01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
PPL Corporation's 2021 combined Form 10-K, filed February 18, 2022, reports consolidated net loss of $1.48 billiona, or $(1.93) per basic share, driven by a $1.61 billion pre-tax loss on the sale of its U.K. utility business, completed June 14, 2021, which generated net proceeds of $10.4 billion.
Income from continuing operations fell to $18 millionb from $640 million in 2020, largely due to a $395 million loss on extinguishment of debt, a $383 million U.K. tax-rate-change deferred tax expense, and higher interest expense. Earnings from Ongoing Operations, a non-GAAP measure, rose to $806 million from $774 million, with Kentucky Regulated at $465 million and Pennsylvania Regulated at $465 million. The company's regulated operations remain the core of the business.
Kentucky Regulated net income was $468 millionc and Pennsylvania Regulated net income was $445 million. Operating revenues were $5.78 billion. The KPSC approved a rate increase of $207 million, effective July 1, 2021, with a four-year base-rate stay-out through July 1, 2025.
A PPL Electric transmission ROE settlement reduced 2021 revenue by $78 milliond, with a base ROE of 9.90% stepping up to 10.00% from June 2023. PPL is reshaping its portfolio with a pending $3.8 billion acquisition of Narragansett Electric, funded by U.K. sale proceeds, with a Massachusetts appeal still pending. The company repurchased 34.8 million shares for $1.0 billion under a $3 billion authorization.
Capital expenditures are projected at about $2.0 billion for 2022 and $3.7 to $4.2 billion for 2023 through 2024. Total long-term debt was $11.14 billion at year-end, down from $14.69 billion, after $3.88 billion of debt tender and redemption activity.
02—Key points
Key Highlights
- Net loss of $1.48 billion ($1.93 per basic share) in 2021, versus net income of $1.47 billion in 2020, reflecting a $1.50 billion loss from discontinued operations tied to the U.K. utility sale.
- Sale of the U.K. utility business completed June 14, 2021, for cash proceeds of $10.7 billion and net proceeds of $10.4 billion, with a pre-tax loss on sale of $1.6 billion.
- Earnings from Ongoing Operations rose to $806 million from $774 million; Kentucky Regulated contributed $465 million and Pennsylvania Regulated $465 million.
- Kentucky Regulated net income was $468 million, and KPSC orders provided annual revenue increases of $207 million with a stay-out through July 1, 2025.
- Pending $3.8 billion acquisition of Narragansett Electric, subject to remaining regulatory approvals including a pending Massachusetts Supreme Judicial Court stay request.
- Repurchased 34.8 million shares for $1.0 billion under a $3 billion authorization; quarterly dividend of 20.00 cents per share announced for April 2022, down from 41.50 cents declared in November 2021.
- Long-term debt fell to $11.14 billion from $14.69 billion after $3.88 billion of tender and redemption activity, with a $395 million loss on extinguishment recorded in 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.84B$5.43B | +7.5% |
| Operating Income | $1.42B$1.59B | −10.2% |
| Interest Expense | $918.00M$634.00M | +44.8% |
| Net Income | -$1.48B$1.47B | −200.7% |
| EPS (Basic) | $-1.93$1.91 | −201.0% |
| EPS (Diluted) | $-1.93$1.91 | −201.0% |
| Shares Outstanding (Basic) | 762.90M768.59M | −0.7% |
| Shares Outstanding (Diluted) | 764.82M769.38M | −0.6% |
05—Questions
Frequently Asked Questions
Why did PPL report a net loss in 2021 when it earned $1.47 billion in 2020?
The loss was driven by discontinued operations, where the U.K. utility business sale produced a $1.61 billion pre-tax loss and $1.50 billion of loss from discontinued operations after taxes. Continuing operations were also weaker, with income falling to $18 million from $640 million, due to the $395 million debt extinguishment loss, a $383 million deferred tax expense from the U.K. corporation tax rate increase, and higher interest expense.
What is the status of the Narragansett Electric acquisition?
PPL agreed to acquire Narragansett Electric for approximately $3.8 billion in cash, to be funded from U.K. sale proceeds. Several approvals have been received, including FERC and FCC consents and a Massachusetts DPU waiver, but the Massachusetts waiver is subject to a pending appeal and the Massachusetts Attorney General has moved for a stay. PPL anticipated a final Rhode Island order by March 2022.
How much did PPL's regulated utilities contribute to earnings?
Kentucky Regulated net income was $468 million and Pennsylvania Regulated net income was $445 million in 2021. On an Earnings from Ongoing Operations basis, each segment contributed $465 million, with Corporate and Other at negative $124 million.
What capital spending does PPL expect?
PPL expects capital expenditures of approximately $2.0 billion in 2022, including about $1.0 billion at PPL Electric and about $0.4 billion each at KU and LG&E. For 2023 through 2024 it anticipates $3.7 to $4.2 billion, excluding Narragansett Electric, which will be added after the acquisition closes.
What changed in PPL Electric's transmission return on equity?
Under a settlement approved by FERC on November 5, 2021, PPL Electric's base ROE is 9.90% through May 31, 2022, rising to 9.95% from June 1, 2022 and 10.00% from June 1, 2023. PPL recorded a $78 million revenue reduction in 2021, and $73 million of revenue will be refunded to customers from January through May 2022.
06—Continue