What Southern (SO) Said on Its Q3 Earnings Call

Key Points

• Southern expects to beat its original 2026 earnings guidance: Q3 adjusted EPS rose to $1.94, and the company estimates full-year EPS of $4.70—$0.10 above the top of its guidance range and up 9% from 2025.
• Electricity demand is accelerating, led by data centers: Weather-normalized sales increased 3.5% in Q3, while data center usage surged 59%. Southern has 21 gigawatts of signed large-load contracts, with another 7 gigawatts in late-stage discussions.
• Growth could bring substantial investment needs: Southern identified about $4 billion of projects beyond its $81 billion capital plan, and its five-year plan could approach $100 billion. It expects to fund additional investment with roughly 40% equity or equity equivalents.

Southern NYSE: SO expects to exceed its original 2026 adjusted earnings guidance after third-quarter results benefited from warmer weather, growing electricity use and rising demand from large customers, including data centers.

The utility reported adjusted earnings per share of $1.94 for the third quarter, up $0.34 from a year earlier and $0.29 above its previous estimate. Chief Financial Officer David Poroch said higher earnings from Southern Power also contributed, partly offset by higher non-fuel operating expenses, taxes other than income taxes and dilution from additional shares outstanding.

For the first nine months of 2026, adjusted earnings per share rose to $4.40 from $3.76 a year earlier. Southern estimated fourth-quarter adjusted earnings of $0.30 per share, which would bring the full-year figure to $4.70. That would be $0.10 above the top of its original guidance range and represent 9% growth from 2025, Poroch said.

Chairman, President and CEO Chris Womack said the company plans to update its financial outlook through 2031 in February, including its capital spending, sales, financing and earnings expectations. He said sustained momentum creates an opportunity to raise the upper end of near-term earnings guidance.

Data Centers Drive Demand Growth

Weather-normalized electricity sales increased 3.5% in the third quarter and 2.7% year to date, Womack said. Commercial sales rose 7.3% from the prior-year quarter, while data center usage increased 59% in the quarter and 52% over the first nine months, primarily as customers accelerated their load ramps.

Residential sales rose 1.3% in the quarter, with approximately 15,000 new electric residential customers and nearly 6,000 new residential gas customers. Womack said industrial sales also increased, citing growth in sectors including primary metals, lumber and transportation.

Southern’s portfolio of signed large-load contracts reached 21 gigawatts, with another 7 gigawatts in late-stage discussions across Alabama, Georgia and Mississippi. Alabama Power and Georgia Power each added approximately 2 gigawatts of contracted load during the quarter.

Womack said the contracts include minimum bills that are not tied to electricity usage. Poroch said the structure allows Southern to recover costs even if customers are slower than anticipated to reach their contracted electricity demand.

Asked about a prospective pipeline of 75 gigawatts, Womack cautioned that Southern was unlikely to secure every project. He said activity remained strong in Georgia and was also moving west into Alabama and Mississippi.

Capital Spending and Financing

Poroch identified approximately $4 billion in projected investment above Southern’s existing $81 billion base capital plan. The additional projects include uprates at Southern Power natural gas facilities, Georgia Power’s nuclear uprates through a partnership with Google, and a pipeline expansion announced by Southern Natural Gas, in which Southern holds a 50% stake.

Southern’s five-year capital plan could potentially approach $100 billion as it considers further opportunities, including generation projects being sought through requests for proposals in Alabama and Georgia. Poroch cautioned that company-owned projects would have to be selected and authorized by the relevant public service commissions before becoming incremental investments.

The company expects to finance additional investment with approximately 40% equity or equity equivalents. Including the identified $4 billion of incremental projects, Southern projects a remaining equity need of about $2 billion through 2030, Poroch said. The company is targeting funds from operations to debt of 17% by 2029.

Southern settled $1.2 billion of previously priced equity during the quarter at an average share price of $95, completing settlement of all $5.3 billion of its forward-priced equity, Poroch said.

Rates and Regulatory Questions

Womack said Southern has committed to holding base rates flat in Alabama and Georgia until at least 2029. Georgia Power reduced rates during the summer, saving a typical residential customer nearly $50 a year, he said.

Analysts asked about affordability and the regulatory outlook following elections that brought changes to Georgia’s public service commission and a new governor-elect. Womack said Southern would work with incoming officials to explain its contracts and the benefits it says large-load growth provides to existing customers.

Womack said he was confident in contracts already signed amid discussion of a possible pause on new data center development in Georgia. He said Southern had explained its process to Governor-elect Bottoms during the campaign and would continue those discussions.

Addressing generation needs, Womack said new nuclear power could be important for the country but that Southern was not in line to pursue a new nuclear project. He said further risk mitigation and potentially incentives would be needed to encourage companies to take that step.

About Southern (NYSE:SO)

Southern Company is an energy holding company based in Atlanta, Georgia. Through its subsidiaries, it generates, transmits and distributes electricity and provides natural gas service, primarily across the southeastern United States.

Its electric utility businesses include Alabama Power, Georgia Power and Mississippi Power, which serve customers in their respective states. Southern Company also owns Southern Power, which develops and operates wholesale power generation assets, and Southern Company Gas, whose businesses distribute natural gas to customers in several states.

Formed in 1945, Southern Company has grown from a regional electric utility holding company into a diversified energy provider.

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