Southern Company (the) · NYSE:SO
Southern Company (the) — The Southern Company — Q4 2020 Earnings Presentation
43 slides from Southern Company (the)'s earnings presentation, Feb 18, 2021
Slide 1: Fourth Quarter 2020 Earnings Conference Call
Fourth Quarter 2020 Earnings Conference Call February 18, 2021
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 in accordance with generally accepted accounting principles (GAAP), this presentation also includes historical adjusted earnings and earnings per share (EPS) excluding: (1) impacts related to (a) the sale of Gulf Power, (b) the sales of P
Slide 4: Highlights
Highlights • Adjusted full-year earnings of $3.25 per share exceeded guidance range • Continued progress on Vogtle 3 & 4 including reaching several major milestones • Demonstrated excellence and resilience throughout four pandemics: COVID-19, economic, social and political • Continued decarbonizatio
Slide 5: Vogtle 3 & 4
Vogtle 3 & 4 • We are focused on meeting November 2021 and 2022 regulatory-approved in-service dates – Unit 3: Working towards a projected November completion timeline – Unit 4: Utilizing an aggressive site workplan targeting a 3Q 2022 in-service with projected margin to the regulatory-approved in-s
Slide 6: Vogtle 3 & 4: COVID-19 Impacts
Vogtle 3 & 4: COVID-19 Impacts • 3 to 4 month estimated schedule impact from the COVID-19 pandemic • Georgia Power’s estimated cost is $150 million to $190 million embedded in Project’s total cost estimate • Impacts have included higher than normal absenteeism and disruptions to planned and ongoing
Slide 7: Vogtle Unit 3
Vogtle Unit 3 • Continued progress at the site with several milestones reached in 2020: – Structural Integrity Test – Closed Vessel Testing – Integrated Leak Rate Test – Cold Hydro Testing • Direct construction is approximately 98% complete • Working to a projected November 2021 completion, with up
Slide 8: Vogtle Unit 4 Direct Construction & Major Milestones
Vogtle Unit 4 Direct Construction & Major Milestones (Direct Construction is Bechtel’s Scope of Work) Milestone bars and lines represent the range of potential start dates for each milestone with the left side of each indicating currently expected start dates under the site work plan and the right s
Slide 9: Vogtle 3 & 4 Cost Estimate
Vogtle 3 & 4 Cost Estimate Total contingency and schedule cost margin of $235 million Projected Estimated Cost of Project ($M) (Georgia Power's 45.7% share) Base project capital cost forecast through October '21 / August '22 $7,770 Schedule cost margin to November utilized 183 Schedule cost margin t
Slide 10: 2020 Earnings Results
2020 Earnings Results 4Q Full Year 2020 2019 2020 2019 Earnings Per Share As Reported $0.37 $0.42 $2.95 $4.53 Less: Acquisition and Disposition Impacts1 $0.01 $0.08 $0.04 $1.37 Estimated Loss on Plants Under Construction2 ($0.12) ($0.01) ($0.23) ($0.03) Asset Impairments3 ($0.03) ($0.02) ($0.10) ($0
Slide 11: 2020 Year-Over-Year Adjusted Drivers
2020 Year-Over-Year Adjusted Drivers 1 12¢ 5¢ (2¢) (1¢) (4¢) $3.25 $3.11 (21¢) 25¢ Southern Southern Parent & Company Shares O&M Power Other Gas Weather Rates, Pricing, Usage, & Other State-Regulated Electrics 2020 Drivers + Investment in state-regulated utilities + Disciplined cost control - Weathe
Slide 12: COVID-19 Sales Impacts and 2021 Outlook
COVID-19 Sales Impacts and 2021 Outlook 2020 weather-normal sales vs. COVID-19 weather-normal projection 10% • 2020 weather-normal total retail kilowatt 5% hour sales were slightly better than expected 0% – Weather-normal kilowatt hour sales declined by ~3% versus our initial expectation of ~4% -5%
Slide 13: Service Territory Economic Update
Service Territory Economic Update • The Southeast is leading the US in job recovery with positive growth over the last three months – Georgia was #2 in the nation for job growth in December • Service territory continues to benefit from strong economic development – Over 24,000 jobs added in 2020 (a
Slide 14: 2021 Guidance = $3.25 to $3.35
2021 Guidance1 = $3.25 to $3.35 ~90% of Projected Earnings from Premier State-Regulated Electric and Gas Franchises $0.08 $0.32 All Other ($0.49) $3.35 Energy to LDCs $0.39 Parent $3.25 Infrastructure under long-term contracts2 Electrics $3.00 • Q1 2021 Estimate1 = 84¢ State-regulated Utilities 1. E
Slide 15: 95% of Projected Capital Investment in State-Regulated Electric and Gas Utilities
95% of Projected Capital Investment in State-Regulated Electric and Gas Utilities Vogtle 3&4: $1.6B State-Regulated Gas • 67% in pipeline replacement and improvement investments • Additional investment driven by customer growth, compliance, and State- maintenance regulated State-Regulated Electric G
Slide 16: Greenhouse Gas Emissions Reductions Goals
Greenhouse Gas Emissions Reductions Goals 2007 2020 2030 2050 50% Baseline Reduced1 Net Zero Reduction 52% Goal Goal 1 The reduction in GHG emissions from 2019 to 2020 was primarily driven by milder weather, decreased customer energy usage resulting from the COVID-19 pandemic, and the continued tran
Slide 17: Significant Year-Over-Year Decrease in Coal Generation
Significant Year-Over-Year Decrease in Coal Generation1 2019 Total Energy Mix 2020 Total Energy Mix Renewables Renewables 12% 15% Coal Coal 17% 22% Nuclear 16% Nuclear 17% Natural Gas Natural Gas 51% 50% 1Energy mix represents all of the energy used to serve retail and wholesale customers. This ener
Slide 18: Southern Company Accolades
Southern Company Accolades 2020 Edison Award, 2020 Top 50 2020 America’s Best Large Edison Electric Institute Companies for Employers, Forbes magazine – – for energy storage Diversity, DiversityInc Ranked No. 14 nationally (3rd initiative (5th consecutive year) consecutive year) 2021 World’s Most Ad
Slide 19: Appendix
Appendix
Slide 20: Capital Investment Plan
Capital Investment Plan
Slide 21: Strong Projected State-Regulated Utility Rate Base Growth
Strong Projected State-Regulated Utility Rate Base Growth I $64B $52B N V E 2020 2021 2022 2023 2024 2025 • Modernization and resilience initiatives S continue to drive the growth profile of our T $13B electric utilities E D $8B • Safety-related pipeline replacement programs continue to provide stro
Slide 22: 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 $64B 2021 - 2025 $52B 13% 14% 2020 2021 2022 2023 2024 2025 $30B 49% 2020 2020 Invested Allowed Retail Customers Capital1 E
Slide 23: State-Regulated Gas LDCs Overview
State-Regulated Gas LDCs Overview Strong projected rate base growth driven by substantial pipeline replacement Projected Capital Investment Composition $13B 2021 - 2025 $8B 21% 2020 2021 2022 2023 2024 2025 2020 2020 Rate Allowed Allowed ROE Customers Base1 Equity Ratio Nicor Gas (IL) 2.3M $3.8B 54%
Slide 24: Projected Capital Investment of $40 billion through 2025
Projected Capital Investment of $40 billion through 2025 95% to be Deployed to State-Regulated Utilities (in $ billions) '21-’25 $8.8 $7.7 $8.0 $7.7 Other 0.3 $7.7 Southern Power 1.3 Gas Pipelines & Other 0.3 LDCs 8.0 Environmental 0.9 Ash Ponds 4.1 1 New Generation 2.5 Base Electric 8.0 Transmissio
Slide 25: $40 Billion in Projected Capital Investment Through 2025: Functional View
$40 Billion in Projected Capital Investment Through 2025: Functional View Total Total (in $ billions) 2021 2022 2023 2024 2025 '21-'23 '21-25 New Generation 0.3 0.4 0.2 0.1 - 0.8 0.9 Generation Maintenance 0.9 0.7 0.9 0.8 0.8 2.6 4.1 Environmental Compliance 0.1 0.1 0.3 0.3 0.2 0.5 0.9 Ash Pond Clos
Slide 26: Changes in Projected Capital Investment Through 2024: Functional View
Changes in Projected Capital Investment Through 2024: Functional View changes since 4Q19 Earnings Call Total (in $ billions) 2021 2022 2023 2024 '21-'24 New Generation 0.0 (0.1) (0.0) 0.1 0.0 Generation Maintenance 0.1 0.1 (0.0) (0.1) 0.1 Environmental Compliance (0.1) (0.1) 0.0 0.1 (0.1) Ash Pond C
Slide 27: $40 Billion in Projected Capital Investment Through 2025: Company View
$40 Billion in Projected Capital Investment Through 2025: Company View Total Total (in $ billions) 2021 2022 2023 2024 2025 '21-'23 '21-'25 Alabama Power 2.1 2.1 2.1 2.0 1.9 6.3 10.2 Georgia Power 4.0 3.4 3.6 3.6 3.7 11.0 18.3 Mississippi Power 0.3 0.3 0.3 0.3 0.3 0.8 1.4 State-regulated Electrics1
Slide 28: Changes in Projected Capital Investment Through 2024: Company View
Changes in Projected Capital Investment Through 2024: Company View changes since 4Q19 Earnings Call Total (in $ billions) 2021 2022 2023 2024 '21-'24 Alabama Power 0.1 0.0 (0.0) (0.0) 0.1 Georgia Power 0.3 (0.1) 0.3 0.4 1.0 Mississippi Power 0.0 0.0 (0.0) 0.0 0.1 State-regulated Electrics 0.5 (0.0)
Slide 29: Capital Markets / Financing
Capital Markets / Financing
Slide 30: 2020 Financing Summary
2020 Financing Summary • Approximately $8.0 billion of long-term debt financed at attractive rates via diverse market access • Lowered the system’s weighted average long-term debt cost while extending the weighted average life 2020 Long-term Debt Financings by Quarter 2020 Long-term Debt Financings
Slide 31: Projected Long-term Debt Financings
Projected Long-term Debt Financings1 Long-term Debt ($ in millions) 2021 2022 2023 2021-2023 Alabama Power $400 $700 $650 $1,750 Georgia Power 1,750 750 1,500 4,000 Mississippi Power 400 100 - 500 State-regulated Electrics $2,550 $1,550 $2,150 $6,250 Southern Power2 400 - - 400 Southern Company Gas
Slide 32: Long-term Debt Maturity Schedule
Long-term Debt Maturity Schedule1,2,3 Long-term Debt ($ in millions) 2021 2022 2023 2021-2023 Alabama Power4 $310 $750 $300 $1,360 Georgia Power 534 478 878 1,890 Mississippi Power 330 15 25 370 State-regulated Electrics $1,174 $1,243 $1,203 $3,620 Southern Power 300 677 290 1,267 Southern Company G
Slide 33: Liquidity and Credit
Liquidity and Credit1 as of 12/31/2020 Over $7.7 billion in committed credit facilities and available liquidity of $6.7 billion (in millions) 2021 2022 2023 2024 Total Credit Facility Expirations $33 $675 $125 $6,900 $7,733 Alabama Georgia Mississippi Southern Southern (in millions) Power Power Powe
Slide 34: Georgia Power DOE Loan Update
Georgia Power DOE Loan Update • DOE loan guarantee program provides Georgia Power ~$5.1 billion of liquidity for Vogtle Units 3&4 capital spend – Georgia Power has drawn $4.7 billion to date – Remaining ~$440 million expected to be drawn this year as eligible spend occurs – Final maturity in 2044 •
Slide 35: Internal FFO to Debt Supporting Current Credit Ratings
Internal FFO to Debt Supporting Current Credit Ratings Numerator (using 2020 Form 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 • Less: Voluntary pension contributions
Slide 36: Vogtle 3 & 4
Vogtle 3 & 4
Slide 37: Vogtle 3 & 4 Major Milestone Definitions
Vogtle 3 & 4 Major Milestone Definitions Initial Energization- Energizing the main transformers to provide the initial supply of off-site power to the plant’s electrical distribution system needed for testing. Individual electrical components – pumps, valve, motors - will be powered providing ‘life’
Slide 38: Vogtle 3 & 4 Major Milestone Definitions
Vogtle 3 & 4 Major Milestone Definitions Cold Hydro Test- Cold Hydro Testing contains several separate tests in different areas of the plant to verify that welds, joints, pipes, and other components of the reactor coolant system, steam-supply system and associated high pressure systems do not leak a
Slide 39: Regulatory
Regulatory
Slide 40: Regulatory Mechanisms – Electric Opcos
Regulatory Mechanisms – Electric Opcos Alabama Georgia Mississippi Annual base rate (Rate RSE) and Three-year rate case cycle with Annual base rate (PEP-6) and Base Rates clause filings annual compliance filings clause filings Other Regulatory Mechanisms Fuel ECR Fuel Rates Fuel Rates Purchased Powe
Slide 41: Regulatory Mechanisms - LDCs
Regulatory Mechanisms - LDCs Annual Base Energy Weather Bad Debt Rate Infrastructure COVID Cost Utility Rate Decoupling Efficiency Normalization Recovery2 Adjustment Programs Recovery Plan Recovery Mechanisms Nicor Gas (Revenue Normalization)1 (Investing in Illinois) Atlanta Gas Light
Slide 42: Letter to President-elect Biden, January 4, 2021
0 601 Pennsylvania Avenue NW Suite 800 South Washington, DC 20004 202 261 5000 tel January 4, 2021 The Honorable Joseph R. Biden Jr. President-elect of the United States Dear Mr. President-elect, Congratulations on your election as the next President of the United States. As you, Vice President-elec
Slide 43: Letter on advanced nuclear energy and clean energy research
Page 2 — January 4, 2021 We welcome your support for advanced nuclear energy. Emission-free nuclear increases America’s fuel diversity using an abundant, low-cost, reliable, 24/7 resource. In addition to six operating units, we are currently working to complete construction of the first new nuclear