Southern Company (the) · NYSE:SO
Southern Company (the) — FY2016 Earnings Presentation
23 slides from Southern Company (the)'s earnings presentation, Feb 22, 2017
Slide 1: Earnings Conference Call Fourth Quarter and Full Year 2016
Earnings Conference Call Fourth Quarter and Full Year 2016 February 22, 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 project
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 excluding: (1) estimated probable losses relating to Mississippi Power’s construction of the Kemper IGCC; (2)
Slide 4: Southern Company Update
Southern Company Update 2016 successes provided a foundation Key 2016 Successes for a stronger financial outlook that Acquisitions should support approximately 5% EPS • Southern Company Gas growth over the long term • 50% of Southern Natural Gas • PowerSecure • All three financed on favorable terms
Slide 5: 2016 Earnings Results
2016 Earnings Results Q4 YTD 2015 2016 2015 2016 Earnings Per Share As Reported $0.30 $0.20 $2.60 $2.57 Impact of estimated Kemper IGCC losses $0.12 $0.13 $0.25 $0.28 Acquisition and integration costs $0.02 $0.00 $0.03 $0.09 MCAR settlement costs - - $0.01 - $0.44 $0.33 $2.89 $2.94 GAS earnings net
Slide 6: FY 2016 vs. FY 2015 Adjusted EPS Drivers
FY 2016 vs. FY 2015 Adjusted EPS Drivers 13¢ (9¢) + Weather and Other Revenue Effects 6¢ (10¢) $2.89 $2.89 at Traditional Electric OpCos Southern Parent Shares Traditional Electric Power and + Southern Power project execution Other Operating and energy margins Companies – Financings to support growt
Slide 7: Southern Company – Residential Customer Growth
Southern Company – Residential Customer Growth Customer growth remains strong, exceeding both expectations and growth registered in recent years (New Customers) 50,000 40,000 30,000 20,000 10,000 0 -10,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Electric Gas* *Approximately 17K new gas cu
Slide 8: 2017 Guidance = $2.90 to $3.02
2017 Guidance = $2.90 to $3.02 $0.09 $3.02 $0.38 All other ($0.29) to Parent Company Energy $2.90 $2.78 infrastructure under long-term contracts Includes Southern Power, interstate natural gas pipelines and company- owned distributed energy resources Q1 2017 Estimate: 57¢ per share State-regulated u
Slide 9: Long-term EPS growth trajectory
Long-term EPS growth trajectory $3.02 A stronger outlook that is resilient to a variety of outcomes $2.90 2017 2018 2019 2020 2021 1. Excludes projected merger-related expenses and earnings from Wholesale Gas Services, any additional estimated losses associated with the Kemper IGCC, and any equity r
Slide 10: Tax Policy Reform Analysis
Tax Policy Reform Analysis Estimated impact to 2021 • EPS: Slightly accretive Key element of Trump Administration Plan • Assumes interest remains deductible and no change in 15% Tax Rate depreciation for capital additions Key elements of • EPS: Slightly accretive to ~5% dilutive House Republican Pla
Slide 11: Kemper Project Update
Kemper Project Update • Achieved initial integrated operations producing electricity • Produced and captured CO2 and other chemical byproducts • Started Gasifier ‘B’ outage to remove ash deposits on February 20, 2017 • Train ‘A’ expected to continue operations during Gasifier ‘B’ outage • Expect to
Slide 12: Our Value Proposition & Financial Objectives
Our Value Proposition & Financial Objectives • Superior risk-adjusted total • Strong, sustainable, returns on shareholder return invested capital • A high degree of financial integrity and • Regular, predictable, sustainable strong investment grade credit ratings EPS and dividend growth Long-term EP
Slide 13: Appendix
Appendix 13
Slide 14: 2016 Earnings Results Reconciliation
2016 Earnings Results Reconciliation Q4 YTD (Millions) 2015 2016 2015 2016 Net Income As Reported $271 $197 $2,367 $2,448 Estimated loss on Kemper IGCC 183 206 365 428 Tax Impact (70) (79) (139) (164) Acquisition and integration costs 25 12 41 120 Tax Impact (6) (4) (10) (38) Additional MCAR settlem
Slide 15: $39.3B in projected capital investments through 2021
$39.3B in projected capital investments through 2021 '17 - '19 '17 - '21 PowerSecure / Other $0.8 $1.0 GAS $5.1 $7.7 Southern Power $4.8 $8.0 Environmental $2.9 $4.5 (includes ash ponds) New Generation $1.8 $1.9 Base Capex $10.1 $16.1 Electric OPCO Total $14.7 $22.5 Total Capital Investment $25.5 $3
Slide 16: Projected Capital Investments by Subsidiary
Projected Capital Investments by Subsidiary (Billions) Total Total 2017 2018 2019 2020 2021 '17-'19 '17-'21 Alabama Power $1.9 $1.6 $1.3 $1.4 $1.3 $4.9 $7.5 Georgia Power 2.9 2.9 2.3 2.1 1.9 8.1 12.2 Gulf Power 0.2 0.2 0.2 0.3 0.2 0.7 1.2 Mississippi Power 0.5 0.3 0.3 0.3 0.2 1.1 1.6 Traditional Ele
Slide 17: Traditional Electric Operating Companies Projected Capital Investments
Traditional Electric Operating Companies Projected Capital Investments (Billions) Total Total 2017 2018 2019 2020 2021 '17-'19 '17-'21 New Generation $1.0 $0.5 $0.3 $0.1 - $1.8 $1.9 Environmental Compliance 0.9 0.7 0.3 0.4 0.6 1.9 2.9 Generation Maintenance 0.9 0.9 0.9 0.9 0.7 2.8 4.4 Transmission G
Slide 18: Southern Company Gas Projected Capital Investments
Southern Company Gas Projected Capital Investments (Billions) Total Total 2017 2018 2019 2020 2021 '17-'19 '17-'21 Rate Base $0.7 $0.7 $0.8 $0.6 $0.6 $2.2 $3.4 Rider / Infrastructure 0.6 0.6 0.5 0.5 0.5 1.7 2.7 New Business / Other Distribution 0.1 0.1 0.1 0.1 0.1 0.4 0.6 Midstream / Pipelines 0.3 0
Slide 19: Southern Company 2017-2019 Projected Financings
Southern Company 2017-2019 Projected Financings in millions - as of 2/22/2017 Long-term Debt 2017 2018 2019 2017 - 2019 Alabama Power $1,100 - $500 $1,600 Georgia Power1 1,200 1,625 900 3,725 Gulf Power 150 - - 150 Mississippi Power 400 1,500 175 2,075 Traditional Electric $2,850 $3,125 $1,575 $7,55
Slide 20: Southern Company Liquidity and Credit
Southern Company Liquidity and Credit in millions - as of 12/31/2016 Over $8.4 billion in combined committed credit facilities and available liquidity of nearly $6.5 billion 2017 2018 2019 2020 Total Consolidated Credit Facilities Expirations $422 $3,620 - $4,400 $8,442 Alabama Georgia Gulf Mississi
Slide 21: Long-Term Debt Maturity Schedule
Long-term Debt Maturity Schedule ($ Millions) 2017 2018 2019 2020 2021 5Y Total Alabama Power 561 - 200 250 310 1,321 Georgia Power 450 750 500 44 369 2,113 Gulf Power 85 - - 175 - 260 Mississippi Power 586 1,200 125 7 270 2,188 Southern Power 560 670 600 300 300 2,430 GAS Consolidated 22 155 350 -
Slide 22: Vogtle Construction Update
Vogtle Construction Update Progress Unit 3 Progress Unit 4 Set Reactor Vessel Set ~1,100 ton CA01 in the nuclear island Set containment vessel Ring 2 Placed concrete inside Containment Vessel Bottom Head Set 3 safety related mechanical modules inside containment building to EL 83’-6” Pla
Slide 23: Vogtle Unit 3 vs. Unit 4 Durations
Vogtle Unit 3 vs. Unit 4 Durations Months 45 40 35 30 25 20 15 10 5 0 Basemat Rebar CA20 CA20 CA01 CA01 SB West Concrete in CV CA20 Set to Fabrication Assembly Fabrication Assembly Concrete EL. to 83' to Set Wedge 82'6" to 87'6" CA01 Placement Unit 3 Duration Unit 4 Duration 23