Southern Company (The) Series 2 Q2 FY2025 earnings call

• Chris Womack noted strong adjusted earnings results, operations team performance during heat wave, and vertically integrated business model benefits.
• Dan Tucker discussed adjusted EPS, year-over-year earnings drivers, and retail electricity sales details.
• Chris Womack highlighted Georgia Power's regulatory processes, including IRP approvals and new generation resource certifications.
• David Poroch talked about capital plan updates, equity funding, and financing activity to support credit ratings.

For the second quarter of 2025, adjusted earnings per share was $0.92 per share, $0.07 above the estimate. Year-to-date, weather normal retail electricity sales were 1.3% higher than the first half of 2024. In the second quarter, retail electricity sales growth was 3% year-over-year. Weather normal residential sales were up 2.8%, commercial sales 3.5% higher, industrial sales 2.8% higher, with data center usage 13% higher and industrial segments like transportation, primary metals, and paper showing robust growth.

• Adjusted EPS estimate for the third quarter is $1.50 per share.
• Base capital plan increased to $76 billion with potential upside tied to generation procurement certifications.
• Projection to fund increased capital plan with ~40% additional equity or equity equivalents, with remaining equity needs manageable.
• Aim to reach ~17% FFO to debt in the latter part of the forecast horizon.

Various important factors could cause actual results to differ materially from forward-looking statements, as discussed in Form 10-K, Form 10-Q, and subsequent securities filings.

Q: On capital plan update and rate base growth shift, any shift in timeline and full financial plan update?

A: Yes, will continue annual updates in 4Q. Rate base growth timing will be reassessed for sustainability over long term.

Q: On RFP update and procurement status for combined cycle capacity?

A: Have reservations and good relationships with OEMs and EPCs, feel good about positioning for execution.

Q: On FFO to debt improvement and year-by-year pace?

A: Expect to reach ~17% near back end of planning horizon, currently at ~14.3% unadjusted/15.3% adjusted for Helene, with progress on equity plan to support target.

Q: On asset sales and PowerSecure?

A: Not commenting on rumors, but always evaluating asset sales if better owner and willing to pay.

Q: On load update and large load pipeline?

A: 50 gigawatt pipeline continues to grow, in advanced discussions with majors/hyperscalers, optimistic about future opportunities.

Q: On Southern Power returns compared to core regulated business and new nuclear stance?

A: Southern Power returns usually higher than state-regulated, but stringent risk-return parameters apply. Continue to believe new nuclear is part of solution set, need financial certainty for projects.

Q: On gas plant counterparty execution and demand outlook?

A: Available capacity in marketplace, orderly IRP process with flexibility for load forecast updates. Demand outlook monitored with disciplined approach.

Q: On Alabama/Mississippi economic momentum and FERC gas pipeline expansion visibility?

A: Advanced discussions on projects, investment already occurring. FERC gas pipeline expansion tied to load growth and utility investment.

Q: On equity needs and using forwards?

A: Have flexibility in toolbox, ATM program used to address equity needs, proactive in achieving equity requirements.

Q: On generation costs and growth rate outlook?

A: Prices going up, but placeholders/reservation fees in plan to deliver capacity. Growth rate outlook reassessed for sustainability, could be as early as 2027.

Q: On balance between conservative approach and growth potential?

A: Take conservative approach, see growth accelerating, need to see sustained momentum before changing long-term outlook.

Q: On asset acquisitions and Southern Power opportunities?

A: Disciplined approach, Southern Power remains opportunity but no placeholders in capital plan. Focus on sustainable long-term opportunities.