Oct. 29, 2009 (PR Newswire) -- COLUMBUS, Ohio, Oct. 29 /PRNewswire-FirstCall/ --
-- 2009 third-quarter earnings $0.93 per share GAAP and ongoing
-- AEP tightens 2009 ongoing guidance range to between $2.90 and $3.05 per
share from previous range of between $2.75 and $3.05 per share
-- Third-quarter ongoing EPS matches prior period despite dilutive effect
of additional shares outstanding, mild weather, weak economy
AMERICAN ELECTRIC POWER
Preliminary, unaudited results
3rd quarter ended Sept. 30 9 months ended Sept. 30
-------------------------- -------------------------
2008 2009 Variance 2008 2009 Variance
Revenue
($ in billions) 4.2 3.5 (0.7) 11.2 10.2 (1.0)
Earnings
($ in millions):
GAAP 374 443 69 1,228 1,119 (109)
Ongoing 374 443 69 1,064 1,124 60
EPS ($):
GAAP 0.93 0.93 0.00 3.06 2.47 (0.59)
Ongoing 0.93 0.93 0.00 2.65 2.49 (0.16)
EPS based on 402mm shares in Q3 2008, 477mm in Q3 2009, 402mm in 9 mo.
2008 and 452 mm in 9 mo. 2009
American Electric Power (NYSE: AEP) today reported 2009 third-quarter earnings, prepared in accordance with generally accepted accounting principles (GAAP), of $443 million, or $0.93 per share, compared with $374 million, or $0.93 per share, for third-quarter 2008.
There were no special items in the quarter, so the GAAP comparison for the quarter is the same as the comparison for ongoing earnings (earnings excluding special items).
The third-quarter 2009 per-share results reflect the dilutive effect of additional shares outstanding, which reduced ongoing earnings by $0.17 per share when compared with the prior year.
A full reconciliation of GAAP earnings to ongoing earnings for the quarter and year to date is included in tables at the end of this news release.
"We're pleased with our results, especially considering the number of factors that worked against us in the third quarter," said Michael G. Morris, AEP chairman, president and chief executive officer. "This was the coolest summer in 30 years for the Eastern states that we serve and the fourth-coolest summer in 30 years for our customers in the Southwest Power Pool - Oklahoma, Arkansas, Louisiana and northeast Texas. The cool summer weather reduced both retail and wholesale sales.
"Of course, the economy remains a significant factor," Morris said. "Our sales to industrial customers in the third quarter were down 17 percent from a year ago, but that's a slight improvement from second quarter, when industrial sales were down 20 percent. We did see an increase in sales to several large metals customers from second quarter to third quarter. We hope that's a sign of better things to come, but we don't see it as a cause for celebration yet."
Morris noted that states served by AEP are more industrialized and export oriented than many other areas of the United States, so the impact of the worldwide economic decline on industrial production was more severe in these regions than in other parts of the country.
"The economy will improve, but it's going to take some time," Morris said. "Fortunately, the export market may recover more rapidly. Until then, we will continue to keep tight control on our spending."
EARNINGS GUIDANCE
AEP tightened its ongoing earnings guidance range for 2009 to between $2.90 and $3.05 per share, reflecting year-to-date performance in the upper half of the previous ongoing guidance range of between $2.75 and $3.05 per share. In providing ongoing earnings guidance, there could be differences between ongoing earnings and GAAP earnings for matters such as, but not limited to, divestitures 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 ONGOING RESULTS BY SEGMENT
$ in millions except EPS
Q3 08 Q3 09 Variance 9 mo. 08 9 mo. 09 Variance
Utility Operations 357 445 88 1,030 1,114 84
Ongoing EPS 0.89 0.93 0.04 2.56 2.47 (0.09)
AEP River Operations 11 10 (1) 21 22 1
Ongoing EPS 0.03 0.02 (0.01) 0.05 0.05 0.00
Generation and
Marketing 16 5 (11) 43 33 (10)
Ongoing EPS 0.04 0.01 (0.03) 0.11 0.07 (0.04)
All Other (10) (17) (7) (30) (45) (15)
Ongoing EPS (0.03) (0.03) 0.00 (0.07) (0.10) (0.03)
----- ----- ---- ----- ----- -----
Ongoing
Earnings 374 443 69 1,064 1,124 60
Ongoing EPS 0.93 0.93 0.00 2.65 2.49 (0.16)
EPS based on 402mm shares in Q3 2008, 477mm in Q3 2009, 402mm in 9 mo.
2008 and 452mm in 9 mo. 2009
Ongoing earnings from Utility Operations increased by $88 million in third-quarter 2009 compared with the same period last year, reflecting increased rates throughout AEP's utility footprint and lower operation and maintenance expenses. These favorable items were somewhat offset by a reduction in both sales to industrial customers and off-system sales and the increase in capital-driven other expenses, such as depreciation and interest expenses, from the prior period.
AEP River Operations' results were slightly lower than in the same period last year because of a decline in barge freight revenue as a result of a weak import market.
Ongoing earnings for Generation and Marketing decreased $11 million during third-quarter 2009 from the same period last year, primarily because of lower gross margins at the Oklaunion Power Station related to lower power prices in the Electric Reliability Council of Texas (ERCOT). Generation and Marketing includes AEP's non-regulated generating, marketing and risk management activities, primarily in the ERCOT area.
All Other, which includes the parent company and other investments, was lower in third-quarter 2009 when compared with the same period last year.
ONGOING RESULTS FROM UTILITY OPERATIONS
$ in millions except EPS
Q3 08 Q3 09 Variance 9 mo. 08 9 mo. 09 Variance
East Regulated
Integrated
Utilities 499 586 87 1,621 1,848 227
Ohio Companies 577 742 165 1,823 2,063 240
West Regulated
Integrated
Utilities 341 356 15 820 899 79
Texas Wires 153 167 14 410 434 24
Off-System Sales 322 96 (226) 786 269 (517)
Transmission Revenue
- 3rd Party 85 95 10 247 269 22
Other Operating
Revenue 150 202 52 440 593 153
--- --- -- --- --- ---
Utility Gross
Margin 2,127 2,244 117 6,147 6,375 228
Operations &
Maintenance (848) (796) 52 (2,435) (2,404) 31
Depreciation &
Amortization (379) (412) (33) (1,099) (1,173) (74)
Taxes Other Than
Income Taxes (187) (191) (4) (569) (573) (4)
Interest Expense &
Preferred Dividend (224) (232) (8) (650) (679) (29)
Other Income &
Deductions 46 38 (8) 135 92 (43)
Income Taxes (178) (206) (28) (499) (524) (25)
---- ---- --- ---- ---- ---
Utility
Operations
Ongoing
Earnings 357 445 88 1,030 1,114 84
Ongoing EPS 0.89 0.93 0.04 2.56 2.47 (0.09)
EPS based on 402mm shares in Q3 2008, 477mm in Q3 2009, 402mm in 9 mo.
2008 and 452 mm in 9 mo. 2009
Retail Sales - Results for third-quarter 2009 improved from the same period last year, primarily because of the impact of rate changes in both AEP's Eastern and Western service areas. The positive impact of the rate changes was somewhat offset by lower sales to industrial customers. Unfavorable weather, primarily in AEP's Eastern service area, decreased margins by $42 million compared with the same period in 2008; cooling degree-days in third-quarter 2009 were 28 percent below normal and 23 percent below the total for the same period in 2009. In AEP's Western service area, cooling degree-days in third-quarter 2009 were 17 percent below normal and 7 percent below the prior period.
Off-System Sales - Gross margins from Off-System Sales for third-quarter 2009 were $226 million lower than those in the same period last year.
