PPL (PPL) Q4 2011 earnings summary

Executive summary

• FY11 results reflected a much larger regulated business after the April 2011 WPD Midlands acquisition and the full-year contribution from the 2010 Kentucky utility acquisition; regulated operations represented ~70% of assets.

• Revenue and operating income rose sharply, while competitive Supply results faced lower margins and nuclear outages; reported earnings also included notable acquisition, tax and litigation items.

Financial highlights

• FY11 operating revenue was $12.737B vs. $8.521B in 2010; operating income was $3.101B vs. $1.866B.

• Net income attributable to shareholders was $1.495B vs. $938M; basic EPS was $2.71 and diluted EPS $2.70, vs. $2.17 for both in 2010.

• Operating cash flow was $2.507B, up $474M YoY; cash and cash equivalents ended 2011 at $1.202B.

Outlook and guidance

• 2012 Kentucky Regulated earnings are projected lower, mainly from higher O&M and depreciation, partly offset by higher margins; Kentucky base-rate increases generally cannot take effect before Jan. 1, 2013.

• 2012 International Regulated earnings are projected higher, led by a full year of WPD Midlands and higher delivery revenue; higher taxes, O&M, depreciation, financing costs and less favorable currency partly offset gains.

• 2012 Pennsylvania Regulated and Supply earnings are projected lower, excluding special items; higher delivery revenue partly offsets Pennsylvania cost increases, while Supply faces weaker energy margins and higher fuel costs.

• FY12-FY16 capital expenditure projections total $18.7B; 2012 funding is expected from cash, operations and debt and common-stock issuance.