Exelon (EXC)

Q4 2011 Earnings Call

January 25, 2012 11:00 am ET


Christopher M. Crane - Chief Executive Officer, President and President of Exelon Generation

Kenneth W. Cornew - Senior Vice President and President of Power Team

Stacie M. Frank - Vice President of Investor Relations

Matthew F. Hilzinger - Chief Financial Officer, Senior Vice President and Treasurer

John W. Rowe - Chairman, Chairman of PECO, Chairman of Exelon Enterprises, Chairman of Exelon Energy Delivery and President of Exelon Generation


Brian Chin - Citigroup Inc, Research Division

Greg Gordon - Morgan Stanley, Research Division

Hugh Wynne - Sanford C. Bernstein & Co., LLC., Research Division

Steven I. Fleishman - BofA Merrill Lynch, Research Division

James L. Dobson - Wunderlich Securities Inc., Research Division



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Good morning. My name is Cassandra, and I would be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter earnings conference call. [Operator Instructions] And now I would like to turn the call over to Stacie Frank, VP of Investor Relations. You may begin.

Stacie M. Frank

Thank you, Cassandra, and good morning. Welcome to Exelon's Fourth Quarter 2011 Earnings Conference Call. We issued our earnings release this morning. If you haven't received it, the release is available on the Exelon website. 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 and Exelon's other filings for a discussion of factors that may cause results to differ from management's projections, forecasts and expectations and for a reconciliation of operating to GAAP earnings.

In addition, during the call today, we will be discussing the proposed merger of Exelon and Constellation Energy Group Inc. Today's discussion is not a substitute for the disclosures in the definitive joint proxy statement and prospectus that was mailed to shareholders on or about October 12, 2011. For important additional information regarding the proposed merger, including the associated risks and uncertainties, please refer to the earnings release and today's 8-K, as well as the definitive joint proxy statement.

Presenting on our call today are John Rowe, Exelon's Chairman and Chief Executive Officer; Matthew Hilzinger, Exelon's Senior Vice President and Chief Financial Officer; and Ken Cornew, Exelon's Senior Vice President and President of Exelon Power team. They are joined by Chris Crane, Exelon's Chief Operating Officer and other members of Exelon senior management team who will be available to answer your questions.

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

John W. Rowe

Good morning, everybody. It's always a shame to waste someone as talented as Stacie reading the Safe Harbor language, but the lawyers keep saying, she has to do it.

2011 was another fine year for Exelon. We had very strong financial and operating performance; we grew the company through acquisitions, which are working on both on an earnings and cash flow basis; we made progress on a range of regulatory, legislative and market issues; and we are getting ever closer to consummating our merger with Constellation.

Our fourth quarter operating earnings were $0.82 per share. While December was a little disappointing due mostly to weather, our full year 2011 operating earnings per share of $4.16 were within our final guidance range, better than our 2010 results and well above our original expectations for the year. Our leading drivers in '11 were the strong performance of the generation fleet, led, of course, by our ninth consecutive year of over 93% capacity factors in nuclear that's helped significantly by our Texas operations. Tax benefits helped us a great deal. The impact of the Illinois Energy Infrastructure Modernization Act was positive, as was our summer weather. The good news was partially offset by costly storms at both ComEd and PECO and lower than weather-normalized load at PECO. ComEd had a terrible July storm wise, which we soaked up successfully, and PECO had both a hurricane and a freak fall snowstorm.

Matt will review the quarter-over-quarter and full year financial drivers in more detail. As you know, we made a $2.1 billion contribution to the pension at the beginning of the year, which along with Doug Brown's fine work on asset allocation, allowed us to end the year at 83% funded status. And remember, this is with very low discount rates. The contribution gives us added cushion in our FFO-to-debt credit metrics and will help us see the company through the current trough and power crisis.

We returned $1.4 billion to our shareholders in dividends. We are keenly aware that to all of you, the dividend is an absolutely critical part of our value proposition. It's what makes it possible for you to hold on with us while we work our way through the gas and power price trough. Our cash flows and credit metrics support our dividend and capital programs even as we accept a higher payout ratio. Chris Crane, who will answer most of the questions today about future performance, believes, as I do, in the continued importance to the dividend. Simply put, we get it. And he is as committed as I am to maintaining it.

As we have mentioned previously, given our pending merger with Constellation, we are not providing full year Exelon standalone guidance for 2012 on today's call. We will provide combined company guidance at an analyst day that we expect to hold after -- in the spring after the merger closes.

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