01—Abstract
Summary
Summary of the 10-K filed February 20, 2020. Cited figures are marked; the original filing is the authoritative source.
Southern Company (SO) operates as a major energy company, primarily focused on the generation, transmission, and distribution of electricity and natural gas.
In 2019, the company completed the sale of Gulf Power, which impacted its reported revenues but strengthened its financial position. The company's operations are segmented into its traditional electric utilities (Alabama Power, Georgia Power, Mississippi Power), Southern Power (wholesale electricity sales), and Southern Company Gas (natural gas distribution). Key ongoing activities include significant capital investments in construction programs, particularly for new generation assets and infrastructure upgrades, with a substantial portion allocated to Georgia Power's Plant Vogtle Units 3 and 4.
The company also remains focused on environmental compliance and sustainability initiatives. Southern Company's financial performance in 2019 was significantly bolstered by the gain on the sale of Gulf Power, leading to a substantial increase in net income and improved earnings per share compared to the previous year.
The company's diversified business segments provide a degree of resilience, with regulated utility operations providing a stable revenue base, while Southern Power engages in the competitive wholesale market. Investors should note the ongoing capital expenditure requirements and the company's reliance on regulatory approvals for cost recovery, which are critical factors for future performance.
02—Key points
Key Highlights
- Southern Company completed the sale of Gulf Power on January 1, 2019, for approximately $5.8 billion, resulting in a pre-tax gain of $2.6 billion.
- Consolidated net income attributable to Southern Company significantly increased in 2019 to $4.7 billion, primarily due to the gain on the sale of Gulf Power and a charge recorded in 2018 related to the construction of Plant Vogtle Units 3 and 4.
- Capital expenditures for construction programs in 2020 are projected at $8.7 billion for the Southern Company system, with significant allocations for new generation and infrastructure improvements across its operating companies.
- Georgia Power's Plant Vogtle Units 3 and 4 construction program remains a major capital investment, with expected in-service dates of November 2021 for Unit 3 and November 2022 for Unit 4, and an updated total project capital cost forecast of $8.4 billion for Georgia Power's ownership interest.
- Southern Company Gas is in the process of selling its interests in Pivotal LNG and Atlantic Coast Pipeline for an aggregate purchase price of $165 million, expecting completion in the first half of 2020.
- The company paid dividends per share of common stock of $2.46 in 2019, a slight increase from $2.38 in 2018.
- The company's business segments are regulated, with rates for traditional electric operating companies and natural gas distribution utilities subject to approval by state Public Service Commissions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 20, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $21.42B$23.50B | −8.8% |
| Operating Expenses | $13.68B$19.30B | −29.1% |
| Operating Income | $7.74B$4.19B | +84.6% |
| Net Income | $4.74B$2.23B | +112.9% |
| EPS (Basic) | $4.53$2.18 | +107.8% |
| EPS (Diluted) | $4.50$2.17 | +107.4% |
| Shares Outstanding (Basic) | 1.05B1.02B | +2.5% |
| Shares Outstanding (Diluted) | 1.05B1.02B | +2.8% |
05—Questions
Frequently Asked Questions
What was the impact of the Gulf Power sale on Southern Company's 2019 financial results?
The sale of Gulf Power on January 1, 2019, for approximately $5.8 billion generated a pre-tax gain of $2.6 billion ($1.4 billion after tax). This significantly boosted Southern Company's 2019 net income to $4.7 billion, a substantial increase from $2.2 billion in 2018.
What are Southern Company's major capital expenditure plans for the near future?
Southern Company plans significant capital investments in its construction programs, with an estimated $8.7 billion for the system in 2020. Major investments include new generation facilities, transmission and distribution system improvements, and environmental compliance, with a significant portion dedicated to Georgia Power's Plant Vogtle Units 3 and 4.
What is the status of the Plant Vogtle Units 3 and 4 construction project?
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's ownership interest has an updated total project capital cost forecast of $8.4 billion. The project has faced challenges but management believes current productivity levels are sufficient to meet regulatory-approved in-service dates.
06—Continue