Earnings Release Highlights
- GAAP Net Income of $106 million and Adjusted EBITDA (non-GAAP)
of $866 million for the first quarter of 2022
- Reaffirming guidance range for full year 2022 Adjusted EBITDA
(non-GAAP) from $2,350 million - $2,750 million
- Completed separation from Exelon Corporation and launched as a
standalone, publicly traded company on Feb. 1, 2022
- Executed on nearly $2.5 billion in planned debt reduction
through May 12, 2022, including over $1 billion in long-term debt,
a $258 million intercompany loan due to Exelon Corporation, and
nearly $1.2 billion in term loans
- Announced sustainability partnership with Microsoft on the
development of a 24/7/365 real-time carbon-free energy matching
solution that will allow customers to fully achieve their zero
emission goals
- Announced agreements with Sheetz and Comcast to procure
carbon-free energy and reduce their carbon footprints through
Constellation’s CORe retail power product
Constellation Energy Corporation (Nasdaq: CEG) today reported
its financial results for the first quarter of 2022.
“We’ve made strong financial and operational progress since our
launch as a standalone company and are focused on our mission of
accelerating the transition to a carbon-free future,” said Joseph
Dominguez, president and CEO of Constellation. “Our nuclear and
renewable fleet performed at industry-leading levels, producing
enough carbon-free energy to avoid 30.2 million metric tons of
carbon dioxide during the quarter, and we continue to partner with
customers to help them achieve their sustainability goals. Going
forward, we are reimagining our nuclear sites as clean energy
centers that can do even more to help solve the climate crisis, by
producing clean hydrogen, removing carbon from the air and
providing a 24/7/365 real-time carbon-free energy matching solution
for customers.”
“We delivered strong financial results during the quarter,
earning $866 million in adjusted EBITDA (non-GAAP) and reaffirming
our full-year, adjusted EBITDA (non-GAAP) guidance of $2.35 billion
to $2.75 billion,” said Daniel Eggers, chief financial officer of
Constellation. “Our commercial operations won new business and
captured value as energy prices increased. Year-to-date, we took
steps to further strengthen our balance sheet with the accelerated
repayment of nearly $2.5 billion in debt. Looking ahead, we see
favorable market conditions and continued opportunities to add
value to our fleet and win new customers as we enhance our product
offerings.”
First Quarter 2022
Our GAAP Net Income for the first quarter of 2022 increased to
$106 million from a ($793) million GAAP Net Loss in the first
quarter of 2021. Adjusted EBITDA (non-GAAP) for the first quarter
of 2022 increased to $866 million from ($465) million in the first
quarter of 2021. For the reconciliations of GAAP Net Income to
Adjusted EBITDA (non-GAAP), refer to the tables beginning on page
3.
Adjusted EBITDA (non-GAAP) in the first quarter of 2022
primarily reflects:
- The absence of impacts from the February 2021 extreme cold
weather event, favorable market and portfolio conditions and lower
nuclear fuel costs; partially offset by decreased capacity revenues
and unfavorable impacts of nuclear outages.
Recent Developments and First Quarter Highlights
- Separation from Exelon: On Feb. 1, 2022, we completed
our separation from Exelon Corporation and launched our company as
a standalone, publicly traded company. On Feb 2, 2022, our stock
began “regular way” trading on the Nasdaq Stock Market under the
symbol “CEG.” We are the nation’s largest producer of carbon-free
energy and leading supplier of sustainable solutions to millions of
residential, public sector and business customers, including three
fourths of Fortune 100 companies. Our generation fleet powers more
than 20 million homes and businesses and is helping to accelerate
the nation’s transition to clean energy with more than 32,400
megawatts of capacity and annual output that is nearly 90 percent
carbon-free.
- Executed long-term agreements with Sheetz and Comcast
supporting 350MW of renewables development through our
Constellation Offsite Renewables (CORe) product: On Feb. 16,
2022, and March 31, 2022, we announced agreements with Sheetz and
Comcast, respectively, to purchase power and renewable energy
certificates (RECs) to help avoid carbon emissions and meet their
individual carbon goals. The CORe retail power product enables the
development of, and increases businesses’ access to, renewable
energy projects by removing the significant complexity associated
with traditional offsite power purchase agreements (PPAs). By
combining the simplified contracting and aggregation process of
CORe with the commitment and involvement from sustainability-minded
companies, we are able to offer more customers the ability to
demonstrate their support of large-scale, offsite renewable energy
projects.
- Sustainability Partnership with Microsoft featuring 24/7/365
Real-Time Carbon-Free Energy Matching Solution: On March 7,
2022, we announced a five-year strategic collaboration with
Microsoft focused on leading the nation's clean energy transition.
One of our first initiatives is the development of a 24/7/365
real-time carbon-free energy matching solution that allows
customers to fully achieve their zero emissions goals. For more
than 150 years, the electric power industry has been focused on
matching generation capacity with customer demand to ensure
24/7/365 reliability. We will soon be providing customers a better
option, utilizing breakthrough technology to match a customer’s
power needs with local carbon-free energy sources, 24 hours a day,
seven days a week, 365 days a year. By combining renewable and
clean energy with exciting new technologies such as battery
storage, fuel cells and hydrogen, we will provide customers with a
real-time, data-driven carbon accounting solution that goes beyond
the current practice of annualizing renewable energy certificates
and credits. As we develop this 24/7/365 real-time carbon-free
energy matching solution, we will be working with Microsoft to
create software that gives customers a transparent and
independently verified view of their sustainability progress.
- Nuclear Operations: Our nuclear fleet, including our
owned output from the Salem Generating Station, produced 42,951
gigawatt-hours (GWhs) in the first quarter of 2022, compared with
43,466 GWhs in the first quarter of 2021. Excluding Salem, our
nuclear plants at ownership achieved a 93.0% capacity factor for
the first quarter of 2022, compared with 94.2%1 for the first
quarter of 2021. The number of planned refueling outage days in the
first quarter of 2022 totaled 76, compared with 84 in the first
quarter of 2021. There were 10 non-refueling outage days in the
first quarter of 2022 and 3 in the first quarter of 2021.
- Fossil and Renewables Operations: The dispatch match
rate for our gas and hydro fleet was 99.4% in the first quarter of
2022, compared with 68.5% in the first quarter of 2021. The lower
performance in the first quarter of 2021 was attributed to
unplanned outages at Texas sites during the February 2021 extreme
cold-weather event. Energy capture for the wind and solar fleet was
96.1% in the first quarter of 2022, compared with 96.4% in the
first quarter of 2021.
- Financing Activities:
- In support of our commitment to maintain strong investment
grade credit metrics, we executed on nearly $2.5 billion in planned
debt reduction through May 12, 2022, including over $1 billion in
long-term debt, a $258 million intercompany loan due to Exelon
Corporation and nearly $1.2 billion in term loans.
GAAP/Adjusted EBITDA (non-GAAP)
Reconciliation
Adjusted EBITDA (non-GAAP) for the first
quarter of 2022 does not include the following items that were
included in reported GAAP Net Income:
(in millions)
Q1 2022 GAAP Net Income Attributable to
Common Shareholders
$
106
Income Taxes
(53)
Depreciation and Amortization
280
Interest Expense, Net
56
Unrealized Loss on Fair Value
Adjustments
118
Decommissioning-Related Activities
354
Pension & OPEB Non-Service Costs
(25)
Separation Costs
37
ERP System Implementation Costs
5
Noncontrolling Interests
(12)
Q1 2022 Adjusted EBITDA
(non-GAAP)
$
866
__________
1Prior year capacity factor was previously reported as 95.3%.
The update reflects a change to the ratio from using the full
average annual mean capacity to the net monthly mean capacity when
calculating capacity factor. There is no change to actual output
and the full year capacity factor would be the same under both
methodologies.
Adjusted EBITDA (non-GAAP) for the first quarter of 2021 does not
include the following items that were included in reported GAAP Net
Loss:
(in millions)
Q1 2021 GAAP Net Loss Attributable to
Common Shareholders
$
(793)
Income Taxes
(179)
Depreciation and Amortization
940
Interest Expense, Net
72
Unrealized Gain on Fair Value
Adjustments
(131)
Plant Retirements and Divestitures
(3)
Decommissioning-Related Activities
(372)
Pension & OPEB Non-Service Costs
(10)
Separation Costs
3
COVID-19 Direct Costs
12
Acquisition Related Costs
8
ERP System Implementation Costs
2
Change in Environmental Liabilities
3
Cost Management Program
2
Noncontrolling Interests
(19)
Q1 2021 Adjusted EBITDA
(non-GAAP)
$
(465)
Webcast Information
We will discuss first quarter 2022 earnings in a conference call
scheduled for today at 10 a.m. Eastern Time (9 a.m. Central Time).
The webcast and associated materials can be accessed at
https://investors.constellationenergy.com.
About Constellation
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 millions of homes,
institutional customers, the public sector, community aggregations
and businesses, including three fourths of Fortune 100 companies. A
Fortune 200 company headquartered in Baltimore, our fleet of
nuclear, hydro, wind and solar generation facilities powers more
than 20 million homes and businesses, providing 10 percent of all
carbon-free energy on the grid in the U.S. Our fleet is helping to
accelerate the nation’s transition to clean energy with more than
32,400 megawatts of capacity and annual output that is nearly 90
percent carbon-free. We have set a goal to achieve 100 percent
carbon-free power generation by 2040 by leveraging innovative
technology and enhancing our diverse mix of hydro, wind and solar
resources paired with the nation’s largest nuclear fleet. Follow
Constellation on Twitter @ConstellationEG.
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. 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 May 12, 2022.
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' 2021 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 2022 Quarterly
Report on Form 10-Q (to be filed on May 12, 2022) 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 14, 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 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.
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 March 31,
2022
Three Months Ended March 31,
2021
GAAP (a)
Non-GAAP
Adjustments
GAAP (a)
Non-GAAP
Adjustments
Operating revenues
$
5,591
$
919
(b),(c)
$
5,559
$
83
(b),(c)
Operating expenses
Purchased power and fuel
3,550
803
(b)
4,610
183
(b),(d)
Operating and maintenance
1,205
(52
)
(c),(d),(h),(i),(j)
1,001
161
(c),(d),(e),(f),(g),(h),(i),(j),(k)
Depreciation and
amortization
280
(280
)
(l)
940
(940
)
(l)
Taxes other than income
taxes
137
(2
)
(i)
121
—
Total operating
expenses
5,172
6,672
Gain on sales of assets and
businesses
16
(2
)
(d)
71
(68
)
(d)
Operating income (loss)
435
(1,042
)
Other income and (deductions)
Interest expense, net
(56
)
56
(m)
(72
)
72
(m)
Other, net
(318
)
321
(b),(c),(i),(j)
167
(157
)
(b),(c)
Total other income and
(deductions)
(374
)
95
Income (loss) before income
taxes
61
(947
)
Income taxes
(53
)
53
(n)
(179
)
179
(n)
Equity in losses of unconsolidated
affiliates
(3
)
—
(1
)
—
Net income (loss)
111
(769
)
Net income attributable to
noncontrolling interests
5
12
(o)
24
19
(o)
Net income (loss) attributable to
common shareholders
$
106
$
(793
)
Effective tax rate
(86.9
) %
18.9
%
Earnings per average common
share
Basic
$
0.32
$
—
Diluted
$
0.32
$
—
Average common shares
outstanding
Basic
327
—
Diluted
328
—
__________
(a) Results reported in accordance with
accounting principles generally accepted in the United States
(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) Adjustments related to plant
retirements and divestitures.
(e) In 2021, adjustment primarily for
reorganization and severance costs related to cost management
programs.
(f) In 2021, adjustment for direct costs related to COVID-19
consisting primarily of costs to acquire personal protective
equipment, costs for cleaning supplies and services, and costs to
hire healthcare professionals to monitor the health of employees.
(g) In 2021, adjustment for costs related to the acquisition of
Electricite de France SA's (EDF's) interest in CENG, which was
completed in the third quarter of 2021. (h) Adjustment for costs
related to a multi-year Enterprise Resource Program (ERP) system
implementation. (i) Adjustment for costs related to the separation
primarily comprised of system-related costs, third-party costs paid
to advisors, consultants, lawyers, and other experts assisting in
the separation, and employee-related severance costs. (j)
Adjustment for Pension and OPEB Non-Service costs. Historically, we
were allocated our portion of pension and OPEB non-service costs
from Exelon, which was included in Operating and maintenance
expense. Effective February 1, 2022, the non-service cost
components will not be included in Other, net. (k) In 2021,
adjustment for changes in environmental liabilities. (l) Adjustment
for depreciation and amortization expense. (m) Adjustment for
interest expense.
(n) Adjustment for income taxes.
(o) Adjustment for elimination of the noncontrolling interest
related to certain adjustments, primarily relating to CRP in 2022
and CENG in 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220512005340/en/
Paul Adams Corporate Communications 410-470-4167
Emily Duncan Investor Relations 833-447-2783
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