Summary
American Electric Power Company, Inc. (AEP) reported improved financial results for the nine months ended September 30, 2018, compared to the same period in 2017. Earnings attributable to common shareholders increased primarily due to favorable rate proceedings across AEP's jurisdictions and an increase in weather-related usage. However, the Generation & Marketing segment saw a decrease in earnings, largely due to a gain on the sale of merchant generation assets in the prior year. Key financial developments include a slight increase in debt-to-capital ratio due to rising construction expenditures, mainly in transmission and distribution investments. AEP's liquidity remains adequate with substantial revolving credit facilities in place, which were recently increased and extended. The company also provided an update on its budgeted construction expenditures, forecasting approximately $24 billion for 2018-2021, to be funded through operating cash flows and financing activities. Investors should note the ongoing impact of federal tax reform, with provisional amounts related to its effects expected to be finalized in the fourth quarter of 2018. Significant regulatory proceedings are underway across various jurisdictions, impacting rates and potentially future earnings.
Financial Highlights
46 data points| Revenue | $4.33B |
| Operating Expenses | $3.66B |
| Operating Income | $668.60M |
| Interest Expense | $256.80M |
| Net Income | $577.60M |
| EPS (Basic) | $1.17 |
| EPS (Diluted) | $1.17 |
| Shares Outstanding (Basic) | 492.98M |
| Shares Outstanding (Diluted) | 493.94M |
Key Highlights
- 1Earnings attributable to AEP Common Shareholders increased to $1,560.4 million for the nine months ended September 30, 2018, up from $1,511.9 million in the prior year period.
- 2The Vertically Integrated Utilities segment reported a significant increase in earnings attributable to common shareholders, rising to $852.2 million from $626.6 million year-over-year.
- 3The Generation & Marketing segment's earnings decreased substantially from $246.3 million to $62.3 million, primarily due to the prior year's gain from the sale of merchant generation assets.
- 4AEP's debt-to-capitalization ratio increased slightly to 56.8% as of September 30, 2018, from 55.5% at year-end 2017, attributed to increased construction expenditures.
- 5The company announced new intermediate and long-term CO2 emission reduction goals, aiming for a 60% reduction from 2000 levels by 2030 and an 80% reduction by 2050.
- 6Several regulatory proceedings and rate case outcomes were reported across various jurisdictions, with a focus on the impact of federal tax reform and the subsequent refund of benefits to customers.
- 7The Wind Catcher Project, a significant 2,000 MW wind generation facility and interconnection tie-line, was cancelled in July 2018 after the PUCT denied SWEPCo's request for a Certificate of Public Convenience and Necessity.