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Exelon Misses Q4 Earnings, Beats Revs

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Exelon Corporation (EXC - Analyst Report) announced fourth-quarter 2013 adjusted operating earnings of 50 cents per share, missing the Zacks Consensus Estimate by 5.7%. Quarterly earnings plunged 21.9% year over year due to a decline in realized energy prices for the sale of energy at every region and higher depreciation and amortization expenses.

On a GAAP basis, quarterly earnings were 58 cents compared with 44 cents a year ago. The difference between GAAP and adjusted operating earnings was primarily due to the combined impact from a mark-to-market gain from the economic hedging activities, unrealized gains for the Nuclear Decommissioning Trust Fund Investments, a merger and integration related costs, charges related to the Midwest Generation bankruptcy and charges for the amortization of commodity contract intangibles.

For 2013, the company’s adjusted operating earnings were $2.50 per share, lagging the Zacks Consensus Estimate by 3 cents. Annual earnings were 12.3% lower than the year-ago level.

Exelon’s GAAP earnings were $2.00 per share in 2013 compared with the prior-year figure of $1.42 per share.

Total Revenue

In fourth-quarter 2013, Exelon's total operating revenues of $6.2 billion beat the Zacks Consensus Estimate by 11.6%. However, quarterly revenues edged down 1.3% year over year primarily due to lower sales figures at the company’s Generation and Commonwealth Edison Co. (“ComEd”) businesses. This was partially offset by a rise in revenues from PECO Energy Company (“PECO”) and Baltimore Gas and Electric (“BGE”) divisions.

The company’s annual total operating revenues were $24.9 billion, surpassing the Zacks Consensus Estimate by 1.2%. Reported revenues increased 6% from the prior-year figure.

Quarterly Highlights

In the quarter under review, Exelon's total operating expenses decreased 4.3% 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 total operating expenses offset the decline in total operating revenues, resulting in an operating income of $0.9 billion, up 26.3% year over year.

In fourth-quarter, the company supplied/sold total electricity of 59,381 Gigawatt hours, down 8.7% year over year.

Financial Update

As of Dec 31, 2013, Exelon’s cash balance was $1.5 billion compared with $1.4 billion at the end of 2012.

Long-term debt as of Dec 31, 2013 totaled $17.3 billion, up from $17.2 billion as of Dec 31, 2012.

For 2013, net cash flows provided by operating activities were $6.3 billion versus $6.1 billion in the year-ago comparable period.

Exelon’s capital expenditure was $5.4 billion in 2013 compared with $5.8 billion a year ago.

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 Dec 31, 2013, is 91% - 94% for 2014, 62% - 65% for 2015, and 30% - 33% for 2016.

Guidance

Exelon provided guidance for 2014 adjusted operating earnings in the range of $2.25 -  $2.55 per share.

Peer Comparison

Dominion Resources, Inc. (D - Snapshot Report) reported fourth-quarter 2013 operating earnings of 80 cents per share, missing the Zacks Consensus Estimate by 9.1%.

Zacks Rank

Exelon currently has a Zacks Rank #2 (Buy). Some other stocks worth considering in the utilities sector include The AES Corp. (AES - Analyst Report) and CMS Energy Corp. (CMS - Analyst Report), each with Zacks Rank #2 (Buy).

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