American Electric Power (AEP) on Tuesday reported third-quarter earnings that exceeded expectations, though a write-down on deregulated assets pushed it into the red on a GAAP basis.
Third-quarter operating earnings came in at $1.30 a share, more than the $1.21 consensus compiled by FactSet, and compared with $1.06 a shares a year earlier. Revenue rose to $4.7 billion from $4.4 billion, in line with forecasts. The company reported a GAAP loss of $765.8 million, compared with a profit of $518.3 million a year earlier after a $2.3 billion write-down related to its deregulated power plants.
The utility company from Columbus, Ohio, also raised and narrowed its 2016 operating earnings guidance range to $3.75 to $3.85 a share, though said it can't forecast GAAP earnings because of potential write-downs and divestitures. AEP was previously shooting for a $3.60 to $3.80 earnings-per-share range.
AEP serves nearly 5.4 million customers in 11 states, and owns the largest electricity transmission network in the U.S., stretching to more than 40,000 miles, as well as 31,000 megawatts of generation capacity.
The company in September agreed to sell four power plants to a newly formed joint venture of Blackstone (BX) and ArcLight Capital Partners for $2.17 billion, continuing its drive to become a fully regulated utility and reduce business risks.
Various utilities have been shedding their deregulated power plants to de-risk their portfolios at a time of low wholesale prices and to generate capital to reinvest in higher growth businesses.
AEP President, Chairman and CEO Nicholas J. Akins suggested other divestitures will follow.