American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q2 2016 Earnings Presentation
28 slides from American Electric Power's earnings presentation, Jul 28, 2016
Slide 1: 2nd Quarter 2016 Earnings Release Presentation
2nd Quarter 2016 Earnings Release Presentation July 28, 2016 1
Slide 2: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are
Slide 3: Second Quarter 2016 Highlights
Second Quarter 2016 Highlights Second Quarter 2016 Company Update Earnings Update Delivered GAAP earnings of $1.02 per share and operating earnings of $0.95 per share for the second quarter 2016 Delivered GAAP earnings of $2.04 per share and operating earnings of $1.97 per share for YTD June 201
Slide 4: Regulated Returns
Regulated Returns Twelve Months Ended 6/30/2016 Earned ROE’s (GAAP and Operating Earnings) OPCo 13.3% Trans 11.7%* I&M APCo 10.1% AEP TX 9.3% PSO 9.4% 8.6% SWEPCO KPCo 7.1% 6.5% Regulated Operations ROE of 9.8% as of June 30, 2016 * Trans ROE includes impact of annual true-up; year-end ROE expected
Slide 5: 2nd Quarter Operating Earnings Segment Detail
2nd Quarter Operating Earnings Segment Detail $0.03 ($0.07) $0.03 2016 Actual EPS $0.43 $0.25 $0.19 $0.09 ($0.01) $0.95 Refer to appendix for additional explanation of variances by segment 5
Slide 6: 2016 YTD Operating Earnings Segment Detail
2016 YTD Operating Earnings Segment Detail $0.03 ($0.07) $0.03 2016 Actual EPS $0.99 $0.47 $0.28 $0.24 ($0.01) $1.97 Refer to appendix for additional explanation of variances by segment 6
Slide 7: Normalized Retail Load Trends
Normalized Retail Load Trends Note: Charts reflect connected load and exclude firm wholesale load & Buckeye Power backup load. 7
Slide 8: Economic Data
Economic Data Source – Moody’s Analytics 8
Slide 9: Regional Industrial Sales Trends
Regional Industrial Sales Trends AEP Industrial Sales Map 9
Slide 10: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO Interest Coverage 5.6x >3.6x FFO to Total Debt 20.2% 15%-20% Note: Credit statistics represent the trailing 12 months as of 6/30/2016 Liquidity Summary (unaudited) 6/30/2016 Actual ($ in millions) Amount
Slide 11: Summary
Summary Solid Q2 2016 results Reaffirming 2016 Operating Earnings Guidance of $3.60 to $3.80/share and 4% to 6% growth rate Continuing strategic review of competitive generation 11
Slide 12: Appendix
Appendix 12
Slide 13: 2nd Quarter Reconciliation of GAAP to Operating Earnings
2nd Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share Q2-15 Q2-16 Change Q2-15 Q2-16 Change GAAP Earnings $430 $502 $72 $0.88 $1.02 $0.14 Non Operating Items: Mark-to-Market Impact of (1) (4) (3) - (0.01) (0.01) Commodity Hedging Activities Disposition of Commercial
Slide 14: YTD June Reconciliation of GAAP to Operating Earnings
YTD June Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share YTD-15 YTD-16 Change YTD-15 YTD-16 Change GAAP Earnings $1,059 $1,003 $(56) $2.16 $2.04 $(0.12) Non Operating Items: Mark-to-Market Impact of (5) (4) 1 (0.01) (0.01) - Commodity Hedging Activities Disposition of Comm
Slide 15: Vertically Integrated Utilities - Second Quarter
Vertically Integrated Utilities Second Quarter Summary Key Drivers: Q2-16 vs. Q2-15 Rate changes: $32M of rate increases at SWEPCo, KPCo, Q2-15 Q2-16 APCo/WPCo, PSO and I&M, in addition to $25M $ millions (except EPS) recognition of deferred WV rate billings. Increases were offset by lower wholesa
Slide 16: Vertically Integrated Utilities - YTD
Vertically Integrated Utilities YTD Summary Key Drivers: YTD-16 vs. YTD-15 Rate changes: $70M of rate increases at SWEPCo, KPCo, YTD-15 YTD-16 APCo/WPCo, PSO and I&M, in addition to $25M $ millions (except EPS) recognition of deferred WV rate billings. Increases were offset by lower wholesale form
Slide 17: Transmission & Distribution Utilities - Second Quarter
Transmission & Distribution Utilities Second Quarter Summary Key Drivers: Q2-16 vs. Q2-15 Q2-15 Q2-16 Rate changes: $6M primarily from Ohio DIR $ millions (except EPS) Operating Revenues $1,061 $1,096 OH Regulatory Provision - $21M favorable due to current year reversal of provision Operating Ex
Slide 18: Transmission & Distribution Utilities - YTD
Transmission & Distribution Utilities YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 Rate changes: $12M primarily from Ohio DIR $ millions (except EPS) Operating Revenues $2,331 $2,193 OH Regulatory Provision - $21M favorable due to current year reversal of provision Operating Expenses
Slide 19: AEP Transmission Holdco - Second Quarter
AEP Transmission Holdco Second Quarter Summary Key Drivers: Q2-16 vs. Q2-15 Q2-15 Q2-16 $50M favorable operating income due to a $ millions (except EPS) $29M increase in the annual formula rate Operating Revenues $99 $162 true-up and increased capital investment in Operating Expenses: the wholly-o
Slide 20: AEP Transmission Holdco - YTD
AEP Transmission Holdco YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 $66M favorable operating income due to a $ millions (except EPS) $29M increase in the annual formula rate Operating Revenues $157 $250 true-up and increased capital investment in Operating Expenses: the wholly-owned T
Slide 21: Generation & Marketing - Second Quarter
Generation & Marketing Second Quarter Summary Key Drivers: Q2-16 vs. Q2-15 Q2-15 Q2-16 $ millions (except EPS) Capacity revenues decreased $51M due to plant retirements and transition of Ohio to full market Operating Revenues $800 $678 pricing Operating Expenses: Energy Costs (491) (444) AEP Day
Slide 22: Generation & Marketing - YTD
Generation & Marketing YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 $ millions (except EPS) Capacity revenues decreased $148M due to plant retirements and transition of Ohio to full Operating Revenues $1,963 $1,426 market pricing Operating Expenses: Energy Costs (1,207) (923) AEP Day
Slide 23: 2nd Quarter Retail Rate Performance
2nd Quarter Retail Rate Performance Vertically Integrated Utilities Transmission & Distribution Utilities Rate Changes, net of Rate Changes, net of offsets (in millions) offsets (in millions) Q2-16 vs. Q2-15 Q2-16 vs. Q2-15 APCo/WPCo $29 Ohio Power $6 I&M ($13) Texas Central - KPCo $5 Texas North -
Slide 24: YTD Retail Rate Performance
YTD Retail Rate Performance Vertically Integrated Utilities Transmission & Distribution Utilities Rate Changes, net of Rate Changes, net of offsets (in millions) offsets (in millions) YTD-16 vs. YTD-15 YTD-16 vs. YTD-15 APCo/WPCo $52 Ohio Power $12 I&M ($6) Texas Central - KPCo $12 Texas North - PSO
Slide 25: 2nd Quarter Normalized Retail Load Performance
2nd Quarter Normalized Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) Q2-16 vs. Q2-15 Q2-16 vs. Q2-15 APCo/WPCo -4.0% Ohio Power -1.3% I&M 1.2% Texas Central 5.5% KPCo -9.5% Texas North
Slide 26: YTD Normalized Retail Load Performance
YTD Normalized Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) YTD-16 vs. YTD-15 YTD-16 vs. YTD-15 APCo/WPCo -2.3% Ohio Power -1.6% I&M 2.0% Texas Central 5.7% KPCo -6.9% PSO 1.1% Texas
Slide 27: 2nd Quarter Weather Impact vs. Prior Year
2nd Quarter Weather Impact vs. Prior Year Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) Q2-16 vs. Q2-15 Q2-16 vs. Q2-15 APCo/WPCo ($2) Ohio Power - I&M $3 Texas Central $2 KPCo $1 Texas North - PSO $2 TOTAL $2 SWEPCO (
Slide 28: YTD Weather Impact vs. Prior Year
YTD Weather Impact vs. Prior Year Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) YTD-16 vs. YTD-15 YTD-16 vs. YTD-15 APCo/WPCo ($36) Ohio Power - I&M ($16) Texas Central ($6) KPCo ($8) Texas North ($2) PSO ($4) TOTAL ($
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