ATLANTA, Feb. 20, 2019 /PRNewswire/ -- Southern Company today reported fourth-quarter 2018 earnings of $278 million, or 27 cents per share, compared with earnings of $496 million, or 49 cents per share, in the fourth quarter of 2017. Southern Company also reported full-year 2018 earnings of $2.23 billion, or $2.18 per share, compared with earnings of $842 million, or 84 cents per share, in 2017.
Excluding the items described in the "Net Income – Excluding Items" table below, Southern Company earned $256 million, or 25 cents per share, during the fourth quarter of 2018, compared with $509 million, or 51 cents per share, during the fourth quarter of 2017. For the full-year 2018, excluding these items, Southern Company earned $3.13 billion, or $3.07 per share, compared with earnings of $3.02 billion, or $3.02 per share, in 2017.
Non-GAAP Financial Measures | Three Months Ended December | Year-to-Date December | |||
Net Income - Excluding Items (in millions) | 2018 | 2017 | 2018 | 2017 | |
Net Income - As Reported | $278 | $496 | $2,226 | $842 | |
Estimated Loss on Plants Under Construction | (6) | 211 | 1,102 | 3,366 | |
Tax Impact | (94) | (25) | (376) | (975) | |
Loss on Plant Scherer Unit 3 | - | - | - | 33 | |
Tax Impact | - | - | - | (13) | |
Acquisition, Disposition, and Integration Impacts | 58 | 16 | (35) | 35 | |
Tax Impact | (11) | 10 | 294 | 12 | |
Wholesale Gas Services | 41 | 105 | (42) | 57 | |
Tax Impact | (14) | (20) | 4 | - | |
Litigation Settlement | - | - | (24) | - | |
Tax Impact | - | - | 6 | - | |
Earnings Guidance Comparability Items: | |||||
Equity Return Related to Kemper IGCC Schedule Extension | - | - | - | (47) | |
Tax Impact | - | - | - | (9) | |
Adoption of Tax Reform | 4 | (284) | (27) | (284) | |
Net Income – Excluding Items | $256 | $509 | $3,128 | $3,017 | |
Average Shares Outstanding – (in millions) | 1,034 | 1,007 | 1,020 | 1,000 | |
Basic Earnings Per Share – Excluding Items | $0.25 | $0.51 | $3.07 | $3.02 | |
NOTE: For more information regarding these non-GAAP adjustments, see the footnotes accompanying the Financial Highlights page of the | |||||
Earnings drivers for the full year 2018 were positively influenced by effects of constructive regulatory outcomes and weather at the state-regulated utilities. These impacts were partially offset by increases in depreciation and amortization, interest expense and share issuances.
"2018 was a banner year for Southern Company, as we continued to see outstanding operational execution throughout the franchise," said Chairman, President and CEO Thomas A. Fanning. "All of our state-regulated electric and gas companies delivered strong performance. We experienced solid customer growth, and we delivered significant benefits to customers resulting from tax reform while maintaining credit metrics across our businesses. We also saw excellent progress with the construction of the new nuclear units at Georgia Power's Plant Vogtle, achieving our year-end construction targets."
Fourth quarter 2018 operating revenues were $5.34 billion, compared with $5.63 billion for the fourth quarter of 2017, a decrease of 5.2 percent. Operating revenues for the full year 2018 were $23.50 billion, compared with $23.03 billion in 2017, an increase of 2.0 percent.
Southern Company's fourth quarter earnings slides with supplemental financial information, including its earnings guidance for 2019, are available at http://investor.southerncompany.com.
Southern Company's financial analyst call will begin at 8 a.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 as of Jan. 1, 2019. 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 December | |||||||||||||||
Net Income–As Reported (See Notes) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Traditional Electric Operating Companies | $ | 407 | $ | (191) | $ | 2,117 | $ | (193) | ||||||||
Southern Power | (48) | 795 | 187 | 1,071 | ||||||||||||
Southern Company Gas | 78 | (60) | 372 | 243 | ||||||||||||
Total | 437 | 544 | 2,676 | 1,121 | ||||||||||||
Parent Company and Other | (159) | (48) | (450) | (279) | ||||||||||||
Net Income–As Reported | $ | 278 | $ | 496 | $ | 2,226 | $ | 842 | ||||||||
Basic Earnings Per Share1 | $ | 0.27 | $ | 0.49 | $ | 2.18 | $ | 0.84 | ||||||||
Average Shares Outstanding (in millions) | 1,034 | 1,007 | 1,020 | 1,000 | ||||||||||||
End of Period Shares Outstanding (in millions) | 1,034 | 1,008 | ||||||||||||||
Non-GAAP Financial Measures | Three Months Ended | Year-to-Date December | ||||||||||||||
Net Income–Excluding Items (See Notes) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net Income–As Reported | $ | 278 | $ | 496 | $ | 2,226 | $ | 842 | ||||||||
Estimated Loss on Plants Under Construction2 | (6) | 211 | 1,102 | 3,366 | ||||||||||||
Tax Impact | (94) | (25) | (376) | (975) | ||||||||||||
Loss on Plant Scherer Unit 33 | — | — | — | 33 | ||||||||||||
Tax Impact | — | — | — | (13) | ||||||||||||
Acquisition, Disposition, and Integration Impacts4 | 58 | 16 | (35) | 35 | ||||||||||||
Tax Impact | (11) | 10 | 294 | 12 | ||||||||||||
Wholesale Gas Services5 | 41 | 105 | (42) | 57 | ||||||||||||
Tax Impact | (14) | (20) | 4 | — | ||||||||||||
Litigation Settlement6 | — | — | (24) | — | ||||||||||||
Tax Impact | — | — | 6 | — | ||||||||||||
Earnings Guidance Comparability Items: | ||||||||||||||||
Equity Return Related to Kemper IGCC Schedule Extension7 | — | — | — | (47) | ||||||||||||
Tax Impact | — | — | — | (9) | ||||||||||||
Adoption of Tax Reform8 | 4 | (284) | (27) | (284) | ||||||||||||
Net Income–Excluding Items | $ | 256 | $ | 509 | $ | 3,128 | $ | 3,017 | ||||||||
Basic Earnings Per Share–Excluding Items | $ | 0.25 | $ | 0.51 | $ | 3.07 | $ | 3.02 | ||||||||
-See Notes on the following page. | ||||||||||||||||
Southern Company | ||||||||
Financial Highlights | ||||||||
Notes | ||||||||
(1) For the three and twelve months ended December 31, 2018 and 2017, dilution does not change basic earnings per share by more than 1 cent and is not material. | ||||||||
(2) Earnings for the three and twelve months ended December 31, 2018 and 2017 include charges and associated legal expenses related to Mississippi Power's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Additionally, the three and twelve months ended December 31, 2018 include a $95 million credit to earnings primarily resulting from the reduction of a state income tax valuation allowance recorded in the twelve months ended December 31, 2017 related to a net operating loss carryforward associated with the Kemper IGCC. Earnings for the twelve months ended December 31, 2018 also include a $1.1 billion charge ($0.8 billion after tax) for an estimated probable loss on Georgia Power's construction of Plant Vogtle Units 3 and 4. These items significantly impacted the presentation of earnings and earnings per share. Additional pre-tax closure costs, including mine reclamation, of up to $25 million for Mississippi Power's Kemper IGCC may occur through 2020. Mississippi Power is also currently evaluating its options regarding the final disposition of the carbon dioxide pipeline and is in discussions with the Department of Energy regarding property closeout and disposition, for which the related costs could be material. Further charges for Georgia Power's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain. | ||||||||
(3) Earnings for the twelve months ended December 31, 2017 include a $32.5 million write-down ($20 million after tax) of Gulf Power's ownership of Plant Scherer Unit 3 as a result of its 2017 retail rate case settlement. | ||||||||
(4) Earnings for the three months ended December 31, 2018 include: (i) a net combined $27 million pre-tax loss (net combined $15 million after-tax loss) in connection with the finalization of the gain and loss calculations for the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas, and Pivotal Home Solutions by Southern Company Gas and (ii) other acquisition, disposition, and integration costs of $31 million pre tax ($32 million after tax, which includes $10 million related to reapportioning state income taxes as a result of the dispositions). Earnings for the twelve months ended December 31, 2018 include: (i) a net combined $291 million pre-tax gain ($51 million after-tax loss) on the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas, and Pivotal Home Solutions by Southern Company Gas; (ii) a $42 million (pre tax and after tax) goodwill impairment charge associated with the sale of Pivotal Home Solutions; (iii) a $119 million pre-tax ($89 million after tax) impairment charge associated with Southern Power's disposition of Plants Stanton and Oleander; and (iv) $95 million pre tax ($77 million after tax) of other acquisition, disposition, and integration costs. Earnings for the three and twelve months ended December 31, 2017 include other acquisition, disposition, and integration costs related to the acquisition of Southern Company Gas and the dispositions of Elizabethtown Gas and Elkton Gas. Further impacts are expected to be recorded in 2019 including a preliminary gain of $2.5 billion pre tax ($1.3 billion after tax) in connection with the sale of Gulf Power, as well as impacts related to Southern Power's announced sale of Plant Mankato. Further costs are also expected to continue to occur in connection with the integration of Southern Company Gas; however, the amount and duration of such expenditures is uncertain. | ||||||||
(5) Earnings for the three and twelve months ended December 31, 2018 and 2017 include the Wholesale Gas Services business of Southern Company Gas. Presenting earnings and earnings per share excluding Wholesale Gas Services provides investors with 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. | ||||||||
(6) Earnings for the twelve months ended December 31, 2018 include the settlement proceeds of Mississippi Power's claim for lost revenue resulting from the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Further proceeds are not expected. | ||||||||
(7) Earnings for the twelve months ended December 31, 2017 include allowance for funds used during construction (AFUDC) equity as a result of extending the Kemper IGCC construction schedule beyond November 30, 2016, as assumed when Southern Company issued its 2017 guidance. As a result, Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also used such measures to evaluate Southern Company's 2017 performance. AFUDC equity ceased in connection with the project's suspension in June 2017. | ||||||||
(8) Earnings for the three and twelve months ended December 31, 2018 and 2017 include net tax impacts as a result of implementing federal tax reform legislation, which was signed into law in December 2017. During 2018, Southern Company obtained and analyzed additional information that was not initially available or reported as provisional amounts at December 31, 2017. Additional adjustments are not expected. Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also used such measures to evaluate Southern Company's performance. | ||||||||
Southern Company | ||||||||||||||||||||||||
Significant Factors Impacting EPS | ||||||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Earnings Per Share– | ||||||||||||||||||||||||
As Reported1 (See Notes) | $ | 0.27 | $ | 0.49 | $ | (0.22) | $ | 2.18 | $ | 0.84 | $ | 1.34 | ||||||||||||
Significant Factors: | ||||||||||||||||||||||||
Traditional Electric Operating Companies | $ | 0.59 | $ | 2.31 | ||||||||||||||||||||
Southern Power | (0.84) | (0.88) | ||||||||||||||||||||||
Southern Company Gas | 0.14 | 0.13 | ||||||||||||||||||||||
Parent Company and Other | (0.10) | (0.18) | ||||||||||||||||||||||
Increase in Shares | (0.01) | (0.04) | ||||||||||||||||||||||
Total–As Reported | $ | (0.22) | $ | 1.34 | ||||||||||||||||||||
Three Months Ended | Year-to-Date | |||||||||||||||||||||||
Non-GAAP Financial Measures | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Earnings Per Share– | ||||||||||||||||||||||||
Excluding Items (See Notes) | $ | 0.25 | $ | 0.51 | $ | (0.26) | $ | 3.07 | $ | 3.02 | $ | 0.05 | ||||||||||||
Total–As Reported | $ | (0.22) | $ | 1.34 | ||||||||||||||||||||
Estimated Loss on Plants Under Construction2 | (0.29) | (1.62) | ||||||||||||||||||||||
Loss on Plant Scherer Unit 33 | — | (0.02) | ||||||||||||||||||||||
Acquisition, Disposition, and Integration Impacts4 | 0.02 | 0.21 | ||||||||||||||||||||||
Wholesale Gas Services5 | (0.05) | (0.09) | ||||||||||||||||||||||
Litigation Settlement6 | — | (0.02) | ||||||||||||||||||||||
Adoption of Tax Reform7 | 0.28 | 0.25 | ||||||||||||||||||||||
Total–Excluding Items | $ | (0.26) | $ | 0.05 | ||||||||||||||||||||
- See Notes on the following page. | ||||||||||||||||||||||||
Southern Company | ||||||||||||||||
Significant Factors Impacting EPS | ||||||||||||||||
Notes | ||||||||||||||||
(1) For the three and twelve months ended December 31, 2018 and 2017, dilution does not change basic earnings per share by more than 1 cent and is not material. | ||||||||||||||||
(2) Earnings for the three and twelve months ended December 31, 2018 and 2017 include charges and associated legal expenses related to Mississippi Power's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Additionally, the three and twelve months ended December 31, 2018 include a $95 million credit to earnings primarily resulting from the reduction of a state income tax valuation allowance recorded in the twelve months ended December 31, 2017 related to a net operating loss carryforward associated with the Kemper IGCC. Earnings for the twelve months ended December 31, 2018 also include a $1.1 billion charge ($0.8 billion after tax) for an estimated probable loss on Georgia Power's construction of Plant Vogtle Units 3 and 4. These items significantly impacted the presentation of earnings and earnings per share. Additional pre-tax closure costs, including mine reclamation, of up to $25 million for Mississippi Power's Kemper IGCC may occur through 2020. Mississippi Power is also currently evaluating its options regarding the final disposition of the carbon dioxide pipeline and is in discussions with the Department of Energy regarding property closeout and disposition, for which the related costs could be material. Further charges for Georgia Power's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain.
Earnings for the twelve months ended December 31, 2017 include allowance for funds used during construction (AFUDC) equity as a result of extending the Kemper IGCC construction schedule beyond November 30, 2016, as assumed when Southern Company issued its 2017 guidance. As a result, Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also used such measures to evaluate Southern Company's 2017 performance. AFUDC equity ceased in connection with the project's suspension in June 2017. | ||||||||||||||||
(3) Earnings for the twelve months ended December 31, 2017 include a $32.5 million write-down ($20 million after tax) of Gulf Power's ownership of Plant Scherer Unit 3 as a result of its 2017 retail rate case settlement. | ||||||||||||||||
(4) Earnings for the three months ended December 31, 2018 include: (i) a net combined $27 million pre-tax loss (net combined $15 million after-tax loss) in connection with the finalization of the gain and loss calculations for the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas, and Pivotal Home Solutions by Southern Company Gas and (ii) other acquisition, disposition, and integration costs of $31 million pre tax ($32 million after tax, which includes $10 million related to reapportioning state income taxes as a result of the dispositions). Earnings for the twelve months ended December 31, 2018 include: (i) a net combined $291 million pre-tax gain ($51 million after-tax loss) on the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas, and Pivotal Home Solutions by Southern Company Gas; (ii) a $42 million (pre tax and after tax) goodwill impairment charge associated with the sale of Pivotal Home Solutions; (iii) a $119 million pre-tax ($89 million after tax) impairment charge associated with Southern Power's disposition of Plants Stanton and Oleander; and (iv) $95 million pre tax ($77 million after tax) of other acquisition, disposition, and integration costs. Earnings for the three and twelve months ended December 31, 2017 include other acquisition, disposition, and integration costs related to the acquisition of Southern Company Gas and the dispositions of Elizabethtown Gas and Elkton Gas. Further impacts are expected to be recorded in 2019 including a preliminary gain of $2.5 billion pre tax ($1.3 billion after tax) in connection with the sale of Gulf Power, as well as impacts related to Southern Power's announced sale of Plant Mankato. Further costs are also expected to continue to occur in connection with the integration of Southern Company Gas; however, the amount and duration of such expenditures is uncertain. | ||||||||||||||||
(5) Earnings for the three and twelve months ended December 31, 2018 and 2017 include the Wholesale Gas Services business of Southern Company Gas. Presenting earnings and earnings per share excluding Wholesale Gas Services provides investors with 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. | ||||||||||||||||
(6) Earnings for the twelve months ended December 31, 2018 include the settlement proceeds of Mississippi Power's claim for lost revenue resulting from the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Further proceeds are not expected. | ||||||||||||||||
(7) Earnings for the three and twelve months ended December 31, 2018 and 2017 include net tax impacts as a result of implementing federal tax reform legislation, which was signed into law in December 2017. During 2018, Southern Company obtained and analyzed additional information that was not initially available or reported as provisional amounts at December 31, 2017. Additional adjustments are not expected. Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also used such measures to evaluate Southern Company's performance. | ||||||||||||||||
Southern Company | ||||||||||||||||
EPS Earnings Analysis | ||||||||||||||||
Description | Three Months Ended | Year-to-Date | ||||||||||||||
Retail Sales | $0.01 | $0.05 | ||||||||||||||
Retail Revenue Impacts, Excluding Tax Reform Changes | (0.10) | (0.08) | ||||||||||||||
Weather | — | 0.18 | ||||||||||||||
Other Operating Revenues | — | (0.01) | ||||||||||||||
Purchased Power Capacity Expense | — | 0.01 | ||||||||||||||
Non-Fuel O&M | 0.01 | 0.02 | ||||||||||||||
Depreciation and Amortization | (0.01) | (0.07) | ||||||||||||||
Taxes Other Than Income Taxes | — | (0.02) | ||||||||||||||
Gain on Dispositions, Net | (0.02) | (0.02) | ||||||||||||||
Interest Expense | 0.01 | (0.02) | ||||||||||||||
Other Income and Deductions | — | 0.01 | ||||||||||||||
Impacts of Tax Reform (Ongoing Basis), Net of Amounts | (0.04) | 0.15 | ||||||||||||||
Income Taxes, Excluding Tax Reform | — | (0.04) | ||||||||||||||
Dividends on Preferred and Preference Stock | — | 0.02 | ||||||||||||||
Total Traditional Electric Operating Companies | $(0.14) | $0.18 | ||||||||||||||
Southern Power | (0.03) | 0.02 | ||||||||||||||
Southern Company Gas | (0.01) | 0.04 | ||||||||||||||
Parent and Other | (0.07) | (0.13) | ||||||||||||||
Increase in Shares | (0.01) | (0.06) | ||||||||||||||
Total Change in EPS (Excluding Items) | $(0.26) | $0.05 | ||||||||||||||
Estimated Loss on Plants Under Construction1 | 0.29 | 1.62 | ||||||||||||||
Loss on Plant Scherer Unit 32 | — | 0.02 | ||||||||||||||
Acquisition, Disposition, and Integration Impacts3 | (0.02) | (0.21) | ||||||||||||||
Wholesale Gas Services4 | 0.05 | 0.09 | ||||||||||||||
Litigation Settlement5 | — | 0.02 | ||||||||||||||
Adoption of Tax Reform6 | (0.28) | (0.25) | ||||||||||||||
Total Change in EPS (As Reported) | $(0.22) | $1.34 | ||||||||||||||
- See Notes on the following page. | ||||||||||||||||
Southern Company |
EPS Earnings Analysis |
Three and Twelve Months Ended December 2018 vs. December 2017 |
Notes |
(1) Earnings for the three and twelve months ended December 31, 2018 and 2017 include charges and associated legal expenses related to Mississippi Power's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Additionally, the three and twelve months ended December 31, 2018 include a $95 million credit to earnings primarily resulting from the reduction of a state income tax valuation allowance recorded in the twelve months ended December 31, 2017 related to a net operating loss carryforward associated with the Kemper IGCC. Earnings for the twelve months ended December 31, 2018 also include a $1.1 billion charge ($0.8 billion after tax) for an estimated probable loss on Georgia Power's construction of Plant Vogtle Units 3 and 4. These items significantly impacted the presentation of earnings and earnings per share. Additional pre-tax closure costs, including mine reclamation, of up to $25 million for Mississippi Power's Kemper IGCC may occur through 2020. Mississippi Power is also currently evaluating its options regarding the final disposition of the carbon dioxide pipeline and is in discussions with the Department of Energy regarding property closeout and disposition, for which the related costs could be material. Further charges for Georgia Power's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain.
Earnings for the twelve months ended December 31, 2017 include allowance for funds used during construction (AFUDC) equity as a result of extending the Kemper IGCC construction schedule beyond November 30, 2016, as assumed when Southern Company issued its 2017 guidance. As a result, Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also used such measures to evaluate Southern Company's 2017 performance. AFUDC equity ceased in connection with the project's suspension in June 2017. |
(2) Earnings for the twelve months ended December 31, 2017 include a $32.5 million write-down ($20 million after tax) of Gulf Power's ownership of Plant Scherer Unit 3 as a result of its 2017 retail rate case settlement. |
(3) Earnings for the three months ended December 31, 2018 include: (i) a net combined $27 million pre-tax loss (net combined $15 million after-tax loss) in connection with the finalization of the gain and loss calculations for the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas, and Pivotal Home Solutions by Southern Company Gas and (ii) other acquisition, disposition, and integration costs of $31 million pre tax ($32 million after tax, which includes $10 million related to reapportioning state income taxes as a result of the dispositions). Earnings for the twelve months ended December 31, 2018 include: (i) a net combined $291 million pre-tax gain ($51 million after-tax loss) on the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas, and Pivotal Home Solutions by Southern Company Gas; (ii) a $42 million (pre tax and after tax) goodwill impairment charge associated with the sale of Pivotal Home Solutions; (iii) a $119 million pre-tax ($89 million after tax) impairment charge associated with Southern Power's disposition of Plants Stanton and Oleander; and (iv) $95 million pre tax ($77 million after tax) of other acquisition, disposition, and integration costs. Earnings for the three and twelve months ended December 31, 2017 include other acquisition, disposition, and integration costs related to the acquisition of Southern Company Gas and the dispositions of Elizabethtown Gas and Elkton Gas. Further impacts are expected to be recorded in 2019 including a preliminary gain of $2.5 billion pre tax ($1.3 billion after tax) in connection with the sale of Gulf Power, as well as impacts related to Southern Power's announced sale of Plant Mankato. Further costs are also expected to continue to occur in connection with the integration of Southern Company Gas; however, the amount and duration of such expenditures is uncertain. |
(4) Earnings for the three and twelve months ended December 31, 2018 and 2017 include the Wholesale Gas Services business of Southern Company Gas. Presenting earnings and earnings per share excluding Wholesale Gas Services provides investors with 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 twelve months ended December 31, 2018 include the settlement proceeds of Mississippi Power's claim for lost revenue resulting from the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Further proceeds are not expected. |
(6) Earnings for the three and twelve months ended December 31, 2018 and 2017 include net tax impacts as a result of implementing federal tax reform legislation, which was signed into law in December 2017. During 2018, Southern Company obtained and analyzed additional information that was not initially available or reported as provisional amounts at December 31, 2017. Additional adjustments are not expected. Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also used such measures to evaluate Southern Company's performance. |
Southern Company | |||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
As Reported | |||||||||||||||||||||||||||||||||||||||||||||||
(In Millions of Dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Year-to-Date December | ||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||||||||||||||
Income Account- | |||||||||||||||||||||||||||||||||||||||||||||||
Retail Electric Revenues- | |||||||||||||||||||||||||||||||||||||||||||||||
Fuel | $ | 1,012 | $ | 966 | $ | 46 | $ | 4,283 | $ | 4,095 | $ | 188 | |||||||||||||||||||||||||||||||||||
Non-Fuel | 2,297 | 2,578 | (281) | 10,939 | 11,235 | (296) | |||||||||||||||||||||||||||||||||||||||||
Wholesale Electric Revenues | 579 | 559 | 20 | 2,516 | 2,426 | 90 | |||||||||||||||||||||||||||||||||||||||||
Other Electric Revenues | 166 | 171 | (5) | 664 | 681 | (17) | |||||||||||||||||||||||||||||||||||||||||
Natural Gas Revenues | 1,048 | 1,045 | 3 | 3,854 | 3,791 | 63 | |||||||||||||||||||||||||||||||||||||||||
Other Revenues | 235 | 310 | (75) | 1,239 | 803 | 436 | |||||||||||||||||||||||||||||||||||||||||
Total Revenues | 5,337 | 5,629 | (292) | 23,495 | 23,031 | 464 | |||||||||||||||||||||||||||||||||||||||||
Fuel and Purchased Power | 1,334 | 1,245 | 89 | 5,608 | 5,263 | 345 | |||||||||||||||||||||||||||||||||||||||||
Cost of Natural Gas | 486 | 515 | (29) | 1,539 | 1,601 | (62) | |||||||||||||||||||||||||||||||||||||||||
Cost of Other Sales | 118 | 220 | (102) | 806 | 513 | 293 | |||||||||||||||||||||||||||||||||||||||||
Non-Fuel O & M | 1,672 | 1,640 | 32 | 5,889 | 5,739 | 150 | |||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 793 | 774 | 19 | 3,131 | 3,010 | 121 | |||||||||||||||||||||||||||||||||||||||||
Taxes Other Than Income Taxes | 325 | 309 | 16 | 1,315 | 1,250 | 65 | |||||||||||||||||||||||||||||||||||||||||
Estimated Loss on Plants Under Construction | (8) | 207 | (215) | 1,097 | 3,362 | (2,265) | |||||||||||||||||||||||||||||||||||||||||
Impairment Charges | 13 | — | 13 | 210 | — | 210 | |||||||||||||||||||||||||||||||||||||||||
Gain on Dispositions, net | 26 | (20) | 46 | (291) | (40) | (251) | |||||||||||||||||||||||||||||||||||||||||
Total Operating Expenses | 4,759 | 4,890 | (131) | 19,304 | 20,698 | (1,394) | |||||||||||||||||||||||||||||||||||||||||
Operating Income | 578 | 739 | (161) | 4,191 | 2,333 | 1,858 | |||||||||||||||||||||||||||||||||||||||||
Allowance for Equity Funds Used During | 39 | 27 | 12 | 138 | 160 | (22) | |||||||||||||||||||||||||||||||||||||||||
Earnings from Equity Method Investments | 40 | 6 | 34 | 148 | 106 | 42 | |||||||||||||||||||||||||||||||||||||||||
Interest Expense, Net of Amounts Capitalized | 456 | 446 | 10 | 1,842 | 1,694 | 148 | |||||||||||||||||||||||||||||||||||||||||
Other Income (Expense), net | (81) | (1) | (80) | 114 | 163 | (49) | |||||||||||||||||||||||||||||||||||||||||
Income Taxes | (149) | (175) | 26 | 449 | 142 | 307 | |||||||||||||||||||||||||||||||||||||||||
Net Income | 269 | 500 | (231) | 2,300 | 926 | 1,374 | |||||||||||||||||||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred and Preference Stock | 4 | 6 | (2) | 16 | 38 | (22) | |||||||||||||||||||||||||||||||||||||||||
Net Income Attributable to Noncontrolling | (13) | (2) | (11) | 58 | 46 | 12 | |||||||||||||||||||||||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO | $ | 278 | $ | 496 | $ | (218) | $ | 2,226 | $ | 842 | $ | 1,384 | |||||||||||||||||||||||||||||||||||
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 December | Year-to-Date December | ||||||||||||||||||||||||||||||||||||||||||||||
As Reported | 2018 | 2017 | Change | Weather | 2018 | 2017 | Change | Weather | |||||||||||||||||||||||||||||||||||||||
Kilowatt-Hour Sales- | |||||||||||||||||||||||||||||||||||||||||||||||
Total Sales | 49,539 | 49,915 | (0.8) | % | 212,144 | 205,541 | 3.2 | % | |||||||||||||||||||||||||||||||||||||||
Total Retail Sales- | 37,973 | 37,705 | 0.7 | % | 0.3 | % | 162,182 | 156,507 | 3.6 | % | 0.9 | % | |||||||||||||||||||||||||||||||||||
Residential | 12,475 | 12,034 | 3.7 | % | 2.2 | % | 54,590 | 50,536 | 8.0 | % | 1.2 | % | |||||||||||||||||||||||||||||||||||
Commercial | 12,346 | 12,333 | 0.1 | % | 0.3 | % | 53,451 | 52,340 | 2.1 | % | 0.5 | % | |||||||||||||||||||||||||||||||||||
Industrial | 12,949 | 13,130 | (1.4) | % | (1.4) | % | 53,341 | 52,785 | 1.1 | % | 1.1 | % | |||||||||||||||||||||||||||||||||||
Other | 203 | 208 | (3.1) | % | (3.2) | % | 800 | 846 | (5.5) | % | (5.7) | % | |||||||||||||||||||||||||||||||||||
Total Wholesale Sales | 11,566 | 12,210 | (5.3) | % | N/A | 49,962 | 49,034 | 1.9 | % | N/A | |||||||||||||||||||||||||||||||||||||
(In Thousands of Customers) | |||||||||||||||||||||||||||||||||||||||||||||||
Period Ended December | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | Change | |||||||||||||||||||||||||||||||||||||||||||||
Regulated Utility Customers- | |||||||||||||||||||||||||||||||||||||||||||||||
Total Utility Customers1- | 8,933 | 9,263 | (3.6) | % | |||||||||||||||||||||||||||||||||||||||||||
Total Traditional Electric | 4,685 | 4,640 | 1.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Southern Company Gas1 | 4,248 | 4,623 | (8.1) | % | |||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||
(1) Includes total customers of approximately 407,000 at December 31, 2017 related to Elizabethtown Gas, Elkton Gas, and Florida City Gas, | |||||||||||||||||||||||||||||||||||||||||||||||
Southern Company | ||||||||||||||||||||||
Financial Overview | ||||||||||||||||||||||
As Reported | ||||||||||||||||||||||
(In Millions of Dollars) | ||||||||||||||||||||||
Three Months Ended | Year-to-Date December | |||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Southern Company1 – | ||||||||||||||||||||||
Operating Revenues | $ | 5,337 | $ | 5,629 | (5.2) | % | $ | 23,495 | $ | 23,031 | 2.0 | % | ||||||||||
Earnings Before Income Taxes | 120 | 325 | (63.1) | % | 2,749 | 1,068 | 157.4 | % | ||||||||||||||
Net Income Available to Common | 278 | 496 | (44.0) | % | 2,226 | 842 | 164.4 | % | ||||||||||||||
Alabama Power – | ||||||||||||||||||||||
Operating Revenues | $ | 1,316 | $ | 1,433 | (8.2) | % | $ | 6,032 | $ | 6,039 | (0.1) | % | ||||||||||
Earnings Before Income Taxes | 96 | 198 | (51.5) | % | 1,236 | 1,434 | (13.8) | % | ||||||||||||||
Net Income Available to Common | 73 | 119 | (38.7) | % | 930 | 848 | 9.7 | % | ||||||||||||||
Georgia Power – | ||||||||||||||||||||||
Operating Revenues | $ | 1,818 | $ | 1,884 | (3.5) | % | $ | 8,420 | $ | 8,310 | 1.3 | % | ||||||||||
Earnings Before Income Taxes | 175 | 352 | (50.3) | % | 1,007 | 2,258 | (55.4) | % | ||||||||||||||
Net Income Available to Common | 173 | 227 | (23.8) | % | 793 | 1,414 | (43.9) | % | ||||||||||||||
Gulf Power – | ||||||||||||||||||||||
Operating Revenues | $ | 359 | $ | 372 | (3.5) | % | $ | 1,465 | $ | 1,516 | (3.4) | % | ||||||||||
Earnings Before Income Taxes | (6) | 30 | (120.0) | % | 140 | 229 | (38.9) | % | ||||||||||||||
Net Income Available to Common | 13 | 19 | (31.6) | % | 160 | 135 | 18.5 | % | ||||||||||||||
Mississippi Power – | ||||||||||||||||||||||
Operating Revenues | $ | 308 | $ | 271 | 13.7 | % | $ | 1,265 | $ | 1,187 | 6.6 | % | ||||||||||
Earnings (Loss) Before Income Taxes | 24 | (202) | N/M | 134 | (3,120) | N/M | ||||||||||||||||
Net Income (Loss) Available to Common | 149 | (556) | N/M | 235 | (2,590) | N/M | ||||||||||||||||
Southern Power1 – | ||||||||||||||||||||||
Operating Revenues | $ | 506 | $ | 478 | 5.9 | % | $ | 2,205 | $ | 2,075 | 6.3 | % | ||||||||||
Earnings Before Income Taxes | (14) | (17) | N/M | 82 | 178 | (53.9) | % | |||||||||||||||
Net Income Available to Common | (48) | 795 | N/M | 187 | 1,071 | (82.5) | % | |||||||||||||||
Southern Company Gas1 – | ||||||||||||||||||||||
Operating Revenues | $ | 1,048 | $ | 1,079 | (2.9) | % | $ | 3,909 | $ | 3,920 | (0.3) | % | ||||||||||
Earnings Before Income Taxes | 67 | 74 | (9.5) | % | 836 | 610 | 37.0 | % | ||||||||||||||
Net Income Available to Common | 78 | (60) | N/M | 372 | 243 | 53.1 | % | |||||||||||||||
N/M - not meaningful | ||||||||||||||||||||||
Notes | ||||||||||||||||||||||
- See Financial Highlights pages for discussion of certain significant items occurring during the periods presented. | ||||||||||||||||||||||
(1) Financial comparisons to the prior year were impacted by (i) Southern Company Gas' disposition of: (a) Pivotal Home Solutions on June 4, 2018, (b) Elizabethtown Gas and Elkton Gas on July 1, 2018, and (c) Florida City Gas on July 29, 2018; (ii) the disposition of Southern Power Company's ownership interest in Plants Oleander and Stanton on December 4, 2018; and (iii) Southern Power Company's sale of (a) a 33% equity interest in a limited partnership indirectly owning substantially all of its solar facilities on May 22, 2018 and (b) a noncontrolling interest in its subsidiary owning eight operating wind facilities on December 11, 2018. | ||||||||||||||||||||||
SOURCE Southern Company
