PPL Corporation (PPL) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call highlights strong infrastructure investment and a promising JV with Blackstone, but concerns remain over industrial sales contraction and unclear management responses. The Q&A raised issues about risk allocation and equity needs, with management providing limited clarity. While the dividend growth target and EPS growth are positive, the lack of transparency on key issues tempers enthusiasm. The overall sentiment is neutral, reflecting a balance between positive strategic initiatives and lingering uncertainties.

Key Financial Performance

Second Quarter GAAP Earnings $0.25 per share, a decrease from $0.26 per share in Q2 2024. The decline was primarily due to IT transformation costs, Rhode Island integration costs, timing of certain operating costs, favorable weather in Q2 2024, and higher interest expense.

Second Quarter Earnings from Ongoing Operations $0.32 per share, a $0.06 per share decrease compared to Q2 2024. The decline was due to timing of operating costs, true-ups, favorable weather in Q2 2024, and higher interest expense.

Cumulative Annual O&M Savings $150 million in 2025 compared to the 2021 baseline. This was achieved through investments in technology and efficiency improvements.

Infrastructure Improvements in 2025 Over $4 billion planned to strengthen grid reliability and resiliency, and advance a cleaner energy mix.

Kentucky Segment Results Flat compared to Q2 2024. Lower sales volumes due to favorable weather in Q2 2024 were offset by other insignificant factors.

Pennsylvania Regulated Segment Results Decreased by $0.02 per share compared to Q2 2024. The decrease was driven by higher operating costs and timing of a transmission revenue true-up, partially offset by returns from ongoing capital investments.

Rhode Island Segment Results Decreased by $0.03 per share compared to Q2 2024. Higher distribution revenues from capital investments were offset by timing of operating costs and other insignificant items.

Corporate and Other Results Decreased by $0.01 per share compared to Q2 2024, primarily due to higher interest expense.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

Infrastructure Improvements: PPL is on track to complete over $4 billion in infrastructure improvements in 2025 to enhance grid reliability and resiliency, and advance a cleaner energy mix.

AI Integration: The company is incorporating artificial intelligence across operations to improve efficiency and results.

Joint Venture with Blackstone Infrastructure: PPL formed a joint venture with Blackstone Infrastructure to build new generation in Pennsylvania to serve data centers, with PPL owning 51% of the venture.

Data Center Expansion in Pennsylvania: PPL is strategically focusing on serving data centers, with 14.5 gigawatts of projects in advanced stages and $750 million to $1.25 billion in projected transmission capital investment.

Economic Growth in Kentucky: Kentucky has seen $36 billion in new investments from 2020 to 2024, with 8.5 gigawatts of potential economic development load in PPL's service territories.

Cost Savings: PPL expects to achieve $150 million in annual O&M savings in 2025 compared to the 2021 baseline.

Regulatory Updates: PPL filed a $391 million revenue increase request in Kentucky and plans to file a base rate case in Pennsylvania by year-end.

Cleaner Energy Transition: PPL is advancing a cleaner energy mix with investments in natural gas combined cycle units and renewable energy projects.

Legislative Support for Generation: PPL is advocating for legislation in Pennsylvania to enable utilities to build new generation to meet demand from data centers.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Regulatory and Legislative Risks: The company is awaiting approval for a stipulation agreement with the KPSC for new generation projects in Kentucky. Delays or rejections could impact planned investments and operational timelines. Additionally, the success of proposed legislation in Pennsylvania to enable new generation construction is uncertain, which could hinder the company's ability to meet growing demand.

Economic and Market Risks: The company is heavily reliant on data center expansion in Pennsylvania and Kentucky for growth. Any slowdown in data center development or failure to secure long-term energy service agreements (ESAs) with hyperscalers could significantly impact revenue projections and planned investments.

Operational Risks: The company faces challenges in managing the timing of operating costs, such as tree trimming and other maintenance expenses, which have impacted quarterly earnings. Additionally, the execution of large-scale infrastructure projects, including $20 billion in planned investments through 2028, carries risks of cost overruns and delays.

Financial Risks: Higher interest expenses and the need for additional equity issuance to fund growth could strain financial performance. The company also faces risks related to achieving its projected 6%-8% annual EPS and dividend growth, especially if operational or market challenges arise.

Supply Chain and Resource Adequacy Risks: The company’s ability to meet the growing demand for new generation in Pennsylvania and Kentucky depends on securing natural gas pipeline expansions, turbine manufacturing, and other critical resources. Delays or shortages in these areas could disrupt project timelines and increase costs.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

2025 Earnings Forecast: PPL remains confident in achieving at least the midpoint of its 2025 ongoing earnings forecast of $1.81 per share, with stronger earnings growth expected in the second half of 2025 due to higher returns on capital investments and lower O&M expenses.

Infrastructure Investments: PPL plans to complete over $4 billion in infrastructure improvements in 2025 to enhance grid reliability and resiliency, and advance a cleaner energy mix. Additionally, the company projects $20 billion in infrastructure improvements from 2025 to 2028, resulting in an average annual rate base growth of 9.8%.

Earnings and Dividend Growth: PPL is well-positioned to achieve its projected 6% to 8% annual earnings per share and dividend growth through at least 2028, with EPS growth expected in the top half of that range.

Credit Profile: PPL expects to maintain an excellent credit profile with an FFO to debt ratio of 16% to 18% and a holding company to total debt ratio below 25% throughout its plan.

Kentucky Generation Projects: PPL anticipates approval of two 645-megawatt natural gas combined cycle units and other related projects in Kentucky, with a final decision expected by November 1, 2025. These projects are expected to support economic development and maintain affordability for customers.

Pennsylvania Data Center Strategy: PPL is focusing on serving data centers in Pennsylvania, with 14.5 gigawatts of data center projects in advanced stages of development. The company projects transmission capital investment needs of $750 million to $1.25 billion to meet this demand, with only $400 million included in the current $20 billion capital plan.

Joint Venture with Blackstone Infrastructure: PPL has formed a joint venture with Blackstone Infrastructure to build new generation in Pennsylvania to serve data centers. The joint venture plans to enter into long-term energy services agreements with hyperscalers, with a projected need for 7.5 gigawatts of new generation over the next 5 to 7 years, representing an investment of $17 billion to $19 billion.

Kentucky Economic Development: PPL forecasts 8.5 gigawatts of economic development load potential in Kentucky, including 5.7 gigawatts of potential data center load. The company anticipates additional generation resources may be required if growth continues to materialize.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Dividend Growth: PPL Corporation projects a 6% to 8% annual earnings per share and dividend growth through at least 2028, with EPS growth expected in the top half of that range.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:Can you elaborate on the $17 billion to $19 billion CapEx needs in Pennsylvania and how it could be solved?

A:The $17 billion to $19 billion estimate is based on the 14.5 gigawatts of data center load in advanced stages of development in the service territory. This would shift the territory from a net long to a net short position by 7.5 gigawatts. Solutions could involve contributions from the joint venture (JV), existing independent power producers (IPPs), and PPL Electric Utilities. The JV, in partnership with Blackstone, could build multiple gigawatts of new generation without significantly altering PPL's risk profile.

Q:How will power risk be allocated within the JV while maintaining PPL's risk profile?

A:The JV is designed to operate in a regulated-like manner with long-term contracted generation involving creditworthy counterparties, such as hyperscalers and utilities. Contracts will be reviewed with credit rating agencies to ensure PPL maintains its credit metrics and ratings. The JV's size and risk profile will depend on these agreements.

Q:What are your thoughts on future equity needs and using forwards to de-risk the plan?

A:The ATM program remains a cost-effective equity issuance method. PPL issued $350 million in the first half of the year and is approaching its $400 million to $500 million target for the year. Options will continue to be evaluated to achieve the most efficient cost of capital.

Q:What is your preferred solution to the PJM capacity auction issues?

A:PPL supports legislation in Pennsylvania to enable utilities to build generation to meet resource adequacy shortfalls and has created a JV with Blackstone to address the lack of new generation. The auctions have led to higher customer costs without new generation, and PPL is actively signing new data center loads. The JV aims to address the supply-demand imbalance and expedite generation development.

Q:What is the expected structure and returns for the JV projects?

A:The JV's capital structure will depend on the negotiated ESAs with hyperscalers. It is likely to align with a utility cap structure, with potential back-leverage by Blackstone. Returns are expected to be slightly higher than regulated returns due to marginally higher risk but will aim to maintain a regulated-like profile.

Q:What is the timeline for progress on the JV, including ESAs or turbine order reservations?

A:Progress could occur in 2025 or earlier, depending on discussions with hyperscalers and other parties. PPL and Blackstone are focused on the venture but will only commit financially, such as reserving turbine slots, once further along in ESA negotiations.

Q:How much incremental generation capacity does PPL have in Kentucky, and what are the future needs?

A:With Mill Creek 2 (300 MW) and other projects, PPL has about 1.8 GW of capacity to meet current needs. If additional load materializes, such as the estimated 700 MW, PPL may need to refile for additional capacity, including battery storage.

Q:Why are industrial and residential sales contracting in Pennsylvania and Kentucky?

A:In Pennsylvania, lower sales from a single steel industry customer impacted industrial load. In Kentucky, sales from smaller industrial customers declined, while larger customers remained flat. Cooler weather in May 2025 may have also reduced cooling load.

Q:How does the Kentucky CPCN settlement impact PPL's CapEx plan?

A:The settlement requires replenishing about $500 million in CapEx, which could be covered by additional opportunities in T&D and data center-related investments in Pennsylvania. The midpoint of the data center CapEx range alone could cover this amount.

Q:Why is PPL filing rate cases sooner than expected?

A:PPL has not filed rate cases in several years across its jurisdictions. The filings are driven by the need to recover costs associated with increased CapEx and to implement strategies for grid strengthening and technology improvements.

Q:Is it possible for PPL to develop contract-based generation assets with its Pennsylvania utility as the offtaker?

A:Yes, this is possible, but any agreement would need to comply with affiliate rules and involve an open RFP process.

Q:What is the cost range for new generation builds, and what are current market trends?

A:The cost range is $2,200 to $2,500 per kW. PPL's current projects in Kentucky are being built at around $2,200 per kW, but greenfield projects could be more expensive.

Q:Why was the battery storage project deferred in Kentucky?

A:The battery storage project was deferred as part of a settlement agreement to keep Mill Creek 2 open longer. PPL retains the ability to refile for the battery project if load growth materializes.

Q:Review of Unclear Management Responses

A:Management avoided directly answering questions about how gas exposure would be hedged in the Blackstone JV and provided limited details on the timing and specifics of ESA negotiations. Additionally, responses about the broader industrial sales contraction lacked clarity, attributing it to isolated customer issues without addressing potential systemic factors.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

PPL Transcript

Propel Holdings Inc. (PRL:CA) Q3 2025 Earnings Call Transcript

Unknown11-5

The earnings call summary indicates strong financial performance with significant revenue and net income growth, especially in Canada and the UK. However, the Q&A reveals concerns about Q4 origination activity, slower growth due to economic challenges, and unclear guidance on new initiatives. The potential share buyback and strategic investments are positive, but the lack of clear timelines and cautious growth guidance balance the overall sentiment to neutral.

PPL Corporation (PPL) Q3 2025 Earnings Call Transcript

Positive11-5

The earnings call reveals strong financial performance with increased earnings in Pennsylvania and Rhode Island. The strategic focus on infrastructure investments and partnerships, notably with Blackstone, is promising. Despite some uncertainties in the Q&A, such as the denial of tracking mechanisms and confidentiality on data center details, the overall guidance remains optimistic. The 2025 earnings forecast and dividend growth projections are positive indicators, suggesting a favorable market reaction. However, the lack of specific guidance on certain projects tempers the sentiment slightly, preventing a 'Strong positive' rating.

PPL Corporation (PPL) Q2 2025 Earnings Call Transcript

Unknown7-31

PPL Corporation (PPL) Q1 2025 Earnings Call Transcript

Positive4-30

PPL's earnings call shows strong financial performance with EPS growth and a positive outlook. The company is managing supply chain challenges and regulatory risks effectively, while maintaining a robust dividend growth target. The Q&A suggests stability in operations and effective cost management. Although there are regulatory and operational risks, the overall sentiment is positive, with the potential for stock price increase driven by financial strength and strategic initiatives like the ATM program.

PPL Report

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.