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Exelon misses Street estimates for Q4, FY'17, introduces FY18 guidance

Exelon Corp. on Feb. 7 reported fourth-quarter 2017 adjusted operating earnings of $536 million, or 55 cents per share, compared with $410 million, or 44 cents per share, in the prior-year period. The S&P Capital IQ consensus normalized EPS estimate for the 2017 fourth quarter was 60 cents per share.

The company attributed the year-over-year increase to regulatory rate increases and weather, as well as the New York zero-emissions credit which helped its nuclear plants in the state and higher capacity prices at its Exelon Generation Co. LLC subsidiary.

Among segments, Exelon Generation posted adjusted operating earnings of $252 million, up from $162 million in the same period in 2016.

Commonwealth Edison Co.'s adjusted operating earnings increased to $123 million in the most recent quarter from $81 million a year ago, due to higher electric distribution and transmission formula rate revenues.

PECO Energy Co. booked fourth-quarter 2017 adjusted operating earnings of $95 million, slightly up from the $94 million the 2016 quarter. Baltimore Gas and Electric Co.'s adjusted operating earnings dropped year over year to $82 million from $105 million, due to a favorable 2016 settlement of a Baltimore city conduit fee dispute and a 2017 impairment of certain transmission-related income tax regulatory assets.

Pepco Holdings LLC saw its adjusted operating earnings increase to $48 million in the fourth quarter of 2017, from $42 million in the prior-year period, due to regulatory rate increases.

On a GAAP basis, Exelon posted fourth-quarter 2017 net income of $1.87 billion, or $1.94 per share, up from $204 million, or 22 cents per share, in the 2016 fourth quarter.

Operating revenues totaled $8.38 billion, including non-GAAP adjustments of $93 million, in the most recent quarter. These compare to revenues of $7.88 billion, including non-GAAP adjustments of $177 million, in the 2016 fourth quarter.

For the year, Exelon posted adjusted operating earnings of $2.47 billion, or $2.60 per share, missing the consensus normalized EPS estimate of $2.65. The results were also lower than the $2.49 billion, or $2.68 per share, recorded in 2016.

The company reported GAAP net income of $3.77 billion, or $3.97 per share, in 2017, up from $1.13 billion, or $1.22 per share, in 2016.

Operating revenues totaled $33.53 billion, including non-GAAP adjustments of $170 million, in 2017. These compare to revenues of $31.36 billion, including non-GAAP adjustments of $545 million, in 2016.

"We will build on this momentum in 2018 with our new dividend growth rate of 5% annually over the next three years, tax reform that will benefit utility customers and reduce tax expenses at Generation, and movement on needed power price formation changes in PJM and broader resiliency reviews at FERC," Exelon President and CEO Christopher Crane said.

The company introduced a 2018 adjusted operating earnings guidance range of $2.90 per share to $3.20 per share.

Exelon also said its utilities plan to invest nearly $21 billion over the next four years to ensure reliable, more resilient and more efficient transmission and distribution of electricity and gas for their customers. The company expects these investments, including the impacts of the tax reform, to drive annual rate base growth of 7.4% through 2021, exceeding the 6.5% growth expectations for the 2017-2020 period it projected a year ago.