American Electric Power Co. Inc. (AEP) said Friday its fourth-quarter earnings surged from last year, due mainly to significant one-time cost recoveries. Excluding items, adjusted earnings for the quarter improved slightly from last year, but missed Street estimates. Revenues also fell short of expectations as retail sales volume declined.
The Columbus, Ohio-based company reported fourth-quarter net income of $308 million or $0.64 per share, compared to $176 million or $0.37 per share last year.
Results for the quarter include one-time benefits of $133 million related to normalization and carrying charges. (Stranded costs recoveries arising from a Texas Supreme Court decision.)
Excluding items, adjusted earnings for the quarter were $194 million or $0.40 per share, compared to $179 million or $0.38 per share a year ago. On average, 14 analysts polled by Thomson Reuters estimated earnings of $0.41 per share. Analysts' estimates usually exclude special items.
Revenues for the fourth-quarter remained unchanged from last year at $3.4 billion. Five analysts expected revenues of $3.45 billion for the quarter.
Sales volume for the quarter totaled 48.6 billion kWh, a modest 0.7 percent increase from last year. Retail sales volume, which accounts for the most of the business slid 2.2 percent from last year.
CEO Nicholas Akins said the company settled all legal challenges regarding construction of its John W. Turk Jr. Power Plant in Arkansas, clearing the way for the plant to begin operation in late 2012.
Akins said the Public Utilities Commission of Texas issued a final order allowing it to securitize funds related to the Texas Supreme Court decision. The company expects to receive proceeds of about $800 million from the securitization later in the first quarter, he noted.
The Texas court earlier ruled in the company's favor regarding the recovery of stranded costs associated with the transition to retail competition.
AEP is trading at $40.0, down $1.26 or 3.05%, on a volume of 3.57 million shares on the NYSE.
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