Constellation Energy Group Inc.‘s (CEG) earnings for the second quarter of fiscal 2010 came in below the Zacks Consensus Estimate of 75 cents, slipping by 4 cents to 71 cents. The quarter’s earnings were also below the year-ago EPS of $1.08 by a large margin of 37 cents. On a reported basis, including one-time items, earnings came in at 36 cents, compared with earnings of 4 cents in the second quarter of 2009.
Operational Results
Constellation Energy’s total revenues of $3.3 billion lagged 21% compared to the Zacks Consensus Estimate of $4.2 billion. On a year-over-year basis, revenues decreased 14% from $3.9 billion in the prior-year quarter. Non-regulated revenues fell 17% year over year to $2.6 billion, regulated electric revenues fell 0.7% to $651.1 million and regulated gas revenues dropped 10% to $99.6 million.
In the reported quarter, volume sales of electricity rose 7.4% year over year. Residential volume sales rose 15%, commercial rose 4.5% while industrial fell 5.3% compared to the prior year.
Segment Results
Baltimore Gas and Electric Company (BGE) reported adjusted earnings of 7 cents per share, up one cent from the year-ago quarter, driven largely by improved customer collections in 2010.
The Generation segment reported adjusted earnings of 43 cents per share, compared with adjusted earnings of 37 cents in the same period last year. The increase is attributed to the benefits realized from the power purchase agreement with CENG and reduced interest expenses. Partly offsetting this increase was the impact of the sale of a 49.99% interest in Constellation Energy’s nuclear business to EDF Group in November 2009.
The NewEnergy segment reported adjusted earnings of 21 cents per share, compared with 66 cents per share last year. This year-over-year variance was a result of earnings increases in the second quarter of 2009, which came primarily from the benefits realized from the sale of a wholesale contract last year. Furthermore, segment results were affected by the company’s previously announced restructuring of wholesale energy operations, which led to lower overall volumes this quarter.
Financial Condition
Constellation Energy reported $1.6 billion of cash and cash equivalents at the end of the second quarter 2010, compared to $3.4 billion at fiscal-end 2009. Long-term debt (net of current portion) fell to $3.8 billion, compared to $4.4 billion at fiscal-end 2009.
Outlook
Constellation Energy retained its fiscal 2010 earnings guidance in the range of $3.05 – $3.45 and its 2011 guidance range of $3.25 –$3.65. This is largely in line with the Zacks Consensus Estimate of $3.32 for 2010 and $3.43 for 2011.
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