Exelon posts highest adjusted earnings margin in 3 years

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Dec. 4 2020, Updated 10:52 a.m. ET

EBITDA margin on the rise

Exelon Corporation’s (EXC) EBITDA (earnings before income taxes, depreciation, and amortization) margin for 3Q 2014 was 33.7%. This is the highest EBITDA margin that Exelon has achieved in 11 quarters. Exelon’s EBITDA for the third quarter was $2.3 billion based on revenues of $6.9 billion.

Quarterly

EBITDA margins reflect the business’ profitability. A higher EBITDA margin implies higher profit margins, while a lower EBITDA margin indicates lower profit margins.

Acquiring utilities healthy for EBITDA margin

In the last two years, Exelon has looked to strengthen its utility division via acquisitions. For example, in 2012, Exelon merged with Constellation, adding 1.2 million utility customers. As the synergies of the merger are realized, EBITDA margins are getting healthier.

This year, Exelon announced two more large-sized deals adding more utility business to its portfolio. It plans to acquire Pepco Holdings, Inc. (POM) and the retail utility arm of Integrys Energy Group, Inc. (TEG).  These acquisitions will strengthen Exelon’s utility division.

Within the Select Sector Utilities Select Sector SPDR Fund (XLU), NextEra Energy Inc. (NEE) derives the best EBITDA margin from its sales. NextEra Energy has an EBITDA margin of close to 40%.

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