Southern Company reports second quarter earnings

ATLANTA, July 31, 2013 /PRNewswire/ -- Southern Company today reported second quarter 2013 earnings of $297 million, or 34 cents per share, compared with earnings of $623 million, or 71 cents per share, in the second quarter of 2012.

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For the six months ended June 30, 2013, earnings were $378 million, or 43 cents per share, compared with $991 million, or $1.14 per share, for the same period in 2012.

Earnings for the three and six months ended June 30, 2013, include after-tax charges of $278 million (32 cents per share) and $611 million (70 cents per share), respectively, related to increased cost estimates for the construction of Mississippi Power's Kemper County project. Earnings for the six months ended June 30, 2013, also include a $16 million (2 cents per share) after-tax charge related to the restructuring of a leveraged lease investment. Earnings for the three and six months ended June 30, 2012, include $21 million (2 cents per share) of insurance recovery related to the March 2009 litigation settlement agreement with MC Asset Recovery, LLC.

Excluding these items, Southern Company earned $575 million, or 66 cents per share, in the second quarter of 2013 compared with earnings of $602 million, or 69 cents per share, during the second quarter of 2012. For the first six months of 2013, excluding these items, Southern Company earned $1.01 billion, or $1.15 per share, compared with earnings of $970 million, or $1.12 per share, for the same period in 2012.

"Despite recent cost challenges, we are making great progress in the construction of the Kemper County energy facility," said Thomas A. Fanning, Southern Company chairman, president and CEO. "The company's investment in this innovative technology will help provide decades of clean, safe, reliable and affordable electricity to Mississippi Power customers."

The revised construction cost estimate reflects Mississippi Power's current analysis of the cost to complete the Kemper project. Mississippi Power's analysis will be ongoing throughout the project's construction.

Earnings were negatively influenced by milder weather in the second quarter of 2013 compared with the second quarter of 2012.

"Georgia experienced the second-most rainfall in 50 years during the second quarter," said Fanning. "The wet weather and unseasonably mild temperatures appear to have slowed economic activity, reduced energy demand and lowered margins due to increases in hydroelectric generation."

Second quarter 2013 operating revenues were $4.25 billion, compared with $4.18 billion for the same period in 2012, an increase of 1.6 percent. Year-to-date 2013 revenues were $8.14 billion, compared with $7.79 billion for the same period in 2012, a 4.6 percent increase.

Kilowatt-hour sales to retail customers in Southern Company's four-state service area decreased 2.9 percent in the second quarter of 2013 compared with the second quarter of 2012. Residential and commercial energy sales decreased 5.3 percent and 4.2 percent, respectively, while industrial energy sales increased 0.6 percent.

For the year to date, retail sales decreased 0.4 percent compared with the same period in 2012. Residential energy sales increased 1.2 percent, commercial energy sales decreased 1.7 percent and industrial energy sales decreased 0.7 percent.

Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 4.6 percent in the second quarter of 2013 compared with the same period in 2012. For the year to date, total energy sales decreased 0.1 percent compared with the same period in 2012.

Southern Company's financial analyst call will begin at 1 p.m. Eastern time today, during which Fanning and Chief Financial Officer Art P. Beattie 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/events.cfm. A replay of the webcast only will be available at the site for 12 months.

Southern Company has also posted on its website detailed financial information on its second quarter performance. These materials are available at www.southerncompany.com.

With 4.4 million customers and nearly 46,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast through its subsidiaries. A leading U.S. producer of clean, safe, reliable and affordable electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications. Southern Company brands are known for energy innovation, excellent customer service, high reliability and retail electric prices that are below the national average. Southern Company and its subsidiaries are leading the nation's nuclear renaissance through the construction of the first new nuclear units to be built in a generation of Americans and are demonstrating their commitment to energy innovation through the development of a state-of-the-art coal gasification plant. Southern Company has been recognized by the U.S. Department of Defense and G.I. Jobs magazine as a top military employer and listed by DiversityInc as a top company for Blacks. The company received the 2012 Edison Award from the Edison Electric Institute for its leadership in new nuclear development, was named Electric Light & Power magazine's Utility of the Year for 2012 and is continually ranked among the top utilities in Fortune's annual World's Most Admired Electric and Gas Utility rankings. Visit our website at 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, statements concerning the economy and completion of the Kemper County integrated coal gasification combined cycle facility ("Kemper IGCC"). 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, 2012, 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 legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, environmental laws including regulation of water, coal combustion byproducts, and emissions of sulfur, nitrogen, carbon, soot, particulate matter, hazardous air pollutants, including mercury, and other substances, and also changes in tax 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; current and future litigation, regulatory investigations, proceedings, or inquiries, including the pending Environmental Protection Agency civil actions against certain Southern Company subsidiaries, Federal Energy Regulatory Commission matters, and Internal Revenue Service and state tax audits; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate; variations in demand for electricity, including those relating to weather, the general economy and recovery from the recent recession, population and business growth (and declines), the effects of energy conservation measures, and any potential economic impacts resulting from federal fiscal decisions; available sources and costs of fuels; effects of inflation; ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of facilities with designs that have not been finalized or previously constructed, including the impact of factors such as labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor or contractor or supplier delay or non-performance under construction or other agreements, delays associated with start-up activities, including major equipment failure, system integration and operations and/or unforeseen engineering problems; ability to construct facilities in accordance with the requirements of permits and licenses and to satisfy any operational and environmental performance standards, including the requirements of tax credits and other incentives; investment performance of Southern Company's employee benefit plans and the Southern Company system's nuclear decommissioning trust funds; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; regulatory approvals and actions related to the Plant Vogtle expansion, including Georgia Public Service Commission ("PSC") approvals, Nuclear Regulatory Commission actions, and potential U.S. Department of Energy loan guarantees; regulatory approvals and actions related to cost recovery for the Kemper IGCC, including Mississippi PSC review of Mississippi Power Company's proposed rate recovery plan and the prudence of Kemper IGCC costs, and actions relating to proposed securitization; the ability to complete the proposed sale of an interest in the Kemper IGCC to the South Mississippi Electric Power Association as contemplated by Mississippi Power Company's proposed rate recovery plan; satisfaction of requirements to utilize investment tax credits and grants; and the outcome of any legal or regulatory proceedings regarding the Mississippi PSC's issuance of the certificate of public convenience and necessity for the Kemper IGCC, the settlement agreement between Mississippi Power Company and the Mississippi PSC, or the State of Mississippi legislation designed to enhance the Mississippi PSC's authority to facilitate development and construction of baseload generation in the State of Mississippi; the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks; the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; 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 terrorist incidents and the threat of terrorist incidents, including cyber intrusion; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company's and its subsidiaries' credit ratings; the impacts of any potential U.S. credit rating downgrade or other sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the availability or benefits of proposed U.S. Department of Energy loan guarantees; the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as influenzas, or other similar occurrences; the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid or operation of generating resources; and the effect of accounting pronouncements issued periodically by standard setting bodies. 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

June


Year-to-Date

June



2013


2012


2013


2012

Consolidated Earnings–As Reported









(See Notes)









  Traditional Operating Companies


$

268



$

549



$

334



$

889


  Southern Power


28



47



57



76


  Total


296



596



391



965


  Parent Company and Other


1



27



(13)



26


  Net Income–As Reported


$

297



$

623



$

378



$

991











  Basic Earnings Per Share


$

0.34



$

0.71



$

0.43



$

1.14











  Average Shares Outstanding (in millions)


874



872



872



870


  End of Period Shares Outstanding (in millions)






874



875













Three Months Ended

June


Year-to-Date

June



2013


2012


2013


2012

Consolidated Earnings–Excluding Items









(See Notes)









  Net Income–As Reported


$

297



$

623



$

378



$

991


  Estimated Loss on Kemper IGCC


278





611




  Leveraged Lease Restructure






16




  MC Asset Recovery Insurance Settlement, net




(21)





(21)


  Net Income–Excluding Items


$

575



$

602



$

1,005



$

970











  Basic Earnings Per Share–Excluding Items


$

0.66



$

0.69



$

1.15



$

1.12











Notes









- For the three and six months ended June 30, 2013 and 2012, dilution does not change basic earnings per share by more than 1 cent and is not material.










- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three and six months ended June 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.










-The charge related to the restructuring of a leveraged lease investment that was completed on March 1, 2013 impacted the presentation of earnings and earnings per share for the six months ended June 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.










- Earnings for the three and six months ended June 30, 2012 include an insurance settlement related to the March 2009 litigation settlement with MC Asset Recovery, LLC and similar insurance recoveries are not expected to occur with any regularity in the future.










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










- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

 

Southern Company

Significant Factors Impacting EPS








Three Months Ended

June


Year-to-Date

June



2013


2012


Change


2013


2012


Change

Consolidated Earnings Per Share–













As Reported (See Notes)


$

0.34



$

0.71



$

(0.37)


$

0.43



$

1.14



$

(0.71)














  Significant Factors:













  Traditional Operating Companies






(0.32)






(0.64)

  Southern Power






(0.02)






(0.02)

  Parent Company and Other






(0.03)






(0.05)

  Total–As Reported






$

(0.37)






$

(0.71)
















Three Months Ended

June


Year-to-Date

June



2013


2012


Change


2013


2012


Change

Consolidated Earnings Per Share–













Excluding Items (See Notes)


$

0.66



$

0.69



$

(0.03)


$

1.15



$

1.12



$

0.03














  Total–As Reported






(0.37)






(0.71)

  Estimated Loss on Kemper IGCC






0.32






0.70

  Leveraged Lease Restructure











0.02

  MC Asset Recovery Insurance Settlement






0.02






0.02

  Total–Excluding Items






$

(0.03)






$

0.03














Notes













- For the three and six months ended June 30, 2013 and 2012, dilution does not change basic earnings per share by more than 1 cent and is not material.














- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three and six months ended June 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.














-The charge related to the restructuring of a leveraged lease investment that was completed on March 1, 2013 impacted the presentation of earnings and earnings per share for the six months ended June 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.














- Earnings for the three and six months ended June 30, 2012 include an insurance settlement related to the March 2009 litigation settlement with MC Asset Recovery, LLC and similar insurance recoveries are not expected to occur with any regularity in the future.














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














- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

 

Southern Company

EPS Earnings Analysis

Three Months Ended June 2013




Cents


Description




(1)¢


Retail Sales




5


Retail Revenue Impacts




(4)


Weather




(1)


Wholesale Revenues




1


Non-Fuel O&M




1


Purchased Power Capacity Expense




(1)


Depreciation and Amortization




2


Other Income and Deductions




(2)


Income Taxes





Total Traditional Operating Companies




(2)


Southern Power




(1)


Parent and Other




(3)¢


Total Change in QTD EPS (x-Items)




(32)


Estimated Loss on Kemper IGCC




(2)


MC Asset Recovery Insurance Settlement




(37)¢


Total Change in QTD EPS (As Reported)




Notes



- The estimated probable loss relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three months ended June 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.




- Earnings for the three months ended June 30, 2012 include an insurance settlement related to the March 2009 litigation settlement with MC Asset Recovery, LLC and similar insurance recoveries are not expected to occur with any regularity in the future.




- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

  

Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)








Three Months Ended June


Year-to-Date June



2013


2012


Change


2013


2012


Change

Income Account-













Retail Revenues-













Fuel


$

1,257



$

1,230



$

27



$

2,395



$

2,265



$

130


Non-Fuel


2,363



2,367



(4)



4,523



4,424



99


Wholesale Revenues


454



415



39



886



764



122


Other Electric Revenues


156



154



2



311



302



9


Non-regulated Operating Revenues


16



15



1



28



30



(2)


Total Revenues


4,246



4,181



65



8,143



7,785



358


Fuel and Purchased Power


1,501



1,440



61



2,858



2,645



213


Non-fuel O & M


947



944



3



1,921



1,911



10


MC Asset Recovery Insurance Settlement




(19)



19





(19)



19


Depreciation and Amortization


476



445



31



942



886



56


Taxes Other Than Income Taxes


232



228



4



467



453



14


Estimated Loss on Kemper IGCC


450





450



990





990


Total Operating Expenses


3,606



3,038



568



7,178



5,876



1,302


Operating Income


640



1,143



(503)



965



1,909



(944)


Allowance for Equity Funds Used During Construction


45



32



13



86



63



23


Leveraged Lease Income (Loss)


5



5





(16)



11



(27)


Interest Expense, Net of Amounts Capitalized


215



220



(5)



426



431



(5)


Other Income (Expense), net


(4)



8



(12)



(10)





(10)


Income Taxes


158



329



(171)



189



529



(340)


Net Income


313



639



(326)



410



1,023



(613)


Dividends on Preferred and Preference Stock of Subsidiaries


16



16





32



32




NET INCOME AFTER DIVIDENDS ON PREFERRED AND PREFERENCE STOCK


$

297



$

623



$

(326)



$

378



$

991



$

(613)















Notes













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














- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.














 

Southern Company


Kilowatt-Hour Sales


(In Millions of KWHs)





















Three Months Ended June



Year-to-Date June




As Reported (See Notes)


2013


2012


Change


Weather Adjusted Change


2013


2012


Change


Weather Adjusted Change*

Kilowatt-Hour Sales-

















Total Sales


44,808



46,964



(4.6)

%





88,378



88,488



(0.1)

%





















Total Retail Sales-


38,392



39,550



(2.9)

%


(0.5)

%


75,467



75,808



(0.4)

%


(0.7)

%

Residential


11,770



12,431



(5.3)

%


(0.5)

%


24,117



23,835



1.2

%


(0.7)

%

Commercial


13,171



13,744



(4.2)

%


(1.6)

%


25,272



25,702



(1.7)

%


(0.7)

%

Industrial


13,226



13,146



0.6

%


0.6

%


25,625



25,812



(0.7)

%


(0.7)

%

Other


225



229



(1.9)

%


(1.9)

%


453



459



(1.1)

%


(1.3)

%


















Total Wholesale Sales


6,416



7,414


(13.5)

%


N/A


12,911



12,680



1.8

%


N/A



































Notes

















* Also reflects reclassification of January 2012 KWH sales among customer classes consistent with actual advanced meter data. Use of actual advanced meter data was implemented during the first quarter of 2012.



















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



















- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.


 

Southern Company


Financial Overview


As Reported


(In Millions of Dollars)

















Three Months Ended June



Year-to-Date June




2013


2012


% Change


2013


2012


% Change

Consolidated –













Operating Revenues


$

4,246



$

4,181



1.6

%


$

8,143



$

7,785



4.6

%

Earnings Before Income Taxes


471



968



(51.3)

%


599



1,552



(61.4)

%

Net Income Available to Common


297



623



(52.3)

%


378



991



(61.9)

%














Alabama Power –













Operating Revenues


$

1,392



$

1,377



1.1

%


$

2,700



$

2,593



4.1

%

Earnings Before Income Taxes


302



321



(5.9)

%


550



541



1.7

%

Net Income Available to Common


173



185



(6.5)

%


314



311



1.0

%














Georgia Power –













Operating Revenues


$

2,042



$

2,020



1.1

%


$

3,924



$

3,765



4.2

%

Earnings Before Income Taxes


464



452



2.7

%


789



715



10.3

%

Net Income Available to Common


282



295



(4.4)

%


479



462



3.7

%














Gulf Power –













Operating Revenues


$

371



$

370



0.3

%


$

697



$

686



1.6

%

Earnings Before Income Taxes


55



59



(6.2)

%


92



93



(0.2)

%

Net Income Available to Common


33



35



(6.8)

%


54



56



(2.3)

%














Mississippi Power –













Operating Revenues


$

306



$

266



15.2

%


$

552



$

495



11.6

%

Earnings Before Income Taxes


(372)



48



N/M


(787)



82



N/M    

Net Income Available to Common


(219)



35



N/M


(465)



60



N/M    














Southern Power –













Operating Revenues


$

307



$

286



7.5

%


$

610



$

539



13.1

%

Earnings Before Income Taxes


33



76



(56.8)

%


77



119



(35.3)

%

Net Income Available to Common


28



47



(40.1)

%


57



76



(24.8)

%














N/M - not meaningful


























Notes













- Mississippi Power Company restated its 2012 financial statements to reflect a pre-tax charge to income for the estimated probable loss on Kemper IGCC of $78 million ($48 million after tax) in 2012. Southern Company evaluated the portion of the estimated probable loss related to 2012 and concluded it was not material to Southern Company. Therefore, Southern Company reflected the pre-tax charge to income for this portion of the estimated probable loss related to 2012 in the first quarter 2013.















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















- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.


























 

 

SOURCE Southern Company



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