t 99.1
Exhibit 99.1
| Contacts: | For news media – George Biechler, 610-774-5997 |
| | For financial analysts – Joseph P. Bergstein, 610-774-5609 |
PPL Corporation reports strong fourth-quarter results
and exceeds 2009 earnings forecasts
| · | Company announces 2009 reported earnings of $1.08 per share and earnings from ongoing operations of $1.95 per share |
| · | 2010 earnings forecast reaffirmed |
ALLENTOWN, Pa. (Feb. 5, 2010) ― Closing the year with a strong fourth quarter, PPL Corporation (NYSE: PPL) on Friday (2/5) announced full-year earnings for 2009 that tracked well ahead of the company’s reported and ongoing earnings forecasts.
PPL’s reported earnings for 2009 were $1.08 per share, compared with $2.47 per share a year ago. Adjusting for special items, PPL’s earnings from ongoing operations for 2009 were $1.95 per share, compared with $2.02 per share for 2008.
For the fourth quarter of 2009, PPL announced reported earnings of $0.40 per share, compared with $0.74 per share a year ago. Adjusting for special items, PPL’s earnings from ongoing operations for the fourth quarter of 2009 were $0.52 per share, compared with $0.46 per share a year ago.
“Our performance this past year speaks volumes about the dedication of our people, the quality of our assets and our overall business model,” said James H. Miller, PPL’s chairman, president and chief executive officer. “Higher wholesale energy margins, solid operating performance and early cost-reduction initiatives enabled us to deliver very sound results in 2009 ― outperforming the challenging business plan that we put in place.”
Miller highlighted some significant 2009 accomplishments: generation records at certain power plants in Pennsylvania and Montana; successful transition to market-based generation prices in Pennsylvania for 2010 and beyond; 20-year extensions of the operating licenses for both units at PPL’s Susquehanna nuclear plant; recognition of PPL’s strong operating performance by the U.K. regulator in a rate review for the next five-year period; decisions to move ahead with major hydroelectric expansions in Pennsylvania and Montana; and the on-time and under-budget installation of major emission-control equipment at one of PPL’s large coal-fired power plants in Pennsylvania.
PPL also reaffirmed its 2010 earnings forecast of $3.10 to $3.50 per share. “We feel confident that the hedges put in place under our multiyear hedging program will provide significant value in 2010, allowing us to continue to forecast very strong financial performance for the year,” Miller said.
2009 Earnings Details
PPL’s 2009 reported earnings included total net special item charges of $0.87 per share, compared with total net special item credits of $0.45 per share in 2008. The major special item charge in 2009 was $0.59 per share for energy-related economic activity, primarily resulting from the reversal in 2009 of hedge ineffectiveness gains recorded in 2008.
Adjusting for special items, PPL’s 2009 earnings from ongoing operations declined by approximately 3 percent, compared with 2008 results, due primarily to less favorable currency exchange rates in its international delivery business segment and lower margins in its Pennsylvania delivery segment. Partially offsetting these earnings declines were higher wholesale energy margins in PPL’s supply business segment in both the eastern and western U.S.
Reported earnings are calculated in accordance with generally accepted accounting principles (GAAP). Earnings from ongoing operations is a non-GAAP financial measure that is adjusted for special items. Special items include the impact of energy-related economic activity (principally unrealized impacts of economic activity and the ineffective portion of qualifying cash flow hedges), as well as other impacts fully detailed at the end of this news release.
(Dollars in millions, except for per share amounts)
| | 2009 | 2008 | % Change |
| Reported Earnings | $407 | $930 | -56% |
| Reported Earnings per Share | $1.08 | $2.47 | -56 % |
| Earnings from Ongoing Operations | $738 | $761 | -3% |
| Per Share Earnings from Ongoing Operations | $1.95 | $2.02 | -3% |
(See the tables at the end of this news release for details as to all special items and the reconciliation of earnings from ongoing operations to reported earnings.)
Fourth-quarter 2009 Earnings Results
For the fourth quarter of 2009, PPL announced reported earnings of $0.40 per share, a 46 percent decline compared with a year ago. Reported earnings for the current quarter included net special item charges totaling $0.12 per share, compared with net special item credits totaling $0.28 per share a year ago.
Adjusting for special items, PPL’s fourth-quarter 2009 earnings from ongoing operations were $0.52 per share, a 13 percent increase over a year ago. This quarterly increase was primarily due to higher wholesale energy margins in the supply business segment in both the eastern and western U.S. and higher electricity delivery margins and lower U.S. income taxes in the international delivery business segment.
(Dollars in millions, except for per share amounts)
| | 4Q 2009 | 4Q 2008 | % Change |
| Reported Earnings | $153 | $277 | -45 % |
| Reported Earnings per Share | $0.40 | $0.74 | -46% |
| Earnings from Ongoing Operations | $198 | $175 | +13 % |
| Per Share Earnings from Ongoing Operations | $0.52 | $0.46 | +13 % |
(See the tables at the end of this news release for details as to all special items and the reconciliation of earnings from ongoing operations to reported earnings.)
Annual and Fourth-quarter Earnings by Business Segment
The following chart shows PPL’s earnings by business segment for the year and for the fourth quarter of 2009 compared with the same periods of 2008.
| | | Year | | 4th Quarter |
| | | 2009 | | 2008 | | 2009 | | 2008 |
| | | (per share) | | | (per share) | |
| Earnings from Ongoing Operations | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Supply | | $ | 0.88 | | | $ | 0.81 | | | $ | 0.25 | | | $ | 0.21 | |
| Pennsylvania Delivery | | | 0.35 | | | | 0.44 | | | | 0.09 | | | | 0.10 | |
| International Delivery | | | 0.72 | | | | 0.77 | | | | 0.18 | | | | 0.15 | |
Total | | $ | 1.95 | | | $ | 2.02 | | | $ | 0.52 | | | $ | 0.46 | |
| | | | | | | | | | | | | |
| Special Items | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Supply | | $ | (0.77 | ) | | $ | 0.46 | | | $ | (0.11 | ) | | $ | 0.28 | |
| Pennsylvania Delivery | | | (0.02 | ) | | | (0.01 | ) | | | (0.01 | ) | | | - | |
| International Delivery | | | (0.08 | ) | | | - | | | | - | | | | - | |
Total | | $ | (0.87 | ) | | $ | 0.45 | | | $ | (0.12 | ) | | $ | 0.28 | |
| | | | | | | | | | | | | |
| Reported Earnings | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Supply | | $ | 0.11 | | | $ | 1.27 | | | $ | 0.14 | | | $ | 0.49 | |
| Pennsylvania Delivery | | | 0.33 | | | | 0.43 | | | | 0.08 | | | | 0.10 | |
| International Delivery | | | 0.64 | | | | 0.77 | | | | 0.18 | | | | 0.15 | |
Total | | $ | 1.08 | | | $ | 2.47 | | | $ | 0.40 | | | $ | 0.74 | |
(For more details and a breakout of special items by segment, see the reconciliation tables at the end of this news release.)
Key Factors Impacting Business Segment Earnings from Ongoing Operations
Supply Segment
PPL’s supply business segment primarily consists of the domestic energy generation and marketing and trading operations of PPL Energy Supply.
Earnings from ongoing operations for PPL’s supply business segment in 2009 increased by $0.07 per share compared with 2008. This increase was primarily due to significant trading losses incurred in 2008, which were caused by the dramatic decline in wholesale energy prices and lack of market liquidity that accompanied the severe contraction of global financial markets.
Other positive drivers of energy margins for the supply business segment in 2009 included higher value from PPL’s generation portfolio, partially offset by lower net margins from load-following agreements due to lower customer demand, higher operation and maintenance expenses, and higher depreciation.
Earnings from ongoing operations for PPL’s supply business segment increased by $0.04 per share in the fourth quarter of 2009 compared with a year ago. This increase was driven primarily by the same factors that affected this business segment’s annual results.
Pennsylvania Delivery Segment
PPL’s Pennsylvania delivery business segment includes the regulated electric delivery operations of PPL Electric Utilities and included the delivery operations of PPL’s natural gas and propane businesses prior to their divestiture in October 2008.
Earnings from ongoing operations for PPL’s Pennsylvania delivery business segment in 2009 declined by $0.09 per share compared with 2008. This decline was primarily the result of lower delivery revenue due to milder weather and the economy, higher financing costs, and the divestiture of PPL’s natural gas and propane businesses in 2008.
Earnings from ongoing operations for PPL’s Pennsylvania delivery business segment declined in the fourth quarter of 2009 by $0.01 per share compared with a year ago. This decline was primarily due to higher operation and maintenance expenses.
International Delivery Segment
PPL’s international delivery business segment primarily includes the regulated electricity delivery operations of Western Power Distribution in the U.K.
Earnings from ongoing operations for PPL’s international delivery business segment in 2009 declined by $0.05 per share compared with 2008. This decline was primarily the net result of less favorable currency exchange rates, which was partially offset by lower financing costs, lower U.K. income taxes and higher electricity delivery margins.
Earnings from ongoing operations for PPL’s international delivery business segment increased in the fourth quarter of 2009 by $0.03 per share compared with a year ago. This increase was primarily the net result of higher electricity delivery margins and lower U.S. income taxes, partially offset by a less favorable currency exchange rate.
2010 Earnings Forecast by Business Segment
Earnings (per share) | 2010 (forecast) | | 2009 (actual) | |
| | Midpoint | | Ongoing operations | |
| | | | | |
| Supply | $2.55 | | $0.88 | |
| Pennsylvania Delivery | 0.27 | | 0.35 | |
| International Delivery | 0.48 | | 0.72 | |
Total | $3.30 | | $1.95 | |
PPL is reaffirming its 2010 earnings forecast of $3.10 to $3.50 per share. This forecast reflects the following key expectations by business segment.
Supply Segment
PPL projects higher earnings from its supply business segment in 2010 compared with 2009 due to strong growth in energy margins. The forecast for strong growth in energy margins is based on hedged power and fuel prices as well as established capacity prices in the PJM Interconnection. These positive factors are expected to be partially offset by higher depreciation, higher financing costs, and higher operation and maintenance expenses.
Pennsylvania Delivery Segment
PPL projects lower earnings from its Pennsylvania delivery business segment in 2010 compared with 2009 as a net result of lower electricity distribution margins, primarily due to continued slow economic growth and weak customer demand; higher operation and maintenance expenses; and lower financing costs.
International Delivery Segment
PPL projects lower earnings from its international delivery business segment in 2010 compared with 2009 as a result of higher income taxes, higher operation and maintenance expenses, and higher financing costs. These negative factors are expected to be partially offset by higher electricity delivery margins and a more favorable currency exchange rate.
PPL Corporation, headquartered in Allentown, Pa., owns or controls nearly 12,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to about 4 million customers in Pennsylvania and the United Kingdom. More information is available at www.pplweb.com.
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(Note: All references to earnings per share in the text and tables of this news release are stated in terms of diluted earnings per share.)
Conference Call and Webcast
PPL invites interested parties to listen to a live Internet webcast of management’s teleconference with financial analysts about annual and fourth-quarter 2009 financial results at 9 a.m. EST Friday, Feb. 5. The meeting is available online live, in audio format, along with slides of the presentation, on PPL’s Web site: www.pplweb.com. The webcast will be available for replay on the PPL Web site for 30 days. Interested individuals also can access the live conference call via telephone at 702-696-4769 (ID# 52833844).
“Earnings from ongoing operations” should not be considered as an alternative to reported earnings, or net income attributable to PPL, which is an indicator of operating performance determined in accordance with generally accepted accounting principles (GAAP). PPL believes that “earnings from ongoing operations,” although a non-GAAP financial measure, is also useful and meaningful to investors because it provides them with management’s view of PPL’s fundamental earnings performance as another criterion in making their investment decisions. PPL’s management also uses “earnings from ongoing operations” in measuring certain corporate performance goals. Other companies may use different measures to present financial performance.
“Earnings from ongoing operations” is adjusted for the impact of special items. Special items include:
| · | The impact of energy-related economic activity (as discussed below). |
| · | Foreign currency-related economic hedges. |
| · | The impact of sales of assets not in the ordinary course of business. |
| · | Impairment charges (including impairments of securities in the company’s nuclear decommissioning trust). |
| · | Workforce reduction and other restructuring impacts. |
| · | Other charges or credits that are, in management’s view, not reflective of the company’s ongoing operations. |
Energy-related economic activity includes the changes in fair value of positions used to hedge a portion of the economic value of PPL’s generation assets, load-following and retail activities. This economic value is subject to changes in fair value due to market price volatility of the input and output commodities (e.g., fuel and power). Also included in this special item are the ineffective portion of qualifying cash flow hedges and the premium amortization associated with options classified as economic activity. These items are included in ongoing earnings over the delivery period that was hedged. Management believes that adjusting for such amounts provides a better matching of earnings from ongoing operations to the actual amounts settled for PPL’s underlying hedged assets.
Statements contained in this news release, including statements with respect to future earnings, energy prices, margins and sales, growth, revenues, expenses, marketing performance, hedging, regulation, exchange rates, corporate strategy, and generating capacity and performance, are “forward-looking statements” within the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements are subject to a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: market demand and prices for energy, capacity and fuel; weather conditions affecting customer energy usage and operating costs; competition in power markets; the effect of any business or industry restructuring; the profitability and liquidity of PPL Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of plants and other facilities; environmental conditions and requirements and the related costs of compliance, including environmental capital expenditures and emission allowance and other expenses; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; asset acquisitions and dispositions; any impact of hurricanes or other severe weather on our business, including any impact on fuel prices; receipt of necessary government permits, approvals, rate relief and regulatory cost recovery; capital market conditions and decisions regarding capital structure; the impact of state, federal or foreign investigations applicable to PPL Corporation and its subsidiaries; the outcome of litigation against PPL Corporation and its subsidiaries; stock price performance; the market prices of equity securities and the impact on pension income and resultant cash funding requirements for defined benefit pension plans; the securities and credit ratings of PPL Corporation and its subsidiaries; political, regulatory or economic conditions in states, regions or countries where PPL Corporation or its subsidiaries conduct business, including any potential effects of threatened or actual terrorism or war or other hostilities; foreign exchange rates; new state, federal or foreign legislation, including new tax legislation; and the commitments and liabilities of PPL Corporation and its subsidiaries. Any such forward-looking statements should be considered in light of such important factors and in conjunction with PPL Corporation’s Form 10-K and other reports on file with the Securities and Exchange Commission.
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Note to Editors: Visit PPL’s media Web site at www.pplnewsroom.com for additional news and background about PPL Corporation.
