American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q2 2017 Earnings Presentation
32 slides from American Electric Power's earnings presentation, Jul 27, 2017
Slide 1: 2nd Quarter 2017 Earnings Release Presentation
2nd Quarter 2017 Earnings Release Presentation July 27, 2017
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: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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, including operati
Slide 4: Second Quarter 2017 Highlights
Second Quarter 2017 Highlights Second Quarter 2017 Company Update Earnings Update Delivered GAAP earnings of $0.76 per share and operating earnings of $0.75 per share for the second quarter 2017 Delivered GAAP earnings of $1.97 per share and operating earnings of $1.72 per share for YTD June 201
Slide 5: Regulated Returns
Regulated Returns Twelve Months Ended 6/30/2017 Earned ROE’s (non-GAAP Operating Earnings) AEP OH Trans 13.6% 13.2% AEP OH * 12.2% AEP TX * APCo I&M* 10.2% 8.9% 9.3% PSO* SWEPCO* 6.7% KPCo* 6.3% 5.2% Regulated Operations ROE of 9.8% as of June 30, 2017 *AEP Ohio adjusted for SEET items. Base rate ca
Slide 6: 2nd Quarter Operating Earnings Segment Detail
2nd Quarter Operating Earnings Segment Detail $0.03 ($0.07) $0.03 205/206 $ 0.06 Rate Changes $ 0.03 JVs $ (0.01) Sold Assets $ (0.08) Rate Changes $ 0.04 Held Assets $ 0.02 Rate True-Ups $ (0.08) Other $ 0.02 Reg. Prov. - OH $ (0.03) Other $ 0.01 Weather $ (0.03) Normal Load $ (0.01) Normal Load $
Slide 7: 2017 YTD Operating Earnings Segment Detail
2017 YTD Operating Earnings Segment Detail $0.03 ($0.07) 205/206 $ 0.09 $0.03 Rate Changes $ 0.08 Other $ 0.04 Sold Assets $ (0.15) Rate Changes $ 0.07 Reg. Prov. - OH $ (0.03) Held Assets $ 0.06 Rate True-Ups $ (0.08) Weather $ 0.01 Trd & Mrkt $ (0.01) Weather $ (0.11) Normal Load $ (0.03) Retail $
Slide 8: Weather Normalized Billed Retail Load Trends
Weather Normalized Billed Retail Load Trends Note: Load figures are provided on a billed basis. Charts reflect connected load and exclude firm wholesale and Buckeye Power backup load. See Appendix for load figures on a billed plus accrued basis. 8
Slide 9: Recovering Energy Prices Impact Load Growth
Recovering Energy Prices Impact Load Growth Source: Moody’s analytics and company records 9
Slide 10: Economic Data – AEP Service Territory
Economic Data – AEP Service Territory estimates estimates estimates Source – Moody’s Analytics 10
Slide 11: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO to Total Debt 18.1% 15%-20% Represents the trailing 12 months as of 6/30/2017 See Appendix for reconciliation to GAAP Liquidity Summary (unaudited) 6/30/2017 Actual ($ in millions) Amount Maturity Revolv
Slide 12: Summary
Summary Decrease in Q2 earnings was anticipated Reaffirming 2017 operating earnings guidance range of $3.55 to $3.75 per share & 5% - 7% growth rate Primary driver second half of 2017 will be significantly favorable year over year O&M 12
Slide 13: Appendix
Appendix 13
Slide 14: 2nd Quarter Reconciliation of GAAP to Operating Earnings
2nd Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share Q2-16 Q2-17 Change Q2-16 Q2-17 Change Reported (GAAP) Earnings $502 $375 ($127) $1.02 $0.76 ($0.26) Non Operating Items: Mark-to-Market Impact of (4) - 4 (0.01) - 0.01 Commodity Hedging Activities* Gain from Compe
Slide 15: YTD June Reconciliation of GAAP to Operating Earnings
YTD June Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share YTD-16 YTD-17 Change YTD-16 YTD-17 Change Reported (GAAP) Earnings $1,003 $967 ($36) $2.04 $1.97 ($0.07) Non Operating Items: Mark-to-Market Impact of (4) 3 7 (0.01) - 0.01 Commodity Hedging Activities* Gain from Com
Slide 16: Vertically Integrated Utilities – Second Quarter
Vertically Integrated Utilities Second Quarter Summary Key Drivers: Q2-17 vs. Q2-16 Q2-16 Q2-17 Rate changes: $24M of rate increases primarily at SWEPCo, APCo/WPCo and I&M. These $ millions (except EPS) increases were offset by wholesale rate Operating Revenues $2,126 $2,120 decreases of $37M, dri
Slide 17: Vertically Integrated Utilities – YTD
Vertically Integrated Utilities YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 Rate changes: $52M of rate increases across multiple jurisdictions offset by wholesale rate $ millions (except EPS) decreases of $36M, driven by formula rate true- Operating Revenues $4,372 $4,411 ups, and a p
Slide 18: Transmission & Distribution Utilities – Second Quarter
Transmission & Distribution Utilities Second Quarter Summary Key Drivers: Q2-17 vs. Q2-16 Q2-16 Q2-17 Rate changes: $31M favorable primarily from $ millions (except EPS) the Texas Distribution Cost Recovery Factor and Operating Revenues $1,096 $1,054 the Ohio DIR and RSR Operating Expenses: OH R
Slide 19: Transmission & Distribution Utilities – YTD
Transmission & Distribution Utilities YTD Summary Key Drivers: YTD-17 vs. YTD-16 Rate changes: $63M primarily from the Texas YTD-16 YTD-17 Distribution Cost Recovery Factor and the Ohio $ millions (except EPS) PIRR, DIR, RSR Operating Revenues $2,193 $2,140 OH Regulatory Provision: $21M unfavora
Slide 20: AEP Transmission Holdco – Second Quarter
AEP Transmission Holdco Second Quarter Summary Key Drivers: Q2-17 vs. Q2-16 Q2-16 Q2-17 $63M favorable operating income primarily $ millions (except EPS) due to the impact of the 205/206 filings. Operating Revenues $162 $247 Operating Income was also higher due to Operating Expenses: increased rev
Slide 21: AEP Transmission Holdco – YTD
AEP Transmission Holdco YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 $111M favorable operating income primarily $ millions (except EPS) due to the impact of the 205/206 filings. Operating Revenues $250 $403 Operating Income was also higher due to Operating Expenses: increased revenues
Slide 22: Generation & Marketing – Second Quarter
Generation & Marketing Second Quarter Summary Key Drivers: Q2-17 vs. Q2-16 Q2-16 Q2-17 $ millions (except EPS) Generation decreased 6,914 GWh (78%) Q2-17 Operating Revenues $678 $412 vs. Q2-16 due to sale of plants in January Operating Expenses: Energy Costs (444) (303) AEP Dayton ATC liquidatio
Slide 23: Generation & Marketing – YTD
Generation & Marketing YTD Summary Key Drivers: YTD-17 vs. YTD-16 YTD-16 YTD-17 $ millions (except EPS) Generation decreased 11,126 GWh (61%) Q2-17 Operating Revenues $1,426 $1,006 vs. Q2-16 due to sale of plants in January Operating Expenses: AEP Dayton ATC liquidations up 3%: Energy Costs (923
Slide 24: 2nd Quarter Retail Rate Performance
2nd Quarter Retail Rate Performance Vertically Integrated Utilities Transmission & Distribution Utilities Rate Changes*, net of Rate Changes, net of offsets (in millions) offsets (in millions) Q2-17 vs. Q2-16 Q2-17 vs. Q2-16 APCo/WPCo ($17) AEP Ohio $17 I&M ($26) AEP Texas $15 KPCo $2 TOTAL $32 PSO
Slide 25: 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-17 vs. YTD-16 YTD-17 vs. YTD-16 APCo/WPCo ($7) AEP Ohio $37 I&M ($20) AEP Texas $26 KPCo $4 TOTAL $63 PSO $4 SW
Slide 26: 2nd Quarter Retail Load Performance
2nd Quarter Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) Q2-17 vs. Q2-16 Q2-17 vs. Q2-16 APCo/WPCo -1.1% AEP Ohio 0.9% I&M -2.9% AEP Texas 5.5% KPCo -2.8% TOTAL 2.8% PSO 1.0% SWEPCO 0
Slide 27: YTD Retail Load Performance
YTD Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) YTD-17 vs. YTD-16 YTD-17 vs. YTD-16 APCo/WPCo -1.4% AEP Ohio 0.5% I&M -1.1% AEP Texas 1.8% KPCo -2.6% PSO 1.2% TOTAL 1.0% SWEPCO -1.0%
Slide 28: Normalized Retail Load Trends (Billed & Accrued)
Normalized Retail Load Trends (Billed & Accrued) Note: Load figures are provided on a billed and accrued basis. Charts reflect connected load and exclude firm wholesale and Buckeye Power backup load. 28
Slide 29: 2nd Quarter Weather Impact
2nd Quarter Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact* Weather Impact (in millions) (in millions) Q2-17 vs. Q2-17 vs. Q2-17 vs. Q2-17 vs. Q2-16 Normal Q2-16 Normal APCo/WPCo ($8) ($4) AEP Ohio - - I&M ($3) ($2) AEP Texas $2 $2 KPCo ($2) ($1)
Slide 30: YTD Weather Impact
YTD Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact* Weather Impact (in millions) (in millions) Q2-17 vs. Q2-17 vs. Q2-17 vs. Q2-17 vs. Q2-16 Normal Q2-16 Normal APCo/WPCo ($47) ($44) AEP Ohio - - I&M ($11) ($16) AEP Texas $4 $1 KPCo ($10) ($10) TO
Slide 31: Weather Impact 2017 vs 2016
Weather Impact 2017 vs 2016 For the quarter, weather was unfavorable to normal by $13M which is $23M worse than last year. Year to date the impact of weather is 31 unfavorable to normal by $94M which is approximately $79M worse than last year.
Slide 32: GAAP to Non-GAAP Reconciliations & Ratios
GAAP to Non-GAAP Reconciliations & Ratios Adjusted FFO Calculation Adjusted Total Debt Calculation 12 Months As of Ended 6/30/17 6/30/17 $ millions $ millions Cash Flow From Operations $4,519 GAAP Total Debt (incl. current maturities) $21,404 Adjustments: Less: Changes in Working Capital (527) Secur
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