- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day ladies and gentlemen, and welcome to the Constellation Energy Corporation Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's call, Emily Duncan, Vice President, Investor Relations.

You may begin.

Emily Duncan

Amy. you, Thank and third everyone, for Constellation joining Good earnings thank conference Corporation's quarter call. Energy morning, you Leading the Officer. call Executive today are Joe Dominguez, Dan Constellation’s Officer; President Eggers, Chief Financial and and Chief Constellation's They by be to your are answer remarks. team following prepared other of available our joined questions who senior members will management Constellation’s morning, our found Relations Investor in this the website. all along the issued We release of presentation, the section with earnings which be of can contain forward-looking earnings subject discuss call The uncertainties. and during and Constellation which other to and are and will we statements its release matters, risks that regarding estimates today's subsidiaries various Actual today's differ our material on call. based in made results comments could the during forward-looking and statements and discussed from assumptions factors risk cause Please considerations circumstances today's refer Constellation's and to projections, results other to and and of that factors and X-K may discussions from expectations. SEC forecasts, the differ management's other for filings includes also presentation non-GAAP and EBITDA, Today's to measures. references other adjusted to earnings GAAP our in the nearest equivalent the measures. Please reconciliations contained measures the of non-GAAP for the release appendix information and refer our and presentation between I'll to of Dominguez. Joe the over now Constellation, CEO turn it

Joe Dominguez

will the his forward Dan the which result in of a we business. look Good the XXX Emily. through the Constellation all owners everyone. Thanks, and the is a continuing and questions the quarter to call. joining in see of new million, expanding EBITDA operations performance parts adjusted at and to strong across world. of to It’s the new call. gratifying of delivering some the to want interest end. Thanks I remarks strong your details especially from had our our morning, thank for company go of We

and plays Thanks transformational the passage to of nuclear help the talented our four everything vital country's I objectives. role during men in calls. you to of us who time [Plainly] the in these this recognizes listen quarter to start We've to big climate run free for IRA that little the biggest had was shout-out clean impact the carbon news Act, the the which with a does want and things. absorb company who a meeting do. Inflation minds Reduction [ph], and always, into us the to As now women the

and it us capital keep business talent. with This helps First, talking when to about and attract about we're that. plant retain Thankfully, you're hard human closures. is constantly people to it's done

make open pollution about and before, hit it's electric nation, about Second, the it especially benefits, energy America. and to IRA reductions. for hard air same for zero just a the want in producing the commodity but that energy clean more begins of it, you recognize we emission the it anyone scarce make care foundation wherever with of of megawatt. energy system shows The deals any world is to affordable We've keeps plants the communities jobs local energy commodity that America. economic in not the climate. It's point, than whenever areas in but It's said today and I you affordability. benefits. up about value don't carbon And that and and The repeating. PTC this the most the and our important reliable is how the constant our clean and bears of modern reliability it's

have investors minute inflation the protection. downside provides returns businesses a cycles protection this IRA highlighting morning the and given this moment protection at through PTC, creating by inflation all inflation owners rightfully take We wanted in concern consistent that of the mechanism to time. about the Third, commodity our with

and X% the goal challenge. that will be of Our for thinking control is to stated that getting significant be inflation to difficult inflation reasons long-term will a Fed's many

U.S. to turn commodity is as risk hydrogen, go BBB, by in to think very the it X, operating PTC these can while IRA Fourth, us opportunity. in us profile commodity I'm outlook. provides and upside and A by XXXX. prices upgraded about. and by see, grow beginning the more of some] ever. in with the maintaining talk to risks. the megawatts, than $XX Constellation's our This couple the [ph], confidence and inflationary about and an gives reassessment a opportunity I enhanced clean this from downside these PTC risk assets Slide case. hour gives growth you grow IRA investors hydrogen What good We plants extending If that current for earn you life lives IRA higher government, were X% the megawatt to X% incremental license years. adjusts PTC, I'll interesting to in that unlimited upgrades slide. of S&P risk talk favorably XXXXs a protection a the the down scenarios our credit as benefits [In life see case, to moment. depicts longer-term a energy and our term unique A investing phases-out the could The pleased is of opportunities fleet. over in great about a by gives is investment automatically dwindle its In inflationary to an investment more to provided our protection. is it unique our grow us to $XX and a part a recognized existing in the important the of slide to now see our blue in manage of by can to starts of Fortunately, life I And investment structural assets. XX positive a as excited pretty the ability extensions, of higher prices, rating to significant

always And shown life clean that's Constellation's on not in units, XX get on technologies. longer green new that context would of existing ours, to than The least. to is is will source the opportunity is obtained and of an the to all next going nuclear to the any filed extending a isn't we've our in some make power America, by decade, With cost chart energy that plants. for the the that carbon and part that us modest life Clinton that's into every is there how carbon at renewal renew additional of that than Clinton into a won't for allowing for any will dollars and and America license investment is of renewals a hundreds XXXX. able hugely additional in be NRC we to until as just middle this This source to would You it it run. the [Climate owners to years on run would energy units last longer renew units to renewal fight a Chest] in four of It colors we for Dresden asking about initial expected free Illinois generation through energy energy competition extension We that renewable just NRC years. will the for be built announced is it renewable in plants over zero America for the century other [ph] gives extended, some about and or renewal subsequent Once with our the XXXX. the resource Constellation unique take operating beyond. clean but energy just would Dresden that certain to provide crisis have just could life serve already opportunity an the been potential to of fleet the of of in Tool ours will the create for at us happen. all the years, policy Last to country, Clinton's need the see run put license And long XXXX here, just service extensions The license the our extending case process we plans big few allow life which climate much week, life our to with of be and at has be continued all in of cost about the It's licenses existing mean the [ph]. [XXXX’s] believe billions to we it other of in licenses providing of a XX years. we'll important these renewable XX NRC life well clean our operate plants, support, and process. America the parts fact the to as the

steel transportation industrial be X, change through role sectors reduce hydrogen. bit create little airplanes, IRA, a for to market. and power manufacturing virtually can plants the and nuclear PTC products. and limitless, the and means COGS that that others, traditional be in will long reaching create can't fuel for play want clean other hydrogen industrial cells opportunities many Slide to become Hydrogen hydrogen that fuels to specifically climate sustainable that and hydrogen Turning fertilizers could clean energy and we to of Like process, used haul other our The earn of emissions, and trucking the talk hydrogen electrification. and are to clean even think an incredibly important for I clean nuclear mitigating agricultural provisions provide in the reached uses both about ability aviation a

Constellation project to produce Nine hydrogen Hydrogen slide. will be be of nuclear will funding Point. at from we through see announced We a Last Alliance we ways know, pilot Mile on also hydrogen participating MachHX, are you the shown that the first from As this for Clean as DOE. week, our the in member a three Midwest hub which for we or applying energy

and cleaning energy, power they're powering us wire. clean that with their customers credit, contract order want translate to use already the to full tax They will and are going opportunities about industrial need processes their are using get our hydrogen hydrogen with Constellation by that to that business. provide clean at In to to thinking hydrogen. prove through XX/X electrolyzers into First, they're

the is opportunity electrolyzers And with that's what with have hydrogen testing at our thing then hydrogen and Nine we're optionality, a hydrogen NYSERDA you producing needed. cells we is and sites. and produce the is The that use store going to making power and need strategies to back back at cell the three with hydrogen of Mile from grid third and you the run one things could it's That interchangeably. and so minutes. grid trying we're co-locate always DOE. make to these power that hydrogen. XX energy times minutes when when is XX we're key move fuel forth could being that grid need able to exploring through putting energy be needs byproducts grid when energy the way doesn't along we excess and opportunity second There, that doesn't on in The to of energy the here grid a the making doing to And to hydrogen at able support fuel where and grid the we'll to be technical on the and it the we energy, work matter

to want turn Slide bit a our about we I As X, operations. talk to little

Our and with performed a power renewable rate renewable capture match XX.X% fleet well of rate dispatch and power XX.X%. of

but perfect ran its Our capacity XX.X% well, not nuclear factor. in at fleet

Our a with performance. significant industry has time for fleet period the end will of led that year Performance leading now. continually

capacity port, to for capacity than higher you, industry incremental open over translates our the of position price fleet to million in into on better a put for an at $XXX that about continue context PTC X% factor operate revenue. the factor a And that X% at average. We is

Slide business highlights. to our commercial X Turning in

both with and purchase gas energy with to renewal clean across our win mentioned closed electric business our XX Swift hours well volumes XXXX. our on at strong customers to and of the with quarter strong see free electricity renewable businesses. Energy I customers. City Those We an performed Chicago reflected during delivered to we We solutions commercial terawatt continue reached in deals Current quarter rates our we during rates and the As of the and that carbon top, provide gas electricity by and are the collaboration agreement delivered XXX% the to chart. of win

in part example way the another we're fight Chicago uses city XXX with for megawatts sustainability construction As remaining procure agreement meet the crisis and of lead yet under its large agreement, will source climate help the will of is will helping the renewable in the a customers energy its uses. new energy and against facility Illinois, solar goals. their our of how This credits

I Finally, fuel. spend to moment used want a on

technology. the many is affordable It's other clean because society and as communities could provides And across Turning as I produces lowest jobs unprecedented, has It important use from lifecycle family the got it industry of through power strong its often that and as to It decarbonize we hydrogen investors less power of energy all talk the any attributes. fuel in on a sensors but It carbon many provides Slide we get mentioned the as prefer fuel. of emissions used density. to that often sustainability. other think reliable, XX, about any core to spent fact nuclear free more we sustaining than reliability fuels, land source we questions to because communities or innovation, we culture. energy with call has is ESG safety incredible to carbon just about country one

fuel how and spend want safely minutes to few stored fuel secured sites. our and I talking So, about – how at safety a

think retiring the for don't waste, scale for all technology any and We all fossil eventual takes not That's fuels how full located [ph] it know energy. energy we credit its producing pre-fund it's [plants] large get tagged, other is and where appropriate of packaged, spent but plans obligations. every for source, of its fuel our renewable disposal, is only gram and true this, we we're tracked. responsibility I that for First, energy or whether

of than energy. dense by any waste extremely energy and less is In terms produces other volume of type volume, nuclear

Super in it of XXXX States For a volume comparison, era. of industry the until could U.S. Walmart. entire has during the inside much a his speech, its nuclear in plant as waste one context, generates of fuel hour spent the By single as Atoms produced nuclear by for now President all the all entire coal produced dawn Eisenhower the gave history. fit nuclear Peace United famous When civilian power from

of what are solution, water hundreds can and steel fuel Now, of stainless of technologies meaning to not and the in are in [indiscernible] in proud Then passive, there These energy and owners. finally resolve materials now unplanned operate. and or produce after is do. a source on containers a completely and it's they earthquakes, sector. year. perfect it's but are the gives perspective there important done. flyer they to used of to stored safely any need less that the frequent no picture these of time for material projectiles, many don't radiation placed perfect as continue solutions shown slide, containers The from the safe extremely emit placed our down. how to we containers storage proposed fuel is us than energy, the know a this And our wanted it in industry to Look, received XX-foot years. because to or in reuse There's radiation energy storms, to they're never this has these many hundreds disposal the we to been we're it's designed share power release and any any withstand be

with flip let me it Dan. that, to over Now,

Dan Eggers

as everyone. higher continued the favorability and XX, favorability The load Starting expense good obligations, EBITDA in-line commercial from bad quarter, $XXX in more quarter adjusted serving residential and morning from to results, portfolio than load drag with earned and as our discussed the million with the successful quarter, benefiting was customer with we absorbed last Slide you, our in we which issues effective third well This shaping options. some debt expectations. produce in customers. Thank management, the Joe, strong business

this And the higher the at quarter, is we or whether the unplanned running these were run power in summer plants, which prices, Anytime costs the much. much prices. to. opportunity than unplanned, spot ran our up outages pointed years, planned recent all into higher loss, in not which impacted generation power down On particularly output an we been Joe overall replacement results during they've are with that with even front,

a million $X and in a everyday million $X context, $X.X cost to day this summer, power, a between million replacement years. unit $X.X compared prior in to million day For was only out

but the prices and demand, day, energy Slide record volatile, prices, followed weather higher in increase set normal with third associated second demand, higher had the and its and its remained their also than warmer competing by post-COVID and XX, records natural quarter, driven warmest while record. have let during the hot NYISO with for in warmest recovery [ph] demand gas July seen record, power especially prices Spot ERCOT and on average warmest below saw reflected day on each load gas] commodity Texas. Turning MISO to [Spot prices summer international single somewhat PGM inventory. market. a me start fuel the

prices. forward to Turning

During increases driving and gas factors same the on natural markets, coal the retirements. announced elevated largely emissions prices, third spot prices, anticipated having of quarter, supply we saw coal impacts higher

likely domestically in see backwardation volatile and started the fourth [ph] the continue winter to forward the to and XXXX and and both compared to for here potential globally. [ph] is Europe of XXXX, weather underlying power steepness in [curves] gas to continue and the natural given a quarter, have return in during We XXXX in over has end the an market this quarter. gas [Freeport tight although facility prices the LNG] Uncertainty and remained ease. Since backwardation

as offset the million a Moving margin higher million total $XX a up mark-to-market is table, we since margin Midwest from Mid-Atlantic, and hedged hedges power the XXXX Open are by gross increased the gross of commercial team. gross as year. this fully of in result strong prices performance of margin prior to $XX of effectively result the the quarter our

$XXX XXXX, is In up quarter, largely Open mark-to-market total power executed million the to hedges business million we $XXX and billion, $XXX margin executed of non-power. the non-power by X.X gross the was power of new billion. and margin by new business offset increased $X.XX quarter. during During between million and gross of

selling higher to XX% nine the in across than PTCX PTC forward, to support we're well now to XXXX the continue we in and our capture support We starting said, prices of through provide to our PTC will and at fleet generation above been in prices years excess have to That portfolio XXXX. are hedged sell excited and quarters levels for the recent price the XX% structural continue and drive plan support we XXXX. the look about values prices have previous in generally business. customer When power

Slide to XX. Turning

did adjusted and of narrowing of around cost bring the of in to perspective, serving We are for volatility. our our mid-point some $X.XX and We're than which us are $X.XX more reaffirming performing to range. our of the health mid-point some operations than company, optimization the market of plus the happy given an long-term guidance with our with antic-pated range billion. year guidance in performance billion EBITDA are and expected, toward business original better commercial opportunities confident billion load From making the decisions load fleet is we $X.XX our our lower this operational the coming

going a be to year current operating expected are the but at the look forward. of than continues that be costs business we over this said, industry, replacement earnings, our some and we both And have had cost right outages utilization business experienced time. higher we've rates year generation still also the Our had have made impacted an some around when decisions business with long in our nuclear I below industry for but leader decisions that strategic to XX% power, we year well did for as in

about including the of you talking on all us, been year work organic this we've First, ahead our of opportunities growth with hydrogen.

benefit Joe pursue from finish of us we IRA outlets, our many growth to As discussed. these the as further see

to related strategic take made to more efforts. growth decision have the on We advance these O&M

quarter, customers fixed about talked I continue as an face we in to signed our the multi-year contracts of backwardated price Second, curve. find last for extremely

economics and our second to first their relationships that contracts. budget our is to positioning will businesses. have customers our deals, longstanding but Being run likely with are We they the of need a future compelling carry over visibility partner opportunities. in a commercial into growth of them a with on us, the next signing our year, of and These good full us for and have number weighing multi-year the to half provide important half contracts business, life certainty our results customers for

we plant out made labor the a in Third, tight before, as inflation. market retirements not the reversal said Coming elevated and of were we of our are vacancy separation, progress to wage we've and immune rates of last restaffing. fall, and significant pressures

and our best to to We in approximately We [ph] have run we competitive vacancy businesses. in our adjustments ensured] at plants, provide our our look talent realized sell our February compensation support Accordingly, [also to from that have have we're X% out we of reduced packages rate that staff the X% customers, and areas a made today. pay. took and to we some ensure

our performed you as well very prices Finally, of have stock you many and from know all benefited year. this

As reinstated driving wanted we part equity we an was well performance year culture key our XXXX. this our this planning in is every is year, costs, executives. financial what our managers long-term particularly while to through above and And of anticipated stock replicate part would ownership as in to compensation additional in of separation, like for have

for remain results the company on owners. driving long-term and year We are this our value happy and our focused with

financing to liquidity turning the Finally, Slide and update XX. on

strong sheet a Our improved extremely result of has our undeniably profile remains and as the IRA. balance risk

competitive business. our credit Joe acknowledgment flows earlier cash revised for risk passage positive and going for also BBB credit As and upgraded our the the the from view material reflecting from to month, upgraded have maintaining of thoughtful this ratings BBB, evidence at of forward. story review a IRA. improvement our We following action, further of advantages its the to want S&P rating significant outlook, mentioned, a S&P we S&P is satisfactory, with colleagues us. stability S&P positive strong The minus a their thank of of while their Along to our business

annuities. above notches and S&P We grade of both investment are now two

our to downgrades strong that a credit metrics thresholds remain maintaining and our balance committed sheet. above well are are We

to taking Although encouraged by come also to they openness S&P’s sheet fund are of as our strong balance opportunities time. over we advantage M&A us up

business model, several requirements credit ended, outlook, hundred the the more with million lowered and that since validation terms our debt as quarter the well the paper. on and including between of our in agencies have as some immediate favorable have and counterparties dollars ratings by collateral commercial Beyond parity benefits, rates long-term lower posting metrics,

Our liquidity in remains September $X capacity as more position with strong billion than unused XX. of

remind strength in close I everyone like out, market. sets As the that I'd of the to financial us others apart from

in [collateral us without for Our those additional we're I'd positioned now the any shareholders. us [ph] growth his appropriately our while Joe in costs. to provides better hosts] liquidity to the closing all like in strength is allows for more pricing, remarks. while to to service business, expand and to more call pursue to value margins markets also customers, need as associated to and back meeting additional where the opportunities turn reflected risk grow inorganic organic returning It transact volatile our with opportunities

Joe Dominguez

company strong. and It's The Dan. an it's haul long essential built for company Thanks, is America. for the

in did our at the for Dresden. These assets sheet announcement balance are we're most point and with executing this well Clinton on the is and the and in beginning life proud great the Financially, to America thing the extending As what really we the about the the was nation, valuable to to life IRA of and I'm as on is important shape. extend time. really company just

grade credit valuable. extremely rating investment Our is

growing products. carbon the the longer XX% any renewables meet puts the generator. nearly be the U.S. and XXX. but this nearly the potential through of We as align So, and that to opportunities was nearly will Fortune a those for there or inorganic will the platform We life built and a twice intend know, told strategy business we nuclear growth of three-fourths apologize exists a us over much you are our in million case assets provide driven own opportunities things The there our have provide can't us exceed meaningful [indiscernible] that dividend capital investment of and credit that end, as that are and questions our energy we're and provide best-in-class excellent which our customers frame, the on our can update. organically year operations, de-risked particular energy finally, there an value critical carbon-free opportunities C&I We to our energy demand decade. long-term of or XX for inflation our I working strategy. four and for through all value sustainability years, deliver capital at see update I'll I our replicated see generation at don't you, share to some opportunities we useful And strong return But said, carbon-free advantage. unlevered opportunities we provide shareholders little growth producing glitch our unique ratings, most growth. And an that, and have country, enormous U.S., and a We're in company capital customers. the for to other to that we meeting support open the next in special the that we the to return providing for with many those than power protection it plants be XX%. to owners proposition. the inorganically dividend the cash an and growing allocation We you mic. double-digit that business a focus exciting platforms, as as grow power provide the a We in through up and today time position are This close delivers flow with climate with deliver buybacks. of goals. carbon-free as we with that's has don't noise energy these strategy the XX% on fleet said best our next an annual our $XXX in I'll starts free and These maintaining IRA competitive to We with nuclear strong and will could clean grade our With when play in how free including value retail that believe on plants our the a need will competitive out we reminder, before generate and of operator threshold best you We're wholesale costs. country for customer value. to our run a allocation

Operator

Our Partners. Thank Instructions] first comes with Guggenheim Shar you. Pourreza [Operator question from

Your line is open.

Shar Pourreza

Hey, morning, guys. good

Joe Dominguez

Shar. morning, Good

Shar Pourreza

at on of is can the we maybe market the has, of that just update been recent then term? on. based more IRA market? when threshold capital near dialogues mind least just And M&A inorganic kind allocation an digested, have we if start seeing the in a likely opportunities going could at What had? your in or date Joe, have on point meet processes a don't a with been update this And less you've you in now on assets firmer couple you see for nuclear do the

Joe Dominguez

Yes, sure.

Let me last first. answer that part

speak themselves quarter on the opportunities our we call. these think I will play again out fourth by inorganic time

some point But to So, us are we'll this my for stuff actionable know we is, in view looking whether time. be now. at is going right stuff by that

to is different. near these than particular resolved gives some and It that we'd question, for asset like exist the fact doesn't the valuation about units [ph]. the why variables sort we each So, [the that's the around the at any a every units? size in site single as asset floor look think we the like going of are gives going asset frequently those everybody sense, got better dual price spoke And lot very importance I particular and good. period] forward uniform us of of I IRA resolve sense some assets. very

process could Its sale. the complicated I that was talent look nuclear that fossil I there a situation at cell, think speak some cells. very a it to obviously involved because asset, just it was wasn't but a

And of they So, with assets. in that to announced assets. would require all the have bids that any would would take that would another involvement buyer Talent marry buy didn't have the we up conforming us fossil that any recently

about but you at We It's to We're we on willingness going a As things talked disciplined. and transact that take going that's we'll the them. to We’ve think very looking to that we're it. necessarily going drive a other timeframe to business right. look take come be everyone. at, have we're at don't market, consolidate, of look will the to owners' all a

know, don't to all this extent bit going certainly of the the to at the – things. valuation, but settle floodgates, starts looking we're looking Shar, of short-term, I in to So, it's a that little the

return call, shareholders resolve will those should will return we're then able by think and discussion the capital to of look be fourth having like. time a I to what to quarter we the

Shar Pourreza

Okay, That's to wanted I level set. perfect. what

it it if so expect results? the something So, transpire, having maybe takes year-end disclose time, married February some doesn't allocation can we capital around before year-end, when inorganic you're report not to to you call

Joe Dominguez

Yes.

don't we things and the the I quarter for think, owners that last indicated think this develop that, that year. by like of those. aiming we I to happen on I would earnings look, going are and call, that provide to end explore information control we're our but we And opportunities to

Shar Pourreza

Okay, morning. seen mean you getting perfect. this of guys moderation everyone Have then year, higher inflation. shy obviously don't be beyond have in Day Analyst pressures potential material on should seeing initial any you seen which should this lastly, we thinking else the of I be rolled it just it as the know, guide you surprise, guys a shouldn't there's think, but a year? out questions about billion you are per We're your lot – we, Joe, How labor more of XXXX like to And I maybe at recently a relates with was level? earlier $X.X and sort and

Joe Dominguez

through is is we're What were anything that protection Yes. about our the IRA. unusual seeing think in don't unusual business. business I afforded this Look, the Shar

maybe So, at price in we it – necessarily into wanted in that's the the maybe you focus give the built time to because But folks inflationary Dan spend think some of to this escalator don't I event top me the could Dan to some… environment. an let we're unpack IRA call on

Dan Eggers

of Thanks, we having point Joe inflationary IRA. Yes. the It's of hit Shar. the think off a on that Thanks, And good Joe. kind I are production question. the

costs is When us I'll bit the down inflationary haven't the power for O&M helping think a been our which kind of business. for prices you the year, has to higher time, levels clearly real seen into about budget this break good long cost right, an a overall from of really I moving in we environment little at look second, more a perspective. you human indulgence from If

First associated is off, labor, a right. O&M spend little bit under half of our with

O&M going our be be labor, to going XX% for the and about XX% got that to represented labor, is work. half half we’ve for to workforce, So, supplier, bill contract it’s population. Of

labor contract XXXX] Our [since longest until [ph]. go

labor the on good range. we of labor rates So, in of have on visibility kind our inflation piece bill, that pretty X.X%

this of levels. On pay the I the of we some some that hiring non-union think and that our year saw side, with recalibrating

upward are bottom. economy, We wage just you're as of everywhere kind else top seeing in seeing the to inflation

So, something that's eye keeping an on.

making and pay fairly sure our we focus Our people well. is

in we that’s power get related but the equation, of multi-year of half contracting partners go side but to be on supplier, range like Obviously, an huge that we for some and the inflation or sensitivities causes so something renewals with inflation them. shorter percent as escalation going to are there and this predominantly We contracts we're major go that. QX of of on, we think spend and a large is to of around the helped in reality dollars. bands supplier things the If contracts is range. spend when other I kind been through some world some our providers. wider to XX so, something things smaller, operate of this of And keeping the to are there's suppliers, managing That's eye that, and big kind and which the like of a I like with of is partners, right hasn't generally things manage half really commodity now. far, It company side with right, this caps of sign and About we're the nuclear that that. them, so the these and drag

we've inflation in what but well that and eye market, something certainly it's we've well managed on. So keep far, seen we'll an below pretty the

buying. and both buy, size we our of we get benefits Given how

next to in of of like roll think nuclear we couple kind This spaced putting we fuel through, investments things year, manage should about spending is when [ph] we continue I in and particularly to you those called us buy the script work opportunity which to they us us some A also or my to our I for inventories in that out an expect this help out costs. is growth. that, there opportunity important some about] had of growth inventory, for think We money think so that year, make things will you that costs to help [that today, important.

on this this the how pretty fairly tails notable Most on stock to comp, year that year, true-ups was the honest. be which work. small of gets the On money are just of amount that timed

bit So, it's our there's in [pretty a O&M is, spend the little there, what scheme but [ph]. tiny] of

on call all that's you O&M I these numbers for plan how in the quarter and probably your will refresh our model at all normal of So, as would course. of about to kind think you look be our earnings fourth

Shar Pourreza

Thanks. Very guys. helpful you Bye. Thank Perfect. disclosures.

Joe Dominguez

Thanks, Shar.

Operator

question our One you. Research. from for moment question. Fleishman Wolfe next our Steve Thank And with comes next

line open. Your is

Steve Fleishman

Good Yes. morning. Hi. Thanks.

mentioned on on to the nuclear] [uprates what the the is the – and So, of fleet Joe, be uprate one could might talk of that? in you growth avenues potential you just [ph], timing any

Joe Dominguez

of morning. good first Steve, all, Yes,

a – everyone [indiscernible] we're for you into of is megawatts] This for those the dug megawatts. PTC that incremental accurate, So, [carbon-free the the I isn't things as little think perfectly that incremental we the bill is saying [ph]. get interprets we one but a basically way double that IRA, interpret the

that to So, for of process Dave not look be economics Bryan we've fourth and as over scratch. our looked We'll might a the be we're years, quarter. to – these from Hanson of have Chief available a Officer, at kicked-off number of Nuclear upgrades at us so upgrades Rhoades looking the at starting different those

an I to fourth to quarter where think a be call. update position being the we'll able provide start in on we're

increase could sense. economics see is that megawatts, to What's when think I you we machine, at the about if the of people. hundreds of it to it's adding to but they you're output need fair right, good the be them, look make say not

O&M incremental technologies in running And to without upgrades become an us O&M efficient actually machines. from are associated it with even cases, there that more allow perspective. involves So, adopting the some

than now. but to be costs quarter be think going we'll more vendors able from right that's cost, we call. something I And on don't that implementation need I and to we So, fourth the think give need get now. the I'd color us that's to to talk study to you available

Steve Fleishman

be, like essentially? being then for and kind of a being Okay. nuclear essentially for And the double would PTC one another PGC, megawatt carbon-free new

Joe Dominguez

Yes.

to Barron I'll who me it it here could me, Let with – explain turn over Kathleen who's works. how

Kathleen Barron

that the about talking credit into is of Joe’s Yes, end tech Steve. at neutral that resource any service Hi, the for carbon-free goes XXXX.

reserve eligible So, incremental you would PTC. existing longer the for be for no megawatts those

tech-neutral transition value. credit roughly that's double the into new You that would carbon-free

Steve Fleishman

Okay.

Joe Dominguez

is what [Indiscernible] right? credits, pipeline

Kathleen Barron

right. That's

Steve Fleishman

Yes.

know it [part] that's with you Okay. O&M, moment, but respect the don't a would the [ph] of, kind you. give you of prior then And much I it's those? at moving projects, going And back to question related us start define on you're that? Thank to just the want degree to into sense get size that how then growth kind to So, can that you the just of to initiatives, temporary. to all really forward, willing capitalized

how to Speakers]? Just [Multiple the how think about big

Joe Dominguez

Yes, Steve.

by kind on spend now You to trying put to too don't don't still [indiscernible]. our a going fine give be of of want O&M know, want you number, I going X% right these of less to We're understand it exact an just opportunities than point is to okay. it's context, that I but us.

about think above that, I any how seeing don't that's I probably it it. getting if think I'm number that's So, helpful.

start moving As work a to on capitalize projects, to we a have project forward commitment from, of move will a we we and forward once business plan this to them go look kind with and right, we you're forward. as sizable

as be to it'd work the going project one move one next we'll think [indiscernible] project on work would we and go O&M because spend behind could project other some the or as capitalized. hydrogen sustaining O&M there, any one of several So, on growth that probably have to longer next not have or the be cycle, maybe commercialize on right? to develop the trying I capitalize to underway, to years there's but gets level be even some growth come is always for going

Dan Eggers

And as we started year earlier is company required just stuff, year. get essentially about to other learn the to that. us investments. years, track. investigating It's talent, opportunities. to needed that hasn't done into other smart. The stuff we this the consultants a in frankly a work good where need the everything. experts Steve, few that position over from it's a get this lot kind smarter It's that's at And before cost All hydrogen a in It's starting upgrades we and and doing. lot work, of of to growth bring the It's hub some investments we some be a those last what

Steve Fleishman

Okay. much. Great. very you Thank

Operator

of Thank question America. you. One comes next Zimbardo And our moment next for our question. Bank Paul with from

is line open. Your

Paul Zimbardo

Thank you. Hi. Good morning.

stream all-in give this much on together expect kind to year-over-year Just Could fold change of how you XXXX? expectations questions. of into O&M to you

Joe Dominguez

when update a I gross we the kind on of pieces give roll put quarter the margin forward think we'll that comprehensive on view fourth give of including outlook. together, said, earnings as the our I call all Paul,

So, early. it's probably a little bit

on pressures where we enumerated guess, are I to out our Shar things challenges the a are in that you think think best understand seeing But there it's of kind this mitigate that some environment. fair I of fair some can. as that we we question, when with about do prior inflationary some to there

Paul Zimbardo

of the and allocation change capital the And prospectively. little bit the you for could level specifically just secondly, rate leverage Okay. how influences elaborate right plan interest on Understood. then in more a

floor you the from well? how a, or of it's level as market levels whether think EBITDA about that, of higher kind a on Just PTC

Joe Dominguez

we're I think [is comfortable Yes, [ph]. now] balance with sheet the right

And of which agencies, the support attractive, I flexibility the right? affords us is think happy saw about. we we're the that

using also The We idea them larger support tool the investment some these to us. can to opportunities. going a potential balance to the look sheet balance kind of look at of as we sheet is be at of available we and use

on our talked right up. anything it we’re M&A at Analyst leverage when as a don't that return is the Star where with this come flex capital North unlevered I investments good internally think and threshold evaluating new or to as else, projects changing growth is we're make about now When I That still Day. look So, or and the at opportunities return we double-digit for we the opportunities a the see time. about we point at and in ability

where So, well we are. pretty that's

Paul Zimbardo

Thanks great. Okay, lot. a

Joe Dominguez

Thanks, Paul.

Operator

question. next Thank you. Morgan with for And our our One moment question next from Arcaro comes Stanley. David

open. Your line is

Joe Dominguez

Good morning, David.

David Arcaro

morning. my be at [ph] fuel ahead partners for of stage? current Thanks morning. might discussions taking others much with if On suppliers? co-locating [a or hydrogen, business or so any kind of state cells] question. wondering, of commercial I than Good Good was this what's farther the opportunities by the different, Wondering the wire

Joe Dominguez

folks here. kind of space in lot a we're with of Look, NDA

has but little to both proposal commercial that So, to going the for able the your a well announce energy timeline site. that say that if in work, I been hopeful be by we're is at on start hub bit to significant commercial customers to that deals And that we'll providing in share position commercial want a activity. The work. what all some to little to part longer, bit there Kathleen, of to fronts. some on their the going and a you as a own is of we're will contracts want as that be take also thoughts would extensive conversations be where who colocation, quarter, reduce first have hydrogen very

So, to the [ph]. has [funding] stuff could that be sense the before a done DOE that in

Kathleen Barron

Joe. That's It is hub. right, exactly a deployment

bid So, to in the demonstrates cases went how of breadth the and all the commercial the DOE two. demonstrates to out use coalition and MachHX production week between involved and last parties the about cases sort midstream, Illinois that a of the many that are connection different announcement potential that create the

hydrogen for different producers, announcement, companies, the number producers, and a together governors that number XXXX, of that national in development DOE the dollars making and have conversations support least next decade. later just alliance the folks said, matching together, will get Midwest of labs, in government of be be the hydrogen bid a have out transportation at production due out and later some [indiscernible] announced, going excited then clean the which to to chain, ultimately of part find is greenfield pulled get step we that there into $X the direct billion super that for Joe to hydrogen we'll just as great April. as And into NGOs, for in in where about to value is So, which the as pull building had we senators expressing DOE, economy. together But for potential this to alliance the really is across

David Arcaro

color kind there for quarter the unplanned just that there in need anything Okay, that any issues of might be the if there. on great. might Thanks were the causes for was or or maintenance spending you saw, I the to so outages wondering wondering any lingering underlying common, kind related quarter? like beyond much of that CapEx you fee last additional

Joe Dominguez

XX the the up – we every happen that a we that outages one-off or things probably that outage. a outages. vendor Yes, high bit Exelon year, The Nine we're had every that didn't a is, issue of adds days perform us. quarter longest more nothing drag. future little sorts projects. year, going missed these but expectations. the And about these that some provided it affect think It and for is at becomes We the even quickly. in issues days part the nothing one occurred prices, for Mile, that very you or unusual part, at and talking created which the in of not to up an We reality quite lose operations during had is But significant specifications

So, here? Hanson to else if wants it flip there's share Bryan let anything to over me to he see

Bryan Hanson

expectations standards. you we think we we have high had. make issues get operate these nothing the extraordinary There's Joe. I that very We'll the covered provide of about quality plants. to No, we oversight it, vendor parts some how any our again, meet of And sure more of

on down repairs isn't when And outage take next couple than of up here to like in for outstanding And restart a And we're which made a be refuel weeks piece track. Dan plant year-end, that right, so, we'll the fall outages factor industry it. of always. and the will the our said, pleased season I'm as performing just equipment and to still better wrapping refuel four with XX% capacity leading this

David Arcaro

Okay, understood. it. appreciate much. Thanks so I

Operator

our our One moment And last question. next question ISI. Durgesh for Chopra you. Thank Evercore comes from with

is Your line open.

Durgesh Chopra

Hey, good team. time morning Thanks giving for me here.

Day, have you guidance since hey, O&M Dan, you this check-in towards to on cash tracking you X.X free flow the billion then wanted Just billion. X.X but margin as some flow, The then, projects. just gross growth unidentified cash higher is articulated have – of Analyst free to some

– we should think just about are us could you So, we if how that range where in tracking update there?

Dan Eggers

online our tracked I and this specifically would our is year Analyst think as the year have the we underline that on expectations is page refreshing that not I we're with the consistent [indiscernible] that Yes, CapEx here, performance in Day. our is say, EBITDA certainly

we price a the year. in next we think next outlook today, I you conditions spring. a the go but I with going about have through As on we always we're feel improved numbers process, the to and the budgeting shared can't market year but for going Obviously, discussion have cost and about good think what's

Durgesh Chopra

a Thanks. finer point. Awesome. then And just maybe

XXXX but On guidance? perhaps of EBITDA we – we about call, floor. Some be expecting expecting? guidance the expect a talked be like, providing a dated we QX what have Should could looks should longer the investors

update, guidance So, in addition we allocation should EBITDA pro forma about, to of how think the ranges? capital sort

Dan Eggers

Yes.

XXXX complexity, There's varying receipts from margin a free be [ph] XXXX. give how disclosures EBITDA to flow head how guidance little and sure. have through treasury we'll and going on] That bit are aware, they're I a calculated. clarification disclosures look. the certainly cash without you think gross [bolt you give you're going and of on as to does some for gross We'll well

could supported to before get we and the it's treasury. number about little a it, a want XXXX, our sure know XXXX like bit we around we're probably we through complicate it, something because more have we to beyond I make how a talk that's want we’re arms would that trying well-reasoned we extend there but have also to going That clarity guys our we little to you process but number, So, base look. that think getting EBITDA but see get also by, to a

Durgesh Chopra

Understood. Thanks so I guys. it. much appreciate

Operator

Joe would I the remarks. to conference like for to you. turn Dominguez back Thank closing now

Joe Dominguez

those new business And thanks to walking many already, are few to this Well, of investigate I like future. with and call compensation we're the expectations other stock guidance. our excited we've that contracts that terrific of for fairly very folks, joining And But a business. their unplanned that, of you with are we And [indiscernible], upside us to we that outset, but a significant involvement been costs and inflationary many the a performing extra the knew, because company. today. we pressure growth than very a employees [owners] much happy for had had and knew like for that our able at have to everybody we've bit a the issues have look, enjoying very, It enjoyed There it, contracts, quarter. said shaping the to has interest opportunities. and our situation our outages. as then been we're increase we had we looking do in all little there's [ph] about that's was of piece We about just but year into talked probably of us the days

fourth on of entertaining to until safe. care the So, quarter you we'll be and again Take call. call look the yourselves end and forward then

Operator

Ladies conference. and gentlemen, program. for you concludes thank today's This in participating today's

a day. great have Everyone disconnect. all may You

Constellation Energy (CEG) 9 Nov 222022 Q3 Earnings call transcript