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Southern (SO) Q4 Earnings Beat on Lower Costs, Sales Miss
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Power supplier The Southern Company (SO - Free Report) reported fourth-quarter 2023 earnings per share (excluding certain one-time items) of 64 cents, ahead of the Zacks Consensus Estimate of 59 cents and significantly above the year-ago adjusted profit of 26 cents. The outperformance reflects lower-than-expected operating expenses to go with the positive effects of weather, rates, usage and pricing changes.
Meanwhile, the utility reported revenues of $6 billion. The top line missed the Zacks Consensus Estimate of $7.7 billion and came in 14.2% lower than fourth-quarter 2022 sales, primarily due to a drop in overall electricity sales.
The firm guided earnings per share of $3.95-$4.05 for this year and 90 cents for the March quarter. Further, Southern Company management stuck to its long-term EPS growth rate projection of 5-7% based on the 2024 adjusted EPS projection.
Southern Company (The) Price, Consensus and EPS Surprise
While Unit 3 of the Vogtle nuclear project started commercial operation on Jul 31, per the latest earnings presentation, Southern Company expects Unit 4 to be up and running during April 2024. The utility said that it recently completed the unit’s initial criticality. At the same time, Southern Company kept the share of its Georgia Power subsidiary in capital costs for the units unchanged.
Overall Sales Breakup
Southern Company’s wholesale power sales were down 12.2% due to a drop in retail electricity demand.
Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the fourth quarter declined 4.3% from the same period last year.
Southern Company’s total retail sales moved down 1.3%, with residential and industrial sales decreasing 3.4% and 1.1%, respectively. This was partly offset by the 0.7% improvement in commercial sales.
Expenses Summary
The Zacks Rank #3 (Hold) power supplier’s operations and maintenance (O&M) cost fell 13.2% year over year to $1.7 billion.
The utility’s total operating expense for the period — at $4.8 billion — was down 30% from the prior-year level and came below our estimate of $6.5 billion.
While we have discussed SO’s fourth-quarter results in detail, let’s see how some other utilities have fared this earnings season.
PPL Corporation (PPL - Free Report) reported fourth-quarter 2023 operating EPS of 40 cents, which surpassed the Zacks Consensus Estimate of 38 cents by 5.3%. The bottom line increased 42.9% from the year-ago quarter’s figure of 28 cents.
PPL’s total operating expenses were $1.64 billion, down 16% from the year-ago quarter’s $1.95 billion. This decrease was due to a fall in fuel and energy purchase expenses and lower other O&M expenses. Meanwhile, PPL increased its projection for capital expenditure to $14.3 billion from 2024 to 2027. Earlier, it had projected the metric to be $11.9 billion for the 2023 to 2026 period.
American Water Works Company (AWK - Free Report) posted fourth-quarter 2023 operating EPS of 88 cents, which surpassed the Zacks Consensus Estimate of 84 cents by 4.8%. The bottom line improved 8.6% from the year-ago quarter's earnings of 81 cents.
American Water Works’ 2023 EPS was $4.90, up 8.6% from $4.51 reported in 2022. The year-over-year improvement in earnings was due to the favorable impacts of the implementation of new rates in Regulated businesses, offset somewhat by increased operating costs. AWK guided 2024 EPS to a range of $5.20-$5.30 compared with the previous expectation of $5.10-$5.20.
IDACORP, Inc. (IDA - Free Report) reported fourth-quarter 2023 earnings of 61 cents per share, which surpassed the Zacks Consensus Estimate by a penny. The company reported earnings of 83 cents in the year-ago quarter.
IDACORP’s 2023 earnings per share were $5.14 compared with $5.11 in 2022. Strong customer growth and operating efficiency, which resulted in flat operations and maintenance expenses with last year, boosted the bottom line. IDA’s 2023 earnings came near the upper end of the guided range of $5.05-$5.15 per share.
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Southern (SO) Q4 Earnings Beat on Lower Costs, Sales Miss
Power supplier The Southern Company (SO - Free Report) reported fourth-quarter 2023 earnings per share (excluding certain one-time items) of 64 cents, ahead of the Zacks Consensus Estimate of 59 cents and significantly above the year-ago adjusted profit of 26 cents. The outperformance reflects lower-than-expected operating expenses to go with the positive effects of weather, rates, usage and pricing changes.
Meanwhile, the utility reported revenues of $6 billion. The top line missed the Zacks Consensus Estimate of $7.7 billion and came in 14.2% lower than fourth-quarter 2022 sales, primarily due to a drop in overall electricity sales.
The firm guided earnings per share of $3.95-$4.05 for this year and 90 cents for the March quarter. Further, Southern Company management stuck to its long-term EPS growth rate projection of 5-7% based on the 2024 adjusted EPS projection.
Southern Company (The) Price, Consensus and EPS Surprise
Southern Company (The) price-consensus-eps-surprise-chart | Southern Company (The) Quote
Vogtle Updates
While Unit 3 of the Vogtle nuclear project started commercial operation on Jul 31, per the latest earnings presentation, Southern Company expects Unit 4 to be up and running during April 2024. The utility said that it recently completed the unit’s initial criticality. At the same time, Southern Company kept the share of its Georgia Power subsidiary in capital costs for the units unchanged.
Overall Sales Breakup
Southern Company’s wholesale power sales were down 12.2% due to a drop in retail electricity demand.
Consequently, there was a downward movement in overall electricity sales and usage. In fact, total electricity sales during the fourth quarter declined 4.3% from the same period last year.
Southern Company’s total retail sales moved down 1.3%, with residential and industrial sales decreasing 3.4% and 1.1%, respectively. This was partly offset by the 0.7% improvement in commercial sales.
Expenses Summary
The Zacks Rank #3 (Hold) power supplier’s operations and maintenance (O&M) cost fell 13.2% year over year to $1.7 billion.
The utility’s total operating expense for the period — at $4.8 billion — was down 30% from the prior-year level and came below our estimate of $6.5 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some Key Utility Earnings
While we have discussed SO’s fourth-quarter results in detail, let’s see how some other utilities have fared this earnings season.
PPL Corporation (PPL - Free Report) reported fourth-quarter 2023 operating EPS of 40 cents, which surpassed the Zacks Consensus Estimate of 38 cents by 5.3%. The bottom line increased 42.9% from the year-ago quarter’s figure of 28 cents.
PPL’s total operating expenses were $1.64 billion, down 16% from the year-ago quarter’s $1.95 billion. This decrease was due to a fall in fuel and energy purchase expenses and lower other O&M expenses. Meanwhile, PPL increased its projection for capital expenditure to $14.3 billion from 2024 to 2027. Earlier, it had projected the metric to be $11.9 billion for the 2023 to 2026 period.
American Water Works Company (AWK - Free Report) posted fourth-quarter 2023 operating EPS of 88 cents, which surpassed the Zacks Consensus Estimate of 84 cents by 4.8%. The bottom line improved 8.6% from the year-ago quarter's earnings of 81 cents.
American Water Works’ 2023 EPS was $4.90, up 8.6% from $4.51 reported in 2022. The year-over-year improvement in earnings was due to the favorable impacts of the implementation of new rates in Regulated businesses, offset somewhat by increased operating costs. AWK guided 2024 EPS to a range of $5.20-$5.30 compared with the previous expectation of $5.10-$5.20.
IDACORP, Inc. (IDA - Free Report) reported fourth-quarter 2023 earnings of 61 cents per share, which surpassed the Zacks Consensus Estimate by a penny. The company reported earnings of 83 cents in the year-ago quarter.
IDACORP’s 2023 earnings per share were $5.14 compared with $5.11 in 2022. Strong customer growth and operating efficiency, which resulted in flat operations and maintenance expenses with last year, boosted the bottom line. IDA’s 2023 earnings came near the upper end of the guided range of $5.05-$5.15 per share.