Southern : Earnings Document

Southern Company

2nd Quarter 2021 Earnings

Contents

Press Release	Page 1
Financial Highlights	Page 3
Significant Factors Impacting EPS	Page 5
EPS Earnings Analysis	Page 7
Consolidated Earnings	Page 9
Kilowatt-Hour Sales and Customers	Page 10
Financial Overview	Page 11

News

Media Contact: Southern Company Media Relations 404-506-5333 or 1-866-506-5333www.southerncompany.com

Investor Relations Contact: Scott Gammill 404-506-0901 [e-mail]

July 29, 2021

Southern Company reports second-quarter 2021 earnings

ATLANTA - Southern Company today reported second-quarter 2021 earnings of $372 million, or 35 cents per share, compared with $612 million, or 58 cents per share, in the second quarter of 2020. For the six months ended June 30, 2021, Southern Company reported earnings of $1.51 billion, or $1.42 per share, compared with earnings of $1.48 billion, or $1.40 per share, for the same period in 2020.

Excluding the items described under "Net Income - Excluding Items" in the table below, Southern Company earned $891 million, or 84 cents per share, during the second quarter of 2021, compared with $822 million, or 78 cents per share, during the second quarter of 2020. For the six months ended June 30, 2021, excluding these items, Southern Company earned $1.93 billion, or $1.82 per share, compared with $1.65 billion, or $1.56 per share, for the same period in 2020.

Non-GAAP Financial Measures		Three Months Ended June			Year-to-Date June
Net Income - Excluding Items (in millions)		2021		2020			2021		2020
Net Income - As Reported	$	372	$	612		$	1,508	$	1,480
Less:
Estimated Loss on Plants Under Construction		(462)		(152)			(507)		(155)
Tax Impact		118		39			130		40
Acquisition and Disposition Impacts		1		-			1		38
Tax Impact		-		-			-		(16)
Wholesale Gas Services		(147)		(31)			19		-
Tax Impact		35		8			(5)		-
Asset Impairments		(89)		(154)			(89)		(154)
Tax Impact		25		80			25		80
Net Income - Excluding Items	$	891	$	822		$	1,934	$	1,647
Average Shares Outstanding - (in millions)
	1,061		1,058			1,060		1,057
Basic Earnings Per Share - Excluding Items	$	0.84	$	0.78	$	1.82	$	1.56

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 of 2021, as compared with 2020, were strong customer usage, as well as robust customer growth and constructive state regulatory actions. These

impacts were partially offset by higher non-fuel operations and maintenance costs as the emerging economic recovery resulted in a return to more normal business operations. Earnings for the second quarter of 2021 were also significantly impacted by a $343 million after-tax charge related to Georgia Power's construction of Plant Vogtle units 3 and 4.

"The Southern Company system achieved solid operational performance in the second quarter of 2021," said Chairman, President and CEO, Thomas A. Fanning. "We saw a year-over-year increase in retail electric sales, as the economies in our service territories continue to recover from the effects of the COVID-19 pandemic, and we experienced strong customer growth in our Southeastern footprint".

"We're also pleased to report that the integrated operation of Plant Vogtle Unit 3 has now been demonstrated with the successful completion of hot functional testing, our most significant project milestone to date," added Fanning.

Second-quarter 2021 operating revenues were $5.2 billion, compared with $4.6 billion for the second quarter of 2020, an increase of 12.5 percent. For the six months ended June 30, 2021, operating revenues were $11.11 billion, compared with $9.64 billion for the corresponding period in 2020, an increase of 15.3 percent. These increases were primarily due to higher fuel costs. Colder weather in the first quarter 2021 also contributed to the increase for the six months ended June 30, 2021.

Southern Company's second-quarter earnings slides with supplemental financial information, including long-term 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 Andrew W. Evans will discuss earnings and provide a general business update, including an update on the Vogtle units 3 and 4 construction project and earnings guidance. 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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Page 3

Southern Company

Financial Highlights

(In Millions of Dollars Except Earnings Per Share)

		Three Months Ended		Year-to-Date
Net Income-As Reported (See Notes)		June				June
	2021			2020			2021			2020
Traditional Electric Operating Companies	$	511		$	645		$	1,267		$	1,287
Southern Power		36			63			133			138
Southern Company Gas		(65)			71			333			346
Total		482			779			1,733			1,771
Parent Company and Other		(110)			(167)			(225)			(291)
Net Income-As Reported	$	372		$	612		$	1,508		$	1,480
Basic Earnings Per Share1	$	0.35	$	0.58		$	1.42	$	1.40
Average Shares Outstanding (in millions)		1,061			1,058			1,060			1,057
End of Period Shares Outstanding (in millions)								1,059			1,056
Non-GAAP Financial Measures		Three Months Ended		Year-to-Date
	June				June
Net Income-Excluding Items (See Notes)		2021			2020			2021			2020
Net Income-As Reported	$	372		$	612		$	1,508		$	1,480
Less:
Estimated Loss on Plants Under Construction2		(462)			(152)			(507)			(155)
Tax Impact		118			39			130			40
Acquisition and Disposition Impacts3		1			-			1			38
Tax Impact		-			-			-			(16)
Wholesale Gas Services4		(147)			(31)			19			-
Tax Impact		35			8			(5)			-
Asset Impairments5		(89)			(154)			(89)			(154)
Tax Impact		25			80			25			80
Net Income-Excluding Items	$	891		$	822		$	1,934		$	1,647
Basic Earnings Per Share-Excluding Items	$	0.84		$	0.78		$	1.82		$	1.56

-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 $0.35 and $1.41 for the three and six months ended June 30, 2021 and was $0.58 and $1.39 for the three and six months ended June 30, 2020, respectively.
2. Earnings for the three months ended June 30, 2021 include a charge of $460 million pre tax ($343 million after tax), earnings for the six months ended June 30, 2021 include charges totaling $508 million pre tax ($379 million after tax), and earnings for the three and six months ended June 30, 2020 include a charge of $149 million pre tax ($111 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, 2021 and 2020 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, totaling $10 million to $20 million annually through 2025.
3. 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. Further impacts may be recorded in future periods in connection with acquisition and disposition activity.
4. Earnings for the three and six months ended June 30, 2021 and 2020 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. This business was sold on July 1, 2021.

(5) Earnings for the three and six months ended June 30, 2021 includes 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. 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 another leveraged lease investment. Impairment charges may occur in the future; however, the amount and timing of any such charges are uncertain.