(Source: Business Wire)
Constellation Energy (NYSE:CEG) today reported adjusted earnings of
$1.23 per share for the third quarter of 2009, compared with adjusted
earnings of $0.76 per share in the same period last year. Adjusted
earnings exclude the cumulative effects of changes in accounting
principles, discontinued operations and special items (which are defined
as significant items that are not related to our ongoing, underlying
business or which distort comparability of results). On a generally
accepted accounting principles (GAAP) basis, the company reported
earnings of $0.69 per share for the third quarter of 2009, compared with
a loss of $1.27 per share in the third quarter of 2008. Year-over-year
GAAP results were driven primarily by the absence of impairment charges
recorded during the third quarter of 2008.
Constellation Energy increased earnings guidance for 2009 to $3.25 to
$3.45 per share and reaffirmed its 2010 earnings guidance of $3.05 to
$3.45 per share.
"Our businesses delivered strong quarterly results and our nuclear and
fossil fleets maintained top-tier reliability and operating
performance," said Mayo A. Shattuck III, chairman, president and chief
executive officer. "Based on these strong financial and operational
results, and early indications that electricity demand is stabilizing in
some markets, we're increasing our 2009 guidance range by 15 cents to
$3.25 to $3.45 per share, as well as reaffirming our 2010 guidance of
$3.05 to $3.45 per share.
"Throughout the year, we've steadily improved our balance sheet metrics
and in the third quarter substantially completed our de-risking
efforts," said Shattuck. "As a result of these activities and improving
financial market conditions, our net available liquidity at the close of
the quarter was $5.7 billion and we were able to retire a $500 million
bond. Through the first three quarters of the year, we've reduced our
total debt by approximately $2 billion. Fitch and Moody's recently
affirmed our company's investment-grade credit rating with a stable
outlook. All of these developments speak to the significant success
we've had in strengthening and stabilizing Constellation Energy's
balance sheet.
"We continue to work toward the close of our pending nuclear joint
venture with EDF Group (EDF). We took a step closer earlier this month
with the approval of the overall transaction by the Nuclear Regulatory
Commission, and we are nearing the end of the process in Maryland," said
Shattuck.
"We also received very welcome news this past Tuesday when the Obama
administration awarded Baltimore Gas and Electric Company a $200 million
stimulus grant for one of the nation's most ambitious Smart Grid
programs. This award, the maximum under the program, will greatly reduce
capital cost for installation of two million residential and commercial
smart meters, and we are currently before the Maryland Public Service
Commission for approval of appropriate cost recovery measures.
"Throughout the year, we have executed well on a broad restructuring
that has positioned our company to prudently expand our physical
footprint," said Shattuck. "We believe we're poised to deliver
significant value to shareholders in the years ahead."
The following tables summarize adjusted earnings per share and earnings
per share reported in accordance with GAAP for the company's business
segments and provide a reconciliation to total company reported earnings.
Three Months Ended September 30,
2009 2008
Reported Reported
GAAP Adjusted GAAP Adjusted
EARNINGS (LOSS) PER COMMON SHARE EPS* EPS EPS* EPS
Baltimore Gas and Electric $ 0.14 $ 0.14 $ 0.11 $ 0.16 ((3))
Merchant Energy 0.58 1.10 ((1)) (1.38 ) 0.59 ((4))
Other Nonregulated (0.03 ) (0.01 ) ((2)) - 0.01 ((5))
Diluted Earnings (Loss) Per Share $ 0.69 $ 1.23 $ (1.27 ) $ 0.76
* Unaudited.
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Reported GAAP EPS was adjusted by the following amounts to calculate Adjusted EPS
(1) Addition of net losses from operations being divested of $0.31 per share, addition of impairment losses and other costs of $0.14 per share, addition of merger termination and strategic alternatives costs of $0.06 per share, and addition of workforce reduction costs of $0.01 per share.
(2) Addition of losses from UniStar of $0.02 per share.
(3) Addition of merger and strategic alternatives costs of $0.06 per share and subtraction of effective tax rate impact related to Maryland settlement agreement of $0.01 per share.
(4) Addition of impairment losses and other costs of $1.76 per share, addition of net write-down of SO(2) and NO(x) allowance inventory of $0.13 per share, addition of merger and strategic alternatives costs of $0.14 per share, and addition of workforce reduction costs of $0.01 per share. Subtraction of mark-to-market gains on certain non-qualifying hedges of $0.07 per share.
(5) Addition of merger and strategic alternatives costs of $0.01 per share.
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Nine Months Ended September 30,
2009 2008
Reported Reported
GAAP Adjusted GAAP Adjusted
EARNINGS (LOSS) PER COMMON SHARE EPS* EPS EPS* EPS
Baltimore Gas and Electric $ 0.61 $ 0.61 $ (0.08 ) $ 0.61 ((3))
Merchant Energy (0.41 ) 2.47 ((1)) 0.59 2.91 ((4))
Other Nonregulated (0.09 ) (0.02 ) ((2)) - 0.01 ((5))
Diluted Earnings Per Share $ 0.11 $ 3.06 $ 0.51 $ 3.53
* Unaudited.
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Reported GAAP EPS was adjusted by the following amounts to calculate Adjusted EPS
(1) Addition of net losses from operations being divested of $1.85 per share, addition of impairment losses and other costs of $0.65 per share, addition of merger termination and strategic alternatives costs of $0.35 per share, and addition of workforce reduction costs of $0.03 per share.
(2) Addition of losses from UniStar of $0.05 per share and addition of impairment losses and other costs of $0.02 per share.
(3) Addition of earnings impact related to the Maryland settlement agreement of $0.69 per share and addition of merger and strategic alternatives costs of $0.06 per share. Subtraction of effective tax rate impact related to Maryland settlement agreement of $0.06 per share.
(4) Addition of impairment losses and other costs of $1.74 per share, addition of net write-down of SO(2) and NO(x )allowance( )inventory of $0.13 per share, addition of mark-to-market losses on certain non-qualifying hedges of $0.32 per share, addition of merger and strategic alternatives costs of $0.14 per share, and addition of workforce reduction costs of $0.01 per share. Subtraction of earnings from our synthetic fuel processing facilities of $0.02 per share.
(5) Addition of merger and strategic alternatives costs of $0.01 per share.
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Baltimore Gas and Electric Company (BGE)
BGE recorded adjusted earnings of 14 cents per share for the third
quarter of 2009, as compared with 16 cents for the third quarter of
2008, with the decline primarily being driven by the impact of share
dilution.
Merchant
Our Merchant segment recorded adjusted earnings of $1.10 per share for
the third quarter of 2009, as compared with 59 cents per share in the
third quarter of 2008. A comparison of year-over-year quarterly results
is difficult due to the nature of our de-risking activities. In the
third quarter of 2008, we realized significant losses while exiting long
power positions to reduce risk and bolster liquidity. This compares to
our modest de-risking efforts in a less volatile market environment in
this year's third quarter. On a year-over-year basis, these very
different activities and objectives drove approximately 95 cents of
positive variance. Other notable contributors of negative year-over-year
impacts in our Merchant business included share dilution and interest
expense. These factors contributed a year-over-year variance of 24 cents.
As for our ongoing Merchant businesses, year-over-year, our Customer
Supply operation was down 17 cents per share, as lower volumes were
offset in part by higher margins on new business and lower levels of
customer attrition. Our Generation operations were down 3 cents per
share in the third quarter of 2009, as compared with the third quarter
of 2008, primarily due to the costs associated with a planned outage at
our R.E. Ginna Nuclear Power Plant in 2009.
Financial Statements
The Sept. 30, 2009, financial statements and supplemental information
are attached.
Adjusted Earnings
Constellation Energy presents adjusted earnings per share (adjusted EPS)
in addition to its reported earnings per share in accordance with
generally accepted accounting principles (reported GAAP EPS). Adjusted
EPS is a non-GAAP financial measure that differs from reported GAAP EPS
because it excludes the cumulative effects of changes in accounting
principles, discontinued operations, special items (which we define as
significant items that are not related to our ongoing, underlying
business or which distort comparability of results) included in
operations, the impact of certain economic, non-qualifying hedges and
synfuel earnings. The mark-to-market impact of these hedges has been
significant to reported results but economically neutral to the company
in that offsetting gains or losses on underlying accrual positions will
be recognized in the future. Synfuel earnings have been excluded due to
the potential for oil-price volatility to result in a
difficult-to-forecast phase-out of tax credits. Effective in 2009, we
are no longer adjusting our reported GAAP EPS for synfuel earnings, due
to the expiration of the tax credit, and non-qualifying hedges, which
were related to activities conducted by our recently divested operations.
We present adjusted EPS because we believe that it is appropriate for
investors to consider results excluding these items in addition to our
results in accordance with GAAP. We believe such a measure provides a
picture of our results that is more comparable among periods, since it
excludes the impact of items such as impairment losses, workforce
reduction costs or gains and losses on the sale of assets, which may
recur occasionally, but tend to be irregular as to timing, thereby
distorting comparisons between periods. However, investors should note
that this non-GAAP measure involves judgment by management (in
particular, judgment as to what is classified as a special item to be
excluded from adjusted earnings). This non-GAAP measure is also used to
evaluate management's performance and for compensation purposes.
Constellation Energy also provides its earnings guidance in terms of
adjusted EPS. Constellation Energy is unable to reconcile its guidance
to GAAP earnings per share because we do not predict the future impact
of special items due to the difficulty of doing so. In the past, the
impact of special items has been material to our operating results
computed in accordance with GAAP. Our 2009 and 2010 guidance excludes
the results of the UniStar Nuclear Energy joint venture and any impact
from the operations and divestiture of our international commodities,
Houston-based gas trading, international uranium marketing and west
power trading operations, in addition to any other special items that
may occur. We note that such information is not in accordance with GAAP
and should not be viewed as a substitute to GAAP information.
SEC Filings
The company plans to file its Form 10-Q for the three months ended Sept.
30, 2009, on or about Nov. 6, 2009.
Forward-Looking Statements
We make statements in this news release that are considered
forward-looking statements within the meaning of the Securities Exchange
Act of 1934. These statements are not guarantees of our future
performance and are subject to risks, uncertainties and other important
factors that could cause our actual performance or achievements to be
materially different from those we project. For a full discussion of
these risks, uncertainties and factors, we encourage you to read our
documents on file with the Securities and Exchange Commission, including
the disclosures set forth in our periodic reports under the
forward-looking statements and risk factors sections. Except as required
by law, we do not intend to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Conference Call Oct. 30, 2009
Constellation Energy will host a conference call at 8:30 a.m. (EDT) on
Oct. 30, 2009, to review the results. To participate, analysts,
investors, media and the public in the U.S. may dial (888) 455-2894
shortly before 8:30 a.m. The international phone number is (773)
681-5899. The conference password is ENERGY. A replay will be available
approximately one hour after the end of the call by dialing (800)
337-4110 or (203) 369-3797 (international).
A live audio webcast of the conference call, presentation slides and the
earnings press release will be available on the Investor Relations page
of Constellation Energy's Web site (www.constellation.com).
A webcast replay, as well as a replay in downloadable MP3 format, will
also be available on the site shortly after the completion of the call.
The call will also be recorded and archived on the site.
About Constellation Energy
Constellation Energy (www.constellation.com)
is a leading supplier of energy products and services to wholesale and
retail electric and natural gas customers. It owns a diversified fleet
of generating units located throughout the United States, totaling
approximately 9,100 megawatts of generating capacity, and is among the
leaders pursuing the development of new nuclear plants in the United
States. The company delivers electricity and natural gas through the
Baltimore Gas and Electric Company (BGE), its regulated utility in
Central Maryland.
