Jan 24, 2001
Capping off the most successful year in its history, PPL Corp. (NYSE: PPL) Wednesday (1/24) announced record 2000 earnings that are 40 percent higher than a year ago. The company's adjusted earnings of $3.28 per share are 23 cents higher than analysts' consensus estimate.
"The earnings that we are reporting today are 75 percent higher than we reported just two years ago," said William F. Hecht, PPL Corp. chairman, president and chief executive officer. "Our 2000 earnings results are more clear evidence that we not only have identified superior opportunities in the competitive energy marketplace, we also have successfully capitalized on those opportunities."
"The main driver for our dramatic earnings growth in 2000 was an increase in margins and volume in our wholesale energy transactions," said Hecht. The competitive generation market, he said, is even more advantageous than the company anticipated.
"We have made excellent progress in our generation expansion program and this effort is building value in a very direct way for our shareowners," said Hecht. "We have carefully focused our generation development efforts in regions where there is exceptional opportunity and a very high likelihood of success."
Hecht also noted that, unlike some other electric companies that have gone through deregulation, PPL does not have any deferred power costs for which regulatory approval would be required for future recovery.
Hecht said that the company is increasing both its 2001 and 2002 earnings forecasts by about 35 cents per share. The 2001 forecast now is $3.60 to $3.65 per share, and the 2002 forecast, $3.90 to $4.00 per share.
"Our forecast of continued strong earnings growth is bolstered by the fact that we have been able to capture the value associated with high forward electricity prices in both the Eastern and Western U.S. markets," said Hecht. In both the Eastern and Western markets, he said, the company has adequate generation to meet its projected retail load obligations and still sell into the wholesale market.
Hecht said the major drivers for PPL's 2001 and 2002 earnings forecast are: increased margins on wholesale energy transactions; increased supply of electricity to sell in the competitive wholesale markets in the West; new power plants in Arizona, Connecticut and Pennsylvania; higher earnings from the company's international businesses; and continued success in controlling costs.
The improved earnings performance and prospects for future growth resulted in "spectacular" total return for shareowners in 2000, Hecht said. "Our total return to shareowners, paced by the outstanding performance of our common stock in the market, was about 105 percent, a level higher than all but two of the 71 energy companies that are part of the Edison Electric Institute index."
Hecht pointed out that achievement of the company's 2002 earnings projection would mean that PPL would have more than doubled its earnings per share since 1998, when its adjusted earnings were $1.87 per share.
PPL's stock price, which increased from $22.875 per share at the beginning of 2000 to $45.188 per share at the end of the year, more than doubled the growth rate of the Dow Jones Utility Average.
Hecht said PPL's dramatic growth can be traced directly to its strategy to increase its earnings from non-regulated businesses. He said about 80 percent of the company's earnings now comes from its generation, marketing and international operations.
As the result of its integrated corporate strategy, PPL Corp. companies now:
-- Own or operate about 10,000 megawatts of electricity generating capacity in Pennsylvania, Montana and Maine. -- Are developing an additional 4,000 megawatts of generating capacity in Connecticut, Pennsylvania, New York, Arizona and Washington. -- Market electricity in wholesale or retail markets in 42 states and Canada, maximizing the value of the company's growing deregulated generation portfolio. -- Provide high-quality electricity delivery services to more than 6 million customers in Pennsylvania, the United Kingdom and Latin America.
Hecht said record-setting performance at the company's generation facilities throughout 2000, optimized by PPL's wholesale trading and marketing activities, highlighted improved performance in all areas of the company. The company's power plants generated nearly 50 million megawatt-hours of electricity during 2000, a company record. And, PPL's trading and marketing organization is conservatively estimated to have added about $60 million in 2000 net income over and above the earnings from PPL's generating assets, Hecht said.
Also contributing to PPL's earnings growth during the year were positive results from the company's regulated energy delivery business in Pennsylvania and a 12 percent increase in the company's electricity sales to retail customers in Pennsylvania and other Mid-Atlantic states.
Actual earnings for 2000 were $3.44 per share, including a non-recurring benefit of 16 cents per share from settlements with various insurers for environmental and other liabilities and the 1-cent dilutive effect of unexercised stock options. Actual earnings for 1999 were $2.84 per share, including several non-recurring items related to securitization of PPL's transition costs, the sale of assets and the write-down of carrying values of certain investments.
The company's adjusted earnings of $3.28 per share for 2000 do not include $17.7 million, or about 7 cents per share, that is owed to the company by the California Independent System Operator. To the extent that the company does receive payment for these sales, there would be a benefit for 2001 earnings. The benefit of receiving this payment from the California ISO is not, however, included in the company's 2001 earnings forecast, Hecht said.
Because of credit risk, PPL is not making sales to California unless required to do so by the Department of Energy.
Earnings for the fourth quarter of 2000 included no non-recurring items and were $0.87 per diluted share, compared to 1999 fourth quarter adjusted earnings of $0.64 per share. This marks the eighth straight time that PPL earnings have topped analysts' consensus estimates. Actual earnings of $1.02 per share for the 1999 period reflected the net benefits of several non- recurring items, including the sale of assets and write-down of carrying values of certain investments.
PPL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) Consolidated Balance Sheet (Millions of Dollars) Dec. 31, 2000 Dec. 31, 1999(a) Assets Current Assets $1,955 $1,293 Investments 1,161 695 Property, plant and equipment Transmission and distribution - net 2,841 2,462 Generation - net 2,177 2,352 General and intangible - net 294 259 Construction work in progress 261 181 Nuclear fuel and other leased property 123 139 Electric utility plant - net 5,696 5,393 Gas and oil utility plant - net 177 171 Other property - net 75 60 5,948 5,624 Recoverable transition costs 2,425 2,647 Regulatory and other assets 881 915 Total assets $12,370 $11,174 Liabilities Current liabilities $2,511 $2,280 Long-term debt (less current portion) 4,467 3,689 Deferred income taxes and ITC 1,412 1,548 Liability for above market NUG purchases 581 674 Other noncurrent liabilities 986 959 Minority interest 54 64 Company-obligated mandatorily redeemable securities 250 250 Preferred stock 97 97 Earnings reinvested 999 654 Other common equity 1,849 1,795 Treasury stock (836) (836) Total liabilities $12,370 $11,174
(a) Certain amounts have been reclassified to conform to the current year presentation.
Consolidated Income Statement (Millions of Dollars) 3 Months Ended Dec. 31 12 Months Ended Dec. 31 2000 1999(a) 2000 1999(a) Operating Revenues Electric $797 $696 $2,984 $2,758 Natural gas and propane 63 30 183 115 Wholesale energy marketing and trading 507 313 2,080 1,440 Energy-related businesses 138 94 436 277 1,505 1,133 5,683 4,590 Operating Expenses Fuel and purchased power 570 464 2,461 2,031 Other operation and maintenance 314 235 951 858 Amortization of recoverable transition costs 68 59 227 194 Depreciation and amortization 65 64 261 257 Other 160 104 581 378 1,177 926 4,481 3,718 Operating income 328 207 1,202 872 Other income (23) 90 (15) 97 Income before interest, income taxes and minority interest 305 297 1,187 969 Interest expense 102 74 376 277 Income taxes 79 82 294 174 Minority interest 0 1 4 14 Income before extraordinary items 124 140 513 504 Extraordinary items (net of taxes) 11 13 11 (46) Income before dividends on preferred stock 135 153 524 458 Preferred stock dividend requirements 7 7 26 26 Net income $128 $146 $498 $432 Earnings per share of common stock - basic Income before nonrecurring items $0.88 $0.64 $3.29 $2.35 Nonrecurring items (net of tax) 0.00 0.38 0.16 0.49 Net income $0.88 $1.02 $3.45 $2.84 Earnings per share of common stock - diluted Income before nonrecurring items $0.87 $0.64 $3.28 $2.35 Nonrecurring items (net of tax) 0.00 0.38 0.16 0.49 Net income $0.87 $1.02 $3.44 $2.84 Average number of shares outstanding (thousands) 144,906 143,695 144,350 152,287
(a) Certain amounts have been reclassified to conform to the current year presentation.
Key Indicators Financial 12 Months Ended 12 Months Ended Dec. 31, 2000 Dec. 31, 1999 Dividends declared per share $1.06 $1.00 Book value per share (a) $13.87 $11.23 Market price per share (a) $45.188 $22.875 Dividend yield 2.4% 4.4% Dividend payout ratio - basic and diluted (b) 32% 43% Price/earnings ratio - basic (b) 13.7 9.7 Price/earnings ratio - diluted (b) 13.8 9.7 Return on average common equity (b) 27.14% 16.89% (a) End of period (b) Based on adjusted earnings Operating - Domestic Energy 3 Months Ended Dec. 31 12 Months Ended Dec. 31 Percent Percent PPL Corp. 2000 1999 Change 2000 1999 Change (millions of kwh) Retail Delivered (a) 8,281 7,959 4.0 33,907 33,045 2.6 Supplied 9,370 8,463 10.7 37,758 33,695 12.1 Wholesale East 6,228 7,745 -19.6 31,544 32,045 -1.6 West Montana Power (b) 1,253 0 n/a 5,096 0 n/a Other 1,069 0 n/a 4,244 0 n/a
(a) Electricity delivered to retail customers represents the kwh delivered to customers within PPL Electric Utilities Corp.'s service territory.
(b) Energy sold to Montana Power for retail customers under a power sale agreement that expires June 30, 2002.
PPL invites interested parties to listen to the live Internet Webcast of management's fourth quarter earnings teleconference with financial analysts at 9 a.m. today. The teleconference is available online live, in audio format, on PPL's Internet Web site: http://www.pplweb.com/. The webcast will be available for replay on the PPL Website for 30 days. Interested individuals also can access the live conference call via telephone at 913-981-4900.
Certain statements contained in this news release, including statements with respect to future earnings, energy prices, supply, sales, margins and deliveries, operating costs, subsidiary performance, growth, project development, and generating capacity and performance, are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Corp. believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve 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 and prices for energy, capacity and fuel; weather variations affecting customer energy usage; competition in retail and wholesale power markets; the effect of any business or industry restructuring; the profitability and liquidity of PPL Corp. and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of plants and other facilities; environmental conditions and requirements; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; political, regulatory or economic conditions in countries where PPL Corp. or its subsidiaries conduct business; receipt of necessary governmental approvals; capital market conditions; stock price performance; foreign exchange rates; and the commitments and liabilities of PPL Corp. and its subsidiaries. Any such forward-looking statements should be considered in light of such factors and in conjunction with PPL Corp.'s Form 10-K and other reports on file with the Securities and Exchange Commission.
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SOURCE: PPL Corp.
Contact: Media, Dan McCarthy, 610-774-5758, or Investors, Tim Paukovits,
610-774-4124, or fax, 610-774-5281, both of PPL