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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Constellation Energy Corporation | NASDAQ:CEG | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-5.72 | -2.60% | 214.21 | 198.92 | 215.03 | 218.87 | 210.96 | 218.09 | 2,373,791 | 05:00:00 |
Earnings Release Highlights
Constellation Energy Corporation (Nasdaq: CEG) today reported its financial results for the third quarter of 2023.
“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:
Recent Developments and Third Quarter Highlights
________
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.
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 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.
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.
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231104859670/en/
Paul Adams Corporate Communications 667-218-7700
Emily Duncan Investor Relations 833-447-2783
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