Southern Company reports third-quarter 2018 earnings
ATLANTA, Nov. 7, 2018 /PRNewswire/ -- Southern Company today reported third-quarter 2018 earnings of $1.16 billion, or $1.14 per share, compared with earnings of $1.07 billion, or $1.07 per share, in the third quarter of 2017. For the nine months ended September 30, 2018, Southern Company reported earnings of $1.95 billion, or $1.92 per share, compared with earnings of $347 million, or 35 cents per share, for the same period in 2017.
Excluding the items described in the "Net Income – Excluding Items" table below, Southern Company earned $1.16 billion, or $1.14 per share, during the third quarter of 2018, compared with $1.13 billion, or $1.12 per share, during the third quarter of 2017. For the nine months ended September 30, 2018, excluding these items, Southern Company earned $2.87 billion, or $2.83 per share, compared with earnings of $2.51 billion, or $2.51 per share, for the same period in 2017.
Non-GAAP Financial Measures | Three Months Ended September | Year-to-Date September | |||
Net Income - Excluding Items (in millions) | 2018 | 2017 | 2018 | 2017 | |
Net Income - As Reported | $1,164 | $1,069 | $1,948 | $347 | |
Estimated Loss on Plants Under Construction | 2 | 34 | 1,108 | 3,155 | |
Tax Impact | (1) | (13) | (282) | (951) | |
Loss on Plant Scherer Unit 3 | - | - | - | 33 | |
Tax Impact | - | - | - | (13) | |
Acquisition, Disposition, and Integration Impacts | (326) | 6 | (93) | 19 | |
Tax Impact | 306 | 7 | 305 | 2 | |
Wholesale Gas Services | 24 | 38 | (83) | (48) | |
Tax Impact | (6) | (15) | 18 | 20 | |
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 | - | - | (31) | - | |
Net Income – Excluding Items | $1,163 | $1,126 | $2,872 | $2,508 | |
Average Shares Outstanding – (in millions) | 1,023 | 1,003 | 1,016 | 998 | |
Basic Earnings Per Share – Excluding Items | $1.14 | $1.12 | $2.83 | $2.51 | |
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 third quarter of 2018 were positively influenced by effects of constructive regulatory outcomes and weather at our state-regulated utilities. These impacts were partially offset by increases in depreciation and amortization, as well as interest expense.
In addition to its solid performance in the third quarter, the company has also delivered significant benefits to customers as a result of tax reform, while continuing to improve the financial profile of its state-regulated businesses.
"Southern Company executed exceptionally well in the third quarter," said Chairman, President and CEO Thomas A. Fanning. "This was demonstrated not only in the performance of our premier, state-regulated electric franchise operations, but also in the remarkable work of our people to restore power in northwest Florida and in parts of Georgia and Alabama following Hurricane Michael in early October," added Fanning. "While we are always pleased to report solid financial performance, our primary mission is bigger than our bottom line, and I believe this has never been more evident than during our response to this catastrophic weather event. The restoration of power to these areas was achieved in what we believe to be record time for an undertaking of such scope."
Third quarter 2018 operating revenues were $6.16 billion, compared with $6.20 billion for the third quarter of 2017, a decrease of 0.7 percent. For the nine months ended September 30, 2018, operating revenues were $18.16 billion, compared with $17.40 billion for the corresponding period in 2017, an increase of 4.3 percent.
Southern Company's third quarter earnings slides with supplemental financial information 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 America's premier energy company, with 46,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume serving 9 million customers through its subsidiaries, as of December 31, 2017. We operate nearly 200,000 miles of electric transmission and distribution lines and more than 80,000 miles of natural gas pipeline, as of December 31, 2017. The company provides clean, safe, reliable and affordable energy through electric operating companies in four states, natural gas distribution companies in four states, a competitive generation company serving wholesale customers in 11 states across America and a nationally recognized provider of customized energy solutions, as well as fiber optics and wireless communications. Southern Company brands are known for excellent customer service, high reliability and affordable prices that are below the national average. Through an industry-leading commitment to innovation, Southern Company and its subsidiaries are creating new products and services for the benefit of customers. We are building the future of energy by developing the full portfolio of energy resources, including carbon-free nuclear, advanced carbon capture technologies, natural gas, renewables, energy efficiency and storage technology. Southern Company has been named by the U.S. Department of Defense and G.I. Jobs magazine as a top military employer, recognized among the Top 50 Companies for Diversity and the number one Company for Progress by DiversityInc, and designated as one of America's Best Employers by Forbes magazine. Visit our website at www.southerncompany.com.
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Financial Highlights | ||||||||||||||||
(In Millions of Dollars Except Earnings Per Share) | ||||||||||||||||
Three Months EndedSeptember | Year-to-Date September | |||||||||||||||
Net Income–As Reported (See Notes) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Traditional Electric Operating Companies | $ | 1,148 | $ | 1,008 | $ | 1,711 | $ | — | ||||||||
Southern Power | 92 | 124 | 235 | 276 | ||||||||||||
Southern Company Gas | 46 | 15 | 294 | 303 | ||||||||||||
Total | 1,286 | 1,147 | 2,240 | 579 | ||||||||||||
Parent Company and Other | (122) | (78) | (292) | (232) | ||||||||||||
Net Income–As Reported | $ | 1,164 | $ | 1,069 | $ | 1,948 | $ | 347 | ||||||||
Basic Earnings Per Share1 | $ | 1.14 | $ | 1.07 | $ | 1.92 | $ | 0.35 | ||||||||
Average Shares Outstanding (in millions) | 1,023 | 1,003 | 1,016 | 998 | ||||||||||||
End of Period Shares Outstanding (in millions) | 1,029 | 1,004 | ||||||||||||||
Non-GAAP Financial Measures | Three Months EndedSeptember | Year-to-Date September | ||||||||||||||
Net Income–Excluding Items (See Notes) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net Income–As Reported | $ | 1,164 | $ | 1,069 | $ | 1,948 | $ | 347 | ||||||||
Estimated Loss on Plants Under Construction2 | 2 | 34 | 1,108 | 3,155 | ||||||||||||
Tax Impact | (1) | (13) | (282) | (951) | ||||||||||||
Loss on Plant Scherer Unit 33 | — | — | — | 33 | ||||||||||||
Tax Impact | — | — | — | (13) | ||||||||||||
Acquisition, Disposition, and Integration Impacts4 | (326) | 6 | (93) | 19 | ||||||||||||
Tax Impact | 306 | 7 | 305 | 2 | ||||||||||||
Wholesale Gas Services5 | 24 | 38 | (83) | (48) | ||||||||||||
Tax Impact | (6) | (15) | 18 | 20 | ||||||||||||
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 | — | — | (31) | — | ||||||||||||
Net Income–Excluding Items | $ | 1,163 | $ | 1,126 | $ | 2,872 | $ | 2,508 | ||||||||
Basic Earnings Per Share–Excluding Items | $ | 1.14 | $ | 1.12 | $ | 2.83 | $ | 2.51 | ||||||||
-See Notes on the following page. | ||||||||||||||||
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Financial Highlights | ||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||
(1) For the three and nine months ended September 30, 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 nine months ended September 30, 2018 and 2017 include charges and associated legal expenses related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Earnings for the nine months ended September 30, 2018 also include a $1.1 billion charge ($0.8 billion after tax) for an estimated probable loss on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. These charges significantly impacted the presentation of earnings and earnings per share. Additional pre-tax cancellation costs of up to $30 million for Mississippi Power Company's Kemper IGCC may occur through the first half of 2020. Further charges for Georgia Power Company's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain. | ||||||||||||||||||||||||||||||||
(3) Earnings for the nine months ended September 30, 2017 include a $32.5 million write-down ($20 million after tax) of Gulf Power Company's ownership of Plant Scherer Unit 3 as a result of its 2017 retail rate case settlement. Further charges are not expected. | ||||||||||||||||||||||||||||||||
(4) Earnings for three months ended September 30, 2018 primarily include: (i) a combined $351 million pre-tax ($38 million after-tax) gain on the sales of Elizabethtown Gas, Elkton Gas and Florida City Gas; and (ii) $25 million pre-tax ($18 million after-tax) of other acquisition, integration and disposition costs. Earnings for the nine months ended September 30, 2018 primarily include: (i) a net combined $317 million pre-tax gain ($35 million after-tax loss) on the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas and Pivotal Home Solutions; (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 the disposition of Plants Stanton and Oleander; and (iv) $63 million pre-tax ($46 million after-tax) of other acquisition, integration and disposition costs. The gain/loss calculations for the four Southern Company Gas dispositions are expected to be finalized in the fourth quarter 2018. Further costs are expected to continue to occur prior to the expected closings of pending dispositions in the first quarter of 2019; however, the amount of such expenditures is uncertain. 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 nine months ended September 30, 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 nine months ended September 30, 2018 include the settlement proceeds of Mississippi Power Company'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 nine months ended September 30, 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 nine months ended September 30, 2018 include additional net tax benefits as a result of implementing federal tax reform legislation, which was signed into law on December 22, 2017. During this period, Southern Company obtained and analyzed additional information that was not initially available or reported as provisional amounts at December 31, 2017. Additional adjustments are expected until Southern Company's 2017 federal income tax return is complete and provisional estimates are actualized during the measurement period ending December 31, 2018. Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also uses such measures to evaluate Southern Company's performance. | ||||||||||||||||||||||||||||||||
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Significant Factors Impacting EPS | ||||||||||||||||||||||||||||||||
Three Months EndedSeptember | Year-to-DateSeptember | |||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||||||||||
Earnings Per Share– | ||||||||||||||||||||||||||||||||
As Reported1 (See Notes) | $ | 1.14 | $ | 1.07 | $ | 0.07 | $ | 1.92 | $ | 0.35 | $ | 1.57 | ||||||||||||||||||||
Significant Factors: | ||||||||||||||||||||||||||||||||
Traditional Electric Operating Companies | $ | 0.14 | $ | 1.71 | ||||||||||||||||||||||||||||
Southern Power | (0.03) | (0.04) | ||||||||||||||||||||||||||||||
Southern Company Gas | 0.03 | (0.01) | ||||||||||||||||||||||||||||||
Parent Company and Other | (0.05) | (0.06) | ||||||||||||||||||||||||||||||
Increase in Shares | (0.02) | (0.03) | ||||||||||||||||||||||||||||||
Total–As Reported | $ | 0.07 | $ | 1.57 | ||||||||||||||||||||||||||||
Three Months EndedSeptember | Year-to-DateSeptember | |||||||||||||||||||||||||||||||
Non-GAAP Financial Measures | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||
Earnings Per Share– | ||||||||||||||||||||||||||||||||
Excluding Items (See Notes) | $ | 1.14 | $ | 1.12 | $ | 0.02 | $ | 2.83 | $ | 2.51 | $ | 0.32 | ||||||||||||||||||||
Total–As Reported | $ | 0.07 | $ | 1.57 | ||||||||||||||||||||||||||||
Estimated Loss on Plants Under Construction2 | (0.02) | (1.34) | ||||||||||||||||||||||||||||||
Loss on Plant Scherer Unit 33 | — | (0.02) | ||||||||||||||||||||||||||||||
Acquisition, Disposition, and Integration Impacts4 | (0.03) | 0.19 | ||||||||||||||||||||||||||||||
Wholesale Gas Services5 | — | (0.03) | ||||||||||||||||||||||||||||||
Litigation Settlement6 | — | (0.02) | ||||||||||||||||||||||||||||||
Adoption of Tax Reform7 | — | (0.03) | ||||||||||||||||||||||||||||||
Total–Excluding Items | $ | 0.02 | $ | 0.32 | ||||||||||||||||||||||||||||
- See Notes on the following page. | ||||||||||||||||||||||||||||||||
Southern Company | ||||||||||||||||
Significant Factors Impacting EPS | ||||||||||||||||
Notes | ||||||||||||||||
(1) For the three and nine months ended September 30, 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 nine months ended September 30, 2018 and 2017 include charges and associated legal expenses related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Earnings for the nine months ended September 30, 2018 also include a $1.1 billion charge ($0.8 billion after tax) for an estimated probable loss on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. These charges significantly impacted the presentation of earnings and earnings per share. Additional pre-tax cancellation costs of up to $30 million for Mississippi Power Company's Kemper IGCC may occur through the first half of 2020. Further charges for Georgia Power Company's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain. Earnings for the nine months ended September 30, 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 nine months ended September 30, 2017 include a $32.5 million write-down ($20 million after tax) of Gulf Power Company's ownership of Plant Scherer Unit 3 as a result of its 2017 retail rate case settlement. Further charges are not expected. | ||||||||||||||||
(4) Earnings for three months ended September 30, 2018 primarily include: (i) a combined $351 million pre-tax ($38 million after-tax) gain on the sales of Elizabethtown Gas, Elkton Gas and Florida City Gas; and (ii) $25 million pre-tax ($18 million after-tax) of other acquisition, integration and disposition costs. Earnings for the nine months ended September 30, 2018 primarily include: (i) a net combined $317 million pre-tax gain ($35 million after-tax loss) on the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas and Pivotal Home Solutions; (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 the disposition of Plants Stanton and Oleander; and (iv) $63 million pre-tax ($46 million after-tax) of other acquisition, integration and disposition costs. The gain/loss calculations for the four Southern Company Gas dispositions are expected to be finalized in the fourth quarter 2018. Further costs are expected to continue to occur prior to the expected closings of pending dispositions in the first quarter of 2019; however, the amount of such expenditures is uncertain. 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 nine months ended September 30, 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 nine months ended September 30, 2018 include the settlement proceeds of Mississippi Power Company'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 nine months ended September 30, 2018 include additional net tax benefits as a result of implementing federal tax reform legislation, which was signed into law on December 22, 2017. During this period, Southern Company obtained and analyzed additional information that was not initially available or reported as provisional amounts at December 31, 2017. Additional adjustments are expected until Southern Company's 2017 federal income tax return is complete and provisional estimates are actualized during the measurement period ending December 31, 2018. Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also uses such measures to evaluate Southern Company's performance. | ||||||||||||||||
Southern Company | ||||||||||||||||
EPS Earnings Analysis | ||||||||||||||||
Description | Three Months Ended September2018 vs. 2017 | Year-to-DateSeptember 2018 vs. 2017 | ||||||||||||||
Retail Sales | $0.02 | $0.04 | ||||||||||||||
Retail Revenue Impacts, Excluding Tax Reform Changes | 0.01 | 0.02 | ||||||||||||||
Weather | 0.05 | 0.18 | ||||||||||||||
Other Operating Revenues | 0.01 | — | ||||||||||||||
Purchased Power Capacity Expense | — | 0.01 | ||||||||||||||
Depreciation and Amortization | (0.02) | (0.06) | ||||||||||||||
Taxes Other Than Income Taxes | (0.01) | (0.02) | ||||||||||||||
Gain on Dispositions, Net | — | (0.01) | ||||||||||||||
Interest Expense | (0.02) | (0.03) | ||||||||||||||
Other Income and Deductions | 0.01 | 0.01 | ||||||||||||||
Impacts of Tax Reform (Ongoing Basis), Net of Amounts to be Returned to Customers | 0.10 | 0.19 | ||||||||||||||
Income Taxes, Excluding Tax Reform | (0.03) | (0.03) | ||||||||||||||
Dividends on Preferred and Preference Stock | — | 0.02 | ||||||||||||||
Total Traditional Electric Operating Companies | $0.12 | $0.32 | ||||||||||||||
Southern Power | (0.03) | 0.04 | ||||||||||||||
Southern Company Gas | (0.01) | 0.06 | ||||||||||||||
Parent and Other | (0.04) | (0.05) | ||||||||||||||
Increase in Shares | (0.02) | (0.05) | ||||||||||||||
Total Change in EPS (Excluding Items) | $0.02 | $0.32 | ||||||||||||||
Estimated Loss on Plants Under Construction1 | 0.02 | 1.34 | ||||||||||||||
Loss on Plant Scherer Unit 32 | — | 0.02 | ||||||||||||||
Acquisition, Disposition, and Integration Impacts3 | 0.03 | (0.19) | ||||||||||||||
Wholesale Gas Services4 | — | 0.03 | ||||||||||||||
Litigation Settlement5 | — | 0.02 | ||||||||||||||
Adoption of Tax Reform6 | — | 0.03 | ||||||||||||||
Total Change in EPS (As Reported) | $0.07 | $1.57 | ||||||||||||||
- See Notes on the following page. | ||||||||||||||||
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EPS Earnings Analysis | ||||||||||||||||||||||||||||||||||||||||||||||||
Three and Nine Months Ended September 2018 vs. September 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) Earnings for the three and nine months ended September 30, 2018 and 2017 include charges and associated legal expenses related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Earnings for the nine months ended September 30, 2018 also include a $1.1 billion charge ($0.8 billion after tax) for an estimated probable loss on Georgia Power Company's construction of Plant Vogtle Units 3 and 4. These charges significantly impacted the presentation of earnings and earnings per share. Additional pre-tax cancellation costs of up to $30 million for Mississippi Power Company's Kemper IGCC may occur through the first half of 2020. Further charges for Georgia Power Company's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain. Earnings for the nine months ended September 30, 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 nine months ended September 30, 2017 include a $32.5 million write-down ($20 million after tax) of Gulf Power Company's ownership of Plant Scherer Unit 3 as a result of its 2017 retail rate case settlement. Further charges are not expected. | ||||||||||||||||||||||||||||||||||||||||||||||||
(3) Earnings for three months ended September 30, 2018 primarily include: (i) a combined $351 million pre-tax ($38 million after-tax) gain on the sales of Elizabethtown Gas, Elkton Gas and Florida City Gas; and (ii) $25 million pre-tax ($18 million after-tax) of other acquisition, integration and disposition costs. Earnings for the nine months ended September 30, 2018 primarily include: (i) a net combined $317 million pre-tax gain ($35 million after-tax loss) on the sales of Elizabethtown Gas, Elkton Gas, Florida City Gas and Pivotal Home Solutions; (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 the disposition of Plants Stanton and Oleander; and (iv) $63 million pre-tax ($46 million after-tax) of other acquisition, integration and disposition costs. The gain/loss calculations for the four Southern Company Gas dispositions are expected to be finalized in the fourth quarter 2018. Further costs are expected to continue to occur prior to the expected closings of pending dispositions in the first quarter of 2019; however, the amount of such expenditures is uncertain. 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 nine months ended September 30, 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 nine months ended September 30, 2018 include the settlement proceeds of Mississippi Power Company'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 nine months ended September 30, 2018 include additional net tax benefits as a result of implementing federal tax reform legislation, which was signed into law on December 22, 2017. During this period, Southern Company obtained and analyzed additional information that was not initially available or reported as provisional amounts at December 31, 2017. Additional adjustments are expected until Southern Company's 2017 federal income tax return is complete and provisional estimates are actualized during the measurement period ending December 31, 2018. Southern Company believes presentation of earnings per share excluding these amounts provides investors with information comparable to guidance. Management also uses such measures to evaluate Southern Company's performance.
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Consolidated Earnings | ||||||||||||||||||||||||||||||||||||||||||||||||
As Reported | ||||||||||||||||||||||||||||||||||||||||||||||||
(In Millions of Dollars) | ||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September | Year-to-Date September | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||||||||||||||||||||||||||
Income Account- | ||||||||||||||||||||||||||||||||||||||||||||||||
Retail Electric Revenues- | ||||||||||||||||||||||||||||||||||||||||||||||||
Fuel | $ | 1,222 | $ | 1,185 | $ | 37 | $ | 3,271 | $ | 3,130 | $ | 141 | ||||||||||||||||||||||||||||||||||||
Non-Fuel | 3,383 | 3,430 | (47) | 8,642 | 8,656 | (14) | ||||||||||||||||||||||||||||||||||||||||||
Wholesale Electric Revenues | 693 | 718 | (25) | 1,923 | 1,867 | 56 | ||||||||||||||||||||||||||||||||||||||||||
Other Electric Revenues | 170 | 168 | 2 | 509 | 510 | (1) | ||||||||||||||||||||||||||||||||||||||||||
Natural Gas Revenues | 492 | 532 | (40) | 2,806 | 2,746 | 60 | ||||||||||||||||||||||||||||||||||||||||||
Other Revenues | 199 | 168 | 31 | 1,007 | 494 | 513 | ||||||||||||||||||||||||||||||||||||||||||
Total Revenues | 6,159 | 6,201 | (42) | 18,158 | 17,403 | 755 | ||||||||||||||||||||||||||||||||||||||||||
Fuel and Purchased Power | 1,567 | 1,541 | 26 | 4,274 | 4,018 | 256 | ||||||||||||||||||||||||||||||||||||||||||
Cost of Natural Gas | 104 | 134 | (30) | 1,053 | 1,085 | (32) | ||||||||||||||||||||||||||||||||||||||||||
Cost of Other Sales | 120 | 90 | 30 | 688 | 293 | 395 | ||||||||||||||||||||||||||||||||||||||||||
Non-Fuel O & M | 1,404 | 1,341 | 63 | 4,217 | 4,100 | 117 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 787 | 767 | 20 | 2,338 | 2,236 | 102 | ||||||||||||||||||||||||||||||||||||||||||
Taxes Other Than Income Taxes | 319 | 303 | 16 | 990 | 941 | 49 | ||||||||||||||||||||||||||||||||||||||||||
Estimated Loss on Plants Under Construction | 1 | 34 | (33) | 1,105 | 3,155 | (2,050) | ||||||||||||||||||||||||||||||||||||||||||
Gain on Dispositions, net | (353) | — | (353) | (317) | (19) | (298) | ||||||||||||||||||||||||||||||||||||||||||
Impairment Charges | 36 | — | 36 | 197 | — | 197 | ||||||||||||||||||||||||||||||||||||||||||
Total Operating Expenses | 3,985 | 4,210 | (225) | 14,545 | 15,809 | (1,264) | ||||||||||||||||||||||||||||||||||||||||||
Operating Income | 2,174 | 1,991 | 183 | 3,613 | 1,594 | 2,019 | ||||||||||||||||||||||||||||||||||||||||||
Allowance for Equity Funds Used During Construction | 36 | 18 | 18 | 99 | 133 | (34) | ||||||||||||||||||||||||||||||||||||||||||
Earnings from Equity Method Investments | 36 | 32 | 4 | 108 | 100 | 8 | ||||||||||||||||||||||||||||||||||||||||||
Interest Expense, Net of Amounts Capitalized | 458 | 407 | 51 | 1,386 | 1,248 | 138 | ||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense), net | 57 | 65 | (8) | 195 | 165 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Income Taxes | 623 | 590 | 33 | 598 | 317 | 281 | ||||||||||||||||||||||||||||||||||||||||||
Net Income | 1,222 | 1,109 | 113 | 2,031 | 427 | 1,604 | ||||||||||||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred and Preference Stock of Subsidiaries | 4 | 10 | (6) | 12 | 32 | (20) | ||||||||||||||||||||||||||||||||||||||||||
Net Income Attributable to Noncontrolling Interests | 54 | 30 | 24 | 71 | 48 | 23 | ||||||||||||||||||||||||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY | $ | 1,164 | $ | 1,069 | $ | 95 | $ | 1,948 | $ | 347 | $ | 1,601 | ||||||||||||||||||||||||||||||||||||
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 September | Year-to-Date September | |||||||||||||||||||||||||||||||||||||||||||||||
As Reported | 2018 | 2017 | Change | Weather Adjusted Change | 2018 | 2017 | Change | Weather Adjusted Change | ||||||||||||||||||||||||||||||||||||||||
Kilowatt-Hour Sales- | ||||||||||||||||||||||||||||||||||||||||||||||||
Total Sales | 59,501 | 58,276 | 2.1 | % | 162,605 | 155,626 | 4.5 | % | ||||||||||||||||||||||||||||||||||||||||
Total Retail Sales- | 46,195 | 44,449 | 3.9 | % | 1.4 | % | 124,209 | 118,802 | 4.6 | % | 1.1 | % | ||||||||||||||||||||||||||||||||||||
Residential | 16,458 | 15,499 | 6.2 | % | 1.2 | % | 42,115 | 38,502 | 9.4 | % | 0.8 | % | ||||||||||||||||||||||||||||||||||||
Commercial | 15,445 | 14,969 | 3.2 | % | 0.8 | % | 41,105 | 40,007 | 2.7 | % | 0.6 | % | ||||||||||||||||||||||||||||||||||||
Industrial | 14,097 | 13,770 | 2.4 | % | 2.4 | % | 40,392 | 39,656 | 1.9 | % | 1.9 | % | ||||||||||||||||||||||||||||||||||||
Other | 195 | 211 | (7.7) | % | (7.9) | % | 597 | 637 | (6.3) | % | (6.5) | % | ||||||||||||||||||||||||||||||||||||
Total Wholesale Sales | 13,306 | 13,827 | (3.8) | % | N/A | 38,396 | 36,824 | 4.3 | % | N/A | ||||||||||||||||||||||||||||||||||||||
(In Thousands of Customers) | ||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended September | ||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | Change | ||||||||||||||||||||||||||||||||||||||||||||||
Regulated Utility Customers- | ||||||||||||||||||||||||||||||||||||||||||||||||
Total Utility Customers- | 8,856 | 9,187 | (3.6) | % | ||||||||||||||||||||||||||||||||||||||||||||
Total Traditional Electric | 4,679 | 4,632 | 1.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
Southern Company Gas1 | 4,177 | 4,555 | (8.3) | % | ||||||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) Includes total customers of approximately 404,000 at September 30, 2017 related to Elizabethtown Gas, Elkton Gas, and Florida City Gas, which were sold in July 2018. | ||||||||||||||||||||||||||||||||||||||||||||||||
Southern Company | ||||||||||||||||||||||
Financial Overview | ||||||||||||||||||||||
As Reported | ||||||||||||||||||||||
(In Millions of Dollars) | ||||||||||||||||||||||
Three Months Ended September | Year-to-Date September | |||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Southern Company – | ||||||||||||||||||||||
Operating Revenues | $ | 6,159 | $ | 6,201 | (0.7) | % | $ | 18,158 | $ | 17,403 | 4.3 | % | ||||||||||
Earnings Before Income Taxes | 1,845 | 1,699 | 8.6 | % | 2,629 | 744 | N/M | |||||||||||||||
Net Income Available to Common | 1,164 | 1,069 | 8.9 | % | 1,948 | 347 | N/M | |||||||||||||||
Alabama Power – | ||||||||||||||||||||||
Operating Revenues | $ | 1,740 | $ | 1,740 | — | % | $ | 4,716 | $ | 4,606 | 2.4 | % | ||||||||||
Earnings Before Income Taxes | 504 | 546 | (7.7) | % | 1,140 | 1,236 | (7.8) | % | ||||||||||||||
Net Income Available to Common | 373 | 325 | 14.8 | % | 857 | 729 | 17.6 | % | ||||||||||||||
Georgia Power – | ||||||||||||||||||||||
Operating Revenues | $ | 2,593 | $ | 2,546 | 1.8 | % | $ | 6,601 | $ | 6,426 | 2.7 | % | ||||||||||
Earnings Before Income Taxes | 926 | 934 | (0.9) | % | 833 | 1,906 | (56.3) | % | ||||||||||||||
Net Income Available to Common | 664 | 580 | 14.5 | % | 621 | 1,188 | (47.7) | % | ||||||||||||||
Gulf Power – | ||||||||||||||||||||||
Operating Revenues | $ | 414 | $ | 437 | (5.3) | % | $ | 1,106 | $ | 1,144 | (3.3) | % | ||||||||||
Earnings Before Income Taxes | 59 | 103 | (42.7) | % | 146 | 199 | (26.6) | % | ||||||||||||||
Net Income Available to Common | 63 | 63 | — | % | 147 | 117 | 25.6 | % | ||||||||||||||
Mississippi Power – | ||||||||||||||||||||||
Operating Revenues | $ | 358 | $ | 341 | 5.0 | % | $ | 956 | $ | 915 | 4.5 | % | ||||||||||
Earnings (Loss) Before Income Taxes | 61 | 64 | (4.7) | % | 110 | (2,918) | N/M | |||||||||||||||
Net Income (Loss) Available to Common | 47 | 40 | 17.5 | % | 86 | (2,034) | N/M | |||||||||||||||
Southern Power – | ||||||||||||||||||||||
Operating Revenues | $ | 635 | $ | 618 | 2.8 | % | $ | 1,699 | $ | 1,597 | 6.4 | % | ||||||||||
Earnings Before Income Taxes | 108 | 115 | (6.1) | % | 96 | 195 | (50.8) | % | ||||||||||||||
Net Income Available to Common | 92 | 124 | (25.8) | % | 235 | 276 | (14.9) | % | ||||||||||||||
Southern Company Gas – | ||||||||||||||||||||||
Operating Revenues | $ | 492 | $ | 565 | (12.9) | % | $ | 2,861 | $ | 2,841 | 0.7 | % | ||||||||||
Earnings Before Income Taxes | 362 | 67 | N/M | 769 | 536 | 43.5 | % | |||||||||||||||
Net Income Available to Common | 46 | 15 | N/M | 294 | 303 | (3.0) | % | |||||||||||||||
N/M - not meaningful | ||||||||||||||||||||||
Notes | ||||||||||||||||||||||
- See Financial Highlights pages for discussion of certain significant items occurring during the periods presented. | ||||||||||||||||||||||
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SOURCE Southern Company