The Southern Company reported Q2 2025 revenue of $6.973 billion, up 7.89% year over year but down 10.32% quarter over quarter, with gross profit of $3.490 billion and a gross margin around 50.05%. EBITDA stood at $3.465 billion and operating income was $1.764 billion, yielding an operating margin near 25.3%. Net income declined to $0.88 billion, or $0.80 per share, down approximately 26.9% year over year and 34.0% sequentially. The YoY earnings decrease was driven by higher interest expense ($0.874 billion) and a larger net charge from other income/expenses (net -$0.622 billion), underscoring the sensitivity of the utilities segment to financing costs in a high-rate environment.
On the cash-flow front, the company generated $2.181 billion from operations, invested $2.8 billion in property, plant and equipment, and reported negative free cash flow of approximately $0.619 billion. Dividends paid totaled $0.758 billion, with net debt around $69.56 billion and a debt-to-capitalization ratio of 0.676. Ending cash stood at $1.265 billion. The balance sheet remains large and asset-rich (total assets of $148.85 billion; total liabilities of $111.51 billion; stockholders’ equity $34.01 billion), reflecting a capital-intensive, regulated utility model. The payout ratio is elevated at 86.1%, consistent with a long-standing capital return policy, though cash flow discipline will be critical as capex remains a dominant driver of near-term free cash flow dynamics.
Looking ahead, The Southern Company benefits from a regulated earnings base and ongoing investments in generation, transmission, and distribution assets. However, the near-term profitability trajectory will continue to hinge on financing costs, regulatory outcomes, and the efficiency of capital deployment. Valuation remains supported by earnings visibility and dividend capacity, but the high leverage and substantial capex spend suggest investors should monitor rate-case developments, debt metrics, and liquidity in the coming quarters.