Southern Company reports second-quarter 2020 earnings

ATLANTA, July 30, 2020 /PRNewswire/ -- Southern Company today reported second-quarter 2020 earnings of $612 million, or 58 cents per share, compared with $899 million, or 86 cents per share, in the second quarter of 2019.  For the six months ended June 30, 2020, Southern Company reported earnings of $1.48 billion, or $1.40 per share, compared with earnings of $2.98 billion, or $2.86 per share, for the same period in 2019. 

Excluding the items described in the "Net Income – Excluding Items" table below, Southern Company earned $822 million, or 78 cents per share, during the second quarter of 2020, compared with $833 million, or 80 cents per share, during the second quarter of 2019.  For the six months ended June 30, 2020, excluding these items, Southern Company earned $1.65 billion, or $1.56 per share, compared with $1.56 billion, or $1.50 per share, for the same period in 2019.

Non-GAAP Financial Measures

Three Months Ended June


Year-to-Date June

Net Income - Excluding Items (in millions)

2020

2019


2020

2019

Net Income - As Reported

$612

$899


$1,480

$2,982

Less:






   Acquisition and Disposition Impacts

-

(18)


38

2,481

  Tax Impact

-

67


(16)

(1,122)

   Estimated Loss on Plants Under Construction

(152)

(8)


(155)

(13)

  Tax Impact

39

2


40

3

   Wholesale Gas Services

(31)

29


-

93

       Tax Impact

8

(6)


-

(23)

   Asset Impairment

(154)

-


(154)

-

       Tax Impact

80

-


80

-

Net Income – Excluding Items

$822

$833


$1,647

$1,563

       Average Shares Outstanding – (in millions)

1,058

1,044


1,057

1,041

Basic Earnings Per Share – Excluding Items

$0.78

$0.80


$1.56

$1.50

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

Earnings drivers year-over-year for the second quarter 2020 were negatively impacted by a decline in sales from demand reduction related to the COVID-19 pandemic and mild weather, largely offset by diligent cost control and constructive state regulatory actions completed in 2019 at the company's utilities.

"Despite the challenges of the COVID-19 pandemic, Southern Company and its subsidiaries have never taken a day off," said Chairman, President and CEO Thomas A. Fanning. "Our electric and gas utilities have continued to provide clean, safe, reliable and affordable energy to customers while operating under appropriate health and safety protocols," added Fanning. "Whether it's our response to major storms in the Southeast or working within our communities to promote racial justice, we continue to deliver results, including continued progress on new nuclear construction."

Second-quarter 2020 operating revenues were $4.62 billion, compared with $5.10 billion for the second quarter of 2019, a decrease of 9.4 percent. For the six months ended June 30, 2020, operating revenues were $9.64 billion, compared with $10.51 billion for the corresponding period in 2019, a decrease of 8.3 percent.  These decreases were primarily due to lower fuel costs, milder weather and a sales decline from COVID-19 demand reduction.

Southern Company's second-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. 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


Year-to-Date


June


June

Net Income–As Reported (See Notes)

2020


2019


2020


2019

  Traditional Electric Operating Companies

$

645



$

782



$

1,287



$

1,346


  Southern Power

63



174



138



230


Southern Company Gas

71



106



346



376


  Total

779



1,062



1,771



1,952


  Parent Company and Other

(167)



(163)



(291)



1,030


  Net Income–As Reported

$

612



$

899



$

1,480



$

2,982










  Basic Earnings Per Share1

$

0.58



$

0.86



$

1.40



$

2.86


  Average Shares Outstanding (in millions)

1,058



1,044



1,057



1,041


  End of Period Shares Outstanding (in millions)





1,056



1,045











Three Months Ended


Year-to-Date

Non-GAAP Financial Measures

June


June

Net Income–Excluding Items (See Notes)

2020


2019


2020


2019

  Net Income–As Reported

$

612



$

899



$

1,480



$

2,982


Less:








Acquisition and Disposition Impacts2



(18)



38



2,481


Tax Impact



67



(16)



(1,122)


Estimated Loss on Plants Under Construction3

(152)



(8)



(155)



(13)


Tax Impact

39



2



40



3


Wholesale Gas Services4

(31)



29





93


Tax Impact

8



(6)





(23)


Asset Impairment5

(154)





(154)




Tax Impact

80





80




  Net Income–Excluding Items

$

822



$

833



$

1,647



$

1,563










  Basic Earnings Per Share–Excluding Items

$

0.78



$

0.80



$

1.56



$

1.50


-See Notes on the following page.






Southern Company


Financial Highlights

Notes

(1)

For the three and six months ended June 30, 2020 and 2019, dilution does not change basic earnings per share by more than $0.02 and is not material.

(2)

Earnings for the six months ended June 30, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Earnings for the three months ended June 30, 2019 primarily include a $23 million pre-tax ($88 million after-tax) gain on the sale of Southern Power Company's Plant Nacogdoches and a $32 million pre-tax and after-tax goodwill impairment charge in contemplation of the sale of the utility infrastructure services business unit of PowerSecure, Inc. Earnings for the six months ended June 30, 2019 also include a preliminary $2.5 billion pre-tax ($1.3 billion after-tax) gain on the sale of Gulf Power Company.

(3)

Earnings for the three and six months ended June 30, 2020 and 2019 include charges, associated legal expenses, and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Earnings for the three and six months ended June 30, 2020 also include a $149 million pre-tax ($111 million after-tax) charge for an estimated probable loss on Georgia Power Company's construction of Plant Vogtle Units 3 and 4, which significantly impacted earnings and earnings per share. Mississippi Power Company expects to substantially complete mine reclamation activities in 2020 and dismantlement of the abandoned gasifier-related assets and site restoration activities in 2025. The additional pre-tax period and closure costs associated with these activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, are estimated to total up to $11 million for the remainder of 2020, $16 million in 2021, and $11 million to $13 million annually in 2022 through 2025.  Further charges for Georgia Power Company's construction of Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges are uncertain.

(4)

Earnings for the three and six months ended June 30, 2020 and 2019 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.

(5)

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 a leveraged lease.




Southern Company

Significant Factors Impacting EPS














Three Months Ended


Year-to-Date


June


June


2020


2019


Change


2020


2019


Change

Earnings Per Share–












As Reported1 (See Notes)

$

0.58



$

0.86



$

(0.28)



$

1.40



$

2.86



$

(1.46)














  Significant Factors:












  Traditional Electric Operating Companies





$

(0.13)







$

(0.05)


Southern Power





(0.11)







(0.09)


Southern Company Gas





(0.03)







(0.03)


Parent Company and Other











(1.27)


Increase in Shares





(0.01)







(0.02)


  Total–As Reported





$

(0.28)







$

(1.46)















Three Months Ended


Year-to-Date


June


June

Non-GAAP Financial Measures

2020


2019


Change


2020


2019


Change

Earnings Per Share–












Excluding Items (See Notes)

$

0.78



$

0.80



$

(0.02)



$

1.56



$

1.50



$

0.06














  Total–As Reported





$

(0.28)







$

(1.46)


Less:












Acquisition and Disposition Impacts2





(0.05)







(1.28)


Estimated Loss on Plants Under Construction3





(0.10)







(0.10)


Wholesale Gas Services4





(0.04)







(0.07)


Asset Impairment5





(0.07)







(0.07)


  Total–Excluding Items





$

(0.02)







$

0.06


- See Notes on the following page.








Southern Company


Significant Factors Impacting EPS

Notes









(1)

For the three and six months ended June 30, 2020 and 2019, dilution does not change basic earnings per share by more than $0.02 and is not material.

(2)

Earnings for the six months ended June 30, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Earnings for the three months ended June 30, 2019 primarily include a $23 million pre-tax ($88 million after-tax) gain on the sale of Southern Power Company's Plant Nacogdoches and a $32 million pre-tax and after-tax goodwill impairment charge in contemplation of the sale of the utility infrastructure services business unit of PowerSecure, Inc. Earnings for the six months ended June 30, 2019 also include a preliminary $2.5 billion pre-tax ($1.3 billion after-tax) gain on the sale of Gulf Power Company.

(3)

Earnings for the three and six months ended June 30, 2020 and 2019 include charges, associated legal expenses, and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Earnings for the three and six months ended June 30, 2020 also include a $149 million pre-tax ($111 million after-tax) charge for an estimated probable loss on Georgia Power Company's construction of Plant Vogtle Units 3 and 4, which significantly impacted earnings and earnings per share. Mississippi Power Company expects to substantially complete mine reclamation activities in 2020 and dismantlement of the abandoned gasifier-related assets and site restoration activities in 2025. The additional pre-tax period and closure costs associated with these activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, are estimated to total up to $11 million for the remainder of 2020, $16 million in 2021, and $11 million to $13 million annually in 2022 through 2025.  Further charges for Georgia Power Company's construction of Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges are uncertain.

(4)

Earnings for the three and six months ended June 30, 2020 and 2019 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.

(5)

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 a leveraged lease.














Southern Company


EPS Earnings Analysis



Three Months


Year-to-Date



Ended June


June


Description

2020 vs. 2019


2020 vs. 2019







Retail Sales

$(0.09)


$(0.08)







Retail Revenue Impacts

0.11


0.20






Weather

(0.10)


(0.11)





Wholesale and Other Operating Revenues

0.01






Non-Fuel O&M

0.05


0.06





Depreciation and Amortization, Interest Expense, Other

(0.05)


(0.12)





Income Taxes

0.05


0.10





Total Traditional Electric Operating Companies

$(0.02)


$0.05





Southern Power

(0.02)


(0.02)





Southern Company Gas

0.01


0.04





Parent and Other

0.02


0.01





Increase in Shares

(0.01)


(0.02)





Total Change in EPS (Excluding Items)

$(0.02)


$0.06





Acquisition and Disposition Impacts1

(0.05)


(1.28)





Estimated Loss on Plants Under Construction2

(0.10)


(0.10)





Wholesale Gas Services3

(0.04)


(0.07)





Asset Impairment4

(0.07)


(0.07)





Total Change in EPS (As Reported)

$(0.28)


$(1.46)

- See Notes on the following page.







Southern Company


EPS Earnings Analysis


Three and Six Months Ended June 2020 vs. June 2019

Notes








(1)

Earnings for the six months ended June 30, 2020 primarily include a $39 million pre-tax ($23 million after-tax) gain on the sale of Southern Power Company's Plant Mankato. Earnings for the three months ended June 30, 2019 primarily include a $23 million pre-tax ($88 million after-tax) gain on the sale of Southern Power Company's Plant Nacogdoches and a $32 million pre-tax and after-tax goodwill impairment charge in contemplation of the sale of the utility infrastructure services business unit of PowerSecure, Inc. Earnings for the six months ended June 30, 2019 also include a preliminary $2.5 billion pre-tax ($1.3 billion after-tax) gain on the sale of Gulf Power Company.

(2)

Earnings for the three and six months ended June 30, 2020 and 2019 include charges, associated legal expenses, and tax impacts related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi. Earnings for the three and six months ended June 30, 2020 also include a $149 million pre-tax ($111 million after-tax) charge for an estimated probable loss on Georgia Power Company's construction of Plant Vogtle Units 3 and 4, which significantly impacted earnings and earnings per share. Mississippi Power Company expects to substantially complete mine reclamation activities in 2020 and dismantlement of the abandoned gasifier-related assets and site restoration activities in 2025. The additional pre-tax period and closure costs associated with these activities, including related costs for compliance and safety, asset retirement obligation accretion, and property taxes, are estimated to total up to $11 million for the remainder of 2020, $16 million in 2021, and $11 million to $13 million annually in 2022 through 2025.  Further charges for Georgia Power Company's construction of Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges are uncertain.

(3)

Earnings for the three and six months ended June 30, 2020 and 2019 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.

(4)

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 a leveraged lease.











Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)


Three Months Ended


Year-to-Date


June


June


2020


2019


Change


2020


2019


Change

Income Account-












Retail Electric Revenues-












Fuel

$

676



$

919



$

(243)



$

1,353



$

1,723



$

(370)


Non-Fuel

2,506



2,621



(115)



4,907



4,900



7


Wholesale Electric Revenues

472



542



(70)



889



1,041



(152)


Other Electric Revenues

168



161



7



320



331



(11)


Natural Gas Revenues

636



689



(53)



1,885



2,163



(278)


Other Revenues

162



166



(4)



284



352



(68)


Total Revenues

4,620



5,098



(478)



9,638



10,510



(872)


Fuel and Purchased Power

821



1,115



(294)



1,638



2,135



(497)


Cost of Natural Gas

144



191



(47)



583



877



(294)


Cost of Other Sales

74



84



(10)



129



203



(74)


Non-Fuel O&M

1,203



1,320



(117)



2,498



2,634



(136)


Depreciation and Amortization

873



755



118



1,730



1,506



224


Taxes Other Than Income Taxes

298



299



(1)



629



628



1


Estimated Loss on Plant Vogtle Units 3 and 4

149





149



149





149


(Gain) Loss on Dispositions, net



(8)



8



(39)



(2,506)



2,467


Total Operating Expenses

3,562



3,756



(194)



7,317



5,477



1,840


Operating Income

1,058



1,342



(284)



2,321



5,033



(2,712)


Allowance for Equity Funds Used During Construction

35



31



4



68



63



5


Earnings from Equity Method Investments

30



33



(3)



72



81



(9)


Interest Expense, Net of Amounts Capitalized

444



429



15



900



859



41


Impairment of Leveraged Lease

154





154



154





154


Other Income (Expense), net

101



99



2



204



176



28


Income Taxes

5



145



(140)



150



1,505



(1,355)


Net Income

621



931



(310)



1,461



2,989



(1,528)


Less:












Dividends on Preferred Stock of Subsidiaries

4



3



1



7



7




Net Income (Loss) Attributable to Noncontrolling Interests

5



29



(24)



(26)





(26)


NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY

$

612



$

899



$

(287)



$

1,480



$

2,982



$

(1,502)


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


2020


2019


Change


Weather Adjusted Change


2020


2019


Change


Weather Adjusted Change

Kilowatt-Hour Sales-
















Total Sales

43,547



48,434



(10.1)

%




87,811



93,601



(6.2)

%



















Total Retail Sales-

32,460



36,752



(11.7)

%


(7.5)

%


66,505



71,117



(6.5)

%


(3.7)

%

Residential

10,879



11,520



(5.6)

%


4.7

%


21,745



22,421



(3.0)

%


3.8

%

Commercial

10,531



12,386



(15.0)

%


(11.5)

%


21,470



23,372



(8.1)

%


(6.3)

%

Industrial

10,886



12,662



(14.0)

%


(14.0)

%


22,952



24,951



(8.0)

%


(8.0)

%

Other

164



184



(11.3)

%


(11.3)

%


338



373



(9.4)

%


(9.2)

%

















Total Wholesale Sales

11,087



11,682



(5.1)

%


N/A


21,306



22,484



(5.2)

%


N/A


































(In Thousands of Customers)






















Period Ended June












2020


2019


Change



Regulated Utility Customers-













Total Utility Customers-






8,580


8,477


1.2%



Total Traditional Electric






4,305


4,246


1.4%



Southern Company Gas





4,275


4,231


1.0%











Southern Company

Financial Overview

As Reported

(In Millions of Dollars)


Three Months Ended


Year-to-Date


June


June


2020


2019


% Change


2020


2019


% Change

Southern Company1, 2












Operating Revenues

$

4,620



$

5,098



(9.4)

%


$

9,638



$

10,510



(8.3)

%

Earnings Before Income Taxes

626



1,076



(41.8)

%


1,611



4,494



(64.2)

%

Net Income Available to Common

612



899



(31.9)

%


1,480



2,982



(50.4)

%













Alabama Power –












Operating Revenues

$

1,365



$

1,513



(9.8)

%


$

2,716



$

2,921



(7.0)

%

Earnings Before Income Taxes

395



388



1.8

%


762



671



13.6

%

Net Income Available to Common

298



296



0.7

%


578



513



12.7

%













Georgia Power –












Operating Revenues

$

1,928



$

2,117



(8.9)

%


$

3,754



$

3,951



(5.0)

%

Earnings Before Income Taxes

319



577



(44.7)

%


665



970



(31.4)

%

Net Income Available to Common

308



448



(31.3)

%


638



759



(15.9)

%













Mississippi Power –












Operating Revenues

$

283



$

313



(9.6)

%


$

559



$

600



(6.8)

%

Earnings Before Income Taxes

41



42



(2.4)

%


79



86



(8.1)

%

Net Income Available to Common

39



37



5.4

%


71



74



(4.1)

%













Southern Power2












Operating Revenues

$

439



$

510



(13.9)

%


$

814



$

953



(14.6)

%

Earnings Before Income Taxes

74



152



(51.3)

%


125



170



(26.5)

%

Net Income Available to Common

63



174



(63.8)

%


138



230



(40.0)

%













Southern Company Gas –












Operating Revenues

$

636



$

689



(7.7)

%


$

1,885



$

2,163



(12.9)

%

Earnings Before Income Taxes

87



112



(22.3)

%


441



459



(3.9)

%

Net Income Available to Common

71



106



(33.0)

%


346



376



(8.0)

%













Notes












- See Financial Highlights pages for discussion of certain significant items occurring during the periods presented.

(1)

Earnings comparisons to the prior year were significantly impacted by the preliminary gain associated with the sale of Gulf Power Company on January 1, 2019.

(2)

Earnings and revenue comparisons to the prior year were significantly impacted by Southern Power Company's dispositions of Plant Nacogdoches on June 13, 2019 and Plant Mankato on January 17, 2020.
























 

SOURCE Southern Company

For further information: Media, Southern Company Media Relations, 404-506-5333 or 1-866-506-5333; or Investor Relations, Scott Gammill, 404-506-0901, sagammil@southernco.com