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01/10 00:30
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong growth in retail electricity sales and a robust large load pipeline, alongside significant capital investment plans. The Q&A section revealed management's proactive approach to regulatory challenges and strategic equity financing. Despite some uncertainties in nuclear and gas-fired projects, the overall sentiment is positive, driven by increased demand forecasts and potential financial growth. The lack of a market cap suggests a more pronounced reaction, likely in the positive range.
Adjusted EPS for Q3 2025 $1.60 per share, $0.10 above the estimate and $0.17 higher than Q3 2024. The increase was driven by continued investment in state-regulated utilities, strong customer growth, and increased customer usage, partially offset by milder weather, higher depreciation and amortization, and higher interest costs.
Adjusted EPS for 9 months ended September 30, 2025 $3.76 compared to $3.56 for the same period in 2024. Revenue growth at state-regulated electrics, influenced by customer growth and higher usage, added $0.12 year-over-year.
Year-to-date weather-normal retail electricity sales 1.8% higher compared to the first 3 quarters of 2024. This growth is the highest annual increase since 2010 (excluding the pandemic), driven by growth across all customer classes.
Commercial sector electricity sales for Q3 2025 Grew 3.5% on a weather-normal basis compared to Q3 2024, driven by increased sales to existing and new customers, including a 17% increase in new data center sales.
Weather-normal residential electricity sales for Q3 2025 2.7% higher than Q3 2024, bolstered by the addition of approximately 12,000 new electric customers in the quarter.
Electricity sales to individual customers for Q3 2025 Grew 1.5% compared to Q3 2024, reflecting continued strength.
Largest industrial customer segments year-to-date Primary metals, paper, and transportation segments were each up 4% or higher through the first 3 quarters of 2025.
Economic development activity in Q3 2025 22 companies announced plans to establish or expand operations in service territories, generating nearly 5,000 potential new jobs and representing expected capital investments totaling approximately $2.8 billion.
New large load contracts: Signed 4 contracts with large load customers across Georgia and Alabama, representing over 2 gigawatts of demand.
New generation projects: Construction continues on approximately 2.5 gigawatts of new generation in Georgia and Alabama, including 3 natural gas combustion turbines and 7 battery storage facilities, projected to go online over the next 2 years.
Economic development: 22 companies announced plans to establish or expand operations in service territories during Q3, generating nearly 5,000 potential new jobs and $2.8 billion in expected capital investments.
Customer growth: Added roughly 12,000 new electric customers in Q3, substantially higher than historical trends.
Retail electricity sales growth: Year-to-date weather-normal retail electricity sales were 1.8% higher compared to the first 3 quarters of 2024, with commercial sector sales up 3.5% and residential sales up 2.7% in Q3.
Financing activities: Issued $4 billion of long-term debt in Q3, fully satisfying 2025 long-term debt financing needs. Priced $1.8 billion of equity through forward sales agreements, solidifying over $7 billion of the $9 billion equity need through 2029.
Capacity expansion: Georgia Power updated its load forecast, projecting a need for 10 gigawatts of capacity resources, including 5 natural gas combined cycle units and 11 battery energy storage facilities.
Acquisition: Alabama Power completed the acquisition of the 900-megawatt Lindsay Hill natural gas generating facility to meet long-term capacity needs.
Weather-related risks: Milder than normal year-over-year weather negatively impacted earnings, indicating potential vulnerability to weather fluctuations.
Higher depreciation and amortization: Increased depreciation and amortization costs partially offset earnings growth, posing a financial challenge.
Higher interest costs: Rising interest costs are impacting financial performance, reflecting potential exposure to interest rate fluctuations.
Equity financing needs: The company has a cumulative equity need of $9 billion through 2029 to fund its $76 billion capital investment plan, which could strain financial resources if not managed effectively.
Regulatory approvals and compliance: Ongoing regulatory proceedings, such as Georgia Power's RFP certification and Alabama Power's acquisitions, require approvals and compliance, which could delay or complicate strategic initiatives.
Load forecast uncertainty: The company's load forecast assumes only a fraction of its 50-gigawatt pipeline materializes, indicating potential risks if actual demand deviates from projections.
Economic and customer growth dependency: The company's financial performance is heavily reliant on robust customer growth and economic development in its service territories, which could be impacted by broader economic downturns.
Financial Objectives for 2025: Southern Company expects to deliver on its financial objectives for 2025, with full-year adjusted earnings projected at the top of the guidance range of $4.30 per share.
Electric Sales Growth: Forecasted electric sales growth of 8% annually through 2029, with Georgia Power expected to grow at an average annual rate of 12% through the same period.
Large Load Contracts: Signed contracts with large load customers representing 7 gigawatts through 2029, ramping to 8 gigawatts in the 2030s. Advanced discussions for several more gigawatts of load are ongoing.
Capacity Expansion Plans: Georgia Power's updated load forecast projects a need for 10 gigawatts of capacity resources, including 5 natural gas combined cycle units and 11 battery energy storage facilities. Alabama Power has completed the acquisition of a 900-megawatt natural gas generating facility, and construction is ongoing for 2.5 gigawatts of new generation in Georgia and Alabama, including natural gas turbines and battery storage facilities.
Capital Investment Plan: A $76 billion capital investment plan through 2029, with $9 billion in equity needs. Over $7 billion of equity has been secured through forward sales agreements and other instruments.
Long-Term Earnings Trajectory: Plans to provide an update on the long-term earnings trajectory during the fourth quarter 2025 earnings call, with potential increases to the EPS growth base as early as 2027.
The selected topic was not discussed during the call.
The earnings call indicates strong growth in retail electricity sales and a robust large load pipeline, alongside significant capital investment plans. The Q&A section revealed management's proactive approach to regulatory challenges and strategic equity financing. Despite some uncertainties in nuclear and gas-fired projects, the overall sentiment is positive, driven by increased demand forecasts and potential financial growth. The lack of a market cap suggests a more pronounced reaction, likely in the positive range.
The earnings call summary presents a mixed picture. The dividend increase and large load pipeline are positive, but management's reluctance to provide clear guidance on growth rebasing and asset sales creates uncertainty. The Q&A session further highlights management's cautious approach to growth projections and asset sales. These factors, combined with the lack of a market cap, suggest a neutral stock price movement in the short term.
The earnings call presents a mixed picture. Positive aspects include the 24th consecutive annual dividend increase and growth in data center and industrial sales. However, there are concerns over decreased retail electricity sales and increased equity issuance, which could dilute current shareholders. The Q&A revealed management's vagueness on key issues, adding uncertainty. Overall, the financial performance is stable, but the lack of clarity and potential dilution balance out the positives, resulting in a neutral sentiment.
The earnings call highlights a mix of positive and negative factors. The dividend increase and strong data center sales are positive, but the equity issuance could dilute shares. The Q&A revealed some uncertainties, particularly around the Georgia Power rate case and the IRA's impact. While adjusted EPS improved, weather-normal retail electricity sales declined. Overall, the mixed signals and uncertainties suggest a neutral stock price movement in the short term.
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