Why did Southern Company's GAAP and adjusted EPS differ in Q2 2026?

GAAP EPS of $1.03 was $0.10 below adjusted EPS of $1.13. The gap reflects $143 million of pre-tax accelerated depreciation from wind repowering at Southern Power ($0.07 per share) and an $8 million estimated loss at Southern Company Gas related to disallowed Nicor Gas capital investments, partly offset by a $0.09 per-share benefit from the prior-year debt extinguishment cost not recurring at the same level... Specifically, the items excluded are added back, so adjusted EPS is higher than GAAP EPS in 2026.

What drove the improvement in earnings this quarter?

Management attributed adjusted earnings growth to investment in state-regulated utilities, customer usage and growth, higher earnings from equity method investments (up $76 million to $86 million in the quarter), and lower income taxes. These gains were partly offset by higher interest expense. Traditional Electric Operating Companies delivered $0.20 of the $0.21 adjusted EPS increase.

Is the Southern Power wind repowering charge a one-time event?

Not entirely. The accelerated depreciation and decommissioning costs will continue until the repowering projects are completed, projected through the third quarter of 2027. Management estimates remaining pre-tax charges of about $205 million in 2026 and $120 million in 2027. Investors should expect these charges to keep depressing reported Southern Power results, although the company excludes them from adjusted EPS.

How strong is demand growth behind these results?

Demand is solid. Total retail kilowatt-hour sales rose 2.1% in Q2 2026 (3.9% total including wholesale), with commercial sales up 7.3% and wholesale sales up 9.2%. Management cited data centers and other large-load customers as drivers of projected significant growth, which also creates the need for substantial new generation and transmission investment and associated capital access and revenue recovery risks.

Did the share count increase affect per-share results?

Yes. Average shares outstanding rose to 1,137 million in Q2 2026 from 1,101 million a year earlier, reducing EPS by $0.04 in the quarter and $0.07 year-to-date. Investors should evaluate whether the capital raised is generating returns that exceed this dilution over time.

SOUTHERN CO 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 30, 2026. Cited figures are marked; the original filing is the authoritative source.

Southern Company (NYSE: SO) reported second-quarter 2026 GAAP earnings of $1.2 billion^a, or $1.03 per share, up from $0.9 billion, or $0.80 per share, in the second quarter of 2025.

Excluding items such as accelerated depreciation from wind repowering at Southern Power, an estimated Nicor Gas disallowance loss, and tax refund items, adjusted earnings were $1.3 billion^b, or $1.13 per share, versus $0.92 a year earlier, a gain of $0.21. For the six months ended June 30, 2026, reported EPS was $2.24 and adjusted EPS was $2.46, versus $2.01 and $2.15 in the prior-year period. Quarterly operating revenues were essentially flat at $6.98 billion (up 0.1%), while year-to-date revenues rose 4.2% to $15.4 billion, helped by higher natural gas revenues and wholesale sales.

Management attributed adjusted earnings growth to investment in state-regulated utilities, customer usage and growth, higher equity method earnings, and lower income taxes, partially offset by higher interest expense. Total retail kilowatt-hour sales rose 2.1% in the quarter, with commercial sales up 7.3%, consistent with the data center and large-load demand growth management highlighted. Investors should note several headwinds and watch items: Southern Power's quarterly loss widened to $25 million^c on accelerated depreciation tied to wind repowering, which is expected to total roughly $205 million pre-tax in 2026 and $120 million in 2027.

Share count growth (1,137 million average shares in Q2 versus 1,101 million) diluted per-share gains by $0.04^d. The filing also flags regulatory and capital-access risks tied to data center-driven generation and transmission investment, and management is scheduled to discuss the results on a call that day.

02—Key points

Key Highlights

Q2 2026 GAAP EPS of $1.03 rose 29% from $0.80; adjusted EPS of $1.13 rose 23% from $0.92, a $0.21 increase.
Year-to-date adjusted EPS of $2.46 rose $0.31 (about 14%) from $2.15; GAAP EPS of $2.24 rose $0.23 from $2.01.
Traditional Electric Operating Companies were the main driver, contributing $0.20 of Q2 EPS growth on retail sales, AFUDC equity, and income tax benefits.
Southern Power posted a Q2 net loss of $25 million, driven by $143 million pre-tax accelerated depreciation from wind repowering, with remaining charges of about $205 million in 2026 and $120 million in 2027.
Southern Company Gas contributed $126 million in Q2 net income, supported by a $9 million state tax refund, partly offset by an estimated $8 million loss tied to Nicor Gas investments disallowed by the Illinois Commerce Commission.
Q2 retail kilowatt-hour sales rose 2.1% (commercial up 7.3%), while wholesale sales increased 9.2%, pointing to strong demand growth in the Southeast.
Share count rose about 3% to 1,137 million average shares, a $0.04 per-share drag on Q2 earnings, which investors should weigh against equity-funded growth.

03—Questions

Frequently Asked Questions

Why did Southern Company's GAAP and adjusted EPS differ in Q2 2026?
GAAP EPS of $1.03 was $0.10 below adjusted EPS of $1.13. The gap reflects $143 million of pre-tax accelerated depreciation from wind repowering at Southern Power ($0.07 per share) and an $8 million estimated loss at Southern Company Gas related to disallowed Nicor Gas capital investments, partly offset by a $0.09 per-share benefit from the prior-year debt extinguishment cost not recurring at the same level... Specifically, the items excluded are added back, so adjusted EPS is higher than GAAP EPS in 2026.
What drove the improvement in earnings this quarter?
Management attributed adjusted earnings growth to investment in state-regulated utilities, customer usage and growth, higher earnings from equity method investments (up $76 million to $86 million in the quarter), and lower income taxes. These gains were partly offset by higher interest expense. Traditional Electric Operating Companies delivered $0.20 of the $0.21 adjusted EPS increase.
Is the Southern Power wind repowering charge a one-time event?
Not entirely. The accelerated depreciation and decommissioning costs will continue until the repowering projects are completed, projected through the third quarter of 2027. Management estimates remaining pre-tax charges of about $205 million in 2026 and $120 million in 2027. Investors should expect these charges to keep depressing reported Southern Power results, although the company excludes them from adjusted EPS.
How strong is demand growth behind these results?
Demand is solid. Total retail kilowatt-hour sales rose 2.1% in Q2 2026 (3.9% total including wholesale), with commercial sales up 7.3% and wholesale sales up 9.2%. Management cited data centers and other large-load customers as drivers of projected significant growth, which also creates the need for substantial new generation and transmission investment and associated capital access and revenue recovery risks.
Did the share count increase affect per-share results?
Yes. Average shares outstanding rose to 1,137 million in Q2 2026 from 1,101 million a year earlier, reducing EPS by $0.04 in the quarter and $0.07 year-to-date. Investors should evaluate whether the capital raised is generating returns that exceed this dilution over time.

04—Continue

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