01—Abstract
Summary
Summary of the 10-K filed February 24, 2014. Cited figures are marked; the original filing is the authoritative source.
PPL Corporation, an energy and utility holding company headquartered in Allentown, Pennsylvania, reported 2013 operating revenues of $11.86 billiona and net income attributable to PPL shareowners of $1.13 billion, compared with $1.53 billion in 2012.
Diluted EPS was $1.76b, down from $2.60 in 2012. The filing attributes the decline mainly to a $697 million pre-tax ($413 million after-tax) charge for terminating the Colstrip operating lease ahead of the planned sale of Montana hydroelectric facilities, along with lower baseload energy prices at the Supply segment. Excluding special items, the filing projects lower earnings in 2014 than 2013, with the U.K.
Regulated segment roughly flat and Pennsylvania Regulated higher. The U.K. Regulated segment, operated through Western Power Distribution, contributed $922 millionc of net income, or 82% of the total for 2013 per the filing, and the filing says PPL projects nearly all of its 2014 earnings will come from rate-regulated businesses.
Kentucky Regulated net income rose to $307 million and Pennsylvania Regulated to $209 milliond, while the Supply segment swung to a loss of $272 million. Total 2014-2018 capital expenditure projections are $19.1 billion, including $2.4 billion of environmental spending.
The filing also covers a pending $900 million sale of 633 MW of Montana hydroelectric facilities to NorthWestern, expected to close no earlier than the second half of 2014, and U.K. distribution revenue reductions of £5 per residential customer. Quarterly dividends were $0.3675 per share in 2013, and the board declared $0.3725 for April 2014.
02—Key points
Key Highlights
- Net income attributable to PPL shareowners was $1.13 billion in 2013, down from $1.53 billion in 2012; diluted EPS was $1.76 versus $2.60.
- A $697 million pre-tax ($413 million after-tax) charge for terminating the Colstrip operating lease in December 2013 drove the Supply segment loss of $272 million.
- The U.K. Regulated segment earned $922 million, which the filing says is 82% of 2013 net income attributable to PPL shareowners.
- Operating revenues were $11.86 billion, with the U.K. Regulated segment contributing $2.40 billion and the Kentucky Regulated segment $3.0 billion.
- Capital expenditure projections for 2014 through 2018 total $19.1 billion, including $2.4 billion for environmental compliance.
- The planned $900 million sale of 633 MW of Montana hydroelectric facilities to NorthWestern is not expected to close before the second half of 2014.
- Dividends declared per share rose to $1.47 in 2013 from $1.44 in 2012, and a 37.25-cent quarterly dividend was declared for April 2014.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 24, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $7.26B$12.13B | −40.1% |
| Operating Income | $2.56B$3.03B | −15.4% |
| Interest Expense | $778.00M$951.00M | −18.2% |
| Net Income | $1.13B$1.53B | −26.0% |
| EPS (Basic) | $1.85$2.61 | −29.1% |
| EPS (Diluted) | $1.76$2.60 | −32.3% |
| Shares Outstanding (Basic) | 608.98M580.28M | +4.9% |
| Shares Outstanding (Diluted) | 663.07M581.63M | +14.0% |
05—Questions
Frequently Asked Questions
Why did PPL's earnings fall sharply in 2013?
The filing attributes the decline mainly to a $697 million pre-tax ($413 million after-tax) charge for terminating the Colstrip operating lease, recorded in the Supply segment, and to lower baseload energy prices. The company reports that excluding special items, its Supply segment pre-tax earnings decreased due to lower baseload energy prices and higher depreciation.
What is the outlook for PPL's 2014 earnings?
Excluding special items, PPL expects lower earnings in 2014 than in 2013. The U.K. Regulated segment is projected to be comparable, Kentucky Regulated lower, Pennsylvania Regulated higher, and the Supply segment lower due to lower energy and capacity prices.
How significant is the U.K. business to PPL?
The U.K. Regulated segment, operated through Western Power Distribution, generated $922 million of 2013 net income attributable to PPL shareowners, which the filing states is 82% of the total. The filing also notes that a majority of PPL's cash flows and reported earnings are currently generated by U.K. operations, which exposes it to pound sterling exchange rate risk.
What major transactions are pending?
PPL Montana agreed in September 2013 to sell 633 MW of hydroelectric facilities to NorthWestern for $900 million in cash, subject to regulatory approvals, with closing not expected before the second half of 2014. PPL also expects to receive $978 million from settling the 2011 Purchase Contracts in 2014.
What are the main regulatory and environmental risks?
The filing highlights EPA rules including MATS, pending CCR and effluent limitation regulations, and possible greenhouse gas regulation of existing power plants. LG&E and KU expect roughly $2.2 billion of environmental capital investment over five years, and PPL Energy Supply's Corette plant was impaired by $65 million with planned long-term reserve status from April 2015.
06—Continue