American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q4 2014 Earnings Presentation
32 slides from American Electric Power's earnings presentation, Jan 28, 2015
Slide 1: 4th Quarter 2014 Earnings Release Presentation
4th Quarter 2014 Earnings Release Presentation January 28, 2015
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: 2014 Performance
2014 Performance Fourth Quarter 2014 YTD 2014 Refer to appendix for reconciliation between GAAP and Operating EPS 3
Slide 4: 2014 Highlights & 2015 Focus
2014 Highlights & 2015 Focus 2014 Highlights 2015 Focus 4
Slide 5: Strong Regulated Results
Strong Regulated Results Twelve Months Ended 12/31/2014 Earned ROEs & Pro-forma 2015 (Operating Earnings*) 2014 Earned Regulated ROE’s 2015 Pro-forma Regulated ROE’s * operating adjusts GAAP results by eliminating any material non operating items and is not weather normalized Lower O&M in 2015 helps
Slide 6: Operating Earnings Per Share Overview
Operating Earnings Per Share Overview 4Q13 4Q14 YTD13 YTD14 EPS EPS EPS EPS Vertically Integrated Utilities $0.23 $0.12 $1.52 $1.45 Transmission & Distribution 0.16 0.15 0.73 0.72 Utilities AEP Transmission Holdco 0.05 0.08 0.16 0.31 Generation & Marketing 0.10 0.06 0.70 0.84 AEP River Operations 0.
Slide 7: 2014 Performance
2014 Performance $4.00 $0.03 ($0.07) $0.02 0.08 $3.50 0.14 $3.43/sh $3.23/sh 0.15 (0.09) $3.00 (0.07) (0.01) Int Inc $ (0.08) AGR $ 0.11 Other $ (0.01) $0.03 Rate Changes $ 0.06 Int Inc/Exp $ 0.02 Regulatory Prov. $ (0.07) Other $ 0.01 $2.50 Trans. Rev. $ 0.09 Normal Load $ 0.06 O&M $ (0.05) $2.00 D
Slide 8: Normalized Load Trends
Normalized Load Trends AEP Residential Normalized GWh Sales AEP Commercial Normalized GWh Sales % Change vs. Prior Year % Change vs. Prior Year 5% 5% 4.4% 3.5% 2.9% 2.1% 0.2% 0.4% 0.2% 1.7% 1.1% 0% 0% -1.5% -1.1% -0.4% -5% -5% 1Q14 2Q14 3Q14 Q4-14 YTD14 2015E 1Q14 2Q14 3Q14 Q4-14 YTD14 2015E AEP Ind
Slide 9: Economic Data
Economic Data GDP Growth by Quarter GDP Growth by Geography 4% 4% US AEP US AEP-East AEP-West Growth vs Prior Year 3% Growth vs Prior Year 3% 3.1% 2.6% 2.7% 2.6% 2% 2% 1.7% 1.9% 1.7% 1% 1.4% 1.3% 1% 1.2% 0% 0% Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Employment Growth by Quarter E
Slide 10: Industrial Class Data
Industrial Class Data 40% AEP Industrial Sales Growth Shale Counties 39% AEP Shale Gas Counties GWh Growth vs Prior Year 30% Non-Shale Counties 28% 30% 28% 20% 23% 17% 10% 9% 1.1% 0% 4% -0.7% -1.7% -1.6% -0.7% -3.5% -3.8% -10% -5.3% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 * Excluding Ormet I
Slide 11: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO Interest Coverage 5.4 >3.6x FFO to Total Debt 21.8% 15%-20% Note: Credit statistics represent the trailing 12 months as of 12/31/2014 Liquidity Summary (unaudited) 12/31/2014 Actual ($ in millions) Amoun
Slide 12: 2015 Outlook
2015 Outlook 2015 Guidance Range: $3.40-$3.60 Earnings Drivers: Rate Changes - primarily WV, OH & KY Load growth - recovering economy Transmission growth O&M - lower than 2014 Earnings shortfall from PJM capacity prices & RSR Power prices and gas prices Off-System Sales 12
Slide 13: Appendix
Appendix 13
Slide 14: 4th Quarter Reconciliation of GAAP to Operating Earnings
4th Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share 4th Qtr. 4th Qtr. 4th Qtr. 4th Qtr. Change Change 2013 2014 2013 2014 Reported (GAAP) Earnings $346 $191 ($155) $0.71 $0.39 ($0.32) Non Operating Items: Turk Plant Impairment (79) - 79 (0.17) - 0.17 Mark-to-Market
Slide 15: YTD Dec. Reconciliation of GAAP to Operating Earnings
YTD Dec. Reconciliation of GAAP to Operating Earnings $ Millions Earnings Per Share YTD Dec. YTD Dec YTD Dec YTD Dec Change Change 2013 2014 2013 2014 Reported (GAAP) Earnings $1,480 $1,634 $154 $3.04 $3.34 $0.30 Non Operating Items: Hedging Activities 6 6 0.01 0.01 Restructuring Program 5 - (5) 0.0
Slide 16: 4th Quarter 2014 Performance
4th Quarter 2014 Performance $0.03 ($0.07) $0.75 $0.17 $0.60/sh $0.09 $0.04 0.03 $0.50 0.02 $0.48/sh (0.11) (0.01) (0.01) (0.04) Rate Changes $ 0.02 AGR $ (0.04) Regulatory Prov. $ (0.02) Weather $ (0.01) Normal Load $ 0.03 Depreciation $ (0.02) $0.25 Other $ (0.01) Rate Changes $ 0.03 Reg. Prov. -
Slide 17: Vertically Integrated Utilities
Vertically Integrated Utilities Fourth Quarter EPS Summary Key Drivers – 4Q14 vs. 4Q13 4Q13 4Q14 $ millions (except EPS) Rate changes: $18M from various jurisdictions offset by APCo $29M & KPCo $36M regulatory provisions Operating Revenues $2,437 $2,197 Weather: $1M unfavorable vs. prior year; $
Slide 18: Vertically Integrated Utilities
Vertically Integrated Utilities YTD EPS Summary Key Drivers – YTD14 vs.YTD13 YTD Dec YTD Dec Rate changes: $147M from various jurisdictions 2013 2014 offset by $29M APCo & $36M KPCo regulatory $ millions (except EPS) provisions Operating Revenues $9,993 $9,484 Weather: $14M favorable vs. prior y
Slide 19: Transmission & Distribution Utilities
Transmission & Distribution Utilities Fourth Quarter EPS Summary Key Drivers – 4Q14 vs. 4Q13 4Q13 4Q14 Rate changes: $10M from Ohio $ millions (except EPS) Operating Revenues $1,086 $1,233 Regulatory Provisions: $15MM Operating Expenses: Weather: $8M unfavorable vs. prior year; $1M Energy Cost
Slide 20: Transmission & Distribution Utilities
Transmission & Distribution Utilities YTD EPS Summary Key Drivers – YTD14 vs.YTD13 YTD Dec YTD Dec Rate changes: $43M from Ohio 2013 2014 Regulatory Provisions: $49MM $ millions (except EPS) Operating Revenues $4,478 $4,814 Weather: $1M unfavorable vs. prior year; $4M favorable vs. normal Oper
Slide 21: AEP Transmission Holdco
AEP Transmission Holdco Fourth Quarter EPS Summary Key Drivers – 4Q14 vs. 4Q13 4Q13 4Q14 $13M favorable operating income due to $ millions (except EPS) increased revenues and expenses, driven by increased capital investment in the wholly- Operating Revenues $25 $52 owned Transcos Operating Expense
Slide 22: AEP Transmission Holdco
AEP Transmission Holdco YTD EPS Summary Key Drivers – YTD14 vs.YTD13 YTD Dec YTD Dec 2013 2014 $71M favorable operating income due to increased revenues and expenses, driven by $ millions (except EPS) increased capital investment in the Operating Revenues $78 $192 wholly-owned Transcos Operating E
Slide 23: Generation & Marketing
Generation & Marketing Fourth Quarter EPS Summary Key Drivers – 4Q14 vs. 4Q13 4Q13 4Q14 $ millions (except EPS) 2013 reflects Ohio Generation in regulated Operating Revenues $852 $793 power pool vs. 2014 corporately separated Operating Expenses: Generation was flat 2014 vs. 2013 Energy Costs (54
Slide 24: Generation & Marketing
Generation & Marketing YTD EPS Summary Key Drivers – YTD14 vs.YTD13 YTD Dec YTD Dec 2013 reflects Ohio Generation in regulated 2013 2014 power pool vs. 2014 corporately separated $ millions (except EPS) Operating Revenues $3,665 $3,858 Generation increased 2,196 GWh (5%) 2014 vs. 2013 Operating
Slide 25: 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) 4Q14 vs. 4Q13 4Q14 vs. 4Q13 APCo/WPCo $14 Ohio Power $10 I&M $2 Texas Central $0 KPCo $11 Texas North $0 PSO ($1) TOTAL
Slide 26: 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) YTD14 vs. YTD13 YTD14 vs. YTD13 APCo/WPCo $61 Ohio Power $43 I&M $18 Texas Central $0 KPCo $47 Texas North $0 PSO $0 TOT
Slide 27: Retail Load Performance
Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) 4Q14 vs. 4Q13 4Q14 vs. 4Q13 APCo/WPCo 3.8% Ohio Power 2.5% I&M 0.1% Texas Central 11.2% KPCo -1.2% PSO 1.2% Texas North 4.2% SWEPCO -0.8%
Slide 28: Retail Load Performance
Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) YTD14 vs. YTD13 YTD14 vs. YTD13 APCo/WPCo 1.6% Ohio Power -2.4% I&M 0.0% Texas Central 5.4% KPCo -0.4% PSO 1.7% Texas North 7.7% SWEPCO 1.
Slide 29: Weather Impact
Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) 4Q14 vs. 4Q13 4Q14 vs. 4Q13 APCo/WPCo ($1) Ohio Power $0 I&M ($3) Texas Central ($7) KPCo $0 Texas North ($1) PSO $5 TOTAL ($8) SWEPCO ($2) Kingsport $0 Impa
Slide 30: Weather Impact
Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) YTD14 vs. YTD13 YTD14 vs. YTD13 APCo/WPCo $16 Ohio Power $0 I&M $4 Texas Central ($1) KPCo $1 Texas North $0 PSO $2 TOTAL ($1) SWEPCO ($10) Kingsport $1 Impa
Slide 31: AEP Generation Resources
AEP Generation Resources Percentage Volumes Sold by Volumes Generated by Source Channel (in million MWh) Short-term/Spot Wholesale Retail Ohio Power & Wheeling Power PPAs Hydro QTD YTD Power prices up 4% Power prices up 26% Natural Gas Natural gas prices down 2% Natural gas prices up 16% Coa
Slide 32: 2014-2017 Financing Plan & Credit Metrics
2014-2017 Financing Plan & Credit Metrics $ in millions 2014A 2015E 2016E 2017E Cash from Operations - Excl. Impact of Bonus Depreciation & FIT Payments 4,000 4,000 4,900 4,900 Impact of Bonus Depreciation 700 600 - - Federal Cash Taxes Refunded (Paid) (100) (400) (800) (800) Cash from Securitizatio
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