The Southern Company (NYSE:SO) Q3 2023 Earnings Call Transcript

Dan Tucker: Yes. You didn’t hear that 40 years and then we’re back.

Operator: And our last question for today is coming from the line of Travis Miller with Morningstar. Please go ahead.

Travis Miller: Hello, you answered almost all my questions on the capital financing and even used where I was going to use creative, but I’ll throw out their nontraditional. Anything we’ve seen several other utilities who needed to raise financing, use some non-traditional mean divestitures, minority interest sale. Is that something in the toolbox for you? Or can we just rule that type of stuff out?

Dan Tucker: Yes. Look, there’s always a toolbox. I would argue our toolbox is a lot smaller than it used to be when it comes to alternative sources of capital. We did a lot of work over the last several years to kind of hone this portfolio of companies to something that really fits and that we feel really good about. So are there some small opportunities? Yes. But do we have any for sale sign sitting out there right now? No?

Travis Miller: Okay, makes sense and then a quick follow-up. The dividends, what do you think the Board is looking for to get off that $0.08 or lift growth rate to 4%, 5%, 6%? What are your thoughts around that?

Dan Tucker: Yes. I think it’s primarily just working our way down to a sustainable payout ratio, right? So if you think about where our guidance sits here in 2023, our payout is going to be something like 77% for 2023. That’s not a sustainable payout ratio for a growing company. Now that’s largely a function of the ROEs we’ve been earning at Georgia Power during construction of Vogtle 3 and 4. As that rolls off, that payout ratio will begin to come down, but we just need to get it somewhere comfortably into something that probably starts with a six in order to start evaluating a higher growth rate.

Operator: And that will conclude today’s question-and-answer session. Sir, are there any closing remarks?

Chris Womack: Again, thank you, everyone, for joining us today. We really appreciate your interest in Southern Company. And we look forward to seeing many of you very, very soon. In the meantime, if you have questions, please give us a call. But again, thank you very much for joining us today.

Operator: Thank you, sir. Ladies and gentlemen, this concludes The Southern Company third quarter 2023 earnings call. You may now disconnect.