Earnings Release Highlights
- GAAP Net Income of $731 million and Adjusted EBITDA (non-GAAP)
of nearly $1.2 billion for the third quarter of 2023
- Raising guidance range for full year 2023 Adjusted EBITDA
(non-GAAP) to $3,800 million to $4,000 million
- Delivering on our commitment to shareholders:
- Expanded the nation's largest, highly reliable carbon-free
nuclear fleet by acquiring a 44% stake in South Texas Project
Electric Generating Station
- Repurchased $250 million of shares, returning value to
shareholders and completing three quarters of our $1.0 billion
share repurchase program
- Achieved major milestone in bid to build world's largest
nuclear-powered hydrogen production facility with U.S. Department
of Energy grant of up to $1.0 billion for MachH2 hydrogen hub
- Reached agreement with ComEd, one of the nation's largest
utilities, to power its 54 metered facilities with locally
produced, carbon-free nuclear energy, every hour of every day
- Earned 2023 Great Place to Work® certification based on
positive ratings from our employees on their experience working at
Constellation
Constellation Energy Corporation (Nasdaq: CEG) today reported
its financial results for the third quarter of 2023.
“Our continued strong performance this quarter is the result of
pairing the nation’s largest clean energy fleet with an unmatched
commercial business, allowing us to produce affordable and reliable
carbon-free energy when and where American families and businesses
need it,” said Joe Dominguez, president and CEO of Constellation.
“This combination of businesses is the fundamental strength of our
strategy. It allows us to help customers like Microsoft and ComEd
manage their energy costs in a volatile market, while also lowering
their carbon emissions with clean energy matched to their use in
every hour of every day. We continue to execute our growth
strategy, closing on the South Texas Project transaction ahead of
schedule and moving forward with $1.5 billion in growth spending on
equipment to increase the output of our nuclear plants, wind
repowering and pursuit of a nuclear-powered clean hydrogen facility
as part of a multi-state hub.”
“Our generation fleet performed at peak levels during a summer
of record heat, while our commercial business continued to win new
business and realize higher margins,” said Dan Eggers, executive
vice president and chief financial officer. “Our gross margin
outlook for 2023 is now $850 million higher than our expectations
at the start of the year and our outlook for 2024 has increased.
Based on current market conditions and the continued strength of
our operations, we are raising 2023 adjusted EBITDA guidance to a
$3.9 billion mid-point and narrowing the range to $3.8 billion to
$4 billion.”
Third Quarter 2023
Our GAAP Net Income for the third quarter of 2023 increased to
$731 million from ($188) million GAAP Net Loss in the third quarter
of 2022. Adjusted EBITDA (non-GAAP) for the third quarter of 2023
increased to $1,199 million from $592 million in the third quarter
of 2022. For the reconciliations of GAAP Net Income (Loss) to
Adjusted EBITDA (non-GAAP), refer to the tables beginning on page
3.
Adjusted EBITDA (non-GAAP) in the third quarter of 2023
primarily reflects:
- Favorable market and portfolio conditions; partially offset by
unfavorable labor, contracting, and materials, and decreased ZEC
revenue.
Recent Developments and Third Quarter Highlights
- Delivering on Our Capital Allocation Promises: In
alignment with our capital and strategic plan, on November 1, 2023
we completed our acquisition of a 44% undivided ownership interest
in the South Texas Project Nuclear Generating Station, a
2,645-megawatt, dual-unit nuclear plant located about 90 miles
southwest of Houston, for $1.75 billion. We issued senior notes
with net proceeds of approximately $1.4 billion which was in part
used to fund the acquisition. This acquisition is complementary to
and aligned strategically with our existing clean energy business
operations. We’ve also continued our share repurchase program,
repurchasing over 2.3 million shares for a total of $250 million in
the third quarter 2023. To date, we have successfully repurchased
approximately 8.5 million shares, utilizing $756 million, inclusive
of taxes and transaction costs, of the $1 billion
authorization.
- Clean Hydrogen Hub Awarded: We are excited to be a major
participant in the MachH2 hydrogen hub recently selected for up to
$1 billion by the Department of Energy. A portion of the hub
funding will be used to build the world's largest nuclear-powered
clean hydrogen production facility at our LaSalle Clean Energy
Center in Illinois. The project will produce an estimated 33,450
tons of clean hydrogen each year and create thousands of
good-paying jobs. We estimate the facility will cost approximately
$900 million, with a portion of the MachH2 award offsetting the
project’s cost.
- Major Utility Carbon-Free Energy Matching Deal: We
signed a historic agreement with Commonwealth Edison (ComEd) to
power its 54 metered facilities with locally produced carbon-free
nuclear energy, every hour of every day. ComEd’s hourly carbon-free
energy purchase will match its anticipated electricity use of
approximately 65,000 megawatt-hours annually. This agreement
follows a similar deal between Constellation and Microsoft
announced in the second quarter of 2023 to power one of its
Virginia data centers with nearly 100 percent carbon-free nuclear
energy. Together, the two transactions are setting a new standard
for how companies across the U.S. can achieve real emissions
reductions.
- 2023 Great Place to Work Certification: In the third
quarter we were Certified™ by Great Place To Work®. The designation
is based on how our employees rate their experience working at
Constellation. In a survey of about 5,000 of our employees, 81% of
those who responded said it is a great place to work – about 24
points higher than the average U.S. company. Great Place To Work®
is acknowledged worldwide as a global benchmark for workplace
culture, employee experience and the leadership behaviors proven to
deliver strong market performance, employee retention and increased
innovation.
- Nuclear Operations: Our nuclear fleet, including our
owned output from the Salem Generating Station, produced 44,125
gigawatt-hours (GWhs) in the third quarter of 2023, compared with
43,794 GWhs in the third quarter of 2022. Excluding Salem, our
nuclear plants at ownership achieved a 97.2% capacity factor for
the third quarter of 2023, compared with 96.4% for the third
quarter of 2022. There were 20 planned refueling outage days in the
third quarter of 2023 and five in the third quarter of 2022. There
were 10 non-refueling outage days in the third quarter of 2023 and
26 in the third quarter of 2022.
- Natural Gas, Oil, and Renewables Operations: The
dispatch match rate for our fleet was 98.5% in the third quarter of
2023, compared with 98.7%1 in the third quarter of 2022. Renewable
energy capture for our fleet was 96.6% in the third quarter of
2023, compared with 96.4%1 in the third quarter of 2022.
________
1Prior year dispatch match and energy
capture was previously reported as 98.8% and 95.7%, respectively.
The update reflects a change to include the Conowingo run-of-river
hydroelectric operational performance within renewable energy
capture, and remove the performance from dispatch match.
GAAP/Adjusted EBITDA (non-GAAP) Reconciliation
Adjusted EBITDA (non-GAAP) for the third quarter of 2023 and
2022, respectively, does not include the following items that were
included in our reported GAAP Net Income (Loss):
(in millions)
Three Months Ended September
30, 2023
Three Months Ended September
30, 2022
GAAP Net Income (Loss) Attributable to
Common Shareholders
$
731
$
(188
)
Income Taxes
209
(149
)
Depreciation and Amortization
266
262
Interest Expense, Net
82
75
Unrealized (Gain) Loss on Fair Value
Adjustments
(215
)
550
Asset Impairments
71
—
Plant Retirements and Divestitures
—
5
Decommissioning-Related Activities
79
88
Pension & OPEB Non-Service Credits
(14
)
(27
)
Separation Costs
18
30
ERP System Implementation Costs
5
5
Change in Environmental Liabilities
13
3
Prior Merger Commitment
—
(50
)
Noncontrolling Interests
(46
)
(12
)
Adjusted EBITDA (non-GAAP)
$
1,199
$
592
Webcast Information
We will discuss third quarter 2023 earnings in a conference call
scheduled for today at 10 a.m. Eastern Time. The webcast and
associated materials can be accessed at
https://investors.constellationenergy.com.
About Constellation
A Fortune 200 company headquartered in Baltimore, Constellation
Energy Corporation (Nasdaq: CEG) is the nation’s largest producer
of clean, carbon-free energy and a leading supplier of energy
products and services to businesses, homes, community aggregations
and public sector customers across the continental United States,
including three fourths of Fortune 100 companies. With annual
output that is nearly 90% carbon-free, our hydro, wind and solar
facilities paired with the nation’s largest nuclear fleet have the
generating capacity to power the equivalent of more than 16 million
average homes, providing about 11% of the nation’s clean energy. We
are further accelerating the nation’s transition to a carbon-free
future by helping our customers reach their sustainability goals,
setting our own ambitious goal of achieving 100% carbon-free
generation by 2040, and by investing in promising emerging
technologies to eliminate carbon emissions across all sectors of
the economy. Follow Constellation on LinkedIn and Twitter.
Non-GAAP Financial Measures
In analyzing and planning for our business, we supplement our
use of net income as determined under generally accepted accounting
principles in the United States (GAAP), with Adjusted EBITDA
(non-GAAP) as a performance measure. Adjusted EBITDA (non-GAAP)
reflects an additional way of viewing our business that, when
viewed with our GAAP results and the accompanying reconciliation to
GAAP net income included above, may provide a more complete
understanding of factors and trends affecting our business.
Adjusted EBITDA (non-GAAP) should not be relied upon to the
exclusion of GAAP financial measures and is, by definition, an
incomplete understanding of our business, and must be considered in
conjunction with GAAP measures. In addition, Adjusted EBITDA
(non-GAAP) is neither a standardized financial measure, nor a
presentation defined under GAAP and may not be comparable to other
companies’ presentations or deemed more useful than the GAAP
information provided elsewhere in this press release and earnings
release attachments. We have provided the non-GAAP financial
measure as supplemental information and in addition to the
financial measures that are calculated and presented in accordance
with GAAP. Adjusted EBITDA (non-GAAP) should not be deemed more
useful than, a substitute for, or an alternative to the most
comparable GAAP Net Income measure provided in this earnings
release and attachments. A reconciliation of projected Adjusted
EBITDA, which is a forward-looking non-GAAP financial measure, to
the most directly comparable GAAP financial measure, is not
provided because we are unable to provide such reconciliation
without unreasonable effort. The inability to provide each
reconciliation is due to the unpredictability of the amounts and
timing of events affecting the items we exclude from the non-GAAP
measure. This press release and earnings release attachments
provide reconciliations of Adjusted EBITDA (non-GAAP) to the most
directly comparable financial measures calculated and presented in
accordance with GAAP, are posted on our website:
www.ConstellationEnergy.com, and have been furnished to the
Securities and Exchange Commission on Form 8-K on November 6,
2023.
Cautionary Statements Regarding Forward-Looking
Information
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 that are subject to risks and uncertainties. Words such as
“could,” “may,” “expects,” “anticipates,” “will,” “targets,”
“goals,” “projects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “predicts,” and variations on such words, and similar
expressions that reflect our current views with respect to future
events and operational, economic, and financial performance, are
intended to identify such forward-looking statements.
The factors that could cause actual results to differ materially
from the forward-looking statements made by Constellation Energy
Corporation and Constellation Energy Generation, LLC, (Registrants)
include those factors discussed herein, as well as the items
discussed in (1) the Registrants' 2022 Annual Report on Form 10-K
in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations, and (c) Part II, ITEM 8. Financial
Statements and Supplementary Data: Note 19, Commitments and
Contingencies; (2) the Registrants' Third Quarter 2023 Quarterly
Report on Form 10-Q (to be filed on November 6, 2023) in (a) Part
II, ITEM 1A. Risk Factors, (b) Part I, ITEM 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations, and (c) Part I, ITEM 1. Financial Statements: Note 13,
Commitments and Contingencies; and (3) other factors discussed in
filings with the SEC by the Registrants.
Investors are cautioned not to place undue reliance on these
forward-looking statements, whether written or oral, which apply
only as of the date of this press release. Neither Registrant
undertakes any obligation to publicly release any revision to its
forward-looking statements to reflect events or circumstances after
the date of this press release.
Constellation Energy
Corporation
GAAP Consolidated Statements
of Operations and
Adjusted EBITDA (non-GAAP)
Reconciling Adjustments
(unaudited)
(in millions, except per share
data)
Three Months Ended September
30, 2023
Three Months Ended September
30, 2022
GAAP (a)
Non-GAAP Adjustments
GAAP (a)
Non-GAAP Adjustments
Operating revenues
$
6,111
$
(178
)
(b),(c)
$
6,051
$
680
(b),(c)
Operating expenses
Purchased power and fuel
3,367
(38
)
(b)
4,695
132
(b)
Operating and maintenance
1,353
(78
)
(c),(d),(f),(l),(o)
989
191
(c),(d),(f),(g),(l),(n)
Depreciation and amortization
266
(266
)
(h)
262
(262
)
(h)
Taxes other than income taxes
148
—
145
—
Total operating expenses
5,134
6,091
Loss on sales of assets and
businesses
—
—
(1
)
1
(g)
Operating income
977
(41
)
Other income and (deductions)
Interest expense, net
(82
)
82
(i)
(75
)
75
(i)
Other, net
—
23
(b),(c),(e),(m)
(196
)
220
(b),(c),(e),(m)
Total other income and
(deductions)
(82
)
(271
)
Income (loss) before income
taxes
895
(312
)
Income taxes
205
(205
)
(j)
(123
)
123
(j)
Equity in losses of unconsolidated
affiliates
—
—
(4
)
—
Net income (loss)
690
(193
)
Net loss attributable to noncontrolling
interests
(41
)
46
(k)
(5
)
12
(k)
Net income (loss) attributable to
common shareholders
$
731
$
(188
)
Effective tax rate
22.9
%
39.4
%
Earnings per average common
share
Basic
$
2.27
$
(0.57
)
Diluted
$
2.26
$
(0.57
)
Average common shares
outstanding
Basic
322
327
Diluted
323
328
__________
(a)
Results reported in accordance
with GAAP.
(b)
Adjustment for mark-to-market on
economic hedges and fair value adjustments related to gas
imbalances and equity investments.
(c)
Adjustment for all gains and
losses associated with NDTs, ARO accretion, ARO remeasurement, and
any earnings neutral impacts of contractual offset for Regulatory
Agreement Units.
(d)
Adjustment for certain
incremental costs related to the separation (system-related costs,
third-party costs paid to advisors, consultants, lawyers, and other
experts assisting in the separation), including a portion of the
amounts billed to us pursuant to the TSA.
(e)
Adjustment for Pension and Other
Postretirement Employee Benefits (OPEB) Non-Service credits.
(f)
Adjustment for costs related to a
multi-year ERP system implementation
(g)
Adjustments related to plant
retirements and divestitures.
(h)
Adjustment for depreciation and
amortization expense.
(i)
Adjustment for interest
expense.
(j)
Adjustment for income taxes.
(k)
Adjustment for elimination of the
noncontrolling interest related to certain adjustments.
(l)
Adjustment for changes in
environmental liabilities.
(m)
Adjustment includes amounts
contractually owed to Exelon under the tax matters agreement.
(n)
Reversal of a charge related to a
2012 merger commitment.
(o)
Adjustment for an asset
impairment.
Constellation Energy
Corporation
GAAP Consolidated Statements
of Operations and
Adjusted EBITDA (non-GAAP)
Reconciling Adjustments
(unaudited)
(in millions, except per share
data)
Nine Months Ended September
30, 2023
Nine Months Ended September
30, 2022
GAAP (a)
Non-GAAP Adjustments
GAAP (a)
Non-GAAP Adjustments
Operating revenues
$
19,122
$
(1,320
)
(b),(c)
$
17,107
$
1,896
(b),(c)
Operating expenses
Purchased power and fuel
11,983
(1,466
)
(b)
11,754
1,263
(b)
Operating and maintenance
4,263
(260
)
(c),(d),(f),(l),(o),(p)
3,466
57
(c),(d),(e),(f),(g),(l),(n)
Depreciation and amortization
808
(808
)
(h)
818
(818
)
(h)
Taxes other than income taxes
419
—
415
(2
)
(d)
Total operating expenses
17,473
16,453
Gain on sales of assets and
businesses
28
(28
)
(g)
13
1
(g)
Operating income
1,677
667
Other income and (deductions)
Interest expense, net
(292
)
292
(i)
(187
)
187
(i)
Other, net
919
(857
)
(b),(c),(e),(m)
(1,169
)
1,213
(b),(c),(d), (e),(g),(m)
Total other income and
(deductions)
627
(1,356
)
Income (loss) before income
taxes
2,304
(689
)
Income taxes
677
(677
)
(j)
(504
)
504
(j)
Equity in losses of unconsolidated
affiliates
(11
)
—
(10
)
—
Net income (loss)
1,616
(195
)
Net (loss) income attributable to
noncontrolling interests
(44
)
70
(k)
(1
)
37
(k)
Net income (loss) attributable to
common shareholders
$
1,660
$
(194
)
Effective tax rate
29.4
%
73.1
%
Earnings per average common
share
Basic
$
5.12
$
(0.59
)
Diluted
$
5.11
$
(0.59
)
Average common shares
outstanding
Basic
324
327
Diluted
325
328
__________
(a)
Results reported in accordance
with GAAP.
(b)
Adjustment for mark-to-market on
economic hedges and fair value adjustments related to gas
imbalances and equity investments.
(c)
Adjustment for all gains and
losses associated with NDTs, ARO accretion, ARO remeasurement, and
any earnings neutral impacts of contractual offset for Regulatory
Agreement Units.
(d)
Adjustment for certain
incremental costs related to the separation (system-related costs,
third-party costs paid to advisors, consultants, lawyers, and other
experts assisting in the separation), including a portion of the
amounts billed to us pursuant to the TSA.
(e)
Adjustment for Pension and Other
Postretirement Employee Benefits (OPEB) Non-Service credits.
(f)
Adjustment for costs related to a
multi-year ERP system implementation
(g)
Adjustments related to plant
retirements and divestitures.
(h
Adjustment for depreciation and
amortization expense.
(i)
Adjustment for interest
expense.
(j)
Adjustment for income taxes.
(k)
Adjustment for elimination of the
noncontrolling interest related to certain adjustments.
(l)
Adjustment for changes in
environmental liabilities.
(m)
Adjustment includes amounts
contractually owed to Exelon under the tax matters agreement.
(n)
Reversal of a charge related to a
2012 merger commitment.
(o)
Adjustment for an asset
impairment.
(p)
Adjustment for acquisition
related costs.
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Paul Adams Corporate Communications 667-218-7700
Emily Duncan Investor Relations 833-447-2783
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