Tax Act impacts PPL earnings, stock issuance

ALLENTOWN, Pa. - In a conference call with analysts, PPL Corporation said that the new U.S. tax reform legislation should result in lower rates for customers going forward, even though the initial impact on the company's earnings is negative.

The company delivered at the high end of its earnings from ongoing operations forecast range, or $2.25 per share, due primarily to lower operation and maintenance expense in the U.S. and U.K. and favorable U.S. weather in the fourth quarter.

"Once again in 2017, we demonstrated strong execution across our U.S. and U.K. businesses," said William H. Spence, PPL's chairman, president and CEO. "We delivered on our earnings commitments, invested $3.5 billion in infrastructure improvements, provided award-winning customer service, strengthened reliability for our customers and increased our dividend for shareowners."

PPL also provided an update on its planned infrastructure investment, announcing that it plans to invest more than $15 billion across its U.S. and U.K. businesses from 2018 to 2022 to make the grid smarter, more reliable and more resilient and to advance a cleaner energy future.

For full year 2017 PPL reported GAAP (Generally Accepted Accounting Principles) earnings of $1.13 billion, or $1.64 per share, compared to $1.90 billion, or $2.79 per share in 2016. The results for 2017 reflect a loss of $321 million, or $0.47 per share, due to the effects of U.S. tax reform legislation enacted in December 2017.  In 2018, the company expects tax reform to negatively impact earnings by about 3 cents per share and result in reduced utility cash flows.  To mitigate the effects on the company’s credit ratings, PPL plans to issue about $1 billion in equity in 2018.


In the company’s Pennsylvania Regulated segment, reported earnings from ongoing operations increased by $0.02 per share compared with a year ago, driven primarily by lower operations and maintenance expense and higher transmission earnings.. The company attributed those conditions to capital investments it's made. Partially offsetting the gain were a lower zonal peak load billing factor, lower distribution sales volumes due to unfavorable weather, and higher depreciation expense and higher interest expense.


The Kentucky Regulated segment, which 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 a decrease in earnings of $0.16 per share in 2017 compared to 2016. The results were driven primarily by lower sales volume due to unfavorable weather and higher depreciation expense, partially offset by higher base electricity and gas rates effective July 1, 2017.

United Kingdom

In PPL’s U.K. Regulated segment reported earnings for 2017 decreased by $0.88 per share compared with a year ago. This was driven primarily by lower foreign currency exchange rates, lower sales volumes, higher interest expense and higher depreciation expense, partially offset by higher prices from an April 1, 2016 price increase, lower operation and maintenance expense, and lower income taxes.

Looking Forward

Spence said the company is well-positioned to deliver competitive earnings growth and dividends as it continues to invest in the future. In addition, he said the company has updated its long-range business plans to reflect the impact of U.S. tax reform on PPL's earnings and cash flow.

Based on these updates, PPL announced a 2018 earnings forecast range of $2.20 to $2.40 per share. The company set a new growth projection of 5 to 6 percent compound annual earnings growth per share from 2018 through 2020.

Backed by the expected growth of its utilities, PPL is increasing its common stock dividend to $0.41 per share on a quarterly basis, raising the annualized dividend about 4 percent from $1.58 per share to $1.64 per share. The increased dividend will be payable April 2, 22018 to shareowners of record as of March 9, 2018.

Headquartered in Allentown, PPL Corporation's (NYSE: PPL) seven utilities serve 10 million customers in the U.S. and United Kingdom and has about 13,000 employees in both countries.

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