Constellation Announces Capital Allocation Strategy, Reports Earnings

In reporting earnings, Constellation announced its capital allocation strategy for 2023 and 2024

Constellation is committing $1.5 billion of growth capital over the next three years to its generation fleet including nuclear uprates, wind repowering and hydrogen.

Constellation will double the annual dividend in 2023 from $0.5640 per share to $1.1280 per share while targeting growth at 10% annually.

Constellation is also authorizing $1 billion in share buybacks.

"Our strong financial position allows us to return exceptional value to shareholders by doubling our dividend and authorizing a $1 billion share repurchase program, while still leaving us the flexibility to build a new, clean hydrogen business and reserve $2 billion in unallocated capital to invest in other organic and inorganic growth as opportunities arise, or return additional capital to shareholders," said Dan Eggers, chief financial officer of Constellation.

Constellation provided more details on its hydrogen pilot at Nine Mile Point.

The hydrogen facility will initially use ~250 MWs and produce ~33,450 TPA hydrogen, with the ability to expand to 400 MWs

Constellation expects long-term off-take agreements to consume more than 90% of the ~250 MWs Constellation is investing total construction CapEx of ~$900M from 2023-2025 in the project. This does not assume DOE cost-share through the hydrogen hub

Hydrogen will be provided to customers co-located at the facility

Constellation anticipates commercial production of hydrogen beginning in 2026

Constellation reported 2022 Electric Retail Load Served by Region (TWh) as follows:

Midwest                          37
Mid-Atlantic                     46
ERCOT                            14
New York                         16
Other/New England/South/West     30

Constellation reported that Adjusted EBITDA (non-GAAP) for the fourth quarter of 2022 decreased to $605 million from $1,027 million in the fourth quarter of 2021. The decrease reflects increased labor, contracting, and materials, unfavorable market and portfolio conditions, and decreased capacity revenues, partially offset by favorable nuclear outages.

Constellation reported that Adjusted EBITDA (non-GAAP) for the year 2022 increased to $2,667 million from $2,185 million in 2021, reflecting the absence of impacts from the February 2021 extreme cold weather event, partially offset by decreased capacity revenues, increased labor, contracting, and materials, and lower CTV gains in 2022 compared to 2021.