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Southern Company reports second-quarter 2021 earnings

PR Newswire

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

 

 

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SOURCE Southern Company