Southern Company reports third-quarter 2023 earnings

Rhea-AI Summary

Southern Company reports third-quarter earnings of $1.4 billion, or $1.30 per share, in 2023 compared with $1.5 billion, or $1.36 per share, in 2022. For the nine months ended September 30, 2023, earnings were $3.1 billion, or $2.86 per share, compared with $3.6 billion, or $3.38 per share, in 2022.

ATLANTA, Nov. 2, 2023 /PRNewswire/ -- Southern Company today reported third-quarter earnings of $1.4 billion, or $1.30 per share, in 2023 compared with earnings of $1.5 billion, or $1.36 per share, in the third quarter of 2022.  For the nine months ended September 30, 2023, Southern Company reported earnings of $3.1 billion, or $2.86 per share, compared with $3.6 billion, or $3.38 per share, for the same period in 2022.

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $1.5 billion, or $1.42 per share, during the third quarter of 2023, compared with $1.4 billion, or $1.31 per share, during the third quarter of 2022.  For the nine months ended September 30, 2023, excluding these items, Southern Company earned $3.3 billion, or $3.01 per share, compared with $3.6 billion, or $3.35 per share, for the same period in 2022.

Non-GAAP Financial Measures		Three Months Ended September			Year-to-Date September
Net Income - Excluding Items (in millions)		2023	2022		2023	2022
Net Income - As Reported		$1,422	$1,472		$3,121	$3,611
Less:
Estimated Loss on Plants Under Construction		(166)	62		(171)	7
Tax Impact		42	(16)		43	(2)
Acquisition and Disposition Impacts		(2)	14		(2)	19
Tax Impact		1	-		1	(2)
Loss on Extinguishment of Debt		-	-		(5)	-
Tax Impact		-	-		1	-
Estimated Loss on Qualifying Infrastructure Plant		-	-		(38)	-
Tax Impact		-	-		10	-
Net Income – Excluding Items		$1,547	$1,412		$3,282	$3,589
Average Shares Outstanding – (in millions)		1,092	1,082		1,092	1,070
Basic Earnings Per Share – Excluding Items		$1.42	$1.31		$3.01	$3.35

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 third quarter 2023, as compared with the same period in 2022, were warmer than normal weather at the company's regulated electric utilities, changes in rates and pricing, and lower income taxes and non-fuel operations and maintenance costs, partially offset by increased depreciation and amortization.

Third-quarter 2023 operating revenues were $7.0 billion, compared with $8.4 billion for the third quarter of 2022, a decrease of 16.7 percent.  For the nine months ended September 30, 2023, operating revenues were $19.2 billion, compared with $22.2 billion for the corresponding period in 2022, a decrease of 13.6 percent.  These decreases were primarily due to lower fuel costs in 2023.

"Our premier state-regulated electric and gas utilities continued to perform well during the third quarter, and Southern Power made strategic additions to its portfolio of renewable generation assets," said President and CEO Christopher C. Womack.

"It is also significant to note that the accelerated economic development we have seen in the Southeast over the last couple of years has contributed to a projected growth in electricity usage that is significantly larger than historic levels," added Womack. "For example, Georgia Power has filed an updated Integrated Resource Plan with the Georgia Public Service Commission, proposing additional investment in our region's energy future to provide energy solutions that are expected to benefit Georgia customers and communities for generations to come."

Southern Company's third-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 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.

Cautionary Note Regarding Forward-Looking Statements:
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, projected growth in electricity usage and expected benefits of Georgia Power's updated Integrated Resource Plan. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company's Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, including tax, environmental and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; the extent and timing of costs and legal requirements related to coal combustion residuals; current and future litigation or regulatory investigations, proceedings, or inquiries; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate, including from the development and deployment of alternative energy sources; variations in demand for electricity and natural gas; available sources and costs of natural gas and other fuels and commodities; the ability to complete necessary or desirable pipeline expansion or infrastructure projects, limits on pipeline capacity, public and policymaker support for such projects, and operational interruptions to natural gas distribution and transmission activities; transmission constraints; the ability to control costs and avoid cost and schedule overruns during the development, construction, and operation of facilities or other projects; legal proceedings and regulatory approvals and actions related to past and ongoing construction projects; the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of U.S. Nuclear Regulatory Commission requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; advances in technology, including the pace and extent of development of low- to no-carbon energy and battery energy storage technologies and negative carbon concepts; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to return on equity, equity ratios, additional generating capacity, and fuel and other cost recovery mechanisms; the ability to successfully operate the electric utilities' generation, transmission, and distribution facilities and the successful performance of necessary corporate functions; the inherent risks involved in operating and constructing nuclear generating facilities; the inherent risks involved in transporting and storing natural gas; the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required; the ability to obtain new short- and long-term contracts with wholesale customers; the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or physical attack and the threat of cyber and physical attacks; global and U.S. economic conditions, including impacts from recession, inflation, interest rate fluctuations and financial market conditions, and the results of financing efforts; access to capital markets and other financing sources; catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events, political unrest, wars or other similar occurrences; the potential effects of COVID-19; and the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources. Southern Company expressly disclaims any obligation to update any forward-looking information.

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)	2023		2022		2023		2022
Traditional Electric Operating Companies	$        1,419		$        1,445		$        2,852		$        3,256
Southern Power	100		95		288		265
Southern Company Gas	82		83		475		516
Total	1,601		1,623		3,615		4,037
Parent Company and Other	(179)		(151)		(494)		(426)
Net Income–As Reported	$        1,422		$        1,472		$        3,121		$        3,611
Basic Earnings Per Share1	$           1.30		$           1.36		$           2.86		$           3.38
Average Shares Outstanding (in millions)	1,092		1,082		1,092		1,070
End of Period Shares Outstanding (in millions)					1,091		1,089
Non-GAAP Financial Measures	Three Months Ended September				Year-To-Date September
Net Income–Excluding Items (See Notes)	2023		2022		2023		2022
Net Income–As Reported	$        1,422		$        1,472		$        3,121		$        3,611
Less:
Estimated Loss on Plants Under Construction2	(166)		62		(171)		7
Tax Impact	42		(16)		43		(2)
Acquisition and Disposition Impacts3	(2)		14		(2)		19
Tax Impact	1		—		1		(2)
Loss on Extinguishment of Debt4	—		—		(5)		—
Tax Impact	—		—		1		—
Estimated Loss on Qualifying Infrastructure Plant5	—		—		(38)		—
Tax Impact	—		—		10		—
Net Income–Excluding Items	$        1,547		$        1,412		$        3,282		$        3,589
Basic Earnings Per Share–Excluding Items	$           1.42		$           1.31		$           3.01		$           3.35
- 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 $1.29 and $2.84 for the three and nine months ended September 30, 2023, respectively, and was $1.35 and $3.36 for the three and nine months ended September 30, 2022, respectively.
2. Earnings for the three and nine months ended September 30, 2023 include a charge of $160 million pre tax ($120 million after tax), and earnings for the three and nine months ended September 30, 2022 include a net credit of $70 million pre tax ($52 million after tax) and $18 million pre tax ($13 million after tax), respectively, 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, 2023 and 2022 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, net of salvage, totaling approximately $15 million annually through 2025. 
3. Earnings for the three and nine months ended September 30, 2022 include a $14 million pre-tax ($11 million after-tax) gain as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power. Further impacts may result from future acquisition and disposition activities; however, the amount and timing of any such impacts are uncertain.
4. Earnings for the nine months ended September 30, 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.
5. Earnings for the nine months ended September 30, 2023 include a charge of $38 million pre tax ($28 million after tax) for an estimated loss at Southern Company Gas associated with an Illinois Commerce Commission disallowance related to its review of the Qualifying Infrastructure Plant (QIP) capital investments by Nicor Gas for calendar year 2019 under the QIP Rider, or Investing in Illinois, program. Further charges may occur; 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
	2023		2022		Change		2023		2022		Change
Earnings Per Share–
As Reported1 (See Notes)	$ 1.30		$ 1.36		$  (0.06)		$ 2.86		$ 3.38		$  (0.52)
Significant Factors:
Traditional Electric Operating Companies					$  (0.02)						$  (0.38)
Southern Power					—						0.02
Southern Company Gas					—						(0.04)
Parent Company and Other					(0.03)						(0.06)
Increase in Shares					(0.01)						(0.06)
Total–As Reported					$  (0.06)						$  (0.52)
	Three Months Ended September						Year-To-Date September
Non-GAAP Financial Measures	2023		2022		Change		2023		2022		Change
Earnings Per Share–
Excluding Items (See Notes)	$ 1.42		$ 1.31		$    0.11		$ 3.01		$ 3.35		$  (0.34)
Total–As Reported					$  (0.06)						$  (0.52)
Less:
Estimated Loss on Plants Under Construction2					(0.16)						(0.13)
Acquisition and Disposition Impacts3					(0.01)						(0.02)
Loss on Extinguishment of Debt4					—						—
Estimated Loss on Qualifying Infrastructure Plant5					—						(0.03)
Total–Excluding Items					$    0.11						$  (0.34)
- 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 $1.29 and $2.84 for the three and nine months ended September 30, 2023, respectively, and was $1.35 and $3.36 for the three and nine months ended September 30, 2022, respectively.
2. Earnings for the three and nine months ended September 30, 2023 include a charge of $160 million pre tax ($120 million after tax), and earnings for the three and nine months ended September 30, 2022 include a net credit of $70 million pre tax ($52 million after tax) and $18 million pre tax ($13 million after tax), respectively, 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, 2023 and 2022 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, net of salvage, totaling approximately $15 million annually through 2025. 
3. Earnings for the three and nine months ended September 30, 2022 include a $14 million pre-tax ($11 million after-tax) gain as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power.  Further impacts may result from future acquisition and disposition activities; however, the amount and timing of any such impacts are uncertain.
4. Earnings for the nine months ended September 30, 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.
5. Earnings for the nine months ended September 30, 2023 include a charge of $38 million pre tax ($28 million after tax) for an estimated loss at Southern Company Gas associated with an Illinois Commerce Commission disallowance related to its review of the Qualifying Infrastructure Plant (QIP) capital investments by Nicor Gas for calendar year 2019 under the QIP Rider, or Investing in Illinois, program. Further charges may occur; however, the amount and timing of any such charges are uncertain.

 

Southern Company
EPS Earnings Analysis
Description	Three Months Ended September         2023 vs. 2022		Year-To-Date September 2023 vs. 2022
Retail Sales	(2)¢		(3)¢
Retail Revenue Impacts	5		4
Weather	9		(14)
Wholesale & Other Operating Revenues	3		9
Non-Fuel O&M(*)	7		15
Depreciation and Amortization	(15)		(44)
Interest Expense and Other	(1)		(7)
Income Taxes	7		15
Total Traditional Electric Operating Companies	13¢		(25)¢
Southern Power	—		2
Southern Company Gas	—		—
Parent Company and Other	(1)		(5)
Increase in Shares	(1)		(6)
Total Change in EPS (Excluding Items)	11¢		(34)¢
Estimated Loss on Plants Under Construction1	(16)		(13)
Acquisition and Disposition Impacts2	(1)		(2)
Loss on Extinguishment of Debt3	—		—
Estimated Loss on Qualifying Infrastructure Plant4	—		(3)
Total Change in EPS (As Reported)	(6)¢		(52)¢
(*) Includes non-service cost-related benefits income.
- See additional Notes on the following page.

Southern Company
EPS Earnings Analysis

Notes

1. Earnings for the three and nine months ended September 30, 2023 include a charge of $160 million pre tax ($120 million after tax), and earnings for the three and nine months ended September 30, 2022 include a net credit of $70 million pre tax ($52 million after tax) and $18 million pre tax ($13 million after tax), respectively, 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, 2023 and 2022 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, net of salvage, totaling approximately $15 million annually through 2025. 
2. Earnings for the three and nine months ended September 30, 2022 include a $14 million pre-tax ($11 million after-tax) gain as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power.  Further impacts may result from future acquisition and disposition activities; however, the amount and timing of any such impacts are uncertain.
3. Earnings for the nine months ended September 30, 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.
4. Earnings for the nine months ended September 30, 2023 include a charge of $38 million pre tax ($28 million after tax) for an estimated loss at Southern Company Gas associated with an Illinois Commerce Commission disallowance related to its review of the Qualifying Infrastructure Plant (QIP) capital investments by Nicor Gas for calendar year 2019 under the QIP Rider, or Investing in Illinois, program. Further charges may occur; 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
	2023		2022		Change		2023		2022		Change
Retail Electric Revenues-
Fuel	$  1,356		$  2,320		$    (964)		$  3,412		$  4,942		$  (1,530)
Non-Fuel	3,783		3,641		142		9,185		9,421		(236)
Wholesale Electric Revenues	727		1,197		(470)		1,930		2,798		(868)
Other Electric Revenues	203		185		18		602		554		48
Natural Gas Revenues	689		857		(168)		3,417		3,998		(581)
Other Revenues	222		178		44		662		519		143
Total Operating Revenues	6,980		8,378		(1,398)		19,208		22,232		(3,024)
Fuel and Purchased Power	1,574		3,068		(1,494)		4,056		6,534		(2,478)
Cost of Natural Gas	102		294		(192)		1,199		1,840		(641)
Cost of Other Sales	126		92		34		381		275		106
Non-Fuel O&M	1,424		1,527		(103)		4,352		4,568		(216)
Depreciation and Amortization	1,143		922		221		3,365		2,728		637
Taxes Other Than Income Taxes	341		352		(11)		1,076		1,073		3
Estimated Loss on Plant Vogtle Units 3 and 4	160		(70)		230		160		(18)		178
Total Operating Expenses	4,870		6,185		(1,315)		14,589		17,000		(2,411)
Operating Income	2,110		2,193		(83)		4,619		5,232		(613)
Allowance for Equity Funds Used During Construction	66		59		7		200		163		37
Earnings from Equity Method Investments	32		28		4		110		109		1
Interest Expense, Net of Amounts Capitalized	620		511		109		1,812		1,461		351
Other Income (Expense), net	141		132		9		428		414		14
Income Taxes	297		414		(117)		492		891		(399)
Net Income	1,432		1,487		(55)		3,053		3,566		(513)
Dividends on Preferred Stock of Subsidiaries	—		3		(3)		—		10		(10)
Net Income (Loss) Attributable to Noncontrolling Interests	10		12		(2)		(68)		(55)		(13)
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY	$  1,422		$  1,472		$       (50)		$  3,121		$  3,611		$    (490)

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
	2023		2022		Change		Weather Adjusted Change		2023		2022		Change		Weather Adjusted Change
Kilowatt-Hour Sales-
Total Sales	55,428		56,606		(2.1) %				150,157		156,874		(4.3) %
Total Retail Sales-	42,364		41,490		2.1 %		(0.9) %		110,715		113,716		(2.6) %		(0.4) %
Residential	15,133		14,467		4.6 %		(1.8) %		36,458		38,632		(5.6) %		(0.4) %
Commercial	14,341		13,827		3.7 %		1.3 %		37,050		37,060		— %		1.3 %
Industrial	12,751		13,048		(2.3) %		(2.3) %		36,791		37,575		(2.1) %		(2.1) %
Other	139		148		(6.1) %		(6.5) %		416		449		(7.5) %		(7.1) %
Total Wholesale Sales	13,064		15,116		(13.6) %		N/A		39,442		43,158		(8.6) %		N/A
(In Thousands of Customers)
									Period Ended September
									2023		2022		Change
Regulated Utility Customers-
Total Utility Customers-									8,792		8,722		0.8 %
Total Traditional Electric									4,476		4,422		1.2 %
Southern Company Gas									4,316		4,300		0.4 %

 

Southern Company
Financial Overview
As Reported
(In Millions of Dollars)
	Three Months Ended September						Year-To-Date September
	2023		2022		% Change		2023		2022		% Change
Southern Company –
Operating Revenues	$  6,980		$  8,378		(16.7) %		$ 19,208		$ 22,232		(13.6) %
Earnings Before Income Taxes	1,729		1,901		(9.0) %		3,545		4,457		(20.5) %
Net Income Available to Common	1,422		1,472		(3.4) %		3,121		3,611		(13.6) %
Alabama Power –
Operating Revenues	$  2,083		$  2,444		(14.8) %		$  5,420		$  6,023		(10.0) %
Earnings Before Income Taxes	644		694		(7.2) %		1,235		1,660		(25.6) %
Net Income Available to Common	565		525		7.6 %		1,132		1,256		(9.9) %
Georgia Power –
Operating Revenues	$  3,237		$  3,889		(16.8) %		$  7,805		$  9,218		(15.3) %
Earnings Before Income Taxes	980		1,084		(9.6) %		1,892		2,272		(16.7) %
Net Income Available to Common	780		858		(9.1) %		1,547		1,851		(16.4) %
Mississippi Power –
Operating Revenues	$      436		$      510		(14.5) %		$  1,137		$  1,279		(11.1) %
Earnings Before Income Taxes	93		79		17.7 %		208		188		10.6 %
Net Income Available to Common	75		62		21.0 %		173		150		15.3 %
Southern Power –
Operating Revenues	$      653		$  1,180		(44.7) %		$  1,686		$  2,618		(35.6) %
Earnings Before Income Taxes	149		143		4.2 %		258		259		(0.4) %
Net Income Available to Common	100		95		5.3 %		288		265		8.7 %
Southern Company Gas –
Operating Revenues	$      689		$      857		(19.6) %		$  3,417		$  3,998		(14.5) %
Earnings Before Income Taxes	110		110		— %		635		677		(6.2) %
Net Income Available to Common	82		83		(1.2) %		475		516		(7.9) %

Notes

- See Financial Highlights pages for discussion of certain significant items occurring during the periods.

 

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SOURCE Southern Company