AEP Q3 Profit Down On Charges, Adj. EPS Tops Estimates; Updates Forecast

(RTTNews) - American Electric Power Co., Inc. (AEP) reported Wednesday a fall in its third-quarter profit on impairment charges. Operating earnings topped analysts' estimates, despite flat earnings and lower electric delivery. Further, the utility holding company lifted the lower end of its fiscal 2013 earnings forecast range.

President and Chief Executive Officer Nicholas Akins said, "Our strong third-quarter 2013 results demonstrate our continued success in advancing our earnings growth strategy and give us the confidence to increase the midpoint of our 2013 operating earnings guidance...We've achieved these positive results primarily from the investments we're making in our regulated operations for the benefit of our customers." Net earnings for the third quarter declined to $433 million or $0.89 per share from $487 million or $1.00 per share a year ago.

The latest quarter results included $100 million or $0.21 per share of items, mainly a $79 million impairment charge resulting from a Public Utility Commission of Texas order, as well as $21 million impairment charge due to a Kentucky Public Service Commission order. The prior year's results included special items of $9 million or $0.02 per share. Operating earnings, which excluded special items, for third-quarter 2013 was $533 million or $1.10 per share, compared to last year's $496 million or $1.02 per share.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $1.08 per share for the quarter. Analysts' estimates typically exclude special items.

Operating earnings from Utility Operations were benefited by successful rate proceedings and lower spending resulting from cost-containment efforts. Operating earnings from Transmission Operations grew on increased transmission investment.

Revenue for the quarter was $4.2 billion, unchanged from last year. Seven analysts estimated revenues of $4.54 billion for the quarter.

Total energy delivered in the quarter declined 1.7 percent to 59.19 billion kilowatt-hours or KWHs from last year, reflecting a 4.4 percent drop in retail delivery, while wholesale electric delivery increased 8.4 percent.

Looking ahead, for fiscal 2013, the company now expects operating earnings in a range of $3.15 to $3.25 per share, compared to the previous estimate of $3.05 to $3.25 per share. Analysts expect the company to report earnings of $3.15 per share for fiscal 2013.

AEP said its Board of Directors also voted Tuesday to increase quarterly dividend by $0.01 to $0.50 per share, providing a dividend increase this year of nearly 4 percent.

Akins added, "...We are still waiting for a decision from the West Virginia Public Service Commission and are confident that we will be in a position to separate our Ohio generation assets from our Ohio wires business by the end of the year."

In pre-market activity, American Electric shares were trading at $44, down $1.24 or 2.74 percent.