American Electric Power's third-quarter net income rose 67 percent, the company reported Wednesday, thanks to a favorable court ruling in Texas and hot weather that boosted electricity demand.
The company reported net income of $928 million, or $1.93 per share, compared with $555 million, or $1.16 a share, in same period a year ago. AEP's revenue for the period rose to $4.3 billion from $4.1 billion.
Waves of extreme heat throughout the U.S. were good for power demand and for AEP, company executives said.
"This was the warmest quarter in over 30 years for our West service areas, and the seventh-warmest in the last 30 years for our East service territories," Chief Financial Officer Brian Tierney told analysts on a conference call.
AEP said its results also benefited from a Texas Supreme Court decision worth $425 million that allowed the company to recover some costs related to retail competition.
Without the impact of that ruling and other one-time items, AEP reported ongoing earnings of $566 million, or $1.17 per share, compared with $552 million, or $1.15 per share, during the third quarter of 2010.
That still topped most Wall Street expectations on earnings, though revenue fell short.
Analysts polled by FactSet expected the company to earn, on average, $1.14 per share on revenue of $4.7 billion. Those estimates typically do not include special items.
AEP's stock rose 15 cents to close at $38.80 Wednesday.
"All in all, the third quarter in almost any way that we would measure it has been a success for us, and we feel very comfortable about that," said Michael Morris, chairman and CEO, addressing analysts on the call for his final time as CEO, after eight years. He is retiring from that position Nov. 11 but will remain chairman. AEP announced on Tuesday that company President Nicholas Akins will succeed Morris as CEO.
Morris said the quarter provided AEP with evidence of improvement in the economy, particularly an increase in industrial sales due to increased production by power customers in the metals and refining industries. However, in the conference call, he also described a "very shaky economy, as compared to what we saw in the latter part of 2010, when things appeared to be recovering."
AEP and other power companies have had a rough recovery from a recession that reduced demand for power, especially from big industrial customers that closed plants and made other cutbacks.
AEP narrowed its full-year forecast on Wednesday and said it's now looking for annual ongoing earnings of between $3.07 and $3.17 per share. The previous range was between $3 and $3.20 per share. Analysts anticipate 2011 earnings of $3.13 a share.
"We, like others, are beginning to see more slowdown in the U.S., but we feel comfortable that we will be within the range," Morris said.
American Electric Power Co. Inc., based in Columbus, Ohio, serves about 5.3 million customers in 11 states.