PPL Corporation Reports Third-Quarter 2020 Earnings

ALLENTOWN, Pa., Nov. 5, 2020 /PRNewswire/ -- PPL Corporation (NYSE: PPL) on Thursday (11/5) announced third-quarter 2020 reported earnings (GAAP) of $281 million, or $0.37 per share, compared with third-quarter 2019 reported earnings of $475 million, or $0.65 per share.

Reported earnings for the first nine months of 2020 were $1.18 billion, or $1.53 per share, compared with $1.38 billion, or $1.89 per share, for the first nine months of 2019.

Adjusting for special items, third-quarter 2020 earnings from ongoing operations (non-GAAP) were $450 million, or $0.58 per share, compared to $445 million, or $0.61 per share, a year ago.

Earnings from ongoing operations for the first nine months of 2020 were $1.39 billion, or $1.81 per share, compared to $1.38 billion, or $1.88 per share, for the first nine months of 2019.

"Despite the ongoing challenge of COVID-19, we continue to provide superior customer service and reliability across all of our service territories, to strengthen grid resilience, and to deliver when it matters most for our hospitals, first responders and the many people now working and learning from home," said Vincent Sorgi, PPL president and chief executive officer.

"And while COVID-19 and milder weather through the first half of the year have impacted PPL's ongoing earnings, we are on track to achieve the low end of our earnings guidance and have narrowed our 2020 guidance range to $2.40 to $2.50 per share from the prior range of $2.40 to $2.60 per share."

Looking ahead, the company continues to invest in a sustainable energy future through innovation, network upgrades and support for research and development, including the Low-Carbon Resources Initiative recently announced by the Electric Power Research Institute and Gas Technology Institute. The company also continues to invest in smart grid technology to make its electricity service even more reliable, adding that its PPL Electric Utilities subsidiary in Pennsylvania recently marked 1 million customer outages avoided since 2015 as a result of the robust deployment of automated smart grid technology.

Regarding PPL's U.K. business, the company said its formal process to sell the Western Power Distribution business remains on track. While there can be no assurance of any specific outcome, including whether it will result in the completion of any transaction, the company continues to expect to announce a transaction in the first half of 2021.

Third-Quarter 2020 Earnings Details

As discussed in this news release, reported earnings are calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). "Earnings from ongoing operations" is a non-GAAP financial measure that is adjusted for special items. See the tables at the end of this news release for a reconciliation of reported earnings (net income) to earnings from ongoing operations, including an itemization of special items.



            
              (Dollars in millions, except for per-share          
          
          3rd Quarter                   
      
      Year to Date
    amounts)



                                                                   2020              2019             Change          2020    2019         Change




            Reported earnings                                           $
        281                            $
      475        (41)                 $
      1,179  $
      1,382   (15)
                                                                                                                              %                                         %



            Reported earnings per share                                $
        0.37                           $
      0.65        (43)                  $
      1.53   $
      1.89   (19)
                                                                                                                              %                                         %




                                                                            
          
          3rd Quarter                   
      
      Year to Date



                                                                   2020              2019             Change          2020    2019         Change




            Earnings from ongoing operations                            $
        450                            $
      445           1                  $
      1,391  $
      1,375      1
                                                                                                                              %                                         %



            Earnings from ongoing operations per share                 $
        0.58                           $
      0.61         (5)                  $
      1.81   $
      1.88    (4)
                                                                                                                              %                                         %

Third-Quarter 2020 Earnings by Segment


                                                                 3rd Quarter                       Year to Date




     
                Per share                          2020                   2019         2020                       2019




     
                Reported earnings



     U.K. Regulated                                         $
       0.07                          $
           0.32                $
         0.74    $
       1.07



     Kentucky Regulated                              0.17                           0.20                           0.43             0.50



     Pennsylvania Regulated                          0.17                           0.16                           0.48             0.46



     Corporate and Other                           (0.04)                        (0.03)                        (0.12)          (0.14)




         Total                                              $
       0.37                          $
           0.65                $
         1.53    $
       1.89





                                                                 3rd Quarter                       Year to Date



                                                      2020                   2019         2020                       2019




     
                Special items (expense) benefit



     U.K. Regulated                                       $
       (0.21)                         $
           0.04              $
         (0.26)   $
       0.02



     Kentucky Regulated



     Pennsylvania Regulated



     Corporate and Other                                                                                       (0.02)          (0.01)




     Total                                                $
       (0.21)                         $
           0.04              $
         (0.28)   $
       0.01





                                                                 3rd Quarter                       Year to Date



                                                      2020                   2019         2020                       2019




     
                Earnings from ongoing operations



     U.K. Regulated                                         $
       0.28                          $
           0.28                $
         1.00    $
       1.05



     Kentucky Regulated                              0.17                           0.20                           0.43             0.50



     Pennsylvania Regulated                          0.17                           0.16                           0.48             0.46



     Corporate and Other                           (0.04)                        (0.03)                        (0.10)          (0.13)




         Total                                              $
       0.58                          $
           0.61                $
         1.81    $
       1.88

Key Factors Impacting Earnings

In addition to the segment drivers outlined below, PPL's reported earnings for the third quarter of 2020 included net special-item after-tax charges of $169 million, or $0.21 per share, primarily from the impact of the U.K. tax rate change on deferred taxes, unrealized losses on foreign currency economic hedges and certain impacts related to COVID-19. Reported earnings for the third quarter of 2019 included net special-item after-tax benefits of $30 million, or $0.04 per share, primarily from unrealized gains on foreign currency economic hedges.

PPL's reported earnings for the first nine months of 2020 included net special-item after-tax charges of $212 million, or $0.28 per share, primarily from the impact of the U.K. tax rate change on deferred taxes, unrealized losses on foreign currency economic hedges and certain impacts related to COVID-19. Reported earnings for the first nine months of 2019 included net special-item after-tax benefits of $7 million, or $0.01 per share, primarily from unrealized losses on foreign currency economic hedges.

U.K. Regulated Segment

PPL's U.K. Regulated segment consists of the regulated electricity delivery operations of Western Power Distribution (WPD), which serves Southwest and Central England and South Wales.

Reported earnings in the third quarter of 2020 decreased by $0.25 per share compared with a year ago. Earnings from ongoing operations in the third quarter of 2020 were even compared with a year ago. Factors impacting third-quarter U.K. Regulated segment earnings results included $0.01 per share from the effect of dilution. Excluding dilution, factors driving earnings results included higher foreign currency exchange rates and lower interest expense, partially offset by lower sales volumes primarily due to the impact of COVID-19, lower pension income and higher income taxes.

Reported earnings for the first nine months of 2020 decreased by $0.33 per share compared with a year ago. Earnings from ongoing operations for the first nine months of 2020 decreased by $0.05 per share compared with a year ago. Factors impacting nine-month U.K. Regulated segment earnings results included $0.05 per share from the effect of dilution. Excluding dilution, factors driving earnings results included higher foreign currency exchange rates and higher prices, offset by lower sales volumes primarily due to the impact of COVID-19, lower pension income and higher operation and maintenance expense.

Kentucky Regulated Segment

PPL's Kentucky Regulated segment primarily consists of the regulated electricity and natural gas operations of Louisville Gas and Electric Company and the regulated electricity operations of Kentucky Utilities Company.

Reported earnings and earnings from ongoing operations in the third quarter of 2020 decreased by $0.03 per share compared with a year ago. Factors impacting third-quarter Kentucky Regulated segment earnings results included $0.01 per share from the effect of dilution. Excluding dilution, factors driving earnings results primarily included lower sales volumes primarily due to weather and lower commercial and industrial demand revenue due to the impact of COVID-19.

Reported earnings and earnings from ongoing operations for the first nine months of 2020 decreased by $0.07 per share compared with a year ago. Factors impacting nine-month Kentucky Regulated segment earnings results included $0.02 per share from the effect of dilution. Excluding dilution, factors driving earnings results included lower sales volumes primarily due to weather, lower commercial and industrial demand revenue due to the impact of COVID-19, higher depreciation and higher income taxes due to a tax credit recognized in the second quarter of 2019, partially offset by higher retail rates effective May 1, 2019.

Pennsylvania Regulated Segment

PPL's Pennsylvania Regulated segment consists of the regulated electricity delivery operations of PPL Electric Utilities.

Reported earnings and earnings from ongoing operations in the third quarter of 2020 increased by $0.01 per share compared with a year ago. Factors impacting Pennsylvania Regulated segment earnings results included $0.01 per share from the effect of dilution. Excluding dilution, factors driving earnings results primarily included returns on additional capital investments in transmission.

Reported earnings and earnings from ongoing operations for the first nine months of 2020 increased by $0.02 per share compared with a year ago. Factors impacting nine-month Pennsylvania Regulated segment earnings results included $0.03 per share from the effect of dilution. Excluding dilution, factors driving earnings results primarily included returns on additional capital investments in transmission.

Corporate and Other

PPL's Corporate and Other category primarily includes unallocated corporate-level financing and other costs.

Reported earnings and earnings from ongoing operations in the third quarter of 2020 decreased by $0.01 per share compared with a year ago. Factors driving earnings results primarily included higher income taxes.

Reported earnings for the first nine months of 2020 increased by $0.02 per share compared with a year ago. Earnings from ongoing operations for the first nine months of 2020 increased by $0.03 per share compared with a year ago. Excluding special items, factors driving earnings results primarily included lower overall corporate expenses and other factors.

2020 Earnings Forecast

PPL narrowed its 2020 earnings from ongoing operations forecast range to $2.40 to $2.50 per share from $2.40 to $2.60 per share. This factors in an estimated $0.10 per share unfavorable impact due to COVID-19 through the end of the third quarter.

Earnings from ongoing operations is a non-GAAP measure that could differ from reported earnings due to special items that are, in management's view, non-recurring or otherwise not reflective of the company's ongoing operations. PPL management is not able to forecast whether any of these factors will occur or whether any amounts will be reported for future periods. Therefore, PPL is not able to provide an equivalent GAAP measure for earnings guidance.

See the table at the end of this news release for a complete reconciliation of the earnings forecast.

Headquartered in Allentown, Pennsylvania, PPL Corporation (NYSE: PPL) is one of the largest companies in the U.S. utility sector. PPL's seven high-performing, award-winning utilities serve more than 10 million customers in the U.S. and U.K. With more than 12,000 employees, the company is dedicated to providing exceptional customer service and reliability and delivering superior value for shareowners. To learn more, visit www.pplweb.com.

(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 unless otherwise noted.)

Conference Call and Webcast

PPL invites interested parties to listen to a live Internet webcast of management's teleconference with financial analysts about third-quarter 2020 financial results at 11 a.m. Eastern time on Thursday, Nov. 5. The call will be webcast live, in audio format, together with slides of the presentation. For those who are unable to listen to the live webcast, a replay with slides will be accessible at www.pplweb.com/investors for 90 days after the call. Interested individuals can access the live conference call via telephone at 1-888-346-8683. International participants should call 1-412-902-4270. Participants will need to enter the following "Elite Entry" number to join the conference: 9778163. Callers can access the webcast link at www.pplweb.com/investors under "Events."

Management utilizes "Earnings from Ongoing Operations" as a non-GAAP financial measure that should not be considered as an alternative to reported earnings, or net income, an indicator of operating performance determined in accordance with GAAP. PPL believes that Earnings from Ongoing Operations is useful and meaningful to investors because it provides management's view of PPL's earnings performance as another criterion in making investment decisions. In addition, PPL's management uses Earnings from Ongoing Operations in measuring achievement of certain corporate performance goals, including targets for certain executive incentive compensation. Other companies may use different measures to present financial performance.

Earnings from Ongoing Operations is adjusted for the impact of special items. Special items are presented in the financial tables on an after-tax basis with the related income taxes on special items separately disclosed. Income taxes on special items, when applicable, are calculated based on the statutory tax rate of the entity where the activity is recorded. Special items may include items such as:

    --  Unrealized gains or losses on foreign currency economic hedges (as
        discussed below).
    --  Gains and losses on sales of assets not in the ordinary course of
        business.
    --  Impairment charges.
    --  Significant workforce reduction and other restructuring effects.
    --  Acquisition and divestiture-related adjustments.
    --  Other charges or credits that are, in management's view, non-recurring
        or otherwise not reflective of the company's ongoing operations.

Unrealized gains or losses on foreign currency economic hedges include the changes in fair value of foreign currency contracts used to hedge British-pound-sterling-denominated anticipated earnings. The changes in fair value of these contracts are recognized immediately within GAAP earnings. Management believes that excluding these amounts from Earnings from Ongoing Operations until settlement of the contracts provides a better matching of the financial impacts of those contracts with the economic value of PPL's underlying hedged earnings.

Statements contained in this news release, including statements with respect to future earnings, cash flows, dividends, financing, regulation and corporate strategy, including the process to sell PPL Corporation's U.K. business, 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: the novel coronavirus pandemic or other pandemic health events or other catastrophic events and their effect on financial markets, economic conditions and our businesses; asset or business acquisitions and dispositions, including our ability to successfully execute our plan to divest PPL Corporation's U.K. business within the anticipated timeframe or any particular terms, if at all, or that such plan may not yield the anticipated benefits; market demand for energy in our U.S. service territories; weather conditions affecting customer energy usage and operating costs; 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 our facilities; the length of scheduled and unscheduled outages at our generating plants; environmental conditions and requirements and the related costs of compliance; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; any impact of severe weather on our business; 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 cyberattack, terrorism, or war or other hostilities; British pound sterling to U.S. dollar 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 factors and other matters discussed in PPL Corporation's Form 10-K and other reports on file with the Securities and Exchange Commission.

Note to Editors: Visit our media website at www.pplnewsroom.com for additional news and background about PPL Corporation.


                                                                                     
         
             PPL CORPORATION AND SUBSIDIARIES


                                                                                   
       
         CONDENSED CONSOLIDATED FINANCIAL INFORMATION (1)


                                                                                   
       
         Condensed Consolidated Balance Sheets (Unaudited)


                                                                                         
        
                (Millions of Dollars)




                                                                                                                                               September 30,              December 31,


                                                                                                                                                        2020                       2019

                                                                                                                                                                                   ---


     
                Assets



     Cash and cash equivalents                                                                                                                                 $
        746                           $
        815



     Accounts receivable                                                                                                                                830                                 792



     Unbilled revenues                                                                                                                                  382                                 504



     Fuel, materials and supplies                                                                                                                       351                                 332



     Current price risk management assets                                                                                                               136                                 147



     Other current assets                                                                                                                               250                                 177



     Property, Plant and Equipment



     Regulated utility plant                                                                                                                         45,058                              42,709



     Less: Accumulated depreciation - regulated utility plant                                                                                         8,726                               8,055




       Regulated utility plant, net                                                                                                                  36,332                              34,654




     Non-regulated property, plant and equipment                                                                                                        490                                 357



     Less: Accumulated depreciation - non-regulated property, plant and equipment                                                                        98                                 109




       Non-regulated property, plant and equipment, net                                                                                                 392                                 248



     Construction work in progress                                                                                                                    1,596                               1,580




     Property, Plant and Equipment, net                                                                                                              38,320                              36,482




     Noncurrent regulatory assets                                                                                                                     1,450                               1,492



     Goodwill and other intangibles                                                                                                                   4,046                               3,940



     Pension benefit asset                                                                                                                              972                                 464



     Noncurrent price risk management assets                                                                                                             53                                 149



     Other noncurrent assets                                                                                                                            388                                 386




     
                Total Assets                                                                                                                              $
        47,924                        $
        45,680






     
                Liabilities and Equity



     Short-term debt                                                                                                                                         $
        1,368                         $
        1,151



     Long-term debt due within one year                                                                                                               1,525                               1,172



     Accounts payable                                                                                                                                   864                                 956



     Other current liabilities                                                                                                                        1,685                               1,621



     Long-term debt                                                                                                                                  21,243                              20,721



     Deferred income taxes and investment tax credits                                                                                                 3,691                               3,212



     Accrued pension obligations                                                                                                                        485                                 587



     Asset retirement obligations                                                                                                                       223                                 212



     Noncurrent regulatory liabilities                                                                                                                2,543                               2,572



     Other deferred credits and noncurrent liabilities                                                                                                  611                                 485



     Common stock and additional paid-in capital                                                                                                     12,268                              12,222



     Earnings reinvested                                                                                                                              5,345                               5,127



     Accumulated other comprehensive loss                                                                                                           (3,927)                            (4,358)




     
                Total Liabilities and Equity                                                                                                              $
        47,924                        $
        45,680



              (1)              The Financial Statements in this
                                  news release have been condensed
                                  and summarized for purposes of
                                  this presentation. Please refer
                                  to PPL Corporation's periodic
                                  filings with the Securities and
                                  Exchange Commission for full
                                  financial statements, including
                                  note disclosure.


                                                                                        
       
                PPL CORPORATION AND SUBSIDIARIES


                                                                                    
       
         Condensed Consolidated Statements of Income (Unaudited)


                                                                                      
       
              (Millions of Dollars, except share data)




                                                                                                                              Three Months Ended                      Nine Months Ended September
                                                                                                                 September 30,                                          30,

                                                                                                                                                              ---

                                                                                                           2020                           2019           2020                    2019

                                                                                                                                                                               ---


              
                Operating Revenues                                                                    $
              1,885                            $
       1,933                         $
       5,678  $
      5,815





              
                Operating Expenses



              Operation



                Fuel                                                                                       177                                      194                         478                      556



                Energy purchases                                                                           136                                      150                         470                      538



                Other operation and maintenance                                                            483                                      480                       1,446                    1,452



              Depreciation                                                                                 323                                      306                         959                      890



              Taxes, other than income                                                                      79                                       77                         226                      232




              Total Operating Expenses                                                                   1,198                                    1,207                       3,579                    3,668






              
                Operating Income                                                                687                                      726                       2,099                    2,147





              Other Income (Expense) - net                                                                  52                                      126                         253                      309





              Interest Expense                                                                             249                                      259                         750                      746






              
                Income Before Income Taxes                                                      490                                      593                       1,602                    1,710





              Income Taxes                                                                                 209                                      118                         423                      328






              
                Net Income                                                                              $
              281                              $
       475                         $
       1,179  $
      1,382






              
                Earnings Per Share of Common Stock:



              Net Income Available to PPL Common Shareowners:



                Basic                                                                                             $
              0.37                             $
       0.66                          $
       1.53   $
      1.91



                Diluted                                                                                           $
              0.37                             $
       0.65                          $
       1.53   $
      1.89





              
                Weighted-Average Shares of Common Stock Outstanding (in
    thousands)



                Basic                                                                                  768,786                                  722,259                     768,502                  721,693



                Diluted                                                                                769,660                                  731,151                     769,270                  730,677


                                                                                            
       
                 PPL CORPORATION AND SUBSIDIARIES


                                                                               
              
         Condensed Consolidated Statements of Cash Flows (Unaudited)


                                                                                              
           
                (Millions of Dollars)




                                                                                                                                                                          Nine Months Ended September
                                                                                                                                                                                      30,



                                                                                                                                                               2020                      2019

                                                                                                                                                                                         ---


     
                Cash Flows from Operating Activities



     Net income                                                                                                                                                    $
         1,179                          $
        1,382



     Adjustments to reconcile net income to net cash provided by operating activities



       Depreciation                                                                                                                                            959                                   890



       Amortization                                                                                                                                             47                                    60



       Defined benefit plans - (income) expense                                                                                                              (155)                                (198)



       Deferred income taxes and investment tax credits                                                                                                        355                                   257



       Unrealized (gains) losses on derivatives, and other hedging activities                                                                                   98                                  (18)



       Other                                                                                                                                                    11                                     9



     Change in current assets and current liabilities



       Accounts receivable                                                                                                                                    (40)                                   57



       Accounts payable                                                                                                                                       (35)                                (116)



       Prepayments                                                                                                                                            (53)                                 (53)



       Accrued interest                                                                                                                                         86                                    74



       Unbilled revenues                                                                                                                                       126                                    58



       Regulatory assets and liabilities, net                                                                                                                 (44)                                 (62)



       Other                                                                                                                                                  (17)                                 (91)



     Other operating activities



       Defined benefit plans - funding                                                                                                                       (264)                                (281)



       Other                                                                                                                                                   (6)                                 (80)




      Net cash provided by operating activities                                                                                                              2,247                                 1,888



     
                Cash Flows from Investing Activities



     Expenditures for property, plant and equipment                                                                                                        (2,348)                              (2,197)



     Purchase of investments                                                                                                                                     -                                 (55)



     Proceeds from the sale of investments                                                                                                                       2                                    63



     Other investing activities                                                                                                                               (12)                                  (5)




      Net cash used in investing activities                                                                                                                (2,358)                              (2,194)



     
                Cash Flows from Financing Activities



     Issuance of long-term debt                                                                                                                              1,598                                 1,465



     Retirement of long-term debt                                                                                                                            (975)                                (200)



     Proceeds from project financing                                                                                                                           152



     Issuance of common stock                                                                                                                                   32                                    49



     Payment of common stock dividends                                                                                                                       (956)                                (893)



     Issuance of term loan                                                                                                                                     300



     Net increase (decrease) in short-term debt                                                                                                               (94)                                 (34)



     Other financing activities                                                                                                                               (24)                                 (24)




      Net cash provided by financing activities                                                                                                                 33                                   363




     
                Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash                                                                        11                                  (10)




     
                Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash                                                                       (67)                                   47



     Cash, Cash Equivalents and Restricted Cash at Beginning of Period                                                                                         836                                   643




     Cash, Cash Equivalents and Restricted Cash at End of Period                                                                                                     $
         769                            $
        690






     
                Supplemental Disclosures of Cash Flow Information



     Significant non-cash transactions:



     Accrued expenditures for property, plant and equipment at September 30,                                                                                         $
         279                            $
        363



     Accrued expenditures for intangible assets at September 30,                                                                                                      $
         86                             $
        67


                                                                                                     
     
     Key Indicators (Unaudited)




                                                                                                                                                  Twelve Months Ended


                                                                                                                                     
            
           September 30




     
                Financial                                                                                                        2020                              2019






     Dividends declared per share of common stock                                                                                       $
         1.6575                       $
       1.6475



     Book value per share (1)(2)                                                                                                         $
         17.80                        $
       16.48



     Market price per share (1)                                                                                                          $
         27.21                        $
       31.49



     Dividend yield                                                                                                                 6.1                                 5.2
                                                                                                                                       %                                  %



     Dividend payout ratio (3)                                                                                                     82.5                                67.0
                                                                                                                                       %                                  %



     Dividend payout ratio - earnings from ongoing operations (3)(4)                                                               69.6                                68.6
                                                                                                                                       %                                  %



     Return on common equity                                                                                                       12.1                                15.1
                                                                                                                                       %                                  %



     Return on common equity - earnings from ongoing operations (4)                                                                14.2                                14.7
                                                                                                                                       %                                  %



     Spot rate of U.S. dollar per British pound sterling for Balance Sheet translation (5)                                                $
         1.34                         $
       1.29



     Average rate of U.S. dollar per British pound sterling for Statement of Income translation (6)                                       $
         1.48                         $
       1.33



              (1)   
              End of period.



              (2)              Based on 768,797 and 722,307 shares
                                  of common stock outstanding (in
                                  thousands) at September 30, 2020,
                                  and September 30, 2019.



              (3)              Based on diluted earnings per share.



              (4)              Calculated using earnings from
                                  ongoing operations, which is a non-
                                  GAAP financial measure that includes
                                  adjustments described in the text
                                  and tables of this news release.



              (5)              As of August 31, 2020, and November
                                  30, 2019, as WPD is consolidated on
                                  a one-month lag.



              (6)              Represents a year-to-date average
                                  and includes the impact of foreign
                                  exchange hedges.


                                                            
              
                Operating - Domestic & International Electricity Sales (Unaudited)




                                                               Three Months Ended                                                                            Nine Months Ended
                                                 September 30,                                                                               September 30,



                                                                                                             Percent                                                           Percent



     (GWh)                                 2020                    2019                                       Change                    2020              2019                    Change






     
                PA Regulated Segment



     Retail Delivered                     9,603                              9,535                                                       0.7                       27,138                 27,930   (2.8)
                                                                                                                                          %
                                                                                                                                                                                                   %






     
                KY Regulated Segment



     Retail Delivered                     7,960                              8,587                                                     (7.3)                      21,592                 23,186   (6.9)

                                                                                                                                          %                                                        %



     Wholesale (1)                          162                                198                                                    (18.2)                         392                    983  (60.1)
                                                                                                                                          %                                                        %




       Total                              8,122                              8,785                                                     (7.5)                      21,984                 24,169   (9.0)

                                                                                                                                          %                                                        %






     
                Total U.S.             17,725                             18,319                                                     (3.2)                      49,122                 52,099   (5.7)

                                                                                                                                          %                                                        %





                   U.K. Regulated Segment



     Delivered                           14,906                             16,142                                                     (7.7)                      50,578                 53,965   (6.3)

                                                                                                                                          %                                                        %



              (1)              Represents FERC-regulated
                                  municipal and unregulated off-
                                  system sales. KU's service to
                                  eight municipalities terminated
                                  effective April 30, 2019. KU
                                  continues to provide service to
                                  two municipalities.



     
                Reconciliation of Segment Reported Earnings to Earnings from Ongoing Operations



     
                (After-Tax)



     
                (Unaudited)





     3rd Quarter 2020                                                                                                     
     (millions of dollars)



                                                                                                     U.K.           
      KY        
               PA              Corp.


                                                                                                     Reg.             Reg.                  Reg.            & Other Total

                                                                                                                                                                      ---


     
                Reported Earnings (1)                                                                    $
       55                                 $
      129                $
        135          $
       (38)  $
      281



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges, net of tax of $14                                            (53)                                                                              (53)



     Talen litigation costs, net of tax of $1                                                          -                                                                      (2)      (2)



     COVID-19 impact, net of tax of $1, $0, $0, $0 (2)                                               (3)                                                       (1)            (1)      (5)



     U.K. tax rate change                                                                          (102)                                                                             (102)



     Strategic corporate initiatives, net of tax of $2                                                 -                                                                      (7)      (7)



     
                Total Special Items                                                              (158)                                                       (1)           (10)    (169)




     
                Earnings from Ongoing Operations                                                        $
       213                                 $
      129                $
        136          $
       (28)  $
      450







                                                                                                                           
     (per share - diluted)



                                                                                                     U.K.           
      KY        
               PA              Corp.


                                                                                                     Reg.             Reg.                  Reg.            & Other Total

                                                                                                                                                                      ---


     
                Reported Earnings (1)                                                                  $
       0.07                                $
      0.17               $
        0.17        $
       (0.04) $
      0.37



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges                                                             (0.07)                                                                            (0.07)



     COVID-19 impact (2)                                                                          (0.01)                                                                            (0.01)



     U.K. tax rate change                                                                         (0.13)                                                                            (0.13)



     
                Total Special Items                                                             (0.21)                                                                            (0.21)




     
                Earnings from Ongoing Operations                                                       $
       0.28                                $
      0.17               $
        0.17        $
       (0.04) $
      0.58



              (1)              Reported Earnings represents Net
                                  Income.



              (2)              COVID-19 impact relates to
                                  incremental costs for labor not
                                  chargeable to capital projects due to
                                  U.K. government lockdown
                                  restrictions, outside services,
                                  customer payment processing,
                                  purchases of personal protective
                                  equipment and other safety related
                                  actions associated with the COVID-19
                                  pandemic.



     
                Reconciliation of Segment Reported Earnings to Earnings from Ongoing Operations



     
                (After-Tax)



     
                (Unaudited)





     Year-to-Date September 30, 2020                                                                                      
        (millions of dollars)



                                                                                                     U.K.          
      KY      
            PA                   Corp.


                                                                                                     Reg.            Reg.             Reg.                 & Other Total

                                                                                                                                                                     ---


     
                Reported Earnings (1)                                                                   $
      574                             $
          330                $
          371          $
       (96) $
      1,179



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges, net of tax of $20                                            (76)                                                                               (76)



     Talen litigation costs, net of tax of $2                                                          -                                                                       (6)      (6)



     COVID-19 impact, net of tax of $4, $1, $0, $0 (2)                                              (15)                 (4)                                  (1)              (1)     (21)



     U.K. tax rate change                                                                          (102)                                                                              (102)



     Strategic corporate initiatives, net of tax of $2                                                 -                                                                       (7)      (7)



     
                Total Special Items                                                              (193)                 (4)                                  (1)             (14)    (212)




     
                Earning from Ongoing Operations                                                         $
      767                             $
          334                $
          372          $
       (82) $
      1,391







                                                                                                                           
        (per share - diluted)



                                                                                                     U.K.          
      KY      
            PA                   Corp.


                                                                                                     Reg.            Reg.             Reg.                 & Other Total

                                                                                                                                                                     ---


     
                Reported Earnings (1)                                                                  $
      0.74                            $
          0.43               $
          0.48        $
       (0.12)  $
      1.53



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges                                                             (0.10)                                                                             (0.10)



     Talen litigation costs                                                                            -                                                                    (0.01)   (0.01)



     COVID-19 impact (2)                                                                          (0.02)                                                                             (0.02)



     U.K. tax rate change                                                                         (0.14)                                                                             (0.14)



     Strategic corporate initiatives                                                                   -                                                                    (0.01)   (0.01)



     
                Total Special Items                                                             (0.26)                                                                    (0.02)   (0.28)




     
                Earnings from Ongoing Operations                                                       $
      1.00                            $
          0.43               $
          0.48        $
       (0.10)  $
      1.81



              (1)              Reported Earnings represents
                                  Net Income.



              (2)              COVID-19 impact relates to
                                  incremental costs for labor
                                  not chargeable to capital
                                  projects due to U.K.
                                  government lockdown
                                  restrictions, outside
                                  services, customer payment
                                  processing, purchases of
                                  personal protective equipment
                                  and other safety related
                                  actions associated with the
                                  COVID-19 pandemic.



     
                Reconciliation of Segment Reported Earnings to Earnings from Ongoing Operations



     
                (After-Tax)



     
                (Unaudited)





     3rd Quarter 2019                                                                                                  
       (millions of dollars)



                                                                                                   U.K.          
      KY    
            PA                   Corp.


                                                                                                   Reg.            Reg.           Reg.                 & Other Total

                                                                                                                                                                 ---


     
                Reported Earnings (1)                                                                 $
      236                           $
          150                $
       118        $
       (29)  $
      475



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges, net of tax of ($8)                                           31                                                                          31



     Talen litigation costs, net of tax of $0                                                        -                                                                  (1)   (1)



     
                Total Special Items                                                               31                                                                   (1)    30




     
                Earnings from Ongoing Operations                                                      $
      205                           $
          150                $
       118        $
       (28)  $
      445







                                                                                                                        
       (per share - diluted)



                                                                                                   U.K.          
      KY    
            PA                   Corp.


                                                                                                   Reg.            Reg.           Reg.                 & Other Total

                                                                                                                                                                 ---


     
                Reported Earnings (1)                                                                $
      0.32                          $
          0.20               $
       0.16      $
       (0.03) $
      0.65



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges                                                             0.04                                                                        0.04



     
                Total Special Items                                                             0.04                                                                        0.04




     
                Earnings from Ongoing Operations                                                     $
      0.28                          $
          0.20               $
       0.16      $
       (0.03) $
      0.61



              (1)              Reported Earnings represents
                                                  Net Income.



     
                Reconciliation of Segment Reported Earnings to Earnings from Ongoing Operations



     
                (After-Tax)



     
                (Unaudited)





     Year-to-Date September 30, 2019                                                                                     
       (millions of dollars)



                                                                                                     U.K.          
      KY    
            PA                   Corp.


                                                                                                     Reg.            Reg.           Reg.                 & Other Total

                                                                                                                                                                   ---


     
                Reported Earnings (1)                                                                   $
      784                           $
          364                $
          333           $
       (99) $
      1,382



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges, net of tax of ($4)                                             15                                                                                15



     Talen litigation costs, net of tax of $1                                                          -                                                                     (4)      (4)



     Other, net of tax of $1                                                                         (4)                                                                              (4)



     
                Total Special Items                                                                 11                                                                      (4)        7




     
                Earnings from Ongoing Operations                                                        $
      773                           $
          364                $
          333           $
       (95) $
      1,375







                                                                                                                          
       (per share - diluted)



                                                                                                     U.K.          
      KY    
            PA                   Corp.


                                                                                                     Reg.            Reg.           Reg.                 & Other Total

                                                                                                                                                                   ---


     
                Reported Earnings (1)                                                                  $
      1.07                          $
          0.50               $
          0.46         $
       (0.14)  $
      1.89



     Less: Special Items (expense) benefit:



     Foreign currency economic hedges                                                               0.03                                                                              0.03



     Talen litigation costs                                                                            -                                                                  (0.01)   (0.01)



     Other                                                                                        (0.01)                                                                           (0.01)



     
                Total Special Items                                                               0.02                                                                   (0.01)     0.01




     
                Earnings from Ongoing Operations                                                       $
      1.05                          $
          0.50               $
          0.46         $
       (0.13)  $
      1.88



              (1)              Reported Earnings represents
                                  Net Income.



     
                Reconciliation of PPL's Earnings Forecast


                   After-tax
                    (Unaudited)


                   (per share -
                    diluted)




                                                             
      2020 Forecast Range


                                                Midpoint                      
           Forecast Range



                                                Midpoint                         High            
       Low



                                                  Total                          2020                2020



                   Estimate of
                    Reported
                    Earnings                               $
      2.17                                       $
     2.22         $
     2.12


      Less: Special
       Items (expense)
       benefit: (1)


      Foreign currency
       economic hedges                            (0.10)                                (0.10)                     (0.10)


      Talen litigation
       costs                                      (0.01)                                (0.01)                     (0.01)


      COVID-19 impact
       (2)                                       (0.02)                                (0.02)                     (0.02)


      U.K. tax rate
       change                                     (0.14)                                (0.14)                     (0.14)


      Strategic
       corporate
       initiatives                                (0.01)                                (0.01)                     (0.01)


                   Total Special
                    Items                         (0.28)                                (0.28)                     (0.28)



                   Forecast of
                    Earnings from
                    Ongoing
                    Operations                             $
      2.45                                       $
     2.50         $
     2.40



              (1)              Reflects only special items recorded
                                  through September 30, 2020. PPL is
                                  not able to forecast special items
                                  for future periods.



              (2)              COVID-19 impact relates to
                                  incremental costs for labor not
                                  chargeable to capital projects due
                                  to U.K. government lockdown
                                  restrictions, outside services,
                                  customer payment processing,
                                  purchases of personal protective
                                  equipment and other safety related
                                  actions associated with the COVID-
                                  19 pandemic.



              Contacts:                    For news media: Ryan
                                             Hill, 610-774-4033


                                            For financial analysts:
                                             Andy Ludwig,
                                             610-774-3389

View original content:http://www.prnewswire.com/news-releases/ppl-corporation-reports-third-quarter-2020-earnings-301167098.html

SOURCE PPL Corporation