American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q1 2014 Earnings Presentation
24 slides from American Electric Power's earnings presentation, Apr 25, 2014
Slide 1: 1st Quarter 2014 Earnings Release Presentation
1st Quarter 2014 Earnings Release Presentation April 25, 2014
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: First Quarter 2014 Highlights
First Quarter 2014 Highlights First Quarter Company Update Earnings Update Delivered GAAP and operating earnings of $1.15 per share for the first quarter 2014 Increasing 2014 operating earnings guidance range to $3.35 - $3.55 per share Financial Update Committed to delivering 4-6% earnings gro
Slide 4: Strong Regulated Results
Strong Regulated Results Twelve Months Ended 03/31/2014 Earned ROEs (Operating Earnings) * operating adjusts GAAP results by eliminating any material non operating items and is not weather normalized 4
Slide 5: First Quarter Operating Earnings Per Share Overview
First Quarter Operating Earnings Per Share Overview 1Q13 1Q14 Segment EPS EPS Vertically Integrated Utilities $0.41 $0.57 Transmission & Distribution 0.18 0.20 Utilities AEP Transmission Holdco 0.03 0.05 Generation & Marketing 0.18 0.33 AEP River Operations 0.00 0.01 Corporate & Other 0.00 (0.01) EP
Slide 6: 1Q14 Performance
1Q14 Performance $0.01 ($0.01) $0.15 $0.02 $0.02 Drivers Gen Resources $0.15 Drivers $0.16 Rate Changes $0.01 Weather 0.01 O&M (0.02) Other 0.02 Drivers Rate Changes $0.08 Weather 0.07 OSS 0.11 O&M (0.03) Depreciation (0.02) Other (0.05) Refer to appendix for additional explanation of variances by s
Slide 7: AEP Generation Resources
AEP Generation Resources Volumes Generated by Source Percentage Volumes Sold by (in million MWh) Channel Hydro Short-term/Spot Natural Gas Wholesale Coal Retail Ohio Power & Wheeling Power PPAs Power prices up 100% Natural gas prices up 45% Volumes up 22% Capacity Factor up 10% Cost-competit
Slide 8: Normalized Load Trends
Normalized Load Trends AEP Residential Normalized GWh Sales AEP Commercial Normalized GWh Sales %Change vs. Prior Year %Change vs. Prior Year AEP Industrial GWh Sales AEP Total Normalized GWh Sales %Change vs. Prior Year %Change vs. Prior Year Note: Line represents Industrial excluding Ormet Note: L
Slide 9: Economic Data
Economic Data GDP Growth by Quarter GDP Growth by Geography 4.5% US AEP-East AEP-West 4.5% US AEP 3.5% 3.5% Growth vs PY Growth vs PY 3.0% 2.9% 2.9% 2.9% 3.0% 2.5% 2.7% 2.5% 2.6% 2.0% 1.5% 1.5% 1.6% 1.3% 0.5% 0.5% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Employment Growth by Quart
Slide 10: Industrial Class Data
Industrial Class Data AEP Industrial Sales Growth AEP Shale Gas Counties 35% Shale Counties* 29.9% 30% 28.4% 25% Non-Shale Counties GWh Growth vs PY 20% 17.3% 15% 8.9% 10% 4.2% 5% 0% -0.8% -0.4% -5% -3.2% -3.8% -10% -5.6% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 *Excluding Ormet Industrial Sales Growth in Shal
Slide 11: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO Interest Coverage 4.9 >3.6x FFO to Total Debt 19.9% 15%-20% Note: Credit statistics represent the trailing 12 months as of 03/31/2014 Liquidity Summary (unaudited) 03/31/2014 Actual ($ in millions) Amoun
Slide 12: Summary
Summary Strong start to 2014 for our customers, shareholders and employees Executing on our commitments LEAN and other continuous improvement initiatives Cost shifting Accelerated transmission investment Increasing 2014 Operating Earnings Guidance $3.35 to $3.55/share 12 Increasing 201
Slide 13: Appendix
Appendix 13
Slide 14: 1st Quarter Reconciliation of GAAP to Operating Earnings
1st Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share 1st Qtr. 1st Qtr. 1st Qtr. 1st Qtr. Change Change 2013 2014 2013 2014 Reported (GAAP) $363 $560 $197 $0.75 $1.15 $0.40 Earnings Non Operating Items: Restructuring Program 5 - (5) 0.01 - (0.01) Reversal of Storm De
Slide 15: Vertically Integrated Utilities
Vertically Integrated Utilities First Quarter EPS Summary Key Drivers – 1Q14 vs. 1Q13 1Q13 1Q14 Rate changes - $60M from various jurisdictions $ millions (except EPS) Weather - $55M favorable vs. prior year; $66M Operating Revenues $2,515 $2,586 favorable vs. normal Operating Expenses: Energy Co
Slide 16: Transmission & Distribution Utilities
Transmission & Distribution Utilities First Quarter EPS Summary Key Drivers – 1Q14 vs. 1Q13 1Q13 1Q14 Rate changes - $5M from Ohio $ millions (except EPS) Operating Revenues $1,134 $1,215 Weather - $9M favorable vs. prior year; $6M favorable vs. normal Operating Expenses: Energy Costs (449) (434
Slide 17: AEP Transmission Holdco
AEP Transmission Holdco First Quarter EPS Summary Key Drivers – 1Q14 vs. 1Q13 1Q13 1Q14 Increased revenues and expenses due to $ millions (except EPS) increased capital investment by the wholly-owned Transcos Operating Revenues $8 $28 Operating Expenses: Equity earnings from Joint Ventures - $4M
Slide 18: Generation & Marketing
Generation & Marketing First Quarter EPS Summary Key Drivers – 1Q14 vs. 1Q13 1Q13 1Q14 $ millions (except EPS) Generation increased 2,517 GWh (22%) 2014 vs. Operating Revenues $920 $1,251 2013 Operating Expenses: AEP Dayton ATC liquidations up 100% - Energy Costs (568) (804) $68.08/MWh in 2014 v
Slide 19: Retail Rate Performance
Retail Rate Performance Vertically Integrated Utilities Transmission & Distribution Utilities Rate Changes, net of Rate Changes, net of offsets (in millions) offsets (in millions) 1Q14 vs. 1Q13 1Q14 vs. 1Q13 APCo $9 Ohio Power $5 I&M $17 Texas Central $0 KPCo $11 Texas North $0 PSO $0 TOTAL $5 SWEPC
Slide 20: Retail Load Performance
Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) 1Q14 vs. 1Q13 1Q14 vs. 1Q13 APCo -1.4% Ohio Power -2.6% I&M 0.4% Texas Wires 8.3% KPCo 0.8% PSO 3.2% TOTAL 1.2% SWEPCO 7.8% Wheeling/ Impa
Slide 21: Weather Impact
Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) 1Q14 vs. 1Q13 1Q14 vs. 1Q13 APCo $27 Ohio Power $0 I&M $13 Texas Central $8 KPCo $6 Texas North $1 PSO $2 TOTAL $9 SWEPCO $7 Wheeling/ $0 $0.01 Kingsport Imp
Slide 22: Vertically Integrated Utilities Off System Sales Gross Margin Detail
Vertically Integrated Utilities Off System Sales Gross Margin Detail First Quarter 1Q14 Physical off-system sales $ in margins increased from GWh millions prior year by $145M Physical Off-System Sales 6,623 $168 Sharing with customers Trading & Marketing 7 increased from prior year by $57M Pre-S
Slide 23: AEP Transmission Holdco
AEP Transmission Holdco 4 types of projects: Regional projects for retirements, $0.80 renewables, economic and market efficiencies Cumulative Base Case Local reliability plans $0.67 Capital Investment Aging infrastructure Customer-driven projects $0.67 High Case Incremental $0.51 Capital Inv
Slide 24: 2014-2016 Capital Spending Forecast
2014-2016 Capital Spending Forecast Capital & Equity Contributions $ in millions, excluding AFUDC Transmission: $2,172 $4.1B: 2014 AEP Transmission 18% Holdco: $2,558 $3.8B: 2015 & 2016 22% Corporate: $315 Regulated Generation 3% Competitive Investment - $2.8B Operations: $536 5% Regulated Distribut
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