PR Newswire | Nov 4, 2021 06:15AM EDT

11/04 05:15 CDT

Southern Company reports third-quarter 2021 earnings ATLANTA, Nov. 4, 2021

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

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

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

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

Net Income - As Reported $1,101 $1,251 $2,608 $2,732

Less:

Estimated Loss on Plants Under Construction (271) 3 (779) (151)

Tax Impact 69 (1) 198 39

Acquisition and Disposition Impacts 119 - 120 38

Tax Impact (112) - (112) (16)

Wholesale Gas Services - (62) 18 (61)

Tax Impact 1 17 (3) 16

Asset Impairments (2) - (91) (154)

Tax Impact (7) - 19 80

Net Income - Excluding Items $1,304 $1,294 $3,238 $2,941

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

Basic Earnings Per Share - Excluding Items $1.23 $1.22 $3.05 $2.78

NOTE: For more information regarding these non-GAAP adjustments, see thefootnotes 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 EndedYear-To-Date September 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 Share^1 $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 EndedYear-To-Date September 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 Construction^2 (271) 3 (779) (151)

Tax Impact 69 (1) 198 39

Acquisition and Disposition Impacts^3 119 - 120 38

Tax Impact (112) - (112) (16)

Wholesale Gas Services^4 - (62) 18 (61)

Tax Impact 1 17 (3) 16

Asset Impairments^5 (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

Dilution is not material in any period presented. Diluted earnings per(1) 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.

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(2) 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.

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(3) 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.

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(4) 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.

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(5) 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 Year-To-Date September September

2021 2020 Change 2021 2020 Change

Earnings Per Share-

As Reported^1 (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 Year-To-Date September 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 Construction^2 (0.19) (0.44)

Acquisition and Disposition Impacts^3 0.01 (0.01)

Wholesale Gas Services^4 0.04 0.06

Asset Impairments^5 (0.01) -

Total-Excluding Items $0.01 $0.27

- 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 $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.

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(2) 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.

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(3) 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.

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(4) 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.

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(5) 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



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



Retail Sales 6? 11?



Retail Revenue Impacts 6 15



Weather (7) 1



Wholesale & Other Operating Revenues 2 11



Non-Fuel O&M (9) (21)



Depreciation and Amortization, Interest 5 9 Expense, Other



Income Taxes (2) (2)



Total Traditional Electric Operating 1? 24? Companies



Southern Power - 2



Southern Company Gas - 2



Increase in Shares - (1)



Total Change in EPS (Excluding Items) 1? 27?



Estimated Loss on Plants Under (19) (44) Construction^1



Acquisition and Disposition Impacts^2 1 (1)



Wholesale Gas Services^3 4 6



Asset Impairments^4 (1) -



Total Change in EPS (As Reported) (14)? (12)?

- See Notes on the following page.

Southern Company

EPS Earnings Analysis

Notes

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(1) 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.

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(2) 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.

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(3) 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.

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(4) 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 SeptemberYear-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 Interests5 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 currentyear presentation.

Southern Company

Kilowatt-Hour Sales and Customers

(In Millions of KWHs)



Three Months Ended September Year-To-Date September

Weather Weather 2021 2020 Change Adjusted2021 2020 Change Adjusted Change Change

Kilowatt-Hour Sales-

Total Sales 54,13453,0991.9 % 146,576140,9104.0 %



Total Retail Sales- 40,44140,2180.6 %3.0 %109,747106,7242.8 %2.4 %

Residential 14,06314,740(4.6)%0.5 %36,941 36,485 1.2 %(0.1) %

Commercial 13,45813,1402.4 %4.2 %35,701 34,611 3.2 %3.3 %

Industrial 12,76212,1774.8 %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 Sales13,69312,8816.3 %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 SeptemberYear-To-Date September

2021 2020 % Change2021 2020 % Change

Southern Company -

Operating Revenues $6,238$5,62011.0 %$17,346$15,25813.7 %

Earnings Before Income Taxes 1,482 1,576 (6.0) %3,142 3,189 (1.5) %

Net Income Available to Common1,101 1,251 (12.0)%2,608 2,732 (4.5) %



Alabama Power -

Operating Revenues $1,904$1,72910.1 %$5,019 $4,445 12.9 %

Earnings Before Income Taxes 655 578 13.3 %1,566 1,340 16.9 %

Net Income Available to Common499 444 12.4 %1,189 1,022 16.3 %



Georgia Power -

Operating Revenues $2,856$2,6179.1 %$7,050 $6,371 10.7 %

Earnings Before Income Taxes 649 945 (31.3)%1,111 1,609 (31.0)%

Net Income Available to Common536 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 Common50 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 Common78 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 Common56 14 N/M 389 360 8.1 %

N/M - Not Meaningful

Notes

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

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SOURCE Southern Company