American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q3 2017 Earnings Presentation
34 slides from American Electric Power's earnings presentation, Oct 26, 2017
Slide 1: 3rd Quarter 2017 Earnings Release Presentation
3rd Quarter 2017 Earnings Release Presentation October 26, 2017
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 2017 Highlights
3rd Quarter 2017 Highlights 3rd Quarter 2017 Company Update Earnings Update Delivered GAAP earnings of $1.11 per share and operating earnings of $1.10 per share for the third quarter 2017 Delivered GAAP earnings of $3.07 per share and operating earnings of $2.82 per share for YTD September 2017
Slide 5: Regulated Returns
Regulated Returns Twelve Months Ended 9/30/2017 Earned ROE’s (non-GAAP Operating Earnings) AEP OH Trans 12.6% 12.7% AEP OH * AEP TX * 11.1% 10.3% APCo I&M* 8.4% 8.4% PSO* SWEPCO* 6.1% 5.9% KPCo* 4.5% Regulated Operations ROE of 9.2% as of September 30, 2017 *AEP Ohio adjusted for SEET items. Base ra
Slide 6: 3rd Quarter Operating Earnings Segment Detail
3rd Quarter Operating Earnings Segment Detail $0.03 ($0.07) Weather $0.03 $ (0.11) Investment Gain $ 0.02 Rate True-Ups $ (0.01) Weather $ (0.01) Sold Assets $ (0.13) O&M Rate Changes $ 0.02 $ 0.01 Normal Load $ 0.02 Held Assets $ 0.02 Other Normal Load $ (0.01) $ 0.01 O&M $ 0.02 Renewables $ 0.01 D
Slide 7: 2017 YTD Operating Earnings Segment Detail
2017 YTD Operating Earnings Segment Detail $0.03 ($0.07) Weather $0.03 $ (0.22) FERC 205 $ 0.09 Investment Gain $ 0.02 Rate Changes $ 0.07 Investments 0.06 Rate True-Ups $ (0.09) Rate Changes $ 0.10 JV's $ (0.01) Sold Assets $ (0.29) Normal Load $ (0.01) Reg Prov - OH $ (0.03) Held Assets $ 0.08 Dep
Slide 8: Weather Normalized Billed Retail Load Trends
Weather Normalized Billed Retail Load Trends Note: Load figures are provided on a billed basis. Charts reflect connected load and exclude firm wholesale and Buckeye Power backup load. See Appendix for load figures on a billed plus accrued basis. 8
Slide 9: Industrial Growth Drivers
Industrial Growth Drivers Source: Moody’s analytics and company records 9
Slide 10: Economic Data – AEP Service Territory
Economic Data – AEP Service Territory Source – Moody’s Analytics 10
Slide 11: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO to Total Debt 17.4% 15%-20% Represents the trailing 12 months as of 9/30/2017 See Appendix for reconciliation to GAAP Liquidity Summary (unaudited) 9/30/2017 Actual ($ in millions) Amount Maturity Revolv
Slide 12: Summary
Summary Narrowed 2017 operating earnings guidance range to $3.55 - $3.68 per share Primary driver of fourth quarter 2017 will be significantly favorable year over year O&M Reaffirming 2018 operating earnings guidance range of $3.75 - $3.95 per share and 5% - 7% growth rate EEI expectations:
Slide 13: Appendix
Appendix 13
Slide 14: 3rd Quarter Reconciliation of GAAP to Operating Earnings
3rd Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share Q3-16 Q3-17 Change Q3-16 Q3-17 Change Reported GAAP Earnings (Loss) ($766) $545 $1,311 ($1.56) $1.11 $2.67 Non Operating Items: Mark-to-Market Impact of Commodity 2 - (2) - - - Hedging Activities (a) Disposition o
Slide 15: YTD September Reconciliation of GAAP to Operating Earnings
YTD September Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share YTD-16 YTD-17 Change YTD-16 YTD-17 Change Reported GAAP Earnings (Loss) $238 $1,512 $1,274 $0.48 $3.07 $2.59 Non Operating Items: Mark-to-Market Impact of Commodity (2) 3 5 - 0.01 0.01 Hedging Activities (a) Gai
Slide 16: Vertically Integrated Utilities – 3rd Quarter Summary
Vertically Integrated Utilities 3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16 Q3-16 Q3-17 Rate changes: $18M of rate decreases at PSO in $ millions (except EPS) addition to $5M of wholesale rate decreases Operating Revenues $2,556 $2,482 driven by formula rate true-ups partially offset Operatin
Slide 17: Vertically Integrated Utilities – YTD Summary
Vertically Integrated Utilities YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 Rate changes: $65M of rate increases across $ millions (except EPS) multiple jurisdictions offset by $14M of rate Operating Revenues $6,928 $6,893 decreases at PSO, $42M of wholesale rate Operating Expenses: d
Slide 18: Transmission & Distribution Utilities – 3rd Quarter Summary
Transmission & Distribution Utilities 3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16 Q3-16 Q3-17 Rate changes: $16M favorable primarily from $ millions (except EPS) the Texas Distribution Cost Recovery Factor and Operating Revenues $1,276 $1,173 the Ohio DIR Operating Expenses: Weather: $7M un
Slide 19: Transmission & Distribution Utilities – YTD Summary
Transmission & Distribution Utilities YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 Rate changes: $79M primarily from the Texas $ millions (except EPS) Distribution Cost Recovery Factor and the Ohio DIR and RSR Operating Revenues $3,468 $3,313 Operating Expenses: OH Regulatory Provisi
Slide 20: AEP Transmission Holdco – 3rd Quarter Summary
AEP Transmission Holdco 3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16 Q3-16 Q3-17 $21M favorable Operating Income primarily $ millions (except EPS) due to increased revenues and expenses Operating Revenues $132 $179 driven by increased capital investment in the Operating Expenses: wholly owned
Slide 21: AEP Transmission Holdco – YTD Summary
AEP Transmission Holdco YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 $132M favorable Operating Income primarily $ millions (except EPS) due to the impact of the 205/206 filings and Operating Revenues $383 $582 also due to increased revenues and expenses Operating Expenses: driven by in
Slide 22: Generation & Marketing – 3rd Quarter Summary
Generation & Marketing 3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16 Q3-16 Q3-17 $ millions (except EPS) Generation decreased 8,843 GWh (78%) Q3-17 vs. Q3-16 primarily due to sale of plants in Operating Revenues $863 $466 January Operating Expenses: Energy Costs (567) (355) AEP Dayton ATC liq
Slide 23: Generation & Marketing – YTD Summary
Generation & Marketing YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 Generation decreased 19,969 GWh (68%) YTD- $ millions (except EPS) 17 vs. YTD-16 primarily due to sale of plants in Operating Revenues $2,289 $1,472 January Operating Expenses: AEP Dayton ATC liquidations up 6%: Ener
Slide 24: 3rd Quarter Retail Rate Performance
3rd Quarter Retail Rate Performance Vertically Integrated Utilities Transmission & Distribution Utilities Rate Changes*, net of Rate Changes, net of offsets (in millions) offsets (in millions) Q3-17 vs. Q3-16 Q3-17 vs. Q3-16 APCo/WPCo - AEP Ohio $2 I&M ($2) AEP Texas $14 KPCo - TOTAL $16 PSO ($18) S
Slide 25: 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-17 vs. YTD-16 YTD-17 vs. YTD-16 APCo/WPCo ($8) AEP Ohio $39 I&M ($22) AEP Texas $40 KPCo $4 TOTAL $79 PSO ($14)
Slide 26: 3rd Quarter Retail Load Performance
3rd Quarter Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) Q3-17 vs. Q3-16 Q3-17 vs. Q3-16 APCo/WPCo 0.5% AEP Ohio -1.2% I&M -1.4% AEP Texas -0.6% KPCo -0.1% TOTAL -0.9% PSO -0.7% SWEPC
Slide 27: YTD Retail Load Performance
YTD Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) YTD-17 vs. YTD-16 YTD-17 vs. YTD-16 APCo/WPCo -0.8% AEP Ohio -0.1% I&M -1.2% AEP Texas 0.8% KPCo -1.8% TOTAL 0.3% PSO 0.4% SWEPCO 0.4%
Slide 28: Normalized Retail Load Trends (Billed & Accrued)
Normalized Retail Load Trends (Billed & Accrued) Note: Load figures are provided on a billed and accrued basis. Charts reflect connected load and exclude firm wholesale and Buckeye Power backup load. 28
Slide 29: 3rd Quarter Weather Impact
3rd Quarter Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) Q3-17 vs. Q3-17 vs. Q3-17 vs. Q3-17 vs. Q3-16 Normal Q3-16 Normal APCo/WPCo ($25) - AEP Ohio - - I&M ($18) ($6) AEP Texas ($7) $1 KPCo ($7) ($2)
Slide 30: YTD Weather Impact
YTD Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) Q3-17 vs. Q3-17 vs. Q3-17 vs. Q3-17 vs. Q3-16 Normal Q3-16 Normal APCo/WPCo ($72) ($44) AEP Ohio - - I&M ($29) ($22) AEP Texas ($2) $1 KPCo ($17) ($12) T
Slide 31: Weather Impact 2017 vs 2016
Weather Impact 2017 vs 2016 For the quarter, weather was unfavorable to normal by $22M which is $87M worse than last year. Year to date the impact of weather is 31 unfavorable to normal by $116M which is approximately $166M worse than last year.
Slide 32: Wind Catcher Procedural Schedules
Wind Catcher Procedural Schedules 2,000 MW wind farm and dedicated ~350-mile 765kV gen-tie line ~$4.5 billion: $2.9B-Wind; $1.6B gen-tie SWEPCO (70%) & PSO (30%) Target Completion: Q4 2020 Total Customer Savings net of costs (over 25-years): $7.6B (including PTC); $2.5 billion over first 1
Slide 33: Pending Base Rate Cases Summary
Pending Base Rate Cases Summary I&M – Indiana PSO – Oklahoma Requested Increase: $263M, ($89M increased D&A) Requested Increase: $156M Requested ROE: 10.6% Requested ROE: 10.0% Key dates: Key dates: OUCC/Intervenors 11/07/2017 Hearing 10/30/2017 I&M Rebuttal 12/06/2017 ALJ report 12/11/2017 Evidenti
Slide 34: GAAP to Non-GAAP Reconciliations & Ratios
GAAP to Non-GAAP Reconciliations & Ratios Adjusted FFO Calculation Adjusted Total Debt Calculation 12 Months As of Ended 9/30/17 9/30/17 $ millions $ millions Cash Flow From Operations $4,229 GAAP Total Debt (incl. current maturities) $21,781 Adjustments: Less: Changes in Working Capital (281) Secur
American Electric Power Company — Q3 2017 Earnings Presentation on 6ix