PPL Corporation (PPL) reported second-quarter 2014 adjusted earnings of 53 cents per share, surpassing the Zacks Consensus Estimate of 44 cents by 20.5%. Quarterly earnings increased 8.2% year over year due to improved performance from Supply, Kentucky Regulated and Pennsylvania Regulated segments. This was partially offset by a lower contribution from the U.K. Regulated segment.
On a GAAP basis, the company posted earnings per share of 34 cents versus 63 cents a year ago. The variance between GAAP and adjusted earnings was due to an 8 cent charge related to a rise in tax valuation allowances and transaction costs for the expected spin-off of PPL Energy Supply, 5 cents for foreign currency-related economic hedges, a charge of 4 cents associated with adjusted energy-related economic activity, and a separation cost of 2 cents.
Total Revenue
In second-quarter 2014, PPL Corporation’s total revenue of $2,874 million missed the Zacks Consensus Estimate of $2,987 million by 3.8%. On a year-over-year basis, the top line decreased 16.7% primarily due to lower unregulated wholesale energy sales.
Operational Update
In the quarter under review, PPL Corporation’s total operating expenses were $2,156 million, down 19.9% year over year mainly owing to lower energy purchase costs.
The company’s quarterly operating income declined 5.3% to $718 million from the prior-year figure of $758 million.
Business Update
PPL Corporation has completed most of the required regulatory filings related to the spin-off of its PPL Energy Supply business. In Jun 2014, the company announced that it will spin off its competitive energy business to create an independent entity, Talen Energy Corporation, in collaboration with an energy and power investment firm Riverstone Holdings LLC. Subject to regulatory approvals, the deal is expected to be completed in the first or second quarter of 2015.
Financial Update
As of Jun 30, 2014, PPL Corporation had cash and cash equivalents of $1.3 billion versus $1.1 billion as of Dec 31, 2013.
Long-term debt as of Jun 30, 2014 was $20.8 billion compared with $20.6 billion at the end of 2013.
Net cash from operating activities in the first half of 2014 was $1.6 billion compared with $0.9 billion in the prior-year period.
Guidance
PPL Corporation increased its 2014 earnings from ongoing operations guidance to $2.20–$2.40 per share, from the previous projection of $2.15–$2.30 per share. The upward revision was primarily due to a rise in electricity delivery revenues under the U.K. Regulated segment and higher transmission margins under Pennsylvania Regulated.
Other Company Releases
American Electric Power Company Inc. (AEP) reported second-quarter 2014 operating earnings of 80 cents per share, beating the Zacks Consensus Estimate of 75 cents by 6.7%.
CMS Energy Corporation (CMS) reported second-quarter 2014 earnings per share of 30 cents, surpassing the Zacks Consensus Estimate of 26 cents by 15.4%.
Wisconsin Energy Corporation (WEC) reported second-quarter 2014 adjusted earnings per share of 59 cents, exceeding the Zacks Consensus Estimate of 52 cents by 13.5%.
Zacks Rank
PPL Corporation currently has a Zacks Rank #3 (Hold).
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