Southern Company reports third-quarter 2021 earnings

Published: Oct. 18, 2021 at 10:45 AM AKDT|Updated: Nov. 4, 2021 at 2:15 AM AKDT

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.

Southern Company (PRNewsFoto/Southern Company) (PRNewsfoto/Southern Company)
Southern Company (PRNewsFoto/Southern Company) (PRNewsfoto/Southern Company)

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


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


24¢





Southern Power


2





Southern Company Gas


2





Increase in Shares


(1)





Total Change in EPS (Excluding Items)


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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