Constellation Reports Third Quarter 2022 Results
Constellation Energy Corporation (Nasdaq: CEG) reported a third-quarter 2022 GAAP net loss of $188 million, a significant decline from a net income of $607 million in the same period last year. Adjusted EBITDA (non-GAAP) decreased to $592 million from $967 million in Q3 2021. The company has narrowed its full-year adjusted EBITDA guidance to $2.45 billion - $2.65 billion. Notably, S&P upgraded its issuer credit rating to BBB, reflecting improved business risk due to supportive policies from the recently signed Inflation Reduction Act. The company is pursuing license renewals for its nuclear plants.
- Issuer credit rating upgraded to BBB from BBB- by S&P, indicating improved business risk profile.
- Narrowed full-year 2022 adjusted EBITDA guidance to $2.45 billion - $2.65 billion, showing confidence in future performance.
- Executed agreement with City of Chicago for 300 MW of renewables, enhancing its clean energy commitment.
- GAAP net loss of $188 million, a significant drop from prior year's net income, indicating financial challenges.
- Adjusted EBITDA decreased to $592 million from $967 million year-over-year, reflecting operational difficulties.
-
GAAP Net Loss of
( and Adjusted EBITDA (non-GAAP) of$188) million for the third quarter of 2022$592 million -
Narrowing guidance range for full year 2022 Adjusted EBITDA (non-GAAP) from
-$2,350 million to$2,750 million -$2,450 million $2,650 million - Inflation Reduction Act signed into law, a recognition from Federal policymakers of the importance of nuclear energy in fighting the climate crisis
- Our issuer credit rating upgraded by Standard & Poor’s (S&P) from BBB- to BBB while maintaining positive outlook, reflecting view that the business risk profile has and will continue to improve
-
Notified the
Nuclear Regulatory Commission (NRC) of our intent to seek license renewals for our Clinton and Dresden units - Published our first Sustainability Report detailing our strategy to lead the clean energy transition
-
Executed agreement with
City of Chicago supporting 300 MW of renewables development and helpingChicago to become one of the largestU.S. cities to commit to clean energy
“We reported solid quarterly financial and operational results, and our long-term outlook has strengthened significantly with passage of the landmark Inflation Reduction Act, which will allow us to create value and drive America’s clean energy transition,” said
“The commercial business continues to post better-than-expected results, and our nuclear fleet remains the most reliable and cost-efficient in the business despite unplanned outages during the quarter,” said
Third Quarter 2022
Our GAAP Net Loss for the third quarter of 2022 was
Adjusted EBITDA (non-GAAP) in the third quarter of 2022 primarily reflects:
- Decreased capacity revenues, increased labor, contracting and material costs and the absence of gains on CTV investments realized in the prior year.
Recent Developments and Third Quarter Highlights
-
Inflation Reduction Act Signed into Law: On
Aug. 16, 2022 ,Congress passed andPresident Biden signed into law the Inflation Reduction Act of 2022, which, among other things, includes federal tax credits, certain of which are transferable or fully refundable, for clean energy technologies including existing nuclear plants and hydrogen production facilities. The Nuclear Production Tax Credit (PTC) recognizes the contributions of carbon-free nuclear power by providing a federal tax credit of up to /MWh, subject to phase-out, beginning in 2024 and continuing through 2032. The Hydrogen PTC provides a 10-year federal tax credit of up to$15 /kilogram for clean hydrogen produced after 2022 from facilities that begin construction prior to 2033. Both the Nuclear and Hydrogen PTCs include adjustments for inflation. The Hydrogen PTC creates additional opportunities for our nuclear fleet to enable decarbonization of other industries through the production of clean hydrogen. With this policy support, we expect that many of our nuclear assets will operate through the end of the Nuclear PTC period.$3 -
Our issuer credit rating upgraded to BBB with positive outlook: On
Oct. 13, 2022 , S&P rating services raised our issuer credit rating (ICR) to ‘BBB’ from ‘BBB-’, reflecting S&P’s view of a material improvement in our business risk profile. S&P cited the passage of the Inflation Reduction Act of 2022 as a material credit positive for us. In S&P’s view, the nuclear production tax credits in the legislation provide long-term visibility into the cash flows for our nuclear fleet and benefit potential future hydrogen production. -
Seeking license renewals for Clinton and Dresden Nuclear Power Plants: On
Oct. 31, 2022 , we announced our intent to seek renewal of the operating licenses for our Clinton and Dresden nuclear power plants. These renewals, if granted, would allow the plants to operate for an additional 20 years. Clinton could operate until 2047 and Dresden could operate until 2049 (Unit 2) and 2051 (Unit 3). The continued operation of the two zero-carbon plants is enabled by state and federal legislation that recognizes the unique environmental and economic value of nuclear energy. -
Published our first Sustainability Report detailing our strategy to lead the clean energy transition and fight the climate crisis: On
Sept. 7, 2022 , we released our first sustainability report, highlighting our efforts to accelerate the transition to a carbon-free future, mitigate the climate crisis and support energy equity and environmental justice. The report details our innovative clean energy center model, powered by always-on, carbon-free nuclear plants, that will bring together new and emerging technologies to help decarbonize other polluting sectors of the economy. Additionally, the report outlines the need to begin transitioning toward a more accurate carbon accounting approach, along with the tools we are helping to pioneer, such as the hourly carbon-free energy matching platform to help our customers achieve true-zero emissions. -
Executed long-term agreement with the
City of Chicago supporting 300 MW of renewables development through our Constellation Offsite Renewables (CORe) product: OnAug. 8, 2022 , we announced an agreement with theCity of Chicago to help meet the City’s commitment to purchase renewable energy for all its facilities and operations by 2025. In addition to enabling the development of Swift Current Energy’s 590 MW Double Black Diamond solar project, the agreement makes theCity of Chicago one of the largestU.S. cities to commit to clean energy and will help reduce the City’s carbon footprint by more than 290,000 metric tons per year. -
Our leaders joined State and Federal officials to celebrate progress on nation’s first nuclear-powered clean hydrogen facility: On
Sept. 28, 2022 , leaders from theU.S. Department of Energy (DOE), theNew York State Energy Research and Development Authority (NYSERDA), and theNew York State Public Service Commission (PSC) joined our leaders and employees atNine Mile Point Nuclear Generating Station (NMP) to celebrate progress on the nation’s first nuclear-powered clean hydrogen production facility, which will begin production by the end of the year. Last year, as part of a award,$5.8 million DOE approved moving forward with construction and installation of an electrolyzer system at NMP that will separate hydrogen and oxygen molecules in water to produce carbon-free hydrogen. In addition, NYSERDA recently announced in funding to help demonstrate hydrogen fuel cell technology at the plant to provide long-duration energy storage for the electric grid. The hydrogen fuel cell project at NMP is currently being designed and is expected to be operational in 2025. These projects will demonstrate the viability of hydrogen electrolyzer and fuel cell technologies, setting the stage for possible deployment at other clean energy centers in our nuclear fleet. 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, including participation in the$12.5 million Midwest Alliance for Clean Hydrogen or "MachH2" hydrogen hub. -
Nuclear Operations: Our nuclear fleet, including our owned output from the
Salem Generating Station , produced 43,794 gigawatt-hours (GWhs) in the third quarter of 2022, compared with 44,350 GWhs in the third quarter of 2021. ExcludingSalem , our nuclear plants at ownership achieved a96.4% capacity factor for the third quarter of 2022, compared with97.7% 1 for the third quarter of 2021. There were five planned refueling outage days in the third quarter of 2022 and 22 in the third quarter of 2021. There were 26 non-refueling outage days in the third quarter of 2022 and none in the third quarter of 2021. -
Natural Gas, Oil, and Renewables Operations: The dispatch match rate for our gas and hydro fleet was
98.8% in the third quarter of 2022, compared with99.4% in the third quarter of 2021. Energy capture for the wind and solar fleet was95.7% in the third quarter of 2022, compared with95.8% in the third quarter of 2021.
GAAP/Adjusted EBITDA (non-GAAP) Reconciliation Adjusted EBITDA (non-GAAP) for the third quarter of 2022 and 2021, respectively, does not include the following items that were included in our reported GAAP Net (Loss) Income: |
|||||||
(in millions) |
Three Months Ended |
Three Months Ended |
|||||
GAAP Net (Loss) Income Attributable to Common Shareholders |
$ |
(188 |
) |
$ |
607 |
|
|
Income Taxes |
|
(149 |
) |
|
177 |
|
|
Depreciation and Amortization |
|
262 |
|
|
866 |
|
|
Interest Expense, Net |
|
75 |
|
|
77 |
|
|
Unrealized Loss (Gain) on Fair Value Adjustments |
|
550 |
|
|
(614 |
) |
|
Asset Impairments |
|
— |
|
|
45 |
|
|
Plant Retirements and Divestitures |
|
5 |
|
|
(62 |
) |
|
Decommissioning-Related Activities |
|
88 |
|
|
(130 |
) |
|
Pension & OPEB Non-Service Costs |
|
(27 |
) |
|
(11 |
) |
|
Separation Costs |
|
30 |
|
|
16 |
|
|
COVID-19 Direct Costs |
|
— |
|
|
5 |
|
|
Acquisition Related Costs |
|
— |
|
|
11 |
|
|
ERP System Implementation Costs |
|
5 |
|
|
5 |
|
|
Change in Environmental Liabilities |
|
3 |
|
|
5 |
|
|
Cost Management Program |
|
— |
|
|
4 |
|
|
Prior Merger Commitment |
|
(50 |
) |
|
— |
|
|
Noncontrolling Interests |
|
(12 |
) |
|
(34 |
) |
|
Adjusted EBITDA (non-GAAP) |
$ |
592 |
|
$ |
967 |
|
Webcast Information
We will discuss third quarter 2022 earnings in a conference call scheduled for today at
About Constellation
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
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 of the Registrants 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.
1Prior year capacity factor was previously reported as
GAAP Consolidated Statements of Operations and Adjusted EBITDA (non-GAAP) Reconciling Adjustments (unaudited) (in millions, except per share data) |
|||||||||||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||||
|
GAAP (a) |
|
Non-GAAP Adjustments |
|
|
|
GAAP (a) |
|
Non-GAAP Adjustments |
|
|
||||||||
Operating revenues |
$ |
6,051 |
|
|
$ |
680 |
|
|
(b),(c) |
|
$ |
4,406 |
|
|
$ |
634 |
|
|
(b),(c) |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchased power and fuel |
|
4,695 |
|
|
|
132 |
|
|
(b) |
|
|
1,546 |
|
|
|
1,386 |
|
|
(b),(d) |
Operating and maintenance |
|
989 |
|
|
|
191 |
|
|
(c),(d),(h),(i),(k),(r) |
|
|
938 |
|
|
|
96 |
|
|
(c),(d),(e),(f),(g),(h),(i),(j),(k),(p) |
Depreciation and amortization |
|
262 |
|
|
|
(262 |
) |
|
(l) |
|
|
866 |
|
|
|
(866 |
) |
|
(l) |
Taxes other than income taxes |
|
145 |
|
|
|
— |
|
|
|
|
|
115 |
|
|
|
— |
|
|
|
Total operating expenses |
|
6,091 |
|
|
|
|
|
|
|
3,465 |
|
|
|
|
|
||||
(Loss) gain on sales of assets and businesses |
|
(1 |
) |
|
|
1 |
|
|
(d) |
|
|
65 |
|
|
|
1 |
|
|
(d) |
Operating income (loss) income |
|
(41 |
) |
|
|
|
|
|
|
1,006 |
|
|
|
|
|
||||
Other income and (deductions) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(75 |
) |
|
|
75 |
|
|
(m) |
|
|
(77 |
) |
|
|
77 |
|
|
(m) |
Other, net |
|
(196 |
) |
|
|
220 |
|
|
(b),(c),(j),(q) |
|
|
(115 |
) |
|
|
121 |
|
|
(b),(c),(d) |
Total other income and (deductions) |
|
(271 |
) |
|
|
|
|
|
|
(192 |
) |
|
|
|
|
||||
(Loss) income before income taxes |
|
(312 |
) |
|
|
|
|
|
|
814 |
|
|
|
|
|
||||
Income taxes |
|
(123 |
) |
|
|
123 |
|
|
(n) |
|
|
177 |
|
|
|
(177 |
) |
|
(n) |
Equity in losses of unconsolidated affiliates |
|
(4 |
) |
|
|
— |
|
|
|
|
|
(4 |
) |
|
|
— |
|
|
|
Net (loss) income |
|
(193 |
) |
|
|
|
|
|
|
633 |
|
|
|
|
|
||||
Net (loss) income attributable to noncontrolling interests |
|
(5 |
) |
|
|
12 |
|
|
(o) |
|
|
26 |
|
|
|
34 |
|
|
(o) |
Net (loss) income attributable to common shareholders |
$ |
(188 |
) |
|
|
|
|
|
$ |
607 |
|
|
|
|
|
||||
Effective tax rate |
|
39.4 |
% |
|
|
|
|
|
|
21.7 |
% |
|
|
|
|
||||
Earnings per average common share |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.57 |
) |
|
|
|
|
|
$ |
— |
|
|
|
|
|
||||
Diluted |
$ |
(0.57 |
) |
|
|
|
|
|
$ |
— |
|
|
|
|
|
||||
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
|
327 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Diluted |
|
328 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
|
GAAP Consolidated Statements of Operations and Adjusted (non-GAAP) EBITDA Reconciling Adjustments (unaudited) (in millions, except per share data) |
|||||||||||||||||||
|
Nine Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
GAAP (a) |
|
Non-GAAP Adjustments |
|
|
|
GAAP (a) |
|
Non-GAAP Adjustments |
|
|
||||||||
Operating revenues |
$ |
17,107 |
|
|
$ |
1,896 |
|
|
(b),(c) |
|
$ |
14,117 |
|
|
$ |
955 |
|
|
(b),(c) |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchased power and fuel |
|
11,754 |
|
|
|
1,263 |
|
|
(b) |
|
|
8,103 |
|
|
|
2,084 |
|
|
(b),(d) |
Operating and maintenance |
|
3,466 |
|
|
|
57 |
|
|
(c),(d),(h),(i),(j),(k) (r) |
|
|
3,413 |
|
|
|
(111 |
) |
|
(c),(d),(e),(f),(g),(h),(i),(j),(k),(p) |
Depreciation and amortization |
|
818 |
|
|
|
(818 |
) |
|
(l) |
|
|
2,735 |
|
|
|
(2,735 |
) |
|
(l) |
Taxes other than income taxes |
|
415 |
|
|
|
(2 |
) |
|
(h) |
|
|
354 |
|
|
|
— |
|
|
|
Total operating expenses |
|
16,453 |
|
|
|
|
|
|
|
14,605 |
|
|
|
|
|
||||
Gain on sales of assets and businesses |
|
13 |
|
|
|
1 |
|
|
(d) |
|
|
144 |
|
|
|
(68 |
) |
|
(d) |
Operating income (loss) |
|
667 |
|
|
|
|
|
|
|
(344 |
) |
|
|
|
|
||||
Other income and (deductions) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(187 |
) |
|
|
187 |
|
|
(m) |
|
|
(225 |
) |
|
|
225 |
|
|
(m) |
Other, net |
|
(1,169 |
) |
|
|
1,213 |
|
|
(b),(c),(d), (i),(j),(q) |
|
|
561 |
|
|
|
(537 |
) |
|
(b),(c),(d) |
Total other income and (deductions) |
|
(1,356 |
) |
|
|
|
|
|
|
336 |
|
|
|
|
|
||||
Loss before income taxes |
|
(689 |
) |
|
|
|
|
|
|
(8 |
) |
|
|
|
|
||||
Income taxes |
|
(504 |
) |
|
|
504 |
|
|
(n) |
|
|
108 |
|
|
|
(108 |
) |
|
(n) |
Equity in losses of unconsolidated affiliates |
|
(10 |
) |
|
|
— |
|
|
|
|
|
(6 |
) |
|
|
— |
|
|
|
Net loss |
|
(195 |
) |
|
|
|
|
|
|
(122 |
) |
|
|
|
|
||||
Net (loss) income attributable to noncontrolling interests |
|
(1 |
) |
|
|
37 |
|
|
(o) |
|
|
125 |
|
|
|
40 |
|
|
(o) |
Net loss attributable to common shareholders |
$ |
(194 |
) |
|
|
|
|
|
$ |
(247 |
) |
|
|
|
|
||||
Effective tax rate(q) |
|
73.1 |
% |
|
|
|
|
|
|
(1,350.0 |
) % |
|
|
|
|
||||
Earnings per average common share |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.59 |
) |
|
|
|
|
|
$ |
— |
|
|
|
|
|
||||
Diluted |
$ |
(0.59 |
) |
|
|
|
|
|
$ |
— |
|
|
|
|
|
||||
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
|
327 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Diluted |
|
328 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221108005463/en/
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FAQ
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