Earnings Release Highlights
- GAAP Net Loss of ($111) million and Adjusted EBITDA (non-GAAP)
of $603 million for the second quarter of 2022
- Reaffirming guidance range for full year 2022 Adjusted EBITDA
(non-GAAP) from $2,350M - $2,750M
- Landmark climate legislation under consideration in
Congress
- Announced agreements with Bank of America and PNC Bank to
procure carbon-free energy and RECs to reduce their carbon
footprints through Constellation’s CORe retail power product
Constellation Energy Corporation (Nasdaq: CEG) today reported
its financial results for the second quarter of 2022.
“The landmark climate legislation currently under consideration
in Congress is a clear affirmation of the value of our carbon-free
nuclear fleet and its indispensable role as part of the clean
energy infrastructure needed to achieve our nation’s ambitious
climate goals,” said Joe Dominguez, president and CEO of
Constellation. “It touches every one of the environmental, public
health and job-creating priorities we laid out on day one,
including providing the foundation to support the ongoing operation
of U.S. nuclear energy sources, establishing a clean hydrogen
economy, enabling the expansion of renewable resources and
safeguarding our nation’s energy security in a way that is
affordable. We continued to win new customer business and
demonstrate our industry-leading operational performance during the
second quarter, and we are pursuing new clean-energy opportunities
as we work to accelerate the transition to a carbon-free
future.”
“We delivered solid financial results during the quarter,
earning $603 million in adjusted EBITDA backed by higher realized
energy prices and lower nuclear fuel costs. We have reaffirmed our
full-year, adjusted EBITDA guidance of $2.35 billion to $2.75
billion,” said Daniel Eggers, chief financial officer of
Constellation. “Our balance sheet and liquidity position remain
strong, and our investment grade balance sheet continues to give us
a valuable competitive advantage in today's volatile markets.”
Second Quarter 2022
Our GAAP Net Loss for the second quarter of 2022 increased to
($111) million from a ($61) million GAAP Net Loss in the second
quarter of 2021. Adjusted EBITDA (non-GAAP) for the second quarter
of 2022 decreased to $603 million from $656 million in the second
quarter of 2021. For the reconciliations of GAAP Net Loss to
Adjusted EBITDA (non-GAAP), refer to the tables beginning on page
3.
Adjusted EBITDA (non-GAAP) in the second quarter of 2022
primarily reflects:
- Decreased capacity revenues and unfavorable impacts of planned
nuclear outages; partially offset by favorable market and portfolio
conditions.
Recent Developments and Second Quarter Highlights
- Consideration of the Inflation Reduction Act by
Congress: On July 27, 2022, Senate Majority Leader Chuck
Schumer and Senator Joe Manchin announced they have reached an
agreement on budget reconciliation legislation, known as the
Inflation Reduction Act of 2022. The legislation provides a
nine-year production tax credit to support carbon-free nuclear
energy resources in recognition of their critical role in
addressing the climate crisis. It also creates a tax credit for the
production of clean hydrogen, which can be made with nuclear and
other carbon-free energy resources. Climate experts have identified
hydrogen as a critical resource to help remove emissions from
difficult-to-decarbonize sectors of the economy.
- Largest Offsite Renewable Deal to Date: Constellation
entered into a 15-year, 300 MW agreement with developer Doral
Renewables to receive approximately 600,000 MWh annually from
Mammoth Central, the third and final phase of the Mammoth Solar
project in Indiana. To support the expansion of this project, we
signed separate long-term Constellation Offsite Renewables (CORe)
agreements with retail customers, including:
- Bank of America: Our 160 MW agreement with Bank of
America will help to power approximately 17 percent of its global
electricity consumption with clean, renewable energy from a portion
of the Mammoth Central project and is expected to reduce greenhouse
gas emissions (GHG) associated with its energy use by more than
95,000 metric tons annually.
- PNC Bank: Our 78 MW agreement with PNC will help the
company purchase renewable energy equivalent to the electricity use
of nearly 50 percent of its legacy operations in Pennsylvania,
Ohio, Maryland, New Jersey, Delaware, District of Columbia and part
of Illinois. The transaction will advance PNC toward its goal of
reaching 100 percent renewable purchased electricity by 2025 while
reducing its carbon footprint by 55,000 metric tons annually.
The CORe retail power product increases businesses’ access to
new-build renewable energy projects by removing the significant
hurdles 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, Constellation is able to
offer more customers access to the economic and sustainability
benefits of large-scale, offsite renewable energy projects. CORe is
among Constellation’s suite of products that help customers achieve
their carbon reduction goals, including opportunities to match
power usage hour-by-hour with locally produced carbon-free energy
on a 24/7/365 basis.
- Nuclear Operations: Our nuclear fleet, including our
owned output from the Salem Generating Station, produced 42,522
gigawatt-hours (GWhs) in the second quarter of 2022, compared with
43,072 GWhs in the second quarter of 2021. Excluding Salem, our
nuclear plants at ownership achieved a 94.2% capacity factor for
the second quarter of 2022, compared with 93.8%1 for the second
quarter of 2021. The number of planned refueling outage days was 66
in both the second quarter of 2022 and the second quarter of 2021.
There were 15 non-refueling outage days in the second quarter of
2022 and seven in the second quarter of 2021.
- Natural Gas, Oil, and Renewables Operations: The
dispatch match rate for our gas and hydro fleet was 99.6% in the
second quarter of 2022, compared with 99.5% in the second quarter
of 2021. Energy capture for the wind and solar fleet was 95.3% in
the second quarter of 2022, compared with 96.0% in the second
quarter of 2021. The lower performance in the quarter was driven by
delays in turbine maintenance repairs at certain wind sites.
GAAP/Adjusted EBITDA (non-GAAP)
Reconciliation
Adjusted EBITDA (non-GAAP) for the second
quarter of 2022 and 2021, respectively, does not include the
following items that were included in our reported GAAP Net
Loss:
(in millions)
Three Months Ended June 30,
2022
Three Months Ended June 30,
2021
GAAP Net Loss Attributable to Common
Shareholders
$
(111)
$
(61)
Income Taxes
(270)
110
Depreciation and Amortization
277
930
Interest Expense, Net
56
76
Unrealized Gain on Fair Value
Adjustments
(24)
(447)
Asset Impairments
—
492
Plant Retirements and Divestitures
(8)
49
Decommissioning-Related Activities
684
(513)
Pension & OPEB Non-Service Costs
(33)
(14)
Separation Costs
31
6
COVID-19 Direct Costs
—
7
Acquisition Related Costs
—
2
ERP System Implementation Costs
5
3
Change in Environmental Liabilities
8
—
Cost Management Program
—
3
Noncontrolling Interests
(12)
13
Adjusted EBITDA (non-GAAP)
$
603
$
656
1Prior year capacity factor was previously reported as 93.7%.
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.
Webcast Information
We will discuss second quarter 2022 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
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 facilities have the generating
capacity to power approximately 20 million homes, 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 August 4,
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' Second Quarter 2022 Quarterly
Report on Form 10-Q (to be filed on August 4, 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 15, 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 June 30,
2022
Three Months Ended June 30,
2021
GAAP (a)
Non-GAAP Adjustments
GAAP (a)
Non-GAAP Adjustments
Operating revenues
$
5,465
$
(298
)
(b),(c)
$
4,153
$
(239
)
(b),(c)
Operating expenses
Purchased power and fuel
3,508
(328
)
(b)
1,947
(515
)
(b),(d)
Operating and maintenance
1,273
80
(c),(d),(h),(i),(j),(k)
1,474
368
(c),(d),(e),(f),(g),(h),(i),(j),(k),
(p)
Depreciation and amortization
277
277
(l)
930
930
(l)
Taxes other than income taxes
133
—
118
—
Total operating expenses
5,191
4,469
(Loss) gain on sales of assets and
businesses
(2
)
(2
)
(d)
8
1
(d)
Operating income (loss)
272
(308
)
Other income and (deductions)
Interest expense, net
(56
)
(56
)
(m)
(76
)
(76
)
(m)
Other, net
(654
)
(669
)
(b),(c),(d),(i),(j),(q)
508
503
(b),(c),(d)
Total other income and
(deductions)
(710
)
432
(Loss) income before income
taxes
(438
)
124
Income taxes
(328
)
(328
)
(n)
110
110
(n)
Equity in losses of unconsolidated
affiliates
(3
)
—
(1
)
—
Net (loss) income
(113
)
13
Net (loss) income attributable to
noncontrolling interests
(2
)
(12
)
(o)
74
13
(o)
Net loss attributable to common
shareholders
$
(111
)
$
(61
)
Effective tax rate
74.9
%
88.7
%
Earnings per average common
share
Basic
$
(0.34
)
$
—
Diluted
$
(0.34
)
$
—
Average common shares
outstanding
Basic
327
—
Diluted
328
—
- Results reported in accordance with accounting principles
generally accepted in the United States (GAAP).
- Adjustment for mark-to-market on economic hedges and fair value
adjustments related to gas imbalances and equity investments.
- 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.
- Adjustments related to plant retirements and divestitures.
- In 2021, adjustment primarily for reorganization and severance
costs related to cost management programs.
- 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.
- 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.
- Adjustment for costs related to a multi-year Enterprise
Resource Program (ERP) system implementation.
- 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.
- 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.
- Adjustment for changes in environmental liabilities.
- Adjustment for depreciation and amortization expense.
- Adjustment for interest expense.
- Adjustment for income taxes.
- Adjustment for elimination of the noncontrolling interest
related to certain adjustments, primarily relating to CRP in 2022
and CENG in 2021.
- In 2021, adjustment for an impairment in the New England asset
group and an impairment recorded as a result of the sale of the
Albany Green Energy biomass facility.
- In 2022, includes amounts contractually owed to Exelon under
the tax matters agreement.
Constellation Energy
GAAP Consolidated Statements
of Operations and
Adjusted (non-GAAP) EBITDA
Reconciling Adjustments
(unaudited)
(in millions, except per share
data)
Six Months Ended June 30,
2022
Six Months Ended June 30,
2021
GAAP (a)
Non-GAAP Adjustments
GAAP (a)
Non-GAAP Adjustments
Operating revenues
$
11,056
$
(1,217
)
(b),(c)
$
9,712
$
(322
)
(b),(c)
Operating expenses
Purchased power and fuel
7,059
(1,131
)
(b)
6,557
(698
)
(b),(d)
Operating and maintenance
2,477
131
(c),(d),(h),(i),(j),(k)
2,476
205
(c),(d),(e),(f),(g),(h),(i),(j),(k),
(p)
Depreciation and amortization
557
557
(l)
1,869
1,869
(l)
Taxes other than income taxes
268
2
(i)
239
—
Total operating expenses
10,361
11,141
Gain on sales of assets and
businesses
13
—
79
69
(d)
Operating income (loss)
708
(1,350
)
Other income and (deductions)
Interest expense, net
(112
)
(112
)
(m)
(148
)
(148
)
(m)
Other, net
(973
)
(992
)
(b),(c),(d), (i),(j),(q)
675
656
(b),(c),(d)
Total other income and
(deductions)
(1,085
)
527
Loss before income taxes
(377
)
(823
)
Income taxes
(381
)
(381
)
(n)
(70
)
(70
)
(n)
Equity in losses of unconsolidated
affiliates
(6
)
—
(3
)
—
Net loss
(2
)
(756
)
Net income attributable to
noncontrolling interests
3
(25
)
(o)
98
(6
)
(o)
Net loss attributable to common
shareholders
$
(5
)
$
(854
)
Effective tax rate(q)
101.1
%
8.5
%
Earnings per average common
share
Basic
$
(0.02
)
$
—
Diluted
$
(0.02
)
$
—
Average common shares
outstanding
Basic
327
—
Diluted
328
—
- Results reported in accordance with accounting principles
generally accepted in the United States (GAAP).
- Adjustment for mark-to-market on economic hedges and fair value
adjustments related to gas imbalances and equity investments.
- 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.
- Adjustments related to plant retirements and divestitures.
- In 2021, adjustment primarily for reorganization and severance
costs related to cost management programs.
- 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.
- 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.
- Adjustment for costs related to a multi-year Enterprise
Resource Program (ERP) system implementation.
- 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.
- 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.
- Adjustment for changes in environmental liabilities.
- Adjustment for depreciation and amortization expense.
- Adjustment for interest expense.
- Adjustment for income taxes.
- Adjustment for elimination of the noncontrolling interest
related to certain adjustments, primarily relating to CRP in 2022
and CENG in 2021.
- In 2021, adjustment for an impairment in the New England asset
group and an impairment recorded as a result of the sale of the
Albany Green Energy biomass facility.
- In 2022, includes amounts contractually owed to Exelon under
the tax matters agreement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220804005315/en/
Paul Adams Corporate Communications 410-470-4167
Emily Duncan Investor Relations 833-447-2783
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