Get Cash Back and $0 Commissions
+ The Power of TradeStation
Business Wire 8-Feb-2019 6:47 AM
Exelon Corporation (NYSE:EXC) today reported its financial results for the fourth quarter and full year 2018.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190208005190/en/
Exelon fourth quarter and full year 2018 highlights (Graphic: Business Wire)
"This was another record-breaking year for Exelon, with our Utility and Generation businesses demonstrating best-ever performances in multiple categories thanks to the hard work of our employees, who also surpassed their previous record for volunteerism. Our ongoing strategy to invest in advanced technology and infrastructure resulted in improved resiliency, reliability and customer satisfaction at our electric and gas companies," said Chris Crane, Exelon president and CEO. "In 2019, we will grow our dividend by 5 percent and seek fair compensation for the zero-carbon power our nuclear fleet provides. We will also modernize the electric grid to address the challenges of climate change and to provide customers with clean, affordable power."
"Exelon delivered another solid financial performance in 2018, earning $3.12 per share on an adjusted (non-GAAP) operating basis, which is at the midpoint of our revised full year guidance of $3.05-$3.20 per share and $0.07 above our original midpoint," said Joe Nigro, Exelon senior executive vice president and CFO. "Over the next four years we will invest nearly $23 billion to strengthen the reliability and resiliency of our system, enable our communities to meet their low carbon energy goals and improve service to our 10 million utility customers. The successes we achieved in 2018 position us well for the year ahead, and we anticipate even more benefits from much-needed policy and market reforms."
Fourth Quarter 2018
Exelon's GAAP Net Income for the fourth quarter of 2018 decreased to $0.16 per share from $1.94 per share in the fourth quarter of 2017. Adjusted (non-GAAP) Operating Earnings increased to $0.58 per share in the fourth quarter of 2018 from $0.56 per share in the fourth quarter of 2017. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 7.
Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2018 primarily reflect higher utility earnings due to electric distribution and energy efficiency earnings at ComEd, regulatory rate increases at PHI and the absence of a 2017 impairment of certain transmission-related income tax regulatory assets; and, at Generation, lower realized energy prices, partially offset by the favorable impacts of Illinois ZEC revenue, increased capacity prices and tax savings related to the Tax Cuts and Jobs Act (TCJA).
Full Year 2018
Exelon's GAAP Net Income decreased to $2.07 per share from $3.99 per share in 2017. Exelon's Adjusted (non-GAAP) Operating Earnings for 2018 increased to $3.12 per share from $2.62 per share in 2017.
Adjusted (non-GAAP) Operating Earnings for the full year 2018 reflect higher utility earnings due to electric distribution and energy efficiency earnings at ComEd, regulatory rate increases at BGE and PHI, favorable weather conditions and volumes at PECO and PHI and the absence of a 2017 impairment of certain transmission-related income tax regulatory assets, all of which were partially offset by increased storm costs at PECO and BGE. On the Generation side, the Adjusted (non-GAAP) Operating Earnings also reflect the favorable impacts of New York and Illinois ZEC revenue (including the impact of ZECs generated in Illinois from June 1, 2017 through Dec. 31, 2017), increased capacity prices, tax savings related to the TCJA, realized gains on nuclear decommissioning trust (NDT) funds and decreased nuclear outage days, all of which were partially offset by lower realized energy prices and the absence of earnings from Exelon Generation Texas Power due to its deconsolidation in the fourth quarter of 2017.
Operating Company Results1
ComEd
ComEd's fourth quarter of 2018 GAAP Net Income increased to $141 million from $120 million in the fourth quarter of 2017. ComEd's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2018 increased to $141 million from $123 million in the fourth quarter of 2017, primarily reflecting higher electric distribution and energy efficiency earnings. Due to revenue decoupling, ComEd's distribution earnings are not affected by actual weather or customer usage patterns.
____________________
1Exelon's five business units include ComEd, which consists of electricity transmission and distribution operations in northern Illinois; PECO, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania; BGE, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland; PHI, which consists of electricity transmission and distribution operations in the District of Columbia and portions of Maryland, Delaware, and New Jersey and retail natural gas distribution operations in northern Delaware; and Generation, which consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products and risk management services.
PECO
PECO's fourth quarter of 2018 GAAP Net Income increased to $124 million from $107 million in the fourth quarter of 2017. PECO's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2018 increased to $125 million from $95 million in the fourth quarter of 2017, primarily due to favorable volumes and income tax impacts.
BGE
BGE's fourth quarter of 2018 GAAP Net Income decreased to $71 million from $76 million in the fourth quarter of 2017. BGE's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2018 decreased to $72 million from $82 million in the fourth quarter of 2017. Due to revenue decoupling, BGE's distribution earnings are not affected by actual weather or customer usage patterns.
PHI
PHI's fourth quarter of 2018 GAAP Net Income increased to $62 million from $4 million in the fourth quarter of 2017. PHI's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2018 increased to $68 million from $48 million in the fourth quarter of 2017, primarily due to regulatory rate increases and the absence of a 2017 impairment of certain transmission-related income tax regulatory assets. Due to revenue decoupling, PHI's distribution earnings related to Pepco Maryland, DPL Maryland and Pepco District of Columbia are not affected by actual weather or customer usage patterns.
Generation
Generation had a GAAP Net Loss of $178 million in the fourth quarter of 2018 compared with GAAP Net Income of $2,224 million in the fourth quarter of 2017. Generation's Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2018 decreased to $221 million from $261 million in the fourth quarter of 2017, primarily reflecting lower realized energy prices, partially offset by the favorable impacts of Illinois ZEC revenue, increased capacity prices and tax savings related to the TCJA.
The proportion of expected generation hedged for the Mid-Atlantic, Midwest, New York and ERCOT reportable segments as of Dec. 31, 2018, was 89.0 percent to 92.0 percent for 2019, 56.0 percent to 59.0 percent for 2020 and 32.0 percent to 35.0 percent for 2021.
Initiates Annual Guidance for 2019
Exelon introduced a guidance range for 2019 Adjusted (non-GAAP) Operating Earnings of $3.00 to $3.30 per share. The outlook for 2019 Adjusted (non-GAAP) Operating Earnings for Exelon and its subsidiaries excludes the following items:
Recent Developments and Fourth Quarter Highlights
GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliations
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2018 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) |
ExelonEarnings per Diluted Share |
Exelon | ComEd | PECO | BGE | PHI | Generation | |||||||||||||||||||||
2018 GAAP Net Income (Loss) | $ | 0.16 | $ | 152 | $ | 141 | $ | 124 | $ | 71 | $ | 62 | $ | (178 | ) | |||||||||||||
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $63 and $61, respectively) | 0.19 | 178 | — | — | — | — | 176 | |||||||||||||||||||||
Unrealized Losses Related to Nuclear Decommissioning Trust (NDT) Funds (net of taxes of $172) | 0.25 | 243 | — | — | — | — | 243 | |||||||||||||||||||||
Merger Commitments (net of taxes of $0 and $1, respectively) | — | — | — | — | — | 4 | — | |||||||||||||||||||||
Plant Retirements and Divestitures (net of taxes of $32 and $31, respectively) | 0.10 | 90 | — | — | — | — | 91 | |||||||||||||||||||||
Cost Management Program (net of taxes of $6, $0, $0, $1 and $5, respectively) | 0.02 | 18 | — | 1 | 1 | 2 | 14 | |||||||||||||||||||||
Annual Asset Retirement Obligation Update (net of taxes of $1) | — | 4 | — | — | — | — | 4 | |||||||||||||||||||||
Change in Environmental Liabilities (net of taxes of $1) | — | 3 | — | — | — | — | 3 | |||||||||||||||||||||
Gain on Contract Settlement (net of taxes of $20 and $19, respectively) | (0.06 | ) | (55 | ) | — | — | — | — | (56 | ) | ||||||||||||||||||
Reassessment of Deferred Income Taxes (entire amount represents tax expense) | — | 3 | — | — | — | — | 1 | |||||||||||||||||||||
Noncontrolling Interests (net of taxes of $15) | (0.08 | ) | (77 | ) | — | — | — | — | (77 | ) | ||||||||||||||||||
2018 Adjusted (non-GAAP) Operating Earnings | $ | 0.58 | $ | 559 | $ | 141 | $ | 125 | $ | 72 | $ | 68 | $ | 221 | ||||||||||||||
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2017 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) |
ExelonEarnings per Diluted Share |
Exelon | ComEd | PECO | BGE | PHI | Generation | |||||||||||||||||||||
2017 GAAP Net Income | $ | 1.94 | $ | 1,880 | $ | 120 | $ | 107 | $ | 76 | $ | 4 | $ | 2,224 | ||||||||||||||
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $7 and $6, respectively) | 0.01 | 8 | — | — | — | — | 9 | |||||||||||||||||||||
Unrealized Gains Related to NDT Funds (net of taxes of $105) | (0.11 | ) | (108 | ) | — | — | — | — | (108 | ) | ||||||||||||||||||
Amortization of Commodity Contract Intangibles (net of taxes of $5) | 0.01 | 8 | — | — | — | — | 8 | |||||||||||||||||||||
Merger and Integration Costs (net of taxes of $1, $1 and $0, respectively) | — | 1 | — | — | 1 | — | 1 | |||||||||||||||||||||
Long-Lived Asset Impairments (net of taxes of $16, $9 and $8, respectively) | 0.03 | 29 | — | — | — | 16 | 12 | |||||||||||||||||||||
Plant Retirements and Divestitures (net of taxes of $45) | 0.07 | 70 | — | — | — | — | 70 | |||||||||||||||||||||
Cost Management Program (net of taxes of $6, $1, $0 and $5, respectively) | 0.01 | 10 | — | 1 | 1 | — | 8 | |||||||||||||||||||||
Vacation Policy Change (net of taxes of $21, $1, $1, $3 and $16, respectively) | (0.03 | ) | (33 | ) | — | (1 | ) | (1 | ) | (5 | ) | (26 | ) | |||||||||||||||
Change in Environmental Liabilities (net of taxes of $17) | 0.03 | 27 | — | — | — | — | 27 | |||||||||||||||||||||
Gain on Deconsolidation of Businesses (net of taxes of $83) | (0.14 | ) | (130 | ) | — | — | — | — | (130 | ) | ||||||||||||||||||
Reassessment of Deferred Income Taxes (entire amount represents tax expense) | (1.30 | ) | (1,257 | ) | 3 | (12 | ) | 5 | 33 | (1,874 | ) | |||||||||||||||||
Noncontrolling Interests (net of taxes of $8) | 0.04 | 40 | — | — | — | — | 40 | |||||||||||||||||||||
2017 Adjusted (non-GAAP) Operating Earnings | $ | 0.56 | $ | 545 | $ | 123 | $ | 95 | $ | 82 | $ | 48 | $ | 261 | ||||||||||||||
Adjusted (non-GAAP) Operating Earnings for the full year 2018 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) |
ExelonEarnings per Diluted Share |
Exelon | ComEd | PECO | BGE | PHI | Generation | |||||||||||||||||||||
2018 GAAP Net Income | $ | 2.07 | $ | 2,010 | $ | 664 | $ | 460 | $ | 313 | $ | 398 | $ | 370 | ||||||||||||||
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $89 and $84, respectively) | 0.26 | 252 | — | — | — | — | 241 | |||||||||||||||||||||
Unrealized Losses Related to NDT Funds (net of taxes of $289) | 0.35 | 337 | — | — | — | — | 337 | |||||||||||||||||||||
Merger and Integration Costs (net of taxes of $2) | — | 3 | — | — | — | — | 3 | |||||||||||||||||||||
Merger Commitments (net of taxes of $0 and $1, respectively) | — | — | — | — | — | 4 | — | |||||||||||||||||||||
Long-Lived Asset Impairments (net of taxes of $13) | 0.04 | 35 | — | — | — | — | 35 | |||||||||||||||||||||
Plant Retirements and Divestitures (net of taxes of $181 and $178, respectively) | 0.53 | 512 | — | — | — | — | 514 | |||||||||||||||||||||
Cost Management Program (net of taxes of $16, $1, $1, $2 and $12 respectively) | 0.05 | 48 | — | 3 | 3 | 4 | 37 | |||||||||||||||||||||
Annual Asset Retirement Obligation Update (net of taxes of $7, $6 and $1, respectively) | 0.02 | 20 | — | — | — | 16 | 4 | |||||||||||||||||||||
Change in Environmental Liabilities (net of taxes of $0) | — | (1 | ) | — | — | — | — | (1 | ) | |||||||||||||||||||
Gain on Contract Settlement (net of taxes of $20 and $19, respectively) | (0.06 | ) | (55 | ) | — | — | — | — | (56 | ) | ||||||||||||||||||
Reassessment of Deferred Income Taxes (entire amount represents tax expense) | (0.02 | ) | (22 | ) | — | — | — | (7 | ) | (28 | ) | |||||||||||||||||
Noncontrolling Interests (net of taxes of $24) | (0.12 | ) | (113 | ) | — | — | — | — | (113 | ) | ||||||||||||||||||
2018 Adjusted (non-GAAP) Operating Earnings | $ | 3.12 | $ | 3,026 | $ | 664 | $ | 463 | $ | 316 | $ | 415 | $ | 1,343 | ||||||||||||||
Adjusted (non-GAAP) Operating Earnings for the full year 2017 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) | ExelonEarnings per Diluted Share | Exelon | ComEd | PECO | BGE | PHI | Generation | |||||||||||||||||||||
2017 GAAP Net Income | $ | 3.99 | $ | 3,786 | $ | 567 | $ | 434 | $ | 307 | $ | 362 | $ | 2,710 | ||||||||||||||
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $68 and $66, respectively) | 0.11 | 107 | — | — | — | — | 109 | |||||||||||||||||||||
Unrealized Gains Related to NDT Funds (net of taxes of $286) | (0.34 | ) | (318 | ) | — | — | — | — | (318 | ) | ||||||||||||||||||
Amortization of Commodity Contract Intangibles (net of taxes of $22) | 0.04 | 34 | — | — | — | — | 34 | |||||||||||||||||||||
Merger and Integration Costs (net of taxes of $25, $0, $2, $2, $7 and $27, respectively) | 0.04 | 40 | 1 | 2 | 2 | (10 | ) | 44 | ||||||||||||||||||||
Merger Commitments (net of taxes of $137, $52 and $18, respectively) | (0.14 | ) | (137 | ) | — | — | — | (59 | ) | (18 | ) | |||||||||||||||||
Long-Lived Asset Impairments (net of taxes of $204, $9 and $194, respectively) | 0.34 | 321 | — | — | — | 16 | 306 | |||||||||||||||||||||
Plant Retirements and Divestitures (net of taxes of $134 and $133, respectively) | 0.22 | 207 | — | — | — | — | 208 | |||||||||||||||||||||
Cost Management Program (net of taxes of $21, $3, $3 and $15, respectively) | 0.04 | 34 | — | 4 | 5 | — | 25 | |||||||||||||||||||||
Annual Asset Retirement Obligation Update (net of taxes of $1) | — | (2 | ) | — | — | — | — | (2 | ) | |||||||||||||||||||
Vacation Policy Change (net of taxes of $21, $1, $1, $3 and $16, respectively) | (0.03 | ) | (33 | ) | — | (1 | ) | (1 | ) | (5 | ) | (26 | ) | |||||||||||||||
Change in Environmental Liabilities (net of taxes of $17) | 0.03 | 27 | — | — | — | — | 27 | |||||||||||||||||||||
Bargain Purchase Gain (net of taxes of $0) | (0.25 | ) | (233 | ) | — | — | — | — | (233 | ) | ||||||||||||||||||
Gain on Deconsolidation of Business (net of taxes of $83) | (0.14 | ) | (130 | ) | — | — | — | — | (130 | ) | ||||||||||||||||||
Like-Kind Exchange Tax Position (net of taxes of $66 and $9, respectively) | (0.03 | ) | (26 | ) | 23 | — | — | — | — | |||||||||||||||||||
Reassessment of Deferred Income Taxes (entire amount represents tax expense) | (1.37 | ) | (1,299 | ) | 1 | (12 | ) | 5 | 34 | (1,856 | ) | |||||||||||||||||
Tax Settlements (net of taxes of $1) | (0.01 | ) | (5 | ) | — | — | — | — | (5 | ) | ||||||||||||||||||
Noncontrolling Interests (net of taxes of $24) | 0.12 | 114 | — | — | — | — | 114 | |||||||||||||||||||||
2017 Adjusted (non-GAAP) Operating Earnings | $ | 2.62 | $ | 2,487 | $ | 592 | $ | 427 | $ | 318 | $ | 338 | $ | 989 | ||||||||||||||
Note:
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items except the unrealized gains and losses related to NDT funds, the marginal statutory income tax rates for 2018 and 2017 ranged from 26.0 percent to 29.0 percent and 39.0 percent to 41.0 percent, respectively. Under IRS regulations, NDT fund returns are taxed at different rates for investments if they are in qualified or non-qualified funds. The effective tax rates for the unrealized gains and losses related to NDT funds were 41.4 percent and 49.5 percent for the three months ended Dec. 31, 2018 and 2017, respectively; and were 46.2 percent and 47.4 percent for the twelve months ended Dec. 31, 2018 and 2017, respectively.
Webcast Information
Exelon will discuss fourth quarter 2018 earnings in a one-hour conference call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time). The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.
About Exelon
Exelon Corporation (NYSE:EXC) is a Fortune 100 energy company with the largest number of electricity and natural gas customers in the U.S. Exelon does business in 48 states, the District of Columbia and Canada and had 2018 revenue of $36 billion. Exelon serves approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 32,000 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation's cleanest and lowest-cost power generation fleets. The company's Constellation business unit provides energy products and services to approximately 2 million residential, public sector and business customers, including more than two-thirds of the Fortune 100. Follow Exelon on Twitter @Exelon.
Non-GAAP Financial Measures
In addition to net income as determined under generally accepted accounting principles in the United States (GAAP), Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) Operating Earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) Operating Earnings exclude certain costs, expenses, gains and losses and other specified items. This measure is intended to enhance an investor's overall understanding of period over period operating results and provide an indication of Exelon's baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this measure is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. Adjusted (non-GAAP) Operating Earnings is not a presentation defined under GAAP and may not be comparable to other companies' presentation. The Company has provided the non-GAAP financial measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) Operating Earnings should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP Net Income measures provided in this earnings release and attachments. This press release and earnings release attachments provide reconciliations of adjusted (non-GAAP) Operating Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, are posted on Exelon's website: www.exeloncorp.com, and have been furnished to the Securities and Exchange Commission on Form 8-K on Feb 8, 2019.
Cautionary Statements Regarding Forward-Looking Information
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by the Registrants include those factors discussed herein, as well as the items discussed in (1) the Registrants' 2017 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 23, Commitments and Contingencies; (2) the Registrants' Third Quarter 2018 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 17, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this press release. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this press release.
EXELON CORPORATION | ||||||||||||||||||||
GAAP Consolidated Statements of Operations and | ||||||||||||||||||||
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments | ||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
(in millions, except per share data) |
||||||||||||||||||||
Three Months Ended December 31, 2018 | Three Months Ended December 31, 2017 (b) | |||||||||||||||||||
GAAP (a) |
Non-GAAPAdjustments |
GAAP (a) |
Non-GAAPAdjustments |
|||||||||||||||||
Operating revenues | $ | 8,814 | $ | 166 | (c) | $ | 8,384 | $ | 93 | (c),(e) | ||||||||||
Operating expenses | ||||||||||||||||||||
Purchased power and fuel | 4,296 | 21 | (c),(g),(k) | 3,508 | 61 | (c),(e),(g) | ||||||||||||||
Operating and maintenance | 2,302 | (38 | ) | (f),(g),(h) | 2,368 | (53 | ) | (f),(g),(h),(i),(l) | ||||||||||||
Depreciation and amortization | 1,068 | (112 | ) | (g) | 1,015 | (109 | ) | (g) | ||||||||||||
Taxes other than income | 441 | (1 | ) | (h) | 418 | 2 | (i) | |||||||||||||
Total operating expenses | 8,107 | 7,309 | ||||||||||||||||||
Gain on sales of assets and businesses | 1 | — | — | — | ||||||||||||||||
Gain on deconsolidation of business | — | — | 213 | (213 | ) | (j) | ||||||||||||||
Operating income | 708 | 1,288 | ||||||||||||||||||
Other income and (deductions) | ||||||||||||||||||||
Interest expense, net | (416 | ) | 15 | (c) | (365 | ) | — | |||||||||||||
Other, net | (323 | ) | 425 | (c),(d) | 304 | (244 | ) | (d),(l) | ||||||||||||
Total other income and (deductions) | (739 | ) | (61 | ) | ||||||||||||||||
(Loss) income before income taxes | (31 | ) | 1,227 | |||||||||||||||||
Income taxes | (142 | ) | 252 | (c),(d),(g),(h),(k),(l) | (726 | ) | 1,110 | (c),(d),(e),(f),(g),(h),(i),(j),(l) | ||||||||||||
Equity in losses of unconsolidated affiliates | (6 | ) | — | (6 | ) | — | ||||||||||||||
Net income | 105 | 1,947 | ||||||||||||||||||
Net (loss) income attributable to noncontrolling interests | (47 | ) | 77 | (m) | 67 | (40 | ) | (m) | ||||||||||||
Net income attributable to common shareholders | $ | 152 | $ | 1,880 | ||||||||||||||||
Effective tax rate(n)(o) | 458.1 | % | (59.2 | )% | ||||||||||||||||
Earnings per average common share | ||||||||||||||||||||
Basic | $ | 0.16 | $ | 1.95 | ||||||||||||||||
Diluted | $ | 0.16 | $ | 1.94 | ||||||||||||||||
Average common shares outstanding | ||||||||||||||||||||
Basic | 969 | 964 | ||||||||||||||||||
Diluted | 971 | 967 | ||||||||||||||||||
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: | ||||||||||||||||||||
Mark-to-market impact of economic hedging activities (c) | $ | 0.19 | $ | 0.01 | ||||||||||||||||
Unrealized (gains) losses related to NDT funds (d) | 0.25 | (0.11 | ) | |||||||||||||||||
Amortization of commodity contract intangibles (e) | — | 0.01 | ||||||||||||||||||
Long-lived asset impairments (f) | — | 0.03 | ||||||||||||||||||
Plant retirements and divestitures (g) | 0.10 | 0.07 | ||||||||||||||||||
Cost management program (h) | 0.02 | 0.01 | ||||||||||||||||||
Vacation policy change (i) | — | (0.03 | ) | |||||||||||||||||
Change in environmental liabilities | — | 0.03 | ||||||||||||||||||
Gain on deconsolidation of business (j) | — | (0.14 | ) | |||||||||||||||||
Gain on contract settlement (k) | (0.06 | ) | — | |||||||||||||||||
Reassessment of deferred income taxes (l) | — | (1.30 | ) | |||||||||||||||||
Noncontrolling interests (m) | (0.08 | ) | 0.04 | |||||||||||||||||
Total adjustments | $ | 0.42 | $ | (1.38 | ) |
(a) | Results reported in accordance with accounting principles generally accepted in the United States (GAAP). | |
(b) | Certain immaterial prior year amounts in the Registrants' Consolidated Statements of Operations and Comprehensive Income have been recasted to reflect new accounting standards issued by the FASB and adopted as of January 1, 2018. | |
(c) | Adjustment to exclude the mark-to-market impact of Exelon's economic hedging activities, net of intercompany eliminations. | |
(d) | Adjustment to exclude impact of net unrealized gains and losses on Generation's NDT funds for Non-Regulatory and Regulatory Agreement Units. The impacts of the Regulatory Agreement Units, including the associated income taxes, are contractually eliminated, resulting in no earnings impact. | |
(e) | Adjustment to exclude the non-cash amortization of intangible assets, net, primarily related to commodity contracts recorded at fair value related to the ConEdison Solutions and FitzPatrick acquisitions. | |
(f) | Adjustment to exclude primarily charges to earnings related to the PHI impairment of the District of Columbia sponsorship intangible asset. | |
(g) | Adjustment to exclude primarily accelerated depreciation and amortization expenses associated with Generation's decision to early retire the Three Mile Island nuclear facility. | |
(h) | Adjustment to exclude primarily severance and reorganization costs related to a cost management program. | |
(i) | Adjustment to exclude the reversal of previously accrued vacation expenses as a result of a change in Exelon's vacation vesting policy. | |
(j) | Adjustment to exclude the gain recorded upon deconsolidation of ExGen Texas Power, LLC (EGTP) net liabilities, which included the previously impaired assets and related debt, as a result of the November 2017 bankruptcy filing. | |
(k) | Adjustment to exclude the gain on the settlement of a long-term gas supply agreement at Generation. | |
(l) | Adjustment to exclude in 2017, the one-time non-cash impacts associated with the Tax Cuts and Jobs Act (TCJA) (including impacts on pension obligations contained within Other) and in 2018, an adjustment to the remeasurement of deferred income taxes as a result of TCJA and changes in forecasted apportionment. | |
(m) | Adjustment to exclude the elimination from Generation's results of the noncontrolling interest related to certain exclusion items, primarily related to the impact of unrealized gains and losses on NDT funds at CENG. | |
(n) | The effective tax rate related to GAAP Net Income for the three months ended December 31, 2018 includes the impact of the Tax Cuts and Jobs Act. | |
(o) | The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 15.6% and 39.9% for the three months ended December 31, 2018 and 2017, respectively. | |
EXELON CORPORATION | ||||||||||||||||||||
GAAP Consolidated Statements of Operations and | ||||||||||||||||||||
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments | ||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
(in millions, except per share data) |
||||||||||||||||||||
Twelve Months Ended December 31, 2018 |
Twelve Months Ended December 31, 2017 (b) | |||||||||||||||||||
GAAP (a) |
Non-GAAPAdjustments |
GAAP (a) |
Non-GAAPAdjustments |
|||||||||||||||||
Operating revenues | $ | 35,985 | $ | 263 | (c) | $ | 33,565 | $ | 170 | (c),(e) | ||||||||||
Operating expenses | ||||||||||||||||||||
Purchased power and fuel | 16,670 | (38 | ) | (c),(i),(o) | 14,035 | (72 | ) | (c),(e),(i) | ||||||||||||
Operating and maintenance | 9,337 | (272 | ) | (f),(h),(i),(j),(k) | 10,025 | (686 | ) | (f),(h),(i),(j),(k),(l),(q) | ||||||||||||
Depreciation and amortization | 4,353 | (553 | ) | (i) | 3,828 | (252 | ) | (e),(i) | ||||||||||||
Taxes other than income | 1,783 | (1 | ) | (j) | 1,731 | 2 | (l) | |||||||||||||
Total operating expenses | 32,143 | 29,619 | ||||||||||||||||||
Gain on sales of assets and businesses | 56 | (48 | ) | (i) | 3 | 1 | (i) | |||||||||||||
Bargain purchase gain | — | — | 233 | (233 | ) | (m) | ||||||||||||||
Gain on deconsolidation of business | — | — | 213 | (213 | ) | (n) | ||||||||||||||
Operating income | 3,898 | 4,395 | ||||||||||||||||||
Other income and (deductions) | ||||||||||||||||||||
Interest expense, net | (1,554 | ) | 25 | (c) | (1,560 | ) | 58 | (h),(p),(r) | ||||||||||||
Other, net | (112 | ) | 625 | (c),(d) | 947 | (638 | ) | (d),(p),(q) | ||||||||||||
Total other income and (deductions) | (1,666 | ) | (613 | ) | ||||||||||||||||
Income before income taxes | 2,232 | 3,782 | ||||||||||||||||||
Income taxes | 120 | 600 | (c),(d),(f),(h),(i),(j),(k),(o),(q) | (126 | ) | 1,566 | (c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(n),(p),(q),(r) | |||||||||||||
Equity in losses of unconsolidated affiliates | (28 | ) | — | (32 | ) | — | ||||||||||||||
Net income | 2,084 | 3,876 | ||||||||||||||||||
Net income attributable to noncontrolling interests | 74 | 113 | (s) | 90 | (114 | ) | (s) | |||||||||||||
Net income attributable to common shareholders | $ | 2,010 | $ | 3,786 | ||||||||||||||||
Effective tax rate(t)(u) | 5.4 | % | (3.3 | )% | ||||||||||||||||
Earnings per average common share | ||||||||||||||||||||
Basic | $ | 2.08 | $ | 4.00 | ||||||||||||||||
Diluted | $ | 2.07 | $ | 3.99 | ||||||||||||||||
Average common shares outstanding | ||||||||||||||||||||
Basic | 967 | 947 | ||||||||||||||||||
Diluted | 969 | 949 | ||||||||||||||||||
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: | ||||||||||||||||||||
Mark-to-market impact of economic hedging activities (c) | $ | 0.26 | $ | 0.11 | ||||||||||||||||
Unrealized losses (gains) related to NDT funds (d) | 0.35 | (0.34 | ) | |||||||||||||||||
Amortization of commodity contract intangibles (e) | — | 0.04 | ||||||||||||||||||
Merger and integration costs (f) | — | 0.04 | ||||||||||||||||||
Merger commitments (g) | — | (0.14 | ) | |||||||||||||||||
Long-lived asset impairments (h) | 0.04 | 0.34 | ||||||||||||||||||
Plant retirements and divestitures (i) | 0.53 | 0.22 | ||||||||||||||||||
Cost management program (j) | 0.05 | 0.04 | ||||||||||||||||||
Annual asset retirement obligation update (k) | 0.02 | — | ||||||||||||||||||
Vacation policy change (l) | — | (0.03 | ) | |||||||||||||||||
Change in environmental liabilities | — | 0.03 | ||||||||||||||||||
Bargain purchase gain (m) | — | (0.25 | ) | |||||||||||||||||
Gain on deconsolidation of business (n) | — | (0.14 | ) | |||||||||||||||||
Gain on contract settlement (o) | (0.06 | ) | — | |||||||||||||||||
Like-kind exchange tax position (p) | — | (0.03 | ) | |||||||||||||||||
Reassessment of deferred income taxes (q) | (0.02 | ) | (1.37 | ) | ||||||||||||||||
Tax settlements (r) | — | (0.01 | ) | |||||||||||||||||
Noncontrolling interests (s) | (0.12 | ) | 0.12 | |||||||||||||||||
Total adjustments | $ | 1.05 | $ | (1.37 | ) |
(a) | Results reported in accordance with accounting principles generally accepted in the United States (GAAP). | |
(b) | Certain immaterial prior year amounts in the Registrants' Consolidated Statements of Operations and Comprehensive Income have been recasted to reflect new accounting standards issued by the FASB and adopted as of January 1, 2018. | |
(c) | Adjustment to exclude the mark-to-market impact of Exelon's economic hedging activities, net of intercompany eliminations. | |
(d) | Adjustment to exclude impact of net unrealized gains and losses on Generation's NDT funds for Non-Regulatory and Regulatory Agreement Units. The impacts of the Regulatory Agreement Units, including the associated income taxes, are contractually eliminated, resulting in no earnings impact. | |
(e) | Adjustment to exclude the non-cash amortization of intangible assets, net, primarily related to commodity contracts recorded at fair value related to the ConEdison Solutions and FitzPatrick acquisitions. | |
(f) | Adjustment to exclude certain costs associated with mergers and acquisitions, including, if and when applicable, professional fees, employee-related expenses and integration activities. In 2017, reflects costs related to the PHI and FitzPatrick acquisitions, offset at PHI by the anticipated recovery of previously incurred PHI acquisition costs. | |
(g) | Adjustment to exclude in 2017, primarily a decrease in reserves for uncertain tax positions related to the deductibility of certain merger commitments associated with the 2012 CEG and 2016 PHI acquisitions. | |
(h) | Adjustment to exclude in 2017, primarily charges to earnings related to the impairment of the ExGen Texas Power, LLC (EGTP) assets held for sale and PHI District of Columbia sponsorship intangible asset and in 2018, primarily the impairment of certain wind projects at Generation. | |
(i) | Adjustment to exclude in 2017, primarily accelerated depreciation and amortization expenses and one-time charges associated with Generation's previous decision to early retire the Three Mile Island nuclear facility. In 2018, primarily accelerated depreciation and amortization expenses and one-time charges associated with Generation's decision to early retire the Oyster Creek nuclear facility, a charge associated with a remeasurement of the Oyster Creek Asset Retirement Obligation (ARO) and accelerated depreciation and amortization expenses associated with the 2017 decision to early retire the Three Mile Island nuclear facility, partially offset by a gain associated with Generation's sale of its electrical contracting business. | |
(j) | Adjustment to exclude primarily severance and reorganization costs related to a cost management program. | |
(k) | Adjustment to exclude for Pepco, an increase related to asbestos identified at its Buzzard Point property. | |
(l) | Adjustment to exclude the reversal of previously accrued vacation expenses as a result of a change in Exelon's vacation vesting policy. | |
(m) | Adjustment to exclude the excess of the fair value of assets and liabilities acquired over the purchase price for the FitzPatrick acquisition. | |
(n) | Adjustment to exclude the gain recorded upon deconsolidation of EGTP's net liabilities, which included the previously impaired assets and related debt, as a result of the November 2017 bankruptcy filing. | |
(o) | Adjustment to exclude the gain on the settlement of a long-term gas supply agreement at Generation. | |
(p) | Adjustment to exclude adjustments to income tax, penalties and interest expenses as a result of the finalization of the IRS tax computation related to Exelon's like-kind exchange tax position. | |
(q) | Adjustment to exclude in 2017, one-time non-cash impacts associated with remeasurements of deferred income taxes as a result of the Tax Cuts and Jobs Act (TCJA) (including impacts on pension obligations contained within Other), changes in the Illinois and District of Columbia statutory tax rates and changes in forecasted apportionment. In 2018, an adjustment to the remeasurement of deferred income taxes as a result of the TCJA and changes in forecasted apportionment. | |
(r) | Adjustment to exclude benefits related to the favorable settlement in 2017 of certain income tax positions related to PHI's unregulated business interests. | |
(s) | Adjustment to exclude elimination from Generation's results of the noncontrolling interests related to certain exclusion items, primarily related to the impact of unrealized gains and losses on NDT funds at CENG. | |
(t) | The effective tax rate related to GAAP Net Income for the twelve months ended December 31, 2018 includes the impact of the TCJA. | |
(u) | The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 18.2% and 36.6% for the twelve months ended December 31, 2018 and 2017, respectively. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190208005190/en/