SOUTHERN CO Q4 FY2024 earnings call

• 2024 was an outstanding year with adjusted earnings at the top of the EPS guidance range, representing 11% growth from 2023 adjusted results.
• The state-regulated utility franchises are the foundation, with 3 electric and 4 natural gas distribution utilities. Economic development is robust, with over 150 companies expanding in the southeastern footprint, supporting over 20,000 jobs.
• Data centers and large manufacturers represent over 50,000 megawatts of potential incremental load by mid-2030s, with commitments for over 10,000 megawatts. Southern Power's portfolio includes ~13,000 megawatts of capacity.
• Base capital investment over the next 5 years is $63 billion, 95% at state-regulated utilities, with transmission investment being the largest driver of increased capital expenditures.

The state-regulated utilities are the primary segment, expected to represent approximately 95% of projected capital investments. They serve 9 million customers and have strong economic development activities. Southern Power, the competitive power business, has a portfolio with approximately 13,000 megawatts of capacity across 50-plus generating facilities in 15 states, with substantially all assets under long-term contracts with creditworthy counterparties.

• 2025 adjusted EPS guidance range is $4.20 to $4.30 per share, midpoint $4.25 (6% growth from 2024 midpoint).
• Long-term adjusted EPS growth rate guidance remains unchanged at 5% to 7%.
• Base capital investment forecast is $63 billion over 5 years, with potential incremental regulated capital investments of $10 billion to $15 billion for 2025 to 2029.

• Commodity risk for Southern Power is minimal, but regulatory processes for generation resources are subject to uncertainty.
• Interest rate risks as parent company debt is refinanced at higher rates.
• Speculative data center projects may be excluded due to credit/collateral requirements, potentially reducing the pipeline in the short term.

Q: Could you flesh out comments on earnings growth cadence and potential derailers?

A: The long-term outlook is solid with fundamentals adding durability, and while there are risks, the team feels confident in sustaining the growth. Risks include regulatory and interest rate factors.

Q: Talk about split of $10 billion to $15 billion investment opportunities between Georgia Power and natural gas pipelines?

A: Substantially all is at Georgia Power, with regulatory processes ongoing, and historical context on RFPs and dispatchable resources.

Q: Leveraging sites for co-location and gas turbines for data centers?

A: Southern Power can leverage opportunities in the Southeast, with potential for recontracting and new projects, but market design and vertical integration are key.

Q: Why 2027 as key year for rebasing?

A: It's due to long-term growth, ramp-up of capital spending and revenues from large load customers, and moderating interest cost headwinds.

Q: Thoughts on gas turbines availability and pricing backdrop?

A: Diversified suppliers are engaged, with reservation fees, and ongoing conversations to secure needed turbines.

Q: Color on dynamic between generation CapEx and transmission CapEx?

A: Transmission has better line of sight and is vertically integrated, while generation has optionality, with outstanding RFPs in Georgia indicating potential generation CapEx.