Southern Company reports second-quarter 2021 earnings

Rhea-AI Summary

Southern Company reported Q2 2021 earnings of $372 million (35 cents/share), down from $612 million (58 cents/share) in Q2 2020. Year-to-date earnings reached $1.51 billion ($1.42/share), slightly up from $1.48 billion ($1.40/share) last year. Excluding certain items, Q2 earnings were $891 million (84 cents/share), compared to $822 million (78 cents/share) in Q2 2020. Operating revenues increased by 12.5% to $5.2 billion, driven by strong customer usage and growth despite higher operational costs and a $343 million charge related to Plant Vogtle's construction.

Positive

• Operating revenues increased 12.5% to $5.2 billion compared to Q2 2020.
• Retail electric sales showed year-over-year growth due to economic recovery.
• Successful completion of hot functional testing for Plant Vogtle Unit 3.

Negative

• Net income decreased by 39.2% from Q2 2020.
• A $343 million after-tax charge impacted earnings due to Plant Vogtle's construction.

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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