10-KPeriod: FY2021

SOUTHERN CO Annual Report, Year Ended Dec 31, 2021

Filed February 17, 2022For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Company (SO) reported its annual results for the period ending December 30, 2021. The company, a major energy provider in the Southeast, operates through its traditional electric operating companies (Alabama Power, Georgia Power, Mississippi Power), Southern Power (wholesale electricity sales), and Southern Company Gas (natural gas distribution). The company's report details its business operations, financial condition, and future outlook, highlighting the impact of capital expenditures, regulatory environments, and ongoing construction projects, most notably Plant Vogtle Units 3 and 4. Investors should note the company's diversified energy portfolio, its significant investments in infrastructure, and its commitment to environmental sustainability goals. The company's performance reflects the ongoing recovery and growth within its service territories. Key financial drivers include retail and wholesale electricity sales, natural gas distribution, and complementary energy services. While the report highlights strategic initiatives and capital allocation, it also underscores the inherent risks associated with regulatory changes, environmental compliance, and large-scale construction projects, which are critical factors for investors to consider.

Financial Highlights

45 data points
Beta

Revenue

$23.46B

Net Income

$2.39B

10.2% Net Margin

EPS (Diluted)

$2.24

Total Assets

$127.53B

Cash & Equivalents

$1.80B

Free Cash Flow

-$1.42B

Financial Statements
Beta
Revenue$23.46B
Operating Expenses$19.41B
Operating Income$3.70B
Net Income$2.39B
EPS (Basic)$2.26
EPS (Diluted)$2.24
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Southern Company operates a diversified energy portfolio including traditional electric utilities, wholesale electricity generation (Southern Power), and natural gas distribution (Southern Company Gas).
  • 2The company is significantly invested in capital expenditures for infrastructure improvement and new generation projects, with a notable focus on the ongoing construction of Plant Vogtle Units 3 and 4.
  • 3Financial performance is influenced by retail and wholesale electricity sales, natural gas distribution volumes, and regulatory approvals for rate adjustments and cost recovery mechanisms.
  • 4The company is subject to significant federal and state regulations impacting rates, environmental compliance, and operational standards.
  • 5Southern Company is undertaking initiatives to address environmental sustainability, including goals for GHG emissions reduction.
  • 6Risk factors include regulatory changes, environmental compliance costs, competition from alternative energy sources, and operational risks associated with power generation and distribution infrastructure.

Frequently Asked Questions

Southern Company's primary business segments include the sale of electricity by its traditional electric operating companies (Alabama Power, Georgia Power, and Mississippi Power), wholesale electricity sales by Southern Power, and the distribution of natural gas and other complementary products and services by Southern Company Gas.

Construction is ongoing for Plant Vogtle Units 3 and 4, with Georgia Power holding a 45.7% ownership interest. The project has faced schedule extensions and cost increases, with significant charges recorded by Georgia Power. The ultimate in-service dates and final costs remain subject to ongoing challenges and regulatory reviews.

For the traditional electric operating companies and Southern Company Gas' regulated operations, fuel costs are generally recovered through approved rate mechanisms, which helps to mitigate direct exposure to market volatility. Southern Power's Power Purchase Agreements (PPAs) typically shift fuel cost responsibility to the counterparties. Southern Company Gas also utilizes hedging strategies for certain operations and weather-related risks.

Southern Company's operations are overseen by various state Public Service Commissions (PSCs) in the states where its utilities operate, as well as the Federal Energy Regulatory Commission (FERC) for wholesale electricity sales and other interstate activities.