American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q3 2021 Earnings Presentation
40 slides from American Electric Power's earnings presentation, Oct 28, 2021
Slide 1: 3rd Quarter 2021 Earnings Release Presentation
3RD QUARTER 2021 EARNINGS RELEASE PRESENTATION October 28, 2021
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: 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
Slide 4: 3rd Quarter 2021 Business Update
3rd Quarter 2021 Business Update Narrow 2021 operating earnings guidance range to $4.65-$4.75, raising midpoint to $4.70 Reaffirm 5%-7% long-term growth rate Dividend growth in line with long-term growth rate and within targeted payout ratio of 60%-70% Sale of Kentucky operations to Liberty
Slide 5: Regulated Returns
Regulated Returns Twelve Months Ended 9/30/2021 Earned ROE’s Authorized Equity Layers (non-GAAP operating earnings, not weather normalized) (in whole percentages) 14% Operating 9/30/17 9/30/21 Improvement Company 12% AEP Ohio2 48% 54% 6% 11.2% 10.3% APCo – VA 43% 50% 7% 10% 9.3% APCo – WV 47% 50% 3%
Slide 6: 3rd Quarter 2021 Financial Update
3rd Quarter 2021 Financial Update 3RD QUARTER 2021 Delivered GAAP earnings of $1.59 per $1.59 share or $796M for the third quarter of $1.51 2021 $1.47 $1.43 Delivered operating earnings of $1.43 per 2020 2021 2020 2021 share or $717M for the third quarter of GAAP EPS OPERATING EPS 2021 2020 2021
Slide 7: 3rd Quarter Operating Earnings Segment Detail
3rd Quarter Operating Earnings Segment Detail 0.05 (0.09) $1.47 0.02 PER SHARE 0.00 (0.02) $1.43 PER SHARE Rate Changes $0.06 Rate Changes $0.01 Invest Growth $0.05 Retail $(0.02) Investment Gain $(0.03) Weather $0.04 Normal Load $(0.01) Land Sales $(0.03) Interest $(0.01) Normal Load $(0.02) Trans
Slide 8: YTD Operating Earnings Segment Detail
YTD Operating Earnings Segment Detail 0.27 (0.11) $3.76 0.06 PER SHARE $3.56 PER SHARE (0.03) 0.01 Rate Changes $0.15 Rate Changes $0.07 Invest Growth $0.15 Wholesale $(0.03) O&M $(0.04) Weather $0.13 Weather $0.01 Annual True-Up $0.10 Retail $(0.02) Investment Gain $0.06 Normal Load $(0.05) Normal
Slide 9: 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% 5.2% 5.0% 4.3% 5% 3.8% 5% 3.7% 1.5% 0% 0% -0.9% -1.1% -0.9% -1.6% -0.5% -5% -1.6% -5% -2.1% -3.1% -4.6% -10% -10
Slide 10: AEP Retail Load Recovery
AEP Retail Load Recovery YTD Normalized Load Comparison 5% 4% 4.3% 4.2% 3% Growth vs. Prior Year 2% 2.3% 1% 1.6% 0% -0.9% -0.8% -0.7% -1% -2% vs YTD 2020 -3.0% -3% vs YTD 2019 -4% Residential Commercial Industrial Total Retail AEP load is up in comparison to 2020 and in total approaching pre-pandemi
Slide 11: Capitalization & Liquidity
Capitalization & Liquidity Total Debt/Total Capitalization Credit Statistics 1 62.5% 62.6% 62.2% 61.5% 59.8% 61.8% Moody’s GAAP 55.9% 55.5% 57.0% FFO to Total Debt 10.2% 10.1% Adj FFO to Total Debt1 13.6% 13.5% Long-Term Target Low to Mid Teens Represents the trailing 12 months as of 9/30/2021 See A
Slide 12: Summary
Summary Narrow 2021 operating earnings guidance range to $4.65-$4.75, raising midpoint to $4.70 Reaffirm 5%-7% long-term growth rate Sale of Kentucky operations Avoid $1.4 billion equity issuance in original 2022 forecast $0.01-$0.02 accretive to 2022 ongoing earnings Preserve credit met
Slide 13: Appendix
APPENDIX 13
Slide 14: 3rd Quarter Reconciliation of GAAP to Operating Earnings
3rd Quarter Reconciliation of GAAP to Operating Earnings $ in millions Earnings Per Share Q3-20 Q3-21 Change Q3-20 Q3-21 Change Reported GAAP Earnings $ 749 $ 796 $ 47 $ 1.51 $ 1.59 $ 0.08 Non Operating Items: Mark-to-Market Impact of (7) (79) (72) (0.01) (0.16) (0.15) Commodity Hedging Activities1
Slide 15: YTD Reconciliation of GAAP to Operating Earnings
YTD Reconciliation of GAAP to Operating Earnings $ in millions Earnings Per Share YTD-20 YTD-21 Change YTD-20 YTD-21 Change Reported GAAP Earnings $ 1,765 $ 1,949 $ 184 $ 3.56 $ 3.90 $ 0.34 Non Operating Items: Mark-to-Market Impact of (11) (91) (80) (0.02) (0.18) (0.16) Commodity Hedging Activities
Slide 16: Vertically Integrated Utilities - 3rd Quarter
Vertically Integrated Utilities 3rd Quarter Summary Key Drivers: Q3-21 vs. Q3-20 $ in millions (except EPS) Q3-20 Q3-21 Rate Changes: $40M favorable vs. prior year primarily from rate increases at KPCo, I&M, PSO Operating Revenues $ 2,435 $ 2,759 and SWEPCO Operating Expenses: Weather: $24M favo
Slide 17: Vertically Integrated Utilities - YTD
Vertically Integrated Utilities YTD Summary Key Drivers: YTD-21 vs. YTD-20 $ in millions (except EPS) YTD-20 YTD-21 Rate Changes: $95M favorable vs. prior year primarily from rate increases at KPCo, I&M, PSO Operating Revenues $ 6,754 $ 7,557 and SWEPCO and a formula rate true-up at I&M Operating
Slide 18: Transmission and Distribution Utilities - 3rd Quarter
Transmission and Distribution Utilities 3rd Quarter Summary Key Drivers: Q3-21 vs. Q3-20 $ in millions (except EPS) Q3-20 Q3-21 Rate Changes: $6M favorable vs. prior Operating Revenues $ 1,165 $ 1,200 year primarily from the Texas DCRF, Ohio DIR and gridSMART, partially offset by the Operating Exp
Slide 19: Transmission and Distribution Utilities - YTD
Transmission and Distribution Utilities YTD Summary Key Drivers: YTD-21 vs. YTD-20 $ in millions (except EPS) YTD-20 YTD-21 Rate Changes: $43M favorable vs. prior Operating Revenues $ 3,307 $ 3,392 year primarily from the Texas DCRF, Ohio DIR and gridSMART, partially offset by the Operating Expens
Slide 20: AEP Transmission Holdco - 3rd Quarter
AEP Transmission Holdco 3rd Quarter Summary Key Drivers: Q3-21 vs. Q3-20 $ in millions (except EPS) Q3-20 Q3-21 $27M favorable Operating Earnings vs. Operating Revenues $ 318 $ 392 prior year primarily due to increased transmission investment Operating Expenses: Operations and Maintenance (28) (40
Slide 21: AEP Transmission Holdco - YTD
AEP Transmission Holdco YTD Summary Key Drivers: YTD-21 vs. YTD-20 $ in millions (except EPS) YTD-20 YTD-21 $134M favorable Operating Earnings vs. Operating Revenues $ 878 $ 1,147 prior year primarily due to increased transmission investment and the annual Operating Expenses: true-up Operations an
Slide 22: Generation & Marketing - 3rd Quarter
Generation & Marketing 3rd Quarter Summary Key Drivers: Q3-21 vs. Q3-20 $ in millions (except EPS) Q3-20 Q3-21 Generation increased 82 GWh or 8% Q3- Operating Revenues $ 482 $ 521 21 vs. Q3-20 primarily due to higher market prices in PJM which drove Operating Expenses: increased generation at Card
Slide 23: Generation & Marketing - YTD
Generation & Marketing YTD Summary Key Drivers: YTD-21 vs. YTD-20 $ in millions (except EPS) YTD-20 YTD-21 Generation increased 846 GWh or 38% Operating Revenues $ 1,292 $ 1,577 YTD-21 vs. YTD-20 primarily due to higher market prices in PJM which drove Operating Expenses: increased generation at C
Slide 24: 3rd Quarter Rate Performance
3rd Quarter Rate Performance Vertically Integrated Utilities Transmission and Distribution Utilities Rate Changes, net of Rate Changes, net of offsets ($ in millions) offsets ($ in millions) Q3-21 vs. Q3-20 Q3-21 vs. Q3-20 APCo/WPCo $2 AEP Ohio $(4) I&M $24 AEP Texas $10 KPCo $9 Total $6 PSO $2 SWEP
Slide 25: YTD Rate Performance
YTD Rate Performance Vertically Integrated Utilities Transmission and Distribution Utilities Rate Changes, net of Rate Changes, net of offsets ($ in millions) offsets ($ in millions) YTD-21 vs. YTD-20 YTD-21 vs. YTD-20 APCo/WPCo - AEP Ohio - I&M $50 AEP Texas $43 KPCo $27 Total $43 PSO $9 SWEPCO $9
Slide 26: 3rd Quarter Weather Impact
3rd Quarter Weather Impact Vertically Integrated Utilities Transmission and Distribution Utilities Weather Impact Weather Impact ($ in millions) ($ in millions) Q3-21 vs. Q3-21 vs. Q3-21 vs. Q3-21 vs. Q3-20 Normal Q3-20 Normal APCo/WPCo $(4) $13 AEP Ohio - - I&M $4 $11 AEP Texas $(3) $(4) KPCo $(1)
Slide 27: YTD Weather Impact
YTD Weather Impact Vertically Integrated Utilities Transmission and Distribution Utilities Weather Impact Weather Impact ($ in millions) ($ in millions) YTD-21 vs. YTD-21 vs. YTD-21 vs. YTD-21 vs. YTD-20 Normal YTD-20 Normal APCo/WPCo $29 $12 AEP Ohio - - I&M $14 $15 AEP Texas $10 $4 KPCo $5 $1 Tota
Slide 28: 3rd Quarter Retail Load Performance
3rd Quarter Retail Load Performance Vertically Integrated Utilities Transmission and Distribution Utilities Retail Load1 Retail Load1 (weather normalized) (weather normalized) Q3-21 vs. Q3-20 Q3-21 vs. Q3-20 APCo/WPCo 2.9% AEP Ohio 4.7% I&M 0.3% AEP Texas 4.9% KPCo 2.2% Total 4.8% PSO 3.3% SWEPCO (1
Slide 29: YTD Retail Load Performance
YTD Retail Load Performance Vertically Integrated Utilities Transmission and Distribution Utilities Retail Load1 Retail Load1 (weather normalized) (weather normalized) YTD-21 vs. YTD-20 YTD-21 vs. YTD-20 APCo/WPCo 2.2% AEP Ohio 4.8% I&M 2.0% AEP Texas 1.9% KPCo (0.1)% Total 3.6% PSO 2.2% SWEPCO (1.3
Slide 30: Industrial Sales Growth
Industrial Sales Growth AEP Industrial GWh Growth 20% $75 15.7% 9.5% 9.7% 10% 6.7% 6.0% Growth vs Prior Year 4.9% 5.4% $50 1.3% 0% -3.3% -3.3% -5.0% -4.7% -0.9% -6.6% -5.5% $25 -10% -8.7% Oil & Gas Related Sectors -9.6% Non-Oil & Gas Related Sectors Oil Price -16.8% -20% $- Q3-19 Q4-19 Q1-20 Q2-20 Q
Slide 31: Economic Data – AEP Service Territory
Economic Data – AEP Service Territory GDP Growth by Quarter Employment Growth by Quarter 12% 12% 12.2% 6% Growth vs Prior Year Growth vs Prior Year 6% 7.2% 6.4% 8.5% 5.2% 3.7% 4.5% 1.6% 0.5% 1.7% 0% 0% -1.3% -2.3% -2.0% -2.9% -4.2% -4.8% -6.0% -5.6% -6.0% -6% -6% -6.8% US AEP US AEP -12% -12% Q3-20
Slide 32: Current Rate Case Activity
Current Rate Case Activity AEP Ohio APCo - Virginia KPCo Docket # 20-0585-EL-AIR Docket # PUR-2020-00015 Docket # 2020-00174 Filing Date 6/1/2020 Filing Date 3/31/2020 Filing Date 6/29/2020 Requested Revenue Requested Rate Base $2.5B Requested Rate Base $1.4B $402M Increase Requested ROE 10% Request
Slide 33: Current Rate Case Activity
Current Rate Case Activity I&M - Indiana PSO Docket # 45576 Docket # 202100055 Filing Date 7/1/2021 Filing Date 4/30/2021 Requested Rate Base $5.2B Requested Rate Base $3.293B Requested ROE 10.0% Requested ROE 10.0% Cap Structure 49.1%D / 50.9%E Cap Structure 47.0%D / 53.0%E $104M $172M1 Gross Reven
Slide 34: 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
Slide 35: North Central Wind Overview
North Central Wind Overview PSO AND SWEPCO REGULATED WIND INVESTMENT Total Rate Base Investment ~$2 billion (1,485 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)
Slide 36: Future Forward - Advancing Towards a Clean Energy Future
Future Forward - Advancing Towards a Clean Energy Future Projected Regulated Resource Additions SOLAR ADDITIONS (MW) Prior Total Incremental TOTAL PROJECTED Company 2021 – 2025 2026 – 2030 Total Solar (2020 EEI) Opportunity RESOURCE ADDITIONS (MW) APCo 210 450 660 710 (50) I&M 450 450 900 1,300 (400
Slide 37: 2021 - 2025 Capital Forecast of $37B
2021 - 2025 Capital Forecast of $37B 2021-2025 Capital Forecast Nuclear Generation IT/Workplace Services Regulated Fossil/Hydro Generation $0.4B • 1% $2.6B • 7% $0.9B • 2% Regulated Environmental Generation $0.9B • 2% 100% of capital allocated to Regulated New Generation regulated businesses and $0.
Slide 38: Kentucky Operations Transaction Overview
Kentucky Operations Transaction Overview Sale of 100% of stock of Kentucky Power Company and AEP Kentucky Transco Transaction Description Buyer: Liberty Utilities Co., a wholly owned subsidiary of Algonquin Power & Utilities Corp. Approximately 165,000 customers Approximately 10,000 distribu
Slide 39: Cash Flows and Financial Metrics
Cash Flows and Financial Metrics Cash flow has not yet been updated to include the sale of Kentucky operations announced on 10/26/21. Details will be provided at Nov EEI to reflect impacts, including use of proceeds and elimination of previously planned 2022 equity needs. $ in millions 2021E 2022E 2
Slide 40: 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 9/30/2021 9/30/2021 (in millions) (in millions) Cash Flow from Operations $ 4,990 GAAP Total Debt $ 35,932 (incl. current maturities) Adjustments: Less: Changes in Working Capit
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