American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Q4 2015 Earnings Presentation
32 slides from American Electric Power's earnings presentation, Jan 28, 2016
Slide 1: 4th Quarter 2015 Earnings Release Presentation
4th Quarter 2015 Earnings Release Presentation January 28, 2016 1
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: Fourth Quarter 2015 Highlights
Fourth Quarter 2015 Highlights Fourth Quarter 2015 Total Shareholder Return YTD 2015 One Year Three Year Five Year Refer to appendix for reconciliation between GAAP and Operating EPS 3
Slide 4: 2015 Highlights & 2016 Focus
2015 Highlights & 2016 Focus 2015 Highlights 2016 Focus Financial Performance Financial Performance Delivered Q4 2015 GAAP and operating earnings of Deliver operating earnings guidance range of $0.96 and $0.48 per share, respectively $3.60 to $3.80 per share Delivered 2015 GAAP and operating e
Slide 5: Regulated Returns
Regulated Returns Twelve Months Ended 12/31/2015 Earned & 2016 Pro-forma Operating ROE 2015 Earned Regulated ROE 2016 Pro-Forma Regulated ROE OPCo OPCo 11.6% Trans 11.9% 11.1% APCo I&M 10.7% I&M Trans APCo 10.2% 9.9% 10.2% SWEPCO PSO AEP TX 9.4% PSO KPCo 9.0% AEP TX 8.6% 9.0% SWEPCO 8.7% 8.6% 8.4% 7
Slide 6: 4th Quarter 2015 vs. Prior Year By Segment
4th Quarter 2015 vs. Prior Year By Segment $0.03 ($0.07) $0.03 2015 Actual EPS $0.24 $0.13 $0.09 $0.02 $0.03 $(0.03) Refer to appendix for additional explanation of variances by segment 6
Slide 7: 2015 vs. Prior Year By Segment
2015 vs. Prior Year By Segment $0.03 $0.06 $0.03 2015 Actual EPS $1.83 $0.72 $0.39 $0.75 $0.06 $(0.06) Refer to appendix for additional explanation of variances by segment 7
Slide 8: Normalized Load Trends
Normalized Load Trends Note: Charts reflect connected load and exclude firm wholesale load & Buckeye Power backup load. 8
Slide 9: Economic Data
Economic Data GDP Growth by Quarter GDP Growth by Geography 4% 4% US AEP US AEP-East AEP-West 3% Growth vs Prior Year 3% Growth vs Prior Year 2.9% 2.7% 2% 2.5% 2.3% 2.2% 2.2% 2% 1.8% 1% 1.4% 1.4% 1% 1.2% 0% 0% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Employment Growth by Quarter E
Slide 10: Industrial Class Data
Industrial Class Data AEP Industrial GWh Growth Industrial Sales Growth in Shale Regions 15% Eagle Ford (TX) Marcellus (WV) 14.9% 70% Permian (TX) Utica (OH) 11.9% 60% Woodford (OK) 10% 10.4% 10.1% 10.5% 9.7% 50% GWh Growth vs Prior Year Growth vs Prior Year 5% 40% 4.7% 0.9% 30% 0% 20% -0.8% -3.2% -
Slide 11: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization Credit Statistics Actual Target FFO Interest Coverage 5.5x >3.6x FFO to Total Debt 20.8% 15%-20% Note: Credit statistics represent the trailing 12 months as of 12/31/2015 Liquidity Summary (unaudited) 12/31/2015 Actual ($ in millions) Amou
Slide 12: Proven track record & 2016 Outlook
Proven track record & 2016 Outlook Proven track record 2016 Outlook 4% - 6% earnings growth 4%-6% growth rate Dividend growth in line with earnings Operating earnings guidance range of $3.60-$3.80 O&M & Cap-ex discipline Clarity regarding PPA and strategic Rate base and earnings growth
Slide 13: Appendix
Appendix 13
Slide 14: Fourth Quarter Operating Earnings Per Share Overview
Fourth Quarter Operating Earnings Per Share Overview Segment Q4-14 Q4-15 YTD-14 YTD-15 EPS EPS EPS EPS Vertically Integrated Utilities $0.12 $0.24 $1.45 $1.83 Transmission & Distribution 0.15 0.13 0.72 0.72 Utilities AEP Transmission Holdco 0.08 0.09 0.31 0.39 Generation & Marketing 0.06 0.02 0.84 0
Slide 15: 4th Quarter Reconciliation of GAAP to Operating Earnings
4th Quarter Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share Q4-14 Q4-15 Change Q4-14 Q4-15 Change Reported (GAAP) Earnings $191 $469 $278 $0.39 $0.96 $0.57 Non Operating Items: Discontinued Commercial - (239) (239) - (0.48) (0.48) Barging Activities Mark-to-Market Impact o
Slide 16: YTD December Reconciliation of GAAP to Operating Earnings
YTD December Reconciliation of GAAP to Operating Earnings $ millions Earnings Per Share YTD-14 YTD-15 Change YTD-14 YTD-15 Change Reported (GAAP) Earnings $1,634 $2,047 $413 $3.34 $4.17 $0.83 Non Operating Items: Discontinued Commercial - (239) (239) - (0.48) (0.48) Barging Activities Mark-to-Market
Slide 17: Vertically Integrated Utilities
Vertically Integrated Utilities Fourth Quarter EPS Summary Key Drivers: Q4-15 vs. Q4-14 Rate changes: $60M primarily from APCo, SWEPCo, Q4-14 Q4-15 KPCo & I&M. Additional $36M and $29M favorable $ millions (except EPS) effect related to prior year regulatory provisions for KPCo and APCo, respectiv
Slide 18: Vertically Integrated Utilities
Vertically Integrated Utilities YTD EPS Summary Key Drivers: YTD-15 vs. YTD-14 Rate changes: $236M primarily from APCo, SWEPCo, YTD-14 YTD-15 I&M and KPCo $ millions (except EPS) $52M favorable effect from reversal of a 2014 VA Operating Revenues $9,484 $9,172 regulatory provision and $36M favor
Slide 19: Transmission & Distribution Utilities
Transmission & Distribution Utilities Fourth Quarter EPS Summary Key Drivers: Q4-15 vs. Q4-14 Q4-14 Q4-15 Rate changes: $8M primarily from Ohio DIR and $ millions (except EPS) energy efficiency program recovery Operating Revenues $1,233 $1,037 OSS: Unfavorable $16M due to OVEC Operating Expenses
Slide 20: Transmission & Distribution Utilities
Transmission & Distribution Utilities YTD EPS Summary Key Drivers: YTD-15 vs. YTD-14 YTD-14 YTD-15 Rate changes: $31M primarily from Ohio DIR $ millions (except EPS) and energy efficiency program recovery Operating Revenues $4,814 $4,557 A $33M regulatory provision was recorded in Operating Expe
Slide 21: AEP Transmission Holdco
AEP Transmission Holdco Fourth Quarter EPS Summary Key Drivers: Q4-15 vs. Q4-14 Q4-14 Q4-15 $18M favorable operating income due to $ millions (except EPS) increased revenues and expenses, driven by Operating Revenues $52 $85 increased capital investment in the wholly- Operating Expenses: owned Tra
Slide 22: AEP Transmission Holdco
AEP Transmission Holdco YTD EPS Summary Key Drivers: YTD-15 vs. YTD-14 YTD-14 YTD-15 $74M favorable operating income due to $ millions (except EPS) increased revenues and expenses, driven by Operating Revenues $192 $329 increased capital investment in the wholly- Operating Expenses: owned Transcos
Slide 23: Generation & Marketing
Generation & Marketing Fourth Quarter EPS Summary Key Drivers: Q4-15 vs. Q4-14 Q4-14 Q4-15 $ millions (except EPS) Generation decreased 3,107 GWh (32%) Q4-15 Operating Revenues $793 $610 vs. Q4-14 Operating Expenses: AEP Dayton ATC liquidations down 24%: Energy Costs (487) (394) $27.01/MWh in Q4
Slide 24: Generation & Marketing
Generation & Marketing YTD EPS Summary Key Drivers: YTD-15 vs. YTD-14 YTD-14 YTD-15 $ millions (except EPS) Generation decreased 5,659 GWh (12.4%) YTD- Operating Revenues $3,858 $3,414 15 vs. YTD-14 Operating Expenses: AEP Dayton ATC liquidations down 29%: Energy Costs (2,381) (2,165) $31.49/MWh
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) Q4-15 vs. Q4-14 Q4-15 vs. Q4-14 APCo/WPCo $30 Ohio Power $8 I&M $8 Texas Central - KPCo $9 Texas North - PSO $2 TOTAL $8
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) YTD-15 vs. YTD-14 YTD-15 vs. YTD-14 APCo/WPCo $100 Ohio Power $31 I&M $56 Texas Central - KPCo $8 Texas North - PSO $5 T
Slide 27: Retail Load Performance
Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) Q4-15 vs. Q4-14 Q4-15 vs. Q4-14 APCo/WPCo -4.4% Ohio Power -3.7% I&M -3.8% Texas Central -2.9% KPCo -7.8% Texas North -0.1% PSO -1.8% TOTA
Slide 28: Retail Load Performance
Retail Load Performance Vertically Integrated Utilities Transmission & Distribution Utilities Retail Load* Retail Load* (weather (weather normalized) normalized) YTD-15 vs. YTD-14 YTD-15 vs. YTD-14 APCo/WPCo -1.6% Ohio Power 0.2% I&M -1.1% Texas Central 0.3% KPCo -3.6% PSO 0.3% Texas North 0.6% SWEP
Slide 29: Weather Impact vs. Prior Year
Weather Impact vs. Prior Year Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) Q4-15 vs. Q4-14 Q4-15 vs. Q4-14 APCo/WPCo ($44) Ohio Power - I&M ($12) Texas Central $1 KPCo ($10) Texas North ($1) PSO ($7) TOTAL - SWEPCO ($
Slide 30: Weather Impact
Weather Impact Vertically Integrated Utilities Transmission & Distribution Utilities Weather Impact Weather Impact (in millions) (in millions) YTD-15 vs. YTD-14 YTD-15 vs. YTD-14 APCo/WPCo ($25) Ohio Power - I&M ($12) Texas Central $5 KPCo ($7) Texas North ($1) PSO - TOTAL $4 SWEPCO $14 Kingsport ($
Slide 31: 2015 – 2018 Financing Plan & Credit Metrics
2015 – 2018 Financing Plan & Credit Metrics $ in millions 2015A 2016E 2017E 2018E Cash from Operations 4,800 5,100 5,100 5,100 Capital & JV Equity Contributions (4,600) (5,000) (5,000) (5,000) Other Investing Activities 500 (100) (200) (200) Common Dividends @ $2.15/share 2015; $2.24/share - 2016 -
Slide 32: 2016 – 2018 Cap-Ex
2016 – 2018 Cap-Ex $15B Cap-ex from 2016-2018 $ in millions excluding AFUDC 2016: $5.0B 2017: $5.0B 2018: $5.0B Regulated Generation - $2.5B Regulated Distribution - $3.9B Regulated Transmission - $7.3B 95% of capital allocated to regulated businesses; 74% allocated to wires 32
American Electric Power Company — Q4 2015 Earnings Presentation on 6ix