Southern Company(US:SO)2022-02-17 22:38Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $3.41 for 2021, which is $0.16 higher than adjusted results in 2020 and $0.06 above the top end of the original 2021 guidance range [25] - Weather-adjusted retail electricity sales increased by 2.4% compared to 2020, with residential sales outpacing expectations by 2.7% [28][29] - The adjusted earnings guidance for 2022 is set at $3.50 to $3.60 per share, representing a growth rate of approximately 7.5% from the midpoint of the original 2021 guidance range [33] Business Line Data and Key Metrics Changes - All major subsidiaries had strong performance in 2021, driven by customer growth and improving retail sales trends [25] - The company experienced a negative $0.05 variance for weather compared to 2020 and a negative $0.14 variance compared to normal weather [26] - The average residential electric customer additions were 43% higher over the past two years than the average for the five years ended in 2019 [30] Market Data and Key Metrics Changes - The economic development pipeline within the Southeast service territories remains robust, with job announcements 22% higher and business investment in Georgia 39% higher than the average for the years leading up to the pandemic [32] - The company added nearly 55,000 new residential electric customers and 30,000 residential natural gas customers across its regulated utilities over the last two years [30] Company Strategy and Development Direction - The company reaffirmed its long-term growth rate expectation of 5% to 7%, with adjusted earnings per share projected in a range of $4 to $4.30 in 2024 [11][34] - The Integrated Resource Plan (IRP) filed by Georgia Power outlines a roadmap for transitioning to cleaner resources, including the retirement of coal units by 2028 and the addition of 6,000 megawatts of renewable generation by 2035 [21][22] - The company is focused on sustainability and long-term value, with significant capital investment plans totaling approximately $41 billion [36][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of milder temperatures on financial performance but highlighted strong customer growth and improving sales trends as positive factors [26][29] - The company is optimistic about the long-term viability of its franchise, driven by economic recovery and customer growth in its service territories [111] - Management emphasized the importance of getting the Vogtle Units 3 and 4 project completed safely and efficiently, with a focus on quality construction and documentation [15][19] Other Important Information - The company recorded an after-tax charge of $686 million during the fourth quarter related to the Vogtle project, with total capital cost forecast for Georgia Power increasing by $480 million [19][18] - The company has a disciplined approach to capital forecasting, ensuring that only expected returns are included in forecasts [37] Q&A Session Summary Question: Breakdown of incremental costs related to Vogtle - The incremental cost of $440 million includes $180 million driven by the co-owners agreement, with $260 million representing Georgia Power's assumption of costs above the threshold [50][51] Question: Impact of COVID-related costs on the project - Management acknowledged that COVID had an impact on the project, but it is not a major driver of the recent cost increase [100][101] Question: Clarification on IRP-related spending - There is modest transmission spending included in the $41 billion base plan, with additional spending expected beyond the forecast period [66] Question: Thoughts on asset optimization and potential sales - The company is open to both buying and selling assets, focusing on what is best for long-term growth [75][76] Question: Clarification on Vogtle co-owners' decision-making - The processes for voting to proceed and tendering costs are separate, and management is not aware of any reasons for co-owners to not proceed [60][62] Question: Clarification on inspection reports and NRC involvement - Management stated that missing inspection reports have not necessitated comprehensive rework, and the NRC is focused on ensuring safety standards are met [83][85]