Constellation Energy Corporation · NASDAQ:CEG
Constellation Energy — Q3 2023 Earnings Presentation
35 slides from Constellation Energy's earnings presentation, Nov 6, 2023
Slide 1: Earnings Conference Call Third Quarter 2023
Earnings Conference Call Third Quarter 2023 November 6, 2023
Slide 2: Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information 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,” “w
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 meas
Slide 4: Non-GAAP Financial Measures Continued
Non-GAAP Financial Measures Continued 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 directl
Slide 5: Constellation Delivered Strong Results in the Quarter and Raises Guidance
Constellation Delivered Strong Results in the Quarter and Raises Guidance 2023 Adjusted EBITDA* Quarter Results Guidance Raised Adjusted EBITDA* Current: $3,800M - $4,000M $1,199M Previously Revised: $3,300M - $3,700M Original: $2,900M - $3,300M US DOE Selected MachH2 Completed Acquisition of 44% Hy
Slide 6: Constellation Provides Reliable and Affordable Carbon-Free Power
Constellation Provides Reliable and Affordable Carbon-Free Power Historical Nuclear Fleet Capacity Factor (1,2) Best-in-Class Nuclear Operations (1,2) 48 100% • Nuclear Capacity Factor: 97.2% • Owned and operated production of 42.0 TWhs 44 95% Capacity Factor Nuclear TWhs 40 90% Strong Performance A
Slide 7: Leading Customer Platform Enables Businesses to Meet Their Energy and Sustainability Needs
Leading Customer Platform Enables Businesses to Meet Their Energy and Sustainability Needs Customer Operational Metrics (TTM) Q3 2023 Electric Load Served by Region (TWhs) Wholesale Retail 90% 20 74% 8 14 12 2 6 38% 7 13 3 4 13% 10 8 4 Power New Gas New Customer C&I Power Customer C&I Gas Customer M
Slide 8: Q3 2023 Adjusted EBITDA Financial Results
Q3 2023 Adjusted EBITDA* Financial Results ($M) Quarter Results Exceeded Expectations $1,199 • Commercial business performance – Strong wholesale and retail performance with margin expansion $592 – Successful optimization of the portfolio to capture benefits from volatility • Nuclear and Texas fleet
Slide 9: Gross Margin Update
Gross Margin* Update September 30, 2023 Change from June 30, 2023 Gross Margin* Category ($M) (1) 2023 2024 2023 2024 Open Gross Margin* $5,000 $5,950 $450 $550 (including South, West, New England, Canada hedged gross margin) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) (2) $2,950 $
Slide 10: Raising and Narrowing Full-Year Adjusted EBITDA Guidance
Raising and Narrowing Full-Year Adjusted EBITDA* Guidance ($M) $4,000 $3,900 • Commercial business outperforming plan in a $3,700 $3,800 volatile market $3,500 $3,300 – Strong wholesale and retail performance with $3,100 $3,300 margin expansion and load auction wins $2,900 – Successful optimization
Slide 11: Financing and Liquidity Update
Financing and Liquidity Update 2023E Credit Metrics (1) STP Transaction Financing 45% Book • Successful $1.4 billion bond issuance to finance Excluding Non-Recourse STP transaction 35% 2.2x 1.8x – Capitalized on robust investor interest for $900 million of 30-year senior notes and $500 million of 10
Slide 12: Constellation is Uniquely Positioned to Create Value for Shareholders
Constellation is Uniquely Positioned to Create Value for Shareholders Unmatched, Premium Assets in the U.S. • Best-in-class nuclear operations • Largest producer of reliable, carbon-free, clean electricity • Largest provider of electricity to C&I customers • Provides customers with hourly carbon-fre
Slide 13: Additional Disclosures
Additional Disclosures =a <= Constellation.
Slide 14: Constellation's Value Proposition
Constellation’s Value Proposition Enduring Businesses Ready to Meet The Climate Crisis • World-Class nuclear operator and largest generator of 24/7 carbon-free firm electricity with ability to extend asset lives • Largest provider of energy solutions to commercial and industrial customers • Strong a
Slide 15: Constellation's ESG Principles
Constellation’s ESG Principles Our Value Proposition and ESG Principles Constellation’s Carbon-Free Policy Advocacy Constellation is positioned to deliver long-term value for our shareholders through our enduring businesses that are ready to ESG Principles meet the climate crisis. We are leading the
Slide 16: Constellation's Climate Commitment
Constellation’s Climate Commitment 100% Of our owned generation will be 100% Reduction of our operations- 100% Of C&I customers provided with carbon-free by 2040 driven emissions by 2040 (1) specific information about how to meet GHG reduction goals Clean Energy Supply: Clean Electricity Supply:
Slide 17: Q3 2023 Adjusted EBITDA
Q3 2023 Adjusted EBITDA* ($M) ($93) ($68) $1,199 ($29) $34 $763 $592 Q3 2022 Market and Labor, Contracting ZEC Revenue Capacity Revenue Other Q3 2023 Portfolio Conditions and Materials 17
Slide 18: Long-Term Debt Maturity Profile
Long-Term Debt Maturity Profile (1) As of 9/30/2023 Long-Term Debt Balances (2) ($M) Recourse $6.1B Non-Recourse $1.5B Total Long-Term Debt $7.6B $23 $334 $900 $900 $900 $750 $788 $600 $500 $350 $79 2039 2024 2026 2029 2034 2036 2044 2046 2049 2023 2025 2031 2032 2033 2035 2051 2052 2053 2027 2030 2
Slide 19: Illinois Zero Emission Credit (ZEC) Overview
Illinois Zero Emission Credit (ZEC) Overview • 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 plan
Slide 20: PTC Provides Support for Nuclear Units When Revenues Fall Below $43.75/MWh
PTC Provides Support for Nuclear Units When Revenues Fall Below $43.75/MWh Illustrative Payoff Dynamics for Non-State-Supported Units in 2024 60 • The PTC provides support of up to $15.00/MWh for units 55 PTC provides when revenues are between $25.00/MWh and support from Market Revenues + PTC ($/MWh
Slide 21: Inflation of Nuclear Production Tax Credit (PTC)
Inflation of Nuclear Production Tax Credit (PTC) (1) PTC Overview Example Assuming 2%, 3% and 4% Inflation (2) • The PTC is in effect beginning after 12/31/23 and through 12/31/32 2% Inflation 3% Inflation 4% Inflation • In the base year 2024, Constellation qualifies for the nuclear PTC up to $15.00
Slide 22: Commercial Disclosures
Commercial Disclosures September 30, 2023 22
Slide 23: Components of Gross Margin Categories
Components of Gross Margin* Categories Gross margin* from Gross margin* linked to power production and sales other business activities Contracted MtM of “Power” New “Non Power” “Non Power” Open Gross Margin* Revenues Business Executed New Business Hedges (2) •Generation Gross •Expected contracted •M
Slide 24: Gross Margin
Gross Margin* September 30, 2023 Change from June 30, 2023 (1) Gross Margin Category ($M) 2023 2024 2023 2024 Open Gross Margin (including South, West, New England & Canada hedged GM)* $5,000 $5,950 $450 $550 (2) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) $2,950 $2,750 - - (3) Mar
Slide 25: Generation and Hedges
Generation and Hedges September 30, 2023 Change from June 30, 2023 Generation and Hedges 2023 2024 2023 2024 (1) Expected Generation (GWh) 195,400 198,200 (800) (600) (2) Midwest (Total) 95,500 96,000 100 (400) Midwest (Excluding CMCs) 40,900 42,200 - (100) Mid-Atlantic 55,300 55,600 500 (500) ERCOT
Slide 26: Sensitivities
Sensitivities Nuclear PTC Value For Plants Not Gross Margin* (3) Supported By State Programs Change from Change from September 30, 2023 September 30, 2023 June 30, 2023 June 30, 2023 (1,2) Sensitivities - with existing hedges ($M) 2023 2024 2023 2024 2024 2024 NiHub ATC Energy Price + $5.00/MWh - $8
Slide 27: Illustrative Example of Modeling 2024 Total Gross Margin
Illustrative Example of Modeling 2024 Total Gross Margin* Midwest (3) Row Item (2) Mid-Atlantic ERCOT New York (Excl. CMCs) (A) Start with fleet-wide open gross margin* $5.95 billion (B) Contracted Revenues $2.75 billion (C) Expected Generation (TWh) 42.2 55.6 21.6 25.0 (D) Hedge % (assuming mid-poi
Slide 28: Additional Constellation Modeling Data
Additional Constellation Modeling Data Total Gross Margin* Reconciliation ($M) (1) 2023 2024 Adjusted Operating Revenues* (2) $27,225 $30,100 Note: 323 million average outstanding diluted shares as of September 30, 2023, per Form 10-Q Adjusted Purchased Power and Fuel* (2) ($17,575) ($20,200) (1) It
Slide 29: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 29
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) FFO (a) CFO (Pre-WC) (c) S&P FFO/Debt (2) = Moody’s CFO Pre-WC/Debt (3) = Adjusted Debt (b) Adjusted Debt (d) S&P FFO Calculation (2) Moody’s CFO Pre-WC Calculation (3) GAAP Operating Income Cash Flow From Operations + Depreciation & Amortization +/- Working Capi
Slide 31: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) Net Debt (a) Net Debt/EBITDA Net Debt (c) Net Debt/EBITDA = = Adjusted EBITDA* (b) Excluding Non-Recourse Adjusted EBITDA* (d) Net Debt Calculation Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term Debt (including
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three Months Ended Nine Months Ended September 30, September 30, Adjusted EBITDA* Reconciliation ($M) 2022 2023 2022 2023 GAAP Net (Loss) Income ($188) $731 ($194) $1,660 Note: Items may not sum due to rounding Income Taxes (1) ($149) $209 ($472) $682 (1) Includes amo
Slide 33: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted O&M* Reconciliation ($M) 2023 2024 GAAP O&M $5,575 $5,325 Decommissioning (1) ($175) ($200) Direct cost of sales incurred to generate revenues for ($225) ($225) certain Commercial and Power businesses (2) Separation Costs (3) ($125) - ERP System Implementatio
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted EBITDA* Reconciliation ($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) Decommissionin
Slide 35: Contact Information
Contact Information InvestorRelations@constellation.com (833) 447-2783 Links Events and Presentations ESG Resources Reports & SEC Filings 35