Southern Company reports second-quarter 2020 earnings
ATLANTA, July 30, 2020 /PRNewswire/ -- Southern Company today reported second-quarter 2020 earnings of $612 million, or 58 cents per share, compared with $899 million, or 86 cents per share, in the second quarter of 2019. For the six months ended June 30, 2020, Southern Company reported earnings of $1.48 billion, or $1.40 per share, compared with earnings of $2.98 billion, or $2.86 per share, for the same period in 2019.
Excluding the items described in the "Net Income - Excluding Items" table below, Southern Company earned $822 million, or 78 cents per share, during the second quarter of 2020, compared with $833 million, or 80 cents per share, during the second quarter of 2019. For the six months ended June 30, 2020, excluding these items, Southern Company earned $1.65 billion, or $1.56 per share, compared with $1.56 billion, or $1.50 per share, for the same period in 2019.
Non-GAAP Year-to-Date
Financial June
Measures Three Months Ended June
Net Income -
Excluding Items
(in millions) 2020 2019 2020 2019
Net Income -As
Reported $612 $899 $1,480 $2,982
Less:
Acquisition and
Disposition
Impacts (18) 38 2,481
Tax Impact 67 (16) (1,122)
Estimated Loss on
Plants Under
Construction (152) (8) (155) (13)
Tax Impact 39 2 40 3
Wholesale Gas
Services (31) 29 93
Tax Impact 8 (6) (23)
Asset Impairment (154) (154)
Tax Impact 80 80
Net Income -
Excluding Items $822 $833 $1,647 $1,563
Average Shares
Outstanding -
(in millions) 1,058 1,044 1,057 1,041
Basic Earnings
Per Share -
Excluding Items $0.78 $0.80 $1.56 $1.50
NOTE: For more information regarding these non-GAAP adjustments, see the footnotes accompanying the Financial Highlights page of the earnings package.
Earnings drivers year-over-year for the second quarter 2020 were negatively impacted by a decline in sales from demand reduction related to the COVID-19 pandemic and mild weather, largely offset by diligent cost control and constructive state regulatory actions completed in 2019 at the company's utilities.
"Despite the challenges of the COVID-19 pandemic, Southern Company and its subsidiaries have never taken a day off," said Chairman, President and CEO Thomas A. Fanning. "Our electric and gas utilities have continued to provide clean, safe, reliable and affordable energy to customers while operating under appropriate health and safety protocols," added Fanning. "Whether it's our response to major storms in the Southeast or working within our communities to promote racial justice, we continue to deliver results, including continued progress on new nuclear construction."
Second-quarter 2020 operating revenues were $4.62 billion, compared with $5.10 billion for the second quarter of 2019, a decrease of 9.4 percent. For the six months ended June 30, 2020, operating revenues were $9.64 billion, compared with $10.51 billion for the corresponding period in 2019, a decrease of 8.3 percent. These decreases were primarily due to lower fuel costs, milder weather and a sales decline from COVID-19 demand reduction.
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 Andrew W. Evans 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 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.
Southern Company
Financial Highlights
(In Millions of Dollars Except Earnings Per Share)
Three Months Ended Year-to-Date
June
June
Net Income-As Reported
(See Notes) 2020 2019 2020 2019
---
Traditional Electric
Operating Companies $
645 $
782 $
1,287 $
1,346
Southern Power 63 174 138 230
Southern Company Gas 71 106 346 376
Total 779 1,062 1,771 1,952
Parent Company and Other (167) (163) (291) 1,030
Net Income-As Reported $
612 $
899 $
1,480 $
2,982
Basic Earnings Per
Share(1) $
0.58 $
0.86 $
1.40 $
2.86
Average Shares
Outstanding (in
millions) 1,058 1,044 1,057 1,041
End of Period Shares Outstanding (in
millions) 1,056 1,045
Three Months Ended Year-to-Date
Non-GAAP Financial
Measures
June
June
Net Income-Excluding
Items (See Notes) 2020 2019 2020 2019
---
Net Income-As Reported $
612 $
899 $
1,480 $
2,982
Less:
Acquisition and
Disposition Impacts(2) - (18) 38 2,481
Tax Impact - 67 (16) (1,122)
Estimated Loss on Plants
Under Construction(3) (152) (8) (155) (13)
Tax Impact 39 2 40 3
Wholesale Gas Services4 (31) 29 93
Tax Impact 8 (6) (23)
Asset Impairment5 (154) (154)
Tax Impact 80 80
Net Income-Excluding
Items $
822 $
833 $
1,647 $
1,563
Basic Earnings Per
Share-Excluding Items $
0.78 $
0.80 $
1.56 $
1.50
-See Notes on the following page.
Southern Company
Financial Highlights
Notes
---
(1) For the three and six months ended
June 30, 2020 and 2019, dilution
does not change basic earnings per
share by more than $0.02 and is not
material.
(2) Earnings for the six months ended
June 30, 2020 primarily include a
$39 million pre-tax ($23 million
after-tax) gain on the sale of
Southern Power Company's Plant
Mankato. Earnings for the three
months ended June 30, 2019
primarily include a $23 million
pre-tax ($88 million after-tax)
gain on the sale of Southern Power
Company's Plant Nacogdoches and a
$32 million pre-tax and after-tax
goodwill impairment charge in
contemplation of the sale of the
utility infrastructure services
business unit of PowerSecure, Inc.
Earnings for the six months ended
June 30, 2019 also include a
preliminary $2.5 billion pre-tax
($1.3 billion after-tax) gain on
the sale of Gulf Power Company.
(3) Earnings for the three and six
months ended June 30, 2020 and 2019
include charges, associated legal
expenses, and tax impacts related
to Mississippi Power Company's
integrated coal gasification
combined cycle facility project in
Kemper County, Mississippi.
Earnings for the three and six
months ended June 30, 2020 also
include a $149 million pre-tax
($111 million after-tax) charge
for an estimated probable loss on
Georgia Power Company's
construction of Plant Vogtle Units
3 and 4, which significantly
impacted earnings and earnings per
share. Mississippi Power Company
expects to substantially complete
mine reclamation activities in 2020
and dismantlement of the abandoned
gasifier-related assets and site
restoration activities in 2025. The
additional pre-tax period and
closure costs associated with these
activities, including related costs
for compliance and safety, asset
retirement obligation accretion,
and property taxes, are estimated
to total up to $11 million for the
remainder of 2020, $16 million in
2021, and $11 million to $13
million annually in 2022 through
2025. Further charges for Georgia
Power Company's construction of
Plant Vogtle Units 3 and 4 may
occur; however, the amount and
timing of any such charges are
uncertain.
(4) Earnings for the three and six
months ended June 30, 2020 and 2019
include Wholesale Gas Services
business results. Presenting
earnings and earnings per share
excluding Wholesale Gas Services
provides an additional measure of
operating performance that excludes
the volatility resulting from mark-
to-market and lower of weighted
average cost or current market
price accounting adjustments.
(5) Earnings for the three and six
months ended June 30, 2020 include
a pre-tax impairment charge of
$154 million ($74 million after
tax) related to a leveraged lease.
Southern Company
Significant Factors Impacting EPS
Three Months Ended
Year-to-Date
June
June
2020 2019 Change 2020 2019 Change
---
Earnings Per Share-
As Reported1 (See Notes) $
0.58 $
0.86 $
(0.28) $
1.40 $
2.86 $
(1.46)
Significant Factors:
Traditional Electric Operating
Companies $
(0.13) $
(0.05)
Southern Power (0.11) (0.09)
Southern Company Gas (0.03) (0.03)
Parent Company and Other (1.27)
Increase in Shares (0.01) (0.02)
Total-As Reported $
(0.28) $
(1.46)
Three Months Ended
Year-to-Date
June
June
Non-GAAP Financial
Measures 2020 2019 Change 2020 2019 Change
---
Earnings Per Share-
Excluding Items (See
Notes) $
0.78 $
0.80 $
(0.02) $
1.56 $
1.50 $
0.06
Total-As Reported $
(0.28) $
(1.46)
Less:
Acquisition and Disposition Impacts(2) (0.05) (1.28)
Estimated Loss on Plants Under
Construction(3) (0.10) (0.10)
Wholesale Gas Services4 (0.04) (0.07)
Asset Impairment5 (0.07) (0.07)
Total-Excluding Items $
(0.02) $
0.06
- See Notes on the following page.
Southern Company
Significant Factors
Impacting EPS
Notes
---
(1) For the three and six months
ended June 30, 2020 and
2019, dilution does not
change basic earnings per
share by more than $0.02
and is not material.
(2) Earnings for the six months
ended June 30, 2020
primarily include a $39
million pre-tax ($23
million after-tax) gain on
the sale of Southern Power
Company's Plant Mankato.
Earnings for the three
months ended June 30, 2019
primarily include a $23
million pre-tax ($88
million after-tax) gain on
the sale of Southern Power
Company's Plant Nacogdoches
and a $32 million pre-tax
and after-tax goodwill
impairment charge in
contemplation of the sale
of the utility
infrastructure services
business unit of
PowerSecure, Inc. Earnings
for the six months ended
June 30, 2019 also include
a preliminary $2.5 billion
pre-tax ($1.3 billion
after-tax) gain on the
sale of Gulf Power Company.
(3) Earnings for the three and
six months ended June 30,
2020 and 2019 include
charges, associated legal
expenses, and tax impacts
related to Mississippi
Power Company's integrated
coal gasification combined
cycle facility project in
Kemper County, Mississippi.
Earnings for the three and
six months ended June 30,
2020 also include a $149
million pre-tax ($111
million after-tax) charge
for an estimated probable
loss on Georgia Power
Company's construction of
Plant Vogtle Units 3 and 4,
which significantly
impacted earnings and
earnings per share.
Mississippi Power Company
expects to substantially
complete mine reclamation
activities in 2020 and
dismantlement of the
abandoned gasifier-related
assets and site restoration
activities in 2025. The
additional pre-tax period
and closure costs
associated with these
activities, including
related costs for
compliance and safety,
asset retirement obligation
accretion, and property
taxes, are estimated to
total up to $11 million for
the remainder of 2020, $16
million in 2021, and $11
million to $13 million
annually in 2022 through
2025. Further charges for
Georgia Power Company's
construction of Plant
Vogtle Units 3 and 4 may
occur; however, the amount
and timing of any such
charges are uncertain.
(4) Earnings for the three and
six months ended June 30,
2020 and 2019 include
Wholesale Gas Services
business results.
Presenting earnings and
earnings per share
excluding Wholesale Gas
Services provides an
additional measure of
operating performance that
excludes the volatility
resulting from mark-to-
market and lower of
weighted average cost or
current market price
accounting adjustments.
(5) Earnings for the three and
six months ended June 30,
2020 include a pre-tax
impairment charge of $154
million ($74 million after
tax) related to a leveraged
lease.
Southern Company
EPS Earnings Analysis
Three Months Year-to-Date
Ended June June
Description 2020 vs. 2019 2020 vs. 2019
Retail Sales $(0.09) $(0.08)
Retail Revenue Impacts 0.11 0.20
Weather (0.10) (0.11)
Wholesale and Other
Operating Revenues 0.01
Non-Fuel O&M 0.05 0.06
Depreciation and
Amortization,
Interest Expense,
Other (0.05) (0.12)
Income Taxes 0.05 0.10
Total Traditional
Electric Operating
Companies $(0.02) $0.05
---
Southern Power (0.02) (0.02)
Southern Company
Gas 0.01 0.04
Parent and Other 0.02 0.01
Increase in Shares (0.01) (0.02)
Total Change in EPS
(Excluding Items) $(0.02) $0.06
---
Acquisition and
Disposition
Impacts(1) (0.05) (1.28)
Estimated Loss on
Plants Under
Construction(2) (0.10) (0.10)
Wholesale Gas
Services(3) (0.04) (0.07)
Asset Impairment4 (0.07) (0.07)
Total Change in EPS
(As Reported) $(0.28) $(1.46)
---
-See Notes on the
following page.
Southern Company
EPS Earnings Analysis
Three and Six Months
Ended June 2020 vs. June
2019
Notes
---
(1) Earnings for the six
months ended June 30,
2020 primarily include a
$39 million pre-tax
($23 million after-tax)
gain on the sale of
Southern Power Company's
Plant Mankato. Earnings
for the three months
ended June 30, 2019
primarily include a $23
million pre-tax ($88
million after-tax) gain
on the sale of Southern
Power Company's Plant
Nacogdoches and a $32
million pre-tax and
after-tax goodwill
impairment charge in
contemplation of the
sale of the utility
infrastructure services
business unit of
PowerSecure, Inc.
Earnings for the six
months ended June 30,
2019 also include a
preliminary $2.5 billion
pre-tax ($1.3 billion
after-tax) gain on the
sale of Gulf Power
Company.
(2) Earnings for the three
and six months ended
June 30, 2020 and 2019
include charges,
associated legal
expenses, and tax
impacts related to
Mississippi Power
Company's integrated
coal gasification
combined cycle facility
project in Kemper
County, Mississippi.
Earnings for the three
and six months ended
June 30, 2020 also
include a $149 million
pre-tax ($111 million
after-tax) charge for
an estimated probable
loss on Georgia Power
Company's construction
of Plant Vogtle Units 3
and 4, which
significantly impacted
earnings and earnings
per share. Mississippi
Power Company expects to
substantially complete
mine reclamation
activities in 2020 and
dismantlement of the
abandoned gasifier-
related assets and site
restoration activities
in 2025. The additional
pre-tax period and
closure costs associated
with these activities,
including related costs
for compliance and
safety, asset retirement
obligation accretion,
and property taxes, are
estimated to total up to
$11 million for the
remainder of 2020, $16
million in 2021, and $11
million to $13 million
annually in 2022 through
2025. Further charges
for Georgia Power
Company's construction
of Plant Vogtle Units 3
and 4 may occur;
however, the amount and
timing of any such
charges are uncertain.
(3) Earnings for the three
and six months ended
June 30, 2020 and 2019
include Wholesale Gas
Services business
results. Presenting
earnings and earnings
per share excluding
Wholesale Gas Services
provides an additional
measure of operating
performance that
excludes 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, 2020 include a
pre-tax impairment
charge of $154 million
($74 million after tax)
related to a leveraged
lease.
Southern Company
Consolidated Earnings
As Reported
(In Millions of Dollars)
Three Months Ended
Year-to-Date
June
June
2020 2019 Change 2020 2019 Change
---
Income Account-
Retail Electric Revenues-
Fuel $
676 $
919 $
(243) $
1,353 $
1,723 $
(370)
Non-Fuel 2,506 2,621 (115) 4,907 4,900 7
Wholesale Electric Revenues 472 542 (70) 889 1,041 (152)
Other Electric Revenues 168 161 7 320 331 (11)
Natural Gas Revenues 636 689 (53) 1,885 2,163 (278)
Other Revenues 162 166 (4) 284 352 (68)
Total Revenues 4,620 5,098 (478) 9,638 10,510 (872)
Fuel and Purchased Power 821 1,115 (294) 1,638 2,135 (497)
Cost of Natural Gas 144 191 (47) 583 877 (294)
Cost of Other Sales 74 84 (10) 129 203 (74)
Non-Fuel O&M 1,203 1,320 (117) 2,498 2,634 (136)
Depreciation and
Amortization 873 755 118 1,730 1,506 224
Taxes Other Than Income
Taxes 298 299 (1) 629 628 1
Estimated Loss on Plant
Vogtle Units 3 and 4 149 149 149 149
(Gain) Loss on
Dispositions, net (8) 8 (39) (2,506) 2,467
Total Operating Expenses 3,562 3,756 (194) 7,317 5,477 1,840
Operating Income 1,058 1,342 (284) 2,321 5,033 (2,712)
Allowance for Equity Funds
Used During Construction 35 31 4 68 63 5
Earnings from Equity Method
Investments 30 33 (3) 72 81 (9)
Interest Expense, Net of
Amounts Capitalized 444 429 15 900 859 41
Impairment of Leveraged
Lease 154 154 154 154
Other Income (Expense), net 101 99 2 204 176 28
Income Taxes 5 145 (140) 150 1,505 (1,355)
Net Income 621 931 (310) 1,461 2,989 (1,528)
Less:
Dividends on Preferred
Stock of Subsidiaries 4 3 1 7 7
Net Income (Loss)
Attributable to
Noncontrolling Interests 5 29 (24) (26) (26)
NET INCOME ATTRIBUTABLE TO
SOUTHERN COMPANY $
612 $
899 $
(287) $
1,480 $
2,982 $
(1,502)
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 June
Year-to-Date June
2020 2019 Change Weather 2020 2019 Change Weather
Adjusted Adjusted
Change Change
---
Kilowatt-Hour Sales-
Total Sales 43,547 48,434 (10.1) 87,811 93,601 (6.2)
%
%
Total Retail 32,460 36,752 (11.7) (7.5) 66,505 71,117 (6.5) (3.7)
Sales- %
% % %
Residential 10,879 11,520 (5.6) 4.7 21,745 22,421 (3.0) 3.8
%
% % %
Commercial 10,531 12,386 (15.0) (11.5) 21,470 23,372 (8.1) (6.3)
% %
% %
Industrial 10,886 12,662 (14.0) (14.0) 22,952 24,951 (8.0) (8.0)
% %
% %
Other 164 184 (11.3) (11.3) 338 373 (9.4) (9.2)
% %
% %
Total Wholesale 11,087 11,682 (5.1) N/A 21,306 22,484 (5.2)
Sales
% % N/A
(In Thousands of Customers)
Period Ended June
2020 2019 Change
Regulated Utility Customers-
Total Utility Customers- 8,580 8,477 1.2%
Total Traditional Electric 4,305 4,246 1.4%
Southern Company Gas 4,275 4,231 1.0%
Southern Company
Financial Overview
As Reported
(In Millions of Dollars)
Three Months Ended
Year-to-Date
June
June
2020 2019 % Change 2020 2019 % Change
---
Southern Company1, 2 -
Operating $
4,620 $
5,098 (9.4) $
9,638 $
10,510 (8.3)
Revenues
% %
Earnings Before 626 1,076 (41.8) 1,611 4,494 (64.2)
Income Taxes % %
Net Income
Available to % %
Common 612 899 (31.9) 1,480 2,982 (50.4)
Alabama Power -
Operating $
1,365 $
1,513 (9.8) $
2,716 $
2,921 (7.0)
Revenues
% %
Earnings Before 395 388 1.8 762 671 13.6
Income Taxes % %
Net Income
Available to % %
Common 298 296 0.7 578 513 12.7
Georgia Power -
Operating $
1,928 $
2,117 (8.9) $
3,754 $
3,951 (5.0)
Revenues
% %
Earnings Before 319 577 (44.7) 665 970 (31.4)
Income Taxes % %
Net Income
Available to % %
Common 308 448 (31.3) 638 759 (15.9)
Mississippi Power -
Operating $
283 $
313 (9.6) $
559 $
600 (6.8)
Revenues
% %
Earnings Before 41 42 (2.4) 79 86 (8.1)
Income Taxes
% %
Net Income 39 37 5.4 71 74 (4.1)
Available to %
Common %
Southern Power(2) -
Operating $
439 $
510 (13.9) $
814 $
953 (14.6)
Revenues % %
Earnings Before 74 152 (51.3) 125 170 (26.5)
Income Taxes % %
Net Income
Available to % %
Common 63 174 (63.8) 138 230 (40.0)
Southern Company Gas -
Operating $
636 $
689 (7.7)
Revenues %
% $
1,885 $
2,163 (12.9)
Earnings Before 87 112 (22.3) 441 459 (3.9)
Income Taxes %
%
Net Income 71 106 (33.0) 346 376 (8.0)
Available to %
Common %
Notes
---
- See Financial Highlights pages for discussion of certain significant items occurring during the periods presented.
(1) Earnings comparisons to the prior year were significantly impacted by the preliminary gain associated with
the sale of Gulf Power Company on January 1, 2019.
(2) Earnings and revenue comparisons to the prior year were significantly impacted by Southern Power Company's
dispositions of Plant Nacogdoches on June 13, 2019 and Plant Mankato on January 17, 2020.
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SOURCE Southern Company
