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AMERICAN ELECTRIC POWER CO INC (AEP)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: Operating EPS of $1.43 and GAAP EPS of $2.29 on revenue of $5.09B; operating EPS up 14% YoY and revenue up 11% YoY .
  • Clear beat vs Street: Q2 operating EPS beat by ~$0.16 and revenue beat by ~$0.12B; management guided to the upper half of FY25 operating EPS range ($5.75–$5.95) and reaffirmed 6–8% LT growth . Results vs consensus: EPS $1.43 vs $1.27*, revenue $5.09B vs $4.97B* (bolded below).
  • Strategic progress: Secured firm agreements for 24 GW of incremental load by 2030 (up from 21 GW), signaled five-year capital plan increase to ~$70B, and closed $2.82B minority transmission equity transaction; PSO’s 795 MW Green Country gas plant approved .
  • Stock reaction catalyst: The combination of estimate beats, upward-skewed FY25 guidance, and accelerating contracted load (data centers, crypto, manufacturing) underpinned by protective tariffs and improved legislative/regulatory constructs (TX UTM, OK SB 998, OH HB 15) is supportive of multiple expansion and near-term sentiment .

What Went Well and What Went Wrong

What Went Well

  • Record Q2 operating EPS and strongest-ever Q2 performance, with reaffirmed FY25 guidance toward the upper half; CEO emphasized customer-first execution driving results: “Our record second-quarter results reflect the strength of our customer-focused strategy” .
  • Acceleration in contracted load: Firm commitments now 24 GW by decade-end (from 21 GW), with ~190 GW in the interconnection queue; unique advantage from AEP’s 765 kV backbone and large transmission footprint .
  • Balance sheet and funding: Closed $2.82B minority equity interest in transmission and executed $2.3B forward equity issuance; S&P outlook to stable and BBB affirmed per call commentary .

What Went Wrong

  • GAAP/Operating divergence driven by one-time FERC NOLC order (+$480M; +$0.90 GAAP EPS) that does not reflect ongoing earnings power; ongoing NOLC impact expected to be ~3 cents annually .
  • Higher depreciation and O&M: CFO flagged increased depreciation from capital investment and higher year-over-year O&M (system improvements, storm spend) partially offsetting gains in T&D .
  • Weather variance: Vertically Integrated utility performance was partially offset by unfavorable weather vs last year’s favorable Q2 while residential volumes declined YoY in both VI and T&D footprints .

Financial Results

Consolidated P&L vs Prior Periods and YoY

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)4,579.2 5,463.4 5,086.9
GAAP EPS ($)0.64 1.50 2.29
Operating EPS ($)1.25 1.54 1.43

Notes: Operating EPS excludes items such as mark-to-market hedging and the FERC NOLC order; reconciliation provided in exhibits .

Margins and Profitability (quarterly)

MetricQ1 2025Q2 2025
EBIT ($USD Millions)1,319.3*1,433.7*
EBIT Margin (%)24.15%*28.18%*
EBITDA ($USD Millions)2,152.7*2,286.8*
EBITDA Margin (%)39.40%*44.95%*

Values marked with * retrieved from S&P Global.

Segment Operating Earnings ($USD Millions)

SegmentQ2 2024Q2 2025
Vertically Integrated Utilities244.8 296.7
Transmission & Distribution Utilities215.3 224.1
AEP Transmission Holdco208.9 224.5
Generation & Marketing61.0 91.7
All Other(68.0) (71.3)
Total Operating Earnings662.0 765.7

KPIs

KPIQ2 2024Q2 2025
T&D Total Retail KWh (mm)22,808 24,561
T&D Commercial KWh (mm)9,209 11,042
VI Total Retail KWh (mm)22,073 21,833
Weather-normalized Peak Demand (GW)33.5 (prior year) 37.6 (current)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating EPSFY 2025$5.75–$5.95 $5.75–$5.95, guiding to upper half Maintained; skewed upward
GAAP EPS (indicative)FY 2025$5.71–$5.91 (as of Q1) $6.57–$6.77 Raised due to FERC NOLC order
LT Operating EPS GrowthMulti-year6%–8% 6%–8% reaffirmed Maintained
Five-year Capital Plan2025–2029$54B Expect ~$70B (to be announced fall) Increased (signaled)
DividendQuarterly$0.93 declared (ongoing)$0.93 payable Sept 10, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q1 2025)Current Period (Q2 2025)Trend
Data center/large-load growth & tariffs>20 GW by decade-end; Bloom fuel cells to bridge; strong tariff progress 24 GW contracted; ~190 GW in queue; approvals in IN/OH/WV/KY; Ohio tariff finalized (85% minimums) Accelerating contracted load; strengthened protections
Capital plan & financing$54B plan; minority transmission equity proposed; forward equity completed Plan increase to ~$70B signaled; closed $2.82B minority interest; no near-term equity needs; consider hybrids/growth equity Larger capex runway; funding flexibility
Regulatory/legislativePJM projects; TX 765 kV line; resiliency; balanced outcomes TX UTM (lag reduced, +50–100 bps ROE uplift), OK SB 998 deferrals, OH HB 15 forward test year More constructive frameworks
Nuclear/SMR strategyEarly site permits under consideration Virginia and Indiana early site permits; risk protections; mid-next decade commercialization Advancing site work prudently
Crypto vs hyperscalersNot specifiedERCOT ~5 GW crypto; 2 GW data centers; PJM/SPP breakdown shared Mix expanding; ERCOT skew to crypto
GAAP vs operating earnings2024 had notable items (Turk, NOLC, ADIT) FERC NOLC +$0.90 GAAP EPS; ongoing ~3¢ annual Clarity on one-offs; limited ongoing impact

Management Commentary

  • “Our record second-quarter results reflect the strength of our customer-focused strategy” — Bill Fehrman (CEO) .
  • “AEP is strategically positioned for sustained growth as we transform the electric grid and invest in new resources to meet the generational load growth” — Fehrman .
  • CFO on FERC NOLC: “Final decision…resulting in a $480 million, or $0.90 per share, increase to GAAP earnings. The tax benefit related to prior years has been excluded from operating earnings” .
  • CFO on financing: “We really don’t have near-term equity needs, even for an increasing capital plan…options include hybrids, growth equity, and strong cash flow” .
  • CEO on tariffs: Ohio’s data center tariff “provides assurances… while keeping costs as low as possible for all customers” .

Q&A Highlights

  • Funding the ~$70B plan: Management prefunded equity needs for $54B; evaluating hybrids and growth equity; no near-term equity issuance required .
  • ROE trajectory: TX UTM expected to lift earned ROEs by 50–100 bps; OK SB 998 should improve earned ROE gap vs authorized .
  • NOLC impacts: One-time GAAP uplift (+$0.90); ongoing operating impact ~3 cents annually .
  • Load composition and timing: 24 GW firmly contracted; ERCOT skewed to crypto; data center interconnections may take 5–7 years, with interim solutions (fuel cells) .
  • Renewables/tax credits: ~$10B renewables in plan remain eligible under current legislation; potential small reallocation if guidance changes .

Estimates Context

MetricConsensus (Q2 2025)Actual (Q2 2025)Surprise
Primary EPS ($)1.267* (14 est.)1.43 Beat by $0.16
Revenue ($USD Billions)4.97* (6 est.)5.09 Beat by ~$0.12B

Values marked with * retrieved from S&P Global.

Implications: Positive estimate revisions likely for FY25 operating EPS given upper-half guidance and momentum in T&D/transmission earnings, with Street models to adjust for GAAP/operating reconciliation and tariff-driven ROE improvements .

Key Takeaways for Investors

  • Quality beat with upward-skewed FY25 guide supports near-term sentiment and potential estimate revisions higher .
  • Structural growth: 24 GW contracted load and protective tariffs (85% minimums in Ohio) reduce volume risk and support rate base expansion through transmission/generation .
  • Funding flexibility: $2.82B minority interest closed; $2.3B forward equity in place; management guiding to no near-term equity needs while signaling hybrids/growth equity as capex scales .
  • ROE uplift catalysts: TX UTM and OK SB 998 reduce lag and should lift earned ROEs, enhancing returns on incremental investment .
  • Watch crypto concentration in ERCOT: ~5 GW pipeline implies higher volatility risk vs hyperscalers; mitigated by tariff minimums and contract structures .
  • Non-GAAP clarity: GAAP EPS inflated by one-time FERC NOLC; focus on operating EPS trajectory for core run-rate .
  • Medium-term thesis: Transmission-led capex and data center/manufacturing reshoring underpin 6–8% LT EPS growth; SMR site work and fuel cell bridges offer optionality without near-term balance sheet strain .

Appendix: Additional Relevant Press Releases and Prior Quarter Context

  • AEP Ohio data center tariff (85% minimums over 12 years, with exit fees and financial viability requirements) .
  • PSO’s acquisition of 795 MW Green Country gas plant approved by OCC (reliability, load growth support) .
  • Transmission strategic partnership: $2.82B for 19.9% minority interest to KKR/PSP (≈5% of transmission rate base) .
  • Q1 2025: Operating EPS $1.54; commercial load +12.3% YoY; FY25 guidance reaffirmed .
  • Q4 2024: Operating EPS $1.24; commercial load +10.6% in 2024; $54B capex plan; Bloom fuel cell bridge solutions .

Values marked with * retrieved from S&P Global.