Exelon Corporation (EXC) announced first-quarter 2014 adjusted operating earnings of 62 cents per share, missing the Zacks Consensus Estimate by 10.1%.
Quarterly earnings plunged 11.4% year over year due to extreme weather conditions in its service territories which created operational difficulties.
On a GAAP basis, quarterly earnings were 10 cents per share compared with a loss of 1 cent per share a year ago.
The difference between GAAP and adjusted operating earnings of 52 cents was primarily due to the combined impact of a 52 cent mark-to-market loss from economic hedging activities, a 1 cent merger and integration related cost and a 4 cent charge for the amortization of commodity contract intangibles. One-time gains included 1 cent from Decommissioning Trust (NDT) Fund Investments and 4 cents from tax adjustments.
Total Revenue
In first-quarter 2014, Exelon's total operating revenues of $8.1 billion beat the Zacks Consensus Estimate by 43.1%.
Quarterly revenues were 17.3% higher than the comparable year-ago period.
Segment Details
Generation: Segment revenues in the first quarter were $5.24 billion, up 20.1% year over year.
Commonwealth Edison Company ("ComEd"): Revenues in the first quarter were $1.13 billion, down 2.2% from the year-ago period.
PECO Energy Company ("PECO"):First quarter revenues of $0.99 billion jumped 10.9% from the year-ago period.
Baltimore Gas and Electric ( "BGE" ):Segment revenues were $1.05 billion, up 19.8% from the year-ago period.
Quarterly Highlights
In the quarter under review, Exelon's total operating expenses increased 23.2% year over year to $7.1 billion, mainly due to an increase in purchase power and fuel expenses as well as operating and maintenance expenses.
The rise in total operating expenses, primarily due to tough weather conditions, took a toll on the operating income of the company. Operating income of $0.96 billion was down 14.8% year over year.
In the first quarter, the company supplied/sold total electricity of 59,572 Gigawatt hours, down 5.4% year over year.
Financial Update
As of Mar 31, 2014, Exelon's cash balance was $0.79 billion compared with $1.5 billion at the end of 2013.
Long-term debt as of Mar 31, 2014 totaled $18.3 billion, up from $17.3 billion as of Dec 31, 2013.
In the first three months of 2014, net cash flows provided by operating activities were $0.16 million versus $0.86 billion in the year-ago comparable period.
Exelon's capital expenditure was $1.21 billion in first quarter 2014 compared with $1.45 billion a year ago.
Hedges
Exelon's hedging program involves hedging of the commodity risks for expected generation, typically on a ratable basis over a three-year period. The proportion of expected generation hedged as of Mar 31, 2014, is 91%–94% for 2014, 64%– 67% for 2015, and 37%–40% for 2016.
Other Company Release
American Electric Power Co., Inc.’s (AEP) earnings per share of $1.15 in the first quarter 2014 surpassed the Zacks Consensus Estimate of 91 cents by 26.37%.
Entergy Corp (ETR) reported first-quarter earnings of $2.29 per share, beating the Zacks Consensus Estimate by 8.5%
CMS Energy Corporation (CMS) posted first-quarter 2014 earnings per share of 75 cents, beating the Zacks Consensus Estimate of 64 cents by 17.2%.
Our View
Utility operators have mostly been recording earnings beats this season thanks to a severe U.S. winter. Exelon was however not so lucky — lower realized energy prices, higher procurement costs for replacement power and increased storm costs ate into margins and profitability. Also, downtime at its nuclear units in the reported quarter hampered production.
That said, Exelon’s focus om increasing its renewable power generation capability is appreciable. Exelon Corporation (EXC) holds a Zacks Rank #2 (Buy).
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