PPL Corporation Reports 2021 Earnings

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.