Exelon Q3 2026 Earnings: Revenue Rose as GAAP Profit Fell

Exelon (Nasdaq: EXC) reported Q3 2026 operating revenue of $7.32 billion, up about 9.2% from $6.71 billion a year earlier, while GAAP diluted EPS fell to $0.70 from $0.86; adjusted operating EPS edged up to $0.87 from $0.86. Revenue increased at each utility, but higher operating, storm, depreciation, and interest costs reduced consolidated operating income and GAAP profit, while rate recovery supported adjusted earnings.

Core Earnings Results

For the quarter ended September 30, 2026, operating expenses increased about 14.1% to $5.94 billion, faster than revenue growth. As a result, operating income fell 8.1%, and the operating margin contracted by about 3.5 percentage points.

Adjusted operating earnings moved in the opposite direction from GAAP profit, rising 2.6% to $897 million. The difference reflected regulatory matters, project impairments, and cost-management expenses excluded from the non-GAAP measure.

Utility Performance

All four utilities generated higher revenue, but their adjusted earnings results diverged. Higher approved distribution and transmission rates benefited ComEd, BGE, and PHI, while PECO faced a substantially heavier cost burden.

ComEd’s improvement reflected a larger distribution and transmission rate base tied to incremental investments, along with higher allowance for funds used during construction. BGE benefited from approved distribution rates and lower contracting costs.

PHI’s adjusted earnings increased as approved distribution rates supported recovery of investments, partly offset by higher storm, depreciation, and interest costs. Its GAAP net income nevertheless declined to $187 million from $291 million because of items excluded from adjusted results.

PECO was the main operating drag. Higher storm costs, the absence of extraordinary storm-cost deferrals recognized in 2025, and increased income tax, contracting, depreciation, and interest expenses outweighed favorable weather and the absence of customer surcharge credits.

For ComEd, BGE, and much of PHI, revenue decoupling means distribution earnings are not intended to vary with actual weather or customer usage patterns.

Rate Recovery Supported Adjusted Earnings, but Costs and Regulatory Items Cut GAAP Profit

Exelon’s reconciliation added a net $168 million to Q3 GAAP profit to arrive at adjusted operating earnings. The adjustments included $130 million for regulatory matters, $26 million for project impairments, and $15 million for a cost-management program, partly offset by a $3 million environmental-cost item. These adjustments increased EPS from $0.70 on a GAAP basis to $0.87 on an adjusted basis.

The divergence was especially visible at PHI, where adjusted earnings rose even as GAAP net income declined. However, the consolidated pressure was not solely an accounting-reconciliation issue: operating income also fell because expense growth exceeded revenue growth.

Balance Sheet and Financing

At September 30, 2026, cash and cash equivalents totaled $1.47 billion, up from $626 million at the end of 2025. Net property, plant, and equipment increased to $88.56 billion from $84.32 billion, consistent with continued investment across the regulated utilities.

Long-term debt rose to $50.79 billion from $47.41 billion at year-end. Quarterly net interest expense also increased to $593 million from $538 million, showing the earnings cost associated with a larger financing base.

During the quarter, PECO issued $750 million of 5.00% first mortgage bonds due in 2031, while DPL issued $75 million of 5.00% first mortgage bonds due in 2036. Both utilities said the proceeds would be used to repay existing debt and for general corporate purposes, and Exelon reported that its planned 2026 debt financings were complete.

Earnings Guidance

Exelon narrowed its full-year 2026 adjusted operating EPS guidance to $2.85-$2.91. The prior range was not included in the supplied release, so the size of the narrowing cannot be quantified. The company also reaffirmed its longer-term operating EPS growth outlook near the upper end of its 5%-7% range from 2025 through 2029.

Management said continued transmission and storage investment would support its growth plans while emphasizing financial discipline and customer affordability.

Risks Investors Should Monitor

• Storm and operating costs: Higher storm expenses weighed on PECO and PHI, while increased contracting, tax, depreciation, and interest costs placed additional pressure on PECO.
• Financing costs: Long-term debt and quarterly interest expense both increased. Further growth in financing costs could offset earnings generated by utility investment.
• Regulatory dependence: Higher approved rates were central to adjusted earnings growth at ComEd, BGE, and PHI, making the timing and outcome of future rate proceedings important.
• GAAP earnings volatility: Regulatory matters, project impairments, and cost-management expenses produced a meaningful gap between GAAP and adjusted results this quarter.

Summary

Exelon’s Q3 2026 revenue growth was broad-based, but expenses increased more rapidly and reduced GAAP earnings and operating margins. Approved rate recovery and utility investment supported a modest increase in adjusted EPS, with strength at ComEd, BGE, and PHI offset by a significant decline at PECO. The main issues to watch are storm and operating costs, rising interest expense, regulatory recovery, and Exelon’s ability to deliver its narrowed 2026 guidance while funding continued infrastructure investment.