Southern Company reports second-quarter 2021 earnings
07/29/2021 - 06:15 AM
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
7¢
5¢
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
9¢
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)
6¢
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)¢
2¢
- 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
View original content to download multimedia:https://www.prnewswire.com/news-releases/southern-company-reports-second-quarter-2021-earnings-301343982.html
SOURCE Southern Company