news/CEG/2023.02.16/Constellation Reports Fourth Quarter and Full Year 2022 Results and Initiates 2023 Fina...txt

Constellation Energy Corporation (Nasdaq: CEG) today reported its financial results for the fourth quarter and full year 2022.

“We had an incredible first year that exceeded expectations as we adapted to rapidly evolving market conditions, successfully advocated for clean energy policies and positioned the company for sustainable, long-term growth,” said Joe Dominguez, president and CEO of Constellation. “I want to emphasize that there is no commodity more valuable to our economy, national security and way of life than energy that is carbon-free, affordable and always there when you need it, and no U.S. company produces more of it than we do. The unique reliability and resiliency of our nuclear fleet was driven home yet again during Winter Storm Elliott, when our operated fleet performed at 100 percent, helping to prevent rolling blackouts on Christmas Eve as fossil generation in our nation’s largest electric grid failed. Nuclear’s value to the grid was also proven in the 2014 polar vortex and again in 2021 during Winter Storm Uri, and it’s only going to increase in the years ahead as we invest to extend the lives of our nuclear plants, increase their output and utilize their carbon-free energy to power the dirtiest parts of our economy with clean hydrogen. We set out one year ago to be the nation’s answer to the climate crisis, and today we have the assets and financial foundation to deliver on that promise.”

“Our strong financial position allows us to return exceptional value to shareholders by doubling our dividend and authorizing a $1 billion share repurchase program, while still leaving us the flexibility to build a new, clean hydrogen business and reserve $2 billion in unallocated capital to invest in other organic and inorganic growth as opportunities arise, or return additional capital to shareholders,” said Dan Eggers, chief financial officer of Constellation. “Operationally, our nuclear fleet remains the most reliable and efficient in the industry and our commercial business delivered high value in a market buffeted by global events. For the year, we delivered $2.667 billion in adjusted EBITDA, which exceeded the top of our range, and we are introducing 2023 adjusted EBITDA guidance of $2.9 billion to $3.3 billion.”

Fourth Quarter 2022

Our GAAP Net Income for the fourth quarter of 2022 was $34 million, down from $42 million GAAP Net Income in the fourth quarter of 2021. Adjusted EBITDA (non-GAAP) for the fourth quarter of 2022 decreased to $605 million from $1,027 million in the fourth quarter of 2021. For the reconciliations of GAAP Net Income to Adjusted EBITDA (non-GAAP), refer to the tables beginning on page 4.

Adjusted EBITDA (non-GAAP) in the fourth quarter of 2022 primarily reflects:

Full Year 2022

Our GAAP Net Loss for 2022 was ($160) million, compared to ($205) million GAAP Net Loss in 2021. Adjusted EBITDA (non-GAAP) for 2022 increased to $2,667 million from $2,185 million in 2021.

Adjusted EBITDA (non-GAAP) for the full year 2022 primarily reflects:

Initiates Annual Guidance for 2023

We introduced a guidance range for 2023 Adjusted EBITDA (non-GAAP) of $2,900 million to $3,300 million. The outlook for Adjusted EBITDA (non-GAAP) excludes the following items:

Recent Developments and Fourth Quarter Highlights

GAAP/Adjusted EBITDA (non-GAAP) Reconciliation

Adjusted EBITDA (non-GAAP) for the fourth quarter of 2022 and 2021, respectively, does not include the following items that were included in our reported GAAP Net Income:

(in millions)

Three Months Ended
December 31, 2022

Three Months Ended
December 31, 2021

GAAP Net Income Attributable to Common Shareholders

$

34

 

$

42

 

Income Taxes

 

133

 

 

117

 

Depreciation and Amortization

 

272

 

 

268

 

Interest Expense, Net

 

64

 

 

72

 

Unrealized Loss on Fair Value Adjustments

 

413

 

 

771

 

Asset Impairments

 

—

 

 

4

 

Plant Retirements and Divestitures

 

(7

)

 

11

 

Decommissioning-Related Activities

 

(306

)

 

(275

)

Pension & OPEB Non-Service Credits

 

(31

)

 

(14

)

Separation Costs

 

41

 

 

24

 

COVID-19 Direct Costs

 

—

 

 

11

 

ERP System Implementation Costs

 

6

 

 

3

 

Change in Environmental Liabilities

 

(2

)

 

5

 

Noncontrolling Interests

 

(12

)

 

(12

)

Adjusted EBITDA (non-GAAP)

$

605

 

$

1,027

 

Webcast Information

We will discuss fourth quarter 2022 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

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 percent 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 15 million homes, providing 11 percent 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 percent 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. 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 and are posted on our website: www.ConstellationEnergy.com, and have been furnished to the Securities and Exchange Commission on Form 8-K on February 16, 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 (to be filed on February 16, 2023) 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, and (2) 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 of the Registrants 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 December 31, 2022

 

Three Months Ended December 31, 2021

 

GAAP (a)

 

Non-GAAP
Adjustments

 

 

 

GAAP (a)

 

Non-GAAP
Adjustments

 

 

Operating revenues

$

7,333

 

 

$

(713

)

 

(b),(c)

 

$

5,532

 

 

$

(326

)

 

(b),(c)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Purchased power and fuel

 

5,708

 

 

 

(1,125

)

 

(b)

 

 

4,061

 

 

 

(1,020

)

 

(b)

Operating and maintenance

 

1,375

 

 

 

(86

)

 

(c),(d),(h),(i),(k)

 

 

1,141

 

 

 

(74

)

 

(c),(d),(e),(f),(g),(h),(i),(j),(k)

Depreciation and amortization

 

272

 

 

 

(272

)

 

(l)

 

 

268

 

 

 

(268

)

 

(l)

Taxes other than income taxes

 

138

 

 

 

—

 

 

 

 

 

121

 

 

 

—

 

 

 

Total operating expenses

 

7,493

 

 

 

 

 

 

 

5,591

 

 

 

 

 

(Loss) gain on sales of assets and businesses

 

(12

)

 

 

—

 

 

 

 

 

57

 

 

 

—

 

 

 

Operating loss

 

(172

)

 

 

 

 

 

 

(2

)

 

 

 

 

Other income and (deductions)

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(64

)

 

 

64

 

 

(m)

 

 

(72

)

 

 

72

 

 

(m)

Other, net

 

383

 

 

 

(367

)

 

(b),(c),(d),(h),(i),(j),(n),(p)

 

 

234

 

 

 

(228

)

 

(b),(c),(d),(e),(i),(c)

Total other income and (deductions)

 

319

 

 

 

 

 

 

 

162

 

 

 

 

 

Income before income taxes

 

147

 

 

 

 

 

 

 

160

 

 

 

 

 

Income taxes

 

116

 

 

 

(116

)

 

(n)

 

 

117

 

 

 

(117

)

 

(n)

Equity in losses of unconsolidated affiliates

 

(4

)

 

 

—

 

 

 

 

 

(4

)

 

 

—

 

 

 

Net income

 

27

 

 

 

 

 

 

 

39

 

 

 

 

 

Net loss attributable to noncontrolling interests

 

(7

)

 

 

12

 

 

(o)

 

 

(3

)

 

 

12

 

 

(o)

Net income attributable to common shareholders

$

34

 

 

 

 

 

 

$

42

 

 

 

 

 

Effective tax rate

 

78.9

%

 

 

 

 

 

 

73.1

%

 

 

 

 

Earnings per average common share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.10

 

 

 

 

 

 

$

—

 

 

 

 

 

Diluted

$

0.10

 

 

 

 

 

 

$

—

 

 

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

328

 

 

 

 

 

 

 

—

 

 

 

 

 

Diluted

 

329

 

 

 

 

 

 

 

—

 

 

 

 

 

__________

(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)

Adjustments related to plant retirements and divestitures.

(e)

In 2021, adjustment primarily for reorganization and severance costs related to cost management programs.

(f)

In 2021, adjustment for direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.

(g)

In 2021, adjustment for costs related to the acquisition of EDF's interest in CENG, which was completed in the third quarter of 2021.

(h)

Adjustment for costs related to a multi-year ERP system implementation.

(i)

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.

(j)

Adjustment for Pension and OPEB Non-Service credits. Historically, we were allocated our portion of pension and OPEB non-service costs from Exelon, which was included in Operating and maintenance expense. Effective February 1, 2022, the non-service credit (cost) components are included in Other, net.

(k)

Adjustment for certain changes in environmental liabilities.

(l)

Adjustment for depreciation and amortization expense.

(m)

Adjustment for interest expense.

(n)

Adjustment for income taxes.

(o)

Adjustment for elimination of the noncontrolling interest related to certain adjustments.

(p)

In 2022, includes amounts contractually owed to Exelon under the TMA.

(q)

Reversal of a charge related to a prior 2012 merger commitment. 

Constellation Energy Corporation

GAAP Consolidated Statements of Operations and Adjusted (non-GAAP) EBITDA Reconciling Adjustments

(unaudited)

(in millions, except per share data)

 

Twelve Months Ended December 31, 2022

 

Twelve Months Ended December 31, 2021

 

GAAP (a)

 

Non-GAAP
Adjustments

 

 

 

GAAP (a)

 

Non-GAAP
Adjustments

 

 

Operating revenues

$

24,440

 

 

$

1,184

 

 

(b),(c)

 

$

19,649

 

 

$

629

 

 

(b),(c)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Purchased power and fuel

 

17,462

 

 

 

138

 

 

(b)

 

 

12,163

 

 

 

1,064

 

 

(b),(d)

Operating and maintenance

 

4,841

 

 

 

(28

)

 

(c),(d),(h),(i),(j),(k) (r)

 

 

4,555

 

 

 

(184

)

 

(c),(d),(e),(f),(g),(h),(i),(j),(k),(p)

Depreciation and amortization

 

1,091

 

 

 

(1,091

)

 

(l)

 

 

3,003

 

 

 

(3,003

)

 

(l)

Taxes other than income taxes

 

552

 

 

 

(2

)

 

(i)

 

 

475

 

 

 

—

 

 

 

Total operating expenses

 

23,946

 

 

 

 

 

 

 

20,196

 

 

 

 

 

Gain on sales of assets and businesses

 

1

 

 

$

1

 

 

(d)

 

 

201

 

 

 

(68

)

 

(d)

Operating income (loss)

 

495

 

 

 

 

 

 

 

(346

)

 

 

 

 

Other income and (deductions)

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(251

)

 

 

251

 

 

(m)

 

 

(297

)

 

 

297

 

 

(m)

Other, net

 

(786

)

 

 

845

 

 

(b),(c),(d), (i),(j),(n)(q)

 

 

795

 

 

 

763

 

 

(b),(c),(d)

Total other income and (deductions)

 

(1,037

)

 

 

 

 

 

 

498

 

 

 

 

 

(Loss) income before income taxes

 

(542

)

 

 

 

 

 

 

152

 

 

 

 

 

Income taxes

 

(388

)

 

 

388

 

 

(n)

 

 

225

 

 

 

(225

)

 

(n)

Equity in losses of unconsolidated affiliates

 

(13

)

 

 

—

 

 

 

 

 

(10

)

 

 

—

 

 

 

Net loss

 

(167

)

 

 

 

 

 

 

(83

)

 

 

 

 

Net (loss) income attributable to noncontrolling interests

 

(7

)

 

 

49

 

 

(o)

 

 

122

 

 

 

53

 

 

(o)

Net loss attributable to common shareholders

$

(160

)

 

 

 

 

 

$

(205

)

 

 

 

 

Effective tax rate

 

71.6

%

 

 

 

 

 

 

148.0

%

 

 

 

 

Earnings per average common share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.49

)

 

 

 

 

 

$

—

 

 

 

 

 

Diluted

$

(0.49

)

 

 

 

 

 

$

—

 

 

 

 

 

Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

328

 

 

 

 

 

 

 

—

 

 

 

 

 

Diluted

 

329

 

 

 

 

 

 

 

—

 

 

 

 

 

__________

(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)

Adjustments related to plant retirements and divestitures.

(e)

In 2021, adjustment primarily for reorganization and severance costs related to cost management programs.

(f)

In 2021, adjustment for direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.

(g)

In 2021, adjustment for costs related to the acquisition of EDF's interest in CENG, which was completed in the third quarter of 2021.

(h)

Adjustment for costs related to a multi-year ERP system implementation.

(i)

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.

(j)

Adjustment for Pension and OPEB Non-Service credits. Historically, we were allocated our portion of pension and OPEB non-service costs from Exelon, which was included in Operating and maintenance expense. Effective February 1, 2022, the non-service credit (cost) components are included in Other, net.

(k)

Adjustment for certain changes in environmental liabilities.

(l)

Adjustment for depreciation and amortization expense.

(m)

Adjustment for interest expense.

(n)

Adjustment for income taxes.

(o)

Adjustment for elimination of the noncontrolling interest related to certain adjustments. In 2022, primarily relates to CRP and in 2021, primarily relates to CENG and the noncontrolling interest portion of a wind project impairment recognized within CRP.

(p)

Reflects an impairment in the New England asset group, an impairment as a result of the sale of the Albany Green Energy biomass facility, and an impairment of a wind project

(q)

In 2022, includes amounts contractually owed to Exelon under the tax matters agreement.

(r)

Reversal of a charge related to a prior 2012 merger commitment.

 
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