Exelon Corporation (EXC) | The Buildout — AI Infrastructure
The Verdict
Exelon is a holding company for six regulated utilities — ComEd, PECO, BGE, Pepco, DPL and ACE — that deliver electricity transmission and distribution across parts of Illinois, Pennsylvania, Maryland, Delaware, New Jersey and the District of Columbia, plus natural gas distribution in three of those territories. It does not sell AI compute, chips or software. Its role in the buildout is indirect: data-center developers need large amounts of power delivered to specific sites, which requires large-load interconnection, transmission and distribution capacity, and battery storage. Exelon supplies that regulated grid capacity rather than an AI product.
| Market Cap | — |
| Revenue (TTM) | $25.3B |
| Revenue Growth | +6.6% |
| EBITDA Margin (TTM) | 35.6% |
| Net Debt | $51.0B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Data-center pipeline of 36 GW, with 4 GW of signed Transmission Security Agreements backed by $1 billion of collateral and 7 GW classified high-probability.
- Transmission rate base guided to grow 16% through 2029, up from "over 15%" a quarter earlier, inside 7.9% annualized rate base growth.
- A ~$41 billion capital plan through 2029 (Q1 framing: $41.7 billion), held unchanged through the pipeline revision, plus a maintained $12B–$17B transmission upside pool.
- FY2026 adjusted operating EPS guidance of $2.81–$2.91 reaffirmed, with a goal of midpoint or better.
- Financing largely pre-funded: ~86% of 2026 debt financing completed and ~37% of equity needs through 2029 priced via ATM forwards.
What We’re Watching
- PECO's Pennsylvania electric and gas rate cases were withdrawn and have not been refiled; no date was given.
- The data-center pipeline fell from 43 GW to 36 GW, with 25 GW still under study and only 4 GW signed.
- S&P lowered BGE's long-term issuer rating to 'A-' from 'A' on April 30, 2026; PECO is on negative outlook and under review for downgrade.
- Q3 2026 is shaped at ~27% of the full-year midpoint and contemplates weather, storms and the PECO employee strike at the beginning of July — not quantified.
The thesis is intact but carrying a visible regulatory gap. The growth engine — transmission — is compounding and the capital plan was raised, not cut; the TSA mechanism converts headline demand into collateralized commitments. Against that, the largest-state rate case is withdrawn and unrefiled, the headline pipeline shrank, and the $350 million cost-savings program went unmentioned this quarter. The open question is whether the pipeline converts into embedded capital and whether PECO refiles in time to keep the recovery schedule on track.
Earnings Beat
Exelon reported Q2 FY2026 revenue of $5,967 million, up about 10% from $5,427 million a year earlier, with a 41.0% gross margin. EBITDA was $1,947 million, a 32.6% margin, and net income was $396 million. Adjusted operating EPS was $0.43 versus $0.39 a year ago.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $6.0B | $7.2B | $5.4B | +10.0% |
| Gross margin | 41.0% | 28.3% | 40.7% | +30bps |
| EBITDA | $1.9B | $2.6B | $1.8B | +6.5% |
| EPS | $0.39 | $0.90 | $0.39 | −1.2% |
that predated the TSA process but are further along, and we feel very comfortable that they will continue.— Jeanne Jones, Chief Financial Officer, 2026-07-30
Management tone: Management escalated its language on PJM supply. On the prior call it said there had been no meaningful progress on new supply; on this call it described an actual near-miss system stress event, saying "the system should not have to operate this close to the edge." On the data-center pipeline cut it gave specific numbers under analyst questioning and tied the reduction to the TSA process. It did not give a PECO refiling date, and it did not revisit the $350 million cost-savings program or the ≤2% O&M target.
Management Guidance
Exelon reaffirmed FY2026 adjusted operating EPS guidance of $2.81–$2.91 with a goal of midpoint or better. Q3 2026 is shaped at approximately 27% of the full-year guidance midpoint, contemplating weather, storms, the PECO employee strike at the beginning of July, and normal weather and storm activity through the remainder of the quarter. Long-term annualized earnings growth is guided near the top end of 5%–7% for 2025–2029, supported by 7.9% annualized rate base growth. Capital deployment for 2026 is approximately $10 billion.
Trajectory
Exelon's revenue is seasonal and lumpy quarter to quarter: $7,242 million in Q1 FY2026 and $5,967 million in Q2 FY2026. Year over year it grew about 8% in Q1 and about 10% in Q2, but the growth is rate- and pass-through-driven — physical delivery volumes were roughly flat to slightly up. The code-computed margin trends flag gross, operating and EBITDA margins as compressing; EBITDA margin was 32.6% in Q2 FY2026 versus 33.7% a year earlier. The structural driver is rate base, guided at 7.9% annualized through 2029 with transmission at 16%.
The Model
The model's locked projections put FY+1 revenue at $26,391.5 million and EBITDA at $9,303 million, a 35.25% margin. For FY+2 it projects revenue of $27,957.0 million and EBITDA of $9,883 million, a 35.35% margin. The near term is anchored by Exelon's own framework — a ~$41 billion capital plan through 2029, 7.9% annualized rate base growth and 16% transmission rate base growth — plus roughly $10 billion of 2026 capital deployment. The FY+2 step-up depends on whether the transmission pipeline and the data-center projects behind signed TSAs convert into rate base.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $24.3B | $26.4B | $28.0B |
| YoY Growth | — | +8.8% | +5.9% |
| EBITDA | $8.8B | $9.3B | $9.9B |
| EBITDA Margin | 36.2% | 35.2% | 35.3% |
Projections are the median of 4 independent model runs. The model’s revenue sits 6.3% above analyst consensus.
Exelon reaffirmed FY2026 adjusted operating EPS guidance of $2.81–$2.91 with a goal of midpoint or better. Q3 2026 is shaped at approximately 27% of the full-year guidance midpoint, contemplating weather, storms, the PECO employee strike at the beginning of July, and normal weather and storm activity through the remainder of the quarter. Long-term annualized earnings growth is guided near the top end of 5%–7% for 2025–2029, supported by 7.9% annualized rate base growth. Capital deployment for 2026 is approximately $10 billion.
What Could Go Right — and Wrong
- The 4 GW of signed TSAs and the 7 GW high-probability bucket convert into embedded capital spend rather than staying a pipeline figure.
- MISO Tranche 2.1 awards — Iowa's MARS and EASL projects in Q4 2026, and the ~$1.9 billion Illinois bids — turn the $12B–$17B upside pool into awarded projects.
- The ComEd grid plan, roughly $15.3 billion of investment through 2031, is approved by December 15, 2026.
- PECO refiles its Pennsylvania rate cases on terms that hold its allowed return, closing the standing regulatory gap.
- The Pittsgrove 500 MW battery recovery is approved in the first half of 2027, bringing roughly $1 billion of storage into the plan.
- The data-center pipeline keeps shrinking — 25 GW is still under study and only 4 GW is signed.
- A PECO refiling proposes a materially lower allowed return or equity ratio, given the affordability and stakeholder pressures that drove the original withdrawal.
- Affordability pressure caps what regulators allow; residential supply costs in the Mid-Atlantic are up to 80% or more over five years.
- The $350 million of 2027 O&M savings and the ≤2% O&M growth cap prove non-recurring, tied as they are to work Exelon says it will no longer pursue.
- PJM and FERC rules keep utility-owned generation and large-load interconnection gated, and the state legislation Exelon is advocating for does not pass.
Looking Ahead
The next 12 months are a regulatory calendar. Pepco Maryland's final order is expected in August 2026, the ComEd grid plan order by December 15, 2026, BGE's rate case order in January 2027, and DPL Delaware's final order in Q3 2027. PECO's withdrawn Pennsylvania rate cases still have no refiling date. Alongside that, the MISO Tranche 2.1 Iowa bids are decided in Q4 2026 and the Pittsgrove battery recovery order is expected in the first half of 2027. Each is a discrete test of how growth capital gets recovered.
- August 2026Pepco Maryland rate order — Tests the $119.9M revenue requirement in Maryland.
- December 15, 2026ComEd grid plan order — Largest capital-program binary: ~$15.3B through 2031.
- Q4 2026MISO Iowa transmission award — MARS and EASL bids; tests the $12-17B upside pool.
- January 2027BGE rate case order — Tests the $156.1M ask and storm recovery mechanism.
- H1 2027Pittsgrove battery recovery order — Would bring ~$1B of storage into the capital plan.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $23.0B | $24.3B | $25.3B | +5.3% |
| Gross Margin | 40.9% | 26.1% | 24.5% | 1,475bps |
| EBITDA | $7.9B | $8.8B | $9.0B | +11.0% |
| EBITDA Margin | 34.4% | 36.2% | 35.6% | +185bps |
| Net Income | $2.5B | $2.8B | $2.8B | +12.5% |
| Free Cash Flow | −$1.5B | −$2.3B | −$1.9B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)24.5%
- EBITDA Margin (TTM)35.6%
- Net Margin (TTM)11.0%
- ROIC5.2%
- FCF Conversion-21.2%
- SBC / Revenue0.0%
The Company
Exelon is a utility services holding company that owns six regulated utilities: ComEd in northern Illinois including Chicago; PECO in southeastern Pennsylvania; BGE in central Maryland including Baltimore; Pepco in the District of Columbia and parts of Montgomery and Prince George's Counties, Maryland; DPL in parts of Delaware and Maryland; and ACE in southern New Jersey. All six deliver electricity transmission and distribution; PECO, BGE and DPL also distribute natural gas. Its stated strategy is to improve reliability and operations, enhance the customer experience and advance clean and affordable energy choices, while ensuring ratemaking mechanisms provide fair financial returns. It does not sell AI products — the connection to the buildout is that its territory is absorbing large-load, data-center growth.
The company operates as a regulated transmission and distribution platform, earning a regulated return on an expanding asset base rather than selling power at market rates. Its durable physical assets are its transmission network — management cites 11,000 circuit miles — and the 765-kV capability, where it says it is one of very few transmission operators that own and operate such lines. It has natural gas city gate infrastructure at PECO (30), BGE (27) and DPL (10). Two 10-K risk factors frame the operating constraints: supply-chain disruptions or cost increases "could materially impact the timing and execution of capital projects," and a lack of sufficient generation and storage could interrupt transmission and distribution services. No sole-source supplier dependencies are disclosed.
Business Segments
Competitive Landscape
Exelon does not sell a differentiated product; it sells regulated service in a fixed footprint. The criticality read is that its transmission service matters locally — data-center projects in its territories would stall without it — but a national buildout could relocate to other utilities with minimal delay. The 765-kV capability — management says it is "one of very few transmission operators that own and operate those types of lines today" — and the 11,000 circuit miles are the durable transmission assets. The TSA mechanism is the conversion gate: signed agreements turn a headline pipeline number into collateralized, capital-plan-embedded demand. The competitors are the PJM and MISO utility peer group pursuing the same data-center power-delivery demand.
- Build-out neighbor read cites it as an alternative for data-center power if utility interconnection is slow; not discussed in Exelon's filings.
- Build-out neighbor read cites it as an alternative for data-center power if utility interconnection is slow; not discussed in Exelon's filings.
Supply Chain
Exelon buys electrical equipment and construction services, and sells regulated transmission and distribution service across six jurisdictions. The 10-K discloses no sole-source supplier dependencies. The loudest signal in the material is not a supplier but PJM's supply shortfall.
More on EXC: Earnings recap