Southern Company (The) Series 2 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.
• Economic development at utilities is robust: over 150 companies announced expanded operations or new facilities in the southeastern footprint, supporting over 20,000 new jobs. The economic development pipeline from large electric load customers, including data centers and large manufacturers, represents over 50,000 MW of potential incremental load by mid-2030s, with data centers alone accounting for roughly 80% of that.
• Southern Power's portfolio is a complement to state-regulated businesses, with ~13,000 MW of capacity. It has 500 MW of solar under construction.
• Complementary businesses like PowerSecure and Southern Telecom add depth to vertical integration and help serve customers in regulated footprints.

Southern Company's state-regulated utility franchises, including three electric utilities and four natural gas distribution utilities, are key. The state-regulated utilities are expected to represent approximately 95% of projected capital investments. Southern Power, the competitive power business, has a portfolio with approximately 13,000 megawatts of capacity across 50-plus generating facilities in 15 states, including ~7,000 MW of natural gas generation, ~3,000 MW of solar, and ~3,000 MW of wind. Southern Power's assets are under long-term contracts with creditworthy counterparties, and it doesn't take meaningful commodity risk.

• 2025 adjusted earnings per share guidance range is $4.20 to $4.30 per share, midpoint $4.25 (6% growth from 2024 adjusted EPS guidance midpoint).
• Long-term adjusted EPS growth rate guidance remains 5% to 7% unchanged.
• Base capital investment forecast over next 5 years is $63B, 95% at state-regulated utilities, a $14B or ~30% increase from 1 year ago.
• Potential incremental regulated capital investments for 2025 to 2029 total $10B to $15B, subject to regulatory processes.

• Interest rates: parent company debt refinanced at meaningfully higher rates.
• Regulatory processes: timing of ongoing regulatory processes for incremental capital opportunities affects line of sight.
• Supply chain challenges: for both generation and transmission, impacting availability of equipment.

Q: What's being seen in Alabama and Mississippi regarding data centers?

A: There's migration of data center activity, with projects like a meta project in Alabama and Compass project in Mississippi, and broader economic development pipelines full of activities.

Q: Thoughts on new nuclear builds and risks?

A: New nuclear is needed, risks must be mitigated through federal activity or private participation, and they'll continue to make the case for new nuclear due to efficiencies with each project.

Q: Reconciling CapEx increase to equity?

A: It's a combination of factors including tax transferability monetization, dividend growth considerations, and other cash flow improvements.

Q: Practicality of finishing summer plant or restarting construction by Southern Power?

A: Not something in Southern Power's wheelhouse currently, with risks and need for capital to cover it.

Q: Dynamic between generation CapEx and transmission CapEx, especially in 2028-2029?

A: Transmission has better line of sight, generation has optionality, and once RFP firm up, potential capital for generation will marry with transmission.

Q: Transmission supply chain availability?

A: Challenging but not as difficult as generation side, with Southern Company's size and engagement helping, but supply chain organization stays on top of market.

Q: Policy support for data center growth in Alabama and tariff design for hyperscale customers?

A: No specific tariff legislation in Alabama known, and they have flexibility in contracting with large load customers.