Southern Company (the) · NYSE:SO
Southern Company (the) — The Southern Company — Q4 2023 Earnings Presentation
41 slides from Southern Company (the)'s earnings presentation, Feb 15, 2024
Slide 1: Fourth Quarter 2023 Earnings Conference Call
Fourth Quarter 2023 Earnings Conference Call February 15, 2024
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, financial objectives, earning
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to including earnings per share (EPS) in accordance with generally accepted accounting principles (GAAP), this presentation also includes historical adjusted EPS excluding: (1) estimated loss on plants under construction; (2) acquisition and disposition impact
Slide 4: Southern Company Value Proposition
Southern Company Value Proposition Strategy: Maximize long-term value to shareholders through a customer-, community-, and relationship-focused business model that produces sustainable levels of return for investors Key financial objectives ✓ Superior risk-adjusted total shareholder return 76 years
Slide 5: Strong near-term adjusted EPS projections and a clean, simple growth story
Strong near-term adjusted EPS projections and a clean, simple growth story Adjusted Full-Year Earnings at the Very Top of EPS Guidance Range • 2023 adjusted EPS of $3.65 • 2024 adjusted EPS guidance range of $3.95 to $4.05 – Midpoint of $4.00 represents 10% growth from 2023 adjusted results – Assume
Slide 6: Highlighting Our Successes
Highlighting Our Successes 2023 Top 50 Companies for 2024 World’s Most Diversity, DiversityInc (8th consecutive year), No. 1 for Black Admired Companies™, executives, No. 3 for veterans, Fortune magazine No. 5 for Supplier Diversity 2023 America’s Best Large No. 1 in Electric & Natural Employers (No
Slide 7: 2023 Earnings Results
2023 Earnings Results Q4 YTD 2023 2022 2023 2022 Earnings / (Loss) Per Share As Reported $0.78 ($0.08) $3.64 $3.28 Less: Estimated Loss on Plants Under Construction1 $0.15 ($0.14) $0.03 ($0.14) Acquisition and Disposition Impacts2 $0.03 ($0.09) $0.03 ($0.07) Loss on Extinguishment of Debt3 - - - - I
Slide 8: 2023 Year-Over-Year Adjusted Drivers
2023 Year-Over-Year Adjusted Drivers1 38¢ (44¢) 2¢ 0¢ (4¢) 35¢ (6¢) $3.65 $3.60 (16¢) Southern Parent & Shares Southern Power Other Weather Company O&M Gas Rates, Pricing, D&A, Interest, Usage & Other Taxes & Other State-Regulated Electric Utilities = +13¢ 2023 Key Drivers + Investment in state-regu
Slide 9: Retail Electricity Sales
Retail Electricity Sales • Strong commercial growth and usage, offset by lower Weather-Normal Retail residential usage (largely return to the office dynamics) Electricity Sales 2023 vs. 2022 -0.4% Total • Lower industrial usage, partially driven by continued weakness in housing-related sectors and c
Slide 10: Our electric customer base remains balanced and diverse
Our electric customer base remains balanced and diverse 2023 Weather-Normal Retail Electric Sales Top 10 Commercial Segments Top 10 Industrial Segments Office 18% Primary Metals 12% Retail 14% Chemicals 12% Education 13% Commercial Industrial Paper 10% Healthcare 11% 33% 34% Pipeline 8% Data Center
Slide 11: Economic development success in Georgia driving significant growth
Economic development success in Georgia driving significant growth 45.6K Projected Cumulative Winter Peak Load Growth Hyundai 8GW & Rivian 2022 IRP 15.6K 2023 IRP Update 30.0K 6GW 26.5K 22.9K 18.4K 4GW 16.0K 2GW GW 2019 2020 2021 2022 2023 2025 2026 2027 2028 2029 2030 2031 Tens of thousands Growth
Slide 12: 2024 Adjusted EPS Guidance = $3.95 to $4.05
2024 Adjusted EPS Guidance1 = $3.95 to $4.05 >90% of Projected Earnings from Premier State-Regulated Electric and Gas Franchises $0.07 $0.38 All Other ($0.71) $4.05 Energy to LDCs $0.50 Infrastructure Parent $3.95 under long-term contracts2 Electrics $3.76 Q1 2024 Adjusted EPS Estimate1 = $0.90 Stat
Slide 13: 97% of Projected Capital Investment in State-Regulated Utilities
97% of Projected Capital Investment in State-Regulated Utilities ~$5 billion increase from previous 5-year total $48B Capital Investment Plan1 drives projected rate base growth of 6% and underpins 5% to 7% projected adjusted EPS growth State-Regulated Gas (8% rate base growth) • 60% in pipeline repl
Slide 14: Growth of Historical Capital Forecast
Growth of Historical Capital Forecast (Annual State-Regulated Utility Capex Forecast Excluding Plant Vogtle Units 3 & 4 Construction) $12B 2024 Plan partially $10B reflects incremental resource needs identified in the Georgia Power 2023 IRP Update $8B $6B $4B 2024 2025 2026 2027 2020 Plan 2021 Plan
Slide 15: Investing to deliver clean, safe, reliable and affordable energy to customers
Investing to deliver clean, safe, reliable and affordable energy to customers Maintenance Growth capital view; Alternative Resilience Compliance thinking through better Other characterization of “other” bucket $48B Capital $48 billion Base Capital Investment Investment Plan* drives Plan* supports ou
Slide 16: Appendix
Appendix 16
Slide 17: Capital Investment Plan
Capital Investment Plan 17
Slide 18: State-Regulated Electric Utilities Overview
State-Regulated Electric Utilities Overview Long-Term Projected Rate Base Growth: ~6% Projected Capital Investment Composition5 2024 - 2028 2023 2023 Invested Allowed Retail Customers Capital1 Equity Ratio Georgia Power 2.7M $38B 56%2 12% 24% Alabama Power 1.5M $23B 55%3 10% Mississippi Power 0.2M $
Slide 19: State-Regulated Gas LDCs Overview
State-Regulated Gas LDCs Overview Long-Term Projected Rate Base Growth: ~8% Projected Capital Investment Composition 2024 - 2028 2023 2023 Rate Allowed Customers Base1 Equity Ratio Nicor Gas (IL) 2.3M $6B 50% 15% 17% Atlanta Gas Light (GA) 1.7M $4B 56% Virginia Natural Gas (VA) 313K $1B 49% $9B Chat
Slide 20: $48 Billion in Projected Capital Investment Through 2028: Functional View
$48 Billion in Projected Capital Investment Through 2028: Functional View Excluding Plant Vogtle Unit 4 Construction Total (in $ billions) 2024 2025 2026 2027 2028 '24-'28 New Generation 0.9 0.9 0.4 0.0 0.0 2.2 Generation Maintenance 1.3 1.1 1.0 1.1 0.9 5.4 Environmental Compliance 0.1 0.1 0.1 0.1 0
Slide 21: $48 Billion in Projected Capital Investment Through 2028: Company View
$48 Billion in Projected Capital Investment Through 2028: Company View Excluding Plant Vogtle Unit 4 Construction Total (in $ billions) 2024 2025 2026 2027 2028 '24-'28 Alabama Power 2.4 2.4 2.2 2.2 2.1 11.4 Georgia Power 5.5 5.3 4.8 4.9 5.1 25.6 Mississippi Power 0.3 0.4 0.3 0.3 0.3 1.5 State-Regul
Slide 22: Capital Markets / Financing
Capital Markets / Financing 22
Slide 23: Long-term Financings
Long-term Financings 1 as of February 15, 2024 Projected Long-term Debt ($ in millions) 2024 2025 2026 2024-2026 Alabama Power 300 450 300 1,050 Georgia Power 2,000 2,000 1,000 5,000 Mississippi Power 250 - - 250 State-Regulated Electrics $2,550 $2,450 $1,300 $6,300 Southern Power 300 - 300 600 Sout
Slide 24: Long-term Debt Maturity Tower
Long-term Debt Maturity Tower1 as of February 15, 2024 $6,000 Long-term Debt1 Alabama Power $11.3B Georgia Power $16.6B $5,000 Mississippi Power $1.6B Southern Company Gas Capital $5.1B Nicor Gas $2.5B $4,000 Southern Power $2.7B 4176 Parent Company $19.9B 500 2250 Total Long-term Debt Maturities3 $
Slide 25: Long-term Debt Maturity Schedule
Long-term Debt Maturity Schedule1 as of February 15, 2024 Projected Long-term Debt ($ in millions) 2024 2025 2026 2024-2026 Alabama Power 2 21 250 45 316 Georgia Power 486 831 424 1,741 Mississippi Power 200 11 65 276 State-Regulated Electrics 3 $807 $1,092 $534 $2,433 Southern Power - 500 964 1,464
Slide 26: Liquidity and Credit
Liquidity and Credit $ in millions as of December 31, 2023 Over $7.6 billion in committed credit facilities and available liquidity of over $4.8 billion (in millions) 2024 2025 2026 2028 Total Credit Facility Expirations $280 $125 $800 $6,400 $7,605 Alabama Georgia Mississippi Southern Southern Pare
Slide 27: Vogtle 3 & 4
Vogtle 3 & 4 27
Slide 28: Plant Vogtle Units 3 & 4 Milestone Timeline Comparison
Plant Vogtle Units 3 & 4 Milestone Timeline Comparison Unit 3 Days between Major Milestones Unit 4 Improvement July 2023 COD Cold Hydro Start 10/16/20 12/7/22 Cold Hydro to Hot Functional Test Start 191 days 103 days 88 days 4/25/21 3/20/23 Hot Functional Test Duration 94 days 42 days 52 days 7/28/2
Slide 29: Plant Vogtle Units 3 & 4 Cost Update
Plant Vogtle Units 3 & 4 Cost Update (Georgia Power’s share) Estimated Cost of Project ($M) Base project capital cost forecast through Q2 20241,2 $10,717 Construction contingency estimate 36 Total project capital cost forecast1,2 $10,753 Net investment as of December 31, 20232 (10,564) Remaining est
Slide 30: Projected Financial Impacts Related to Plant Vogtle Units 3 & 4
Projected Financial Impacts Related to Plant Vogtle Units 3 & 4 Illustrative Annualized Cash Flow Improvement Projected EPS Impacts of Delays Post Plant Vogtle Unit 4 In Service1 (increases relative to 2021) Vogtle Monthly Impacts3 EPS4 1-Month Delay at U4 ~ (3₵) Tax Depreciation (15-yr tax life) 3
Slide 31: Regulatory
Regulatory 31
Slide 32: Regulatory Recovery Mechanisms – Electric Subsidiaries
Regulatory Recovery Mechanisms – Electric Subsidiaries1 Alabama Power Georgia Power Mississippi Power Annual base rate (Rate RSE) Three-year base rate case cycle Annual base rate (PEP-6) Base Rates and clause filings with annual compliance filings and clause filings Other Regulatory Mechanisms Fuel
Slide 33: Regulatory Mechanisms – Gas LDCs
Regulatory Mechanisms – Gas LDCs1 Nicor Gas Atlanta Gas Light (AGL) Virginia Natural Gas (VNG) Chattanooga Gas (CGC) Rate Decoupling (Revenue Normalization)2 (Straight –Fixed –Variable) (Revenue Normalization)2 Weather Normalization N/A Bad Debt Recovery3 N/A Energy Efficiency Plan R
Slide 34: Georgia Power 2023 IRP Update Schedule
Georgia Power 2023 IRP Update Schedule Link to access Commission Meetings and Hearings: Georgia Public Service Commission - YouTube Docket Number: 55378 October 27, 2023 Georgia Power files IRP Update December 4, 2023 Georgia Power direct testimony filing January 16-17, 2024 Georgia Power hearings F
Slide 35: Sustainability
Sustainability 35
Slide 36: Greenhouse Gas Emission Reduction Goal: 50% by 2030, Net Zero by 2050
Greenhouse Gas Emission Reduction Goal: 50% by 2030, Net Zero by 2050 Annual energy mix Total Scope 1 GHG emissions 1% (based on equity share) 14% 15% 15% 14% Renewables/ 49% 15% 17% Metric tons of C02e (millions) 16% 16% 157 reduction Other since 2007 Nuclear 48% 50% 52% 85 82 80 Natural Gas 69% Co
Slide 37: Achieving Our Path to Net Zero
Achieving Our Path to Net Zero A path to net zero ▪ We expect our path to net zero to be achieved through: – Continued coal fleet transition – Utilization of natural gas to enable fleet transition – Further growth in portfolio of zero-carbon resources – Enhanced energy efficiency initiatives – Conti
Slide 38: Strong Growth in Renewables and Storage
Strong Growth in Renewables and Storage ~20,000 MWs Over 4X increase in renewable and storage resources <5,000 MWs 2015 2016 2017 2018 2019 2020 2021 2022 2023 2030E* Solar Wind Hydro Storage Other Includes owned and contracted resources including 100% capacity for jointly owned projects. With respe
Slide 39: Robust Disclosure
Robust Disclosure Sustainability Website available here Key Data and Reports available here Supplier Code of Conduct available here Policy Engagement and Advocacy available here ESG Data Table CDP Climate Reports Sustainability Summary Frameworks & Other • TCFD Report • SASB Report • GRI Report • EE
Slide 40: Ratings and Rankings Demonstrate Commitment and Progress
Ratings and Rankings Demonstrate Commitment and Progress Scale Rating Letter grade CCC – AAA (best) A MSCI (2023) Score 0-10 (best) 5.9 Sustainalytics ESG Risk Rating (2023) 0 (best) – 100 29.1 ISS Governance Score (2024) 1 (best) – 10 1 CDP Climate (2021 & 2022) Letter grade A- Letter grade A GRESB
Slide 41: Southern Company
S rN Southern Company