Southern Company(SO) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $0.92 for Q2 2025, which is $0.07 above the estimate and $0.18 lower than 2024 [7] - Year-to-date retail electricity sales were 1.3% higher than 2024, with a 3% increase in retail electricity sales in Q2 compared to the previous year [8][9] - Adjusted EPS estimate for Q3 is $1.50 per share [8] Business Line Data and Key Metrics Changes - Increased earnings from state-regulated utilities contributed positively, with higher usage and customer growth adding $0.06 year-over-year compared to 2024 [7] - Weather-normal residential sales increased by 2.8%, supported by over 15,000 new electric customers in the quarter [8] - Data center usage was notably up 13% compared to 2024, while industrial sales to major customer segments like transportation and primary metals grew by 6% year-over-year [9] Market Data and Key Metrics Changes - Economic development activities in the Southeast resulted in nearly $2 billion of capital investment and over 6,000 new jobs announced [10] - The large load pipeline across Alabama, Georgia, and Mississippi remains above 50 gigawatts of potential incremental load by the mid-2030s [11] Company Strategy and Development Direction - The company is focused on disciplined growth, with a commitment to customer affordability and regulatory stability [12] - Georgia Power's 2025 integrated resource plan (IRP) was approved, allowing for continued investment in existing fleet and new generation resources [13][14] - The company plans to certify approximately 10 gigawatts of new generation resources, including a mix of third-party power purchase agreements and Georgia Power-owned resources [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic environment in the Southeast, with unemployment rates and population growth better than national averages [10] - The company is encouraged by the momentum in attracting large load customers and expects to reassess its long-term EPS growth rate as early as 2027 [19][20] - Management emphasized the importance of investing in people and leadership transitions to ensure sustained long-term success [21] Other Important Information - The company has increased its five-year base capital plan from $63 billion to $76 billion, with potential upside of approximately $5 billion still pending [16] - The CFO transition was highlighted, with management expressing gratitude for the retiring CFO's contributions [22] Q&A Session Summary Question: Capital plan update and rate base growth - Management confirmed that they will provide a full financial plan update in the Q4 call and are encouraged by the marketplace momentum [26][27] Question: RFP update and procurement status - Management assured that they have good relationships with OEMs and EPCs, positioning themselves efficiently for upcoming projects [28] Question: FFO to debt improvement timeline - Management expects to reach approximately 17% FFO to debt near the end of the planning horizon, with proactive measures being taken [37][40] Question: Asset sales and rumors - Management stated they are always evaluating opportunities but would not comment on specific rumors [41] Question: Load update and pipeline growth - Management indicated that the large load pipeline continues to grow, with advanced discussions ongoing with major customers [49] Question: Southern Power returns compared to regulated business - Management noted that Southern Power's returns are generally higher than state-regulated returns, but they maintain stringent risk-return parameters [64] Question: New nuclear discussions - Management emphasized the need for new nuclear energy and ongoing discussions with various stakeholders [68] Question: Large load update filing - Management confirmed that an update filing is expected in August, which may reflect higher load than previously discussed [71] Question: Gas plants and timing confidence - Management clarified that the planned new units are based on existing capacity rolling off PPAs [78] Question: Trends on generation costs - Management acknowledged rising generation costs but indicated they are prepared to react accordingly [101]