The Southern Company ((SO)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Southern Company recently held its fourth-quarter 2024 earnings call, showcasing a resilient and optimistic outlook despite facing some external challenges. The sentiment from the call was overwhelmingly positive, accentuated by record-breaking earnings growth and substantial plans for future development. While the company navigates high interest rates and temporary sales losses due to a hurricane, its strong economic development and growth projections set a hopeful tone for the future.
Record-Breaking Earnings Growth
Southern Company reported adjusted earnings at the very top of their earnings per share (EPS) guidance range, achieving an impressive 11% growth from their 2023 adjusted results. This milestone underscores the company’s robust financial health and its ability to meet and exceed market expectations.
Strong Commercial and Residential Growth
The company experienced significant commercial and residential growth, with commercial sales rising by 17% year-over-year. Additionally, Southern Company welcomed a record addition of 57,000 new residential electric customers and 26,000 new natural gas distribution customers, signaling a thriving demand in their service areas.
Significant Capital Investment Plan
Southern Company announced a $63 billion capital investment plan over the next five years, with 95% of this investment directed towards state-regulated utilities. This represents a $14 billion increase from their previous forecast, highlighting their commitment to expanding infrastructure and service capacity.
Economic Development and Load Growth
More than 150 companies have announced expanded operations within Southern Company’s southeastern footprint, supporting the creation of over 20,000 new jobs. This expansion is poised to generate a potential load of over 50,000 megawatts by the mid-2030s, further solidifying Southern Company’s role as a key player in regional economic development.
Positive Long-term Growth Outlook
Southern Company maintains a projected long-term adjusted EPS growth rate of 5% to 7%, with a potential trajectory near the top of this range. This consistency in growth expectations reinforces investor confidence in the company’s strategic direction.
Interest Rate Challenges
Despite an optimistic outlook, Southern Company acknowledges the challenge posed by high interest rates. As the parent company debt is refinanced at higher rates, these will act as partially offsetting factors against their financial performance.
Temporary Sales Losses Due to Hurricane Helene
The company reported that weather-normalized total retail electricity sales for the year increased by approximately 1% compared to 2023, excluding the impact of temporary sales losses due to Hurricane Helene. This indicates resilience in their core operations despite adverse weather conditions.
Forward-Looking Guidance
Looking to the future, Southern Company provided optimistic guidance with a projected 6% growth in adjusted EPS for 2025, in the range of $4.20 to $4.30. They anticipate retail electricity sales growth of 2% to 3% in 2025 compared to 2024, and a long-term annual growth projection of about 8% from 2025 through 2029. Their base capital investment forecast stands at $63 billion over the next five years, with potential additional investments of $10 billion to $15 billion primarily driven by new generation resources and natural gas pipeline expansions.
In summary, Southern Company’s earnings call reflected a strong performance and an optimistic outlook for the future. With record-breaking earnings growth, ambitious capital investment plans, and a focus on sustainable development, the company is well-positioned to navigate current challenges while capitalizing on long-term growth opportunities.
