Q4 2011 Earnings Call
January 25, 2012 1:00 pm ET
Daniel S. Tucker - Vice President of Investor Relations and Financial Planning
Thomas A. Fanning - Chairman of the Board, Chief Executive Officer and President
Art P. Beattie - Chief Financial Officer and Executive Vice President
Michael J. Lapides - Goldman Sachs Group Inc., Research Division
Mark Barnett - Morningstar Inc., Research Division
Angie Storozynski - Macquarie Research
Brian Chin - Citigroup Inc, Research Division
Dan Eggers - Crédit Suisse AG, Research Division
Jonathan P. Arnold - Deutsche Bank AG, Research Division
Leslie Rich - J.P. Morgan Asset Management, Inc.
Andrew Levi - Caris & Company, Inc., Research Division
Ali Agha - SunTrust Robinson Humphrey, Inc., Research Division
Paul Patterson - Glenrock Associates LLC
Greg Gordon - ISI Group Inc., Research Division
Nathan Judge - Atlantic Equities LLP
Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division
James D. von Riesemann - UBS Investment Bank, Research Division
Previous Statements by SO
» Southern's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Southern's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Southern's CEO Discusses Q1 2011 Results - Earnings Call Transcript
Good afternoon. My name is Carrie, and I will be your conference operator today. [Operator Instructions] At this time, I would like to welcome everyone to the Southern Company Fourth Quarter 2011 Earnings Call. [Operator Instructions] I would now like to turn the call over to Mr. Dan Tucker, Vice President of Investor Relations and Financial Planning. Please go ahead, sir.
Daniel S. Tucker
Thank you, Carrie. Welcome to Southern Company's Fourth Quarter 2011 Earnings Call. Joining me this afternoon are Tom Fanning, Chairman, President and Chief Executive Officer of Southern Company; and Art Beattie, Chief Financial Officer.
Let me remind you that we will make forward-looking statements today in addition to providing historical information. There are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K and subsequent filings.
We'll also be including slides as part of today's conference call. These slides provide details on the information that will be discussed on this call. You can access the slides on our Investor Relations website at www.southernco.com if you want to follow along during the presentation.
Now at this time, I'll turn the call over to Tom Fanning, Southern Company's Chairman, President and Chief Executive Officer.
Thomas A. Fanning
Good afternoon, and thank you for joining us. As you can see from the materials we released this morning, we had a solid year overall in 2011. I'm especially pleased that in a business environment filled with challenges and uncertainties, our systems still performed in an exemplary fashion, delivering exceptional value to customers throughout our territory. I'm also proud to report that on January 5, we celebrated our 100th anniversary as a holding company. You may be aware that on that day, Art Beattie, rang the opening bell at the New York Stock Exchange. We were tapped by the New York Stock Exchange as a charter member of their new century club, and we held a celebration in Atlanta that featured our 4 most recently retired CEOs: Ed Addison, Bill Dahlberg, Allen Franklin and David Ratcliffe.
Few businesses can claim that they've been around for 100 years, but Southern Company is now one of them. And even as we honor our past, we're already building for the future, harnessing the energy and innovative spirit of our more than 26,000 employees to begin our next 100 years.
Against that backdrop, I'd like to take a moment to update you on where we stand with our 5 strategic business priorities. First, remaining committed to our business model. We continue to provide superior customer value in the form of industry-leading reliability, low prices and exceptional customer service. The 2011 peak season equivalent forced outage rate for our fossil/hydro generation was 1.3%, the second best in our company's history, and it compares to a historical industry average of around 7%.
We also continued a long-term trend of improved performance for our transmission and distribution assets. And our employees performed heroically in restoring service to customers throughout 2011 during a series of catastrophic storms that included ice storms and tornadoes.
Meanwhile, the price of our products remain well below the national average and our customer satisfaction is among the best in the nation. These results and others are indicative of our strong commitment to customer value and are also a major reason Southern Company was named Power Company of the Year in December at the Platt's 2011 Global Energy Awards.
Second, achieving success with our major construction projects. Plant Vogtle Units 3 and 4 and Plant Ratcliffe in Kemper County Mississippi are progressing well. All targets related to cost and schedule remained achievable. We see that the combined construction and operating license or COL for Units 3 and 4 Plant Vogtle is imminent.
In the meantime, nearly 2,000 workers are moving ahead with work on the site under the parameters of the original Limited Work Authorization. Once the COL has been obtained, we will begin placing rebar in the Unit 3 Nuclear Island to prepare for the pouring of the first concrete for the containment structure. By year end 2012, we expect to increase the number of workers at the Vogtle site to 2,650, ultimately reaching a peak of approximately 5,000 workers in 2014.
The Vogtle project will ultimately impact some 25,000 jobs across the country, offering a much-needed boost to our nation's ongoing economic recovery efforts. At Plant Ratcliffe, we continue to make progress as we prepare to introduce 21st Century Coal technology to the United States. As of December 2011, we have already confirmed 2/3 of the project cost and expect to have confirmed nearly 90% by the end of 2012. We have 1,100 workers on site today and expect to have around 2,000 at the project's peak.
Third, arguing for a sensible national energy policy. We continue to promote the concept of a common sense national energy policy that leverages all the arrows in the quiver, nuclear, 21st Century Coal, natural gas, renewables and energy efficiency and develop technology solutions not rhetoric through proprietary research and development.
On the regulatory front, we are currently reviewing and assessing the EPA's final 1,100 page order for utility MACT, now referred to as mercury and air toxic standards, or MATS. Our focus remains on finding the solution that's in the best interest of our customers. We are also involved in other key constituencies in this review, including the communities we serve, as well as our state public service commissions in permitting agencies. We will discuss the MATS rule in greater detail later in this call.
Fourth, promoting Smart Energy. We are focusing R&D efforts on promoting clean, efficient and economic electro technologies to grow our share of energy sales. This year, we expect to achieve major progress adding to our Smart Grid infrastructure as we near completion of the addition of more than 4.6 million Smart Meters for customers throughout our territory. This initiative will lead to better data gathering, faster restoration time and improved power quality, and provide one more illustration of our commitment to enhancing the value we provide to customers.
Fifth, developing our people. I think it's interesting to note that our results in 2011 were achieved with about a 25% of our officers in new positions. In addition to leveraging our own outstanding bench strength, we also brought in a few key leaders from outside the company, and we completed more than 400 transfers of employees between our various subsidiaries, further proof of our commitment to keep developing our workforce. The result of this is a more diversed, more experienced and better functioning leadership team.
Elsewhere, we continue to make strides in our efforts to build our reputation as an employer of choice. Since our last earnings call, we've been ranked by G.I. Jobs Magazine as the number one military-friendly employer among all U.S. utilities and the second highest among all U.S. industry. We were also recognizes as one of the best places to work in America by Business Insider Magazine.
In summary, as our business continues to grow and evolve, we will pursue the successful achievement of these 5 priorities, all for the benefit of the customers and the communities we serve.
At this point, I'll turn to Art for a discussion of our financial highlights for the fourth quarter and the full year, as well as our guidance for 2012 and a summary of our financial outlook for the future.
Art P. Beattie
Thanks, Tom. First, I will review the fourth quarter and full year 2011 results, then I will discuss our sales data, economic outlook and sales forecast, followed by our capital budget in 2012 financing plan. I will conclude with our earnings guidance.