Feb 4, 2016

PPL Corporation Reports 2015 Earnings
- Increased per-share earnings from ongoing operations by 9 percent in 2015.
- Announces 2016 earnings forecast range of $2.25 to $2.45 per share.
- Updates compound annual per-share earnings growth rate to 5 to 6 percent through 2018.
- Increases annualized common stock dividend to $1.52 per share.

ALLENTOWN, Pa., Feb. 4, 2016 /PRNewswire/ -- PPL Corporation (NYSE: PPL) on Thursday (2/4) announced 2015 reported earnings of $682 million, or $1.01 per share, compared with $1.74 billion, or $2.61 per share, in 2014.

The company's results for 2015 reflect the loss from discontinued operations of $921 million, or $1.36 per share, resulting primarily from the June 1 spinoff of its competitive supply business.

Adjusting for special items, including results from the discontinued operations of the former Supply segment, earnings from ongoing operations were $1.49 billion, or $2.21 per share, compared with earnings from ongoing operations (adjusted) of $1.35 billion, or $2.03 per share in 2014, an increase of 9 percent on a per-share basis.

The company's results exceeded the midpoint of its 2015 earnings from ongoing operations forecast range of $2.15 to $2.25, marking the sixth consecutive year PPL has exceeded the midpoint of its earnings forecast.

"2015 marked a pivotal year for PPL, one in which we again delivered strong results for our shareowners while laying a firm foundation for PPL's continued growth and success," said William H. Spence, PPL's chairman, president and Chief Executive Officer.

"We completed the successful spinoff of our Supply segment, capping our strategic transformation into a high-performing, purely regulated utility business," Spence said. "We completed $3.5 billion in infrastructure improvements for our customers, secured approvals for recovery of additional utility investments in Pennsylvania and Kentucky rate cases, successfully transitioned to a new eight-year price-control period in the United Kingdom and reduced corporate support costs.

"Looking forward, we are well-positioned to continue to deliver competitive earnings growth and dividend yields, all supported by a low-risk business plan," Spence said.

The company announced its 2016 earnings forecast range of $2.25 to $2.45 per share. In addition, Spence said PPL expects compound annual growth through 2018 of 5 to 6 percent above 2014 earnings of $2.03 per share from ongoing operations (adjusted).

Earnings from PPL's operations in the United States, including its corporate services organization, are expected to grow 11 to 13 percent through 2018, with 1 to 3 percent earnings growth expected in the United Kingdom.

Backed by the continued strong performance and expected growth of its utilities, PPL announced that it is increasing its common stock dividend to $0.38 per share on a quarterly basis. The increased dividend will be payable April 1 to shareowners of record as of March 10. The increase, PPL's 14th in 15 years, raises the annualized dividend from $1.51 per share to $1.52 per share.

In closing out 2015, PPL reported fourth-quarter earnings of $399 million, or $0.59 per share, compared with reported earnings of $695 million, or $1.04 per share, in 2014. Adjusting for special items, fourth-quarter earnings from ongoing operations were $294 million, or $0.43 per share, compared with $330 million, or $0.49 per share, in 2014.  

2015 Earnings Details

PPL's reported earnings for 2015 included net special-item after-tax charges of $807 million, or $1.20 per share.

Special items for 2015 included a loss from discontinued operations of $921 million, or $1.36 per share, resulting primarily from the June 1 spinoff of its competitive supply business, partially offset by a reduction in the U.K. corporate income tax rate and unrealized gains on foreign currency-related economic hedges.

PPL's reported earnings for the fourth quarter of 2015 included net special-item after-tax credits of $105 million, or $0.16 per share.

Special items for the fourth quarter of 2015 included reductions to net deferred income tax liabilities resulting from a reduction in the U.K. corporate income tax rate and unrealized gains on foreign currency-related economic hedges.

Reported earnings are calculated in accordance with U.S. GAAP (generally accepted accounting principles). "Earnings from ongoing operations" is a non-GAAP financial measure that is adjusted for special items, including the Supply segment's earnings and the loss from discontinued operations associated with the spinoff of the Supply segment. In addition, 2014 has been adjusted to reflect the impact of dissynergies related to the spinoff of the Supply segment. Special items and the dissynergies are fully detailed at the end of this news release.

 

 

(See the tables at the end of this news release for a reconciliation of reported earnings (loss) to earnings from ongoing operations.)

 

 

(See the reconciliation tables at the end of this news release for an itemization of special items and dissynergy adjustments.)

Key Factors Impacting Earnings from Ongoing Operations

U.K. Regulated Segment 
PPL's U.K. Regulated segment primarily consists of the regulated electricity delivery operations of Western Power Distribution (WPD), serving Southwest and Central England and South Wales.

Earnings from ongoing operations in 2015 increased by $0.07 per share compared with a year ago. This increase was primarily due to lower income taxes, lower depreciation expense and higher  margins driven by an April 1, 2014 price increase, partially offset by lower prices driven by an April 1, 2015 price decrease due to the beginning of the new eight-year price control period (RIIO-ED1).

Earnings from ongoing operations in the fourth quarter of 2015 decreased by $0.07 per share compared with a year ago. This decrease was primarily due to lower margins primarily driven by an April 1, 2015 price decrease due to the commencement of RIIO-ED1 and higher operation and maintenance expense, partially offset by lower U.K. income taxes due to a change in tax rates and lower depreciation expense.

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.

Earnings from ongoing operations in 2015 increased by $0.04 per share compared with a year ago. This was primarily due to higher base electricity rates effective July 1, 2015, and higher returns on additional environmental capital investments, partially offset by lower sales volumes due to unfavorable weather in the fourth quarter, and higher operation and maintenance expense, including costs associated with the retirement of coal-fired generation at the Cane Run facility, and higher financing costs related to the 2015 debt issuances.

Earnings from ongoing operations in the fourth quarter of 2015 decreased by $0.01 per share compared with a year ago. This was primarily due to lower sales volumes due to unfavorable weather and higher financing costs, partially offset by higher base electricity rates effective July 1, 2015, and higher returns on additional environmental capital investments.                 

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

Earnings from ongoing operations in 2015 decreased by $0.03 per share compared with a year ago, driven primarily by higher operation and maintenance expense and higher depreciation expense,  partially offset by higher transmission and distribution margins and the release of a gross receipts tax reserve.

Earnings from ongoing operations in the fourth quarter of 2015 decreased by $0.01 per share compared with a year ago.  This was primarily due to higher operation and maintenance expense, higher depreciation expense and lower sales volumes due to unfavorable weather, partially offset by higher transmission margins and the release of a gross receipts tax reserve.

Corporate and Other 
PPL's Corporate and Other category primarily includes unallocated corporate-level financing and other costs. Corporate and Other in 2015 improved by $0.10 per share compared with a year ago (adjusted) and $0.03 per share in the fourth quarter compared with the previous year. This was primarily due to the benefits of the corporate restructuring.

 

 

(See the tables at the end of this news release for a reconciliation of reported earnings to 2015 earnings from ongoing operations.)

The midpoint of PPL's 2016 earnings forecast of $2.35 per share represents an increase of more than 6 percent compared to 2015 earnings from ongoing operations. This increase is primarily attributable to increases in the Pennsylvania Regulated and Kentucky Regulated segments.

U.K. Regulated Segment            
PPL projects relatively flat segment earnings in 2016 compared with 2015, due to higher financing costs, depreciation expense, currency, taxes and other expenses, partially offset by lower operation and maintenance expense, including pension expense, and higher gross margins. 

The 2016 foreign currency exposure for this segment is 95 percent hedged at an average rate of $1.56 per pound.

Kentucky Regulated Segment  
PPL projects higher segment earnings in 2016 compared with 2015, primarily driven by electric and gas base rate increases effective July 1, 2015, and higher returns on additional environmental capital investments, partially offset by higher depreciation expense and higher financing costs.

Pennsylvania Regulated Segment
PPL projects higher segment earnings in 2016 compared with 2015, primarily driven by a distribution base rate increase effective Jan. 1, 2016, and higher transmission margins, partially offset by higher depreciation, higher financing costs and a benefit received in 2015 from the release of a gross receipts tax reserve.

 

Corporate and Other 
PPL projects costs to be relatively flat in this category in 2016 compared with 2015.

Headquartered in Allentown, Pa., 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 10 million customers in the U.S. and United Kingdom. The company and its 13,000 employees are 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 2015 financial results at 8:30 a.m. Eastern Standard Time on Thursday, Feb. 4. The call will be webcast live, in audio format, along 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 30 days after the call. Interested individuals can access the live conference call via telephone at 1-888-317-6003. International participants should call 1-412-317-6061. Participants in Canada should call 1-866-284-3684. Participants will need to enter the following "Elite Entry" number in order to join the conference: 0130109.

 

"Earnings from ongoing operations," should not be considered as an alternative to reported earnings, or net income, which is an indicator of operating performance determined in accordance with U.S. generally accepted accounting principles (GAAP). PPL believes that earnings from ongoing operations, although a non-GAAP financial measure, is also useful and meaningful to investors because it provides management's view of PPL's earnings excluding the Supply segment, as the spinoff was completed June 1, 2015. Other companies may use different measures to present financial performance. Earnings from ongoing operations is adjusted for the impact of special items as described below, which includes the Supply segment's earnings now reflected in discontinued operations. Also included in special items is the loss on spinoff resulting from the fair value of the Supply segment being less than PPL's recorded value as of June 1, 2015, the date of the spinoff. "Earnings from ongoing operations (adjusted)" for 2014 also reflects, within the Corporate and Other category, the impact of spinoff dissynergies that would remain with PPL after the completion of the transaction, if left unmitigated.

 

"Earnings from ongoing operations" is adjusted for the impact of special items. Special items include:

  • Unrealized gains or losses on foreign currency-related economic hedges.
  • Supply segment discontinued operations.
  • Gains and losses on sales of assets not in the ordinary course of business.
  • Impairment charges.
  • Workforce reduction and other restructuring effects.
  • Acquisition and divestiture-related adjustments.
  • Other charges or credits that are, in management's view, not reflective of the company's ongoing operations.

Statements contained in this news release, including statements with respect to future earnings, cash flows, financing, regulation and corporate strategy, 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: 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; asset or business acquisitions and dispositions; 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 states, regions or countries where PPL Corporation or its subsidiaries conduct business, including any potential effects of threatened or actual terrorism or war or other hostilities; British pound sterling to U.S. dollar exchange rates; 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 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE PPL Corporation

 

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