BALTIMORE, MD - Constellation Energy (NYSE: CEG) today reported adjusted earnings of $0.76 per share for the second quarter of 2011, compared with adjusted earnings of $0.71 per share in the second quarter of 2010. Adjusted earnings exclude the cumulative effects of changes in accounting principles, discontinued operations and special items (which are defined as significant items that are not related to the company's ongoing, underlying business or which distort comparability of results). On a Generally Accepted Accounting Principles (GAAP) basis, Constellation Energy reported earnings of $0.49 per share in the second quarter of 2011, compared with earnings of $0.36 per share in the second quarter of 2010.
Constellation Energy lowered its 2011 earnings guidance range by $0.05 to $3.05 to $3.35 per share, reflecting the combined effects of longer-than-expected outages at our nuclear joint venture facilities and the impact of our recent acquisitions in the competitive residential electric market. In light of the pending merger with Exelon, the company is no longer providing earnings guidance for 2012.
"Our core businesses are performing well and we continue to advance our strategy to grow market share, expand our product mix and acquire new business in this highly competitive price environment," said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy.
"Our competitive advantage continues to be our ability to bundle competitively priced conventional and renewable energy supply with a broad portfolio of energy efficiency and management solutions," Shattuck said. "We recently grew our national mass-market footprint with the acquisitions of Connecticut-based MXenergy, one of the 10 largest suppliers of electricity and natural gas to residential customers, and StarTex, a Houston-based supplier of electricity to residential and business customers in the active Texas market. These acquisitions are an important component of our growth and diversification strategy, and put us near our goal to serve 1 million residential customers by year-end.
"Our environmentally advantaged generation fleet continued to perform efficiently and reliably during the quarter," Shattuck said. "In particular, our recently acquired Boston Generating assets outperformed during the quarter as actual generation exceeded expected output.
"At Baltimore Gas and Electric (BGE), our regulated utility, customers continue to benefit from competition among energy suppliers," Shattuck said. "To date, about 250,000 of BGE's 1.1 million residential customers get their power from a competitive electricity supplier, representing a five-fold increase in retail shopping since 2009. In addition, about 100,000 residential gas customers are shopping for alternative suppliers, comprising more than 15 percent of BGE's total gas customers.
"Looking ahead, we expect to achieve a number of critical milestones in our proposal to merge with Exelon, combining one of the nation's cleanest, most efficient generation fleets with the nation's largest competitive energy provider," Shattuck said. "We completed all material federal and state regulatory filings during the quarter and are focused on obtaining timely approvals from key stakeholders, including our shareholders. We continue to believe the merger will provide us with a diverse and adaptable platform on which to grow market share and deliver strong results going forward."
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 (see full press release below).
BGE reported adjusted second-quarter 2011 earnings of $0.09 per share, up from $0.07 per share in the second quarter of 2010. The increase is primarily the result of higher electric distribution revenue, which was approved in the Maryland Public Service Commission's (PSC) 2010 rate case order, and increased transmission rates.
The Generation segment reported adjusted second-quarter 2011 earnings of $0.41 per share, compared with adjusted earnings of $0.43 per share in the year-earlier period. The decrease is primarily the result of an increase in outage days at Constellation Energy Nuclear Group, LLCSM facilities, partially offset by the earnings contribution from our Boston Generating acquisition.
Our NewEnergy segment reported adjusted earnings of $0.26 per share in the second quarter of 2011, up from adjusted earnings of $0.21 per share in the second quarter of 2010. The second-quarter 2011 adjusted earnings include a mark-to-market timing gain of $0.11 per share, which was partially offset by costs associated with residential marketing and our recent acquisitions.
Download the financial statements and supplemental information.
Constellation Energy presents adjusted earnings per share (adjusted EPS) in addition to 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 and 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 adjusted EPS because we believe that it is appropriate for investors to consider results excluding these items in addition to our results in accordance with GAAP. We believe such a measure provides a picture of our results that is more comparable among periods, since it excludes the impact of items such as impairment losses, work force reduction costs or gains and losses on the sale of assets, which may recur occasionally, but tend to be irregular as to timing, thereby distorting comparisons between periods. However, investors should note that this non-GAAP measure involves judgment by management (in particular, judgment as to what is classified as a special item to be excluded from adjusted earnings). This non-GAAP measure is also used to evaluate management's performance and for compensation purposes.
Constellation Energy also provides its earnings guidance in terms of adjusted EPS. Constellation Energy is unable to reconcile its guidance to GAAP earnings per share because we do not predict the future impact of special items due to the difficulty of doing so. In the past, the impact of special items has been material to our operating results computed in accordance with GAAP. We note that such information is not in accordance with GAAP and should not be viewed as a substitute to GAAP information.
Constellation Energy plans to file its Form 10-Q on or about Aug. 8, 2011.
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.
Additional Information and Where to Find it
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. On June 27, 2011, Exelon filed with the SEC a Registration Statement on Form S-4 that included a preliminary joint proxy statement/prospectus and other relevant documents to be mailed by Exelon and Constellation to their respective security holders in connection with the proposed merger of Exelon and Constellation. These materials are not yet final and may be amended. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION about Exelon, Constellation and the proposed merger. Investors and security holders will be able to obtain these materials (when they are available) and other documents filed with the SEC free of charge at the SEC's website, www.sec.gov. In addition, a copy of the preliminary joint proxy statement/prospectus and definitive joint proxy statement/prospectus (when it becomes available) may be obtained free of charge from Exelon Corporation, Investor Relations, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398, or from Constellation Energy Group, Inc., Investor Relations, 100 Constellation Way, Suite 600C, Baltimore, MD 21202. Investors and security holders may also read and copy any reports, statements and other information filed by Exelon, or Constellation, with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for further information on its public reference room.
Participants in the Merger Solicitation
Exelon, Constellation, and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Exelon's directors and executive officers is available in its proxy statement filed with the SEC by Exelon on March 24, 2011 in connection with its 2011 annual meeting of shareholders, and information regarding Constellation's directors and executive officers is available in its proxy statement filed with the SEC by Constellation on April 15, 2011 in connection with its 2011 annual meeting of shareholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the preliminary joint proxy statement/prospectus and will be contained in the definitive joint proxy statement/prospectus.