.
Exelon’s total operating revenue for 2011 was $19,184 million versus $18,644 million reported in the prior fiscal year, reflecting a growth of 2.9%. Fiscal year 2011 revenue missed the Zacks Consensus Estimate of $19,586 million.
Quarterly Highlights
During the quarter, the total operating expenses of the company fell by 10.3% year over year driven by a 21.8% dip in the input costs. The reduction in operating expenses during the quarter boosted the operating income of the company which grew 13.1% from the prior-year quarter.
Interest expenses during the quarter decreased by $2 million to $181 million versus $183 million in the year-ago quarter.
Segment Update
Generation: Exelon’s Generation segment achieved a nuclear capacity factor of 93.0% in the fourth quarter of 2011 versus 93.1% in the year-ago quarter. Generation’s average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $39.31 per megawatt/hour (MWh) in the quarter compared with $41.45 per MWh in the prior-year quarter.
Commonwealth Edison Company (ComEd): In the fourth quarter of 2011, heating degree-days in the ComEd service territory were down 20.1% versus the same period in 2010 and were 19.6% below normal. ComEd’s total retail electric deliveries declined 2.6% quarter over quarter due to decrease in deliveries to small commercial and industrial customers. These were partially offset by increases in deliveries to large commercial, industrial and residential customers.
PECO Energy Company (PECO): Heating degree-days in the PECO service territory were down 22.8% year over year and were 20.3% below normal. Total retail electric deliveries were down 6.1% from last year, reflecting a decline in deliveries to large commercial and industrial customersthat was partially offset by increased deliveries to residential and small commercial and industrial customers.
On the retail gas side, deliveries in the fourth quarter of 2011 were down 22.7% from the year-ago level, mainly due to unfavorable after-tax effect of $25 million on fourth quarter 2011 earnings compared with 2010 and an unfavorable after-tax effect of $22 million owing to normal weather.
Annual Highlights
The rise in total revenue for the fiscal year was more than offset by escalating operating expenses that increased at a higher trajectory compared to revenue, resulting in a slip in operating income by 5.2% year over year.
Exelon-operated nuclear plants achieved an average capacity factor of 93.3% in 2011 versus 93.9% in 2010.
Interest expenses of the company at the end of the year were $726 million versus $817 million at the end of 2010.
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 December 31, 2011, is 88% – 91% for 2012, 61% – 64% for 2013 and 32% – 35% for 2014.
Peer Comparison
Ameren Corporation (AEE) competes with Exelon Corporation. AEE announced its 2011 pro-forma earnings guidance in the range of $2.50 – $2.60 per share. As per the Zacks Consensus Estimate, 2011 pro-forma earnings are expected to be $2.51 per share.
Based in Chicago, Illinois, Exelon Corporation, a utility services holding company, engages in the generation, transmission, distribution and sale of electricity to residential, commercial, industrial and wholesale customers.
Exelon Corporation currently retains a Zacks #3 Rank (short-term Hold rating).
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