SOUTHERN CO (SO)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 delivered solid top- and bottom-line growth with operating revenues of $7.27B (+4.2% YoY) and GAAP EPS of $1.40 (+$0.10 YoY); adjusted EPS was $1.43 (+$0.01 YoY), driven by higher utility revenues, partially offset by higher interest, D&A, O&M, and taxes .
• The quarter absorbed unprecedented Hurricane Helene impacts; management currently estimates ~$1.1B of storm-related restoration and rebuild costs, all deferred pending constructive regulatory recovery processes in Georgia .
• Demand narrative strengthened: weather‑normalized retail sales were essentially flat YoY after excluding ~0.4% lost sales from storm impacts, with data center power usage up ~10% YoY and robust new customer additions (12k electric; 7k gas) .
• Guidance context: management reiterated a 2024 adjusted EPS outcome at the high end ($4.05) of the prior $3.95–$4.05 range and set a Q4 2024 adjusted EPS estimate of $0.49; the company’s Q3 adjusted EPS of $1.43 exceeded its prior intra-quarter estimate of $1.30 .
• Potential stock catalysts: visible beat vs the company’s prior intra-quarter EPS estimate, storm cost deferral with history of constructive recovery, accelerating large-load pipeline (Georgia Power pipeline >36 GW by mid‑2030s with 8 GW committed) and DOE grid resilience funding at Georgia Power (> $160M) supporting capacity and reliability investments .

What Went Well and What Went Wrong

• What Went Well

  • Strong consolidated performance: Operating revenues rose to $7.27B (+4.2% YoY), operating income to $2.37B (+$258M YoY), and GAAP net income to $1.54B (+$113M YoY) .
  • Demand indicators: Data center usage +10% YoY; 42 new/expanded projects in the quarter representing 5,000+ potential jobs and ~$2.6B in capital commitments; electric customer adds +12k and gas +7k .
  • Strategic funding tailwind: Georgia Power awarded >$160M DOE GRIP grant to enhance transmission capacity, resilience, and enable further renewable integration and load growth .
  • Management quote: “Our entire company...continued to perform well during the third quarter” (CEO Christopher Womack) .

• What Went Wrong

  • Historic storm impact: Hurricane Helene was Georgia Power’s most destructive event; initial restoration/rebuild estimate ~$1.1B; costs deferred and subject to regulatory recovery processes .
  • Cost pressure: Higher interest expense (+$72M YoY), higher D&A (+$67M YoY), and higher non‑fuel O&M (+$238M YoY) tempered earnings leverage .
  • Segment softness: Southern Power net income fell to $82M (from $100M) and operating revenues declined to $600M (from $653M) YoY; Southern Company Gas net income fell to $38M (from $82M) YoY in Q3 .

Financial Results

• Consolidated headline results and comparisons

• Segment performance (operating revenues and net income)

• KPIs and volumes

Notes: Weather‑normalized total retail kWh was essentially flat YoY after excluding ~0.4% lost sales from storm impacts .

Guidance Changes

No additional quantitative revenue/margin/tax guidance was provided in the 8‑K/press release; management emphasized constructive regulatory processes and disciplined capital allocation amid accelerating large‑load demand .

Earnings Call Themes & Trends

Management Commentary

• CEO (Chris Womack): “Our entire company...continued to perform well during the third quarter” and lauded the “extraordinary response” to Hurricane Helene, the most destructive storm in Georgia Power’s history .
• CFO (Dan Tucker): Initial estimated Helene restoration/rebuild cost is ~$1.1B; all costs currently deferred; will determine capex vs O&M split as bills finalize .
• Demand outlook: Weather‑normalized retail sales essentially flat YoY after excluding ~0.4% lost sales due to Helene; data center usage +10% YoY; 42 projects announced in quarter with >$2.6B in capex and 5,000+ potential jobs; Georgia Power large‑load pipeline >36 GW with 8 GW committed by mid‑2030s .
• Stance on nuclear: New nuclear requires better risk mitigation (federal and counterparties); evaluating uprates at six legacy units—more viable under IRA—but significant capital/time required; not committing until risks mitigated .

Selected quotes:

• “The initial estimated cost for this historic storm‑related restoration and rebuild is approximately $1.1 billion.” — CFO Dan Tucker .
• “Georgia Power’s potential load additions and its economic development pipeline have grown to over 36 gigawatts by the mid‑2030s, with 8 gigawatts committed.” — CFO Dan Tucker .
• “We’re not going down [a new nuclear] path until the risk is mitigated.” — CFO Dan Tucker .

Q&A Highlights

• Storm cost recovery: All Helene costs deferred; PSC has historically been constructive. Typical recovery periods range ~2–6 years depending on balance and context; deferral typically earns at cost of capital though PSC has flexibility .
• Capex vs O&M split: Too early to size; likely skews more capital given magnitude of rebuild, but final split awaits invoicing and review .
• Large‑load pricing and bill impact: Substantially all committed large load is paid for by specific customers; objective is mutual benefits, with downward pressure for existing customers .
• New build timelines: Gas generation concept‑to‑COD typically ~3–5 years; SO has pre-positioned for long‑lead items and EPC partners; recent ~800 MW CC (Barry 8) took a little over 3 years .
• SONAT pipeline expansion: Early days; ~90% brownfield (compression/looping) which de‑risks permitting; strategically important for serving future load .

Estimates Context

• S&P Global (Capital IQ) Wall Street consensus for Q3 2024 EPS and revenue was unavailable due to access limits at the time of this analysis. Values retrieved from S&P Global were unavailable (daily request limit exceeded).
• Company intra‑quarter estimate context: Management had estimated Q3 adjusted EPS at $1.30 on the Q2 call; actual adjusted EPS printed at $1.43, a clear beat vs the company’s intra‑quarter estimate .
• Implications: Sell‑side models may adjust for (1) higher regulated revenue run‑rate amid strong C&I/data center demand, (2) higher interest/D&A/O&M, and (3) storm cost deferrals with regulatory recovery timing assumptions.

Key Takeaways for Investors

• Core regulated earnings power intact: Revenue and operating income grew solidly; adjusted EPS of $1.43 was strong despite cost headwinds and storm impacts .
• Load growth story compounding: Data center usage rising and large‑load pipeline/commitments expanding, particularly in Georgia; management messaging points to sustained medium‑term rate base growth .
• Storm overhang manageable: ~$1.1B restoration estimate deferred; history of constructive recovery in Georgia mitigates longer‑term P&L/cash flow risk; watch capex/O&M split and recovery tenor .
• Capital needs and funding tailwinds: DOE GRIP award (> $160M) and potential SONAT expansion support delivering capacity for demand growth and resilience; monitor 2025 IRP and subsequent regulatory filings .
• Nuclear optionality, not obligation: Uprates remain on the table; new nuclear requires further risk mitigation; discipline remains a core theme .
• 4Q setup and FY outcome: Management’s Q4 adjusted EPS estimate ($0.49) implies FY 2024 at ~$4.05 (top of prior range); focus on execution, storm recovery cadence, and 2025 planning milestones .

Citations

• Q3 2024 press release and financial highlights:
• Q3 2024 8‑K (Item 2.02) and exhibits:
• Q3 2024 earnings call transcript:
• Q2 2024 press release and call:
• Q1 2024 press release:
• DOE GRIP funding press release (Georgia Power):
• Dividend declaration:

Estimates note: S&P Global consensus data was unavailable due to access limits at the time of analysis; therefore, comparisons to Wall Street consensus could not be provided. Values retrieved from S&P Global were unavailable.