Exelon Corporation (EXC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents several positive aspects: significant O&M savings, improved customer reliability, and a focus on affordability. The Q&A section reinforces confidence in the company's growth strategy and regulatory approach. Despite some vague responses, the overall sentiment is positive due to strong financial metrics, successful cost management, and proactive stakeholder engagement. The reaffirmed guidance and optimistic growth outlook are likely to support a positive stock price movement, particularly if the company follows through on its strategic plans.
Key Financial Performance
Adjusted Operating Earnings Per Share (2025) $2.77, delivering above expectations. This represents a 7.4% annual earnings growth rate since 2021. The growth is attributed to strong cost management, favorable weather and storm conditions, and resolution of certain regulatory proceedings.
Annual Rate Base Growth (2021-2025) 8% growth. This growth highlights Exelon's ability to navigate changes and consistently execute investments that directly benefit customers.
Top-Quartile Reliability Metrics Maintained top-quartile reliability metrics for over a decade. This performance is attributed to targeted investments in safety, reliability, and resiliency of the system.
Economic Impact of Investments Every $1 million invested creates 8 jobs or $1.6 million of economic output. This reflects the direct benefits of Exelon's investments to local economies.
Winter Storm Fern Performance Fewer than 1% of customers experienced outages despite record-low temperatures and heavy snow. This reliability is due to decade-long investments in system safety and resiliency.
Customer Affordability Initiatives Executed a $60 million customer relief fund to support low and moderate-income customers facing higher supply costs. This initiative reflects Exelon's focus on affordability.
O&M Savings Achieved $580 million in annual O&M savings relative to inflation levels over the last decade. This was achieved through operational efficiencies and cost management.
Customer Reliability Savings Reduced annual customer interruptions by nearly 2 million since 2021, saving customers $1 billion in avoided outage costs in 2025 alone. This is due to top-quartile reliability and targeted investments.
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Operating Highlights
Adjusted Operating Earnings: Reported $2.77 per share for 2025, exceeding expectations and achieving a 7.4% annual earnings growth rate since 2021.
Capital Investment: Plan to invest $41.3 billion through 2029, with $10 billion in 2026, focusing on transmission and distribution.
Reliability Metrics: Maintained top-quartile reliability metrics for over a decade, with utilities ranked 1, 2, 4, and 7 among peers.
Load Growth: Anticipated load growth exceeding 3% through 2029, supported by a large load pipeline and signed transmission security agreements.
Transmission Investments: $1.2 billion incremental investment recommended in PJM Reliability Window results, with additional large-scale projects underway.
Operational Efficiencies: Executed $60 million customer relief fund and maintained cost growth below inflation, saving $580 million annually in O&M costs.
Storm Resilience: Investments ensured minimal disruptions during Winter Storm Fern, with fewer than 1% of customers experiencing outages.
Regulatory Progress: Achieved key milestones, including settlements for Atlantic City Electric and Delmarva gas rate cases, and filed ComEd's second multiyear grid plan.
Energy Security Advocacy: Advocated for utility-generated power to enhance energy security and affordability, highlighting potential $9.6 billion to $20 billion savings for PJM customers.
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Risk or Challenges
Regulatory Challenges: Exelon faces ongoing regulatory challenges, including the need to align investments with jurisdictional priorities and regulatory approvals for rate cases. For example, the company expressed disappointment in receiving only half of the BGE reconciliation, which required realignment of capital.
Supply Chain and Energy Supply Risks: The company highlighted the increasing costs of energy supply, with supply-side costs rising up to 80% in the Mid-Atlantic over the last five years. This has led to higher customer bills without corresponding increases in energy supply, creating affordability challenges.
Economic and Market Pressures: Exelon noted the impact of high supply prices and emerging reliability risks, which require active collaboration with federal, RTO, and state leaders to address. The company also faces economic uncertainties tied to energy security and affordability.
Operational Risks: Despite strong reliability metrics, Exelon acknowledged the challenges of maintaining top-quartile performance amid extreme weather events like Winter Storm Fern. The storm tested the grid's resilience, requiring significant employee effort and investment to minimize disruptions.
Strategic Execution Risks: The company’s ambitious $41.3 billion capital investment plan through 2029, including significant transmission investments, carries execution risks. These include the need for regulatory approvals, cost management, and timely project completion.
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Guidance & Outlook
Capital Investments: Exelon plans to invest $41.3 billion in capital through 2029, with $10 billion allocated for 2026. Over 70% of the plan-over-plan increase is driven by transmission investments to enhance reliability and resiliency.
Transmission Growth: Exelon anticipates a 15% CAGR in transmission rate base growth from 2025 through 2029, supported by $12 billion to $17 billion in additional transmission opportunities over the next decade.
Rate Base Growth: The company projects an annualized rate base growth of 7.9% through 2029, with a projected addition of nearly $23 billion in rate base from 2025 to 2029.
Earnings Growth: Exelon expects annualized earnings growth of 5% to 7% through 2029, with the expectation of being near the top end of that range. Operating earnings guidance for 2026 is set at $2.81 to $2.91 per share.
Load Growth: Anticipated load growth is expected to exceed 3% through 2029, supported by a large load pipeline and increasing transmission security agreements (TSAs).
Dividend Growth: Exelon projects annual dividend growth of 5%, with a dividend of $1.68 per share anticipated in 2026.
Operational Efficiency: The company aims to keep O&M cost growth below 2.5% annually through 2029, with nearly flat expense growth from 2024 to 2026.
Regulatory Developments: Exelon is progressing on key regulatory filings, including Pepco Maryland base rate case, Delmarva Power electric base rate case, and ComEd's multiyear grid plan, with final orders expected in 2026 and beyond.
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Shareholder Return Plan
Dividend Growth: We continue to project an annual dividend growth at 5% and anticipate paying out a dividend of $1.68 per share in 2026 in line with that growth.
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Key Q&A
Q:What is the tailwind to the plan to keep at the high end of the 5% to 7% outlook?
A:Jeanne Jones explained that the company has had a track record of rate base growth of about 8% and earnings growth of 7.4% since 2021. She mentioned that the equity needs, average debt cost, and AFUDC associated with transmission capital contribute to reaching the near top end of the outlook.
Q:How is the company thinking about regulatory strategy for 2026 and the timing of rate cases?
A:Calvin Butler stated that the company is in constant conversations with stakeholders to balance affordability and grid reliability. They plan to file in Maryland this year and are considering the best approach for Pennsylvania. Jeanne Jones added that the company has accounted for various scenarios and feels confident in achieving the 5% to 7% growth.
Q:What are the T&Ds advocating for in the RBA process at PJM, and is the September auction on track?
A:Colette Honorable stated that the company supports the reliability backstop action and is focused on increasing supply to lower customer costs and improve reliability. She highlighted that utility-generated power could reduce PJM customer costs by $9.6 billion to $20 billion in the '28/'29 delivery year. The company is also focused on extending the price cap and improving reliability.
Q:How are conversations on legislative fronts progressing, and is there collaboration with generators?
A:Calvin Butler emphasized an all-of-the-above approach and collaboration with stakeholders to address affordability. Colette Honorable added that the company is active in discussions in Pennsylvania, Maryland, Delaware, and New Jersey, focusing on solutions like colocation and utility generation. Jeanne Jones mentioned that collaboration with generators is possible at the right price, emphasizing the need for new generation at a reasonable cost.
Q:What is needed to step-function change the 5% to 7% growth trajectory?
A:Jeanne Jones explained that the company is progressing steadily, with rate base CAGR increasing from 7.4% to 7.9%. She emphasized the company's focus on executable and defensible growth, avoiding flashy numbers, and accounting for financing costs.
Q:Why couldn't the company grow at the same 7.5% growth rate as before?
A:Jeanne Jones stated that while the company strives to exceed expectations, increasing financing costs and the need to account for associated costs make it challenging to maintain the same growth rate. However, the company is confident in its strong earned ROEs and transmission investments.
Q:How should incremental financing costs for capital opportunities be managed?
A:Jeanne Jones stated that the company will maintain a 40% equity ratio, resulting in $3.4 billion over four years. She noted that this is manageable, with $700 million already priced, and the company aims to keep a cushion on the balance sheet.
Q:Are there movements in the 9% to 10% earned ROE range with the shift to more transmission?
A:Jeanne Jones mentioned that the company's average earned ROE since separation has been around 9.4%, and as the company invests more in transmission, it expects to maintain or slightly improve this range over time.
Q:When is clarity on the CAMT expected?
A:Jeanne Jones stated that the company hopes to have a final resolution on the CAMT in the near term.
Q:Will there be a lessons learned report for Maryland, and when will it be available?
A:Calvin Butler expressed confidence that a lessons learned report will be available in 2026, although the company plans to file in Maryland in the first half of the year.
Q:What is the company's perspective on the new governor in New Jersey?
A:Calvin Butler and Michael Innocenzo noted that the executive orders from the new governor are constructive and focus on affordability and efficient supply. The company supports these discussions and finds them aligned with its goals.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer on the specific timing of the lessons learned report for Maryland, only stating that it is expected in 2026. Additionally, while discussing collaboration with generators, the response was somewhat vague, emphasizing the need for the right price without providing concrete details on ongoing negotiations or agreements.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Appendix Slide
CEJA
Fern
MISO Tranche
OM
Slide utility
TSAs
Tranche project
Tri County
advocacy effort
average
award
billion
capacity expansion
capital plan
case cost
commitment
decade
dedication
disclosure
dividend
effect beginning
expertise
foundation
income
increase transmission
inflation
line sight
outage
priority
quartile reliability
rate base
saving
security
size scale
success
track record
transmission investment
EXC Transcript
Exelon Corporation (EXC) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call summary presents several positive aspects: significant O&M savings, improved customer reliability, and a focus on affordability. The Q&A section reinforces confidence in the company's growth strategy and regulatory approach. Despite some vague responses, the overall sentiment is positive due to strong financial metrics, successful cost management, and proactive stakeholder engagement. The reaffirmed guidance and optimistic growth outlook are likely to support a positive stock price movement, particularly if the company follows through on its strategic plans.
Exelon Corporation (EXC) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call summary reveals strong financial performance with increased EPS, reaffirmed guidance, and a robust rate base growth. The Q&A section emphasizes opportunities in legislation and transmission, with management expressing optimism about settlements and agreements. Despite some uncertainties, the overall sentiment leans positive due to strong financial metrics, strategic growth plans, and optimistic management outlook, suggesting a likely positive stock price movement.
Exelon Corporation (EXC) Q2 2025 Earnings Call Transcript
Unknown7-31
The earnings call summary presents a mixed picture with several negative aspects. The financial performance shows a decline in operating earnings, while rising operational costs and financial pressures from customer relief initiatives add strain. Despite some positive developments like investment plans and potential transmission opportunities, these are overshadowed by financial challenges and unclear management responses in the Q&A section. Additionally, the refusal to provide clear guidance on certain initiatives contributes to a negative sentiment. Overall, the negative financial results and uncertainties suggest a likely negative stock price reaction in the short term.
Earnings call transcript: Exelon Q1 2025 beats expectations with strong earnings
Unknown5-1
The earnings call presents a mixed sentiment. Financial performance shows improvement with strong EPS growth, but increased interest expenses and vague management responses in the Q&A raise concerns. The investment plan and shareholder return strategy are positive, but the equity financing and share issuance could dilute stock value. The lack of clarity on regulatory impacts and resource adequacy further tempers optimism. Considering these factors, the stock price is likely to remain stable, resulting in a neutral outlook.
EXC Slides
EXC Report
Frequently Asked Questions
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