Constellation Energy Corporation · NASDAQ:CEG
Constellation Energy — Q3 2022 Earnings Presentation
35 slides from Constellation Energy's earnings presentation, Nov 8, 2022
Slide 1: Earnings Conference Call Third Quarter 2022
= Constellation Earnings Conference Call am =| Vhird Quarter 2022 kk = November 8, 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 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: Inflation Reduction Act (IRA) Transforms Constellation
Inflation Reduction Act (IRA) Transforms Constellation Nuclear PTC Floor Price 42) ail Limits downside risk while providing upside opportunity Enables nuclear fleet life extension © Opportunities to grow, including clean hydrogen S&P upgrade (1) See H.R. 5376 for adeitional details all numbers assum
Slide 6: Extending the Life of our Nuclear Fleet
Extending the Life of our Nuclear Fleet to 80 years 20,000 tial Sul equent License Renewal for emaining Flee psequent Li 18,000 16,000 14,000 Capacity (MW) 6,000 4,00C 2,000 2022 2025 1(SL int adi under the the initial othe 30 s and regulatic hich — Form10-0 for additional information y—
Slide 7: IRA Provides Opportunities for Carbon-Free Hydrogen Production
IRA Provides Opportunities for Carbon-Free Hydrogen Production ea 24/7 Hydrogen by Wires 7 On-site Hydrogen Production Clean Energy Center = Clean MWs on the Grid Advantages of Nuclear Produced Hydrogen Superior economics compared to renewables Reduces Reliability of nuclear transmission to source p
Slide 8: Q3 2022 Generation Operating Highlights
Q3 2022 Generation Operating Highlights Historical Nuclear Fleet Capacity Factor Best-in-Class Nuclear Operations (12) 2 100% e 44 ° 95% eo 6 ° + Nuclear Capacity Factor: 96.4% * Owned and operated production of 41.6 TWhs + Unplanned outages at five sites, including Nine Mile Point and Calvert Cliff
Slide 9: Q3 2022 Commercial Business Highlights
Q3 2022 Commercial Business Highlights Customer Operations Metrics (Trailing Twelve-Months) Q3 2022 Electric Load Served by Region (TWhs) 82% 83% MM Retail Wholesale 20 8 15 12 35% 3 6 Power New Gas New Customer Retail Power Natural Gas Customer Midwest Mid- ERCOT New Other ® Customer Win Rate Win R
Slide 10: 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 11: Q3 EBITDA Results
Q3 EBITDA Results Adjusted EBITDA* Financial Highlights ($M) *# Effective portfolio management through summer volatility and successful load auction wins V Unplanned outages with higher replacement power costs V Higher costs to drive long-term value 93 2021 Q3 2022 — = Constellation.
Slide 12: Gross Margin Update
Gross Margin* Update September 30, 2022 Change from June 30, 2022 Gross Margin* Category ($M) 2022 2023 2022 2023 CO WET 5 $9,750 $8,500 $50 $1,800 (including South, West, New England, Canada hedged gross margin) ® Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) $2,450 $2,800 - - Mark-
Slide 13: Narrowing Full-Year Adjusted EBITDA Guidance
Narrowing Full-Year Adjusted EBITDA* Guidance ($M) $2,750 Commercial business outperformed plan Supporting long-term value: --- $2,550 ij — Accelerating investment in growth projects, a $2,450 including hydrogen post-IRA $2,350 — Investing in attracting and retaining top employee talent in competiti
Slide 14: Financing and Liquidity Update
Financing and Liquidity Update 2022 Credit Metrics © 2022 YTD Ac —— — Downgrade Threshold Wl 800k Liquidity Facility Date 50% ie yo, Sree Issued $1,08 Pre-Capitalized Trust Securities (P-Cap) February 9 Debt Reduction 40% 35% na) 2.0x Repaid $200M Term Loan January 26 30% sx Settled $258M intercompa
Slide 15: Constellation's Value Proposition
6 Constellation’s Value Proposition Enduring Businesses Ready to Meet the Climate Crisis ‘* World-Class nuclear operator and largest generator of 24/7 carbon-free firm electricity with ability to extend asset lives * Largest provider of energy and solutions to ‘commercial and industrial customers **
Slide 16: Additional Disclosures
16 Additional Disclosures — = Constellation
Slide 17: Disciplined Capital Allocation Strategy Designed to Deliver Value for Our Shareholders
Disciplined Capital Allocation Strategy Designed to Deliver Value for Our Shareholders Maintain Strong Annual Dividend Investment Grade with Targeted Credit Metrics 10% Annual Growth Delivering Value to Our Shareholders Organic and Inorganic Growth Return Excess Consistent with Cash to Role as a Lea
Slide 18: Q3 2022 Adjusted EBITDA
Q3 2022 Adjusted EBITDA* ($M) $967 $592 $17 $3 932021 Labor, Contracting CapacityRevenues —_ Impact of CTV Market and Nuclear Fuel Costs Other 32022 and Materials Investments Portfolio Conditions — 1 = Constellation.
Slide 19: Q3 2022 YTD Adjusted EBITDA
Q3 2022 YTD Adjusted EBITDA* ($M) $89 $203 ae 6p 52,080 $1,227 $1158 2021 Impact of Marketand —-NuclearFuel Capacity Labor, Nuclear Outages Impact of CTV Other 2022 Feb 2021 Portfolio Costs Revenues Contracting Investments Weather Event Conditions and Materials 9 — = Constellation.
Slide 20: Long-Term Debt Maturity Profile
20 Long-Term Debt Maturity Profile “ LT Debt Balances @ As of 9/30/2022 ($M) Recourse $3.08 Non-Recourse $178 a ° = 0 © 5 2 Q 3 a x 2 + 9 rey & Q ry ro) g gy Memes = & & 8 8 8 8 F 8 8 8 &§ RF 8 € & B (2) Maturity profile excludes non-recourse debt. P-Cap facility, securitized debt, capital leases, f
Slide 21: Inflation of Nuclear Production Tax Credit (PTC)
Inflation of Nuclear Production Tax Credit (PTC) PTC Overview Example Assuming 2% and 3% Inflation @ + The PTC is in effect beginning after 12/31/23 and through 12/31/32 + Inthe base year 2024, Constellation qualifies for the nuclear PTC up to $15/MWh; the PTC amount is reduced by 80% of gross recei
Slide 22: Process for Subsequent License Renewal
22 Process for Subsequent License Renewal Under the Atomic Energy Act, reactor licenses are limited to an initial period of 40 years. This was based on antitrust considerations, not limitations in the technology. NRC permits nuclear reactor licensees to renew license periods of 20 years from 40 to 6
Slide 23: Commercial Disclosures
23 Commercial Disclosures September 30, 2022 — = Constellation
Slide 24: Portfolio Management Strategy
Portfolio Management Strategy Strategic Policy Alignment Three-Year Ratable Hedging Bull / Bear Program + Our portfolio starts in a position of already + Ensure stability in near-term cash flows and + Ability to exercise fundamental market views to partially hedged, via longer term state programs ea
Slide 25: Components of Gross Margin Categories
25 Components of Gross Margin* Categories eA A Gross margin* linked to power production and sales other business activities ee Contracted “Power” New “Non Power” “Non Power” Open Gross Margin Revenues Business Executed New Business *Generation Gross “Expected contracted *Mark-to-Market +Retail, Whol
Slide 26: Gross Margin
26 Gross Margin* September 30, 2022 Change from June 30,2022 Gross Margin Category ($M) ° 2022 2023 2022 2023 Open Gross Margin (including South, West, New England & Canada hedged GM)* ° $9,750 $8,500 $50 $1,800 Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) $2,450 $2,800 = 2 Mark-to-
Slide 27: Generation and Hedges
27 Generation and Hedges ‘September 30,2022 Change from June 30, 2022 Generation and Hedges 2022 2023 2022 2023 Expected Generation (GWh) 193,000 197,900 (3.600) (500) Midwest (Total) ? 96,500 95,600 (200) 100 Midwest (Excluding CMCs) 64,500 41,400 (300) (00) Mid-Atlantic 55,500 55.500 (200) 500 ERC
Slide 28: Hedged Gross Margin Sensitivities
Hedged Gross Margin* Sensitivities Gross Margin* Sensitivities (with existing hedges) °” 2022 2023 2022 2023 Henry Hub Natural Gas ($7MMBtu) + $0.50/MMBtu $20 $55 $10 ($10) - $0.50/MMBtu ($15) ($45) ($10) $35 NiHub ATC Energy Price +$2.50/MWh : $10 : : - $2.50/MWh : ($10) : PJM-W ATC Energy Price +
Slide 29: Illustrative Example of Modeling 2023 Total Gross Margin
Illustrative Example of Modeling 2023 Total Gross Margin* Midwest id= i @ Row Item (Excl, cMcs)® MicrAtlantic —-ERCOT New York (A) Start with fleet-wide open gross margin* + $8.5 billion (8) Contracted Revenues < $2.8 billion = (C) Expected Generation (TWh) 414 65.5 21 25.8 (0) Hedge % (assuming mid
Slide 30: Additional Constellation Modeling Data
30 Additional Constellation Modeling Data Total Gross Margin* Reconciliation (in $M) © 2022 2023 Adjusted Operating Revenues* (2) $22,475 $28,475 Adjusted Purchased Power and Fuel* (2) ($14,675) ($19,750) Other Revenues (@) ($200) ($225) ee ao Total Gross Margin* (Non-GAAP) $7,350 $8,250 Other Reven
Slide 31: Appendix: Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures — = Constellation
Slide 32: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations FFO (a) CFO (Pre-WC) (c) S&P FFO/Debt 2) = §=—W_—________ Moody's CFO Pre-WC/Debt 3) = =§_—W—_______ Adjusted Debt (b) Adjusted Debt (d) S&P FFO Calculation @ Moody's CFO Pre-WC Calculation @) GAAP Operating Income Cash Flow From Operations + Depreciation & Amortizat
Slide 33: GAAP to Non-GAAP Reconciliations
33 GAAP to Non-GAAP Reconciliations ane Net Debt (a) Debt/EBITDA ” Net Debt (c) Adjusted EBITDA* (b) Excluding Non-Recourse Adjusted EBITDA* (d) Net Debt Calculation Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term Debt (including current maturities
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three Months Ended Nine Months Ended @) includes amounts contractually owed to Exelon under September 30, September 30, Hatter tareseermecer sone Pe (2) elaes te acelrated deprecation assooatd wth Adlusied EBITOAS Reconciliation ($M) 202) 2022 2024 2022 Os GAAP Net In
Slide 35: Contact Information
Contact Information InvestorRelations@constellation.com (833) 447-2783 Links Events and Presentations ESG Resources Reports & SEC Filings vw “= Constellation.