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MarketScreener Homepage  >  Equities  >  Nyse  >  Southern Company    SO

SOUTHERN COMPANY

(SO)
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Southern : 3Q19 Earnings Package

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10/30/2019 | 06:07am EST

Southern Company

3rd Quarter 2019 Earnings

September 30, 2019

Contents

Press Release

Page 1

Financial Highlights

Page 3

Significant Factors Impacting EPS

Page 5

EPS Earnings Analysis

Page 7

Consolidated Earnings

Page 9

Kilowatt-Hour Sales and Customers

Page 10

Financial Overview

Page 12

News

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

Investor Relations Contact: Scott Gammill 404-506-0901 sagammil@southernco.com

October 30, 2019

Southern Company reports third-quarter 2019 earnings

ATLANTA - 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.

###

Page 3

Southern Company

Financial Highlights

(In Millions of Dollars Except Earnings Per Share)

Three Months Ended

Year-to-Date

September

September

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 Ended

Year-to-Date

September

September

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.

Page 4

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.

Page 5

Southern Company

Significant Factors Impacting EPS

Three Months Ended

Year-to-Date

September

September

Earnings Per Share-

2019

2018

Change

2019

2018

Change

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 Ended

Year-to-Date

September

September

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

0.03

(1.50)

Impacts2

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.

Page 6

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.

Page 7

Southern Company

EPS Earnings Analysis

Three Months Ended

Year-to-Date

Description

September

September

2019 vs. 2018

2019 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.

Page 8

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.

Page 9

Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)

Three Months Ended

Year-to-Date

September

September

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

33

36

(3)

96

99

(3)

Construction

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

4

4

-

11

12

(1)

Subsidiaries

Net Income Attributable to Noncontrolling

25

54

(29)

26

71

(45)

Interests

NET INCOME ATTRIBUTABLE TO

$ 1,316

$ 1,164

$

152

$ 4,298

$ 1,948

$

2,350

SOUTHERN COMPANY

Notes

- Certain prior year data may have been reclassified to conform with current year presentation.

Page 10

Southern Company

Kilowatt-Hour Sales

(In Millions of KWHs)

Three Months Ended September

As Reported

Adjusted1

Weather

Weather

2019

2018

Change

Adjusted

2018

Change

Adjusted

Kilowatt-Hour Sales-

Change

Change

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

Weather

Weather

2019

2018

Change

Adjusted

2018

Change

Adjusted

Kilowatt-Hour Sales-

Change

Change

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-hoursales 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.

Page 11

Southern Company

Customers

(In Thousands of Customers)

Period Ended September

Regulated Utility Customers-

2019

2018

Change

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.

Page 12

Southern Company

Financial Overview

As Reported

(In Millions of Dollars)

Three Months Ended

Year-to-Date

September

September

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.

Disclaimer

Southern Company published this content on 30 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2019 11:06:14 UTC

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Financials (USD)
Sales 2019 22 187 M
EBIT 2019 5 488 M
Net income 2019 4 258 M
Debt 2019 44 486 M
Yield 2019 3,96%
P/E ratio 2019 15,3x
P/E ratio 2020 19,5x
EV / Sales2019 4,94x
EV / Sales2020 5,03x
Capitalization 65 168 M
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Mean consensus HOLD
Number of Analysts 20
Average target price 61,50  $
Last Close Price 62,14  $
Spread / Highest target 12,6%
Spread / Average Target -1,03%
Spread / Lowest Target -13,1%
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Thomas A. Fanning Chairman, President & Chief Executive Officer
Andrew W. Evans Chief Financial Officer & Executive Vice President
Kenneth E. Coleman Chief Information Officer & Senior Vice President
Mark Berry Head-Research & Development
Donald M. James Independent Director
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