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Exelon Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 22, 2010 03:14PM
Exelon Corp. (EXC) filed Quarterly Report for the period ended 2010-09-30. Exelon Corp. has a market cap of $28.77 billion; its shares were traded at around $43.52 with a P/E ratio of 11.5 and P/S ratio of 1.7. The dividend yield of Exelon Corp. stocks is 4.8%. Exelon Corp. had an annual average earning growth of 12.5% over the past 10 years.EXC is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Arnold Van Den Berg of Century Management, Brian Rogers of T Rowe Price Equity Income Fund, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Mario Gabelli of GAMCO Investors, Paul Tudor Jones of The Tudor Group, Donald Yacktman of Yacktman Asset Management Co., Kenneth Fisher of Fisher Asset Management, LLC, Manning & Napier Advisors, Inc, David Dreman of Dreman Value Management, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Revenue net of purchased power and fuel expense, which is a non-GAAP measure as discussed below, increased by $196 million, primarily due to the impact of favorable weather conditions of $117 million in the ComEd and PECO service territories, higher capacity revenues at Generation of $67 million and increased revenues of $50 million at the utility companies to recover the costs of regulatory required programs, which are offset in operating expenses. Increased revenue net of purchased power and fuel expense was partially offset by a $57 million impairment of SO2 emissions allowances as a result of changes in market prices related to the U.S. EPAs proposed Transport Rule.
Operating and maintenance expense increased by $120 million primarily due to a 2009 reduction in Generations ARO for the Non-Regulatory Agreement Units of $52 million, higher costs at the utility companies associated with regulatory required programs of $50 million, which are offset in revenue net of purchased power expense, and increased wages and other benefits expense of $37 million. Offsetting the increase were decreased planned nuclear refueling outage costs, excluding Salem, of $26 million.
Revenue net of purchased power and fuel expense increased by $246 million primarily due to the impact of favorable weather conditions of $151 million in the ComEd and PECO service territories and mark-to-market gains of $273 million from Generations hedging activities in 2010 compared to gains of $139 million in 2009. Exelon also benefited from increased capacity revenues of $122 million at Generation and a decrease in costs of $67 million associated with the Illinois Settlement Legislation, primarily at Generation. Further, revenues increased by $108 million at the utility companies to recover the costs of regulatory required programs, which are offset in operating expenses. Offsetting these favorable impacts were unfavorable market and portfolio conditions of $151 million, increased nuclear fuel costs of $87 million, the impact of lower nuclear output of $63 million due to increased planned nuclear outage days and a $57 million impairment of SO2 emissions allowances related to the U.S. EPAs proposed Transport Rule.
Operating and maintenance expense decreased by $140 million primarily due to the impact of 2009 activities, including the $223 million impairment of the Handley and Mountain Creek stations and reduced stock compensation costs of $37 million across the operating companies. In addition, ComEd recorded a net reduction of $60 million in operating and maintenance expense resulting from the February 2010 approval by the ICC of ComEds uncollectible accounts expense rider mechanism. Decreased operating and maintenance expense was partially offset by higher costs at the utility companies associated with regulatory required programs of $108 million, which are offset in revenue net of purchased power expense, a 2009 reduction in Generations ARO of $52 million and incremental costs of $41 million related to storms in the ComEd and PECO service territories.
Depreciation and amortization expense increased by $251 million primarily due to a scheduled increase in CTC amortization expense at PECO of $125 million in accordance with its 1998 Restructuring Settlement and increased depreciation expense of $126 million primarily due to ongoing capital expenditures and the change in estimated useful lives associated with the plants subject to shutdowns announced in December 2009. Exelons results were also significantly affected by net NDT gains of $86 million in 2010 compared to $220 million in 2009 for Non-Regulatory Agreement Units as a result of less favorable market performance.
Adjusted (non-GAAP) Operating Earnings. Exelons adjusted (non-GAAP) operating earnings for the three months ended September 30, 2010 were $739 million, or $1.11 per diluted share, compared with adjusted (non-GAAP) operating earnings of $633 million, or $0.96 per diluted share, for the same period in 2009. Exelons adjusted (non-GAAP) operating earnings for the nine months ended September 30, 2010 were $2,057 million, or $3.10 per diluted share, compared with adjusted (non-GAAP) operating earnings of $2,112 million, or $3.19 per diluted share, for the same period in 2009. In addition to net income, 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 information is intended to enhance an investors overall understanding of year-to-year operating results and provide an indication of Exelons 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 information 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 presentations or deemed more useful than the GAAP information provided elsewhere in this report.
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