Exelon Q1 earnings slip 70%


Exelon (NYSE:EXC) reported Friday that its first-quarter earnings fell 70 percent on merger costs, weak margins, and warmer-than-normal weather that reduced demand for electricity.

Exelon, the largest operator of nuclear plants in the U.S., said it completed its acquisition of Constellation Energy Group Inc.

in March, in a deal valued at nearly $8 billion, which caused Moody's Investors Service to downgrade its investment-grade rating on Exelon, noting the company will likely see negative free cash flow for several years.

For the three months ended march 31, the company reported net income of $200 million, or 28 cents a share, down from $668 million, or $1.01 a share, a year earlier.

Excluding adjustments, merger-related costs and other items, earnings fell to 85 cents a share from $1.17 a share.

Revenue slipped 5.4 percent to $4.69 billion.

Analysts had forecast earnings of 81 cents a share on revenue of $7.67 billion, according to Thomson Reuters.

Operating margin narrowed to 7.7 percent from 24.3 percent a year earlier.

"As expected, our lower operating earnings for first quarter 2012 reflected unfavorable market factors and mild weather," said Exelon president and CEO Christopher M. Crane.

"However, I am pleased with our continued strong operational performance, such as the 93.6 percent capacity factor achieved by our nuclear operations.

"In the quarter’s most significant news, we successfully closed our merger with Constellation Energy on March 12 after securing all required regulatory approvals, less than one year after we first announced the transaction, and integration activities are progressing extremely well."

With its purchase of Constellation, Exelon owns all or part of 20 reactors, the largest group of U.S. nuclear power plants.

Exelon owns Illinois utility Commonwealth Edison as well, but its largest business is operating power plants across the U.S. and
selling the electricity on the wholesale market, however recent declines U.S. natural gas prices has forced wholesale power prices lower.

Exelon's generation business, which includes its nuclear operations, saw its earnings fall 66 percent to $168 million.

Exelon’s nuclear plants supplied 93.6 percent of their power output capacity for the first quarter, down from 94.8 percent for the same period a year earlier because of scheduled refueling.

In March, the company completed the purchase of Whitetail Wind Energy LLC, a 92-megawatt (MW) wind project to be constructed east of Laredo, Texas. The project has a 25-year power purchase agreement with Austin Energy for its entire output. Commercial operation is expected in late 2012.

In April, Exelon and First Solar, Inc. announced that the Antelope Valley Solar Ranch One project had received the first advance of a loan guaranteed by the U.S. Department of Energy’s Loan Programs Office, finalizing Exelon’s ownership of the project.

First Solar is constructing the 230-MW photovoltaic power project in northern Los Angeles County and will operate and maintain the project for Exelon.

The first portion of the project is expected to come online in late 2012, with full operation planned for late 2013.

The project has a 25-year power purchase agreement, approved by the California Public Utilities Commission, with Pacific Gas & Electric Company for the full output of the plant.

Headquartered in Chicago, Exelon has operations and business activities in 47 states, the District of Columbia and Canada.

Exelon is the largest competitive U.S. power generator, with approximately 35,000 megawatts of owned capacity.

The company’s shares were up 0.46 percent Friday morning at $39.

Quick facts: Exelon

Price: 36.85 USD

Market: NYSE
Market Cap: $35.91 billion

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