Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the PPL Corporation Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Note that this event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President, Investor Relations. Please go ahead.

Andy Ludwig

Good morning, everyone, and thank you for joining the PPL Corporation conference call on second quarter 2023 financial results.

for on slides of Investors provided website. our have this the presentation section We call from Officer. with President today’s begin We’ll updates and Bergstein, and Vince Joe Chief Financial CEO; PPL Sorgi, following And with we’ll remarks. a session conclude our Q&A prepared

attention Before in Slide a draw X statement. to we cautionary I’ll get started, your brief

SEC about presentation contains to actual for these or forward-looking that filings Please operating refer other and differ future some presentation today factors from future may from Our events. appendix results the materially this of the PPL’s forward-looking statements of the discussion results Actual results differ a statements. to statements. forward-looking of cause could

non-GAAP on will refer to from earnings this measures We call. operations ongoing also including

to reconciliation comparable please the refer For measures, GAAP to appendix. the

call to over the Vince. now I’ll turn

Vince Sorgi

Welcome good our everyone. you, update. investor and quarter Thank Andy, second to morning,

per operations a XXXX items, and with were $X.XX our to earnings share. second $X.XX in in $X.XX and years our year-to-date our with Slide on midpoint and results per Pennsylvania, were reported the to to forecast we’ve activity despite Today, the compared per start $X.XX of financial mild from as Let’s But share. storm our results our and quarter ago. this with by line storm a with O&M, per impacts, per were $X.XX has most ever few Adjusting about storm per confident original compared quarter the plan. earnings ongoing highlights active year from of second share share expectations quarter been one a special impacted continued weather share experienced. $X.XX mild Overall, we Between ability negatively apart second remain quarter these deliver on we in of earnings of announced Kentucky the weather from X. ongoing our results share $X.XX for

detail in areas from and will his headwinds in several weather we financial can in Joe identified cover have storms, and that review. We which offset the

to $XX know, and area to the the slightly year. million forecast achieve expenses, tracking June. $XX focused remain is we are despite on we one this you extremely of on O&M million through our And O&M, storm incremental reductions As track we are ahead targeted

that continue half second expect of through trend year. improve and We to the the

least In our earnings dividend XXXX addition, future. and our our today, rate to reaffirmed resilient, least as targeted X% will by share advance we X% projected at clean $XX remain of and through investment capital we to low-risk million growth and This billion plan per supported O&M $XXX business XXXX, a by in reliable, be confident plan. of energy at savings affordable

Turning quarter operational few second to highlights. a

ongoing our our in reliability smart us activity grid continue technology deliver of enables We both is the again, respond a only investments, do more despite prevents outages This automation but when system in customers and direct to not quickly excellent to hardening that result increased Kentucky occur. our jurisdiction, that for Pennsylvania. and outages, storm across also

complete positioned Island transition next with services integration Grid of Energy, we the Rhode National to year. well On remain our

Utilities climate progress territory supports make a smarter build an before deploy and to Public functionality we important continue that metering as state’s We service on to our filing Rhode advanced also the grid across Island leading Commission, the seek goals.

proposals. Hearings business our held the and to were case before Island review Rhode July late in PUC recovery cost

decision later this fall. a AMF our expect We on filing

Kentucky more track I’ll the with which on cover detail the slide. process, remain CPCN on also next We in

rating first the our real-time capacity integrate nation bring to existing information management of the can value innovation transmission is DLR Finally, and technology dynamic gestion Utilities its Institute as grid. this the to better the technology FERC the better to reduce approach provide and the PPL network. the Southeastern also utilize for sensors industry-leading utility Exchange Edison transmission that has both enables line recognized in to industry Electric with use its continue system. grid receive technology. our Electric the managing that transmission on awards Electric on we this recognized line Electric and for PPL in groundbreaking us congestion

Turning to with our by coal represents of forward an path XXXX. customers. the investment remain replace affordable, in for energy confident CPCN mix and we and an the our plan Slide as plan best X focused Kentucky. remain X,XXX on our update megawatt We process to advancing on cleaner reliable aging Kentucky generation We seek generation

gas solar new replace As storage. of nearly era and would it of cycle X,XXX megawatts over natural generation, megawatts megawatts battery XXX X,XXX combined generation proposed, several XXXXs with coal units of

addition, would dozen than more energy establish a programs. new In it efficiency

request Kentucky and procedural schedule the largely approved our filing while approved by retirement May, Senate the X. consolidation our to The CPCN request keeping Public Service as commission CPCN Commission Bill consolidate the the required generation In unchanged.

For intervenor the surprises. was with July schedule, real testimony no filed XX

due X. Ultimately, customers best testimony last days. the XX an settlement, we proposed decision by concludes strategic info discussions with a settlement. August could state’s we’ve on to X, conference explore several from or the potential August open for and scheduled Next settlement then interest update. a hearings Public our and we is confident are are filings very with August plan the November to to up but by my the also our parties in That and the XX followed rebuttal anticipate operational Again, set is begin without commission are we to that our case. a

to turn now financial for call I’ll the Joe the over update.

Joe Bergstein

you, Vince, and Thank morning, everyone. good

to turn Let’s Slide X.

efficiency $X.XX share Rhode decline results share from in focus drivers improved XXXX lower additional operations both higher XXXX. The Pennsylvania to due to As partially segment weather our Vince interest and the operating of months and volumes sales in Primary O&M at earnings prior at were by mentioned, Kentucky growth. QX per our plan $X.XX ongoing quarter compared higher per to driven second from in factors of were on as were lower year last $X.XX mild the QX expense offset fund per our rates X driven expected interest Those share compared borrowings to increased in earnings year. by expense, by continued from and Island

well lower to our share by slightly the to more by in quarter expectations, Pennsylvania performed our and results per Kentucky resulted territory were the service impacted volumes electricity ahead Overall, by of in sales results of X% Kentucky $X.XX and over weather, than from forecast. Degree mild apart XX% teams our for in compared were X% which in This compared normal. and Pennsylvania. lower XX% actual days

drivers Slide Turning on the to for quarter X. ongoing segment the

lower were expense partially interest Regulated by and by primarily results higher Our higher by higher sales decreased segment volumes recovery. year-over-year. Pennsylvania $X.XX revenue rider and offset transmission Results driven distribution

the $X.XX Our Kentucky lower decreased were segment by expense, lower sales results share volumes interest offset impacted higher and O&M expense. by primarily year-over-year. by partially Results per

the Our year-over-year, quarter. of Rhode Island $X.XX earnings X per segment reflecting this additional results months share increased by

Corporate to factors at per individually share were expense. Finally, significant increased partially offset lower primarily not interest results Other expense higher year, and by the & $X.XX other prior to that compared O&M due

Moving to Slide X.

per first to by PPL’s share totaled unfavorably items for plan lower has Our weather puts special QX Adjusting $X.XX total compared to earnings the due results $X.XX half sales ongoing performance quarter, our through volumes. impacted earnings $X.XX for per XX. operations per year-to-date through June the recorded share year-to-date our share XXXX. a from second of of GAAP Mild at about

higher to of storm-related year far significant $X.XX have our activity. we so In addition, due costs the plan per experienced this about share to compared storm

on XXXX to outperformance and achieving we’ve plan as several are storm storm our increased we to O&M the through we more weather and forecast in projected quarter, areas. in earnings impacts costs than been tracking expect we remain Importantly, offset able the unfavorable favorably offset to the second to these and due confident

mechanism projected and Pennsylvania experience lower sales to disc in in that the is First, the higher O&M segment. offset volumes

expect integration are Energy, tracking Rhode plan. provide compared we of our to we our favorably to upside Second, Island on which

and XXXX O&M forecast spend, In $X.XX debt This discretionary Third, optimize the achieving other we executed open a of we to of to expense total, plan. financing earnings And path in interest per consultant annual O&M. convertible spend. finally, these reduce the discretionary share. and continue timing quarter clear the our midpoint offsets identified first will and to our contractor our includes the positions our present of filling relative that

targets, excellent We achieving expect record an track of financial we to which continue our have in XXXX.

million more and ensure ahead $XXX Officer our our to is and least I a from of Officer, by Looking efficiency which employees efficiencies Information XXXX, our the tracking achieve Chief entire TMO, The we Transformation achieve to we established savings our O&M initiatives company across chair, long-term TMO, as objectives. engagement at and plans Office on or with our progress our the Management responsible from possible gives Chief for with confidence Operating support more assumed of even our date, that my areas This deliver identified potential above our help remarks. prepared the it XXX million affordable $XXX with us initiatives identifying well transition achieve have us verifying additional as a clean That targeted will and savings in and our structure energy customers. long-term we concludes To we target. forecast process rigorous will savings. savings for significantly over and

turn I’ll to Vince. back over call the

Vince Sorgi

In goals closing, we Joe. for confident in our achieving remain Thank you, XXXX.

we commitments mild those overcome created owners. and to in and our weather While have deliver share some plans headwinds, on storms have to challenges place

billion and provide in affordable for on target to than customers. also We’re energy reliable more $X.X our to complete infrastructure safe, improvements

Island Rhode to continues Energy go of smoothly. Our integration

continue least, automation in deliver and owners solidly value more Kentucky and technology we to our last both regulatory to customers share deliver we’re savings PPL O&M Future centralized functions for filings the of across on various not as We better alike. Rhode and And progress targeted Utility our to and playbook, track but Island. incorporate our execute

for let’s questions. With it that, open operator, up

Operator

comes Evercore ahead. from first Chopra Instructions] Please with [Operator go today The question Durgesh ISI.

Durgesh Chopra

guys. housekeeping straightforward here. I Hey, questions. Pretty good quarter had two morning,

investment quantify in AMI First, that what’s can Rhode How is? much you the Island? ask

Vince Sorgi

$XXX the in We’re Durgesh? million range

Durgesh Chopra

it. time frame? over Got And what

Vince Sorgi

somewhere million around there. $XXX

Sorry, say that again?

Durgesh Chopra

is time what $XXX million Over you. Thank that to million? $XXX frame Sorry.

Vince Sorgi

get to through that we hearings we the So month. approved, last need Well, just late right? went

decision up will by frame we deploy expect over And capital. the the time of there kind which dictate this of in commission fall We that have the to year. then that a

Durgesh Chopra

Would some... be incremental to Or have current do that wins? you plan your CapEx

Vince Sorgi

that’s No, plan. in the current

Durgesh Chopra

Got it.

How savings. just it weather opportunities? think mentioned obviously, that? you pie prepared sounds in Island the year-date I brings integration upside a you the integration and mentioned the excess elaborate like other $XXX Rhode and on million. then what’s headwinds like terms of maybe your storm, you in But be what opportunities of and remarks, And on just Okay. in might and of Can lot the offsetting the that like

Joe Bergstein

Yes.

seeing been is and expected there. had driving is at do the integration we’re have a So Rhode is going of in what lower Really, than exit a Island very we’re which we quicker well. the to able Durgesh – lot TSAs outperformance cost

of mindful pace also hiring open there. we positions of which we’re We’re the have the at some

we’re grid. fully looking up that completely from over So staffing and operations to take

would And those driving are Island We be $X.XX the to so Rhode $X.XX are areas expect about to that for the the that year. integration.

As that’s far well. the on and establishment as progress $XXX the million going of extremely the TMO, the

As than forum more company. Really, employee across we over save areas $XXX engagement ideas, O&M we’re a more the totaling by million, I developing driven share we on efficient be that TMO tends achieve initiatives to significant and $XXX implement XXX could million. the as provides noted, for and employees their have the it’s also to

the What business confidence lot So I yet – a is that all that a really point process and the where the achieving even and of is part we on of where cases this. rigor as give can million this dollar I the tell vet to development that that in We we that of as more potentially are. are to we of to amount TMO got needed. brings to $XXX we’re them don’t to through savings, working want confident than enhanced you complete the at

Durgesh Chopra

time. the for Thanks it. Got

Vince Sorgi

Durgesh. Thanks,

Operator

Bank The with of Please ahead. next question comes go from America. Paul Zimbardo

Paul Zimbardo

team. good morning, Thanks. Hi,

in Just to something about of savings be question that Is Or period? those that follow-up TMO that Durgesh the incremental planning the derisking outlook? on more could is last and and quickly. the extending

Joe Bergstein

Yes.

de-risk certainly So for rates. have to offset well. period, period those look, will we it we the whether are the in this planning longer-dated interest I of that items. have still we is confidence through all items give whether through And of items. have whether into that We they see million to the us in $XXX and excess see million $XXX as are come inflation will and go mean, to they those there headwinds execution,

X% to and have to us and longer-term we X% opportunities and achieve So to confidence ideas we of headwinds to persist $XXX on it strategy. the it the execute a just in the and continue see near-term to the on execute bank in gives or those earnings gives should us then the confidence increase, growth,

Vince Sorgi

that, would reiterate I Paul. Yes.

both, shores beyond $XXX million, up it gives right? gives upside the us in potential looking think but us the I Certainly, confidence likely that.

Paul Zimbardo

Very Okay. decently Great. noticed trailing sales months, XX switching down topics. Thank quarter Pennsylvania, the clear. the in then I both weather-normalized volumes you. now Kentucky. And and were

color the Just for the year? any could and give of just on on seeing what you expectations half the second ground you’re

Joe Bergstein

Yes, sure.

the an So that, well, forecast of our total and from that’s to half we of our continue we our normal in believe expect growth XX we second have would – year, points weather. plans continue of forecast. forecast, a From in sale basis we longer-term the growth achievable in be

that expect the conservation that to impact would commodity we’re particularly Some side on a we as I expect be longer-term growth in seeing, decline already anomaly see a shorter-term with significant in the seen becomes year energy been vehicles more and would given prevalent. of usage residential the that commodity prices. residential prices we’ve to has to and due rising electrification this electric near-term

in have usage. than really impacted industrial are Those customers Kentucky more Lower our demand-driven not margins. sales

give there about is factors assumptions. of in think longer-term, our we confidence number us As a that

continue flow see Pennsylvania economic in factors and continued including positive growth. rates GDP to strong and We Kentucky, unemployment

years which broken in back-to-back over plant the As about. well $XX of development That’s a of in includes ground we’ve lot we’re ounce talked EV off of and record billion times Kentucky, of ‘XX. under numerous and Ford That investments ‘XX discussed in initiative, construction. coming battery we’ve each of economic

targeting state of billion $X XXXX. The is for another investment

at development. year period from was per we there years the when to XXXX average in of look to XX So $X prior this XXXX, an billion economic about

place $XX each support growth highlights in strong well. continued of in year see see and great the ‘XX and business economic industrial to we in growth there to is So a of as Kentucky and agricultural sectors do billion ‘XX and to this assumptions. $X But development manufacturing billion continue our projecting

Vince Sorgi

Yes.

We’re not story say our impact than I the is concerned other would with volumes all at weather. on really weather-driven. volume

Paul Zimbardo

for Okay. answer. the Appreciate Great. it. Thanks detailed

Vince Sorgi

Sure.

Operator

Arcaro The Morgan next David question Please from ahead. go Stanley. with comes

David Arcaro

Hi. Good morning.

Vince Sorgi

Good morning. Hi David.

David Arcaro

Hey, Thanks for taking my morning. questions. good

Let’s see.

all and easing thinking longer curious, prices I was at of current pressures term, Kentucky, there? prices PPA lower one just mix just term coming wondering chain for think maybe easing. if CPCN to opportunities industry, we filing module longer to for generation analysis was think lower somewhat all other mix that I starting supply here. the declining in are the I your outlook see if or generation you’re has commodity evolved or just solar PPA costs some the an down, at impact see prices you the costs in the or could

Vince Sorgi

in to to that issues, you Kentucky industry, getting and they deployed issue the I in Look, chain think company-owned permitting make so I as have navigate is than because Yes. is and citing although solutions the can I more think which are abate. issue been to opposed much been easier think our starting an though days have able bigger the is developers the supply we it right, solar far. easier In and across permitting, citing that third-party necessarily our that case,

So, it. as CPCN our a in of know, company-owned and combination you has PPAs

issues there more that higher the we have executability that that see we to get built. push to continue us will We company-owned at actually degree look of them and we those recommending if to can of more PPAs continue confidence a could where

David Arcaro

all in the didn’t I Okay. helpful there. color. Thanks. Got That’s I had. appreciate backdrop it. That’s that

Vince Sorgi

You’re welcome.

Operator

ahead. from Please comes Pourreza Partners. go The with question next Shar Guggenheim

Shar Pourreza

guys. morning Good Hey.

Vince Sorgi

Good morning Shar.

Shar Pourreza

morning. Good

I just the the thanks incremental mean, the want obviously, to the Kentucky on Vince, prepared starting with CPCN in timeline. for color So, filing. – I

to prospects ahead look for we As settlement. the

not conference. You mentioned any August how it XXth about would what renewables? formal like? great. on look be think partial, I Is but to maybe guess could that Just additional gas, the color that the

Vince Sorgi

to itself at various what interveners. with get I positions appreciate, right process just the necessarily But engaged actively you are this don’t is say negotiating call. we around I point will Well, now think look, can want on I into the

the enough their the get significant and to able is for at mentioned, you goes settlement on issues to if the conference case As present Then we parties. a least the consideration. that well, can with be PSC may we XXth, settlement in scheduled stipulation for

say, this are to able the at August. one. But know, early you it’s plan to to as all along. if As indicating tell to we up would forum PSC point, Shar, the hearings scheduled ready been as settlement to are But XXnd I on begin agreement, a of too settlement. we if a course, if the we could defend we’re have become reach for reach of That able the take be we don’t, the filed, to will

we discussions. So, certainly, tell get if at there, this a early open to are we point but little those can to

Shar Pourreza

in that in let on plan, that bit pollution guess off a maybe favor, you worst-case right? issues what to through are do you – chance In little have with space could much you I there CapEx I me a how CPCN, control there frame a So, Vince, avenues, Do where work CapEx me guess just drill right, – side. the could then the T&D the down defending offset is scenario scenario? issues. or you backfilled, in your being see do that of And just either

Vince Sorgi

that, we elsewhere might settlement fleet. different think I either the am would EPS litigating of our whether generation deploy I the other spend case environmental replacement a in building buckets that that on material given or of across we or or key and fully a capital our CapEx, Kentucky it’s targets whether the CapEx plan types or sure would look, have I takeaway expect is not Well, our have impact

a X, SCRs and at in the I outcome, ELG regulations, with that’s to-date, MATS the at Gen all when based consistent Mill incremental and Plan, required would filed Good that the nothing especially look think CPCN, Neighbor on could look X, Creek at been ELG in Creek so. X, also what regs, we significant new that plant on don’t going look were you at to the Mill you Mill the regs the on you the coal retirement. assuming be an But testimony When Shar, result require is we everything If do if tower Creek investments were X. or was which to the cooling

was if retirements, the it outcome. that of think a I full even the So, again, will rejection be which don’t

As we the have include million billion maintenance $X.X of talked the amount doesn’t capital That in going that’s spend on $XXX in of the we have to past, plants forward. even those environmental to CapEx.

am necessarily where different impacts we It be again, not trajectory. might that just So, are EPS the sure spending outcome and CapEx buckets capital. I the

Shar Pourreza

doesn’t out is This And then we are that where going turn timing to So, it to right? worst you recognize case lag, your spending the near-term. have just be ahead the that bucket capital. the divits in are so negative, can immediately scenario, fairly obviously wouldn’t assuming in But this. does incremental go keep and lastly, a no be ones it capital that that in growth earnings you case

Vince Sorgi

recovery. to have require would which continue away under start to Some to that – environmental CapEx case base be would the for does of cost not to recoverable that those point, recovery, And a that your spending that, right to have plants. rate operate would we

Shar Pourreza

great Have it. a you, Appreciate Thank Perfect. weekend. Okay. guys.

Vince Sorgi

Thanks.

Operator

next comes question Please UBS. Orrill ahead. from The with Gregg go

Vince Sorgi

Hey Greg.

Gregg Orrill

in anything to testimony willing to incremental This that the Did intervenors with or positions process kind I learn was was the – line their that expectations. of are share? that you the process may you itself you from Yes. about repetitive. Thanks. know said Hey. be that

Vince Sorgi

the I would testimony was expected. really, Not Gregg. as say

positions expected about talked the we we plan filed. that we think when rolled I out intervener

of would more it in customers cost, pushing it lot our So, hearing with which be complies Again, think association serve cleaner importantly, coal. Louisville interests. we two from the our our and knew with retiring We from cities major knew balances intervenors renewables. our those the But increasingly would safe It SB-X, plan, and Lexington. be coal all against we reliable, environmental we lease energy. to complies a is obligations more are

or So, we the a up process from into lot IRP actually what of were took extremely with proposed. intervene thoughtful we input and coming

we I into we see willing have of couple reach in if are engage the about, here can the discussions next parties, with however, As going settlement on the weeks something to and will in XXnd. the hearings talked beginning we

most, would that if plan So, say, of we with the into not the I as expected that we original filed incorporated all commission. and

Gregg Orrill

Thanks. Alright.

Operator

go next [Operator question with comes Anthony Instructions] Mizuho. Crowdell from ahead. Please The

Anthony Crowdell

Good Vince. morning morning Joe. Good

Vince Sorgi

morning. Good

Anthony Crowdell

would litigated maybe that to Shar’s I it. they stronger just answer wanted one, settlement with and if in Kentucky more Do parties am reach prefer are can of know plants just a question sure to track commission record? buyers the or follow-up closure a not or on I have whatever, they you the a the or fully you given prefer maybe

Vince Sorgi

their don’t I one Anthony, uphold way. whether a obligation going the way or it it’s they of preference obligation lease requirements ensure cost and serve again, honest have or they to SB-X with case settlement to you, that to reliable to other. our that the our in meets a know be are a

as a if in or the in they do as in to front accept on it or settlement or They have evidence settlement certainly I of authority of not Not sure they The going will one case. regardless settlement, take mean our of the it’s to of them. a really not. will which are them, don’t they whether terms them lies what’s they So, but a in take front in whether preference the evidence case. duty their is case. with that to approve have

Anthony Crowdell

Is successful foggy. and in commission I been – the modified Kentucky. past approved in reaching memory my guess Has I has company believe getting little the them. is the settlements those believe I in lastly, just then And Great. not has settlements accurate? that a

Vince Sorgi

have has them At have settlement past, parties So, as in with The you times, filed. material. nothing they they are reach modified commission to times, right. the to our And accepted Generally, I able the other say, cases. slightly been slightly. modified would we them them, to have

Anthony Crowdell

for taking it. questions. Good. Appreciate Thanks my

Vince Sorgi

you, Anthony. Thank

Operator

over question-and-answer our the to to concludes closing turn Sorgi any back Vince for This session. conference remarks. I like would

Vince Sorgi

I forward just everyone so And year. our to second at about progress year-to-date, for the conference. the the to a say joining have we on call. half weekend and will far see the great Feeling you thanks want us good looking of soon next

Operator

The for now you presentation. concluded. conference has attending Thank today’s

You may disconnect. now

PPL (PPL) 4 Aug 232023 Q2 Earnings call transcript