PPL Corporation Reports 2021 Earnings

ALLENTOWN, Pa., Feb. 18, 2022 /PRNewswire/ -- PPL Corporation (NYSE: PPL) on Friday (2/18) reported a 2021 net loss of $1.48 billion, or $1.93 per share, compared with reported earnings of $1.47 billion, or $1.91 per share in 2020.

Adjusting for special items, 2021 earnings from ongoing operations (non-GAAP) were $806 million, or $1.05 per share, compared with $774 million, or $1.00 per share, a year ago. Special items were primarily attributable to discontinued operations associated with PPL's former U.K. utility business, a U.K. tax rate change and a loss on the early extinguishment of company debt.

"2021 was a significant year for PPL as we strategically repositioned the company for future growth and success. With the sale of our U.K. business and the planned acquisition of Narragansett Electric, we are extremely excited about the future for our company, our customers and our shareowners. And as we executed on our strategic transactions, we worked tirelessly to positively impact our customers' lives, deliver best-in-class energy service, and strengthen our communities," said PPL President and Chief Executive Officer Vincent Sorgi.

"We provided energy safely, reliably and affordably to our customers, achieving award-winning customer satisfaction in the process. We continued to lead the way in deploying innovative smart grid solutions to improve resilience and enable increased distributed energy resources, including renewables. In addition, we made significant progress in advancing our clean energy strategy. This included adopting a net-zero carbon emissions goal and significantly ramping up our investment in clean energy research and development to achieve our goal."

After completing the sale of its U.K. utility business in 2021, PPL remains focused on obtaining approval for the acquisition of The Narragansett Electric Company from National Grid. The company said it anticipates receiving a final order from the Rhode Island Division of Public Utilities and Carriers by March 2022. PPL expects to provide a strategic update, including details on its plan to achieve competitive earnings per share growth, at an investor day following the decision.  

The company also announced that it completed its targeted $1 billion in share repurchases through Dec. 31, 2021. 

In addition, PPL announced a quarterly common stock dividend of $0.20 per share, payable April 1, 2022, to shareowners of record as of March 10, 2022. This will mark the company's 305^th consecutive quarterly dividend paid since 1946. The dividend payment is based on projected earnings per share from PPL's existing business operations in Pennsylvania and Kentucky and the company's targeted payout ratio of 60%-65%. During its investor day, PPL plans to provide updated annualized dividend expectations and future dividend growth projections that are in line with earnings per share growth.

PPL's fourth-quarter 2021 reported earnings were $134 million, or $0.18 per share, compared with reported earnings of $290 million, or $0.38 per share, in 2020.

Adjusting for special items, primarily attributable to integration expenses associated with the planned acquisition of Narragansett Electric and discontinued operations associated with the U.K. utility business, fourth-quarter 2021 earnings from ongoing operations were $163 million, or $0.22 per share, compared with fourth-quarter 2020 earnings from ongoing operations of $181 million, or $0.23 per share.

Fourth-Quarter and Year-to-Date 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 to earnings from ongoing operations, including an itemization of special items.

Fourth-Quarter and Year-to-Date Earnings by Segment

Key Factors Impacting Earnings

In addition to the segment drivers outlined below, PPL's reported earnings in 2021 included special-item after-tax expenses of $2.29 billion, or $2.98 per share, primarily attributable to discontinued operations associated with the U.K. utility business, a U.K. tax rate change and a loss on the early extinguishment of debt. 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 until completion of its sale on June 14, 2021. Reported earnings in 2020 included a special-item after-tax benefit of $695 million, or $0.91 per share, attributable to U.K. earnings that were reclassified to discontinued operations, partially offset primarily by a U.K. tax rate change.

PPL's reported earnings for the fourth quarter of 2021 included special-item after-tax expenses of $29 million, or $0.04 per share, primarily attributable to integration expenses associated with the planned acquisition of Narragansett Electric and discontinued operations associated with the U.K. utility business. Reported earnings for the fourth quarter of 2020 included a special-item after-tax benefit of $109 million, or $0.15 per share, attributable to U.K. earnings that were reclassified to discontinued operations, partially offset by other factors.

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 2021 increased by $0.08 per share compared with a year ago. Earnings from ongoing operations in 2021 increased by $0.06 per share compared with a year ago. Excluding special items, factors driving earnings results included higher retail rates effective July 1, 2021, and lower interest expense primarily due to interest costs allocated to the Kentucky Regulated segment in 2020 that were not allocated in 2021 and lower interest rates. These factors were partially offset by higher depreciation expense and higher operation and maintenance expense.

Reported earnings and earnings from ongoing operations in the fourth quarter of 2021 were comparable to a year ago. Factors driving earnings results primarily included higher operation and maintenance expense and higher depreciation expense, offset by higher retail rates effective July 1, 2021.

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

Reported earnings in 2021 decreased by $0.07 per share compared with a year ago. Earnings from ongoing operations decreased by $0.04 per share compared to a year ago. Excluding special items, factors driving earnings results primarily included a reduction in the transmission formula rate return on equity, lower peak transmission demand and higher operation and maintenance expense, partially offset by returns on additional capital investments in transmission.

Reported earnings and earnings from ongoing operations in the fourth quarter of 2021 decreased by $0.01 per share compared with a year ago. Excluding special items, factors driving earnings results primarily included a reduction in the transmission formula rate return on equity and higher operation and maintenance expense, partially offset by returns on additional capital investments in transmission.

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

Reported earnings in 2021 decreased by $0.81 per share compared with a year ago. Earnings from ongoing operations in 2021 increased by $0.03 per share compared with a year ago. Excluding special items, factors driving earnings results primarily included lower interest expense, partially offset by other factors.

Reported earnings in the fourth quarter of 2021 decreased by $0.02 per share compared with a year ago. Earnings from ongoing operations in the fourth quarter of 2021 were comparable to a year ago. Excluding special items, factors driving earnings results primarily included lower interest expense, offset by other factors.

About PPL

PPL Corporation (NYSE:PPL), based in Allentown, Pennsylvania, is a leading U.S. energy company focused on providing electricity and natural gas safely, reliably and affordably to more than 2.5 million customers in the U.S. PPL's high-performing, award-winning utilities are addressing energy challenges head-on by building smarter, more resilient and more dynamic power grids and advancing sustainable energy solutions. For more information, 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 fourth-quarter and full-year 2021 financial results at 11 a.m. Eastern time on Friday, Feb. 18. The call will be webcast live, in audio format, together with slides of the presentation. Interested individuals can access the webcast link at www.pplweb.com/investors under Events and Presentations or 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 in order to join the conference: 9935125. 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.

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.
• Significant losses on early extinguishment of debt.
• 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, 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; 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.

SOURCE PPL Corporation