Southern Company (the) · NYSE:SO
Southern Company (the) — Q4 2012 Earnings Presentation
27 slides from Southern Company (the)'s earnings presentation, Jan 30, 2013
Slide 1: Fourth Quarter 2012 Earnings Conference Call
Fourth Quarter 2012 Earnings Conference Call January 30, 2013
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 complet
Slide 3: On Today's Call
On Today’s Call The 5 Priorities 2012 Financial Results Economy and Sales Forecast Capital Expenditure and Financing Plans Earnings Guidance and Dividend Objectives Closing Remarks Q&A 3
Slide 4: Our Top Priorities
Our Top Priorities Excel at the fundamentals Achieve success with major construction projects Support building of national energy policy Promote Smart Energy Value a ue aandd de develop e op ou our peop peoplee 4
Slide 5: Excel at The Fundamentals
Excel at The Fundamentals Safety 2012 Generation Mix 2012 was one off our safest f t years Nuclear 17% Coal Customer Satisfaction 36% All four operating companies in top quartile among U.S. utilities Gas 45% Reliability Industry leader in EFOR Providing g the lowest cost Decade long trend of
Slide 6: Vogtle Units 3 & 4 Construction Progress
Vogtle Units 3 & 4 Unit 3 Turbine Island January 2012 December 2012 Unitt 3 Nuclearr Island January 2012 December 2012 6
Slide 7: The Kemper Project
The Kemper Project January 2012 December 2012 Reached a settlement with the MPSC on January 24, 2013 Recovery framework should mitigate rate impacts on customers Filed for initial rates ($ ($172M)) on Januaryy 25,, 2013 On track for May 2014 in-service date 7
Slide 8: Our Top Priorities
Our Top Priorities Excel at the fundamentals Achieve success with major construction projects Support building of national energy policy Promote Smart Energy Value a ue aandd de develop e op ou our peop peoplee 8
Slide 9: Summary of 2012 Earnings Results
Summary of 2012 Earnings Results Q4 Earnings Per Share = $0.44 2012 Earnings Per Share = $2.70 2012 Earnings Per Shares ex-items = $2.68* * Excludes +2¢ EPS impact of insurance recovery related to the MC Asset Recovery settlement 9
Slide 10: FY 2012 vs. FY 2011 EPS Drivers
FY 2012 vs. FY 2011 EPS Drivers ¢ 22¢ -20¢ ¢ 5¢ -4¢ 4¢ 11¢ -1¢ -1¢ -2¢ 3¢ -5¢ -1¢ 2¢ $2.68 PPA D&A Other 2¢ Other Parent / $2.57 Expense Taxes Income Interest Income Southern Other Shares Taxes Power Weather Non-Fuel Customer Other C O&M Growth Revenue Effects Traditional Operating Companies +11¢ 20
Slide 11: 2012 Retail Sales
2012 Retail Sales Q4 FY 2012 As Reported Weather Normal As Reported Weather Normal Residential 6.6% 5.2% -5.4% 1.1% Commercial 0.7% -0.7% -1.6% -0.2% Industrial 1.2% 1.2% 0.2% 0.2% Total Retail 2.6% 1.7% -2.3% 0.4% Six of our top seven industrial segments reflected energy sales growth in Q4 Stri
Slide 12: Economic Roundtable
Economic Roundtable GDP projected to grow approximately 2% – Higher growth in the second half of the year Improving I i global l b l economy andd iindustrial d t i l production d ti could positively affect exports Housing markets in our territories rebounding Cautious outlook for the commerc
Slide 13: 2013 Retail Sales Forecast (kWh)
2013 Retail Sales Forecast (kWh) Weather-Normal Growth Sales Mix 2.0% Industrial Residential 1.0% 33% 33% 33% 33% 0.6% Commercial 0.5% 33% 34% Residential Commercial Industrial Total Estimated range for sales growth of 0.7% 0 7% - 1.3% 1 3% 13
Slide 14: $16.5B Capital Expenditure Program
$16.5B Capital Expenditure Program (2013-2015) (2013 2015) $5.8B $5.5B $5.1B '13-'15 Southern Power $2.4 B Environmental $3.6 B New Generation $2.6 B T&D Growth $2.0 B Nuclear Fuel $0.9 B Maintenance $4 2 B $4.2 Other $0.7 B Traditional OpCos $14.1 B 14 2013 2014 2015 Note: Totals may not add due to
Slide 15: 2013 – 2015 Financing Plan
2013 – 2015 Financing Plan ($ in millions) 2013 2014 2015 Alabama $ 350 $ 500 $ 750 Georgia (1) 1,450 400 1,900 Gulf 100 200 100 Mississippi (2) 650 700 - Southern Power (3) 300 400 650 Holding Company 300 500 - Long Term Securities Sec rities Issuances Iss ances $ 3,150 3 150 $ 2,700 2 700 $ 3,400
Slide 16: Earnings Per Share Guidance
Earnings Per Share Guidance 2013 guidance range = $2.68 - $2.80 per share* Projected long-term growth of 4% to 6% $2.80 2013 $2.68 $2 68 Q1 2013 Estimate: $0.51 $ per share* 16 * Excludes potential one-time restructuring charges for Choctaw leveraged lease
Slide 17: Dividend Objectives
Dividend Objectives Estimated long-term EPS growth of 4% to 6% is supportive of a growing dividend, consistent with the past several years +7¢ +7¢ +7¢ +7¢ +7¢ +6¢ +6¢ +6¢ +3¢ +3¢ +3¢ 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 17 Note: Future dividend increases are subject
Slide 18: Our Customer-Focused Business Model
Our Customer-Focused Business Model Healthy 4 Simple Rules Constructive Capital Regulation Investments est e ts Keep the lights on Customers Make it affordable Give great service High Reliability Be a positive force Low Prices High Customer Satisfaction The fundamentals for our Traditional O
Slide 19: Low-risk Southern Power Business Model
Low-risk Southern Power Business Model Contract Coverage (5 yr avg.) 77% Avg Remaining Contract Life Avg. 10 2 years 10.2 Long-term bi-lateral contracts with credit-worthy counterparties Owned Capacity 8,889 MW (includes 27MW on-line in 2013) No/minimal fuel or transmission risk 98% Maintain a
Slide 20: A Strong Track Record
A Strong Track Record Traditional OpCo ROE Southern Power Net Income* 14% 12% $160M 10% 8% $120M 6% 4% $80M 2% 0% $40M 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $2 68 $2.68 $2.60 EPS Growth* $2.57 Dividend Growth $1.90 $2.40 $2.37 $2.37 $2.32
Slide 21: Superior Risk-Adjusted Shareholder Return
Superior Risk-Adjusted Shareholder Return Southern Company remains a premier investment for medium and long long-term term investors One Two Three Five Ten Fifteen Twenty Thirty Y Year Y Year Y Year Y Year Y Year Y Year Y Year Y Year Southern Company (%) (3.4) 10.7 13.9 7.1 9.2 12.2 12.2 14.6 Philad
Slide 22: Appendix
22 Appendix SOUTHERN PN COMPANY
Slide 23: Q4 2012 vs. Q4 2011 EPS Drivers
Q4 2012 vs. Q4 2011 EPS Drivers 1¢ -1¢ 9¢ -1¢ -3¢ 1¢ $0.44 PPA D&A 1¢ Other Expense Taxes Parent / Income Southern 1¢ Other Taxes Power 1¢ 2¢ Non-Fuel 3¢ Other Weather Operating O&M $0.30 Other Revenue Revenue Customer Effects Usage Traditional Operating Companies +12¢ Q4 2011 Q4 2012 23
Slide 24: 2013 – 2015 CapEx Forecast - Functional
2013 – 2015 CapEx Forecast - Functional Total ($ billions) 2013 2014 2015 ’13-’15 New Generation $1.1 $1.0 $0.6 $2.6 Environmental Compliance 1.0 1.5 1.1 3.6 T&D Growth 0.7 0.7 0.7 2.0 Maintenance (G, T & D) 1.4 1.4 1.4 4.2 Nuclear Fuel 0.3 0.3 0.3 0.9 General 0.2 0.2 0.3 0.7 Traditional OpCo Total
Slide 25: 2013 – 2015 CapEx Forecast - Company
2013 – 2015 CapEx Forecast - Company Total ($ billions) 2013 2014 2015 ’13-’15 Alabama $1.2 $1.5 $1.5 $4.3 Georgia 2.2 2.4 2.2 6.8 Gulf 0.3 0.5 0.3 1.1 Mississippi 0.8 0.5 0.3 1.5 Other Subsidiaries 0.1 0.2 0.1 0.4 Traditional OpCo Total $4.6 $5.1 $4.4 $14.1 Southern Power 0.9 0.8 0.7 2.4 Total Cape
Slide 26: Generation Portfolio Diversity
Generation Portfolio Diversity Capacity Factors Q4 Full Year 2011 2012 2011 2012 Coal - PRB 70% 82% 78% 71% Coal - Non-PRB 28% 18% 46% 29% Gas - Combined Cycle 64% 76% 61% 71% Generation Mix Q4 Full Year 2011 2012 2011 2012 Gas/Oil 40% 47% 32% 45% Coal 41% 32% 50% 36% Nuclear 17% 19% 16% 17% Hydro 2
Slide 27: Reconciliations to GAAP
Reconciliations to GAAP Southern Company – Earnings Per Share 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 EPS (GAAP) $ 2.03 $ 2.07 $ 2.14 $ 2.12 $ 2.29 $ 2.26 $ 2.07 $ 2.37 $ 2.57 $ 2.70 Earnings from synthetic fuel investments1 (0.08) (0.10) (0.11) (0.02) (0.08) - - - - - Dynegy Settlement2 (