The paragraph is an introduction to the Southern Company's First Quarter 2025 Earnings Call. Paul, the conference operator, begins by welcoming participants and outlining the structure of the call, including a question-and-answer session. Greg MacLeod, Director of Investor Relations, then takes over, noting the presence of key company leaders Chris Womack and Dan Tucker. Greg mentions that the presentation will include forward-looking statements and non-GAAP financial information, with relevant reconciliations available on their website. Chris Womack then discusses the positive earnings results for the first quarter, highlighting growth in all major business areas and economic resilience in the Southeast.

The state-regulated electric utility is experiencing customer growth, attracting various commercial and industrial customers, particularly data centers, due to its reliable and resilient grid. Despite policy uncertainty around tariffs, the company estimates potential cost increases of 1% to 3%. They leverage their large supplier network and strong vendor relationships to navigate tariff challenges and ensure compliance with the USMCA. Various mitigation strategies are in place to handle potential tariff impacts, such as project contingencies and regulatory approaches, without materially affecting the financial outlook. The company remains committed to balancing affordability with reliability, maintaining a strong financial position, and focused on disciplined execution.

The paragraph outlines the company's financial performance for the first quarter of 2025, reporting an adjusted EPS of $1.23 per share, which is $0.20 higher than the previous year and slightly above estimates. The key factors contributing to this performance were investments in state-regulated utilities and weather-related impacts, although higher operating costs and depreciation partially offset these gains. Retail electricity sales were slightly lower than the previous year, primarily due to decreased residential usage, although customer additions provided some offset. The report also considers the impacts of an extra day in the first quarter of 2024, return to office trends, and customers managing energy use due to inflation and economic concerns. An EPS estimate of $0.85 per share is projected for the second quarter.

The paragraph discusses the strong commercial and industrial sales in the Southeast, particularly in sectors like data centers, office buildings, and transportation, driven by projects such as the Hyundai Mega plant in Georgia. The Southeast economy is performing well, with low unemployment and high population growth. Economic development is robust, with significant capital investment and job creation in the region's electric service areas. Looking forward, there is a growing pipeline of potential large load projects, although sales forecasts remain conservative. Georgia Power's 2025 Integrated Resource Plan focuses on investing in maintaining and upgrading existing energy facilities, with a resolution expected by mid-July. Additionally, Georgia is progressing with plans for 13 gigawatts of new energy resources through competitive proposals.

The paragraph discusses the company's recent and planned financial activities related to energy resource projects. The company has submitted resources for valuation, with successful bidders for 8.5 gigawatts of energy resources expected to be notified soon. Georgia Power plans to seek project certification by July. The company aims to adjust its long-term earnings growth outlook by 2027, influenced by potential capital expenditure updates. It has issued $2.2 billion in long-term debt and $2.4 billion in junior subordinated notes, valued as 50% equity, and engaged in forward contracts for $1 billion in common stock sales. These, plus annual equity issuances, form part of the company's financial strategy to maintain investor interest and control costs, benefiting customers.

The paragraph discusses Southern Company's strategic financial actions and performance. It highlights their plan to address $4 billion in equity needs over five years, maintaining strong credit ratings and shareholder value. Chris Womack announces an $0.08 per share increase in the company's annual dividend, marking the 24th consecutive year of increases and 78 years of consistent or increased dividends since 1948. This dividend record is a key component of Southern Company's long-term value strategy. The company has achieved reliable, predictable results and is optimistic about future goals. The operator then opens the floor for questions, and Carly Davenport from Goldman Sachs asks about the second-quarter EPS guidance, noting it seems lower compared to last year's second quarter and 2024.

The paragraph involves a discussion between Carly Davenport and Dan Tucker regarding factors affecting an estimate compared to a strong first quarter performance. Dan Tucker identifies two major factors: weather, noting a difference in weather conditions year-over-year, and timing related to normal transactions within the Georgia transmission system. There was a notable transaction in the previous year's second quarter, which is not expected to recur. Carly also inquires about updates on Georgia Power's load pipeline, including project statuses and customer communications. Chris Womack responds, indicating no shift in customer tone despite recent announcements from hyperscale companies about their capital budgets.

The paragraph discusses the ongoing investment efforts of data centers and hyperscaler clients in a service territory, with specific reference to Georgia. There's a strong economic activity, reflected by the robust pipeline of projects expected to reach around 52 gigawatts by the mid-2030s, with 4 gigawatts contracted and 8 gigawatts committed. A shift towards earlier project timelines, particularly by 2028-2029, is noted as exciting. Julien Dumoulin-Smith asks about any changes in the composition or geography of data center clients, like Microsoft, but despite focus on specific sites, there's an overall acceleration in opportunities.

The paragraph features a discussion about the diversity of customers and ongoing interest in a company's offerings, as highlighted by Chris Womack. Julien Dumoulin-Smith appreciates the previous comments and inquires about how the company plans to reconcile its improved balance sheet and a potential rebate in 2027, specifically reaching a 17% target. Dan Tucker responds by indicating that the company has a clear vision to achieve its goals through a measured approach in financing. The imminent driver of financial improvement is the reduction of debt related to regulatory assets, including $2 billion tied to Georgia Power's past fuel under-recoveries and storm costs from Hurricane Helene. As these costs are recovered, the company expects a natural improvement in its financial position.

The paragraph discusses a capital plan that might influence the timeline for reaching a 17% target, potentially extending it by a year or two. However, there's confidence in foreseeable progress by 2027. Nick Campanella from Barclays asks about rebates and whether the company anticipates reaching the higher end of their 5% to 7% growth target by 2027. Dan Tucker responds by reiterating a previous stance that if certain capital opportunities and data center momentum persist, they could reach the top of their range in the latter half of their plan, despite near-term headwinds like interest refinancing.

The paragraph discusses a pending Georgia Power rate case and the company's progress towards filing it by early July as required by a 2022 order. Chris Womack confirms that everything is on track regarding the timeline. Jeremy Tonet from JPMorgan inquires about potential strategies for managing customer bills amid nationwide pressures, such as the timing of rate changes with fuel cost recovery. Womack acknowledges various factors being considered but notes that it's too early to specify details about the filing, highlighting the focus on affordability and large load growth's impact on pricing.

The paragraph discusses factors affecting a future filing, such as fuel adjustments and hurricane recovery costs. Jeremy Tonet inquires about the outlook for the Inflation Reduction Act (IRA), particularly regarding transferability, and its impact on Southern. Dan Tucker responds, noting that while they take advantage of transferability to efficiently monetize tax credits, they are not heavily reliant on it. If unavailable, it would have a minimal impact on their financials. Chris Womack does not add further comments.

The paragraph discusses a conversation involving several individuals, including Dan and Chris Womack, about their ongoing engagement with policymakers to emphasize the value and benefits of certain tax credits and policies for customers. They acknowledge the political uncertainty in Washington but are actively communicating these points to ensure understanding. Jeremy Tonet finds the explanation helpful. Then, Andrew Weisel from Scotiabank asks about demand trends, particularly regarding sequential slowdowns in customer classes and data center growth. Dan Tucker responds that the changes are not significant, and when adjusted for the Leap Day effect, the commercial and industrial sectors show some growth. He also highlights that the data center growth is measured year-over-year on an increasing scale.

The paragraph discusses the differences in comparing current numbers to previous quarters due to changes in the baseline a year ago, leading to potential misalignment or misinterpretation of trends. It mentions that some large industrial activities were delayed and are expected in the coming months, but there are no significant concerns about systemic economic trends. Andrew Weisel asks for clarification on a large energy load pipeline, initially thought to be 52 gigawatts. Dan Tucker emphasizes the importance of the activity's robust tone rather than precise numbers, explaining that the Georgia pipeline is indeed 52 gigawatts but there's a desire to avoid being overly precise due to potential double counting in pipeline estimations.

The paragraph discusses speculative projects and the importance of focusing on tangible trends rather than just headline numbers. Andrew Weisel expresses reassurance that the numbers are indeed rising. David Arcaro from Morgan Stanley asks Dan Tucker about the impact of a modified rate structure for data centers in Georgia. Tucker explains that it is still early to gauge the reaction as the framework, approved by the public utility commission, was only finalized recently. He mentions that while the framework does not include specific pricing, it's a basis for tariff structures, and customers are in the process of understanding it. Chris Womack notes feedback about the importance of orderly processes.

The paragraph discusses the implementation of a new framework that brings order and certainty to engagements with customers, especially in an evolving market. This framework, approved by a commission, is seen as beneficial and has been considered by other states. Dan Tucker notes that the pipeline has grown due to these rules. When David Arcaro inquires about changes in requests for proposals (RFPs) due to factors like tariffs and inflation, Dan Tucker explains that the RFP process is highly confidential and managed by an independent evaluator, so he can't provide details. He emphasizes the importance of the RFP's independent sourcing process.

The paragraph involves a conversation during a Q&A session where Dan Tucker and Durgesh Chopra discuss the timeline and details regarding the release of data from a Request for Proposal (RFP). Durgesh seeks clarification on whether concrete data points will be available by July, as implied in various communications. Dan confirms that by their Q2 call, they expect to discuss incremental capital opportunities associated with their largest all-source RFP and possibly others. After this discussion, the operator introduces Alex from Guggenheim Securities, who inquires about the impact of tariffs on growth opportunities at Southern Power, particularly in relation to building contracted gas and contract renewals for expiring tolling agreements, given the current tariff and supply chain environment.

Dan Tucker discusses Southern Power's current projects, highlighting the progress and minimal risks associated with their solar and wind initiatives, as well as their approach to contracting for new gas projects. He emphasizes Southern Power's strategy of securing contracts before undertaking projects to mitigate risks. An unidentified analyst inquires about the upcoming General Rate Case (GRC) in the context of an election year and the Public Service Commission's increased activity. Chris Womack responds that it's too early to predict the specifics of the filing, but affordability will be a primary concern.

In the paragraph, Dan Tucker addresses a question from Travis Miller about the role of midstream investments in their generation expansion plans. He explains that securing a natural gas supply is crucial, and they are well-positioned with firm transportation agreements and participation in several expansion projects in the Southeast. While they see opportunities for incremental supply, there are no plans for new pipeline projects. Tucker notes that they already hold a 50% interest in the Southern Natural pipeline, operated by Kinder Morgan, and have smaller, passive investments in other midstream ventures.

The paragraph discusses opportunities associated with pipeline expansion projects, mainly in familiar service areas with minimal greenfield exposure. Chris Womack highlights a consensus among industry leaders and government officials on the need for more infrastructure, including pipelines and transmission, to meet growing demand. There's also a mention of advocating for permitting reforms to facilitate timely infrastructure development. Additionally, the conversation touches on the company's dividend policy, where Dan Tucker explains that maintaining a modest dividend growth is strategic for financing their capital plan and adjusting the payout ratio towards the low 60% range.

During the conclusion of Southern Company's First Quarter 2025 Earnings Call, Travis Miller and Chris Womack addressed the future of capital opportunities and equity needs. They suggested that if these needs persist, the approach might remain modest; otherwise, the Board could consider alternative strategies. Chris Womack thanked the participants for their interest and looked forward to future discussions. The operator then ended the call.

This summary was generated with AI and may contain some inaccuracies.