PPL Corporation

Good morning and welcome to the PPL Corporation third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining the PPL Corporation conference call on third quarter 2023 financial results. We provided slides for this presentation on the investor section of our website. We begin today's call with updates from Vince Sorge, PPL President and CEO, and Joe Bergstein, Chief Financial Officer, and conclude with a Q&A session following our prepared remarks. Before we get started, I'll draw your attention to slide two and a brief cautionary statement. Our presentation today contains forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL's SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward-looking statements. We'll also refer to non-GAAP measures, including earnings from ongoing operations or ongoing earnings on this call. For reconciliations to the comparable GAAP measures, please refer to the appendix. I'll now turn the call over to Vince.

Thank you, Andy, and good morning, everyone. Welcome to our third quarter investor update. Let's start with an overview of our financial results on slide four. Today we announced third quarter reported earnings of 31 cents per share. Adjusting for special items, third quarter earnings from ongoing operations were 43 cents per share, compared with 41 cents per share a year ago. These results position us well to deliver our 2023 earnings guidance. despite the significant impact of mild weather and storms in the first half of the year. As Joe will cover in his financial review, we've been successful in overcoming these headwinds through effective regulatory mechanisms, our continued focus on operating efficiently, and outperformance in several other areas. The team has done an outstanding job in keeping us on track to deliver our 2023 financial objectives while providing energy safely and reliably to our customers. As a result of our progress through Q3, we have narrowed our 2023 ongoing earnings forecast range to $1.55 to $1.60 per share, with the midpoint of $1.58 per share unchanged. As we look to close out the year in strong fashion, we also remain on track to invest nearly $2.5 billion to modernize the grid, strengthen grid resiliency, and advance a cleaner energy mix. In addition, we're on pace to achieve our targeted $50 to $60 million in O&M efficiencies this year. Looking forward, we've reaffirmed our projected earnings per share and dividend growth rates of 6% to 8% through at least 2026, as we remain confident in our low-risk business plan. This growth is supported by our $12 billion capital investment plan and targeted O&M savings of at least $175 million by 2026 to advance a reliable, resilient, affordable, and cleaner energy future. We expect to fund this growth without the need for equity issuances through at least 2026, while maintaining superior credit metrics and one of the strongest balance sheets in our sector. Turning to slide five and some operational highlights, we continue to deliver top-quartile reliability and advance industry-leading grid innovation that drives efficiency and improves service to our customers as we execute our utility of the future strategy. In support of this work, The Department of Energy has selected PPL Electric Utilities and Rhode Island Energy to receive a combined $100 million in federal funding for planned smart grid projects in our service territories. The projects that were selected by the DOE were generally included in our current capital plan. However, these grants will certainly help to support affordability for our customers, which we remain keenly focused on. Our Pennsylvania project will extend PPL Electric's self-healing smart grid already one of the most sophisticated energy networks in the nation, to further enhance grid reliability and resiliency. Meanwhile, our Rhode Island project will accelerate Rhode Island Energy's investment in grid resilience and smart grid capabilities to support the state's leading clean energy goals. The process to receive this funding through the IIJA was highly competitive. PPL was one of only a few companies to be selected for multiple awards in this initial round of funding. As we focus on creating the utilities of the future that are agile, innovative, and technology enabled, we continue to be recognized for our leadership in the smart grid space. During the third quarter, PPL Electric Utilities received two additional awards for innovative, industry-leading work that has helped improve the safety, reliability, and affordability of electricity delivered to our more than 1.5 million customers in Pennsylvania. Moving to Rhode Island, We remain focused on supporting Rhode Island's clean energy goals and bringing more affordable offshore wind opportunities to the state. On October 13th, we issued an RFP to procure 1,200 megawatts of offshore wind to help power the state's energy needs. The RFP was the state's largest ever renewable energy solicitation and was issued just a week after Connecticut, Massachusetts, and Rhode Island signed a memorandum of understanding. paving the way for a potential multi-state selection of offshore wind opportunities. Each state is conducting procurements in a similar timeframe, and we're hopeful that our larger procurement, a streamlined application process, flexibility on contract durations, and the potential for multi-state coordination will provide better economies of scale for developers and reasonable pricing options for our customers. Bids are due by January 31st. with any resulting selection expected next summer. Any PPAs agreed to by Rhode Island Energy would be subject to review and approval by the Rhode Island Public Utilities Commission. Lastly on this slide, LG&E began contract negotiations a few weeks ago for a labor contract that expires on November 10th. The contract covers more than 600 of our employees in Kentucky. For decades, we have successfully worked together with our unions in Kentucky to reach agreements. and we're optimistic we can continue that success. We look forward to continued progress over the coming days and weeks to achieve an outcome that balances the needs of our employees and our customers. And importantly, the company has completed its preparedness plan to ensure we can continue to deliver safe and reliable service to our customers should negotiations break down. Moving to slide six for a couple of key regulatory updates. We remain focused on advancing our generation investment plan as we seek to replace up to 1,500 megawatts of aging coal generation with an affordable, reliable, and cleaner energy mix by 2028. We continue to believe that our plan represents the best path forward for our Kentucky customers. As proposed, it would replace several 1970s-era coal units with over 1,200 megawatts of new combined cycle natural gas generation nearly 1,000 megawatts of solar generation, and 125 megawatts of battery storage. In addition, it would establish more than a dozen new energy efficiency programs. The Kentucky Public Service Commission conducted public hearings in August, followed by post-hearing briefs in September. The hearings, as well as the intervener briefs, have largely been as expected. And looking forward, we continue to expect a decision from the Commission by November 6th. Shifting to Rhode Island, In late September, we received regulatory approval to deploy advanced metering functionality statewide as we lay the foundation for a smarter, more resilient, reliable, and dynamic grid that supports the state's leading climate goals. As part of its unanimous decision, the Rhode Island Public Utilities Commission authorized capital investments of up to $153 million for this initiative. We're pleased with the outcome of the Commission's decision for this important project. Advanced metering functionality, which we've deployed in Pennsylvania and are currently deploying in Kentucky, is a key step in modernizing our energy networks. And as we've seen in our other service territories, it delivers significant benefits for our customers. We expect to begin installing the digital meters in late 2024 and to complete the deployment over the next three years, capitalizing on our experience in both Pennsylvania and Kentucky. These investments will also be largely recoverable through the annual ISR process in Rhode Island. That concludes my operational update. I'll now turn the call over to Joe for the financial update.