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Southern Company reports second-quarter 2021 earnings

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ATLANTA, July 29, 2021 /PRNewswire/ -- Southern Company today reported second-quarter 2021 earnings of $372 million, or 35 cents per share, compared with $612 million, or 58 cents per share, in the second quarter of 2020. For the six months ended June 30, 2021, Southern Company reported earnings of $1.51 billion, or $1.42 per share, compared with earnings of $1.48 billion, or $1.40 per share, for the same period in 2020.

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $891 million, or 84 cents per share, during the second quarter of 2021, compared with $822 million, or 78 cents per share, during the second quarter of 2020. For the six months ended June 30, 2021, excluding these items, Southern Company earned $1.93 billion, or $1.82 per share, compared with $1.65 billion, or $1.56 per share, for the same period in 2020.

 

Non-GAAP Financial Measures


Three Months Ended June


Year-to-Date June

Net Income - Excluding Items (in millions)


2021

2020


2021

2020

Net Income - As Reported


$372

$612


$1,508

$1,480

Less:







   Estimated Loss on Plants Under Construction


(462)

(152)


(507)

(155)

  Tax Impact


118

39


130

40

   Acquisition and Disposition Impacts


1

-


1

38

  Tax Impact


-

-


-

(16)

   Wholesale Gas Services


(147)

(31)


19

-

       Tax Impact


35

8


(5)

-

   Asset Impairments


(89)

(154)


(89)

(154)

       Tax Impact


25

80


25

80

Net Income – Excluding Items


$891

$822


$1,934

$1,647

       Average Shares Outstanding – (in millions)                     


1,061

1,058


1,060

1,057

Basic Earnings Per Share – Excluding Items


$0.84

$0.78


$1.82

$1.56

 

NOTE: For more information regarding these non-GAAP adjustments, see the footnotes accompanying the Financial Highlights page of the earnings package.

 

Earnings drivers year-over-year for the second quarter of 2021, as compared with 2020, were strong customer usage, as well as robust customer growth and constructive state regulatory actions. These impacts were partially offset by higher non-fuel operations and maintenance costs as the emerging economic recovery resulted in a return to more normal business operations. Earnings for the second quarter of 2021 were also significantly impacted by a $343 million after-tax charge related to Georgia Power's construction of Plant Vogtle units 3 and 4.

"The Southern Company system achieved solid operational performance in the second quarter of 2021," said Chairman, President and CEO, Thomas A. Fanning. "We saw a year-over-year increase in retail electric sales, as the economies in our service territories continue to recover from the effects of the COVID-19 pandemic, and we experienced strong customer growth in our Southeastern footprint".

"We're also pleased to report that the integrated operation of Plant Vogtle Unit 3 has now been demonstrated with the successful completion of hot functional testing, our most significant project milestone to date," added Fanning.

Second-quarter 2021 operating revenues were $5.2 billion, compared with $4.6 billion for the second quarter of 2020, an increase of 12.5 percent. For the six months ended June 30, 2021, operating revenues were $11.11 billion, compared with $9.64 billion for the corresponding period in 2020, an increase of 15.3 percent. These increases were primarily due to higher fuel costs. Colder weather in the first quarter 2021 also contributed to the increase for the six months ended June 30, 2021.

Southern Company's second-quarter earnings slides with supplemental financial information, including long-term earnings guidance, are available at http://investor.southerncompany.com.

Southern Company's financial analyst call will begin at 1 p.m. Eastern Time today, during which Fanning and Chief Financial Officer Andrew W. Evans will discuss earnings and provide a general business update, including an update on the Vogtle units 3 and 4 construction project and earnings guidance. Investors, media and the public may listen to a live webcast of the call and view associated slides at https://investor.southerncompany.com/events-and-presentations/default.aspx. A replay of the webcast will be available on the site for 12 months.

About Southern Company
Southern Company (NYSE: SO) is a leading energy company serving 9 million customers through its subsidiaries. The company provides clean, safe, reliable and affordable energy through electric operating companies in three states, natural gas distribution companies in four states, a competitive generation company serving wholesale customers across America, a leading distributed energy infrastructure company, a fiber optics network and telecommunications services. Southern Company brands are known for excellent customer service, high reliability and affordable prices below the national average. For more than a century, we have been building the future of energy and developing the full portfolio of energy resources, including carbon-free nuclear, advanced carbon capture technologies, natural gas, renewables, energy efficiency and storage technology. Through an industry-leading commitment to innovation and a low-carbon future, Southern Company and its subsidiaries develop the customized energy solutions our customers and communities require to drive growth and prosperity. Our uncompromising values ensure we put the needs of those we serve at the center of everything we do and govern our business to the benefit of our world. Our corporate culture and hiring practices have been recognized nationally by the U.S. Department of Defense, G.I. Jobs magazine, DiversityInc, Black Enterprise, Forbes and the Women's Choice Award. To learn more, visit www.southerncompany.com.

 



Southern Company

 

Financial Highlights

 

(In Millions of Dollars Except Earnings Per Share)










Three Months Ended June


Year-to-Date

June

Net Income–As Reported (See Notes)

2021


2020


2021


2020

  Traditional Electric Operating Companies

$

511



$

645



$

1,267



$

1,287


  Southern Power

36



63



133



138


Southern Company Gas

(65)



71



333



346


  Total

482



779



1,733



1,771


  Parent Company and Other

(110)



(167)



(225)



(291)


  Net Income–As Reported

$

372



$

612



$

1,508



$

1,480










  Basic Earnings Per Share1

$

0.35



$

0.58



$

1.42



$

1.40


  Average Shares Outstanding (in millions)

1,061



1,058



1,060



1,057


  End of Period Shares Outstanding (in millions)





1,059



1,056










Non-GAAP Financial Measures

Three Months Ended June


Year-to-Date

June

Net Income–Excluding Items (See Notes)

2021


2020


2021


2020

  Net Income–As Reported

$

372



$

612



$

1,508



$

1,480


Less:








Estimated Loss on Plants Under Construction2

(462)



(152)



(507)



(155)


Tax Impact

118



39



130



40


Acquisition and Disposition Impacts3

1





1



38


Tax Impact







(16)


Wholesale Gas Services4

(147)



(31)



19




Tax Impact

35



8



(5)




Asset Impairments5

(89)



(154)



(89)



(154)


Tax Impact

25



80



25



80


  Net Income–Excluding Items

$

891



$

822



$

1,934



$

1,647










  Basic Earnings Per Share–Excluding Items

$

0.84



$

0.78



$

1.82



$

1.56


-See Notes on the following page.

 

 

Southern Company

Financial Highlights


Notes

(1)

Dilution is not material in any period presented. Diluted earnings per share was $0.35 and $1.41 for the three and six months ended June 30, 2021 and was $0.58 and $1.39 for the three and six months ended June 30, 2020, respectively.

(2)

Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4.  Further charges may occur; however, the amount and timing of any such charges are uncertain.  Earnings for the three and six months ended June 30, 2021 and 2020 also include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi.  Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.

(3)

Earnings for the six months ended June 30, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.

(4)

Earnings for the three and six months ended June 30, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.  This business was sold on July 1, 2021.

(5)

Earnings for the three and six months ended June 30, 2021 includes pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7 million ($6 million after tax) related to a leveraged lease investment.  Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of $154 million ($74 million after tax) related to another leveraged lease investment.  Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain. 

 

 



Southern Company

Significant Factors Impacting EPS














Three Months Ended June


Year-to-Date

June


2021


2020


Change


2021


2020


Change

Earnings Per Share–












As Reported1 (See Notes)

$

0.35



$

0.58



$

(0.23)



$

1.42



$

1.40



$

0.02














  Significant Factors:












  Traditional Electric Operating Companies





$

(0.13)







$

(0.02)


Southern Power





(0.03)








Southern Company Gas





(0.13)







(0.01)


Parent Company and Other





0.06







0.06


Increase in Shares











(0.01)


  Total–As Reported





$

(0.23)







$

0.02















Three Months Ended June


Year-to-Date

June

Non-GAAP Financial Measures

2021


2020


Change


2021


2020


Change

Earnings Per Share–












Excluding Items (See Notes)

$

0.84



$

0.78



$

0.06



$

1.82



$

1.56



$

0.26














  Total–As Reported





$

(0.23)







$

0.02


Less:












Estimated Loss on Plants Under Construction2





(0.21)







(0.24)


Acquisition and Disposition Impacts3











(0.02)


Wholesale Gas Services4





(0.09)







0.01


Asset Impairments5





0.01







0.01


  Total–Excluding Items





$

0.06







$

0.26


- See Notes on the following page.

 

 

Southern Company

Significant Factors Impacting EPS

Notes

(1)

Dilution is not material in any period presented. Diluted earnings per share was $0.35 and $1.41 for the three and six months ended June 30, 2021 and was $0.58 and $1.39 for the three and six months ended June 30, 2020, respectively.

(2)

Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4.  Further charges may occur; however, the amount and timing of any such charges are uncertain.  Earnings for the three and six months ended June 30, 2021 and 2020 also include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi.  Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.

(3)

Earnings for the six months ended June 30, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.

(4)

Earnings for the three and six months ended June 30, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.  This business was sold on July 1, 2021.

(5)

Earnings for the three and six months ended June 30, 2021 includes pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7 million ($6 million after tax) related to a leveraged lease investment.  Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of $154 million ($74 million after tax) related to another leveraged lease investment.  Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

 



Southern Company

EPS Earnings Analysis





Description

Three Months Ended
June 2021 vs. 2020


Year-To-Date     
June 2021 vs. 2020





Retail Sales






Retail Revenue Impacts

7


9





Weather

1


8





Wholesale & Other Operating Revenues

4


8





Non-Fuel O&M

(11)


(11)





Depreciation and Amortization, Interest Expense, Other

1


4





Total Traditional Electric Operating Companies


23¢





Southern Power

(3)


2





Southern Company Gas

1


3





Parent and Other

(1)


(1)





Increase in Shares


(1)





Total Change in EPS (Excluding Items)


26¢





Estimated Loss on Plants Under Construction1

(21)


(24)





Acquisition and Disposition Impacts2


(2)





Wholesale Gas Services3

(9)


1





Asset Impairments4

1


1





Total Change in EPS (As Reported)

(23)¢


- See Notes on the following page.




 

 

Southern Company

EPS Earnings Analysis


Notes

(1)

Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4.  Further charges may occur; however, the amount and timing of any such charges are uncertain.  Earnings for the three and six months ended June 30, 2021 and 2020 also include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi.  Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.

(2)

  Earnings for the six months ended June 30, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.

(3)

Earnings for the three and six months ended June 30, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.  This business was sold on July 1, 2021.

(4)

Earnings for the three and six months ended June 30, 2021 includes pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7 million ($6 million after tax) related to a leveraged lease investment.  Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of $154 million ($74 million after tax) related to another leveraged lease investment.  Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

 



Southern Company

Consolidated Earnings

 

As Reported

(In Millions of Dollars)

 


Three Months Ended June


Year-to-Date June


2021


2020


Change


2021


2020


Change

Income Account-












Retail Electric Revenues-












Fuel

$

875



$

676



$

199



$

1,712



$

1,353



$

359


Non-Fuel

2,724



2,506



218



5,229



4,907



322


Wholesale Electric Revenues

546



472



74



1,091



889



202


Other Electric Revenues

175



168



7



346



320



26


Natural Gas Revenues

677



636



41



2,371



1,885



486


Other Revenues

201



162



39



359



284



75


Total Revenues

5,198



4,620



578



11,108



9,638



1,470


Fuel and Purchased Power

1,065



821



244



2,120



1,638



482


Cost of Natural Gas

231



144



87



814



583



231


Cost of Other Sales

103



74



29



185



129



56


Non-Fuel O&M

1,438



1,203



235



2,810



2,498



312


Depreciation and Amortization

891



873



18



1,762



1,730



32


Taxes Other Than Income Taxes

313



298



15



657



629



28


Estimated Loss on Plant Vogtle Units 3 and 4

460



149



311



508



149



359


(Gain) Loss on Dispositions, net

(11)





(11)



(54)



(39)



(15)


Total Operating Expenses

4,490



3,562



928



8,802



7,317



1,485


Operating Income

708



1,058



(350)



2,306



2,321



(15)


Allowance for Equity Funds Used During Construction

45



35



10



90



68



22


Earnings (Loss) from Equity Method Investments

(40)



30



(70)



5



72



(67)


Interest Expense, Net of Amounts Capitalized

450



444



6



901



900



1


Impairment of Leveraged Leases

7



154



(147)



7



154



(147)


Other Income (Expense), net

108



101



7



167



204



(37)


Income Taxes (Benefit)

(12)



5



(17)



178



150



28


Net Income

376



621



(392)



1,482



1,461



(126)


Less:












Dividends on Preferred Stock of Subsidiaries

4



4





7



7




Net Income (Loss) Attributable to Noncontrolling Interests



5



(5)



(33)



(26)



(7)


NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY

$

372



$

612



$

(240)



$

1,508



$

1,480



$

28


Notes
- Certain prior year data may have been reclassified to conform with current year presentation.

 

Southern Company

Kilowatt-Hour Sales and Customers

(In Millions of KWHs)


















Three Months Ended June


Year-to-Date June


2021


2020


Change


Weather Adjusted Change


2021


2020


Change


Weather Adjusted Change

Kilowatt-Hour Sales-















Total Sales

46,020



43,547



5.7

%




92,442



87,811



5.3

%



















Total Retail Sales-

34,655



32,460



6.8

%


6.0

%


69,306



66,505



4.2

%


2.0

%

Residential

10,838



10,879



(0.4)

%


(2.0)

%


22,878



21,745



5.2

%


(0.4)

%

Commercial

11,500



10,531



9.2

%


8.7

%


22,243



21,470



3.6

%


2.7

%

Industrial

12,162



10,886



11.7

%


11.7

%


23,870



22,952



4.0

%


4.0

%

Other

155



164



(5.4)

%


(5.3)

%


315



338



(6.6)

%


(6.8)

%

















Total Wholesale Sales

11,365



11,087



2.5

%


N/A


23,136



21,306



8.6

%


N/A

































(In Thousands of Customers)






















Period Ended June












2021


2020


Change



Regulated Utility Customers-













Total Utility Customers-








8,659


8,580


0.9%



Total Traditional Electric






4,359


4,305


1.3%



Southern Company Gas








4,300


4,275


0.6%













Southern Company


Financial Overview

 


As Reported


(In Millions of Dollars)

 



Three Months Ended June


Year-to-Date June



2021


2020


% Change


2021


2020


% Change


Southern Company –













Operating Revenues

$

5,198



$

4,620



12.5

%


$

11,108



$

9,638



15.3

%


Earnings Before Income Taxes

364



626



(41.9)

%


1,660



1,611



3.0

%


Net Income Available to Common

372



612



(39.2)

%


1,508



1,480



1.9

%















Alabama Power –













Operating Revenues

$

1,556



$

1,365



14.0

%


$

3,115



$

2,716



14.7

%


Earnings Before Income Taxes

439



395



11.1

%


910



762



19.4

%


Net Income Available to Common

331



298



11.1

%


690



578



19.4

%















Georgia Power –













Operating Revenues

$

2,225



$

1,928



15.4

%


$

4,195



$

3,754



11.7

%


Earnings Before Income Taxes

93



319



(70.8)

%


462



665



(30.5)

%


Net Income Available to Common

143



308



(53.6)

%


494



638



(22.6)

%















Mississippi Power –













Operating Revenues

$

303



$

283



7.1

%


$

610



$

559



9.1

%


Earnings Before Income Taxes

46



41



12.2

%


95



79



20.3

%


Net Income Available to Common

38



39



(2.6)

%


83



71



16.9

%















Southern Power –













Operating Revenues

$

490



$

439



11.6

%


$

930



$

814



14.3

%


Earnings Before Income Taxes

34



74



(54.1)

%


89



125



(28.8)

%


Net Income Available to Common

36



63



(42.9)

%


133



138



(3.6)

%















Southern Company Gas –













Operating Revenues

$

677



$

636



6.4

%


$

2,371



$

1,885



25.8

%


Earnings (Loss) Before Income Taxes

(94)



87



N/M


425



441



(3.6)

%


Net Income (Loss) Available to Common

(65)



71



N/M


333



346



(3.8)

%















































N/M - Not Meaningful

Notes
- See Financial Highlights pages for discussion of certain significant items occurring during the periods

 

 

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About SO

Southern Company is an American gas and electric utility holding company based in the southern United States. It is headquartered in Atlanta, Georgia, with executive offices also located in Birmingham, Alabama. The company is the second largest utility company in the U.S. in terms of customer base, as of 2021.