Constellation Expects to End Year Comfortably in the Upper End of Guidance and Sees Material Improvements In 2024
Earnings Release Highlights
-
GAAP Net Income of
and Adjusted EBITDA (non-GAAP) of$96 million for the first quarter of 2023$658 million -
Expect to be comfortably in the top half of our guidance range for full year Adjusted EBITDA (non-GAAP) from
-$2,900 million $3,300 million -
Delivering on our commitment to shareholders – commenced
share repurchase program repurchasing approximately$1 billion in the first quarter, equivalent to approximately 3.2 million shares, and paid first quarter dividend per share of$250 million , double that of prior quarter$0.28 20 - Began producing hydrogen at Nine Mile Point, demonstrating the value of producing hydrogen with carbon-free nuclear energy to help address the climate crisis
- Executed on long-term debt financings consistent with plan
“We had a strong start to 2023, putting us in position to end the year comfortably in the top half of our guidance range and giving us confidence to raise our gross margin outlook for 2024,” said Joe Dominguez, president and CEO of Constellation. “Our performance was led by the Commercial team as customers came to us for help managing their energy needs in a time of volatile markets, a trend we think will continue to create value for the balance of 2023 and into 2024. Our clean generation fleet also performed well during the quarter, reliably delivering affordable, carbon-free energy to homes and businesses across the country.”
“We are returning significant value to our shareholders after doubling our dividend since last year and completing about a quarter of the
First Quarter 2023
Our GAAP Net Income for the first quarter of 2023 decreased to
Adjusted EBITDA (non-GAAP) in the first quarter of 2023 primarily reflects:
- Increased labor, contracting, and materials, decreased capacity revenues and unfavorable impacts of nuclear outages partially offset by favorable market and portfolio conditions in 2023 compared to 2022.
Recent Developments and First Quarter Highlights
-
Delivering on Our Capital Allocation Promises: In our commitment to return value to shareholders, our share repurchase program commenced in the first quarter, successfully repurchasing approximately 3.2 million shares. We also paid our first quarter dividend of
per share, this was double the per share amount paid in the previous year.$0.28 20 -
Clean Hydrogen Progress: Hydrogen production has commenced at the nation’s first 1 MW demonstration scale, nuclear-powered clean hydrogen production facility at our Nine Mile Point Nuclear Plant in
Oswego, New York , an advancement that will help demonstrate the potential for hydrogen to power a clean economy. The clean Hydrogen Generation System operating at Nine Mile will help set the stage for possible large-scale deployments at other clean energy centers in our fleet that would couple clean hydrogen production with storage and other on-site uses. As part of our broader decarbonization strategy, we are currently working with public and private entities representing every phase in the hydrogen value chain to pursue development of regional hydrogen production and distribution hubs. Recently, the Midwest Alliance for Clean Hydrogen (MachH2), of which we are a member, announced it had officially submitted a full application to theU.S. Department of Energy (DOE) to develop a regional clean hydrogen production and distribution hub (H2Hub), funded under the Infrastructure Investment and Jobs Act (IIJA). -
Financing Activities: We successfully executed our financing plan through the issuance of
of long-term debt and$1.35 billion of tax-exempt bonds. On February 24, 2023 we issued and sold$435 million in aggregate principal amount of Senior Notes due 2028 and$750 million in aggregate principal amount of Senior Notes due 2033. The proceeds of the financings were used for general corporate purposes. The 2028 Senior Notes carry an interest rate of$600 million 5.600% per annum. The 2033 Senior Notes carry an interest rate of5.800% per annum. The tax-exempt bonds bear interest rates from4.100% to4.450% . -
Nuclear Operations: Our nuclear fleet, including our owned output from the Salem Generating Station, produced 42,463 gigawatt-hours (GWhs) in the first quarter of 2023, compared with 42,598 GWhs in the first quarter of 2022. Excluding
Salem , our nuclear plants at ownership achieved a92.8% capacity factor for the first quarter of 2023, compared with93.0% for the first quarter of 2022. There were 86 planned refueling outage days in the first quarter of 2023 and 76 in the first quarter of 2022. There were nine non-refueling outage days in the first quarter of 2023 and 10 in the first quarter of 2022. -
Natural Gas, Oil, and Renewables Operations: The dispatch match rate for our fleet was
98.4% in the first quarter of 2023, compared with99.2% 1 in the first quarter of 2022. Renewable energy capture for our fleet was96.6% in the first quarter of 2023, compared with96.8% 1 in the first quarter of 2022.
GAAP/Adjusted EBITDA (non-GAAP) Reconciliation
Adjusted EBITDA (non-GAAP) for the first quarter of 2023 and 2022, respectively, does not include the following items that were included in our reported GAAP Net Income:
(in millions) |
Three Months Ended March 31, 2023 |
Three Months Ended March 31, 2022 |
||||
GAAP Net Income Attributable to Common Shareholders |
$ |
96 |
|
$ |
106 |
|
Income Taxes |
|
131 |
|
|
(53 |
) |
Depreciation and Amortization |
|
267 |
|
|
280 |
|
Interest Expense, Net |
|
107 |
|
|
56 |
|
Unrealized Loss on Fair Value Adjustments |
|
297 |
|
|
118 |
|
Plant Retirements and Divestitures |
|
(27 |
) |
|
— |
|
Decommissioning-Related Activities |
|
(240 |
) |
|
354 |
|
Pension & OPEB Non-Service Costs |
|
(14 |
) |
|
(25 |
) |
Separation Costs |
|
30 |
|
|
37 |
|
ERP System Implementation Costs |
|
6 |
|
|
5 |
|
Change in Environmental Liabilities |
|
17 |
|
|
— |
|
Noncontrolling Interests |
|
(12 |
) |
|
(12 |
) |
Adjusted EBITDA (non-GAAP) |
$ |
658 |
|
$ |
866 |
|
Webcast Information
We will discuss first 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
Headquartered in
________________________ |
|
1 |
Prior year dispatch match and energy capture were previously reported as |
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
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' First Quarter 2023 Quarterly Report on Form 10-Q (to be filed on May 4, 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 12, 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
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|||||||||||||||||||
|
Three Months Ended March 31, 2023 |
|
Three Months Ended March 31, 2022 |
||||||||||||||||
|
GAAP (a) |
|
Non-GAAP Adjustments |
|
|
|
GAAP (a) |
|
Non-GAAP Adjustments |
|
|
||||||||
Operating revenues |
$ |
7,565 |
|
|
$ |
(930 |
) |
|
(b),(c) |
|
$ |
5,591 |
|
|
$ |
919 |
|
|
(b),(c) |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchased power and fuel |
|
5,729 |
|
|
|
(1,226 |
) |
|
(b) |
|
|
3,550 |
|
|
|
803 |
|
|
(b) |
Operating and maintenance |
|
1,432 |
|
|
|
(92 |
) |
|
(c),(d),(f),(l) |
|
|
1,205 |
|
|
|
(52 |
) |
|
(c),(d),(e),(f),(g) |
Depreciation and amortization |
|
267 |
|
|
|
(267 |
) |
|
(h) |
|
|
280 |
|
|
|
(280 |
) |
|
(h) |
Taxes other than income taxes |
|
132 |
|
|
|
— |
|
|
|
|
|
137 |
|
|
|
(2 |
) |
|
(d) |
Total operating expenses |
|
7,560 |
|
|
|
|
|
|
|
5,172 |
|
|
|
|
|
||||
Gain on sales of assets and businesses |
|
26 |
|
|
|
(26 |
) |
|
(g) |
|
|
16 |
|
|
|
(2 |
) |
|
(g) |
Operating income |
|
31 |
|
|
|
|
|
|
|
435 |
|
|
|
|
|
||||
Other income and (deductions) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(107 |
) |
|
|
107 |
|
|
(i) |
|
|
(56 |
) |
|
|
56 |
|
|
(i) |
Other, net |
|
314 |
|
|
|
(293 |
) |
|
(c),(e) |
|
|
(318 |
) |
|
|
321 |
|
|
(b),(c),(d), (e) |
Total other income and (deductions) |
|
207 |
|
|
|
|
|
|
|
(374 |
) |
|
|
|
|
||||
Income before income taxes |
|
238 |
|
|
|
|
|
|
|
61 |
|
|
|
|
|
||||
Income taxes |
|
131 |
|
|
|
(131 |
) |
|
(j) |
|
|
(53 |
) |
|
|
53 |
|
|
(j) |
Equity in losses of unconsolidated affiliates |
|
(5 |
) |
|
|
— |
|
|
|
|
|
(3 |
) |
|
|
— |
|
|
|
Net income |
|
102 |
|
|
|
|
|
|
|
111 |
|
|
|
|
|
||||
Net income attributable to noncontrolling interests |
|
6 |
|
|
|
12 |
|
|
(k) |
|
|
5 |
|
|
|
12 |
|
|
(k) |
Net income attributable to common shareholders |
$ |
96 |
|
|
|
|
|
|
$ |
106 |
|
|
|
|
|
||||
Effective tax rate |
|
55.0 |
% |
|
|
|
|
|
|
(86.9 |
) % |
|
|
|
|
||||
Earnings per average common share |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.29 |
|
|
|
|
|
|
$ |
0.32 |
|
|
|
|
|
||||
Diluted |
$ |
0.29 |
|
|
|
|
|
|
$ |
0.32 |
|
|
|
|
|
||||
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
|
328 |
|
|
|
|
|
|
|
327 |
|
|
|
|
|
||||
Diluted |
|
328 |
|
|
|
|
|
|
|
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 costs. |
(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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230503006076/en/
Paul
Corporate Communications
410-470-4167
Emily Duncan
Investor Relations
833-447-2783
Source: Constellation Energy Corporation