BALTIMORE, MD - Constellation Energy (NYSE: CEG) today reported adjusted earnings of $3.06 per share for the full year 2010, compared with adjusted earnings of $3.36 per share in 2009. 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 $4.90 per share, compared with earnings of $22.19 per share in 2009. The 2010 GAAP results include noncash impairment charges related to our existing nuclear joint venture, Constellation Energy Nuclear Group, LLC (CENG), and our former nuclear joint venture, UniStar Nuclear Energy, LLC. The 2009 GAAP results reflect the gain on our sale of a 49.99 percent interest in CENG to EDF Group (EDF).
Constellation Energy reaffirmed its 2011 earnings guidance range of $3.10 to $3.40 per share and its 2012 guidance range of $2.40 to $2.70 per share.
"We ended 2010 having completed all of the strategic initiatives we announced at the start of the year, successfully putting our core businesses in a stronger position to operate more efficiently, strengthen existing customer relationships and win new business," said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. "We completed our goal of deploying more than $1 billion of cash to acquire strategically located generation assets, including the 2,950-megawatt Boston Generating fleet in New England and the 550-megawatt Colorado Bend Energy Center near Wharton, Texas. Through acquisitions and organic growth, we significantly increased our generation capacity during the year, laying the foundation for continued growth in our wholesale and retail energy supply businesses in regions where our load obligations exceed our physical generating capacity.
"Our NewEnergy segment maintained its focus on selling customers innovative products and services, such as on-site solar installations," Shattuck said. "In September, we announced the acquisition of CPower, increasing our managed load response to approximately 1,500 megawatts and making us the second-largest load response provider in competitive commercial and industrial markets. We also made a strategic decision to offer electricity to residential customers in Maryland and New Jersey, growing to more than 80,000 customers by year end.
"Baltimore Gas and Electric Company (BGE), our regulated utility, exceeded its targets for safety, customer service and financial performance for the year," Shattuck said. "In August, BGE received Maryland Public Service Commission (PSC) approval to deploy one of the most ambitious smart grid programs in the nation. When fully implemented, this initiative will lead to improvements in service and reliability, and facilitate expected customer savings of more than $2.5 billion over the life of the program. BGE also received a summary order from the PSC on its combined electric and gas rate filing - the first such filing in more than 17 years. BGE is awaiting receipt of the PSC's comprehensive order detailing its findings.
"Looking ahead, we believe our investments in clean generation, efficiency and new products put us in strong position to benefit as the energy market recovers," Shattuck said.
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 earnings of $0.69 per share, down from $0.80 per share in 2009. The decrease was the result of higher operating and maintenance costs driven by a combination of increased storm-related expenses and inflation, partially offset by lower bad debt expense and higher power transmission revenue.
The Generation segment reported adjusted earnings of $1.81 per share, down $0.30 from 2009 adjusted results of $2.11 per share. The decline was driven primarily by the loss of earnings resulting from our sale of a 49.99 percent interest in CENG to EDF in November 2009.
Our NewEnergy segment reported adjusted earnings of $0.54 per share in 2010, improving $0.08 per share compared with 2009. The adjusted earnings were negatively impacted by noncash mark-to-market earnings. Excluding this impact, the increase in adjusted earnings was primarily the result of improved profitability in our power operations and greater upstream gas production.
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-K on or about Feb. 25, 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.