Southern Company reports second-quarter 2022 earnings

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Jul 28, 2022, 06:30 ET

ATLANTA , July 28, 2022 /PRNewswire/ -- Southern Company today reported second-quarter earnings of $1.1 billion, or $1.04 per share, in 2022 compared with $372 million, or 35 cents per share, in 2021. For the six months ended June 30, 2022, Southern Company reported earnings of $2.1 billion, or $2.01 per share, compared with $1.5 billion, or $1.42 per share, for the same period in 2021.

Excluding the items described under "Net Income – Excluding Items" in the table below, Southern Company earned $1.1 billion, or $1.07 per share, during the second quarter of 2022, compared with $891 million, or 84 cents per share, during the second quarter of 2021. For the six months ended June 30, 2022, excluding these items, Southern Company earned $2.2 billion, or $2.05 per share, compared with $1.9 billion, or $1.82 per share, for the same period in 2021.

Non-GAAP Financial Measures	Three Months Ended June		Year-to-Date June
Net Income - Excluding Items (in millions)	2022	2021	2022	2021
Net Income - As Reported	$1,107	$372	$2,139	$1,508
Less:
Estimated Loss on Plants Under Construction	(54)	(462)	(55)	(507)
Tax Impact	13	118	13	130
Acquisition and Disposition Impacts	5	1	5	1
Tax Impact	(1)	-	(1)	-
Wholesale Gas Services	-	(147)	-	19
Tax Impact	-	35	-	(5)
Asset Impairments	-	(89)	-	(89)
Tax Impact	-	25	-	25
Net Income – Excluding Items	$1,144	$891	$2,177	$1,934
Average Shares Outstanding – (in millions)	1,065	1,061	1,064	1,060
Basic Earnings Per Share – Excluding Items	$1.07	$0.84	$2.05	$1.82

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 second quarter 2022, as compared with the same period in 2021, were higher revenues associated with increased usage, changes in rates and pricing, and warmer than normal weather at our regulated electric utilities, partially offset by higher non-fuel operations and maintenance costs, reflecting a rising cost environment and our long-term commitments to reliability and resilience.

Second-quarter 2022 operating revenues were $7.2 billion, compared with $5.2 billion for the second quarter of 2021, an increase of 38.6 percent. For the six months ended June 30, 2022, operating revenues were $13.9 billion, compared with $11.1 billion for the corresponding period in 2021, an increase of 24.7 percent. These increases were primarily due to higher fuel costs and warmer weather in the second quarter 2022.

"Southern Company's generation fleet and power delivery system performed exceedingly well during the second quarter, which included the second hottest June in 50 years" said Chairman, President and CEO, Thomas A. Fanning. "I am proud of our team's continued outstanding performance during times when our customers need us most."

Southern Company's second-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 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 https://investor.southerncompany.com/events-and-presentations/default.aspx. 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.

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

	Three Months Ended June		Year-To-Date June
Net Income–As Reported (See Notes)	2022	2021	2022	2021
Traditional Electric Operating Companies	$ 1,036	$ 511	$ 1,811	$ 1,267
Southern Power	98	36	170	133
Southern Company Gas	115	(65)	433	333
Total	1,249	482	2,414	1,733
Parent Company and Other	(142)	(110)	(275)	(225)
Net Income–As Reported	$ 1,107	$ 372	$ 2,139	$ 1,508

Basic Earnings Per Share¹	$ 1.04	$ 0.35	$ 2.01	$ 1.42
Average Shares Outstanding (in millions)	1,065	1,061	1,064	1,060
End of Period Shares Outstanding (in millions)			1,063	1,059

Non-GAAP Financial Measures	Three Months Ended June		Year-To-Date June
Net Income–Excluding Items (See Notes)	2022	2021	2022	2021
Net Income–As Reported	$ 1,107	$ 372	$ 2,139	$ 1,508
Less:
Estimated Loss on Plants Under Construction²	(54)	(462)	(55)	(507)
Tax Impact	13	118	13	130
Acquisition and Disposition Impacts	5	1	5	1
Tax Impact	(1)	—	(1)	—
Wholesale Gas Services³	—	(147)	—	19
Tax Impact	—	35	—	(5)
Asset Impairments⁴	—	(89)	—	(89)
Tax Impact	—	25	—	25
Net Income–Excluding Items	$ 1,144	$ 891	$ 2,177	$ 1,934

Basic Earnings Per Share–Excluding Items	$ 1.07	$ 0.84	$ 2.05	$ 1.82
- See Notes on the following page.

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Southern Company
Financial Highlights
Notes
(1)	Dilution is not material in any period presented. Diluted earnings per share was $1.03 and $2.00 for the three and six months ended June 30, 2022 and was $0.35 and $1.41 for the three and six months ended June 30, 2021, respectively.
(2)	Earnings for the three and six months ended June 30, 2022 include a charge of $52 million pre tax ($39 million after tax), earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), and earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges may occur; however, the amount and timing of any such charges are uncertain. Earnings for the three and six months ended June 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 six months ended June 30, 2021 include results of the Wholesale Gas Services business, which was sold on July 1, 2021. 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.
(4)	Earnings for the three and six months ended June 30, 2021 include pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7 million ($6 million after tax) related to a leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

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Southern Company
Significant Factors Impacting EPS

	Three Months Ended June			Year-To-Date June
	2022	2021	Change	2022	2021	Change
Earnings Per Share–
As Reported¹(See Notes)	$ 1.04	$ 0.35	$ 0.69	$ 2.01	$ 1.42	$ 0.59

Significant Factors:
Traditional Electric Operating Companies			$ 0.49			$ 0.51
Southern Power			0.06			0.04
Southern Company Gas			0.17			0.09
Parent Company and Other			(0.03)			(0.04)
Increase in Shares			—			(0.01)
Total–As Reported			$ 0.69			$ 0.59

	Three Months Ended June			Year-To-Date June
Non-GAAP Financial Measures	2022	2021	Change	2022	2021	Change
Earnings Per Share–
Excluding Items (See Notes)	$ 1.07	$ 0.84	$ 0.23	$ 2.05	$ 1.82	$ 0.23

Total–As Reported			$ 0.69			$ 0.59
Less:
Estimated Loss on Plants Under Construction²			0.28			0.31
Acquisition and Disposition Impacts			0.01			—
Wholesale Gas Services³			0.11			(0.01)
Asset Impairments⁴			0.06			0.06
Total–Excluding Items			$ 0.23			$ 0.23
- See Notes on the following page.

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Southern Company
Significant Factors Impacting EPS
Notes
(1)	Dilution is not material in any period presented. Diluted earnings per share was $1.03 and $2.00 for the three and six months ended June 30, 2022 and was $0.35 and $1.41 for the three and six months ended June 30, 2021, respectively.
(2)	Earnings for the three and six months ended June 30, 2022 include a charge of $52 million pre tax ($39 million after tax), earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), and earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges may occur; however, the amount and timing of any such charges are uncertain. Earnings for the three and six months ended June 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 six months ended June 30, 2021 include results of the Wholesale Gas Services business, which was sold on July 1, 2021. 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.
(4)	Earnings for the three and six months ended June 30, 2021 include pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7 million ($6 million after tax) related to a leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

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Southern Company
EPS Earnings Analysis


Description	Three Months Ended June 2022 vs. 2021	Year-To-Date June 2022 vs. 2021

Retail Sales	6¢	7¢

Retail Revenue Impacts	16	21

Weather	10	11

Wholesale & Other Operating Revenues	1	1

Non-Fuel O&M^(*)	(5)	(14)

Depreciation and Amortization, Interest Expense, Other	(3)	(2)

Income Taxes	(4)	(4)

Total Traditional Electric Operating Companies	21¢	20¢

Southern Power	6	4

Southern Company Gas	—	5

Parent and Other	(4)	(5)

Increase in Shares	—	(1)

Total Change in EPS (Excluding Items)	23¢	23¢

Estimated Loss on Plants Under Construction¹	28	31

Acquisition and Disposition Impacts	1	—

Wholesale Gas Services²	11	(1)

Asset Impairments³	6	6

Total Change in EPS (As Reported)	69¢	59¢
(*) Includes non-service cost-related benefits income
- See additional Notes on the following page.

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Southern Company
EPS Earnings Analysis
Notes
(1)	Earnings for the three and six months ended June 30, 2022 include a charge of $52 million pre tax ($39 million after tax), earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), and earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax) for estimated probable losses on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. Further charges may occur; however, the amount and timing of any such charges are uncertain. Earnings for the three and six months ended June 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 six months ended June 30, 2021 include results of the Wholesale Gas Services business, which was sold on July 1, 2021. 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.
(3)	Earnings for the three and six months ended June 30, 2021 include pre-tax impairment charges of $82 million ($58 million after tax) related to Southern Company Gas' investment in the PennEast Pipeline project and $7 million ($6 million after tax) related to a leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.

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

	Three Months Ended June			Year-To-Date June
	2022	2021	Change	2022	2021	Change
Retail Electric Revenues-
Fuel	$ 1,608	$ 875	$ 733	$ 2,622	$ 1,712	$ 910
Non-Fuel	3,181	2,724	457	5,780	5,229	551
Wholesale Electric Revenues	937	546	391	1,601	1,091	510
Other Electric Revenues	192	175	17	370	346	24
Natural Gas Revenues	1,083	677	406	3,140	2,371	769
Other Revenues	205	201	4	341	359	(18)
Total Operating Revenues	7,206	5,198	2,008	13,854	11,108	2,746
Fuel and Purchased Power	2,123	1,065	1,058	3,466	2,120	1,346
Cost of Natural Gas	452	231	221	1,546	814	732
Cost of Other Sales	114	103	11	183	185	(2)
Non-Fuel O&M	1,558	1,438	120	3,075	2,810	265
Depreciation and Amortization	913	891	22	1,805	1,762	43
Taxes Other Than Income Taxes	349	313	36	721	657	64
Estimated Loss on Plant Vogtle Units 3 and 4	52	460	(408)	52	508	(456)
Gain on Dispositions, net	(10)	(11)	1	(33)	(54)	21
Total Operating Expenses	5,551	4,490	1,061	10,815	8,802	2,013
Operating Income	1,655	708	947	3,039	2,306	733
Allowance for Equity Funds Used During Construction	53	45	8	104	90	14
Earnings (Loss) from Equity Method Investments	34	(40)	74	80	5	75
Interest Expense, Net of Amounts Capitalized	488	450	38	950	901	49
Other Income (Expense), net	139	101	38	283	160	123
Income Taxes (Benefit)	304	(12)	316	477	178	299
Net Income	1,089	376	713	2,079	1,482	597
Dividends on Preferred Stock of Subsidiaries	4	4	—	7	7	—
Net Loss Attributable to Noncontrolling Interests	(22)	—	(22)	(67)	(33)	(34)
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY	$ 1,107	$ 372	$ 735	$ 2,139	$ 1,508	$ 631

Notes

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

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

	Three Months Ended June				Year-To-Date June
	2022	2021	Change	Weather Adjusted Change	2022	2021	Change	Weather Adjusted Change
Kilowatt-Hour Sales-
Total Sales	51,541	46,020	12.0 %		100,269	92,442	8.5 %

Total Retail Sales-	37,072	34,655	7.0 %	2.3 %	72,228	69,306	4.2 %	1.5 %
Residential	12,062	10,838	11.3 %	1.0 %	24,166	22,878	5.6 %	(0.1) %
Commercial	12,246	11,500	6.5 %	2.2 %	23,233	22,243	4.5 %	2.1 %
Industrial	12,615	12,162	3.7 %	3.7 %	24,527	23,870	2.8 %	2.8 %
Other	149	155	(4.2) %	(4.4) %	302	315	(4.4) %	(4.4) %

Total Wholesale Sales	14,469	11,365	27.3 %	N/A	28,041	23,136	21.2 %	N/A


*(In Thousands of Customers)*

					Period Ended June
					2022	2021	Change
Regulated Utility Customers-
Total Utility Customers-					8,724	8,659	0.8 %
Total Traditional Electric					4,410	4,359	1.2 %
Southern Company Gas					4,314	4,300	0.3 %

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

	Three Months Ended June			Year-To-Date June
	2022	2021	% Change	2022	2021	% Change
Southern Company –
Operating Revenues	$ 7,206	$ 5,198	38.6 %	$ 13,854	$ 11,108	24.7 %
Earnings Before Income Taxes	1,393	364	N/M	2,556	1,660	54.0 %
Net Income Available to Common	1,107	372	N/M	2,139	1,508	41.8 %

Alabama Power –
Operating Revenues	$ 1,931	$ 1,556	24.1 %	$ 3,580	$ 3,115	14.9 %
Earnings Before Income Taxes	508	439	15.7 %	964	910	5.9 %
Net Income Available to Common	383	331	15.7 %	730	690	5.8 %

Georgia Power –
Operating Revenues	$ 3,121	$ 2,225	40.3 %	$ 5,328	$ 4,195	27.0 %
Earnings Before Income Taxes	772	93	N/M	1,187	462	N/M
Net Income Available to Common	608	143	N/M	993	494	N/M

Mississippi Power –
Operating Revenues	$ 434	$ 303	43.2 %	$ 769	$ 610	26.1 %
Earnings Before Income Taxes	57	46	23.9 %	107	95	12.6 %
Net Income Available to Common	45	38	18.4 %	87	83	4.8 %

Southern Power –
Operating Revenues	$ 899	$ 490	83.5 %	$ 1,438	$ 930	54.6 %
Earnings Before Income Taxes	101	34	N/M	116	89	30.3 %
Net Income Available to Common	98	36	N/M	170	133	27.8 %

Southern Company Gas –
Operating Revenues	$ 1,083	$ 677	60.0 %	$ 3,140	$ 2,371	32.4 %
Earnings (Loss) Before Income Taxes	151	(94)	N/M	567	425	33.4 %
Net Income (Loss) Available to Common	115	(65)	N/M	433	333	30.0 %
N/M - Not Meaningful