Slide 1: PPL 4th Quarter Earnings Call
PPL 4th Quarter Earnings Call February 14, 2020
Slide 2: Cautionary Statements and Factors That May Affect Future Results
Cautionary Statements and Factors That May Affect Future Results Statements made in this presentation about future operating results or other future events are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may diff
Slide 3: Agenda
Agenda I. Executive Overview and Outlook Bill Spence II. Operational Review Vince Sorgi III. Financial Review Joe Bergstein IV. Closing Remarks and Q&A Bill Spence PPL 4th Quarter Earnings Call – February 14, 2020 3
Slide 4: 2019 Executive Review
2019 Executive Review 2019 Achievements Exceeded Midpoint of 2019 EPS Forecast (Earnings Per Share) ➢ Achieved financial targets $2.50 $2.45 ✓ Delivered solid financial results – 10th straight year exceeding midpoint of earnings forecast $2.30 ✓ Increased dividend for 17th time in 18 Years ➢ Superio
Slide 5: 2020 Outlook
2020 Outlook 2020 Objectives 2020 Ongoing EPS Forecast (Earnings Per Share) ➢ Achieve ongoing earnings guidance of $2.60 $2.40 - $2.60 per share $2.45 $2.40 ➢ Dividend growth ➢ Execute another $3.3 billion of capital investments that continue to advance a 2019A 2020E Ongoing EPS Forecast Range clean
Slide 6: Operational Review
Operational Review A century of people powering life.
Slide 7: U.K. Regulated Update
U.K. Regulated Update 2019 Operational Achievements ➢ 1st U.K. network operator to publish EV strategy ▪ WPD anticipates up to an additional 3 million EVs by 2030 ➢ Continued efforts to connect distributed generation; ~10GW connected through 2019 ➢ Further developed demand response solutions to WPD
Slide 8: Pennsylvania Regulated Update
Pennsylvania Regulated Update 2019 Operational Achievements ➢ Deployed a new distributed energy resource management system, enabling customer-owned renewables and energy storage connections to grid ➢ Developed innovative technology that automatically cuts power to downed power lines ➢ Substantially
Slide 9: Kentucky Regulated Update
Kentucky Regulated Update 2019 Operational Achievements ➢ Continued progress on $800 million project to cap and close ash ponds at coal facilities ➢ Retired ~300MW of coal-fired generation ➢ Completed construction on first phase of Solar Share program ➢ Conducted RFP for up to 200MW of renewable pow
Slide 10: Advancing PPL's Clean Energy Transition Strategy
Advancing PPL’s Clean Energy Transition Strategy Increasing 2050 target and accelerating prior target by 10 years to 2040 Metric Tonnes (in millions) PPL’s projected carbon emissions over time Accelerated Target to 70% ✓ Exited competitive generation in 2015, 62.6 Prior 2050 target Increased target
Slide 11: Transition to a cleaner energy future supported by Kentucky's generation strategy
PPL’s transition to a cleaner energy future is supported by Kentucky’s generation strategy Economically reducing coal-fired generation mix and enabling renewable growth PPL regulated asset base is largely non-coal Generation mix in Kentucky transitions over time 2019A Rate Base (1) 2020-2024E Capex
Slide 12: 2020 – 2024 Capital Plan
2020 – 2024 Capital Plan Investing $14 billion over next five years to advance a cleaner energy future Capex by Utility Notable Changes (1) ($ in billions) + $300 million to U.K. plan Additional Opportunities $3.3 •AMI (KY) •EV/Decarbonization (U.K.) ▪ Timing related to general •Resiliency investmen
Slide 13: Financial Review
Financial Review A century of people powering life.
Slide 14: Financial Overview
Financial Overview Financial Highlights Q4 Earnings Per Share $0.57 $0.57 ➢ Achieved strong 4th quarter ongoing $0.48 $0.52 earnings per share of $0.57 ➢ Delivered 2019 financial results of $2.45 per share at high end of guidance range 2018 Q4 2019 Q4 2018 Q4 2019 Q4 ▪ Exceeded midpoint of ongoing f
Slide 15: 2019 Financial Results
2019 Financial Results Exceeded midpoint of earnings forecast for 10th consecutive year $ 2 .40 $ 0 .05 $ 0 .05 $ 0 .00 $ 2 .45 $ 0 .12 ($ 0 .07) $ 0 .59 $ 0 .59 ($ 0 .10) $ 0 .62 $ 0 .62 U.K. ($0.02) U.K. ($0.06) Adj. Margin $0.04 Adj. Margin $0.08 Adj. Margin $0.10 O&M ($0.03) PA ($0.02) PA ($0.03
Slide 16: 2020 Financial Outlook
2020 Financial Outlook Initiating earnings forecast of $2.40 – $2.60 per share $ 2 .45 $ 0 .04 $ 0 .05 $ 0 .02 $ 2 .50 $ 0 .06 ($ 0 .01) $ 0 .59 $ 0 .59 ($ 0 .11) U.K. $0.01 U.K. ($0.06) Base Revenues Transmission Base Rates O&M KY ($0.02) PA ($0.03) $ 0 .62 KY ($0.03) Foreign Currency Revenues Depr
Slide 17: Updated 2021 Financial Outlook
Updated 2021 Financial Outlook Updating forecast to reflect current market conditions and currency forecasts Key Assumptions to Updated 2021 Forecast ➢ Updated foreign currency rates $2.80 ▪ New: $1.25/£ to $1.40/£ $2.60 ▪ Prior: $1.35/£ to $1.60/£ $2.50 ➢ Items that have not significantly changed $
Slide 18: Foreign Currency Update
Foreign Currency Update Foreign Currency Hedge Status (1) Indicates percentage of ongoing earnings hedged 90% 5% 0% 2020 2021 2022 Average Hedge Rate(2) $1.48/£ $1.33/£ - ➢ Increased 2020 hedge position to 90% from 70% ➢ Increased 2021 hedge position to 5% from 0% ➢ Continue to utilize options in ou
Slide 19: Increased Dividend for 18th Time in Years
Increased Dividend for 18th Time in 19 Years PPL’s dividend increased to $1.66 per share on an annualized basis 10-Year Dividend History PPL Dividend Yield vs. Large Cap Utilities (2) ($ per share) Large Cap Utility Average: 3.2% $1.64 $1.65 $1.66 $1.58 4.6% 4.4% $1.51 $1.52 3.9% $1.47 $1.49 3.6% $1
Slide 20: Closing Remarks
Closing Remarks 4 0 A century of people powering life.
Slide 21: Decade of Transformation, Century of Excellence
Decade of Transformation, Century of Excellence A decade of transformation, growth, and improved operational excellence (1) (1) (1) (1) 2009 2012 2016 2019 Business Profile (2) 27% 28% % Utility % Competitive Energy 73% 72% 100% 100% (3) Market Cap ($bn) $12.2 $16.7 $23.1 $25.9 Regulatory Asset Base
Slide 22: Appendix
I: .tereee eee RR) Appendix A century of people powering life.
Slide 23: Q4 2019 Financial Results
Q4 2019 Financial Results (Earnings Per Share) $ 0 .04 $ 0 .00 $ 0 .00 $ 0 .57 $ 0 .52 $ 0 .04 $ 0 .10 $ 0 .11 ($ 0 .01) ($ 0 .02) KY ($0.01) U.K. ($0.01) Adj. Margin $0.01 Adj. Margin $0.02 Adj. Margin $0.04 O&M ($0.01) $ 0 .16 PA ($0.01) Other Income $0.02 O&M $0.02 O&M ($0.02) Other Income $0.01
Slide 24: U.S. Regulated Volume Variances
U.S. Regulated Volume Variances Kentucky Regulated Weather-Normalized Retail Sales 3-months ended 12/31/2019 vs 12/31/2018 12-months ended 12/31/2019 vs 12/31/2018 5.0% 3.0% % Change 1.0% (1.0%) (0.7%) (0.9%) (3.0%) (1.4%) (2.7%) (3.2%) (2.8%) (5.0%) (3.5%) (4.8%) Residential Commercial Industrial T
Slide 25: Projected Rate Base Growth
Projected Rate Base Growth ($ in billions) 2019A-2024E ~4% CAGR CAGR Breakdown $33.4 $34.2 $32.7 $31.4 $29.9 $4.2 $4.4 $28.3 $4.2 4.1% $4.0 $3.9 $5.2 $3.6 $5.0 $5.2 $4.7 $4.3 $4.0 5.4% $11.3 $11.2 $11.2 $11.3 $10.4 $10.8 1.5% $12.2 $12.7 $13.4 $10.3 $10.9 $11.5 5.4% 2019A 2020E 2021E 2022E 2023E 202
Slide 26: U.K. Regulated Incentive Revenues
U.K. Regulated Incentive Revenues WPD continues to demonstrate how premier network operators deliver value for customers and shareowners Incentive Revenues (1) Excellent Customer Satisfaction Ratings Customer Service Rating (10 point scale) $105 $105 9 .1 $94 $100 9 .0 9 .0 9 .0 $95 $95 8.8 2018/201
Slide 27: U.K. Regulated: True-up Mechanisms
U.K. Regulated: True-up Mechanisms ➢ TRU Adjustment ▪ Tariffs are set using a forecasted RPI as determined by HM Treasury ▪ Forecasted RPI is trued up to actuals and the corresponding revenue adjustment is collected from or returned to customers two regulatory years later ➢ MOD Adjustment ▪ On an an
Slide 28: U.K. Regulated: RIIO-2 Projected Timelines
U.K. Regulated: RIIO-2 Projected Timelines Proposed Electricity Distribution Timeline(1) RIIO-ED2 RIIO-ED2 RIIO-ED2 Open Letter Sector methodology RIIO-ED2 RIIO-ED2 Final Consultation Consultation Initial Business Open Hearings Determination (August) ✓ (Q2 – Q3) Plan Submission (Q1) (Q4) (Q2) RIIO-E
Slide 29: Debt Maturities
Debt Maturities 2025 and ($ in Millions) 2020 2021 2022 2023 2024 Beyond Total PPL Capital Funding $0 $0 $800 $600 $350 $2,780 $4,530 PPL Electric Utilities (1) $0 $400 $474 $90 $0 $3,075 $4,039 LG&E and KU Energy $475 $250 $0 $0 $0 $0 $725 Louisville Gas & Electric(1) $0 $292 $0 $0 $0 $1,732 $2,024
Slide 30: Liquidity Profile
Liquidity Profile Letters of C redit & C om m ercial Unused Ex piration C apacity Borrow ed Paper Issued C apacity Entity F acility Date (M illions) (M illions) (M illions) (M illions) PPL C apital F unding Syndicated Credit Facility Jan-2024 $1,450 $0 $450 $1,000 Bilateral Credit Facility Mar-2020
Slide 31: PPL's Credit Ratings
PPL’s Credit Ratings PPL Corporation PPL Capital Funding Credit Rating S&P Moody’s Credit Rating S&P Moody’s Secured NR NR Secured NR NR Unsecured NR NR Unsecured BBB+ Baa2 Long-term Issuer A- Baa2 Long-term Issuer A- NR Outlook Stable Stable Outlook Stable Stable WPD Holding Company LKE Holding Com
Slide 32: Voluntary ESG Disclosures
Voluntary ESG Disclosures Extensive and transparent reporting keeps stakeholders informed ➢ TCFD, SASB disclosure mapping (1) (2) ➢ CPA-Zicklin political disclosure (3) ➢ Responsive to Sustainalytics, MSCI, ISS, and other ratings (4) (1) TCFD: Task Force on Climate-related Financial Disclosures. (2)
Slide 33: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) 4th Quarter Year-to-Date (millions of dollars) December 31, 2019 December 31, 2019 U.K. KY PA Corp. & U.K. KY PA Corp. & Total Total Reg. Reg. Reg. Other Reg. Reg. Reg. Other Reported Earnings $ 193
Slide 34: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) 4th Quarter Year-to-Date (millions of dollars) December 31, 2018 December 31, 2018 U.K. KY PA Corp. & U.K. KY PA Corp. & Total Total Reg. Reg. Reg. Other Reg. Reg. Reg. Other Reported Earnings $ 278
Slide 35: Adjusted Gross Margins Summary
Adjusted Gross Margins Summary (Unaudited) Twelve Months Ended December 31, (millions of dollars, except share data) Per Share Diluted 2019 2018 Change (after-tax) U.K. Adjusted Gross Margins $ 1,998 $ 2,089 $ (91) $ (0.10) Less: Impact of changes in foreign currency exchange rates (107) (0.12) U.K.
Slide 36: Reconciliation of Adjusted Gross Margins to Operating Income
Reconciliation of Adjusted Gross Margins to Operating Income (Unaudited) Twelve Months Ended December 31, 2019 Twelve Months Ended December 31, 2018 (millions of dollars) U.K. KY PA U.K. KY PA Adjusted Adjusted Adjusted Adjusted Adjusted Adjusted Gross Gross Gross Operating Gross Gross Gross Operati
Slide 37: Forward-Looking Information Statement
Forward-Looking Information Statement Statements contained in this presentation, 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
Slide 38: Definitions of non-GAAP Financial Measures
Definitions of non-GAAP Financial Measures 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 believe
Slide 39: Definitions of non-GAAP Financial Measures
Definitions of non-GAAP Financial Measures Management also utilizes the following non-GAAP financial measures as indicators of performance for its businesses: "U.K. Adjusted Gross Margins" is a single financial performance measure of the electricity distribution operations of the U.K. Regulated segm