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AEP Reports Strong 2015 Third-Quarter Earnings; Increases 2015 Operating Earnings Guidance

  • 2015 operating earnings guidance range increased and narrowed to $3.67 to $3.77 per share from $3.50 to $3.65 per share
  • Investments in regulated businesses continue to support earnings growth

AMERICAN ELECTRIC POWER

Preliminary, unaudited results








Third-quarter ended Sept. 30


Year-to-date ended Sept. 30



2015

2014

Variance


2015

2014

Variance

Revenue ($ in billions):

4.4

4.2

0.2


12.8

12.6

0.2

Earnings ($ in millions):









GAAP

519

493

26


1,578

1,443

135


Operating

521

493

28


1,575

1,443

132

EPS ($):










GAAP

1.06

1.01

0.05


3.22

2.95

0.27


Operating

1.06

1.01

0.05


3.21

2.95

0.26

EPS based on 491mm shares Q3 2015, 489mm shares Q3 2014, 490mm shares YTD 2015 and 488mm shares YTD 2014.

American Electric Power (NYSE: AEP) today reported third-quarter 2015 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $519 million or $1.06 per share, compared with $493 million or $1.01 per share in third-quarter 2014. Operating earnings (GAAP earnings excluding special items) for third-quarter 2015 were $521 million or $1.06 per share, compared with third-quarter 2014 operating earnings of $493 million or $1.01 per share.

The difference in third-quarter 2015 GAAP earnings of $519 million and operating earnings of $521 million was due to commodity hedging within the Generation & Marketing segment.

A full reconciliation of GAAP earnings with operating earnings for the quarter and year-to-date is included in the tables at the end of this news release.

"We continue to execute on our strategy of investing in our core regulated businesses to improve service to customers, while demonstrating continuous improvement in our operations. Our strong earnings performance so far this year and our ability to continue delivering results give us the confidence to raise and narrow our 2015 operating earnings guidance range to $3.67 to $3.77 per share from $3.50 to $3.65 per share. AEP's Board of Directors voted earlier this week to boost our quarterly dividend by 3 cents to 56 cents per share, an increase of 5.7 percent annually," said Nicholas K. Akins, AEP chairman, president and chief executive officer.

"Our Transmission Holding Co. contributed 9 cents per share to earnings this quarter and remains on track to achieve an estimated 38 cents per share for the year. Net plant assets for this business grew by $1.2 billion year-over-year, an increase of 51 percent," Akins said.

"We saw positive load growth in all major retail customer classes in the third quarter. While sales to the oil and gas sector and those related to the auto industry remain strong, other industrial sectors are under pressure due to the strong dollar and the weak global economy," Akins said.

EARNINGS GUIDANCE

Management has increased and narrowed its 2015 operating earnings guidance range to $3.67 to $3.77 per share from the previous 2015 operating earnings guidance of $3.50 to $3.65 per share. In providing operating earnings guidance, there could be differences between operating earnings and GAAP earnings for matters such as, but not limited to, impairments or changes in accounting principles. AEP management is not able to estimate the impact, if any, on GAAP earnings of these items. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.

SUMMARY OF RESULTS BY SEGMENT

$ in millions








GAAP Earnings

3Q 15

3Q 14

Variance

YTD 15

YTD 14

Variance

Vertically Integrated Utilities(a)

274

219

55

780

651

129

Transmission & Distribution Utilities (b)

113

92

21

288

279

9

AEP Transmission Holdco (c)

46

43

3

147

114

33

Generation & Marketing (d)

91

117

(26)

360

378

(18)

AEP River Operations (e)

4

11

(7)

16

17

(1)

All Other

(9)

11

(20)

(13)

4

(17)

Total GAAP Earnings

519

493

26

1,578

1,443

135








Operating Earnings

3Q 15

3Q 14

Variance

YTD 15

YTD 14

Variance

Vertically Integrated Utilities

274

219

55

780

651

129

Transmission & Distribution Utilities

113

92

21

288

279

9

AEP Transmission Holdco

46

43

3

147

114

33

Generation & Marketing

93

117

(24)

357

378

(21)

AEP River Operations

4

11

(7)

16

17

(1)

All Other

(9)

11

(20)

(13)

4

(17)

Total Operating Earnings

521

493

28

1,575

1,443

132

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 Company of Oklahoma, Southwestern Electric Power and Wheeling Power.




(b) Includes Ohio Power, AEP Texas Central and AEP Texas North.





(c) Includes wholly-owned transmission-only subsidiaries and transmission-only joint ventures.


(d) Includes nonregulated generation in ERCOT and PJM as well as marketing, risk management and retail activities in ERCOT, PJM and MISO.




(e) Includes commercial barging operations.







Operating earnings from Vertically Integrated Utilities for third-quarter 2015 increased $55 million compared with the same period in 2014. This reflects the impact of favorable weather and rate outcomes, partially offset by reduced off-system sales and increased operations and maintenance expense.

Operating earnings from Transmission & Distribution Utilities for third-quarter 2015 increased $21 million compared with the same period in 2014, primarily because of an unfavorable regulatory provision recorded in the third quarter of 2014.

Operating earnings from AEP Transmission Holdco for third-quarter 2015 increased $3 million compared with the same period in 2014, largely due to increased transmission-related investment, partially offset by higher property taxes and an increase in expenses related to the Electric Transmission Texas joint venture.

Operating earnings from Generation & Marketing for third-quarter 2015 decreased $24 million compared with the same period in 2014, primarily from reduced...


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