The operator introduces the Constellation Energy Corporation First Quarter Earnings Call and introduces the host, Emily Duncan. She introduces the speakers, President and CEO Joe Dominguez and CFO Dan Eggers, and mentions other members of the management team who will be available for questions. She also reminds listeners that the call may be recorded and that the company's earnings release and presentation can be found on their website. She also mentions that the presentation contains forward-looking statements and non-GAAP measures.

Joe Dominguez, CEO of Constellation, began the meeting by thanking Wanda and Emily for their introductions and welcoming everyone. He then discussed the company's successful first quarter and their progress in the energy industry. He also announced that the board had authorized another billion dollars in stock buybacks, showing their confidence in the company's strategy. However, he took a moment to remember and celebrate the late former CEO of Exelon, Chris Crane, who passed away last month. Joe praised Chris for his operational excellence and dedication to the safety and development of his employees. He also acknowledged Chris's leadership and courage in the industry.

The speaker discusses the importance of nuclear energy and how it is a crucial part of Constellation's DNA. He mentions the legacy of excellence left by Chris Crane and the company's plans to grow base earnings by at least 10% through the decade. He also highlights the demand for clean and reliable energy and how Constellation is well-positioned to meet this demand and contribute to America's national security and economic competitiveness. The speaker assures that challenges in the technology industry will be overcome and the company is working towards leading the world in the development of these technologies.

Constellation is in advanced talks with multiple well-known companies to power their data economy needs. These deals will have long-term value and ensure the sustainability of the company's fleet and the jobs and economic benefits it provides. As demand for clean power grows, the role of nuclear energy will also grow. Constellation plans to extend the lives of their existing sites to power the nation until 2060 and beyond, and also increase output through up rates at their current plants. This will add up to 1000 MW or more of clean, firm power to the grid.

Constellation is adding hundreds of megawatts of renewable energy through deals with customers and wind repowerings. They are also looking to partner with others to locate new technologies, such as new nuclear, at their existing sites with community support and existing infrastructure. The company delivered strong first quarter earnings and is confident in their full year outlook. Their creditworthiness is being recognized and they issued the first green bond to fund nuclear power in the US. The company is enthusiastic about their future and has been buying back shares.

The board has authorized an additional $1 billion in share repurchases, bringing the total buyback capacity to $1.5 billion. This is possible due to strong free cash flows and allocation opportunities. The importance of nuclear energy to the economy, electric system, and environmental goals has been recognized by states and the federal government. Constellation has issued the first nuclear green bond in the US, which received significant demand and recognition of the importance of clean, reliable nuclear energy. Moody's has upgraded the company's credit and carbon transition score, further acknowledging the role of nuclear energy in the energy transition. Customers are also signing deals for carbon-free power from existing nuclear plants and exploring behind-the-meter opportunities at Constellation's sites.

Congress has taken steps to provide funding for the nuclear fuel chain in the US, reducing geopolitical risks. Many states are also taking action to support nuclear energy, such as passing laws and removing barriers for new development. Nuclear performance for the quarter was strong and ahead of plan, with over 41 million megawatt hours produced and a 93.3% capacity factor. Three refueling outages were completed faster than expected, with one outage at Quad Cities finishing 8 days ahead of schedule.

The company's renewable and natural gas fleet had a strong performance, with high energy capture and power dispatch match. The commercial team also had a successful start, with strong margins and value creation through integrated generation and customer business. The company recently signed two deals with large customers, converting them to a product that includes nuclear energy to fill in gaps when renewables are not operating. This shows that customers recognize the need for full-time clean power to run their businesses. The financial update will be provided by Dan.

In the third quarter, the company earned $2.78 per share in GAAP earnings and $1.82 per share in adjusted operating earnings, which is $1.04 per share higher than the previous year. The commercial businesses performed well due to the generation to load portfolio optimization strategy. Margins were better than planned and nuclear output was higher, resulting in lower costs for refueling outages. This was also the first quarter with contribution from the South Texas project and the first quarter with the nuclear production tax credit in effect. The company's stock performance has resulted in higher compensation expenses, but the company remains confident in their earnings guidance for the year.

The company has had a successful year in terms of financing and liquidity. They have purchased a significant amount of clean megawatts and have a strong stock performance. They have also completed $1.5 billion in share repurchases and have authorized an additional $1 billion for future repurchases. The company's credit ratings have been upgraded and they have issued a corporate green bond to finance green projects such as nuclear upgrades. Despite a busy corporate supply market, the bond was oversubscribed and the company was able to upsize it to $900 million.

The company achieved tight pricing for their 30-year offering, demonstrating strong investor confidence in the company and its assets. They have $2.3 billion of unallocated capital in the next few years, providing strategic flexibility. The company is unique with visible base earnings growth and a strong position in the nuclear power market. They are well positioned to meet the demand for clean and reliable power.

Constellation is a reliable power source that is in high demand due to the changing electric system. The company sees this as an opportunity to provide value to their owners and support the energy transition and national security. Both Republicans and Democrats recognize nuclear as the backbone of the electric system. Constellation has the potential to capture additional opportunities in the volatile power market and is exploring the possibility of locating next generation nuclear units at their site.

Joseph Dominguez discusses the company's response to a request for information from Google, Microsoft, and Nucor Steel regarding clean power supply. He outlines a multi-tiered structure that would involve using existing power plants for long-term PPAs, subsequent license renewals for plants in their fleet, upgrades, and investigating different technologies such as SMRS. The ultimate goal is for the customer to fund the construction and operation of a new unit on the company's site, with the company having a stake in the ownership. This plan is still in the early stages.

The speaker discusses the interest of clients in the clean power sector and how they are looking at various technologies, including Rolls Royce's SMR technology. However, the speaker emphasizes the importance of focusing on the existing fleet and ensuring its readiness for subsequent license renewal. They also mention potential opportunities for upgrades and new clean generation in the future. The speaker also mentions discussions with hyperscalers and big data center developers, but is cautious about linking the company to any specific projects at this time.

The company is seeing an increase in interest for developing large projects to support the need for training systems and foundational models. These projects require data centers that are larger than what currently exists in the market. They have not updated their ranges for enhanced gross margin for 2024 and 2025, but will do so when they revisit their guidance.

The speaker believes that updating their earnings guidance will provide an opportunity to refresh their disclosures, including their expectations for enhanced earnings in 2024 and 2025. There has been a lot of movement in the market, particularly in the back end of the curve, but within the range they have previously shared, there has not been much movement. The market for '27, '28, and '29 is more stable, while the market for '25 and '26 has been more volatile. The speaker also mentions the attribute value slide as a good proxy for how price movements can impact enhanced earnings. The company still uses a rule of thumb of ten to 20% of consolidated range for '26, '27, and '28.

The speaker is discussing the potential impact of market fluctuations on the company's attribute value in 2028. They mention that power prices later in the decade may have upside potential, but the market is not currently very liquid. They also address industry chatter about a potential TMI restart, stating that they are considering various opportunities, including this one.

The speaker discusses the potential for Constellation to become a leader in adding clean energy to the grid through opportunities in the data center industry. They mention the high level of interest and demand from clients and the focus on nuclear energy due to sustainability goals. However, specific details and timing are not yet available.

The company is focused on monetizing the value of their nuclear plant and their prospective customers are in a competitive race to grow this capability. However, there is complexity and diligence required for these transactions, which can take months or even years. Some customers are looking at colocation opportunities to speed up the process, but there is still a necessary study process that needs to be done either on the grid or behind the fence line. The company has become skilled at using the necessary study tools to identify potential locations for load integration behind the fence line.

The speaker explains that a necessary study process is required to build a hydrogen hub at LaSalle and that it could take up to a year to complete. Once completed, the process goes through a routine approval process. Without the necessary study, it could take even longer to determine where to co-locate data centers. Building a data center also takes time and requires a ramp-up period, so it is unlikely that a 1 GW data center will be built in a short amount of time. Contracts have a scaling component to them and the process of building a data center will likely take place over several years.

In this paragraph, Joseph Dominguez discusses the energy demands on the system and how they will be managed. He mentions that they are working quickly and have a lot of people thinking about and working on the issue. He also mentions that they are not able to announce a time frame for any announcements due to competitive reasons and not wanting to be unfair to their clients. Lastly, James McHugh briefly mentions the impact of a law regarding nuclear fuel positioning, but there is not much more to report on the matter.

The speaker discusses the company's strategy and strong position in the industry, as well as their confidence in having access to affordable fuel for the next decade. They also mention authorizing additional share buybacks and explain that they believe investing in their own company offers the best potential for growth and value compared to other opportunities such as M&A.

The company plans to invest in upgrading and expanding their operations, rather than pursuing mergers and acquisitions. They are also waiting for guidance from the treasury on how the nuclear PTC will be applied, with the expectation that spot prices will be the determining factor.

In the paragraph, Joseph Dominguez thanks the listeners for joining the call and expresses appreciation for their interest in the company. He also acknowledges the hard work of the company's employees and states that they are confident about the company's future. He concludes by saying that they look forward to the next quarter's earnings call and Wanda closes the call.

This summary was generated with AI and may contain some inaccuracies.