American Electric Power (AEP) Misses Q1 EPS by 9c, Revenues Miss; Reaffirms FY20 EPS Mid-Point Guidance Above Consensus

American Electric Power (NYSE: AEP) reported Q1 EPS of $1.02, $0.09 worse than the analyst estimate of $1.11. Revenue for the quarter came in at $3.7 billion versus the consensus estimate of $4.22 billion.

"The continued health and safety of our employees, customers and communities has been our priority over the past few months as we've taken steps to ensure critical electric service during the pandemic. Our front line employees are working in smaller teams, practicing physical distancing, wearing facial coverings and taking other preventive measures. We also have nearly 12,000 of our employees working very effectively from home," said Nicholas K. Akins, AEP chairman, president and chief executive officer.

"We temporarily suspended all service disconnections for non-payment and are putting in place longer term plans to help customers keep their accounts in good standing. We also created a team focused on proactively helping small business customers access federal and state loan programs. Additionally, the AEP Foundation has committed nearly $3 million in emergency response funding to support non-profit organizations across our service area," Akins said.

"Our long-term investment strategy to enhance service for our customers and grow our contracted renewables business bolstered earnings for the quarter, despite the negative impacts of warmer than normal weather. Our Transmission Holding Co. business contributed 28 cents per share to earnings in the first quarter, an improvement of 3 cents over the first quarter last year. Net plant in that business increased by 18% since March 2019, primarily to address aging infrastructure.

"We continue to make progress on our $2 billion North Central wind projects and will proceed with that acquisition when approvals are complete. We have approvals from Arkansas, Oklahoma and FERC and expect to receive decisions on our settlement in Louisiana as well as a final order from Texas in the coming months," Akins said.

"Our load projections for the year have been revised based on the economic impacts of the pandemic. We now expect residential load to grow by 3% for the year, but we are anticipating commercial and industrial load declines of 6% and 8%, respectively. In response, we've cut our planned operating and maintenance expense by $100 million. In addition, we are shifting $500 million of our planned 2020 capital spending to future years to support our credit metrics. We still plan to invest $33 billion in capital over the next five years, exclusive of the North Central wind projects.

"Based on unfavorable weather in the first quarter, our updated load forecast and the actions we have taken, we expect to be in the lower half of our existing 2020 operating earnings guidance range of $4.25 to $4.45 per share," Akins said.

GUIDANCE:

American Electric Power sees FY2020 EPS of $4.25-$4.45, versus the consensus of $4.30.

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