Exelon Corporation Q1 2010 Earnings Call Transcript

Exelon Corporation Q1 2010 Earnings Call Transcript
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Exelon Corporation (EXC)

Q1 2010 Earnings Call Transcript

April 23, 2010 11:00 am ET

Executives

Stacie Frank – VP, IR

John Rowe – Chairman and CEO

Matthew Hilzinger – SVP and CFO

Ken Cornew – SVP and President, Exelon Power Team

Betsy Moler – EVP, Government Affairs and Public Policy

Frank Clark – Chairman and CEO, ComEd

Anne Pramaggiore – President and COO, ComEd

Analysts

Daniel Eggers – Credit Suisse

Hugh Wynne – Sanford Bernstein

Jonathan Arnold – Deutsche Bank

Michael Lapides – Goldman Sachs

Paul Ridzon – KeyBanc

Presentation

Operator

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Good morning. My name is Christine; I will be your conference operator today. At this time, I would like to welcome everyone to the Exelon first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. I will turn the call over to Ms. Stacie Frank, Vice President of Investor Relations. Please go ahead.

Stacie Frank

Thank you, Christine. Good morning. Welcome to Exelon's first quarter 2010 earnings review and conference call update. Thank you for joining us today. We issued our earnings release this morning, if you haven’t received it, the release is available on the Exelon website at www.exeloncorp.com.

Before we begin today’s discussion, let me remind you that the earnings release and other matters we will discuss in today’s call contain forward-looking statements and estimates that are subject to various risks and uncertainties, as well as adjusted non-GAAP operating earnings.

Please refer to today’s 8-K or our other filings for discussion of factors that may cause results to differ from management’s projections, forecasts and expectations and for reconciliation of operating to GAAP earnings.

Leading the call today are; John Rowe, Exelon's Chairman and Chief Executive Officer, and Matthew Hilzinger, Exelon's Senior Vice President and Chief Financial Officer. They are joined by other members of Exelon's senior management team who will be available to answer your questions. We have scheduled 60 minutes for this call.

I will now turn the call over to John Rowe, Exelon's CEO.

John Rowe

Thank you, Stacy. Good morning, everyone. In the first quarter Exelon was able to beat our own expectations. Our results and our confidents in the balance of the year allow us to raise the bottom of our full year earnings guidance. As you all know we’re working very hard to manage everything that is in our control and to keep ourselves positioned for the day when commodity markets improve.

As the economy recovers and capacity and energy markets improve Exelon will again increase its value. And it will come as either carbon legislation or pollutant regulations impact the oldest and least efficient generating units among our competitors. The timing may be uncertain, but those forces are escapable. I will begin with a quick overview of the first quarter.

As you’ve seen in the press release, we’ve recorded operating earnings of $1 per share above our guidance range of $0.85 to $0.95 per share. We were able to deliver these results through exceptional operating performance and better than expected load at PECO. Our nuclear fleet achieved a capacity factor of 92.3% in to chip, while conducting five refueling outages. Among these outages was a steam generators replacement at Three Mile Island.

We recently completed outage to acquire series, resulted in plant upgrades that marked 100 cumulative megawatts in added capacity, since we announced the program last year. The ComEd and PECO continued to improve their performance. ComEd recorded its best ever first quarter results for reliability and frequency of outages. And Denis O'Brien and the team at PECO performed superbly in the face of the series of genuinely extraordinary so far [ph].

As a result of our success in the first quarter, we are revising our full year guidance from the $3.60 to $4 per share range that we had to $3.70 to $4 per share. In addition to this performance this reflects the fact that some of our market conditions at generation are more favorable than our previous forecast.

It reflects our continued progress on achieving our OEM targets, and as we told you in January, we now have certainty about out attention expense for the year. Cash from operations is similarly showing improvement. Matt, will walk you through the details, but much of the improvement is associated with the cash benefits of the better than expected earnings and with tax planning items.

We are putting cash toward in three different place, we are maintaining our dividend, we are continuing investing in our nuclear upgrades, and we are expect to increase our financial flexibility by making a discretionary contribution to our pension funds this year. This will both improve our funded status and reduce our mandatory cash contribution to 2012 and beyond. The precise amount will be determined by our board some time this year, but we anticipate that the contribution will be in the neighborhood of $500 million.

Before Matt gives you more detail on the financials, I want to update you on what we know about developments in Pennsylvania, Illinois and Washington.

In Pennsylvania, the headline is obviously PECO’s electric and gas distribution rate filing. This is PECO’s first delivery rate case filing in 21 years and only the second gas rate case over that period of time. It reflects over 2.5 billion in infrastructure investments in the PECO delivery system, while keeping rate increases very moderate. Denis O’Brien has a chart to show how the average PECO residential customer can offset the entire increase by installing a programmable thermostat and five compact fluorescent light box.

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