10-QPeriod: Q1 FY2023

Constellation Energy Corp Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 4, 2023For Securities:CEG

Summary

Constellation Energy Corporation reported a net income of $102 million for the first quarter of 2023, a slight decrease from $111 million in the prior year period. This was driven by a significant increase in operating revenues to $7.565 billion from $5.591 billion, largely due to favorable mark-to-market activity and higher energy prices, partially offset by increased purchased power and fuel costs. The company's cash flow from operations saw a significant decline to a negative $934 million from a positive $1.351 billion, primarily influenced by changes in collateral requirements and working capital movements. However, investing activities provided a positive cash flow of $219 million, supported by proceeds from Nuclear Decommissioning Trust (NDT) fund sales. Constellation also continues to manage its capital structure, announcing a new $1 billion share repurchase program and issuing $1.353 billion in long-term debt.

Financial Highlights

47 data points
Beta

Revenue

$7.57B

Net Income

$96.00M

1.3% Net Margin

EPS (Diluted)

$0.29

Total Assets

$46.16B

Cash & Equivalents

$237.00M

Free Cash Flow

-$1.59B

Financial Statements
Beta
Revenue$7.57B
Operating Expenses$7.56B
Operating Income$31.00M
Interest Expense$107.00M
Net Income$96.00M
EPS (Basic)$0.29
EPS (Diluted)$0.29
Shares Outstanding (Basic)328.00M
Shares Outstanding (Diluted)328.00M

Key Highlights

  • 1Total operating revenues increased by 35.3% to $7.565 billion, primarily driven by favorable mark-to-market activity in economic hedging and higher energy prices.
  • 2Net income attributable to common shareholders decreased slightly to $96 million from $106 million in the prior year quarter.
  • 3Cash flow from operating activities turned negative, reaching $(934) million, a significant drop from $1.351 billion in Q1 2022, largely due to collateral requirements and working capital changes.
  • 4The company repurchased $251 million of its common stock in the first quarter under a new $1 billion share repurchase program announced in February 2023.
  • 5Constellation issued $1.353 billion in long-term debt during the quarter to fund general corporate purposes.
  • 6The PJM performance bonuses related to Winter Storm Elliott are estimated to provide a $148 million receivable, with $38 million recognized in revenue during the quarter.
  • 7Capacity prices in key regions like the Mid-Atlantic and Midwest saw significant year-over-year declines, impacting revenue.

Frequently Asked Questions

The substantial increase in operating revenues to $7.565 billion from $5.591 billion was primarily driven by a favorable swing in mark-to-market activity on economic hedges, which resulted in gains of $929 million in Q1 2023 compared to losses of $921 million in Q1 2022. Higher energy prices also contributed to this increase.

Cash flow from operating activities declined significantly to $(934) million from $1.351 billion. This was largely influenced by substantial changes in collateral posted or received related to derivative positions and shifts in working capital, particularly a decrease in accounts payable and accrued expenses. The timing of cash flows related to collateral is a key driver.

Constellation expects to receive an estimated $148 million from PJM performance bonuses, net of non-performance charges, related to Winter Storm Elliott. They recognized $38 million of this as revenue in the first quarter of 2023. However, this estimate involves significant judgment and is subject to potential changes due to generator defaults and litigation.

Constellation announced a new $1 billion share repurchase program in February 2023, under which they repurchased $251 million of stock in the first quarter. They also issued $1.353 billion in long-term debt to fund general corporate purposes and repaid $30 million of existing long-term debt. The company also declared a quarterly dividend of $0.2820 per share.