Akins Discusses AEP’s Second Quarter Financial Results with Cramer on ‘Mad Money’

AEP CEO Nick Akins (right) appeared on “Mad Money with Jim Cramer” July 28

Nick Akins, AEP chairman, president and chief executive officer, spoke with Jim Cramer of “Mad Money with Jim Cramer” on CNBC July 28 following AEP’s 2016 second-quarter earnings report.

View the entire segment.

In discussing AEP’s strong second-quarter results — which beat Wall Street expectations — Cramer asked Akins if the company was surprised by its success.

“It wasn’t any surprise to us because we’ve been investing in infrastructure — particularly in transmission,” Akins answered. “The earnings profile of transmission continues to improve dramatically and also weather — we had more normal weather (in the second quarter). In previous quarters, the weather was very light. Obviously, we had a good outcome as a result.”

Cramer also noted from AEP’s earnings report that sales to both residential and commercial customers improved during the second quarter, but industrial sales declined.

“Residential and commercial customer sales both increased during the quarter and usage by customers continues to improve,” Akins said. “One issue we have is around industrial load. If you look at industrial and manufacturing, we’re seeing a slowdown from an oil and gas perspective, and mining, as well. Mining is being hit pretty hard. Within our territory, we’re seeing 22,000 less jobs in oil and gas and mining from year-to-year. That’s a substantial amount of job loss, and a lot of that was in our western territory in Arkansas, Oklahoma, Louisiana and Texas. You’re starting to see a significant slowdown in that activity. You’re seeing an 18 percent reduction on the mining side of things, so we have to watch that very closely.”

As a hedge, Akins told Cramer AEP is investing in renewables and converting some coal plants to natural gas. Cramer asked if AEP would consider purchasing a natural gas pipeline company to further expand its portfolio.

“One thing we look at is the threshold around investments,” Akins responded. “Again, we have the largest transmission system in the country, so when you look at the ability to deploy capital, you want to be able to do that wisely. Our investments really focus on transmission and other types of investments such as renewables. We continue to move into that space because we’re really focused on what the customer experience is going to be in the future. Maybe at some future time (AEP will consider pipeline investment), but we have a runway ahead of us in transmission investment that is really good for us.”