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    SO
    Earnings call· Sep 2025(Q3 FY25)

    SOUTHERN CO SO

    Oct 30, 2025 Source

    Executive summary

    The Southern Company Q3 FY25 — Strong Earnings and Significant Large Load Contract Momentum

    The Southern Company delivered strong third-quarter adjusted earnings, exceeding estimates, driven by robust customer growth and increased usage, particularly from data centers. The company continues to execute on its disciplined capital plan, securing significant large load contracts with protective terms for existing customers and making substantial progress on its equity financing needs. Management anticipates finishing the year strong and plans to provide updated long-term guidance and capital outlook in early 2026, with potential for an EPS rebasing as early as 2027.

    Highlights

    5

    • Adjusted EPS of $1.60 per share in Q3 FY25, meaningfully above the $1.50 estimate and $0.17 higher than Q3 FY24.

    • Year-to-date weather-normal retail electricity sales increased by 1.8% compared to the first three quarters of 2024, with commercial sector growth of 3.5% (data centers up 17%) and residential sales up 2.7%.

    • Secured 4 new large load contracts in Georgia and Alabama representing over 2 GW of demand in the last two months, bringing total contracted large load to 7 GW through 2029 (ramping to 8 GW in 2030s).

    • Solidified over $7 billion of the $9 billion cumulative equity need through 2029, including $1.8 billion from ATM forward sales, significantly reducing financing risk.

    • Economic development activity remains robust with 22 companies announcing $2.8 billion in capital investments and nearly 5,000 new jobs in Q3 FY25.

    Concerns

    2

    • Higher depreciation and amortization, and higher interest costs partially offset positive drivers for Q3 FY25 earnings.

    • Milder-than-normal year-over-year weather partially offset positive earnings drivers for Q3 FY25.

    Guidance & targets

    9
    CategoryTargetConfidence
    Adjusted EPS
    top of $4.30 per share range
    high materiality
    High
    Adjusted EPS
    $0.54 per share
    medium materiality
    High
    Long-term EPS growth trajectory
    increasing the base from where our long-term EPS growth starts, which could be potentially as early as 2027
    high materiality
    Medium
    Total forecasted electric sales growth
    8% annually
    high materiality
    High
    Georgia Power average annual electric sales growth
    12%
    medium materiality
    High
    FFO to debt ratio
    towards 17%
    high materiality
    High
    Cumulative equity need
    $9 billion
    high materiality
    High
    Georgia Power RFP final determination
    by the end of this year
    medium materiality
    High
    Long-term plan update timing
    during our fourth quarter 2025 earnings call this coming February
    high materiality
    High

    Operational metrics

    17
    Adjusted EPS
    $1.60up $0.17 YoY
    Q3 FY25

    Meaningfully above the $1.50 estimate provided last quarter.

    Adjusted EPS
    $3.76up $0.20 YoY
    YTD Q3 FY25

    Compared to $3.56 for the same period in 2024.

    Commercial sector weather-normal sales growth
    3.5%YoY
    Q3 FY25

    Contributed to overall retail sales growth.

    Data center sales growth
    17%YoY
    Q3 FY25

    Contributed to commercial sector growth.

    Residential weather-normal sales growth
    2.7%YoY
    Q3 FY25

    Bolstered by the addition of roughly 12,000 new electric customers.

    New electric customers added
    12,000
    Q3 FY25

    Substantially higher than historical trends.

    Industrial customer segments sales growth
    4% or higherYoY
    YTD Q3 FY25

    All largest industrial customer segments are up year-over-year.

    Long-term debt issued
    $4 billion
    Q3 FY25

    Fully satisfied long-term debt financing needs for 2025 at each subsidiary.

    Equity financing secured
    over $7 billion
    through Q3 FY25

    Solidified through ATM forward sales, hybrid security issuances, and internal equity plans.

    ATM forward sales
    $1.8 billion
    Q3 FY25

    Priced as additional equity under the at-the-market program.

    Credit rating downgrade threshold
    16%
    long-term

    Quantitative credit metric target provided by rating agencies for FFO to debt.

    New generation capacity under construction
    2.5
    current

    Construction continues to serve projected long-term capacity needs.

    Southern Power PPA repricing uplift
    almost 3x
    future

    Indicates significant opportunity as existing contracts roll off.

    SNG System 4 expansion investment
    $3 billion
    current

    Project is going as scheduled and expected to serve projected growth.

    Incremental capital for Georgia Power RFP
    $4 billion
    future

    Additional capital needed if the full request is approved by the Georgia Public Service Commission.

    Incremental capital for gas infrastructure
    $1 billion
    future

    Opportunities within FERC-regulated jurisdictions in the gas infrastructure business.

    Customer rates vs national average
    more than 10%
    current

    Reflects the company's focus on affordability.

    Industry KPIs

    6
    MetricValueDetails
    Ffo to debt17%%
    Retail sales growth1.8%%
    Regulatory rate base growthfrozen
    New gas generation builds upgrades900MW
    Recontracted capacity price upliftalmost 3xmultiple
    Contracted large load capacity esas loas7GW

    Orderbook & backlog

    4
    Large load potential pipelinemore than 50 GWQ3 FY25

    Potential incremental load by mid-2030s; disciplined approach assumes only a fraction materializes.

    Contracted large load7 GWQ3 FY25

    up >2 GW in last 2 months

    Through 2029, across Alabama, Georgia, and Mississippi. Represents signed agreements.

    Contracted large load8 GWQ3 FY25

    In the 2030s, representing the ramp-up of existing contracts.

    Large load in advanced discussions (committed)approximately 12 GWQ3 FY25

    Very far down the road, negotiating terms and conditions, finalizing engineering studies, on the verge of signing contracts.

    Deals & partnerships

    2
    Multiple large load customersContracts for incremental electricity demandover 2 GW

    Four contracts signed across Georgia and Alabama in the last two months.

    Lindsay Hill natural gas generating facilityAcquisition of a natural gas generating facility

    Alabama Power completed the acquisition of the 900-megawatt Lindsay Hill natural gas generating facility, following approvals from the Alabama Public Service Commission and FERC.

    Capital programs

    4
    Capital Investment Planunderway$76 billion
    Funding: equity and debt

    Cumulative plan through 2029, requiring $9 billion in equity financing.

    Georgia Power RFP Capacity Requestpending regulatory approval

    Benefit: 10 GW (5 natural gas combined cycle units and 11 battery energy storage facilities)

    Request to meet projected capacity needs, awaiting final determination from the commission by year-end.

    New Generation Construction (Georgia and Alabama)underway

    Benefit: approximately 2.5 GW (3 natural gas combustion turbines and 7 battery storage facilities)

    Construction continues to bring new generation online to serve projected growth.

    Southern Natural Gas System 4 Expansionmoving forward$3 billion
    Funding: 50% owned by Southern Company Gas

    Benefit: valuable resource in serving projected growth

    Project is on track and expected to serve projected growth in service territories.

    Risks & headwinds

    5
    Higher depreciation and amortizationQ3 FY25

    partially offset positive drivers

    Higher interest costsQ3 FY25

    partially offset positive drivers

    Milder-than-normal weatherQ3 FY25

    partially offset positive drivers

    Regulatory uncertainty from Georgia PSC electionnear-term (post-election)

    potential for different views

    Mitigation: Company has a long history of working constructively with elected commissioners, regardless of views.

    Unmitigated risks for new nuclear developmentlong-term

    not ready to commit

    Mitigation: Company is not pursuing new nuclear builds until all risks are mitigated, despite federal support and industry interest.

    What to watch in Q4 FY25

    5

    Long-term EPS trajectory and rebasing

    Q1 FY26 (February earnings call)
    CurrentPotential for rebasing as early as 2027
    TargetClarity on base and long-term growth rate

    Why it matters

    This will define the company's future earnings growth profile and investor expectations.

    we expect to provide additional clarity on our long-term earnings trajectory, which, as we've highlighted before, could translate into increasing the base from where our long-term EPS growth starts, which could be potentially as early as 2027.

    Q&A highlights

    7

    How are customers reacting to the new tariff structures for large load, and how do minimum bill components ensure cost recovery?

    Customers understand the long-term commitments and the new rules help attract serious counterparties. Contracts are structured with minimum bills covering all costs, protecting both customers and investors.

    “The minimum bills cover all of our costs, whether or not the meter spins. And once they hit their ramps and they start moving up, it's just very beneficial for the company and for our customers.”

    asked by Carly Davenport · answered by David Poroch

    2 min read5 chapters

    Detailed Narrative

    01

    Regulatory Framework and Customer Affordability

    Southern Company's state-regulated utilities continue to provide reliable and affordable energy, with customer rates more than 10% below the national average. The rate plan extension at Georgia Power, freezing base rates until at least 2029, demonstrates the benefits of a constructive regulatory framework and a focus on balancing growth with affordability. This approach ensures stability for customers while supporting necessary investments.

    02

    Large Load Growth Strategy

    The company is actively managing significant growth opportunities, particularly from large load customers like data centers. Contracts are structured to cover incremental service costs, benefiting existing customers and ensuring affordability. This disciplined approach helps protect existing ratepayers from the costs associated with new demand, with 4 new contracts representing over 2 GW secured in the last two months.

    03

    Financing Strategy and Credit Quality

    Southern Company is proactively addressing its financing needs, having issued $4 billion in long-term debt in Q3 FY25 and solidified over $7 billion of its $9 billion cumulative equity need through 2029. This strategy, including $1.8 billion from ATM forward sales and hybrid issuances, aims to support its $76 billion capital plan and maintain strong investment-grade credit ratings, targeting 17% FFO to debt.

    04

    Generation Capacity Expansion

    To meet growing demand, Southern Company is expanding its generation capacity. This includes Alabama Power's acquisition of the 900 MW Lindsay Hill natural gas facility and ongoing construction of approximately 2.5 GW of new generation (3 natural gas combustion turbines and 7 battery storage) in Georgia and Alabama, projected to come online within the next two years. Georgia Power's RFP for 10 GW of capacity, including natural gas and battery storage, is awaiting final commission determination by year-end.

    05

    Economic Development and Regional Strength

    The Southeast economy remains robust, evidenced by significant economic development activity in Q3 FY25, with 22 companies announcing nearly $2.8 billion in capital investments and creating almost 5,000 new jobs across Southern Company's service territories. This activity, coupled with strong customer growth and usage, underpins the company's positive outlook and forecasted electric sales growth of 8% annually through 2029.

    AI-generated summary of the company’s earnings call. Not investment advice.