Exelon Corp (EXC) Q4 2024 Earnings Call Highlights: Strong Financial Performance and Strategic ...

GuruFocus.com
13 Feb
  • GAAP Earnings for 2024: $2.45 per share.
  • Adjusted Operating Earnings for 2024: $2.50 per share.
  • 2025 Operating Earnings Guidance: $2.64 to $2.74 per share.
  • Dividend for 2025: Increased to $1.60 per share.
  • Capital Investment Plan (2025-2028): $38 billion.
  • Annualized Earnings Growth (2025-2028): 5% to 7%.
  • Return on Equity for 2024: 9.1%.
  • Rate Base Growth (2024-2028): 7.4% annualized.
  • Credit Rating Upgrade: S&P upgraded to BBB+.
  • Equity Funding Strategy: 40% of incremental capital funded with equity.
  • Projected Transmission Investment Opportunity: $10 billion to $15 billion over the next 5 to 10 years.
  • Warning! GuruFocus has detected 8 Warning Signs with EXC.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Exelon Corp (NASDAQ:EXC) achieved top quartile reliability performance across all four of its utilities, with three ranking in the top five among peers.
  • The company reported GAAP earnings of $2.45 per share and adjusted operating earnings of $2.50 per share for 2024, meeting or exceeding guidance.
  • Exelon Corp (NASDAQ:EXC) plans to invest $38 billion from 2025 to 2028, with over 80% of the $3.5 billion capital growth attributed to transmission, supporting customer needs and economic development.
  • The company received an upgrade to its credit rating by S&P, reflecting a strong balance sheet and financial health.
  • Exelon Corp (NASDAQ:EXC) is maintaining a balanced funding strategy, with 40% equity financing, supporting a projected annualized earnings growth of 5% to 7% through 2028.

Negative Points

  • Exelon Corp (NASDAQ:EXC) faced challenges with regulatory approvals, such as the $400 million capital not approved in the Illinois grid plan.
  • The company is dealing with significant storm and weather headwinds, impacting operational costs and performance.
  • There is ongoing uncertainty and need for clarity regarding FERC's policy on colocation and network load, which could impact future operations.
  • Exelon Corp (NASDAQ:EXC) is navigating a complex regulatory environment with multiple rate cases and legislative proposals across its jurisdictions.
  • The company is facing challenges related to energy supply prices and resource adequacy, requiring collaboration with stakeholders and policymakers.

Q & A Highlights

Q: Can you provide more color on the reconciliation decision in Maryland and its impact on future rate case filings? A: Calvin Butler, President and CEO, stated that the process is progressing well, with costs incurred deemed prudent. Jeanne Jones, CFO, added that the reconciliation is expected to conclude in the first half of the year, with initial proposals aligning with prior reconciliations. The multiyear plans have provided strong alignment with state policy and competitive distribution rates, which are beneficial for cost control and affordability.

Q: What are your latest thoughts on the 205 docket with FERC, and are there any discussions with stakeholders? A: Colette Honorable, EVP of Public Policy and Chief External Affairs Officer, mentioned that they are awaiting a decision in the 205 docket and continue to engage with stakeholders, including PJM, to find solutions that work for customers and investors. They are optimistic about a positive result and are actively working on resource adequacy and energy security issues.

Q: How should we think about the growth into 2027 as shown on Slide 18? A: Jeanne Jones, CFO, explained that the growth is calculated year-over-year off the prior year's midpoint, focusing on how Exelon grows from the 2024 midpoint of $2.45 per share through 2028, aiming for the midpoint or better of the 5% to 7% growth range over the four-year period.

Q: Can you comment on the legislative priorities in Maryland and Pennsylvania regarding generation and rate-based solutions? A: Calvin Butler, President and CEO, noted that there are over 45 bills being tracked across jurisdictions, focusing on affordability, energy security, and adequate generation. Carim Khouzami, CEO of BGE, added that Maryland is focused on increasing in-state generation, while Dave Velazquez, CEO of PECO, mentioned active legislative sessions in Pennsylvania addressing resource adequacy and potential alternatives to PJM capacity markets.

Q: How do you view the potential for settlements in PJM policy discussions, and what is the impact of data center deposits on rate base growth? A: Calvin Butler, President and CEO, emphasized the importance of affordability and equitable cost-sharing. Jeanne Jones, CFO, noted that meaningful deposits are being received, indicating real load growth. The 2024 rate base was about $400 million lower due to deposits, which protect customers and signal the need for further investment to accommodate new load.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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