ALLENTOWN, Pa., Aug. 7, 2018 /PRNewswire/ -- PPL Corporation
(NYSE: PPL) on Tuesday (8/7) announced second-quarter 2018 reported
earnings (GAAP) of $515 million or
$0.73 per share, an increase from
second-quarter 2017 reported earnings of $292 million, or $0.43 per share.
Reported earnings for the first six months of 2018 were
$967 million, or $1.38 per share, an increase from $695 million, or $1.01 per share, for the first six months of
2017.
Adjusting for special items, second-quarter 2018 earnings from
ongoing operations (non-GAAP) were $384
million, or $0.55 per share,
compared to $356 million, or
$0.52 per share, a year ago, a
per-share increase of about 6 percent. The increase in ongoing
earnings was driven by higher earnings at PPL's U.K. segment.
Earnings from ongoing operations for the first six months of
2018 were $901 million, or
$1.29 per share, compared to
$781 million, or $1.14 per share, for the first six months of
2017, a per-share increase of about 13 percent. This increase was
driven by higher earnings at PPL's U.S. businesses.
"Our regulated utilities continue to excel operationally as we
invest in the future for our customers," said William H. Spence, PPL's chairman, president and
chief executive officer. "We have also addressed the impacts of tax
reform, taken the necessary steps to strengthen our credit metrics
through the execution of an equity forward, and remain well
positioned to deliver competitive earnings growth and a secure and
growing dividend.
"Following another strong quarter, we've raised the midpoint of
our ongoing earnings guidance for 2018," Spence said.
With the effect of special items recorded through the second
quarter, the company's forecast range for 2018 reported earnings is
$2.34 to $2.49 per share.
PPL's new forecast range for 2018 earnings from ongoing
operations is $2.25 to $2.40 per share, with a midpoint of $2.33 per share, an increase from the previous
forecast of $2.20 to $2.40 per share, with a midpoint of $2.30 per share.
The company continues to expect 5 to 6 percent compound annual
earnings growth per share from 2018 through 2020 off of its
original 2018 ongoing earnings forecast midpoint of $2.30 per share.
In addition to announcing second-quarter earnings, Spence said
PPL has continued to demonstrate value to customers through its
investments and operational effectiveness. The corporation's
Kentucky Utilities and PPL Electric Utilities businesses once again
received J.D. Power® awards for residential customer
satisfaction in July, ranking in first place among mid-sized and
large electric utilities, respectively, in their regions. At the
same time, Western Power Distribution achieved the top marks for
customer satisfaction and stakeholder engagement in the U.K. for
the seventh consecutive year. PPL's U.S. utilities also delivered
power safely and reliably during heat waves that gripped their
regions in late June and early July, reflecting the continued
benefits of the major investments they have made, and continue to
make, to strengthen grid resiliency and reliability.
"Our utilities continue to be among the very best in the regions
they serve, and we're intent on keeping it that way as we focus on
delivering best-in-sector operational performance, investing
responsibly in a sustainable energy future, maintaining a strong
financial foundation, and engaging and developing our people,"
Spence said.
Second-Quarter and Year-to-Date Earnings
Details
PPL's reported earnings for the second quarter of 2018 included
net special-item after-tax benefits of $131
million, or $0.18 per share,
from foreign currency economic hedges partially offset by
Kentucky state tax reform.
Reported earnings for the second quarter of 2017 included net
special-item after-tax charges of $64
million, or $0.09 per share,
from foreign currency economic hedges.
PPL's reported earnings for the first six months of 2018
included net special-item after-tax benefits of $66 million, or $0.09 per share, from foreign currency economic
hedges partially offset by Kentucky state tax reform. Reported earnings
for the first six months of 2017 included net special-item
after-tax charges of $86 million, or
$0.13 per share, from foreign
currency economic hedges.
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.
(Dollars in
millions, except for
per-share amounts)
|
2nd
Quarter
|
|
Year To
Date
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Reported
earnings
|
$
|
515
|
|
|
$
|
292
|
|
|
76
|
%
|
|
$
|
967
|
|
|
$
|
695
|
|
|
39
|
%
|
Reported earnings per
share
|
$
|
0.73
|
|
|
$
|
0.43
|
|
|
70
|
%
|
|
$
|
1.38
|
|
|
$
|
1.01
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Year To
Date
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Earnings from ongoing
operations
|
$
|
384
|
|
|
$
|
356
|
|
|
8
|
%
|
|
$
|
901
|
|
|
$
|
781
|
|
|
15
|
%
|
Earnings from ongoing
operations
per share
|
$
|
0.55
|
|
|
$
|
0.52
|
|
|
6
|
%
|
|
$
|
1.29
|
|
|
$
|
1.14
|
|
|
13
|
%
|
Second-Quarter and
Year-to-Date Earnings by Segment
|
|
|
2nd
Quarter
|
|
Year To
Date
|
Per
share
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reported earnings
|
|
|
|
|
|
|
|
U.K.
Regulated
|
$
|
0.55
|
|
|
$
|
0.22
|
|
|
$
|
0.84
|
|
|
$
|
0.63
|
|
Kentucky
Regulated
|
0.11
|
|
|
0.12
|
|
|
0.30
|
|
|
0.26
|
|
Pennsylvania
Regulated
|
0.11
|
|
|
0.11
|
|
|
0.32
|
|
|
0.22
|
|
Corporate and
Other
|
(0.04)
|
|
|
(0.02)
|
|
|
(0.08)
|
|
|
(0.10)
|
|
Total
|
$
|
0.73
|
|
|
$
|
0.43
|
|
|
$
|
1.38
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Year To
Date
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Special items
(expense) benefit
|
|
|
|
|
|
|
|
U.K.
Regulated
|
$
|
0.19
|
|
|
$
|
(0.09)
|
|
|
$
|
0.10
|
|
|
$
|
(0.13)
|
|
Kentucky
Regulated
|
(0.01)
|
|
|
—
|
|
|
(0.01)
|
|
|
—
|
|
Pennsylvania
Regulated
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Corporate and
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
0.18
|
|
|
$
|
(0.09)
|
|
|
$
|
0.09
|
|
|
$
|
(0.13)
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Year To
Date
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Earnings from
ongoing operations
|
|
|
|
|
|
|
|
U.K.
Regulated
|
$
|
0.36
|
|
|
$
|
0.31
|
|
|
$
|
0.74
|
|
|
$
|
0.76
|
|
Kentucky
Regulated
|
0.12
|
|
|
0.12
|
|
|
0.31
|
|
|
0.26
|
|
Pennsylvania
Regulated
|
0.11
|
|
|
0.11
|
|
|
0.32
|
|
|
0.22
|
|
Corporate and
Other
|
(0.04)
|
|
|
(0.02)
|
|
|
(0.08)
|
|
|
(0.10)
|
|
Total
|
$
|
0.55
|
|
|
$
|
0.52
|
|
|
$
|
1.29
|
|
|
$
|
1.14
|
|
Key Factors Impacting Earnings
U.K. Regulated Segment
PPL's U.K. Regulated segment
primarily consists of the regulated electricity delivery operations
of Western Power Distribution (WPD) plc, which serves Southwest and
Central England and South Wales.
Reported earnings in the second quarter of 2018 increased by
$0.33 per share compared to a year
ago. Earnings from ongoing operations in the second quarter of 2018
increased by $0.05 per share.
Excluding special items, factors driving earnings results included
higher foreign currency exchange rates, higher pension income,
higher sales volumes and higher prices from an April 1, 2018 price increase, partially offset by
higher income taxes and the effect of share dilution.
Reported earnings in the first six months of 2018 increased by
$0.21 per share compared to a year
ago. Earnings from ongoing operations in the first six months of
2018 decreased by $0.02 per share.
Excluding special items, factors driving earnings results included
higher income taxes, the effect of share dilution and other
factors, partially offset by higher foreign currency exchange rates
and higher pension income.
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 second quarter of 2018 decreased by
$0.01 per share compared to a year
ago. Earnings from ongoing operations in the second quarter of 2018
were flat compared to a year ago. Excluding a special item related
to Kentucky state tax reform,
earnings increases associated with higher base electricity and gas
rates effective July 1, 2017, and
higher sales volumes due to favorable weather were largely offset
by higher operation and maintenance expense and higher depreciation
expense.
Reported earnings in the first six months of 2018 increased by
$0.04 per share compared to a year
ago. Earnings from ongoing operations in the first six months of
2018 increased by $0.05 per share.
Excluding a special item related to Kentucky state tax reform, earnings increases
associated with higher base electricity and gas rates effective
July 1, 2017, and higher sales
volumes due to favorable weather were partially offset by higher
operation and maintenance expense and higher depreciation
expense.
Pennsylvania Regulated Segment
PPL's Pennsylvania
Regulated segment consists of the regulated electricity delivery
operations of PPL Electric Utilities.
Reported earnings and earnings from ongoing operations in the
second quarter of 2018 were flat compared to a year ago, driven
primarily by returns on additional capital investments in
transmission, offset by higher operation and maintenance expense
and higher depreciation expense.
Reported earnings and earnings from ongoing operations in the
first six months of 2018 increased by $0.10 per share compared to a year ago, driven
primarily by returns on additional capital investments in
transmission, higher distribution sales volumes and lower operation
and maintenance expense, partially offset by higher depreciation
expense.
Corporate and Other
PPL's Corporate and Other category
primarily includes unallocated corporate-level financing and other
costs.
The loss in second-quarter reported earnings and earnings from
ongoing operations increased by $0.02
per share compared to a year ago, primarily due to income
taxes.
The loss in reported earnings and earnings from ongoing
operations for the first six months of 2018 decreased by
$0.02 per share compared to a year
ago, primarily due to income taxes.
2018 Earnings
Forecast
|
|
|
Reported
Earnings
|
|
Earnings from
Ongoing
Operations
|
|
2018 forecast
midpoint
|
|
2017
actual
|
|
2018 forecast
midpoint
|
|
2017
actual
|
Per
share
|
|
|
|
|
|
|
|
U.K.
Regulated
|
$
|
1.43
|
|
|
$
|
0.95
|
|
|
$
|
1.33
|
|
|
$
|
1.28
|
|
Kentucky
Regulated
|
0.55
|
|
|
0.42
|
|
|
0.56
|
|
|
0.57
|
|
Pennsylvania
Regulated
|
0.58
|
|
|
0.52
|
|
|
0.58
|
|
|
0.51
|
|
Corporate and
Other
|
(0.14)
|
|
|
(0.25)
|
|
|
(0.14)
|
|
|
(0.11)
|
|
Total
|
$
|
2.42
|
|
|
$
|
1.64
|
|
|
$
|
2.33
|
|
|
$
|
2.25
|
|
(See the tables at the end of this news release for a
reconciliation of reported earnings to earnings from ongoing
operations.)
U.K. Regulated Segment
PPL projects higher segment
earnings in 2018 compared with 2017. The increase in reported
earnings reflects the 2017 unfavorable impact of U.S. tax reform
and unrealized losses on foreign currency economic hedges.
Excluding these 2017 special items, the increase is expected to be
driven primarily by higher foreign currency exchange rates and
higher pension income, partially offset by higher taxes and the
effect of share dilution.
The remaining 2018 foreign currency exposure for this segment is
100 percent hedged at an average rate of $1.32 per pound.
Kentucky Regulated Segment
PPL projects higher
reported segment earnings in 2018 compared with 2017, which
reflects the 2017 unfavorable impact of U.S. tax reform. Excluding
this 2017 special item, segment earnings are expected to be
relatively flat, driven by favorable weather and higher base
electricity and gas rates effective July 1,
2017, offset by higher operation and maintenance expense,
higher depreciation expense, higher interest expense and a lower
tax shield on holding company interest and expenses.
Pennsylvania Regulated Segment
PPL projects higher
segment earnings in 2018 compared to 2017, driven primarily by
higher transmission earnings, partially offset by higher
depreciation expense, higher interest expense and the effect of
share dilution.
Corporate and Other
PPL projects lower reported costs
in 2018 compared with 2017, which reflects the 2017 unfavorable
impact of U.S. tax reform. Excluding this 2017 special item, PPL
projects costs to be higher in this category in 2018 compared with
2017 with a lower tax shield on holding company interest
expense.
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. 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 second-quarter 2018 financial results at 10 a.m. Eastern time on Tuesday, Aug. 7. 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 in order to join the conference: 8934502.
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 effective tax rate of
the entity where the activity is recorded. Special items
include:
- Unrealized gains or losses on foreign currency economic
hedges (as discussed below).
- 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.
Unrealized gains or losses on foreign currency economic
hedges include the changes in fair value of foreign currency
contracts used to hedge British-pound-sterling-denominated
anticipated earnings. The changes in fair value of these
contracts are recognized immediately within GAAP
earnings. Management believes that excluding these amounts
from Earnings from Ongoing Operations until settlement of the
contracts provides a better matching of the financial impacts of
those contracts with the economic value of PPL's underlying hedged
earnings.
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: market demand for
energy in our U.S. 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
cyberattack, 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 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)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2018
|
|
2017
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
852
|
|
|
$
|
485
|
|
Accounts
receivable
|
741
|
|
|
781
|
|
Unbilled
revenues
|
453
|
|
|
543
|
|
Fuel, materials and
supplies
|
288
|
|
|
320
|
|
Current price risk
management assets
|
78
|
|
|
49
|
|
Other current
assets
|
188
|
|
|
116
|
|
Property, Plant and
Equipment
|
|
|
|
Regulated utility
plant
|
38,999
|
|
|
38,228
|
|
Less: Accumulated
depreciation - regulated utility plant
|
7,083
|
|
|
6,785
|
|
Regulated
utility plant, net
|
31,916
|
|
|
31,443
|
|
Non-regulated
property, plant and equipment
|
370
|
|
|
384
|
|
Less: Accumulated
depreciation - non-regulated property, plant and
equipment
|
108
|
|
|
110
|
|
Non-regulated property, plant and
equipment, net
|
262
|
|
|
274
|
|
Construction work in
progress
|
1,645
|
|
|
1,375
|
|
Property, Plant and
Equipment, net
|
33,823
|
|
|
33,092
|
|
Noncurrent regulatory
assets
|
1,530
|
|
|
1,504
|
|
Goodwill and other
intangibles
|
4,002
|
|
|
3,955
|
|
Pension benefit
asset
|
498
|
|
|
284
|
|
Noncurrent price risk
management assets
|
185
|
|
|
215
|
|
Other noncurrent
assets
|
192
|
|
|
135
|
|
Total
Assets
|
$
|
42,830
|
|
|
$
|
41,479
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Short-term
debt
|
$
|
1,864
|
|
|
$
|
1,080
|
|
Long-term debt due
within one year
|
203
|
|
|
348
|
|
Accounts
payable
|
804
|
|
|
924
|
|
Other current
liabilities
|
1,577
|
|
|
1,671
|
|
Long-term
debt
|
20,217
|
|
|
19,847
|
|
Deferred income taxes
and investment tax credits
|
2,760
|
|
|
2,591
|
|
Accrued pension
obligations
|
665
|
|
|
800
|
|
Asset retirement
obligations
|
297
|
|
|
312
|
|
Noncurrent regulatory
liabilities
|
2,747
|
|
|
2,704
|
|
Other noncurrent
liabilities
|
456
|
|
|
441
|
|
Common stock and
additional paid-in capital
|
10,469
|
|
|
10,312
|
|
Earnings
reinvested
|
4,266
|
|
|
3,871
|
|
Accumulated other
comprehensive loss
|
(3,495)
|
|
|
(3,422)
|
|
Total Liabilities
and Equity
|
$
|
42,830
|
|
|
$
|
41,479
|
|
|
|
(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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Operating
Revenues
|
$
|
1,848
|
|
|
$
|
1,725
|
|
|
$
|
3,974
|
|
|
$
|
3,676
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
Operation
|
|
|
|
|
|
|
|
Fuel
|
189
|
|
|
183
|
|
|
403
|
|
|
374
|
|
Energy
purchases
|
148
|
|
|
136
|
|
|
389
|
|
|
351
|
|
Other
operation and maintenance
|
506
|
|
|
432
|
|
|
974
|
|
|
902
|
|
Depreciation
|
273
|
|
|
246
|
|
|
542
|
|
|
488
|
|
Taxes, other than
income
|
74
|
|
|
70
|
|
|
157
|
|
|
145
|
|
Total Operating
Expenses
|
1,190
|
|
|
1,067
|
|
|
2,465
|
|
|
2,260
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
658
|
|
|
658
|
|
|
1,509
|
|
|
1,416
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense) - net
|
234
|
|
|
(68)
|
|
|
191
|
|
|
(77)
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
235
|
|
|
222
|
|
|
474
|
|
|
439
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
657
|
|
|
368
|
|
|
1,226
|
|
|
900
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
142
|
|
|
76
|
|
|
259
|
|
|
205
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
515
|
|
|
$
|
292
|
|
|
$
|
967
|
|
|
$
|
695
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
of Common Stock:
|
|
|
|
|
|
|
|
Net Income Available
to PPL Common Shareowners:
|
|
|
|
|
|
Basic
|
$
|
0.74
|
|
|
$
|
0.43
|
|
|
$
|
1.39
|
|
|
$
|
1.02
|
|
Diluted
|
$
|
0.73
|
|
|
$
|
0.43
|
|
|
$
|
1.38
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
Weighted-Average
Shares of Common Stock Outstanding (in
thousands)
|
|
|
|
|
|
|
|
Basic
|
699,006
|
|
|
683,841
|
|
|
696,772
|
|
|
682,370
|
|
Diluted
|
700,976
|
|
|
686,351
|
|
|
698,161
|
|
|
684,725
|
|
PPL
CORPORATION AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(Millions of
Dollars)
|
|
|
Six Months
Ended
June 30,
|
|
2018
|
|
2017
|
Cash Flows from
Operating Activities
|
|
|
|
Net income
|
$
|
967
|
|
|
$
|
695
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities
|
|
|
|
Depreciation
|
542
|
|
|
488
|
|
Amortization
|
34
|
|
|
45
|
|
Defined
benefit plans - (income)
|
(101)
|
|
|
(45)
|
|
Deferred
income taxes and investment tax credits
|
171
|
|
|
201
|
|
Unrealized (gains) losses on derivatives,
and other hedging activities
|
(91)
|
|
|
135
|
|
Other
|
7
|
|
|
17
|
|
Change in current
assets and current liabilities
|
|
|
|
Accounts
receivable
|
46
|
|
|
26
|
|
Accounts
payable
|
(90)
|
|
|
(92)
|
|
Prepayments
|
(60)
|
|
|
(66)
|
|
Accrued
interest
|
(79)
|
|
|
(77)
|
|
Unbilled
revenues
|
91
|
|
|
70
|
|
Other
|
39
|
|
|
(43)
|
|
Other operating
activities
|
|
|
|
Defined
benefit plans - funding
|
(206)
|
|
|
(552)
|
|
Proceeds
from transfer of excess benefit plan funds
|
65
|
|
|
—
|
|
Other
|
(10)
|
|
|
(12)
|
|
Net cash provided by
operating activities
|
1,325
|
|
|
790
|
|
Cash Flows from
Investing Activities
|
|
|
|
Expenditures for
property, plant and equipment
|
(1,527)
|
|
|
(1,373)
|
|
Purchase of
available-for-sale securities
|
(65)
|
|
|
—
|
|
Other investing
activities
|
(57)
|
|
|
(12)
|
|
Net cash used in
investing activities
|
(1,649)
|
|
|
(1,385)
|
|
Cash Flows from
Financing Activities
|
|
|
|
Issuance of long-term
debt
|
584
|
|
|
594
|
|
Retirement of
long-term debt
|
(250)
|
|
|
(60)
|
|
Issuance of common
stock
|
147
|
|
|
177
|
|
Payment of common
stock dividends
|
(558)
|
|
|
(529)
|
|
Net increase in
short-term debt
|
788
|
|
|
554
|
|
Other financing
activities
|
(16)
|
|
|
(25)
|
|
Net cash provided by
financing activities
|
695
|
|
|
711
|
|
Effect of Exchange
Rates on Cash, Cash Equivalents and Restricted Cash
|
(7)
|
|
|
7
|
|
Net Increase in
Cash, Cash Equivalents and Restricted Cash
|
364
|
|
|
123
|
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of Period
|
511
|
|
|
367
|
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
$
|
875
|
|
|
$
|
490
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information
|
|
|
|
Significant non-cash
transactions:
|
|
|
|
Accrued expenditures
for property, plant and equipment at June 30,
|
$
|
329
|
|
|
$
|
284
|
|
Accrued expenditures
for intangible assets at June 30,
|
$
|
59
|
|
|
$
|
56
|
|
Key Indicators
(Unaudited)
|
|
|
|
|
|
|
12 Months
Ended
|
|
June
30
|
Financial
|
2018
|
|
|
2017
|
|
|
|
|
|
Dividends declared
per share of common stock
|
$
|
1.61
|
|
|
|
$
|
1.55
|
|
Book value per share
(1)(2)
|
$
|
16.08
|
|
|
|
$
|
15.30
|
|
Market price per
share (1)
|
$
|
28.55
|
|
|
|
$
|
38.66
|
|
Dividend
yield
|
5.6
|
%
|
|
|
4.0
|
%
|
Dividend payout ratio
(3)
|
79.9
|
%
|
|
|
64.9
|
%
|
Dividend payout ratio
- earnings from ongoing operations (3)(4)
|
66.9
|
%
|
|
|
65.7
|
%
|
Return on common
equity
|
12.9
|
%
|
|
|
15.7
|
%
|
Return on common
equity - earnings from ongoing operations (4)
|
15.4
|
%
|
|
|
15.5
|
%
|
Spot rate of U.S.
dollar per British pound sterling for Balance Sheet translation
(5)
|
$
|
1.33
|
|
|
|
$
|
1.29
|
|
Average rate of U.S.
dollar per British pound sterling for Statement of Income
translation (6)
|
$
|
1.29
|
|
|
|
$
|
1.21
|
|
|
|
(1)
|
End of
period.
|
(2)
|
Based on 699,128 and
685,473 shares of common stock outstanding (in thousands) at
June 30, 2018 and June 30, 2017.
|
(3)
|
Based on diluted
earnings per share.
|
(4)
|
Calculated using
earnings from ongoing operations, which is a non-GAAP financial
measure that includes adjustments described in the text and tables
of this news release.
|
(5)
|
As of May 31, 2018
and 2017, as WPD is consolidated on a one-month lag.
|
(6)
|
Represents a
year-to-date average and includes the impact of foreign exchange
hedges.
|
Operating -
Domestic & International Electricity Sales
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended
June 30,
|
|
|
|
6 Months Ended
June 30,
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
(GWh)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Retail
Delivered
|
|
|
|
|
|
|
|
|
|
|
|
PPL Electric
Utilities
|
8,549
|
|
|
8,211
|
|
|
4.1
|
%
|
|
18,588
|
|
|
17,757
|
|
|
4.7
|
%
|
LKE
|
7,572
|
|
|
7,160
|
|
|
5.8
|
%
|
|
15,380
|
|
|
14,395
|
|
|
6.8
|
%
|
Total
|
16,121
|
|
|
15,371
|
|
|
4.9
|
%
|
|
33,968
|
|
|
32,152
|
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Delivered
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
18,808
|
|
|
18,322
|
|
|
2.7
|
%
|
|
39,118
|
|
|
38,980
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
Wholesale
|
|
|
|
|
|
|
|
|
|
|
|
LKE
(1)
|
558
|
|
|
511
|
|
|
9.2
|
%
|
|
1,264
|
|
|
1,077
|
|
|
17.4
|
%
|
|
(1)
Represents FERC-regulated municipal and
unregulated off-system sales.
|
Reconciliation of
Segment Reported Earnings to Earnings from Ongoing
Operations
|
(After-Tax)
|
(Unaudited)
|
|
|
2nd Quarter
2018
|
(millions of
dollars)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
394
|
|
|
$
|
77
|
|
|
$
|
75
|
|
|
$
|
(31)
|
|
|
$
|
515
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges, net of tax of ($37)
|
140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140
|
|
Kentucky state tax
reform
|
—
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
(9)
|
|
Total Special
Items
|
140
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
131
|
|
Earnings from
Ongoing Operations
|
$
|
254
|
|
|
$
|
86
|
|
|
$
|
75
|
|
|
$
|
(31)
|
|
|
$
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(per share -
diluted)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
0.55
|
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
(0.04)
|
|
|
$
|
0.73
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges
|
0.19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.19
|
|
Kentucky state tax
reform
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Total Special
Items
|
0.19
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
0.18
|
|
Earnings from
Ongoing Operations
|
$
|
0.36
|
|
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
(0.04)
|
|
|
$
|
0.55
|
|
Reconciliation of
Segment Reported Earnings to Earnings from Ongoing
Operations
|
(After-Tax)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date June 30,
2018
|
(millions of
dollars)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
591
|
|
|
$
|
210
|
|
|
$
|
223
|
|
|
$
|
(57)
|
|
|
$
|
967
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges, net of tax of ($20)
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75
|
|
Kentucky state tax
reform
|
—
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
(9)
|
|
Total Special
Items
|
75
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
66
|
|
Earnings from
Ongoing Operations
|
$
|
516
|
|
|
$
|
219
|
|
|
$
|
223
|
|
|
$
|
(57)
|
|
|
$
|
901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(per share -
diluted)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
0.84
|
|
|
$
|
0.30
|
|
|
$
|
0.32
|
|
|
$
|
(0.08)
|
|
|
$
|
1.38
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges
|
0.10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
Kentucky state tax
reform
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Total Special
Items
|
0.10
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
0.09
|
|
Earnings from
Ongoing Operations
|
$
|
0.74
|
|
|
$
|
0.31
|
|
|
$
|
0.32
|
|
|
$
|
(0.08)
|
|
|
$
|
1.29
|
|
Reconciliation of
Segment Reported Earnings to Earnings from Ongoing
Operations
|
(After-Tax)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
2nd Quarter
2017
|
(millions of
dollars)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
148
|
|
|
$
|
79
|
|
|
$
|
77
|
|
|
$
|
(12)
|
|
|
$
|
292
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges, net of tax of $34
|
(64)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64)
|
|
Total Special
Items
|
(64)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64)
|
|
Earnings from
Ongoing Operations
|
$
|
212
|
|
|
$
|
79
|
|
|
$
|
77
|
|
|
$
|
(12)
|
|
|
$
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(per share -
diluted)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
0.22
|
|
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
(0.02)
|
|
|
$
|
0.43
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges
|
(0.09)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.09)
|
|
Total Special
Items
|
(0.09)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.09)
|
|
Earnings from
Ongoing Operations
|
$
|
0.31
|
|
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
(0.02)
|
|
|
$
|
0.52
|
|
Reconciliation of
Segment Reported Earnings to Earnings from Ongoing
Operations
|
(After-Tax)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date June 30,
2017
|
(millions of
dollars)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
434
|
|
|
$
|
174
|
|
|
$
|
156
|
|
|
$
|
(69)
|
|
|
$
|
695
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
—
|
|
Foreign currency
economic hedges, net of tax of $46
|
(85)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85)
|
|
Adjustment to
investment, net of tax of $0
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Total Special
Items
|
(85)
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(86)
|
|
Earnings from
Ongoing Operations
|
$
|
519
|
|
|
$
|
175
|
|
|
$
|
156
|
|
|
$
|
(69)
|
|
|
$
|
781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(per share -
diluted)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
0.63
|
|
|
$
|
0.26
|
|
|
$
|
0.22
|
|
|
$
|
(0.10)
|
|
|
$
|
1.01
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges
|
(0.13)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.13)
|
|
Total Special
Items
|
(0.13)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.13)
|
|
Earnings from
Ongoing Operations
|
$
|
0.76
|
|
|
$
|
0.26
|
|
|
$
|
0.22
|
|
|
$
|
(0.10)
|
|
|
$
|
1.14
|
|
Reconciliation of
Segment Reported Earnings to Earnings from Ongoing
Operations
|
(After-Tax)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date December
31, 2017
|
(millions of
dollars)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
652
|
|
|
$
|
286
|
|
|
$
|
359
|
|
|
$
|
(169)
|
|
|
$
|
1,128
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges, net of tax of $59
|
(111)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(111)
|
|
Spinoff of the Supply
segment, net of tax of ($1)
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Other:
|
|
|
|
|
|
|
|
|
|
U.S. tax
reform
|
(122)
|
|
|
(112)
|
|
|
10
|
|
|
(97)
|
|
|
(321)
|
|
Settlement of
indemnification agreement, net of tax of ($2)
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Adjustment to
investment, net of tax of $0
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Total Special
Items
|
(233)
|
|
|
(109)
|
|
|
10
|
|
|
(93)
|
|
|
(425)
|
|
Earnings from
Ongoing Operations
|
$
|
885
|
|
|
$
|
395
|
|
|
$
|
349
|
|
|
$
|
(76)
|
|
|
$
|
1,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(per share -
diluted)
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
Reported
Earnings
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
0.52
|
|
|
$
|
(0.25)
|
|
|
$
|
1.64
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges
|
(0.15)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.15)
|
|
Other:
|
|
|
|
|
|
|
|
|
|
U.S. tax
reform
|
(0.18)
|
|
|
(0.16)
|
|
|
0.01
|
|
|
(0.14)
|
|
|
(0.47)
|
|
Settlement of
indemnification agreement
|
—
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Total Special
Items
|
(0.33)
|
|
|
(0.15)
|
|
|
0.01
|
|
|
(0.14)
|
|
|
(0.61)
|
|
Earnings from
Ongoing Operations
|
$
|
1.28
|
|
|
$
|
0.57
|
|
|
$
|
0.51
|
|
|
$
|
(0.11)
|
|
|
$
|
2.25
|
|
Reconciliation of
PPL's Forecast of Reported Earnings to Earnings from Ongoing
Operations
|
|
(After-Tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecast (per-share -
diluted)
|
|
2018
Midpoint
|
|
|
|
|
U.K.
|
|
KY
|
|
PA
|
|
Corp.
|
|
|
|
High
|
|
Low
|
|
Reg.
|
|
Reg.
|
|
Reg.
|
|
&
Other
|
|
Total
|
|
2018
|
|
2018
|
Reported
Earnings
|
1.43
|
|
|
0.55
|
|
|
0.58
|
|
|
(0.14)
|
|
|
2.42
|
|
|
2.49
|
|
|
$
|
2.34
|
|
Less: Special Items
(expense) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
economic hedges
|
0.10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
|
0.10
|
|
|
0.10
|
|
Kentucky state tax
reform
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
Total Special
Items
|
0.10
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
0.09
|
|
|
0.09
|
|
|
0.09
|
|
Earnings from
Ongoing Operations
|
$
|
1.33
|
|
|
$
|
0.56
|
|
|
$
|
0.58
|
|
|
$
|
(0.14)
|
|
|
$
|
2.33
|
|
|
$
|
2.40
|
|
|
$
|
2.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
|
For news media – Ryan
Hill, 610-774-5997
|
|
For financial
analysts – Andy Ludwig, 610-774-3389
|
View original
content:http://www.prnewswire.com/news-releases/ppl-corporation-reports-second-quarter-earnings-300693077.html
SOURCE PPL Corporation