Constellation Energy Corp (CEG) Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 adjusted operating EPS was $1.91 vs $1.68 in Q2 2024; GAAP EPS was $2.67; management reaffirmed full‑year adjusted EPS guidance of $8.90–$9.60, supported by strong generation/commercial performance and Illinois banked ZEC revenues, partly offset by lower nuclear PTC accruals due to higher projected gross receipts .
• Results beat S&P Global consensus: EPS $1.91 vs $1.83* and revenue $6.10B vs $4.91B*; Q1 2025 had a slight EPS miss ($2.14 vs $2.21*) but a revenue beat ($6.79B vs $5.44B*) .
• Strategic catalysts: 20‑year PPA with Meta for Clinton (starting June 2027, +30 MW uprates), accelerated Crane restart into 2027, and FERC/Texas/NY approvals for Calpine; DoJ review ongoing and close expected by year‑end .
• Capacity auction uplift expected to add ~$0.50 EPS in 2026 and ~$1.50 in 2027, with benefits flowing above the PTC floor and Illinois CMC units refunding upside to customers .
• Capital returns: $400M ASR executed in Q2; cumulative buybacks ~$2.4B with ~$600M remaining authorization; dividend declared $0.3878 per share for Sept. 5, 2025 .

What Went Well and What Went Wrong

What Went Well

• Nuclear fleet achieved 94.8% capacity factor with “second best fleet production ever”; three refueling outages averaged 19 days vs industry ~33–40 days historically, supporting availability and margin capture .
• Commercial team optimized portfolio amid volatility; strong renewals and higher‑than‑average margins, including growth in hourly carbon‑free/emissions‑free products and rising data center load from existing customers (+45% vs 2023) .
• Strategic wins: 20‑year Meta PPA for Clinton, accelerated Crane restart, and regulatory approvals for Calpine; CEO: “We’re adding megawatts…expediting Crane…expanding nuclear plant capacity through uprates” .

What Went Wrong

• Fewer nuclear PTCs accrued quarter‑over‑quarter given higher anticipated gross receipts; management flagged quarterly YoY “noise” from means-tested PTC dynamics .
• Non‑refueling nuclear outage days rose to 22 vs 3 in Q2 2024, modestly pressuring capacity factor (94.8% vs 95.4% prior year) .
• Equity‑linked compensation expense increased with stock performance, creating earnings headwinds; management is monitoring the impact .

Financial Results

*Values retrieved from S&P Global.

Results vs S&P Global consensus

*Values retrieved from S&P Global.

Operational KPIs

Regional supply/sales (TWh)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We’re adding megawatts to the grid through…expediting the Crane…expanding nuclear plant capacity through uprates, and launching a new, AI‑powered demand response tool” .
• CFO: “We earned $2.67 GAAP and $1.91 adjusted EPS…recognized [Illinois] banked ZEC credits…fewer nuclear PTCs accrued…we’re reaffirming full‑year operating EPS” .
• CEO on pipeline: “We’re in the late innings on one transaction…waiting for inputs from utilities” .
• CFO on capacity auction: “Fleet is above the PTC floor for 2026 and 2027…uplift will flow to earnings…≈+$0.50 in 2026 and ≈+$1.50 in 2027” .
• CFO on cash taxes: “100% bonus depreciation and immediate R&D deduction…$200–$300M annual cash favorability per year for Constellation standalone” .

Q&A Highlights

• Interconnection timelines: Utilities expediting studies; months vs years; one “late innings” deal viable pending utility process .
• Front vs behind‑the‑meter: Near‑term deals are front‑of‑meter given FERC ambiguity; behind‑the‑meter still strategic for very large sites; pairing nuclear attributes with gas interconnections offers 20‑year firm clean pricing .
• DR market mechanics: PJM ELCC rising to >90% improves DR economics; Constellation’s AI‑powered DR to help add DR resources .
• Pricing/demand: Scarcity in capacity and constraints in renewables/storage support rising price levels; customers should engage now .
• Calpine rationale: Combination creates differentiated coast‑to‑coast product; expected ≥$2.00 EPS accretion through 2029 .

Estimates Context

• Q2 2025: Adjusted EPS $1.91 vs S&P Global consensus $1.83* (beat); revenue $6.10B vs $4.91B* (beat). 11 EPS estimates and 5 revenue estimates contributed* .
• Q1 2025: Adjusted EPS $2.14 vs $2.21* (slight miss); revenue $6.79B vs $5.44B* (beat)* .
• Forward look: Management reaffirmed FY25 adjusted EPS $8.90–$9.60; capacity‑market uplift expected 2026–2027 .
  *Values retrieved from S&P Global.

Key Takeaways for Investors

• Strong beat on Q2 revenue and EPS vs consensus, with guidance reaffirmed, suggests durable base earnings and enhanced earnings from market volatility and DR initiatives .
• Structural tailwinds: PJM capacity redesign, expedited interconnections, and OBBBA tax provisions (bonus depreciation, R&D expensing, 45U/45Y) support margin/FCF visibility .
• Deal cadence increasing: Meta 20‑year PPA at Clinton, accelerated Crane restart, and pending large data center transaction are catalysts; Calpine close remains a year‑end event .
• Capacity auction uplift quantified (~$0.50 EPS ’26; ~$1.50 ’27), with most fleet above PTC floor; note Illinois CMC refund mechanics on upside .
• Operational excellence persists (94.8% capacity factor; outage execution), enabling incremental generation for peak periods and reliability .
• Near‑term trading: Positive setup on policy and capacity tailwinds; watch DOJ process on Calpine and timing of next PPA announcement/interconnection clearance .
• Medium‑term thesis: Unique ability to offer 20‑year firm clean power, monetization of nuclear attributes, and cross‑selling with gas fleet post‑Calpine underpins double‑digit base EPS growth .