Southern Company Is Set to Report Its 1Q16 Results on April 27



Management guidance

Southern Company (SO), one of the biggest utilities in North America, is set to report its 1Q16 earnings on April 27, 2016. Southern Company’s management has provided earnings per share (or EPS) guidance of $0.53 for the first quarter. SO reported EPS of $0.56 in the same quarter last year.

For 2016, Southern Company’s management expects flat EPS compared to 2015. Incremental earnings from operations in 2016 are expected to be offset by the impact of additional shares to fund SO’s AGL Resources (GAS) transaction and bonus depreciation.

However, for the long term, Southern Company is targeting 4%–5% earnings growth after 2016, which is in line with the industry trend.

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Earnings drivers

Southern Company’s operational zones experienced higher temperatures in 1Q16 than in 1Q15. This may have a negative impact on the company’s quarterly earnings. However, a higher number of customers could partially offset the weather’s negative impact. Over the last few quarters, Southern Company has expanded its customer base, which has resulted in improved earnings.

Southern Company has witnessed a 0.3% fall in sales to the industrial sector, but it expects its sales to grow by 1% in 1Q16.

AGL Resources merger

AGL Resources’ merger with Southern Company reached the next step this month as it received approval from Georgia regulators. After the acquisition, Southern Company’s management expects its long-term earnings growth rate to accelerate to 4%–5% annually.

After the acquisition, the company expects to serve 9 million customers collectively, making it the second-largest utility (VPU) by customer base. Currently, Duke Energy (DUK) and Exelon (EXC) are the industry leaders by number of customers.


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