Southern Company(US:SO)2023-11-02 19:45Financial Data and Key Metrics Changes - For Q3 2023, adjusted earnings were $1.42 per share, which is $0.12 higher than estimates and $0.11 higher than the previous year [53] - For the nine months ended September 30, 2023, adjusted earnings per share were $3.01, down from $3.35 for the same period in 2022, primarily due to mild weather conditions [54][55] - The adjusted estimate for Q4 is $0.59 per share, implying a full-year result of approximately $3.60 on an adjusted basis [56] Business Line Data and Key Metrics Changes - Southern Power announced the acquisition of two solar facilities, adding to a portfolio of 5,500 megawatts of carbon-free generating capacity [14] - Alabama Power's Barry Unit 8, a 720-megawatt combined cycle unit, was successfully placed in service on schedule and on budget [15] Market Data and Key Metrics Changes - Year-to-date 2023 weather-normal retail electricity sales were approximately 0.5% lower than the first nine months of 2022 [57] - Approximately 35,000 electric customers and 19,000 gas customers were added year-to-date, trends that continue to outpace pre-pandemic levels [57] Company Strategy and Development Direction - Georgia Power is proposing additional investments in its integrated resource plan (IRP) to ensure resilience, reliability, and flexibility for customers [7] - The company aims to reach net zero by 2050 and has signed a memorandum with the U.S. General Services Administration to develop carbon-free electricity solutions [8] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about economic growth in the Southeast and the role of utilities in attracting new jobs and investments [6] - The company anticipates a shift in electricity sales growth to a mid- to high single-digit range over the next five years due to new data-centric businesses and manufacturing facilities [59] Other Important Information - The Georgia Public Service Commission is expected to vote on the Vogtle Unit 3 and 4 cost recovery application on December 19 [66] - Management highlighted the importance of maintaining a sustainable payout ratio for dividends, aiming for a ratio that starts with a six to support higher growth rates [107] Q&A Session Summary Question: Discussion on CapEx and ownership opportunities in Alabama - Management indicated that the CapEx upside is additional to existing plans and that ownership will be a mix of owned and third-party PPAs [19][22] Question: Outlook for 2024 amidst headwinds and load growth - Management stated it is premature to provide guidance for 2024, with a focus on assessing economic development activities and interest rate headwinds [27][28] Question: Update on Vogtle Unit 4 pump issue - Management confirmed that the pump replacement process is underway and expressed confidence in the timeline for bringing the unit online [63][70] Question: Impact of load growth on CapEx and customer bills - Management noted that the new customers are expected to use electricity consistently, which will provide sufficient revenue to cover capital investments [75] Question: Interest rate sensitivities and management strategies - Management discussed strategies to mitigate interest rate impacts, including creative financing approaches [44] Question: Update on Georgia elections and implications for Southern Company - Management indicated that the Rose case is still pending and that they cannot predict the outcomes of upcoming elections [88][90] Question: Future of natural gas supply and infrastructure - Management is actively working on expanding pipeline capacity to meet customer demands [92] Question: Green hydrogen's role in the IRP - Management is exploring opportunities for green hydrogen as part of their renewable resource strategy [94] Question: Management changes at Alabama Power - Management clarified that recent leadership changes are due to retirements and succession planning, not indicative of larger issues [102]