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Earnings Release Highlights

  • GAAP Net Income of $0.93 per share and Adjusted (non-GAAP) Operating
    Earnings of $0.87 per share for the first quarter of 2019
  • Exelon and subsidiaries upgraded by S&P and Fitch on successful
    execution of utility growth strategy
  • Supreme Court upholds the legality of the ZEC program in Illinois and
    New York
  • New Jersey BPU voted to grant ZECs to Hope Creek and Salem 1 and 2
  • Strong utility operations with every utility achieving top decile
    CAIDI performance

CHICAGO–(BUSINESS WIRE)–Exelon Corporation (NYSE: EXC) today reported its financial results for
the first quarter of 2019.

“Delivering clean energy to address climate change while meeting the
needs of our customers and the communities we serve continues to drive
Exelon’s business results. Our electric and gas companies earned top
marks on key customer satisfaction and operating metrics, while our
nuclear generation fleet had its best quarterly capacity factor in 10
years,” said Christopher M. Crane, president and CEO. “The Supreme Court
declined to hear cases disputing Illinois’ and New York’s Zero Emissions
Credit programs, preserving these states’ emissions-free nuclear power
plants and the economic and environmental benefits they provide. We
marked the anniversaries of our mergers with Constellation and Pepco
Holdings, which not only have improved service for our customers but
also increased our regulated business mix and provided more stable
earnings.”

“Exelon made a strong start to 2019, with adjusted (non-GAAP) operating
earnings this quarter above the midpoint of our guidance range, at $0.87
per share,” said Joseph Nigro, Exelon’s senior executive vice president
and CFO. “Our strategy to invest in advanced technology and
infrastructure to grow our regulated business continues to prove
successful and, in recognition of this, both S&P and Fitch upgraded
Exelon’s credit ratings.”

First Quarter 2019

Exelon’s GAAP Net Income for the first quarter of 2019 increased to
$0.93 per share from $0.60 per share in the first quarter of 2018.
Adjusted (non-GAAP) Operating Earnings decreased to $0.87 per share in
the first quarter of 2019 from $0.96 per share in the first quarter of
2018. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP)
Operating Earnings, refer to the tables beginning on page 5.

The Adjusted (non-GAAP) Operating Earnings in the first quarter of 2019
reflect lower realized energy prices and the absence of the revenue
recognized in the first quarter of 2018 related to Zero Emissions
Credits (ZECs) generated in Illinois from June through December 2017,
partially offset by increased capacity prices at Generation. On the
utility side, the Adjusted (non-GAAP) Operating Earnings reflect higher
utility earnings due to regulatory rate increases at PECO, BGE and PHI
and lower storm costs at PECO and BGE.

Operating Company Results1

ComEd

ComEd’s first quarter of 2019 GAAP Net Income and Adjusted (non-GAAP)
remained relatively consistent compared with the first quarter of 2018.
Due to revenue decoupling, ComEd’s distribution earnings are not
affected by actual weather or customer usage patterns.

PECO

PECO’s first quarter of 2019 GAAP Net Income increased to $168 million
from $113 million in the first quarter of 2018. PECO’s Adjusted
(non-GAAP) Operating Earnings for the first quarter of 2019 increased to
$169 million from $114 million in the first quarter of 2018, primarily
due to regulatory rate increases and the absence of the March 2018
winter storm costs.

BGE

BGE’s first quarter of 2019 GAAP Net Income increased to $160 million
from $128 million in the first quarter of 2018. BGE’s Adjusted
(non-GAAP) Operating Earnings for the first quarter of 2019 increased to
$161 million from $129 million compared with the first quarter of 2018,
primarily due to regulatory rate increases and the absence of the March
2018 winter storm costs. Due to revenue decoupling, BGE’s distribution
earnings are not affected by actual weather or customer usage patterns.

PHI

PHI’s first quarter of 2019 GAAP Net Income increased to $117 million
from $65 million in the first quarter of 2018. PHI’s Adjusted (non-GAAP)
Operating Earnings for the first quarter of 2019 increased to $118
million from $65 million in the first quarter of 2018, primarily due to
regulatory rate increases. Due to revenue decoupling, PHI’s distribution
earnings related to Pepco Maryland, DPL Maryland and Pepco District of
Columbia are not affected by actual weather or customer usage patterns.

Generation

Generation’s first quarter of 2019 GAAP Net Income increased to $363
million from $136 million in the first quarter of 2018. Generation’s
Adjusted (non-GAAP) Operating Earnings for the first quarter of 2019
decreased to $294 million from $474 million in the first quarter of
2018, primarily due to lower realized energy prices and the absence of
the revenue recognized in the first quarter of 2018 related to ZECs
generated in Illinois from June through December 2017, partially offset
by increased capacity prices.

The proportion of expected generation hedged as of March 31, 2019, was
90 percent to 93 percent for 2019, 64 percent to 67 percent for 2020 and
38 percent to 41 percent for 2021.

___________

1Exelon’s five business units include ComEd, which consists
of electricity transmission and distribution operations in northern
Illinois; PECO, which consists of electricity transmission and
distribution operations and retail natural gas distribution operations
in southeastern Pennsylvania; BGE, which consists of electricity
transmission and distribution operations and retail natural gas
distribution operations in central Maryland; PHI, which consists of
electricity transmission and distribution operations in the District of
Columbia and portions of Maryland, Delaware, and New Jersey and retail
natural gas distribution operations in northern Delaware; and
Generation, which consists of owned and contracted electric generating
facilities and wholesale and retail customer supply of electric and
natural gas products and services, including renewable energy products
and risk management services.

Recent Developments and First Quarter Highlights

  • Credit Ratings Upgrade: On March 1, 2019, S&P upgraded Exelon
    and all its subsidiaries by one notch. Exelon’s issuer credit rating
    was raised from BBB to BBB+. On March 14, 2019, Fitch Ratings upgraded
    the senior unsecured rating for Exelon from BBB to BBB+ and the senior
    unsecured ratings of PECO and BGE to A- from BBB+. In addition, Fitch
    upgraded PECO’s first mortgage bonds from A to A+ and BGE’s first
    mortgage bonds from A- to A. Both agencies noted that their upgrades
    reflect Exelon’s solid 2018 financial results, which demonstrated
    successful execution of its value proposition to grow the utilities
    and harvest free cash flow from Generation to support that growth. S&P
    and Fitch were encouraged by Exelon’s discipline and commitment to
    delivering on its long-term strategy to maintain strong operational
    and financial measures, succeed in the execution of ZECs, improve
    operations and regulatory framework at PHI, and focus on utility
    growth. This strategy has led to a meaningful reduction in overall
    business risk by changing the long-term earnings profile outlook of
    the Company to become more regulated.
  • New Jersey Board of Public Utilities (NJBPU) Awards ZEC Payments:
    In 2017, Public Service Enterprise Group Incorporated (PSEG) announced
    that its New Jersey nuclear plants, including Salem, of which
    Generation owns a 42.59 percent ownership interest, were showing
    increased signs of economic distress, which could lead to early
    retirement. PSEG is the operator of Salem and has the decision-making
    authority to retire Salem. In 2018, New Jersey enacted legislation
    that established a ZEC program that provides compensation for nuclear
    plants that demonstrate to the NJBPU that they meet certain
    requirements, including that they make a significant contribution to
    air quality in the state and that their revenues are insufficient to
    cover their costs and risks. On April 18, 2019, the NJBPU approved the
    award of ZECs to Salem 1 and Salem 2. Assuming the New Jersey ZEC
    program operates as expected, Generation no longer considers Salem to
    be at heightened risk for early retirement.
  • Supreme Court Upholds Illinois and New York ZECs: On April 15,
    2019, the U.S. Supreme Court denied the plaintiffs’ petition seeking a
    review of circuit court decisions in Illinois and New York related to
    ZECs. The U.S. Supreme Court decision affirmed the right for states to
    create climate and clean energy policies.
  • ComEd Distribution Formula Rate Filing: On April 8, 2019, ComEd
    filed its annual distribution formula rate update with the Illinois
    Commerce Commission (ICC). The ICC approval is due by December 2019
    and the rates will take effect in January 2020. The filing request
    includes a total decrease to the revenue requirement of $6 million,
    reflecting an increase of $57 million for the initial revenue
    requirement for 2019 and a decrease of $63 million related to the
    annual reconciliation for 2018. The revenue requirement for 2019 and
    annual reconciliation for 2018 provide for a weighted average debt and
    equity return on distribution rate base of 6.53 percent inclusive of a
    requested ROE of 8.91 percent.
  • ACE New Jersey Electric Distribution Base Rate Case: On March
    13, 2019, the NJBPU issued its order providing for a net increase to
    ACE’s annual electric distribution base rates of $70 million (before
    New Jersey sales and use tax) and reflecting a ROE of 9.6 percent. The
    new rates were effective April 1, 2019.
  • Nuclear Operations: Generation’s nuclear fleet, including its
    owned output from the Salem Generating Station and 100 percent of the
    CENG units, produced 45,715 gigawatt-hours (GWhs) in the first quarter
    of 2019, compared with 46,941 GWhs in the first quarter of 2018.
    Excluding Salem, the Exelon-operated nuclear plants at ownership
    achieved a 97.1 percent capacity factor for the first quarter of 2019,
    compared with 96.5 percent for the first quarter of 2018. The number
    of planned refueling outage days in the first quarter of 2019 totaled
    74, compared with 68 in the first quarter of 2018. There were no
    non-refueling outage days in the first quarter of 2019, compared with
    six in the first quarter of 2018.
  • Fossil and Renewables Operations: The Dispatch Match rate for
    Generation’s gas and hydro fleet was 97.8 percent in the first quarter
    of 2019, compared with 98.1 percent in the first quarter of 2018.
    Energy Capture for the wind and solar fleet was 96.5 percent in the
    first quarter of 2019, compared with 95.2 percent in the first quarter
    of 2018.
  • Financing Activities:

    • On February 19, 2019, ComEd issued $400 million aggregate
      principal amount of its First Mortgage Bonds, 4.00 percent Series
      126, due March 1, 2049. ComEd used the proceeds to repay a portion
      of its outstanding commercial paper obligations and for general
      corporate purposes.

GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliation

Adjusted (non-GAAP) Operating Earnings for the first quarter of 2019 do
not include the following items (after tax) that were included in
reported GAAP Net Income:

  Exelon            
Earnings
per
Diluted
(in millions)   Share   Exelon   ComEd   PECO   BGE   PHI   Generation
2019 GAAP Net Income $ 0.93 $ 907 $ 157 $ 168 $ 160 $ 117 $ 363
Mark-to-Market Impact of Economic Hedging Activities (net of taxes
of $12 and $10, respectively)
0.03 31 26
Unrealized Gains Related to Nuclear Decommissioning Trust (NDT) Fund
Investments (net of taxes of $161)
(0.20 ) (193 ) (193 )
Long-Lived Asset Impairments (net of taxes of $1) 4 4
Plant Retirements and Divestitures (net of taxes of $6) 0.02 19 19
Cost Management Program (net of taxes of $3, $0, $0, $0 and $3,
respectively)
0.01 11 1 1 1 8
Noncontrolling Interests (net of taxes of $13)   0.07     67                     67  
2019 Adjusted (non-GAAP) Operating Earnings   $ 0.87     $ 846     $ 157     $ 169     $ 161     $ 118     $ 294  
 

Adjusted (non-GAAP) Operating Earnings for the first quarter of 2018 do
not include the following items (after tax) that were included in
reported GAAP Net Income:

  Exelon            
Earnings
per
Diluted
(in millions)   Share   Exelon   ComEd   PECO   BGE   PHI   Generation
2018 GAAP Net Income $ 0.60 $ 585 $ 165 $ 113 $ 128 $ 65 $ 136
Mark-to-Market Impact of Economic Hedging Activities (net of taxes
of $69)
0.20 197 197
Unrealized Losses Related to NDT Fund Investments (net of taxes of
$45)
0.07 66 66
Merger and Integrations Costs (net of taxes of $1) 3 3
Plant Retirements and Divestitures (net of taxes of $32) 0.10 92 92
Cost Management Program (net of taxes of $1, $0, $0 and $1,
respectively)
0.01 5 1 1 3
Noncontrolling Interests (net of taxes of $5)   (0.02 )   (23 )                   (23 )
2018 Adjusted (non-GAAP) Operating Earnings   $ 0.96     $ 925     $ 165     $ 114     $ 129     $ 65     $ 474  
 

Note:

Amounts may not sum due to rounding.

Unless otherwise noted, the income tax impact of each reconciling item
between GAAP Net Income and Adjusted (non-GAAP) Operating Earnings is
based on the marginal statutory federal and state income tax rates for
each Registrant, taking into account whether the income or expense item
is taxable or deductible, respectively, in whole or in part. For all
items except the unrealized gains and losses related to NDT fund
investments, the marginal statutory income tax rates for 2019 and 2018
ranged from 26.0 percent to 29.0 percent. Under IRS regulations, NDT
fund investment returns are taxed at different rates for investments if
they are in qualified or non-qualified funds. The effective tax rates
for the unrealized gains and losses related to NDT fund investments were
45.4 percent and 40.3 percent for the three months ended March 31, 2019
and 2018, respectively.

Webcast Information

Exelon will discuss first quarter 2019 earnings in a one-hour conference
call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time).
The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.

About Exelon

Exelon Corporation (NYSE: EXC) is a Fortune 100 energy company with the
largest number of electricity and natural gas customers in the U.S.
Exelon does business in 48 states, the District of Columbia and Canada
and had 2018 revenue of $36 billion. Exelon serves approximately 10
million customers in Delaware, the District of Columbia, Illinois,
Maryland, New Jersey and Pennsylvania through its Atlantic City
Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries.
Exelon is one of the largest competitive U.S. power generators, with
more than 32,000 megawatts of nuclear, gas, wind, solar and
hydroelectric generating capacity comprising one of the nation’s
cleanest and lowest-cost power generation fleets. The company’s
Constellation business unit provides energy products and services to
approximately 2 million residential, public sector and business
customers, including more than two-thirds of the Fortune 100. Follow
Exelon on Twitter @Exelon.

Non-GAAP Financial Measures

In addition to net income as determined under generally accepted
accounting principles in the United States (GAAP), 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 measure is intended to enhance an investor’s
overall understanding of period over period operating results and
provide an indication of Exelon’s 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
measure 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’
presentation. The Company has provided the non-GAAP financial measure as
supplemental information and in addition to the financial measures that
are calculated and presented in accordance with GAAP. Adjusted
(non-GAAP) Operating Earnings should not be deemed more useful than, a
substitute for, or an alternative to the most comparable GAAP Net Income
measures provided in this earnings release and attachments. This press
release and earnings release attachments provide reconciliations of
adjusted (non-GAAP) Operating Earnings to the most directly comparable
financial measures calculated and presented in accordance with GAAP, are
posted on Exelon’s website: www.exeloncorp.com,
and have been furnished to the Securities and Exchange Commission on
Form 8-K on May 2, 2019.

Cautionary Statements Regarding Forward-Looking Information

This press release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that
are subject to risks and uncertainties. The factors that could cause
actual results to differ materially from the forward-looking statements
made by the Registrants include those factors discussed herein, as well
as the items discussed in (1) the Registrants’ 2018 Annual Report on
Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
and (c) ITEM 8. Financial Statements and Supplementary Data: Note 22,
Commitments and Contingencies; (2) the Registrants’ First Quarter 2019
Quarterly Report on Form 10-Q (to be filed on May 2, 2019) in (a) Part
II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial
Information, ITEM 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations and (c) Part I, Financial
Information, ITEM 1. Financial Statements: Note 16, Commitments and
Contingencies; and (3) other factors discussed in filings with the SEC
by the Registrants. Readers are cautioned not to place undue reliance on
these forward-looking statements, which apply only as of the date of
this press release. None of the Registrants undertakes any obligation to
publicly release any revision to its forward-looking statements to
reflect events or circumstances after the date of this press release.

   
EXELON CORPORATION
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments

(unaudited)

(in millions, except per share data)

 
Three Months Ended Three Months Ended
March 31, 2019 March 31, 2018
  Non-GAAP     Non-GAAP  
GAAP (a) Adjustments GAAP (a) Adjustments
Operating revenues $ 9,477 $ 52 (b) $ 9,693 $ 97 (b)
Operating expenses
Purchased power and fuel 4,553 20 (b),(c) 4,727 (183 ) (b),(c)
Operating and maintenance 2,189 56 (c),(d),(e) 2,384 (36 ) (c),(d),(f)
Depreciation and amortization 1,075 (100 ) (c) 1,091 (137 ) (c)
Taxes other than income 445   446  
Total operating expenses 8,262 8,648
Gain on sales of assets and businesses 3   56   (53 ) (c)
Operating income 1,218   1,101  
Other income and (deductions)
Interest expense, net (403 ) 15 (b) (371 )
Other, net 467   (358 ) (c),(g) (28 ) 111 (g)
Total other income and (deductions) 64   (399 )
Income before income taxes 1,282 702
Income taxes 310 (139 ) (b),(c),(d),(e),(g),(h) 59 148 (b),(c),(d),(f),(g),(h)
Equity in losses of unconsolidated affiliates (6 ) (7 )
Net income 966 636
Net income attributable to noncontrolling interests 59   (67 ) (i) 51   23 (i)
Net income attributable to common shareholders $ 907   $ 585  
Effective tax rate(h) 24.2 % 8.4 %
Earnings per average common share
Basic $ 0.93 $ 0.61
Diluted $ 0.93   $ 0.60  
Average common shares outstanding
Basic 971 966
Diluted 972 968
Effect of adjustments on earnings per average diluted common
share recorded in accordance with GAAP:
Mark-to-market impact of economic hedging activities (b) $ 0.03 $ 0.20
Unrealized (gains) losses related to NDT fund investments (g) (0.20 ) 0.07
Plant retirements and divestitures (c) 0.02 0.10
Cost management program (d) 0.01 0.01
Noncontrolling interests (i) 0.07   (0.02 )
Total adjustments $ (0.06 ) (j) $ 0.36  
(a)   Results reported in accordance with accounting principles generally
accepted in the United States (GAAP).
(b) Adjustment to exclude the mark-to-market impact of Exelon’s economic
hedging activities, net of intercompany eliminations.
(c) In 2018, adjustment to exclude accelerated depreciation and
amortization expenses and one-time charges associated with
Generation’s decision to early retire the Oyster Creek nuclear
facility and accelerated depreciation and amortization expenses
associated with the 2017 decision to early retire the Three Mile
Island (TMI) nuclear facility, partially offset by a gain associated
with Generation’s sale of its electrical contracting business. In
2019, adjustment to exclude accelerated depreciation and
amortization expenses associated with Generation’s previous decision
to early retire the TMI nuclear facility and a benefit associated
with a remeasurement of the TMI asset retirement obligation.
(d) Adjustment to exclude reorganization costs related to cost
management programs.
(e) Adjustment to exclude the impairment of certain wind projects at
Generation.
(f) Adjustment to exclude costs related to the PHI acquisition.
(g) Adjustment to exclude the impact of net unrealized gains and losses
on Generation’s NDT fund investments for Non-Regulatory and
Regulatory Agreement Units. The impacts of the Regulatory Agreement
Units, including the associated income taxes, are contractually
eliminated, resulting in no earnings impact.
(h) The effective tax rate related to Adjusted (non-GAAP) Operating
Earnings is 16.8 percent and 17.1 percent for the three months ended
March 31, 2019 and March 31, 2018, respectively.
(i) Adjustment to exclude elimination from Generation’s results of the
noncontrolling interests related to certain exclusion items,
primarily related to the impact of unrealized gains and losses on
NDT fund investments at CENG.
(j) Amounts may not sum due to rounding.

Contacts

Robin Gray
Corporate Communications
202-637-0317

Emily
Duncan
Investor Relations
312-394-2345