Pepco Holdings Reports First Quarter 2015 Financial Results

WASHINGTON--(BUSINESS WIRE)-- Pepco Holdings, Inc. (NYSE: POM) today reported first quarter 2015 consolidated earnings as follows:

“Our first quarter financial results reflect our investment in utility infrastructure aimed at improving system reliability and customer service,” said Joseph M. Rigby, Chairman, President and Chief Executive Officer. “Higher operation and maintenance costs, largely driven by the implementation of a new customer information system also impacted first quarter consolidated earnings.” Rigby added, “As we work on obtaining the remaining regulatory approvals for the merger with Exelon, we are pleased to have reached a merger settlement agreement with Montgomery and Prince George’s Counties and other parties in Maryland.” Rigby added, “We believe this transaction provides significant benefits for all of our stakeholders and that the commitments we have made meet our jurisdictions’ requirements for merger approval. We continue to expect the transaction to close in the second or third quarter of this year.”

Pepco Holdings’ GAAP net income for the three months ended March 31, 2015 was $53 million, or 21 cents per share, as compared to $75 million, or 30 cents per share for the same period in 2014. There were no adjustments to GAAP earnings for the first quarter of 2014. Excluding items that we believe are not representative of ongoing business operations, adjusted net income for the first quarter of 2015 would have been $61 million, or 24 cents per share.

The primary drivers of the decrease in adjusted net income for the first quarter of 2015, as compared to the 2014 period, were higher operation and maintenance expense (primarily due to the implementation of a new customer information system and increased distribution system maintenance), higher depreciation expense and a 2014 gain on the condemnation of transmission property in the Pepco service territory. Higher electric distribution revenue (primarily due to higher rates driven by increased infrastructure investment and customer growth) partially offset the decrease.

Non-GAAP Financial Information

Management believes the adjusted net income and related per share data are representative of Pepco Holdings’ ongoing business operations. Management uses this information internally to evaluate Pepco Holdings’ period-over-period financial performance and, therefore, believes that this information is useful to investors. The presentation of adjusted net income and related per share data is intended to complement, and should not be considered as an alternative to, reported earnings and related per share data presented in accordance with generally accepted accounting principles in the United States (GAAP).

Reconciliation of GAAP Financial Information to Adjusted Financial Information

The income tax effects with respect to the foregoing adjustments, where applicable, were calculated using a composite income tax rate of 35 percent. Most merger-related costs are not tax deductible.

Recent Events

Pepco Holdings – Exelon Merger

• On March 16, 2015, a settlement agreement in the proposed merger with Exelon Corporation was filed with the Maryland Public Service Commission (MPSC). The agreement was entered into with Montgomery and Prince George’s Counties and certain other parties in Maryland and requires the approval of the MPSC. The current deadline for the decision is May 15, 2015. The approval of a settlement agreement filed with the Delaware Public Service Commission in February 2015 is anticipated on or before June 2, 2015. An application for merger approval is pending with the District of Columbia Public Service Commission (DCPSC). Evidentiary hearings were held in April. District of Columbia law does not impose a time limit on the DCPSC’s review of the merger application. The parties anticipate receiving final approvals and closing the transaction in the second or third quarter of 2015.

Operations

• Power Delivery electric sales were 12,597 gigawatt hours (GWh) in the first quarter of 2015, compared to 12,264 GWh for the first quarter of 2014. In the electric service territories, heating degree days increased by 3 percent for the first quarter of 2015, compared to the same period in 2014. Weather-adjusted electric sales were 12,034 GWh in the first quarter of 2015, compared to 11,809 GWh for the first quarter of 2014.
• For the three months ended March 31, 2015, PES signed $4 million in energy efficiency contracts and $3 million in underground transmission construction contracts. PES signed $17 million in energy efficiency contracts and $32 million in underground transmission contracts for the same period in 2014.

Financing

• On March 16, 2015, Pepco issued $200 million of 4.15 percent first mortgage bonds that are due on March 15, 2043. The bonds were issued at a premium of $8 million, resulting in a 3.9 percent yield to maturity. The net proceeds were used to repay outstanding commercial paper and for general corporate purposes.

Further details regarding changes in first quarter consolidated earnings between 2015 and 2014 are provided in the schedules that follow. Additional information regarding financial results and recent regulatory events can be found in the Pepco Holdings, Inc. Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission, and which is also available at www.pepcoholdings.com/investors. Pepco Holdings, Inc. routinely makes available this and other important information on its website, which is a key channel of distribution for Pepco Holdings, Inc. to reach its public investors and to disclose material, non-public information. Information on the website is not part of this news release.

About PHI: Pepco Holdings, Inc. (NYSE: POM) is one of the largest energy delivery companies in the Mid-Atlantic region, serving about 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City Electric provide regulated electricity service; Delmarva Power also provides natural gas service. Through Pepco Energy Services, PHI also provides energy savings performance contracting services, underground transmission and distribution construction and maintenance services, and steam and chilled water under long-term contracts.

Forward-Looking Statements: Some of the statements contained in this news release with respect to Pepco Holdings, Pepco, Delmarva Power and Atlantic City Electric, including each of their respective subsidiaries (each, a Reporting Company), are forward-looking statements within the meaning of the U.S. federal securities laws, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “could,” “expects,” “intends,” “assumes,” “seeks to,” “plans,” “anticipates,” “believes,” “projects,” “estimates,” “predicts,” “potential,” “future,” “goal,” “objective,” or “continue” or the negative of such terms or other variations thereof or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause one or more Reporting Company’s or their subsidiaries’ actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Therefore, forward-looking statements are not guarantees or assurances of future performance, and actual results could differ materially from those indicated by the forward-looking statements. These factors should be read together with the risk factors included in the “Risk Factors” section and other statements contained in each Reporting Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 27, 2015, and in each Reporting Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, and investors should refer to these risk factor sections and other statements. All of such factors and forward-looking statements are difficult to predict, contain uncertainties, are beyond each Reporting Company’s control and may cause actual results to differ materially from those contained in any forward-looking statements. Any forward-looking statements speak only as to the date this news release was issued, and none of the Reporting Companies undertakes any obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for a Reporting Company to predict all such factors. Furthermore, it may not be possible to assess the impact of any such factor on such Reporting Company’s or its subsidiaries’ business (viewed independently or together with the business or businesses of some or all of the other Reporting Companies or their subsidiaries) or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any specific factors that may be provided should not be construed as exhaustive.

Pepco Holdings, Inc.
Media Contact:
Courtney Nogas, 202-872-2680
24/7 Media Hotline 202-872-2680
[email protected]
or
Investor Contact:
Donna Kinzel, 302-429-3004
[email protected]

Source: Pepco Holdings, Inc.

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