Core Insights - American Electric Power (AEP) reported revenue of $6.01 billion for the quarter ended September 2025, reflecting an 11.3% increase year-over-year and exceeding the Zacks Consensus Estimate of $5.65 billion by 6.46% [1] - The company's EPS was $1.80, slightly down from $1.85 in the same quarter last year, resulting in an EPS surprise of -0.55% against the consensus estimate of $1.81 [1] Financial Performance - Total Energy Sales for Vertically Integrated Utilities reached 29,565 GWh, surpassing the average estimate of 28,865.97 GWh [4] - Total Energy Sales for Transmission & Distribution Utilities amounted to 28,636 GWh, exceeding the average estimate of 27,730.36 GWh [4] - Total Energy Sales for Wholesale Electric - Transmission & Distribution Utilities was 552 GWh, compared to the estimated 526.65 GWh [4] - Total Energy Sales for Retail Electric - Transmission & Distribution Utilities totaled 28,084 GWh, above the average estimate of 27,203.71 GWh [4] - Operating Earnings (non-GAAP) for Vertically Integrated Utilities were $573.5 million, below the average estimate of $606.24 million [4] - Operating Earnings (non-GAAP) for Transmission & Distribution Utilities were $259.1 million, exceeding the average estimate of $231.1 million [4] - Operating Earnings (non-GAAP) for AEP Transmission Holdco were $199.9 million, below the average estimate of $208.08 million [4] - Operating Earnings (non-GAAP) for Generation & Marketing were $48.4 million, compared to the average estimate of $56.13 million [4] - Operating Earnings (GAAP) for Vertically Integrated Utilities were $578.2 million, slightly above the average estimate of $562.55 million [4] Market Performance - AEP shares returned +2.3% over the past month, while the Zacks S&P 500 composite increased by +3.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Performance - American Electric Power Company reported a significant increase in revenue, reaching $4.5 billion for the quarter, representing a 10% year-over-year growth[12]. - The company achieved a net income of $1.2 billion, which is a 15% increase compared to the same quarter last year[12]. - Reported GAAP Earnings for the three months ended September 30, 2025, were $972.0 million, compared to $959.6 million for the same period in 2024, reflecting an increase of approximately 1.4%[31]. - Operating Earnings for the three months ended September 30, 2025, were $962.9 million, up from $985.4 million in the same period in 2024, indicating a decrease of about 2.6%[31]. - Reported GAAP Earnings for the nine months ended September 30, 2025, reached $2,998.0 million, an increase from $2,303.0 million in the same period of 2024, representing a growth of approximately 30.2%[33]. - Operating Earnings for the nine months ended September 30, 2025, were $2,551.9 million, compared to $2,317.8 million for the same period in 2024, reflecting an increase of about 10.1%[33]. - Net income for the three months ended September 30, 2025, was $1,000.3 million, representing a 4.0% increase from $961.7 million in the prior year[205]. - The company reported a net income of $3,090.8 million for the nine months ended September 30, 2025, compared to $2,309.9 million in 2024, reflecting a significant increase of 34.0%[205]. Customer and Market Growth - Customer base expanded by 3% year-over-year, adding approximately 100,000 new customers across its service territories[12]. - AEP's customer demand showed a significant increase in commercial sales volumes, primarily driven by new data processor loads, while industrial sales growth remained slow due to elevated interest rates[38]. - AEP's forecasted retail sales volumes for 2025 were updated, indicating a decline primarily due to ongoing elevated interest rates and tariff-related headwinds[41]. Capital Expenditures and Investments - AEP plans to invest $2 billion in renewable energy projects over the next three years, focusing on wind and solar energy[12]. - AEP's capital expenditures for the year are projected to be around $5 billion, primarily for infrastructure upgrades and maintenance[12]. - The company plans to invest approximately $11.9 billion in capital expenditures in 2025, with a forecast of $72 billion for the five-year period from 2026 to 2030[178]. - AEP expanded its generation portfolio by acquiring four power generation facilities for a total of $1.7 billion, adding 1,272 MW of generating capacity[45]. - AEP received regulatory approvals for approximately 1,826 MW of owned renewable generation facilities, totaling about $4.5 billion, with additional approvals for 1,059 MW of renewable PPAs[48]. Regulatory and Compliance Issues - The ongoing development of new legislation and regulatory frameworks will be crucial for the company's future capital plans and operational efficiency[20]. - Compliance with environmental regulations may lead to accelerated depreciation and regulatory disallowances, potentially reducing future net income and cash flows[96]. - The Federal EPA finalized a new more stringent annual primary PM standard in February 2024, which may require AEP to invest in additional pollution control equipment[100]. - The Federal EPA's revised MATS rule issued in April 2024 includes stricter standards for emissions from coal-fired units, which may impact AEP's compliance costs[107]. - The Federal EPA's CCR Rule was revised in April 2024 to expand its scope to include inactive impoundments, affecting AEP's operations[108]. Strategic Initiatives - AEP is actively pursuing strategic acquisitions to enhance its market presence, with a focus on regional utilities[12]. - AEP is exploring partnerships in artificial intelligence to optimize grid management and enhance service reliability[12]. - AEP has launched a new energy management platform aimed at improving customer engagement and energy efficiency[12]. Financial Stability and Liquidity - AEP's financial condition is measured by the strength of its balance sheet and the liquidity provided by its cash flows[156]. - As of September 30, 2025, AEP's total debt was $47,295.3 million, with a debt-to-total capital ratio of 60.0%, down from 62.6% as of December 31, 2024[157]. - AEP had approximately $6.8 billion in net available liquidity, including $5 billion from revolving credit facilities and $1,067.7 million in cash and cash equivalents[160]. - Net cash flows from operating activities for the nine months ended September 30, 2025, were $5,130.8 million, an increase of $54 million compared to $5,076.9 million in 2024[172]. Challenges and Risks - The company anticipates continued challenges from economic conditions, regulatory changes, and potential impacts from global conflicts and trade tensions[20]. - Supply chain constraints have been driven by international tensions, inflation, and labor shortages, extending lead times and increasing costs for fuel, materials, and labor, but have not materially impacted net income or cash flows[72]. - Changes in technology, particularly in energy storage and alternative generation sources, are expected to influence future operational strategies[24]. Environmental Goals - The company has set a target to reduce carbon emissions by 50% by 2030, aligning with its sustainability goals[12]. - AEP is committed to reducing Scope 1 GHG emissions by 80% by 2030 through state IRPs, with a focus on supporting clean energy mandates[106].

Financial Data and Key Metrics Changes - American Electric Power reported third quarter 2025 operating earnings of $1.80 per share, a decrease from $1.85 per share in the same period last year, primarily due to the prior year's sale of the onsite partners' distributed resources business [24][25] - Year-to-date operating earnings totaled $4.78 per share, up from $4.38 per share in 2024, representing an increase of approximately 9% year over year [25] - The company reaffirmed its 2025 full-year operating earnings range of $5.75 to $5.95 per share, guiding to the upper half of this range [9][34] Business Line Data and Key Metrics Changes - Significant commercial and industrial load growth of nearly 8% on a rolling 12-month basis as of September 30, 2025, compared to the same period last year [25] - The generation and marketing segment's performance was impacted by the prior year sale of the distributed resources business, but favorable energy margins helped support overall results [26] Market Data and Key Metrics Changes - AEP projects a system peak demand of 65 gigawatts by 2030, with a load growth of almost 76% in the next five years, driven by data centers and reshoring of manufacturing [10][11] - The company has secured 28 gigawatts of contracted load additions, up from 24 gigawatts previously reported, backed by energy service agreements or letters of agreement [10][11] Company Strategy and Development Direction - AEP announced an increased long-term operating earnings growth rate of 7% to 9% for 2026 to 2030, with an expected 9% CAGR over the five-year period [7][27] - The company is focused on a $72 billion capital plan, with over two-thirds directed towards transmission and generation to support load growth [30][34] - AEP is actively engaging with regulators and policymakers to achieve constructive outcomes that benefit both customers and shareholders [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and team, highlighting the importance of disciplined execution and strong cash flow from operations [36][37] - The company is committed to maintaining affordability for customers, forecasting average system residential customer rates to increase by approximately 3.5% annually through 2030, below the historical average inflation rate [21][35] Other Important Information - AEP has secured commission approvals for data center tariffs in Ohio and large load tariff modifications in Indiana, Kentucky, and West Virginia [11][16] - The company is exploring generation solutions, including participation in the early site permit process for small modular reactors in Indiana and Virginia [19][20] Q&A Session Summary Question: Drivers of earnings step up in 2028 - Management indicated that the capital plan peaking in 2027 and 2028, along with positive legislative outcomes, will drive earnings growth during that period [39][40] Question: Composition of equity needs - Management discussed the anticipated equity needs and potential for minority stake sell downs, indicating a proactive approach to funding growth [42][44] Question: Earnings growth in 2028 to 2030 - Management clarified that the guidance for 2028 to 2030 reflects year-over-year growth, with expectations to be at or above the high end of the range [49][64] Question: Strategy for data center load growth - Management expressed confidence in meeting transmission capacity needs for data centers, highlighting the competitive advantage of their 765 kV transmission network [71][73] Question: Balance between renewables and gas generation - Management emphasized a balanced approach to generation planning, aligning with state energy policies and customer preferences [75][76]

Financial Data and Key Metrics Changes - American Electric Power reported third quarter 2025 operating earnings of $1.80 per share, a decrease from $1.85 per share in the same period last year, primarily due to the prior year's sale of the onsite partners' distributed resources business [24][25] - Year-to-date operating earnings totaled $4.78 per share, up from $4.38 per share in 2024, representing a 9% year-over-year increase [25][26] - The company reaffirmed its 2025 full-year operating earnings range of $5.75-$5.95 per share, guiding to the upper half of this range, and introduced a 2026 operating earnings guidance range of $6.15-$6.45 per share, reflecting an approximate 8% increase [9][26] Business Line Data and Key Metrics Changes - Significant commercial and industrial load growth of nearly 8% on a rolling 12-month basis as of September 30, 2025, was noted, driven by favorable rate changes and strong transmission investment execution [25][26] - The company has secured 28 GW of contracted load additions, up from the previously reported 24 GW, which are backed by energy service agreements or letters of agreement [10][11] Market Data and Key Metrics Changes - AEP projects a system peak demand of 65 GW by 2030, with a load growth of almost 76% in the next five years, particularly in Indiana, Ohio, Oklahoma, and Texas [10][11] - The company highlighted that large annual capital budgets from hyperscalers reinforce the conviction of demand growth, with significant contributions from data centers and reshoring of manufacturing [9][10] Company Strategy and Development Direction - AEP announced a new long-term operating earnings growth rate of 7%-9% for 2026-2030, with an expected 9% CAGR over the five-year period, supported by a $72 billion capital plan [7][8] - The company is focused on operational excellence and engaging with regulators to achieve constructive outcomes that benefit both customers and shareholders [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and team, emphasizing the importance of affordability and financial strength while executing the capital plan [20][35] - The management team is actively working with legislators and policymakers to reduce regulatory lag and improve forecasted regulated ROEs to 9.5% by 2030 [15][16] Other Important Information - AEP's capital plan includes over $7 billion for renewable energy deployment, reflecting the company's commitment to balancing customer demands for both gas and renewables [75] - The company has secured significant agreements for turbines and high-voltage transmission equipment, positioning itself well for future growth [54] Q&A Session Summary Question: Earnings step up and Ohio rate case filing - Trevor explained that earnings growth is driven by the capital plan, with significant CapEx deployed in 2027 and 2028, and positive legislative outcomes will manifest during this period [39][40] Question: Composition of equity needs - Trevor noted that the company anticipates 30%-40% equity for the capital plan, with proactive measures already taken to address growth equity needs [42][43] Question: Earnings growth in 2028-2030 - Trevor indicated that the company expects to be at or above the high end of the growth rate in 2028, 2029, and 2030, with a flat growth assumption during those years [50][51] Question: Data center load growth and transmission capacity - Bill highlighted that 80% of the incremental load growth is tied to data centers, and the company is well-positioned to connect these customers efficiently [71][73] Question: Balance between renewables and gas - Bill stated that the company is focused on aligning generation planning with state energy policies, with a significant capital plan for renewables [75] Question: Future growth beyond 2030 - Trevor expressed confidence in the potential for continued load growth beyond 2030, emphasizing the importance of signed contracts and ongoing discussions [85][86]

Financial Data and Key Metrics Changes - American Electric Power reported third quarter 2025 operating earnings of $1.80 per share, a decrease from $1.85 per share in the same period last year, primarily due to the prior year's sale of the onsite partners' distributed resources business [22] - Year-to-date operating earnings totaled $4.78 per share, up from $4.38 per share in 2024, representing an increase of approximately 9% year over year [23] - The company reaffirmed its 2025 full-year operating earnings range of $5.75 to $5.95 per share, guiding to the upper half of this range [7] Business Line Data and Key Metrics Changes - Significant commercial and industrial load growth of nearly 8% on a rolling 12-month basis as of September 30, 2025, compared to the same period last year [23] - The generation and marketing segment's performance was impacted by the prior year sale of the distributed resources business, but favorable energy margins helped support overall results [24] Market Data and Key Metrics Changes - AEP projects a system peak demand of 65 gigawatts by 2030, with a load growth of almost 76% in the next five years, driven by data centers and reshoring of manufacturing [9] - The company secured 28 gigawatts of contracted load additions, up from the previously reported 24 gigawatts, backed by energy service agreements or letters of agreement [10] Company Strategy and Development Direction - AEP announced an increased long-term operating earnings growth rate of 7% to 9% for 2026 to 2030, with an expected 9% CAGR over the five-year period [5] - The company is focused on a $72 billion capital plan, which is one of the largest in the industry, aimed at supporting infrastructure investments and meeting growing system demand [6][28] - AEP is actively engaging with regulators and policymakers to achieve constructive outcomes that benefit both customers and shareholders [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and team, highlighting the importance of disciplined execution and strong cash flow from operations [35] - The management team emphasized the need for generation diversity to meet electricity demand growth and ensure reliability [16] - AEP is committed to maintaining affordability for customers while executing its capital plan, forecasting residential customer rates to increase by approximately 3.5% annually through 2030 [19] Other Important Information - AEP has secured commission approvals for data center tariffs in Ohio and large load tariff modifications in Indiana, Kentucky, and West Virginia [10] - The company is exploring generation solutions, including participation in the early site permit process for small modular reactors [17] Q&A Session Summary Question: Drivers of earnings step up in 2028 - Management indicated that the capital plan peaking in 2027 and 2028, along with positive legislative outcomes, will drive earnings growth during that period [39] Question: Composition of equity needs - Management discussed the anticipated equity needs and potential for minority stake sell-downs, indicating a proactive approach to funding growth [41] Question: Balance between renewables and gas generation - Management stated that the strategy will align with state energy policies, focusing on both gas and renewables to meet customer demands [67] Question: Transmission capacity for data centers - Management expressed confidence in the ability to connect data centers and manage the increased load growth, highlighting the competitive advantage of AEP's transmission network [66]

Core Viewpoint - American Electric Power (AEP) reported quarterly earnings of $1.8 per share, slightly missing the Zacks Consensus Estimate of $1.81 per share, and down from $1.85 per share a year ago, indicating an earnings surprise of -0.55% [1] Financial Performance - AEP posted revenues of $6.01 billion for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 6.46%, and up from $5.4 billion year-over-year [2] - Over the last four quarters, AEP has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - AEP shares have increased approximately 24.8% since the beginning of the year, outperforming the S&P 500's gain of 17.2% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with current consensus EPS estimates at $1.13 for the coming quarter and $5.90 for the current fiscal year [7] - The Zacks Rank for AEP is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Utility - Electric Power industry is currently in the top 21% of Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

AEP Third Quarter 2025 Earnings Presentation October 29, 2025 AEP CONFIDENTIAL Cautionary Note Regarding Forward- Looking Statements This presentation contains forward-looking statements. Words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue" and similar expressions, including statements reflecting future results or guidance and statements of outlook are intended to identify forward-looking statements but are not the exclusive means of id ...

Financial Performance - Third-quarter 2025 GAAP earnings were $972 million or $1.82 per share, compared to $960 million or $1.80 per share in the same quarter of 2024[3] - Operating earnings for third-quarter 2025 were $963 million or $1.80 per share, down from $985 million or $1.85 per share in third-quarter 2024[3] - AEP's revenue for the third quarter of 2025 was $6.01 billion, an increase of $590.3 million from $5.42 billion in the same quarter of 2024[13] - Year-to-date GAAP earnings for 2025 were $2,998.0 million, with an EPS of $5.61, compared to $2,551.9 million and $4.78 in the same period of 2024[35] - The company reported a total adjustment impact of $14.8 million on earnings, contributing an additional $0.03 to EPS[37] - The company incurred severance charges of $93.6 million, impacting overall earnings[37] - The impact of regulatory liabilities and adjustments related to NOLC reduced earnings by $259.6 million[37] Operating Earnings Guidance - AEP reaffirms its 2025 operating earnings guidance range of $5.75 to $5.95 per share, expecting results to be in the upper half of this range[4] - AEP announced a new long-term operating earnings growth rate of 7-9% over the next five years, supported by a $72 billion capital plan[4] - Year-to-date operating earnings (non-GAAP) for 2025 were $2,551.9 million, reflecting a significant increase compared to the previous year[35] Capital Investment and Growth - The capital plan is expected to drive a 10% annual growth in rate base, reaching $128 billion by 2030[5] - The company plans to invest over $20 billion in generation resources and $30 billion in transmission assets over the next five years[8] - AEP's capital plan is one of the largest in the industry, driven by commitments from large load customers including data centers and industrials[6] Sales Performance - Total retail electric sales for Q3 2025 reached 25,348 million kWh, a 1.2% increase from 25,043 million kWh in Q3 2024[34] - Wholesale electric sales increased by 18.5% in Q3 2025, totaling 4,217 million kWh compared to 3,559 million kWh in Q3 2024[34] - The company experienced a 30.4% increase in commercial retail electric sales in Q3 2025, reaching 12,610 million kWh[34] - Total retail electric sales increased by 1.3% year-over-year, totaling 71,115 million kWh[39] - Wholesale electric sales surged by 18.6%, reaching 12,451 million kWh compared to the previous year[39] - Residential retail electric sales rose by 1.8%, totaling 24,618 million kWh[39] - Commercial retail electric sales increased by 4.2%, reaching 19,548 million kWh[39] - Total retail electric sales in transmission and distribution utilities grew by 10.6%, totaling 76,172 million kWh[39] Other Financial Impacts - The impact of Ohio legislation resulted in a reduction of $8.5 million in Q3 2025[31] - The company reported a mark-to-market impact of commodity hedging activities resulting in a loss of $0.6 million in Q3 2025[31] - Operating earnings for Q3 2025 (non-GAAP) were $962.9 million, down from $985.4 million in Q3 2024[31]

Core Insights - American Electric Power (AEP) reported third-quarter 2025 GAAP earnings of $972 million or $1.82 per share, an increase from $960 million or $1.80 per share in the same quarter of 2024 [1] - Operating earnings for the same period were $963 million or $1.80 per share, down from $985 million or $1.85 per share in third-quarter 2024 [1] - AEP reaffirmed its 2025 operating earnings guidance range of $5.75 to $5.95 per share, expecting results to be in the upper half of this range [1][9] Financial Performance - AEP's revenue for the third quarter of 2025 was $6,010.4 million, up from $5,420.1 million in the same quarter of 2024, reflecting a change of $590.3 million or 10.9% [8] - Year-to-date revenue increased from $15,025.0 million in 2024 to $16,560.7 million in 2025, a change of $1,535.7 million or 10.2% [8] - Year-to-date GAAP earnings rose from $2,303.0 million in 2024 to $2,998.0 million in 2025, an increase of $695.0 million or 30.2% [8] Growth Strategy - AEP announced a new long-term operating earnings growth rate of 7-9% over the next five years, supported by a $72 billion capital plan [2] - The capital plan is expected to drive a 10% annual growth in rate base, with operating earnings per share anticipated to increase at a 9% compounded annual growth rate over the five-year period [2] - AEP's peak system demand is projected to rise to 65 GW by 2030, up from the current peak of 37 GW, necessitating a $30 billion investment in transmission assets [4] Infrastructure Investments - AEP's capital plan includes over $20 billion in generation resources to meet customer demands in fast-growing regions, with $17 billion dedicated to enhancing the distribution network [5] - The company is confident in securing 28 GW of load additions by 2030, supported by Electric Service Agreements and an additional 190 GW of load requests at various development stages [3] Customer Commitment and Regulatory Engagement - AEP is implementing new tariff structures requiring large power demand customers to make financial commitments based on load forecasts, ensuring fair cost allocation [7] - The company emphasizes listening to regulators and policymakers to improve regulatory outcomes and develop solutions for customer needs [7]

Industry Overview - The Zacks Utility - Electric Power industry offers stable, long-term income due to its regulated framework, allowing companies to recover costs and earn steady returns, thus reducing earnings volatility [1] - The U.S. electric utilities industry is evolving beyond its traditional role as a steady income provider, driven by investments in clean energy, grid modernization, and electrification, supported by federal incentives and climate policies [2] Company Profiles - NextEra Energy (NEE) focuses on renewable energy and sustainable growth, managing one of the largest portfolios of wind and solar projects globally, backed by solid financials and innovation [3] - American Electric Power (AEP) benefits from regulated operations and a commitment to clean energy, investing in renewable and nuclear generation, grid modernization, and transmission upgrades [4] Earnings Growth Projections - NextEra Energy's earnings per share (EPS) estimates for 2025 and 2026 have increased by 7.29% and 7.95% year over year, with long-term growth projected at 8.04% [6] - American Electric Power's EPS estimates for 2025 and 2026 have increased by 4.98% and 6.47% year over year, with long-term growth projected at 6.43% [9] Financial Metrics - NextEra Energy has a return on equity (ROE) of 12.31%, compared to AEP's 11.55%, both exceeding the industry average of 10.35% [7][13] - NextEra Energy's debt-to-capital ratio is 60.48%, while AEP's is 59.78%, both slightly below the industry average of 61.16% [12] Capital Expenditure Plans - NextEra Energy plans to invest approximately $74.6 billion from 2025 to 2029 for infrastructure and clean electricity generation [17] - American Electric Power plans to invest $54 billion during the same period for electric transmission, distribution, and generation infrastructure [17] Dividend Yield - NextEra Energy's current dividend yield is 2.68%, while American Electric Power's is 3.21%, both higher than the S&P 500's yield of 1.49% [19] Valuation - NextEra Energy trades at a Price/Earnings Forward 12-month ratio of 21.53X, while American Electric Power trades at 18.67X, compared to the industry's 15.45X [20] Price Performance - NextEra Energy has gained 18.2% in the last three months, outperforming American Electric Power's 7.3% increase during the same period [21] Conclusion - NextEra Energy shows stronger earnings estimates, higher ROE, and a larger capital expenditure plan, positioning it as a more favorable investment choice in the utility sector compared to American Electric Power [23]