Exelon Beats on Earnings and Revs

Exelon Corporation (EXC) announced third-quarter 2013 pro forma earnings of 78 cents per share, surpassing the Zacks Consensus Estimate by 12 cents.

Quarterly earnings edged up 1.3% year over year on the back of robust performance from the generating assets, positive outcomes from strategic investments, improvement in capacity prices associated with the Reliability Pricing Model for the PJM Interconnection, LLC market and operating and maintenance synergies related to the Constellation-merger.

The results excluded unrealized gain related to nuclear of 3 cents, a mark-to-market gain of 17 cents from the economic hedging activities, a penny charge for the asset retirement obligations, the Constellation-merger and integration costs of 3 cents, a 5 cents charge for the amortization of commodity contract intangibles and long-lived asset impairment charges of 3 cents. Including these one time charges and gains, the company’s earnings were 86 cents compared with 35 cents in the year-ago quarter.

Total Revenue

Exelon's total operating revenues were $6.5 billion, beating the Zacks Consensus Estimate by $0.2 billion.

However, quarterly revenues edged down 1.2% year over year primarily due to lower sales figures at the company’s Commonwealth Edison Company (“ComEd”) and PECO Energy Company (“PECO”) businesses. This was partially offset by a rise in revenues from Baltimore Gas and Electric (“BGE”) and Generation operations.

Quarterly Highlights

In the quarter under review, total operating expenses declined 11.7% year over year to $5.3 billion, mainly due to a decrease in purchase power and fuel expenses as well as operating and maintenance expenses.

Decline in operating expenses offset the decline in revenue, resulting in an operating income of $1.3 billion, up 108% year over year.

Financial Update

Exelon ended the quarter with cash and cash equivalents of $1.6 billion, up from $1.4 billion at the end of 2012.

Long-term debt as of Sep 30, 2013 totaled $17.6 billion, up from $17.2 billion as of Dec 31, 2012.

During the first nine months of 2013, net cash flows provided by operating activities was $4.4 billion versus $4.6 billion in the year-ago comparable period.

Exelon’ capital expenditure was $3.9 billion during the first nine months of 2013 compared with $4.1 billion in the prior-year period.

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 Sep 30, 2013, is 97% - 100% for 2013, 84% - 87% for 2014, and 48% - 51% for 2015.

Guidance

Exelon narrowed its full-year 2013 guidance to $2.40 - $2.60 per share from the earlier projection of $2.35 - $2.65 per share.

Peer Comparison

Entergy Corp. (ETR) posted operational earnings of $2.41 per share, ahead of the Zacks Consensus Estimate of $2.29 by 5.2%.

Zacks Rank

Exelon currently has a Zacks Rank #3 (Hold). However, other stocks from the industry that are presently performing well include NRG Yield, Inc. (NYLD) and UNS Energy Corporation (UNS), each with a Zacks Rank #1 (Strong Buy).

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