Workflow
American Electric Power(AEP) - 2024 Q4 - Earnings Call Transcript
AEPAmerican Electric Power(AEP)2025-02-13 17:50
Filings

Financial Data and Key Metrics Changes - The company reported fourth quarter 2024 operating earnings of 1.24pershare,totaling1.24 per share, totaling 660 million, which brings the full-year 2024 operating earnings to 5.62pershare,anincreaseof5.62 per share, an increase of 0.37 per share or about 7% year over year [11][36]. - GAAP earnings for the fourth quarter were 1.25pershare,comparedto1.25 per share, compared to 0.64 per share in 2023, and for the year, GAAP earnings were 5.60pershare,upfrom5.60 per share, up from 4.26 per share in 2023 [34]. Business Line Data and Key Metrics Changes - Operating earnings for vertically integrated utilities were 2.63pershare,up2.63 per share, up 0.16 from the previous year, driven by rate changes and a return to normal weather [37]. - The transmission and distribution utility segment earned 1.51pershare,anincreaseof1.51 per share, an increase of 0.21 from last year, supported by increased rates and transmission revenue [38]. - Generation and marketing produced 0.48pershare,down0.48 per share, down 0.11 from last year, primarily due to the sale of assets and lower retail energy margins [39]. Market Data and Key Metrics Changes - Commercial load growth was reported at 12.3% for the fourth quarter and 10.6% for the full year compared to 2023 [17]. - Industrial sales grew by more than 402,000 megawatt hours in 2024, with a notable growth of almost 5% in Texas [49]. Company Strategy and Development Direction - The company is focused on a robust 54billioncapitalplanfrom2025through2029,aimingtosupportlargeloadgrowthdrivenbydatacentersandeconomicdevelopment[12][16].−Thecompanyiscommittedtomaintainingastrongbalancesheettofunditscapitalplanandisexploringvariousfinancingoptions,includingsecuritizationandequityissuance[13][69].Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sfuture,emphasizingtheimportanceofexecutionandaccountabilityindeliveringvaluetostakeholders[8][29].−Thecompanyanticipatessignificantloadgrowthopportunities,particularlyfromdatacenters,whichareexpectedtoaddupto20gigawattsofincrementalloadby2030[17][51].OtherImportantInformation−Thecompanyannouncedaminorityinteresttransactioninitstransmissionbusinessfor54 billion capital plan from 2025 through 2029, aiming to support large load growth driven by data centers and economic development [12][16]. - The company is committed to maintaining a strong balance sheet to fund its capital plan and is exploring various financing options, including securitization and equity issuance [13][69]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, emphasizing the importance of execution and accountability in delivering value to stakeholders [8][29]. - The company anticipates significant load growth opportunities, particularly from data centers, which are expected to add up to 20 gigawatts of incremental load by 2030 [17][51]. Other Important Information - The company announced a minority interest transaction in its transmission business for 2.82 billion, which is expected to enhance earnings and credit profiles [14][57]. - The company is actively engaged with stakeholders across its service territories to align investments with local goals [25]. Q&A Session Summary Question: Can you sustain the FFO improvement over the plan? - Management indicated that they are targeting an FFO to debt ratio in the 14% to 15% range, with some expected fluctuations due to changes in calculations [64][66]. Question: What are the means of issuing the remaining $2.5 billion in equity? - Management mentioned potential options including securitization, hybrids, or issuing equity, but emphasized a judicious approach to equity issuance [68][69]. Question: How much of the 20 gigawatts of load is in Ohio? - Management confirmed that a significant portion of the load growth is concentrated in Ohio and Texas, with ongoing discussions to ensure economic development opportunities [74][76]. Question: What are the terms of the data center tariffs? - Management explained that tariffs are driven by the cost of incremental projects, ensuring that the costs are covered by the customers driving the demand [84][86]. Question: What is the status of the SMR projects? - Management is exploring SMR technology and has begun early site permit work, but no specific arrangements have been finalized yet [94][96].