No bad stock

The Southern Company
CEO : Mr. Thomas A. Fanning

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	22.2% YoY	-5300.0%	-51.9%	2023-02-16

Dan Tucker says,

Financial Results

• Adjusted earnings of $3.60 per share for the year, $0.19 higher than 2021
• Higher revenues due to retail pricing, warmer weather, customer growth, and increased usage and investment on regulated utilities
• Partially offset by higher non-fuel O&M expenses and interest expenses

Customer Growth

• Nearly 50,000 residential electric customers and over 30,000 residential gas customers added throughout the year
• Residential customer usage outpaced expectations due to sustained hybrid work practices
• Commercial sales beat forecast by nearly 2%, while industrial sales were lower than forecast by 1.5%

Economic Development

• Economic development pipeline in service territories is robust, with new corporate announcements and expansions in various industries
• Georgia Power and Alabama Power named Top US utilities for economic development for the fourth consecutive year

Earnings Guidance

• Adjusted earnings guidance range for 2023 is $3.55 to $3.65 per share
• 2024 adjusted earnings guidance range is $3.95 to $4.10 per share
• Long-term adjusted EPS growth rate projected at 5% to 7%

Capital Investment

• Total base capital investment plan of approximately $43 billion, with 97% of total projected capital deployment over the next five years at state-regulated utilities
• Allocated up to $3.5 billion over the five-year plan for Southern Power’s growth through investments that facilitate fleet transitions and growth of clean energy infrastructure
• Believe upside potential exists in state-regulated subsidiary forecast and Southern Power allocation, which could result in total spend of over $46 billion

Tom Fanning says,

Overall Financial Performance and Company Operations

• Southern Company reported strong adjusted earnings per share, consistent with the top of the guidance range.
• The company’s success was attributed to the hard work of thousands of people throughout the organization to provide customers with clean, safe, reliable, and affordable energy.
• The operation team, generation fleet, and power delivery system worked exceptionally well in 2022, including meeting an all-time peak load of over 41,000 megawatts in June and navigating well in extreme winter cold event over the Christmas weekend.
• Vogtle Units 3 and 4 continue to progress, and the company remains committed to bringing both units online to provide Georgia with reliable, carbon-free energy for 60 to 80 years.

Vogtle Units 3 and 4 Update

• Unit 3 experienced vibrations associated with certain piping within the passive cooling system that required additional time to remediate. Additional issues were identified, and the Unit 3 schedule was extended to address them. The projected in-service date for Unit 3 is May or June 2023.
• Unit 4 has seen a marked improvement in testing results compared to Unit 3, though testing productivity has consumed margin in the schedule. The in-service date for Unit 4 has been further risk-adjusted to reflect a range of the projected in-service date between late 4th quarter 2023 and the end of the first quarter of 2024.
• The cost forecast for the extension of Unit 3 and Unit 4 projected in-service dates, to the end of the second quarter 2023 and the end of the first quarter 2024, respectively, reflects a projected increase of $201 million in capital costs.

Q & A sessions,

Business Model and Sustainability

• Southern Company aims to deliver superior risk-adjusted total shareholder returns through a customer and community-focused business model, growing investment in state-regulated utility franchises, credit quality, and achieving net-zero greenhouse gas emissions.
• The company prioritizes its remarkable dividend track record, paying quarterly dividends that are equal to or greater than the previous quarter for over 20 years.
• The recent announcement of Chris Womack succeeding the current CEO as President and CEO in the coming months highlights the company’s depth of talent, strengthens its deep bench, and brings a fresh perspective to each of its businesses.

Vogtle Units 3 and 4

• The site team at Unit 3 is testing and starting up the process to support the unit’s next major milestone, initial criticality.
• Additional time has been given to the Unit 3 schedule to address issues and reduce risks associated with other potential problems.

CapEx and Investment

• Historically, Southern Company has undershot its outward year forecast by an average of $3 billion over five years.
• The upside case may include $3 billion of additional franchise-related rate base looking CapEx investments, which may be tilted towards the back end.
• Contract conditions have gotten tougher for Southern Company, particularly for bilateral contracts where they expect about 150 basis points premium compared to franchise utilities.
• Additional CapEx available outside the five-year period may include generation transition capital for more gas and renewable sources of energy, particularly solar in its region.

Operations, Resilience, and Planning

• Southern Company had another exceptional year in 2022, reporting strong adjusted earnings per share consistent with the very top of its guidance range.
• The company’s vertically integrated state-regulated business model provides customers with clean, safe, reliable and affordable energy, making it a premier sustainable investment.
• The company’s success in meeting peak load, extreme weather events, and winterization programs is a testament to the benefits of thoughtful planning assumptions and robust resilience investments.

Economic Outlook

• The Southeast tends to grow about 1% a year projected for the next five years, with historically low unemployment levels, steady population growth, and a business-friendly climate.
• The company sees a potential for a wee bit of a downturn or slowing in the economy in 2023, but does not see it dipping into recession levels and expects recovery in 2024.