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Southern Company reports third-quarter 2022 earnings

SO

ATLANTA, Oct. 27, 2022 /PRNewswire/ -- Southern Company today reported third-quarter earnings of $1.5 billion, or $1.36 per share, in 2022 compared with $1.1 billion, or $1.04 per share, in 2021. For the nine months ended September 30, 2022, Southern Company reported earnings of $3.6 billion, or $3.38 per share, compared with $2.6 billion, or $2.46 per share, for the same period in 2021.

Southern Company (PRNewsFoto/Southern Company) (PRNewsfoto/Southern Company)

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $1.4 billion, or $1.31 per share, during the third quarter of 2022, compared with $1.3 billion, or $1.23 per share, during the third quarter 2021. For the nine months ended September 30, 2022, excluding these items, Southern Company earned $3.6 billion, or $3.35 per share, compared with $3.2 billion, or $3.05 per share, for the same period in 2021.

Non-GAAP Financial Measures


Three Months Ended September


Year-to-Date September

Net Income - Excluding Items (in millions)


2022

2021


2022

2021

Net Income - As Reported


$1,472

$1,101


$3,611

$2,608

Less:







Estimated Loss on Plants Under Construction


62

(271)


7

(779)

Tax Impact


(16)

69


(2)

198

Acquisition and Disposition Impacts


14

119


19

120

Tax Impact


-

(112)


(2)

(112)

Wholesale Gas Services


-

-


-

18

Tax Impact


-

1


-

(3)

Asset Impairments


-

(2)


-

(91)

Tax Impact


-

(7)


-

19

Net Income – Excluding Items


$1,412

$1,304


$3,589

$3,238

Average Shares Outstanding – (in millions)


1,082

1,061


1,070

1,060

Basic Earnings Per Share – Excluding Items


$1.31

$1.23


$3.35

$3.05

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

Adjusted earnings drivers for the third quarter 2022, as compared with the same period in 2021, were higher revenues associated with increased usage, rates and pricing at the company's regulated utilities, partially offset by higher non-fuel operations and maintenance costs, reflecting a rising cost environment and the company's long-term commitment to reliability and resilience, along with higher interest expense.

Third-quarter 2022 operating revenues were $8.4 billion, compared with $6.2 billion for the third quarter of 2021, an increase of 34.3 percent. For the nine months ended September 30, 2022, operating revenues were $22.2 billion, compared with $17.3 billion for the corresponding period in 2021, an increase of 28.2 percent. These increases were primarily due to higher fuel costs.

"Our premier, state-regulated electric and gas utilities continued to perform well during the third quarter," commented Chairman, President and CEO, Thomas A. Fanning. "The economies within our service territories remain strong, and customer growth outpaced our expectations."

Added Fanning, "At Plant Vogtle Unit 3, we successfully completed initial fuel load with the safe transfer of all 157 fuel assemblies from the spent fuel pool to the reactor core. This historic milestone marks the completion of another critical step toward start-up and commercial operation of Unit 3."

Southern Company's third-quarter earnings slides with supplemental financial information, including earnings guidance, 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 Daniel S. Tucker 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. 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.

Page 3


Southern Company

Financial Highlights

(In Millions of Dollars Except Earnings Per Share)










Three Months Ended
September


Year-To-Date September

Net Income–As Reported (See Notes)

2022


2021


2022


2021

Traditional Electric Operating Companies

$ 1,445


$ 1,085


$ 3,256


$ 2,352

Southern Power

95


78


265


211

Southern Company Gas

83


56


516


389

Total

1,623


1,219


4,037


2,952

Parent Company and Other

(151)


(118)


(426)


(344)

Net Income–As Reported

$ 1,472


$ 1,101


$ 3,611


$ 2,608









Basic Earnings Per Share1

$ 1.36


$ 1.04


$ 3.38


$ 2.46

Average Shares Outstanding (in millions)

1,082


1,061


1,070


1,060

End of Period Shares Outstanding (in millions)





1,089


1,060









Non-GAAP Financial Measures

Three Months Ended
September


Year-To-Date September

Net Income–Excluding Items (See Notes)

2022


2021


2022


2021

Net Income–As Reported

$ 1,472


$ 1,101


$ 3,611


$ 2,608

Less:








Estimated Loss on Plants Under Construction2

62


(271)


7


(779)

Tax Impact

(16)


69


(2)


198

Acquisition and Disposition Impacts3

14


119


19


120

Tax Impact


(112)


(2)


(112)

Wholesale Gas Services4




18

Tax Impact


1



(3)

Asset Impairments5


(2)



(91)

Tax Impact


(7)



19

Net Income–Excluding Items

$ 1,412


$ 1,304


$ 3,589


$ 3,238









Basic Earnings Per Share–Excluding Items

$ 1.31


$ 1.23


$ 3.35


$ 3.05

- See Notes on the following page.


Page 4

Southern Company

Financial Highlights


Notes

(1)

Dilution is not material in any period presented. Diluted earnings per share was $1.35 and $3.36 for the three and nine months ended September 30, 2022 and was $1.03 and $2.44 for the three and nine months ended September 30, 2021, respectively.

(2)

Earnings for the three and nine months ended September 30, 2022 include a net credit of $70 million pre tax ($52 million after tax) and $18 million pre tax ($13 million after tax), respectively, earnings for the three months ended September 30, 2021 include a charge of $264 million pre tax ($197 million after tax), and earnings for the nine months ended September 30, 2021 include charges totaling $772 million pre tax ($576 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges and credits may occur; however, the amount and timing are uncertain. Earnings for the three and nine months ended September 30, 2022 and 2021 also 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, net of salvage, totaling $10 million to $20 million annually through 2025.

(3)

Earnings for the three and nine months ended September 30, 2022 include a $14 million pre-tax ($11 million after-tax) gain as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power. Earnings for the three and nine months ended September 30, 2021 include a preliminary $121 million pre-tax ($93 million after-tax) gain on the sale of Sequent, as well as $85 million in additional tax expense resulting from the sale. Further impacts may result from future acquisition and disposition activities; however, the amount and timing of any such impacts are uncertain.

(4)

Earnings for the three and nine months ended September 30, 2021 include results of the Wholesale Gas Services business. Presenting earnings and earnings per share excluding Wholesale Gas Services provided an additional measure of operating performance that excluded the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments. Amounts subsequent to the July 1, 2021 sale of Sequent represent final income adjustments.

(5)

Earnings for the three and nine months ended September 30, 2021 include pre-tax impairment charges of $2 million ($9 million after tax) and $84 million ($67 million after tax), respectively, related to Southern Company Gas' investment in the PennEast Pipeline project. Earnings for the nine months ended September 30, 2021 also include a pre-tax impairment charge of $7 million ($6 million after tax) related to a leveraged lease investment. Southern Company Gas expects to record a pre-tax impairment charge totaling approximately $125 million ($95 million after tax) in the fourth quarter 2022 related to the pending sale of two natural gas storage facilities. Additional impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.





Page 5

Southern Company

Significant Factors Impacting EPS














Three Months Ended
September


Year-To-Date September


2022


2021


Change


2022


2021


Change

Earnings Per Share–












As Reported1 (See Notes)

$ 1.36


$ 1.04


$ 0.32


$ 3.38


$ 2.46


$ 0.92













Significant Factors:












Traditional Electric Operating Companies





$ 0.34






$ 0.85

Southern Power





0.02






0.05

Southern Company Gas





0.03






0.12

Parent Company and Other





(0.04)






(0.07)

Increase in Shares





(0.03)






(0.03)

Total–As Reported





$ 0.32






$ 0.92














Three Months Ended
September


Year-To-Date September

Non-GAAP Financial Measures

2022


2021


Change


2022


2021


Change

Earnings Per Share–












Excluding Items (See Notes)

$ 1.31


$ 1.23


$ 0.08


$ 3.35


$ 3.05


$ 0.30













Total–As Reported





$ 0.32






$ 0.92

Less:












Estimated Loss on Plants Under Construction2





0.23






0.56

Acquisition and Disposition Impacts3










0.01

Wholesale Gas Services4










(0.02)

Asset Impairments5





0.01






0.07

Total–Excluding Items





$ 0.08






$ 0.30

- See Notes on the following page.



Page 6

Southern Company

Significant Factors Impacting EPS


Notes

(1)

Dilution is not material in any period presented. Diluted earnings per share was $1.35 and $3.36 for the three and nine months ended September 30, 2022 and was $1.03 and $2.44 for the three and nine months ended September 30, 2021, respectively.

(2)

Earnings for the three and nine months ended September 30, 2022 include a net credit of $70 million pre tax ($52 million after tax) and $18 million pre tax ($13 million after tax), respectively, earnings for the three months ended September 30, 2021 include a charge of $264 million pre tax ($197 million after tax), and earnings for the nine months ended September 30, 2021 include charges totaling $772 million pre tax ($576 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges and credits may occur; however, the amount and timing are uncertain. Earnings for the three and nine months ended September 30, 2022 and 2021 also 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, net of salvage, totaling $10 million to $20 million annually through 2025.

(3)

Earnings for the three and nine months ended September 30, 2022 include a $14 million pre-tax ($11 million after-tax) gain as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power. Earnings for the three and nine months ended September 30, 2021 include a preliminary $121 million pre-tax ($93 million after-tax) gain on the sale of Sequent, as well as $85 million in additional tax expense resulting from the sale. Further impacts may result from future acquisition and disposition activities; however, the amount and timing of any such impacts are uncertain.

(4)

Earnings for the three and nine months ended September 30, 2021 include results of the Wholesale Gas Services business. Presenting earnings and earnings per share excluding Wholesale Gas Services provided an additional measure of operating performance that excluded the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments. Amounts subsequent to the July 1, 2021 sale of Sequent represent final income adjustments.

(5)

Earnings for the three and nine months ended September 30, 2021 include pre-tax impairment charges of $2 million ($9 million after tax) and $84 million ($67 million after tax), respectively, related to Southern Company Gas' investment in the PennEast Pipeline project. Earnings for the nine months ended September 30, 2021 also include a pre-tax impairment charge of $7 million ($6 million after tax) related to a leveraged lease investment. Southern Company Gas expects to record a pre-tax impairment charge totaling approximately $125 million ($95 million after tax) in the fourth quarter 2022 related to the pending sale of two natural gas storage facilities. Additional impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.



Page 7


Southern Company

EPS Earnings Analysis








Description

Three Months Ended
September 2022 vs. 2021


Year-To-Date
September 2022 vs. 2021





Retail Sales


13¢





Retail Revenue Impacts

11


32





Weather

2


13





Wholesale & Other Operating Revenues

2


4





Non-Fuel O&M(*)

(5)


(19)





Depreciation and Amortization, Interest Expense, Other

(4)


(7)





Income Taxes

(1)


(6)





Total Traditional Electric Operating Companies

11¢


30¢





Southern Power

2


5





Southern Company Gas

2


7





Parent and Other

(4)


(9)





Increase in Shares

(3)


(3)





Total Change in EPS (Excluding Items)


30¢





Estimated Loss on Plants Under Construction1

23


56





Acquisition and Disposition Impacts2


1





Wholesale Gas Services3


(2)





Asset Impairments4

1


7





Total Change in EPS (As Reported)

32¢


92¢

(*) Includes non-service cost-related benefits income




- See additional Notes on the following page.




Page 8

Southern Company

EPS Earnings Analysis


Notes

(1)

Earnings for the three and nine months ended September 30, 2022 include a net credit of $70 million pre tax ($52 million after tax) and $18 million pre tax ($13 million after tax), respectively, earnings for the three months ended September 30, 2021 include a charge of $264 million pre tax ($197 million after tax), and earnings for the nine months ended September 30, 2021 include charges totaling $772 million pre tax ($576 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges and credits may occur; however, the amount and timing are uncertain. Earnings for the three and nine months ended September 30, 2022 and 2021 also 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, net of salvage, totaling $10 million to $20 million annually through 2025.

(2)

Earnings for the three and nine months ended September 30, 2022 include a $14 million pre-tax ($11 million after-tax) gain as a result of the early termination of the transition services agreement related to the 2019 sale of Gulf Power. Earnings for the three and nine months ended September 30, 2021 include a preliminary $121 million pre-tax ($93 million after-tax) gain on the sale of Sequent, as well as $85 million in additional tax expense resulting from the sale. Further impacts may result from future acquisition and disposition activities; however, the amount and timing of any such impacts are uncertain.

(3)

Earnings for the three and nine months ended September 30, 2021 include results of the Wholesale Gas Services business. Presenting earnings and earnings per share excluding Wholesale Gas Services provided an additional measure of operating performance that excluded the volatility resulting from mark-to-market and lower of weighted average cost or current market price accounting adjustments. Amounts subsequent to the July 1, 2021 sale of Sequent represent final income adjustments.

(4)

Earnings for the three and nine months ended September 30, 2021 include pre-tax impairment charges of $2 million ($9 million after tax) and $84 million ($67 million after tax), respectively, related to Southern Company Gas' investment in the PennEast Pipeline project. Earnings for the nine months ended September 30, 2021 also include a pre-tax impairment charge of $7 million ($6 million after tax) related to a leveraged lease investment. Southern Company Gas expects to record a pre-tax impairment charge totaling approximately $125 million ($95 million after tax) in the fourth quarter 2022 related to the pending sale of two natural gas storage facilities. Additional impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

Page 9


Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)














Three Months Ended September


Year-To-Date September


2022


2021


Change


2022


2021


Change

Retail Electric Revenues-












Fuel

$ 2,320


$ 1,186


$ 1,134


$ 4,942


$ 2,899


$ 2,043

Non-Fuel

3,641


3,365


276


9,421


8,593


828

Wholesale Electric Revenues

1,197


731


466


2,798


1,822


976

Other Electric Revenues

185


179


6


554


525


29

Natural Gas Revenues

857


623


234


3,998


2,994


1,004

Other Revenues

178


154


24


519


513


6

Total Operating Revenues

8,378


6,238


2,140


22,232


17,346


4,886

Fuel and Purchased Power

3,068


1,522


1,546


6,534


3,642


2,892

Cost of Natural Gas

294


129


165


1,840


943


897

Cost of Other Sales

92


71


21


275


255


20

Non-Fuel O&M

1,547


1,446


101


4,621


4,257


364

Depreciation and Amortization

922


896


26


2,728


2,658


70

Taxes Other Than Income Taxes

352


312


40


1,073


969


104

Estimated Loss on Plant Vogtle Units 3 and 4

(70)


264


(334)


(18)


772


(790)

Gain on Dispositions, net

(20)


(125)


105


(53)


(179)


126

Total Operating Expenses

6,185


4,515


1,670


17,000


13,317


3,683

Operating Income

2,193


1,723


470


5,232


4,029


1,203

Allowance for Equity Funds Used During Construction

59


49


10


163


140


23

Earnings from Equity Method Investments

28


30


(2)


109


35


74

Interest Expense, Net of Amounts Capitalized

511


451


60


1,461


1,352


109

Other Income (Expense), net

132


131


1


414


290


124

Income Taxes

414


372


42


891


550


341

Net Income

1,487


1,110


377


3,566


2,592


974

Dividends on Preferred Stock of Subsidiaries

3


4


(1)


10


11


(1)

Net Income (Loss) Attributable to Noncontrolling Interests

12


5


7


(55)


(27)


(28)

NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY

$ 1,472


$ 1,101


$ 371


$ 3,611


$ 2,608


$ 1,003

Notes

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

Page 10



















Southern Company

Kilowatt-Hour Sales and Customers

(In Millions of KWHs)


















Three Months Ended September


Year-To-Date September


2022


2021


Change


Weather
Adjusted
Change


2022


2021


Change


Weather
Adjusted
Change

Kilowatt-Hour Sales-















Total Sales

56,606


54,134


4.6 %




156,874


146,576


7.0 %



















Total Retail Sales-

41,490


40,441


2.6 %


1.8 %


113,716


109,747


3.6 %


1.6 %

Residential

14,467


14,063


2.9 %


1.3 %


38,632


36,941


4.6 %


0.4 %

Commercial

13,827


13,458


2.7 %


2.0 %


37,060


35,701


3.8 %


2.0 %

Industrial

13,048


12,762


2.2 %


2.2 %


37,575


36,632


2.6 %


2.6 %

Other

148


158


(6.2) %


(6.3) %


449


473


(5.0) %


(5.0) %

















Total Wholesale Sales

15,116


13,693


10.4 %


N/A


43,158


36,829


17.2 %


N/A

































(In Thousands of Customers)






















Period Ended September












2022


2021


Change



Regulated Utility Customers-













Total Utility Customers-








8,722


8,656


0.8 %



Total Traditional Electric






4,422


4,373


1.1 %



Southern Company Gas








4,300


4,283


0.4 %



Page 11








Southern Company

Financial Overview

As Reported

(In Millions of Dollars)














Three Months Ended September


Year-To-Date September


2022


2021


% Change


2022


2021


% Change

Southern Company –












Operating Revenues

$ 8,378


$ 6,238


34.3 %


$ 22,232


$ 17,346


28.2 %

Earnings Before Income Taxes

1,901


1,482


28.3 %


4,457


3,142


41.9 %

Net Income Available to Common

1,472


1,101


33.7 %


3,611


2,608


38.5 %













Alabama Power –












Operating Revenues

$ 2,444


$ 1,904


28.4 %


$ 6,023


$ 5,019


20.0 %

Earnings Before Income Taxes

694


655


6.0 %


1,660


1,566


6.0 %

Net Income Available to Common

525


499


5.2 %


1,256


1,189


5.6 %













Georgia Power –












Operating Revenues

$ 3,889


$ 2,856


36.2 %


$ 9,218


$ 7,050


30.8 %

Earnings Before Income Taxes

1,084


649


67.0 %


2,272


1,111


104.5 %

Net Income Available to Common

858


536


60.1 %


1,851


1,030


79.7 %













Mississippi Power –












Operating Revenues

$ 510


$ 378


34.9 %


$ 1,279


$ 988


29.5 %

Earnings Before Income Taxes

79


60


31.7 %


188


155


21.3 %

Net Income Available to Common

62


50


24.0 %


150


133


12.8 %













Southern Power –












Operating Revenues

$ 1,180


$ 679


73.8 %


$ 2,618


$ 1,610


62.6 %

Earnings Before Income Taxes

143


92


55.4 %


259


181


43.1 %

Net Income Available to Common

95


78


21.8 %


265


211


25.6 %













Southern Company Gas –












Operating Revenues

$ 857


$ 623


37.6 %


$ 3,998


$ 2,994


33.5 %

Earnings Before Income Taxes

110


189


(41.8) %


677


613


10.4 %

Net Income Available to Common

83


56


48.2 %


516


389


32.6 %

Notes

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

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/southern-company-reports-third-quarter-2022-earnings-301660819.html

SOURCE Southern Company