| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | |||||||||||
| Washington, D.C. 20549 | |||||||||||
| FORM | |||||||||||
| CURRENT REPORT | ||||||||
| Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||
| Date of Report (Date of earliest event reported) | ||||||||
| Commission File Number | Name of Registrant; State or Other Jurisdiction of Incorporation; Address of Principal Executive Offices; and Telephone Number | IRS Employer Identification Number | ||||||||||||
(a | ||||||||||||||
(a | ||||||||||||||
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| CONSTELLATION ENERGY CORPORATION: | ||||||||||||||
| Indicate by check mark whether any of the registrants are emerging growth companies as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||
Emerging growth company | |||||
| If an emerging growth company, indicate by check mark if any of the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||
Section 2 - Financial Information
Item 2.02. Results of Operations and Financial Condition.
Section 7 - Regulation FD
Item 7.01. Regulation FD Disclosure.
On November 6, 2023, Constellation Energy Corporation (Nasdaq: CEG) announced via press release its results for the third quarter ended September 30, 2023. A copy of the press release and related attachments are attached hereto as Exhibit 99.1. Also attached as Exhibit 99.2 to this Current Report on Form 8-K are the presentation slides to be used during the third quarter 2023 earnings conference call. This Form 8-K and the attached exhibits are provided under Items 2.02, 7.01 and 9.01 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission.
We have scheduled the conference call for 10:00 AM ET on November 6, 2023. To access the call by phone, please follow the registration link available on the Investor Relations page of our website: https://investors.constellationenergy.com. The call will also be webcast and archived on the Investor Relations page of our website. Media representatives are invited to participate on a listen-only basis.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description | ||||
| 101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
| 104 | The cover page from the Current Report on Form 8-K, formatted as Inline XBRL. | ||||
* * * * *
This combined Current Report on Form 8-K is being furnished separately by Constellation Energy Corporation and Constellation Energy Generation, LLC, (collectively, the "Registrants"). Information contained herein relating to one of the Registrants has been furnished by such Registrant on its own behalf. Neither Registrant makes any representation as to information relating to the other Registrant.
This report 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 the 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 report. 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 report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONSTELLATION ENERGY CORPORATION | |||||
| /s/ Daniel L. Eggers | |||||
| Daniel L. Eggers | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Constellation Energy Corporation | |||||
| CONSTELLATION ENERGY GENERATION, LLC | |||||
| /s/ Daniel L. Eggers | |||||
| Daniel L. Eggers | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Constellation Energy Generation, LLC | |||||
November 6, 2023
EXHIBIT INDEX
| Exhibit No. | Description | ||||
| 101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
| 104 | The cover page from the Current Report on Form 8-K, formatted as Inline XBRL. | ||||
Exhibit 99.1
News Release
| Contact: | Paul Adams Corporate Communications 667-218-7700 Emily Duncan Investor Relations 833-447-2783 | |||||||
CONSTELLATION REPORTS THIRD QUARTER 2023 RESULTS
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
Baltimore (Nov. 6, 2023) — Constellation Energy Corporation (Nasdaq: CEG) today reported its financial results for the third quarter of 2023.
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“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.
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•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.
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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
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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.
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Earnings Release Attachments
Table of Contents
Constellation Energy Corporation and Subsidiary Companies
Consolidated Statements of Operations
(unaudited)
(in millions)
| Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||
| Operating revenues | $ | 6,111 | $ | 19,122 | |||||||
| Operating expenses | |||||||||||
| Purchased power and fuel | 3,367 | 11,983 | |||||||||
| Operating and maintenance | 1,353 | 4,263 | |||||||||
| Depreciation and amortization | 266 | 808 | |||||||||
| Taxes other than income taxes | 148 | 419 | |||||||||
| Total operating expenses | 5,134 | 17,473 | |||||||||
| Gain on sales of assets and businesses | — | 28 | |||||||||
| Operating income | 977 | 1,677 | |||||||||
| Other income and (deductions) | |||||||||||
| Interest expense, net | (82) | (292) | |||||||||
| Other, net | — | 919 | |||||||||
| Total other income and (deductions) | (82) | 627 | |||||||||
| Income before income taxes | 895 | 2,304 | |||||||||
| Income taxes | 205 | 677 | |||||||||
| Equity in losses of unconsolidated affiliates | — | (11) | |||||||||
| Net income | 690 | 1,616 | |||||||||
Net loss attributable to noncontrolling interests | (41) | (44) | |||||||||
| Net income attributable to common shareholders | $ | 731 | $ | 1,660 | |||||||
| Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||||||||
| Operating revenues | $ | 6,051 | $ | 17,107 | |||||||
| Operating expenses | |||||||||||
| Purchased power and fuel | 4,695 | 11,754 | |||||||||
| Operating and maintenance | 989 | 3,466 | |||||||||
| Depreciation and amortization | 262 | 818 | |||||||||
| Taxes other than income taxes | 145 | 415 | |||||||||
| Total operating expenses | 6,091 | 16,453 | |||||||||
| (Loss) gain on sales of assets and businesses | (1) | 13 | |||||||||
Operating (loss) income | (41) | 667 | |||||||||
| Other income and (deductions) | |||||||||||
| Interest expense, net | (75) | (187) | |||||||||
| Other, net | (196) | (1,169) | |||||||||
| Total other income and (deductions) | (271) | (1,356) | |||||||||
| Loss before income taxes | (312) | (689) | |||||||||
| Income taxes | (123) | (504) | |||||||||
| Equity in losses of unconsolidated affiliates | (4) | (10) | |||||||||
| Net loss | (193) | (195) | |||||||||
Net loss income attributable to noncontrolling interests | (5) | (1) | |||||||||
| Net loss attributable to common shareholders | $ | (188) | $ | (194) | |||||||
| Change in Net income (loss) attributable to common shareholders from 2022 to 2023 | $ | 919 | $ | 1,854 | |||||||
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Constellation Energy Corporation and Subsidiary Companies
Consolidated Balance Sheets
(unaudited)
(in millions)
| September 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 1,889 | $ | 422 | |||||||
| Restricted cash and cash equivalents | 88 | 106 | |||||||||
| Accounts receivable | |||||||||||
Customer accounts receivable (net of allowance for credit losses of $58 and $46 as of September 30, 2023 and December 31, 2022, respectively) | 1,541 | 2,585 | |||||||||
Other accounts receivable (net of allowance for credit losses of $5 as of September 30, 2023 and December 31, 2022) | 723 | 731 | |||||||||
| Mark-to-market derivative assets | 1,467 | 2,368 | |||||||||
| Inventories, net | |||||||||||
| Natural gas, oil, and emission allowances | 289 | 429 | |||||||||
| Materials and supplies | 1,133 | 1,076 | |||||||||
| Renewable energy credits | 593 | 617 | |||||||||
| Other | 2,179 | 1,026 | |||||||||
| Total current assets | 9,902 | 9,360 | |||||||||
| Property, plant, and equipment, net | 20,849 | 19,822 | |||||||||
| Deferred debits and other assets | |||||||||||
| Nuclear decommissioning trust funds | 14,573 | 14,114 | |||||||||
| Investments | 727 | 202 | |||||||||
| Mark-to-market derivative assets | 970 | 1,261 | |||||||||
| Deferred income taxes | 43 | 44 | |||||||||
| Other | 1,901 | 2,106 | |||||||||
| Total deferred debits and other assets | 18,214 | 17,727 | |||||||||
| Total assets | $ | 48,965 | $ | 46,909 | |||||||
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| September 30, 2023 | December 31, 2022 | ||||||||||
| Liabilities and shareholders’ equity | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | 527 | $ | 1,159 | |||||||
| Long-term debt due within one year | 116 | 143 | |||||||||
Accounts payable and accrued expenses | 2,252 | 3,734 | |||||||||
| Mark-to-market derivative liabilities | 1,108 | 1,558 | |||||||||
| Renewable energy credit obligation | 857 | 901 | |||||||||
| Other | 403 | 344 | |||||||||
| Total current liabilities | 5,263 | 7,839 | |||||||||
| Long-term debt | 7,512 | 4,466 | |||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | 3,208 | 3,031 | |||||||||
| Asset retirement obligations | 13,797 | 12,699 | |||||||||
| Pension obligations | 610 | 605 | |||||||||
| Non-pension postretirement benefit obligations | 642 | 609 | |||||||||
| Spent nuclear fuel obligation | 1,278 | 1,230 | |||||||||
| Payable related to Regulatory Agreement Units | 2,923 | 2,897 | |||||||||
| Mark-to-market derivative liabilities | 536 | 983 | |||||||||
| Other | 1,196 | 1,178 | |||||||||
| Total deferred credits and other liabilities | 24,190 | 23,232 | |||||||||
| Total liabilities | 36,965 | 35,537 | |||||||||
| Commitments and contingencies | |||||||||||
| Shareholders’ equity | |||||||||||
| Common stock | 12,576 | 13,274 | |||||||||
| Retained earnings (deficit) | 887 | (496) | |||||||||
| Accumulated other comprehensive loss, net | (1,797) | (1,760) | |||||||||
| Total shareholders’ equity | 11,666 | 11,018 | |||||||||
| Noncontrolling interests | 334 | 354 | |||||||||
| Total equity | 12,000 | 11,372 | |||||||||
| Total liabilities and shareholders’ equity | $ | 48,965 | $ | 46,909 | |||||||
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Constellation Energy Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
(unaudited)
(in millions)
| Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income (loss) | $ | 1,616 | $ | (195) | ||||||||||
| Adjustments to reconcile net income (loss) to net cash flows (used in) provided by operating activities | ||||||||||||||
| Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization | 1,840 | 1,810 | ||||||||||||
| Deferred income taxes and amortization of ITCs | 189 | (915) | ||||||||||||
| Net fair value changes related to derivatives | 146 | 544 | ||||||||||||
| Net realized and unrealized (gains) losses on NDT funds | (154) | 1,032 | ||||||||||||
| Net realized and unrealized (gains) losses on equity investments | (490) | 27 | ||||||||||||
| Other non-cash operating activities | 147 | 291 | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Accounts receivable | 942 | (150) | ||||||||||||
| Receivables from and payables to affiliates, net | — | 20 | ||||||||||||
| Inventories | 90 | (166) | ||||||||||||
| Accounts payable and accrued expenses | (1,526) | 789 | ||||||||||||
| Option premiums paid, net | (36) | (163) | ||||||||||||
| Collateral (posted) received, net | (222) | 766 | ||||||||||||
| Income taxes | 277 | 364 | ||||||||||||
| Pension and non-pension postretirement benefit contributions | (46) | (229) | ||||||||||||
| Other assets and liabilities | (4,892) | (3,756) | ||||||||||||
| Net cash flows (used in) provided by operating activities | (2,119) | 69 | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Capital expenditures | (1,735) | (1,090) | ||||||||||||
| Proceeds from NDT fund sales | 4,221 | 3,034 | ||||||||||||
| Investment in NDT funds | (4,374) | (3,212) | ||||||||||||
| Collection of DPP, net | 4,058 | 3,095 | ||||||||||||
| Proceeds from sales of assets and businesses | 24 | 41 | ||||||||||||
| Other investing activities | (15) | 3 | ||||||||||||
| Net cash flows provided by investing activities | 2,179 | 1,871 | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Change in short-term borrowings | (959) | (209) | ||||||||||||
| Proceeds from short-term borrowings with maturities greater than 90 days | 527 | — | ||||||||||||
| Repayments of short-term borrowings with maturities greater than 90 days | (200) | (1,180) | ||||||||||||
| Issuance of long-term debt | 3,192 | 9 | ||||||||||||
| Retirement of long-term debt | (150) | (1,143) | ||||||||||||
| Retirement of long-term debt to affiliate | — | (258) | ||||||||||||
| Contributions from Exelon | — | 1,750 | ||||||||||||
| Dividends paid on common stock | (277) | (139) | ||||||||||||
| Repurchases of common stock | (750) | — | ||||||||||||
| Other financing activities | 6 | (43) | ||||||||||||
| Net cash flows provided by (used in) financing activities | 1,389 | (1,213) | ||||||||||||
| Increase in cash, restricted cash, and cash equivalents | 1,449 | 727 | ||||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | 528 | 576 | ||||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | 1,977 | $ | 1,303 | ||||||||||
4
Constellation Energy Corporation
Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA (non-GAAP) and Analysis of Earnings
Three Months Ended September 30, 2023 and 2022
(unaudited)
(in millions)
2022 GAAP Net Loss Attributable to Common Shareholders | $ | (188) | ||||||
| Income Taxes (1) | (149) | |||||||
| Depreciation and Amortization | 262 | |||||||
| Interest Expense, Net | 75 | |||||||
Unrealized Loss on Fair Value Adjustments (2) | 550 | |||||||
| Plant Retirements and Divestitures | 5 | |||||||
| Decommissioning-Related Activities (3) | 88 | |||||||
Pension & OPEB Non-Service Credits | (27) | |||||||
| Separation Costs (4) | 30 | |||||||
| ERP System Implementation Costs (5) | 5 | |||||||
| Change in Environmental Liabilities | 3 | |||||||
Prior Merger Commitment (6) | (50) | |||||||
Noncontrolling Interests (7) | (12) | |||||||
2022 Adjusted EBITDA (non-GAAP) | $ | 592 | ||||||
| Year Over Year Effects on Adjusted EBITDA (non-GAAP): | ||||||||
Market and Portfolio Conditions (8) | 763 | |||||||
ZEC Revenue (9) | (68) | |||||||
Labor, Contracting and Materials (10) | (93) | |||||||
Capacity Revenue (11) | (29) | |||||||
| Other | 34 | |||||||
| Total Year Over Year Effects on Adjusted EBITDA (non-GAAP) | $ | 607 | ||||||
2023 GAAP Net Income Attributable to Common Shareholders | $ | 731 | ||||||
Income Taxes (1) | 209 | |||||||
| Depreciation and Amortization | 266 | |||||||
| Interest Expense, Net | 82 | |||||||
| Unrealized Gain on Fair Value Adjustments (2) | (215) | |||||||
| Asset Impairments | 71 | |||||||
| Decommissioning-Related Activities (3) | 79 | |||||||
Pension & OPEB Non-Service Credits | (14) | |||||||
| Separation Costs (4) | 18 | |||||||
| ERP System Implementation Costs (5) | 5 | |||||||
| Change in Environmental Liabilities | 13 | |||||||
Noncontrolling Interests (7) | (46) | |||||||
2023 Adjusted EBITDA (non-GAAP) | $ | 1,199 | ||||||
5
(1)Includes amounts contractually owed to Exelon under the Tax Matters Agreement (TMA) reflected in Other, net.
(2)Includes mark-to-market on economic hedges and fair value adjustments related to gas imbalances and equity investments.
(3)Reflects all gains and losses associated with Nuclear Decommissioning Trusts (NDT), Asset Retirement Obligation (ARO) accretion, ARO remeasurement, and any earnings neutral impacts of contractual offset for Regulatory Agreement Units.
(4)Represents 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 Transition Services Agreement (TSA).
(5)Reflects costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(6)Reversal of a charge related to a 2012 merger commitment.
(7)Represents elimination of the noncontrolling interest related to certain adjustments.
(8)Favorable market and portfolio conditions primarily driven by higher realized margins on load contracts and generation-to-load optimization.
(9)Lower ZEC revenues primarily driven by lower Illinois ZEC prices in the current planning year.
(10)Primarily reflects increased employee-related costs, including labor and other incentives.
(11)Reflects decreased capacity revenues primarily in the Mid-Atlantic, partially offset by New York.
6
Constellation Energy Corporation
Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA (non-GAAP) and Analysis of Earnings
Nine Months Ended September 30, 2023 and 2022
(unaudited)
(in millions, except per share data)
2022 GAAP Net Loss Attributable to Common Shareholders | $ | (194) | |||
| Income Taxes (1) | (472) | ||||
| Depreciation and Amortization | 818 | ||||
| Interest Expense, Net | 187 | ||||
Unrealized Loss on Fair Value Adjustments (2) | 645 | ||||
| Plant Retirements and Divestitures | (3) | ||||
Decommissioning-Related Activities (3) | 1,126 | ||||
Pension & OPEB Non-Service Credits | (85) | ||||
Separation Costs (4) | 99 | ||||
ERP System Implementation Costs (5) | 16 | ||||
| Change in Environmental Liabilities | 12 | ||||
Prior Merger Commitment (6) | (50) | ||||
Noncontrolling Interests (7) | (37) | ||||
2022 Adjusted EBITDA (non-GAAP) | $ | 2,062 | |||
| Year Over Year Effects on Adjusted EBITDA (non-GAAP): | |||||
Market and Portfolio Conditions (8) | 1,315 | ||||
ZEC Revenue (9) | 111 | ||||
Labor, Contracting and Materials (10) | (309) | ||||
Capacity Revenue (11) | (204) | ||||
Nuclear Outages (12) | (116) | ||||
| Other | 29 | ||||
| Total Year Over Year Effects on Adjusted EBITDA (non-GAAP) | $ | 826 | |||
| 2023 GAAP Net Income Attributable to Common Shareholders | $ | 1,660 | |||
Income Taxes (1) | 682 | ||||
| Depreciation and Amortization | 808 | ||||
| Interest Expense, Net | 292 | ||||
| Unrealized Gain on Fair Value Adjustments (2) | (344) | ||||
| Asset Impairments | 71 | ||||
| Plant Retirements and Divestitures | (28) | ||||
| Decommissioning-Related Activities (3) | (277) | ||||
Pension & OPEB Non-Service Credits | (41) | ||||
| Separation Costs (4) | 84 | ||||
| Acquisition Related Costs | 2 | ||||
| ERP System Implementation Costs (5) | 20 | ||||
| Change in Environmental Liabilities | 29 | ||||
Noncontrolling Interests (7) | (70) | ||||
| 2023 Adjusted EBITDA (non-GAAP) | $ | 2,888 | |||
7
(1)Includes amounts contractually owed to Exelon under the TMA reflected in Other, net.
(2)Includes mark-to-market on economic hedges and fair value adjustments related to gas imbalances and equity investments.
(3)Reflects all gains and losses associated with NDTs, ARO accretion, ARO remeasurement, and any earnings neutral impacts of contractual offset for Regulatory Agreement Units.
(4)Represents 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.
(5)Reflects costs related to a multi-year ERP system implementation.
(6)Reversal of a charge related to a 2012 merger commitment.
(7)Represents elimination of the noncontrolling interest related to certain adjustments.
(8)Favorable market and portfolio conditions primarily driven by higher realized margins on load contracts and generation-to-load optimization.
(9)Includes revenue recognized for ZECs delivered under the Illinois ZEC program in prior planning years.
(10)Primarily reflects increased employee-related costs, including labor and other incentives, and certain non-essential maintenance work.
(11)Reflects decreased capacity revenues primarily in the Mid-Atlantic and Midwest.
(12)Reflects volume and operating and maintenance impact of nuclear outages.
8
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.
9
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.
10
Statistics
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
Supply Source (GWhs) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Nuclear Generation(a) | ||||||||||||||||||||||||||
| Mid-Atlantic | 13,654 | 13,540 | 39,672 | 39,272 | ||||||||||||||||||||||
| Midwest | 24,023 | 24,275 | 69,975 | 71,079 | ||||||||||||||||||||||
| New York | 6,448 | 5,979 | 18,837 | 18,563 | ||||||||||||||||||||||
| Total Nuclear Generation | 44,125 | 43,794 | 128,484 | 128,914 | ||||||||||||||||||||||
| Natural Gas, Oil, and Renewables | ||||||||||||||||||||||||||
| Mid-Atlantic | 361 | 230 | 1,466 | 1,573 | ||||||||||||||||||||||
| Midwest | 155 | 126 | 715 | 774 | ||||||||||||||||||||||
| ERCOT | 5,146 | 4,987 | 12,286 | 10,873 | ||||||||||||||||||||||
Other Power Regions(b) | 1,929 | 2,401 | 6,544 | 7,179 | ||||||||||||||||||||||
| Total Natural Gas, Oil, and Renewables | 7,591 | 7,744 | 21,011 | 20,399 | ||||||||||||||||||||||
| Purchased Power | ||||||||||||||||||||||||||
| Mid-Atlantic | 6,166 | 6,508 | 13,615 | 12,164 | ||||||||||||||||||||||
| Midwest | 104 | 74 | 726 | 425 | ||||||||||||||||||||||
| ERCOT | 1,612 | 705 | 4,561 | 2,855 | ||||||||||||||||||||||
Other Power Regions(b) | 13,221 | 13,869 | 32,875 | 39,964 | ||||||||||||||||||||||
| Total Purchased Power | 21,103 | 21,156 | 51,777 | 55,408 | ||||||||||||||||||||||
| Total Supply/Sales by Region | ||||||||||||||||||||||||||
| Mid-Atlantic | 20,181 | 20,278 | 54,753 | 53,009 | ||||||||||||||||||||||
| Midwest | 24,282 | 24,475 | 71,416 | 72,278 | ||||||||||||||||||||||
| New York | 6,448 | 5,979 | 18,837 | 18,563 | ||||||||||||||||||||||
| ERCOT | 6,758 | 5,692 | 16,847 | 13,728 | ||||||||||||||||||||||
Other Power Regions(b) | 15,150 | 16,270 | 39,419 | 47,143 | ||||||||||||||||||||||
| Total Supply/Sales by Region | 72,819 | 72,694 | 201,272 | 204,721 | ||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Outage Days(c) | ||||||||||||||||||||||||||
| Refueling | 20 | 5 | 200 | 147 | ||||||||||||||||||||||
| Non-refueling | 10 | 26 | 44 | 51 | ||||||||||||||||||||||
| Total Outage Days | 30 | 31 | 244 | 198 | ||||||||||||||||||||||
__________
(a)Includes the proportionate share of output where we have an undivided ownership interest in jointly-owned generating plants and the total output for fully owned plants.
(b)Other Power Regions includes New England, South, West, and Canada.
(c)Outage days exclude Salem.
11
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| ZEC Reference Prices | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| State (Region) | ||||||||||||||||||||||||||
New Jersey (Mid-Atlantic)(a) | $ | 10.00 | $ | 9.88 | $ | 9.93 | $ | 9.95 | ||||||||||||||||||
| Illinois (Midwest) | 0.30 | 12.01 | 6.81 | 14.50 | ||||||||||||||||||||||
| New York (New York) | 18.27 | 21.38 | 19.31 | 21.38 | ||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Capacity Reference Prices | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| Location (Region) | ||||||||||||||||||||||||||
| Eastern Mid-Atlantic Area Council (Mid-Atlantic) | $ | 49.49 | $ | 97.86 | $ | 76.36 | $ | 135.57 | ||||||||||||||||||
| ComEd (Midwest) | 34.13 | 68.96 | 53.48 | 139.29 | ||||||||||||||||||||||
| Rest of State (New York) | 199.89 | 108.22 | 147.48 | 89.67 | ||||||||||||||||||||||
| Southeast New England (Other) | 66.67 | 126.67 | 100.00 | 142.06 | ||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Electricity Reference Prices | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| Location (Region) | ||||||||||||||||||||||||||
| PJM West (Mid-Atlantic) | $ | 33.31 | $ | 90.43 | $ | 31.95 | $ | 74.33 | ||||||||||||||||||
| ComEd (Midwest) | 30.85 | 81.99 | 26.75 | 62.90 | ||||||||||||||||||||||
| Central (New York) | 29.58 | 74.96 | 26.85 | 60.89 | ||||||||||||||||||||||
| North (ERCOT) | 129.60 | 97.58 | 64.41 | 68.47 | ||||||||||||||||||||||
Southeast Massachusetts (Other)(b) | 33.45 | 86.27 | 38.15 | 89.01 | ||||||||||||||||||||||
__________
(a)The ZEC price is expected to be $10.00/MWh for each delivery period and is subject to an annual update once full year generation is known. Following the latest annual update, on August 16, 2023 the ZEC price for the delivery period beginning June 1, 2022 through May 31, 2023 was calculated to be $9.88.
(b)Reflects New England, which comprises the majority of the activity in the Other region.
12
Earnings Conference Call Third Quarter 2023 November 6, 2023
This presentation 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’ combined 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, (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 presentation. 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 presentation. Cautionary Statements Regarding Forward-Looking Information 2
The Registrants report their financial results in accordance with accounting principles generally accepted in the United States (GAAP). Constellation supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including: • Adjusted EBITDA represents earnings before interest, income taxes, depreciation and amortization, and excludes certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments from economic hedging activities and fair value adjustments related to gas imbalances and equity investments, decommissioning related activity, asset impairments, certain amounts associated with plant retirements and divestitures, pension and other post-employment benefits (OPEB) non-service credits, separation related costs and other items as set forth in the Appendix. Includes nuclear fuel amortization expense. • Adjusted cash flows from operations primarily includes net cash flows from operating activities and Collection of Deferred Purchase Price (DPP) related to the revolving accounts receivable arrangement, which is presented in cash flows from investing activities under GAAP • Free cash flows before growth (FCFbg) is adjusted cash flows from operations less capital expenditures under GAAP for maintenance and nuclear fuel, non- recurring capital expenditures related to separation and Enterprise Resource Program (ERP) system implementation, changes in collateral, net merger and acquisitions, and equity investments and other items as set forth in the Appendix • Adjusted operating revenues excludes the mark-to-market impact of economic hedging activities due to the volatility and unpredictability of the future changes in commodity prices • Adjusted purchased power and fuel excludes the mark-to-market impact of economic hedging activities and fair value adjustments related to gas imbalances due to the volatility and unpredictability of the future changes in commodity prices • Total gross margin is defined as adjusted operating revenues less adjusted purchased power and fuel expense, excluding revenue related to decommissioning, gross receipts tax, production tax credits (PTCs), variable interest entities, and net of direct cost of sales for certain end-user businesses • Adjusted operating and maintenance (O&M) excludes direct cost of sales for certain end-user businesses, Asset Retirement Obligation (ARO) accretion expense from unregulated units and decommissioning costs that do not affect profit and loss, the impact from operating and maintenance expense related to variable interest entities at Constellation, and other items as set forth in the reconciliation in the Appendix Due to the forward-looking nature of some projected non-GAAP financial measures, reconciliations of projected non-GAAP financial measures 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 measures. Non-GAAP Financial Measures 3
This information is intended to enhance an investor’s overall understanding of period over period financial results and provide an indication of Constellation’s baseline operating performance by excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. These non-GAAP financial measures are not a presentation defined under GAAP and may not be comparable to other companies’ presentations of similarly titled financial measures. Constellation has provided these non-GAAP financial measures as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These non-GAAP measures should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP measures provided in the materials presented. Non-GAAP financial measures are identified by the phrase “non-GAAP” or an asterisk (*). Reconciliations of these non-GAAP measures to the most comparable GAAP measures are provided in the appendices and attachments to this presentation, except for the reconciliation for total gross margin*, which appears on slide 28 of this presentation. Non-GAAP Financial Measures Continued 4
Constellation Delivered Strong Results in the Quarter and Raises Guidance 5 Quarter Results Adjusted EBITDA* $1,199M 2023 Adjusted EBITDA* Guidance Raised Current: $3,800M - $4,000M Previously Revised: $3,300M - $3,700M Original: $2,900M - $3,300M Completed Acquisition of 44% Stake in South Texas Project (STP) US DOE Selected MachH2 Hydrogen Hub for up to $1B in Funding, Including Constellation Project ComEd Carbon-Free Energy Matching Agreement Great Place To Work® Certified™
Best-in-Class Nuclear Operations (1,2) • Nuclear Capacity Factor: 97.2% • Owned and operated production of 42.0 TWhs 6 Constellation Provides Reliable and Affordable Carbon-Free Power (1) Salem is not included in operational metrics (outage days, capacity factor and generation). Nuclear operations prior to Q3 2021 reflect our 50.01% ownership share of the CENG Joint Venture. Reflects 100% ownership of CENG beginning August 7, 2021. (2) Capacity factors reflect net monthly mean methodology. Capacity factors for periods in prior years may not tie to previous earnings presentations due to change in methodology for comparison purposes, however full year reported capacity factors are not impacted. (3) Carbon-free electricity reflected at ownership. Measured using the EPA Greenhouse Gas Emissions calculator https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator. 75% 80% 85% 90% 95% 100% 28 32 36 40 44 48 N u cl ea r T W h s C ap acity F acto r Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 TWhs Capacity Factor Generated ~45.0 TWhs of carbon-free electricity, which avoided ~31.9 million metric tons of carbon dioxide; equivalent to over 7.1 million passenger vehicles being removed for one year (3) Historical Nuclear Fleet Capacity Factor (1,2) Strong Performance Across Our Renewable and Natural Gas Fleet • Renewable Energy Capture: 96.6% • Power Dispatch Match: 98.5% • Texas fleet generated ~160 GWhs more than in Q3 2022
Leading Customer Platform Enables Businesses to Meet Their Energy and Sustainability Needs 7 Note: Items may not sum due to rounding (1) Other includes New England, South and West Customer Operational Metrics (TTM) Q3 2023 Electric Load Served by Region (TWhs) 10 13 4 4 8 8 3 62 Midwest Mid-Atlantic ERCOT New York Other (1) 12 20 7 14 Wholesale Retail 38% 13% 74% 90% Power New Customer Win Rate Gas New Customer Win Rate C&I Power Customer Renewal Rate C&I Gas Customer Renewal Rate ComEd Hourly Carbon-Free Nuclear Energy Matching Deal ComEd signs historic agreement with Constellation to power its 54 facilities with reliable, carbon-free energy produced where and when it is used, marking another key step toward a carbon-free economy ComEd, one of the nation’s largest utilities, will power all of its facilities with locally produced reliable, carbon-free nuclear energy, every hour of every day Will match its anticipated electricity use of about 65,000 megawatt-hours annually, which includes its corporate and regional headquarters, reporting centers, business offices, training and special use facilities and substations This deal and the previously announced deal with Microsoft are setting a new standard for how companies across the U.S. can achieve real emissions reductions
Q3 2023 Adjusted EBITDA* Financial Results 8 Quarter Results Exceeded Expectations $592 $1,199 Q3 2022 Q3 2023 ($M) • Commercial business performance – Strong wholesale and retail performance with margin expansion – Successful optimization of the portfolio to capture benefits from volatility • Nuclear and Texas fleet performance
Gross Margin* Category ($M) (1) 2023 2024 2023 2024 Open Gross Margin* (including South, West, New England, Canada hedged gross margin) $5,000 $5,950 $450 $550 Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) (2) $2,950 $2,750 - - Mark-to-Market of Hedges (3) $800 ($300) - ($350) Power New Business / To Go $50 $300 ($50) $100 Non-Power Margins Executed $350 $400 - $100 Non-Power New Business / To Go $50 $200 - ($50) Total Gross Margin* (4) $9,200 $9,300 $400 $350 Nuclear PTC Value For Plants Not Supported By State Programs (4,5) N/A $150 N/A ($100) Total Gross Margin* + PTC (4,5) $9,200 $9,450 $400 $250 September 30, 2023 Change from June 30, 2023 Gross Margin* Update 9 (1) Gross margin* categories rounded to nearest $50M; excludes gross margin from STP (2) Includes gross margin* and CMC payments for CMC plants (3) Mark-to-Market of Hedges assumes mid-point of hedge percentages (4) Based on September 30 2023, market conditions (5) Plants included in PTC value are Calvert Cliffs, LaSalle, Limerick and Peach Bottom Key Messages • Gross margin + PTC increased $400M in 2023 and $250M in 2024 due to stronger new business execution • In 2023, executed $450M of Power New Business and raised Power New Business target by $400M • In 2024, executed $150M of Power New Business and raised the target by $250M; executed $100M of Non-Power New Business and raised Non- Power New Business target by $50M; earning less PTC revenues as a result of higher market prices across the major regions • PTC value reflects credits attributable to the four plants not supported by state programs and assumes gross receipts are determined using spot prices
Raising and Narrowing Full-Year Adjusted EBITDA* Guidance 10 Raising full-year Adjusted EBITDA* guidance range to $3,800M - $4,000M • Commercial business outperforming plan in a volatile market – Strong wholesale and retail performance with margin expansion and load auction wins – Successful optimization of the portfolio to capture benefits from volatility • Revenue recognition of Illinois ZEC • Performance benefit from Winter Storm Elliott Original Previously Revised Current $3,300 $3,700 $4,000 $2,900 $3,300 ($M) $3,900 $3,500 $3,800 $3,100
Financing and Liquidity Update 11 35% 45% Moody’s CFO Pre-WC/ Debt* S&P FFO / Debt* Net Debt / EBITDA* 2.2x 1.8x Book Excluding Non-Recourse 2023E Credit Metrics (1) STP Transaction Financing Share Repurchase Update Under our $1 billion authorization for share repurchases, we have deployed ~$750 million to repurchase ~8.5 million shares through Q3 Current Credit Ratings Moody’s Baa2; positive outlook S&P BBB; positive outlook • Successful $1.4 billion bond issuance to finance STP transaction – Capitalized on robust investor interest for $900 million of 30-year senior notes and $500 million of 10-year senior notes – 30-year tranche highlights long-operating life of assets Note: Forecasted year-end debt is ~$8.3 billion, including 2023 financings (1) Credit metrics forecast as of Fourth Quarter 2022 Earnings Conference Call disclosure 2023 credit metrics remain in line with initial forecast, inclusive of September bond issuance
Constellation is Uniquely Positioned to Create Value for Shareholders 12 • Best-in-class nuclear operations • Largest producer of reliable, carbon-free, clean electricity • Largest provider of electricity to C&I customers • Provides customers with hourly carbon-free energy matching Unmatched, Premium Assets in the U.S. • Downside commodity price risk protected by U.S. government, while preserving ability to capture commodity price upside • Production Tax Credit grows with inflation • Supports growth opportunities that will help decarbonize the U.S. including nuclear uprates, clean hydrogen and wind repowering • Extends horizon of our clean, carbon-free nuclear fleet to 80 years Beneficiary of Inflation Reduction Act • Strong free cash flow generation allows for: – Dividend growth – Robust organic growth at compelling double-digit unlevered returns – Growth from M&A – Share repurchases Growing Value for Shareholders LaSalle Clean Energy Center
Additional Disclosures 13
Constellation’s Value Proposition 14 Enduring Businesses Ready to Meet The Climate Crisis • World-Class nuclear operator and largest generator of 24/7 carbon-free firm electricity with ability to extend asset lives • Largest provider of energy solutions to commercial and industrial customers • Strong advocate for, and ideally situated to benefit from, energy policies that drive the transition to carbon-free energy Delivering Value For Our Shareholders • Strong free cash flows, optimized through industry-leading operations, support of carbon-free energy and focus on costs • Disciplined capital allocation strategy supports strong investment grade balance sheet, growth investment consistent with corporate strategy, and return of capital to owners Premier ESG Company • ~90% carbon-free energy growing to 100% carbon-free by 2040 • Committed to advancing diversity, equity and inclusion in our workplace and communities • Maintaining the highest standards of corporate governance
Constellation’s ESG Principles 15 Constellation’s ESG Principles Providing Carbon-Free Energy and Climate Mitigation Commercial & Industrial Customer Transformation Innovation and Technology Enablement Carbon-Free Policy Advocacy Equity and Community Empowerment Commitment to Diversity, Equity and Inclusion Strong Corporate Governance and Risk Management Our Value Proposition and ESG Principles Constellation is positioned to deliver long-term value for our shareholders through our enduring businesses that are ready to meet the climate crisis. We are leading the transition to a carbon-free future as one of the largest providers of energy solutions to commercial and industrial (C&I) customers and the largest producer of carbon-free power in the U.S. Furthermore, our fleet is uniquely situated to be the reliable, baseline carbon- free energy source of the energy transition. We are proud of our history of actively working to reduce our emissions and improving the value, longevity and output of our assets through policy leadership, technology and innovation. Based on this foundation, Constellation is ideally suited to support our customers’ ambitions to reduce their environmental impact and seek solutions to the climate crisis. Our disciplined capital allocation strategy supports a strong investment grade balance sheet, reinvestment in our business, growth investment consistent with our corporate strategy and return of capital to owners. Our ESG principles are core to our business strategy and value proposition. Our values and ESG principles guide us in our central purpose. We are focused on driving action in these critical focus areas:
Constellation’s Climate Commitment 16 100% 100% 100% Of our owned generation will be carbon-free by 2040 Reduction of our operations- driven emissions by 2040 (1) Of C&I customers provided with specific information about how to meet GHG reduction goals Clean Energy Supply: Clean Electricity Supply: We commit that our owned generation supply will be 100% carbon-free by 2040; with an interim goal of 95% carbon- free by 2030 subject to policy support and technology advancements. Operational Emissions Reduction Goal: We aspire to reduce operations driven emissions by 100% by 2040 subject to technology and policy advancement Interim target to reduce carbon emissions by 65% from 2020 levels by 2030 Constellation commits to reducing methane emissions 30% from 2020 levels by 2030, aligned with the Administration’s global methane pledge Supply Chain Engagement: Partner with our key energy suppliers on their GHG emissions and climate adaptation strategies Clean Customer Transformation: Prior to the end of 2022, we successfully delivered on our commitment to provide 100% of our C&I customers with customer-specific information on their GHG impact for facilities contracting for power and gas supply from Constellation, that include hourly carbon-free energy matching Commit to support reductions in customers’ gas emissions and a transition to low carbon fuels Technology Enablement and Commercialization: Commit to enable the future technologies and business models needed to drive the clean energy economy to improve the health and welfare of communities through venture investing and R&D. We will target 25 percent or more of our investments in business enterprises led by minorities, women, veteran/service-disabled veterans and LGBTQ+ individuals and will require investment recipients to disclose how they engage in equitable employment and contracting practices, using performance as a factor when considering investments (1) Any emissions that cannot be technologically reduced by that time will be offset; includes all GHGs except methane which is addressed in a separate methane reduction goal
17 Q3 2023 Adjusted EBITDA* $763 Q3 2022 Market and Portfolio Conditions ($93) Labor, Contracting and Materials ($68) ZEC Revenue ($29) Capacity Revenue $34 Other Q3 2023 $592 $1,199 ($M)
Long-Term Debt Maturity Profile (1) 18 Note: Items may not sum due to rounding (1) Maturity profile excludes non-recourse debt, P-Cap facility, securitized debt, capital leases, fair value adjustments, unamortized debt issuance costs and unamortized discount/premium (2) Long-term debt balances reflect Q3 2023 Form 10-Q GAAP financials, which include items listed in footnote 1 except for the P-Cap facility ($M) Long-Term Debt Balances (2) Recourse $6.1B Non-Recourse $1.5B Total Long-Term Debt $7.6B $750 $79 $350 $788 $334 2 0 2 4 $900 $23 2 0 2 5 2 0 2 6 2 0 2 7 2 0 2 8 2 0 2 9 2 0 3 0 2 0 3 1 2 0 3 2 $600 2 0 3 3 $500 2 0 3 4 2 0 3 5 2 0 3 6 2 0 3 7 2 0 2 3 $900 2 0 3 9 2 0 4 0 2 0 4 1 2 0 4 2 2 0 4 3 2 0 4 4 2 0 4 5 2 0 4 6 2 0 4 7 2 0 4 8 2 0 4 9 2 0 5 0 2 0 5 1 2 0 5 2 $900 2 0 5 3 2 0 3 8 Sr. Notes Tax-Exempt Bonds As of 9/30/2023
• The Zero Emission Standard, passed in December 2016, requires the Illinois Power Agency (IPA) to procure contracts with zero emission facilities for zero emission credits (ZECs) • The program has a 10-year duration that commenced with the 2017/2018 planning year and runs through May 2027 • The IPA calculates the ZEC price for each planning year based on the social cost of carbon and a market price index relative to a baseline market price index – The social cost of carbon was set at $16.50/MWh for the first six years of the program and then increases at $1/MWh per year beginning in the 2023/2024 planning period – The market price index resets each year (1), while the baseline market price index was set at $31.40/MWh • Total compensation is limited by an annual cap designed to limit the cost of ZECs to each utility’s customers – There is a “banking” mechanism, where, for ZECs delivered that exceed the annual cap each year they may be paid in subsequent years if the payments would not exceed the annual cap in the year paid – In each planning year since the program commenced on June 1, 2017, we have delivered ZECs to the utilities in excess of the annual compensation cap • For the June 1, 2023 to May 31, 2024 planning year the ZEC price has been established at $0.30 per ZEC, subject to an annual cap of $224 million. ZECs generated and delivered during this planning year will not exceed the annual cap, providing available funds to compensate for ZECs delivered but not paid in prior planning years. Illinois Zero Emission Credit (ZEC) Overview Social Cost of Carbon Amount that market price index exceeds the baseline market price index of $31.40/MWh ZEC Price (1) Based on the energy forward prices for each month of the applicable delivery year averaged for each trade date during the preceding calendar year19 Planning Year ZEC Price ($/MWh) 2017/2018 $16.50 2018/2019 $16.50 2019/2020 $16.50 2020/2021 $16.50 2021/2022 $16.50 2022/2023 $12.01 2023/2024 $0.30
20 25 30 35 40 45 50 55 60 20 25 30 35 40 45 50 55 60 Market Revenues ($/MWh) M ar ke t R ev en u es + P T C ( $ / M W h ) 20 PTC Provides Support for Nuclear Units When Revenues Fall Below $43.75/MWh Illustrative Payoff Dynamics for Non-State-Supported Units in 2024 • The PTC provides support of up to $15.00/MWh for units when revenues are between $25.00/MWh and $43.75/MWh while preserving the ability of the unit to participate in upside from commodity markets • The green line assumes revenues of $47.00/MWh and since it is above the $43.75/MWh PTC phase out units would not receive PTC value • When revenues fall below the $43.75/MWh phase out, the PTC will provide support for the units • Assuming revenues of $35.00/MWh, the orange line, we would expect units to receive $7.00/MWh PTC, bringing the total value the unit would receive to $42.00/MWh Merchant Unit Payoff $35/MWh $47/MWh PTC provides support from $25/MWh - $43.75/MWh
Maximum PTC Gross Receipts Threshold Power Price At Which PTC=$0 Maximum PTC Gross Receipts Threshold Power Price At Which PTC=$0 Maximum PTC Gross Receipts Threshold Power Price At Which PTC=$0 2024 15.00$ 25.00$ 43.75$ 15.00$ 25.00$ 43.75$ 15.00$ 25.00$ 43.75$ 2025 15.00$ 26.00$ 44.75$ 15.00$ 26.00$ 44.75$ 15.00$ 26.00$ 44.75$ 2026 15.00$ 26.00$ 44.75$ 15.00$ 27.00$ 45.75$ 15.00$ 27.00$ 45.75$ 2027 15.00$ 27.00$ 45.75$ 17.50$ 27.00$ 48.88$ 17.50$ 28.00$ 49.88$ 2028 15.00$ 27.00$ 45.75$ 17.50$ 28.00$ 49.88$ 17.50$ 29.00$ 50.88$ 2029 17.50$ 28.00$ 49.88$ 17.50$ 29.00$ 50.88$ 17.50$ 30.00$ 51.88$ 2030 17.50$ 28.00$ 49.88$ 17.50$ 30.00$ 51.88$ 20.00$ 32.00$ 57.00$ 2031 17.50$ 29.00$ 50.88$ 17.50$ 31.00$ 52.88$ 20.00$ 33.00$ 58.00$ 2032 17.50$ 29.00$ 50.88$ 20.00$ 32.00$ 57.00$ 20.00$ 34.00$ 59.00$ 2% Inflation 3% Inflation 4% Inflation • Starting in 2025, the maximum PTC and gross receipts threshold are subject to an inflation adjustment based on the GDP price deflator for the preceding calendar year: • Maximum PTC is rounded to nearest $2.50/MWh and gross receipts threshold is rounded to nearest $1.00/MWh Inflation of Nuclear Production Tax Credit (PTC) (1) 21 (1) See H.R. 5376 for additional details; all numbers assume that prevailing wage requirements are satisfied (2) Annual inflation adjustment is consistent with past published guidance for renewable energy credits, published annually PTC Overview Example Assuming 2%, 3% and 4% Inflation (2) Inflation Adjustment= GDP price deflator in preceeding year GDP price deflator in 2023 PTC Inflation Adjustment • The PTC is in effect beginning after 12/31/23 and through 12/31/32 • In the base year 2024, Constellation qualifies for the nuclear PTC up to $15.00/MWh; the PTC amount is reduced by 80% of gross receipts exceeding $25.00/MWh, phasing out completely after $43.75/MWh • The nuclear PTC can be credited against taxes or monetized through sale to an unrelated taxpayer
Commercial Disclosures September 30, 2023 22
Open Gross Margin* •Generation Gross Margin* at current market prices, including ancillary revenues, nuclear fuel amortization and fuel expense •Power Purchase Agreement (PPA) Costs and Revenues •Provided at a consolidated level for all regions (includes hedged gross margin* for South, West, New England and Canada (1)) Contracted Revenues •Expected contracted revenues from CMC payments to eligible IL plants •Expected capacity revenues for generation of electricity •Expected revenues from Zero Emissions Credits (ZEC) MtM of Hedges (2) •Mark-to-Market (MtM) of power, capacity and ancillary hedges, including cross commodity, retail and wholesale load transactions •Provided directly at a consolidated level for four major regions. Provided indirectly for each of the four major regions via Effective Realized Energy Price (EREP), reference price, hedge %, and expected generation. “Power” New Business •Retail, Wholesale planned electric sales •Portfolio Management new business •Mid marketing new business “Non Power” Executed •Retail, Wholesale executed gas sales •Energy Efficiency (3) •Constellation Home (3) “Non Power” New Business •Retail, Wholesale planned gas sales •Energy Efficiency (3) •Constellation Home (3) •Portfolio Management / origination fuels new business •Proprietary trading (4) Components of Gross Margin* Categories 23 Margins move from new business to MtM of hedges over the course of the year as sales are executed (5) Margins move from “Non power new business” to “Non power executed” over the course of the year Gross margin* linked to power production and sales Gross margin* from other business activities (1) Hedged gross margins* for South, West, New England & Canada region will be included with Open Gross Margin*; no expected generation, hedge %, EREP or reference prices provided for these regions (2) MtM of hedges provided directly for the four larger regions; MtM of hedges is not provided directly at the regional level but can be easily estimated using EREP, reference price and hedged MWh (3) Gross margin* for these businesses are net of direct “cost of sales” (4) Proprietary trading gross margins* will generally remain within the “Non Power” New Business category and only move to the “Non Power” Executed category upon management discretion (5) Margins for South, West, New England & Canada regions and optimization of fuel and PPA activities captured in Open Gross Margin*
Gross Margin Category ($M) (1) 2023 2024 2023 2024 Open Gross Margin (including South, West, New England & Canada hedged GM)* $5,000 $5,950 $450 $550 Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) (2) $2,950 $2,750 - - Mark-to-Market of Hedges (3) $800 ($300) - ($350) Power New Business / To Go $50 $300 ($50) $100 Non-Power Margins Executed $350 $400 - $100 Non-Power New Business / To Go $50 $200 - ($50) Total Gross Margin* (4) $9,200 $9,300 $400 $350 Nuclear PTC Value for Plants Not Supported By State Programs (4,5) N/A $150 N/A ($100) Total Gross Margin* + PTC (4,5) $9,200 $9,450 $400 $250 Reference Prices (4) 2023 2024 2023 2024 Henry Hub Natural Gas ($/MMBtu) $2.59 $3.39 ($0.09) ($0.14) Midwest: NiHub ATC prices ($/MWh) $28.48 $39.18 $0.45 $2.42 Mid-Atlantic: PJM-W ATC prices ($/MWh) $34.36 $46.33 $0.29 $2.38 ERCOT-N ATC Spark Spread ($/MWh) HSC Gas, 7.2HR, $2.50 VOM $39.03 $25.80 $15.13 $7.74 New York: NY Zone A ($/MWh) $27.16 $40.18 ($0.02) $2.79 September 30, 2023 Change from June 30, 2023 Gross Margin* 24 (1) Gross margin* categories rounded to nearest $50M (2) Includes gross margin* and CMC payments for CMC plants (3) Mark-to-Market of Hedges assumes mid-point of hedge percentages (4) Based on September 30, 2023, market conditions (5) Plants included in PTC value are Calvert Cliffs, LaSalle, Limerick and Peach Bottom
Generation and Hedges 2023 2024 2023 2024 Expected Generation (GWh) (1) 195,400 198,200 (800) (600) Midwest (Total) (2) 95,500 96,000 100 (400) Midwest (Excluding CMCs) 40,900 42,200 - (100) Mid-Atlantic 55,300 55,600 500 (500) ERCOT 19,100 21,600 (1,200) 600 New York 25,500 25,000 (200) (300) % of Expected Generation Hedged (3) 97%-100% 80%-83% (1%) - 2% 0%-3% Midwest (Total) 98%-101% 79%-82% (1%) - 2% (5%) - (2%) Midwest (Excluding CMCs) 97%-100% 54%-57% (2%) - 1% (10%) - (7%) Mid-Atlantic 97%-100% 77%-80% (3%) - 0% 2% - 5% ERCOT 96%-99% 88%-91% 1% - 4% 15% - 18% New York 96%-99% 82%-85% 2% - 5% 1% - 4% Effective Realized Energy Price ($/MWh) (4) Midwest (Excluding CMCs) $35.50 $36.50 $2.00 ($0.50) Mid-Atlantic $52.00 $49.50 $2.50 $0.50 ERCOT (5) $11.50 $13.50 $0.50 $2.00 New York $27.50 $34.00 $1.00 ($0.50) September 30, 2023 Change from June 30, 2023 25 (1) Expected generation is the volume of energy that best represents our commodity position in energy markets from owned or contracted for capacity based upon a simulated dispatch model that makes assumptions regarding future market conditions, which are calibrated to market quotes for power, fuel, load following products, and options. Expected generation assumes 14 refueling outages in 2023 and 13 in 2024 at Constellation-operated nuclear plants and Salem. Expected generation assumes capacity factors of 94.1% and 94.2% in 2023 and 2024, respectively at Constellation-operated nuclear plants, at ownership. These estimates of expected generation in 2023 and 2024 do not represent guidance or a forecast of future results as we have not completed its planning or optimization processes for those years. (2) Midwest (Total) expected generation includes generation from CMC plants of 54,600 GWh in 2023 and 53,800 GWh in 2024 (3) Percent of expected generation hedged is the amount of equivalent sales divided by expected generation. It includes all hedging products, such as wholesale and retail sales of power, options and swaps. The Midwest values in the table reflect IL plants receiving CMC payments as 100% hedged. To align with the Midwest EREP, however, one should exclude plant and hedge volumes associated with CMC payments. New York values include the effect of the New York ZEC. (4) Effective realized energy price is representative of an all-in hedged price, on a per MWh basis, at which expected generation has been hedged. It is developed by considering the energy revenues and costs associated with our hedges and by considering the natural gas that has been purchased to lock in margin. It excludes uranium costs, RPM capacity, ZEC and CMC revenues, but includes the mark-to-market value of capacity contracted at prices other than RPM clearing prices including our load obligations. It can be compared with the reference prices used to calculate open gross margin* in order to determine the mark-to-market value of Constellation’s energy hedges. (5) Spark spreads shown for ERCOT Generation and Hedges
Sensitivities - with existing hedges ($M) (1,2) 2023 2024 2023 2024 2024 2024 NiHub ATC Energy Price + $5.00/MWh - $85 - $25 ($75) - - $5.00/MWh - ($85) - ($25) $75 - PJM-W ATC Energy Price + $5.00/MWh - $60 - - ($85) $30 - $5.00/MWh - ($55) - $5 $115 - NYPP Zone A ATC Energy Price + $5.00/MWh $5 $15 - ($5) - - - $5.00/MWh ($5) ($15) - $5 - - Nuclear Capacity Factor +/- 1% +/- $25 +/- $55 ($5) $5 - - Nuclear PTC Value For Plants Not Supported By State Programs (3) September 30, 2023 Change from June 30, 2023 September 30, 2023 Change from June 30, 2023 Gross Margin* Sensitivities 26 (1) Sensitivities rounded to the nearest $5M (2) Based on September 30, 2023, market conditions and hedged position; power price sensitivities are derived by adjusting the power price assumption while keeping all other price inputs constant; due to correlation of the various assumptions, the hedged gross margin* impact calculated by aggregating individual sensitivities may not be equal to the hedged gross margin* impact calculated when correlations between the various assumptions are also considered; sensitivities based on commodity exposure which includes open generation and all committed transactions. (3) Plants included in PTC value are Calvert Cliffs, LaSalle, Limerick and Peach Bottom
Row Item Midwest (Excl. CMCs) (2) Mid-Atlantic ERCOT (3) New York (A) Start with fleet-wide open gross margin* (B) Contracted Revenues (C) Expected Generation (TWh) 42.2 55.6 21.6 25.0 (D) Hedge % (assuming mid-point of range) 55.5% 78.5% 89.5% 83.5% (E=C*D) Hedged Volume (TWh) 23.4 43.6 19.3 20.9 (F) Effective Realized Energy Price ($/MWh) $36.50 $49.50 $13.50 $34.00 (G) Reference Price ($/MWh) $39.18 $46.33 $25.80 $40.18 (H=F-G) Difference ($/MWh) ($2.68) $3.17 ($12.30) ($6.18) (I=E*H) Mark-to-Market value of hedges ($ million) (1) ($65) $140 ($240) ($130) (J=A+B+I) Hedged Gross Margin* ($ million) (K) Power New Business / To Go ($ million) (L) Non-Power Margins Executed ($ million) (M) Non-Power New Business / To Go ($ million) (N=J+K+L+M) Total Gross Margin * (O) Nuclear PTC Value For Plants Not Supported By State Programs (4) (P=N+O) Total Gross Margin* + Nuclear PTC (4) $9,450 million $400 $200 $9,300 million $5.95 billion $8,400 $300 $2.75 billion $150 Illustrative Example of Modeling 2024 Total Gross Margin* 27 (1) Mark-to-market rounded to the nearest $5M (2) Uses the Midwest hedge ratio that excludes the CMC plant volume and hedges (3) Spark spreads shown for ERCOT (4) Plants included in PTC value are Calvert Cliffs, LaSalle, Limerick and Peach Bottom
Additional Constellation Modeling Data 28 Total Gross Margin* Reconciliation ($M) (1) 2023 2024 Adjusted Operating Revenues* (2) $27,225 $30,100 Adjusted Purchased Power and Fuel* (2) ($17,575) ($20,200) Nuclear PTC Value for Plants Not Supported by State Programs (3) N/A ($150) Wind PTCs ($25) ($25) Other Revenues (4) ($200) ($200) Direct cost of sales incurred to generate revenues for certain Commercial and Power businesses ($225) ($225) Total Gross Margin* (Non-GAAP) $9,200 $9,300 Nuclear PTC Value for Plants Not Supported by State Programs (3) N/A $150 Total Gross Margin* + Nuclear PTC (3) $9,200 $9,450 Note: 323 million average outstanding diluted shares as of September 30, 2023, per Form 10-Q (1) Items may not sum due to rounding. All amounts rounded to the nearest $25M (2) Excludes the mark-to-market impact of economic hedging activities due to the volatility and unpredictability of the future changes to power prices (3) Plants included in PTC value are Calvert Cliffs, LaSalle, Limerick and Peach Bottom (4) Other Revenues primarily reflects revenues from variable interest entities, funds collected through revenues for decommissioning the former PECO nuclear plants through regulated rates and gross receipts tax revenues (5) Other primarily reflects noncontrolling interest and Other Revenues (excluding gross receipts tax revenue) (6) Taxes Other Than Income (TOTI) includes gross receipts tax revenues (7) Cash tax rate excludes impact from PTC. Includes receivable from Exelon for tax credits. If receivable were to be excluded in calculation, cash tax rate would be 13% in 2023 and 14% in 2024. Inputs ($M) (1) 2023 2024 Adjusted O&M* ($5,000) ($4,900) Wind PTCs $25 $25 Other (5) $75 ($25) Taxes Other Than Income (TOTI) (6) ($400) ($450) Effective Tax Rate 27% 26% Cash Tax Rate (7) 9% 4%
Appendix Reconciliation of Non-GAAP Measures 29
S&P FFO/Debt (2) = FFO (a) Moody’s CFO Pre-WC/Debt (3) = CFO (Pre-WC) (c) Adjusted Debt (b) Adjusted Debt (d) S&P FFO Calculation (2) Moody’s CFO Pre-WC Calculation (3) GAAP Operating Income Cash Flow From Operations + Depreciation & Amortization +/- Working Capital Adjustment = EBITDA - Nuclear Fuel Amortization - Interest +/- Other Moody’s CFO Adjustments +/- Cash Taxes = CFO Pre-Working Capital (c) + Nuclear Fuel Amortization +/- Mark-to-Market Adjustments (Economic Hedges) +/- Other S&P Adjustments = FFO (a) S&P Adjusted Debt Calculation (2) Moody’s Adjusted Debt Calculation (3) Long-Term Debt Long-Term Debt + Short-Term Debt + Short-Term Debt + Purchase Power Agreement and Operating Lease Imputed Debt + Underfunded Pension (pre-tax) + Pension/OPEB Imputed Debt (after-tax) +Operating Lease Imputed Debt + AR Securitization Imputed Debt +/- Other Moody’s Debt Adjustments - Off-Credit Treatment of Non-Recourse Debt = Adjusted Debt (d) - Cash on Balance Sheet +/- Other S&P Adjustments = Adjusted Debt (b) GAAP to Non-GAAP Reconciliations (1) 30 (1) Due to the forward-looking nature of some forecasted non-GAAP measures, information to reconcile the forecasted adjusted (non-GAAP) measures to the most directly comparable GAAP measure may not be available; therefore, management is unable to reconcile these measures (2) Calculated using S&P Methodology (3) Calculated using Moody’s Methodology
Net Debt/EBITDA = Net Debt (a) Net Debt/EBITDA Excluding Non-Recourse = Net Debt (c) Adjusted EBITDA* (b) Adjusted EBITDA* (d) Net Debt Calculation Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term Debt (including current maturities) + Short-Term Debt + Short-Term Debt - Cash on Balance Sheet - Cash on Balance Sheet = Net Debt (a) - Non-Recourse Debt = Net Debt Excluding Non-Recourse (c) Adjusted EBITDA* Calculation Adjusted EBITDA* Calculation Excluding Non-Recourse GAAP Net Income GAAP Net Income + Income Tax Expense + Income Tax Expense + Interest Expense, Net + Interest Expense, Net + Depreciation & Amortization + Depreciation & Amortization +/- Adjustments +/- Adjustments = Adjusted EBITDA* (b) - EBITDA from Projects Financed by Non-Recourse Debt = Adjusted EBITDA* Excluding Non-Recourse Debt (d) GAAP to Non-GAAP Reconciliations (1) 31 (1) Due to the forward-looking nature of some forecasted non-GAAP measures, information to reconcile the forecasted adjusted (non-GAAP) measures to the most directly comparable GAAP measure may not be currently available; therefore, management is unable to reconcile these measures
Three Months Ended September 30, Nine Months Ended September 30, Adjusted EBITDA* Reconciliation ($M) 2022 2023 2022 2023 GAAP Net (Loss) Income ($188) $731 ($194) $1,660 Income Taxes (1) ($149) $209 ($472) $682 Depreciation and Amortization $262 $266 $818 $808 Interest Expense, Net $75 $82 $187 $292 Unrealized (Gain) Loss on Fair Value (2) $550 ($215) $645 ($344) Plant Retirements & Divestitures $5 - ($3) ($28) Asset Impairments - $71 - $71 Decommissioning-Related Activities (3) $88 $79 $1,126 ($277) Pension & OPEB Non-Service Credits ($27) ($14) ($85) ($41) Separation Costs (4) $30 $18 $99 $84 ERP System Implementation Costs (5) $5 $5 $16 $20 Change in Environmental Liabilities $3 $13 $12 $29 Acquisition Related Costs - - - $2 Prior Merger Commitment (6) ($50) - ($50) - Noncontrolling Interests (7) ($12) ($46) ($37) ($70) Adjusted EBITDA* $592 $1,199 $2,062 $2,888 GAAP to Non-GAAP Reconciliation 32 Note: Items may not sum due to rounding (1) Includes amounts contractually owed to Exelon under the Tax Matters Agreement (TMA) reflected in Other, net (2) Includes mark-to-market on economic hedges and fair value adjustments related to gas imbalances and equity investments (3) Reflects all gains and losses associated with Nuclear Decommissioning Trusts (NDT), Asset Retirement Obligation (ARO) accretion, ARO remeasurement, and any earnings neutral impacts of contractual offset for Regulatory Agreement Units (4) Represents certain incremental costs related to the separation (system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the separation), including a portion of the amounts billed to us pursuant to the Transition Services Agreement (TSA) (5) Reflects costs related to a multi-year Enterprise Resource Program (ERP) system implementation (6) Reversal of a charge related to a 2012 merger commitment (7) Represents elimination of the noncontrolling interest related to certain adjustments
GAAP to Non-GAAP Reconciliation 33 Adjusted O&M* Reconciliation ($M) 2023 2024 GAAP O&M $5,575 $5,325 Decommissioning (1) ($175) ($200) Direct cost of sales incurred to generate revenues for certain Commercial and Power businesses (2) ($225) ($225) Separation Costs (3) ($125) - ERP System Implementation (4) ($25) - Change in Environmental Liabilities ($25) - Adjusted O&M* (Non-GAAP) $5,000 $4,900 Note: Items may not sum due to rounding. All amounts rounded to the nearest $25M. (1) Reflects all gains and losses associated with ARO accretion, ARO remeasurement, and any earnings neutral impacts of contractual offset for Regulatory Agreement Units (2) Reflects the direct cost of sales of certain businesses, which are included in Total Gross Margin* (3) Represents certain incremental costs related to the separation (system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the separation), including a portion of the amounts billed to us pursuant to the TSA (4) Reflects costs related to a multi-year ERP system implementation
Adjusted EBITDA* Reconciliation ($M) 2023 GAAP Net Income $2,025 - $2,225 Income Taxes $850 Interest Expense $450 Depreciation and Amortization $1,100 Unrealized (Gain)/Loss on Fair Value Adjustments (1) ($500) Pension and OPEB Non-Service Credits ($50) Decommissioning Related Activity (2) ($175) Separation Costs (3) $125 ERP System Implementation (4) $25 Noncontrolling Interest (5) ($50) Adjusted EBITDA* (Non-GAAP) $3,800 - $4,000 GAAP to Non-GAAP Reconciliation 34 Note: Items may not sum due to rounding. All amounts rounded to the nearest $25M (1) Includes mark-to-market on economic hedges, fair value adjustments related to gas imbalances and equity investments, and gain on property sales. (2) Reflects all gains and losses associated with NDT, ARO accretion, ARO remeasurement, and any earnings neutral impacts of contractual offset for Regulatory Agreement Units (3) Represents 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 (4) Reflects costs related to a multi-year ERP system implementation (5) Represents elimination of the noncontrolling interest related to certain adjustments
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