CONSTELLATION ENERGY CORPORATION Investor Presentation
December 2023
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," "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' combined 2022 Annual Report on Form 10-K in
- Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, (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 (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 presentation. 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 presentation.
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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 measures, including:
- Adjusted EBITDA represents earnings before interest, income taxes, depreciation and amortization, and excludes certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments from economic hedging activities and fair value adjustments related to gas imbalances and equity investments, decommissioning related activity, asset impairments, certain amounts associated with plant retirements and divestitures, pension and other post-employment benefits (OPEB) non-service credits, separation related costs and other items as set forth in the Appendix. Includes nuclear fuel amortization expense.
- Adjusted cash flows from operations primarily includes net cash flows from operating activities and Collection of Deferred Purchase Price (DPP) related to the revolving accounts receivable arrangement, which is presented in cash flows from investing activities under GAAP
- Free cash flows before growth (FCFbg) is adjusted cash flows from operations less capital expenditures under GAAP for maintenance and nuclear fuel, non- recurring capital expenditures related to separation and Enterprise Resource Program (ERP) system implementation, changes in collateral, net merger and acquisitions, and equity investments and other items as set forth in the Appendix
- Adjusted operating revenues excludes the mark-to-market impact of economic hedging activities due to the volatility and unpredictability of the future changes in commodity prices
- Adjusted purchased power and fuel excludes the mark-to-market impact of economic hedging activities and fair value adjustments related to gas imbalances due to the volatility and unpredictability of the future changes in commodity prices
- Total gross margin is defined as adjusted operating revenues less adjusted purchased power and fuel expense, excluding revenue related to decommissioning, gross receipts tax, production tax credits (PTCs), variable interest entities, and net of direct cost of sales for certain end-user businesses
- Adjusted operating and maintenance (O&M) excludes direct cost of sales for certain end-user businesses, Asset Retirement Obligation (ARO) accretion expense from unregulated units and decommissioning costs that do not affect profit and loss, the impact from operating and maintenance expense related to variable interest entities at Constellation, and other items as set forth in the reconciliation in the Appendix
Due to the forward-looking nature of some projected non-GAAP financial measures, reconciliations of projected non-GAAP financial measures 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 measures.
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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 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 performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods.
These non-GAAP financial measures are not a presentation defined under GAAP and may not be comparable to other companies' presentations of similarly titled financial measures. Constellation has provided these non-GAAP financial measures as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These non-GAAP measures should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP measures provided in the materials presented.
Non-GAAP financial measures are identified by the phrase "non-GAAP" or an asterisk (*). Reconciliations of these non-GAAP measures to the most comparable GAAP measures are provided in the appendices and attachments to this presentation, except for the reconciliation for total gross margin*, which appears on slide 55 of this presentation.
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Constellation at a Glance
- #1 provider of carbon-free 24/7 energy in the United States
- Lowest carbon emissions and carbon intensity generator in the United States
- 32,355 MWs of total generating capacity
- ~126 million metric tons of carbon avoided (1)
- 94.8% capacity factor at nuclear plants
- Ability to extend fleet to 80 years - providing 24/7 carbon-free power through 2050 and beyond
- #1 in market share for C&I customers (2)
- #2 retail electricity provider (2)
- #3 in market share for mass market customers (2)
- Ranked #1 Overall Retail Energy Supplier (3)
- Top 10 natural gas provider in the U.S.
- Serves ¾ of the Fortune 100
- ~2 million total customers
- 208 TWhs of load served
- Operates in 48 states and the District of Columbia
- Fortune 200 company, based on $24.4B in operating revenues in 2022
- Approximately 13,400 employees nationwide
- Employees volunteered over 80,000 hours in 2022
- Donated more than $12.5M to charitable causes, including $4.6M from employee contributions
- Increasingly diverse workforce, with strong diverse hiring and promotion rates and community workforce development partnerships
Note: Numbers reflect year-end 2022
- Measured using the EPA Greenhouse Gas Emissions calculatorhttps://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator
- Per DNV's 2022 Market Share Landscape report
- (3) Per DNV's 2022 Energy Blueprint: Sales Strategies report, Constellation ranked #1 in pre-sale support, pricing and contracting, and after sale service
Constellation is Uniquely Positioned to Create Value for Shareholders
Unmatched, Premium Assets in the U.S.
- Best-in-classnuclear operations
- Largest producer of reliable, carbon-free, clean electricity
- Largest provider of electricity to C&I customers
- Provides customers with hourly carbon-free energy matching
Beneficiary of Inflation Reduction Act
- Downside commodity price risk protected by U.S. government, while preserving ability to capture commodity price upside
- Production Tax Credit grows with inflation
- Supports growth opportunities that will help decarbonize the U.S. including nuclear uprates, clean hydrogen and wind repowering
- Extends horizon of our clean, carbon-free nuclear fleet to 80 years
Growing Value for Shareholders
- Strong free cash flow generation allows for:
- Dividend growth
- Robust organic growth at compelling double-digit unlevered returns
- Growth from M&A
- Share repurchases
LaSalle Clean Energy Center
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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 solutions to commercial and industrial customers
• Strong advocate for, and ideally situated to benefit from, energy policies that drive the transition to carbon-free energy
Delivering Value For Our Shareholders
• Strong free cash flows, optimized through industry-leading operations, support of carbon-free energy and focus on costs
• Disciplined capital allocation strategy supports strong investment grade balance sheet, growth investment consistent with corporate strategy, and return of capital to owners
Premier ESG Company
• ~90% carbon-free energy growing to 100% carbon-free by 2040
• Committed to advancing diversity, equity and inclusion in our workplace and communities
• Maintaining the highest standards of corporate governance
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/MWh | ||||||||||||||||||||||||||||||||||||
Constellation (3) | Constellation (3) | 8 | Constellation (3) | 85 | ||||||||||||||||||||||||||||||||||
178.2 | ||||||||||||||||||||||||||||||||||||||
NextEra Energy (2) | 110.5 | PSEG (12) | 10 | PSEG (12) | 376 | |||||||||||||||||||||||||||||||||
Duke (1) | 86.7 | Energy Harbor (14) | 14 | NextEra Energy (2) | 429 | |||||||||||||||||||||||||||||||||
Dominion (8) | 53.2 | Riverstone (18) | 16 | Dominion (8) | 593 | |||||||||||||||||||||||||||||||||
Southern (4) | 50.3 | LS Power (19) | 19 | Energy Harbor (14) | 627 | |||||||||||||||||||||||||||||||||
Berkshire Hathaway Energy (6) | 49.2 | WEC Energy Group (20) | 23 | Entergy (7) | 638 | |||||||||||||||||||||||||||||||||
Entergy (7) | 48.6 | DTE Energy (15) | 29 | Duke (1) | 807 | |||||||||||||||||||||||||||||||||
Energy Harbor (14) | 31.9 | Evergy (17) | 31 | Riverstone (18) | 863 | |||||||||||||||||||||||||||||||||
PSEG (12) | 31.4 | Ameren (16) | 33 | Energy Capital Partners (9) | 869 | |||||||||||||||||||||||||||||||||
Xcel (11) | 30.3 | Dominion (8) | 34 | Southern (4) | 908 | |||||||||||||||||||||||||||||||||
AEP (10) | 24.4 | NRG (13) | 36 | Berkshire Hathaway Energy (6) | 1,009 | |||||||||||||||||||||||||||||||||
Vistra Energy (5) | 19.8 | Entergy (7) | 38 | LS Power (19) | 1,054 | |||||||||||||||||||||||||||||||||
Riverstone (18) | 17.9 | Xcel (11) | 41 | Xcel (11) | 1,070 | |||||||||||||||||||||||||||||||||
DTE Energy (15) | 12.9 | NextEra Energy (2) | 46 | Vistra Energy (5) | 1,276 | |||||||||||||||||||||||||||||||||
NRG (13) | 9.7 | Energy Capital Partners (9) | 46 | WEC Energy Group (20) | 1,339 | |||||||||||||||||||||||||||||||||
Evergy (17) | 9.6 | AEP (10) | 60 | AEP (10) | 1,394 | |||||||||||||||||||||||||||||||||
Ameren (16) | 7.5 | Berkshire Hathaway Energy (6) | 65 | DTE Energy (15) | 1,451 | |||||||||||||||||||||||||||||||||
Energy Capital Partners (9) | 7.3 | Southern (4) | 82 | NRG (13) | 1,585 | |||||||||||||||||||||||||||||||||
WEC Energy Group (20) | 4.7 | Duke (1) | 86 | Evergy (17) | 1,661 | |||||||||||||||||||||||||||||||||
LS Power (19) | 1.0 | Vistra Energy (5) | 110 | Ameren (16) | 1,771 | |||||||||||||||||||||||||||||||||
0 | 50 | 100 | 150 | 200 | 0 | 20 | 40 | 60 | 80 | 100 | 120 | 0 | 500 | 1,000 | 1,500 | 2,000 |
- Reflects 2021 regulated and non-regulated generation. Source: Benchmarking Air Emissions, November 2023: https://www.ceres.org/resources/reports/benchmarking-air-emissions-100-largest-electric-power-producers-united-states-2023
- (2) Number in parentheses is the company's ranking among the 20 largest investor-owned producers (total MWh) in 2021, i.e. Constellation was the third largest generator in 2021
Strong Operations Deliver Reliable and Affordable Carbon-Free Power
Nuclear Capacity Factor (%) (1,2)
Average Nuclear Refueling Outage Days (2,4)
Industry Average
94.6% | 95.7% | 95.4% | 94.5% | 94.8% |
90.8% | 91.7% | 90.8% | 90.9% | 90.9% |
2018 | 2019 | 2020 | 2021 | 2022 |
Ranking Among Major
Operators (2-Yr)(3)
20221
20211
20201
20191
20181
Industry Average | ||||
35 | 36 | 40 | ||
34 | 32 | |||
21 | 21 | 22 | 22 | 21 |
2018 | 2019 | 2020 | 2021 | 2022 |
Ranking Among Major
Operators (3)
20221
20211
20201
20191
20181
Nuclear Composite Operational Excellence (5) | Power Metrics (6) | |
(Total of Rankings of 14 Indicators) | ||
Industry Average | 91.3% | 92.1% | ||
84.9% | 84.9% | |||
73.0% | ||||
55.9% | 55.8% | 55.9% | 55.8% | 56.1% |
2018 | 2019 | 2020 | 2021 | 2022 |
Ranking Among Major
Operators (3)
20221
20211
20201
20191
20182
Power Dispatch Match | Wind & Solar Energy Capture | |||||
98.1% 96.1% | 97.9% 96.3% | 98.4% 93.4% | 95.7% | 98.4% 95.8% | ||
72.4% |
2018 | 2019 | 2020 | 2021 | 2022 |
Source: Constellation's internal benchmarking report
- Reflects Constellation's ownership share of CENG and other partially-owned units. Includes 100% ownership of CENG following closure of EDF Put on August 6, 2021.
- Excludes Salem. Constellation and Industry averages reflect Oyster Creek and TMI partial year operation in 2018 and 2019, respectively.
- Major nuclear operator is defined as one entity responsible for the operation of at least two sites and comprising of at least four units; Major Operator rankings reflect 100% ownership for Constellation.
- Refueling outage values are not adjusted for ownership
- Composite Operational Excellence Metric consists of 14 indicators in Production, Cost, and Safety. Value represents the percentage of the maximum available score by ranking of Major Operators across the 14 indicators.
- Power Dispatch Match is used to measure the responsiveness of a unit to the market, expressed as actual energy gross margin relative to total desired energy gross margin. Desired energy gross margin is measured by revenues less fuel costs and variable O&M when unit is dispatched. Wind Energy Capture represents actual energy produced by wind turbine generators of a wind farm, divided by the on-site measured total wind energy available. Solar Energy Capture represents actual energy produced by the sum of the Generating System Modules of a solar plant or group of solar plants, divided by total expected energy to be produced by the sum of
- the same Generating System Modules. Energy Capture for the combined wind and solar fleet is weighted by the relative site projected pre-tax variable revenue, with deductions made for certain excusable events that are non-controllable.
Leading Customer Platform Enables Customers to Meet Their Energy and Sustainability Needs
Leading Customer Operational Metrics (TTM) (1)
2022 Electric Load Served by Region (TWhs)
90%
79%
36%
18%
50
13
37
71
25
46
16
2
14
Wholesale Retail
55
25
16
30
Power New | Gas New Customer | C&I Power Customer | C&I Gas Customer |
Customer Win Rate | Win Rate | Renewal Rate | Renewal Rate |
Midwest | Mid-Atlantic | ERCOT | New York | Other (2) |
Our Experience and Capabilities Deliver Value to Our | Hourly Carbon-Free Matching Agreements | ||
Customers and for Our Shareholders | |||
Strong platform creates | • Landmark agreement with Microsoft (announced June 2023) combines | ||
Volatility supports expanding | the environmental attributes of nuclear power with hourly carbon-free | ||
opportunities to help customers | energy matching to help one of Microsoft's Virginia data centers operate | ||
customer margins | |||
manage volatile energy markets | on nearly 100% clean power | ||
• Agreement with ComEd enables ComEd to power its 54 facilities with | |||
Comprehensive suite of products | reliable, carbon-free energy produced where and when it is used, | ||
marking another key step toward a carbon-free economy | |||
Successful load auctions | tailored to meet our customers' | ||
• Agreements are setting a new standard for how companies across the | |||
evolving needs | |||
U.S. can achieve real emissions reductions and is proof that hourly, | |||
regional matching of clean energy to demand is both practical and feasible today with suitable infrastructure and energy innovation
- As of December 31, 2022
10 (2) Other includes New England, South and West
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Disclaimer
Constellation Energy Corporation published this content on 05 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 December 2023 14:07:26 UTC.
