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PPL Corporation Reports First-Quarter 2021 Earnings

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- 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 /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 amounts)


1st Quarter



2021


2020


Change

Reported earnings


$

(1,840)



$

554



NM*

Reported earnings per share


$

(2.39)



$

0.72



NM*










1st Quarter



2021


2020


Change

Earnings from ongoing operations


$

219



$

206



6

%

Earnings from ongoing operations per share


$

0.28



$

0.27



4

%

*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 Segment
PPL'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 Segment
PPL'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 Other
PPL'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 plant

6,156



6,008


Regulated utility plant, net

23,198



23,032


Non-regulated property, plant and equipment

245



237


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

38



37


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




(1)

The Financial Statements in this news release have been condensed and 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 Taxes


262



265







Income Taxes


59



61







Income from Continuing Operations After Income Taxes


203



204







Income (Loss) from Discontinued Operations (net of income taxes)


(2,043)



350







Net Income (Loss)


$

(1,840)



$

554







Earnings Per Share of Common Stock:





Basic and Diluted



Income (Loss) from Continuing Operations After Income Taxes


$

0.26



$

0.27


Income (Loss) from Discontinued Operations (net of income taxes)


$

(2.65)



$

0.45


Net Income (Loss) Available to PPL Common Shareowners


(2.39)



0.72







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 taxes)

2,043



(350)


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 hedging activities



(4)


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 operations

396



413


Net cash provided by operating activities - discontinued operations

267



279


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 operations

(472)



(619)


Net cash used in investing activities - discontinued operations

(263)



(214)


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 operations

55



283


Net cash used in financing activities - discontinued operations

(126)



(43)


Net cash provided by (used in) financing activities

(71)



240


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

8



1


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

114



(23)


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

(21)



77


Cash, Cash Equivalents and Restricted Cash at Beginning of Period

443



660


Cash, Cash Equivalents and Restricted Cash at End of Period

$

422



$

737






Supplemental Disclosures of Cash Flow Information




Significant non-cash transactions:




Accrued expenditures for property, plant and equipment at March 31,

$

229



$

237














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, 2021

(millions of dollars)


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 Discontinued Operations







(2,047)



(2,047)


Talen litigation costs, net of tax of $1





(3)





(3)


Valuation allowance adjustment

4





(4)



4



4


Challenge to transmission formula rate return on equity reserve, net of tax of $6



(13)







(13)


Total Special Items

4



(13)



(7)



(2,043)



(2,059)


Earning from Ongoing Operations

$

142



$

126



$

(49)



$



$

219























(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 Discontinued Operations







(2.66)



(2.66)


Valuation allowance adjustment

0.01





(0.01)



0.01



0.01


Challenge to transmission formula rate return on equity reserve



(0.02)







(0.02)


Total Special Items

0.01



(0.02)



(0.01)



(2.65)



(2.67)


Earnings from Ongoing Operations

$

0.18



$

0.16



$

(0.06)



$



$

0.28




(1)

Reported Earnings represents Net Income.

(2)

Earnings for the U.K. Regulated segment are now reflected as discontinued 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(2)


Ops.(3)


Total

Reported Earnings(1)

$

127



$

118



$

(41)



$

350



$

554


Less: Special Items (expense) benefit:










Income (Loss) from Discontinued Operations







350



350


Talen litigation costs, net of tax of $1





(2)





(2)


Total Special Items





(2)



350



348


Earnings from Ongoing Operations

$

127



$

118



$

(39)



$



$

206























(per share - diluted)


KY


PA


Corp.


Disc.




Reg.


Reg.


& Other(2)


Ops.(3)


Total

Reported Earnings(1)

$

0.16



$

0.16



$

(0.05)



$

0.45



$

0.72


Less: Special Items (expense) benefit:










Income (Loss) from Discontinued Operations







0.45



0.45


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.

(3)

Earnings for the U.K. Regulated segment are now reflected as discontinued 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

Cision
Cision

View original content:http://www.prnewswire.com/news-releases/ppl-corporation-reports-first-quarter-2021-earnings-301285497.html

SOURCE PPL Corporation