The Southern Company delivered solid QQ3 2024 results underpinned by a large, regulated asset base that supports stable earnings and cash flow. Revenue of $7.274 billion, gross profit of $3.953 billion, and net income of $1.535 billion translated into an earnings per share (EPS) of $1.40 (diluted $1.39). On a YoY basis, revenue rose 4.2% and net income grew ~7.95%, while QoQ revenue expanded 12.55%, driven by seasonal and rate-base dynamics common to mature utilities with regulated earnings visibility. Operating cash flow was $3.616 billion and free cash flow reached $1.305 billion, supporting a healthy, albeit leverage-leaning, balance sheet supported by ongoing capex in regulated assets and renewables.
The balance sheet reflects a large-cap utilities profile: total assets of $143.96 billion with total debt of $65.08 billion and net debt around $64.06 billion, yielding a debt-to-capitalization of ~65.7% and a net debt to EBITDA framework that underscores the need for disciplined capital allocation. Interest coverage sits at approximately 3.12x, and the dividend payout ratio stands near 47.8%, highlighting The Southern Company’s commitment to income-generating shareholders while funding long-cycle capital projects. In the near term, the company is positioned to leverage rate-base growth, grid modernization, and growth in renewable energy and gas infrastructure; however, it faces regulatory, interest-rate, and commodity-price risks inherent to the sector.
Looking ahead, the investment thesis rests on continued regulated earnings growth and capital deployment in transmission, distribution, and renewable assets, coupled with disciplined cost management. Investors should monitor regulatory outcomes (rate cases), capital expenditure progression, weather-driven demand, and inflationary pressure on project costs, which will influence long-run cash flow stability and dividend sustainably.