Southern Company reports first-quarter 2023 earnings

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Apr 27, 2023, 06:45 ET

ATLANTA, April 27, 2023 /PRNewswire/ -- Southern Company today reported first-quarter earnings of $862 million, or 79 cents per share, in 2023 compared with earnings of $1.03 billion, or 97 cents per share, in the first quarter of 2022.

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $867 million, or 79 cents per share, during the first quarter of 2023, compared with $1.03 billion, or 97 cents per share, during the first quarter of 2022.

Non-GAAP Financial Measures	Three Months Ended March
Net Income - Excluding Items (in millions)	2023	2022
Net Income - As Reported	$862	$1,032
Less:
Estimated Loss on Plants Under Construction	(2)	(1)
Tax Impact	1	-
Loss on Extinguishment of Debt	(5)	-
Tax Impact	1	-
Net Income – Excluding Items	$867	$1,033
Average Shares Outstanding – (in millions)	1,091	1,063
Basic Earnings Per Share – Excluding Items	$0.79	$0.97

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 first quarter 2023, as compared with 2022, were increased depreciation and amortization, milder weather and higher interest expense, partially offset by higher revenues associated with rates and pricing at the company's regulated utilities.

First-quarter 2023 operating revenues were $6.5 billion, compared with $6.6 billion for the first quarter of 2022, a decrease of 2.5 percent.

"Southern Company delivered a solid start to 2023 despite the mildest weather on record for a first quarter in the Southeastern United States," said President Christopher C. Womack. Added Womack, "We are encouraged by continued strong residential customer growth in both the electric and gas sectors, as well as healthy economies and a robust economic development pipeline in our service footprint."

Southern Company's first-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 Womack 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 provider serving 9 million customers across the Southeast and beyond through its family of companies. Providing clean, safe, reliable and affordable energy with excellent service is our mission. The company has electric operating companies in three states, natural gas distribution companies in four states, a competitive generation company, a leading distributed energy distribution company with national capabilities, a fiber optics network and telecommunications services. Through an industry-leading commitment to innovation, resilience and sustainability, we are taking action to meet customers' and communities' needs while advancing our goal of net zero greenhouse gas emissions by 2050. Our uncompromising values ensure we put the needs of those we serve at the center of everything we do and are the key to our sustained success. We are transforming energy into economic, environmental and social progress for tomorrow. Our corporate culture and hiring practices have earned the company national awards and recognition from numerous organizations, including Forbes, The Military Times, DiversityInc, Black Enterprise, J.D. Power, Fortune, Human Rights Campaign and more. To learn more, visit www.southerncompany.com.


Southern Company
Financial Highlights
*(In Millions of Dollars Except Earnings Per Share)*

	Three Months Ended March
Net Income–As Reported (See Notes)	2023	2022
Traditional Electric Operating Companies	$ 610	$ 774
Southern Power	102	72
Southern Company Gas	309	319
Total	1,021	1,165
Parent Company and Other	(159)	(133)
Net Income–As Reported	$ 862	$ 1,032

Basic Earnings Per Share¹	$ 0.79	$ 0.97
Average Shares Outstanding (in millions)	1,091	1,063
End of Period Shares Outstanding (in millions)	1,090	1,063


Non-GAAP Financial Measures	Three Months Ended March
Net Income–Excluding Items (See Notes)	2023	2022
Net Income–As Reported	$ 862	$ 1,032
Less:
Estimated Loss on Plants Under Construction²	(2)	(1)
Tax Impact	1	—
Loss on Extinguishment of Debt³	(5)	—
Tax Impact	1	—
Net Income–Excluding Items	$ 867	$ 1,033

Basic Earnings Per Share–Excluding Items	$ 0.79	$ 0.97
- See Notes on the following page.

Southern Company
Financial Highlights

Notes
(1)	Dilution is not material in any period presented. Diluted earnings per share was $0.79 and $0.97 for the three months ended March 31, 2023 and 2022, respectively.

(2)	Earnings for the three months ended March 31, 2023 and 2022 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 approximately $15 million annually through 2025. Additionally, further charges and credits related to estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4 may occur; however, the amount and timing are uncertain.

(3)	Earnings for the three months ended March 31, 2023 include costs associated with the extinguishment of debt at Southern Company. Similar transaction costs may occur in the future at Southern Company or one of its unregulated subsidiaries; however, the amount and timing of any such costs are uncertain.

Southern Company
Significant Factors Impacting EPS

	Three Months Ended March
	2023	2022	Change
Earnings Per Share–
As Reported¹(See Notes)	$ 0.79	$ 0.97	$ (0.18)

Significant Factors:
Traditional Electric Operating Companies			$ (0.16)
Southern Power			0.03
Southern Company Gas			(0.01)
Parent Company and Other			(0.02)
Increase in Shares			(0.02)
Total–As Reported			$ (0.18)


	Three Months Ended March
Non-GAAP Financial Measures	2023	2022	Change
Earnings Per Share–
Excluding Items (See Notes)	$ 0.79	$ 0.97	$ (0.18)

Total–As Reported			$ (0.18)
Less:
Estimated Loss on Plants Under Construction²			—
Loss on Extinguishment of Debt³			—
Total–Excluding Items			$ (0.18)
- See Notes on the following page.

Southern Company
Significant Factors Impacting EPS

Notes
(1)	Dilution is not material in any period presented. Diluted earnings per share was $0.79 and $0.97 for the three months ended March 31, 2023 and 2022, respectively.

(2)	Earnings for the three months ended March 31, 2023 and 2022 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 approximately $15 million annually through 2025. Additionally, further charges and credits related to estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4 may occur; however, the amount and timing are uncertain.

(3)	Earnings for the three months ended March 31, 2023 include costs associated with the extinguishment of debt at Southern Company. Similar transaction costs may occur in the future at Southern Company or one of its unregulated subsidiaries; however, the amount and timing of any such costs are uncertain.

Southern Company
EPS Earnings Analysis
Three Months Ended March 2023 vs. March 2022

Description	Cents

Retail Sales	1¢

Retail Revenue Impacts	7

Weather	(11)

Wholesale & Other Operating Revenues	3

Non-Fuel O&M^(*)	2

Depreciation and Amortization	(14)

Interest Expense and Other	(5)

Income Taxes	1

Total Traditional Electric Operating Companies	(16)¢

Southern Power	3

Southern Company Gas	(1)

Parent Company and Other	(2)

Increase in Shares	(2)

Total Change in EPS (Excluding Items)	(18)¢

Estimated Loss on Plants Under Construction¹	—

Loss on Extinguishment of Debt²	—

Total Change in EPS (As Reported)	(18)¢
(*) Includes non-service cost-related benefits income.
- See additional Notes on the following page.

Southern Company
EPS Earnings Analysis

Notes
(1)	Earnings for the three months ended March 31, 2023 and 2022 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 approximately $15 million annually through 2025. Additionally, further charges and credits related to estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4 may occur; however, the amount and timing are uncertain.

(2)	Earnings for the three months ended March 31, 2023 include costs associated with the extinguishment of debt at Southern Company. Similar transaction costs may occur in the future at Southern Company or one of its unregulated subsidiaries; however, the amount and timing of any such costs are uncertain.

Southern Company
Consolidated Earnings
As Reported
*(In Millions of Dollars)*

	Three Months Ended March
	2023	2022	Change
Retail Electric Revenues-
Fuel	$ 1,050	$ 1,014	$ 36
Non-Fuel	2,549	2,599	(50)
Wholesale Electric Revenues	599	664	(65)
Other Electric Revenues	190	177	13
Natural Gas Revenues	1,875	2,058	(183)
Other Revenues	217	136	81
Total Operating Revenues	6,480	6,648	(168)
Fuel and Purchased Power	1,292	1,343	(51)
Cost of Natural Gas	898	1,095	(197)
Cost of Other Sales	127	69	58
Non-Fuel O&M	1,482	1,516	(34)
Depreciation and Amortization	1,111	892	219
Taxes Other Than Income Taxes	394	372	22
Gain on Dispositions, net	(42)	(23)	(19)
Total Operating Expenses	5,262	5,264	(2)
Operating Income	1,218	1,384	(166)
Allowance for Equity Funds Used During Construction	65	51	14
Earnings from Equity Method Investments	48	46	2
Interest Expense, Net of Amounts Capitalized	582	462	120
Other Income (Expense), net	147	145	2
Income Taxes	97	173	(76)
Net Income	799	991	(192)
Dividends on Preferred Stock of Subsidiaries	—	4	(4)
Net Loss Attributable to Noncontrolling Interests	(63)	(45)	(18)
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY	$ 862	$ 1,032	$ (170)

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 March
	2023	2022	Change	Weather Adjusted Change
Kilowatt-Hour Sales-
Total Sales	46,725	48,728	(4.1) %

Total Retail Sales-	33,382	35,155	(5.0) %	0.4 %
Residential	10,630	12,103	(12.2) %	1.2 %
Commercial	10,883	10,987	(0.9) %	1.8 %
Industrial	11,724	11,912	(1.6) %	(1.6) %
Other	145	153	(4.9) %	(4.0) %

Total Wholesale Sales	13,343	13,573	(1.7) %	N/A


*(In Thousands of Customers)*

	Period Ended March
	2023	2022	Change
Regulated Utility Customers-
Total Utility Customers-	8,824	8,755	0.8 %
Total Traditional Electric	4,449	4,397	1.2 %
Southern Company Gas	4,375	4,358	0.4 %

Southern Company
Financial Overview
As Reported
*(In Millions of Dollars)*

	Three Months Ended March
	2023	2022	% Change
Southern Company –
Operating Revenues	$ 6,480	$ 6,648	(2.5) %
Earnings Before Income Taxes	896	1,164	(23.0) %
Net Income Available to Common	862	1,032	(16.5) %

Alabama Power –
Operating Revenues	$ 1,647	$ 1,649	(0.1) %
Earnings Before Income Taxes	253	458	(44.8) %
Net Income Available to Common	255	347	(26.5) %

Georgia Power –
Operating Revenues	$ 2,176	$ 2,208	(1.4) %
Earnings Before Income Taxes	349	415	(15.9) %
Net Income Available to Common	296	385	(23.1) %

Mississippi Power –
Operating Revenues	$ 390	$ 335	16.4 %
Earnings Before Income Taxes	71	50	42.0 %
Net Income Available to Common	58	42	38.1 %

Southern Power –
Operating Revenues	$ 508	$ 539	(5.8) %
Earnings Before Income Taxes	32	15	113.3 %
Net Income Available to Common	102	72	41.7 %

Southern Company Gas –
Operating Revenues	$ 1,875	$ 2,058	(8.9) %
Earnings Before Income Taxes	412	416	(1.0) %
Net Income Available to Common	309	319	(3.1) %