ALE Allete Inc

Exelon Corporation (EXC) announced first quarter 2013 operating earnings of 70 cents per share, lower than the year-ago figure of 85 cents per share but ahead of the Zacks Consensus Estimate by 2 cents. However, the company succeeded in reaching its top end of the guidance.

This excludes unrealized gains related to nuclear decommissioning trust fund investments of 4 cents, gain on plant retirements and divestitures of 2 cents. It also excludes mark-to-market impact of economic hedging activities of 27 cents, constellation merger and integration costs of 3 cents, amortization of commodity contract intangibles of 14 cents, re-measurement of like-kind exchange tax position of 31 cents and nuclear uprate project cancellation of 2 cents per share.

Including these gain and charges, GAAP loss per share reported by the company was 1 cent versus earnings per share of 28 cents.

The results reflect lower energy margins at Generation, higher operating and maintenance expenses, higher depreciation and amortization expense and increased average diluted common shares outstanding due to the merger with Constellation Energy (“CEG”). However, these negatives were partially offset by addition of Constellation Energy’s contribution to Generation’s energy margins, contribution of Baltimore Gas and Electric’s (“BGE”) financial results, higher nuclear volume due to fewer planned and unplanned outage days and impact of favorable weather in the Commonwealth Edison Company (“ComEd”) and PECO Energy Company (“PECO”) territories.

Total Revenue

Exelon's total operating revenue for first quarter 2013 was $6,894 million, reflecting year-over-year growth of 42.5%. Reported quarter revenue also surpassed the Zacks Consensus Estimate of $6,560 million.

Quarterly Highlights

During the quarter, total operating expenses increased sharply 55.3% year over year to $5,779 million mainly due to higher purchase power and fuel, and operating and maintenance costs.

However, increase in operating expenses was offset by increase in revenue, resulting in an operating income of $1,124 million, up from $1,102 million in first quarter of 2012.

Segment Update

Generation: Segment generated net income of $336 million, down 17.8% year over year. Exelon-operated nuclear plants achieved a 96.4% capacity factor for the first quarter of 2013.

Commonwealth Edison Company (ComEd): Segment net income was $89 million, up from $88 million in the year ago period. The results were driven by favorable weather in ComEd’s service territory. However, this was partially offset by lower realized prices resulting from changes in customer mix.

PECO Energy Company (PECO): Segment net income increased to $123 million from $100 million reported in the year-ago period driven by favorable weather in PECO’s service territory.

BaltimoreGas and Electric (BGE): Segment generated net income of $74 million.

Financial Update

The company exited the quarter with cash and cash equivalents of $679 million, down from $1,411 million at the end of 2012. Long-term debt as of Mar 31, 2013 totaled $16,210 million, down from $17,190 million at the end of Dec 31, 2012.

Cash provided by operating activities in first quarter of 2013 was $859 million versus $994 million in the comparable period last year. Capital expenditure during the reported quarter was $1,447 million versus $1,496 million in the comparable year-ago period.

Hedges

Exelon's hedging program involves the hedging of commodity risks for expected generation, typically on a ratable basis over a three-year period. The proportion of expected generation hedged as of Mar 31, 2013, is 98% - 101% for 2013, 70% - 73% for 2014, and 33% - 36% for 2015.    

Peer Comparison

Recently, Mich.-based CMS Energy Corporation (CMS) announced first-quarter 2013 earnings per share of 53 cents on both adjusted and GAAP basis, beating the Zacks Consensus Estimate of 46 cents. Earnings were 43.2% higher than 37 cents earned in the year-ago quarter.

Zacks Rank

Exelon Corp. presently retains a short-term Zacks Rank #3 (Hold). Stocks worth considering are ALLETE, Inc. (ALE) and Calpine Corp. (CPN), both with a Zacks Rank #2 (Buy).

 

 
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