Southern Company reports second-quarter 2020 earnings
Southern Company reported a second-quarter 2020 net income of $612 million (58 cents per share), down from $899 million (86 cents per share) in the same period last year. The six-month earnings totaled $1.48 billion ($1.40 per share), a decrease from $2.98 billion ($2.86 per share) in 2019. Operating revenues fell 9.4% to $4.62 billion for the quarter, primarily due to lower fuel costs and reduced sales from the COVID-19 pandemic. Despite these challenges, management highlighted diligent cost control and ongoing progress in nuclear construction.
- Diligent cost control measures helped mitigate financial impacts from COVID-19.
- Continued progress on new nuclear construction projects.
- Net income decreased 32% year-over-year in Q2 2020.
- Operating revenues declined 9.4% year-over-year for Q2 2020.
ATLANTA, July 30, 2020 /PRNewswire/ -- Southern Company today reported second-quarter 2020 earnings of
Excluding the items described in the "Net Income – Excluding Items" table below, Southern Company earned
Non-GAAP Financial Measures | Three Months Ended June | Year-to-Date June | |||
Net Income - Excluding Items (in millions) | 2020 | 2019 | 2020 | 2019 | |
Net Income - As Reported | |||||
Less: | |||||
Acquisition and Disposition Impacts | - | (18) | 38 | 2,481 | |
Tax Impact | - | 67 | (16) | (1,122) | |
Estimated Loss on Plants Under Construction | (152) | (8) | (155) | (13) | |
Tax Impact | 39 | 2 | 40 | 3 | |
Wholesale Gas Services | (31) | 29 | - | 93 | |
Tax Impact | 8 | (6) | - | (23) | |
Asset Impairment | (154) | - | (154) | - | |
Tax Impact | 80 | - | 80 | - | |
Net Income – Excluding Items | |||||
Average Shares Outstanding – (in millions) | 1,058 | 1,044 | 1,057 | 1,041 | |
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.
Earnings drivers year-over-year for the second quarter 2020 were negatively impacted by a decline in sales from demand reduction related to the COVID-19 pandemic and mild weather, largely offset by diligent cost control and constructive state regulatory actions completed in 2019 at the company's utilities.
"Despite the challenges of the COVID-19 pandemic, Southern Company and its subsidiaries have never taken a day off," said Chairman, President and CEO Thomas A. Fanning. "Our electric and gas utilities have continued to provide clean, safe, reliable and affordable energy to customers while operating under appropriate health and safety protocols," added Fanning. "Whether it's our response to major storms in the Southeast or working within our communities to promote racial justice, we continue to deliver results, including continued progress on new nuclear construction."
Second-quarter 2020 operating revenues were
Southern Company's second-quarter earnings slides with supplemental financial information 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. Investors, media and the public may listen to a live webcast of the call and view associated slides at http://investor.southerncompany.com/webcasts. 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 | Year-to-Date | ||||||||||||||
June | June | ||||||||||||||
Net Income–As Reported (See Notes) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Traditional Electric Operating Companies | $ | 645 | $ | 782 | $ | 1,287 | $ | 1,346 | |||||||
Southern Power | 63 | 174 | 138 | 230 | |||||||||||
Southern Company Gas | 71 | 106 | 346 | 376 | |||||||||||
Total | 779 | 1,062 | 1,771 | 1,952 | |||||||||||
Parent Company and Other | (167) | (163) | (291) | 1,030 | |||||||||||
Net Income–As Reported | $ | 612 | $ | 899 | $ | 1,480 | $ | 2,982 | |||||||
Basic Earnings Per Share1 | $ | 0.58 | $ | 0.86 | $ | 1.40 | $ | 2.86 | |||||||
Average Shares Outstanding (in millions) | 1,058 | 1,044 | 1,057 | 1,041 | |||||||||||
End of Period Shares Outstanding (in millions) | 1,056 | 1,045 | |||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||
Non-GAAP Financial Measures | June | June | |||||||||||||
Net Income–Excluding Items (See Notes) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net Income–As Reported | $ | 612 | $ | 899 | $ | 1,480 | $ | 2,982 | |||||||
Less: | |||||||||||||||
Acquisition and Disposition Impacts2 | — | (18) | 38 | 2,481 | |||||||||||
Tax Impact | — | 67 | (16) | (1,122) | |||||||||||
Estimated Loss on Plants Under Construction3 | (152) | (8) | (155) | (13) | |||||||||||
Tax Impact | 39 | 2 | 40 | 3 | |||||||||||
Wholesale Gas Services4 | (31) | 29 | — | 93 | |||||||||||
Tax Impact | 8 | (6) | — | (23) | |||||||||||
Asset Impairment5 | (154) | — | (154) | — | |||||||||||
Tax Impact | 80 | — | 80 | — | |||||||||||
Net Income–Excluding Items | $ | 822 | $ | 833 | $ | 1,647 | $ | 1,563 | |||||||
Basic Earnings Per Share–Excluding Items | $ | 0.78 | $ | 0.80 | $ | 1.56 | $ | 1.50 | |||||||
-See Notes on the following page. | |||||||||||||||
Southern Company | |
Financial Highlights | |
Notes | |
(1) | For the three and six months ended June 30, 2020 and 2019, dilution does not change basic earnings per share by more than |
(2) | Earnings for the six months ended June 30, 2020 primarily include a |
(3) | Earnings for the three and six months ended June 30, 2020 and 2019 include charges, associated legal expenses, and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Earnings for the three and six months ended June 30, 2020 also include a |
(4) | Earnings for the three and six months ended June 30, 2020 and 2019 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. |
(5) | Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of |
Southern Company | |||||||||||||||||||||||
Significant Factors Impacting EPS | |||||||||||||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||||||||||
June | June | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Earnings Per Share– | |||||||||||||||||||||||
As Reported1 (See Notes) | $ | 0.58 | $ | 0.86 | $ | (0.28) | $ | 1.40 | $ | 2.86 | $ | (1.46) | |||||||||||
Significant Factors: | |||||||||||||||||||||||
Traditional Electric Operating Companies | $ | (0.13) | $ | (0.05) | |||||||||||||||||||
Southern Power | (0.11) | (0.09) | |||||||||||||||||||||
Southern Company Gas | (0.03) | (0.03) | |||||||||||||||||||||
Parent Company and Other | — | (1.27) | |||||||||||||||||||||
Increase in Shares | (0.01) | (0.02) | |||||||||||||||||||||
Total–As Reported | $ | (0.28) | $ | (1.46) | |||||||||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||||||||||
June | June | ||||||||||||||||||||||
Non-GAAP Financial Measures | 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||
Earnings Per Share– | |||||||||||||||||||||||
Excluding Items (See Notes) | $ | 0.78 | $ | 0.80 | $ | (0.02) | $ | 1.56 | $ | 1.50 | $ | 0.06 | |||||||||||
Total–As Reported | $ | (0.28) | $ | (1.46) | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Acquisition and Disposition Impacts2 | (0.05) | (1.28) | |||||||||||||||||||||
Estimated Loss on Plants Under Construction3 | (0.10) | (0.10) | |||||||||||||||||||||
Wholesale Gas Services4 | (0.04) | (0.07) | |||||||||||||||||||||
Asset Impairment5 | (0.07) | (0.07) | |||||||||||||||||||||
Total–Excluding Items | $ | (0.02) | $ | 0.06 | |||||||||||||||||||
- See Notes on the following page. | |||||||||||||||||||||||
Southern Company | |||||||||
Significant Factors Impacting EPS | |||||||||
Notes | |||||||||
(1) | For the three and six months ended June 30, 2020 and 2019, dilution does not change basic earnings per share by more than | ||||||||
(2) | Earnings for the six months ended June 30, 2020 primarily include a | ||||||||
(3) | Earnings for the three and six months ended June 30, 2020 and 2019 include charges, associated legal expenses, and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Earnings for the three and six months ended June 30, 2020 also include a | ||||||||
(4) | Earnings for the three and six months ended June 30, 2020 and 2019 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. | ||||||||
(5) | Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of | ||||||||
Southern Company | ||||
EPS Earnings Analysis | ||||
Three Months | Year-to-Date | |||
Ended June | June | |||
Description | 2020 vs. 2019 | 2020 vs. 2019 | ||
Retail Sales | ||||
Retail Revenue Impacts | 0.11 | 0.20 | ||
Weather | (0.10) | (0.11) | ||
Wholesale and Other Operating Revenues | 0.01 | — | ||
Non-Fuel O&M | 0.05 | 0.06 | ||
Depreciation and Amortization, Interest Expense, Other | (0.05) | (0.12) | ||
Income Taxes | 0.05 | 0.10 | ||
Total Traditional Electric Operating Companies | ||||
Southern Power | (0.02) | (0.02) | ||
Southern Company Gas | 0.01 | 0.04 | ||
Parent and Other | 0.02 | 0.01 | ||
Increase in Shares | (0.01) | (0.02) | ||
Total Change in EPS (Excluding Items) | ||||
Acquisition and Disposition Impacts1 | (0.05) | (1.28) | ||
Estimated Loss on Plants Under Construction2 | (0.10) | (0.10) | ||
Wholesale Gas Services3 | (0.04) | (0.07) | ||
Asset Impairment4 | (0.07) | (0.07) | ||
Total Change in EPS (As Reported) | ||||
- See Notes on the following page. | ||||
Southern Company | ||||||||
EPS Earnings Analysis | ||||||||
Three and Six Months Ended June 2020 vs. June 2019 | ||||||||
Notes | ||||||||
(1) | Earnings for the six months ended June 30, 2020 primarily include a | |||||||
(2) | Earnings for the three and six months ended June 30, 2020 and 2019 include charges, associated legal expenses, and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Earnings for the three and six months ended June 30, 2020 also include a | |||||||
(3) | Earnings for the three and six months ended June 30, 2020 and 2019 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. | |||||||
(4) | Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of | |||||||
Southern Company | |||||||||||||||||||||||
Consolidated Earnings | |||||||||||||||||||||||
As Reported | |||||||||||||||||||||||
(In Millions of Dollars) | |||||||||||||||||||||||
Three Months Ended | Year-to-Date | ||||||||||||||||||||||
June | June | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Income Account- | |||||||||||||||||||||||
Retail Electric Revenues- | |||||||||||||||||||||||
Fuel | $ | 676 | $ | 919 | $ | (243) | $ | 1,353 | $ | 1,723 | $ | (370) | |||||||||||
Non-Fuel | 2,506 | 2,621 | (115) | 4,907 | 4,900 | 7 | |||||||||||||||||
Wholesale Electric Revenues | 472 | 542 | (70) | 889 | 1,041 | (152) | |||||||||||||||||
Other Electric Revenues | 168 | 161 | 7 | 320 | 331 | (11) | |||||||||||||||||
Natural Gas Revenues | 636 | 689 | (53) | 1,885 | 2,163 | (278) | |||||||||||||||||
Other Revenues | 162 | 166 | (4) | 284 | 352 | (68) | |||||||||||||||||
Total Revenues | 4,620 | 5,098 | (478) | 9,638 | 10,510 | (872) | |||||||||||||||||
Fuel and Purchased Power | 821 | 1,115 | (294) | 1,638 | 2,135 | (497) | |||||||||||||||||
Cost of Natural Gas | 144 | 191 | (47) | 583 | 877 | (294) | |||||||||||||||||
Cost of Other Sales | 74 | 84 | (10) | 129 | 203 | (74) | |||||||||||||||||
Non-Fuel O&M | 1,203 | 1,320 | (117) | 2,498 | 2,634 | (136) | |||||||||||||||||
Depreciation and Amortization | 873 | 755 | 118 | 1,730 | 1,506 | 224 | |||||||||||||||||
Taxes Other Than Income Taxes | 298 | 299 | (1) | 629 | 628 | 1 | |||||||||||||||||
Estimated Loss on Plant Vogtle Units 3 and 4 | 149 | — | 149 | 149 | — | 149 | |||||||||||||||||
(Gain) Loss on Dispositions, net | — | (8) | 8 | (39) | (2,506) | 2,467 | |||||||||||||||||
Total Operating Expenses | 3,562 | 3,756 | (194) | 7,317 | 5,477 | 1,840 | |||||||||||||||||
Operating Income | 1,058 | 1,342 | (284) | 2,321 | 5,033 | (2,712) | |||||||||||||||||
Allowance for Equity Funds Used During Construction | 35 | 31 | 4 | 68 | 63 | 5 | |||||||||||||||||
Earnings from Equity Method Investments | 30 | 33 | (3) | 72 | 81 | (9) | |||||||||||||||||
Interest Expense, Net of Amounts Capitalized | 444 | 429 | 15 | 900 | 859 | 41 | |||||||||||||||||
Impairment of Leveraged Lease | 154 | — | 154 | 154 | — | 154 | |||||||||||||||||
Other Income (Expense), net | 101 | 99 | 2 | 204 | 176 | 28 | |||||||||||||||||
Income Taxes | 5 | 145 | (140) | 150 | 1,505 | (1,355) | |||||||||||||||||
Net Income | 621 | 931 | (310) | 1,461 | 2,989 | (1,528) | |||||||||||||||||
Less: | |||||||||||||||||||||||
Dividends on Preferred Stock of Subsidiaries | 4 | 3 | 1 | 7 | 7 | — | |||||||||||||||||
Net Income (Loss) Attributable to Noncontrolling Interests | 5 | 29 | (24) | (26) | — | (26) | |||||||||||||||||
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY | $ | 612 | $ | 899 | $ | (287) | $ | 1,480 | $ | 2,982 | $ | (1,502) | |||||||||||
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 | ||||||||||||||||||||||
2020 | 2019 | Change | Weather Adjusted Change | 2020 | 2019 | Change | Weather Adjusted Change | ||||||||||||||||
Kilowatt-Hour Sales- | |||||||||||||||||||||||
Total Sales | 43,547 | 48,434 | (10.1) | % | 87,811 | 93,601 | (6.2) | % | |||||||||||||||
Total Retail Sales- | 32,460 | 36,752 | (11.7) | % | (7.5) | % | 66,505 | 71,117 | (6.5) | % | (3.7) | % | |||||||||||
Residential | 10,879 | 11,520 | (5.6) | % | 4.7 | % | 21,745 | 22,421 | (3.0) | % | 3.8 | % | |||||||||||
Commercial | 10,531 | 12,386 | (15.0) | % | (11.5) | % | 21,470 | 23,372 | (8.1) | % | (6.3) | % | |||||||||||
Industrial | 10,886 | 12,662 | (14.0) | % | (14.0) | % | 22,952 | 24,951 | (8.0) | % | (8.0) | % | |||||||||||
Other | 164 | 184 | (11.3) | % | (11.3) | % | 338 | 373 | (9.4) | % | (9.2) | % | |||||||||||
Total Wholesale Sales | 11,087 | 11,682 | (5.1) | % | N/A | 21,306 | 22,484 | (5.2) | % | N/A | |||||||||||||
(In Thousands of Customers) | |||||||||||||||||||||||
Period Ended June | |||||||||||||||||||||||
2020 | 2019 | Change | |||||||||||||||||||||
Regulated Utility Customers- | |||||||||||||||||||||||
Total Utility Customers- | 8,580 | 8,477 | |||||||||||||||||||||
Total Traditional Electric | 4,305 | 4,246 | |||||||||||||||||||||
Southern Company Gas | 4,275 | 4,231 | |||||||||||||||||||||
Southern Company | ||||||||||||||||||||||
Financial Overview | ||||||||||||||||||||||
As Reported | ||||||||||||||||||||||
(In Millions of Dollars) | ||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||
June | June | |||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||
Southern Company1, 2 – | ||||||||||||||||||||||
Operating Revenues | $ | 4,620 | $ | 5,098 | (9.4) | % | $ | 9,638 | $ | 10,510 | (8.3) | % | ||||||||||
Earnings Before Income Taxes | 626 | 1,076 | (41.8) | % | 1,611 | 4,494 | (64.2) | % | ||||||||||||||
Net Income Available to Common | 612 | 899 | (31.9) | % | 1,480 | 2,982 | (50.4) | % | ||||||||||||||
Alabama Power – | ||||||||||||||||||||||
Operating Revenues | $ | 1,365 | $ | 1,513 | (9.8) | % | $ | 2,716 | $ | 2,921 | (7.0) | % | ||||||||||
Earnings Before Income Taxes | 395 | 388 | 1.8 | % | 762 | 671 | 13.6 | % | ||||||||||||||
Net Income Available to Common | 298 | 296 | 0.7 | % | 578 | 513 | 12.7 | % | ||||||||||||||
Georgia Power – | ||||||||||||||||||||||
Operating Revenues | $ | 1,928 | $ | 2,117 | (8.9) | % | $ | 3,754 | $ | 3,951 | (5.0) | % | ||||||||||
Earnings Before Income Taxes | 319 | 577 | (44.7) | % | 665 | 970 | (31.4) | % | ||||||||||||||
Net Income Available to Common | 308 | 448 | (31.3) | % | 638 | 759 | (15.9) | % | ||||||||||||||
Mississippi Power – | ||||||||||||||||||||||
Operating Revenues | $ | 283 | $ | 313 | (9.6) | % | $ | 559 | $ | 600 | (6.8) | % | ||||||||||
Earnings Before Income Taxes | 41 | 42 | (2.4) | % | 79 | 86 | (8.1) | % | ||||||||||||||
Net Income Available to Common | 39 | 37 | 5.4 | % | 71 | 74 | (4.1) | % | ||||||||||||||
Southern Power2 – | ||||||||||||||||||||||
Operating Revenues | $ | 439 | $ | 510 | (13.9) | % | $ | 814 | $ | 953 | (14.6) | % | ||||||||||
Earnings Before Income Taxes | 74 | 152 | (51.3) | % | 125 | 170 | (26.5) | % | ||||||||||||||
Net Income Available to Common | 63 | 174 | (63.8) | % | 138 | 230 | (40.0) | % | ||||||||||||||
Southern Company Gas – | ||||||||||||||||||||||
Operating Revenues | $ | 636 | $ | 689 | (7.7) | % | $ | 1,885 | $ | 2,163 | (12.9) | % | ||||||||||
Earnings Before Income Taxes | 87 | 112 | (22.3) | % | 441 | 459 | (3.9) | % | ||||||||||||||
Net Income Available to Common | 71 | 106 | (33.0) | % | 346 | 376 | (8.0) | % | ||||||||||||||
Notes | ||||||||||||||||||||||
- See Financial Highlights pages for discussion of certain significant items occurring during the periods presented. | ||||||||||||||||||||||
(1) | Earnings comparisons to the prior year were significantly impacted by the preliminary gain associated with the sale of Gulf Power Company on January 1, 2019. | |||||||||||||||||||||
(2) | Earnings and revenue comparisons to the prior year were significantly impacted by Southern Power Company's dispositions of Plant Nacogdoches on June 13, 2019 and Plant Mankato on January 17, 2020. | |||||||||||||||||||||
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SOURCE Southern Company
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