Exelon Corporation

Hello and welcome to Exelon's fourth quarter earnings call. My name is Michelle and I will be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today's webcast is being recorded. During the presentation, we'll have a question and answer session. You can ask questions by pressing star 11 on your telephone keypad. If you would like to view the presentation in a full screen view, click the full screen button by hovering your computer mouse cursor over the PowerPoint screen. Press the escape key on your keyboard to return to your original view. And finally, should you need technical assistance, as a best practice, we suggest you first refresh your browser. If that does not resolve the issue, please click on the Help option in the upper right-hand corner of your screen for online troubleshooting. It is now my pleasure to turn today's program over to Andrew Plange, Vice President of Investor Relations. The floor is yours.

Thank you, Michelle, and good morning, everyone. Thank you for joining us for our 2024 Fourth Quarter Earnings Call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer, and Gene Jones, Exelon's Chief Financial Officer. Other members of Exelon's Senior Management Team are also with us today, and they will be available to answer your questions following our prepared remarks. Today's presentation, along with our earnings release and other financial information, can be found in the Investor Relations section of Exelon's website. We would also like to remind you that today's presentation and the associated earnings release materials contain forward-looking statements which are subject to risks and uncertainties. find the cautionary statements on these risks on slide two of today's presentation or in our SEC filings. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It is now my pleasure to turn the call over to Calvin Butler, Exxon's President and CEO.

Thank you, Andrew, and good morning, everyone. We're pleased to have you with us for our fourth quarter earnings call, closing out another successful year for Exelon. We're entering our 25th year as a company since the historic merger of Commonwealth Edison and Philadelphia Electric Company in 2000. Fly eagles fly. The industry and the company have seen a tremendous amount of change during that time, not unlike the years over the century plus that shaped ComEd and PECO since their origins in 1881. But some threads indelibly run through that history, including, most importantly, a commitment to excellence in service to our customers. That commitment inspired Samuel Insel in Chicago, whose vision made electricity more accessible to all customers. And it continues to inspire us today, which shows in the results we're reporting and where our focus will be in the years ahead. It was another year of excellent operating performance. All four of Exelon utilities achieved top quartile for reliability, with three of our utilities ranking in the top five among our peer benchmark and all four utilities performing in the top eight. It was also another year of excellent financial performance. We reported GAAP earnings for 2024 of $2.45 per share and adjusted operating earnings of $2.50 per share. making it our third straight year as a pure T&D company of meeting the midpoint or better of guidance. In fact, when you look back at the earnings path we laid out when announcing our separation in our Q4 2021 earnings call, the midpoint of our 2024 guidance was $2.50. When you think of all the change Exelon has managed during that time separating the company, generationally high inflation and interest rates, transitioning to the new ComEd rate structure, it is remarkable to think that we maintained our trajectory. That is who we are, a company that our customers, employees, policymakers, and investors count on to deliver. On the regulatory front, we successfully closed out a very busy year for rate cases, As we'll discuss further, this puts us on very strong footing to serve our customers and focus on expanding ways to support the energy transformation in the years ahead. These include ensuring our jurisdictions can continue to participate in the exciting growth of artificial intelligence powered by data centers that can foster economic development. And as Jean will discuss, there are other significant potential transmission opportunities as well. such as the MISO Tranche 2.1 work that are not currently in our guidance, but which will require an additional $10 to $15 billion of investment to serve our customers in the coming 5 to 10 years. Those opportunities illustrate why our updated four-year plan continues to reflect the steady investment growth that you should expect from a company that serves more customers than any other in the U.S., in some of the most critical regions for the economy. We now expect to invest $38 billion from 2025 to 2028 to support customer needs. No single project will be more than 3% of that plan. And of that 3.5 billion in capital growth, more than 80% is attributable to transmission. This type of investment ensures that our utilities remain a key engine of our jurisdiction's economies. Not only do our investments create good local jobs, an estimated 70,000 plus, and not only do they ensure the spending stays local with more than $4 billion of our supplier spend sourced from our jurisdictions. Most importantly, it ensures reliability. which when the economy increasingly counts on access to reliable, resilient power, can really multiply the power of our impact. The growth in our high-density load pipeline by over two and a half times in the last year is evidence of that. ComEd alone won 15 major projects. bringing in an estimated $17 billion of projected capital investments from other companies and creating over 1,000 jobs in northern Illinois. And with this development comes increased load, and we're seeing 1% to 2% load growth over our four-year period, allowing us to distribute the cost of the grid over more usage. To fund these investments in a disciplined manner, we are maintaining a balanced funding strategy. financing the growth with 40% equity and building on a solid trajectory to sustaining and improving our credit metrics over the plan. This commitment to balance sheet strength is evidenced by an upgrade to Exelon's credit rating by S&P last week. With continued returns on equity in the 9% to 10% range, we expect annualized earnings growth of 5% to 7% through 2028, with the expectation of being at the midpoint or better of that range. For 2025, we're initiating operating earnings guidance of $2.64 to $2.74 per share. And we are increasing our dividend to $1.60 per share, keeping our payout ratio in line with the 60% we have communicated as part of our capital allocation policy. The top line results make it clear 2024 was a successful year. And slide five more extensively highlights all of the ways in which our execution set us up for continued service to our customers, communities, and stakeholders, checking all of the boxes that we laid out this time last year. For instance, we invested $7.5 billion of capital, executing within 1% of our guidance, even with substantial reductions at ComEd as we worked to gain approval of our refiled grid plan. We earned a 9.1% return on equity despite a large portion of our rate base awaiting updated rate recovery and significant storm and weather headwinds. We executed on our financing plan and continue to see strong investment-grade credit ratings at our agencies, carrying that into the S&P upgrade this year. As you'll hear more from Gene, our organization remained laser-focused on cost. having identified dozens of initiatives that support 100 million of sustainable savings and many more that we continue to pursue with our dedicated team. It's a key contributor to our year-over-year growth in O&M of just half a percent. But beyond managing our costs, affordability remains a top priority into 2025, and our customers anchor our focus as we engage with policymakers, I will return to this topic in my closing remarks. I am so proud of all that our 20,000 employees were able to accomplish this year, and I thank them for their commitment no matter the circumstances. And that starts with job one of safely keeping the lights on and the gas flowing, which I'll cover on the next slide. As I mentioned, it was another top decile year for ComEd and Pepco Holdings from an outage frequency and outage duration perspective. and BGE and PECO also attained top quartile. This was no small feat, and particularly at ComEd, which faced an unprecedented set of storms in July that produced 43 tornadoes, more than that region sees in an entire year, while also receiving the Reliability One Award for outstanding performance in the Midwest. On the gas side, our hardworking employees at BGE, PECO, and Pepco Holdings also delivered top decile performance across the board for the entirety of 2024, the fourth year in a row that all three have achieved top decile. This sustained operational excellence is where our investments translate to real customer value. Importantly, our employees achieved these results with a strong focus on safety, ending the year with top quartile performance on serious injury incident rate. Now, any safety incident is one too many, so we continue to build out our observational tools and procedures to improve. Lastly, our customer satisfaction scores remain consistent with the levels seen throughout the third quarter, with ComEd and PECO in the first quartile and BGE and Pepco Holdings in the second quartile. With the onset of our first colder-than-normal winter in a number of years and higher energy supply costs, we recognize that affordability remains a critical aspect of the customer experience. To further improve performance at BGE and Pepco Holdings, they are extending efforts to enhance customer support in partnership with our communities. BGE and Pepco Holdings are waiving late payment fees in the winter months. and suspending non-payment disconnections in February, including extending the length of payment arrangements where needed. We are also continuing to focus on empowering our customers to access digital tools and strategies to conserve energy during high usage months. Now, we took similar actions during the pandemic. Our customers can count on us to proactively take measures when needed to balance affordability while ensuring a safe, reliable, resilient grid, which is critical to our communities and our economy. We look forward to continuing to collaborate with our stakeholders to expand our solution set for customers. I'll now turn the call to Jean to recap our 2024 financial performance and provide details on our updated long-term plan. Jean?