Exhibit 99.1
| Contacts: | For news media – George Biechler, 610-774-5997 |
| | For financial analysts – Tim Paukovits, 610-774-4124 |
PPL Reports Solid First-Quarter 2009 Earnings
| · | Lower operating expenses and financing benefits are positive drivers |
| · | U.K. currency exchange rates, lower energy margins negatively impact quarterly earnings |
| · | Company reaffirms 2009 and 2010 earnings forecasts |
ALLENTOWN, Pa. (May 1, 2009) ― PPL Corporation (NYSE: PPL) on Friday (5/1) reported a slight decline in first-quarter earnings for 2009, compared with the same quarter of 2008.
PPL’s reported earnings in the most recent quarter were $0.64 per share, compared with $0.69 per share a year ago. Excluding special items, PPL’s earnings from ongoing operations for the quarter were $0.60 per share, compared with $0.61 per share a year ago.
The primary drivers of PPL’s quarterly earnings from ongoing operations were less favorable U.K. currency exchange rates and lower wholesale energy margins in the U.S., offset by financing activity benefits and lower operating expenses both in the U.S. and the U.K.
PPL reaffirmed its 2009 forecast of $1.60 to $1.90 per share in earnings from ongoing operations. PPL’s 2009 forecast of reported earnings is $1.64 to $1.94 per share, reflecting special items recorded through March 31, 2009. The company also reaffirmed its 2010 earnings forecast of $3.60 to $4.20 per share, saying that – due to lower wholesale electricity prices – it currently expects 2010 earnings to be at the low end of this range. Following its normal practice, the company will provide an updated review of the 2010 forecast this fall.
“The actions we’ve taken since late 2008 and our solid first-quarter performance reinforce our belief that we can achieve our 2009 earnings forecast,” said James H. Miller, PPL’s chairman, president and chief executive officer.
“We’re seeing the benefits from reducing our capital and operation and maintenance spending and from steps we’ve taken to reduce our risks in the wholesale energy markets,” Miller said. “We also took advantage of our strong liquidity position to repurchase some long-term debt, which will result in future reductions in interest expense.”
Miller said the company remains focused on maintaining a strong balance sheet and stable investment-grade credit ratings. “These are traditional PPL strengths, providing us stable access to lower-cost funding in this credit-challenged economic environment,” he said.
“We’re still pursuing select growth opportunities, such as the expansion of our hydroelectric generation capacity in Pennsylvania and Montana,” Miller said, “largely driven by the availability of necessary federal economic stimulus incentives. These initiatives will further enhance PPL’s already-diverse generation portfolio as the nation moves toward limits on carbon emissions.”
First-Quarter 2009 Earnings Details
Reported earnings in the first quarter of 2009 included a net special item credit of $0.04 per share, including a $0.13 per share credit related to the mark-to-market impacts of energy-related, non-trading economic hedges.
Special item charges in the quarter, totaling $0.09 per share, were: $0.04 per share related to the impairment of emission allowances; $0.03 per share related to the recent workforce reduction; $0.01 per share related to impairments of securities in PPL’s nuclear decommissioning trust funds; and $0.01 per share related to other smaller asset impairments. For the first-quarter of 2008, PPL recorded a net special item credit of $0.08 per share.
Reported earnings are calculated in accordance with generally accepted accounting principles (GAAP). Earnings from ongoing operations is a non-GAAP financial measure that excludes special items. Special items include charges or credits that are unusual or nonrecurring. Special items also include the mark-to-market impact of energy-related, non-trading economic hedges and impairments of securities in PPL’s nuclear decommissioning trust funds.
(Dollars in millions, except for per share amounts)
| | 1st Quarter | 1st Quarter | |
| | 2009 | 2008 | % Change |
| Reported Earnings | $241 | $260 | -7% |
| Reported Earnings Per Share | $0.64 | $0.69 | -7% |
| Earnings from Ongoing Operations | $226 | $228 | -1% |
| Per Share Earnings from Ongoing Operations | $0.60 | $0.61 | -2% |
(See the tables at the end of the news release for details as to the reconciliation of reported earnings versus earnings from ongoing operations.)
First-Quarter 2009 Earnings by Business Segment
The following chart shows PPL’s earnings by business segment for the first quarter of 2009, compared with the same period of 2008.
| | | 1st Quarter |
| | | 2009 | | 2008 |
| (per share) | | | |
| Earnings from Ongoing Operations | | | | | | | | |
| | | | | | | | | |
| Supply | | $ | 0.22 | | | $ | 0.19 | |
| Pennsylvania Delivery | | | 0.14 | | | | 0.16 | |
| International Delivery | | | 0.24 | | | | 0.26 | |
Total | | $ | 0.60 | | | $ | 0.61 | |
| | | | | | | |
| Special Items | | | | | | | | |
| | | | | | | | | |
| Supply | | $ | 0.06 | | | $ | 0.08 | |
| Pennsylvania Delivery | | | (0.01 | ) | | | - | |
| International Delivery | | | (0.01 | ) | | | - | |
Total | | $ | 0.04 | | | $ | 0.08 | |
| | | | | | | |
| Reported Earnings | | | | | | | | |
| | | | | | | | | |
| Supply | | $ | 0.28 | | | $ | 0.27 | |
| Pennsylvania Delivery | | | 0.13 | | | | 0.16 | |
| International Delivery | | | 0.23 | | | | 0.26 | |
Total | | $ | 0.64 | | | $ | 0.69 | |
(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 operations of PPL Energy Supply.
Earnings from ongoing operations for PPL’s supply business segment in the first quarter of 2009 increased by $0.03 per share, or 16 percent, compared with 2008. This increase was primarily due to a $0.05 per share gain recorded on the repurchase of a portion of PPL Energy Supply’s debt; lower operation and maintenance expenses at PPL’s Susquehanna nuclear plant as a result of the timing of this year’s refueling outage; and higher wholesale energy margins in the western U.S. due to higher wholesale sales and higher hydroelectric generation output.
Partially offsetting these positive factors were lower wholesale energy margins in the eastern U.S., primarily driven by higher average fuel prices and lower realized margins from marketing and trading activities.
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 its natural gas and propane businesses prior to their divestiture in October 2008.
Earnings from ongoing operations for PPL’s Pennsylvania delivery business segment in the first quarter of 2009 declined by $0.02 per share, or 13 percent, compared with 2008. This decrease was primarily due to the loss of earnings from the natural gas and propane businesses and higher financing costs. Partially offsetting these negative factors were lower operation and maintenance expenses.
International Delivery Segment
PPL’s international delivery business segment primarily includes investments in the regulated electric distribution companies in the United Kingdom.
Earnings from ongoing operations for PPL’s international delivery business segment in the first quarter of 2009 declined by $0.02 per share, or 8 percent, compared with a year ago. This decline was primarily due to less favorable currency exchange rates, partially offset by lower financing costs and lower U.K. income taxes.
2009 Ongoing Earnings Forecast by Business Segment
PPL is reaffirming its 2009 forecast of $1.60 to $1.90 per share in earnings from ongoing operations. This forecast reflects the following expectations by business segment.
| | | 2009 (Forecast) | | | 2008 (Actual) | |
| per share | | midpoint | | | | |
| | | | | | | |
| Supply | | $ | 0.85 | | | $ | 0.81 | |
| Pennsylvania Delivery | | | 0.40 | | | | 0.44 | |
| International Delivery | | | 0.50 | | | | 0.77 | |
Total | | $ | 1.75 | | | $ | 2.02 | |
Supply Segment
PPL projects higher earnings in its supply business segment in 2009 compared with 2008, driven by higher energy margins as a result of higher expected baseload generation and margins from marketing and trading activities, despite higher expected coal expense- partially offset by higher expected operation and maintenance expenses and depreciation.
Pennsylvania Delivery Segment
PPL projects lower earnings from its Pennsylvania delivery business segment in 2009 compared with 2008, due to the divestiture of the natural gas distribution and propane businesses and slightly lower results from the electricity delivery business. Slightly higher revenues in the electricity delivery business are expected to be offset by higher operation and maintenance expenses.
International Delivery Segment
PPL projects lower earnings from its international delivery business segment in 2009 compared with 2008 as a result of less favorable currency exchange rates.
2010 Earnings Forecast
PPL’s earnings for 2010 are currently expected to be at the low end of the previously announced range of $3.60 to $4.20 per share.
The full-requirements supply contract between PPL EnergyPlus and PPL Electric Utilities expires at the end of 2009. As a result of hedging more than 90 percent of its baseload generation through March 31, 2009, PPL continues to forecast strong growth in energy margins in 2010.
The strong 2010 margin growth forecast is based on the following key assumptions:
| · | Hedged power and fuel positions and wholesale prices observed in competitive markets and used to value unhedged positions. |
| · | Capacity prices in the PJM Interconnection based on the reliability pricing model auction results for 2010. |
| · | Strong power plant performance. |
| · | Increased nuclear power output through the previously announced planned uprates. |
| · | Increased fuel and operation and maintenance expenses. |
| · | Higher costs of environmental compliance. |
This forecast does not depend upon new assets being added to the company’s portfolio and assumes PPL Electric Utilities will be able to fully recover its purchased power costs resulting from the ongoing solicitation process approved by the Pennsylvania Public Utility Commission.
PPL Corporation, headquartered in Allentown, Pa., controls or owns more than 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.)
PPL invites interested parties to listen to a live Internet webcast of management’s teleconference with financial analysts about first-quarter 2009 financial results at 9 a.m. EDT Friday, May 1. 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# 95710431).
“Earnings from ongoing operations” excludes the impact of special items. Special items include charges or credits that are unusual or nonrecurring. Special items also include the mark-to-market impact of energy-related, non-trading economic hedges and impairments of securities in PPL’s nuclear decommissioning trust funds. These energy-related, non-trading economic hedges are used to hedge a portion of the economic value of PPL’s generation assets and PPL’s 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., coal and power). The mark-to-market impact of these hedges is economically neutral to the company because the mark-to-market gains or losses on the energy hedges will reverse as the hedging contracts settle in the future. 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 measure, is also useful and meaningful to investors because it provides them with PPL’s underlying 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.
Statements contained in this news release, including statements with respect to future earnings, energy prices, margins and sales, growth, revenues, expenses, credit profile, cash flow, liquidity, financing, marketing performance, hedging, regulation, 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 involve 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 and rate relief; 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 the corporation and its subsidiaries.
