Southern Company (the) · NYSE:SO
Southern Company (the) — The Southern Company — Q4 2022 Earnings Presentation
41 slides from Southern Company (the)'s earnings presentation, Feb 16, 2023
Slide 1: Fourth Quarter 2022 Earnings Conference Call
Fourth Quarter 2022 Earnings Conference Call February 16, 2023
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) net charges related to Georgia Power’s construction of Plant Vogtle Units 3 and 4;
Slide 4: Southern Company Update: Adjusted Full-Year Earnings at Top of Guidance Range
Southern Company Update Adjusted Full-Year Earnings at the Top of Guidance Range • 2022 Adjusted EPS of $3.60 vs. $3.41 in 2021 • Primary drivers: – Higher retail electricity sales indicative of continued economic strength in the Southeast – Strong customer growth – Investment in state-regulated uti
Slide 5: Recent Southern Company Recognitions
Recent Southern Company Recognitions 2022 Wall Street 2022 Top 50 Companies for 2022 America’s Best Large Journal’s Diversity, DiversityInc Employers (No. 2 overall in U.S.), Management (7th consecutive year) Forbes Magazine 250 List, No. 1 for Black executives, 2022 Best Employers for Women, Drucke
Slide 6: Update on Vogtle Units 3 & 4
Update on Vogtle Units 3 & 4 • Updated projected in-service dates for each unit – Unit 3: May or June 2023 – Unit 4: Late Q4 2023 to end of Q1 2024 • Georgia Power’s share of total capital cost forecast increased $201 million – Recorded after-tax charge of $150 million – Primarily reflects schedule
Slide 7: Update on Vogtle Units 3 & 4
Update on Vogtle Units 3 & 4 • Unit 3 – Pipe vibration repairs complete – Additional remediation activities underway for items identified during start-up testing – Initial criticality projected during March or April • Unit 4 Unit 3 Turbine Building – Cold hydro testing completed in December – Sustai
Slide 8: Vogtle Unit 3 ITAAC Completion Forecast
Vogtle Unit 4 ITAAC Completion Forecast1 Start Hot Functional Testing 3 200 Start Fuel Load Unit 4 In-Service 0 30 Cumulative ITAAC Remaining as of Month-end 30 30 30 0 Total ITAAC Completed 191 2 2 0 Total ITAAC Remaining 173 Monthly ITAAC Completions 23 20 20 00 0 0 2 0 0 0 20 0 0 B 23 MA 23 A 23
Slide 9: Vogtle 3 & 4 – Cost Update
Vogtle 3 & 4 – Cost Update (Georgia Power’s share) Estimated Cost of Project ($M) Base project capital cost forecast through Q2 2023/ Q1 20241,2 $10,533 Construction contingency estimate 60 Total project capital cost forecast1,2 $10,593 Net investment as of December 31, 20222 (9,521) Remaining estim
Slide 10: 2022 Results
2022 Results Q4 Full Year 2022 2021 2022 2021 Earnings / (Loss) Per Share As Reported ($0.08) ($0.20) $3.28 $2.26 Less: Estimated Loss on Plants Under Construction1 ($0.14) ($0.65) ($0.14) ($1.19) Acquisition and Disposition Impacts2 ($0.09) $0.11 ($0.07) $0.12 Wholesale Gas Services3 - - - $0.01 Im
Slide 11: 2022 Year-Over-Year Adjusted Drivers
2022 Year-Over-Year Adjusted Drivers1 29¢ (26¢) 8¢ 8¢ (12¢) 17¢ (5¢) $3.60 $3.41 Southern O&M Southern Parent & Shares Rates, Pricing, Power Weather Company Other Usage & Other Gas State-Regulated Electrics 2022 Drivers + Strong customer growth + Investment in state-regulated utilities + Weather (+3
Slide 12: Retail Electricity Sales - 2022 Results
Retail Electricity Sales - 2022 Results • Robust customer growth: +49,000 residential electric customers and +31,000 residential gas customers • Economic development pipeline in our service territories remains robust – 2022 announced job creation and capital investment +135% and +257% compared to 20
Slide 13: 2023 Adjusted EPS Guidance = $3.55 to $3.65
2023 Adjusted EPS Guidance1 = $3.55 to $3.65 ~90% of Projected Earnings from Premier State-Regulated Electric and Gas Franchises $0.04 $0.39 All Other ($0.63) $3.65 Energy to LDCs $0.45 Infrastructure Parent $3.55 under long-term contracts2 Electrics $3.35 Q1 2023 Adjusted EPS Estimate1 = 70¢ State-
Slide 14: 2024 Adjusted EPS Guidance = $3.95 to $4.10
2024 Adjusted EPS Guidance1 = $3.95 to $4.10 Upside fleet transition & renewables capex deferred beyond 2024 $4.30 Increased Parent to Company interest $4.00 costs, including higher rates and V3&4 (as of Q4 2020) $4.10 $4.10 to to $4.00 $3.95 Includes up to 5¢ for Vogtle Unit 4 schedule 1 Excludes a
Slide 15: 97% of Projected Capital Investment in State-Regulated Utilities
97% of Projected Capital Investment in State-Regulated Utilities Forecast represents ~$2 billion increase from previous 5-year total $43 billion Base Capital Investment Plan* supports our long-term projected adjusted EPS growth of 5%-7% State-Regulated Gas • 65% in Pipeline Replacement and Improveme
Slide 16: Opportunities for Increased Capital Investment 2023 to 2027
Opportunities for Increased Capital Investment 2023 to 2027 Potential for $46B+ for the 5-year period Investment opportunities to move towards our net zero greenhouse gas emissions goal extend beyond 2027 97% of base capital investment plan* $3+ billion in Southern Power growth projects, plus concen
Slide 17: Southern Company Value Proposition
Southern Company Value Proposition Southern Company’s strategy is to maximize long-term value to shareholders through a customer-, community- and relationship-focused business model that produces sustainable levels of return on energy infrastructure Key financial objectives ✓ Superior risk-adjusted
Slide 18: Appendix
Appendix 18
Slide 19: Year-Over-Year Total Energy Mix Comparison
Year-Over-Year Total Energy Mix1 Comparison 2021 Total Energy Mix 2022 Total Energy Mix Renewables Renewables 15% Coal 15% Coal 21% 20% Nuclear Nuclear 16% 15% Natural Gas Natural Gas 48% 50% 1Energy mix represents all of the energy used to serve retail and wholesale customers. This energy mix inclu
Slide 20: Capital Investment Plan
Capital Investment Plan 20
Slide 21: Growth of Historical Capital Forecast
Growth of Historical Capital Forecast (Annual State-Regulated Utility Capex Forecast Excluding Vogtle 3 & 4) $10B $8B $6B $4B $2B 2023 2024 2025 2026 2019 Plan 2020 Plan 2021 Plan 2022 Plan 2023 Plan 21
Slide 22: Strong Projected State-Regulated Utility Rate Base Growth
Strong Projected State-Regulated Utility Rate Base Growth Consistent with Base Capital Investment Plan $73B $58B • Grid and fleet modernization and I resilience initiatives continue to drive the N projected growth profile of our electric V 2022 2023 2025 2026 2027 E 2024 utilities S T $16B • Investm
Slide 23: State-Regulated Electric Utilities Overview
State-Regulated Electric Utilities Overview Strong projected invested capital growth driven by modernization and resilience initiatives Projected Capital Investment Composition (excluding Vogtle) $73B 2023 - 2027 $58B 19% (Consistent with Base Capital Investment Plan) 2022 2023 2024 2025 2026 2027 1
Slide 24: State-Regulated Gas LDCs Overview
State-Regulated Gas LDCs Overview Strong projected rate base growth driven by substantial pipeline replacement Projected Capital Investment Composition $16B 2023 - 2027 $10B (Consistent with Base Capital Investment Plan) 18% 2022 2023 2024 2025 2026 2027 17% $9B 2022 Rate Allowed Equity 2022 Custome
Slide 25: $43 Billion Projected Capital Investment Through 2027: Functional View
$43 Billion in Projected Capital Investment Through 2027: Functional View Excluding Vogtle 3 & 4 Total (in $ billions) 2023 2024 2025 2026 2027 '23-'27 New Generation 0.2 0.1 0.2 0.1 0.0 0.5 Generation Maintenance 1.2 1.0 0.8 0.8 1.0 4.8 Environmental Compliance 0.1 0.1 0.1 0.1 0.0 0.5 Ash Pond Clos
Slide 26: $43 Billion Projected Capital Investment Through 2027: Company View
$43 Billion in Projected Capital Investment Through 2027: Company View Excluding Vogtle 3 & 4 Total (in $ billions) 2023 2024 2025 2026 2027 '23-'27 Alabama Power 2.3 2.3 2.2 2.1 2.1 11.0 Georgia Power 3.9 4.1 4.0 4.4 4.0 20.3 Mississippi Power 0.3 0.3 0.3 0.2 0.2 1.4 State-Regulated Electrics 6.6 6
Slide 27: Capital Markets / Financing
Capital Markets / Financing 27
Slide 28: Long-term Debt Peer Comparison
Long-term Debt Peer Comparison as of December 31, 2022 4.5% Peer 10 Peer 2 Peer 9 4.0% Peer 3 Peer 4 Peer 5 Peer 1 Peer 7 Peer 19 Peer 15 Peer 8 Peer 17 SO Average Coupon (%) Peer 6 Peer 13 Peer 18 Peer 16 3.5% Peer 14 Peer 11 Peer 12 3.0% 2.5% 10 12 14 16 18 20 22 Average Time to Maturity (years) S
Slide 29: Long-term Debt Financings
Long-term Debt Financings1 as of February 16, 2023 Projected Long-term Debt ($ in millions) 2023 2024 2025 2023-2025 Alabama Power 600 500 500 1,600 Georgia Power 1,500 1,300 1,700 4,500 Mississippi Power 100 250 100 450 State-Regulated Electrics $2,200 $2,050 $2,300 $6,550 Southern Power - - - - So
Slide 30: Long-term Debt Maturity Tower
Long-term Debt Maturity Tower1 as of December 31, 2022 Long-term Debt1 $ in millions Alabama Power $10.7B $6,000 Georgia Power $14.8B Mississippi Power $1.5B $5,000 Southern Company Gas Capital2 $4.9B Nicor $2.3B Southern Power $3.0B $4,000 Parent Company $17.8B 500 Total Long-term Debt Maturities3
Slide 31: Long-term Debt Maturity Schedule
Long-term Debt Maturity Schedule1 as of December 31, 2022 Long-term Debt ($ in millions) 2023 2024 2025 2023-2025 Alabama Power 300 21 250 571 Georgia Power 886 486 131 1,502 Mississippi Power - 200 11 211 State-Regulated Electrics $1,186 $707 $391 $2,284 Southern Power 290 - 500 790 Southern Compan
Slide 32: Liquidity and Credit
Liquidity and Credit $ in millions as of December 31, 2022 Over $7.6 billion in committed credit facilities and available liquidity of over $7 billion (in millions) 2023 2024 2025 2026 Total Credit Facility Expirations $ 280 $ 700 $ 125 $ 6,550 $7,655 Alabama Georgia Mississippi Southern Southern (i
Slide 33: Vogtle 3 & 4
Vogtle 3 & 4 33
Slide 34: Projected Financial Impacts Related to Vogtle 3 & 4
Projected Financial Impacts Related to Vogtle 3 & 4 Illustrative Annualized Cash Flow Improvement Projected EPS Impacts of Delays Post Vogtle Unit 4 In-Service1 (increases relative to 2021) Vogtle Quarterly Impacts3 EPS4 3-Month Delay at U3 ~ (2₵) Tax 3-Month Delay at U4 ~ (5₵) Depreciation (15-yr t
Slide 35: Vogtle 3 & 4 Major Milestone Definitions
Vogtle 3 & 4 Major Milestone Definitions Hot Functional Test- Hot Functional Testing will demonstrate the integrated operation of the primary coolant system and steam supply system at design temperature and pressure with no fuel in the reactor. Operators use the heat generated by plant equipment to
Slide 36: Regulatory
Regulatory 36
Slide 37: 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 38: 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 39: Vogtle Construction Monitoring (VCM) 28 Schedule
Vogtle Construction Monitoring (VCM) 28 Schedule Link to access Commission Meetings and Hearings: Georgia Public Service Commission - YouTube Docket Number: 29849 February 16, 2023 VCM 28 filing May 5, 2023 Georgia Power and Southern Nuclear testimony filing June 1, 2023 Georgia Power and Southern N
Slide 40: Georgia Power 2023 Fuel Filing (FCR-26) Schedule
Georgia Power 2023 Fuel Filing (FCR-26) Schedule Link to access Commission Meetings and Hearings: Georgia Public Service Commission - YouTube Docket Number: 3382 February 28, 2023 Georgia Power files application and direct testimony April 14, 2023 Staff and intervenor testimony filing April 24, 2023
Slide 41: ro N
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