Boosted by load growth that has returned to pre-pandemic levels, American Electric Power (NASDAQ:AEP) executives told financial analysts Wednesday that the company is building on the momentum it experienced last year.
Nick Akins | © RTO Insider LLC
Leave it to AEP CEO Nick Akins, a drummer and huge rock fan in his spare time, to explain the company’s good place in a different way.
“What’s going on today at AEP is a perfect blend of the execution of Bachman-Turner Overdrive’s ‘Takin’ Care Of Business’ with the edge of Prince’s ‘Let’s Go Crazy.’ In a good sense, of course,” he said during the company’s second-quarter earnings call.
CFO Julie Sloat said AEP’s normalized sales through June were 2% above pre-pandemic levels. Residential sales were up 1.2% during the quarter and up 1% year-to-date, compared to 2021. That helped drive a 14-cent increase in the earnings per share for the company’s vertically integrated utilities.
“Last year’s strong growth numbers were expected considering it was a recovery year from the pandemic shutdowns,” Sloat said. “This year’s growth is perhaps even more impressive considering the growth as compared to a strong recovery year.”
Akins agreed with an analyst who remarked that the Columbus, Ohio-based company’s load growth provides a “very strong tailwind” for this year.
“It’s always good to be ahead a little bit any time you go in the latter part of the year because summer is always good,” Akins said. “Our load guy is pretty optimistic. And if you knew our load guy, you know it takes a long way for him to get there. But we feel really good about the position that we have.”
AEP reported quarterly earnings of $525 million ($1.02/share), down slightly from earnings of $578 million ($1.16/share) a year ago during the same quarter.
Operating earnings, which exclude special items, came in at $618 million ($1.20/share). That beat Zacks Investment Research analysts’ average estimate of $1.18/share. AEP reaffirmed its 2022 operating earnings guidance range of $4.87 to $5.07/share and 6 to 7% long-term growth rate.
The excluded items included charges related to the expected sale of AEP’s Kentucky operations and an equity investment’s write-off in the Flat Ridge II joint venture wind facility in Kansas. The company is currently discussing the possible sale of its 235-MW ownership.
Kentucky regulators in May signed off on the $2.8 billion transaction with Liberty Utilities, but the deal still awaits approval from FERC and West Virginia regulators. Akins said both states have approved the operating agreement for the 1.55-GW Mitchell Power Plant in West Virginia but with different formats and some divergent post-2028 plant provisions. (See PSC OKs Sale of AEP’s Kentucky Operations to Liberty Utilities.)
After opening at $94.83 on Wednesday, a $1.59 drop from the previous close, AEP’s share price gained $1.46 and finished the day at $96.29. It was trading at $94.99 following the market’s close.
