Southern Company (the) · NYSE:SO
Southern Company (the) — Q4 2013 Earnings Presentation
26 slides from Southern Company (the)'s earnings presentation, Jan 29, 2014
Slide 1: Fourth Quarter 2013 Earnings Conference Call
Fourth Quarter 2013 Earnings Conference Call January 29, 2014
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 statem
Slide 3: Agenda
Agenda • 2013 Operational Highlights • Vogtle & Kemper Updates • 2013 Financial & Sales Results • Updated Forecast 3
Slide 4: Major Regulatory Activities in 2013
Major Regulatory Activities in 2013 Alabama Georgia Gulf Mississippi 4
Slide 5: Outstanding Operational Performance
Outstanding Operational Performance Safety 2013 Generation Mix • 2013 was our safest year ever Nuclear Customer Satisfaction 16% Coal • Southern Company took the top five 38% spots in annual benchmark survey Gas 42% Reliability • 2013 was our best year for transmission and distribution Providing the
Slide 6: Vogtle Unit Progress
Vogtle Unit 3 Progress Nuclear Island January 2013 December 2013 Turbine Island January 2013 December 2013 Cooling Tower 6 January 2013 December 2013
Slide 7: Vogtle Unit 3 CA20 Module
Vogtle Unit 3 CA20 Module 7
Slide 8: Vogtle Unit 3 Nuclear Island – 2014 Activity
Vogtle Unit 3 Nuclear Island – 2014 Activity Waste Tanks Current CA-04 View CB-65 Auxiliary Building Walls to Elevation 82’6” CA-03 CA-01 CA-20 CA-02 (Inside Vessel) Middle Ring Projected CA-05 (Inside Vessel) Year-End Auxiliary Building Walls to Lower Ring View Elevation 100’ Shield Building Panel
Slide 9: Kemper IGCC
Kemper IGCC In Progress • 679K linear feet of gasifier piping installed (~75%) • Testing of combined cycle Upcoming for 2014 • First gasifier heat up • Reliable syngas to combined cycle Combined Cycle 9 Steam Piping in Gasifier Island Gas Clean-Up
Slide 10: Kemper IGCC
Kemper IGCC Lignite Gasifier Delivery Combined Cycle Gas Clean- Up Cooling Towers 10
Slide 11: Q4 2013 Earnings Results
Q4 2013 Earnings Results Q4 YTD Earnings Per Share $0.47 $1.88 Impact of increase in Kemper cost estimate $0.03 $0.83 Impact of Leveraged Lease Restructure $0.00 $0.02 Impact of MCAR settlement ($0.02) ($0.02) Earnings Per Share x-items $0.48 $2.71 11
Slide 12: FY2013 vs. FY2012 Adjusted EPS Drivers
FY2013 vs. FY2012 Adjusted EPS Drivers 10¢ -3¢ 3¢ -2¢ -2¢ 2¢ -3¢ 2¢ -6¢ -1¢ Weather 6¢ -1¢ Income -2¢ Wholesale Other Interest Southern Revenues Operating Non-fuel PPA Expense Taxes Power Parent $2.71 Revenues O&M Expense and Other 1¢ -1¢ Shares $2.68 Other D&A Customer Revenue Taxes Other Usage & E
Slide 13: 2013 Retail Sales
2013 Retail Sales Q4 YTD As Reported Weather Normal As Reported Weather Normal* Residential 6.0% 0.5% 0.2% -0.3% Commercial 1.4% -0.1% -0.9% -0.1% Industrial 4.8% 4.8% 1.5% 1.5% Total Retail 3.9% 1.7% 0.3% 0.4% As expected, stronger 2nd half sales growth 1.7% 1.0% 0.4% Q1 Q2 Q3 Q4 Year -0.5% -0.9% 1
Slide 14: 2014 Outlook
2014 Outlook Economic Roundtable Expected 2014 Sales Growth GDP projected to grow 2.5% – 3.0% Industrial activity continues to improve with many new entrants being international firms Housing markets continue to improve with housing-related sectors benefiting Economic momentum from late 2013 carryin
Slide 15: $15.9B Capital Expenditure Program
$15.9B Capital Expenditure Program (2014-2016) $6.1B $5.4B 14 - '16 $4.5B Potential Southern Power 1.4 Growth Projects Southern Power Base 0.4 Environmental 3.2 New Generation 2.3 Base T&D Growth 1.3 $14.5B Nuclear Fuel 0.9 Maintenance 5.4 Other 1.0 2014 2015 2016 Notes: Totals may not add due to ro
Slide 16: 2014 – 2016 Financing Plan
2014 – 2016 Financing Plan ($ in billions) 2014 2015 2016 Georgia DOE Loan $ 1.5 $ 1.1 $ 0.4 Mississippi Securitization - 0.9 - Capital Markets Issuances: New Money 0.9 0.7 0.2 Maturity & Bridge Financing Replacement 0.4 1.3 1.3 Long Term Securities Issuances $ 2.8 $ 4.0 $ 1.9 Equity Issuances $ 0.6
Slide 17: 2014 Earnings Per Share Guidance
2014 Earnings Per Share Guidance $2.80 +4¢ (+1.5%) 2013 EPS* $2.71 -4¢ (-1.5%) Dilution from Kemper write-offs 2014 & beyond -7¢ $2.72 Adjusted base for growth $2.64 * Excludes -83¢ EPS impact of updated Kemper Project cost estimate, -2¢ EPS impact of Leveraged Lease Restructure, and +2¢ EPS 17 impa
Slide 18: Invested Capital Growth is Expected to Slow
Invested Capital Growth is Expected to Slow 5.8% 5.3% 4.9% 3.6% 2008 - 2013 2014 2015 2016 CAGR 18
Slide 19: 2015 & 2016 Earnings Per Share Growth
2015 & 2016 Earnings Per Share Growth $3.03 $2.91 Potential longer-term EPS Growth Drivers $2.89 • Regulated Capacity $2.80 • So Power Capacity $2.80 • Effluent Guidelines (ELG) $2.71* -7¢ • 316(b) $2.72 $2.64 • Coal Ash Rules (CCR) 2014 2015 2016 • Equity ratio Dividend Forecast $2.08 $2.15 $2.22 I
Slide 20: Guidance and Dividends
Guidance and Dividends On average over the past 10 years, Southern Company has had the smallest guidance ranges (measured as a % of the midpoint) UTY average SO Average EPS Guidance Range Size of UTY Companies 2004-2013 During this same time frame, Southern Company has increased its common dividend
Slide 21: Appendix
21 Appendix SOUTHERN a COMPANY
Slide 22: Generation Portfolio Diversity
Generation Portfolio Diversity Capacity Factors Q4 YTD 2012 2013 2012 2013 Coal - PRB 82% 79% 71% 73% Coal - Non-PRB 18% 25% 29% 32% Gas - Combined Cycle 69% 65% 71% 66% Generation Mix Q4 YTD 2012 2013 2012 2013 Gas/Oil 47% 43% 45% 42% Coal 32% 37% 36% 38% Nuclear 19% 17% 17% 16% Hydro/Other 2% 3% 2
Slide 23: Q4 2013 vs. Q4 2012 Adjusted EPS Drivers
Q4 2013 vs. Q4 2012 Adjusted EPS Drivers 2¢ -1¢ -1¢ 1¢ -2¢ 1¢ Southern -1¢ Power 3¢ 2¢ Income Parent $0.48 -1¢ Taxes and Other Other Interest Shares Operating Expense Revenues Non-Fuel O&M 1¢ D&A Other Income $0.44 Weather Customer Growth Traditional Operating Companies 7¢ Q4 2012 Q4 2013 23 Note: E
Slide 24: 2014 – 2016 CapEx Forecast – Functional
2014 – 2016 CapEx Forecast – Functional Total $billions 2014 2015 2016 ‘14-’16 New Generation $1.2 $0.7 $0.5 $2.3 Environmental Compliance 1.5 1.1 0.6 3.2 Transmission 0.1 0.2 0.1 0.4 Distribution 0.3 0.3 0.3 0.9 Total T&D Growth 0.4 0.4 0.4 1.3 Generation 0.9 0.9 0.8 2.7 Transmission 0.6 0.5 0.4 1.
Slide 25: 2014 – 2016 CapEx Forecast – Company
2014 – 2016 CapEx Forecast – Company Total $billions 2014 2015 2016 '14 - '16 Alabama Power $1.7 $1.7 $1.2 $4.6 Georgia Power 2.5 2.4 2.1 7.0 Gulf Power 0.4 0.3 0.2 0.9 Mississippi Power 0.8 0.3 0.2 1.3 Other Subsidiaries 0.2 0.1 0.1 0.3 Traditional OpCo Total $5.6 $4.7 $3.8 $14.1 Southern Power 0.2
Slide 26: 2014 – 2016 long-term securities issuances
2014 – 2016 long-term securities issuances ($ in billions) 2014 2015 2016 Alabama Power $ 0.4 $ 0.9 $ 0.4 Georgia Power - 0.8 0.2 Gulf Power 0.2 0.1 0.1 Mississippi Power 0.5 - 0.3 Southern Power 1 - 0.3 - Holding Company 0.3 - 0.5 Long Term Market Issuances $ 1.3 $ 2.0 $ 1.5 Georgia DOE Loan 1.5 1.