Constellation Energy Corp Q3 FY2024 earnings call

• FERC Ruling: Constellation views the narrow FERC ruling on Talen's ISA as not the final word, with multiple pathways to resolve colocation issues. • Results and Guidance: Third quarter GAAP earnings were $3.82 per share and adjusted operating earnings $2.74 per share. Adjusted operating earnings guidance for full year raised to $8 to $8.40 per share, midpoint $8.20. • Crane Restart: The restart of the Crane Clean Energy Center is a symbol of nuclear energy rebirth, validating the demand for 24/7 clean energy. • Nuclear Uprates: At least 1,000 megawatts of additional nuclear generation could be brought online through uprates, with significant interest from customers. • Commercial Performance: The commercial team has outperformed plan, with strong margins and continued growth in products like CORe+ and CFE. • Partnerships: Work on SMRs with Rolls-Royce Nuclear, advanced engineering tests with NET Power, and CCUS partnerships with GE.

In the third quarter, nuclear performance was strong with over 41 million-megawatt hours of reliable, carbon-free generation and a 95% capacity factor. Refueling outages were exceptional, with an average of under 20 days. Renewables and natural gas fleet had 96% renewable energy capture and 98.2% power dispatch matching. The commercial business, particularly the CORe+ business, has grown significantly since 2020, adding 2,800 megawatts of wind and solar, contributing to meeting customer and system needs. Revenue contribution from these segments is tied to the strong performance of generation and commercial operations.

• Adjusted operating earnings guidance for full year 2024 raised to $8 to $8.40 per share, midpoint $8.20, up from original guidance. • 2026 will have more and longer refueling outages due to uprates at Byron and Braidwood, affecting electricity production and O&M. • PTC 4 expected to be flat in 2025. • Aim for at least 13% compound base EPS growth through 2030.

• Narrow FERC ruling on colocation is a regulatory uncertainty. • Potential delays in resolving colocation issues which could impact data center development. • Market price volatility, especially in natural gas and capacity markets, affecting earnings projections.

Q: Jeremy Tonet of JPMorgan Securities asked about front vs. behind the meter deals and value creation.

A: Joseph Dominguez said Constellation is pursuing both, leveraging ability to sell energy, capacity, and sustainability products anywhere in PJM, and speed to market is key.

Q: Shar Pourreza of Guggenheim Partners inquired about transmission capacity in ComEd and PECO zones.

A: Joseph Dominguez noted ComEd zone has robust export capabilities and new transmission being built.

Q: Steve Fleishman of Wolfe Research asked about colocation structures and timeline.

A: Joseph Dominguez explained nuclear units would switch to grid in emergencies and be compensated, and delay in front of meter structures would depend on transmission and study processes.

Q: David Arcaro of Morgan Stanley asked about hyperscalers' perspective.

A: Joseph Dominguez said hyperscalers see PJM as a priority, and regulatory flexibility is needed.

Q: Nick Campanella of Barclays asked about grid charges and capital allocation.

A: Daniel Eggers mentioned fourth quarter call will provide updated guidance and capital allocation plans, with intention to use buybacks when appropriate.