American Electric Power Company, Inc. · NASDAQ:AEP

American Electric Power — Q1 2022 Earnings Presentation

35 slides from American Electric Power's earnings presentation, Apr 28, 2022

  1. Slide 1: 1st Quarter 2022 Earnings Release Presentation

    1st Quarter 2022 Earnings Release Presentation April 28, 2022

  2. 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

  3. Slide 3: Non-GAAP Financial Measures

    Non-GAAP Financial Measures AEP reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). AEP supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including operati

  4. Slide 4: Pure Play Regulated Utility

    Pure Play Regulated Utility 16,700 EMPLOYEES 25GW OWNED GENERATION 5.5M CUSTOMERS, 11 STATES 40,000 TRANSMISSION MILES LARGEST IN THE U.S. $88B TOTAL ASSETS 224,000 DISTRIBUTION MILES $56B RATE BASE $50B CURRENT MARKET CAPITALIZATION Statistics as of December 31, 2021 except for market capitalizatio

  5. Slide 5: AEP's Strategic Vision and Execution

    AEP’s Strategic Vision and Execution Execute Strategy Top Priorities Clean • Transform all parts of our business to align with AEP emission reduction goals Lead the transformation to a clean • Improve the reliability and resiliency of the grid to facilitate a clean energy economy for energy economy

  6. Slide 6: 1st Quarter 2022 Business Update

    1st Quarter 2022 Business Update  1st Quarter 2022 operating earnings of $1.22 per share or $616M  Reaffirm 2022 operating earnings guidance range of $4.87-$5.07 and 6%-7% long-term growth rate  Kentucky operations sale to Liberty expected to close in Q2-22  Progress on unregulated renewable div

  7. Slide 7: Regulatory Timeline of Kentucky Sale

    Regulatory Timeline of Kentucky Sale In October 2021, AEP entered into an agreement to sell its Kentucky operations to Liberty (Algonquin Power & Utilities) for an enterprise value of $2.846B. The sale is expected to close in Q2-22 pending regulatory approvals. Nov Dec Jan Feb Mar Apr May June AEP F

  8. Slide 8: Commitment to Regulated Renewables

    Commitment to Regulated Renewables 0.5 GW 15 GW 16 GW North Central Wind 2022-2030 Regulated Renewable In-Service in 2021 Opportunity by 2030 Commissioned 1 GW NCW – Traverse site on 3/18/2022 409 MW owned resources filed for approval at APCo in Q4-21 Renewable RFPs in progress at APCo, I&M, PSO and

  9. Slide 9: Regulated Renewable Projects and RFPs

    Regulated Renewable Projects and RFPs Owned Renewable Projects Currently Seeking Regulatory Approval Projected Regulatory filing date: Resource Project MWs In-Service Date December 30, 2021 Solar Amherst / Virginia 5 Q4-22 Expected Order: Solar Bedington / West Virginia 50 Q4-23 July 2022 Solar Fire

  10. Slide 10: 1st Quarter 2022 Financial Update

    1st Quarter 2022 Financial Update $1.41 $1.16 $1.22 $1.15 2021 2022 2021 2022 2020 GAAP EPS 2021 OPERATING EPS 2020 2021  Delivered GAAP earnings of $1.41 per share or $715M for the first quarter of 2022  Delivered operating earnings of $1.22 per share or $616M for the first quarter of 2022 2019 2

  11. Slide 11: 1st Quarter Operating Earnings Segment Detail

    1st Quarter Operating Earnings Segment Detail 0.07 (0.01) $1.22 (0.03) (0.01) PER SHARE 0.05 $1.15 PER SHARE Rate Changes $0.10 Rate Changes $0.04 Invest Growth $0.03 Retail $(0.04) O&M $(0.04) Normal Load $0.05 Weather $(0.01) Other Taxes $(0.02) Generation $(0.03) Investment Gain $(0.03) Wholesale

  12. Slide 12: Weather Normalized Billed Retail Load Trends

    Weather Normalized Billed Retail Load Trends AEP Normalized Residential GWh Sales AEP Normalized Commercial GWh Sales % Change vs. Prior Year % Change vs. Prior Year 15% 15% 10.0% 10% 10% 5.0% 4.3% 4.2% 5% 5% 1.5% 0.8% 0% 0% -0.4% -0.8% -1.6% -1.9% -1.6% -5% -5% -3.1% -10% -10% -15% -15% Q1-21 Q2-21

  13. Slide 13: Capitalization & Liquidity

    Capitalization & Liquidity Total Debt/Total Capitalization 61.8% 62.1% 61.5% Credit Statistics 59.8% 55.5% 57.0% Moody’s GAAP FFO to Total Debt 13.7% 13.7% Targeted Range 14.0%-15.0% Represents the trailing 12 months as of 3/31/2022 See Appendix for reconciliation to GAAP Liquidity Summary 2017 2018

  14. Slide 14: Summary

    Summary  Reaffirm 2022 operating earnings guidance range of $4.87-$5.07  Reaffirm long-term growth rate of 6%-7%  Kentucky operations sale expected to close in Q2-22  Continue to de-risk and simplify the business North Central Wind - Traverse 14

  15. Slide 15: Appendix – Q1 2022 Performance

    APPENDIX – Q1 2022 PERFORMANCE 15

  16. Slide 16: 1st Quarter Reconciliation of GAAP to Operating Earnings

    1st Quarter Reconciliation of GAAP to Operating Earnings $ in millions Earnings Per Share Q1-21 Q1-22 Change Q1-21 Q1-22 Change Reported GAAP Earnings $ 575 $ 715 $ 140 $ 1.16 $ 1.41 $ 0.25 Non Operating Items: Mark-to-Market Impact of Commodity (4) (100) (96) (0.01) (0.20) (0.19) Hedging Activities

  17. Slide 17: Vertically Integrated Utilities

    Vertically Integrated Utilities 1st Quarter Summary Key Drivers: Q1-22 vs. Q1-21 $ in millions (except EPS) Q1-21 Q1-22  Rate Changes: $64M favorable vs. prior year primarily from rate increases at APCo, I&M, PSO Operating Revenues $ 2,537 $ 2,687 and SWEPCO Operating Expenses:  Normal Load: $35M

  18. Slide 18: Transmission and Distribution Utilities

    Transmission and Distribution Utilities 1st Quarter Summary Key Drivers: Q1-22 vs. Q1-21 $ in millions (except EPS) Q1-21 Q1-22  Rate Changes: $29M favorable vs. prior year primarily from the Texas DCRF, Ohio DIR and Operating Revenues $ 1,088 $ 1,247 gridSMART Operating Expenses:  Normal Load: $2

  19. Slide 19: AEP Transmission Holdco

    AEP Transmission Holdco 1st Quarter Summary Key Drivers: Q1-22 vs. Q1-21 $ in millions (except EPS) Q1-21 Q1-22  $9M favorable Operating Income vs. prior year primarily due to increased transmission Operating Revenues $ 377 $ 411 investment, partially offset by higher property Operating Expenses: t

  20. Slide 20: Generation & Marketing

    Generation & Marketing 1st Quarter Summary Key Drivers: Q1-22 vs. Q1-21 $ in millions (except EPS) Q1-21 Q1-22  Generation decreased 312 GWh or 29% Q1-22 vs. Q1-21 primarily due to unplanned outages at Operating Revenues $ 629 $ 493 Cardinal plant in Q1-22 Operating Expenses:  AEP Dayton ATC liqui

  21. Slide 21: 1st Quarter Rate Performance

    1st Quarter Rate Performance Vertically Integrated Utilities Transmission and Distribution Utilities Rate Changes, net of Rate Changes, net of offsets ($ in millions) offsets ($ in millions) Q1-22 vs. Q1-21 Q1-22 vs. Q1-21 APCo/WPCo $15 AEP Ohio $21 I&M $25 AEP Texas $8 KPCo $2 Total $29 PSO $10 SWE

  22. Slide 22: 1st Quarter Weather Impact

    1st Quarter Weather Impact Vertically Integrated Utilities Transmission and Distribution Utilities Weather Impact Weather Impact ($ in millions) ($ in millions) Q1-22 vs. Q1-22 vs. Q1-22 vs. Q1-22 vs. Q1-21 Normal Q1-21 Normal APCo/WPCo $(2) $(5) AEP Ohio $(1) $(1) I&M $5 $1 AEP Texas $(5) $5 KPCo -

  23. Slide 23: 1st Quarter Retail Load Performance

    1st Quarter Retail Load Performance Vertically Integrated Utilities Transmission and Distribution Utilities Retail Load1 Retail Load1 (weather normalized) (weather normalized) Q1-22 vs. Q1-21 Q1-22 vs. Q1-21 APCo/WPCo 0.4% AEP Ohio 2.3% I&M 0.3% AEP Texas 12.0% KPCo 3.0% Total 5.9% PSO 2.3% SWEPCO 0

  24. Slide 24: Industrial Sales Growth

    Industrial Sales Growth AEP Industrial GWh Growth 20% $100 15.7% 9.7% 10% $75 6.7% 6.0% 7.4% 5.8% 5.5% Growth vs Prior Year 4.0% 1.3% 0% $50 -0.9% -1.3% -5.5% -3.3% -4.7% -4.6% -8.7% Oil & Gas Related Sectors -10% -9.6% $25 Non-Oil & Gas Related Sectors Oil Price -16.8% -20% $- Q1-20 Q2-20 Q3-20 Q4-

  25. Slide 25: Economic Data – AEP Service Territory

    Economic Data – AEP Service Territory GDP Growth by Quarter Employment Growth by Quarter 12.2% 12% 12% 8.5% 6% 5.9% 5.6% 5.8% Growth vs Prior Year 4.6% 4.5% Growth vs Prior Year 6% 4.3% 4.2% 4.9% 4.8% 4.2% 4.2% 4.1% 3.4% 1.1% 1.3% 0.5% 0% 0% -1.5% -6% -6% -5.4% US AEP US AEP -12% -12% Q1-21 Q2-21 Q3

  26. Slide 26: GAAP to Non-GAAP Reconciliations and Ratios

    GAAP to Non-GAAP Reconciliations and Ratios Adjusted FFO Calculation Adjusted Total Debt Calculation 12 Months As of Ended 3/31/2022 3/31/2022 (in millions) (in millions) Cash Flow from Operations $ 5,579 GAAP Total Debt $ 38,348 (incl. current maturities) Adjustments: Less: Changes in Working Capit

  27. Slide 27: Appendix – Regulatory and Renewables

    APPENDIX – REGULATORY AND RENEWABLES 27

  28. Slide 28: Regulated Returns and Authorized Equity Layers

    Regulated Returns and Authorized Equity Layers Twelve Months Ended 3/31/2022 Earned ROE’s (non-GAAP operating earnings, not weather normalized) 16% 14% 3/31/2022 Regulated 12% 11.2% Operations ROE of 10.6% 10% 9.8% 9.2% 9.1% 8% 7.8% 7.5% 7.6% 6% 6.6% Operating companies supported by Transmission Hol

  29. Slide 29: Current Rate Case Activity

    Current Rate Case Activity APCo – Virginia I&M – Indiana Docket # PUR-2020-00015 Docket # 45576 Filing Date 3/31/2020 Filing Date 7/1/2021 Requested Rate Base $2.5B Requested Rate Base $5.2B Requested ROE 9.9% Requested ROE 10.0% Cap Structure 50%D / 50%E Cap Structure 49.1%D / 50.9%E $65M $104M Gro

  30. Slide 30: Current Rate Case Activity

    Current Rate Case Activity SWEPCO – Arkansas1 SWEPCO – Louisiana SWEPCO – Texas Docket # 21-070-U Docket # U-35441 Docket # 51415 Filing Date 7/23/2021 Filing Date 12/18/2020 Filing Date 10/13/2020 Requested Rate Base $1.56B Requested Rate Base $2.1B Requested Rate Base $2.0B Requested ROE 10.35% Re

  31. Slide 31: Current Regulated Renewables Opportunity

    Current Regulated Renewables Opportunity Wind Additions Solar Additions Included in Included in 2022-2030 2022-2026 2022-2030 2022-2026 Company Company (MW) Capital Plan (MW) Capital Plan (MW / billions) (MW / billions) APCo 1,504 803 $ 1.3 APCo 629 292 $ 0.5 I&M 800 400 $ 0.6 I&M 1,300 195 $ 0.4 PS

  32. Slide 32: North Central Wind Overview

    North Central Wind Overview PSO and SWEPCO Regulated Wind Investment Total Rate Base Investment ~$2 billion (1,484 MW) Estimated Commercial Name MW Investment Date Apr. 14, 2021 Sundance 199 $300M (100% PTC) North Central Wind North Central Wind – Maverick Sept. 10, 2021 Maverick 287 $400M (80% PTC)

  33. Slide 33: Appendix – Financial

    APPENDIX — FINANCIAL AMERICAN eo [ae

  34. Slide 34: 2022-2026 Capital Forecast of $38B

    2022-2026 Capital Forecast of $38B Regulated IT/Workplace Services Fossil/Hydro Generation $2.5B • 7% $1.0B • 3% Nuclear Generation Regulated Environmental Generation $0.3B • 1% $0.6B • 1% Regulated New Generation $0.4B • 1% Generation & Marketing $0.4B • 1% The ability to quickly redeploy Distribut

  35. Slide 35: 2022-2026 Cash Flows and Financial Metrics

    2022-2026 Cash Flows and Financial Metrics Cash proceeds related to sale of contracted renewable assets within the unregulated business are not included below. $ in millions 2022E 2023E 2024E 2025E 2026E Cash from Operations $ 5,600 $ 6,100 $ 6,400 $ 6,900 $ 7,400 Net Cash Proceeds from Sale of Kent

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