01—Abstract
Summary
Summary of the 10-K filed February 17, 2023. Cited figures are marked; the original filing is the authoritative source.
PPL Corporation's 2022 combined Form 10-K, filed February 17, 2023, covers PPL and three subsidiaries: PPL Electric Utilities, Louisville Gas and Electric Company, and Kentucky Utilities Company.
PPL reported 2022 net income of $756 milliona, compared with a net loss of $1,480 million in 2021, which included discontinued operations from the U.K. utility business sold in June 2021. Income from continuing operations rose to $714 million from $18 million, and PPL's Earnings from Ongoing Operations were $1,041 million versus $806 million. Operating revenues were $7,902 million, up from $5,783 million, largely due to the May 25, 2022 acquisition of Narragansett Electric (now Rhode Island Energy), which contributed $1,038 million of revenue and $1.59 billion of goodwill assigned across segments.
The filing describes PPL as a utility holding company with three reportable segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company projects capital expenditures of $8,517 millionb for 2023 through 2025, with the largest share in transmission, electric distribution, and generation. Total long-term debt was $13,243 million at year-end 2022, and the Acquisition was funded with the U.K. sale proceeds.
Pending matters include a KPSC filing for two 621 MW natural gas combined-cycle units and retirement schedules for several coal units, a Talen-related adversary proceeding seeking recovery of about $900 millionc in alleged fraudulent transfers, and a Pennsylvania Public Utility Commission investigation into billing issues. For investors, the key points are the step-up in regulated earnings from the Rhode Island acquisition, the growing capital plan, and the legal and regulatory uncertainties noted in the filing, which management says it cannot predict.
02—Key points
Key Highlights
- Net income of $756 million for 2022, versus a net loss of $1,480 million in 2021 that included discontinued U.K. utility operations.
- Earnings from Ongoing Operations of $1,041 million, up from $806 million, with Kentucky Regulated at $515 million, Pennsylvania Regulated at $516 million, and Rhode Island Regulated at $65 million.
- Operating revenues of $7,902 million, up from $5,783 million, including $1,038 million from Rhode Island Energy following the May 25, 2022 acquisition of Narragansett Electric.
- Acquisition of Narragansett Electric for about $3.8 billion in cash plus $1.5 billion of assumed long-term debt, producing $1.6 billion of goodwill.
- Projected capital expenditures of $8,517 million for 2023 through 2025, including $2,386 million in 2023.
- Long-term debt of $13,243 million at December 31, 2022, and total credit facility capacity of $3,750 million with $850 million borrowed.
- Quarterly common dividend increased to 24.00 cents per share, announced February 17, 2023, with the 2022 dividend declared at $0.875 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 17, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $7.79B$5.84B | +33.4% |
| Operating Income | $1.37B$1.42B | −3.5% |
| Interest Expense | $513.00M$918.00M | −44.1% |
| Net Income | $756.00M-$1.48B | +151.1% |
| EPS (Basic) | $1.03$-1.93 | +153.4% |
| EPS (Diluted) | $1.02$-1.93 | +152.8% |
| Shares Outstanding (Basic) | 736.03M762.90M | −3.5% |
| Shares Outstanding (Diluted) | 736.90M764.82M | −3.7% |
05—Questions
Frequently Asked Questions
How did PPL's 2022 earnings compare with 2021?
Net income was $756 million in 2022, compared with a net loss of $1,480 million in 2021. The 2021 loss reflected discontinued operations from the U.K. utility business and a $395 million loss on debt extinguishment. Earnings from Ongoing Operations, which excludes special items, rose to $1,041 million from $806 million.
What did PPL pay for Narragansett Electric, and how is it reflected in results?
PPL paid about $3.8 billion in cash, funded with proceeds from the 2021 U.K. utility sale, and assumed about $1.5 billion of long-term debt. The acquisition added $1,038 million of operating revenue and $1.59 billion of goodwill. Rhode Island Regulated reported a 2022 net loss of $44 million, which included $109 million of after-tax acquisition integration special items.
What major capital investments are planned?
PPL projects total capital expenditures of $8,517 million for 2023 through 2025: $2,386 million in 2023, $2,693 million in 2024, and $3,438 million in 2025. Transmission facilities total $2,962 million and electric distribution facilities $2,734 million. LG&E and KU also filed with the KPSC for two 621 MW natural gas combined-cycle plants, a 125 MW battery storage facility, and solar projects.
What significant legal or regulatory matters are pending?
The Talen Energy-related Adversary Proceeding, filed in the U.S. Bankruptcy Court for the Southern District of Texas, seeks recovery of an alleged fraudulent transfer of about $900 million. PPL believes it has meritorious defenses but says it cannot predict the outcome and that losses could be material. The Pennsylvania Public Utility Commission opened an investigation on January 31, 2023 into estimated bills and customer service issues. The filing notes that the outcomes of these matters cannot be predicted.
What is the dividend and capital return picture?
PPL declared a 22.50 cent quarterly dividend in November 2022 and announced a 24.00 cent quarterly dividend on February 17, 2023, payable April 3, 2023. Common dividends were $0.875 per share declared for 2022. No share repurchases occurred in 2022, although the Board had authorized up to $3 billion of repurchases in August 2021, of which about $1 billion was used in 2021.
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