Southern Company reports third-quarter 2021 earnings

Rhea-AI Summary

Southern Company reported third-quarter 2021 earnings of $1.1 billion, or $1.04 per share, down from $1.3 billion or $1.18 per share in the same period of 2020. Year-to-date earnings were $2.6 billion, or $2.46 per share, compared to $2.7 billion, or $2.58 per share in 2020. However, excluding certain items, third-quarter earnings improved slightly to $1.30 billion, or $1.23 per share. Operating revenues increased to $6.2 billion in Q3 2021, up 11% year-over-year, driven by higher customer usage and growth, though impacted by $197 million charge related to construction.

Positive

• Q3 2021 operating revenues increased to $6.2 billion, up 11% year-over-year.
• Year-to-date earnings excluding items rose to $3.2 billion, or $3.05 per share, compared to $2.9 billion, or $2.78 per share in 2020.
• Strong customer growth observed in the Southeastern footprint.

Negative

• Q3 2021 earnings decreased to $1.1 billion compared to $1.3 billion in Q3 2020.
• A significant $197 million after-tax charge affected third-quarter earnings linked to the construction of Plant Vogtle units 3 and 4.

ATLANTA, Nov. 4, 2021 /PRNewswire/ -- Southern Company today reported third-quarter 2021 earnings of $1.1 billion, or $1.04 per share, compared with $1.3 billion, or $1.18 per share, in the third quarter of 2020.  For the nine months ended September 30, 2021, Southern Company reported earnings of $2.6 billion, or $2.46 per share, compared with earnings of $2.7 billion, or $2.58 per share, for the same period in 2020.

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $1.30 billion, or $1.23 per share, during the third quarter of 2021, compared with $1.29 billion, or $1.22 per share, during the third quarter of 2020.  For the nine months ended September 30, 2021, excluding these items, Southern Company earned $3.2 billion, or $3.05 per share, compared with $2.9 billion, or $2.78 per share, for the same period in 2020.

Non-GAAP Financial Measures		Three Months Ended September			Year-to-Date September
Net Income - Excluding Items (in millions)		2021	2020		2021	2020
Net Income - As Reported		$1,101	$1,251		$2,608	$2,732
Less:
Estimated Loss on Plants Under Construction		(271)	3		(779)	(151)
Tax Impact		69	(1)		198	39
Acquisition and Disposition Impacts		119	-		120	38
Tax Impact		(112)	-		(112)	(16)
Wholesale Gas Services		-	(62)		18	(61)
Tax Impact		1	17		(3)	16
Asset Impairments		(2)	-		(91)	(154)
Tax Impact		(7)	-		19	80
Net Income – Excluding Items		$1,304	$1,294		$3,238	$2,941
Average Shares Outstanding – (in millions)		1,061	1,058		1,060	1,058
Basic Earnings Per Share – Excluding Items		$1.23	$1.22		$3.05	$2.78

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 third 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 ongoing economic recovery resulted in a continuing return to more normal business operations. Earnings for the third quarter of 2021 were also significantly impacted by a $197 million after-tax charge related to Georgia Power's construction of Plant Vogtle units 3 and 4.

"The Southern Company system once again experienced outstanding operational performance in the third quarter of 2021," said Chairman, President and CEO Thomas A. Fanning. "As the economies in our service territories continued to recover from the COVID-19 pandemic, we saw higher retail kilowatt-hour sales at our state-regulated electric utilities, and we continued to experience strong customer growth in our Southeastern footprint."

Third-quarter 2021 operating revenues were $6.2 billion, compared with $5.6 billion for the third quarter of 2020, an increase of 11.0 percent. For the nine months ended September 30, 2021, operating revenues were $17.3 billion, compared with $15.3 billion for the corresponding period in 2020, an increase of 13.7 percent. These increases were primarily due to higher fuel costs and the negative impacts of the COVID-19 pandemic on energy sales in 2020.

Southern Company's third-quarter 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 Fanning and Chief Financial Officer Daniel S. Tucker 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 September								Year-To-Date September
Net Income–As Reported (See Notes)	2021				2020				2021				2020
Traditional Electric Operating Companies	$	1,085			$	1,284			$	2,352			$	2,571
Southern Power	78				74				211				212
Southern Company Gas	56				14				389				360
Total	1,219				1,372				2,952				3,143
Parent Company and Other	(118)				(121)				(344)				(411)
Net Income–As Reported	$	1,101			$	1,251			$	2,608			$	2,732
Basic Earnings Per Share1	$	1.04			$	1.18			$	2.46			$	2.58
Average Shares Outstanding (in millions)	1,061				1,058				1,060				1,058
End of Period Shares Outstanding (in millions)									1,060				1,056
Non-GAAP Financial Measures	Three Months Ended September								Year-To-Date September
Net Income–Excluding Items (See Notes)	2021				2020				2021				2020
Net Income–As Reported	$	1,101			$	1,251			$	2,608			$	2,732
Less:
Estimated Loss on Plants Under Construction2	(271)				3				(779)				(151)
Tax Impact	69				(1)				198				39
Acquisition and Disposition Impacts3	119				—				120				38
Tax Impact	(112)				—				(112)				(16)
Wholesale Gas Services4	—				(62)				18				(61)
Tax Impact	1				17				(3)				16
Asset Impairments5	(2)				—				(91)				(154)
Tax Impact	(7)				—				19				80
Net Income–Excluding Items	$	1,304			$	1,294			$	3,238			$	2,941
Basic Earnings Per Share–Excluding Items	$	1.23			$	1.22			$	3.05			$	2.78
-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 $1.03 and $2.44 for the three and nine months ended September 30, 2021 and was $1.18 and $2.57 for the three and nine months ended September 30, 2020, respectively.
(2)	Earnings for the three months ended September 30, 2021 include a charge of $264 million pre tax ($197 million after tax), earnings for the nine months ended September 30, 2021 include charges totaling $772 million pre tax ($576 million after tax), and earnings for the nine months ended September 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 nine months ended September 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 three and nine months ended September 30, 2021 primarily include a preliminary $121 million pre-tax ($93 million after-tax) gain on the sale of Sequent, as well as $85 million in additional tax expense due to the resulting changes in state apportionment rates.  Earnings for the nine months ended September 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 nine months ended September 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.  Amounts subsequent to the July 1, 2021 sale of Sequent represent final income adjustments.
(5)	Earnings for the three and nine months ended September 30, 2021 include pre-tax impairment charges of $2 million ($9 million after tax) and $84 million ($67 million after tax), respectively, related to Southern Company Gas' investment in the PennEast Pipeline project and for the nine months ended September 30, 2021 also include a pre-tax impairment charge of $7 million ($6 million after tax) related to a leveraged lease investment.  Earnings for the nine months ended September 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 September												Year-To-Date September
	2021				2020				Change				2021				2020				Change
Earnings Per Share–
As Reported1 (See Notes)	$	1.04			$	1.18			$	(0.14)			$	2.46			$	2.58			$	(0.12)
Significant Factors:
Traditional Electric Operating Companies									$	(0.18)											$	(0.20)
Southern Power									—												—
Southern Company Gas									0.04												0.03
Parent Company and Other									—												0.06
Increase in Shares									—												(0.01)
Total–As Reported									$	(0.14)											$	(0.12)
	Three Months Ended September												Year-To-Date September
Non-GAAP Financial Measures	2021				2020				Change				2021				2020				Change
Earnings Per Share–
Excluding Items (See Notes)	$	1.23			$	1.22			$	0.01			$	3.05			$	2.78			$	0.27
Total–As Reported									$	(0.14)											$	(0.12)
Less:
Estimated Loss on Plants Under Construction2									(0.19)												(0.44)
Acquisition and Disposition Impacts3									0.01												(0.01)
Wholesale Gas Services4									0.04												0.06
Asset Impairments5									(0.01)												—
Total–Excluding Items									$	0.01											$	0.27
- 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 $1.03 and $2.44 for the three and nine months ended September 30, 2021 and was $1.18 and $2.57 for the three and nine months ended September 30, 2020, respectively.
(2)	Earnings for the three months ended September 30, 2021 include a charge of $264 million pre tax ($197 million after tax), earnings for the nine months ended September 30, 2021 include charges totaling $772 million pre tax ($576 million after tax), and earnings for the nine months ended September 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 nine months ended September 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 three and nine months ended September 30, 2021 primarily include a preliminary $121 million pre-tax ($93 million after-tax) gain on the sale of Sequent, as well as $85 million in additional tax expense due to the resulting changes in state apportionment rates.  Earnings for the nine months ended September 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 nine months ended September 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.  Amounts subsequent to the  July 1, 2021 sale of Sequent represent final income adjustments.
(5)	Earnings for the three and nine months ended September 30, 2021 include pre-tax impairment charges of $2 million ($9 million after tax) and $84 million ($67 million after tax), respectively, related to Southern Company Gas' investment in the PennEast Pipeline project and for the nine months ended September 30, 2021 also include a pre-tax impairment charge of $7 million ($6 million after tax) related to a leveraged lease investment.  Earnings for the nine months ended September 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 September 2021 vs. 2020		Year-To-Date September    2021 vs. 2020
Retail Sales	6¢		11¢
Retail Revenue Impacts	6		15
Weather	(7)		1
Wholesale & Other Operating Revenues	2		11
Non-Fuel O&M	(9)		(21)
Depreciation and Amortization, Interest Expense, Other	5		9
Income Taxes	(2)		(2)
Total Traditional Electric Operating Companies	1¢		24¢
Southern Power	—		2
Southern Company Gas	—		2
Increase in Shares	—		(1)
Total Change in EPS (Excluding Items)	1¢		27¢
Estimated Loss on Plants Under Construction1	(19)		(44)
Acquisition and Disposition Impacts2	1		(1)
Wholesale Gas Services3	4		6
Asset Impairments4	(1)		—
Total Change in EPS (As Reported)	(14)¢		(12)¢
- See Notes on the following page.

 

Southern Company
EPS Earnings Analysis
Notes
(1)	Earnings for the three months ended September 30, 2021 include a charge of $264 million pre tax ($197 million after tax), earnings for the nine months ended September 30, 2021 include charges totaling $772 million pre tax ($576 million after tax), and earnings for the nine months ended September 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 nine months ended September 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 three and nine months ended September 30, 2021 primarily include a preliminary $121 million pre-tax ($93 million after-tax) gain on the sale of Sequent, as well as $85 million in additional tax expense due to the resulting changes in state apportionment rates.  Earnings for the nine months ended September 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 nine months ended September 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.  Amounts subsequent to the July 1, 2021 sale of Sequent represent final income adjustments.
(4)	Earnings for the three and nine months ended September 30, 2021 include pre-tax impairment charges of $2 million ($9 million after tax) and $84 million ($67 million after tax), respectively, related to Southern Company Gas' investment in the PennEast Pipeline project and for the nine months ended September 30, 2021 also include a pre-tax impairment charge of $7 million ($6 million after tax) related to a leveraged lease investment.  Earnings for the nine months ended September 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 September												Year-To-Date September
	2021				2020				Change				2021				2020				Change
Income Account-
Retail Electric Revenues-
Fuel	$	1,186			$	949			$	237			$	2,899			$	2,301			$	598
Non-Fuel	3,365				3,294				71				8,593				8,202				391
Wholesale Electric Revenues	731				584				147				1,822				1,473				349
Other Electric Revenues	179				164				15				525				484				41
Natural Gas Revenues	623				477				146				2,994				2,362				632
Other Revenues	154				152				2				513				436				77
Total Revenues	6,238				5,620				618				17,346				15,258				2,088
Fuel and Purchased Power	1,522				1,163				359				3,642				2,801				841
Cost of Natural Gas	129				71				58				943				654				289
Cost of Other Sales	71				72				(1)				255				201				54
Non-Fuel O&M	1,446				1,286				160				4,257				3,785				472
Depreciation and Amortization	896				889				7				2,658				2,619				39
Taxes Other Than Income Taxes	312				304				8				969				932				37
Estimated Loss on Plant Vogtle Units 3 and 4	264				—				264				772				149				623
(Gain) Loss on Dispositions, net	(125)				—				(125)				(179)				(39)				(140)
Total Operating Expenses	4,515				3,785				730				13,317				11,102				2,215
Operating Income	1,723				1,835				(112)				4,029				4,156				(127)
Allowance for Equity Funds Used During Construction	49				38				11				140				106				34
Earnings from Equity Method Investments	30				33				(3)				35				105				(70)
Interest Expense, Net of Amounts Capitalized	451				443				8				1,352				1,343				9
Impairment of Leveraged Leases	—				—				—				7				154				(147)
Other Income (Expense), net	131				113				18				297				319				(22)
Income Taxes	372				293				79				550				443				107
Net Income	1,110				1,283				(173)				2,592				2,746				(154)
Less:
Dividends on Preferred Stock of Subsidiaries	4				4				—				11				11				—
Net Income (Loss) Attributable to Noncontrolling Interests	5				28				(23)				(27)				3				(30)
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY	$	1,101			$	1,251			$	(150)			$	2,608			$	2,732			$	(124)

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 September												Year-To-Date September
	2021			2020			Change			Weather Adjusted Change			2021			2020			Change			Weather Adjusted Change
Kilowatt-Hour Sales-
Total Sales	54,134			53,099			1.9	%					146,576			140,910			4.0	%
Total Retail Sales-	40,441			40,218			0.6	%		3.0	%		109,747			106,724			2.8	%		2.4	%
Residential	14,063			14,740			(4.6)	%		0.5	%		36,941			36,485			1.2	%		(0.1)	%
Commercial	13,458			13,140			2.4	%		4.2	%		35,701			34,611			3.2	%		3.3	%
Industrial	12,762			12,177			4.8	%		4.8	%		36,632			35,129			4.3	%		4.3	%
Other	158			161			(2.3)	%		(2.1)	%		473			499			(5.2)	%		(5.3)	%
Total Wholesale Sales	13,693			12,881			6.3	%		N/A			36,829			34,186			7.7	%		N/A
(In Thousands of Customers)
													Period Ended September
													2021			2020			Change
Regulated Utility Customers-
Total Utility Customers-													8,656			8,580			0.9%
Total Traditional Electric													4,373			4,322			1.2%
Southern Company Gas													4,283			4,258			0.6%

 

Southern Company
Financial Overview
As Reported
(In Millions of Dollars)
	Three Months Ended September											Year-To-Date September
	2021				2020				% Change			2021				2020				% Change
Southern Company –
Operating Revenues	$	6,238			$	5,620			11.0	%		$	17,346			$	15,258			13.7	%
Earnings Before Income Taxes	1,482				1,576				(6.0)	%		3,142				3,189				(1.5)	%
Net Income Available to Common	1,101				1,251				(12.0)	%		2,608				2,732				(4.5)	%
Alabama Power –
Operating Revenues	$	1,904			$	1,729			10.1	%		$	5,019			$	4,445			12.9	%
Earnings Before Income Taxes	655				578				13.3	%		1,566				1,340				16.9	%
Net Income Available to Common	499				444				12.4	%		1,189				1,022				16.3	%
Georgia Power –
Operating Revenues	$	2,856			$	2,617			9.1	%		$	7,050			$	6,371			10.7	%
Earnings Before Income Taxes	649				945				(31.3)	%		1,111				1,609				(31.0)	%
Net Income Available to Common	536				773				(30.7)	%		1,030				1,411				(27.0)	%
Mississippi Power –
Operating Revenues	$	378			$	336			12.5	%		$	988			$	895			10.4	%
Earnings Before Income Taxes	60				79				(24.1)	%		155				158				(1.9)	%
Net Income Available to Common	50				67				(25.4)	%		133				138				(3.6)	%
Southern Power –
Operating Revenues	$	679			$	523			29.8	%		$	1,610			$	1,337			20.4	%
Earnings Before Income Taxes	92				116				(20.7)	%		181				242				(25.2)	%
Net Income Available to Common	78				74				5.4	%		211				212				(0.5)	%
Southern Company Gas –
Operating Revenues	$	623			$	477			30.6	%		$	2,994			$	2,362			26.8	%
Earnings Before Income Taxes	189				17				N/M			613				458				33.8	%
Net Income Available to Common	56				14				N/M			389				360				8.1	%

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

FAQ

What were Southern Company's earnings for Q3 2021?

Southern Company reported Q3 2021 earnings of $1.1 billion, or $1.04 per share.

How did Southern Company's revenues perform in Q3 2021?

Southern Company's operating revenues for Q3 2021 were $6.2 billion, an increase of 11% from Q3 2020.

What is the outlook for Southern Company earnings in 2021?

For the full year, Southern Company reported year-to-date earnings of $2.6 billion, or $2.46 per share.

What impact did Plant Vogtle have on Southern Company's earnings?

The construction of Plant Vogtle units 3 and 4 resulted in a significant $197 million after-tax charge affecting earnings.