Southern Company reports third-quarter 2019 earnings
ATLANTA, Oct. 30, 2019 /PRNewswire/ -- Southern Company today reported third-quarter 2019 earnings of $1.32 billion, or $1.26 per share, compared with $1.16 billion, or $1.14 per share, in the third quarter of 2018. For the nine months ended September 30, 2019, Southern Company reported earnings of $4.30 billion, or $4.12 per share, compared with earnings of $1.95 billion, or $1.92 per share, for the same period in 2018.
Excluding the items described in the "Net Income – Excluding Items" table below, Southern Company earned $1.40 billion, or $1.34 per share, during the third quarter of 2019, compared with $1.16 billion, or $1.14 per share, during the third quarter of 2018. For the nine months ended September 30, 2019, excluding these items, Southern Company earned $2.97 billion, or $2.84 per share, compared with earnings of $2.87 billion, or $2.83 per share, for the same period in 2018.
Non-GAAP Financial Measures | Three Months Ended September | Year-to-Date September | |||
Net Income - Excluding Items (in millions) | 2019 | 2018 | 2019 | 2018 | |
Net Income - As Reported | $1,316 | $1,164 | $4,298 | $1,948 | |
Acquisition, Disposition, and Integration Impacts | 5 | (326) | (2,477) | (93) | |
Tax Impact | 7 | 306 | 1,130 | 305 | |
Estimated Loss on Plants Under Construction | 3 | 2 | 16 | 1,108 | |
Tax Impact | (1) | (1) | (4) | (282) | |
Wholesale Gas Services | 14 | 24 | (79)
| (83) | |
Tax Impact | (5) | (6) | 18 | 18 | |
Asset Impairment | 92 | - | 92 | - | |
Tax Impact | (27) | - | (27) | - | |
Litigation Settlement | - | - | - | (24) | |
Tax Impact | - | - | - | 6 | |
Earnings Guidance Comparability Items: | |||||
Adoption of Tax Reform | - | - | - | (31) | |
Net Income – Excluding Items | $1,404 | $1,163 | $2,967 | $2,872 | |
Average Shares Outstanding – (in millions) | 1,048 | 1,023 | 1,043 | 1,016 | |
Basic Earnings Per Share – Excluding Items | $1.34 | $1.14 | $2.84 | $2.83 | |
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 2019 were positively influenced by higher revenues associated with changes in rates and pricing, net of usage changes, as well as warmer than normal weather at Southern Company's regulated utilities. These impacts were partially offset by the impact of divested entities on earnings.
"We continue to be pleased with our operational performance through the first three quarters of 2019, as our premier, state-regulated electric and gas franchises provided reliable energy to customers despite the challenge of record-breaking temperatures in our service footprint" said Chairman, President and CEO Thomas A. Fanning. "Our electrical system demonstrated great resilience during these conditions with strong generation availability and record year-to-date transmission performance, resulting in exceptional reliability for customers. Even amid these peak loads, a diverse fuel mix enabled the Southern Company system to reduce carbon emissions by 35% compared to the strongest demand of 2007 – our benchmark year for carbon emissions."
Third quarter 2019 operating revenues were $6.0 billion, compared with $6.2 billion for the third quarter of 2018, a decrease of 2.7 percent. For the nine months ended September 30, 2019, operating revenues were $16.5 billion, compared with $18.2 billion for the corresponding period in 2018, a decrease of 9.1 percent. These decreases reflect the sales of Gulf Power and other assets that are no longer affiliated with Southern Company.
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 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 EndedSeptember | Year-to-DateSeptember | |||||||||||||||
Net Income–As Reported (See Notes) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Traditional Electric Operating Companies | $ | 1,373 | $ | 1,148 | $ | 2,719 | $ | 1,711 | ||||||||
Southern Power | 86 | 92 | 316 | 235 | ||||||||||||
Southern Company Gas | (29) | 46 | 347 | 294 | ||||||||||||
Total | 1,430 | 1,286 | 3,382 | 2,240 | ||||||||||||
Parent Company and Other | (114) | (122) | 916 | (292) | ||||||||||||
Net Income–As Reported | $ | 1,316 | $ | 1,164 | $ | 4,298 | $ | 1,948 | ||||||||
Basic Earnings Per Share1 | $ | 1.26 | $ | 1.14 | $ | 4.12 | $ | 1.92 | ||||||||
Average Shares Outstanding (in millions) | 1,048 | 1,023 | 1,043 | 1,016 | ||||||||||||
End of Period Shares Outstanding (in millions) | 1,049 | 1,029 | ||||||||||||||
Non-GAAP Financial Measures | Three Months EndedSeptember | Year-to-DateSeptember | ||||||||||||||
Net Income–Excluding Items (See Notes) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Income–As Reported | $ | 1,316 | $ | 1,164 | $ | 4,298 | $ | 1,948 | ||||||||
Acquisition, Disposition, and Integration Impacts2 | 5 | (326) | (2,477) | (93) | ||||||||||||
Tax Impact | 7 | 306 | 1,130 | 305 | ||||||||||||
Estimated Loss on Plants Under Construction3 | 3 | 2 | 16 | 1,108 | ||||||||||||
Tax Impact | (1) | (1) | (4) | (282) | ||||||||||||
Wholesale Gas Services4 | 14 | 24 | (79) | (83) | ||||||||||||
Tax Impact | (5) | (6) | 18 | 18 | ||||||||||||
Asset Impairment5 | 92 | — | 92 | — | ||||||||||||
Tax Impact | (27) | — | (27) | — | ||||||||||||
Litigation Settlement6 | — | — | — | (24) | ||||||||||||
Tax Impact | — | — | — | 6 | ||||||||||||
Earnings Guidance Comparability Items: | ||||||||||||||||
Adoption of Tax Reform7 | — | — | — | (31) | ||||||||||||
Net Income–Excluding Items | $ | 1,404 | $ | 1,163 | $ | 2,967 | $ | 2,872 | ||||||||
Basic Earnings Per Share–Excluding Items | $ | 1.34 | $ | 1.14 | $ | 2.84 | $ | 2.83 | ||||||||
-See Notes on the following page. | ||||||||||||||||
Southern Company | |||||||||
Financial Highlights | |||||||||
Notes | |||||||||
(1) | For the three and nine months ended September 30, 2019 and 2018, dilutive impacts are immaterial ($0.03 or less per share). Diluted earnings per share was $1.25 and $4.09 in the third quarter and year-to-date 2019, respectively, and $1.13 and $1.91 in the third quarter and year-to-date 2018, respectively. | ||||||||
(2) | Earnings for the three months ended September 30, 2019 include an $18 million pre-tax and after-tax impairment charge in contemplation of the sale of PowerSecure Inc.'s lighting services business, partially offset by $13 million pre tax ($6 million after tax) of other acquisition, disposition, and integration impacts. Earnings for the nine months ended September 30, 2019 include a $2.5 billion pre-tax gain ($1.3 billion after tax) on the sale of Gulf Power Company, a $23 million pre-tax ($88 million after tax) gain on the sale of Southern Power Company's Plant Nacogdoches, and $17 million pre tax ($7 million after tax) of other acquisition, disposition, and integration impacts, partially offset by pre-tax and after-tax impairment charges totaling $50 million related to the sale and contemplated sale of PowerSecure Inc.'s utility infrastructure services and lighting businesses, respectively. Earnings for the 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, disposition, and integration 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 Pivotal Home Solutions transaction; (iii) a $119 million pre-tax ($89 million after tax) impairment charge associated with the sales of Plants Stanton and Oleander; and (iv) $63 million pre tax ($46 million after tax) of other acquisition, disposition, and integration costs. Further impacts are expected to be recorded in 2019 in connection with the sale of Gulf Power Company, as well as the pending 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. | ||||||||
(3) | Earnings for the three and nine months ended September 30, 2019 and 2018 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. Additional pre-tax closure costs, including mine reclamation, of up to $20 million for Mississippi Power Company's Kemper IGCC may occur through 2020. Mississippi Power Company 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 Company's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain. | ||||||||
(4) | Earnings for the three and nine months ended September 30, 2019 and 2018 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 three and nine months ended September 30, 2019 include a pre-tax impairment charge of $92 million ($65 million after tax) associated with Southern Company Gas' natural gas storage facility in Louisiana. Further charges associated with this facility are not expected. Southern Company Gas has two other natural gas storage facilities with a combined net book value of $328 million at September 30, 2019. These facilities could be impacted by ongoing U.S. natural gas storage market changes that may imply impacts to future rates and/or asset values, and, if sustained, could trigger impairment. | ||||||||
(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 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. | ||||||||
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Significant Factors Impacting EPS | ||||||||||||||||||||||||
Three Months EndedSeptember | Year-to-DateSeptember | |||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||||
Earnings Per Share– | ||||||||||||||||||||||||
As Reported1 (See Notes) | $ | 1.26 | $ | 1.14 | $ | 0.12 | $ | 4.12 | $ | 1.92 | $ | 2.20 | ||||||||||||
Significant Factors: | ||||||||||||||||||||||||
Traditional Electric Operating Companies | $ | 0.22 | $ | 0.99 | ||||||||||||||||||||
Southern Power | (0.01) | 0.08 | ||||||||||||||||||||||
Southern Company Gas | (0.07) | 0.05 | ||||||||||||||||||||||
Parent Company and Other | 0.01 | 1.19 | ||||||||||||||||||||||
Increase in Shares | (0.03) | (0.11) | ||||||||||||||||||||||
Total–As Reported | $ | 0.12 | $ | 2.20 | ||||||||||||||||||||
Three Months EndedSeptember | Year-to-DateSeptember | |||||||||||||||||||||||
Non-GAAP Financial Measures | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||
Earnings Per Share– | ||||||||||||||||||||||||
Excluding Items (See Notes) | $ | 1.34 | $ | 1.14 | $ | 0.20 | $ | 2.84 | $ | 2.83 | $ | 0.01 | ||||||||||||
Total–As Reported | $ | 0.12 | $ | 2.20 | ||||||||||||||||||||
Acquisition, Disposition, and Integration Impacts2 | 0.03 | (1.50) | ||||||||||||||||||||||
Estimated Loss on Plants Under Construction3 | — | (0.80) | ||||||||||||||||||||||
Wholesale Gas Services4 | (0.01) | — | ||||||||||||||||||||||
Asset Impairment5 | 0.06 | 0.06 | ||||||||||||||||||||||
Litigation Settlement6 | — | 0.02 | ||||||||||||||||||||||
Adoption of Tax Reform7 | — | 0.03 | ||||||||||||||||||||||
Total–Excluding Items | $ | 0.20 | $ | 0.01 | ||||||||||||||||||||
- See Notes on the following page. | ||||||||||||||||||||||||
Southern Company | |||||||||||||
Significant Factors Impacting EPS | |||||||||||||
Notes | |||||||||||||
(1) | For the three and nine months ended September 30, 2019 and 2018, dilutive impacts are immaterial ($0.03 or less per share). Diluted earnings per share was $1.25 and $4.09 in the third quarter and year-to-date 2019, respectively, and $1.13 and $1.91 in the third quarter and year-to-date 2018, respectively. | ||||||||||||
(2) | Earnings for the three months ended September 30, 2019 include an $18 million pre-tax and after-tax impairment charge in contemplation of the sale of PowerSecure Inc.'s lighting services business, partially offset by $13 million pre tax ($6 million after tax) of other acquisition, disposition, and integration impacts. Earnings for the nine months ended September 30, 2019 include a $2.5 billion pre-tax gain ($1.3 billion after tax) on the sale of Gulf Power Company, a $23 million pre-tax ($88 million after tax) gain on the sale of Southern Power Company's Plant Nacogdoches, and $17 million pre tax ($7 million after tax) of other acquisition, disposition, and integration impacts, partially offset by pre-tax and after-tax impairment charges totaling $50 million related to the sale and contemplated sale of PowerSecure Inc.'s utility infrastructure services and lighting businesses, respectively. Earnings for the 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, disposition, and integration 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 Pivotal Home Solutions transaction; (iii) a $119 million pre-tax ($89 million after tax) impairment charge associated with the sales of Plants Stanton and Oleander; and (iv) $63 million pre tax ($46 million after tax) of other acquisition, disposition, and integration costs. Further impacts are expected to be recorded in 2019 in connection with the sale of Gulf Power Company, as well as the pending 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. | ||||||||||||
(3) | Earnings for the three and nine months ended September 30, 2019 and 2018 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. Additional pre-tax closure costs, including mine reclamation, of up to $20 million for Mississippi Power Company's Kemper IGCC may occur through 2020. Mississippi Power Company 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 Company's Plant Vogtle Units 3 and 4 may occur; however, the amount and timing of any such charges is uncertain. | ||||||||||||
(4) | Earnings for the three and nine months ended September 30, 2019 and 2018 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 three and nine months ended September 30, 2019 include a pre-tax impairment charge of $92 million ($65 million after tax) associated with Southern Company Gas' natural gas storage facility in Louisiana. Further charges associated with this facility are not expected. Southern Company Gas has two other natural gas storage facilities with a combined net book value of $328 million at September 30, 2019. These facilities could be impacted by ongoing U.S. natural gas storage market changes that may imply impacts to future rates and/or asset values, and, if sustained, could trigger impairment. | ||||||||||||
(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 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 | |||||||||||||
EPS Earnings Analysis | |||||||||||||
Description | Three Months Ended September2019 vs. 2018 | Year-to-Date September2019 vs. 2018 | |||||||||||
Retail Sales | $(0.05) | $(0.10) | |||||||||||
Retail Revenue Impacts | 0.18 | 0.33 | |||||||||||
Weather | 0.09 | 0.05 | |||||||||||
Wholesale and Other Operating Revenues | 0.02 | 0.05 | |||||||||||
Non-Fuel O&M | — | (0.03) | |||||||||||
Interest Expense, Depreciation and Amortization, Other | (0.02) | (0.02) | |||||||||||
Income Taxes | 0.06 | 0.09 | |||||||||||
Gulf Power Earnings | (0.06) | (0.14) | |||||||||||
Total Traditional Electric Operating Companies | $0.22 | $0.23 | |||||||||||
Southern Power | (0.01) | (0.10) | |||||||||||
Southern Company Gas | 0.01 | 0.01 | |||||||||||
Parent and Other | 0.01 | (0.05) | |||||||||||
Increase in Shares | (0.03) | (0.08) | |||||||||||
Total Change in EPS (Excluding Items) | $0.20 | $0.01 | |||||||||||
Acquisition, Disposition, and Integration Impacts1 | (0.03) | 1.50 | |||||||||||
Estimated Loss on Plants Under Construction2 | — | 0.80 | |||||||||||
Wholesale Gas Services3 | 0.01 | — | |||||||||||
Asset Impairment4 | (0.06) | (0.06) | |||||||||||
Litigation Settlement5 | — | (0.02) | |||||||||||
Adoption of Tax Reform6 | — | (0.03) | |||||||||||
Total Change in EPS (As Reported) | $0.12 | $2.20 | |||||||||||
- See Notes on the following page. | |||||||||||||
Southern Company | ||||||||
EPS Earnings Analysis | ||||||||
Three and Nine Months Ended September 2019 vs. September 2018 | ||||||||
Notes | ||||||||
(1) | Earnings for the three months ended September 30, 2019 include an $18 million pre-tax and after-tax impairment charge in contemplation of the sale of PowerSecure Inc.'s lighting services business, partially offset by $13 million pre tax ($6 million after tax) of other acquisition, disposition, and integration impacts. Earnings for the nine months ended September 30, 2019 include a $2.5 billion pre-tax gain ($1.3 billion after tax) on the sale of Gulf Power Company, a $23 million pre-tax ($88 million after tax) gain on the sale of Southern Power Company's Plant Nacogdoches, and $17 million pre tax ($7 million after tax) of other acquisition, disposition, and integration impacts, partially offset by pre-tax and after-tax impairment charges totaling $50 million related to the sale and contemplated sale of PowerSecure Inc.'s utility infrastructure services and lighting businesses, respectively. Earnings for the 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, disposition, and integration 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 Pivotal Home Solutions transaction; (iii) a $119 million pre-tax ($89 million after tax) impairment charge associated with the sales of Plants Stanton and Oleander; and (iv) $63 million pre tax ($46 million after tax) of other acquisition, disposition, and integration costs. Further impacts are expected to be recorded in 2019 in connection with the sale of Gulf Power Company, as well as the pending 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. | |||||||
(2) | Earnings for the three and nine months ended September 30, 2019 and 2018 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. Additional pre-tax closure costs, including mine reclamation, of up to $20 million for Mississippi Power Company's Kemper IGCC may occur through 2020. Mississippi Power Company 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 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 three and nine months ended September 30, 2019 and 2018 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. | |||||||
(4) | Earnings for the three and nine months ended September 30, 2019 include a pre-tax impairment charge of $92 million ($65 million after tax) associated with Southern Company Gas' natural gas storage facility in Louisiana. Further charges associated with this facility are not expected. Southern Company Gas has two other natural gas storage facilities with a combined net book value of $328 million at September 30, 2019. These facilities could be impacted by ongoing U.S. natural gas storage market changes that may imply impacts to future rates and/or asset values, and, if sustained, could trigger impairment. | |||||||
(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 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. | |||||||
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Consolidated Earnings | |||||||||||||||||||||||||||||||||||||||||||||
As Reported | |||||||||||||||||||||||||||||||||||||||||||||
(In Millions of Dollars) | |||||||||||||||||||||||||||||||||||||||||||||
Three Months EndedSeptember | Year-to-DateSeptember | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||||||||||||||||||||||||
Income Account- | |||||||||||||||||||||||||||||||||||||||||||||
Retail Electric Revenues- | |||||||||||||||||||||||||||||||||||||||||||||
Fuel | $ | 1,083 | $ | 1,222 | $ | (139) | $ | 2,807 | $ | 3,271 | $ | (464) | |||||||||||||||||||||||||||||||||
Non-Fuel | 3,429 | 3,383 | 46 | 8,329 | 8,642 | (313) | |||||||||||||||||||||||||||||||||||||||
Wholesale Electric Revenues | 625 | 698 | (73) | 1,667 | 1,937 | (270) | |||||||||||||||||||||||||||||||||||||||
Other Electric Revenues | 163 | 165 | (2) | 492 | 495 | (3) | |||||||||||||||||||||||||||||||||||||||
Natural Gas Revenues | 498 | 492 | 6 | 2,661 | 2,806 | (145) | |||||||||||||||||||||||||||||||||||||||
Other Revenues | 197 | 199 | (2) | 549 | 1,007 | (458) | |||||||||||||||||||||||||||||||||||||||
Total Revenues | 5,995 | 6,159 | (164) | 16,505 | 18,158 | (1,653) | |||||||||||||||||||||||||||||||||||||||
Fuel and Purchased Power | 1,326 | 1,567 | (241) | 3,461 | 4,274 | (813) | |||||||||||||||||||||||||||||||||||||||
Cost of Natural Gas | 79 | 104 | (25) | 956 | 1,053 | (97) | |||||||||||||||||||||||||||||||||||||||
Cost of Other Sales | 114 | 120 | (6) | 316 | 688 | (372) | |||||||||||||||||||||||||||||||||||||||
Non-Fuel O & M | 1,292 | 1,404 | (112) | 3,888 | 4,217 | (329) | |||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 760 | 787 | (27) | 2,267 | 2,338 | (71) | |||||||||||||||||||||||||||||||||||||||
Taxes Other Than Income Taxes | 303 | 319 | (16) | 931 | 990 | (59) | |||||||||||||||||||||||||||||||||||||||
Estimated Loss on Plants Under Construction | 4 | 1 | 3 | 10 | 1,105 | (1,095) | |||||||||||||||||||||||||||||||||||||||
Impairment Charges | 110 | 36 | 74 | 142 | 197 | (55) | |||||||||||||||||||||||||||||||||||||||
(Gain) Loss on Dispositions, net | (6) | (353) | 347 | (2,512) | (317) | (2,195) | |||||||||||||||||||||||||||||||||||||||
Total Operating Expenses | 3,982 | 3,985 | (3) | 9,459 | 14,545 | (5,086) | |||||||||||||||||||||||||||||||||||||||
Operating Income | 2,013 | 2,174 | (161) | 7,046 | 3,613 | 3,433 | |||||||||||||||||||||||||||||||||||||||
Allowance for Equity Funds Used During Construction | 33 | 36 | (3) | 96 | 99 | (3) | |||||||||||||||||||||||||||||||||||||||
Earnings from Equity Method Investments | 39 | 36 | 3 | 120 | 108 | 12 | |||||||||||||||||||||||||||||||||||||||
Interest Expense, Net of Amounts Capitalized | 434 | 458 | (24) | 1,294 | 1,386 | (92) | |||||||||||||||||||||||||||||||||||||||
Other Income (Expense), net | 61 | 57 | 4 | 239 | 195 | 44 | |||||||||||||||||||||||||||||||||||||||
Income Taxes | 367 | 623 | (256) | 1,872 | 598 | 1,274 | |||||||||||||||||||||||||||||||||||||||
Net Income | 1,345 | 1,222 | 123 | 4,335 | 2,031 | 2,304 | |||||||||||||||||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred Stock of Subsidiaries | 4 | 4 | — | 11 | 12 | (1) | |||||||||||||||||||||||||||||||||||||||
Net Income Attributable to Noncontrolling Interests | 25 | 54 | (29) | 26 | 71 | (45) | |||||||||||||||||||||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO SOUTHERN COMPANY | $ | 1,316 | $ | 1,164 | $ | 152 | $ | 4,298 | $ | 1,948 | $ | 2,350 | |||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||
- Certain prior year data may have been reclassified to conform with current year presentation. | |||||||||||||||||||||||||||||||||||||||||||||
Southern Company | |||||||||||||||||||||
Kilowatt-Hour Sales | |||||||||||||||||||||
(In Millions of KWHs) | |||||||||||||||||||||
Three Months Ended September | |||||||||||||||||||||
As Reported | Adjusted1 | ||||||||||||||||||||
2019 | 2018 | Change | Weather Adjusted Change | 2018 | Change | Weather Adjusted Change | |||||||||||||||
Kilowatt-Hour Sales- | |||||||||||||||||||||
Total Sales | 56,703 | 59,501 | (4.7) | % | 55,898 | 1.4 | % | ||||||||||||||
Total Retail Sales- | 43,090 | 46,195 | (6.7) | % | (9.6) | % | 42,789 | 0.7 | % | (2.4) | % | ||||||||||
Residential | 15,368 | 16,458 | (6.6) | % | (12.4) | % | 14,717 | 4.4 | % | (1.9) | % | ||||||||||
Commercial | 14,404 | 15,445 | (6.7) | % | (9.4) | % | 14,298 | 0.7 | % | (2.1) | % | ||||||||||
Industrial | 13,133 | 14,097 | (6.8) | % | (6.8) | % | 13,585 | (3.3) | % | (3.3) | % | ||||||||||
Other | 185 | 195 | (5.4) | % | (5.7) | % | 189 | (2.2) | % | (2.4) | % | ||||||||||
Total Wholesale Sales | 13,613 | 13,306 | 2.3 | % | N/A | 13,109 | 3.8 | % | N/A | ||||||||||||
Year-to-Date September | |||||||||||||||||||||
As Reported | Adjusted1 | ||||||||||||||||||||
2019 | 2018 | Change | Weather Adjusted Change | 2018 | Change | Weather Adjusted Change | |||||||||||||||
Kilowatt-Hour Sales- | |||||||||||||||||||||
Total Sales | 150,303 | 162,605 | (7.6) | % | 153,409 | (2.0) | % | ||||||||||||||
Total Retail Sales- | 114,207 | 124,209 | (8.1) | % | (8.5) | % | 115,520 | (1.1) | % | (1.7) | % | ||||||||||
Residential | 37,790 | 42,115 | (10.3) | % | (11.0) | % | 37,789 | — | % | (0.9) | % | ||||||||||
Commercial | 37,776 | 41,105 | (8.1) | % | (8.8) | % | 38,112 | (0.9) | % | (1.7) | % | ||||||||||
Industrial | 38,084 | 40,392 | (5.7) | % | (5.7) | % | 39,043 | (2.5) | % | (2.5) | % | ||||||||||
Other | 557 | 597 | (6.7) | % | (6.6) | % | 576 | (3.3) | % | (3.2) | % | ||||||||||
Total Wholesale Sales | 36,096 | 38,396 | (6.0) | % | N/A | 37,889 | (4.7) | % | N/A | ||||||||||||
Notes | |||||||||||||||||||||
(1) Kilowatt-hour sales comparisons to the prior year were significantly impacted by the disposition of Gulf Power Company on January 1, 2019. These 2018 kilowatt-hour sales and changes exclude Gulf Power Company. | |||||||||||||||||||||
Southern Company | |||||||||||||||||||||||||||||||||||||||||||||
Customers | |||||||||||||||||||||||||||||||||||||||||||||
(In Thousands of Customers) | |||||||||||||||||||||||||||||||||||||||||||||
Period Ended September | |||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | Change | |||||||||||||||||||||||||||||||||||||||||||
Regulated Utility Customers- | |||||||||||||||||||||||||||||||||||||||||||||
Total Utility Customers- | 8,462 | 8,856 | (4.4)% | ||||||||||||||||||||||||||||||||||||||||||
Total Traditional Electric1 | 4,254 | 4,679 | (9.1)% | ||||||||||||||||||||||||||||||||||||||||||
Southern Company Gas | 4,208 | 4,177 | 0.7% | ||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||
(1) Includes approximately 467,000 customers at September 30, 2018 related to Gulf Power Company, which was sold on January 1, 2019. | |||||||||||||||||||||||||||||||||||||||||||||
Southern Company | |||||||||||||||||||||||
Financial Overview | |||||||||||||||||||||||
As Reported | |||||||||||||||||||||||
(In Millions of Dollars) | |||||||||||||||||||||||
Three Months EndedSeptember | Year-to-DateSeptember | ||||||||||||||||||||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||||
Southern Company1 – | |||||||||||||||||||||||
Operating Revenues | $ | 5,995 | $ | 6,159 | (2.7) | % | $ | 16,505 | $ | 18,158 | (9.1) | % | |||||||||||
Earnings Before Income Taxes | 1,712 | 1,845 | (7.2) | % | 6,207 | 2,629 | 136.1 | % | |||||||||||||||
Net Income Available to Common | 1,316 | 1,164 | 13.1 | % | 4,298 | 1,948 | 120.6 | % | |||||||||||||||
Alabama Power – | |||||||||||||||||||||||
Operating Revenues | $ | 1,841 | $ | 1,740 | 5.8 | % | $ | 4,762 | $ | 4,716 | 1.0 | % | |||||||||||
Earnings Before Income Taxes | 617 | 504 | 22.4 | % | 1,288 | 1,140 | 13.0 | % | |||||||||||||||
Net Income Available to Common | 469 | 373 | 25.7 | % | 982 | 857 | 14.6 | % | |||||||||||||||
Georgia Power – | |||||||||||||||||||||||
Operating Revenues | $ | 2,755 | $ | 2,593 | 6.2 | % | $ | 6,706 | $ | 6,601 | 1.6 | % | |||||||||||
Earnings Before Income Taxes | 1,094 | 926 | 18.1 | % | 2,064 | 833 | 147.8 | % | |||||||||||||||
Net Income Available to Common | 839 | 664 | 26.4 | % | 1,598 | 621 | 157.3 | % | |||||||||||||||
Mississippi Power – | |||||||||||||||||||||||
Operating Revenues | $ | 370 | $ | 358 | 3.4 | % | $ | 970 | $ | 956 | 1.5 | % | |||||||||||
Earnings Before Income Taxes | 80 | 61 | 31.1 | % | 166 | 110 | 50.9 | % | |||||||||||||||
Net Income Available to Common | 65 | 47 | 38.3 | % | 139 | 86 | 61.6 | % | |||||||||||||||
Southern Power1 – | |||||||||||||||||||||||
Operating Revenues | $ | 574 | $ | 635 | (9.6) | % | $ | 1,527 | $ | 1,699 | (10.1) | % | |||||||||||
Earnings Before Income Taxes | 130 | 108 | 20.4 | % | 301 | 96 | 213.5 | % | |||||||||||||||
Net Income Available to Common | 86 | 92 | (6.5) | % | 316 | 235 | 34.5 | % | |||||||||||||||
Southern Company Gas1 – | |||||||||||||||||||||||
Operating Revenues | $ | 498 | $ | 492 | 1.2 | % | $ | 2,661 | $ | 2,861 | (7.0) | % | |||||||||||
Earnings (Loss) Before Income Taxes | (51) | 362 | (114.1) | % | 408 | 769 | (46.9) | % | |||||||||||||||
Net Income (Loss) Available to Common | (29) | 46 | (163.0) | % | 347 | 294 | 18.0 | % | |||||||||||||||
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 (a) Plants Oleander and Stanton on December 4, 2018 and (b) Plant Nacogdoches on June 13, 2019; (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; and (iv) Southern Company's disposition of Gulf Power Company on January 1, 2019. | ||||||||||||||||||||||
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SOURCE Southern Company