American Electric Power
AEP Reports 2016 Fourth-Quarter and Year-End Earnings
American Electric Power (NYSE: AEP) today reported fourth-quarter 2016 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $373 million or $0.76 per share, compared with GAAP earnings of $470 million or $0.96 per share in fourth-quarter 2015. Operating earnings for fourth-quarter 2016 were $330 million or $0.67 per share, compared with operating earnings of $233 million or $0.48 per share in fourth-quarter 2015.
Year-end 2016 GAAP earnings were $611 million or $1.24 per share, compared with 2015 GAAP earnings of $2.047 billion or $4.17 per share. Year-end 2016 operating earnings were $1.937 billion or $3.94 per share, compared with 2015 operating earnings of $1.808 billion or $3.69 per share. Operating earnings is a non-GAAP measure representing GAAP earnings excluding special items.
The difference between fourth-quarter 2016 GAAP and operating earnings was largely due to a federal tax audit settlement, final accounting for the sale of AEP's commercial barge operations in fourth-quarter 2015 and the mark-to-market impact of commodity hedging activities within the Generation & Marketing segment.
The difference between year-end 2016 GAAP and operating earnings was primarily due to the impairment of certain merchant generation assets, a federal tax audit settlement and the mark-to-market impact of commodity hedging activities within the Generation & Marketing segment.
A full reconciliation of GAAP earnings to operating earnings for the quarter and year-end is included in the tables at the end of this news release.
"In 2016, we were able to successfully grow operating earnings and offset the challenges to our competitive business from deregulation in Ohio. We also increased our quarterly dividend payment by 5.4 percent to 59 cents per share based on our strong balance sheet and optimism about our future growth," said Nicholas K. Akins, AEP chairman, president and chief executive officer.
"Our transmission business continues to bolster earnings, contributing 54 cents to earnings for the year, an increase of more than 38 percent from 2015. Additionally, we benefited from successful regulatory proceedings in several states, reflecting increased investments to improve service for our customers, and reached a global settlement agreement in Ohio to resolve a significant number of outstanding regulatory and legal cases.
"We expect to complete the sale of four competitive power plants soon, and we will reduce debt and reinvest net proceeds from that sale in our regulated businesses to support future earnings growth. We wrote down our remaining competitive generation assets in the third quarter of 2016 and will continue the strategic review process for those plants," Akins said.
"For the first time in more than a year, we saw positive retail sales growth in the fourth quarter of 2016, and we expect modest overall load growth in 2017 as improving energy and metals prices support industrial growth and our regional economies. We benefited from warmer than normal weather in 2016, but low energy prices, a strong dollar and a weak global economy reduced overall load growth year-over-year," Akins said.
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