PPL Corporation Q4 FY2025 earnings call

2025 was a year where PPL met its stated financial targets, with operational teams performing well due to infrastructure investment and workforce execution. An updated business plan was announced, focusing on extending growth, maintaining customer affordability, and a strong credit profile. Progress was made on rate cases in Kentucky, Pennsylvania, and Rhode Island. There was strong economic development in Pennsylvania and Kentucky with data center and manufacturing investments. Innovation was emphasized with digital solutions to improve customer service. O&M savings exceeded targets, and engagement with stakeholders supported economic development.

In 2025, ongoing earnings were $1.81 per share, a 7.1% increase from the prior year. The Kentucky segment saw an increase of $0.09 per share due to higher sales volumes, more CapEx earnings, and lower O&M, offset by some interest expense. The Pennsylvania segment rose by $0.04 per share from higher transmission revenue, distribution rider recovery, higher sales volumes, and lower operating costs, partially offset by higher depreciation and interest expense. The Rhode Island segment decreased by $0.02 per share due to higher operating costs and other factors, partially offset by higher distribution revenue. For 2026, the ongoing earnings guidance is $1.90 to $1.98 per share, with a midpoint of $1.94 per share, representing a 7.2% growth from 2025. The capital investment plan projects $23 billion from 2026 to 2029, an increase from the prior plan. The annual dividend growth rate target has been modified to 4% to 6% while issuing equity to fund the capital plan.

For 2026, the ongoing earnings are guided to be between $1.90 and $1.98 per share, with a midpoint of $1.94 per share, showing a 7.2% growth from 2025. The 6% to 8% annual EPS growth target has been extended through at least 2029, with an expectation that the CAGR will be near the top end of this range. The capital investment needs from 2026 to 2029 are projected to be $23 billion, an increase from the prior $20 billion plan. The annual dividend growth rate target has been adjusted to 4% to 6% while issuing equity to fund the capital plan.

The first quartile T&D performance is trending worse overall for the industry because of more frequent and severe storms and extreme weather events, causing utilities to increase capital investment plans. In the Kentucky rate case, some elements were not approved, leading to reassessment of the timing of the next rate case. The generation supply situation in PJM is a significant driver of higher customer bills, and uncertainties exist regarding data center project completions and the financial risk for PPL.

Q: Shahriar Pourreza inquired about the conversations and sticky points in the Pennsylvania rate case, and the hearing duration.

A: Vince Sorgi mentioned the rate case focused on data centers' impact on customers, net metering, and settlement progress, with hearings being brief but the case advancing as expected.

Q: Jeremy Tonet asked about Genco contracts, JV participation in auctions, and the types of generation.

A: Vince Sorgi said contracts could be announced off-cycle, the JV is evaluating auction participation, and alternative generation solutions are being considered.

Q: Steven Fleishman asked about the types of generation for the JV and the risk of data center backlog.

A: Vince Sorgi stated generation types could be diverse, and data center developers remain engaged.

Q: Michael Ronigen asked about the upside of EPS growth and how investments are financed.

A: Joe Bergstein and Vince Sorgi discussed the drivers of upside and the financing of investments.

Q: Julian asked about the materiality of the JV and the load forecast in Pennsylvania and Kentucky.

A: Vince Sorgi talked about the JV's progress, delays in Pennsylvania load forecasts, and the load forecast in Kentucky.

Q: Angie Storozynski asked about Pennsylvania IPP contracting and PJM planning.

A: Vince Sorgi discussed LTRAA and generation ownership and how they fit into PJM planning.

Q: Anthony Crowdell asked about Pennsylvania settlement discussions and hyperscalers' generation preference.

A: Vince Sorgi said settlement discussions were normal, and hyperscalers prefer new generation to address adequacy issues.