BALTIMORE, MD - Constellation Energy (NYSE: CEG) today reported 2011 adjusted earnings of $3.07 per share, excluding mark-to-market timing losses of $0.83 per share and Hurricane Irene restoration costs of $0.12 per share. This is comparable to 2010 adjusted earnings of $3.29 per share when mark-to-market timing losses of $0.23 per share are excluded. Factoring in the mark-to-market timing and Hurricane Irene adjustments, 2011 adjusted results are in line with earnings guidance provided by management. 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 a loss of $1.70 per share for the full year 2011, compared with a loss of $4.90 per share in 2010. The 2011 GAAP results include $3.82 per share of special items, including noncash impairment charges related to our existing nuclear joint venture, Constellation Energy Nuclear Group, LLC (CENG), and certain power generation investments. The 2010 GAAP results include noncash impairment charges related to CENG, and our former nuclear joint venture, UniStar Nuclear Energy, LLC.
"We closed the year having met our goal to grow our national retail customer base, integrate newly acquired generation assets and deliver a diverse and innovative portfolio of energy products and services designed to help our customers make more efficient use of energy," said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. "By successfully executing the strategy we laid out at the start of 2011, we strengthened and diversified our core businesses despite the multiple challenges posed by difficult economic and market conditions and unusually severe weather.
"We continue to expand our role in developing and operating clean, reliable sources of energy, realizing a more than 80 percent year-over-year increase in our solar business and continuing to safely and efficiently operate our expanding base of fossil and renewable energy assets and Constellation Energy Nuclear Group's environmentally advantaged nuclear fleet," Shattuck said.
"Baltimore Gas and Electric Company (BGE), our regulated utility, again delivered reliable performance in the face of multiple severe weather events," Shattuck said. "BGE mobilized a force of approximately 6,700 people to restore power in the wake of Hurricane Irene, bringing customers back on-line 20 percent faster than during Hurricane Isabel in 2003. In the year ahead, we will move ahead with the system-wide deployment of smart grid technology across BGE's service territory, providing new tools to more reliably and efficiently deliver power -- and savings -- to our 1.2 million customers in central Maryland.
"We look forward to continued progress on our strategic goals as we move ahead with our pending merger with Exelon," Shattuck said. "In December, we reached a comprehensive settlement with the state of Maryland and other key stakeholders, adding momentum to our proposal to combine the nation's leading retail and wholesale energy provider with one of the nation's largest and cleanest producers of energy. The merger is on track with a close anticipated in the first quarter of 2012, absent any delay in the Federal Energy Regulatory Commission approval process.
"As we integrate our two businesses, we anticipate working with our colleagues at Exelon to more closely align our cost structure with current market conditions," Shattuck said. "Combined, we will be a stronger and better balanced company that should be well positioned to deliver continued growth in the years ahead."
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.
Excluding Hurricane Irene restoration costs of $0.12 per share, BGE reported adjusted 2011 earnings of $0.81 per share, up from adjusted earnings of $0.69 per share in 2010. The year-over-year variance is primarily the result of higher distribution revenue, which reflected the Maryland Public Service Commission's 2010 rate case order, and increased transmission rates.
The Generation segment reported adjusted 2011 earnings of $1.43 per share, down from adjusted earnings of $1.81 per share in 2010. The decrease is primarily the result of lower power prices, increased outage days at CENG and last winter's extreme weather in Texas. These negative variances were partially offset by earnings contributions from generation assets that were not part of our portfolio during all or part of 2010.
Our NewEnergy segment reported adjusted earnings, excluding mark-to-market timing, of $0.85 per share in 2011, up from adjusted earnings, excluding mark-to-market timing, of $0.77 per share in 2010. The increase is primarily the result of a $0.38 per share contribution from structured products and the sale of certain upstream assets. Partially offsetting this positive variance is a $0.23 per share loss resulting from this year's extreme weather in Texas and $0.06 per share of dilution from our MXenergy and StarTex acquisitions.
Investor Call Will Not Be Held
Due to our anticipated merger with Exelon, Constellation Energy will not host an investor conference call to discuss its year-end results.
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). We have also presented adjusted EPS excluding mark-to-market timing and Hurricane Irene restoration costs to improve the comparability of results among periods. These measures are 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 2011 Form 10-K on or about Feb. 27, 2012.
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.