Southern Company reports third-quarter 2022 earnings

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October 27, 2022 6:46 AM EDT

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.

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 CompanySouthern 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 EndedSeptember

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 EndedSeptember

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 EndedSeptember

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 EndedSeptember

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-DateSeptember 2022 vs. 2021

Retail Sales

6¢

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)

8¢

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


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