Continued Momentum in Competitive Supply Businesses and Productivity Gains
BALTIMORE, July 29 /PRNewswire-FirstCall/ -- Constellation Energy
(NYSE: CEG) today reported second quarter 2005 earnings excluding special
items of $0.66 per share, up 22 percent compared to $0.54 per share excluding
special items in the second quarter of 2004. These results exceed the
company's earnings guidance range provided in April 2005 of $0.47 - $0.62 per
share. On a GAAP basis, the company's reported earnings were $0.68 per share
in the second quarter of 2005, compared to $0.76 per share during the same
quarter last year.
"Constellation Energy's strong performance in the second quarter reflects
the continued execution of a business strategy emphasizing smart growth and
increased productivity," said Mayo A. Shattuck III, chairman, president and
chief executive officer of Constellation Energy. "The strong quarter was
marked by continued momentum in the company's competitive supply businesses.
Constellation NewEnergy again demonstrated its ability to grow volume and
maintain margins, while the wholesale competitive supply operation also
delivered strong results and grew the backlog of transactions, providing a
solid foundation for future years' earnings. Once again, Baltimore Gas &
Electric had a good quarter and is executing to its plan. BGE continues to be
a stable contributor of earnings and cash flow.
"Importantly, we continue to make significant progress toward our 2005
productivity target," said Shattuck. "Most of the actions required to achieve
our calendar year target have been executed, and we are well on our way to
achieving our $80 million productivity goal this year. Year-to-date, we have
realized about 80 percent of our goal, largely driven by greater operating
efficiencies across our Generation Group, which completed record refueling
outages at all three of our nuclear plants. We also completed the sale of the
Oleander Power Plant in Cocoa, Fla., further demonstrating our discipline to
focus our capital and management talent on strategically relevant markets.
Based on our success during the first half of 2005, we reaffirm our guidance
range of $3.35 to $3.60 earnings per share."
The following table summarizes both earnings per share excluding special
items and earnings per share reported in accordance with generally accepted
accounting principles (GAAP) for the three and six months ended June 30, 2005
and 2004:
Three Months Ended June 30,
2005 2004
Reported EPS Reported EPS
GAAP Excluding GAAP Excluding
EARNINGS PER COMMON SHARE EPS* Special Items EPS* Special Items
Baltimore Gas and Electric $0.13 $0.13 $0.13 $0.13
Merchant Energy 0.51 0.51 0.63 0.42(1)
Other Nonregulated 0.02 0.02 -- (0.01)(2)
Diluted Earnings Per Share
from Continuing Operations 0.66 0.66 0.76 0.54
Income from Discontinued
Operations Assuming
Dilution - Oleander 0.02 -- 0.01 --
Loss from Discontinued
Operations Assuming
Dilution - Hawaiian
Geothermal Power Plant -- -- (0.01) --
Diluted Earnings Per Share $0.68 $0.66 $0.76 $0.54
* Unaudited.
Prior period amounts reclassified to conform with current period
presentation of Oleander discontinued operations.
GAAP EPS was adjusted by the following amounts to calculate EPS excluding
special items
(1) Synfuel tax credits associated with 2003 production at SC facility --
($0.21) per share.
(2) Net gain on sales of investments and other assets -- ($0.02) per
share, partially offset by impairment of a financial investment --
$0.01 per share.
Six Months Ended June 30,
2005 2004
Reported EPS Reported EPS
GAAP Excluding GAAP Excluding
EARNINGS PER COMMON SHARE EPS* Special Items EPS* Special Items
Baltimore Gas and Electric $0.53 $0.53 $0.56 $0.56
Merchant Energy 0.78 0.78 0.85 0.64(1)
Other Nonregulated 0.02 0.02 -- (0.02)(2)
Diluted Earnings Per Share
from Continuing Operations 1.33 1.33 1.41 1.18
Income from Discontinued
Operations Assuming
Dilution - Oleander 0.02 -- 0.03 --
Loss from Discontinued
Operations Assuming
Dilution -- Hawaiian
Geothermal Power Plant -- -- (0.29) --
Diluted Earnings Per Share $1.35 $1.33 $1.15 $1.18
* Unaudited.
Prior period amounts reclassified to conform with current period
presentation of Oleander discontinued operations.
GAAP EPS was adjusted by the following amounts to calculate EPS excluding
special items
(1) Synfuel tax credits associated with 2003 production at SC facility -
($0.21) per share.
(2) Net gain on sales of investments and other assets - ($0.03) per
share, partially offset by impairment of a financial investment -
$0.01 per share.
Baltimore Gas and Electric (BGE)
BGE reported earnings of $0.13 per share for the second quarter of 2005,
consistent with the top of our guidance range provided in April and unchanged
from the $0.13 per share earned for the second quarter of 2004.
In April, BGE filed a gas distribution rate case requesting an annual gas
revenue increase of $52.7 million. BGE last sought an increase in natural gas
delivery rates in 1999, and since that time, the utility has experienced
higher operating costs and has made substantial capital investments to keep
the quality of customer service high. The company expects a decision from the
Maryland Public Service Commission near year-end.
Merchant Energy
Our merchant energy business earned $0.51 per share, which was in line
with the high-end of our $0.38 - $0.53 per share earnings guidance range.
These results are above the $0.42 per share excluding special items earned
during the second quarter of 2004. The increase resulted primarily from
productivity gains and the timing of nuclear refueling outages.
Also in the second quarter, Constellation Energy Commodities Group, the
wholesale origination and risk management unit, acquired interests in two
natural gas producing properties in separate transactions for a combined $233
million. The properties are located in Texas and Alabama, with proved reserves
estimated by third parties to be more than 216 billion cubic feet equivalent.
The company estimates 2006 production volume will be 10.5 billion cubic feet
equivalent.
"These acquisitions are consistent with our strategy across all
commodities of focusing on the physical energy requirements of our customers
and managing their exposure to commodity prices and volume variability," said
Thomas V. Brooks, president of Constellation Energy Commodities Group. "Our
power model has worked well for us, and we have developed a significant
competitive advantage that involves acquiring undifferentiated commodities at
the source and managing the physical logistics and risks involved in moving
the commodity to the customer, often in the form of a customized transaction
that meets specific needs. The skill sets of good valuation on the front end,
effective hedging and management of variable quantity and price risks, and
structuring around customer needs are directly translatable to gas."
Earnings Excluding Special Items
Constellation Energy presents earnings excluding special items in addition
to its reported earnings per share in accordance with generally accepted
accounting principles (reported GAAP EPS). Earnings excluding special items
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, and other 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. We present
earnings excluding special items 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 comparable among periods since it excludes the impact of items
such as workforce reduction costs, which may recur occasionally, but tend to
be irregular as to timing, thereby distorting comparisons between periods.
However, investors should note that these non-GAAP measures involve judgments
by management (in particular, judgments as to what is or is not classified as
a special item). These non-GAAP measures are also used to evaluate
management's performance and for compensation purposes.
Constellation Energy also provides its earnings guidance in terms of
earnings excluding special items. Constellation Energy is unable to reconcile
its 2005 earnings guidance excluding special items to GAAP earnings per share
because we do not predict the future impact of special items due to the
difficulty of doing so. The impact of special items could be material to our
operating results computed in accordance with GAAP.
SEC Filings
The company plans to file its Form 10-Q for the three months ended June
30, 2005 on or about August 8, 2005.
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 Form 10-K under the forward-
looking statements section.
Conference Call July 29, 2005
Constellation Energy will host a conference call at 8:30 a.m. EDT on July
29, 2005, to review its second quarter 2005 financial 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. The replay number is (800) 691-4871 (U.S.) or
(203) 369-3319 (international). A live audio webcast of the conference call,
as well as presentation slides, will be available on the Investor Relations
page of the company Web site, http://www.constellation.com. The reference to
our Web site is an active textual reference and the contents of our Web site
are not part of this press release.
About Constellation Energy
Constellation Energy (http://www.constellation.com), a FORTUNE 200 company
based in Baltimore, 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 more than 100 generating units located throughout
the United States, totaling approximately 12,000 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. In 2004, the combined revenues of the integrated energy company
totaled $12.5 billion.
Constellation Energy Group and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
(In Millions, Except Per Share Amounts)
Revenues
Nonregulated revenues $2,928.7 $2,198.6 $5,702.4 $4,425.8
Regulated electric revenues 465.1 477.2 956.6 961.6
Regulated gas revenues 141.7 111.5 506.3 429.4
Total revenues 3,535.5 2,787.3 7,165.3 5,816.8
Expenses
Fuel and purchased energy
expenses 2,624.7 1,927.7 5,341.1 4,128.6
Operating expenses 473.6 466.4 938.9 866.0
Depreciation and amortization 136.5 127.3 270.2 248.9
Accretion of asset retirement
obligations 15.3 12.4 30.4 23.5
Taxes other than income taxes 67.1 61.6 135.6 125.6
Total expenses 3,317.2 2,595.4 6,716.2 5,392.6
Income from Operations 218.3 191.9 449.1 424.2
Other Income 11.3 5.0 21.6 9.6
Fixed Charges
Interest expense 76.7 83.5 158.0 168.3
Interest capitalized and
allowance for borrowed funds
used during construction (2.6) (3.2) (5.6) (5.8)
BGE preference stock dividends 3.3 3.3 6.6 6.6
Total fixed charges 77.4 83.6 159.0 169.1
Income from Continuing Operations
Before Income Taxes 152.2 113.3 311.7 264.7
Income Tax Expense (Benefit) 33.2 (14.9) 72.4 26.2
Income from Continuing Operations 119.0 128.2 239.3 238.5
Income from discontinued
operations associated with our
Oleander plant, net of
income taxes of $1.8, $1.7, $2.1,
and $3.1, respectively 2.7 2.7 3.1 4.9
Loss from discontinued operations
associated with our Hawaiian
Geothermal Power Plant, net of
income taxes of $2.6 and $26.4,
respectively -- (2.7) -- (49.0)
Net Income $121.7 $128.2 $242.4 $194.4
Earnings Applicable to Common Stock $121.7 $128.2 $242.4 $194.4
Average Shares of Common Stock
Outstanding - Basic 177.6 168.7 177.2 168.4
Average Shares of Common Stock
Outstanding - Diluted 179.7 169.6 179.2 169.4
Earnings Per Common Share from
Continuing Operations -Basic $0.67 $0.76 $1.35 $1.42
Income from discontinued
operations associated with our
Oleander plant - Basic 0.02 0.02 0.02 0.03
Loss from discontinued operations
associated with our Hawaiian
Geothermal Power Plant - Basic -- (0.02) -- (0.30)
Earnings Per Common Share - Basic $0.69 $0.76 $1.37 $1.15
Earnings Per Common Share from
Continuing Operations - Diluted $0.66 $0.76 $1.33 $1.41
Income from discontinued
operations associated with our
Oleander plant - Diluted 0.02 0.01 0.02 0.03
Loss from discontinued operations
associated with our Hawaiian
Geothermal Power Plant - Diluted -- (0.01) -- (0.29)
Earnings Per Common Share - Diluted $0.68 $0.76 $1.35 $1.15
Certain prior-period amounts have been reclassified to conform with the
current period's presentation.
Constellation Energy Group and Subsidiaries
Consolidated Balance Sheets (Unaudited)
June 30, December 31,
2005 2004
ASSETS (In Millions)
Current Assets
Cash and cash equivalents $719.0 $706.3
Accounts receivable (net of
allowance for uncollectibles of
$43.7 and $43.1, respectively) 2,191.7 1,979.3
Mark-to-market energy assets 626.1 567.3
Risk management assets 589.8 471.5
Fuel stocks 324.0 298.3
Materials and supplies 205.5 203.8
Other 287.9 262.9
Total current assets 4,944.0 4,489.4
Investments And Other Assets
Nuclear decommissioning trust funds 1,065.9 1,033.7
Investments in qualifying
facilities and power projects 310.6 318.4
Mark-to-market energy assets 626.2 359.8
Risk management assets 478.3 306.2
Regulatory assets (net) 145.7 195.4
Goodwill 147.1 144.8
Other 523.7 412.8
Total investments and other assets 3,297.5 2,771.1
Property, Plant And Equipment
Nonregulated property, plant and
equipment 8,718.0 8,638.4
Regulated property, plant and
equipment 5,450.8 5,412.7
Nuclear fuel (net of amortization) 258.3 264.3
Accumulated depreciation (4,290.4) (4,228.8)
Net property, plant and equipment 10,136.7 10,086.6
Total Assets $18,378.2 $17,347.1
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings $1.6 $-
Current portion of long-term debt 193.7 480.4
Accounts payable and accrued
liabilities 1,580.0 1,424.9
Customer deposits and collateral 325.7 223.8
Mark-to-market energy liabilities 609.1 559.7
Risk management liabilities 272.2 304.3
Accrued expenses and other 602.7 669.3
Total current liabilities 3,585.0 3,662.4
Deferred Credits And Other
Liabilities
Deferred income taxes 1,251.7 1,303.3
Asset retirement obligations 863.3 825.0
Mark-to-market energy liabilities 550.6 315.0
Risk management liabilities 1,148.2 472.2
Postretirement and postemployment
benefits 377.8 375.3
Net pension liability 244.0 269.7
Deferred investment tax credits 67.6 71.2
Other 296.7 232.0
Total deferred credits and other liabilities 4,799.9 3,863.7
Long-Term Debt
Long-term debt of nonregulated businesses 3,514.7 3,800.5
Long-term debt of BGE 1,225.9 1,245.9
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 (9.1) (10.5)
Current portion of long-term debt (193.7) (480.4)
Total long-term debt 4,795.5 4,813.2
Minority Interests 95.4 90.9
BGE Preference Stock Not Subject To
Mandatory Redemption 190.0 190.0
Common Shareholders' Equity
Common stock 2,567.9 2,502.5
Retained earnings 2,549.2 2,425.9
Accumulated other comprehensive loss (204.7) (201.5)
Total common shareholders' equity 4,912.4 4,726.9
Total Liabilities And Equity $18,378.2 $17,347.1
Constellation Energy Group and Subsidiaries
Merchant Energy Operating Statistics (Unaudited)
Six Months Ended June 30,
Hydro &
Nuclear Coal Oil Gas Other Total
Generation by Fuel Type(%)
2005 53.3 30.8 0.7 13.5 1.7 100.0
2004 48.8 35.5 2.0 11.5 2.2 100.0
Thousands of MWH
2005 14,982 8,656 208 3,811 470 28,127
2004 12,557 9,148 523 2,965 571 25,764
Utility Operating Statistics (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
ELECTRIC
Revenues (In Millions)
Residential -- with househeating $80.6 $85.4 $203.4 $213.4
-- other 149.0 153.4 289.1 287.6
-- total 229.6 238.8 492.5 501.0
Commercial -- excluding delivery
service 177.5 181.4 353.6 335.1
-- delivery service 24.8 16.4 48.0 33.0
Industrial -- excluding delivery
service 13.6 23.7 26.2 60.8
-- delivery service 6.6 4.8 12.5 8.5
System Sales 452.1 465.1 932.8 938.4
Other 13.0 12.1 23.8 23.2
Total $465.1 $477.2 $956.6 $961.6
Sales (In Thousands) -- MWH
Residential -- with househeating 1,027 1,130 2,860 3,071
-- other 1,766 1,865 3,659 3,712
-- total 2,793 2,995 6,519 6,783
Commercial -- excluding delivery
service 1,922 2,515 4,064 4,949
-- delivery service 1,851 1,196 3,497 2,325
Industrial -- excluding delivery
service 163 368 320 1,047
-- delivery service 767 692 1,503 1,050
Total System Sales 7,496 7,766 15,903 16,154
GAS
Revenues (In Millions)
Residential -- excluding delivery
service $78.9 $71.6 $293.2 $284.3
-- delivery service 4.0 1.2 13.5 9.3
-- total 82.9 72.8 306.7 293.6
Commercial -- excluding delivery
service 24.7 22.4 91.6 83.8
-- delivery service 5.4 5.0 17.0 16.0
Industrial -- excluding delivery
service 1.4 1.8 5.4 5.9
-- delivery service 2.7 1.6 5.5 3.9
System Sales 117.1 103.6 426.2 403.2
Off-System Sales 26.1 7.0 80.5 24.6
Other 2.0 2.0 4.3 4.3
Total $145.2 $112.6 $511.0 $432.1
Sales (In Thousands) - DTH
Residential -- excluding delivery
service 5,436 4,934 24,566 25,108
-- delivery service 755 726 3,504 4,036
-- total 6,191 5,660 28,070 29,144
Commercial -- excluding delivery
service 2,058 2,068 8,820 8,588
-- delivery service 5,880 7,158 17,170 18,616
Industrial -- excluding delivery
service 131 145 551 558
-- delivery service 4,758 3,409 9,028 7,813
System Sales 19,018 18,440 63,639 64,719
Off-System Sales 3,521 975 10,878 3,411
Total 22,539 19,415 74,517 68,130
Utility operating statistics do not reflect the elimination of
intercompany transactions.
Heating/Cooling Degree Days (Calendar-Month Basis)
Heating Degree Days - Actual 559 458 3,091 3,062
- Normal 525 529 2,967 2,991
Cooling Degree Days - Actual 210 291 210 293
- Normal 238 233 241 237
Constellation Energy Group and Subsidiaries
Supplemental Financial Statistics (Unaudited)
Six Months Ended
June 30,
2005 2004
Ratio of Earnings to Fixed Charges 2.71 2.42
Effective Tax Rate 22.7% 9.7%
Equity Investment In Nonregulated
Businesses -- End of Period $3,279.4 $2,977.9
Equity Investment In Regulated
Business -- End of Period $1,633.0 $1,462.8
Common Stock Data
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Common Stock Dividends - Per Share
--Declared $0.335 $0.285 $0.670 $0.570
--Paid $0.335 $0.285 $0.620 $0.545
Market Value Per Share
--High $57.91 $41.35 $57.91 $41.47
--Low $50.36 $35.89 $43.01 $35.89
--Close $57.69 $37.90 $57.69 $37.90
Shares Outstanding--End of Period
(In Millions) 177.8 169.3 177.8 169.3
Book Value per Share--End of Period $27.63 $26.23 $27.63 $26.23
SOURCE Constellation Energy
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http://www.prnewswire.com/comp/084087.html
CONTACT:
Media Contacts, Robert L. Gould, or Angelique
Rewers, +1-410-234-7433, or Investor Contact, Kevin W. Hadlock,
+1-410-783-3647, all of Constellation Energy
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