Southern Company reports fourth-quarter and full-year 2023 earnings
- None.
- None.
Insights
The reported earnings by Southern Company represent a substantial turnaround from a loss in the previous year to a profit. The increase in net income from a loss of $87 million to a gain of $855 million for the fourth quarter and from $3.5 billion to $4.0 billion for the full year, is significant. This performance is especially noteworthy considering the decrease in operating revenues by over 14% for the quarter and nearly 14% for the year. The improved earnings are attributed to a combination of higher utility revenues and lower non-fuel operations, maintenance costs and income taxes. However, these positive results are partially offset by increased depreciation, amortization and interest expenses.
Investors would be interested in the company's efficiency in reducing operational costs and the impact of the completion of Plant Vogtle Unit 3, which could promise future operational stability. The decrease in operating revenues due to lower fuel costs could also suggest a favorable cost environment for the company. These factors, combined with the reported earnings, could influence investor sentiment and the company's stock market performance.
The successful completion of Plant Vogtle Unit 3 is a landmark event for the energy sector, being the first new nuclear unit in the U.S. in over 30 years. This development could have significant implications for Southern Company's long-term production capabilities and cost structure. Nuclear energy provides a stable and often cost-effective source of power, which could enhance Southern Company's competitiveness in the energy market.
However, the capital-intensive nature of nuclear projects and associated risks, such as regulatory hurdles and public perception, must be considered. The energy sector is also undergoing a transition towards renewable sources and Southern Company's investment in nuclear might be seen as a strategic move to diversify its energy portfolio or as a potential misalignment with future energy trends. The long-term impact on the company's financials and stock performance will depend on how effectively it can integrate this new asset into its operations and market strategy.
The reported decline in operating revenues for Southern Company is indicative of broader industry trends where utility companies are facing challenges such as fluctuating fuel costs and changing consumption patterns. Despite these challenges, Southern Company's ability to increase its net income suggests effective cost management and operational efficiency. The relevance of these financial results extends beyond the company, potentially impacting the utility sector's benchmarks and expectations.
Investors and market participants often look at utility companies for stable returns and resilience during economic fluctuations. Southern Company's performance, particularly in the context of decreased revenues and the completion of a significant infrastructure project, could be a bellwether for the sector's health. The emphasis on non-GAAP financial measures, which exclude certain items to provide a clearer picture of ongoing operations, reflects an industry practice aimed at giving stakeholders a more standardized basis for comparison and decision-making.
Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned
Non-GAAP Financial Measures | Three Months Ended | Year-to-Date December | ||||
Net Income - Excluding Items (in millions) | 2023 | 2022 | 2023 | 2022 | ||
Net Income - As Reported | ||||||
Less: | ||||||
Estimated Loss on Plants Under Construction | 222 | (205) | 51 | (199) | ||
Tax Impact | (56) | 52 | (13) | 51 | ||
Acquisition and Disposition Impacts | 1 | (134) | (1) | (115) | ||
Tax Impact | 32 | 34 | 33 | 32 | ||
Loss on Extinguishment of Debt | - | - | (5) | - | ||
Tax Impact | - | - | 1 | - | ||
Estimated Loss on Qualifying Infrastructure Plant and Other Capital Investments | (58) | - | (96) | - | ||
Tax Impact | 14 | - | 24 | - | ||
Impairments | - | (119) | - | (119) | ||
Tax Impact | - | - | - | - | ||
Net Income – Excluding Items | ||||||
Average Shares Outstanding – (in millions) | 1,092 | 1,090 | 1,092 | 1,075 | ||
Basic Earnings Per Share – Excluding Items | ||||||
NOTE: For more information regarding these non-GAAP adjustments, see the footnotes accompanying the Financial Highlights page of the earnings package.
Adjusted earnings drivers for the full year 2023, as compared with 2022, were higher utility revenues, lower non-fuel operations and maintenance costs and income taxes, partially offset by increased depreciation and amortization and interest expense, and milder than normal weather at the company's regulated electric utilities.
Fourth-quarter 2023 operating revenues were
"Last year was an exceptional year for Southern Company," said Chairman, President and CEO Christopher C. Womack. "In 2023, we once again demonstrated that we can accomplish extraordinary things. In addition to delivering strong financial results in the face of unprecedented headwinds, we completed Plant Vogtle Unit 3 – the first newly-constructed nuclear unit in
Southern Company's fourth-quarter and full-year earnings slides with supplemental financial information, including 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 Womack and Chief Financial Officer Daniel S. Tucker will discuss earnings and provide a general business update. Investors, media and the public may listen to a live webcast of the call and view associated slides at http://investor.southerncompany.com. 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 provider serving 9 million customers across the Southeast and beyond through its family of companies. Providing clean, safe, reliable and affordable energy with excellent service is our mission. The company has electric operating companies in three states, natural gas distribution companies in four states, a competitive generation company, a leading distributed energy distribution company with national capabilities, a fiber optics network and telecommunications services. Through an industry-leading commitment to innovation, resilience and sustainability, we are taking action to meet customers' and communities' needs while advancing our goal of net zero greenhouse gas emissions by 2050. Our uncompromising values ensure we put the needs of those we serve at the center of everything we do and are the key to our sustained success. We are transforming energy into economic, environmental and social progress for tomorrow. Our corporate culture and hiring practices have earned the company national awards and recognition from numerous organizations, including Forbes, The Military Times, DiversityInc, Black Enterprise, J.D. Power, Fortune, Human Rights Campaign and more. To learn more, visit www.southerncompany.com.
Southern Company | |||||||
Financial Highlights | |||||||
(In Millions of Dollars Except Earnings Per Share) | |||||||
Three Months Ended | Year-To-Date December | ||||||
Net Income (Loss)–As Reported (See Notes) | 2023 | 2022 | 2023 | 2022 | |||
Traditional Electric Operating Companies | $ 785 | $ 62 | $ 3,637 | $ 3,318 | |||
Southern Power | 69 | 89 | 357 | 354 | |||
Southern Company Gas | 140 | 56 | 615 | 572 | |||
Total | 994 | 207 | 4,609 | 4,244 | |||
Parent Company and Other | (139) | (294) | (633) | (720) | |||
Net Income (Loss)–As Reported | $ 855 | $ (87) | $ 3,976 | $ 3,524 | |||
Basic Earnings (Loss) Per Share1 | $ 0.78 | $ (0.08) | $ 3.64 | $ 3.28 | |||
Average Shares Outstanding (in millions) | 1,092 | 1,090 | 1,092 | 1,075 | |||
End of Period Shares Outstanding (in millions) | 1,091 | 1,089 | |||||
Non-GAAP Financial Measures | Three Months Ended | Year-To-Date December | |||||
Net Income–Excluding Items (See Notes) | 2023 | 2022 | 2023 | 2022 | |||
Net Income (Loss)–As Reported | $ 855 | $ (87) | $ 3,976 | $ 3,524 | |||
Less: | |||||||
Estimated Loss on Plants Under Construction2 | 222 | (205) | 51 | (199) | |||
Tax Impact | (56) | 52 | (13) | 51 | |||
Acquisition and Disposition Impacts3 | 1 | (134) | (1) | (115) | |||
Tax Impact | 32 | 34 | 33 | 32 | |||
Loss on Extinguishment of Debt4 | — | — | (5) | — | |||
Tax Impact | — | — | 1 | — | |||
Estimated Loss on Qualifying Infrastructure Plant and Other Capital Investments5 | (58) | — | (96) | — | |||
Tax Impact | 14 | — | 24 | — | |||
Impairments6 | — | (119) | — | (119) | |||
Tax Impact | — | — | — | — | |||
Net Income–Excluding Items | $ 700 | $ 285 | $ 3,982 | $ 3,874 | |||
Basic Earnings Per Share–Excluding Items | $ 0.64 | $ 0.26 | $ 3.65 | $ 3.60 | |||
- See Notes on the following page | |||||||
Southern Company
Financial Highlights
Notes
- Dilution is not material in any period presented. Diluted earnings (loss) per share was
$0.78 $3.62 $(0.08) $3.26 - Earnings for the three and twelve months ended December 31, 2023 include a credit of
$228 million $170 million $68 million $50 million $201 million $150 million $183 million $137 million 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, net of salvage, totaling approximately$15 million - Earnings for the three and twelve months ended December 31, 2023 include a
$35 million $131 million $99 million $14 million $11 million - Earnings for the twelve months ended December 31, 2023 include costs associated with the extinguishment of debt at Southern Company. Similar transaction costs may occur in the future at Southern Company or one of its unregulated subsidiaries; however, the amount and timing of any such costs are uncertain.
- Earnings for the three and twelve months ended December 31, 2023 include a charge of
$58 million $44 million $96 million $72 million Illinois program and (2) Nicor Gas' general base rate case proceeding. Further charges may occur; however, the amount and timing of any such charges are uncertain. - Earnings for the three and twelve months ended December 31, 2022 include an impairment charge of
$119 million
Southern Company | |||||||||||
Significant Factors Impacting EPS | |||||||||||
Three Months Ended | Year-To-Date December | ||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Earnings (Loss) Per Share– | |||||||||||
As Reported1 (See Notes) | $ 0.78 | $ 0.86 | $ 3.64 | $ 3.28 | $ 0.36 | ||||||
Significant Factors: | |||||||||||
Traditional Electric Operating Companies | $ 0.66 | $ 0.30 | |||||||||
Southern Power | (0.02) | — | |||||||||
Southern Company Gas | 0.08 | 0.04 | |||||||||
Parent Company and Other | 0.14 | 0.08 | |||||||||
Increase in Shares | — | (0.06) | |||||||||
Total–As Reported | $ 0.86 | $ 0.36 | |||||||||
Three Months Ended | Year-To-Date December | ||||||||||
Non-GAAP Financial Measures | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||
Earnings Per Share– | |||||||||||
Excluding Items (See Notes) | $ 0.64 | $ 0.26 | $ 0.38 | $ 3.65 | $ 3.60 | $ 0.05 | |||||
Total–As Reported | $ 0.86 | $ 0.36 | |||||||||
Less: | |||||||||||
Estimated Loss on Plants Under Construction2 | 0.29 | 0.17 | |||||||||
Acquisition and Disposition Impacts3 | 0.12 | 0.10 | |||||||||
Loss on Extinguishment of Debt4 | — | — | |||||||||
Estimated Loss on Qualifying Infrastructure Plant and Other Capital Investments5 | (0.04) | (0.07) | |||||||||
Impairments6 | 0.11 | 0.11 | |||||||||
Total–Excluding Items | $ 0.38 | $ 0.05 | |||||||||
- See Notes on the following page | |||||||||||
Southern Company
Significant Factors Impacting EPS
Notes
- Dilution is not material in any period presented. Diluted earnings (loss) per share was
$0.78 $3.62 $(0.08) $3.26 - Earnings for the three and twelve months ended December 31, 2023 include a credit of
$228 million $170 million $68 million $50 million $201 million $150 million $183 million $137 million 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, net of salvage, totaling approximately$15 million - Earnings for the three and twelve months ended December 31, 2023 include a
$35 million $131 million $99 million $14 million $11 million - Earnings for the twelve months ended December 31, 2023 include costs associated with the extinguishment of debt at Southern Company. Similar transaction costs may occur in the future at Southern Company or one of its unregulated subsidiaries; however, the amount and timing of any such costs are uncertain.
- Earnings for the three and twelve months ended December 31, 2023 include a charge of
$58 million $44 million $96 million $72 million Illinois program and (2) Nicor Gas' general base rate case proceeding. Further charges may occur; however, the amount and timing of any such charges are uncertain. - Earnings for the three and twelve months ended December 31, 2022 include an impairment charge of
$119 million
Southern Company | |||
EPS Earnings Analysis | |||
Description | Three Months Ended | Year-To-Date December | |
Retail Sales | —¢ | (2)¢ | |
Retail Revenue Impacts | 26 | 30 | |
Weather | (2) | (16) | |
Wholesale & Other Operating Revenues | 1 | 10 | |
Non-Fuel O&M(*) | 20 | 35 | |
Depreciation and Amortization | (15) | (59) | |
Interest Expense and Other | (2) | (10) | |
Income Taxes | 9 | 25 | |
Total Traditional Electric Operating Companies | 37¢ | 13¢ | |
Southern Power | (2) | — | |
Southern Company Gas | 3 | 2 | |
Parent Company and Other | — | (4) | |
Increase in Shares | — | (6) | |
Total Change in EPS (Excluding Items) | 38¢ | 5¢ | |
Estimated Loss on Plants Under Construction1 | 29 | 17 | |
Acquisition and Disposition Impacts2 | 12 | 10 | |
Loss on Extinguishment of Debt3 | — | — | |
Estimated Loss on Qualifying Infrastructure Plant and Other | (4) | (7) | |
Impairments5 | 11 | 11 | |
Total Change in EPS (As Reported) | 86¢ | 36¢ | |
(*) Includes non-service cost-related benefits income | |||
- See additional Notes on the following page | |||
Southern Company
EPS Earnings Analysis
Notes
- Earnings for the three and twelve months ended December 31, 2023 include a credit of
$228 million $170 million $68 million $50 million $201 million $150 million $183 million $137 million 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, net of salvage, totaling approximately$15 million - Earnings for the three and twelve months ended December 31, 2023 include a
$35 million $131 million $99 million $14 million $11 million - Earnings for the twelve months ended December 31, 2023 include costs associated with the extinguishment of debt at Southern Company. Similar transaction costs may occur in the future at Southern Company or one of its unregulated subsidiaries; however, the amount and timing of any such costs are uncertain.
- Earnings for the three and twelve months ended December 31, 2023 include a charge of
$58 million $44 million $96 million $72 million Illinois program and (2) Nicor Gas' general base rate case proceeding. Further charges may occur; however, the amount and timing of any such charges are uncertain. - Earnings for the three and twelve months ended December 31, 2022 include an impairment charge of
$119 million
Southern Company | |||||||||||
Consolidated Earnings | |||||||||||
As Reported | |||||||||||
(In Millions of Dollars) | |||||||||||
Three Months Ended December | Year-To-Date December | ||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Retail Electric Revenues- | |||||||||||
Fuel | $ 1,018 | $ 1,460 | $ (442) | $ 4,430 | $ 6,402 | ||||||
Non-Fuel | 2,728 | 2,374 | 354 | 11,913 | 11,795 | 118 | |||||
Wholesale Electric Revenues | 537 | 843 | (306) | 2,467 | 3,641 | (1,174) | |||||
Other Electric Revenues | 190 | 193 | (3) | 792 | 747 | 45 | |||||
Natural Gas Revenues | 1,285 | 1,964 | (679) | 4,702 | 5,962 | (1,260) | |||||
Other Revenues | 287 | 213 | 74 | 949 | 732 | 217 | |||||
Total Operating Revenues | 6,045 | 7,047 | (1,002) | 25,253 | 29,279 | (4,026) | |||||
Fuel and Purchased Power | 1,192 | 1,894 | (702) | 5,248 | 8,428 | (3,180) | |||||
Cost of Natural Gas | 445 | 1,164 | (719) | 1,644 | 3,004 | (1,360) | |||||
Cost of Other Sales | 179 | 121 | 58 | 560 | 396 | 164 | |||||
Non-Fuel O&M | 1,741 | 2,005 | (264) | 6,093 | 6,573 | (480) | |||||
Depreciation and Amortization | 1,160 | 935 | 225 | 4,525 | 3,663 | 862 | |||||
Taxes Other Than Income Taxes | 349 | 338 | 11 | 1,425 | 1,411 | 14 | |||||
Estimated Loss on Plant Vogtle Units 3 and 4 | (228) | 201 | (429) | (68) | 183 | (251) | |||||
Impairment Charges | — | 251 | (251) | — | 251 | (251) | |||||
Total Operating Expenses | 4,838 | 6,909 | (2,071) | 19,427 | 23,909 | (4,482) | |||||
Operating Income | 1,207 | 138 | 1,069 | 5,826 | 5,370 | 456 | |||||
Allowance for Equity Funds Used During Construction | 68 | 61 | 7 | 268 | 224 | 44 | |||||
Earnings from Equity Method Investments | 34 | 42 | (8) | 144 | 151 | (7) | |||||
Interest Expense, Net of Amounts Capitalized | 634 | 561 | 73 | 2,446 | 2,022 | 424 | |||||
Other Income (Expense), net | 125 | 86 | 39 | 553 | 500 | 53 | |||||
Income Taxes (Benefit) | 4 | (96) | 100 | 496 | 795 | (299) | |||||
Net Income (Loss) | 796 | (138) | 934 | 3,849 | 3,428 | 421 | |||||
Dividends on Preferred Stock of Subsidiaries | — | 1 | (1) | — | 11 | (11) | |||||
Net Loss Attributable to Noncontrolling Interests | (59) | (52) | (7) | (127) | (107) | (20) | |||||
NET INCOME (LOSS) ATTRIBUTABLE TO SOUTHERN COMPANY | $ 855 | $ (87) | $ 942 | $ 3,976 | $ 3,524 | $ 452 | |||||
Notes | |||||||||||
Southern Company | |||||||||||||||
Kilowatt-Hour Sales and Customers | |||||||||||||||
(In Millions of KWHs) | |||||||||||||||
Three Months Ended December | Year-To-Date December | ||||||||||||||
2023 | 2022 | Change | Weather | 2023 | 2022 | Change | Weather | ||||||||
Kilowatt-Hour Sales- | |||||||||||||||
Total Sales | 45,351 | 47,398 | (4.3) % | 195,507 | 204,273 | (4.3) % | |||||||||
Total Retail Sales- | 33,817 | 34,264 | (1.3) % | (0.3) % | 144,531 | 147,981 | (2.3) % | (0.4) % | |||||||
Residential | 10,622 | 11,000 | (3.4) % | (1.0) % | 47,080 | 49,633 | (5.1) % | (0.5) % | |||||||
Commercial | 11,294 | 11,219 | 0.7 % | 1.4 % | 48,343 | 48,279 | 0.1 % | 1.3 % | |||||||
Industrial | 11,765 | 11,899 | (1.1) % | (1.1) % | 48,556 | 49,474 | (1.9) % | (1.9) % | |||||||
Other | 136 | 146 | (6.2) % | (5.9) % | 552 | 595 | (7.2) % | (6.8) % | |||||||
Total Wholesale Sales | 11,534 | 13,134 | (12.2) % | N/A | 50,976 | 56,292 | (9.4) % | N/A | |||||||
(In Thousands of Customers) | |||||||||||||||
Period Ended December | |||||||||||||||
2023 | 2022 | Change | |||||||||||||
Regulated Utility Customers- | |||||||||||||||
Total Utility Customers- | 8,861 | 8,795 | 0.8 % | ||||||||||||
Total Traditional Electric | 4,487 | 4,437 | 1.1 % | ||||||||||||
Southern Company Gas | 4,374 | 4,358 | 0.4 % | ||||||||||||
Southern Company | |||||||||||
Financial Overview | |||||||||||
As Reported | |||||||||||
(In Millions of Dollars) | |||||||||||
Three Months Ended December | Year-To-Date December | ||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||
Southern Company – | |||||||||||
Operating Revenues | $ 6,045 | $ 7,047 | (14.2) % | (13.8) % | |||||||
Earnings (Loss) Before Income Taxes | 800 | (234) | N/M | 4,345 | 4,223 | 2.9 % | |||||
Net Income (Loss) Available to Common | 855 | (87) | N/M | 3,976 | 3,524 | 12.8 % | |||||
Alabama Power – | |||||||||||
Operating Revenues | $ 1,630 | $ 1,794 | (9.1) % | $ 7,050 | $ 7,817 | (9.8) % | |||||
Earnings Before Income Taxes | 216 | 114 | 89.5 % | 1,451 | 1,774 | (18.2) % | |||||
Net Income Available to Common | 238 | 84 | 183.3 % | 1,370 | 1,340 | 2.2 % | |||||
Georgia Power – | |||||||||||
Operating Revenues | $ 2,313 | $ 2,366 | (2.2) % | (12.7) % | |||||||
Earnings (Loss) Before Income Taxes | 636 | (89) | N/M | 2,528 | 2,183 | 15.8 % | |||||
Net Income (Loss) Available to Common | 533 | (38) | N/M | 2,080 | 1,813 | 14.7 % | |||||
Mississippi Power – | |||||||||||
Operating Revenues | $ 337 | $ 415 | (18.8) % | $ 1,474 | $ 1,694 | (13.0) % | |||||
Earnings Before Income Taxes | 16 | 13 | 23.1 % | 224 | 201 | 11.4 % | |||||
Net Income Available to Common | 15 | 14 | 7.1 % | 188 | 164 | 14.6 % | |||||
Southern Power – | |||||||||||
Operating Revenues | $ 503 | $ 751 | (33.0) % | $ 2,189 | $ 3,369 | (35.0) % | |||||
Earnings (Loss) Before Income Taxes | (16) | 8 | N/M | 242 | 267 | (9.4) % | |||||
Net Income Available to Common | 69 | 89 | (22.5) % | 357 | 354 | 0.8 % | |||||
Southern Company Gas – | |||||||||||
Operating Revenues | $ 1,285 | $ 1,964 | (34.6) % | $ 4,702 | $ 5,962 | (21.1) % | |||||
Earnings Before Income Taxes | 191 | 75 | 154.7 % | 826 | 752 | 9.8 % | |||||
Net Income Available to Common | 140 | 56 | 150.0 % | 615 | 572 | 7.5 % | |||||
N/M - Not Meaningful | |||||||||||
Notes | |||||||||||
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SOURCE Southern Company
FAQ
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