Southern Q1 Earnings Call Highlights

Key Points

• Q1 adjusted EPS was $1.32, $0.12 above management’s estimate, driven by customer growth and higher usage (including a 42% jump in data center usage); management gave a Q2 adjusted EPS guide of $1.00.
• Large-load contracting is a major growth driver—Southern cites 23 GW of contracted or latent load, more than 11 GW fully contracted, and a prospective pipeline of well over 75 GW with ~12 GW in late-stage discussions and ~6 GW expected to convert soon.
• On financing, Southern secured historic $26.5 billion in DOE loan agreements (projected to save customers ~$7 billion over ~30 years), raised $500 million via its ATM program, expects roughly $1.8 billion more equity need through 2030, and increased the annual dividend by $0.08 to $3.04.

Southern NYSE: SO reported first-quarter 2026 adjusted earnings per share of $1.32, exceeding management’s estimate and rising $0.09 from the prior-year period, driven by customer growth and increased usage across its regulated electric utilities. Management also highlighted continued momentum in large-load contracting, new resource development, and financing actions designed to support long-term growth and customer affordability.

First-quarter results top estimate as load growth accelerates

Chief Financial Officer David Poroch said Southern’s adjusted EPS of $1.32 was “$0.12 above our estimate,” with “meaningful customer growth and increased usage, including from data centers at our state-regulated electric utilities” among the primary drivers versus the first quarter of 2025. Poroch added that increased revenues at the company’s gas utilities and higher energy-related revenues in unregulated businesses, including Southern Power, also contributed. Those items were “partially offset by higher financing costs and milder weather year-over-year compared to the first quarter of 2025,” he said.

Poroch provided an adjusted EPS estimate for the second quarter of $1.00 per share.

On the demand side, Poroch said first-quarter weather-normal retail electricity sales to all classes rose 2.3% year over year, which he described as the highest first-quarter total retail sales growth the company has seen “in recent history.” Sales increased across all three customer classes, including residential, where Southern added 46,000 new customers during the quarter. Weather-normal commercial sales grew 4.5%, which Poroch said was bolstered by data center growth. Data center usage increased 42% year over year, “primarily due to accelerating usage ramps at large load facilities,” he said.

Industrial sales grew 1.5%, with Poroch pointing to “robust activity at multiple steel manufacturers in Alabama” as a source of strength.

Large-load contracting expands; pipeline remains sizable

Chairman, President and CEO Christopher Womack said the company’s first-quarter performance reflected “premium execution and the strength of our strategy to serve the phenomenal growth we’re seeing across the Southeast.” He reiterated that demand from large-load customers is a meaningful component of the company’s outlook, stating that across Southern’s electric service territories, the company has “culminated in 23 GW of contracted or latent stage load.”

Womack said that in the past two months, Southern assigned contracts for an additional 1.9 gigawatts of customer load with “high credit quality hyperscalers,” bringing fully contracted large-load agreements to “more than 11 GW across our electric subsidiaries.” Poroch similarly noted that Georgia Power signed two projects totaling 1.9 GW over the same period, pushing contracted large loads to more than 11 GW across Alabama, Georgia, and Mississippi.

Management emphasized the structure of these agreements. Womack said the bilateral negotiated contracts are designed so “customers driving incremental demand cover the full share of the cost to serve them,” which he said helps ensure growth benefits all customers. In the Q&A, Womack stressed Southern’s focus on “full” cost recovery rather than “incremental,” while Poroch highlighted that minimum bills embedded in the contracts are “designed to recover all of the cost introduced into the system.” Poroch said the company is “not…held captive to a variable pricing methodology in order to recover those costs,” adding that the contract design is intended to protect customers and support “downward pressure on rates going forward.”

Poroch said the prospective large-load pipeline remains “well over 75 GW,” and that Southern is in “active late-stage discussions for another 12 GW of contracted load through the mid-2030s,” up 2 GW from what the company shared the prior quarter. Roughly half of that late-stage volume—about 6 GW—is expected to be finalized with executed contracts “in the near term,” he said. Poroch also said that in a little more than two months, projects representing 12 GW advanced to the next stage in Southern’s large-load process.

When asked about differing trends across states, Womack said the dynamic appeared to be “more about timing,” while also noting increased activity “migrate to the West” and “greater activity in Alabama and Mississippi.” Poroch added that in Georgia, collateral requirements in the contracting framework are “shaking a lot of the potentials out…that are more speculative in nature,” leaving “a high quality portfolio of potential customers,” which he characterized as a strengthening rather than a weakening.

Resource additions, RFP activity, and Southern Power investment

Womack highlighted recent project execution at Georgia Power, noting commercial operation of two battery energy storage systems over the prior two months that provide “nearly 200 MW of capacity.” He said the projects represent an “important step forward” and are part of a broader “10 GW portfolio of approved new generation resources” in development, including multiple battery systems and natural gas combustion turbines projected to come online later in 2026 and 2027.

Looking longer term, Poroch said Georgia Power initiated the regulatory process for an all-source request for proposals to procure 2 to 6 GW of new dispatchable generation resources, including thermal generation, battery energy storage, and renewables, projected to enter service in 2032 and 2033. Management said that to the extent company-owned resources are selected through Alabama Power and Georgia Power RFP processes and authorized by regulators, the resulting investments could be “substantial incremental investment above our current base capital plan.”

In response to a question on timing, Womack said the Georgia RFP is a “year-long process,” with management indicating investors would likely wait “until the end of the year” for the process to play out. Poroch outlined a subsequent certification timeline extending “pretty much through 2027,” with potential spending beginning around 2028 if Southern proposals are selected and deliveries in 2032 and 2033.

At Southern Power, Poroch said the company plans to add 400 MW of additional capacity through natural gas turbine upgrades at multiple existing facilities in Alabama and Georgia, with commercial operation projected between 2029 and 2031. He said the investment is expected to add about $700 million to Southern’s capital plan over the next several years, and the company is also evaluating an additional 300 MW of uprates along with other new-generation opportunities. On timing, Poroch said the company could work through the remaining uprate opportunities “over probably the course of the next year or so,” and Womack added construction on the 400 MW uprates is scheduled to begin in 2026.

Discussing Southern Power’s contracting strategy, Womack said the business is “up in the mid-90s” percent contracted, with many contracts extending into the mid-2030s. Poroch said discussions around contracting the 400 MW uprates were “fairly late stage” and expected to be wrapped up “in the relatively near future.” He added that Southern Power’s approach is to contract with “high credit quality counterparties” and that the company “definitely do[es] not build it and see who shows up.” Womack reiterated, “We don’t take merchant risk.”

DOE loan agreements, equity funding, and dividend increase

Womack also pointed to “historic $26.5 billion in loan agreements with the Department of Energy” that he said will benefit customers in Alabama and Georgia “for decades.” He said the loans are expected to reduce pressure on the company’s capital market needs and, over an approximately 30-year term, are projected to generate “cumulative savings of $7 billion for customers.”

On financing, Poroch said Southern sourced an additional $500 million of equity through its at-the-market program using forward contracts that settle at the company’s discretion by 2028. Including previously sourced equity and the incremental Southern Power capital expenditures discussed on the call, Poroch said Southern projects a remaining need of about $1.8 billion of equity or equity equivalents through 2030 to support its capital plan and credit objectives, including a path to 17% funds from operations to debt by 2029. In response to a question about incremental capital, Poroch said a “good rule of thumb” is to expect about 40% of incremental capital to be funded through equity.

Southern also announced a dividend increase. Womack said the board approved an $0.08 per share increase in the annual common dividend, raising the annualized rate to $3.04 per share. He said the action marks the company’s 25th consecutive annual increase and extends its record to 79 consecutive years of paying a dividend “equal to or greater than the previous year.”

Other call highlights: nuclear stance, regulatory backdrop, and supply chain

During the Q&A, Womack addressed questions about potential new nuclear development. He said he was “very excited” about actions by the Trump administration to support new nuclear construction, including regulatory steps and discussions around supply chain lead times. However, he said Southern “is not at a place to make a commitment about building a new unit,” adding that the company intends to continue sharing experience from Vogtle Units 3 and 4 with others interested in moving forward.

Womack also addressed the Georgia Public Service Commission election cycle, noting primary elections on May 19 and potential runoffs on June 16. He said there is “a lot of conversation about data centers and large load customers and things like rate stability” on the campaign trail, and added that Southern believes it can continue to operate in a constructive regulatory environment regardless of election outcomes, citing the company’s history of navigating political changes.

On supply chain and labor, Womack said the company is “very well positioned” due to its scale and supplier relationships, while cautioning that tightness in areas such as turbines, transformers, and labor cannot be taken for granted. He also noted that for current RFP planning, Southern has “the turbines identified to support those RFPs.”

About Southern NYSE: SO

Southern Company NYSE: SO is an Atlanta-based energy holding company that provides electric and gas utility services and owns power generation assets across the United States. Founded in 1945, the company operates a portfolio of regulated electric utilities and affiliated businesses that generate, transmit and distribute electricity to residential, commercial and industrial customers.

Southern's principal regulated electric subsidiaries include Georgia Power, Alabama Power and Mississippi Power, which serve large portions of the southeastern United States.

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