Constellation Energy Corporation Q3 FY2025 earnings call

Financial Performance

• Delivered third quarter GAAP earnings of $2.97 per share and adjusted operating earnings of $3.04 per share, higher than the prior year.

Nuclear and Generation Highlights

• Nuclear plants had near-perfect reliability during the summer. Fleet-wide capacity factor of 96.8%, consistently 4% higher than the industry average.
• Renewable and natural gas fleets performed near plan during the quarter.

Data Economy and Transactions

• Active with serious customers in the data economy, making progress on transactions, with the market showing increased buyer maturity.

Maryland Agreement

• Reached a landmark agreement with Maryland and stakeholders for the continued operation of Conowingo Dam for 50 years, a win-win for the bay and region.

Calpine Deal

• Calpine remains on track to close in the fourth quarter, awaiting DOJ approval with no effect from the government shutdown.

Public Support for Nuclear

• Strong public support for nuclear energy, with 3/4 of the public supporting nuclear, 9 out of 10 wanting existing plant licenses extended, and 2 out of 3 wanting more nuclear plants.

Generation Initiatives

• Provided options to Maryland for dispatchable generation, committed to restart Crane Clean Energy Center, relicensing Conowingo, bringing new nuclear uprates online, and collaborating on demand response capacity.

In the third quarter, Constellation Energy Corporation reported GAAP earnings of $2.97 per share and adjusted operating earnings of $3.04 per share, which was higher than the same period last year. The nuclear team achieved a fleet-wide capacity factor of 96.8%, significantly higher than the industry average. The renewable and natural gas fleets performed near plan, with renewable energy capture at 96.8% and power dispatch match at 95.5%. The commercial team delivered strong performance with sales margins above long-term averages, and renewal rates for both power and gas remained robust.

Full Year Guidance

• Narrowed full year stand-alone adjusted operating earnings guidance range to $9.05 to $9.45 per share.

Calpine Deal Guidance

• Plan to provide combined company guidance and modeling tools around the typical fourth quarter call in late February.

Capital Allocation

• Post-Calpine deal, capital allocation strategy remains unchanged with priorities including maintaining a strong balance sheet, 10% annual dividend growth, pursuing growth opportunities meeting double-digit unlevered return threshold, and using remaining $600 million on share buyback program.

Q: Just on your hyperscaler comment. Are you still kind of confident with announcing another hyperscale deal by year-end? Or should we assume early next year.

A: Yes. My expectation is that deals will be completed soon. I think it will happen before we talk again. But there are approval processes that customers have to go through that sometimes are time consuming.

Q: In Maryland. You talked about the 700 megawatts of natural gas capacity. Where would those be coming from? And maybe on timing, how quickly would those be available to come online?

A: They're physically located in buildings in the Midwest and in New England. They're incredibly lightly used assets that we could relocate relatively quickly to Maryland. And we have taken measures to refurbish those units and get them ready for rapid redeployment.

Q: Could you maybe also reflect on your demand response efforts and the initiative that you're pursuing there? And I know you've talked about flexibility of data centers in the past. Are you seeing progress there in terms of data center willingness to go that route?

A: We've been involved in EPRI's DC Flex. We're seeing some flexibility, and we began to explore using AI to attract customers for demand response. We're partnering with Grid Beyond and seeing strong interest from industrial customers with innovative product structures.