PPL Corporation on Thursday (8/5) announced second-quarter 2021 reported earnings (GAAP) of $19 million, or $0.03 per share, compared with second-quarter 2020 reported earnings of $344 million, or $0.45 per share.
PPL reported a net loss of $1.82 billion, or $2.37 per share, for the first six months of 2021, compared with reported earnings of $898 million, or $1.17 per share, for the first six months of 2020.
Adjusting for special items, second-quarter 2021 earnings from ongoing operations (non-GAAP) were $147 million, or $0.19 per share, compared with $159 million, or $0.20 per share, a year ago.
Earnings from ongoing operations for the first six months of 2021 were $366 million, or $0.47 per share, compared with $365 million, or $0.47 per share, for the first six months of 2020.
Special items in the second quarter included a U.K. tax rate change and a loss on the early extinguishment of debt, partially offset by earnings from the operations of the U.K. utility business prior to the completion of its sale on June 14, 2021. Special items for the first six months of 2021 included the above factors, as well as a non-cash net loss from discontinued operations primarily due to the realization of accumulated other comprehensive losses associated with the U.K. utility business.
“In the second quarter, PPL continued to execute on its strategic repositioning, including completing the sale of our U.K. utility business,” said Vincent Sorgi, PPL president and chief executive officer. “Having achieved exceptional value for the U.K. assets, we strengthened our balance sheet by retiring $3.5 billion in corporate debt. We also advanced the process to acquire The Narragansett Electric Company in Rhode Island with several key approvals, and we accomplished key priorities in our Kentucky rate review, which will support continued investment in technology and infrastructure to improve service to our customers. Most importantly, we delivered electricity and natural gas safely and reliably for those we serve.”
Sorgi said the company will seek to build on this momentum in the remainder of 2021 while continuing to lay a strong foundation for long-term growth and success.
With a view toward maximizing shareowner value, PPL continues to evaluate the best uses for the remaining proceeds from the U.K. sale, which resulted in net cash proceeds of $10.4 billion after taxes and fees. In addition to utilizing a portion of the proceeds to strengthen its balance sheet, the company plans to use an additional $3.8 billion to acquire Narragansett Electric. Potential uses for the remaining proceeds include investing incremental capital at PPL’s utilities or in renewable energy, as well as repurchasing PPL shares. PPL’s Board of Directors recently authorized a new share repurchase program pursuant to which the company may purchase up to $3 billion in outstanding common shares at the discretion of management. The company said it expects to repurchase approximately $500 million in common shares by the end of 2021 and will continue to assess opportunities to deploy the remaining proceeds.
PPL said it remains focused on securing the final approvals for the Narragansett Electric acquisition in order to close on the transaction by March 2022. PPL continues to coordinate closely with National Grid on planning to ensure a seamless transition for Narragansett employees and customers upon regulatory approval and closing of the transaction. In June, the company announced its planned leadership team for the Rhode Island utility.
PPL also announced today that it has set a new goal to achieve net-zero carbon emissions by 2050 and is on track to achieve an 80% reduction from 2010 levels by 2040 and a 70% reduction by 2035.
PPL said its new net-zero emissions goal and interim targets, which cover greenhouse gas emissions from generation and other sources, reflect updated forecasts, analyses and ongoing business planning, as well as the company’s expanded efforts to invest in research and development of clean energy technologies. The company currently is undertaking an enterprise-wide initiative to enhance its clean energy transition strategy and has engaged an industry-leading global consulting firm to assist it in this effort.
“PPL is fully committed to driving innovation that enables us to achieve net-zero carbon emissions by 2050 and ensuring a balanced, responsible and just transition for our employees, communities and customers as we advance toward our clean energy goals,” said Sorgi.
Second-Quarter 2021 Earnings Details
As discussed in this news release, reported earnings are calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). “Earnings from ongoing operations” is a non-GAAP financial measure that is adjusted for special items. See the tables at the end of this news release for a reconciliation of reported earnings (net income) to earnings from ongoing operations, including an itemization of special items.
(Dollars in millions, except for per-share amounts) |
2nd Quarter |
Year to Date |
|||||||||||||||||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||
Reported earnings |
$ |
19 |
$ |
344 |
(94) |
% |
$ |
(1,821) |
$ |
898 |
NM* |
||||||||||
Reported earnings per share |
$ |
0.03 |
$ |
0.45 |
(93) |
% |
$ |
(2.37) |
$ |
1.17 |
NM* |
||||||||||
2nd Quarter |
Year to Date |
||||||||||||||||||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||||||||||||
Earnings from ongoing operations |
$ |
147 |
$ |
159 |
(8) |
% |
$ |
366 |
$ |
365 |
0 |
% |
|||||||||
Earnings from ongoing operations per share |
$ |
0.19 |
$ |
0.20 |
(5) |
% |
$ |
0.47 |
$ |
0.47 |
0 |
% |
|||||||||
*NM: Not meaningful |
Second-Quarter 2021 Earnings by Segment |
|||||||||||||||
2nd Quarter |
Year to Date |
||||||||||||||
Per share |
2021 |
2020 |
2021 |
2020 |
|||||||||||
Reported earnings |
|||||||||||||||
Kentucky Regulated |
$ |
0.11 |
$ |
0.10 |
$ |
0.30 |
$ |
0.26 |
|||||||
Pennsylvania Regulated |
0.12 |
0.15 |
0.27 |
0.31 |
|||||||||||
Corporate and Other |
(0.92) |
(0.05) |
(1.01) |
(0.10) |
|||||||||||
Discontinued Operations |
0.72 |
0.25 |
(1.93) |
0.70 |
|||||||||||
Total |
$ |
0.03 |
$ |
0.45 |
$ |
(2.37) |
$ |
1.17 |
|||||||
2nd Quarter |
Year to Date |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Special items (expense) benefit |
|||||||||||||||
Kentucky Regulated |
$ |
— |
$ |
— |
$ |
0.01 |
$ |
— |
|||||||
Pennsylvania Regulated |
(0.01) |
— |
(0.03) |
— |
|||||||||||
Corporate and Other |
(0.87) |
— |
(0.89) |
— |
|||||||||||
Discontinued Operations |
0.72 |
0.25 |
(1.93) |
0.70 |
|||||||||||
Total |
$ |
(0.16) |
$ |
0.25 |
$ |
(2.84) |
$ |
0.70 |
|||||||
2nd Quarter |
Year to Date |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Earnings from ongoing operations |
|||||||||||||||
Kentucky Regulated |
$ |
0.11 |
$ |
0.10 |
$ |
0.29 |
$ |
0.26 |
|||||||
Pennsylvania Regulated |
0.13 |
0.15 |
0.30 |
0.31 |
|||||||||||
Corporate and Other |
(0.05) |
(0.05) |
(0.12) |
(0.10) |
|||||||||||
Discontinued Operations |
— |
— |
— |
— |
|||||||||||
Total |
$ |
0.19 |
$ |
0.20 |
$ |
0.47 |
$ |
0.47 |
Key Factors Impacting Earnings
In addition to the segment drivers outlined below, PPL’s reported earnings for the second quarter of 2021 included net special-item after-tax charges of $128 million, or $0.16 per share, primarily attributable to a U.K. tax rate change and a loss on the early extinguishment of debt, partially offset by earnings from the operations of the U.K. utility business prior to the completion of its sale on June 14, 2021. Reported earnings for the second quarter of 2020 included net special-item after-tax benefits of $185 million, or $0.25 per share, primarily attributable to U.K. earnings that were reclassified to discontinued operations.
Reported earnings for the first six months of 2021 included net special-item after-tax charges of $2.19 billion, or $2.84 per share, primarily attributable to discontinued operations associated with the U.K. utility business, a U.K. tax rate change and a loss on the early extinguishment of debt. The special-item charges attributable to discontinued operations included a non-cash net loss on the sale of the U.K. utility business, primarily due to the realization of accumulated other comprehensive losses and forecasted federal taxes associated with the sale, partially offset by earnings from the operations of the U.K. utility business until completion of its sale on June 14, 2021. Reported earnings for the first six months of 2020 included net special-item after-tax benefits of $533 million, or $0.70 per share, primarily attributable to U.K. earnings that were reclassified to discontinued operations.
Kentucky Regulated Segment
PPL’s Kentucky Regulated segment primarily consists of the regulated electricity and natural gas operations of Louisville Gas and Electric Company and the regulated electricity operations of Kentucky Utilities Company.
Reported earnings and earnings from ongoing operations in the second quarter of 2021 increased by $0.01 per share compared with a year ago. Factors driving earnings results primarily included higher commercial and industrial demand revenue due to the 2020 impact of COVID-19 and lower interest expense primarily due to interest costs allocated to the Kentucky Regulated segment in 2020 that were not allocated in 2021, partially offset by higher operation and maintenance expense.
Reported earnings for the first six months of 2021 increased by $0.04 per share compared with a year ago. Earnings from ongoing operations for the first six months of 2021 increased by $0.03 per share compared with a year ago. Factors driving earnings results primarily included higher sales volumes primarily due to weather, lower interest expense primarily due to interest costs allocated to the Kentucky Regulated segment in 2020 that were not allocated in 2021, and higher commercial and industrial demand revenue due to the 2020 impact of COVID-19, partially offset by higher operation and maintenance expense.
Pennsylvania Regulated Segment
PPL’s Pennsylvania Regulated segment consists of the regulated electricity delivery operations of PPL Electric Utilities.
Reported earnings in the second quarter of 2021 decreased by $0.03 per share compared with a year ago. Earnings from ongoing operations in the second quarter of 2021 decreased by $0.02 per share compared with a year ago. Factors driving earnings results primarily included lower peak transmission demand, an increase in the reserve amount recorded as a result of a challenge to the transmission formula rate return on equity and favorable tax-related items recognized in 2020, partially offset by returns on additional capital investments in transmission.
Reported earnings for the first six months of 2021 decreased by $0.04 per share compared with a year ago. Earnings from ongoing operations for the first six months of 2021 decreased by $0.01 per share compared with a year ago. Factors driving earnings results primarily included lower peak transmission demand, a reserve recorded as a result of a challenge to the transmission formula rate return on equity and favorable tax-related items recognized in 2020, partially offset by returns on additional capital investments in transmission, lower operation and maintenance expense and higher sales volumes due to weather.
Corporate and Other
PPL’s Corporate and Other category primarily includes unallocated corporate-level financing and other costs.
Reported earnings in the second quarter of 2021 decreased by $0.87 per share compared with a year ago. Earnings from ongoing operations in the second quarter of 2021 were flat compared with a year ago.
Reported earnings for the first six months of 2021 decreased by $0.91 per share compared with a year ago. Earnings from ongoing operations for the first six months of 2021 decreased by $0.02 per share compared with a year ago. Factors driving earnings results primarily included higher interest expense primarily due to interest costs reflected in Corporate and Other in 2021 that were previously allocated to the operating segments in 2020.
About PPL
PPL Corporation, based in Allentown, Pennsylvania, is a leading U.S. energy company focused on providing electricity and natural gas safely, reliably and affordably to more than 2.5 million customers in the U.S. PPL’s high-performing, award-winning utilities are addressing energy challenges head-on by building smarter, more resilient and more dynamic power grids and advancing sustainable energy solutions. For more information, visit www.pplweb.com.