PR Newswire | Jul 29, 2021 06:15AM EDT

07/29 05:15 CDT

Southern Company reports second-quarter 2021 earnings ATLANTA, July 29, 2021

ATLANTA, July 29, 2021 /PRNewswire/ -- Southern Company today reported second-quarter 2021 earnings of $372 million, or 35 cents per share, compared with $612 million, or 58 cents per share, in the second quarter of 2020. For the six months ended June 30, 2021, Southern Company reported earnings of $1.51 billion, or $1.42 per share, compared with earnings of $1.48 billion, or $1.40 per share, for the same period in 2020.

Excluding the items described under "Net Income - Excluding Items" in the table below, Southern Company earned $891 million, or 84 cents per share, during the second quarter of 2021, compared with $822 million, or 78 cents per share, during the second quarter of 2020. For the six months ended June 30, 2021, excluding these items, Southern Company earned $1.93 billion, or $1.82 per share, compared with $1.65 billion, or $1.56 per share, for the same period in 2020.

Non-GAAP Financial Measures Three Months Year-to-Date Ended June June

Net Income - Excluding Items (in millions) 2021 2020 2021 2020

Net Income - As Reported $372 $612 $1,508 $1,480

Less:

Estimated Loss on Plants Under Construction (462) (152) (507) (155)

Tax Impact 118 39 130 40

Acquisition and Disposition Impacts 1 - 1 38

Tax Impact - - - (16)

Wholesale Gas Services (147) (31) 19 -

Tax Impact 35 8 (5) -

Asset Impairments (89) (154) (89) (154)

Tax Impact 25 80 25 80

Net Income - Excluding Items $891 $822 $1,934 $1,647

Average Shares Outstanding - (in 1,061 1,058 1,060 1,057millions)

Basic Earnings Per Share - Excluding Items $0.84 $0.78 $1.82 $1.56

NOTE: For more information regarding these non-GAAP adjustments, see thefootnotes accompanying the Financial Highlights page of the earnings package.

Earnings drivers year-over-year for the second quarter of 2021, as compared with 2020, were strong customer usage, as well as robust customer growth and constructive state regulatory actions. These impacts were partially offset by higher non-fuel operations and maintenance costs as the emerging economic recovery resulted in a return to more normal business operations. Earnings for the second quarter of 2021 were also significantly impacted by a $343 million after-tax charge related to Georgia Power's construction of Plant Vogtle units 3 and 4.

"The Southern Company system achieved solid operational performance in the second quarter of 2021," said Chairman, President and CEO, Thomas A. Fanning. "We saw a year-over-year increase in retail electric sales, as the economies in our service territories continue to recover from the effects of the COVID-19 pandemic, and we experienced strong customer growth in our Southeastern footprint".

"We're also pleased to report that the integrated operation of Plant Vogtle Unit 3 has now been demonstrated with the successful completion of hot functional testing, our most significant project milestone to date," added Fanning.

Second-quarter 2021 operating revenues were $5.2 billion, compared with $4.6 billion for the second quarter of 2020, an increase of 12.5 percent. For the six months ended June 30, 2021, operating revenues were $11.11 billion, compared with $9.64 billion for the corresponding period in 2020, an increase of 15.3 percent. These increases were primarily due to higher fuel costs. Colder weather in the first quarter 2021 also contributed to the increase for the six months ended June 30, 2021.

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

Southern Company's financial analyst call will begin at 1 p.m. Eastern Time today, during which Fanning and Chief Financial Officer Andrew W. Evans will discuss earnings and provide a general business update, including an update on the Vogtle units 3 and 4 construction project and earnings guidance. Investors, media and the public may listen to a live webcast of the call and view associated slides at https://investor.southerncompany.com/events-and-presentations/default.aspx. A replay of the webcast will be available on the site for 12 months.

About Southern CompanySouthern 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 EndedYear-to-Date June June

Net Income-As Reported (See Notes) 2021 2020 2021 2020

Traditional Electric Operating $511 $645 $1,267$1,287Companies

Southern Power 36 63 133 138

Southern Company Gas (65) 71 333 346

Total 482 779 1,733 1,771

Parent Company and Other (110) (167) (225) (291)

Net Income-As Reported $372 $612 $1,508$1,480



Basic Earnings Per Share^1 $0.35 $0.58 $1.42 $1.40

Average Shares Outstanding (in 1,061 1,058 1,060 1,057 millions)

End of Period Shares Outstanding (in 1,059 1,056 millions)



Three Months EndedYear-to-Date Non-GAAP Financial Measures June June

Net Income-Excluding Items (See Notes)2021 2020 2021 2020

Net Income-As Reported $372 $612 $1,508$1,480

Less:

Estimated Loss on Plants Under (462) (152) (507) (155) Construction^2

Tax Impact 118 39 130 40

Acquisition and Disposition Impacts^3 1 - 1 38

Tax Impact - - - (16)

Wholesale Gas Services^4 (147) (31) 19 -

Tax Impact 35 8 (5) -

Asset Impairments^5 (89) (154) (89) (154)

Tax Impact 25 80 25 80

Net Income-Excluding Items $891 $822 $1,934$1,647



Basic Earnings Per Share-Excluding $0.84 $0.78 $1.82 $1.56 Items

-See Notes on the following page.

Southern Company

Financial Highlights

Notes

Dilution is not material in any period presented. Diluted earnings per(1) share was $0.35 and $1.41 for the three and six months ended June 30, 2021 and was $0.58 and $1.39 for the three and six months ended June 30, 2020, respectively.

Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges may occur; however, the amount and timing of any such charges are uncertain. Earnings for the three and six(2) months ended June 30, 2021 and 2020 also include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.

Earnings for the six months ended June 30, 2020 primarily include a $39(3) 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.

Earnings for the three and six months ended June 30, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings(4) per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments. This business was sold on July 1, 2021.

Earnings for the three and six months ended June 30, 2021 includes pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7(5) million ($6 million after tax) related to a leveraged lease investment. Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of $154 million ($74 million after tax) related to another leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.





Southern Company

Significant Factors Impacting EPS



Year-to-Date Three Months Ended June June

2021 2020 Change 2021 2020 Change

Earnings Per Share-

As Reported^1 (See Notes) $0.35$0.58$(0.23)$1.42$1.40$0.02



Significant Factors:

Traditional Electric Operating Companies $(0.13) $(0.02)

Southern Power (0.03) -

Southern Company Gas (0.13) (0.01)

Parent Company and Other 0.06 0.06

Increase in Shares - (0.01)

Total-As Reported $(0.23) $0.02



Year-to-Date Three Months Ended June June

Non-GAAP Financial Measures 2021 2020 Change 2021 2020 Change

Earnings Per Share-

Excluding Items (See Notes) $0.84$0.78$0.06 $1.82$1.56$0.26



Total-As Reported $(0.23) $0.02

Less:

Estimated Loss on Plants Under Construction^2 (0.21) (0.24)

Acquisition and Disposition Impacts^3 - (0.02)

Wholesale Gas Services^4 (0.09) 0.01

Asset Impairments^5 0.01 0.01

Total-Excluding Items $0.06 $0.26

- See Notes on the following page.

Southern Company

Significant Factors Impacting EPS

Notes

Dilution is not material in any period presented. Diluted earnings per(1) share was $0.35 and $1.41 for the three and six months ended June 30, 2021 and was $0.58 and $1.39 for the three and six months ended June 30, 2020, respectively.

Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges may occur; however, the amount and timing of any such charges are uncertain. Earnings for the three and six(2) months ended June 30, 2021 and 2020 also include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.

Earnings for the six months ended June 30, 2020 primarily include a $39(3) 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.

Earnings for the three and six months ended June 30, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings(4) per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments. This business was sold on July 1, 2021.

Earnings for the three and six months ended June 30, 2021 includes pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7(5) million ($6 million after tax) related to a leveraged lease investment. Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of $154 million ($74 million after tax) related to another leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.





Southern Company

EPS Earnings Analysis



Three Months Year-To-Date Description Ended June 2021 vs. June 2021 vs. 2020 2020



Retail Sales 7? 5?



Retail Revenue Impacts 7 9



Weather 1 8



Wholesale & Other Operating Revenues 4 8



Non-Fuel O&M (11) (11)



Depreciation and Amortization, Interest 1 4 Expense, Other



Total Traditional Electric Operating 9? 23? Companies



Southern Power (3) 2



Southern Company Gas 1 3



Parent and Other (1) (1)



Increase in Shares - (1)



Total Change in EPS (Excluding Items) 6? 26?



Estimated Loss on Plants Under Construction(21) (24) ^1



Acquisition and Disposition Impacts^2 - (2)



Wholesale Gas Services^3 (9) 1



Asset Impairments^4 1 1



Total Change in EPS (As Reported) (23)? 2?

- See Notes on the following page.

Southern Company

EPS Earnings Analysis

Notes

Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges may occur; however, the amount and timing of any such charges are uncertain. Earnings for the three and six(1) months ended June 30, 2021 and 2020 also include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.

Earnings for the six months ended June 30, 2020 primarily include a $39(2) 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.

Earnings for the three and six months ended June 30, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings(3) per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments. This business was sold on July 1, 2021.

Earnings for the three and six months ended June 30, 2021 includes pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7(4) million ($6 million after tax) related to a leveraged lease investment. Earnings for the three and six months ended June 30, 2020 include a pre-tax impairment charge of $154 million ($74 million after tax) related to another leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.





Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)

Three Months Ended June Year-to-Date June

2021 2020 Change 2021 2020 Change

Income Account-

Retail Electric Revenues-

Fuel $875$676$199 $1,712$1,353$359

Non-Fuel 2,7242,506218 5,229 4,907 322

Wholesale Electric Revenues 546 472 74 1,091 889 202

Other Electric Revenues 175 168 7 346 320 26

Natural Gas Revenues 677 636 41 2,371 1,885 486

Other Revenues 201 162 39 359 284 75

Total Revenues 5,1984,620578 11,108 9,638 1,470

Fuel and Purchased Power 1,065821 244 2,120 1,638 482

Cost of Natural Gas 231 144 87 814 583 231

Cost of Other Sales 103 74 29 185 129 56

Non-Fuel O&M 1,4381,203235 2,810 2,498 312

Depreciation and Amortization 891 873 18 1,762 1,730 32

Taxes Other Than Income Taxes 313 298 15 657 629 28

Estimated Loss on Plant Vogtle Units 3 and 4 460 149 311 508 149 359

(Gain) Loss on Dispositions, net (11) - (11) (54) (39) (15)

Total Operating Expenses 4,4903,562928 8,802 7,317 1,485

Operating Income 708 1,058(350) 2,306 2,321 (15)

Allowance for Equity Funds Used During Construction 45 35 10 90 68 22

Earnings (Loss) from Equity Method Investments (40) 30 (70) 5 72 (67)

Interest Expense, Net of Amounts Capitalized 450 444 6 901 900 1

Impairment of Leveraged Leases 7 154 (147) 7 154 (147)

Other Income (Expense), net 108 101 7 167 204 (37)

Income Taxes (Benefit) (12) 5 (17) 178 150 28

Net Income 376 621 (392) 1,482 1,461 (126)

Less:

Dividends on Preferred Stock of Subsidiaries 4 4 - 7 7 -

Net Income (Loss) Attributable to Noncontrolling Interests- 5 (5) (33) (26) (7)

NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY $372$612$(240)$1,508$1,480$28

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

Southern Company

Kilowatt-Hour Sales and Customers

(In Millions of KWHs)



Three Months Ended June Year-to-Date June

Weather Weather 2021 2020 Change Adjusted 2021 2020 Change Adjusted Change Change

Kilowatt-Hour Sales-

Total Sales46,02043,5475.7 % 92,442 87,811 5.3 %



Total Retail 34,65532,4606.8 %6.0 % 69,306 66,505 4.2 %2.0 % Sales-

Residential10,83810,879(0.4) %(2.0) % 22,878 21,745 5.2 %(0.4)%

Commercial 11,50010,5319.2 %8.7 % 22,243 21,470 3.6 %2.7 %

Industrial 12,16210,88611.7 %11.7 % 23,870 22,952 4.0 %4.0 %

Other 155 164 (5.4) %(5.3) % 315 338 (6.6) %(6.8)%



Total Wholesale 11,36511,0872.5 %N/A 23,136 21,306 8.6 %N/A Sales





(In Thousands of Customers)



Period Ended June

2021 2020 Change

Regulated Utility Customers-

Total Utility 8,659 8,580 0.9% Customers-

Total Traditional Electric 4,359 4,305 1.3%

Southern Company 4,300 4,275 0.6% Gas





Southern Company

Financial Overview

As Reported

(In Millions of Dollars)

Three Months Ended June Year-to-Date June

2021 2020 % Change2021 2020 % Change

Southern Company -

Operating Revenues $ 5,198 $ 4,620 12.5 %$ 11,108 $9,638 15.3 %

Earnings Before Income364 626 (41.9)%1,660 1,611 3.0 % Taxes

Net Income Available 372 612 (39.2)%1,508 1,480 1.9 % to Common



Alabama Power -

Operating Revenues $ 1,556 $ 1,365 14.0 %$ 3,115 $2,716 14.7 %

Earnings Before Income439 395 11.1 %910 762 19.4 % Taxes

Net Income Available 331 298 11.1 %690 578 19.4 % to Common



Georgia Power -

Operating Revenues $ 2,225 $ 1,928 15.4 %$ 4,195 $3,754 11.7 %

Earnings Before Income93 319 (70.8)%462 665 (30.5) % Taxes

Net Income Available 143 308 (53.6)%494 638 (22.6) % to Common



Mississippi Power -

Operating Revenues $ 303 $ 283 7.1 %$ 610 $559 9.1 %

Earnings Before Income46 41 12.2 %95 79 20.3 % Taxes

Net Income Available 38 39 (2.6) %83 71 16.9 % to Common



Southern Power -

Operating Revenues $ 490 $ 439 11.6 %$ 930 $814 14.3 %

Earnings Before Income34 74 (54.1)%89 125 (28.8) % Taxes

Net Income Available 36 63 (42.9)%133 138 (3.6) % to Common



Southern Company Gas -

Operating Revenues $ 677 $ 636 6.4 %$ 2,371 $1,885 25.8 %

Earnings (Loss) Before(94) 87 N/M 425 441 (3.6) % Income Taxes

Net Income (Loss) (65) 71 N/M 333 346 (3.8) % Available to Common



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