Constellation Energy Corporation · NASDAQ:CEG
Constellation Energy — Investor Presentation (November 2022)
58 slides from Constellation Energy's investor presentation, November 2022
Slide 1: Investor Presentation
Investor Presentation November 2022
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 ans and variations on such words, and similar expressions that reflect ou
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 de 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 performanc
Slide 5: Constellation at a Glance
Constellation at a Glance • #1 provider of carbon-free 24/7 • #1 in market share for C&I • Fortune 200 company, based on energy in the United States customers $19.6 billion in operating revenues • Lowest carbon emissions and • #2 retail electricity provider in 2021 carbon intensity generator in the
Slide 6: 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 and solutions to commercial and industrial customers * Stro
Slide 7: Our Unique Businesses Give Us a Durable, Competitive Advantage
Our Unique Businesses Give Us a Durable, Competitive Advantage Constellation is the largest producer of carbon-free electricity in the United States nearly two times more than the next producer. Our plants provide firm, resilient, reliable, 24/7 power no matter the weather with 18-24 months of fuel
Slide 8: Constellation is the Largest Producer of Carbon-Free Electricity in the United States
Constellation is the Largest Producer of Carbon-Free Electricity in the United States Largest Producers of Carbon-Free Lowest CO2 Emissions Among Major Lowest Carbon Intensity Among Generation (1,2) Investor-Owned Generators (2) Major Investor-Owned Generators (2) million MWh million short tonnes lb
Slide 9: Firm Nuclear Power Plays a Unique Role in the Fight Against the Climate Crisis
Firm Nuclear Power Plays a Unique Role in the Fight Against the Climate Crisis 24/7 80 years Firm Carbon-Free Resilient Variable License Renewals Nuclear power Nuclear power has Renewables Second license provides firm carbon- onsite fuel for 18-24 Nuclear power can renewals will extend free electric
Slide 10: Carbon-Free Energy Goals
-Free Energy Goals -Free Electricity by State(1) New York Illinois Maryland Pennsylvania New Jersey 100% carbon-free by 100% carbon-free by 100% carbon-free by 80% emission reduction by 100% carbon-free by 2040(3) 2045(3) 2040(3) 2050(3) 2050(3) Exelon Other Nuclear Quad Renewables(2) 57% 14% 3% Cit
Slide 11: Families and Businesses Meet Their Sustainability and Carbon Reduction Targets
Families and Businesses Meet Their Sustainability and Carbon Reduction Targets Carbon Footprint Carbon-Free Power Carbon Reduction Renewable On-site Renewable Projects Energy Efficiency Measures Reduce emissions Reduce Greenhouse Install renewable Off-site renewable Building automation, lighting wit
Slide 12: Best-in-Class Nuclear Operations Resulting in More Carbon-Free Energy
Best-in-Class Nuclear Operations Resulting in More Carbon-Free Energy Nuclear Capacity Factor (%) (1,2,3) Average Nuclear Refueling Outage Days (3,5) Industry Average Industry Average Ranking Among Major Ranking Among Major 95.7% 95.4% Operators (2-Yr) (4) Operators (4) 94.1% 94.6% 94.3% 36 34 35 34
Slide 13: Leading Customer Operational Metrics Result in Consistent and Repeatable Load
Leading Customer Operational Metrics Result in Consistent and Repeatable Load Leading Customer Operational Metrics Consistent Load(1) Power New Customer Win Rate Natural Gas Customer Retention Rate Wholesale Retail Power Customer Renewal Rate 91% 92% 91% 91% 90% 215 210 210 210 200 78% 79% 79% 77% 6
Slide 14: Cost Management Outpacing Inflation
Cost Management Outpacing Inflation ($ in millions) $4,975 -1.5% 5,000 $4,775 $4,450 $4,475 $4,475 4,500 $4,400 $4,375 $4,375 $225 $225 $4,225 $4,150 0 2017 2018 2019 2020 2021E(1) 2022E(4) 2023E(4) 2024E(4) Q4 2019 Disclosures(2) Adjusted O&M*(3) Focus on Efficiencies and Cost Management ▪ Constell
Slide 15: Carbon-Free Capital Investment Plans
Carbon-Free Capital Investment Plans ($ in millions) $2,250 $2,150 $325 $300 $1,800 $1,800 $1,750 $75 $175 $1,675 $125 $100 $1,550 $900 $325 $225 $75 $25 $50 $900 $25 $1,300 $875 $875 $675 $675 $725 $650 $1,025 $950 $850 $650 $675 $700 $675 $650 2017 2018 2019 2020 2021E 2022E 2023E 2024E Baseline C
Slide 16: Disciplined Capital Allocation Strategy Designed to Deliver Value for Our Shareholders
Disciplined Capital Allocation Strategy Designed to Deliver Value for Our Shareholders 16
Slide 17: Financing and Liquidity Update
Financing and Liquidity Update 2022 Credit Metrics (1) 2022 YTD Activity Downgrade Threshold Book Liquidity Facility Date Excluding Non-Recourse 50% 3.0 Issued $1.0B Pre-Capitalized Trust Securities (P-Cap) February 9 45% Debt Reduction 40% 35% 2.0x Repaid $200M Term Loan January 26 2.0 30% Settled
Slide 18: Growth Opportunities Can Deliver Value for Our Shareholders
Growth Opportunities Can Deliver Value for Our Shareholders We may pursue growth opportunities that provide additional value building on our core businesses or expanding our competitive advantages • Opportunistic carbon-free energy acquisitions, particularly nuclear plants with supportive policy • C
Slide 19: Available Cash Flow Outlook
Available Cash Flow Outlook ($ in billions) $4.6 - $5.0 Opening Balance $1.8 Sheet Adjustment ($1.8) ($2.2) ($0.4) ($0.4) ($0.1) FCFbg* $2.8 - $3.2 ($1.8) ($2.2) 2022 - 2023 Debt Reduction(2) Dividend Separation O&M / CapEx(3) Identified Growth Unidentified Growth Available Cash(1) / Return of Capit
Slide 20: Narrowed 2022 Full-Year Adj. EBITDA Guidance on the Q3 Earnings Call
Narrowed 2022 Full-Year Adj. EBITDA* Guidance on the Q3 Earnings Call ($M) $2,750 • Commercial business outperformed plan $2,650 • Supporting long-term value: $2,550 $2,550 Accelerating investment in growth projects, $2,450 including hydrogen post-IRA $2,350 Investing in attracting and retaining top
Slide 21: Environmental, Social & Governance
Environmental, Social & Governance 21
Slide 22: Environmental, Social and Governance Priorities
Environmental: • Clean Energy Leadership: Continue to be the cleanest supplier of power in the US and maintain leadership through our climate commitment to own 100% carbon-free generation by 2040. E • Investing in a Clean Energy Economy: Leverage our platform to impact customers through enabling new
Slide 23: Accelerating the Transition to a Carbon-Free Future
Accelerating the Transition to a Carbon-Free Future Launched Volta partnership to accelerate the deployment of energy storage technologies to enable electric vehicles and Commitment: 100% complement renewable owned generation energy deployment carbon-free by 2040; 100% reduction of operations-driven
Slide 24: Emissions Intensity vs Paris Pathways
Agreement Levels 0.700 Below 2 Degrees Paris Pledges 2 Degrees Constellation(1) 0.600 0.500 0.400 t CO2e/MWh 0.300 0.200 0.100 0.000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Reflects Transition Pathway Initiative data as of January 20, 2021; https://w
Slide 25: Clean Energy Supply, Customer Transformation, Technology Enablement
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: We commit that our owned generatio
Slide 26: Appendix
= Constellation Appendix —w hy EE ————_ =
Slide 27: Returning Value to Our Shareholders Through an Annual Dividend
Returning Value to Our Shareholders Through an Annual Dividend(1) +10% $180 ($ million) 2022 2023E 2024E 27
Slide 28: Inflation of Nuclear Production Tax Credit (PTC)
Inflation of Nuclear Production Tax Credit (PTC) (1) PTC Overview Example Assuming 2% and 3% Inflation (2) • 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 2% Inflation 3% Inflation $15/MWh; the PTC amount
Slide 29: Process for Subsequent License Renewal
Process for Subsequent License Renewal • Under the Atomic Energy Act, reactor licenses are limited to an initial period of 40 years. This was based on antitrust considerations, not limitations in the technology. • NRC permits nuclear reactor licensees to renew license periods of 20 years from 40 to
Slide 30: Hedging the Portfolio
Hedging the Portfolio Matching Our → Majority of our hedging is done through our Illustrative Annual Customer Contract customer channels Generation to Composition Customer → C&I contract terms range from less than 6 months to more than 10 years, with average Needs New Business length of ~2 years → A
Slide 31: PJM Capacity Market
PJM Capacity Market 2021/2022 2022/2023 2023/2024 Cleared Volumes Price Cleared Volumes Price Cleared Volumes Price Zone (MW)(1) ($/MW-day) (MW) (1) ($/MW-day) (MW) (1) ($/MW-day) Nuclear 5,175 $196 4,600 $69 10,025 $34 Natural Gas/Oil/Others - $196 - $69 - $34 ComEd 5,175 4,600 10,025 Nuclear 3,925
Slide 32: Long-Term Debt Maturity Profile
Long-Term Debt Maturity Profile (1) As of 9/30/2022 LT Debt Balances (2) ($M) Recourse $3.0B Non-Recourse $1.7B Total LT Debt $4.7B $900 $900 $788 $350 2023 2030 2033 2022 2026 2029 2031 2032 2036 2039 2042 2024 2025 2027 2028 2038 2034 2035 2037 2040 2041 (1) Maturity profile excludes non-recourse
Slide 33: Demand for Carbon-Free Electricity
Positioned for Long-Term Success Demand for Carbon-Free Electricity and Byproducts Electricity Demand Will Nearly Double and Carbon-Free Electricity Will Expand Five-fold to Meet Net Zero by 2050 +88% • Electricity must grow to ~50% of energy used in 8,140 TWhs industry, transport and buildings to m
Slide 34: Constellation's Nuclear Plants are Clean Energy Centers
Constellation’s Nuclear Plants are Clean Energy Centers Power to X H2, e-methanol, RaQ [ Fal e-ammonia 6o6) ’, ae cs => Data Center EEE Clean Energy Center smmp> Direct Air © Capture “a Flexible Grid Energy and Capacity (24/7) Nuclear energy sites will evolve to meet America’s demand for flexible, c
Slide 35: Zero-Emitting Nuclear is Prime Vehicle for Producing Hydrogen
Zero-Emitting Nuclear is Prime Vehicle for Producing Hydrogen Superior Low barriers to Scalable and Advantageous Enhanced criticality Economics implementation iterative end-uses of nuclear assets Green hydrogen from Nuclear plants require Electrolyzer capacity Certain end-uses With increasing nuclea
Slide 36: Our C&I Concentration is a Core Strength
Our C&I Concentration is a Core Strength Financial Stability Scalable Platform Strong Foundation for Growth • Predictable load and stable unit • Broad suite of energy, sustainability, • Best positioned to sell sustainability margins and analytics solutions for customers and carbon-free products due
Slide 37: Nuclear Fuel Cycle
Nuclear Fuel Cycle = Constellation
Slide 38: Nuclear Fuel Cycle Front End
Nuclear Fuel Cycle Front End Mining and Fabrication Conversion Enrichment Milling • Uranium mining can be • U3O8 is then converted to • When uranium is mined, • Fabrication plants convert done through conventional uranium hexafluoride (UF6) milled and converted, only enriched uranium into methods (s
Slide 39: Uranium is Relatively Abundant
Uranium is Relatively Abundant Global Distribution of Identified Resources Distribution of Reasonably Assured (<USD 130/kgU as of 1 January 2019) Resources (RAR) 1,400 <USD 130-260/kgU <USD 80-130/kgU <USD 40-80/kgU 1,200 <USD 40/kgU 1,000 800 1,000 tU 600 400 200 0 Ukraine Nambia* Canada Kazakhstan
Slide 40: Conversion, Enrichment and Fabrication
Conversion, Enrichment and Fabrication 2020 Conversion Enrichment Fabrication (% Total Capacity Utilization) (1) (% Total Capacity) (% U.S. Capacity) (6) Orano (France) (2) CNNC (China) 8% CNNC (China) (3) 16% Framatome Other (5) 25% 28% Tenex (Russia) 43% 11% Areva (France) Westinghouse 49% Rosatom
Slide 41: Nuclear Fuel Hedging Strategy Leads to Cost Stability
Nuclear Fuel Hedging Strategy Leads to Cost Stability Operational Risk Management Financial Risk Management ▪ Hedge well in advance to secure supply and avoid near-term costs ▪ Structure forward contracts to control price risk variability ▪ Establish metrics to measure and forecast cost variability
Slide 42: Spent Nuclear Fuel is Safely and Securely Stored
Spent Nuclear Fuel is Safely and Securely Stored We know where every ounce of nuclear fuel is located: 100% of spent nuclear fuel is contained, numbered, catalogued, tracked and isolated from the environment Strong oversight from U.S. Nuclear Regulatory Commission (NRC): Spent nuclear fuel is stored
Slide 43: Disposal of Nuclear Fuel is the Responsibility of the U.S. Government
Disposal of Nuclear Fuel is the Responsibility of the U.S. Government • Under the Nuclear Waste Policy Act (NWPA) of 1982, DOE is responsible for the development of a geologic repository for and the disposal of spent nuclear fuel and high-level radioactive waste • • Under the terms of the NWPA and S
Slide 44: Commercial Disclosures
Commercial Disclosures September 30, 2022 44
Slide 45: Portfolio Management Strategy
Portfolio Management Strategy Strategic Policy Alignment Three-Year Ratable Hedging Bull / Bear Program • Our portfolio starts in a position of already • Ensure stability in near-term cash flows and • Ability to exercise fundamental market views to partially hedged, via longer term state programs ea
Slide 46: 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 Open Gross Margin* Revenues Business Executed New Business Hedges (2) Generation Gross Expected contracted Mark-to-Market Retail, Wholesale Retail,
Slide 47: Gross Margin
Gross Margin* September 30, 2022 Change from June 30, 2022 Gross Margin Category ($M) (1) 2022 2023 2022 2023 Open Gross Margin (including South, West, New England & Canada hedged GM)* (2) $9,750 $8,500 $50 $1,800 (3) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) $2,450 $2,800 - - (4
Slide 48: Generation and Hedges
Generation and Hedges September 30, 2022 Change from June 30, 2022 Generation and Hedges 2022 2023 2022 2023 Expected Generation (GWh) (1) 193,000 197,900 (3,600) (500) Midwest (Total) (2) 96,500 95,600 (200) 100 Midwest (Excluding CMCs) 64,500 41,400 (300) (100) Mid-Atlantic 55,500 55,500 (200) 500
Slide 49: Hedged Gross Margin Sensitivities
Hedged Gross Margin* Sensitivities September 30, 2022 Change from June 30, 2022 Gross Margin* Sensitivities (with existing hedges) (1,2) 2022 2023 2022 2023 Henry Hub Natural Gas ($/MMBtu) + $0.50/MMBtu $20 $55 $10 ($10) - $0.50/MMBtu ($15) ($45) ($10) $35 NiHub ATC Energy Price + $2.50/MWh - $10 -
Slide 50: Illustrative Example of Modeling 2023 Total Gross Margin
Illustrative Example of Modeling 2023 Total Gross Margin* Midwest Row Item (2) Mid-Atlantic ERCOT (3) New York (Excl. CMCs) (A) Start with fleet-wide open gross margin* $8.5 billion (B) Contracted Revenues $2.8 billion (C) Expected Generation (TWh) 41.4 55.5 21 25.8 (D) Hedge % (assuming mid-point o
Slide 51: Additional Constellation Modeling Data
Additional Constellation Modeling Data Total Gross Margin* Reconciliation (in $M) (1) 2022 2023 Adjusted Operating Revenues* (2) $22,475 $28,475 Adjusted Purchased Power and Fuel* (2) ($14,675) ($19,750) Other Revenues (3) ($200) ($225) Direct cost of sales incurred to generate revenues for certain
Slide 52: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 52
Slide 53: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) FFO (a) CFO (Pre-WC) (c) S&P FFO/Debt (2) = CFO Pre-WC/Debt (3) = Adjusted Debt (b) Adjusted Debt (d) S&P FFO Calculation (2) -WC Calculation (3) GAAP Operating Income Cash Flow From Operations + Depreciation & Amortization +/- Working Capital Adjustment = EBITDA
Slide 54: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) Net Debt (a) Debt/EBITDA Net Debt (c) 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 current
Slide 55: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted EBITDA* Reconciliation (in $M)(1) 2022 GAAP Net Income $250 - $550 Income Tax Expense $125 Interest Expense $275 Depreciation and Amortization $1,100 Pension and OPEB Non-Service Costs $(100) Mark-to-Market Impact from Economic Hedging Activities $525 ERP Sys
Slide 56: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Free Cash Flow before Growth* (in $M)(1) 2022 - 2023 Adjusted Cash Flows from Operations* (Non-GAAP)(2) $5,550 - $5,950 Base and Nuclear Fuel Capital Expenditures(3) $(3,100) Reinvestment in Nuclear Decommissioning Trust Funds(4) $(550) Collateral activity $600 O&M re
Slide 57: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted O&M* Reconciliation ($M)(1,2) 2017 2018 2019 2020 2021 2022 2023 2024 GAAP O&M $6,350 $5,475 $4,725 $5,150 $4,600 $5,000 $5,050 $5,000 Decommissioning(3) $(200) $(200) - $(200) $(125) $(175) $(200) $(200) Plant Retirements and Divestitures(4) $(100) $(100) -
Slide 58: Contact Information
Contact Information InvestorRelations@constellation.com (833) 447-2783 Links Events and Presentations ESG Resources Reports & SEC Filings
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