American Electric Power Company, Inc. Q3 FY2025 earnings call

• Transformative moment for the industry, AEP is a fast-growing pure-play electric utility with new leaders and organizational changes.
• $72 billion capital plan over 5 years, driven by massive load growth and transmission needs.
• Strong transmission scale with over 2,100 miles of 765 kV transmission lines, awarded 765 kV projects in ERCOT Permian Basin and PJM.
• Focus on operational excellence, working with regulators and policymakers for constructive outcomes to reduce regulatory lag and improve ROEs to 9.5% by 2030.
• Positive legislative outcomes in Ohio, Oklahoma, Texas, and ongoing base rate cases in multiple states.
• Resource adequacy efforts with generation filings and exploration of small modular reactors.

Third quarter operating earnings totaled $1.80 per share or $963 million. Year-to-date operating earnings totaled $4.78 per share, up from $4.38 per share in 2024, representing an increase of $0.40 per share or approximately 9% year-over-year. The Generation & Marketing segment was affected by the prior year sale of the distributed resources business but had favorable energy margins offsetting part of the impact.

• Reaffirmed 2025 full-year operating earnings range of $5.75 to $5.95 per share, guiding to the upper half.
• 2026 operating earnings guidance range $6.15 to $6.45 per share, ~8% increase from 2025 midpoint.
• Long-term operating earnings growth rate 7% to 9% for 2026-2030 with 9% CAGR over 5 years, expecting lower growth in first 2 years and higher in last 3 years.
• $72 billion capital plan supporting load growth, with over 2/3 of investment in transmission and generation.

Q: Ross Fowler asked about drivers of earnings step-up in 2028 and Ohio rate case impact.

A: Trevor Mihalik said earnings driven by capital plan peaking in mid-plan, positive legislative/regulatory outcomes including Ohio's forward-looking test year.

Q: Ross Fowler asked about equity composition and minority stake sell-downs.

A: Trevor Mihalik said ~33% growth equity in plan, with 80% issued in back half; Bill Fehrman said no current plans for asset sales.

Q: Steve Fleishman asked about LOA vs ESA and partnership with infrastructure provider.

A: Trevor Mihalik explained LOA vs ESA, William Fehrman discussed supply framework agreements for turbines and transmission equipment, working on Bloom partnerships.

Q: Jeremy Tonet asked about DPS CAGR.

A: Trevor Mihalik said Board raised dividend by 2%, targeting 50%-60% payout ratio, dividend growth part of total shareholder return.

Q: David Arcaro asked about transmission capacity for data centers and generation balance.

A: William Fehrman said 765 kV transmission gives competitive advantage, focused on state energy policies, balancing renewables and gas based on state needs.

Q: Julien Dumoulin-Smith asked about load growth beyond 5-year plan and LOAs vs ESAs.

A: Trevor Mihalik said confident in 5-year plan, 28 gigawatts under firm LOAs/ESAs with more potential from discussed LOAs.

Q: Carly Davenport asked about LOAs outside Texas and new transmission budget.

A: Trevor Mihalik said LOAs outside Texas exist, PJM opportunities built into 5-year capital plan.

Q: Nicholas Campanella asked about ROE improvement cadence.

A: William Fehrman said ROE improvement due to constructive regulatory outcomes, legislative developments, and focus on West Virginia reconsideration.