American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q1 2023 Earnings Presentation
35 slides from American Electric Power's earnings presentation, May 4, 2023
Slide 1: 1st Quarter 2023 Earnings Release Presentation
1st Quarter 2023 Earnings Release Presentation May 4, 2023
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act
“Safe Harbor” 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 based on reasonable assumptions, any such statements may be influence
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial 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 measures, including operati
Slide 4: AEP Is a Pure Play Regulated Utility
17,000 AEP Is a Pure Play Regulated Utility 40k TRANSMISSION MILES $ 94B TOTAL ASSETS EMPLOYEES Nation’s largest electric Strong balance sheet Across the system transmission system 225k DISTRIBUTION MILES $ 61B RATE BASE 5.6M CUSTOMERS One of the largest distribution As of December 31, 2022 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: 1st Quarter 2023 Business Update
1st Quarter 2023 Business Update • 1st Quarter 2023 operating earnings of $1.11 per share or $572M • Reaffirm 2023 operating earnings guidance range of $5.19-$5.39 and 6-7% long-term growth • Committed to FFO/Debt target of 14%-15% • Renewed focus on Kentucky • Ongoing de-risking and simplifying of
Slide 7: Transaction Overview of Unregulated Contracted Renewables Sale
Transaction Overview of Unregulated Contracted Renewables Sale • On 2/22/2023, AEP signed an agreement to sell 100% of equity of 1,365 MW unregulated contracted Transaction Description renewable assets containing 14 large-scale projects Buyer • IRG Acquisition Holdings, consortium owned by Invenergy
Slide 8: Asset Sales and Strategic Review Announcements
Asset Sales and Strategic Review Announcements Sell New Mexico • A 50/50 joint venture partnership with PNM Resources consisting of 8 operating projects of 135 MW, 1 project under construction of 50 MW, 6 development projects of 440 MW, all located in New Mexico Renewable Development • Book value of
Slide 9: 1st Quarter 2023 Financial Update
1st Quarter 2023 1st QUARTER 2023 Financial Update • Delivered GAAP earnings of $0.77 per share or $397M for the first quarter of 2023 • Delivered operating earnings of $1.11 per share or $572M for the first quarter of 2023 Reaffirm 2023 operating earnings guidance of $5.19-$5.39 $1.41 $1.22 $1.11 $
Slide 10: 1st Quarter Operating Earnings
1st Quarter Operating $1.22 (0.07) Earnings Per Share 0.06 (0.05) (0.06) Segment Detail 0.01 $1.11 Per Share Rate Changes $0.08 Weather $(0.13) O&M $0.02 Renewables $0.04 Normal Load $0.05 Rate Changes $0.02 Invest Growth $0.02 Investment Loss $(0.01) Generation $(0.02) Key Drivers Q1-23 vs. Q1-22 O
Slide 11: Weather Normalized Billed Retail Load Trends
Weather Normalized AEP Normalized Residential GWh Sales AEP Normalized Commercial GWh Sales Billed Retail Load % Change vs. Prior Year % Change vs. Prior Year 10% 10% 7.8% Trends 5% 5% 4.2% 4.1% 3.4% 5.4% 2.1% 4.5% 0.8% 1.2% 0.8% 0% 0% -0.8% -0.8% -0.6% -0.6% -0.1% -1.4% -5% -5% Load in AEP’s servic
Slide 12: Capitalization and Liquidity
Credit Statistics1 Total Debt/Total Capitalization Capitalization 61.8% 62.1% 62.9% 64.1% 57.0% 59.8% and Liquidity Moody’s GAAP FFO to Total Debt 11.4% 11.4% Targeted Range 14.0%-15.0% 2018 2019 2020 2021 2022 Q1-23 Short/Long-Term Debt Securitization Debt FFO/Debt target of 14%-15%; Liquidity Summ
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: Q1 2023 Performance
Appendix Q1 2023 Performance 1st Quarter 2023 Earnings Presentation
Slide 15: 1st Quarter Reconciliation of GAAP to Operating Earnings
1st Quarter $ in millions Earnings Per Share Reconciliation of GAAP Q1-22 Q1-23 Change Q1-22 Q1-23 Change to Operating Earnings Reported GAAP Earnings $ 715 $ 397 $ (318) $ 1.41 $ 0.77 $ (0.64) Non-Operating Items: Weighted average number of shares outstanding: 506.1M Q1-22 Mark-to-Market Impact of
Slide 16: Vertically Integrated Utilities 1st Quarter Performance
Vertically Integrated Utilities 1st Quarter Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) Q1-23 vs. Q1-23 vs. Q1-23 vs. Q1-22 Q1-23 vs. Q1-22 Q1-22 Normal APCo/WPCo (0.
Slide 17: Transmission and Distribution Utilities 1st Quarter Performance
Transmission and Distribution Utilities 1st Quarter Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) Q1-23 vs. Q1-23 vs. Q1-22 Normal Q1-23 vs. Q1-22 Q1-23 vs. Q1-22 AEP O
Slide 18: GAAP to Non-GAAP Reconciliations and Ratios
GAAP to Adjusted FFO Calculation Adjusted Total Debt (Non-GAAP) Calculation Non-GAAP 12 Months As of Reconciliations Ended 3/31/2023 3/31/2023 (in millions) and Ratios (in millions) GAAP Total Debt Cash Flow from Operations $ 4,384 $ 42,766 (incl. current maturities) Adjustments: Less: Changes in Wo
Slide 19: Appendix: Portfolio Management
Appendix Portfolio Management 1st Quarter 2023 Earnings Presentation
Slide 20: Competitive Business Platform
Competitive Business Platform DISTRIBUTED RESOURCES CUSTOMER CLASSES (SALE ANNOUNCED) • Residential • Solar • Commercial • Energy Storage • Industrial • Reciprocating Engines • Municipals • Fuel Cells • Cooperatives • Substations RETAIL SERVICES (SALE ANNOUNCED) WHOLESALE SERVICES • Electric Sales •
Slide 21: Transmission Joint Venture Businesses
Transmission Joint Project Name Location Owners AEP’s Portion of Net Plant as Base ROE RTO Adder Project Risk ROE Total Authorized Venture Businesses BHE (50%), AEP of 3/31/2023 ROE ETT Texas (ERCOT) $1,729M 9.60% 0.00% 0.00% 9.60% (50%) Evergy, Inc. (50%), Prairie Wind Kansas BHE (25%), $ 32M 10.80
Slide 22: Appendix: Financial Forecast and Focus on O&M Efficiency
Appendix Financial Forecast and Focus on O&M Efficiency 1st Quarter 2023 Earnings Presentation
Slide 23: 2023-2027 Capital Forecast of $40B
Other Generation Corporate $1.1B • 3% Nuclear $3.1B • 7% Generation Regulated $0.3B • 1% Environmental 2023-2027 Capital 99% Generation $0.4B • 1% Forecast of $40B Gen & Marketing of capital allocated to $0.4B • 1% regulated businesses The ability to quickly redeploy transmission Distribution and di
Slide 24: 2023-2027 Cash Flows and Financial Metrics
$ in millions 2023E 2024E 2025E 2026E 2027E Cash from Operations $ 5,800 $ 6,700 $ 7,000 $ 7,700 $ 8,100 2023-2027 Cash Net Cash Proceeds from Sale of Assets1 1,200 - - - - Flows and Financial Capital and JV Equity Contributions Other Investing Activities (6,800) (100) (8,900) (300) (9,700) (200) (7
Slide 25: Continuous Focus on O&M Efficiency
2023E Inflation Gap of ~$0.6B $5B Inflation ~6% Avg. 2022A – 2023E Inflation ~2% Avg. Continuous Focus 2013A – 2021A on O&M Efficiency $4B O&M discipline over Total Non-fuel O&M $3B time amid rising costs $3.0B $2.6B $2.6B $3.1B and growing asset base $2.9B $3.1B $2.9B $2.2B $2.5B $2.6B helps keep c
Slide 26: Appendix: Regulatory and Renewables
Appendix Regulatory and Renewables 1st Quarter 2023 Earnings Presentation
Slide 27: Actions to Close the ROE Gap
PSO SWEPCO AEP Texas Actions to Close APCo KPCo 12% the ROE Gap 9.4% 9.4% 9.5% 9.4% 10% 9.3% 8% 8.5% 7.8% 7.4% 6.7% 6% Focus on achieving authorized ROEs in all 4% operating companies; 2.9% 2% 3/31/2023 Regulated Operations ROE of 8.8% 0% ACTION PLANS TO CLOSE GAP APCo KPCo PSO SWEPCO AEP Texas Othe
Slide 28: Actively Managing Current Fuel Cost Impacts
Actively Managing APCo VA • Current Mechanism: 12-month fuel clause to reset and account for prior year Current Fuel Cost • Adjustment: Reset base of fuel level with a 24-month recovery and carrying charge on under- recovered balance starting in September 2022 Impacts APCo/WPCo WV • Current Mechanis
Slide 29: Current Rate Case Activity
Current Rate Case Activity APCo – Virginia PSO – Oklahoma SWEPCO – Louisiana Docket # PUR-2023-00002 Docket # PUD 2022-000093 Docket # U-35441 Filing Date 3/31/2023 Filing Date 11/22/2022 Filing Date 12/18/2020 Requested Rate Base $2.9B Requested Rate Base $4.4B Requested Rate Base $2.1B Requested R
Slide 30: Resource Plans Are Aligned with Climate Goals
Resource Plans Are IRP FILINGS Aligned with Climate 2022 | 2023 Goals IN – Jan 2022 MI – Feb 2022 VA– Apr 2022 VA VCEA – KY – Mar 2023 LA Draft – Q1-23 LA – Q4-23 Mar 2023 EST EST Current IRPs identify a 10-YEAR RESOURCE NEEDS significant need for new clean GENERATION ADDITIONS energy resources over
Slide 31: Regulated New Generation Regulatory Status
Total Projected Resource Project MWs Jurisdictional Status Investment In-Service Date Regulated New Solar Amherst / Virginia 5 Q2-23 209 MW / ~$500M Projects Approved July 20221 Wind Top Hat / Illinois 204 Q3-25 Generation Wind Grover Hill / Ohio 143 Q4-25 Virginia Order Expected Q3 20232 Regulatory
Slide 32: Regulated New Generation Investment
Regulated New RFPs Generation IN PROGRESS1 Investment RFP Issued Wind April 2023 March 20232 September 2022 Growth 800 MW 1,900 MW 600 MW Solar 850 MW 500 MW Storage - 315 MW - Continuing execution on Natural Gas - 540 MW - the $8.6B regulated Reg. Filings and renewables investment Q2-24 ‒ Q4-24 Q1-
Slide 33: Appendix: Economic Development
Appendix Economic Development 1st Quarter 2023 Earnings Presentation
Slide 34: Economic Development Project Announcements
Data Center Expansion Sustainable Egg Carton Mfg. New Albany, OH Van Wert, OH Economic Crypto & Cloud Computing Data Center (Multiple Locations) Central Ohio Development Project Dowagiac, MI Biopharmaceutical Mfg. New Albany, OH Announcements: Motor Vehicle Parts Stamping - 2021 to Q1 2023 Expansion
Slide 35: Recent AEP Reshoring Successes
Nucor (APCo) Recent AEP • The largest single investment in West Virginia history. Reshoring • Site chosen because of high voltage infrastructure, AEP’s proven ability to serve large loads and Successes AEP’s excellent customer service. Intel (AEP Ohio) • $20B investment at the first Midwest chip pro
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