Southern Company reports second-quarter earnings

Jul 29, 2015, 07:15 ET from Southern Company

ATLANTA, July 29, 2015 /PRNewswire/ -- Southern Company today reported second-quarter 2015 earnings of $629 million, or 69 cents per share, compared with earnings of $611 million, or 68 cents per share, in the second quarter of 2014. For the six months ended June 30, 2015, earnings were $1.14 billion, or $1.25 per share, compared with $962 million, or $1.08 per share, for the same period in 2014.

Earnings for the three and six months ended June 30, 2015, include after-tax charges of $14 million and $20 million, respectively, related to increased construction estimates for Mississippi Power's Kemper County integrated gasification combined-cycle (IGCC) project. Earnings for the six months ended June 30, 2014, include an after-tax charge of $235 million, or 26 cents per share, related to the Kemper County IGCC project. Earnings for the three and six months ended June 30, 2015, also include a $4 million after-tax charge related to the discontinued operations of Mirant and the March 2009 settlement agreement with MC Asset Recovery, LLC.

Excluding these items, Southern Company earned $647 million, or 71 cents per share, during the second quarter of 2015, compared with earnings of $611 million, or 68 cents per share, during the second quarter of 2014. For the first six months of 2015, excluding these items, Southern Company earned $1.16 billion, or $1.28 per share, compared with earnings of $1.20 billion, or $1.34 per share, for the same period in 2014.

Earnings for the second quarter of 2015 were positively influenced by retail revenue effects at Southern Company's traditional operating companies, warmer weather and stronger than expected performance of its Southern Power subsidiary. Earnings were negatively influenced by increased non-fuel operations and maintenance expenses.

"We are encouraged by positive customer growth during the second quarter of 2015, particularly in the residential sector," said Southern Company Chairman, President and CEO Thomas A. Fanning. "Also, for the first time since 2004, we have experienced two consecutive quarters of weather-normalized growth in all three customer classes – residential, commercial and industrial – as our region continues to grow faster than the U.S. as a whole."

Second-quarter 2015 operating revenues were $4.34 billion, compared with $4.47 billion for the second quarter of 2014, a decrease of 2.9 percent. For the six months ended June 30, 2015, operating revenues were $8.52 billion, compared with $9.11 billion for the same period in 2014, a decrease of 6.5 percent.

Kilowatt-hour sales to retail customers in Southern Company's four-state service area increased 2.2 percent in the second quarter of 2015, compared with the second quarter of 2014. Residential energy sales increased 4.6 percent, commercial energy sales increased 2.3 percent and industrial energy sales increased 0.1 percent. For the first six months of 2015, retail sales increased 0.5 percent, compared with the same period in 2014. Residential energy sales decreased 0.2 percent, commercial energy sales increased 0.7 percent and industrial energy sales increased 1.0 percent.

Weather-adjusted kilowatt-hour sales to retail customers in Southern Company's four-state service area increased 0.7 percent in the second quarter of 2015, compared with the second quarter of 2014. Weather-adjusted residential energy sales increased 1.2 percent, weather-adjusted commercial energy sales increased 0.7 percent and industrial energy sales increased 0.2 percent. For the first six months of 2015, weather-adjusted retail sales increased 0.8 percent, compared with the same period in 2014. Weather-adjusted residential energy sales increased 0.7 percent, weather-adjusted commercial energy sales increased 0.7 percent and industrial energy sales increased 1.1 percent.

Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, increased 2.1 percent in the second quarter of 2015, compared with the second quarter of 2014. For the first six months of 2015, total energy sales decreased 0.6 percent, compared with the same period in 2014.

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/webcasts. A replay of the webcast 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 more than 4.5 million customers and approximately 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 excellent customer service, high reliability and affordable prices that are below the national average. Through an industry-leading commitment to innovation, Southern Company and its subsidiaries are inventing America's energy future by developing the full portfolio of energy resources, including nuclear, 21st century coal, natural gas, renewables and energy efficiency, and creating new products and services for the benefit of customers. Southern Company has been named by the U.S. Department of Defense and G.I. Jobs magazine as a top military employer, listed by Black Enterprise magazine as one of the 40 Best Companies for Diversity and designated a 2014 Top Employer for Hispanics by Hispanic Network. The company earned the 2014 National Award of Nuclear Science and History by the National Atomic Museum Foundation for its leadership and commitment to nuclear development, 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.

Southern Company

Financial Highlights

(In Millions of Dollars Except Earnings Per Share)

Three Months Ended

June

Year-to-Date

June

2015

2014

2015

2014

Consolidated Earnings–As Reported

(See Notes)

  Traditional Operating Companies

$

561

$

580

$

1,038

$

899

  Southern Power

46

31

79

64

  Total

607

611

1,117

963

  Parent Company and Other

22

21

(1)

  Net Income–As Reported

$

629

$

611

$

1,138

$

962

  Basic Earnings Per Share

$

0.69

$

0.68

$

1.25

$

1.08

  Average Shares Outstanding (in millions)

909

895

910

892

  End of Period Shares Outstanding (in millions)

908

896

Three Months Ended

June

Year-to-Date June

2015

2014

2015

2014

Consolidated Earnings–Excluding Items

(See Notes)

  Net Income–As Reported

$

629

$

611

$

1,138

$

962

  Estimated Loss on Kemper IGCC

14

20

235

Additional MCAR settlement costs

4

4

  Net Income–Excluding Items

$

647

$

611

$

1,162

$

1,197

  Basic Earnings Per Share–Excluding Items

$

0.71

$

0.68

$

1.28

$

1.34

Notes

- For the three and six months ended June 30, 2015 and 2014, 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, 2015 and the six months ended June 30, 2014. Similar charges may occur with uncertain frequency.

- Earnings for the three and six months ended June 30, 2015 include additional costs related to the discontinued operations of Mirant Corporation and the March 2009 litigation settlement with MC Asset Recovery, LLC. Further charges are not expected to occur.

- 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

2015

2014

Change

2015

2014

Change

Consolidated Earnings Per Share–

As Reported (See Notes)

$

0.69

$

0.68

$

0.01

$

1.25

$

1.08

$

0.17

 Significant Factors:

 Traditional Operating Companies

$

(0.02)

$

0.16

Southern Power

0.02

0.02

Parent Company and Other

0.02

0.02

 Increase in Shares

(0.01)

(0.03)

 Total–As Reported

$

0.01

$

0.17

Three Months Ended

June

Year-to-Date June

2015

2014

Change

2015

2014

Change

Consolidated Earnings Per Share–

Excluding Items (See Notes)

$

0.71

$

0.68

$

0.03

$

1.28

$

1.34

$

(0.06)

  Total–As Reported

$

0.01

$

0.17

  Estimated Loss on Kemper IGCC

0.02

(0.24)

 Additional MCAR settlement costs

0.01

  Total–Excluding Items

$

0.03

$

(0.06)

Notes

- For the three and six months ended June 30, 2015 and 2014, 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, 2015 and the six months ended June 30, 2014. Similar charges may occur with uncertain frequency. 

- Earnings for the three and six months ended June 30, 2015 include additional costs related to the discontinued operations of Mirant Corporation and the March 2009 litigation settlement with MC Asset Recovery, LLC. Further charges are not expected to occur. These costs were the same for the three and six months ended June 30, 2015; however, these costs on a per share basis differ between the periods due to the effects of rounding. 

- 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 2015 vs. June 2014

Cents

Description

Retail Sales

3

Retail Revenue Impacts

3

Weather

(1)

Wholesale Operations

(1)

Other Operating Revenues

(5)

Non-Fuel O&M

1

Depreciation and Amortization

(3)

Other Income and Deductions

2

Interest Expense

—¢

Total Traditional Operating Companies

2

Southern Power

2

Parent and Other

(1)

Increase in Shares

Total Change in QTD EPS (Excluding Items)

(2)

Estimated Loss on Kemper IGCC

Total Change in QTD EPS (As Reported)

Notes

- 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) impacted the presentation of earnings per share for the three months ended June 30, 2015 and any similar charges may occur with uncertain frequency.

- 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

2015

2014

Change

2015

2014

Change

Income Account-

Retail Revenues-

Fuel

$

1,130

$

1,296

$

(166)

$

2,218

$

2,772

$

(554)

Non-Fuel

2,584

2,474

110

5,038

4,856

182

Wholesale Revenues

448

515

(67)

915

1,119

(204)

Other Electric Revenues

162

169

(7)

325

334

(9)

Other Revenues

13

13

24

30

(6)

Total Revenues

4,337

4,467

(130)

8,520

9,111

(591)

Fuel and Purchased Power

1,371

1,595

(224)

2,727

3,429

(702)

Non-Fuel O & M

1,100

1,019

81

2,222

2,005

217

Depreciation and Amortization

500

504

(4)

987

1,001

(14)

Taxes Other Than Income Taxes

245

246

(1)

497

493

4

Estimated Loss on Kemper IGCC

23

23

32

380

(348)

Total Operating Expenses

3,239

3,364

(125)

6,465

7,308

(843)

Operating Income

1,098

1,103

(5)

2,055

1,803

252

Allowance for Equity Funds Used During Construction

39

62

(23)

102

119

(17)

Interest Expense, Net of Amounts Capitalized

180

210

(30)

393

416

(23)

Other Income (Expense), net

(12)

(6)

(6)

(19)

(13)

(6)

Income Taxes

302

321

(19)

576

497

79

Net Income

643

628

15

1,169

996

173

Dividends on Preferred and Preference Stock of Subsidiaries

14

17

(3)

31

34

(3)

NET INCOME AFTER DIVIDENDS ON PREFERRED AND PREFERENCE STOCK

$

629

$

611

$

18

$

1,138

$

962

$

176

Notes

- Certain prior year data may have 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

2015

2014

Change

Weather Adjusted Change*

2015

2014

Change

Weather Adjusted Change*

Kilowatt-Hour Sales-

Total Sales

47,878

46,903

2.1

%

94,123

94,705

(0.6)

%

Total Retail Sales-

40,072

39,198

2.2

%

0.7

%

79,281

78,897

0.5

%

0.8

%

Residential

12,548

12,001

4.6

%

1.2

%

26,125

26,175

(0.2)

%

0.7

%

Commercial

13,654

13,343

2.3

%

0.7

%

26,069

25,891

0.7

%

0.7

%

Industrial

13,645

13,629

0.1

%

0.2

%

26,633

26,378

1.0

%

1.1

%

Other

225

225

(0.3)

%

(0.4)

%

454

453

0.2

%

0.2

%

Total Wholesale Sales

7,806

7,705

1.3

%

N/A

14,842

15,808

(6.1)

%

N/A

Note

*Also reflects adjustment of 2014 KWH sales consistent with Mississippi Power's updated methodology to estimate the unbilled revenue allocation among customer classes implemented in the first quarter 2015.

 

Southern Company

Financial Overview

As Reported

(In Millions of Dollars)

Three Months Ended June

Year-to-Date June

2015

2014

% Change

2015

2014

% Change

Consolidated –

Operating Revenues

$

4,337

$

4,467

(2.9)

%

$

8,520

$

9,111

(6.5)

%

Earnings Before Income Taxes

945

949

(0.4)

%

1,745

1,493

16.9

%

Net Income Available to Common

629

611

2.9

%

1,138

962

18.3

%

Alabama Power –

Operating Revenues

$

1,455

$

1,437

1.3

%

$

2,856

$

2,945

(3.0)

%

Earnings Before Income Taxes

329

302

8.9

%

621

626

(0.8)

%

Net Income Available to Common

200

173

15.6

%

369

360

2.5

%

Georgia Power –

Operating Revenues

$

2,016

$

2,186

(7.8)

%

$

3,994

$

4,455

(10.3)

%

Earnings Before Income Taxes

462

493

(6.3)

%

842

929

(9.4)

%

Net Income Available to Common

277

311

(10.9)

%

513

577

(11.1)

%

Gulf Power –

Operating Revenues

$

384

$

384

%

$

741

$

791

(6.3)

%

Earnings Before Income Taxes

59

58

1.7

%

121

120

0.8

%

Net Income Available to Common

35

34

2.9

%

72

71

1.4

%

Mississippi Power –

Operating Revenues

$

275

$

311

(11.6)

%

$

552

$

642

(14.0)

%

Earnings (Loss) Before Income Taxes

66

79

(16.5)

%

105

(223)

N/M

Net Income (Loss) Available to Common

49

62

(21.0)

%

84

(110)

N/M

Southern Power –

Operating Revenues

$

337

$

329

2.4

%

$

684

$

680

0.6

%

Earnings Before Income Taxes

53

29

82.8

%

98

66

48.5

%

Net Income Available to Common

46

31

48.4

%

79

64

23.4

%

N/M - not meaningful

Note

- 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.

 

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