• Adjusted EPS: $1.23 per share, $0.20 higher than Q1 2024 and $0.03 above estimate.
• Second Quarter EPS Estimate: $0.85 per share.
• Weather-Normal Retail Electricity Sales: 0.3% lower than Q1 2024.
• Data Center Sales Growth: Up 11% year-over-year.
• Office Buildings Sales Growth: Up 4% year-over-year.
• Transportation Sector Sales Growth: Up 4% year-over-year.
• Capital Investment Announcements: Over $11 billion with more than 4,000 new jobs in electric service territories.
• Long-Term Debt Issued: $2.2 billion by state-regulated electric subsidiaries year-to-date.
• Junior Subordinated Notes Issued: Approximately $2.4 billion year-to-date.
• Common Stock Forward Contracts: $1 billion through ATM program.
• Annual Common Dividend Increase: $0.08 per share, raising the annualized rate to $2.96 per share.

• Warning! GuruFocus has detected 11 Warning Signs with SO.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Southern Co (NYSE:SO) reported adjusted earnings for the first quarter above estimates, with year-over-year growth across all major businesses.
• The Southeast region, where Southern Co operates, continues to show economic resilience with robust economic development activity.
• Southern Co's state-regulated electric utilities are experiencing customer growth, particularly in data centers, which saw an 11% year-over-year increase in sales.
• The company has a strong financial outlook, supported by disciplined execution and constructive regulatory frameworks.
• Southern Co's Board of Directors approved an $0.08 per share increase in the annual common dividend, marking the 24th consecutive annual increase.

Negative Points

• Southern Co faces policy uncertainty regarding tariffs, which could lead to potential cost increases of 1% to 3% in their base capital plan.
• The company's adjusted EPS estimate for the second quarter is lower than the previous year, partly due to weather-related impacts and timing of transactions.
• Retail electricity sales were 0.3% lower than the first quarter of 2024, driven by reduced usage in the residential customer class.
• Higher operating costs, depreciation, and amortization partially offset the positive earnings impact from investments and weather-related factors.
• Southern Co's financing activities include significant debt issuance, which may impact future financial flexibility and interest costs.

Q & A Highlights

Q: Could you explain the factors driving the second-quarter EPS guidance of $0.85, which is lower than last year's second quarter? A: Daniel Tucker, CFO, explained that the two main factors are weather and timing. The previous year's second quarter had warmer-than-normal weather, which boosted results, and there was a significant transaction within the Georgia transmission system last year that won't recur this year.

Q: Can you provide an update on the Georgia Power load pipeline and any changes in conversations with data center customers? A: Chris Womack, CEO, noted no change in tone from data center customers, with continued robust interest. Daniel Tucker added that the Georgia pipeline totals 52 gigawatts, with 4 gigawatts contracted and 8 gigawatts committed, and there's an increase in near-term interest.

Q: Are you seeing any changes in the composition of data center customers or their geographic distribution? A: Chris Womack stated that there is a diverse range of customers, including hyperscalers and developers, showing interest across the service territory, indicating continued momentum.

Q: How does Southern Co plan to manage customer bills amid potential rate pressures, especially in the Georgia Power rate case? A: Chris Womack mentioned that they are considering various factors, including large load growth pricing and fuel adjustments, to focus on affordability. However, it's too early to specify the exact nature of the filing.

Q: What is Southern Co's outlook on the Inflation Reduction Act (IRA) and its impact, particularly regarding transferability? A: Daniel Tucker noted that while transferability is beneficial, Southern Co is not heavily reliant on it. The impact on FFO to debt would be minimal. Chris Womack emphasized ongoing engagement with policymakers to highlight the benefits of tax credits for customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.