Southern Company Reports First-Quarter 2021 Earnings

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Apr 29, 2021, 06:30 ET

ATLANTA, April 29, 2021 /PRNewswire/ -- Southern Company today reported first-quarter 2021 earnings of $1.14 billion, or $1.07 per share, compared with $868 million, or 82 cents per share, in the first quarter of 2020.

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $1.04 billion, or 98 cents per share, during the first quarter of 2021, compared with $825 million, or 78 cents per share, during the first quarter of 2020.

Non-GAAP Financial Measures	Three Months Ended March
Net Income - Excluding Items (in millions)	2021	2020
Net Income - As Reported	$1,135	$868
Less:
Estimated Loss on Plants Under Construction	(45)	(3)
Tax Impact	11	1
Acquisition and Disposition Impacts	-	38
Tax Impact	-	(16)
Wholesale Gas Services	166	31
Tax Impact	(40)	(8)
Net Income – Excluding Items	$1,043	$825
Average Shares Outstanding – (in millions)	1,060	1,057
Basic Earnings Per Share – Excluding Items	$0.98	$0.78


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

Earnings drivers for the first quarter of 2021, as compared with 2020, were robust customer growth, higher residential sales and colder weather, partially offset by lower commercial and industrial sales.

"Southern Company experienced a strong start to the year," said Chairman, President and CEO, Thomas A. Fanning. "The economies in our service territories are starting to recover from the COVID-19 pandemic," added Fanning. "Customer demand is improving faster than we anticipated. Importantly, programs we implemented to keep customers connected during the pandemic – including alternative payment arrangements -- have helped those in need of assistance as we have continued to reliably provide for their energy needs. I am extremely proud of our employees and the ways we have partnered with our communities during this time."

First-quarter 2021 operating revenues were $5.9 billion, compared with $5.0 billion for the first quarter of 2020, an increase of 17.8 percent. This increase was primarily due to colder weather and higher fuel costs.

Southern Company's first-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 Andrew W. Evans will discuss earnings and provide a general business update, including an update on the Vogtle units 3 and 4 construction project. Investors, media and the public may listen to a live webcast of the call and view associated slides at http://investor.southerncompany.com/webcasts. A replay of the webcast will be available on the site for 12 months.

About Southern Company

Southern Company (NYSE: SO) is a leading energy company serving 9 million customers through its subsidiaries. The company provides clean, safe, reliable and affordable energy through electric operating companies in three states, natural gas distribution companies in four states, a competitive generation company serving wholesale customers across America, a leading distributed energy infrastructure company, a fiber optics network and telecommunications services. Southern Company brands are known for excellent customer service, high reliability and affordable prices below the national average. For more than a century, we have been building the future of energy and developing the full portfolio of energy resources, including carbon-free nuclear, advanced carbon capture technologies, natural gas, renewables, energy efficiency and storage technology. Through an industry-leading commitment to innovation and a low-carbon future, Southern Company and its subsidiaries develop the customized energy solutions our customers and communities require to drive growth and prosperity. Our uncompromising values ensure we put the needs of those we serve at the center of everything we do and govern our business to the benefit of our world. Our corporate culture and hiring practices have been recognized nationally by the U.S. Department of Defense, G.I. Jobs magazine, DiversityInc, Black Enterprise, Forbes and the Women's Choice Award. To learn more, visit www.southerncompany.com.



Southern Company
Financial Highlights
*(In Millions of Dollars Except Earnings Per Share)*

	Three Months Ended March
Net Income–As Reported (See Notes)	2021		2020
Traditional Electric Operating Companies	$	756	$	642
Southern Power	97		75
Southern Company Gas	398		275
Total	1,251		992
Parent Company and Other	(116)		(124)
Net Income–As Reported	$	1,135	$	868

Basic Earnings Per Share¹	$	1.07	$	0.82
Average Shares Outstanding (in millions)	1,060		1,057
End of Period Shares Outstanding (in millions)	1,059		1,056

Non-GAAP Financial Measures	Three Months Ended March
Net Income–Excluding Items (See Notes)	2021		2020
Net Income–As Reported	$	1,135	$	868
Less:
Estimated Loss on Plants Under Construction²	(45)		(3)
Tax Impact	11		1
Acquisition and Disposition Impacts³	—		38
Tax Impact	—		(16)
Wholesale Gas Services⁴	166		31
Tax Impact	(40)		(8)
Net Income–Excluding Items	$	1,043	$	825

Basic Earnings Per Share–Excluding Items	$	0.98	$	0.78
-See Notes on the following page.


Southern Company Financial Highlights
Notes
(1)	Dilution is not material in any period presented. Diluted earnings per share was $1.06 and $0.81 for the three months ended March 31, 2021 and 2020, respectively.
(2)	Earnings for the three months ended March 31, 2021 include a charge of $48 million pre tax ($36 million after tax) for an estimated probable loss 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 months ended March 31, 2021 and 2020 include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.
(3)	Earnings for the three months ended March 31, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.
(4)	Earnings for the three months ended March 31, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.



Southern Company
Significant Factors Impacting EPS

	Three Months Ended March
	2021		2020		Change
Earnings Per Share–
As Reported¹(See Notes)	$	1.07	$	0.82	$	0.25

Significant Factors:
Traditional Electric Operating Companies					$	0.11
Southern Power					0.02
Southern Company Gas					0.12
Parent Company and Other					—
Increase in Shares					—
Total–As Reported					$	0.25

	Three Months Ended March
Non-GAAP Financial Measures	2021		2020		Change
Earnings Per Share–
Excluding Items (See Notes)	$	0.98	$	0.78	$	0.20

Total–As Reported					$	0.25
Less:
Estimated Loss on Plants Under Construction²					(0.03)
Acquisition and Disposition Impacts³					(0.02)
Wholesale Gas Services⁴					0.10
Total–Excluding Items					$	0.20
- See Notes on the following page.


Southern Company Significant Factors Impacting EPS
Notes
(1)	Dilution is not material in any period presented. Diluted earnings per share was $1.06 and $0.81 for the three months ended March 31, 2021 and 2020, respectively.
(2)	Earnings for the three months ended March 31, 2021 include a charge of $48 million pre tax ($36 million after tax) for an estimated probable loss 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 months ended March 31, 2021 and 2020 include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.
(3)	Earnings for the three months ended March 31, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.
(4)	Earnings for the three months ended March 31, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.



	Southern Company
	EPS Earnings Analysis
	Three Months Ended March 2021 vs. March 2020

	Description	Cents

	Retail Sales	(1)¢

	Retail Revenue Impacts	2

	Weather	6

	Wholesale & Other Operating Revenues	4

	Depreciation and Amortization, Interest Expense, Other	3

	Total Traditional Electric Operating Companies	14¢

	Southern Power	4

	Southern Company Gas	2

	Total Change in EPS (Excluding Items)	20¢

	Estimated Loss on Plants Under Construction¹	(3)

	Acquisition and Disposition Impacts²	(2)

	Wholesale Gas Services³	10

	Total Change in EPS (As Reported)	25¢
	- See Notes on the following page.


Southern Company EPS Earnings Analysis
Notes
(1)	Earnings for the three months ended March 31, 2021 include a charge of $48 million pre tax ($36 million after tax) for an estimated probable loss 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 months ended March 31, 2021 and 2020 include charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries), and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Mississippi Power Company expects to incur additional pre-tax period costs to complete dismantlement of the abandoned gasifier-related assets and site restoration activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, totaling $10 million to $20 million annually through 2025.
(2)	Earnings for the three months ended March 31, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.
(3)	Earnings for the three months ended March 31, 2021 and 2020 include Wholesale Gas Services business results. Presenting earnings and earnings per share excluding Wholesale Gas Services provides an additional measure of operating performance that excludes the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments.



Southern Company
Consolidated Earnings
As Reported
*(In Millions of Dollars)*
	Three Months Ended March
	2021		2020		Change
Income Account-
Retail Electric Revenues-
Fuel	$	838	$	677	$	161
Non-Fuel	2,504		2,401		103
Wholesale Electric Revenues	545		418		127
Other Electric Revenues	170		151		19
Natural Gas Revenues	1,694		1,249		445
Other Revenues	159		122		37
Total Revenues	5,910		5,018		892
Fuel and Purchased Power	1,055		817		238
Cost of Natural Gas	583		439		144
Cost of Other Sales	82		55		27
Non-Fuel O&M	1,372		1,296		76
Depreciation and Amortization	871		857		14
Taxes Other Than Income Taxes	345		330		15
Estimated Loss on Plant Vogtle Units 3 and 4	48		—		48
(Gain) Loss on Dispositions, net	(44)		(39)		(5)
Total Operating Expenses	4,312		3,755		557
Operating Income	1,598		1,263		335
Allowance for Equity Funds Used During Construction	46		34		12
Earnings from Equity Method Investments	45		42		3
Interest Expense, Net of Amounts Capitalized	450		456		(6)
Other Income (Expense), net	58		103		(45)
Income Taxes	190		145		45
Net Income	1,107		841		266
Less:
Dividends on Preferred Stock of Subsidiaries	4		4		—
Net Loss Attributable to Noncontrolling Interests	(32)		(31)		(1)
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY	$	1,135	$	868	$	267


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 March
	2021	2020	Change		Weather Adjusted Change
Kilowatt-Hour Sales-
Total Sales	46,422	44,263	4.9	%

Total Retail Sales-	34,651	34,045	1.8	%	(1.6)	%
Residential	12,040	10,866	10.8	%	1.1	%
Commercial	10,743	10,939	(1.8)	%	(3.1)	%
Industrial	11,708	12,066	(3.0)	%	(3.0)	%
Other	160	174	(7.7)	%	(8.2)	%

Total Wholesale Sales	11,771	10,218	15.2	%	N/A


*(In Thousands of Customers)*

	Period Ended March
	2021	2020	Change
Regulated Utility Customers-
Total Utility Customers-	8,673	8,578	1.1%
Total Traditional Electric	4,338	4,280	1.4%
Southern Company Gas	4,335	4,298	0.9%



Southern Company
Financial Overview
As Reported
*(In Millions of Dollars)*
	Three Months Ended March
	2021		2020		% Change
Southern Company –
Operating Revenues	$	5,910	$	5,018	17.8	%
Earnings Before Income Taxes	1,297		986		31.5	%
Net Income Available to Common	1,135		868		30.8	%

Alabama Power –
Operating Revenues	$	1,559	$	1,351	15.4	%
Earnings Before Income Taxes	473		368		28.5	%
Net Income Available to Common	359		280		28.2	%

Georgia Power –
Operating Revenues	$	1,970	$	1,825	7.9	%
Earnings Before Income Taxes	369		347		6.3	%
Net Income Available to Common	351		331		6.0	%

Mississippi Power –
Operating Revenues	$	307	$	277	10.8	%
Earnings Before Income Taxes	49		38		28.9	%
Net Income Available to Common	45		32		40.6	%

Southern Power –
Operating Revenues	$	440	$	375	17.3	%
Earnings Before Income Taxes	55		51		7.8	%
Net Income Available to Common	97		75		29.3	%

Southern Company Gas –
Operating Revenues	$	1,694	$	1,249	35.6	%
Earnings Before Income Taxes	519		354		46.6	%
Net Income Available to Common	398		275		44.7	%