PPL Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Second quarter GAAP earnings $0.25 per share; adjusting for special items, ongoing operations earnings $0.32 per share. Confident in midpoint of 2025 ongoing earnings forecast of $1.81 per share.
• Infrastructure Improvements: On track to complete over $4 billion in infrastructure improvements in 2025; projecting $20 billion in infrastructure from 2025-2028 with average annual rate base growth 9.8%.
• Regulatory Updates: Stipulation agreement with KPSC for Kentucky generation; rate increase requests in Kentucky and Rhode Island; PA base rate case expected by end of year.
• Data Center Strategy: Enabling speed to market for data centers in Pennsylvania; joint venture with Blackstone Infrastructure for new generation; $90B+ project commitments in Pennsylvania.
• Innovation: Incorporating AI in business; aiming for $150M in O&M savings by year-end vs 2021 baseline.

Segment Performance

• Kentucky Segment: Flat compared to Q2 2024; lower sales volumes due to favorable weather last year offset by other factors.
• Pennsylvania Regulated Segment: Decreased by $0.02 per share; higher operating costs and timing of transmission revenue true-up, partially offset by returns from capital investments.
• Rhode Island Segment: Decreased by $0.03 per share; higher distribution revenues from capital investments offset by timing of operating costs and other items.
• Corporate and Other: Decreased by $0.01 per share; primarily due to higher interest expense.

Guidance

• 2025 ongoing earnings forecast midpoint $1.81 per share; confident in achieving midpoint.
• Projecting 6%-8% annual EPS and dividend growth through 2028, with EPS growth in top half of range.
• $20B in infrastructure improvements from 2025-2028, average annual rate base growth 9.8%.

Risks

• Uncertainty in PJM capacity auctions impacting generation build.
• Dependence on hyperscalers signing ESAs for joint venture generation build.
• Weather impacts on sales volumes and earnings.
• Regulatory approval timelines for stipulations and rate cases.

Question and Answer

Q: Elaborate on $17B-$19B CapEx in Pennsylvania and how it could be solved.

A: Estimate for data center load in PA; joint venture, IPPs, and PPL Electric Utilities could take parts of it.

Q: Bigger picture on PJM capacity auction and preferred solutions.

A: Joint venture created to address lack of generation build; auctions clearing at high levels with no new generation.

Q: Timing of progress on JV partnership.

A: In active discussions with hyperscalers; no material commitments yet; timing depends on hyperscalers.

Q: Kentucky CPCN settlement and incremental generation capacity.

A: Mill Creek 2 extension helps; 700+ MW additional load may require more generation.

Q: Rate cases and regulatory activity.

A: Long time since rate cases in jurisdictions; need to address cost inflation and grid improvements.