American Electric Power Company, Inc. Q4 FY2025 earnings call

• Operating in a period of industry transformation with accelerating electrification and rising energy demand. - Achieved strong financial performance in 2025 with operating earnings of $5.97 per share, above guidance. - Reaffirmed 2026 full-year operating earnings guidance range $6.15 to $6.45 per share and long-term earnings growth rate 7%-9% with 9% CAGR. - Experienced significant load growth with 56 gigawatts of firm incremental contracted load additions, doubling previous figures. - Engaged in innovation with small modular reactors (SMRs) and a $2.65 billion fuel cell purchase. - Strong transmission position with ownership of nearly 90% of 765 kV infrastructure in the US. - Made progress on regulatory and legislative fronts, including favorable rate case outcomes and tariff filings. - Focus on customer affordability through innovative rate design and O&M efficiency.

AEP's 2025 full-year operating earnings were $5.97 per share, exceeding the top end of the guidance range. Retail sales grew 7.5% in 2025, with commercial and industrial sales up nearly 10% (driven by data centers in Indiana, Texas, and Ohio, and industrial sales in Texas) and residential sales up approximately 3%. The Generation & Marketing segment had favorable energy margins. Revenue was up 8.3% corresponding to the 7.5% retail sales growth.

• Reaffirmed 2026 full-year operating earnings guidance range of $6.15 to $6.45 per share. - Maintained premium long-term earnings growth rate of 7% to 9% for 2026-2030 with an expected 9% CAGR. - $72 billion five-year capital plan with a 10% rate base CAGR. - Identified approximately $5 billion to $8 billion of confirmed or endorsed incremental generation and transmission projects in addition to the $72 billion plan.

• Potential supply chain and labor constraints in executing large infrastructure projects. - Uncertainties in the regulatory process, including timing of decisions on filings and reforms. - Ensuring proper cost allocation for large loads to protect residential customers from increased costs. - Risks associated with the execution timeline of large projects, such as alignment with SB 6 implementation in Texas.

Q: Could the doubled contracted load put upward pressure on the 9% CAGR and how will financing be addressed?

A: Trevor mentioned the $72 billion plan is conservative and they'll provide more clarity on financing in the first quarter call, with formal updates in the third quarter. The 28 gigawatts of additional load is additive to the plan.

Q: What's the level of confidence in ESAs and LOAs given potential pushback?

A: Trevor stated confidence comes from financially secure counterparties, take-or-pay components, and large load tariffs, with 180 gigawatts plus in the queue to backfill. Bill added good community relations in rural areas.

Q: Thoughts on contracted generation business, especially Bloom Energy deal?

A: William said it's complementary to serving customers, with Bloom Energy being a proven technology. Trevor noted the long-term agreement with a creditworthy counterparty provides positive cash flow.

Q: Physical and labor constraints with 36 gigawatts in ERCOT?

A: William said the team is well ahead on equipment and contracting supply, with focus on execution to meet customer demand. Trevor added load is spread across service territories including data centers and industrials.

Q: Impact of permitting reform on near and medium term opportunities?

A: William said the team is engaged with Senate partners, and they're pushing for permitting reform to accelerate infrastructure development.