American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q4 2023 Earnings Presentation
36 slides from American Electric Power's earnings presentation, Feb 27, 2024
Slide 1: 4th Quarter 2023 Earnings Release Presentation
th “Safe Harbor” 4 Quarter 2023 Earnings Statement Under the Release Presentation on Private Securities Litigation Reform February 27, 2024 Act of 1995 Published on February 26, 2024 Darcy Reese, Vice President Investor Relations 614-716-2614 dlreese@aep.com Annie Pribisko, Director Investor Relatio
Slide 2: 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 “Safe Harbor” Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influence
Slide 3: Non-GAAP Financial Measures
AEP reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). AEP Non-GAAP Financial supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including operating earnin
Slide 4: AEP Is a Pure Play Regulated Utility
AEP Is a Pure $ Play Regulated Utility 40K TRANSMISSION MILES 97B TOTAL ASSETS 17,000 EMPLOYEES Nation’s largest electric Strong balance sheet Across the system transmission system $ 225K DISTRIBUTION MILES 66B RATE BASE 5.6M CUSTOMERS One of the largest distribution Strong rate base growth Througho
Slide 5: AEP Is Powering the Future
AEP Is Powering the Future One of the Largest Utilities in the U.S. by Rate Base and Market Cap Delivering Consistent, Strong Operating Attractive Transmission Leading the Clean Energy Actively Managing the Business Performance and Distribution Assets Transition and Portfolio • Stable, resilient bus
Slide 6: 2023 Highlights
2023 Highlights Financial Performance Legislative and Regulatory Outcomes • GAAP earnings of $0.64 per share for Q4-23 and $4.26 for 2023 • Securitization legislation passed in Kentucky • Operating earnings of $1.23 per share for Q4-23 and $5.25 for 2023 • Bi-annual Distribution Cost Recovery Factor
Slide 7: 2024 Focus
2024 Focus Financial Performance Regulatory Initiatives and Updates • Reaffirm 2024 operating earnings guidance range of $5.53-$5.73, midpoint of $5.63 • Build upon AEP talent and strengthen relationships at federal and local • Reaffirm 6%-7% long-term operating earnings growth with dividend growth
Slide 8: Asset Sales
Asset Sales • On 12/22/23, AEP signed an agreement to sell 50% of NMRD to Exus North American Holdings, LLC. AEP and PNM Resources plan Sell New Mexico Renewable to sell the portfolio of 15 solar projects totaling 625 MW Development (NMRD), a joint • Purchase price of approximately $230M subject to
Slide 9: 4th Quarter 2023 Financial Update
4th Quarter 2023 4th QUARTER 2023 $1.23 $1.05 Financial Update • Delivered GAAP earnings of $0.64 $0.75 per share or $336M for the fourth $0.64 quarter of 2023 AEP delivered solid fourth quarter and 2023 earnings; • Delivered operating earnings of 2022 2023 2022 2023 successfully managed the $1.23 p
Slide 10: YTD 2023 Operating Earnings
$5.25 YTD 2023 0.09 (0.09) Per Share 0.11 Operating $5.09 0.14 Earnings Per Share (0.09) Segment Detail Rate Changes $0.321 Rate Changes $0.10 Invest Growth $0.09 Renewables $0.04 Investment Gain $0.05 Weather $(0.28) Weather $(0.09) Income Taxes $0.05 Generation $(0.03) Net Interest $(0.20) Normal
Slide 11: Weather Normalized Billed Retail Load Trends
Weather Normalized AEP Normalized Residential GWh Sales AEP Normalized Commercial GWh Sales % Change vs. Prior Year % Change vs. Prior Year Billed Retail Load 10% 10% 7.8% 7.7% 7.5% 8.2% 7.8% 7.6% Trends 5% 5% 5.4% 4.5% 4.1% 0.6% 0.1% 0% 0% -0.8% -0.7% -0.4% -0.1% -1.4% -0.9% -2.4% -5% -5% Load in A
Slide 12: Capitalization and Liquidity
Total Debt/Total Capitalization 62.1% 62.9% 62.4% 63.0% Capitalization FFO to Total Debt (Trailing 12 Months)1 57.0% 59.8% 61.8% and Liquidity 12/31/2023 13.2% Targeted Range 14%-15% 12/31/2023 FFO/Debt was 13.2% 2018 2019 2020 2021 2022 Q3-23 Q4-23 Short/Long-Term Debt Securitization Debt Liquidity
Slide 13: Summary of Stakeholder Commitments
Summary of Stakeholder Commitments 6%-7% Annual Dividend Growth In-line with Strong Balance Sheet Operating Earnings Earnings Growth and Targeted with a Target FFO/Debt Growth Payout Ratio of 60%-70% of 14%-15% ESG Goal of Net Customer Care: Commitment to Active Management of the AEP Identification
Slide 14: Appendix: Q4-23 Performance
Appendix Q4-23 Performance 4th Quarter 2023 Earnings Release Presentation 14
Slide 15: 4th Quarter 2023 Operating Earnings
4th Quarter 2023 0.02 $1.23 0.14 (0.06) 0.04 Per Share Operating Earnings Segment Detail $1.05 0.04 Per Share Rate Changes $0.10 Rate Changes $0.02 Invest Growth $0.02 Generation $(0.01) Investment Gain $0.04 Key Drivers Q4-23 vs. Q4-22 Weather $(0.04) Weather $(0.02) 2023 True-Up $(0.06) Retail $0.
Slide 16: 4th Quarter Reconciliation of GAAP to Operating Earnings
$ in millions Earnings Per Share 4th Quarter Q4-22 Q4-23 Change Q4-22 Q4-23 Change Reported GAAP Earnings $ 384 $ 336 $ (48) $ 0.75 $ 0.64 $ (0.11) Reconciliation of GAAP Non-Operating Items: to Operating Earnings West Virginia Fuel Disallowance1 - 181 181 - 0.35 0.35 Weighted average number of shar
Slide 17: YTD Reconciliation of GAAP to Operating Earnings
$ in millions Earnings Per Share YTD-22 YTD-23 Change YTD-22 YTD-23 Change Reported GAAP Earnings $ 2,307 $ 2,208 $ (99) $ 4.51 $ 4.26 $ (0.25) YTD Reconciliation of Non-Operating Items: Mark-to-Market Impact of Commodity GAAP to Operating Hedging Activities4 (77) 228 305 (0.15) 0.44 0.59 Earnings W
Slide 18: Vertically Integrated Utilities 4th Quarter Performance
Vertically Integrated Utilities 4th Quarter Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) Q4-23 vs. Q4-23 vs. Q4-23 vs. Q4-22 Q4-23 vs. Q4-22 Q4-22 Normal APCo/WPCo 0.3
Slide 19: Vertically Integrated Utilities YTD Performance
Vertically Integrated Utilities YTD Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) YTD-23 vs. YTD-23 vs. YTD-23 vs. YTD-22 YTD-23 vs. YTD-22 YTD-22 Normal APCo/WPCo (1.0
Slide 20: Transmission and Distribution Utilities 4th Quarter Performance
Transmission and Distribution Utilities 4th Quarter Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) Q4-23 vs. Q4-23 vs. Q4-22 Normal Q4-23 vs. Q4-22 Q4-23 vs. Q4-22 AEP O
Slide 21: Transmission and Distribution Utilities YTD Performance
Transmission and Distribution Utilities YTD Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) YTD-23 vs. YTD-23 vs. YTD-22 Normal YTD-23 vs. YTD-22 YTD-23 vs. YTD-22 AEP Oh
Slide 22: FFO to Total Debt
FFO to Total Debt1 FFO Calculation (in millions) 12 Months Ended 12/31/2023 Cash Flow from Operations (GAAP) $ 5,012 Changes in Working Capital 703 Operating Lease Depreciation 124 FFO to Total Debt = 13.2% Capitalized Interest (117) $5,737M FFO / $43,482M Adjusted Total Debt Junior Subordinated Deb
Slide 23: Appendix: Financial Forecast
Appendix Financial Forecast 4th Quarter 2023 Earnings Release Presentation 23
Slide 24: 2024 Operating Earnings Guidance
0.08 0.20 (0.34) 2024 Operating $5.63/sh $5.25/sh 0.38 0.06 Earnings 2023 Operating EPS 2024 EPS Midpoint Guidance Rate Changes $0.56 Rate Changes $0.15 Investment/Rate $0.08 Renewables $(0.10) Net Interest $(0.06) Base Growth Trans Revenue $0.06 Trans Revenue $0.12 Generation $(0.05) O&M $0.11 Reta
Slide 25: 2024-2028 Capital Forecast of $43B
Regulated New Other Generation Generation $1.2B • 3% Nuclear $0.5B • 1% 2024-2028 Capital Generation Corporate Forecast of $43B Regulated $0.4B • 1% $3.5B • 8% 100% of capital allocated to Environmental Generation regulated businesses $0.3B • 1% The ability to quickly redeploy transmission and distr
Slide 26: 2024-2028 Cash Flows and Financial Metrics
$ in millions 2024E 2025E 2026E 2027E 2028E 2024-2028 Cash Cash from Operations Net Cash Proceeds from Sale of $ 6,700 $ 6,800 $ 7,700 $ 8,200 $8,600 Flows and Financial Assets 7001 - - - - Capital Expenditures: Metrics Capital and JV Equity Contributions (7,000) (6,200) (6,400) (6,400) (7,200) Rene
Slide 27: Total Non-fuel O&M
2024E Inflation Inflation ~5% Avg. Gap of ~$1.1B 2022A – 2024E Inflation ~2% Avg. $5B 2014A – 2021A Continuous Focus on O&M Efficiency $4B Total Non-fuel O&M O&M discipline over time amid rising costs $3B and growing asset base $3.0B $3.1B $2.6B $2.6B helps keep customer $2.9B $3.1B $3.1B $3.2B $2.5
Slide 28: Appendix: Regulatory, Renewables and Economic Development
Appendix Regulatory, Renewables and Economic Development 4th Quarter 2023 Earnings Release Presentation 28
Slide 29: Regulated Returns
Twelve Months Ended 12/31/2023 Earned ROE’s – Total Regulated ROE was 8.8% Regulated Returns (non-GAAP operating earnings, not weather normalized) 14% Regulated Operations ROE 12% 9.2% as of 12/31/2023 of 8.8%; 10.7% depressed by approximately 10% 10.3% 9.6% 40 bps on mild weather 8.8% 8.4% 8.1% 8%
Slide 30: Current Rate Case Activity
Current Rate Case Activity APCo – Virginia I&M – Indiana I&M - Michigan Docket # PUR-2023-00002 Docket # 45933 Docket # U-21461 Filing Date 3/31/2023 Filing Date 8/9/2023 Filing Date 9/15/2023 Continued focus on Requested Rate Base $2.9B Requested Rate Base $5.4B Requested Rate Base $1.3B regulatory
Slide 31: Current Rate Case Activity
Current Rate Case Activity KPCo – Kentucky1 PSO – Oklahoma (2022 Case) PSO – Oklahoma (2024 Case) Docket # 2023-00159 Docket # PUD 2022-000093 Docket # PUD 2023-000086 Continued focus on Filing Date 6/29/2023 Filing Date 11/22/2022 Filing Date 1/31/2024 regulatory execution Requested Rate Base $1.8B
Slide 32: Resource Plans Are Aligned with Capacity Needs
Resource Plans Are IRP FILINGS Aligned with Capacity 2023 | 2024 Needs KY – Mar 2023 OK – Oct 2023 LA – Feb 2024 VA VCEA – OK – Oct 2024 IN – Nov 2024 AR – Dec 2024 VA VCEA – Mar 2023 Apr 2024 MI – Dec 2024 Current IRPs identified ~20 GW of new generation opportunities 2024-2033 RESOURCE NEEDS over
Slide 33: Regulated New Generation Status
In Service/ Regulated New Total Investment Resource Project MWs Acquisition Date Jurisdictional Status Generation 209 MW / ~$500M Solar Amherst / Virginia 5 2023 Projects Approved July 2022 Status Wind Top Hat / Illinois 204 2025 Docket # PUR-2021-00206 Project Approved September 2023 143 MW / ~$426
Slide 34: Regulated New Generation Investment
RFPs Regulated New IN PROGRESS1 Generation RFPs Issued March 2023 November 2023 January 2024 Investment Wind 800 MW Growth Solar 850 MW 1,500 MW of SPP 2,100 MW of SPP accredited capacity accredited capacity Storage 315 MW Continuing execution on Natural Gas 540 MW the $9.4B regulated renewables inv
Slide 35: Economic Development Project Announcements
Data Center Expansion New Albany, OH Sustainable Egg Carton Mfg. Van Wert, OH Economic Composite Materials for RVs Three Rivers, MI Data Center (Multiple Locations) Central Ohio Development Project Solar Panel Mfg. Pataskala, OH Announcements: 1 Motor Vehicle Parts Stamping - Expansion 2021 to Q4-23
Slide 36: Other Large Economic Development Successes
Intel (AEP Ohio) Other Large • $20B investment at the first Midwest chip production plant. • Property was annexed into AEP Ohio service Economic territory. • The site was selected because of AEP’s Development competence in serving large loads, team strength and depth and demonstrated ability to meet
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