Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT_99-1 - CEO REMARKS - JOHN W. SOMERHALDER II - SOUTHERN Co GAS | exhibit_99-1.htm |
| EX-99.3 - EXHIBIT_99-3 - PIVOTAL - DANA A. GRAMS - SOUTHERN Co GAS | exhibit_99-3.htm |
| EX-99.4 - EXHIBIT_99-4 - GAAP RECONCILIATIONS - SOUTHERN Co GAS | exhibit_99-4.htm |
| 8-K - FORM 8-K - SOUTHERN Co GAS | form8_k.htm |
SouthStar
Mike Braswell - CEO, SouthStar Energy Services
SouthStar Overview
• Currently serve approximately
600,000 residential, small business,
large commercial and industrial
customers and customer equivalents in
eight states
600,000 residential, small business,
large commercial and industrial
customers and customer equivalents in
eight states
• Leverage local brands:
o Georgia Natural Gas
o Piedmont Energy Company
o Florida Natural Gas
o Ohio Natural Gas
o New York Natural Gas
Mississippi
Alabama
Georgia
Tennessee
Virginia
West
Virginia
Ohio
Pennsylvania
New York
Maine
North Carolina
South
Carolina
Florida
Michigan
Core Retail Market (GA)
Expanded Retail
Markets
SE C&I Markets
(includes GA)
(includes GA)
Indiana
Illinois
SouthStar is a multistate full-service provider of natural gas supply, transportation
and related services.
and related services.
SouthStar Core Competencies
Manage risks
inherent to retail
business and
maintain compliance.
Create incremental
value from asset
management
inherent to retail
business and
maintain compliance.
Create incremental
value from asset
management
Manage retail
customer portfolio
for long-term value
and profitability
customer portfolio
for long-term value
and profitability
Proactively
advocate to
protect and
improve our
markets and
business model
advocate to
protect and
improve our
markets and
business model
Brands
Retail
Book
Customer
Care
Asset /
Risk
Mgmt.
Risk
Mgmt.
Market
Advocacy
SouthStar
Competencies
Competencies
Deliver high quality,
cost efficient billing
and customer service
through outsourced
vendors
cost efficient billing
and customer service
through outsourced
vendors
SouthStar EBT Track Record (1)
High grading of GA customer
portfolio and building
commercial capabilities
portfolio and building
commercial capabilities
Profitable growth and
market expansion
market expansion
Historically
high storage
spreads
high storage
spreads
(1) Earnings before tax. SouthStar’s EBT is equal to net income as it does not record income taxes because of its partnership
structure. Results represent 100% of SouthStar earnings, which effective January 1, 2010 are split 85% to AGL Resources and
15% to Piedmont Natural Gas. EBT excludes lower-of-cost-or-market (LCM) inventory adjustments which were $6MM in 2006;
$(6)MM in 2007; $17MM in 2008; $(11)MM in 2009 and $(6)MM in 2010.
structure. Results represent 100% of SouthStar earnings, which effective January 1, 2010 are split 85% to AGL Resources and
15% to Piedmont Natural Gas. EBT excludes lower-of-cost-or-market (LCM) inventory adjustments which were $6MM in 2006;
$(6)MM in 2007; $17MM in 2008; $(11)MM in 2009 and $(6)MM in 2010.
Key 2010 Results - SouthStar
• Achieved full year 2010 earnings EBIT
of $103 million
of $103 million
• Stable market share in Georgia (core
market) despite continued high levels of
competitor activity and consumer
shopping
market) despite continued high levels of
competitor activity and consumer
shopping
• Continued environmental advertising
theme highlighting recycled natural gas
and NGVs
theme highlighting recycled natural gas
and NGVs
• Capitalized on commercial opportunities
to generate incremental $17 million
operating margin (above retail)
to generate incremental $17 million
operating margin (above retail)
• Ohio, Florida and SE C&I continue to
perform well, contributing $18 million of
operating margin
perform well, contributing $18 million of
operating margin
• Developed strategic plan for ongoing
geographic expansion, including
entering NY market
geographic expansion, including
entering NY market
SouthStar Markets
Including multi-state growth strategy
Emerging Markets - Retail / C&I
Expanded Markets
Core Markets - Retail (GA)
WA
OR
CA
NV
ID
MT
ND
AZ
NM
TX
OK
SD
NE
UT
WY
CO
AR
MS
AL
GA
TN
KY
VA
WV
IL
IN
OH
IA
MN
MI
WI
PA
NY
ME
CT
MA
VT
NH
NC
SC
FL
NJ
MD
DE
DC
LA
MO
KS
Customer and Market Objectives
(1) Customer counts as of 4/1/11
(2) Projected FY11 throughput
Market Update
Natural Gas Market
• 200 Bcf yty storage deficit has resulted in a flattening curve
• Lower price volatility, tighter seasonal spreads impacting commercial
margins
margins
Stronger than expected
U.S. gas production
U.S. gas production
LDC Factors
• Universe of natural gas customer prospects not growing
• Top line growth opportunities challenged
Low system growth
Retail Markets
• Increased pressure on retail spreads, market share & price plan mix
• Greater investment required for customer acquisition and retention
Increased competition
and consumer
involvement
and consumer
involvement
Area / Topic
Environment
Business Impact
Economic Environment
• More credit-challenged customers in the marketplace
• Even higher credit customers affected in terms of their ability to pay
Slow economy and
high unemployment,
but some signs of
moderation exist
high unemployment,
but some signs of
moderation exist
Federal Regulatory
• SouthStar’s compliance efforts continue with an additional emphasis
on monitoring and advocating for rulemaking associated with Dodd-
Frank implementation
on monitoring and advocating for rulemaking associated with Dodd-
Frank implementation
Requirements from
federal agencies
(FERC, CFTC)
continue to expand
federal agencies
(FERC, CFTC)
continue to expand
2011 Priorities and Objectives
• Achieve EBT in the range of $95 million - $105 million
• Maintain stable GA market share and portfolio mix
o Launch updated marketing campaign
o Utilize variable pricing plan discounts and new pricing products to bolster market
share and mix
share and mix
• Retain/acquire appropriate C&I book to maximize overall margin
contribution
contribution
o Maintain large C&I customer base and continue to leverage the base for peaking
services and nomination optimization
services and nomination optimization
• Continue multi-state growth strategy
o Focus on continued growth (FL, NY, OH and TN)
o Prepare to enter select emerging markets
• Position commercial business to create incremental value from asset
management while managing risks inherent in retail business
management while managing risks inherent in retail business
• Assess new product and service opportunities
Cautionary Statements and Supplemental Information
Forward-Looking Statements
Certain expectations and projections regarding our future performance referenced in this presentation, in other reports or statements we file with the SEC or otherwise release to the public, and on our
website, are forward-looking statements. Senior officers and other employees may also make verbal statements to analysts, investors, regulators, the media and others that are forward-looking.
Forward-looking statements involve matters that are not historical facts, such as statements regarding our future operations, prospects, strategies, financial condition, economic performance (including
growth and earnings), industry conditions and demand for our products and services. Because these statements involve anticipated events or conditions, forward-looking statements often include
words such as "anticipate," "assume," "believe," "can," "could," "estimate," "expect," "forecast," "future," "goal," "indicate," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek,"
"should," "target," "would," or similar expressions. Forward-looking statements contained in this presentation include, without limitation, statements regarding future earnings per share, dividend growth
and EBIT contribution, our priorities for 2011 and the proposed merger with Nicor Inc. Our expectations are not guarantees and are based on currently available competitive, financial and economic
data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations.
website, are forward-looking statements. Senior officers and other employees may also make verbal statements to analysts, investors, regulators, the media and others that are forward-looking.
Forward-looking statements involve matters that are not historical facts, such as statements regarding our future operations, prospects, strategies, financial condition, economic performance (including
growth and earnings), industry conditions and demand for our products and services. Because these statements involve anticipated events or conditions, forward-looking statements often include
words such as "anticipate," "assume," "believe," "can," "could," "estimate," "expect," "forecast," "future," "goal," "indicate," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek,"
"should," "target," "would," or similar expressions. Forward-looking statements contained in this presentation include, without limitation, statements regarding future earnings per share, dividend growth
and EBIT contribution, our priorities for 2011 and the proposed merger with Nicor Inc. Our expectations are not guarantees and are based on currently available competitive, financial and economic
data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations.
Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural gas and related products; the impact of changes in state and federal legislation and
regulation including changes related to climate change; actions taken by government agencies on rates and other matters; concentration of credit risk; utility and energy industry consolidation; the
impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, unexpected change in project costs,
including the cost of funds to finance these projects; the impact of acquisitions and divestitures; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our
credit ratings or the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including recent disruptions in the capital markets and lending environment
and the current economic downturn; general economic conditions; uncertainties about environmental issues and the related impact of such issues; the impact of changes in weather, including climate
change, on the temperature-sensitive portions of our business; the impact of natural disasters such as hurricanes on the supply and price of natural gas; acts of war or terrorism; and other factors
which are provided in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not undertake to update these
statements to reflect subsequent changes.
regulation including changes related to climate change; actions taken by government agencies on rates and other matters; concentration of credit risk; utility and energy industry consolidation; the
impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, unexpected change in project costs,
including the cost of funds to finance these projects; the impact of acquisitions and divestitures; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our
credit ratings or the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including recent disruptions in the capital markets and lending environment
and the current economic downturn; general economic conditions; uncertainties about environmental issues and the related impact of such issues; the impact of changes in weather, including climate
change, on the temperature-sensitive portions of our business; the impact of natural disasters such as hurricanes on the supply and price of natural gas; acts of war or terrorism; and other factors
which are provided in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not undertake to update these
statements to reflect subsequent changes.
Supplemental Information
Company management evaluates segment financial performance based on earnings before interest and taxes (EBIT), which includes the effects of corporate expense allocations and on operating
margin. EBIT is a non-GAAP (accounting principles generally accepted in the United States of America) financial measure that includes operating income, other income and expenses. Items that are
not included in EBIT are financing costs, including debt and interest expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our businesses from an operational perspective, exclusive of the costs to finance
those activities and exclusive of income taxes, neither of which is directly relevant to the efficiency of those operations. Operating margin is a non-GAAP measure calculated as operating revenues
minus cost of gas, excluding operation and maintenance expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's calculation of
operating income. The company believes operating margin is a better indicator than operating revenues of the contribution resulting from customer growth, since cost of gas is generally passed
directly through to customers. In addition, in this presentation, the company has presented its earnings per share excluding expenses incurred with respect to the proposed Nicor merger. As the
company does not routinely engage in transactions of the magnitude of the proposed Nicor merger, and consequently does not regularly incur transaction related expenses with correlative size, the
company believes presenting EPS excluding Nicor merger expenses provides investors with an additional measure of the company’s core operating performance. EBIT, operating margin and EPS
excluding merger expenses should not be considered as alternatives to, or more meaningful indicators of, the company's operating performance than operating income, net income attributable to AGL
Resources Inc. or EPS as determined in accordance with GAAP. In addition, the company's EBIT, operating margin and non-GAAP EPS may not be comparable to similarly titled measures of another
company. We also present certain non-GAAP financial measures excluding the effects of our proposed merger with Nicor. Because we complete material mergers and acquisitions only occasionally,
we believe excluding these effects from certain measures is useful because they allow investors to more easily evaluate and compare the performance of the Company's core businesses from period
to period. Reconciliations of non-GAAP financial measures referenced in this presentation are available on the company’s Web site at www.aglresources.com
margin. EBIT is a non-GAAP (accounting principles generally accepted in the United States of America) financial measure that includes operating income, other income and expenses. Items that are
not included in EBIT are financing costs, including debt and interest expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our businesses from an operational perspective, exclusive of the costs to finance
those activities and exclusive of income taxes, neither of which is directly relevant to the efficiency of those operations. Operating margin is a non-GAAP measure calculated as operating revenues
minus cost of gas, excluding operation and maintenance expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's calculation of
operating income. The company believes operating margin is a better indicator than operating revenues of the contribution resulting from customer growth, since cost of gas is generally passed
directly through to customers. In addition, in this presentation, the company has presented its earnings per share excluding expenses incurred with respect to the proposed Nicor merger. As the
company does not routinely engage in transactions of the magnitude of the proposed Nicor merger, and consequently does not regularly incur transaction related expenses with correlative size, the
company believes presenting EPS excluding Nicor merger expenses provides investors with an additional measure of the company’s core operating performance. EBIT, operating margin and EPS
excluding merger expenses should not be considered as alternatives to, or more meaningful indicators of, the company's operating performance than operating income, net income attributable to AGL
Resources Inc. or EPS as determined in accordance with GAAP. In addition, the company's EBIT, operating margin and non-GAAP EPS may not be comparable to similarly titled measures of another
company. We also present certain non-GAAP financial measures excluding the effects of our proposed merger with Nicor. Because we complete material mergers and acquisitions only occasionally,
we believe excluding these effects from certain measures is useful because they allow investors to more easily evaluate and compare the performance of the Company's core businesses from period
to period. Reconciliations of non-GAAP financial measures referenced in this presentation are available on the company’s Web site at www.aglresources.com
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