Southern Company Q1 2025 slides: Adjusted EPS jumps 19%, maintains strong growth outlook

Southern Company (NYSE:SO) reported strong first-quarter 2025 results during its earnings presentation on May 1, with adjusted earnings per share increasing 19.4% year-over-year. The utility giant also reaffirmed its full-year guidance and outlined substantial capital investment plans focused on its regulated businesses.

Quarterly Performance Highlights

Southern Company reported first-quarter 2025 earnings per share of $1.21, up from $1.03 in the same period last year, representing a 17.5% increase. Adjusted earnings per share, which excludes accelerated depreciation from repowering, reached $1.23, a 19.4% increase from Q1 2024.

The primary drivers behind this growth included investments in state-regulated utilities and favorable weather conditions, partially offset by higher operations and maintenance expenses and increased depreciation and amortization costs.

As shown in the following breakdown of year-over-year adjusted earnings drivers:

State-regulated electric utilities contributed the largest portion of the earnings growth, adding 19 cents to EPS. Southern Company Gas and Southern Power each added 1 cent, while share dilution reduced EPS by 1 cent.

The company’s Q1 2025 adjusted earnings were primarily driven by its electric utilities segment, which contributed $0.93 per share, followed by local distribution companies (LDCs) at $0.29, and competitive power and other long-term contract assets at $0.12.

Strategic Initiatives & Capital Allocation

Southern Company outlined its plan to address a $4 billion equity need through 2029, using a balanced approach that includes $1.2 billion from hybrid securities, $1 billion from at-the-market (ATM) equity sales, and $1.8 billion from internal equity generation.

The company plans to invest $63 billion in capital expenditures from 2025 through 2029, with 95% allocated to state-regulated utilities. This includes $50.3 billion for electric utilities and $9.2 billion for gas utilities. Management emphasized that this focus on regulated investments supports their long-term adjusted EPS growth target of 5% to 7%.

On April 21, 2025, Southern Company’s board approved an 8-cent dividend increase to an annualized rate of $2.96 per share, marking the company’s 24th consecutive year of dividend increases and extending its 78-year streak of maintaining or increasing dividend payments.

Forward-Looking Statements

Southern Company provided full-year 2025 adjusted earnings guidance of $4.20 to $4.30 per share, with a second-quarter estimate of $0.85 per share. This guidance represents continued growth from the company’s 2024 performance.

The company highlighted potential additional regulated capital investment opportunities of $10-15 billion above its base forecast, with further clarity expected by July 2025. These opportunities include ongoing Georgia Power resource RFPs and FERC-regulated natural gas pipeline expansions, which could potentially increase the company’s projected long-term state-regulated rate base growth to over 8%.

Georgia Power is seeking bids for approximately 13 GW of resources through 2031, including 8,500 MW of all-source capacity, 3,350 MW of utility-scale solar, 1,000 MW of battery storage, and 383 MW of distributed generation. The utility’s 2025 Integrated Resource Plan projects 7% annual peak demand growth through 2030/2031, with a significant portion driven by data center expansion.

Economic & Market Outlook

Despite a slight 0.3% decline in overall retail electricity sales in Q1 2025 compared to Q1 2024, Southern Company highlighted strong economic indicators in its Southeast territory. Residential usage decreased by 1.8%, but this was partially offset by 0.5% growth in both commercial and industrial sectors.

The company noted that data center usage increased by 11%, contributing significantly to industrial demand. Southern’s service territory continues to outperform national averages with 4.4% population growth since 2019 (versus 3.0% U.S. average), 6.9% non-manufacturing employment growth (versus 5.1% U.S. average), and a lower unemployment rate of 3.5% (versus 4.2% U.S. average).

To address the growing demand from large customers, particularly data centers, Georgia Power received approval from the Georgia Public Service Commission in April 2025 for modified rules and regulations for new customers exceeding 100MW. These modifications include minimum contract terms of 15 years for data centers (10 years for others), minimum bill provisions, termination payment requirements, and collateral requirements based on creditworthiness.

Southern Company’s value proposition continues to focus on providing regular, predictable, and sustainable returns through a customer-focused business model. The company maintains strong investment-grade credit ratings while targeting risk-adjusted total shareholder returns. With over 90% of earnings coming from state-regulated utilities and projected electric load growth of approximately 8% from 2025 to 2029, Southern Company is positioning itself for sustainable long-term growth.

The company’s financial position remains solid with over $8.9 billion in committed credit facilities and available liquidity of $9.4 billion as of March 31, 2025. Southern Company’s weighted average long-term debt maturity stands at 15.5 years, providing stability to its capital structure.

As Southern Company moves forward with its substantial capital investment plans and navigates the evolving energy landscape, its focus on regulated utilities and strategic growth opportunities appears well-positioned to deliver on its long-term financial targets while supporting the economic development of its service territory.

Full presentation:

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