Constellation Energy Corporation (CEG) Earnings

Management highlights

- People & Recognition * Bob Wallace retired from the Board after 25+ years of service, with leadership thanked by the executive team * Recognized as a Great Place to Work for the 4th consecutive year, the world's top business for people with disabilities, and one of the U.S.'s 50 most community-minded companies * Employees achieved >99% nuclear capacity factor during the mid-Atlantic heat wave, delivering reliable grid operation when needed most - Strategic Project Milestones * 920 megawatts of new long-term nuclear power purchase agreements (PPAs) were signed, with an average 18.5-year duration and all counterparties investment-grade; 30% of the company's clean baseload output is now contracted under long-term agreements * NRC approved the licensing amendment for the Crane nuclear facility restart, clearing the way for new fuel delivery and keeping the project on track for restart in H2 2027 * Subsequent license renewal applications filed for Ginna and Nine Mile Point 1 nuclear facilities, enabled by the extension of New York's ZEC program, securing operations of both plants through 2050 and beyond * The integration of Calpine is progressing well, with cross-functional teams identifying additional value creation opportunities; an agreement to sell the Brazos Valley Energy Center to LS Power for $860 million was reached, satisfying the final DOJ divestiture requirement for the Calpine acquisition - Regulatory Progress * FERC has pressured PJM to accelerate market reforms for large load interconnection, resulting in much faster progress than many observers expected; PJM has released proposals for Reliability Backstop Procurement (RBP) and Interim Resource Adequacy Service (IRAS), with a planned RBP auction this fall for a 6.8 gigawatt target, and results expected by year-end * Stakeholders are urging the EPA to exempt FERC-required backup generator curtailments from the 50-hour annual limit, which would unlock additional stranded generation capacity for data center customers and lower system-wide costs - Capital Allocation * Year-to-date, the company has deployed $2.2 billion for opportunistic, accretive share repurchases, leaving $2.8 billion of remaining authorization available for future deployment

Guidance

- Full-year 2025 adjusted operating earnings guidance was raised to a range of $11.50 to $12.50 per share, an upward revision of $0.50 to both the top and bottom of the prior range of $11.00 to $12.00 per share * The midpoint of the new guidance range is equal to the prior top end of the range, with management noting upside opportunities to deliver additional value for the full year * Management will revisit the full-year 2025 guidance on the Q3 2025 earnings call after peak summer demand concludes * Updated 2029 capital allocation sensitivity now reflects a $0.20 per share floor from completed share repurchases to date, with upside potential of more than $0.75 per share from remaining buyback capacity and additional growth investments * After the 2025 IRS inflation adjustment for the nuclear production tax credit (PTC), the projected 2030 PTC strike price increased from $49.88 to $50.88 per megawatt-hour, raising projected 2030 base earnings by approximately $0.30 per share; the PTC's automatic inflation linkage provides ongoing upside to long-term earnings if inflation exceeds the 2% annual long-term assumption, supporting a target of double-digit base earnings growth into the 2030s

Segment performance

The call did not break out financial performance by separate product segments. The company reported overall Q2 2025 GAAP earnings of $1.42 per share and adjusted operating earnings of $2.55 per share, which was $0.64 higher than the year-ago quarter. The nuclear segment delivered a 93% fleet capacity factor and generated 40 terawatt-hours of electricity, completing 6 planned refueling outages during the quarter. The 23-day average refueling outage duration outperformed the industry average by 40%, even with an extended outage for a turbine upgrade at Byron Unit 1.

Risks & headwinds

- Uncertainty remains around the final details of PJM's proposed market reforms for large load interconnection and resource adequacy, with additional clarification still needed on some provisions of the RBP and IRAS proposals * Final approval of PJM's reform proposals by FERC is still pending, which could impact customer contracting timelines and project economics * ERCOT power market prices remain under near-term pressure due to earlier-than-expected additions of battery storage and new generation that have come online before new data center load is fully connected to the grid * Public opposition to data center development and new generation projects could increase permitting and development timelines for future growth projects

Analyst Q&A

• Q: Are the new 920MW of long-term nuclear PPAs in line with your stated $20-$50/MWh pricing range, and what types of customers are these deals with? /

  A: Management confirms the deals align with Constellation's internal long-term value requirements for the nuclear fleet, matching the $20-$50/MWh range that was previously disclosed. Consistent with customer requests to protect their procurement strategies, management declined to publicly share specific pricing or full customer details, noting the 920MW includes the already announced Walmart deal and other unannounced transactions, and that robust pipeline of future deals remains active. Most of the new contracts are expected to be in PJM, where the majority of Constellation's nuclear fleet is located.

• Q: What is your view on the Batch Zero data center permitting process in ERCOT, and what is your outlook for ERCOT power prices? /

  A: Constellation has multiple early-stage data center projects participating in the Batch Zero process, and can provide all requested information Governor Abbott has asked for, with no expected meaningful delays to the process. Management notes that current weak ERCOT power prices were fully expected, as new battery and generation capacity has been added to the grid faster than new data center load has come online. Prices are expected to tighten and move toward equilibrium as data center construction is completed and load connects to the grid.

• Q: When can we expect final regulatory clarity for co-location of load and generation in PJM, and when do you expect new organic new build investments beyond the Crane restart? /

  A: PJM is expected to release its co-location proposal in November 2026, with a final FERC order expected in Q1 or Q2 of 2027, much faster than the prior 2029 target, driven by FERC pressure. Management notes that early site permitting work is ongoing at multiple sites to prepare for potential new nuclear development, with New York being the most active market for conversations with state regulators. No new nuclear build investments are imminent, so no capital expenditure impacts are expected in the near term.

• Q: How has the tone of customer conversations changed in PJM after recent regulatory progress? /

  A: Customer interest in contracting has increased significantly as regulatory uncertainty has decreased, with ambiguity historically being the biggest barrier to deal execution. Large data economy customers, which are planning hundreds of billions of dollars of infrastructure investment, just need clear rule clarity to move forward with contracting. Management expects a significant increase in deal flow once final PJM and FERC rules are confirmed, building on the 920MW of deals signed this quarter.