Southern Company reports first-quarter earnings

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Apr 29, 2015, 07:30 ET

ATLANTA, April 29, 2015 /PRNewswire/ -- Southern Company today reported first-quarter 2015 earnings of $508 million, or 56 cents a share, compared with earnings of $351 million, or 39 cents a share, in the first quarter of 2014.

The first-quarter results for 2015 include a $6 million after-tax charge related to an increased construction estimate for Mississippi Power's Kemper integrated gasification combined cycle (IGCC) project. The first-quarter results for 2014 included a $235 million (27 cents per share) after-tax charge for the Kemper IGCC project. Excluding these items, Southern Company earned $514 million, or 56 cents per share, during the first quarter of 2015 compared to $586 million, or 66 cents per share, in the first quarter of 2014.

Earnings for the first quarter of 2015 were positively influenced by retail revenue effects at Southern Company's traditional operating companies, offset by milder winter weather compared to 2014 and increased operating and maintenance expenses.

"We are encouraged by positive customer growth during the first quarter of 2015, along with strong industrial sales and an economic development pipeline that remains robust," said Southern Company Chairman, President and CEO Thomas A. Fanning. "In the meantime, we remain focused on our core business strategy of providing clean, safe, reliable and affordable electricity to customers throughout the Southeast."

First-quarter 2015 operating revenues were $4.18 billion, compared with $4.64 billion for the same period in 2014, a decrease of 9.9 percent quarter over quarter.

Kilowatt-hour sales to retail customers in Southern Company's four-state service area decreased 1.2 percent in the first quarter of 2015 compared with the first quarter of 2014. Due primarily to milder winter weather than in 2014, residential and commercial energy sales decreased 4.2 percent and 1.1 percent, respectively, while industrial energy sales increased 1.9 percent.

Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 3.3 percent in the first quarter of 2015 compared with the same period in 2014.

Southern Company's financial analyst call will begin at 1 p.m. Eastern time today, during which Fanning and Chief Financial Officer Art P. Beattie 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 at the site for 12 months.

Southern Company has also posted on its website detailed financial information on its first-quarter performance. These materials are available at www.southerncompany.com.

With more than 4.5 million customers and approximately 46,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast through its subsidiaries. A leading U.S. producer of clean, safe, reliable and affordable 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 energy innovation, excellent customer service, high reliability and retail electric prices that are below the national average. Southern Company and its subsidiaries are leading the nation's nuclear renaissance through the construction of the first new nuclear units to be built in a generation of Americans and are demonstrating their commitment to energy innovation through the development of a state-of-the-art coal gasification plant. Southern Company has been recognized by the U.S. Department of Defense and G.I. Jobs magazine as a top military employer, listed by DiversityInc as a top company for Blacks and designated a 2014 Top Employer for Hispanics by Hispanic Network. The company received the Edison Award from the Edison Electric Institute for its leadership in new nuclear development, was named Electric Light & Power magazine's Utility of the Year for 2012 and is continually ranked among the top utilities in Fortune's annual World's Most Admired Electric and Gas Utility rankings. Visit our website at www.southerncompany.com.

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

	Three Months Ended March
	2015		2014
Consolidated Earnings–As Reported
(See Notes)
Traditional Operating Companies	$	477	$	318
Southern Power	33		33
Total	510		351
Parent Company and Other	(2)		—
Net Income–As Reported	$	508	$	351

Basic Earnings Per Share	$	0.56	$	0.39

Average Shares Outstanding (in millions)	910		890
End of Period Shares Outstanding (in millions)	908		891

	Three Months Ended March
	2015		2014
Consolidated Earnings–Excluding Items
(See Notes)
Net Income–As Reported	$	508	$	351
Estimated Loss on Kemper IGCC	6		235
Net Income–Excluding Items	$	514	$	586

Basic Earnings Per Share–Excluding Items	$	0.56	$	0.66

Notes
- For the three months ended March 31, 2015 and 2014, dilution does not change basic earnings per share by more than 1 cent and is not material.

- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three months ended March 31, 2014 and any similar charges may occur with uncertain frequency.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results. In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

Southern Company

Significant Factors Impacting EPS

Three Months Ended March

2015

2014

Change

Consolidated Earnings Per Share–

As Reported (See Notes)

0.56

0.39

0.17

Significant Factors:

Traditional Operating Companies

0.18

Increase in Shares

(0.01)

Total–As Reported

0.17

Three Months Ended March

2015

2014

Change

Consolidated Earnings Per Share–

Excluding Items (See Notes)

0.56

0.66

(0.10)

Total–As Reported

0.17

Estimated Loss on Kemper IGCC

(0.27)

Total–Excluding Items

(0.10)

Notes

- For the three months ended March 31, 2015 and 2014, dilution does not change basic earnings per share by more than 1 cent and is not material.

- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three months ended March 31, 2014 and any similar charges may occur with uncertain frequency.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results. In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

Southern Company
EPS Earnings Analysis
Three Months Ended March 2015 vs. March 2014

Cents	Description

1¢	Retail Sales

5	Retail Revenue Impacts

(3)	Weather

(3)	Wholesale Operations

(10)	Non-Fuel O&M

1	Depreciation and Amortization

1	Other Income and Deductions

(1)	Interest Expense

(9)¢	Total Traditional Operating Companies

(1)	Increase in Shares

(10)¢	Total Change in EPS (x-Items)

27	Estimated Loss on Kemper IGCC

17¢	Total Change in EPS (As Reported)

Notes
- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three months ended March 31, 2014 and any similar charges may occur with uncertain frequency.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results. In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

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

	Three Months Ended March
	2015		2014		Change
Income Account-
Retail Revenues-
Fuel	$	1,088	$	1,476	$	(388)
Non-Fuel	2,454		2,382		72
Wholesale Revenues	467		604		(137)
Other Electric Revenues	163		165		(2)
Other Revenues	11		17		(6)
Total Revenues	4,183		4,644		(461)
Fuel and Purchased Power	1,356		1,834		(478)
Non-Fuel O & M	1,122		986		136
Depreciation and Amortization	487		497		(10)
Taxes Other Than Income Taxes	252		247		5
Estimated Loss on Kemper IGCC	9		380		(371)
Total Operating Expenses	3,226		3,944		(718)
Operating Income	957		700		257
Allowance for Equity Funds Used During Construction	63		57		6
Interest Expense, Net of Amounts Capitalized	213		206		7
Other Income (Expense), net	(8)		(7)		(1)
Income Taxes	274		176		98
Net Income	525		368		157
Dividends on Preferred and Preference Stock of Subsidiaries	17		17		—
NET INCOME AFTER DIVIDENDS ON PREFERRED AND PREFERENCE STOCK	$	508	$	351	$	157

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

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results. In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

Southern Company
Kilowatt-Hour Sales
*(In Millions of KWHs)*

	Three Months Ended March
As Reported	2015	2014	Change		Weather Adjusted Change*
Kilowatt-Hour Sales-
Total Sales	46,244	47,802	(3.3)	%

Total Retail Sales-	39,209	39,699	(1.2)	%	1.0	%
Residential	13,577	14,174	(4.2)	%	0.2	%
Commercial	12,415	12,548	(1.1)	%	0.7	%
Industrial	12,988	12,749	1.9	%	2.0	%
Other	229	228	0.6	%	0.8	%

Total Wholesale Sales	7,035	8,103	(13.2)	%	N/A

Note
*Also reflects adjustment of first quarter 2014 KWH sales consistent with Mississippi Power's updated methodology to estimate the unbilled revenue allocation among customer classes implemented in the first quarter 2015.

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

	Three Months Ended March
	2015		2014		% Change
Consolidated –
Operating Revenues	$	4,183	$	4,644	(9.9)	%
Earnings Before Income Taxes	799		544		46.9	%
Net Income Available to Common	508		351		44.7	%

Alabama Power –
Operating Revenues	$	1,401	$	1,508	(7.1)	%
Earnings Before Income Taxes	292		324		(9.9)	%
Net Income Available to Common	169		187		(9.6)	%

Georgia Power –
Operating Revenues	$	1,978	$	2,269	(12.8)	%
Earnings Before Income Taxes	380		436		(12.8)	%
Net Income Available to Common	236		266		(11.3)	%

Gulf Power –
Operating Revenues	$	357	$	407	(12.3)	%
Earnings Before Income Taxes	62		62		—	%
Net Income Available to Common	37		37		—	%

Mississippi Power –
Operating Revenues	$	276	$	331	(16.6)	%
Earnings (Loss) Before Income Taxes	39		(302)		N/M
Net Income (Loss) Available to Common	35		(172)		N/M

Southern Power –
Operating Revenues	$	348	$	351	(0.9)	%
Earnings Before Income Taxes	45		37		21.6	%
Net Income Available to Common	33		33		—	%

N/M - not meaningful

Note
- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results. In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.