Slide 1: PPL 3rd Quarter Earnings Call
PPL 3rd Quarter Earnings Call November 5, 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, including the process to sell PPL’s U.K. business, are forward- looking statements under the Safe Harbor provisions of the Private Securities L
Slide 3: Agenda
Agenda I. Third Quarter Review Vince Sorgi II. Q3 Financial Review Joe Bergstein III. Closing Remarks Vince Sorgi IV. Q&A PPL 3rd Quarter Earnings Call – November 5, 2020 3
Slide 4: Third Quarter Review
Third Quarter Review Q3 Highlights Q3 Earnings Results (Earnings Per Share) ➢ Delivered Q3 2020 ongoing earnings results of $0.58 per share vs. $0.61 per share in Q3 $0.65 $0.61 $0.58 2019 $0.37 ➢ Remain steadfast in delivering safe and reliable service to customers as we manage the impacts of COVID
Slide 5: Regulatory and ESG Updates
Regulatory and ESG Updates Regulatory Updates Sustainability and Governance Updates ➢ U.K. Regulated Updates ➢ Joined EPRI and GTI led initiative to ▪ WPD response to RIIO-ED2 methodology accelerate low-carbon energy technologies (1)(2) encourages strong incentive-based regime to ▪ Collaborative eff
Slide 6: Q3 2020 Financial Results
Q3 2020 Financial Results (Earnings Per Share) $0.02 impact due to lower sales volumes to be recovered through decoupling mechanism in 2022-2023 $0.61 $0.00 $0.01 $0.02 $0.58 ($0.02) ($0.01) $0.20 ($0.03) $0.17 KY ($0.02) U.K. ($0.01) Adj. Margin ($0.03) Adj. Margin $0.02 Adj. Margin ($0.01) Taxes (
Slide 7: COVID Implications on Sales by Segment
COVID Implications on Sales by Segment Stronger residential sales continue to partially mitigate impact in U.S.; Impacts from lower sales volumes in U.K. to be recovered via decoupling mechanism Quarterly Weather-Normalized Electricity Sales Volume Variances (2020 vs. 2019) Pennsylvania Regulated Ke
Slide 8: Appendix
I: .tereee eee RR) Appendix A century of people powering life.
Slide 9: YTD 2020 Financial Results
YTD 2020 Financial Results (Earnings Per Share) $0.07 impact due to lower sales volumes to be recovered through decoupling mechanism in 2022-2023 $1.88 $0.06 $0.03 $1.81 $0.00 ($0.05) $0.50 ($0.10) ($0.01) $0.43 PA ($0.01) U.K. ($0.05) Adj. Margin ($0.05) Adj. Margin $0.06 Adj. Margin $0.03 Other $0
Slide 10: Foreign Currency Update
Foreign Currency Update Foreign Currency Hedge Status ➢ Remaining 2020 hedge position Indicates percentage at 100% compared to 95% at the of ongoing earnings hedged 100% end of the second quarter ➢ Average hedge rate decreased to $1.45/£ from $1.47/£ (1) 2020 Average Hedge Rate (2) $1.45/£ Note: As
Slide 11: U.K. Load Profile and Sensitivities
U.K. Load Profile and Sensitivities U.K. volume variances are NPV neutral; decoupled and trued-up in 2 years Key Considerations 2019A Margin Breakdown ➢ Any revenue under collection due 21% to volume declines, including Fixed Electric Customer Charge COVID, will be trued-up in tariff two Electric De
Slide 12: Pennsylvania Load Profile and Sensitivities
Pennsylvania Load Profile and Sensitivities Fixed charges and formula rates make up a significant percentage of margin Key Considerations 2019A Margin Breakdown ➢ Approx. 40% of margins are from 13% Transmission business, under 39% Transmission Distribution (Fixed) FERC-Formula rates 31% Distributio
Slide 13: Kentucky Load Profile and Sensitivities
Kentucky Load Profile and Sensitivities Revenue diversity, fixed and demand charges reduce sensitivity to load Key Considerations 2019A Margin Breakdown ➢ Approx. 25% of margins are from 9% 10% 9% Fixed Electric Customer Charge fixed customer charges, riders and Electric Energy Charge formula rates
Slide 14: 2020 – 2024 Capital Plan by Utility
2020 – 2024 Capital Plan by Utility ($ in billions) Additional Opportunities $3.3 •AMI (KY) •EV/Decarbonization (U.K.) $3.0 •Resiliency investment (all) $1.2 $2.5 $2.5 $2.5 $1.1 $0.4 $1.1 $1.2 $1.3 $0.4 $0.7 $0.4 $0.4 $0.3 $0.3 $0.3 $0.3 $0.8 $0.3 $0.8 $0.5 $0.5 $0.5 $0.2 $0.3 $0.2 $0.2 $0.1 2020E 2
Slide 15: Projected Rate Base by Utility
Projected Rate Base by Utility ($ in billions) 2019A-2024E CAGR Breakdown $33.4 $34.2 $32.7 $31.4 $29.9 $28.3 5.4% $12.2 $12.7 $13.4 $11.5 $10.9 $10.3 4.1% $4.0 $4.2 $4.2 $4.4 $3.6 $3.9 $4.7 $5.0 $5.2 $5.2 5.4% $4.0 $4.3 $5.3 $5.7 $6.1 $6.3 $6.5 $6.6 4.5% $5.1 $5.1 $5.1 $5.0 $4.8 $4.6 (2.0%) 2019A 2
Slide 16: 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) $100 $105 $105 9 .1 9 .0 9 .0 9 .0 9 .2 9 .1 9 .1 9 .1 $94
Slide 17: U.K. Regulated: True-up Mechanisms
U.K. Regulated: True-up Mechanisms ➢ TRU Adjustment ▪ Tariffs are set using a forecasted RPI as determined by HM Treasury ▪ Forecasted RPI is trued up to actuals and the corresponding revenue adjustment is collected from or returned to customers two regulatory years later ➢ MOD Adjustment ▪ On an an
Slide 18: U.K. Regulated: RIIO-2 Projected Timelines
U.K. Regulated: RIIO-2 Projected Timelines Proposed Electricity Distribution Timeline (1) RIIO-ED2 RIIO-ED2 RIIO-ED2 Open Letter Sector Methodology RIIO-ED2 Final Consultation Consultation Draft Business Plan Determination (August) ✓ (July) ✓ Submission (July) (December) RIIO-ED2 RIIO-ED2 RIIO-ED2 F
Slide 19: Dividend Profile
Dividend Profile PPL’s dividend is an important component to total shareowner return 10-Year Dividend History PPL Dividend Yield vs. Large Cap Utilities (2) ($ per share) Large Cap Utility Average: 3.9% $1.64 $1.65 $1.66 $1.58 6.0% $1.52 $1.47 $1.49 $1.51 $1.44 4.7% 4.6% 4.5% $1.40 $1.40 4.2% 3.9% 3
Slide 20: Debt Maturities
Debt Maturities 2025 and ($ in Millions) 2020 2021 2022 2023 2024 Beyond Total PPL Capital Funding $0 $0 $900 $600 $350 $3,780 $5,630 PPL Electric Utilities(1)(2) $0 $400 $474 $90 $0 $3,075 $4,039 LG&E and KU Energy $0 $250 $0 $0 $0 $0 $250 Louisville Gas & Electric(1) $0 $292 $0 $0 $0 $1,732 $2,024
Slide 21: Liquidity Profile
Liquidity Profile Letters of Credit & Commercial Unused Expiration Capacity Borrowed Paper Issued Capacity Entity Facility Date (Millions) (Millions) (Millions) (Millions) PPL Capital Funding Syndicated Credit Facility Jan-2024 $1,450 $0 $0 $1,450 Term Loan Credit Facility Mar-2022 100 100 0 0 Term
Slide 22: 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 23: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) 3rd Quarter Year-to-Date (millions of dollars) September 30, 2020 September 30, 2020 U.K. KY PA Corp. & U.K. KY PA Corp. & Total Total Reg. Reg. Reg. Other Reg. Reg. Reg. Other Reported Earnings (1)
Slide 24: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax 3rd Quarter Year-to-Date (millions of dollars) September 30, 2019 September 30, 2019 U.K. KY PA Corp. & U.K. KY PA Corp. & Total Total Reg. Reg. Reg. Other Reg. Reg. Reg. Other Reported Earnings (1) $ 236 $ 150
Slide 25: Adjusted Gross Margins Summary
Adjusted Gross Margins Summary (Unaudited) Three Months Ended September 30, (millions of dollars, except share data) Per Share Diluted 2020 2019 Change (after-tax) U.K. Adjusted Gross Margins $ 431 $ 446 $ (15) $ (0.02) Less: Impact of changes in foreign currency exchange rates 12 0.01 U.K. Adjusted
Slide 26: Reconciliation of Adjusted Gross Margins to Operating Income
Reconciliation of Adjusted Gross Margins to Operating Income (Unaudited) Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 (millions of dollars) U.K. KY PA U.K. KY PA Adjusted Adjusted Adjusted Adjusted Adjusted Adjusted Gross Gross Gross Operating Gross Gross Gross Operatin
Slide 27: Reconciliation of PPL’s Earnings Forecast
Reconciliation of PPL’s Earnings Forecast After-Tax (Unaudited) 2020 Forecast (per share - diluted) 2020 Forecast Range Midpoint High Low (1) Estimate of Reported Earnings $ 2.17 $ 2.22 $ 2.12 (2) Less: Special Items (expense) benefit: Foreign currency economic hedges (0.10) (0.10) (0.10) Talen liti
Slide 28: 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, including the process to sell PPL Corporation’s U.K. business, are “forward-looking statements”
Slide 29: 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 30: 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