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AMERICAN ELECTRIC POWER CO INC (AEP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 operating EPS was $1.54, a clear beat versus Wall Street consensus of ~$1.40; GAAP EPS was $1.50. Revenue was $5.463B, above the ~$5.182B consensus, and EBITDA was roughly in line with consensus, supporting a guidance reaffirmation and constructive tone on load growth * *.
  • Management reaffirmed 2025 operating EPS guidance of $5.75–$5.95 and long-term EPS growth of 6–8%, with an indicative GAAP EPS range of $5.71–$5.91 reflecting mark-to-market, OnSite sale, and Ohio legislation items; targeted FFO/debt remains 14–15% .
  • Strategic funding actions completed anticipated equity needs through 2029: $2.82B minority stake in Ohio/I&M transcos (pending FERC) and $2.3B forward equity offering, equivalent to issuing common stock at ~$140/share; capital plan is $54B with potential $10B incremental upside .
  • Commercial load growth accelerated 12.3% YoY, with more than 500 prospective customers seeking ~180 GW of connections and firm contracts underpinning >20 GW incremental load by decade-end; tariff exposure on the $54B plan is minimal (~0.3%) .
  • Dividend maintained: quarterly cash dividend of $0.93 per share declared, payable June 10, 2025, continuing a 115-year record of quarterly payments .

What Went Well and What Went Wrong

What Went Well

  • Operating EPS beat and guidance reaffirmation: “robust operating earnings” enabled reaffirmation of $5.75–$5.95 and 6–8% LT growth; Q1 operating EPS was $1.54 vs $1.27 prior-year .
  • Strategic financing actions derisk plan: $2.82B minority transmission stake and $2.3B forward equity completed anticipated equity needs through 2029; “equivalent to issuing common stock at approximately $140 per share” .
  • Load growth and regulatory momentum: commercial load +12.3% YoY; approvals for large-load tariffs in IN/KY/WV, with Ohio decision expected in 2H; PJM awards (~$1.7B) and PUCT approvals (AEP Texas resiliency, 765-kV) underpin future investment .
  • Quote: “We continue to see potential for an additional $10 billion of investments over the next five years… direct tariff exposure on our $54 billion capital plan is minimal at approximately 0.3%” — CEO Bill Fehrman .

What Went Wrong

  • GAAP EPS down YoY: GAAP EPS fell to $1.50 from $1.91, reflecting items including a ~$28M write-off tied to Ohio HB 15 (OVEC) and mark-to-market impacts .
  • Margin mix headwind and residential softness: C&I margins are structurally lower than residential; management noted residential throughput pressures and margin differences (vertically integrated resi ~5x data center; T&D ~8x) .
  • Credit metric below target: FFO/debt was 13.2% TTM, below the 14–15% target; minority transaction expected to add 40–60 bps, but execution remains key to reach the target cushion above the 13% threshold .
  • Hyperscaler timing risk: Microsoft delayed Ohio projects, though AEP cited diverse backlog and firm contracts to backfill; still a headline risk if broader hyperscaler timing shifts .

Financial Results

Headline Results vs Prior Year (Company-reported)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)5,025.7 5,463.4
GAAP Net Income ($USD Millions)1,003.1 800.2
GAAP EPS ($)1.91 1.50
Operating Net Income ($USD Millions, non-GAAP)670.4 823.3
Operating EPS ($, non-GAAP)1.27 1.54

Quarterly Trend (S&P Global data)

MetricQ3 2024Q4 2024Q1 2025
Revenues ($USD Millions)5,301.0*4,593.7*5,331.6*
Net Income ($USD Millions)959.6*664.1*800.2*
Diluted EPS - Continuing Ops ($)1.80*1.24*1.50*
EBITDA ($USD Millions)2,250.7*1,882.4*2,152.7*
EBITDA Margin (%)41.5%*40.1%*39.4%*
Net Income Margin (%)17.7%*14.1%*14.6%*

Values with an asterisk are retrieved from S&P Global.

Segment Earnings (Company-reported)

SegmentGAAP Earnings ($MM) Q1 2024GAAP Earnings ($MM) Q1 2025Operating Earnings ($MM) Q1 2024Operating Earnings ($MM) Q1 2025
Vertically Integrated Utilities560.8 324.1 300.3 349.9
Transmission & Distribution Utilities150.3 164.6 150.3 192.3
AEP Transmission Holdco208.7 234.6 208.7 234.6
Generation & Marketing137.6 102.4 65.4 76.3
All Other(54.3) (25.5) (54.3) (29.8)
Total1,003.1 800.2 670.4 823.3

Selected KPIs (Energy & Delivery)

KPIQ1 2024Q1 2025YoY Change
VIU Total Retail KWh (MM)23,119 23,934 +3.5%
VIU Wholesale KWh (MM)3,763 4,791 +27.3%
T&D Total Retail KWh (MM)21,263 23,527 +10.6%
T&D Wholesale KWh (MM)590 667 +13.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating EPS (non-GAAP)FY 2025$5.75–$5.95 $5.75–$5.95 Maintained
GAAP EPS (indicative)FY 2025N/A$5.71–$5.91 New disclosure
Long-term EPS GrowthMulti-year6%–8% 6%–8% Maintained
FFO / Debt TargetMulti-year14%–15% 14%–15% Maintained
DividendQuarterly$0.93 declared 1/21/25 [29 in list, superseded]$0.93 declared 4/29/25 Maintained
Transmission contribution to Op. EarningsFY 2025N/A~55% of operating earnings New disclosure

EPS GAAP-to-operating reconciliation drivers for FY 2025: mark-to-market (-$0.03), OnSite sale (+$0.02), Ohio legislation (+$0.05) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Load growth / C&I mixCommercial load +10% YTD; contracts for ~20 GW by decade-end Commercial load +10.6% in 2024; forecast 8–9% annual total retail load 2025–2027 Commercial load +12.3% YoY; forecast 8–9% annual retail load growth through 2027; firm LOAs/ESAs underpin >20 GW Accelerating, high confidence
Regulatory / tariffsFocus on affordability; new growth plan and capital expansion Multiple base cases and resiliency; minority transco stake financing Approvals for large-load tariffs (IN/KY/WV); Ohio HB 15 viewed constructive; minimal direct tariff exposure (~0.3%) Positive momentum
Financing & balance sheetExpanded capex to $54B; guidance framework $2.82B minority transco stake announced $2.3B forward equity; equity needs completed through 2029; FFO/debt 13.2% TTM, minority deal adds 40–60 bps Derisked funding; target FFO/debt 14–15%
Transmission growth (Permian 765-kV)N/AN/APUCT approved 765-kV paths; AEP Texas selected to build ~300 miles; project ~$1–$2B New growth vector
IRA / tax transferabilityN/AN/ARepeal unlikely; existing/safe-harbor credits expected protected; transferability exposure ~$200–$300M/year manageable Watch, manageable
Technology/AI enablementN/AFuel cell agreements up to 1 GW (Bloom Energy) Hyperscalers AWS/Google connected in Indiana; firm contracts; Ohio data center tariff decision pending Scaling with contractual support
SMR explorationN/AEarly-site permits for SMRs in IN/VA Continued engagement, grant pursuit Early-stage, strategic option

Management Commentary

  • “Completing our anticipated equity needs for the next five years… gives us the foundation we need to bring our capital plan to fruition… direct tariff exposure on our $54 billion capital plan is minimal at approximately 0.3%.” — CEO Bill Fehrman .
  • “Operating earnings for the first quarter totaled $1.54 per share… weather accounted for about $0.18 of the quarter-over-quarter variance.” — CFO Trevor Mihalik .
  • “Across our 11-state operating footprint, we currently have more than 500 existing and potential customers actively requesting to connect almost 180 gigawatts of load… every megawatt in the forecast… is supported by LOAs; in PJM, 80% backed by ESAs.” — CFO Trevor Mihalik .
  • “HB 15… introduces a multiyear forward-looking test year with a true-up mechanism… a significant advantage for us; OVEC impacts going forward are manageable and less than $10 million annually.” — CEO Bill Fehrman/CFO Trevor Mihalik .

Q&A Highlights

  • Regulatory and securitization in WV: management aims for balanced outcome; securitization could reduce bill impact ~75% and decrease increase to ~3.8% .
  • Hyperscaler timing risk: Microsoft delays noted, but backlog and diversified demand mitigate; ~6 GW industrial load also contracted .
  • Margin dynamics: residential margin strength vs lower C&I margins (residential ~5x data center, T&D ~8x) shapes near-term profitability mix .
  • Ohio HB 15 construct: transition from ESP to multiyear test years supports timely recovery; OVEC annual earnings impact now ~<$10M .
  • CapEx upside financing: equity needs pre-funded; securitization ($2.4B) and hybrids provide flexibility; no further transmission sell-down contemplated .
  • FFO/debt path: 13.2% TTM; minority transaction adds 40–60 bps; execution and operations to reach 14–15% target .
  • Permian 765-kV: ~$1–$2B project, work begins soon; strategic leadership in 765-kV positions AEP for further Texas opportunities .

Estimates Context

  • Q1 2025 comparison to consensus: AEP delivered EPS $1.54 vs ~$1.40 consensus; revenue $5.463B vs ~$5.182B; EBITDA ~$2.153B vs ~$2.127B; EPS had ~14 estimates, revenue had ~5 *.
MetricConsensus (Q1 2025)Actual (Q1 2025)
Primary EPS ($)1.4018*1.54
Revenue ($USD Billions)5.1829*5.4634
EBITDA ($USD Billions)2.1271*2.1527*
Primary EPS - # of Estimates14*—
Revenue - # of Estimates5*—

Values with an asterisk are retrieved from S&P Global.

Implications: Strong operational beat on EPS and revenue, aided by favorable weather and rate changes; EBITDA in line suggests limited surprise at the operating profit level, but narrative strength on load growth and financing derisking supports guidance stickiness .

Key Takeaways for Investors

  • Beat and reaffirm: Operating EPS beat with revenue upside; guidance and LT growth maintained, supporting estimate stability near current ranges * .
  • Derisked funding: $2.82B minority transco stake (pending FERC) + $2.3B forward equity complete anticipated equity needs through 2029; reduces near-term equity issuance risk .
  • Load-driven growth runway: Firm LOAs/ESAs underpin >20 GW incremental demand; commercial load +12.3% YoY and forecasted 8–9% annual retail growth through 2027 create multi-year capex visibility .
  • Texas transmission catalyst: PUCT-approved 765-kV paths; AEP Texas to build ~300 miles; project size ~$1–$2B — a potential near-term stock narrative driver .
  • Regulatory progress: Large-load tariffs approved in IN/KY/WV; Ohio HB 15 seen as constructive for timely recovery and rate design — reduces regulatory lag .
  • Credit watchpoint: FFO/debt at 13.2% TTM; minority transaction adds 40–60 bps — execution on operations and capex pacing key to achieving 14–15% target .
  • Mix and margins: C&I growth dilutes near-term margins vs residential, but expands system headroom and supports affordability; investors should model mix effects and rate mechanisms accordingly .

Values with an asterisk are retrieved from S&P Global.