Southern Company (the) · NYSE:SO
Southern Company (the) — Q2 2017 Earnings Presentation
22 slides from Southern Company (the)'s earnings presentation, Aug 2, 2017
Slide 1: Earnings Conference Call Second Quarter 2017
Earnings Conference Call Second Quarter 2017 August 2, 2017
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Certain information contained in this presentation is forward‐looking information based on current expectations and plans that involve risks and uncertainties. Forward‐looking information includes, among other things, statements concerning ongoing
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to including earnings in accordance with generally accepted accounting principles (GAAP), this presentation also includes historical adjusted earnings and earnings per share (EPS) excluding: (1) estimated losses relating to Mississippi Power’s integrated coal
Slide 4: Southern Company Update
Southern Company Update • Continued strong operational and adjusted financial results across our major businesses • Kemper: Ongoing settlement discussions pursuant to the Mississippi PSC order on July 6, 2017 • Progress at the Vogtle 3&4 site continues as Georgia Power is in the final stages of form
Slide 5: Kemper Project Update
Kemper Project Update • Successfully demonstrated every major facet of the TRIG technology at commercial scale • Recorded $2.8 billion pre-tax ($2 billion after-tax) charge in June – Future cancellation costs of $100 million - $200 million not included • Ongoing settlement discussions pursuant to th
Slide 6: Vogtle 3&4 Construction Site Update
Vogtle 3&4 Construction Site Update Work continues at the site as productivity has improved over the first half of 2017 % Complete as Project Phase Remaining of May 2017 - Finalizing electrical design from China lessons learned Engineering 98% - Construction improvements Procurement 84% - Bulk procu
Slide 7: Vogtle 3&4 Toshiba Parent Guarantee and Westinghouse Services Agreements
Vogtle 3&4 Toshiba Parent Guarantee and Westinghouse Services Agreements • Toshiba Parent Guarantee Agreement finalized in June – Fixes Toshiba’s obligation to the project owners - whether the project is completed or not – $3.68 billion, or approximately $1.7 billion to Georgia Power – Monthly payme
Slide 8: Vogtle 3&4 Cost and Schedule Estimates
Vogtle 3&4 Cost and Schedule Estimates Georgia Power’s 45.7% ownership share Vogtle “Go” Vogtle “No-go” Preliminary in-service dates Estimated range of outcomes Preliminary Cancellation Cost Estimate Unit 3 February 2021 - March 2022 (in billions) Unit 4 February 2022 - March 2023 CWIP as of June 30
Slide 9: Key Events and Vogtle 3&4 Next Steps
Key Events and Vogtle 3&4 Next Steps • Fuel load at Sanmen and Haiyang in China • Recommendation to Georgia PSC later in August • 1st Toshiba payment due in October 9
Slide 10: 2017 Q2 Earnings Results
2017 Q2 Earnings Results Q2 2017 2016 Earnings Per Share As Reported ($1.38) $0.67 Kemper IGCC Impacts1 $2.09 $0.05 Acquisition and Integration costs2 - $0.03 Wholesale Gas Services $0.02 - Earnings Per Share Excluding Items $0.73 $0.75 1. Kemper IGCC impacts for 2017 includes $2.12 for the estimate
Slide 11: Q2 2017 vs. Q2 2016 Adjusted EPS Drivers
Q2 2017 vs. Q2 2016 Adjusted EPS Drivers Traditional Southern Electric Company Operating Gas Companies Q2 Drivers + Other Revenue Effects at Traditional Electric Operating Companies – Weather – Financings to support growth Excluding Estimated losses associated with the Kemper IGCC project and additi
Slide 12: 2017 Q2 and Projected Full Year Adjusted EPS
2017 Q2 and Projected Full Year Adjusted EPS 2017 Q2 Adjusted EPS 2017 Projected Full Year Adjusted EPS $0.09 ($0.29) $3.02 9¢ (7¢) $2.78 $2.78 $0.38 All Other All Other Parent / Other to Q2 Earnings $2.90 $2.78 Energy Energy Infrastructure Infrastructure under underlong-term long-term 1 contracts 1
Slide 13: Southern Company 2017 Financings
Southern Company 2017 Financings1 As of July 31, 2017 $3.4 billion Long-Term Debt issued Year-to-Date / Up to $2.8 billion remaining in 2017 millions $1,800 Projected DOE Draw 2 $1,600 Projected Sr. Debt Potential Sr. Debt $400 Additional Need $1,400 2017 Base Plan Issued Year-to-Date $1,200 $400 $1
Slide 14: Long-term EPS growth trajectory
Long-term EPS growth trajectory 5% Long-term growth remains achievable $3.02 $2.90 2017 2018 2019 2020 2021 Excludes projected merger-related expenses and earnings from Wholesale Gas Services, any additional estimated losses associated with the Kemper County energy facility. 14 Long-term guidance wi
Slide 15: Dividend Growth
Dividend Growth We believe the current dividend growth trajectory is sustainable1 +8¢ +7¢ +7¢ +7¢ +7¢ +7¢ +7¢ +7¢ +7¢ +7¢ +6¢ +6¢ +6¢ +3¢ +3¢ +3¢ 1 2002 2003 2004 2005 2006 2007 Dividend 2008 increases 2009 since 2010 2002 2011 2012 2013 2014 2015 2016 2017 2017 Our objective remains: Regular, predi
Slide 16: Appendix
Appendix 16
Slide 17: 2017 Q2 Earnings Results Reconciliation
2017 Q2 Earnings Results Reconciliation Q2 (millions) 2017 2016 Net Income As Reported ($1,381) $623 Estimated Loss on Kemper IGCC 3,012 81 Tax Impact (896) (31) Acquisition and Integration Costs 9 44 Tax Impact (4) (13) Wholesale Gas Services 28 - Tax Impact (11) - Earnings Guidance Comparability I
Slide 18: Vogtle 3&4 Construction Update
Vogtle 3&4 Construction Update Unit 3 Unit 4 Progress Progress ✓ Started Auxiliary Bldg Walls to EL. 107’ ✓ Set KB11, KB12, and R104 mechanical modules inside the ✓ Continued installation of reactor coolant piping Auxiliary Building ✓ Placed concrete in cylindrical wall RC-03 from EL. 100’-107’2” &
Slide 19: Vogtle 3&4: Toshiba Obligation Payment Schedule
Vogtle 3&4: Toshiba Obligation Payment Schedule in millions 2017 2018 2019 2020 2021 Georgia Georgia Georgia Georgia Georgia Vogtle Power Vogtle Power Vogtle Power Vogtle Power Vogtle Power Owners 45.7% Owners 45.7% Owners 45.7% Owners 45.7% Owners 45.7% January $77.5 $35.4 $51.5 $23.5 $110.0 $50.3
Slide 20: Southern Company Liquidity and Credit
Southern Company Liquidity and Credit As of June 30, 2017 Over $8.1 billion in combined committed credit facilities and available liquidity of over $5.5 billion (in millions) 2017 2018 2019 2020 2022 Total Consolidated Credit Facilities Expirations $156 $757 $25 $30 $7,200 $8,168 Alabama Georgia Mis
Slide 21: Long-term Debt Maturity Schedule
Long-term Debt Maturity Schedule As of June 30, 2017 (in millions) Remaining 2017 2018 2019 2020 2021 5Y Total Alabama Power $361 - $200 $250 $310 $1,121 Georgia Power - 750 500 494 369 2,113 Gulf Power - - - 175 - 175 Mississippi Power 35 900 125 7 270 1,337 Southern Power 560 670 600 300 300 2,430
Slide 22: We target FFO to Debt of >16% over the long term
We target FFO to Debt of >16% over the long term Numerator (using 10-K Statements of Cash Flow) Net cash provided from operating activities Less: Changes in certain current assets and liabilities Plus: Retail fuel cost over/under recovery – short-term Key drivers for 2018 and beyond Less: Distributi