Sign in
GP

GEORGIA POWER CO (GPJA)·Q2 2024 Earnings Summary

Executive Summary

  • Southern Company’s consolidated Q2 2024 results were strong: operating revenues rose to $6.463B (+12.4% YoY) and adjusted EPS was $1.10; Georgia Power segment revenue rose to $2.875B (+20.2% YoY) and net income to $762M (+61.8% YoY) .
  • Adjusted EPS of $1.10 significantly beat management’s prior internal estimate of $0.90; management guided Q3 adjusted EPS to $1.30 and reiterated full‑year EPS range of $3.95–$4.05, targeting at least the top half given YTD strength .
  • Key demand catalyst: data center load growth. Sales to existing data centers rose ~17% YoY; Georgia Power’s pipeline expanded to 24.3 GW, with firm commitments now 7.3 GW, supporting accelerated load from 2026–2028 .
  • Reliability and cost discipline drove outperformance amid the warmest Q2 in 38 years; operating income increased to $1.939B and retail sales rose across residential and commercial customer classes .
  • Dividend support remains intact at the parent: Southern Company declared a $0.72 quarterly dividend payable Sept. 6, 2024, marking 76 consecutive years of rising or stable dividends .

What Went Well and What Went Wrong

What Went Well

  • Robust financial performance and beat vs company estimate: “Adjusted earnings per share was $1.10 per share… $0.20 above our estimate” .
  • Demand and pipeline momentum: “Sales to existing data centers… up approximately 17% year-over-year,” with pipeline now “over 30 gigawatts of potential load… about 40% projects and 80% potential load are data centers” .
  • Strong reliability under extreme weather: “Warmest second quarter in the last 38 years… peak electric load of over 38,000 megawatts… our electric system delivered outstanding reliability” .

What Went Wrong

  • Cost headwinds: higher interest expense (+$84M YoY to $694M) and higher depreciation and amortization (+$70M YoY to $1.182B) partially offset revenue gains .
  • Tax headwind linked to Vogtle accounting: a $14M income tax charge remeasuring deferred tax assets associated with prior estimated probable loss on Plant Vogtle due to a Georgia corporate tax rate change .
  • Wholesale volumes softened: total wholesale sales down 1.1% in Q2 YoY and 8.4% YTD; natural gas revenues declined 2.5% in Q2 and 7.0% YTD .

Financial Results

Consolidated (Southern Company)

MetricQ4 2023Q1 2024Q2 2024
Operating Revenues ($USD Billions)$6.045 $6.646 $6.463
Net Income Available to Common ($USD Billions)$0.855 $1.129 $1.203
Basic EPS ($USD)$0.78 $1.03 $1.10
Operating Income ($USD Billions)$1.207 $1.703 $1.939
Interest Expense, net ($USD Billions)$0.634 $0.665 $0.694

YoY context (Q2 2024 vs Q2 2023):

  • Operating revenues +12.4%
  • Net income +43.6%
  • Earnings before income taxes +60.5%

Company-estimate comparison:

  • Adjusted EPS: $1.10 vs prior internal estimate $0.90 (+$0.20)

Segment Focus: Georgia Power

MetricQ4 2023Q1 2024Q2 2024
Operating Revenues ($USD Billions)$2.313 $2.398 $2.875
Earnings Before Income Taxes ($USD Billions)$0.636 $0.516 $0.954
Net Income Available to Common ($USD Billions)$0.533 $0.437 $0.762
YoY % (Q2 only)——Rev +20.2%; EBT +69.4%; NI +61.8%

Drivers and non-GAAP adjustments:

  • EPS drivers include retail revenue impacts (+$0.24), weather (+$0.14), and higher income taxes (-$0.03) QoQ vs Q2 2023; see EPS earnings analysis .
  • Non-GAAP: Q2 results include a pre-tax credit of $21M ($16M after tax) related to estimated probable loss on Vogtle units, and a $14M tax charge from Georgia tax rate change tied to Vogtle deferred tax assets .

KPIs

KPIQ2 2023Q2 2024
Total KWh Sales (Millions)48,003 49,897
Total Retail Sales (Millions KWh)34,969 37,007
Residential Retail Sales (Millions KWh)10,695 11,889
Commercial Retail Sales (Millions KWh)11,826 12,666
Industrial Retail Sales (Millions KWh)12,317 12,318
Regulated Utility Customers (Thousands)8,800 8,873

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSQ3 2024—$1.30 per shareNew quarterly estimate
Full-year EPS rangeFY 2024$3.95–$4.05$3.95–$4.05 (remain)Maintained; aiming for top half
Data center pipeline (Georgia Power)Mid‑2030s21 GW pipeline; 6.2 GW commitments (Q1)24.3 GW pipeline; 7.3 GW commitmentsRaised
DOE loan program potential7–8 years—$15–$20B eligible capital; up to 80% debt financingNew financing avenue
Dividend (SO common)Sept. 6, 2024$0.72$0.72Maintained/ongoing program

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Data center demandPipeline growth disclosed; early commitments; Q1 noted higher usage by existing data center customers Existing data center sales +17% YoY; pipeline up to 24.3 GW; commitments to 7.3 GW; forecast 6% retail sales growth 2025–2028 (9% at Georgia Power) Strengthening; accelerating toward 2026–2028
Reliability & weatherQ4/Q1 weather impacts; operational resiliency noted Warmest Q2 in 38 years; outstanding reliability; peak load >38 GW Strong reliability under extreme conditions
Regulatory trajectory (GRC/IRP)IRP update filed in GA; constructive environments 2025 GA IRP to further “button up”; equity ratios were tax-reform driven; ongoing commission dialogues Constructive, continued engagement
Financing (DOE loans, SONAT)Not discussed in Q1 PR; legacy Vogtle DOE support historically DOE loans: $15–$20B eligible capital; SONAT expansion proposal ($3B, 50% partner), early-stage Emerging financing capacity
Nuclear fleet (Vogtle 3/4)Vogtle 4 achieved commercial operation (Q1) Vogtle 3 valve issue resolved; ~98% capacity factor; advocacy for government leadership on new nuclear Stable operations; supportive stance on nuclear expansion

Management Commentary

  • “We reported strong adjusted earnings results for the second quarter… well positioned to achieve our financial objectives for 2024.” – Christopher Womack .
  • “Adjusted EPS… $1.10 per share… $0.20 above our estimate… driven by investments in state-regulated utilities and warmer-than-normal weather.” – Daniel Tucker .
  • “Sales to existing data centers… up approximately 17% year-over-year… pipeline includes nearly 200 projects and over 30 gigawatts of potential load… 80% potential load are data centers.” – Daniel Tucker .
  • “Warmest second quarter in the last 38 years… peak electric load over 38,000 MW… outstanding reliability.” – Christopher Womack .
  • “DOE loan office… $15–$20B eligible capital… up to 80% financed… tremendous benefit to customers.” – Daniel Tucker .

Q&A Highlights

  • Load growth sustainability and guidance: Management kept FY EPS range ($3.95–$4.05) and set Q3 adjusted EPS at $1.30; cautious given summer seasonality but aiming for top half of the range .
  • Data center acceleration: Existing data center sales +17%; new hyperscale builds drive 2026–2028 growth; Georgia Power pipeline expanded to 24.3 GW; firm commitments now 7.3 GW .
  • Regulatory posture: Equity ratio changes linked to tax reform across states; GA GRC to vet issues in 2025; GA IRP filing in 2025 will evolve long‑term forecasts .
  • Infrastructure: SONAT gas expansion proposal ($3B total; SO 50% partner) at early stage; supportive of infrastructure to serve large loads .
  • Nuclear: Vogtle 3 issue resolved; ~98% capacity factor; new nuclear build requires government leadership to mitigate risk .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable at time of query (system limit). As a proxy, results materially exceeded company’s internal quarterly estimate (Adjusted EPS $1.10 vs $0.90) .
  • Given outperformance and stronger commercial/data center usage trends, street estimates for out‑year EPS and revenue likely require upward revisions to incorporate accelerated load and potential capital deployment, subject to regulatory approvals and execution cadence .

Key Takeaways for Investors

  • Georgia Power delivered standout segment performance in Q2: revenue +20.2% YoY and net income +61.8% YoY, underscoring constructive regulation and strong demand in the Southeast .
  • The data center super‑cycle is a tangible driver: existing site usage up 17% and a growing pipeline of new hyperscale projects should accelerate load and earnings from 2026 onward; monitor GA IRP and pricing structures for incremental visibility .
  • Near‑term beats were weather‑aided, but management’s cost discipline and reliability suggest sustaining higher baseline performance; they plan to “fix the roof while the sun is shining” to support future years .
  • Financing optionality is expanding: DOE loan program and potential SONAT expansion could lower cost of capital and facilitate growth investments with customer benefits; timing remains early‑stage .
  • Risks: higher interest and D&A trends, wholesale softness, and tax impacts tied to Vogtle adjustments; regulatory outcomes in GA GRC/IRP will be pivotal to long‑term returns .
  • Dividend stability at the parent remains intact, supporting total return while growth investments ramp; GPJA, as Georgia Power’s junior notes, benefit from underlying utility cash flows .
  • Actionable: Position for medium‑term growth (2026–2028) driven by data centers and Southeast industrial expansion; in the near term, watch Q3 execution vs $1.30 EPS estimate and the top‑half outcome for FY EPS .