Southern Company reports second-quarter 2018 results
ATLANTA, Aug. 8, 2018 /PRNewswire/ -- Southern Company today reported a second quarter 2018 loss of $154 million, or 15 cents per share, compared with a loss of $1.38 billion, or $1.38 per share, in the second quarter of 2017. For the six months ended June 30, 2018, Southern Company reported earnings of $784 million, or 77 cents per share, compared with a loss of $723 million, or 73 cents per share, for the same period in 2017.
Excluding the items described in the "Net Income - Excluding Items" table below, Southern Company earned $815 million, or 80 cents per share, during the second quarter of 2018, compared with $728 million, or 73 cents per share, during the second quarter of 2017. For the six months ended June 30, 2018, excluding these items, Southern Company earned $1.71 billion, or $1.69 per share, compared with earnings of $1.38 billion, or $1.39 per share, for the same period in 2017.
Non-GAAP Financial Measures Three Months Ended June Year-to-Date June
----------------------- -----------------
Net Income - Excluding Items (in millions) 2018 2017 2018 2017
---- ---- ---- ----
Net Income (Loss) - As Reported $(154) $(1,381) $784 $(723)
Estimated Loss on Plants Under Construction 1,060 3,012 1,105 3,120
Tax Impact (270) (896) (281) (937)
Loss on Plant Scherer Unit 3 - - - 33
Tax Impact - - - (13)
Acquisition, Disposition, and Integration Impacts 172 9 233 13
Tax Impact 4 (4) (1) (5)
Wholesale Gas Services 32 28 (108) (86)
Tax Impact (11) (11) 25 35
Litigation Settlement (24) - (24) -
Tax Impact 6 - 6 -
Earnings Guidance Comparability Items:
Equity Return Related to Kemper IGCC - (24) - (47)
Schedule Extension
Tax Impact - (5) - (9)
Adoption of Tax Reform - - (31) -
--- --- --- ---
Net Income - Excluding Items $815 $728 $1,708 $1,381
==== ==== ====== ======
Average Shares Outstanding - (in millions) 1,014 998 1,012 996
Basic Earnings Per Share - Excluding Items $0.80 $0.73 $1.69 $1.39
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 second quarter of 2018 were positively influenced by effects of constructive regulatory outcomes and weather at our state regulated electric utilities, and increased contributions from Southern Power's renewables fleet. These impacts were partially offset by increases in depreciation and amortization, as well as operations and maintenance costs. Earnings for the second quarter 2018 were also significantly affected by an approximately $1.1 billion charge ($0.8 billion after-tax) related to Georgia Power's construction of Plant Vogtle Units 3 and 4.
"Southern Company's premier, state-regulated electric and gas franchise operations, along with our competitive generation subsidiary, Southern Power, continued to perform well during the second quarter," said Chairman, President and CEO Thomas A. Fanning. "This consistency in our core operations remains the cornerstone for delivering on our long-term financial objectives as we continue to build America's energy future."
Second quarter 2018 operating revenues were $5.63 billion, compared with $5.43 billion for the second quarter of 2017, an increase of 3.6 percent. For the six months ended June 30, 2018, operating revenues were $12.00 billion, compared with $11.20 billion for the corresponding period in 2017, an increase of 7.1 percent.
Southern Company's second quarter earnings slides with supplemental financial information, including its updated earnings guidance for 2018, 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.
Cautionary Note Regarding Forward-Looking Statements:
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning long-term financial objectives. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company's Annual Report on Form 10-K for the year ended December 31, 2017 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, including environmental laws and regulations governing air, water, land, and protection of other natural resources, and also changes in tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; the uncertainty surrounding the federal tax reform legislation, including implementing regulations and Internal Revenue Service interpretations, actions that may be taken in response by regulatory authorities, and its impact, if any, on the credit ratings of Southern Company and its subsidiaries; current and future litigation or regulatory investigations, proceedings, or inquiries; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate, including from the development and deployment of alternative energy sources such as self-generation and distributed generation technologies; variations in demand for electricity and natural gas, including those relating to weather, the general economy, population and business growth (and declines), the effects of energy conservation and efficiency measures and any potential economic impacts resulting from federal fiscal decisions; available sources and costs of natural gas and other fuels; limits on pipeline capacity; transmission constraints; effects of inflation; the ability to control costs and avoid cost and schedule overruns during the development, construction, and operation of facilities, including Plant Vogtle Units 3 and 4 which includes components based on new technology that is just beginning initial operation in the global nuclear industry at scale, including changes in labor costs, availability, and productivity, challenges with management of contractors, subcontractors, or vendors, adverse weather conditions, shortages, increased costs or inconsistent quality of equipment, materials, and labor, including any changes related to imposition of import tariffs, contractor or supplier delay, non-performance under construction, operating, or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance; the ability to construct facilities in accordance with the requirements of permits and licenses (including satisfaction of U.S. Nuclear Regulatory Commission ("NRC") requirements), to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; investment performance of the Southern Company system's employee and retiree benefit plans and nuclear decommissioning trust funds; advances in technology; ongoing renewable energy partnerships and development agreements; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; the ability to successfully operate the electric utilities' generating, transmission, and distribution facilities and Southern Company Gas' natural gas distribution and storage facilities and the successful performance of necessary corporate functions; legal proceedings and regulatory approvals and actions related to Plant Vogtle Units 3 and 4, including Georgia Public Service Commission approvals and NRC actions; a decision by more than 10 percent of the owners of Plant Vogtle Units 3 and 4 not to proceed with construction; litigation or other disputes related to the Kemper County energy facility; the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks; the inherent risks involved in transporting and storing natural gas; the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, including the proposed dispositions of Gulf Power and Southern Power's plants located in Florida and the potential sale of a noncontrolling interest in Southern Power's wind facilities, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; the possibility that the anticipated benefits from the acquisition of Southern Company Gas cannot be fully realized or may take longer to realize than expected and the possibility that costs related to the integration of Southern Company and Southern Company Gas will be greater than expected; the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required; the ability to obtain new short- and long-term contracts with wholesale customers; the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or physical attack and the threat of physical attacks; interest rate fluctuations and financial market conditions and the results of financing efforts; changes in Southern Company's and any of its subsidiaries' credit ratings, including impacts on interest rates, access to capital markets, and collateral requirements; the impacts of any sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on foreign currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the benefits of the U.S. Department of Energy loan guarantees; the ability of Southern Company's electric utilities to obtain additional generating capacity (or sell excess generating capacity) at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events such as influenzas, or other similar occurrences; the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage resources; impairments of goodwill or long-lived assets; and the effect of accounting pronouncements issued periodically by standard-setting bodies. Southern Company expressly disclaims any obligation to update any forward?looking information.
Southern Company
Financial Highlights
(In Millions of Dollars Except Earnings Per Share)
Three Months Ended Year-to-Date
June June
Net Income (Loss)-As Reported (See Notes) 2018 2017 2018 2017
---- ---- ---- ----
Traditional Electric Operating Companies $(48) $(1,442) $563 $(1,010)
Southern Power 22 82 143 151
Southern Company Gas (31) 49 248 288
--- --- --- ---
Total (57) (1,311) 954 (571)
Parent Company and Other (97) (70) (170) (152)
--- --- ---- ----
Net Income (Loss)-As Reported $(154) $(1,381) $784 $(723)
===== ======= ==== =====
Basic Earnings (Loss) Per Share(1) $(0.15) $(1.38) $0.77 $(0.73)
Average Shares Outstanding (in millions) 1,014 998 1,012 996
End of Period Shares Outstanding (in millions) 1,014 999
Non-GAAP Financial Measures Three Months Ended Year-to-Date
June June
Net Income-Excluding Items (See Notes) 2018 2017 2018 2017
---- ---- ---- ----
Net Income (Loss)-As Reported $(154) $(1,381) $784 $(723)
Estimated Loss on Plants Under Construction(2) 1,060 3,012 1,105 3,120
Tax Impact (270) (896) (281) (937)
Loss on Plant Scherer Unit 3(3) - - - 33
Tax Impact - - - (13)
Acquisition, Disposition, and Integration Impacts4 172 9 233 13
Tax Impact 4 (4) (1) (5)
Wholesale Gas Services5 32 28 (108) (86)
Tax Impact (11) (11) 25 35
Litigation Settlement6 (24) - (24) -
Tax Impact 6 - 6 -
Earnings Guidance Comparability Items:
Equity Return Related to Kemper IGCC - (24) - (47)
Schedule Extension7
Tax Impact - (5) - (9)
Adoption of Tax Reform8 - - (31) -
Net Income-Excluding Items $815 $728 $1,708 $1,381
==== ==== ====== ======
Basic Earnings Per Share-Excluding Items $0.80 $0.73 $1.69 $1.39
-See Notes on the following page.
Southern Company
Financial Highlights
Notes
(1) For the three and six months ended June 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 six months ended June 30, 2017 and for the six months ended June 30, 2018 include charges related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Earnings for the three and six months ended June 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. All of these charges significantly impacted the presentation of earnings and earnings per share. Additional pre-tax cancellation costs of up to $25 million for Mississippi Power Company's Kemper IGCC are expected to occur during the remainder of 2018 and 2019. 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 six months ended June 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 the three and six months ended June 30, 2018 and 2017 include costs related to the acquisition and integration of Southern Company Gas and earnings for the three and six months ended June 30, 2018 include costs related to (a) the dispositions of Elizabethtown Gas, Elkton Gas, Pivotal Home Solutions, and Florida City Gas and (b) the pending dispositions of Gulf Power Company and Southern Power Company's ownership interests in Plants Oleander and Stanton. The costs associated with the Pivotal Home Solutions transaction include a goodwill impairment charge of $42 million in the first quarter 2018 and a net loss of $76 million, which included $40 million of income tax expense in the second quarter 2018. The costs associated with the Southern Power Company plants disposition include a pre-tax impairment charge of $119 million, partially offset by a reduction in depreciation as a result of ceasing depreciation upon meeting the held-for-sale accounting criteria. Further costs are expected to continue to occur prior to the expected closings of the pending dispositions in the first half 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 six months ended June 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 three and six months ended June 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 three and six months ended June 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 six months ended June 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
Significant Factors Impacting EPS
Three Months Ended Year-to-Date
June June
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
Earnings (Loss) Per Share-
As Reported1 (See Notes) $(0.15) $(1.38) $1.23 $0.77 $(0.73) $1.50
Significant Factors:
Traditional Electric Operating Companies $1.40 $1.58
Southern Power (0.06) (0.01)
Southern Company Gas (0.08) (0.04)
Parent Company and Other (0.03) (0.02)
Increase in Shares - (0.01)
Total-As Reported $1.23 $1.50
===== =====
Three Months Ended Year-to-Date
June June
Non-GAAP Financial Measures 2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
Earnings Per Share-
Excluding Items (See Notes) $0.80 $0.73 $0.07 $1.69 $1.39 $0.30
Total-As Reported $1.23 $1.50
Estimated Loss on Plants Under Construction(2) (1.31) (1.32)
Loss on Plant Scherer Unit 3(3) - (0.02)
Acquisition, Disposition, and Integration 0.17 0.22
Impacts4
Wholesale Gas Services5 - (0.03)
Litigation Settlement6 (0.02) (0.02)
Adoption of Tax Reform7 - (0.03)
--- -----
Total-Excluding Items $0.07 $0.30
===== =====
- See Notes on the following page.
Southern Company
Significant Factors Impacting EPS
Notes
(1) For the three and six months ended June 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 six months ended June 30, 2017 and for the six months ended June 30, 2018 include charges related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Earnings for the three and six months ended June 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. All of these charges significantly impacted the presentation of earnings and earnings per share. Additional pre-tax cancellation costs of up to $25 million for Mississippi Power Company's Kemper IGCC are expected to occur during the remainder of 2018 and 2019. 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 three and six months ended June 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 six months ended June 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 the three and six months ended June 30, 2018 and 2017 include costs related to the acquisition and integration of Southern Company Gas and earnings for the three and six months ended June 30, 2018 include costs related to (a) the dispositions of Elizabethtown Gas, Elkton Gas, Pivotal Home Solutions, and Florida City Gas and (b) the pending dispositions of Gulf Power Company and Southern Power Company's ownership interests in Plants Oleander and Stanton. The costs associated with the Pivotal Home Solutions transaction include a goodwill impairment charge of $42 million in the first quarter 2018 and a net loss of $76 million, which included $40 million of income tax expense in the second quarter 2018. The costs associated with the Southern Power Company plants disposition include a pre-tax impairment charge of $119 million, partially offset by a reduction in depreciation as a result of ceasing depreciation upon meeting the held-for-sale accounting criteria. Further costs are expected to continue to occur prior to the expected closings of the pending dispositions in the first half 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 six months ended June 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 three and six months ended June 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 six months ended June 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
Three Months Ended June 2018 vs. June 2017
Dollars Description
------- -----------
$0.05 Weather
0.01 Other Operating Revenues
(0.02) Non-Fuel O&M
0.01 Purchased Power Capacity Expense
(0.02) Depreciation and Amortization
0.01 Dividends on Preferred and
Preference Stock
0.05 Impacts of Tax Reform (Ongoing
Basis), Net of Amounts to be
Returned to Customers
(0.01) Income Taxes, Excluding Tax Reform
$0.08 Total Traditional Electric
Operating Companies
----- ---------------------------
0.03 Southern Power
0.01 Southern Company Gas
(0.04) Parent and Other
(0.01) Increase in Shares
$0.07 Total Change in EPS (Excluding
Items)
----- -------------------------------
1.31 Estimated Loss on Plants Under
Construction(1)
(0.17) Acquisition, Disposition, and
Integration Impacts(2)
0.02 Litigation Settlement(3)
$1.23 Total Change in EPS (As Reported)
----- --------------------------------
- See Notes on the following page.
Southern Company
EPS Earnings Analysis
Three Months Ended June 2018 vs. June 2017
Notes
(1) Earnings for the three months ended June 30, 2017 include charges related to Mississippi Power Company's integrated coal gasification combined cycle facility project in Kemper County, Mississippi (Kemper IGCC). Earnings for the three months ended June 30, 2018 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. All of these charges significantly impacted the presentation of earnings and earnings per share. Additional pre-tax cancellation costs of up to $25 million for Mississippi Power Company's Kemper IGCC are expected to occur during the remainder of 2018 and 2019. 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 three months ended June 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 three months ended June 30, 2018 and 2017 include costs related to the acquisition and integration of Southern Company Gas and earnings for the three months ended June 30, 2018 include costs related to (a) the dispositions of Elizabethtown Gas, Elkton Gas, Pivotal Home Solutions, and Florida City Gas and (b) the pending dispositions of Gulf Power Company and Southern Power Company's ownership interests in Plants Oleander and Stanton. The costs associated with the Pivotal Home Solutions transaction include a net loss of $76 million, which included $40 million of income tax expense in the second quarter 2018. The costs associated with the Southern Power Company plants disposition include a pre-tax impairment charge of $119 million, partially offset by a reduction in depreciation as a result of ceasing depreciation upon meeting the held-for-sale accounting criteria. Further costs are expected to continue to occur prior to the expected closings of the pending dispositions in the first half 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.
(3) Earnings for the three months ended June 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.
Southern Company
Consolidated Earnings
As Reported
(In Millions of Dollars)
Three Months Ended June Year-to-Date June
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
Income Account-
Retail Electric Revenues-
Fuel $1,022 $1,016 $6 $2,049 $1,944 $105
Non-Fuel 2,718 2,761 (43) 5,259 5,227 32
Wholesale Electric Revenues 611 618 (7) 1,230 1,149 81
Other Electric Revenues 175 167 8 339 342 (3)
Natural Gas Revenues 706 684 22 2,314 2,214 100
Other Revenues 395 184 211 808 326 482
--- --- --- --- --- ---
Total Revenues 5,627 5,430 197 11,999 11,202 797
----- ----- --- ------ ------ ---
Fuel and Purchased Power 1,339 1,303 36 2,707 2,478 229
Cost of Natural Gas 228 232 (4) 949 951 (2)
Cost of Other Sales 279 114 165 568 203 365
Non-Fuel O & M 1,559 1,356 203 3,008 2,740 268
Depreciation and Amortization 783 754 29 1,552 1,469 83
Taxes Other Than Income Taxes 316 308 8 671 638 33
Estimated Loss on Plants Under Construction 1,060 3,012 (1,952) 1,105 3,120 (2,015)
----- ----- ------ -----
Total Operating Expenses 5,564 7,079 (1,515) 10,560 11,599 (1,039)
----- ----- ------ ------ ------ ------
Operating Income (Loss) 63 (1,649) 1,712 1,439 (397) 1,836
Allowance for Equity Funds Used During Construction 32 58 (26) 63 115 (52)
Earnings from Equity Method Investments 31 28 3 72 67 5
Interest Expense, Net of Amounts Capitalized 470 424 46 928 840 88
Other Income (Expense), net 78 52 26 138 98 40
Income Taxes (Benefit) (139) (587) 448 (25) (273) 248
---- ---- --- ---- ---
Net Income (Loss) (127) (1,348) 1,221 809 (684) 1,493
Less:
Dividends on Preferred and Preference Stock 4 11 (7) 8 22 (14)
of Subsidiaries
Net Income Attributable to Noncontrolling 23 22 1 17 17 -
Interests
NET INCOME (LOSS) ATTRIBUTABLE $(154) $(1,381) $1,227 $784 $(723) $1,507
TO SOUTHERN COMPANY
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 June Year-to-Date June
As Reported 2018 2017 Change Weather 2018 2017 Change Weather
Adjusted Adjusted
Change Change
------ ------
Kilowatt-Hour Sales-
Total Sales 52,260 51,152 2.2% 103,104 97,350 5.9%
Total Retail Sales- 39,624 38,849 2.0% 0.1% 78,014 74,353 4.9% 0.8%
Residential 12,691 12,087 5.0% - % 25,657 23,003 11.5% 0.6%
Commercial 13,373 13,271 0.8% (0.2)% 25,660 25,038 2.5% 0.5%
Industrial 13,363 13,280 0.6% 0.6% 26,295 25,886 1.6% 1.6%
Other 197 211 (6.9)% (6.8)% 402 426 (5.6)% (5.8)%
Total Wholesale Sales 12,636 12,303 2.7% N/A 25,090 22,997 9.1% N/A
(In Thousands of Customers)
Period Ended June
2018 2017 Change
---- ---- ------
Regulated Utility Customers-
Total Utility Customers- 9,276 9,194 0.9%
Total Traditional Electric 4,667 4,621 1.0%
Southern Company Gas(1) 4,609 4,573 0.8%
Notes
-----
(1) Includes total customers of approximately 407,000 and 403,000 customers at June 30, 2018 and 2017,
respectively, related to Elizabethtown Gas, Elkton Gas, and Florida City Gas, which were sold subsequent
to June 30, 2018.
Southern Company
Financial Overview
As Reported
(In Millions of Dollars)
Three Months Ended June Year-to-Date June
2018 2017 % Change 2018 2017 % Change
---- ---- -------- ---- ---- --------
Southern Company -
Operating Revenues $5,627 $5,430 3.6% $11,999 $11,202 7.1%
Earnings (Loss) Before Income Taxes (266) (1,935) N/M 784 (957) N/M
Net Income (Loss) Available to Common (154) (1,381) N/M 784 (723) N/M
Alabama Power -
Operating Revenues $1,503 $1,484 1.3% $2,976 $2,866 3.8%
Earnings Before Income Taxes 326 386 (15.5)% 636 689 (7.7)%
Net Income Available to Common 259 230 12.6% 484 403 20.1%
Georgia Power -
Operating Revenues $2,048 $2,048 - % $4,008 $3,880 3.3%
Earnings (Loss) Before Income Taxes (539) 551 N/M (94) 971 N/M
Net Income (Loss) Available to Common (396) 347 N/M (44) 607 N/M
Gulf Power -
Operating Revenues $344 $357 (3.6)% $692 $707 (2.1)%
Earnings Before Income Taxes 31 61 (49.2)% 87 95 (8.4)%
Net Income Available to Common 42 35 20.0% 84 53 58.5%
Mississippi Power -
Operating Revenues $297 $303 (2.0)% $598 $575 4.0%
Earnings (Loss) Before Income Taxes 60 (2,934) N/M 49 (2,981) N/M
Net Income (Loss) Available to Common 46 (2,054) N/M 39 (2,074) N/M
Southern Power -
Operating Revenues $555 $529 4.9% $1,064 $979 8.7%
Earnings (Loss) Before Income Taxes (28) 66 (142.4)% (12) 78 (115.4)%
Net Income Available to Common 22 82 (73.2)% 143 151 (5.3)%
Southern Company Gas -
Operating Revenues $730 $716 2.0% $2,369 $2,276 4.1%
Earnings Before Income Taxes 24 80 (70.0)% 407 468 (13.0)%
Net Income (Loss) Available to Common (31) 49 N/M 248 288 (13.9)%
N/M - not meaningful
Notes
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- See Financial Highlights pages for discussion of certain significant items occurring during the periods presented.
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SOURCE Southern Company
