COLUMBUS, Ohio, May 6,
2020 /PRNewswire/ --
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AMERICAN ELECTRIC
POWER
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Preliminary,
unaudited results
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First Quarter
ended March 31
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2020
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2019
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Variance
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Revenue ($ in
billions):
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3.7
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4.1
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(0.4)
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Earnings ($ in
millions):
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GAAP
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495.2
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572.8
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(77.6)
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Operating
(non-GAAP)
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504.2
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584.8
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(80.6)
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EPS
($):
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GAAP
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1.00
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1.16
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(0.16)
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Operating
(non-GAAP)
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1.02
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1.19
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(0.17)
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EPS based on 495mm
shares in 1Q 2020, 493mm shares in 1Q 2019
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American Electric Power (NYSE: AEP) today reported first-quarter
2020 earnings, prepared in accordance with Generally Accepted
Accounting Principles (GAAP), of $495
million or $1.00 per share,
compared with $573 million or
$1.16 per share in first-quarter
2019. Operating earnings for first-quarter 2020 were $504 million or $1.02 per share, compared with first-quarter 2019
operating earnings of $585 million or
$1.19 per share. Operating earnings
is a non-GAAP measure representing GAAP earnings excluding special
items. The difference between first-quarter 2020 GAAP earnings and
operating earnings was due to the mark-to-market impact of economic
hedging activities and certain expenses related to the COVID-19
pandemic.
A full reconciliation of GAAP earnings to operating earnings for
the quarter is included in the tables at the end of this news
release.
"The continued health and safety of our employees, customers and
communities has been our priority over the past few months as we've
taken steps to ensure critical electric service during the
pandemic. Our front line employees are working in smaller teams,
practicing physical distancing, wearing facial coverings and taking
other preventive measures. We also have nearly 12,000 of our
employees working very effectively from home," said Nicholas K. Akins, AEP chairman, president and
chief executive officer.
"We temporarily suspended all service disconnections for
non-payment and are putting in place longer term plans to help
customers keep their accounts in good standing. We also created a
team focused on proactively helping small business customers access
federal and state loan programs. Additionally, the AEP Foundation
has committed nearly $3 million in
emergency response funding to support non-profit organizations
across our service area," Akins said.
"Our long-term investment strategy to enhance service for our
customers and grow our contracted renewables business bolstered
earnings for the quarter, despite the negative impacts of warmer
than normal weather. Our Transmission Holding Co. business
contributed 28 cents per share to
earnings in the first quarter, an improvement of 3 cents over the first quarter last year. Net
plant in that business increased by 18% since March 2019, primarily to address aging
infrastructure.
"We continue to make progress on our $2
billion North Central wind projects and will proceed with
that acquisition when approvals are complete. We have approvals
from Arkansas, Oklahoma and FERC and expect to receive
decisions on our settlement in Louisiana as well as a final order from
Texas in the coming months," Akins
said.
"Our load projections for the year have been revised based on
the economic impacts of the pandemic. We now expect residential
load to grow by 3% for the year, but we are anticipating commercial
and industrial load declines of 6% and 8%, respectively. In
response, we've cut our planned operating and maintenance expense
by $100 million. In addition, we are
shifting $500 million of our planned
2020 capital spending to future years to support our credit
metrics. We still plan to invest $33
billion in capital over the next five years, exclusive of
the North Central wind projects.
"Based on unfavorable weather in the first quarter, our updated
load forecast and the actions we have taken, we expect to be in the
lower half of our existing 2020 operating earnings guidance range
of $4.25 to $4.45 per share," Akins said.
SUMMARY OF RESULTS
BY SEGMENT
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$ in
millions
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GAAP
Earnings
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1Q
20
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1Q
19
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Variance
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Vertically Integrated
Utilities (a)
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245.3
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302.4
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(57.1)
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Transmission &
Distribution Utilities (b)
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116.2
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156.5
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(40.3)
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AEP Transmission
Holdco (c)
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140.6
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124.2
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16.4
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Generation &
Marketing (d)
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28.4
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40.1
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(11.7)
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Corporate and
Other
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(35.3)
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(50.4)
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15.1
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Total GAAP
Earnings
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495.2
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572.8
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(77.6)
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Operating Earnings
(non-GAAP)
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1Q
20
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1Q
19
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Variance
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Vertically Integrated
Utilities (a)
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247.2
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310.8
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(63.6)
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Transmission &
Distribution Utilities (b)
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117.0
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156.6
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(39.6)
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AEP Transmission
Holdco (c)
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140.6
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124.2
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16.4
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Generation &
Marketing (d)
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34.7
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43.1
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(8.4)
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Corporate and
Other
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(35.3)
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(49.9)
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14.6
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Total Operating
Earnings (non-GAAP)
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504.2
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584.8
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(80.6)
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A full reconciliation
of GAAP earnings with operating earnings is included in tables at
the end of this news release.
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(a)
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Includes AEP
Generating Co., Appalachian Power, Indiana Michigan Power, Kentucky
Power, Kingsport Power, Public Service Company of Oklahoma,
Southwestern Electric Power and Wheeling Power.
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(b)
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Includes Ohio Power
and AEP Texas.
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(c)
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Includes wholly-owned
transmission-only subsidiaries and transmission-only joint
ventures.
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(d)
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Includes AEP OnSite
Partners, AEP Renewables, competitive generation in ERCOT and PJM
as well as marketing, risk management and retail activities in
ERCOT, PJM and MISO.
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EARNINGS GUIDANCE
AEP management reaffirmed its 2020 operating earnings guidance
range of $4.25 to $4.45 per share. Operating earnings could differ
from GAAP earnings for matters such as impairments, divestitures or
changes in accounting principles. AEP management is not able to
forecast if any of these items will occur or any amounts that may
be reported for future periods. Therefore, AEP is not able to
provide a corresponding GAAP equivalent for earnings guidance.
Reflecting special items recorded through the first quarter, the
estimated earnings per share on a GAAP basis would be $4.23 to $4.43 per
share. See the table below for a full reconciliation of 2020
earnings guidance.
2020 EPS Guidance
Reconciliation
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Estimated EPS on a
GAAP basis
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$4.23
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to
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$4.43
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Mark-to-market impact of commodity hedging activities
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0.01
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COVID-19
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0.01
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Operating EPS
Guidance
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$4.25
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to
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$4.45
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WEBCAST
AEP's quarterly discussion with financial analysts and investors
will be broadcast live over the internet at 9 a.m. Eastern today at
http://www.aep.com/webcasts. The webcast will include audio of the
discussion and visuals of charts and graphics referred to by AEP
management. The charts and graphics will be available for download
at http://www.aep.com/webcasts.
AEP's earnings are prepared in accordance with accounting
principles generally accepted in the
United States and represent the company's earnings as
reported to the Securities and Exchange Commission. The company's
operating earnings, a non-GAAP measure representing GAAP earnings
excluding special items as described in the news release and
charts, provide another representation for investors to evaluate
the performance of the company's ongoing business activities. AEP
uses operating earnings as the primary performance measurement when
communicating with analysts and investors regarding its earnings
outlook and results. The company uses operating earnings data
internally to measure performance against budget, to report to
AEP's Board of Directors and also as an input in determining
performance-based compensation under the company's employee
incentive compensation plans.
American Electric Power, based in Columbus, Ohio, is focused on building a
smarter energy infrastructure and delivering new technologies and
custom energy solutions to our customers. AEP's approximately
17,400 employees operate and maintain the nation's largest
electricity transmission system and more than 221,000 miles of
distribution lines to efficiently deliver safe, reliable power to
nearly 5.5 million regulated customers in 11 states. AEP also is
one of the nation's largest electricity producers with
approximately 31,000 megawatts of diverse generating capacity,
including more than 5,200 megawatts of renewable energy. AEP's
family of companies includes utilities AEP Ohio, AEP Texas,
Appalachian Power (in Virginia and
West Virginia), AEP Appalachian
Power (in Tennessee), Indiana
Michigan Power, Kentucky Power, Public Service Company of
Oklahoma, and Southwestern
Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas
Panhandle). AEP also owns AEP Energy, AEP Energy Partners,
AEP OnSite Partners, and AEP Renewables, which provide innovative
competitive energy solutions nationwide. For more information,
visit aep.com.
---
This report made by American Electric Power and its Registrant
Subsidiaries 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 that could cause actual
outcomes and results to be materially different from those
projected. Among the factors that could cause actual results to
differ materially from those in the forward-looking statements are:
changes in economic conditions, electric market demand and
demographic patterns in AEP service territories; the impact of
pandemics, including COVID-19, and any associated disruption of
AEP's business operations due to impacts on economic or market
conditions, electricity usage, employees, customers, service
providers, vendors and suppliers; inflationary or deflationary
interest rate trends; volatility in the financial markets,
particularly developments affecting the availability or cost of
capital to finance new capital projects and refinance existing
debt; the availability and cost of funds to finance working capital
and capital needs, particularly during periods when the time lag
between incurring costs and recovery is long and the costs are
material; decreased demand for electricity; weather conditions,
including storms and drought conditions, and AEP's ability to
recover significant storm restoration costs; the cost of fuel and
its transportation, the creditworthiness and performance of fuel
suppliers and transporters and the cost of storing and disposing of
used fuel, including coal ash and spent nuclear fuel; the
availability of fuel and necessary generation capacity and the
performance of AEP's generation plants; AEP's ability to recover
fuel and other energy costs through regulated or competitive
electric rates; AEP's ability to build or acquire renewable
generation, transmission lines and facilities (including the
ability to obtain any necessary regulatory approvals and permits)
when needed at acceptable prices and terms and to recover those
costs; new legislation, litigation and government regulation,
including oversight of nuclear generation, energy commodity trading
and new or heightened requirements for reduced emissions of sulfur,
nitrogen, mercury, carbon, soot or particulate matter and other
substances that could impact the continued operation, cost
recovery, and/or profitability of AEP's generation plants and
related assets; evolving public perception of the risks associated
with fuels used before, during and after the generation of
electricity, including coal ash and nuclear fuel; timing and
resolution of pending and future rate cases, negotiations and other
regulatory decisions, including rate or other recovery of new
investments in generation, distribution and transmission service
and environmental compliance; resolution of litigation; AEP's
ability to constrain operation and maintenance costs; prices and
demand for power generated and sold at wholesale; changes in
technology, particularly with respect to energy storage and new,
developing, alternative or distributed sources of generation; AEP's
ability to recover through rates any remaining unrecovered
investment in generation units that may be retired before the end
of their previously projected useful lives; volatility and changes
in markets for coal and other energy-related commodities,
particularly changes in the price of natural gas; changes in
utility regulation and the allocation of costs within regional
transmission organizations, including ERCOT, PJM and SPP; changes
in the creditworthiness of the counterparties with whom AEP has
contractual arrangements, including participants in the energy
trading market; actions of rating agencies, including changes in
the ratings of AEP debt; the impact of volatility in the capital
markets on the value of the investments held by AEP's pension,
OPEB, captive insurance entity and nuclear decommissioning trust
and the impact of such volatility on future funding requirements;
accounting standards periodically issued by accounting
standard-setting bodies; other risks and unforeseen events,
including wars, the effects of terrorism (including increased
security costs), embargoes, naturally occurring and human-caused
fires, cyber security threats and other catastrophic events; and
the ability to attract and retain the requisite work force and key
personnel.
# # #
American Electric
Power
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Financial Results
for Year-to-Date 2020
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Reconciliation of
GAAP to Operating Earnings (non-GAAP)
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2020
|
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Vertically
Integrated
Utilities
|
|
Transmission
& Distribution
Utilities
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AEP
Transmission
Holdco
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|
Generation
& Marketing
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Corporate
and Other
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Total
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EPS
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($
millions)
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|
|
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|
|
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GAAP
Earnings
|
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245.3
|
|
|
116.2
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|
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140.6
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28.4
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(35.3)
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495.2
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|
$
|
1.00
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|
|
|
|
|
|
|
|
|
|
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|
|
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Special
Items
|
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|
|
|
|
|
|
|
|
|
|
|
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Mark-to-Market Impact
of
Economic Hedging Activities
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(a)
|
—
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|
|
—
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|
|
—
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|
|
6.3
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—
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6.3
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|
0.01
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|
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COVID-19
Charges
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(b)
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1.9
|
|
|
0.8
|
|
|
—
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|
|
—
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|
|
—
|
|
|
2.7
|
|
|
0.01
|
|
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Total Special
Items
|
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1.9
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|
0.8
|
|
|
—
|
|
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6.3
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—
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|
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9.0
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|
|
$
|
0.02
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
Operating
Earnings
(non-GAAP)
|
|
247.2
|
|
|
117.0
|
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|
140.6
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34.7
|
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(35.3)
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|
504.2
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$
|
1.02
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Financial Results
for Year-to-Date 2019
|
Reconciliation of
GAAP to Operating Earnings (non-GAAP)
|
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2019
|
|
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|
Vertically
Integrated
Utilities
|
|
Transmission
& Distribution
Utilities
|
|
AEP
Transmission
Holdco
|
|
Generation
& Marketing
|
|
Corporate
and Other
|
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Total
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EPS
|
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($
millions)
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|
|
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|
GAAP
Earnings
|
|
302.4
|
|
|
156.5
|
|
|
124.2
|
|
|
40.1
|
|
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(50.4)
|
|
|
572.8
|
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Special
Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-Market
Impact of
Economic Hedging Activities
|
(a)
|
—
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|
|
—
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
|
0.01
|
|
|
Severance
Charges
|
(b)
|
8.4
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
9.0
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|
|
$
|
0.02
|
|
|
Total Special
Items
|
|
8.4
|
|
|
0.1
|
|
|
—
|
|
|
3.0
|
|
|
0.5
|
|
|
12.0
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Earnings
(non-GAAP)
|
|
310.8
|
|
|
156.6
|
|
|
124.2
|
|
|
43.1
|
|
|
(49.9)
|
|
|
584.8
|
|
|
$
|
1.19
|
|
(a)
|
Reflected in Revenues
and Income Tax Expense
|
(b)
|
Reflected in Other
Operation Expenses and Income Tax Expense
|
American Electric
Power
|
Summary of
Selected Sales Data
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Regulated
Connected Load
|
(Data based on
preliminary, unaudited results)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31
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ENERGY &
DELIVERY SUMMARY
|
|
2020
|
|
2019
|
|
Change
|
|
|
|
|
|
|
|
Vertically
Integrated Utilities
|
|
|
|
|
|
|
Retail
Electric (in millions of kWh):
|
|
|
|
|
|
|
Residential
|
|
8,262
|
|
|
9,216
|
|
|
(10.4)
|
%
|
Commercial
|
|
5,366
|
|
|
5,633
|
|
|
(4.7)
|
%
|
Industrial
|
|
8,475
|
|
|
8,545
|
|
|
(0.8)
|
%
|
Miscellaneous
|
|
530
|
|
|
546
|
|
|
(2.9)
|
%
|
Total
Retail
|
|
22,633
|
|
|
23,940
|
|
|
(5.5)
|
%
|
|
|
|
|
|
|
|
Wholesale Electric (in millions of
kWh): (a)
|
|
3,618
|
|
|
5,804
|
|
|
(37.7)
|
%
|
|
|
|
|
|
|
|
Total
KWHs
|
|
26,251
|
|
|
29,744
|
|
|
(11.7)
|
%
|
|
|
|
|
|
|
|
Transmission &
Distribution Utilities
|
|
|
|
|
|
|
Retail
Electric (in millions of kWh):
|
|
|
|
|
|
|
Residential
|
|
6,300
|
|
|
6,547
|
|
|
(3.8)
|
%
|
Commercial
|
|
5,873
|
|
|
5,618
|
|
|
4.5
|
%
|
Industrial
|
|
5,908
|
|
|
5,771
|
|
|
2.4
|
%
|
Miscellaneous
|
|
182
|
|
|
176
|
|
|
3.4
|
%
|
Total Retail (b)
|
|
18,263
|
|
|
18,112
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
Wholesale Electric (in millions of
kWh): (c)
|
|
390
|
|
|
638
|
|
|
(38.9)
|
%
|
|
|
|
|
|
|
|
Total
KWHs
|
|
18,653
|
|
|
18,750
|
|
|
(0.5)
|
%
|
(a)
|
Includes Off-System
Sales, municipalities and cooperatives, unit power, and other
wholesale customers
|
(b)
|
Represents energy
delivered to distribution customers
|
(c)
|
Primarily Ohio's
contractually obligated purchases of OVEC power sold to
PJM
|
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SOURCE American Electric Power