# How Constellation Energy makes money

CXProWealth Business Lens · Constellation Energy (CEG) · Q2 FY2026

Read from the 10-Q for the period 2026-04-01 to 2026-06-30, filed 2026-08-06 with the SEC (accession 0001868275-26-000104): https://www.sec.gov/Archives/edgar/data/1868275/000186827526000104/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $7.5B (+10.5% on the year)
- Operating income: $580.0M (operating margin 7.7%)
- Net income: $513.0M (net margin 6.8%)
- Gross margin: not reported (the company reports expenses by nature: no cost of revenue or gross profit line exists)
- Free cash flow: -$118.0M (-1.6% of revenue)
- Cash conversion (operating cash flow / net income): 2.20x
- Capital expenditure: 16.6% of revenue

## Where the money goes (Q2 FY2026)

- Operating revenues → Total operating expenses: $6.9B
- Total operating expenses → Purchased power and fuel: $4.0B
- Total operating expenses → Operating and maintenance: $2.3B
- Total operating expenses → Depreciation and amortization: $443.0M
- Total operating expenses → Taxes other than income taxes: $207.0M
- Operating revenues → Operating income (loss): $578.0M
- Gain (loss) on sales of assets → Operating income (loss): $2.0M
- Operating income (loss) → Income (loss) before income taxes: $580.0M
- Total other income and (deductions) → Income (loss) before income taxes: $320.0M
- Income (loss) before income taxes → Income tax (benefit) expense: $398.0M
- Income (loss) before income taxes → Net income (loss): $502.0M
- Equity in income (losses) of unconsolidated affiliates → Net income (loss): $6.0M
- Net income (loss) → Net income (loss) attributable to common shareholders: $508.0M
- Net income (loss) attributable to noncontrolling interests → Net income (loss) attributable to common shareholders: $5.0M

## Where the revenue comes from

### Segments (Segment Information - Generation Total Revenues (Details))

| Member | Value | Share |
|---|---:|---:|
| Calpine | $2.1B | 28.6% |
| Midwest | $1.6B | 20.9% |
| Mid-Atlantic | $1.6B | 20.7% |
| Other Power Regions | $964.0M | 12.8% |
| New York | $564.0M | 7.5% |
| Ercot | $446.0M | 5.9% |

The members do not sum to total revenue.

### RevenueType (Revenue from Contracts with Customers - Disaggregation of Revenue (Details))

| Member | Value | Share |
|---|---:|---:|
| Power and Power-related Revenues | $5.0B | 66.1% |
| Other Revenues | $2.1B | 28.6% |
| Capacity Revenues | $396.0M | 5.3% |

The members sum to total revenue.

### ConsolidationItems (Segment Information - Generation Total Revenues (Details))

| Member | Value | Share |
|---|---:|---:|
| Operating Segments | $7.2B | 96.5% |
| Segment Reconciling Items | $260.0M | 3.5% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q2 FY2026 | Of revenue |
|---|---:|---:|
| Operating revenues | $7.5B | 100% |
| Purchased power and fuel | $4.0B | 53.6% |
| Operating and maintenance | $2.3B | 30.0% |
| Depreciation and amortization | $443.0M | 5.9% |
| Taxes other than income taxes | $207.0M | 2.8% |
| **Total operating expenses** | $6.9B | 92.3% |
| Gain (loss) on sales of assets | $2.0M | 0.0% |
| **Operating income (loss)** | $580.0M | 7.7% |
| Interest expense, net | ($283.0M) | 3.8% |
| Other, net | $603.0M | 8.0% |
| **Total other income and (deductions)** | $320.0M | 4.3% |
| **Income (loss) before income taxes** | $900.0M | 12.0% |
| Income tax (benefit) expense | $398.0M | 5.3% |
| Equity in income (losses) of unconsolidated affiliates | $6.0M | 0.1% |
| **Net income (loss)** | $508.0M | 6.8% |
| Net income (loss) attributable to noncontrolling interests | -$5.0M | 0.1% |
| **Net income (loss) attributable to common shareholders** | $513.0M | 6.8% |
| **Net income (loss)** | $508.0M | 6.8% |
| Prior service benefit reclassified to periodic benefit cost | $0 | 0.0% |
| Actuarial loss reclassified to periodic cost | (-$26.0M) | 0.3% |
| Pension and non-pension postretirement benefit plan valuation adjustment | ($0) | 0.0% |
| Unrealized gain (loss) on cash flow hedges | $2.0M | 0.0% |
| Unrealized gain (loss) on foreign currency translation | -$1.0M | 0.0% |
| **Other comprehensive income (loss), net of income taxes** | $27.0M | 0.4% |
| **Comprehensive income (loss)** | $535.0M | 7.1% |
| Comprehensive income (loss) attributable to noncontrolling interests | -$5.0M | 0.1% |
| **Comprehensive income (loss) attributable to common shareholders** | $540.0M | 7.2% |
| Basic (in shares) | 360,000,000 |  |
| Assumed exercise and/or distributions of stock-based awards (in shares) | 0 |  |
| **Diluted (in shares)** | 360,000,000 |  |
| Basic (in dollars per share) | $1 | 0.0% |
| Diluted (in dollars per share) | $1 | 0.0% |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2020 | $17.6B | $256.0M | $589.0M | $584.0M | $1.7B | -$1.2B |
| FY2021 | $19.6B | -$346.0M | -$205.0M | -$1.3B | $1.3B | -$2.7B |
| FY2022 | $24.4B | $495.0M | -$160.0M | -$2.4B | $1.7B | -$4.0B |
| FY2023 | $24.9B | $1.6B | $1.6B | -$5.3B | $2.4B | -$7.7B |
| FY2024 | $23.6B | $4.4B | $3.7B | -$2.5B | $2.6B | -$5.0B |
| FY2025 | $25.5B | $3.1B | $2.3B | $4.2B | $2.9B | $1.3B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +8.3% (year before -5.4%): accelerating
- Operating income: -29.1% (year before +170.3%): slowing
- Net income: -38.1% (year before +131.0%): slowing
- Free cash flow: +74.4% (year before —): too short a history to read

## Operating figures stated in the filing

- Generating capacity: 55 gw (as of 2026-06-30). "With 55 gigawatts of capacity from nuclear, natural gas, oil, geothermal, hydro, wind and solar facilities" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Retail customer accounts: 2,500,000 accounts (as of 2026-06-30). "serving approximately 2.5 million customer accounts nationwide, including 80% of the Fortune 100" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Nuclear fleet capacity factor: 93.0% (as of 2026-06-30). "Nuclear fleet capacity factor 93.0 % 94.8 % 92.7 % 94.5 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Nuclear fleet capacity factor: 94.8% (as of 2025-06-30). "Nuclear fleet capacity factor 93.0 % 94.8 % 92.7 % 94.5 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Refueling outage days: 86 days (as of 2026-06-30). "Refueling outage days 86 41 185 129" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Refueling outage days: 41 days (as of 2025-06-30). "Refueling outage days 86 41 185 129" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Equivalent forced outage factor (natural gas, oil and pumped-storage hydro): 6.2% (as of 2026-06-30). "The EFOF for the three and six months ended June 30, 2026 was 6.2% and 5.2%, respectively." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Nuclear generation: 44,160 gwh (as of 2026-06-30). "Total Nuclear Generation 44,160 45,170 (1,010) (2.2) % 88,827 90,753 (1,926) (2.1) %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Nuclear generation: 45,170 gwh (as of 2025-06-30). "Total Nuclear Generation 44,160 45,170 (1,010) (2.2) % 88,827 90,753 (1,926) (2.1) %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Natural gas, oil and renewables generation: 30,649 gwh (as of 2026-06-30). "Total Natural Gas, Oil, and Renewables 30,649 5,560 25,089 451.2 % 62,711 11,465 51,246 447.0 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Natural gas, oil and renewables generation: 5,560 gwh (as of 2025-06-30). "Total Natural Gas, Oil, and Renewables 30,649 5,560 25,089 451.2 % 62,711 11,465 51,246 447.0 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Total electricity supply and sales: 89,815 gwh (as of 2026-06-30). "Total Supply/Sales by Segment 89,815 65,641 24,174 36.8 % 183,145 134,064 49,081 36.6 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Total electricity supply and sales: 65,641 gwh (as of 2025-06-30). "Total Supply/Sales by Segment 89,815 65,641 24,174 36.8 % 183,145 134,064 49,081 36.6 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- New long-term nuclear PPAs signed: 920 mw (as of 2026-06-30). "We have signed an additional 920 MW of long-term PPAs for clean, reliable nuclear generation with a diverse set of investment grade customers to help them meet their evolving energy needs." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)

## Key insights

### Nuclear now supplies under half of what Constellation sells

Nuclear output was 49.2% of the 89,815 GWh supplied, against 68.8% a year earlier, as Calpine's natural gas fleet joined the mix.

Total supply and sales reached 89,815 GWh against 65,641 GWh a year earlier. Nuclear generation fell to 44,160 GWh from 45,170 GWh, while natural gas, oil and renewables output rose to 30,649 GWh from 5,560 GWh. That category moved from 8.5% of supply to 34.1%. The rest of supply is power bought in the market to serve customers. _(from the filing)_
Calpine, acquired in January, is now the largest segment by revenue: $2,147 million, 28.6% of $7,504 million in operating revenues. The filing describes the merger as coupling the largest producer of emissions-free energy with Calpine's dispatchable natural gas assets, and as creating the nation's leading competitive retail electric supplier. _(from the filing)_
Analysis: this changes what drives profit. A nuclear plant's costs are mostly fixed and its fuel is contracted years ahead; a gas plant earns the spread between power and gas prices each hour it runs. Purchased power and fuel took 53.6% of revenue against 51.3% a year earlier, consistent with a larger fuel-burning fleet, though the filing also cites hedge marks and higher transmission costs. _(analysis)_

### Revenue rose 23.0% but operating income fell 39.0%

Total operating expenses grew 34.5%, outpacing sales, and cut the operating margin to 7.7% from 15.6%, with costs the filing ties largely to Calpine.

Operating revenues were $7,504 million against $6,101 million. Purchased power and fuel rose 28.4% to $4,023 million, operating and maintenance 39.3% to $2,253 million, and depreciation and amortization 74.4% to $443 million. Operating income was $580 million against $951 million. _(from the filing)_
The filing ties the operating and maintenance increase largely to labor and contracting costs from adding Calpine's operations, to Calpine merger and integration costs, and to nuclear refueling outages, and the depreciation increase mainly to assets acquired from Calpine. It names unrealized losses on economic hedges, merger and integration costs and nuclear outages as the main reasons profit fell, partly offset by higher capacity revenues and the added Calpine operations. _(from the filing)_
Analysis: several of these costs come from the deal rather than from running the plants: integration spending, depreciation on assets revalued at purchase, and hedge marks that reflect price moves on power not yet delivered. That makes a single quarter's 7.7% operating margin a weak guide on its own. The test is whether the margin recovers as integration costs fade and the Calpine fleet runs a full year. _(analysis)_

### Non-operating gains outweighed operating profit this quarter

Other, net of $603 million exceeded $580 million of operating income and made up 67.0% of pre-tax income, mostly from decommissioning-related activities.

Other, net added $603 million against $440 million a year earlier. The filing attributes it mostly to decommissioning-related activities, which include gains on the nuclear decommissioning trust funds. It equaled 67.0% of the $900 million of income before taxes, against 34.6% of $1,273 million a year earlier. _(from the filing)_
The same gains raised the tax bill. Income tax expense was $398 million, 44.2% of pre-tax income against 34.6% a year earlier, which the filing explains by higher qualified trust fund income taxed at a higher rate. Net interest expense, $283 million against $118 million, took 48.8% of operating income against 12.4%. _(from the filing)_
Net income to common shareholders was $513 million against $839 million. With 360 million diluted shares against 314 million, after the stock issued for Calpine, earnings per share were $1.42 against $2.67. _(from the filing)_
Analysis: trust fund results follow financial markets, not power sales, and the company removes decommissioning-related activities from its adjusted (non-GAAP) operating earnings. Reported net income this quarter therefore says less than usual about the power business; operating income and cash flow are the better read of how the fleet performed. _(analysis)_

### Capital spending absorbed all of the quarter's operating cash

Capital spending of $1,246 million was 110.5% of $1,128 million in operating cash flow, turning free cash flow to minus $118 million from $710 million.

Operating cash flow was $1,128 million against $1,477 million a year earlier, and capital spending $1,246 million against $767 million. A year earlier capital spending used 51.9% of operating cash; this quarter it used 110.5%, and it equaled 16.6% of revenue. _(from the filing)_
For the first half, the filing attributes higher capital spending to the planned restart of the Crane nuclear plant, the inclusion of Calpine, and infrastructure for large loads co-located at its plants. For the full year 2025, capital spending of $2,949 million was 69.6% of $4,237 million in operating cash flow, leaving free cash flow of $1,288 million. _(from the filing)_
Analysis: operating cash flow was 2.2 times net income to common shareholders, so earnings are not the constraint on cash here; the investment program is. Quarterly cash flow also swings with collateral, working capital and the timing of program refunds, so one quarter does not set a trend. The filing expects the required divestitures to close by year end, and their proceeds bear on how much of this spending is funded by borrowing. _(analysis)_

### Competitive edge

- **A large nuclear fleet that runs almost continuously** Even with refueling outage days at 86 against 41, the nuclear fleet ran at a 93.0% capacity factor and produced 44,160 GWh.
- **Long contracts with large buyers for firm clean power** The company signed another 920 MW of long-term nuclear power agreements with investment grade customers, turning part of a volatile commodity into contracted revenue.
- **Its own plants serve its own customers** Pairing 55 gigawatts of plants with about 2.5 million retail accounts lets rising prices lift generation earnings while raising supply costs, narrowing net exposure.

### What to watch

- **Commodity prices and hedge marks swing reported results** Purchased power and fuel took 53.6% of revenue, and the filing names unrealized hedge losses first among the reasons profit fell this quarter.
- **More debt raises the stakes of a rating downgrade** Net interest expense was $283 million against $118 million, 48.8% of operating income, and losing investment grade would require substantial extra collateral.
- **Market rules and approvals shape revenue and timing** Capacity prices, how data centers connect beside existing plants, the required divestitures and the Crane restart all depend on regulators, not demand alone.

## Investor view

**Calpine lifted Constellation's revenue 23.0%, but fuel, operating costs, depreciation and interest grew faster, and operating income fell**

### How it makes money

Constellation sells electricity, and the capacity to supply it, from its own plants and from power it buys. The filing describes 55 gigawatts of nuclear, natural gas, oil, geothermal, hydro, wind and solar capacity, and a retail business serving about 2.5 million customer accounts. In the quarter, power and power-related sales were $4,959 million, 66.1% of $7,504 million in operating revenues. _(from the filing)_
The largest cost is the commodity itself. Purchased power and fuel was $4,023 million, 53.6% of revenue. The company judges its regions on the spread between the two: "RNF is Operating revenues net of Purchased power and fuel expenses." Running costs, depreciation and taxes come out of that spread. _(from the filing)_
Nuclear is the base of the supply. The fleet generated 44,160 GWh in the quarter at a 93.0% capacity factor, 49.2% of the 89,815 GWh the company supplied or sold. Natural gas, oil and renewables added 30,649 GWh, and the rest was power bought in the market to serve customers. _(from the filing)_
Capacity revenues, paid for being available to the grid rather than for energy delivered, were $396 million, 5.3% of revenue. Other revenues, which include natural gas sales and contracts accounted for as derivatives, were $2,149 million, 28.6% of revenue. _(from the filing)_

### What shifted

Calpine, acquired in January, is now the largest segment: $2,147 million of revenue, 28.6% of the total. It moved natural gas, oil and renewables output to 30,649 GWh from 5,560 GWh a year earlier, and total supply and sales to 89,815 GWh from 65,641 GWh. Nuclear generation fell to 44,160 GWh from 45,170 GWh. _(from the filing)_
Costs grew faster than revenue. Purchased power and fuel rose 28.4%, operating and maintenance 39.3% and depreciation and amortization 74.4%, to $443 million. The filing ties the operating cost rise largely to Calpine's operations and to merger and integration costs, and the depreciation rise to assets acquired from Calpine. Operating income was $580 million against $951 million. _(from the filing)_
The filing gives three main reasons for lower profit: unrealized losses on economic hedges, Calpine merger and integration costs, and nuclear outages. Refueling outage days rose to 86 from 41, and the nuclear capacity factor slipped to 93.0% from 94.8%. Higher capacity revenues and the added Calpine operations partly offset these. _(from the filing)_
Below operating income, financing costs reset. Net interest expense was $283 million against $118 million, 48.8% of operating income against 12.4% a year earlier. Other, net added $603 million, more than operating income itself, mostly from decommissioning-related activities. Net income to common shareholders was $513 million against $839 million, or $1.42 per share against $2.67, on 360 million diluted shares against 314 million. _(from the filing)_

### Risks in the filing

The quarterly report states that its risk factors are unchanged from the annual report, which already covered the Calpine acquisition and its operations. The exposure it discusses first is commodity prices: the price of electricity, fuel and capacity has a significant impact on revenue and purchased power cost, and generation that is not hedged moves with forward prices. _(from the filing)_
Credit ratings carry collateral risk. The company says its access to capital markets and its financing costs may depend on its ratings, and that losing investment grade would require it to post substantial additional collateral on derivatives and other contracts, possibly beyond its credit facilities and cash, sending it to the capital markets for more liquidity. _(from the filing)_
Nuclear fuel supply is named directly. The company monitors the Russia and Ukraine conflict, U.S. restrictions on Russian enriched uranium and Russian export limits, and has contracted to enlarge its nuclear fuel inventory to protect continuity of supply over the longer term. _(from the filing)_
Regulation shapes both revenue and timing. The filing cites PJM capacity market reform and FERC orders on co-located large loads, regulatory approvals still needed to close the divestitures required for the Calpine merger, and NRC and state approvals for the planned Crane restart, whose full delivery to the grid depends on transmission upgrades. _(from the filing)_
Two of these named risks already show in the numbers. Unrealized hedge losses were a main reason profit fell, which is commodity price exposure reaching the income statement before the hedged power is delivered. Nuclear outages, an operating risk, cut generation and appear among the filing's stated causes of the decline. _(analysis)_

## Founder view: mechanisms

### Availability is the product

A nuclear plant's costs are almost entirely fixed: staff, maintenance, fuel loaded long in advance, decommissioning. Revenue arrives only for energy produced and capacity kept available. So the model is to run a large fleet as close to continuously as possible, schedule refueling tightly and spread the fixed cost over the most output. Small changes in uptime move profit far more than they move cost. _(analysis)_

### Own supply matched to own customers

Constellation pairs its plants with a large retail and wholesale customer book. Selling its own output to its own customers lets one side offset the other: when market prices rise, generation earns more while the cost of supplying customers rises with it. What the two sides do not cancel is hedged in the market, concentrated in the nearest years where trading is deep enough to do it well. _(analysis)_

### Buying scale front-loads the cost

The Calpine acquisition bought a dispatchable gas fleet, a second retail book and wider geographic reach in one step. Deals like this deliver revenue at once but also bring depreciation on revalued assets, interest on assumed and new debt, integration costs and more shares. The economics are judged over years; the first quarters carry the costs before savings and new contracts arrive. _(analysis)_

### Selling certainty to large buyers

Beyond energy, Constellation sells availability and clean supply. Capacity markets pay for plants kept ready; long-term power purchase agreements with large companies pay for firm, emissions-free supply years ahead; data center developers short of grid connections pay for sites, interconnection and power next to existing plants. Each turns part of a volatile commodity into contracted revenue. _(analysis)_

## Member research

Signed-in members read, on the page: what Constellation Energy's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Constellation Energy 10-Q for the period to 2026-06-30: https://www.sec.gov/Archives/edgar/data/1868275/000186827526000104/ (2026-08-06)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02