Sign in
SC

SOUTHERN CO (SO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 adjusted EPS was $0.92, above SO’s internal estimate by $0.07 and above Wall Street consensus ($0.879), while GAAP EPS was $0.80; operating revenues rose 7.9% YoY to $6.97B, beating consensus ($6.47B). Bold beat: revenue and adjusted EPS both exceeded estimates .*
  • Year-over-year EPS compression reflected higher O&M, interest, D&A, milder weather, and lapping prior-year transmission asset sale gains; these were partially offset by higher utility revenues .
  • Management raised the five-year base capital plan to $76B (from $63B) with line of sight to add ~$12B regulated capex tied to Georgia Power resource certifications and IRP approvals; potential upside ~$5B remains pending (generation certifications, gas pipeline expansions) .
  • Large-load demand momentum continues (data center usage +13% YoY), IRP approval and filings to certify ~10 GW of new resources position SO to serve growth; quarterly dividend declared at $0.74 per share reinforces capital return continuity .
  • Near-term stock catalysts: Q3 adjusted EPS estimate of $1.50, Georgia PSC decisions on ~10 GW resource certifications later in 2025, and ongoing large-load filings updating the load forecast trajectory .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line growth and adjusted earnings: Operating revenues +7.9% YoY to $6.97B; adjusted EPS $0.92 vs $0.879 consensus; management: “we reported strong adjusted earnings… meaningfully above the estimate provided last quarter” .*
  • Demand momentum: Weather-normal retail sales up across classes; data center usage +13% YoY; system met YTD peak load ~39 GW during extreme heat with no major issues .
  • Regulatory progress and capex visibility: GA PSC approved 2025 IRP; Georgia Power filed to certify ~9.9–10 GW (including CC gas, BESS, solar+BESS), increasing five-year base capex to $76B and improving line of sight to new resources .

What Went Wrong

  • EPS down YoY due to headwinds: higher non-fuel O&M, interest, D&A, income taxes; milder weather; lapping prior-year gains on transmission asset sales; as-reported EPS change drivers detailed in EPS analysis (-30¢ YoY) .
  • Non-GAAP adjustments weighed on GAAP: loss on extinguishment of debt (-$0.09 EPS) and accelerated depreciation from Southern Power wind repowering (-$0.03 EPS) reduced reported EPS vs adjusted .
  • Parent company drag and higher interest expense: Parent & Other reduced EPS by -$0.13 YoY; interest expense rose +$180MM YoY in Q2 (to $874MM) given higher rate environment; management reiterated refinancing headwinds near term .

Financial Results

Headline Metrics vs Prior Quarters

MetricQ4 2024Q1 2025Q2 2025
Operating Revenues ($USD Billions)$6.341 $7.775 $6.973
Operating Income ($USD Billions)$1.058 $2.010 $1.764
Operating Margin (%)16.7% (calc from cited figures) 25.9% (calc) 25.3% (calc)
Basic EPS (GAAP)$0.49 $1.21 $0.80
Adjusted EPS (Excluding Items)$0.50 $1.23 $0.92

Notes: Operating margin calculated from cited revenues and operating income. Certain prior-year data may have been reclassified (per company) .

Q2 2025 vs Q2 2024 vs Estimates

MetricQ2 2024Q2 2025 ActualWall St. ConsensusResult
Operating Revenues ($USD Billions)$6.463 $6.973 $6.470*Bold beat
Basic EPS (GAAP)$1.10 $0.80 N/AYoY down
Adjusted EPS$1.10 $0.92 $0.879*Bold beat

Notes: *Values retrieved from S&P Global.

Segment Breakdown (Operating Revenues and Net Income Available to Common)

SegmentOperating Revenues ($MM) Q2 2024Operating Revenues ($MM) Q2 2025Net Income ($MM) Q2 2024Net Income ($MM) Q2 2025
Alabama Power1,873 1,968 369 381
Georgia Power2,875 3,110 762 607
Mississippi Power364 400 61 59
Southern Power524 546 86 51
Southern Company Gas831 979 108 106
Southern Company (Total)6,463 6,973 1,203 880

KPIs

KPIQ2 2024Q2 2025Notes
Total kWh Sales (MM)49,897 49,858 -0.1% YoY
Total Retail Sales (MM kWh)37,007 37,194 +0.5% YoY; +3.0% weather-adjusted
Residential Retail (MM kWh)11,889 11,565 -2.7% YoY; +2.8% weather-adjusted
Commercial Retail (MM kWh)12,666 12,836 +1.3% YoY; +3.5% weather-adjusted
Industrial Retail (MM kWh)12,318 12,668 +2.8% YoY; +2.8% weather-adjusted
Regulated Utility Customers (000s)8,873 8,941 +0.8% YoY
Data Center Usage YoY (%)N/A+13% Management disclosed

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Adjusted EPS EstimateQ2 2025$0.85 (from Q1 call) Actual $0.92 Bold beat vs internal guide
Quarterly Adjusted EPS EstimateQ3 2025N/A$1.50 New quarterly guide
Five-Year Base Capital Plan2025–2029$63B (as of Q4 2024) $76B (raised by $13B) Raised
Potential Incremental Regulated Capex2025–2029$10–$15B contemplated (IRP/RFPs, pipelines) ~$12B added into base (GA IRP/certs); up to +$4B more if full 10 GW certified Line of sight improved
Equity/Eq. Equivalents NeedsThrough 2029~$4B (base plan) +$5B incremental for raised capex (40% equity content) Raised
FFO-to-Debt TargetLT horizon~17% later in plan ~17% later in plan; proactive equity, ATM forwards Maintained trajectory
DividendRegular quarterlyAnnualized $2.96 (raised in Apr) $0.74 per quarter declared (payable Sep 8, 2025) Maintained quarterly cadence
Resource Certifications (GA Power)2029–2031 need2025 IRP filed Jan; approvals pending PSC approved 2025 IRP (Jul); ~9.9–10 GW certification requests filed (mix of CC gas, BESS, solar+BESS, PPAs) Progressed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Large-load/data center demandPipeline >50 GW; 10 GW commitments; data centers +17% YoY (FY 2024); early traction in AL/MS Data center usage +13% YoY; GA pipeline shifting earlier (2028–2029); advanced discussions with hyperscalers Rising, front-loaded timing
Regulatory/IRP frameworkIRP process and all-source RFPs (~13 GW) in GA; rules for large-load contracts approved GA PSC approved 2025 IRP; certification filings for ~10 GW; base rates frozen through 2028 per settlement Positive, constructive outcomes
Capex and financingBase plan $63B; potential +$10–$15B; equity via ATM/JSNs; dividend modest growth Base plan $76B; +$12B added; potential +$4B more; incremental ~$5B equity by 2029; ATM forwards $1.2B priced Upward capex trajectory; proactive funding
Tariffs/supply chainTariff exposure manageable (1–3% potential cost increase; mitigations) Continued OEM/EPC reservations for CC turbines; upward pricing pressure acknowledged Manageable headwind
Nuclear outlookVogtle value; long-term need for new nuclear with risk mitigation “This country needs more nuclear”; pursuing uprates and planning; need financial backstops Supportive stance
Midstream gasSNG pipeline poised for growth; expansions likely brownfield Participating in SE expansions; brownfield loops; complements CC additions Increasing relevance

Management Commentary

  • “We reported strong adjusted earnings results for the second quarter, meaningfully above the estimate provided last quarter, and we remain on track to meet our financial objectives for 2025.” – Chris Womack .
  • “Earlier this year… we are adding $12 billion of state‑regulated capital into our five‑year base capital plan… In total, our five‑year base capital plan has increased $13 billion from $63 billion to $76 billion.” – David Poroch .
  • “Interest from large load customers… continues to be strong and growing, and we're increasingly well positioned to serve this robust projected growth in a sustainable fashion.” – Chris Womack .
  • “Our ATM program really is a forward… locking in a price today for securities… delivered in the future.” – Dan Tucker .

Q&A Highlights

  • Rate base and growth cadence: Management reiterated potential rebasing of the 5–7% EPS trajectory by 2027 contingent on sustainable large-load momentum; near-term headwind from parent refinancing persists .
  • Resource procurement: Reservations with OEMs/EPCs for combined cycle units; mix of PPAs and company-owned resources in GA certifications; confidence in execution timing .
  • Balance sheet/FFO-to-debt: Target ~17% later in plan; proactive equity (ATM forwards, JSNs) adds ~70 bps to metrics; storm/fuel recoveries shape trajectory .
  • Asset portfolio: No comment on rumored asset sales; Southern Power returns framed as above regulated with strict risk/return criteria; repowering underway and recontracting opportunities early 2030s .
  • Nuclear and midstream: Strong advocacy for new nuclear with risk mitigation; gas pipeline expansions largely brownfield, aligned with CC growth .

Estimates Context

  • Q2 2025 beats: Adjusted EPS $0.92 vs $0.879 consensus (beat); operating revenues $6.973B vs $6.470B consensus (beat). Bold beats reflect stronger utility revenue and disciplined execution despite cost headwinds .*
  • Internal beat: Adjusted EPS exceeded SO’s Q2 estimate by $0.07; Q3 adjusted EPS estimate set at $1.50 .
    Notes: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Demand-driven growth story is intact and accelerating, with data center load and broader industrial activity underpinning multi-year capex and rate base expansion .
  • Constructive GA regulatory outcomes (IRP approval, base rate freeze, resource certifications) de-risk execution and improve visibility to ~10 GW additions across CC gas, BESS, and renewables .
  • Capital plan increased to $76B with proactive funding (ATM forwards, JSNs); incremental ~$5B equity by 2029 supports credit-quality path to ~17% FFO-to-debt .
  • Near-term EPS variability from weather and refinancing is offset by rising utility revenues and disciplined large-load contracting; ongoing quarterly updates may reset investor expectations for 2027 rebasing .
  • Dividend continuity (quarterly $0.74) and measured growth remain part of the equity narrative amid elevated capex needs .
  • Watch upcoming PSC decisions on GA certifications and mid-August large-load filings; these are key catalysts for capex timing, rate base growth, and long-term EPS trajectory .
  • Non-GAAP adjustments (debt extinguishment, wind repowering) impacted GAAP EPS but are transparent and time-bounded; adjusted EPS better reflects ongoing operations .