Southern Comfort In Earnings Growth: Utility Giant Outperforms EPS Estimates Despite Revenue Setback

Southern Company SO reported a fourth-quarter fiscal 2023 operating revenue decline of 14.2% year-over-year to $6.04 billion, missing the consensus of $7.89 billion. The company stated that the decrease was primarily due to lower fuel costs.

Operating revenues: Alabama Power $1.63 billion (-9.1% Y/Y), Georgia Power $2.313 billion (-2.2% Y/Y), Mississippi Power $337 million (-18.8% Y/Y), Southern Power $503 million (-33% Y/Y) and Southern Company Gas $1.285 billion (-34.6% Y/Y).

Operating expenses decreased sharply to $4.84 billion in the quarter. Adjusted EPS was $0.64, up from $0.26 YoY, beating the consensus of $0.60.

Total Utility Customers increased 0.8% Y/Y, with Total Traditional Electric +1.1% and Southern Company Gas +0.4%. Kilowatt-Hour Sales declined by 4.3% Y/Y, with Retail sales down 1.3% and Wholesale sales down 12.2%.

The company held over $7.6 billion in committed credit facilities and available liquidity of over $4.8 billion as of December 31, 2023.

2024 Outlook: Southern Company expects Adjusted EPS of $3.95-$4.05, versus consensus of $4.01. Midpoint of $4.00 represents 10% growth from 2023.

The company expects a long-term adjusted EPS growth estimate of 5% to 7% from the 2024 adjusted EPS guidance range. The company anticipates a $5 billion increase to a 5-year capital investment plan for state-regulated utilities.

Price Action: SO shares are trading lower by 0.89% at $67.21 on the last check Thursday.