Yahoo Finance Exelon Corp (EXC) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges and ...
GAAP Earnings Per Share: $0.66
Non-GAAP Earnings Per Share: $0.68
Operating Earnings Guidance for 2024: $2.40 to $2.50 per share
Long-term Operating Earnings Growth: Expected annualized growth of 5% to 7%
ComEd Revenue Requirement Approval: Approved ahead of schedule, recognizing investments made last year
PECO Rate Cases: Filed electric and gas rate cases to support infrastructure investment and customer programs
Delmarva Power & Light Rate Approval: Settlement approved for electric distribution rate case
2024 Capital Expenditures: $7.4 billion planned
Consolidated Return on Equity: Targeted at 9% to 10%
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Exelon Corp (NASDAQ:EXC) reported solid operational performance and is on track to meet financial expectations for the year.
The company has made significant regulatory progress, particularly with the early approval of an updated revenue requirement for ComEd.
Exelon Corp (NASDAQ:EXC) continues to perform in the top quartile operationally across all operating company utilities.
The company reaffirmed its long-term guidance, expecting a 5% to 7% annualized operating earnings growth.
Exelon Corp (NASDAQ:EXC) has successfully managed significant storm activity and maintained strong performance in customer satisfaction scores.
Negative Points
Exelon Corp (NASDAQ:EXC) faced challenges due to well-below-normal weather across its jurisdictions, impacting financial performance.
The company reported a decrease in earnings per share in Q1 2024 compared to Q1 2023, primarily due to higher interest expenses and restoration costs.
There are ongoing regulatory challenges and the need for approval of the refiled grid plan in Illinois.
Exelon Corp (NASDAQ:EXC) is experiencing some operational challenges, particularly with BGE's lower performance at the start of the year.
The company's financial performance is slightly behind historical patterns for Q1, influenced by warmer-than-normal temperatures and storm activity.
Q & A Highlights
Q: Looking at Pennsylvania, there appears to be an abundance of natural gas growth potential in the Marcellus and Utica if incremental demand materializes. Do you see this backdrop in ample reserve margin supporting data center development in the state? A: (Calvin G. Butler - CEO, President & Director, Exelon Corporation) Yes, there is significant activity around high-density load growth in Pennsylvania. The state's aggressive economic development and status as an energy exporter provide opportunities for growth in various sectors, including data centers. The utilities in all jurisdictions will partner in economic development to leverage the assets of the regions effectively.
Q: Could you talk more about the prospects of receiving approval for both the storm mechanism and weather normalization adjustment in the PECO rate cases? Are these mechanisms a first-time ask in front of the PUC? A: (David M. Velazquez - President & CEO of PECO, Exelon Corporation) Both the storm reserve and weather normalization adjustments have been used or are currently in use in Pennsylvania. The weather normalization adjustment is already in place for four of the six gas utilities, and the storm reserve mechanism is similar to what one major electric company in PA uses. These mechanisms are known and have been approved in the past.
Q: As you think about getting clarity around the grid plan refiling for ComEd, is there any potential for that refiling resolution to also come sooner, or do you think it's really a December event? A: (Calvin G. Butler - CEO, President & Director, Exelon Corporation) The resolution for the grid plan refiling is expected to be a December event. The process involves working with all stakeholders to drive it to conclusion, aiming for rates to be effective at the beginning of the next year. This timeline aligns with the procedural schedule set by the administrative law judge.
Q: Given the move in rates year-to-date, do you expect there to be any sort of impact relative to your base plan for the rest of the year's financing needs? A: (Jeanne M. Jones - Executive VP & CFO, Exelon Corporation) The early completion of corporate financing and pre-issuance hedging mitigated the impact of interest rate volatility. The majority of interest expenses at operating companies are covered through reconciliations or captured in new rate cases, minimizing exposure at the corporate level.
Q: Can you provide further color on the significant activity around high-density load growth in Pennsylvania and Illinois? A: (David M. Velazquez and Michael A. Innocenzo, Exelon Corporation) There is continued interest from various businesses, including data centers, in the PECO territory. The infrastructure in Pennsylvania supports this growth both on the generation and transmission sides. Additionally, the state's proactive economic development policies enhance opportunities for growth in electrification and other sectors.
Q: What are the key drivers for the increase in the revenue requirement for ComEd in the recent ICC order? A: (Jeanne M. Jones - Executive VP & CFO, Exelon Corporation) The increase in the revenue requirement for ComEd is driven by the impact of higher U.S. treasury yields, higher O&M expenses due to new requirements under the Climate and Equitable Jobs Act, and additional investments in infrastructure to support reliable service and economic growth in Illinois.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
