Southern Co Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
The Southern Company's Q3 2025 earnings call highlighted strong financial performance, driven by investments in state-regulated utilities, customer growth, and increased usage. The company is making strides in securing large load contracts and managing its equity needs. Southern Company is also focused on constructive regulatory relationships and economic development in its service territories.
Key Financial Results:
Adjusted EPS for Q3 2025 was $1.60 per share, $0.10 above estimate and $0.17 higher than Q3 2024.
Adjusted EPS for the nine months ended September 30, 2025, was $3.76, compared to $3.56 for the same period in 2024.
Revenue grew at state-regulated electrics, influenced by customer growth and higher usage, adding $0.12 year-over-year.
The adjusted EPS estimate for Q4 is $0.54 per share, projecting full-year adjusted earnings at the top of the 2025 annual guidance range of $4.30 per share.
Business Segment Results:
Weather-normal retail electricity sales were 1.8% higher year-to-date compared to the first three quarters of 2024.
Commercial sector electricity sales grew 3.5% in Q3 2025 on a weather-normal basis, driven by increased sales to existing and new data centers, up 17%.
Weather-normal residential sales grew 2.7% in Q3 2025, with roughly 12,000 new electric customers added in the quarter.
Electricity sales to individual customers grew 1.5% in the quarter.
Year-to-date, all largest industrial customer segments are up year-over-year, including primary metals, paper, and transportation segments, each up 4% or higher through the first three quarters.
Capital Allocation:
Issued $4 billion of long-term debt in Q3 2025 across Alabama Power, Georgia Power, Southern Company Gas, and Southern Power.
Fully satisfied long-term debt financing needs for 2025 at each subsidiary.
Solidified over $7 billion of a $9 billion equity need through 2029 via ATM program forward sales, hybrid security issuances, and internal equity plans.
Priced in an additional $1.8 billion of equity through forward sales agreements under the ATM program.
Industry Trends and Dynamics:
Economic development activity remains robust, with 22 companies announcing new or expanded operations in the service territories during Q3, generating nearly 5,000 potential new jobs and representing expected capital investments totaling approximately $2.8 billion.
The total pipeline remains more than 50 gigawatts of potential incremental load by the mid-2030s across electric subsidiaries.
Signed four contracts in the last two months representing over 2 gigawatts of load.
Contracts in place with large load customers representing 7 gigawatts through 2029, ramping to 8 gigawatts into the 2030s.
Growth Opportunities and Strategies:
Focus on disciplined approach to forecasting, pricing, contracting, and deploying resources to serve growth opportunities.
Rate plan extension at Georgia Power freezes base rates until at least 2029, excluding storm-related costs.
Georgia Power filed an update to its load forecast projecting capacity need consistent with the 10 gigawatts of capacity resources being requested.
Alabama Power completed the acquisition of the 900-megawatt Lindsay Hill natural gas generating facility.
Construction continues on approximately 2.5 gigawatts of new generation in Georgia and Alabama.
South System 4 Expansion at Southern Natural Gas continues to move forward.
Financial Guidance and Outlook:
Expects to provide a complete update to the long-term plan during the Q4 2025 earnings call, including refreshes to the five-year capital investment outlook, sales forecast, and financing plans, as well as 2026 and long-term EPS guidance.
Expects to provide additional clarity on the long-term earnings trajectory, which could translate into increasing the base from where the long-term EPS growth starts, potentially as early as 2027.
Plan to continue utilizing equity or equity equivalents in support of the path towards 17% FFO-to-debt within the planning horizon.
Regulatory and Political Environment:
Georgia Power's ongoing RFP certification proceedings are scheduled for a final determination by the Commission by the end of the year.
The elections in Georgia for the two Commission seats will be held next Tuesday.
The updated load forecast supports the need for the whole 10 gigawatts that are being requested.
