PR Newswire | May 6, 2021 08:03AM EDT

05/06 07:00 CDT

PPL Corporation Reports First-Quarter 2021 Earnings- Announces first-quarter reported net loss (GAAP) of $2.39 per share, reflecting a $2.65 per share net loss from discontinued operations associated with the U.K. utility business.- Achieves earnings from ongoing operations of $0.28 per share.- Continues to advance strategic repositioning of company; transactions remain on track to close. ALLENTOWN, Pa., May 6, 2021

ALLENTOWN, Pa., May 6, 2021 /PRNewswire/ -- PPL Corporation (NYSE: PPL) on Thursday (5/6) announced a first-quarter 2021 reported net loss (GAAP) of $1.84 billion, or $2.39 per share, compared with first-quarter 2020 reported earnings of $554 million, or $0.72 per share.

Adjusting for special items, first-quarter 2021 earnings from ongoing operations (non-GAAP) were $219 million, or $0.28 per share, compared to $206 million, or $0.27 per share, a year ago.

Special items in the quarter included a non-cash net loss from discontinued operations primarily due to the realization of accumulated other comprehensive losses associated with the U.K. utility business, Western Power Distribution. On March 18, PPL announced agreements to sell WPD to National Grid for 7.8 billion and, in a separate transaction, to acquire The Narragansett Electric Company from another National Grid subsidiary for $3.8 billion.

"Across PPL, we continue to deliver electricity and gas safely and reliably for our customers as we navigate the pandemic," said Vincent Sorgi, PPL president and chief executive officer. "At the same time, we continue to make progress on the transformative transactions that will better position PPL for long-term growth and success.

"In the U.K., we are on track to close the WPD sale by the end of July," said Sorgi. "In the U.S., we have made all the required regulatory filings to secure approval for the Narragansett Electric acquisition and remain confident in our ability to close the transaction by March of next year. We've also established a Rhode Island transition team that has actively begun planning to ensure a seamless transition for employees and Narragansett Electric customers upon approval and closing of the transaction."

First-Quarter 2021 Earnings Details

As discussed in this news release, reported earnings are calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). "Earnings from ongoing operations" is a non-GAAP financial measure that is adjusted for special items. See the tables at the end of this news release for a reconciliation of reported earnings (net income) to earnings from ongoing operations, including an itemization of special items.

(Dollars in millions, except for per-share 1st Quarter amounts)

2021 2020 Change

Reported earnings $(1,840)$554 NM*

Reported earnings per share $(2.39) $0.72NM*



1st Quarter

2021 2020 Change

Earnings from ongoing operations $219 $206 6 %

Earnings from ongoing operations per share $0.28 $0.274 %

*NM: Not meaningful

First-Quarter 2021 Earnings by Segment



1st Quarter

Per share 2021 2020

Reported earnings

Kentucky Regulated $0.19 $0.16

Pennsylvania Regulated 0.14 0.16

Corporate and Other (0.07) (0.05)

Discontinued Operations (2.65) 0.45

Total $(2.39)$0.72



1st Quarter

2021 2020

Special items (expense) benefit

Kentucky Regulated $0.01 $-

Pennsylvania Regulated (0.02) -

Corporate and Other (0.01) -

Discontinued Operations (2.65) 0.45

Total $(2.67)$0.45



1st Quarter

2021 2020

Earnings from ongoing operations

Kentucky Regulated $0.18 $0.16

Pennsylvania Regulated 0.16 0.16

Corporate and Other (0.06) (0.05)

Discontinued Operations - -

Total $0.28 $0.27

Key Factors Impacting Earnings

In addition to the segment drivers outlined below, PPL's reported earnings for the first quarter of 2021 included net special-item after-tax charges of $2.059 billion, or $2.67 per share, primarily attributable to discontinued operations associated with the U.K. utility business. The special-item charges attributable to discontinued operations included a non-cash net loss on the sale of the U.K. utility business, primarily due to the realization of accumulated other comprehensive losses, and forecasted federal taxes associated with the sale, partially offset by earnings from the operations of the U.K. utility business for the first quarter. Reported earnings for the first quarter of 2020 included net special-item after-tax benefits of $348 million, or $0.45 per share, primarily attributable to U.K. earnings that were reclassified to discontinued operations.

Kentucky Regulated SegmentPPL's Kentucky Regulated segment primarily consists of the regulated electricity and natural gas operations of Louisville Gas and Electric Company and the regulated electricity operations of Kentucky Utilities Company.

Reported earnings in the first quarter of 2021 increased by $0.03 per share compared with a year ago. Earnings from ongoing operations in the first quarter of 2021 increased by $0.02 per share compared with a year ago. Factors driving earnings results primarily included higher sales volumes primarily due to weather, partially offset by higher operation and maintenance expense.

Pennsylvania Regulated SegmentPPL's Pennsylvania Regulated segment consists of the regulated electricity delivery operations of PPL Electric Utilities.

Reported earnings in the first quarter of 2021 decreased by $0.02 per share compared with a year ago. Earnings from ongoing operations in the first quarter of 2021 were flat compared with a year ago. Factors driving earnings results primarily included returns on additional capital investments in transmission, higher sales volumes due to weather and lower operation and maintenance expense, offset by lower peak transmission demand and a reserve recorded as a result of a challenge to the transmission formula rate return on equity.

Corporate and OtherPPL's Corporate and Other category primarily includes unallocated corporate-level financing and other costs.

Reported earnings in the first quarter of 2021 decreased by $0.02 per share compared with a year ago. Earnings from ongoing operations in the first quarter of 2021 decreased by $0.01 per share compared with a year ago. Factors driving earnings results primarily included higher interest expense.

Headquartered in Allentown, Pennsylvania, PPL Corporation (NYSE: PPL) is one of the largest companies in the U.S. utility sector. PPL's seven high-performing, award-winning utilities serve more than 10 million customers in the U.S. and U.K. With more than 12,000 employees, the company is dedicated to providing exceptional customer service and reliability and delivering superior value for shareowners. To learn more, visit www.pplweb.com.

(Note: All references to earnings per share in the text and tables of this news release are stated in terms of diluted earnings per share unless otherwise noted.)

Conference Call and Webcast

PPL invites interested parties to listen to a live Internet webcast of management's teleconference with financial analysts about first-quarter 2021 financial results at 11 a.m. Eastern time on Thursday, May 6. The call will be webcast live, in audio format, together with slides of the presentation. For those who are unable to listen to the live webcast, a replay with slides will be accessible at www.pplweb.com/investors for 90 days after the call. Interested individuals can access the live conference call via telephone at 1-888-346-8683. International participants should call 1-412-902-4270. Participants will need to enter the following "Elite Entry" number to join the conference: 3142932. Callers can access the webcast link at www.pplweb.com/investors under "Events."

# # #

Management utilizes "Earnings from Ongoing Operations" as a non-GAAP financial measure that should not be considered as an alternative to reported earnings, or net income, an indicator of operating performance determined in accordance with GAAP. PPL believes that Earnings from Ongoing Operations is useful and meaningful to investors because it provides management's view of PPL's earnings performance as another criterion in making investment decisions. In addition, PPL's management uses Earnings from Ongoing Operations in measuring achievement of certain corporate performance goals, including targets for certain executive incentive compensation. Other companies may use different measures to present financial performance.

Earnings from Ongoing Operations is adjusted for the impact of special items. Special items are presented in the financial tables on an after-tax basis with the related income taxes on special items separately disclosed. Income taxes on special items, when applicable, are calculated based on the statutory tax rate of the entity where the activity is recorded. Special items may include items such as:

* Gains and losses on sales of assets not in the ordinary course of business. * Impairment charges. * Significant workforce reduction and other restructuring effects. * Acquisition and divestiture-related adjustments. * Other charges or credits that are, in management's view, non-recurring or otherwise not reflective of the company's ongoing operations.

Statements contained in this news release, including statements with respect to future earnings, cash flows, dividends, financing, regulation and corporate strategy, including the process to sell PPL Corporation's U.K. utility business, are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements are subject to a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: asset or business acquisitions and dispositions, including our ability to successfully execute our plan to divest PPL Corporation's U.K. business within the anticipated timeframe and pursuant to the terms in the previously announced share purchase agreement with respect to that sale or any particular terms, or that such divestiture may not yield the anticipated benefits; the novel coronavirus pandemic or other pandemic health events or other catastrophic events and their effect on financial markets, economic conditions and our businesses; market demand for energy in our service territories; weather conditions affecting customer energy usage and operating costs; the effect of any business or industry restructuring; the profitability and liquidity of PPL Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of our facilities; the length of scheduled and unscheduled outages at our generating plants; environmental conditions and requirements and the related costs of compliance; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; any impact of severe weather on our business; receipt of necessary government permits, approvals, rate relief and regulatory cost recovery; capital market conditions and decisions regarding capital structure; the impact of state, federal or foreign investigations applicable to PPL Corporation and its subsidiaries; the outcome of litigation against PPL Corporation and its subsidiaries; stock price performance; the market prices of equity securities and the impact on pension income and resultant cash funding requirements for defined benefit pension plans; the securities and credit ratings of PPL Corporation and its subsidiaries; political, regulatory or economic conditions in jurisdictions where PPL Corporation or its subsidiaries conduct business, including any potential effects of threatened or actual cyberattack, terrorism, or war or other hostilities; new state, federal or foreign legislation, including new tax legislation; and the commitments and liabilities of PPL Corporation and its subsidiaries. Any such forward-looking statements should be considered in light of such important factors and in conjunction with factors and other matters discussed in PPL Corporation's Form 10-K and other reports on file with the Securities and Exchange Commission.

Note to Editors: Visit our media website at www.pplnewsroom.com for additional news and background about PPL Corporation.

PPL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL INFORMATION ^(1)

Condensed Consolidated Balance Sheets (Unaudited)

(Millions of Dollars)



March 31,December 31,

2021 2020

Assets

Cash and cash equivalents $421 $442

Accounts receivable 711 689

Unbilled revenues 225 301

Fuel, materials and supplies 260 302

Regulatory assets 121 99

Other current assets 164 84

Current assets held for sale 18,425 18,983

Property, Plant and Equipment

Regulated utility plant 29,354 29,040

Less: Accumulated depreciation - regulated utility plant6,156 6,008

Regulated utility plant, net 23,198 23,032

Non-regulated property, plant and equipment 245 237

Less: Accumulated depreciation - non-regulated property,38 37 plant and equipment

Non-regulated property, plant and equipment, net 207 200

Construction work in progress 1,292 1,268

Property, Plant and Equipment, net 24,697 24,500

Noncurrent regulatory assets 1,233 1,262

Goodwill and other intangibles 1,064 1,067

Pension benefit asset 67 24

Other noncurrent assets 393 363

Total Assets $47,781$48,116



Liabilities and Equity

Short-term debt $1,547 $1,168

Long-term debt due within one year 976 1,074

Accounts payable 660 745

Other current liabilities 1,064 1,045

Current liabilities held for sale 11,376 11,023

Long-term debt 13,715 13,615

Deferred income taxes and investment tax credits 3,491 2,658

Accrued pension obligations 183 189

Asset retirement obligations 130 132

Noncurrent regulatory liabilities 2,526 2,530

Other deferred credits and noncurrent liabilities 559 564

Common stock and additional paid-in capital 12,281 12,278

Earnings reinvested 3,155 5,315

Accumulated other comprehensive loss (3,882) (4,220)

Total Liabilities and Equity $47,781$48,116

The Financial Statements in this news release have been condensed and(1) summarized for purposes of this presentation. Please refer to PPL Corporation's periodic filings with the Securities and Exchange Commission for full financial statements, including note disclosure.







PPL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(Millions of Dollars, except share data)



Three Months Ended March 31,

2021 2020

Operating Revenues $1,498 $1,440



Operating Expenses

Operation

Fuel 177 163

Energy purchases 220 201

Other operation and maintenance 367 355

Depreciation 267 250

Taxes, other than income 52 47

Total Operating Expenses 1,083 1,016



Operating Income 415 424



Other Income (Expense) - net - (5)



Interest Expense 153 154



Income From Continuing Operations Before Income 262 265 Taxes



Income Taxes 59 61



Income from Continuing Operations After Income Taxes203 204



Income (Loss) from Discontinued Operations (net of (2,043) 350 income taxes)



Net Income (Loss) $(1,840) $554



Earnings Per Share of Common Stock:

Basic and Diluted

Income (Loss) from Continuing Operations After $0.26 $0.27 Income Taxes

Income (Loss) from Discontinued Operations (net of $(2.65) $0.45 income taxes)

Net Income (Loss) Available to PPL Common (2.39) 0.72 Shareowners



Weighted-Average Shares of Common Stock Outstanding (in thousands)

Basic 769,159 767,948

Diluted 770,710 768,738







PPL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions of Dollars)



Three Months Ended March 31,

2021 2020

Cash Flows from Operating Activities

Net income (loss) $(1,840)$554

Loss (income) from discontinued operations (net of income 2,043 (350)taxes)

Income from continuing operations (net of income taxes) 203 204

Adjustments to reconcile net income to net cash provided by operating activities - continuing operations

Depreciation 267 250

Amortization 11 9

Defined benefit plans - (income) expense 4 9

Deferred income taxes and investment tax credits 50 75

Unrealized (gains) losses on derivatives, and other - (4) hedging activities

Other 1 7

Change in current assets and current liabilities

Accounts receivable (60) -

Accounts payable (42) (42)

Prepayments (76) (75)

Accrued interest 69 66

Unbilled revenues 76 62

Regulatory assets and liabilities, net 29 (25)

Other (60) (98)

Other operating activities

Defined benefit plans - funding (33) (54)

Other (43) 29

Net cash provided by operating activities - continuing 396 413 operations

Net cash provided by operating activities - discontinued 267 279 operations

Net cash provided by operating activities 663 692

Cash Flows from Investing Activities

Expenditures for property, plant and equipment (471) (616)

Other investing activities (1) (3)

Net cash used in investing activities - continuing (472) (619)operations

Net cash used in investing activities - discontinued (263) (214)operations

Net cash used in investing activities (735) (833)

Cash Flows from Financing Activities

Proceeds from project financing 5 -

Issuance of common stock 1 20

Payment of common stock dividends (320) (317)

Issuance of term loan - 200

Retirement of term loan (300) -

Retirement of commercial paper (73) -

Net increase (decrease) in short-term debt 752 388

Other financing activities (10) (8)

Net cash provided by financing activities - continuing 55 283 operations

Net cash used in financing activities - discontinued (126) (43) operations

Net cash provided by (used in) financing activities (71) 240

Effect of Exchange Rates on Cash, Cash Equivalents and 8 1 Restricted Cash included in Discontinued Operations

Net (Increase) Decrease in Cash, Cash Equivalents and 114 (23) Restricted Cash included in Discontinued Operations

Net Increase (Decrease) in Cash, Cash Equivalents and (21) 77 Restricted Cash

Cash, Cash Equivalents and Restricted Cash at Beginning of443 660 Period

Cash, Cash Equivalents and Restricted Cash at End of $422 $737Period



Supplemental Disclosures of Cash Flow Information

Significant non-cash transactions:

Accrued expenditures for property, plant and equipment at $229 $237March 31,





Operating - Electricity Sales (Unaudited)



Three Months Ended March 31,

Percent

(GWh) 2021 2020 Change



PA Regulated Segment

Retail Delivered 9,861 9,446 4.4 %



KY Regulated Segment

Retail Delivered 7,572 7,228 4.8 %

Wholesale ^(1) 276 126 119.0%

Total 7,848 7,354 6.7 %



Total 17,709 16,800 5.4 %

(1) Represents FERC-regulated municipal and unregulated off-system sales.







Reconciliation of Segment Reported Earnings to Earnings from Ongoing Operations

(After-Tax)

(Unaudited)



Year-to-Date March 31, (millions of dollars) 2021

KY PA Corp. Disc.

Reg. Reg. & Other Ops.^(2) Total

Reported Earnings^(1) $146 $113 $(56) $(2,043)$(1,840)

Less: Special Items (expense) benefit:

Income (Loss) from - - - (2,047) (2,047) Discontinued Operations

Talen litigation costs, - - (3) - (3) net of tax of $1

Valuation allowance 4 - (4) 4 4 adjustment

Challenge to transmission formula rate return on - (13) - - (13) equity reserve, net of tax of $6

Total Special Items 4 (13) (7) (2,043) (2,059)

Earning from Ongoing $142 $126 $(49) $- $219 Operations





(per share - diluted)

KY PA Corp. Disc.

Reg. Reg. & Other Ops.^(2) Total

Reported Earnings^(1) $0.19$0.14$(0.07)$(2.65) $(2.39)

Less: Special Items (expense) benefit:

Income (Loss) from - - - (2.66) (2.66) Discontinued Operations

Valuation allowance 0.01 - (0.01) 0.01 0.01 adjustment

Challenge to transmission formula rate return on - (0.02)- - (0.02) equity reserve

Total Special Items 0.01 (0.02)(0.01) (2.65) (2.67)

Earnings from Ongoing $0.18$0.16$(0.06)$- $0.28 Operations

(1) Reported Earnings represents Net Income.

Earnings for the U.K. Regulated segment are now reflected as discontinued(2) operations due to the announced sale on March 18, 2021, and are treated as a special item.







Reconciliation of Segment Reported Earnings to Earnings from Ongoing Operations

(After-Tax)

(Unaudited)



Year-to-Date March 31, 2020 (millions of dollars)

KY PA Corp. Disc.

Reg. Reg. & Other^Ops.^ Total (2) (3)

Reported Earnings^(1) $127 $118 $(41) $350 $554

Less: Special Items (expense) benefit:

Income (Loss) from Discontinued - - - 350 350 Operations

Talen litigation costs, net of - - (2) - (2) tax of $1

Total Special Items - - (2) 350 348

Earnings from Ongoing Operations$127 $118 $(39) $- $206





(per share - diluted)

KY PA Corp. Disc.

Reg. Reg. & Other^Ops.^ Total (2) (3)

Reported Earnings^(1) $0.16$0.16$(0.05)$0.45$0.72

Less: Special Items (expense) benefit:

Income (Loss) from Discontinued - - - 0.45 0.45 Operations

Total Special Items - - - 0.45 0.45

Earnings from Ongoing Operations$0.16$0.16$(0.05)$- $0.27

(1) Reported Earnings represents Net Income.

(2) The amount for the period ended March 31, 2020, has been adjusted for certain costs that were previously included in the U.K. Regulated segment.

Earnings for the U.K. Regulated segment are now reflected as discontinued(3) operations due to the announced sale on March 18, 2021, and are treated as a special item.

Contacts:For news media: Dana Burns, 610-774-5409

For financial analysts: Andy Ludwig, 610-774-3389

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SOURCE PPL Corporation