American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q2 2024 Earnings Presentation
31 slides from American Electric Power's earnings presentation, Jul 30, 2024
Slide 1: 2nd Quarter 2024 Earnings Release Presentation
nd 2 Quarter 2024 Earnings Release Presentation July 30, 2024 2nd Quarter 2024 Earnings Release Presentation 1
Slide 2: 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 based on reasonable assumptions, any such statements may be influenced by factors t
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, including operating earnin
Slide 4: AEP Is a Pure Play Regulated Utility
AEP Is a Pure $ Play Regulated Utility 40K TRANSMISSION MILES 100B TOTAL ASSETS 16,000 EMPLOYEES Nation’s largest electric Strong balance sheet Across the system transmission system As of June 30, 2024 As of July 1, 2024 $ 225K DISTRIBUTION MILES 66B RATE BASE 5.6M CUSTOMERS One of the largest distr
Slide 5: AEP Investment Thesis
AEP Investment Thesis Powering the Future as 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 Focusing on the Customer and Performance and Distribution Assets Transition Actively Managing the
Slide 6: 2nd Quarter 2024 Business Highlights
2nd Quarter 2024 Business Highlights • Welcome Bill Fehrman as CEO, effective August 1, 2024; direction and strategy remain on track • Q2 2024 operating earnings of $1.25 per share or $662M • Reaffirm 2024 operating earnings guidance range of $5.53-$5.73 and 6%-7% long-term growth rate • Customer co
Slide 7: 2nd Quarter 2024 Financial Update
2nd Quarter 2024 2nd QUARTER 2024 $1.13 $1.25 $1.01 Financial Update • Delivered GAAP earnings of $0.64 $0.64 per share or $340M for the second quarter of 2024 • Delivered operating earnings of 2023 2021 2024 2022 2023 2021 2024 2022 $1.25 per share or $662M for the 2021 2022 2021 2022 GAAP EPS OPER
Slide 8: 2nd Quarter Operating Earnings
2nd Quarter $1.25 Operating 0.06 Per Share Earnings 0.11 0.01 (0.01) Segment Detail $1.13 (0.05) Per Share Rate Changes $0.05 Rate Changes $0.03 Invest Growth $0.01 Renewables $(0.04) Net Interest $(0.04) Key Drivers Q2-24 vs. Q2-23 Weather $0.10 Weather $0.04 Generation $0.02 Income Taxes $0.05 Nor
Slide 9: Weather Normalized Billed Retail Load Trends
Weather Normalized AEP Normalized Residential GWh Sales AEP Normalized Commercial GWh Sales1 % Change vs. Prior Year % Change vs. Prior Year Billed Retail Load 15% 15% 12.4% 11.5% Trends 10% 10% 7.7% 7.5% 8.2% 10.5% 7.6% 4.5% 4.1% 5% 5% 0.6% 0.1% Customer commitments for more 0% 0% -0.7% -0.7% -0.8%
Slide 10: Capitalization and Liquidity
Total Debt/Total Capitalization 62.9% 63.0% 62.8% 62.6% Capitalization FFO to Total Debt (Trailing 12 Months)1 59.8% 61.8% 62.1% and Liquidity 6/30/2024 14.6% Targeted Range 14%-15% 6/30/2024 FFO/Debt was 14.6% 2019 2020 2021 2022 2023 Q1-24 Q2-24 Short/Long-Term Debt Securitization Debt and within
Slide 11: Appendix: Q2-24 Performance
Appendix Q2-24 Performance 2nd Quarter 2024 Earnings Release Presentation 11
Slide 12: YTD Operating Earnings Segment Detail
$2.52 0.05 Per Share YTD Operating 0.06 0.02 Earnings 0.14 Segment Detail $2.24 0.01 Per Share Rate Changes $0.13 Rate Changes $0.06 Invest Growth $0.02 Renewables $(0.06) Net Interest $(0.10) Weather $0.13 Weather $0.05 Income Taxes $0.01 Generation $0.06 Income Taxes $0.06 Normalized Sales $(0.06)
Slide 13: 2nd Quarter Reconciliation of GAAP to Operating Earnings
2nd Quarter $ in millions Earnings Per Share Q2-23 Q2-24 Change Q2-23 Q2-24 Change Reconciliation of GAAP Reported GAAP Earnings $ 521 $ 340 $ (181) $ 1.01 $ 0.64 $ (0.37) to Operating Earnings Non-Operating Items: Weighted average number of shares outstanding: 514.9M Q2-23 Provision for Refund – Tu
Slide 14: YTD Reconciliation of GAAP to Operating Earnings
$ in millions Earnings Per Share YTD-23 YTD-24 Change YTD-23 YTD-24 Change Reported GAAP Earnings $ 918 $ 1,343 $ 425 $ 1.78 $ 2.55 $ 0.77 YTD Reconciliation of Non-Operating Items: GAAP to Operating Impact of Net Operating Losses Carryforward on Retail Rate Making1 - (260) (260) - (0.50) (0.50) Ear
Slide 15: Vertically Integrated Utilities 2nd Quarter Performance
Vertically Integrated Utilities 2nd Quarter Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) Q2-24 vs. Q2-24 vs. Q2-24 vs. Q2-23 Q2-24 vs. Q2-23 Q2-23 Normal APCo3 $26 APC
Slide 16: Vertically Integrated Utilities YTD Performance
Vertically Integrated Utilities YTD Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) YTD-24 vs. YTD-24 vs. YTD-24 vs. YTD-23 YTD-24 vs. YTD-23 YTD-23 Normal APCo3 $43 APCo
Slide 17: Transmission and Distribution Utilities 2nd Quarter Performance
Transmission and Distribution Utilities 2nd Quarter Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) Q2-24 vs. Q2-24 vs. Q2-23 Normal Q2-24 vs. Q2-23 Q2-24 vs. Q2-23 AEP O
Slide 18: Transmission and Distribution Utilities YTD Performance
Transmission and Distribution Utilities YTD Performance RATE PERFORMANCE WEATHER IMPACT RETAIL LOAD PERFORMANCE Rate Changes, net Weather Impact Retail Load1 of offsets ($ in millions) (weather normalized) ($ in millions) YTD-24 vs. YTD-24 vs. YTD-23 Normal YTD-24 vs. YTD-23 YTD-24 vs. YTD-23 AEP Oh
Slide 19: FFO to Total Debt
FFO to Total Debt1 FFO Calculation (in millions) 12 Months Ended 6/30/2024 Cash Flow from Operations (GAAP) $ 6,035 Changes in Working Capital 344 Operating Lease Depreciation 123 FFO to Total Debt = 14.6% Capitalized Interest (124) $6,394M FFO / $43,702M Adjusted Total Debt Junior Subordinated Debe
Slide 20: Appendix: Financial Forecast
Appendix Financial Forecast 2nd Quarter 2024 Earnings Release Presentation 20
Slide 21: 2024-2028 Capital Forecast of $43B
Regulated New Other Generation Generation $1.2B • 3% Nuclear $0.5B • 1% 2024-2028 Capital Generation Corporate Forecast of $43B Regulated $0.4B • 1% $3.5B • 8% 100% of capital allocated to Environmental Generation regulated businesses $0.3B • 1% The ability to quickly redeploy transmission and distr
Slide 22: 2024-2028 Cash Flows and Financial Metrics
$ in millions 2024E 2025E 2026E 2027E 2028E 2024-2028 Cash Cash from Operations Net Cash Proceeds from Sale of Assets $ 6,700 4001 $ 6,800 - $ 7,700 - $ 8,200 - $8,600 - Flows and Financial Capital Expenditures: Metrics Capital and JV Equity Contributions2 (7,500) (6,200) (6,400) (6,400) (7,200) Ren
Slide 23: Total Non-fuel O&M
2024E Inflation Inflation ~5% Avg. Gap of ~$1.1B 2022A – 2024E Inflation ~2% Avg. $5B 2014A – 2021A Continuous Focus on O&M Efficiency $4B Total Non-fuel O&M O&M discipline over time amid rising costs $3B and growing rate base $3.0B $3.1B $2.6B $2.6B helps keep customer $2.9B $3.1B $3.1B $3.2B $2.5B
Slide 24: Transmission – Delivering Significant Shareholder Value
Transmission Rate Base and Earnings Per Share $3.51-$.3.54 Transmission – $3.24-$3.27 $3.36-$3.39 Delivering $2.99-$3.02 $3.13-$3.16 Significant $2.80 $2.60 Shareholder $2.57 Value $2.06 $2.09 $18B $20B $21B $17B $15B $14B 2024E transmission investment $1.63 $13B represents 53% of total AEP $12B ear
Slide 25: Appendix: Regulatory and Generation Resources
Appendix Regulatory and Generation Resources 2nd Quarter 2024 Earnings Release Presentation 25
Slide 26: Regulated Returns
Twelve Months Ended 6/30/2024 Earned ROE’s – Total Regulated ROE was 8.9% Regulated Returns (non-GAAP operating earnings, not weather normalized) 14% Regulated Operations ROE 12% as of 6/30/2024 of 8.9% 10.8% 10% 9.3% 8.9% 9.0% 9.0% 8.5% 8% 8.0% 7.5% 1 Base rate cases pending/order recently received
Slide 27: Current Rate Case Activity
Current Rate Case Activity AEP Texas APCo – Virginia Docket # 56165 Docket # PUR-2024-00024 Continued focus on Filing Date 2/29/2024 Filing Date 3/29/2024 regulatory execution Requested Rate Base $9.3B Requested Rate Base $3.2B Requested ROE 10.6% Requested ROE 10.8% Cap Structure 55%D / 45%E Cap St
Slide 28: Current Rate Case Activity
Current Rate Case Activity I&M – Indiana I&M - Michigan PSO – Oklahoma Docket # 45933 Docket # U-21461 Docket # PUD 2023-000086 Filing Date 8/9/2023 Filing Date 9/15/2023 Filing Date 1/31/2024 Continued focus on Requested Rate Base $5.4B Requested Rate Base $1.3B Requested Rate Base $4.5B regulatory
Slide 29: New Generation – Resource Plans Are Aligned with Capacity Needs
New Generation – IRP FILINGS Resource Plans Are 2023 | 2024 2025 Aligned with Capacity Needs VA VCEA – KY – Mar 2023 OK – Oct 2023 LA – Feb 2024 VA VCEA – OK – Oct 2024 IN – Mar 2025 AR – Dec 2024 Mar 2023 Apr 2024 Current IRPs identified ~20 GW 2024-2033 RESOURCE NEEDS of new generation opportuniti
Slide 30: New Generation – Project Status
In Service/ New Generation – Total Investment Resource Project MWs Acquisition Date Jurisdictional Status Project Status 209 MW / ~$500M Solar Amherst / Virginia 5 2023 Projects Approved July 2022 Docket # PUR-2021-00206 Wind Top Hat / Illinois 204 2025 Project Approved September 2023 143 MW / ~$426
Slide 31: New Generation – Investment Growth
RFPs New Generation – IN PROGRESS1 Investment RFPs Issued May 2024 November 2023 January 2024 Growth Wind Solar 800 MW 1,500 MW of SPP 2,100 MW of SPP Continuing execution on Storage accredited capacity accredited capacity the $9.4B regulated renewables investment Natural Gas - over the next five ye
American Electric Power Company — Q2 2024 Earnings Presentation on 6ix