Slide 1: Fourth Quarter Earnings Call
Fourth Quarter Earnings Call February 4, 2009 Exhibit 99.2
Slide 2: Cautionary Statements And Factors That May Affect Future Results
Cautionary Statements And Factors That May Affect Future Results Any 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
Slide 3: Agenda
Agenda • 2008 Earnings, 2009 and 2010 Earnings Forecast and Outlook • Segment Results and Financial Overview • Operational Review • Q&A J. H. Miller P. A. Farr W. H. Spence 2
Slide 4: Reported Earnings
Reported Earnings Per share $1.11 $0.74 $0.00 $0.50 $1.00 $1.50 4Q 2007 4Q 2008 3 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Per share $3.35 $2.47 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 2007 2008
Slide 5: Earnings From Ongoing Operations
Earnings From Ongoing Operations Per share $0.60 $0.46 $0.00 $0.50 $1.00 4Q 2007 4Q 2008 4 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Per share $2.60 $2.02 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2007 2008
Slide 6: Strong Long-Term Earnings Growth
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2007A* 2008A* 2009 2010 Strong Long-Term Earnings Growth Forecast 5 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.60 $2.02 $4.20 Per Share $1.90 $1.60 $3.60
Slide 7: Ongoing Earnings Overview
Ongoing Earnings Overview $(0.14) $0.60$0.46Total (0.07)0.220.15International Delivery 0.010.090.10Pennsylvania Delivery $ (0.08) $0.29$0.21Supply Change Q4 2007 Q4 2008 6 Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $(0.58) $2.60$2.0
Slide 8: Supply Segment Earnings Drivers
Supply Segment Earnings Drivers 0.04O&M 0.01Energy Margins - -West (0.01)Other (0.18)Synfuel (0.09)Financing $0.812008 EPS – Ongoing Earnings (0.61)Total $(0.38) Energy Margins - -East $1.422007 EPS – Ongoing Earnings 2008 Note: See Appendix for the per share reconciliation of reported earnings and
Slide 9: Pennsylvania Delivery Segment Earnings Drivers
Pennsylvania Delivery Segment Earnings Drivers (0.02)O&M (0.03)Income taxes and other $0.442008 EPS – Ongoing Earnings 0.04 Total $ 0.09 Delivery Margins (a) $0.402007 EPS – Ongoing Earnings 2008 8 (a) Net of CTC/ITC amortization, interest expense on transition bonds and ancillary charges. Note: See
Slide 10: International Delivery Segment Earnings Drivers
International Delivery Segment Earnings Drivers (0.02) Effect of Exchange Rates $0.03 Delivery Margins (0.11) Latin American Operations $0.772008 EPS – Ongoing Earnings (0.01) Total 0.02 Income taxes & other 0.07 O&M $0.782007 EPS – Ongoing Earnings 2008 9 Note: See Appendix for the per share reconc
Slide 11: 2008 Earnings Contributions
2008 Earnings Contributions $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 2008A $2.60* Net Impact of Asset Divestiture ($0.09) $2.02* Depreciation ($0.03) Energy Margins ($0.37) Synfuels ($0.18) O&M $0.09 2007A 10 *Earnings from ongoing operations – See Appendix for the per share reconciliation of
Slide 12: Expected 2009 Earnings Contributions
Expected 2009 Earnings Contributions 11 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. **Midpoint of forecast Per Share $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 2008A* $2.02* Financing Costs ($0.07)
Slide 13: Strong Long-Term Earnings Growth
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2007A* 2008A* 2009 2010 Strong Long-Term Earnings Growth Forecast 12 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.60 $2.02 $4.20 Per Share $1.90 $1.60 $3.60
Slide 14: Cash Flow Forecast
Cash Flow Forecast Millions ($300) ($100) $100 $300 $500 $700 2007A 2008A 2009E 2010E Free cash flow before dividends 13 Note: See Appendix for the reconciliation of cash flow measures.
Slide 15: Liquidity Profile
Liquidity Profile (1) Reported as of 12/31/2008 Diverse bank group consisting of 23 banks committed under domestic facilities, with no bank having more than 14% of commitments. 14 Institution Facility Expiration Date Total Facility (Millions) Letters of Credit Outstanding (1) (Millions) Drawn (1) (M
Slide 16: PPL Energy Supply Collateral Profile
PPL Energy Supply Collateral Profile (Millions of Dollars) - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Available Credit Capacity Cash Posted Borrowings/
Slide 17: Debt Maturities
Debt Maturities (1) PPL Electric Utilities prefunding done in 10/2008 for 2009 maturity As of 12/31/2008 16 ($Millions) 2009 2010 2011 2012 2013 PPL Energy Supply $0 $0 $500 $0 $737 PPL Capital Funding 201 0 0 0 0 PPL Electric Utilities 486 (1) 0 0 0 500 WPD Group 0 0 0 0 0 Sub Total $687 $0 $500 $0
Slide 18: PA and International Delivery Operational Update
PA and International Delivery Operational Update PA Delivery • PPLEU completed 4 of 6 RFPs • Bids due for 5th RFP March 30 with PUC approval expected April 2 • 2011-2013 Procurement Plan – Evidentiary Hearings Scheduled for February 11-13 • 10% of eligible customers enrolled in Rate Phase-In Plan In
Slide 19: Supply Segment Operational Update
Supply Segment Operational Update 18 • Completed work on Montour cooling tower sub-structure and unit went back in service in November 2008 • Susquehanna set generation record in 4Q08 • Susquehanna Unit 2 up-rate of 69 MW to be completed in Spring 2009 • Federal court reversed its decision vacating
Slide 20: Marketing and Trading
19 Marketing and Trading * Marketing included as part of total generation gross margins in 2005. 2% 5% 8% 0%M&T as % of Supply Gross Margin * Marketing & Trading Gross Margins $Millions 4% $32 $35 $41 $11 $43 $104 $122 $74 $(121) $1 $32 $78 $145 $85 ($125) ($75) ($25) $25 $75 $125 $175 2005 2006 200
Slide 21: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions -Electricity and Fuel Note: As of 12/31/2008 20 2009 2010 2011 2012 Electricity Sales East 95% 80% 43% 23% West 93% 72% 66% 46% Total 95% 79% 47% 26% Uranium 100% 100% 100% 100% Coal East 100% 84% 71% 49% West 100% 100% 86% 77% Total 100% 89% 75% 57% Unhedged Coal – million t
Slide 22: Hedged Baseload Electricity 2009-2012
Hedged Baseload Electricity 2009-2012 Hedged Baseload Electricity Sales 0% 20% 40% 60% 80% 100% 2009 2010 2011 2012 % of Coal, Hydro & Nuclear Output $20 $30 $40 $50 $60 $70 $80 $/M W h Average Sale Price 21
Slide 23: Open EBITDA
Open EBITDA *Based on forward market prices as of December 31, 2008 2010E 2011E 2012E Generation Output - MWh 55.5 55.8 56.7 Unhedged Gross Margin* 2,637 2,732 2,741 O&M (859) (899) (929) Open EBITDA 1,778 1,833 1,812 Fuel 309 239 190 Power 214 92 166 Other 7 5 8 Above/ (Below) Market Value of Hedge
Slide 24: 2009-2012 Sensitivities
2009 - -2012 Sensitivities EPS Impact 2009 2010 2011 2012 $10/MW-Day Capacity Price Change >$0.00 >$0.00 >$0.00 ±$0.03 $1/MWh of Unhedged Baseload Sales ±<$0.01 ±$0.01 ±$0.04 ±$0.06 $1/MWh of Unhedged Total Sales ±<$0.01 ±$0.02 ±$0.05 ±$0.07 1% Generation Availability ±$0.02 ±$0.03 ±$0.03 ±$0.03 See
Slide 25: PPL
PPL
Slide 26: Market Prices
Market Prices ELECTRIC PJM On-Peak Off-Peak ATC(2) Mid-Columbia On-Peak Off-Peak ATC(2) GAS(3) NYMEX TZ6NNY PJM MARKET HEAT RATE(4) CAPACITY PRICES (Per MWD) EQA Actual 2008 2009 2010 2011 2012 $81 $63 $69 $69 $69 $49 $47 $51 $52 $52 $69 $55 $59 $60 $60 $65 $48 $57 $59 $59 $51 $38 $44 $46 $46 $59 $4
Slide 27: PPL Supply Business Overview
PPL Supply Business Overview 2009E Production GWh A-2 Gas/Oil 37% Coal 34% Nuclear 18% Hydro8% QFs 3% 2009E Installed Capacity MW Gas/Oil 9% Coal 52% Nuclear 31% Hydro 8% Note: Graphs include tolling agreements.
Slide 28: PPL's Generation Portfolio
PPL’s Generation Portfolio Total Domestic Generation: 12,184 MW Planned Uprate Projects or Additions: 148 MW A-3 (1) Reflects reduction of 60 MW expected loss due to increased plant usage during scrubber operation. (2) Includes tolling agreements. Coal 3,500 Nuclear 2,165 Oil 1,817 Gas 2,282 Hydro 3
Slide 29: 2007 Synfuel and Divested Assets Ongoing Earnings Contributions
2007 Synfuel and Divested Assets Ongoing Earnings Contributions A-4 Synfuel Q1 Q2 Q3 Q4 2007 Synfuel Earnings $0.07 $0.01 $0.02 $0.04 $0.14 Fuel Costs 0.01 0.01 0.01 0.01 0.04 Total Synfuel Contribution $0.08 $0.02 $0.03 $0.05 $0.18 Net Impact of Asset Divestitures $0.03 $0.03 $0.02 $0.00 $0.08
Slide 30: Reconciliation of Cash from Operations to Free Cash Flow before Dividends
Reconciliation of Cash from Operations to Free Cash Flow before Dividends (Millions of Dollars) A-5 303898Asset Sales (203)Investment in Energy Project $347$231($237 )$513Free Cash Flow before Dividends (61)18(58)39Other Investing Activities-net (1,762)(1,218)(1,503)(1,685)Capital Expenditures --(29
Slide 31: Capital Expenditures by Segment
Millions $939 $678 $752 $790 $286 $289 $582 $649 $278 $251 $428 $448 $0 $400 $800 $1,200 $1,600 $2,000 2008A 2009E 2010E 2011E Supply PA Delivery International Delivery $1,503 $1,887 $1,762 $1,218 Capital Expenditures by Segment A-6
Slide 32: Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations A-7 (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending December 31, 2008 Reported earnings $182 $38 $57 $277 Special Items: MTM adj's from energy-related, non- trading eco
Slide 33: Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations A-8 (Dollars Per Share) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending December 31, 2008 Reported earnings $0.49 $0.10 $0.15 $0.74 Special Items: MTM adj's from energy-related, non- trading
Slide 34: Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations
Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations A-9 (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total Year-to-Date December 31, 2008 Reported earnings $479 $161 $290 $930 Special Items: MTM adj's from energy-related, non- trading ec
Slide 35: Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations
Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations A-10 (Dollars Per Share) Pennsylvania International Supply Delivery Delivery Total Year-to-Date December 31, 2008 Reported earnings $1.27 $0.43 $0.77 $2.47 Special Items: MTM adj's from energy-related, non- trading
Slide 36: Reconciliation of Year-to-Date Operating Income and Energy Margins
Reconciliation of Year-to-Date Operating Income and Energy Margins A-11 2008 2007 Change Per Share (after-tax) Synfuel Tax Credit Reclass (a) Per Share Adjusted (after-tax) Eastern U.S., pre-tax $1,286 $1,555 ($269) ($0.42) $0.04 ($0.38) Western U.S., pre-tax 278 269 9 0.01 0.01 Domestic gross energ
Slide 37: Reconciliation of Year-to-Date Operating Income and Energy Margins
Reconciliation of Year-to-Date Operating Income and Energy Margins A-12 2008 2007 Revenue adjustments WPD utility revenue ($824) ($863) Domestic delivery component of utility revenue (1,325) (1,308) Other utility revenue (52) (48) RMR revenues (52) Mark-to-market adjustments from certain economic ac
Slide 38: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations High Low 2009 2009 2008 2007 2006 Per Share Earnings from Ongoing Operations $1.90 $1.60 $2.02 $2.60 $2.25 Special items (net of taxes): economic hedges 0.67 0.08 (0.03) Reversal of cost recovery - Hurricane Isabel (0.02)
Slide 39: Credit Ratings
A-14 Issuer Rating BBB Tax-Exempt Bonds* Aaa AAA Outlook STABLE NEGATIVE STABLE Senior Secured Debt A3 A- A Commercial Paper P-2 A-2 F-2 Preferred Stock Baa3 BBB BBB Issuer Rating Baa1 A- BBB First Mortgage Bonds A3 A- A Tax- Exempt Bonds** Baa1 AA Preference Stock Baa3 BBB BBB PPL Electric Utilitie
Slide 40: Credit Ratings (cont.)
Credit Ratings (cont.) A-15 A-3 Commercial Paper A-BBB+ Baa1Senior Unsecured Debt F2A-2P-2 Commercial Paper POSITIVE STABLE STABLE Outlook BBB+ BBB+ Baa1 Issuer Rating A-BBB+ Baa1 Senior Unsecured Debt F2A-2 Commercial Paper POSITIVE STABLE STABLE Outlook Western Power Distribution (South West) PLC
Slide 41: Forward-Looking Information Statement
Forward-Looking Information Statement A-16 Statements contained in this presentation, including statements with respect to future earnings, energy prices, margins, sales and supply, marketing performance, hedging, growth, revenues, expenses, rates, regulation, cash flows, credit profile, financing,
Slide 42: Earnings from ongoing operations definition
“Earnings from ongoing operations” excludes the impact of special items. Special items include charges, credits or gains that are unusual or nonrecurring. Special items also include the mark-to-market impact of energy-related, non-trading economic hedges and impairments of securities in PPL’s nuclea