- First-quarter 2023 GAAP earnings of $0.77 per share; operating earnings of
$1.11 per share
- 2023 operating earnings (non-GAAP) guidance range reaffirmed at
$5.19 to $5.39 per share with long-term growth rate of 6%
to 7% and FFO/Debt target of 14% to 15%
- AEP launches sale process for retail and distributed resources
businesses, announces strategic review of certain non-core
transmission joint ventures, remains on track to close on
unregulated renewable asset sale
COLUMBUS, Ohio, May 4, 2023
/PRNewswire/ --
|
AMERICAN ELECTRIC
POWER
Preliminary,
unaudited results
|
|
|
|
First Quarter
ended March 31
|
|
|
2023
|
2022
|
Variance
|
Revenue ($ in
billions):
|
4.7
|
4.6
|
0.1
|
Earnings ($ in
millions):
|
|
|
|
|
GAAP
|
397.0
|
714.7
|
(317.7)
|
|
Operating
(non-GAAP)
|
571.6
|
616.4
|
(44.8)
|
|
|
|
|
|
EPS
($):
|
|
|
|
|
|
GAAP
|
0.77
|
1.41
|
(0.64)
|
|
Operating
(non-GAAP)
|
1.11
|
1.22
|
(0.11)
|
EPS based on 514
million shares 1Q 2023, 506 million shares 1Q 2022.
|
|
American Electric Power (Nasdaq: AEP) today reported
first-quarter 2023 earnings, prepared in accordance with Generally
Accepted Accounting Principles (GAAP), of $397 million or $0.77 per share, compared with GAAP earnings of
$715 million or $1.41 per share in first-quarter 2022. Operating
earnings for first-quarter 2023 were $572
million or $1.11 per share,
compared with operating earnings of $616
million or $1.22 per share in
first-quarter 2022.
Operating earnings is a non-GAAP measure representing GAAP
earnings excluding special items. The difference between 2023 GAAP
and operating earnings for the quarter was largely due to the
mark-to-market impact of commodity prices on economic hedging
activities and charges related to the anticipated sale of the
unregulated contracted renewables portfolio. A full reconciliation
of GAAP earnings to operating earnings for the quarter is included
in the tables at the end of this news release.
"In the first quarter, our team executed on key priorities to
advance our strategy even as we experienced the second warmest
temperatures we've seen in 30 years. We continue to see the
positive impacts of our regulatory efforts and investments in
transmission along with strong growth in commercial and industrial
load, reflecting our ongoing focus on attracting businesses and
jobs to our communities through our economic development efforts,"
said Julie Sloat, AEP president and
chief executive officer.
"AEP has a strong track record of delivering on our stakeholder
commitments and demonstrating disciplined capital and O&M cost
management as we invest in a clean and reliable energy system to
benefit our customers. These efforts, combined with our active
approach to managing the business, give us confidence in
reaffirming our 2023 operating earnings guidance range of
$5.19 to $5.39 per share and our long-term growth rate of
6% to 7%.
"The investments we're making to enhance service while
maintaining affordability for customers continue to support our
earnings growth strategy. As part of our five-year, $40 billion capital plan, we have a robust
pipeline of wires investments and are making significant progress
on transitioning our generation fleet to support the clean energy
economy," Sloat said.
"We also continue to simplify and de-risk our business. In
February, we announced an agreement to sell our 1,365-megawatt
unregulated renewables portfolio to IRG Acquisition Holdings, which
we expect to close in the second quarter of 2023.
"We've launched a sale process for our AEP Energy retail and AEP
OnSite Partners distributed resources businesses as well as our 50%
share in the New Mexico Renewable Development joint venture. In
addition, we are reviewing certain non-core transmission joint
ventures, including AEP's ownership interests in Prairie Wind
Transmission, Pioneer Transmission and Transource Energy to
determine if our current stake in these businesses fits with our
long-term plan. Active review of our portfolio allows us to
continue prioritizing investment in our regulated utilities to
enhance service for our customers," Sloat said.
SUMMARY OF RESULTS
BY SEGMENT
|
$ in
millions
|
|
GAAP
Earnings
|
1Q 23
|
1Q 22
|
Variance
|
Vertically Integrated
Utilities (a)
|
261.0
|
298.2
|
(37.2)
|
Transmission &
Distribution Utilities (b)
|
125.7
|
152.8
|
(27.1)
|
AEP Transmission
Holdco (c)
|
181.5
|
173.1
|
8.4
|
Generation &
Marketing (d)
|
(157.7)
|
114.2
|
(271.9)
|
All Other
|
(13.5)
|
(23.6)
|
10.1
|
Total GAAP Earnings
(Loss)
|
397.0
|
714.7
|
(317.7)
|
|
|
|
|
Operating Earnings
(non-GAAP)
|
1Q 23
|
1Q 22
|
Variance
|
Vertically Integrated
Utilities (a)
|
265.2
|
298.2
|
(33.0)
|
Transmission &
Distribution Utilities (b)
|
125.7
|
152.8
|
(27.1)
|
AEP Transmission
Holdco (c)
|
181.5
|
173.1
|
8.4
|
Generation &
Marketing (d)
|
45.2
|
14.7
|
30.5
|
All Other
|
(46.0)
|
(22.4)
|
(23.6)
|
Total Operating
Earnings (non-GAAP)
|
571.6
|
616.4
|
(44.8)
|
|
A full reconciliation
of GAAP earnings with operating earnings is included in tables at
the end of this news release.
|
|
a.
|
Includes AEP Generating
Co., Appalachian Power, Indiana Michigan Power, Kentucky Power,
Kingsport Power, Public Service Co. of Oklahoma, Southwestern
Electric Power and Wheeling Power
|
b.
|
Includes Ohio Power and
AEP Texas
|
c.
|
Includes wholly-owned
transmission-only subsidiaries and transmission-only joint
ventures
|
d.
|
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
|
EARNINGS GUIDANCE
AEP management reaffirmed its 2023 operating earnings guidance
range of $5.19 to $5.39 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 $4.85 to $5.05 per
share. See the table below for a full reconciliation of 2023
earnings guidance.
2023 EPS
Guidance Reconciliation
|
|
|
|
|
Estimated EPS on a
GAAP basis
|
$4.85
|
to
|
$5.05
|
|
|
|
|
Mark-to-market impact
of commodity hedging activities
|
|
0.23
|
|
|
|
|
|
Termination of the
sale of Kentucky operations
|
|
(0.06)
|
|
|
|
|
|
Pending sale of
unregulated renewables
|
|
0.17
|
|
|
|
|
|
Operating EPS
Guidance
|
$5.19
|
to
|
$5.39
|
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 powering a cleaner,
brighter energy future for its customers and communities. AEP's
approximately 17,000 employees operate and maintain the nation's
largest electricity transmission system and more than 225,000 miles
of distribution lines to safely deliver reliable and affordable
power to 5.6 million regulated customers in 11 states. AEP also is
one of the nation's largest electricity producers with
approximately 30,000 megawatts of diverse generating capacity,
including more than 7,000 megawatts of renewable energy. The
company's plans include growing its renewable generation portfolio
to approximately 50% of total capacity by 2032. AEP is on track to
reach an 80% reduction in carbon dioxide emissions from 2005 levels
by 2030 and has committed to achieving net zero by 2045. AEP is
recognized consistently for its focus on sustainability, community
engagement, and diversity, equity and inclusion. 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, which provides
innovative competitive energy solutions nationwide. For more
information, visit aep.com.
WEBSITE DISCLOSURE
AEP may use its website as a distribution channel for material
company information. Financial and other important information
regarding AEP is routinely posted on and accessible through AEP's
website at https://www.aep.com/investors/. In addition, you may
automatically receive email alerts and other information about AEP
when you enroll your email address by visiting the "Email Alerts"
section at https://www.aep.com/investors/.
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 and any associated disruption of AEP's business
operations due to impacts on economic or market conditions, costs
of compliance with potential government regulations, electricity
usage, supply chain issues, customers, service providers, vendors
and suppliers; the economic impact of increased global trade
tensions including the conflict between Russia and Ukraine, and the adoption or expansion of
economic sanctions or trade restrictions; inflationary or
deflationary interest rate trends; volatility and disruptions in
the financial markets precipitated by any cause, including failure
to make progress on federal budget or debt ceiling matters or
instability in the banking industry, 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 if expected sources of capital, such as proceeds from
the sale of assets, subsidiaries or tax credits, do not
materialize, and 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 generation plants; AEP's
ability to recover fuel and other energy costs through regulated or
competitive electric rates; the ability to transition from fossil
generation and the 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, including favorable tax
treatment, cost caps imposed by regulators and other operational
commissions and customers for renewable generation projects, and to
recover all related costs; new legislation, litigation and
government regulation, including changes to tax laws and
regulations, 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 generation plants and related
assets; the impact of federal tax legislation on results of
operations, financial condition, cash flows or credit ratings; the
risks associated with fuels used before, during and after the
generation of electricity and the byproducts and wastes of such
fuels, including coal ash and spent 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; the impact of
changing expectations and demands of customers, regulators,
investors and stakeholders, including heightened emphasis on
environmental, social and governance concerns; 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 contractual
arrangements, including participants in the energy trading market;
actions of rating agencies, including changes in the ratings of
debt; the impact of volatility in the capital markets on the value
of the investments held by AEP's pension, other postretirement
benefit plans, 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 and military conflicts, 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
|
Financial Results
for the First Quarter of 2023
|
Reconciliation of
GAAP to Operating Earnings (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
Vertically
Integrated
Utilities
|
|
Transmission
& Distribution
Utilities
|
|
AEP
Transmission
Holdco
|
|
Generation
& Marketing
|
|
Corporate
and Other
|
|
Total
|
|
EPS (a)
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings
(Loss)
|
|
261.0
|
|
125.7
|
|
181.5
|
|
(157.7)
|
|
(13.5)
|
|
397.0
|
|
$
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Items
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-Market Impact
of Commodity Hedging Activities
|
(c)
|
4.2
|
|
—
|
|
—
|
|
114.4
|
|
—
|
|
118.6
|
|
0.23
|
|
|
Termination of the Sale
of Kentucky Operations
|
(d)
|
—
|
|
—
|
|
—
|
|
—
|
|
(33.7)
|
|
(33.7)
|
|
(0.06)
|
|
|
Pending Sale of
Unregulated Renewables
|
(e)
|
—
|
|
—
|
|
—
|
|
88.5
|
|
1.2
|
|
89.7
|
|
0.17
|
|
Total Special
Items
|
|
4.2
|
|
—
|
|
—
|
|
202.9
|
|
(32.5)
|
|
174.6
|
|
$
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings
(Loss)
(non-GAAP)
|
|
265.2
|
|
125.7
|
|
181.5
|
|
45.2
|
|
(46.0)
|
|
571.6
|
|
$
1.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Results
for the First Quarter of 2022
|
Reconciliation of
GAAP to Operating Earnings (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
|
Vertically
Integrated
Utilities
|
|
Transmission
& Distribution
Utilities
|
|
AEP
Transmission
Holdco
|
|
Generation
& Marketing
|
|
Corporate
and Other
|
|
Total
|
|
EPS (a)
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings
(Loss)
|
|
298.2
|
|
152.8
|
|
173.1
|
|
114.2
|
|
(23.6)
|
|
714.7
|
|
$
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Items
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-Market Impact
of Commodity Hedging Activities
|
(c)
|
—
|
|
—
|
|
—
|
|
(99.5)
|
|
—
|
|
(99.5)
|
|
(0.20)
|
|
|
Transaction Costs -
Sale of Kentucky Operations
|
(d)
|
—
|
|
—
|
|
—
|
|
—
|
|
2.6
|
|
2.6
|
|
0.01
|
|
|
Mark-to-Market Impact
of Certain Investments
|
(f)
|
—
|
|
—
|
|
—
|
|
—
|
|
0.6
|
|
0.6
|
|
—
|
|
|
Accumulated Deferred
Income Tax Adjustments
|
(g)
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.0)
|
|
(2.0)
|
|
—
|
|
Total Special
Items
|
|
—
|
|
—
|
|
—
|
|
(99.5)
|
|
1.2
|
|
(98.3)
|
|
$
(0.19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings
(Loss)
(non-GAAP)
|
|
298.2
|
|
152.8
|
|
173.1
|
|
14.7
|
|
(22.4)
|
|
616.4
|
|
$
1.22
|
|
|
|
(a)
|
Per share amounts are
divided by Weighted Average Common Shares Outstanding –
Basic
|
(b)
|
Excluding tax related
adjustments, all items presented in the table are tax adjusted at
the statutory rate unless otherwise noted
|
(c)
|
Represents the impact
of mark-to-market economic hedging activities
|
(d)
|
Represents an
adjustment to the loss on the expected sale of the Kentucky
Operations which was terminated in April 2023 and other related
third-party transaction costs
|
(e)
|
Represents the loss on
the expected sale of the Competitive Contracted Renewable Portfolio
and other related third-party transaction costs
|
(f)
|
Represents the impact
of mark-to-market on certain investments
|
(g)
|
Represents the impact
of out-of-periods adjustments related to accumulated deferred
income taxes
|
American Electric
Power
|
Summary of Selected
Sales Data
|
Regulated Connected
Load
|
(Data based on
preliminary, unaudited results)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31
|
ENERGY &
DELIVERY SUMMARY
|
|
2023
|
|
2022
|
|
Change
|
|
|
|
|
|
|
|
Vertically
Integrated Utilities
|
|
|
|
|
|
|
Retail Electric
(in millions of kWh):
|
|
|
|
|
|
|
Residential
|
|
8,099
|
|
9,225
|
|
(12.2) %
|
Commercial
|
|
5,372
|
|
5,518
|
|
(2.6) %
|
Industrial
|
|
8,295
|
|
8,162
|
|
1.6 %
|
Miscellaneous
|
|
521
|
|
544
|
|
(4.2) %
|
Total
Retail
|
|
22,287
|
|
23,449
|
|
(5.0) %
|
|
|
|
|
|
|
|
Wholesale Electric (in millions of kWh): (a)
|
|
3,260
|
|
4,474
|
|
(27.1) %
|
|
|
|
|
|
|
|
Total
KWHs
|
|
25,547
|
|
27,923
|
|
(8.5) %
|
|
|
|
|
|
|
|
Transmission &
Distribution Utilities
|
|
|
|
|
|
|
Retail Electric
(in millions of kWh):
|
|
|
|
|
|
|
Residential
|
|
6,266
|
|
6,977
|
|
(10.2) %
|
Commercial
|
|
6,744
|
|
5,999
|
|
12.4 %
|
Industrial
|
|
6,526
|
|
5,930
|
|
10.1 %
|
Miscellaneous
|
|
168
|
|
171
|
|
(1.8) %
|
Total Retail
(b)
|
|
19,704
|
|
19,077
|
|
3.3 %
|
|
|
|
|
|
|
|
Wholesale Electric (in millions of kWh): (a)
|
|
453
|
|
571
|
|
(20.7) %
|
|
|
|
|
|
|
|
Total
KWHs
|
|
20,157
|
|
19,648
|
|
2.6 %
|
|
|
(a)
|
Includes off-system
sales, municipalities and cooperatives, unit power and other
wholesale customers
|
(b)
|
Represents energy
delivered to distribution customers
|
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SOURCE American Electric Power