10-KPeriod: FY2018

SOUTHERN CO Annual Report, Year Ended Dec 31, 2018

Filed February 20, 2019For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Company (SO) reported its 2018 annual results, highlighting a significant increase in consolidated net income to $2.2 billion, largely driven by the absence of major charges incurred in 2017 related to the Kemper IGCC project. However, this was partially offset by a $1.1 billion charge in 2018 for the ongoing Plant Vogtle Units 3 & 4 construction. The company also completed several significant divestitures in 2018, including the sale of Gulf Power for approximately $5.8 billion and the sale of three natural gas distribution utilities by Southern Company Gas for approximately $2.3 billion. Southern Power also divested non-controlling interests in its solar and wind facilities, generating approximately $2.4 billion in proceeds. These strategic moves indicate a focus on portfolio optimization and debt reduction. The company continues to navigate a complex regulatory environment, with significant capital expenditures planned for construction programs, including the ongoing Plant Vogtle nuclear project, and compliance with environmental regulations.

Financial Highlights

44 data points
Beta

Revenue

$23.50B

Net Income

$2.23B

9.5% Net Margin

EPS (Diluted)

$2.17

Total Assets

$116.91B

Cash & Equivalents

$1.40B

Free Cash Flow

-$1.06B

Financial Statements
Beta
Revenue$23.50B
Operating Expenses$19.30B
Operating Income$4.19B
Net Income$2.23B
EPS (Basic)$2.18
EPS (Diluted)$2.17
Shares Outstanding (Basic)1.02B
Shares Outstanding (Diluted)1.02B

Key Highlights

  • 1Southern Company reported consolidated net income of $2.2 billion for 2018, a substantial increase from $842 million in 2017, largely due to the absence of significant Kemper IGCC charges from the prior year.
  • 2The company incurred a $1.1 billion pre-tax charge in 2018 related to the ongoing construction of Plant Vogtle Units 3 and 4, impacting profitability.
  • 3Significant divestitures occurred in 2018, including the sale of Gulf Power for $5.8 billion and the sale of three natural gas distribution utilities by Southern Company Gas for approximately $2.3 billion.
  • 4Southern Power completed the sale of non-controlling interests in its solar and wind facilities, generating approximately $2.4 billion in proceeds.
  • 5The company is undertaking substantial construction programs, with projected capital expenditures totaling $8.0 billion for 2019, including significant investment in Plant Vogtle Units 3 and 4.
  • 6Environmental compliance remains a key focus, with substantial capital expenditures planned for ash pond closure and monitoring, as well as ongoing efforts to meet air and water quality regulations.
  • 7The company paid dividends per share of common stock of $2.38 in 2018, reflecting a consistent dividend payout history.

Frequently Asked Questions

Southern Company reported consolidated net income of $2.2 billion for the year ended December 31, 2018.

In 2018, Southern Company completed the sale of Gulf Power for approximately $5.8 billion and Southern Company Gas sold three of its natural gas distribution utilities for approximately $2.3 billion. Southern Power also sold non-controlling interests in its solar and wind facilities for approximately $2.4 billion.

Construction continues on Plant Vogtle Units 3 and 4, with expected in-service dates of November 2021 for Unit 3 and November 2022 for Unit 4. Georgia Power recorded a $1.1 billion pre-tax charge in Q2 2018 to reflect revised cost estimates and ongoing uncertainties regarding future rate recovery.

The Tax Reform Legislation, which reduced the federal corporate income tax rate to 21%, provided tax benefits to Southern Company. For 2018, Southern Company recorded lower federal income tax expense and benefits from the flowback of excess deferred income taxes. Several subsidiaries also implemented regulatory mechanisms to mitigate impacts on credit metrics.