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Exelon's (EXC) CEO Chris Crane on Q1 2014 Earnings - Call Transcript

Stocks in this article: EXC

This transcript originally appeared on Seeking Alpha.

Title: Exelon's CEO Discusses Q1 2014 Results - Earnings Call Transcript

Symbol: EXC

Call Start: 11:00

Call End: 12:00

Exelon Corporation (EXC)

Q1 2014 Earnings Conference Call

April 30, 2014 11:00 a.m. ET


Ravi Ganti - Vice President-Investor Relations

Chris Crane - President and CEO

Joe Rigby - Chairman, President and CEO of Pepco Holdings

Jack Thayer - Executive Vice President and CFO

Joseph Nigro - Executive Vice President and Chief Executive Officer-Constellation


Dan Eggers - Credit Suisse

Greg Gordon - ISI Group

Steve Fleishman - Wolfe Trahan

Julien Smith - UBS

Paul Ridzon - KeyBanc

Jonathan Arnold - Deutsche Bank

Ali Agha - SunTrust Robinson Humphrey



Good morning. My name is Brandy and I will be your conference operator today. At this time, I would like to welcome everyone to the Exelon Acquisition of Pepco Holdings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session (Operator Instructions) Thank you.

Mr. Ravi Ganti, Vice President of Investor Relations, sir you may begin your conference.

Ravi Ganti

Thank you, operator. Good morning everyone, thank you for joining us. Earlier this morning we made two announcements. Exelon plans to acquire Pepco Holdings in an all cash transaction and our first quarter 2014 earnings results. Materials and presentations related to the earning and acquisition are available on the investor relations section of our website.

Our discussion in today's call contains forward looking statements and estimates that are subject to various risks and uncertainties. You should refer to the first two slides of today's presentation as well as information in Exelon's SEC filings for a discussion of factors that may cause the results to differ from management's projections, forecasts and expectations.

Leading the call today are Chris Crane, Exelon's President and CEO; Joe Rigby, Chairman, President and CEO of Pepco Holdings and Jack Thayer, Executive Vice President and CFO, Exelon.

We have scheduled 60 minutes for today's call. After the prepared remarks, we will open the call for Q&A session.

With that, I turn the call over to Chris, CEO, Exelon.

Chris Crane

Thanks everybody for joining us this morning. Before we get to the topic that will focus on today's call, our acquisition of Pepco Holdings, I want to spend a minute on our earnings for the quarter.

We delivered on our financial expectations with earnings of $0.62 a share which was within the range of our - for our quarter. Our earnings for the quarter would have been $0.12 higher without the large outage in January - the outage at [indiscernible] nuclear facility and the impact of the severe ice storm in the PECO service territory. We are providing guidance of $0.40 to $0.50 per share for the second quarter operating earnings.

We are on track to deliver on our financial goals for the full-year. We provided prepared remarks on the market portfolio strategy and advantage results along with our earnings release this morning, you can contact IR for any follow-up questions. We do have Ken Cornew and Joe Nigro in the room if there is specific that you want to touch on.

Now move on to the topic that is the focus today. We're extremely pleased to announce that we've reached an agreement to acquire Pepco Holdings. We're doing is call from Washington DC and I'm very pleased to be here today with Pepco's CEO Joe Rigby joining the call to share his views on the transaction, what it means or Pepco, the 2 million customers in the DC, Delaware, Maryland and New Jersey area.

We think this deal is the right deal at the right time for Exelon. This is a strategic acquisition that results in a leading Mid-Atlantic electric and gas utility platform with the contiguous footprint that will serve almost 10 million customers in six states. This acquisition will add further sources of stable regulated cash to our portfolio and leverages our position as a leader in operating large urban utilities.

Exelon will pay a cash consideration of $27.25. That translates to a 27.7 upfront premium based on last Friday's closing. We have committed financing via our bridge line in place to fund the acquisition and our strong balance sheet will enable us to source permanent financing for the purchase price using balanced mix of debt and equity along with cash on our balance sheet.

Jack will talk through more of the financial details later but let me give you a few initial thoughts. This transaction is highly accretive beginning in our first year of full operations as a combined company. It's accretive to the tune of $0.15 to $0.20 per share on a steady-state basis. It maintains Exelon balance sheet flexibility to continue to pursue further growth investment across all of our businesses. And it preserves the upside in Exelon value that we still see fundamentally expected to gain from the continued recovery in the power markets which have been strong since the first of the year.

For Pepco Holdings customers, this transaction results in direct consumer benefits and enables further sharing of operational best practices across a larger suite of utilities.

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