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Southern Company reports second-quarter 2022 earnings

Southern Company reports second-quarter 2022 earnings

Southern Company reports second-quarter 2022 earnings

PR Newswire

ATLANTA, July 28, 2022

ATLANTA , July 28, 2022 /PRNewswire/ -- Southern Company today reported second-quarter earnings of $1.1 billion, or $1.04 per share, in 2022 compared with $372 million, or 35 cents per share, in 2021. For the six months ended June 30, 2022, Southern Company reported earnings of $2.1 billion, or $2.01 per share, compared with $1.5 billion, or $1.42 per share, for the same period in 2021.

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

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $1.1 billion, or $1.07 per share, during the second quarter of 2022, compared with $891 million, or 84 cents per share, during the second quarter of 2021.  For the six months ended June 30, 2022, excluding these items, Southern Company earned $2.2 billion, or $2.05 per share, compared with $1.9 billion, or $1.82 per share, for the same period in 2021.

Non-GAAP Financial Measures


Three Months Ended June


Year-to-Date June

Net Income - Excluding Items (in millions)


2022

2021


2022

2021

Net Income - As Reported


$1,107

$372


$2,139

$1,508

Less:







   Estimated Loss on Plants Under Construction


(54)

(462)


(55)

(507)

  Tax Impact


13

118


13

130

   Acquisition and Disposition Impacts


5

1


5

1

  Tax Impact


(1)

-


(1)

-

   Wholesale Gas Services


-

(147)


-

19

       Tax Impact


-

35


-

(5)

   Asset Impairments


-

(89)


-

(89)

       Tax Impact


-

25


-

25

Net Income – Excluding Items


$1,144

$891


$2,177

$1,934

       Average Shares Outstanding – (in millions)                     


1,065

1,061


1,064

1,060

Basic Earnings Per Share – Excluding Items


$1.07

$0.84


$2.05

$1.82

 

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 second quarter 2022, as compared with the same period in 2021, were higher revenues associated with increased usage, changes in rates and pricing, and warmer than normal weather at our regulated electric utilities, partially offset by higher non-fuel operations and maintenance costs, reflecting a rising cost environment and our long-term commitments to reliability and resilience.

Second-quarter 2022 operating revenues were $7.2 billion, compared with $5.2 billion for the second quarter of 2021, an increase of 38.6 percent. For the six months ended June 30, 2022, operating revenues were $13.9 billion, compared with $11.1 billion for the corresponding period in 2021, an increase of 24.7 percent.  These increases were primarily due to higher fuel costs and warmer weather in the second quarter 2022.

"Southern Company's generation fleet and power delivery system performed exceedingly well during the second quarter, which included the second hottest June in 50 years" said Chairman, President and CEO, Thomas A. Fanning. "I am proud of our team's continued outstanding performance during times when our customers need us most."

Southern Company's second-quarter earnings slides with supplemental financial information are available at http://investor.southerncompany.com.

Southern Company's financial analyst call will begin at 1 p.m. Eastern Time today, during which Fanning and Chief Financial Officer 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 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.

 

Page 3


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)

2022


2021


2022


2021

  Traditional Electric Operating Companies

$          1,036


$              511


$          1,811


$          1,267

  Southern Power

98


36


170


133

Southern Company Gas

115


(65)


433


333

  Total

1,249


482


2,414


1,733

  Parent Company and Other

(142)


(110)


(275)


(225)

  Net Income–As Reported

$          1,107


$              372


$          2,139


$          1,508









  Basic Earnings Per Share1

$             1.04


$             0.35


$             2.01


$             1.42

  Average Shares Outstanding (in millions)

1,065


1,061


1,064


1,060

  End of Period Shares Outstanding (in millions)





1,063


1,059









Non-GAAP Financial Measures

Three Months Ended June


Year-To-Date June

Net Income–Excluding Items (See Notes)

2022


2021


2022


2021

  Net Income–As Reported

$          1,107


$              372


$          2,139


$          1,508

Less:








Estimated Loss on Plants Under Construction2

(54)


(462)


(55)


(507)

Tax Impact

13


118


13


130

Acquisition and Disposition Impacts

5


1


5


1

Tax Impact

(1)



(1)


Wholesale Gas Services3


(147)



19

Tax Impact


35



(5)

Asset Impairments4


(89)



(89)

Tax Impact


25



25

  Net Income–Excluding Items

$          1,144


$              891


$          2,177


$          1,934









  Basic Earnings Per Share–Excluding Items

$             1.07


$             0.84


$             2.05


$             1.82

- See Notes on the following page.

 

Page 4

Southern Company

Financial Highlights

(1)

Dilution is not material in any period presented. Diluted earnings per share was $1.03 and $2.00 for the three and six months ended June 30, 2022 and was $0.35 and $1.41 for the three and six months ended June 30, 2021, respectively.

(2)

Earnings for the three and six months ended June 30, 2022 include a charge of $52 million pre tax ($39 million after tax), earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), and earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 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, 2022 and 2021 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 $10 million to $20 million annually through 2025.

(3)

Earnings for the three and six months ended June 30, 2021 include results of the Wholesale Gas Services business, which was sold on July 1, 2021. Presenting earnings and earnings per share excluding Wholesale Gas Services provided an additional measure of operating performance that excluded the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.

(4)

Earnings for the three and six months ended June 30, 2021 include 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. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

 

Page 5


Southern Company

Significant Factors Impacting EPS














Three Months Ended June


Year-To-Date June


2022


2021


Change


2022


2021


Change

Earnings Per Share–












As Reported1 (See Notes)

$   1.04


$   0.35


$    0.69


$   2.01


$   1.42


$    0.59













  Significant Factors:












  Traditional Electric Operating Companies





$    0.49






$    0.51

Southern Power





0.06






0.04

Southern Company Gas





0.17






0.09

Parent Company and Other





(0.03)






(0.04)

Increase in Shares










(0.01)

  Total–As Reported





$    0.69






$    0.59














Three Months Ended June


Year-To-Date June

Non-GAAP Financial Measures

2022


2021


Change


2022


2021


Change

Earnings Per Share–












Excluding Items (See Notes)

$   1.07


$   0.84


$    0.23


$   2.05


$   1.82


$    0.23













  Total–As Reported





$    0.69






$    0.59

Less:












Estimated Loss on Plants Under Construction2





0.28






0.31

Acquisition and Disposition Impacts





0.01






Wholesale Gas Services3





0.11






(0.01)

Asset Impairments4





0.06






0.06

  Total–Excluding Items





$    0.23






$    0.23

- See Notes on the following page.

 

Page 6

Southern Company

Significant Factors Impacting EPS

(1)

Dilution is not material in any period presented. Diluted earnings per share was $1.03 and $2.00 for the three and six months ended June 30, 2022 and was $0.35 and $1.41 for the three and six months ended June 30, 2021, respectively.

(2)

Earnings for the three and six months ended June 30, 2022 include a charge of $52 million pre tax ($39 million after tax), earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), and earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 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, 2022 and 2021 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 $10 million to $20 million annually through 2025.

(3)

Earnings for the three and six months ended June 30, 2021 include results of the Wholesale Gas Services business, which was sold on July 1, 2021. Presenting earnings and earnings per share excluding Wholesale Gas Services provided an additional measure of operating performance that excluded the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.

(4)

Earnings for the three and six months ended June 30, 2021 include 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. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

 

Page 7


Southern Company

EPS Earnings Analysis








Description

Three Months Ended
June 2022 vs. 2021


Year-To-Date June
2022 vs. 2021





Retail Sales






Retail Revenue Impacts

16


21





Weather

10


11





Wholesale & Other Operating Revenues

1


1





Non-Fuel O&M(*)

(5)


(14)





Depreciation and Amortization, Interest Expense, Other

(3)


(2)





Income Taxes

(4)


(4)





Total Traditional Electric Operating Companies

21¢


20¢





Southern Power

6


4





Southern Company Gas


5





Parent and Other

(4)


(5)





Increase in Shares


(1)





Total Change in EPS (Excluding Items)

23¢


23¢





Estimated Loss on Plants Under Construction1

28


31





Acquisition and Disposition Impacts

1






Wholesale Gas Services2

11


(1)





Asset Impairments3

6


6





Total Change in EPS (As Reported)

69¢


59¢

(*) Includes non-service cost-related benefits income




- See additional Notes on the following page.




 

Page 8

Southern Company

EPS Earnings Analysis

(1)

Earnings for the three and six months ended June 30, 2022 include a charge of $52 million pre tax ($39 million after tax), earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), and earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 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, 2022 and 2021 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 $10 million to $20 million annually through 2025.

(2)

Earnings for the three and six months ended June 30, 2021 include results of the Wholesale Gas Services business, which was sold on July 1, 2021. Presenting earnings and earnings per share excluding Wholesale Gas Services provided an additional measure of operating performance that excluded the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.

(3)

Earnings for the three and six months ended June 30, 2021 include 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. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

 

Page 9


Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)














Three Months Ended June


Year-To-Date June


2022


2021


Change


2022


2021


Change

Retail Electric Revenues-












Fuel

$  1,608


$      875


$      733


$  2,622


$  1,712


$      910

Non-Fuel

3,181


2,724


457


5,780


5,229


551

Wholesale Electric Revenues

937


546


391


1,601


1,091


510

Other Electric Revenues

192


175


17


370


346


24

Natural Gas Revenues

1,083


677


406


3,140


2,371


769

Other Revenues

205


201


4


341


359


(18)

Total Operating Revenues

7,206


5,198


2,008


13,854


11,108


2,746

Fuel and Purchased Power

2,123


1,065


1,058


3,466


2,120


1,346

Cost of Natural Gas

452


231


221


1,546


814


732

Cost of Other Sales

114


103


11


183


185


(2)

Non-Fuel O&M

1,558


1,438


120


3,075


2,810


265

Depreciation and Amortization

913


891


22


1,805


1,762


43

Taxes Other Than Income Taxes

349


313


36


721


657


64

Estimated Loss on Plant Vogtle Units 3 and 4

52


460


(408)


52


508


(456)

Gain on Dispositions, net

(10)


(11)


1


(33)


(54)


21

Total Operating Expenses

5,551


4,490


1,061


10,815


8,802


2,013

Operating Income

1,655


708


947


3,039


2,306


733

Allowance for Equity Funds Used During Construction

53


45


8


104


90


14

Earnings (Loss) from Equity Method Investments

34


(40)


74


80


5


75

Interest Expense, Net of Amounts Capitalized

488


450


38


950


901


49

Other Income (Expense), net

139


101


38


283


160


123

Income Taxes (Benefit)

304


(12)


316


477


178


299

Net Income

1,089


376


713


2,079


1,482


597

Dividends on Preferred Stock of Subsidiaries

4


4



7


7


Net Loss Attributable to Noncontrolling Interests

(22)



(22)


(67)


(33)


(34)

NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY

$  1,107


$      372


$      735


$  2,139


$  1,508


$      631

 

- Certain prior year data may have been reclassified to conform with current year presentation.

 

Page 10



















Southern Company

Kilowatt-Hour Sales and Customers

(In Millions of KWHs)


















Three Months Ended June


Year-To-Date June


2022


2021


Change


Weather
Adjusted
Change


2022


2021


Change


Weather
Adjusted
Change

Kilowatt-Hour Sales-















Total Sales

51,541


46,020


12.0 %




100,269


92,442


8.5 %



















Total Retail Sales-

37,072


34,655


7.0 %


2.3 %


72,228


69,306


4.2 %


1.5 %

Residential

12,062


10,838


11.3 %


1.0 %


24,166


22,878


5.6 %


(0.1) %

Commercial

12,246


11,500


6.5 %


2.2 %


23,233


22,243


4.5 %


2.1 %

Industrial

12,615


12,162


3.7 %


3.7 %


24,527


23,870


2.8 %


2.8 %

Other

149


155


(4.2) %


(4.4) %


302


315


(4.4) %


(4.4) %

















Total Wholesale Sales

14,469


11,365


27.3 %


N/A


28,041


23,136


21.2 %


N/A

































(In Thousands of Customers)






















Period Ended June












2022


2021


Change



Regulated Utility Customers-













Total Utility Customers-








8,724


8,659


0.8 %



Total Traditional Electric






4,410


4,359


1.2 %



Southern Company Gas








4,314


4,300


0.3 %



 

Page 11








Southern Company

Financial Overview

As Reported

(In Millions of Dollars)














Three Months Ended June


Year-To-Date June


2022


2021


% Change


2022


2021


% Change

Southern Company –












Operating Revenues

$  7,206


$  5,198


38.6 %


$ 13,854


$ 11,108


24.7 %

Earnings Before Income Taxes

1,393


364


N/M


2,556


1,660


54.0 %

Net Income Available to Common

1,107


372


N/M


2,139


1,508


41.8 %













Alabama Power –












Operating Revenues

$  1,931


$  1,556


24.1 %


$  3,580


$  3,115


14.9 %

Earnings Before Income Taxes

508


439


15.7 %


964


910


5.9 %

Net Income Available to Common

383


331


15.7 %


730


690


5.8 %













Georgia Power –












Operating Revenues

$  3,121


$  2,225


40.3 %


$  5,328


$  4,195


27.0 %

Earnings Before Income Taxes

772


93


N/M


1,187


462


N/M

Net Income Available to Common

608


143


N/M


993


494


N/M













Mississippi Power –












Operating Revenues

$      434


$      303


43.2 %


$      769


$      610


26.1 %

Earnings Before Income Taxes

57


46


23.9 %


107


95


12.6 %

Net Income Available to Common

45


38


18.4 %


87


83


4.8 %













Southern Power –












Operating Revenues

$      899


$      490


83.5 %


$  1,438


$      930


54.6 %

Earnings Before Income Taxes

101


34


N/M


116


89


30.3 %

Net Income Available to Common

98


36


N/M


170


133


27.8 %













Southern Company Gas –












Operating Revenues

$  1,083


$      677


60.0 %


$  3,140


$  2,371


32.4 %

Earnings (Loss) Before Income Taxes

151


(94)


N/M


567


425


33.4 %

Net Income (Loss) Available to Common

115


(65)


N/M


433


333


30.0 %

N/M - Not Meaningful












 

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

 

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SOURCE Southern Company