PPL (PPL) Q4 2014 earnings summary

Executive summary

• 2014 net income attributable to shareowners was $1.737B; ongoing earnings were $1.629B, at the top of the forecast range. Regulated utilities generated 88% of ongoing earnings.

• Strategic focus shifted toward regulated utilities through the planned spin-off of competitive generation assets into Talen Energy; closing was expected in Q2 2015, with shareowners slated to own 65% of Talen Energy.

• Regulated businesses planned nearly $18B of infrastructure investment over five years, with projected combined rate-base growth of 7% annually and ongoing earnings growth of 4%–6% through at least 2017.

Financial highlights

• Operating revenue was $11.499B vs. $11.721B in 2013; operating income rose to $3.272B from $2.278B.

• Net income attributable to shareowners was $1.737B vs. $1.130B; diluted EPS was $2.61 vs. $1.76. Ongoing earnings were $1.629B vs. $1.591B, with diluted ongoing EPS flat at $2.45.

• 2014 included a $237M pretax ($137M after-tax) gain on the Montana hydro sale; 2013 included a $697M pretax ($413M after-tax) Colstrip lease-termination charge.

• Operating cash flow was $3.403B; capital expenditures were $4.090B. Year-end assets were $48.864B and long-term debt was $20.391B.

Outlook and guidance

• 2015 regulated-utility ongoing EPS forecast was $2.05–$2.25, midpoint $2.15, vs. adjusted 2014 regulated-utility ongoing EPS of $2.03.

• 2015 earnings were projected higher in U.K. and Kentucky regulated operations, lower in Pennsylvania regulated operations; no Supply segment forecast was issued ahead of the spin-off.

• Earnings growth of 4%–6% annually through at least 2017 was expected, supported by 7% annual regulated rate-base growth and $75M in targeted annual corporate support-cost savings after the spin-off.

• Projected 2015–2019 capital expenditures totaled $19.668B, including $5.711B for Pennsylvania regulated operations and $5.489B for Kentucky regulated operations.