Slide 1: PPL 1st Quarter Earnings Call
PPL 1st Quarter Earnings Call May 8, 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 Bill Spence II. Financial Review Joe Bergstein III. Operational Review Vince Sorgi IV. Closing Remarks and Q&A Bill Spence PPL 1st Quarter Earnings Call – May 8, 2020 3
Slide 4: COVID-19: Our Strategy and Commitments
COVID-19: Our Strategy and Commitments PPL is committed to the safety of our employees, customers, and communities, while maintaining our premier level of reliable service ➢ Safety is #1 priority for employees and customers ▪ Social distancing has been critical to success ▪ Transitioned to essential
Slide 5: Q1 Executive Review
Q1 Executive Review Q1 Highlights Q1 Earnings Results (Earnings Per Share) ➢ Delivered Q1 2020 ongoing earnings $0.72 $0.70 $0.67 results of $0.67 per share vs. $0.70 per $0.64 share in Q1 2019 ▪ Variance primarily driven by share dilution and mild Q1 2020 weather, partially offset by returns on cap
Slide 6: Financial Review
Financial Review A century of people powering life.
Slide 7: Q1 2020 Financial Results
Q1 2020 Financial Results (Earnings Per Share) $ 0 .70 $ 0 .03 $ 0 .01 $ 0 .67 $ 0 .02 $ 0 .16 ($ 0 .03) ($ 0 .04) ($ 0 .02) $ 0 .16 $ 0 .17 U.K. $0.01 U.K. ($0.02) Adj. Margin $0.01 Adj. Margin $0.02 Adj. Margin $0.04 Other $0.01 PA ($0.02) PA ($0.01) O&M ($0.01) Other ($0.01) $ 0 .16 KY ($0.02) KY
Slide 8: Key COVID-19 Risks and Mitigation
Key COVID-19 Risks and Mitigation Estimate approximately ($0.03) – ($0.04) monthly EPS impact based on April’s lockdown phase, primarily due to lower total electric sales in U.K. and Kentucky Risk Mitigating Factors Customer Sales ➢ Lower C&I sales being offset partially by stronger Residential sale
Slide 9: Overview of Load Sensitivities and U.K. Decoupling
Overview of Load Sensitivities and U.K. Decoupling Majority of estimated load impact is recoverable via favorable decoupling mechanism in the U.K. (NPV neutral) Load Observations & Sensitivities (1) U.K. Decoupling Example (4) U.K. (2) PA KY (For illustrative purposes only) True-up, plus inflation I
Slide 10: Liquidity Update
Liquidity Update Strengthened liquidity well positions company to manage through downturn Recent Liquidity Highlights Liquidity Position at April 30, 2020 (1)(2) ($ in billions) ➢ Added $400 million of term loan credit facilities at PPL Capital Funding ▪ Provides flexibility given recent volatility
Slide 11: Operational Review
Operational Review A century of people powering life.
Slide 12: Operating in a COVID Environment
Operating in a COVID Environment Well positioned to deliver our commitments to customers and shareowners Key Operational Considerations ➢ Ensuring safety for customers and employees ✓ Implemented robust work at home measures; minimal positive cases ✓ Suspended service shutoffs for non-payment; waive
Slide 13: Visible Capital Plan Remains on Track
Visible Capital Plan Remains on Track No material changes to capex plan or rate base forecast expected due to COVID 2020-2024E Capex Plan 2020-2024E Rate Base $33.4 $34.2 $32.7 $31.4 $1.8 $29.9 $4.2 $4.4 $4.2 $4.0 $3.9 $5.2 $5.0 $5.2 $4.7 $2.0 $4.3 ~$14 $5.9 $11.2 $0.5 Billion $10.8 $11.2 $11.3 $11.
Slide 14: PPL's Clean Energy Strategy Remains Clear
PPL’s Clean Energy Strategy Remains Clear Targeting significant carbon reductions to advance a cleaner energy future PPL’s Projected Carbon Emissions Over Time Metric Tonnes (in millions) 62.6 56% 70% 80% 27.4 18.8 12.5 2010A 2019A 2040 2050 ➢ Current reduction targets meet objective of below 2° Cel
Slide 15: Closing Remarks
Closing Remarks A century of people powering life.
Slide 16: PPL is Well-Positioned for the Future
PPL is Well-Positioned for the Future Stable, rate-regulated profile remains strong despite current challenges ➢ Strong financial profile and operational agility o Significant liquidity position to manage through extended downturn o Transparent, low-risk capital plan ➢ Exceptional operational perfor
Slide 17: Appendix
I: .tereee eee RR) Appendix A century of people powering life.
Slide 18: 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 19: 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 20: 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 21: Pension Considerations
Pension Considerations Pension plans continue to be well-funded despite market volatility U.S. Pension Funded Status Requirements and Updates 92% ➢ U.S. Plans 91% o Liability driven investment strategy plus active management mitigated investment losses from recent volatility (1) o No changes to pens
Slide 22: U.S. Regulated Volume Variances (Q1)
U.S. Regulated Volume Variances (Q1) Sales volumes driven largely by weather in Q1; minimal COVID-19 impact Kentucky Regulated Weather-Normalized Retail Sales 3-months ended 3/31/2020 vs. 3/31/2019 12-months ended 3/31/2020 vs. 3/31/2019 5.0% 3.2% 0.3% % Change 0.0% (0.1%) (0.8%) (1.3%) (2.1%) (2.1%
Slide 23: Foreign Currency Update
Foreign Currency Update Foreign Currency Hedge Status (1) Indicates percentage of ongoing earnings hedged 86% 8% 0% 2020 2021 2022 Average Hedge Rate(2) $1.55/£ $1.32/£ - ➢ 86% hedged for the remainder of 2020 with no material changes since February; options represent about one-third of the hedge po
Slide 24: U.K. Regulated Incentive Revenues
U.K. Regulated Incentive Revenues WPD continues to demonstrate how premier network operators deliver value for customers and shareowners 2019/20 Earned Incentive Revenue Summary (1) Excellent Customer Satisfaction Ratings Customer Service Rating (10 point scale) 9 .1 9 .0 9 .0 9 .0 9 .2 9 .1 9 .1 9
Slide 25: 2020 – 2024 Capital Plan by Utility
2020 – 2024 Capital Plan by Utility Investing $14 billion over next five years to advance a cleaner energy future ($ in billions) Additional Opportunities $3.3 •AMI (KY) •EV/Decarbonization (U.K.) $0.4 $3.0 •Resiliency investment (all) $0.4 $2.5 $2.5 $2.5 $0.7 $0.4 $0.3 $0.3 $0.4 $0.3 $0.3 $0.3 $1.0
Slide 26: Projected Rate Base Growth
Projected Rate Base Growth ($ 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 $11.5 5.4% 2019A 2020E 2021E 2022E 2023E 202
Slide 27: Dividend Profile
Dividend Profile PPL’s dividend is an important component to total shareowner return 10-Year Dividend History PPL Dividend Yield vs. Large Cap Utilities (2) ($ per share) Large Cap Utility Average: 4.1% $1.64 $1.65 $1.66 $1.58 6.5% $1.51 $1.52 $1.47 $1.49 4.9% $1.44 4.5% 4.5% 4.3% $1.40 $1.40 4.1% 3
Slide 28: U.K. Regulated: True-up Mechanisms
U.K. Regulated: True-up Mechanisms ➢ TRU Adjustment ▪ Tariffs are set using a forecasted RPI as determined by HM Treasury ▪ Forecasted RPI is trued up to actuals and the corresponding revenue adjustment is collected from or returned to customers two regulatory years later ➢ MOD Adjustment ▪ On an an
Slide 29: U.K. Regulated: RIIO-2 Projected Timelines
U.K. Regulated: RIIO-2 Projected Timelines Proposed Electricity Distribution Timeline (1) RIIO-ED2 RIIO-ED2 RIIO-ED2 Open Letter Sector methodology RIIO-ED2 RIIO-ED2 Final Consultation Consultation Initial Business Open Hearings Determination (August) ✓ (Q2 – Q3) Plan Submission (Q1) (Q4) (Q2) RIIO-
Slide 30: Debt Maturities
Debt Maturities 2025 and ($ 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) $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 31: 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 $49 $1,401 Term Loan Credit Facility Mar-2022 1
Slide 32: 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 33: 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 (1) TCFD: Task Force on Climate-related Financial Disclosures. (2) SAS
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) Year-to-Date (millions of dollars) March 31, 2020 U.K. KY PA Corp. & Total Reg. Reg. Reg. Other Reported Earnings $ 340 $ 127 $ 118 $ (31) $ 554 Less: Special Items (expense) benefit: Foreign curren
Slide 35: Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations
Reconciliation of Segment Reported Earnings to Earnings From Ongoing Operations After-Tax (Unaudited) Year-to-Date (millions of dollars) March 31, 2019 U.K. KY PA Corp. & Total Reg. Reg. Reg. Other Reported Earnings $ 264 $ 117 $ 121 $ (36) $ 466 Less: Special Items (expense) benefit: Foreign curren
Slide 36: Adjusted Gross Margins Summary
Adjusted Gross Margins Summary (Unaudited) Three Months Ended March 31, (millions of dollars, except share data) Per Share Diluted 2020 2019 Change (after-tax) U.K. Adjusted Gross Margins $ 575 $ 546 $ 29 $ 0.03 Less: Impact of changes in foreign currency exchange rates 9 0.01 U.K. Adjusted Gross Ma
Slide 37: Reconciliation of Adjusted Gross Margins to Operating Income
Reconciliation of Adjusted Gross Margins to Operating Income (Unaudited) Three Months Ended March 31, 2020 Three Months Ended March 31, 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 Operating Margi
Slide 38: Reconciliation of PPL's Earnings Forecast
Reconciliation of PPL’s Earnings Forecast After-Tax (Unaudited) 2020 Forecast Range (per share - diluted) Midpoint High Low Estimate of Reported Earnings $ 2.55 $ 2.65 $ 2.45 (1) Less: Special Items (expense) benefit: Foreign currency economic hedges 0.05 0.05 0.05 Total Special Items 0.05 0.05 0.05
Slide 39: 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 40: 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 41: 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