• Adjusted Earnings Per Share (EPS): $4.05 for 2024, representing 11% growth from 2023.
• Electricity Sales Growth: Weather-normalized total retail electricity sales up approximately 1% compared to 2023.
• New Residential Electric Customers: 57,000 added in 2024.
• New Natural Gas Distribution Customers: 26,000 added in 2024.
• Projected Retail Electricity Sales Growth for 2025: 2% to 3% increase compared to 2024.
• Projected Long-term Sales Growth (2025-2029): Average annual growth of approximately 8%.
• Georgia Power Retail Electric Sales Growth (2025-2029): Projected to be approximately 12%.
• Commercial Segment Growth (2025-2029): Projected average growth of 18%.
• Base Capital Investment Forecast (Next 5 Years): $63 billion, with 95% at state-regulated utilities.
• Projected Long-term State-regulated Rate Base Growth: Approximately 7% annually.
• Adjusted EPS Guidance for 2025: $4.20 to $4.30 per share.
• Projected Long-term Adjusted EPS Growth Rate: 5% to 7%.
• Dividend History: Dividend equal to or greater than the previous year for 77 consecutive years, with increases over the last 23 years.

• Warning! GuruFocus has detected 14 Warning Signs with SO.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Southern Co (NYSE:SO) achieved adjusted earnings at the top of their EPS guidance range, representing an 11% growth from 2023.
• The company added 57,000 new residential electric customers and 26,000 new natural gas distribution customers in 2024.
• Southern Co (NYSE:SO) projects a long-term adjusted EPS growth rate of 5% to 7%, with potential to reach the top of this range.
• The company has a robust economic development pipeline, with over 150 companies expanding or locating new facilities in their service area, supporting over 20,000 new jobs.
• Southern Power, a subsidiary, has a portfolio of 13,000 megawatts of capacity and is exploring new renewable energy projects, enhancing long-term earnings potential.

Negative Points

• Interest rates are expected to remain high, impacting refinancing costs and potentially offsetting some growth.
• The company faces challenges with supply chain constraints, particularly in securing gas turbines for future projects.
• Southern Co (NYSE:SO) has significant equity needs, projecting average annual equity needs of approximately $800 million to support credit quality.
• The company is dealing with the aftermath of weather-related impacts, including Hurricane Helene, which affected electricity sales.
• There is uncertainty regarding the timing and realization of potential incremental capital investments totaling $10 billion to $15 billion.

Q & A Highlights

Q: Could you elaborate on the earnings growth trajectory within the 5% to 7% range over the next five years, considering increased rate base growth and potential capital investment opportunities? A: Daniel Tucker, CFO, explained that Southern Co. maintains a strong long-term outlook of 5% to 7% growth. The company is seeing incremental fundamental factors that add durability to this outlook. With potential incremental capital updates, they are solidly within their range and could be near the top by 2027, potentially starting the growth rate from a higher sustained point.

Q: Regarding the $10 billion to $15 billion of investment opportunities above the plan, how should we think about the split between Georgia Power and natural gas pipeline opportunities? A: Daniel Tucker, CFO, stated that the majority of these investments are related to Georgia Power, with some degree involving natural gas pipelines. Regulatory processes are ongoing, and clarity is expected around July. Historically, larger dispatchable resources have been involved, and the current market suggests a greater likelihood of needing to build new resources.

Q: Can you provide insights into Southern Power's cumulative earnings trajectory and potential repowering opportunities? A: Daniel Tucker, CFO, noted that Southern Power's assets are under long-term contracts through the end of the decade, with opportunities for recontracting benefiting the next decade. New brownfield gas plants and generation outside the Southeast are also opportunities. Southern Power will remain a steady contributor, with significant opportunities emerging towards the end of the plan and into the next decade.

Q: What is the significance of 2027 for potentially rebasing the growth trajectory, and can you provide any sense of the size of rebasing? A: Daniel Tucker, CFO, explained that 2027 is significant due to the ramp-up in capital spending and revenues from large load customers, which are more back-end loaded. Interest costs are a headwind in the early years, but once refinancing is complete, and opportunities become tangible, the company could rebase the growth trajectory from a higher point.

Q: How is Southern Co. addressing the availability and pricing of gas turbines, considering potential future dispatchable gas generation needs? A: Chris Womack, CEO, stated that Southern Co. has diversified its suppliers and is engaged with several to ensure access to turbines. They are paying reservation fees to secure their place in line and feel confident due to their history with OEMs and diverse supplier experience.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.