American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q3 2016 Earnings Presentation
28 slides from American Electric Power's earnings presentation, Nov 1, 2016
Slide 1: 3rd Quarter 2016 Earnings Release Presentation
3rd Quarter 2016 Earnings Release Presentation November 1, 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: Third Quarter 2016 Highlights
Third Quarter 2016 Highlights Third Quarter 2016 Company Update Earnings Update Realized GAAP loss of $1.56 per share and operating earnings of $1.30 per share for the third quarter 2016 Realized GAAP earnings of $0.48 per share and operating earnings of $3.27 per share for YTD September 2016
Slide 4: Regulated Returns
Regulated Returns Twelve Months Ended 9/30/2016 Earned ROE’s (Operating Earnings) OPCo 13.2%* AEPTHC* 12.2% I&M 11.2% AEP TX APCo 10.1% 10.3% PSO 9.1% KPCo SWEPCO 7.2% 7.2% Regulated Operations ROE of 10.5% as of September 30, 2016 * Transco ROE is 11.4% Sphere size based on each company’s relative
Slide 5: 3rd Quarter Operating Earnings Segment Detail
3rd Quarter Operating Earnings Segment Detail $0.03 2016 Operating EPS $0.71 $0.32 $0.14 $0.16 ($0.03) $1.30 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 2016 Operating EPS $1.70 $0.79 $0.42 $0.40 ($0.04) $3.27 Refer to appendix for additional explanation of variances by segment 6
Slide 7: Normalized Retail Load Trends
Normalized Retail Load Trends Note: Charts reflect connected load and exclude firm wholesale load & Buckeye Power backup load. 7
Slide 8: Economic Data
Economic Data Source – Moody’s Analytics 8
Slide 9: Regional Industrial Sales Trends
Regional Industrial Sales Trends AEP Industrial Sales Map 9
Slide 10: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO Interest Coverage 5.9x >3.6x FFO to Total Debt 21.8% 15%-20% Note: Credit statistics represent the trailing 12 months as of 9/30/2016 Liquidity Summary (unaudited) 9/30/2016 Actual ($ in millions) Amount
Slide 11: Appendix
Appendix 11
Slide 12: Asset Impairment Impact
Asset Impairment Impact Assets: Ohio (Cardinal, Conesville 4-6, Stuart, Zimmer) and others Pre-tax impairment of $2.3 Billion After-tax impairment of $1.5 Billion GAAP EPS impact of $2.98 per share Remaining net book value of $50 Million 12
Slide 13: 3rd Quarter Reconciliation of GAAP to Operating Earnings
3rd Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share Q3-15 Q3-16 Change Q3-15 Q3-16 Change GAAP Earnings (Loss) $519 ($766) ($1,285) $1.06 ($1.56) ($2.62) Non Operating Items: Mark-to-Market Impact of 2 2 - - - - Commodity Hedging Activities Disposition of Commercia
Slide 14: YTD September Reconciliation of GAAP to Operating Earnings
YTD September Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share YTD-15 YTD-16 Change YTD-15 YTD-16 Change GAAP Earnings $1,578 $238 ($1,340) $3.22 $0.48 ($2.74) Non Operating Items: Mark-to-Market Impact of (3) (2) 1 (0.01) - 0.01 Commodity Hedging Activities Disposition of
Slide 15: Vertically Integrated Utilities
Vertically Integrated Utilities Third Quarter Summary Key Drivers: Q3-16 vs. Q3-15 Q3-15 Q3-16 Rate changes: $49M of rate increases at SWEPCo, KPCo, APCo/WPCo, PSO, I&M and Kingsport $ millions (except EPS) Operating Revenues $2,471 $2,556 Weather: $53M favorable vs. prior year; $58M favorable v
Slide 16: Vertically Integrated Utilities
Vertically Integrated Utilities YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 Rate changes: $102M of rate increases primarily at KPCo, PSO, and APCo/WPCo, including recognition of $25 million $ millions (except EPS) of deferred WV rate billings Operating Revenues $7,159 $6,928 VA regu
Slide 17: Transmission & Distribution Utilities
Transmission & Distribution Utilities Third Quarter Summary Key Drivers: Q3-16 vs. Q3-15 Q3-15 Q3-16 Rate changes: $24M primarily from Ohio Phase- $ millions (except EPS) in Recovery Rider and Distribution Investment Operating Revenues $1,189 $1,276 Rider, and Texas Distribution Cost Recovery Fact
Slide 18: Transmission & Distribution Utilities
Transmission & Distribution Utilities YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 Rate changes: $36M primarily from Ohio Phase-in $ millions (except EPS) Recovery Rider and Distribution Investment Rider, and Texas Distribution Cost Recovery Factor Operating Revenues $3,520 $3,468 Oper
Slide 19: AEP Transmission Holdco
AEP Transmission Holdco Third Quarter Summary Key Drivers: Q3-16 vs. Q3-15 Q3-15 Q3-16 $32M favorable operating income due to $ millions (except EPS) increased capital investment in the wholly- Operating Revenues $88 $132 owned Transcos, partially offset by higher Operating Expenses: depreciation,
Slide 20: AEP Transmission Holdco
AEP Transmission Holdco YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 $98M favorable operating income due to a $ millions (except EPS) $29M increase in the annual formula rate Operating Revenues $245 $383 true-up in Q2 and increased capital Operating Expenses: investment in the wholly-o
Slide 21: Generation & Marketing
Generation & Marketing Third Quarter Summary Key Drivers: Q3-16 vs. Q3-15 Q3-15 Q3-16 $ millions (except EPS) AEP Dayton ATC liquidation pricing up 3%: $30.56/MWh in Q3-16 vs. $29.72/MWh in Q3-15 Operating Revenues $840 $863 Operating Expenses: Generation increased 927 GWh (9%) Q3-16 vs. Energy
Slide 22: Generation & Marketing
Generation & Marketing YTD Summary Key Drivers: YTD-16 vs. YTD-15 YTD-15 YTD-16 Capacity revenues decreased $143M primarily due to plant retirements and transition of Ohio to $ millions (except EPS) full market pricing Operating Revenues $2,803 $2,289 Operating Expenses: Energy margins decreased
Slide 23: 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) Q3-16 vs. Q3-15 Q3-16 vs. Q3-15 APCo/WPCo $9 Ohio Power $20 I&M $8 Texas Central $3 KPCo $10 Texas North $1
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 $60 Ohio Power $32 I&M $2 Texas Central $3 KPCo $21 Texas North $1 PSO
Slide 25: 3rd Quarter Normalized Retail Load Performance
3rd Quarter Normalized Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) Q3-16 vs. Q3-15 Q3-16 vs. Q3-15 APCo/WPCo -0.9% Ohio Power -0.1% I&M 1.3% Texas Central 1.7% KPCo -9.7% 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 -1.8% Ohio Power -1.1% I&M 1.7% Texas Central 4.2% KPCo -7.8% PSO 0.7% Texas
Slide 27: 3rd Quarter Weather Impact vs. Prior Year
3rd Quarter Weather Impact vs. Prior Year Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) Q3-16 vs. Q3-15 Q3-16 vs. Q3-15 APCo/WPCo $25 Ohio Power - I&M $15 Texas Central $3 KPCo $8 Texas North ($1) PSO $4 TOTAL $2 SWEPC
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 ($10) Ohio Power - I&M ($1) Texas Central ($3) KPCo ($1) Texas North ($3) PSO $1 TOTAL ($6)
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