Slide 1: 2nd Quarter Earnings Call
2nd Quarter Earnings Call Energy forward. Tuesday, August 6, 2019
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 Bill Spence II. Financial Review Joe Bergstein III. Closing Remarks and Q&A Bill Spence 3 2nd Quarter Earnings Call – August 6, 2019 © PPL Corporation 2019
Slide 4: Executive Overview
Executive Overview Q2 2019 Highlights Q2 Earnings Results (Earnings Per Share) ➢ Delivered Q2 2019 ongoing earnings results of $0.58 per share $0.73 $0.60 $0.58 $0.55 ➢ On track to achieve financial targets ▪ Reaffirmed 2019 ongoing earnings guidance range of $2.30 - $2.50 per share (1) ▪ Reaffirmed
Slide 5: Q2 Financial Results
Q2 Financial Results $ 0 .03 $ 0 .00 $ 0 .58 $ 0 .55 $ 0 .03 $ 0 .04 $ 0 .13 $ 0 .12 ($ 0 .02) ($ 0 .05) $ 0 .11 U.K. ($0.02) U.K. ($0.02) Adj. Margin $0.01 Adj. Margin $0.03 Adj. Margin $0.02 $ 0 .13 PA ($0.01) Other Income $0.02 Utility Depreciation ($0.01) KY ($0.02) Currency $0.01 Operations $0.
Slide 6: Foreign Currency Update
Foreign Currency Update Foreign Currency Hedge Status Forward Foreign Currency Rates (1) (2) ($ /£) 100% 1.70 1.60 1.50 1 .4 6 1 .4 1 63% 1.40 1.30 1.20 1.10 0% 2019 2020 2021 2019 2020 2021 FX Forecast Range Hedged Rate (3) Forward Rate ➢ Increased 2020 hedge position to 63% from 55% during Q2 ➢ Co
Slide 7: Appendix
Appendix
Slide 8: U.S. Regulated Volume Variances
U.S. Regulated Volume Variances Kentucky Regulated Weather-Normalized Retail Sales 3-months ended 6/30/2019 vs 6/30/2018 12-months ended 6/30/2019 vs 6/30/2018 5.0% 3.0% % Change 0.6% 0.5% 1.0% (1.0%) (0.2%) (0.6%) (0.7%) (3.0%) (1.3%) (1.9%) (5.0%) (4.7%) Residential Commercial Industrial Total Res
Slide 9: YTD Financial Results
YTD Financial Results $ 1 .29 $ 0 .11 $ 0 .02 $ 1 .27 ($ 0 .01) ($ 0 .01) $ 0 .31 ($ 0 .06) $ 0 .29 ($ 0 .07) $ 0 .32 $ 0 .29 U.K. ($0.04) U.K. ($0.03) Adj. Margin $0.03 Adj. Margin $0.02 Adj. Margin $0.03 O&M ($0.01) PA ($0.01) PA ($0.01) Depreciation ($0.01) Utility O&M ($0.01) KY ($0.01) KY ($0.0
Slide 10: 2019 Financial Outlook
2019 Financial Outlook ~$15 Billion $ 2 .40 $ 0 .02 $ 2 .40 $ 2 .32 $ 0 .13 $ 0 .02 $ 0 .04 ($ 0 .08) $ 0 .59 $ 0 .54 ($ 0 .13) $ 0 .55 U.K. ($0.01) U.K. ($0.08) Adj. Margin Adj. Margin Adj. Margin Other PA ($0.02) PA ($0.03) Currency O&M O&M $ 0 .62 $ 0 .60 $ 0 .59 KY ($0.03) KY ($0.05) Other Incom
Slide 11: Capital Expenditure Plan
Capital Expenditure Plan ($ in billions) ~$15 Billion $3.3 $3.1 $0.4 $2.9 $0.4 $0.4 $2.6 $2.6 $0.7 $0.7 $0.4 $0.3 $0.4 $0.3 $0.4 $1.2 $1.0 $0.7 $0.9 $0.7 $1.3 $1.0 $1.1 $1.1 $1.1 2019E 2020E 2021E 2022E 2023E U.K. Regulated KY Regulated PA Transmission PA Distribution Note: U.K. capital plan is base
Slide 12: Projected Rate Base Growth
Projected Rate Base Growth ($ in billions) 2018A-2023E ~4.7% CAGR CAGR Breakdown $33.2 $34.1 $32.0 $30.4 $4.3 $29.0 $4.2 $4.1 $27.1 $3.9 4.2% $3.7 $5.0 $5.2 $3.5 $4.7 $4.4 $4.0 $3.5 $11.2 $11.3 8.2% $10.7 $11.1 $9.8 $10.4 2.9% $12.1 $12.8 $13.3 $10.3 $10.9 $11.4 5.2% 2018A 2019E 2020E 2021E 2022E 20
Slide 13: Drive 5-6% EPS Growth Through 2020
Prudent Investments, Timely Recovery Drive 5-6% EPS Growth Through 2020 Strong Rate Base Growth Supported by constructive regulatory recovery mechanisms 5-7% CAGR Rate Base CAGR 2018-2020 ~80% Capex Earns Return within 1 year EPS Growth 2018-2020 ($ in billions) $30.4 $ 2 .58 $27.1 $3.9 $ 2 .54 $3.5
Slide 14: Commitment to Dividend Growth
Commitment to Dividend Growth Dividends are a key component Delivers consistent dividend to PPL’s investment proposition 10-Year Dividend History PPL Dividend Yield vs. Large Cap Utilities (2) ($ per share) Large Cap Utility Average: 3.7% $1.64 $1.65 $1.58 5.6% $1.51 $1.52 4.9% $1.47 $1.49 4.4% 4.4%
Slide 15: 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) $110 $110 9 .1 $103 $96 9 .0 9 .0 9 .0 $100 $100 8.8 2018/2
Slide 16: True-up Mechanisms
U.K. Regulated: True-up Mechanisms ➢ TRU Adjustment ▪ Tariffs are set using a forecasted RPI as determined by HM Treasury ▪ Forecasted RPI is trued up to actuals and the corresponding revenue adjustment is collected from or returned to customers two regulatory years later ➢ MOD Adjustment ▪ On an an
Slide 17: RIIO-2 Projected Timelines
U.K. Regulated: RIIO-2 Projected Timelines Electricity Distribution Timeline(1) RIIO-ED2 RIIO-ED2 RIIO-ED2 RIIO-ED2 RIIO-ED2 Open Letter Strategy Business Plan Business Plan Slow Tracking Consultation Consultation Submission for Submission for Decision (August) ✓ (June - August) Fast Tracking Slow T
Slide 18: Funding Growth
Funding Growth 2018A 2019E (1) ($ in millions) Domestic Cash from Operations $1,905 $1,800 (2) Domestic Maintenance Capex (844) (950) Dividend From U.K. Regulated 399 400 Cash Available for Distribution $1,460 $1,250 Common Dividend (1,133) (1,200) Cash Available for Reinvestment $327 $50 Domestic G
Slide 19: Debt Maturities
Debt Maturities 2024 and ($ in Millions) 2019 2020 2021 2022 2023 Beyond Total PPL Capital Funding $0 $0 $0 $800 $600 $3,130 $4,530 PPL Electric Utilities (1) 0 100 400 474 90 2,675 3,739 LG&E and KU Energy 0 475 250 0 0 0 725 Louisville Gas & Electric (1) 40 0 292 0 0 1,692 2,024 Kentucky Utilities
Slide 20: 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 $1,014 $436 Bilateral Credit Facility Mar-2020
Slide 21: 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 22: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) 2nd Quarter Year-to-Date (millions of dollars) June 30, 2019 June 30, 2019 U.K. KY PA Corp. & U.K. KY PA Corp. & Total Total Reg. Reg. Reg. Other Reg. Reg. Reg. Other Reported Earnings $ 284 $ 97 $
Slide 23: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) 2nd Quarter Year-to-Date (millions of dollars) June 30, 2018 June 30, 2018 U.K. KY PA Corp. & U.K. KY PA Corp. & Total Total Reg. Reg. Reg. Other Reg. Reg. Reg. Other Reported Earnings $ 394 $ 77 $
Slide 24: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) Twelve Months Ended (millions of dollars) December 31, 2018 U.K. KY PA Corp. & Total Reg. Reg. Reg. Other Reported Earnings $ 1,114 $ 411 $ 431 $ (129) $ 1,827 Less: Special Items (expense) benefit:
Slide 25: Adjusted Gross Margins Summary
Adjusted Gross Margins Summary (Unaudited) Three Months Ended June 30, (millions of dollars, except share data) Per Share Diluted 2019 2018 Change (after-tax) U.K. Adjusted Gross Margins $ 500 $ 538 $ (38) $ (0.04) Less: Impact of changes in foreign currency exchange rates (31) (0.03) U.K. Adjusted
Slide 26: Reconciliation of Year-to-Date Adjusted Gross Margins to Operating Income
Reconciliation of Year-to-Date Adjusted Gross Margins to Operating Income (Unaudited) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 (millions of dollars) U.K. KY PA U.K. KY PA Adjusted Adjusted Adjusted Adjusted Adjusted Adjusted Gross Gross Gross Operating Gross Gross Gross Operat
Slide 27: Reconciliation of PPL's Earnings Forecast
Reconciliation of PPL’s Earnings Forecast After-Tax (Unaudited) 2019 Forecast (per share - diluted) Midpoint Forecast Range U.K. KY PA Corp. & High Low Total Reg. Reg. Reg. Other 2019 2019 Estimate of Reported Earnings $ 1.37 $ 0.55 $ 0.59 $ (0.14) $ 2.37 $ 2.47 $ 2.27 Less: Special Items (expense)
Slide 28: Reconciliation of Domestic Cash Flows
Reconciliation of Domestic Cash Flows Year Ended December 2018 (millions of dollars) Presentation of Funding Growth Reclassifications Adjustments PPL Global, LLC PPL Consolidated Statement of Cash Flows non-GAAP Domestic Dividend From Common Other Domestic Statement of GAAP Description Amount Maint.
Slide 29: 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 30: 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 31: 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