American Electric Power Co., Inc. (NYSE:AEP) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 09:00 am ET


American Electric Power Co., Inc. (NYSE:AEP) Q3 2018 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by. And welcome to the American Electric Power Third Quarter 2018 Earnings Call. (Operator Instructions) And as a reminder, today's conference call is being recorded.

I would now like to turn the conference over to Bette Jo Rozsa. Please go ahead.

Bette Jo Rozsa

Thank you, Cynthia. Good morning, everyone and welcome to the third quarter 2018 earnings call for American Electric Power. Thank you for taking the time to join us today. Our earnings release, presentation slides and related financial information are available on our website at

(Forward-Looking Cautionary Statements)

Our presentation also includes references to non-GAAP financial information. Please refer to the reconciliation of the applicable GAAP measures provided in the appendix of today's presentation.

Joining me this morning for opening remarks are Nick Akins, our Chairman, President and CEO; and Brian Tierney, our CFO. We will take your questions following their remarks.

I will now turn the call over to Nick.

Nicholas Akins

Thanks, Bette Jo. Good morning, everyone, and welcome again to AEP's third quarter 2018 earnings Call. We just completed another financially strong quarter given positive weather results, continued economic growth albeit moderated in most sectors of the economy and continue resolution of regulatory related matters. The headlines for this quarter are not only that our Board decided to raise (ph) the quarterly dividend by 8.1% to $0.67 a share earlier this week, we're also adjusting our 2018 guidance range upward from from $3.75 to $3.95 per share to $3.88 to $3.98 per share.

The economy in our service territory continues to grow mainly in oil and gas-related industries but others such as chemical industries, primary metals, et cetera are tampering because of tariffs and a strengthening US dollar. Ron will cover that in more detail, but overall AEP continues to deliver on its commitment of providing steady consistent dividend growth commensurate with the long-term earnings growth expectation of 5% to 7%. As with the specifics for the quarter and the year-to-date, GAAP and operating earnings for third quarter 2018 came in at $1.17 per share and $1.26 per share respectively versus third quarter 2017 GAAP and operating earnings of $1.11 and $1.10 per share, respectively.

This brings 2018 year-to-date GAAP and operating earnings to $3.17 per share and $3.23 per share respectively versus 2017 GAAP and operating earnings of $3.07 per share and $2.82 per share, respectively. The difference between GAAP and operating for the quarter and for year-to-date 2018 are primarily due to an impairment taken related to the Racine hydroelectric plant, severance charges taken in response to announce plant closures and economic hedging activities. This has been another very positive quarter financially and operationally, that should bode well for ending the year in a positive fashion.

Because of our belief that we are, and continue to be on a firm 5% to 7% our earnings trajectory void by strong base planning in the future. Our Board was very comfortable increasing the dividend by 8.1%, well within our 60% to 70%