Southern Company Conference Call Preview

Feb. 19, 2017 10:11 AM ETThe Southern Company (SO)12 Comments
Robert Howard, CFA profile picture
Robert Howard, CFA
409 Followers

Summary

  • Company earnings will be released February 22.
  • Weather in Q4 should be supportive in meeting annual guidance.
  • Look for an update on integration of AGL into the company.
  • Status of Kemper and Vogtle construction is important to watch.
  • Major financing needs over the next few years mean that the repercussions of any problems will be greatly magnified.

Southern Company (NYSE:SO) had a busy 2016, and investors should expect updates on many different topics on SO's Feb. 22 call. Company guidance for 2016 was a range of $2.76-2.88/share before certain items, and in their November analyst day meeting, management said they expected results to come in at the upper end of the range. SO earnings at the end of Q3 were already $2.60/share, so the company was well on its way to reaching its target. In Q4 2015 they earned $0.44/share adjusted for certain items, so if they can get similar earnings this year they will blow through their guidance numbers.

The 4th quarter is not an extreme weather period for SO, but the weather appears to have given a bigger tailwind than last year. In SO's 2015 Q4 earnings release, the company said that Q4 weather was an 8¢ drag vs. 2014 results. (See p. 7 of release) Based on data from the National Oceanographic and Atmospheric Administration, December 2016 heating degree days in Georgia and Alabama in December were back at 2014 levels after a big drop in 2015. (degree day data can be found here)

Some discussion of 2017 guidance should also be expected. We are obviously early into 2017, so it is unlikely there will be a change to the $2.90-3.02 range that was discussed in their analyst day. It is important to note that guidance excludes some special items, and that's where things get tricky, because SO has some things going on that could create significant one-time events.

The two big items that have a "special" risk to them are the new Kemper County energy facility in Mississippi and the new Vogtle 3 and 4 nuclear plant units under construction in Georgia.

Previously the Kemper County energy facility was going to open in

This article was written by

Robert Howard, CFA profile picture
409 Followers
Rob Howard is Co-Manager at Boiling Point Resources. Rob has extensive background in the utility industry working at Baltimore Gas and Electric for over seven years. While there he spent time in Distribution Engineering, Demand Side Management, and Rates and Regulation. This hands on experience has given him a deep understanding of industry issues. After his industry experience Rob moved to the investments business, where he has been following utilities since 2002. Rob has a BS in Engineering and a BA in Economics from Swarthmore College. He has an MBA in Finance from The University of Texas. He is also a CFA charterholder.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (12)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.