Constellation Energy Corporation · NASDAQ:CEG
Constellation Energy — Investor Presentation (February 2023)
61 slides from Constellation Energy's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
Investor Presentation February 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 at a Glance
Constellation at a Glance • #1 provider of carbon-free 24/7 • #1 in market share for C&I • Expected to be a Fortune 200 energy in the United States customers (2) company, based on $24.4B in • Lowest carbon emissions and • #2 retail electricity provider (2) operating revenues in 2022 carbon intensity
Slide 6: Constellation's Value Proposition
Constellation’s Value Proposition 6
Slide 7: 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 8: Strong Operations Deliver Reliable and Affordable Carbon-Free Power
Strong Operations Deliver Reliable and Affordable Carbon-Free Power Nuclear Capacity Factor (%) (1,2) Average Nuclear Refueling Outage Days (2,4) Industry Average Industry Average Ranking Among Major Ranking Among Major 95.7% 95.4% 94.8% Operators (2-Yr) (3) Operators (3) 94.6% 94.5% 36 35 34 90.8%
Slide 9: Leading Customer Platform Enables Customers to Meet Their Energy and Sustainability Needs
Leading Customer Platform Enables Customers to Meet Their Energy and Sustainability Needs Leading Customer Operational Metrics (TTM) 2022 Electric Load Served by Region (TWhs) Wholesale Retail 90% 71 79% 25 55 50 13 25 36% 18% 46 16 16 37 30 2 14 Power New Gas New Customer C&I Power Customer C&I Gas
Slide 10: Financial Disclosures
10 Financial Disclosures — <= Constellation.
Slide 11: Providing Value to Our Shareholders Through Our Capital Allocation Plan
Providing Value to Our Shareholders Through Our Capital Allocation Plan Credit Ratings Doubling common dividend, • S&P – BBB; positive outlook targeting 10% annual • Moody’s – Baa2; stable outlook future growth $1.5 billion of organic growth meeting our double-digit return threshold • Commercial-sca
Slide 12: Growth Opportunities Can Deliver Value for Our Shareholders
Growth Opportunities Can Deliver Value for Our Shareholders We may pursue growth opportunities that provide additional value building on our core businesses or expanding our competitive advantages • Opportunistic carbon-free energy acquisitions, particularly nuclear plants with supportive policy • C
Slide 13: Investments in Carbon-Free Future that Comfortably Exceed our Double-Digit Return Threshold
Investments in Carbon-Free Future that Comfortably Exceed our Double- Digit Return Threshold Commercial Hydrogen Production Nuclear Uprates • Hydrogen facility will initially use ~250 MWs • Increasing nuclear output by ~135 MWs at and produce ~33,450 TPA hydrogen, with the Byron and Braidwood abilit
Slide 14: Gross Margin Update
Gross Margin* Update December 31, 2022 Change from September 30, 2022 (1) Gross Margin Category ($M) 2023 2024 2023 Open Gross Margin* $7,000 $6,400 ($1,500) (including South, West, New England, Canada hedged gross margin) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) (2) $2,800 $2,7
Slide 15: Adjusted O&M and Capital Expenditures
Adjusted O&M* and Capital Expenditures Adjusted O&M* Flat 2023-2025 Investing for Long-Term Value Through CapEx (1) ($M) ($M) $2,575 $2,525 $2,475 $4,875 $4,850 $4,850 $400 $575 $525 $1,175 $1,175 $1,175 $1,000 $775 $800 2023E 2024E 2025E 2023E 2024E 2025E Adjusted O&M* Commited Growth Nuclear Fuel
Slide 16: Our Investment Grade Balance Sheet is a Competitive Advantage
Our Investment Grade Balance Sheet is a Competitive Advantage 2023E Credit Metrics Long-Term Debt Maturity Profile (2) Book As of 2/24/2023 LT Debt Balances (3) 45% ($M) Excluding Non-Recourse Recourse $4.3B 35% Non-Recourse $1.6B 2.2x Total Long-Term Debt $6.0B 1.8x $900 $900 Moody’s CFO S&P FFO /
Slide 17: Strong Free Cash Flows Create Value Through Growth and Capital Return
Strong Free Cash Flows Create Value Through Growth and Capital Return ($B) ($0.2) $0.6 - $1.0 $3.9 - $4.3 ($1.0) ($0.8) ($1.0) FCFbg* $3.8 - $4.2 $1.8 - $2.2 Beginning Cash Available (1) $0.2 2023 - 2024 Debt Issuance & Separation Identified Growth Dividend Authorized Share Unidentified Growth Avail
Slide 18: Initiated Full-Year 2023 Adjusted EBITDA Guidance of $2,900M - $3,300M
Initiated Full-Year 2023 Adjusted EBITDA* Guidance of $2,900M - $3,300M ($M) $3,300 $3,100 $2,900 $2,667 $2,185 2021 Results 2022 Results 2023 Guidance 18
Slide 19: Environmental, Social & Governance
Environmental, Social & Governance 19
Slide 20: Constellation's ESG Strategy
Constellation’s ESG Strategy 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 c
Slide 21: 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 22: 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 Constellation’s Climate enable electric vehicles and Commitment: 100% complement renewable owned generation energy deployment carbon-free by 2040; 100% reduct
Slide 23: Constellation's Emissions are Already Significantly Below Paris Climate Agreement Levels
Constellation’s Emissions are Already Significantly Below Paris Climate Agreement Levels 0.700 Below 2 Degrees Paris Pledges 2 Degrees Constellation(1) 0.600 0.500 t CO2e/MWh 0.400 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 Refle
Slide 24: Constellation's Nuclear Plants are Clean Energy Centers
Constellation’s Nuclear Plants are Clean Energy Centers 24
Slide 25: State and Federal Policies
State and Federal Policies 25
Slide 26: Inflation Reduction Act (IRA) Transforms Constellation
Inflation Reduction Act (IRA) Transforms Constellation Nuclear PTC Floor Price (1,2) Limits downside risk while providing $/MWh upside opportunity $60 $59.00 $57.00 $55 Enables nuclear fleet life extension $50.88 $50 $45 Opportunities to grow, including H2, nuclear uprates, and wind repowering / ref
Slide 27: 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 $25.00/MWh and Market Revenues + PTC ($/MWh) support fro
Slide 28: 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 Power
Slide 29: Zero-Emission Credit (ZEC) Overview and Timelines
Zero-Emission Credit (ZEC) Overview and Timelines Plant State Capacity (MW) (1) 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Clinton IL 1,080 June ’17 May ‘27 Quad Cities IL 1,403 June ’17 May ‘27 Fitzpatrick NY 842 April ’17 March ‘29 Ginna NY 576 April ’17 March ‘29 Nine Mile Point NY 1,676 A
Slide 30: New York ZEC Price Determination
New York ZEC Price Determination Energy and Short Ton to U.S. SCC Baseline RGGI Net CO2 Capacity MWh Adjusted SCC Reference Price Upstate ZEC Tranche Date "Central Value“ Estimate Externality Forecast (Conversion ($/MWh) ($/MWh) Price ($/MWh) ($/Short Ton) ($/Short Ton) ($/Short Ton) Adjustment Fact
Slide 31: Illinois Carbon Mitigation Credit (CMC) Overview and Timelines
Illinois Carbon Mitigation Credit (CMC) Overview and Timelines Plant State Capacity (MW) 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Braidwood IL 2,386 June ’22 May ‘27 Byron IL 2,347 June ’22 May ‘27 Dresden IL 1,845 June ’22 May ‘27 Program Elements Illinois Carbon Mitigation Credits Program
Slide 32: Nuclear
32 Nuclear — <= Constellation.
Slide 33: 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 34: Nuclear is Among the Safest Forms of Power Generation and Has Lowest Life Cycle Emissions
Nuclear is Among the Safest Forms of Power Generation (1) and Has Lowest Life Cycle Emissions of any Technology (2) Nuclear Hydro Onshore Wind Offshore Wind Solar PV Solar Thermal Gas NGCC (with CCS) Minimum g CO2 eq. per kWh Coal IGCC (with CCS) Range of Lifecycle GHG Emissions Observed Gas NGCC Co
Slide 35: Extending the Life of our Nuclear Fleet to 80 years
Extending the Life of our Nuclear Fleet to 80 years 22,000 20,000 Potential Subsequent License Renewal for Remaining Fleet Dresden Subsequent License Renewal (80 Years) 18,000 Clinton License Renewal (60 Years) Clinton Subsequent License Renewal (80 Years) 16,000 Peach Bottom Subsequent License Rene
Slide 36: 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 37: 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 38: Securing Nuclear Fuel Supply Through 2028
Securing Nuclear Fuel Supply Through 2028 Nuclear Fuel Capital Expenditures • We have built a diverse and resilient portfolio that can ($M) $1,175 $1,175 $1,175 withstand a Russian supply disruption • We entered into contracts to increase our inventory to mitigate $850 the risk of possible supply di
Slide 39: Nuclear Fuel Hedging Strategy
Nuclear Fuel Hedging Strategy 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 Promote supplier diver
Slide 40: 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
Slide 41: 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 1,000 tU 800 600 400 200 0 Canada Russia China Niger Austrai
Slide 42: 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 43: 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 44: 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 • As required by the NWPA, Constellat
Slide 45: Appendix
——a <= Constellation Appendix =—— 4 iy EE ————_
Slide 46: Nuclear Fleet Overview
Nuclear Fleet Overview License 2-Year License Capacity Policy Support Spent Fuel Plant Location Type/Containment Extension Ownership Capacity Expiration (1) (MW) (2) (Term) Storage Status Factor (3) Braidwood, IL Pressurized Water Reactor Unit 1: 2046 CMC Unit 1: 96.4% Renewed 2,386 Constellation: 1
Slide 47: Commercial Disclosures
Commercial Disclosures December 31, 2022 47
Slide 48: 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 49: Gross Margin
Gross Margin* December 31, 2022 Change from September 30, 2022 (1) Gross Margin Category ($M) 2023 2024 2023 Open Gross Margin (including South, West, New England & Canada hedged GM)* $7,000 $6,400 ($1,500) (2) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) $2,800 $2,750 - (3) Mark-to
Slide 50: Generation and Hedges
Generation and Hedges December 31, 2022 Change from September 30, 2022 Generation and Hedges 2023 2024 2023 (1) Expected Generation (GWh) 196,500 198,200 (1,400) (2) Midwest (Total) 95,500 96,400 (100) Midwest (Excluding CMCs) 41,300 42,300 (100) Mid-Atlantic 54,800 56,400 (700) ERCOT 20,400 20,100
Slide 51: Sensitivities
Sensitivities Nuclear PTC Value For Plants Not Gross Margin (3) Supported By State Programs Change from December 31, 2022 December 31, 2022 September 30, 2022 (1,2) Sensitivities (with existing hedges) 2023 2024 2023 2023 2024 NiHub ATC Energy Price + $5.00/MWh - $65 ($15) - - - $5.00/MWh - ($65) $1
Slide 52: Illustrative Example of Modeling 2024 Total Gross Margin
Illustrative Example of Modeling 2024 Total Gross Margin* Midwest Row Item (2) Mid-Atlantic ERCOT (3) New York (Excl. CMCs) (A) Start with fleet-wide open gross margin* $6.4 billion (B) Contracted Revenues $2.75 billion (C) Expected Generation (TWh) 42.3 56.4 20.1 25.3 (D) Hedge % (assuming mid-poin
Slide 53: Additional Constellation Modeling Data
Additional Constellation Modeling Data Total Gross Margin* Reconciliation ($M) (1) 2023 2024 Adjusted Operating Revenues* (2) $30,350 $31,750 Adjusted Purchased Power and Fuel* (2) ($21,500) ($22,325) Wind Production Tax Credits (PTC) ($25) ($25) Other Revenues (3) ($225) ($225) Direct cost of sales
Slide 54: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 54
Slide 55: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) FFO (a) CFO (Pre-WC) (c) S&P FFO/Debt (2) = Moody’s CFO Pre-WC/Debt (3) = Adjusted Debt (b) Adjusted Debt (d) S&P FFO Calculation (2) Moody’s CFO Pre-WC Calculation (3) GAAP Operating Income Cash Flow From Operations + Depreciation & Amortization +/- Working Capi
Slide 56: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) Net Debt (a) Net Debt/EBITDA Net Debt (c) Net Debt/EBITDA = = Adjusted EBITDA* (b) Excluding Non-Recourse Adjusted EBITDA* (d) Net Debt Calculation Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term Debt (including
Slide 57: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Twelve Months Ended (1) Includes amounts contractually owed to Exelon under the Tax Matters Agreement (TMA) reflected in Other, net December 31, (2) Includes the accelerated depreciation associated with early plant retirements Adjusted EBITDA* Reconciliation ($M) 2021
Slide 58: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted EBITDA* Reconciliation ($M) 2023 GAAP Net Income $550 - $850 Income Taxes $425 Interest Expense $425 Depreciation and Amortization $1,125 Unrealized (Gain)/Loss on Fair Value Adjustments (1) $400 Pension and OPEB Non-Service Credits ($50) Decommissioning Rela
Slide 59: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Adjusted O&M* Reconciliation ($M) 2023 2024 2025 GAAP O&M $5,425 $5,275 $5,250 Decommissioning (1) ($200) ($200) ($175) Direct cost of sales incurred to generate revenues for ($250) ($225) ($225) certain Commercial and Power businesses (2) Separation Costs (3) ($75) -
Slide 60: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Free Cash Flow before Growth* ($M) 2023 - 2024 Adjusted Cash Flows from Operations* (Non-GAAP) (1) $8,050 - $8,450 Baseline and Nuclear Fuel Capital Expenditures ($4,000) Reinvestment in Nuclear Decommissioning Trust Funds (2) ($450) Collateral activity $150 O&M relat
Slide 61: Contact Information
Contact Information InvestorRelations@constellation.com (833) 447-2783 Links Events and Presentations ESG Resources Reports & SEC Filings
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