Constellation Energy Corporation Q2 FY2025 earnings call

• Constellation was recertified as a great place to work for the third year in a row.
• Executed $400 million in Accelerated Repurchases following the Meta transaction.
• Made progress on the Calpine acquisition, with 3 approvals received and working with DOJ on a second request for data.
• Announced significant new carbon-free energy transactions with Meta and Comcast.
• Highlighted support for nuclear power from legislation like the Big Beautiful Bill, which preserves and expands nuclear credits.
• Discussed PJM capacity auction insights, including market clearing of new generation capacity and the impact of demand factors.

In the second quarter, Constellation Energy Corporation reported GAAP earnings of $2.67 per share and adjusted operating earnings of $1.91 per share. The nuclear team posted its second best fleet production ever with a capacity factor of 94.8%, producing over 41 million-megawatt hours of emissions-free power. Renewables and natural gas fleets were also ahead of plan, with renewable energy capture at 96.1% and power dispatch match at 98.3%. The fleet's full year gross receipts for the majority were at or above the PTC floor, resulting in fewer PTCs accrued compared to the prior year.

• Reaffirmed full year operating EPS range of $8.90 to $9.60 per share.
• For 2026, the net EPS impact of Constellation is approximately $0.50 per share from capacity markets.
• For 2027, assuming capacity prices hold, expects an approximately $1.50 per share increase in EPS.
• Calpine acquisition is expected to add $2 in EPS and $2 billion of free cash flow before growth starting next year.

• Interconnection issues for certain deals, with utilities' response times and processes affecting timelines.
• Uncertainty in FERC decisions regarding behind-the-meter configurations for data center generation.
• State policies affecting data center development and grid reliability, potentially driving data center customers to more friendly regions.

Q: Steve Fleishman asked about the potential late inning data center deal and interconnection timelines, as well as new nuclear strategy.

A: Joseph Dominguez said the late inning deal is hoped to be done this year, interconnection timelines vary by project but utilities are more responsive now; on new nuclear, confidence is growing incrementally with better understanding of cost structures and timelines.

Q: Jeremy Tonet inquired about auction trends and state-level action on PJM changes.

A: Joseph Dominguez mentioned PJM improving ELCC for demand response in future auctions, and states like New York may take action on nuclear, while rethinking fossil fuel retirement requirements makes sense.

Q: David Arcaro asked about pricing in data center deals and balance between front of the meter and co-located on-site data centers.

A: Joseph Dominguez said can't comment on specific deal pricing, and currently working on front of the meter deals, with land around plants being valuable for co-location.

Q: Sophie Karp asked about utility responses to interconnection requests and tax provisions in the Big Beautiful Bill.

A: Joseph Dominguez discussed utility responses affecting data center development and Daniel Eggers mentioned bonus depreciation and other tax provisions providing $200 million to $300 million favorable per year out the horizon.