- Earnings driven by strong generation performance
- Affirms guidance for 2008 at $5.25 to $5.75 per share
- Reaffirms 2009 outlook of 15 to 20 percent growth over 2008 earnings
BALTIMORE, April 30 /PRNewswire-FirstCall/ -- Constellation Energy
(NYSE: CEG) today reported adjusted earnings of $0.95 per share for the
first quarter of 2008, 8 percent lower than the $1.03 adjusted earnings per
share earned in the same period last year. Adjusted earnings exclude the
impact of special items, discontinued operations, certain economic,
non-qualifying hedges and synfuel earnings. On a Generally Accepted
Accounting Principles (GAAP) basis, the company earned $0.81 per share in
the first quarter of 2008, compared to $1.07 per share in the same period
last year.
Constellation Energy reaffirmed earnings guidance for 2008 at $5.25 to
$5.75 per share, and for 2009, the company expects to grow earnings 15 to
20 percent over projected 2008 earnings.
"We are pleased with our first quarter results, which were in line with
our expectations and reflect solid operating performance," said Mayo A.
Shattuck III, chairman, president and chief executive officer of
Constellation Energy. "We achieved several operational successes during the
first quarter of 2008, including strong results from our generation fleet,
driven by the roll- off of below-market hedges. Our Nuclear Group delivered
particularly strong operating results, as we successfully completed planned
outages and limited nuclear fleet forced outages to less than 3 days.
"During the first quarter, we continued to transact opportunistically.
We purchased the Hillabee Energy Center for approximately $155 million,
which should be completed in 2010 at about 45 percent of the cost to build
a new plant. This acquisition complements our roughly 3,100 megawatts of
peak load in the Southeast, a growing area of our business. The addition of
this generation asset continues to expand our growth strategy beyond
competitive markets into regulated markets, while capitalizing on our
expertise and extensive background in building and operating generating
facilities. Consistent with our 'Invest-Develop-Harvest' strategy in
upstream gas, we executed the sale of a non-operating interest in producing
wells to Constellation Energy Partners, recognizing a gain of approximately
$14 million.
"Lastly, during the first quarter, we announced a comprehensive
settlement with political and regulatory leaders in Maryland," said
Shattuck. "We believe the agreement provides far-reaching benefits for our
customers, our investors and Maryland. All parties gain meaningfully in
this carefully crafted settlement, and the overarching value is a return to
regulatory stability and normalcy. There is commitment to putting the past
behind us and focusing on discussions around the many energy-related
challenges and opportunities that lie in Maryland's future. We fully
recognize that the expression of many different views and concerns about
Maryland's future energy policy will continue and is likely to spark rather
intensive debates. However, we are confident that we can go about these
discussions in a constructive manner now that the past has been laid to
rest."
The following table summarizes adjusted earnings per share and earnings
per share reported in accordance with GAAP for the company's business
segments and provides a reconciliation to total company reported earnings.
Three Months Ended March 31,
2008 2007
Reported Reported
GAAP Adjusted GAAP Adjusted
EARNINGS PER COMMON SHARE EPS* EPS EPS* EPS
Baltimore Gas and Electric $0.41 $0.37 (1) $0.36 $0.36
Merchant Energy 0.40 0.58 (2) 0.67 0.62 (3)
Other Nonregulated - - 0.05 0.05
Diluted Earnings Per Share from
Continuing Operations 0.81 0.95 1.08 1.03
Loss from Discontinued Operations
Assuming Dilution - - (0.01) -
Diluted Earnings Per Share $0.81 $0.95 $1.07 $1.03
* Unaudited.
GAAP EPS was adjusted by the following amounts to calculate Adjusted EPS
(1) Subtraction of effective tax rate impact related to Maryland
settlement agreement of $0.04 per share.
(2) Addition of mark-to-market losses on certain non-qualifying hedges
of $0.19 per share. Subtraction of earnings from our synthetic
fuel processing facilities of $0.01 per share.
(3) Subtraction of earnings from our synthetic fuel processing
facilities of $0.10 per share. Addition of mark-to-market losses on
certain non-qualifying hedges of $0.05 per share.
Baltimore Gas and Electric
Baltimore Gas and Electric (BGE) reported adjusted earnings of 37 cents
per share in the first quarter of 2008. Compared to the first quarter of
2007, BGE's first quarter 2008 adjusted EPS was up 1 cent per share, due to
higher transmission revenue, favorable gas supply revenue, favorable storm
expenses and share accretion. These positive items were partially offset by
higher interest expense and other costs.
Merchant
On an adjusted basis, the Merchant segment earned 58 cents per share
during the first quarter of 2008, down 4 cents per share from the first
quarter last year. On the positive side, Generation was up 12 cents, which
benefited from higher energy and capacity prices as below-market hedges
continue to roll off and a shorter planned refueling outage at Calvert
Cliffs. Customer Supply was unfavorable 2 cents per share, primarily driven
by lower wholesale backlog and reduced retail power margins, offset by an
increase in retail gas margins. Global Commodities was down 7 cents,
compared with the first quarter of 2007, due to the negative impact of
hedge ineffectiveness, isolated coal supplier defaults and lower portfolio
management and trading results, partially offset by strong gains in
structured products and energy investments. Higher net interest expense and
other items reduced earnings by 7 cents per share, compared to the first
quarter of last year.
Financial Statements
The March 31, 2008, 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 is 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.
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 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 or an economic, non- qualifying hedge 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, economic, non-qualifying hedges and synfuel results due to
the difficulty of doing so. The impact of special items, economic,
non-qualifying hedges and synfuel results could be material to our
operating results computed in accordance with GAAP. 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
March 31, 2008, on or about May 9, 2008.
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 those 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 April 30, 2008
Constellation Energy will host a conference call at 8:30 a.m. (EDT) on
April 30, 2008, 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 (866) 514-3171 or (203) 369-2004
(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 (http://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.
Constellation Energy (http://www.constellation.com), a FORTUNE 125
company with 2007 revenues of $21 billion, is the nation's largest
competitive supplier of electricity to large commercial and industrial
customers and the nation's largest wholesale power seller. Constellation
Energy also manages fuels and energy services on behalf of energy intensive
industries and utilities. It owns a diversified fleet of 78 generating
units located throughout the United States, totaling approximately 8,700
megawatts of generating capacity. The company delivers electricity and
natural gas through the Baltimore Gas and Electric Company (BGE), its
regulated utility in Central Maryland.
Addendum - Amounts Excluded from Adjusted EPS
Non-qualifying Hedges - after-tax loss of $(34.6) million, or $(0.19)
per share
During the first quarter of 2008, we recognized a $(34.6) million
after- tax loss related to certain non-qualifying hedges of gas
transportation rights and gas storage contracts, which are economic hedges
that do not meet the criteria or are not designated for cash-flow hedge
accounting under FAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended, and thus are required to be
marked-to-market. This mark-to-market loss is essentially a timing
difference that is expected to be offset as we realize the related accrual
contracts in cash in future periods.
Effective Tax Rate Impact: Maryland Settlement - after-tax benefit of
$6.6 million, or $0.04 per share
As a result of the approximately $187 million in BGE residential
electric customer credits provided for in the settlement agreement with the
State of Maryland and the Maryland Public Service Commission, we expect our
2008 effective tax rate to be reduced. Pursuant to Accounting Principles
Board Opinion No. 28, Interim Financial Reporting, and FASB Interpretation
FIN 18, Accounting for Income Taxes in Interim Periods an Interpretation of
APB Opinion No. 28, we recorded our first quarter 2008 income tax expense
based on an estimate of our full-year 2008 effective tax rate that reflects
these credits. We have excluded this reduction to income tax expense from
our adjusted first quarter 2008 earnings to be consistent with how we plan
to treat the $187 million non-recurring charge we will record in the second
quarter of 2008. We will similarly adjust our results for the income tax
expense impact of the credits for the remaining three quarters of 2008.
Synfuel Earnings - after-tax gain of $3.6 million, or $0.01 per share
We have removed a $3.6 million gain generated during the first quarter
of 2008, primarily related to the final true-up of the estimated tax-credit
phase-out that we recorded in 2007 based on oil price and inflation
information published by the IRS in the first quarter of 2008.
Constellation Energy Group and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
2008 2007
(In Millions, Except Per Share Amounts)
Revenues
Nonregulated revenues $3,726.9 $4,193.8
Regulated electric revenues 709.3 514.8
Regulated gas revenues 391.0 402.5
Total revenues 4,827.2 5,111.1
Expenses
Fuel and purchased energy expenses 3,743.1 4,016.7
Operating expenses 590.1 568.7
Depreciation, depletion, and amortization 148.3 132.4
Accretion of asset retirement obligations 16.6 17.7
Taxes other than income taxes 74.8 73.2
Total expenses 4,572.9 4,808.7
Income from Operations 254.3 302.4
Other Income 42.3 42.4
Fixed Charges
Interest expense 78.8 80.3
Interest capitalized and allowance for
borrowed funds used during construction (7.1) (3.8)
BGE preference stock dividends 3.3 3.3
Total fixed charges 75.0 79.8
Income from Continuing Operations Before
Income Taxes 221.6 265.0
Income Tax Expense 75.9 67.7
Income from Continuing Operations 145.7 197.3
Loss from discontinued operations, net of
income taxes of $0.8 - (1.6)
Net Income $145.7 $195.7
Earnings Applicable to Common Stock $145.7 $195.7
Average Shares of Common Stock Outstanding -
Basic 178.2 180.6
Average Shares of Common Stock Outstanding -
Diluted 180.2 182.8
Earnings Per Common Share from Continuing
Operations - Basic $0.82 $1.09
Loss from discontinued operations - Basic - (0.01)
Earnings Per Common Share - Basic $0.82 $1.08
Earnings Per Common Share from Continuing
Operations - Diluted $0.81 $1.08
Loss from discontinued operations - Diluted - (0.01)
Earnings Per Common Share - Diluted $0.81 $1.07
Certain prior-period amounts have been reclassified to conform with the
current period's presentation.
Constellation Energy Group and Subsidiaries
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
2008 2007
ASSETS (In Millions)
Current Assets
Cash and cash equivalents $662.6 $1,095.9
Accounts receivable (net of allowance
for uncollectibles of $139.3 and $44.9,
respectively) 4,560.5 4,289.5
Fuel stocks 609.2 591.3
Materials and supplies 208.9 207.5
Derivative assets 1,843.0 760.6
Unamortized energy contract assets 86.5 32.0
Deferred income taxes - 300.7
Other 445.7 408.1
Total current assets 8,416.4 7,685.6
Investments And Other Noncurrent Assets
Nuclear decommissioning trust funds 1,274.4 1,330.8
Other investments 541.1 542.2
Regulatory assets (net) 548.6 576.2
Goodwill 261.3 261.3
Derivative assets 1,472.4 1,030.2
Unamortized energy contract assets 194.7 178.3
Other 366.6 370.6
Total investments and other noncurrent
assets 4,659.1 4,289.6
Property, Plant And Equipment
Nonregulated property, plant and equipment 8,454.9 8,087.0
Regulated property, plant and equipment 6,150.8 6,051.2
Nuclear fuel (net of amortization) 347.2 374.3
Accumulated depreciation (4,843.7) (4,745.4)
Net property, plant and equipment 10,109.2 9,767.1
Total Assets $23,184.7 $21,742.3
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings $- $14.0
Current portion of long-term debt 232.8 380.6
Accounts payable and accrued liabilities 2,931.8 2,630.1
Customer deposits and collateral 202.2 146.6
Derivative liabilities 1,847.4 1,134.3
Unamortized energy contract liabilities 389.7 392.2
Deferred income taxes 95.3 -
Accrued expenses and other 742.0 956.0
Total current liabilities 6,441.2 5,653.8
Deferred Credits And Other Noncurrent
Liabilities
Deferred income taxes 1,415.7 1,588.5
Asset retirement obligations 934.5 917.6
Derivative liabilities 1,480.3 1,118.9
Unamortized energy contract liabilities 1,132.2 1,218.6
Defined benefit obligations 762.3 828.6
Deferred investment tax credits 48.8 50.5
Other 167.1 155.9
Total deferred credits and other noncurrent
liabilities 5,940.9 5,878.6
Long-Term Debt
Long-term debt of nonregulated businesses 2,853.9 2,830.8
Long-term debt of BGE 1,189.5 1,334.2
Rate stabilization securitization bonds
of BGE 623.2 623.2
6.20% deferrable interest subordinated
debentures due October 15, 2043 to BGE
wholly owned BGE Capital Trust II relating
to trust preferred securities 257.7 257.7
Unamortized discount and premium (4.8) (4.8)
Current portion of long-term debt (232.8) (380.6)
Total long-term debt 4,686.7 4,660.5
Minority Interests 19.9 19.2
BGE Preference Stock Not Subject To
Mandatory Redemption 190.0 190.0
Common Shareholders' Equity
Common stock 2,544.5 2,513.3
Retained earnings 3,958.3 3,919.5
Accumulated other comprehensive loss (596.8) (1,092.6)
Total common shareholders' equity 5,906.0 5,340.2
Total Liabilities And Equity $23,184.7 $21,742.3
Certain prior-period amounts have been reclassified to conform with the
current period's presentation.
Constellation Energy Group and Subsidiaries
Merchant Operating Statistics (Unaudited)
Three Months Ended March 31,
Oil & Hydro &
Nuclear Coal Gas Renewables Other Total
Generation by Fuel Type (%)
2008 59.4 35.6 - 3.5 1.5 100.0
2007 56.9 38.0 0.9 2.8 1.4 100.0
Thousands of MWH
2008 7,804 4,686 (2) 456 192 13,136
2007 7,116 4,757 110 352 179 12,514
Utility Operating Statistics (Unaudited)
Three Months Ended
March 31,
2008 2007
ELECTRIC
Revenues (In Millions)
Residential $504.7 $298.9
Commercial
Excluding Delivery Service Only 120.0 134.9
Delivery Service Only 52.1 49.9
Industrial
Excluding Delivery Service Only 6.2 6.8
Delivery Service Only 6.5 6.6
System Sales 689.5 497.1
Other 19.9 17.7
Total $709.4 $514.8
Distribution Volumes (In Thousands) - MWH
Residential 3,698 3,806
Commercial
Excluding Delivery Service Only 900 1,054
Delivery Service Only 2,775 2,792
Industrial
Excluding Delivery Service Only 51 65
Delivery Service Only 755 749
Total 8,179 8,466
GAS
Revenues (In Millions)
Residential
Excluding Delivery Service Only $240.7 $260.1
Delivery Service Only 7.3 7.5
Commercial
Excluding Delivery Service Only 69.1 73.2
Delivery Service Only 15.0 15.4
Industrial
Excluding Delivery Service Only 3.8 4.0
Delivery Service Only 4.1 4.0
System Sales 340.0 364.2
Off-System Sales 53.3 40.6
Other 3.1 2.5
Total $396.4 $407.3
Distribution Volumes (In Thousands) - DTH
Residential
Excluding Delivery Service Only 17,948 19,645
Delivery Service Only 1,951 2,190
Commercial
Excluding Delivery Service Only 5,768 6,110
Delivery Service Only 10,510 10,649
Industrial
Excluding Delivery Service Only 334 343
Delivery Service Only 5,159 4,164
System Sales 41,670 43,101
Off-System Sales 5,244 4,518
Total 46,914 47,619
Utility operating statistics do not reflect the elimination of
intercompany transactions.
Heating Degree Days (Calendar-Month Basis)
Heating Degree Days - Actual 2,329 2,428
- Normal 2,472 2,448
Constellation Energy Group and Subsidiaries
Supplemental Financial Statistics (Unaudited)
Three Months Ended
March 31,
2008 2007
Effective Tax Rate 33.7% 25.3%
Equity Investment In Nonregulated Businesses --
End of Period $4,186.4 $3,681.4
Equity Investment In Regulated Business --
End of Period $1,719.6 $1,691.9
Common Stock Data
Three Months Ended
March 31,
2008 2007
Common Stock Dividends - Per Share
-- Declared $0.4775 $0.4350
-- Paid $0.4350 $0.3775
Market Value Per Share
-- High $107.97 $88.20
-- Low $81.94 $68.78
-- Close $88.27 $86.95
Shares Outstanding -- End of Period (In Millions) 178.4 180.2
Book Value per Share -- End of Period $33.11 $29.82
SOURCE Constellation Energy
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Related links:
http://www.constellation.com
CONTACT:
Media, Debra Larsson or Diana L. Hayden,
+1-410-470-7433; Investors, Kevin Hadlock, +1-410-470-3647 or
Janet Mosher, +1-410-470-1884, all of Constellation Energy
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