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Southern Company Reports Third Quarter Earnings
PRNewswire
ATLANTA
(NYSE:SO)
ATLANTA, Oct. 28 /PRNewswire-FirstCall/ -- Southern Company (NYSE: SO) today reported third quarter earnings of $790.0 million, or 99 cents a share, compared with $780.4 million, or $1.01 a share, in the same period a year ago.
For the nine months ended Sept. 30, Southern Company's earnings were $1.39 billion, or $1.77 a share, compared with $1.56 billion, or $2.02 a share, for the same period a year ago. Excluding certain items described below, Southern Company earned $2.02 a share for the first nine months of 2009, compared with $2.11 a share for the same period in 2008.
Earnings for the nine-month period ended Sept. 30, 2009, included a charge of 25 cents a share related to a settlement agreement with MC Asset Recovery (MCAR) LLC to resolve a lawsuit arising out of the 2003 bankruptcy of Mirant Corp., a Southern Company subsidiary until its 2001 spin-off. Earnings for the nine months ended Sept. 30, 2008, included a charge of 9 cents per share related to tax issues on three leveraged-lease investments from the 1990s, when Southern Company pursued development of international energy projects.
Revenues for the third quarter were $4.68 billion, compared with $5.43 billion in the same period a year ago, a 13.7 percent decrease. For the first nine months of the year, revenues totaled $12.23 billion, compared with $13.32 billion in the same period a year ago, a decrease of 8.2 percent.
Significantly cooler than average weather for the period and the weak economy continued to have a negative impact on earnings in the third quarter, as evidenced by a decrease in electricity usage and sales, and flat customer growth. Industrial sales sustained the greatest impact, dropping 9.6 percent in the third quarter, compared with the third quarter last year. Other negative drivers included decreased revenues from commercial and industrial market-response rates and an increase in the number of Southern Company shares outstanding.
"While the economy continues to take its toll, we are seeing signs of stabilization and what may be the beginnings of recovery in certain sectors in our region. We realized an 11 percent increase in industrial sales over the second quarter of 2009," said Southern Company Chief Executive Officer David M. Ratcliffe. "Most importantly, our employees continue to manage through this recession and provide our customers with reliable electricity at prices below the national average."
Positive earnings drivers for the third quarter included lower operations and maintenance expenses, increased monthly service charges, revenues associated with the recovery of investments in environmental equipment, and the amortization of excess funds set aside for the removal of retired equipment.
In the third quarter, kilowatt-hour sales to retail customers in Southern Company's four-state service area decreased 5.1 percent compared with sales in the third quarter of 2008. Residential electricity sales decreased 2.6 percent. Electricity sales to commercial customers decreased 3.6 percent, and industrial sales decreased 9.6 percent. Year-to-date, kilowatt-hour sales to retail customers decreased 6.0 percent compared with sales during the same period in 2008. Residential electricity sales decreased 1.7 percent. Commercial sales decreased 1.9 percent and industrial sales declined 14.7 percent.
Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 6.1 percent in the third quarter of 2009 compared with the same period of 2008. Year-to-date, total sales of electricity decreased 7.6 percent as compared with the same period in 2008.
Southern Company's financial analysts call will be at 1 p.m. Eastern time Oct. 28, at which time Ratcliffe and Chief Financial Officer Paul Bowers will discuss earnings and earnings guidance as well as a general business update. Investors, media and the public may listen to a live webcast of the call at http://investor.southerncompany.com/events.cfm. A replay of the webcast will be available at the site for 12 months.
With 4.4 million customers and more than 42,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast. A leading U.S. producer of 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 retail electric prices that are below the national average. Southern Company is consistently listed among the top U.S. electric service providers in customer satisfaction by the American Customer Satisfaction Index (ACSI). Visit our Web site 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 economic recovery. 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, 2008, and subsequent securities filings, could cause results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter 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, Internal Revenue Service audits, and Mirant matters; 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, population and business growth (and declines), and the effects of energy conservation measures; available sources and costs of fuels; effects of inflation; ability to control costs and cost overruns during the development and construction of facilities; investment performance of Southern Company's employee benefit plans; 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 storm restoration cost recovery; regulatory approvals related to the potential Plant Vogtle expansion, including Georgia Public Service Commission and Nuclear Regulatory Commission approvals; 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 neighboring utilities and other wholesale customers; the direct or indirect effect on Southern Company's business resulting from terrorist incidents and the threat of terrorist incidents; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company's and its subsidiaries' credit ratings; 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 an avian or other influenza, or other similar occurrences; the direct or indirect effects on Southern Company's business resulting from incidents similar to the August 2003 power outage in the Northeast; and the effect of accounting pronouncements issued periodically by standard setting bodies. Southern Company and its subsidiaries expressly disclaim any obligation to update any forward-looking information.
Southern Company
Financial Highlights
(In Millions of Dollars Except
Earnings Per Share)
Three Months
Ended Year-to-Date
September September
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Consolidated Earnings-As Reported
(See Notes)
Traditional Operating Companies $726 $727 $1,449 $1,520
Southern Power 67 59 126 124
---- ---- ------ ------
Total 793 786 1,575 1,644
Parent Company and Other (3) (6) (181) (88)
---- ---- ------ ------
Net Income-As Reported $790 $780 $1,394 $1,556
==== ==== ====== ======
Basic Earnings Per Share - $0.99 $1.01 $1.77 $2.02
Average Shares Outstanding (in
millions) 798 773 790 769
End of Period Shares Outstanding
(in millions) 801 775
Three Months
Ended Year-to-Date
September September
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Consolidated Earnings-Excluding Items
(See Notes)
Net Income-As Reported $790 $780 $1,394 $1,556
Leveraged Lease Adjustment - - - 67
MC Asset Recovery Litigation Settlement - - 202 -
----- ----- ------ ------
Net Income-Excluding Items $790 $780 $1,596 $1,623
===== ===== ====== ======
Basic Earnings Per Share-Excluding Items $0.99 $1.01 $2.02 $2.11
Significant Factors Impacting EPS
Three Months Ended
September Year-to-Date September
---------------- ----------------------
2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Consolidated
Earnings Per
Share-
As Reported (See
Notes) $0.99 $1.01 $(0.02) $1.77 $2.02 $(0.25)
Significant
Factors:
-----------
Traditional
Operating
Companies - (0.09)
Southern Power 0.01 -
Parent Company
and Other - (0.11)
Additional Shares (0.03) (0.05)
------ ------
Total-As Reported $(0.02) $(0.25)
====== ======
Three Months Ended
September Year-to-Date September
---------------- ----------------------
2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Consolidated
Earnings Per
Share-
Excluding
Items (See Notes) $0.99 $1.01 $(0.02) $2.02 $2.11 $(0.09)
Total-As Reported (0.02) (0.25)
Leveraged Lease Adjustment - (0.09)
MC Asset Recovery
Litigation Settlement - 0.25
------- ------
Total-Excluding Items $(0.02) $(0.09)
======= ======
Notes
-----
- For the three months and nine months ended September 30, 2009 and 2008,
diluted earnings per share are not more than 1 cent per share and are
not material.
- The charge related to Southern Company's tax treatment of investments in
leveraged leases significantly impacted the presentation of earnings and
earnings per share for the nine months ended September 30, 2008, and
such charges related to these investments are not expected to occur in
the future.
- The charge related to Southern Company's MC Asset Recovery litigation
settlement significantly impacted the presentation of earnings and
earnings per share for the nine months ended September 30, 2009, and
significant charges related to the Mirant spin-off are not expected to
occur in the future.
- Certain prior year data has been reclassified to conform with current
year presentation.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final
results published in the Form 10-Q.
Southern Company
EPS Earnings Analysis
Three Months Ended September 2009
----- -----------
Cents Description
----- -----------
(0.06) Non-Fuel Revenues
(0.03) Weather
0.06 Non-Fuel O&M
0.03 Depreciation & Amortization
0.01 Other Income & Deductions
(0.01) Interest Expense
----- -------------------------------------
$0.00 Total Traditional Operating Companies
----- -------------------------------------
0.01 Southern Power
0.00 Parent and Other
(0.03) Increase in Shares
------ ------------------------------------
($0.02) Total Change in QTD EPS (As Reported)
------ -------------------------------------
Notes
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final
results published in the Form 10-Q.
Southern Company
Consolidated Earnings
(In Millions of Dollars)
Three Months
Ended Year-to-Date
September September
---------- ----------
2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Income Account-
Retail Revenue-
Fuel $1,539 $1,911 $(372) $4,097 $4,506 $(409)
Non-Fuel 2,458 2,568 (110) 6,258 6,428 (170)
Wholesale Revenues 519 775 (256) 1,408 1,880 (472)
Other Electric Revenues 141 142 (1) 392 414 (22)
Non-regulated Operating
Revenues 25 31 (6) 78 97 (19)
----- ----- ----- ------- ----- ------
Total Revenues 4,682 5,427 (745) 12,233 13,325 (1,092)
----- ----- ----- ------- ----- ------
Fuel and Purchased Power 1,901 2,531 (630) 4,997 5,895 (898)
Non-fuel O & M 821 908 (87) 2,523 2,720 (197)
MCAR Litigation
Settlement 0 0 0 202 0 202
Depreciation and
Amortization 332 367 (35) 1,099 1,070 29
Taxes Other Than Income
Taxes 213 216 (3) 621 603 18
----- ----- ----- ------- ----- ------
Total Operating Expenses 3,267 4,022 (755) 9,442 10,288 (846)
----- ----- ----- ------- ----- ------
Operating Income 1,415 1,405 10 2,791 3,037 (246)
Other Income, net 54 46 8 166 71 95
Interest Charges 226 219 7 685 665 20
Income Taxes 436 435 1 829 838 (9)
----- ----- ----- ------- ----- ------
Net Income 807 797 10 1,443 1,605 (162)
Dividends on Preferred and
Preference Stock of
Subsidiaries 17 17 0 49 49 0
----- ----- ---- ------ ------ ------
NET INCOME AFTER
DIVIDENDS ON PREFERRED
AND PREFERENCE STOCK
(See Notes) $790 $780 $10 $1,394 $1,556 $(162)
===== ===== ====== ====== ====== ======
Kilowatt-Hour Sales
(In Millions of KWHs)
Three Months Ended September
Weather
Adjusted
As Reported (See Notes) 2009 2008 Change Change
---- ---- ------ ------
Kilowatt-Hour Sales-
Total Sales 53,314 56,769 -6.1%
Total Retail Sales- 43,474 45,800 -5.1% -3.4%
Residential 15,727 16,153 -2.6% 0.4%
Commercial 14,979 15,546 -3.6% -2.1%
Industrial 12,529 13,866 -9.6% -9.3%
Other 239 235 1.3% 1.2%
Total Wholesale Sales 9,840 10,969 -10.3% N/A
Year-to-Date September
----------------------
Weather
Adjusted
As Reported (See Notes) 2009 2008 Change Change
---- ---- ------ ------
Kilowatt-Hour Sales-
Total Sales 143,172 154,865 -7.6%
Total Retail Sales- 116,797 124,258 -6.0% -5.3%
Residential 40,289 40,983 -1.7% -0.4%
Commercial 41,068 41,885 -1.9% -1.3%
Industrial 34,722 40,688 -14.7% -14.6%
Other 718 702 2.4% 2.5%
Total Wholesale Sales 26,375 30,607 -13.8% N/A
Notes
-----
- Certain prior year data has been reclassified to conform with current
year presentation.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final
results published in the Form 10-Q.
Southern Company
Financial Overview
(In Millions of Dollars)
Three Months
Ended Year-to-Date
September September
-------------- -------------
2009 2008 %Change 2009 2008 %Change
---- ---- -------- ---- ---- --------
Consolidated -
Operating
Revenues $4,682 $5,427 -13.7% $12,233 $13,325 -8.2%
Earnings Before
Income Taxes 1,243 1,232 0.9% 2,272 2,443 -7.0%
Net Income Available
to Common 790 780 1.2% 1,394 1,556 -10.4%
Alabama Power -
Operating
Revenues $1,592 $1,866 -14.6% $4,298 $4,672 -8.0%
Earnings Before
Income Taxes 425 418 1.9% 958 888 8.0%
Net Income Available
to Common 261 252 4.0% 584 535 9.3%
Georgia Power -
Operating
Revenues $2,327 $2,644 -12.0% $5,967 $6,620 -9.9%
Earnings Before
Income Taxes 608 643 -5.6% 1,091 1,292 -15.6%
Net Income Available
to Common 388 402 -3.5% 700 826 -15.3%
Gulf Power -
Operating
Revenues $378 $422 -10.5% $1,003 $1,083 -7.4%
Earnings Before
Income Taxes 65 62 4.9% 140 138 2.2%
Net Income Available
to Common 41 37 10.3% 90 84 7.3%
Mississippi Power -
Operating
Revenues $331 $382 -13.3% $886 $965 -8.2%
Earnings Before
Income Taxes 57 56 2.5% 122 120 1.5%
Net Income Available
to Common 35 36 -3.6% 75 76 -2.1%
Southern Power -
Operating
Revenues $283 $516 -45.1% $745 $1,048 -28.9%
Earnings Before
Income Taxes 108 98 11.7% 205 203 1.2%
Net Income Available
to Common 67 60 13.0% 126 124 1.8%
Notes
-----
- Certain prior year data has been reclassified to conform with current
year presentation.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final results
published in the Form 10-Q.
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