Constellation Forecasts Strong Earnings Growth in 2024

Source: 2/27/2024, Location: North America

Marking the start of its third year as an independent company, Constellation, the nation’s largest producer of carbon-free energy, will host a virtual investor and analyst event via webcast today to lay out a forecast for earnings growth based on the strength of its industry-leading commercial business and market and policy recognition that nuclear energy is essential to addressing the climate crisis while preserving grid reliability and the nation’s energy security.

“The most valuable commodity in the world today remains clean energy that can be depended on in every hour of every day, and no U.S. company is better positioned to deliver on that promise than Constellation, which has more clean, reliable nuclear capacity than all other U.S. competitive generators combined,” said Joe Dominguez, president and CEO of Constellation. “State and federal policies, bipartisan political support, public opinion surveys and increased customer demand for reliable and clean energy all point to strong and growing support for nuclear energy to power our economy for decades to come. Combined with our industry-leading Commercial business that helps our customers achieve their climate goals, we see a growing landscape of opportunities to continue building our business and lead the clean energy transition.”

Highlights from the Investor Update

Strong financial outlook with predictable earnings: Constellation initiated guidance for 2024 Adjusted (Non-GAAP) Operating Earnings of $7.23 to $8.03 per share. The Adjusted (Non-GAAP) Operating Earnings guidance excludes the effects of the following from projected GAAP net income:

- Unrealized impacts of fair value adjustments

- Decommissioning-related activities

- Pension and Other Postretirement Employment Benefit (OPEB) non-service credits

- Separation costs

- Enterprise Resource Program (ERP) system implementation

- Other items not directly related to the ongoing operations of the business

- Noncontrolling interest related to exclusion items

The nuclear production tax credit (PTC) in the IRA provides a stable foundation for consistent and growing earnings that will allow Constellation to continue investing in growth opportunities, including by adding clean energy generation to its fleet through uprates, repowering wind assets, license extensions and asset acquisitions while also returning capital to shareholders. The PTC provides revenue visibility and also preserves Constellation’s ability to capture upside from tightening power market conditions.

Long-term base EPS growth of at least 10%: Constellation is targeting long-term base earnings per share (EPS) growth of at least 10% through the decade backstopped by the nuclear production tax credit in the Inflation Reduction Act (IRA) and effective deployment of our strong free cash flow generation.

Base earnings, a significant component of total Adjusted (Non-GAAP) Operating Earnings, are consistent, visible earnings that will grow over time and can be modeled using simple price times quantity calculations, such as expected generation volumes times price or customer margins times volumes. The company has opportunities to grow base earnings faster by monetizing the value of the reliable, carbon-free nuclear power generated at its Clean Energy Centers through hourly carbon-free matching solutions, behind-the-meter opportunities like data centers or hydrogen, government clean energy procurements or higher market prices.

Constellation's Assets Are Unmatched

Growth fueled by customer demand: With a customer-facing business that serves three fourths of Fortune 100 companies and 21% of the competitive C&I market, Constellation is well positioned to meet the growing needs of digital infrastructure and other essential industries looking for reliable, carbon-free electricity to power economic growth. U.S. electricity demand is expected to grow twice as fast through 2030 compared with the past decade, while at the same time the grid is growing more dependent on intermittent resources. Major tech companies alone are expected to make significant investments to expand our nation’s digital infrastructure over the next five years, with data centers growing from 2% to 7.5% of U.S. electricity demand by 2030. The nation’s top technology firms have set goals to power this growth with clean and dependable energy. Growing recognition of nuclear energy as a reliable clean energy resource creates opportunities for Constellation to forge new customer relationships and capture additional value from our 180 million MWh of annual clean energy output.

World-class operations are a competitive advantage: Constellation is ranked No. 1 in operational metrics among major nuclear operators, with our clean-energy fleet avoiding the equivalent of 251 million metric tons of carbon dioxide pollution over the past two years. The company’s nuclear fleet achieved a 94.6% capacity factor from 2022-2023, approximately 4% above recent industry average. That additional output compared with industry peers is the equivalent of having another reactor’s worth of power or $335 million in additional annual revenue (pre-tax).

Returning value to shareholders: Constellation announced plans to grow its dividend per share by 25% this year, exceeding the company’s dividend growth target of at least 10% annually. This brings the total dividend increase to 150% in two years. The company completed its first $1 billion stock repurchase plan last year, and in December the board approved an additional $1 billion repurchase with $150 million already executed.

Dividend Declaration: Our Board of Directors has declared a quarterly dividend of $0.3525 per share on our common stock. The dividend is payable on Tuesday, March 19, 2024, to shareholders of record as of 5 p.m. Eastern time on Friday, March 8, 2024.

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