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PPL Corp (PPL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 ongoing EPS was $0.32, below the S&P Global consensus of $0.39; GAAP EPS was $0.25. Revenue of $2.025B exceeded consensus $1.986B, while margins compressed on timing, weather, and higher interest expense .*
  • Management reaffirmed 2025 ongoing EPS guidance of $1.75–$1.87 with confidence in achieving at least the midpoint ($1.81), and reiterated 6%–8% annual EPS and dividend growth through at least 2028, targeting the top half of the EPS range .
  • Strategic catalysts: joint venture with Blackstone Infrastructure to build contracted gas-fired generation to serve data centers in Pennsylvania, and a constructive Kentucky CPCN stipulation supporting new NGCCs and a Ghent Unit 2 SCR, with potential battery storage deferred but reserving the right to refile as needed .
  • Narrative for H2 2025: stronger earnings driven by higher returns on capital investments, formula rates/AFUDC, and lower O&M (including the timing of tree trimming), while maintaining strong credit metrics (FFO/debt 16%–18%) .

What Went Well and What Went Wrong

What Went Well

  • Ongoing execution: “We anticipate strong earnings growth in the second half of 2025, driven by higher returns on capital investments and lower O&M year over year” .
  • Strategic progress: JV with Blackstone aims to deliver long-term contracted generation for hyperscalers with regulated‑like risk, avoiding merchant exposure; PPL owns 51% .
  • Regulatory momentum: Kentucky CPCN stipulation supports two 645 MW NGCCs, Ghent Unit 2 SCR, life extension of Mill Creek 2, AFUDC on NGCCs, and trackers/ERCs to reduce regulatory lag .

What Went Wrong

  • Earnings headwinds: Ongoing EPS fell to $0.32 from $0.38 YoY, driven by timing of operating cost true‑ups ($0.03), weather versus Q2 2024 ($0.01), and higher interest expense (~$0.01) .
  • Segment softness: Pennsylvania ongoing EPS -$0.02 YoY on higher O&M and a transmission revenue true‑up; Rhode Island -$0.03 YoY on higher O&M timing .
  • Margin compression: EBIT margin and net income margin declined versus Q1 2025, reflecting cost timing and interest expense; management flagged H2 rebound as O&M normalizes .*

Financial Results

Core Financials vs Prior Periods and Consensus

MetricQ2 2024Q1 2025Q2 2025 ActualQ2 2025 Consensus*Surprise
Revenue ($USD Billions)$1.881 $2.504 $2.025 $1.986*+$0.039B
GAAP Diluted EPS ($)$0.26 $0.56 $0.25 N/AN/A
Ongoing EPS ($)$0.38 $0.60 $0.32 $0.386*-$0.066

Notes: Consensus values marked with * are from S&P Global.

Margins

MetricQ2 2024Q1 2025Q2 2025
EBIT Margin %22.97%*27.40%*21.23%*
Net Income Margin %10.10%*16.53%*9.04%*

Notes: Values retrieved from S&P Global.*

Segment EPS per Share (Reported vs Ongoing)

SegmentReported EPS Q2 2024Reported EPS Q2 2025Ongoing EPS Q2 2024Ongoing EPS Q2 2025
Kentucky Regulated$0.18 $0.17 $0.18 $0.18
Pennsylvania Regulated$0.21 $0.19 $0.21 $0.19
Rhode Island Regulated$0.01 $(0.02) $0.04 $0.01
Corporate & Other$(0.14) $(0.09) $(0.05) $(0.06)
Total$0.26 $0.25 $0.38 $0.32

KPIs – Electricity Sales (GWh), Quarterly

KPIQ2 2024Q2 2025
PA Regulated: Retail Delivered8,587 8,426
KY Regulated: Retail Delivered7,158 7,043
KY Regulated: Wholesale130 268
KY Regulated: Total7,288 7,311
Total PA + KY15,875 15,737

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ongoing EPSFY 2025$1.75–$1.87 (midpoint $1.81) $1.75–$1.87 (midpoint $1.81); expect ≥ midpoint Maintained
EPS Growth Target2025–20286%–8%; target top half 6%–8%; target top half Maintained
Dividend Growth Target2025–20286%–8% annual growth 6%–8% annual growth Maintained
Quarterly DividendQ3 2025$0.2725 (raised ~6% on Feb 13, 2025) $0.2725 (declared Aug 22, 2025) Maintained
Special Items impactFY 2025$(0.04) in forecast through Q1 $(0.12) in forecast through Q2 Lower GAAP (more specials)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24)Previous Mentions (Q1’25)Current Period (Q2’25)Trend
AI/Data centers strategyEmphasized enabling fast interconnections; 56–60 GW interest; 9–11 GW advanced; $400M PA transmission in plan Advanced-stage projects reached ~11 GW; ESAs with minimum load commitments; PA queue >50 GW 14.5 GW advanced projects; JV with Blackstone; 7.5 GW generation need, $17–$19B investment discussed Accelerating demand and solutions
Regulatory (PA/KY/RI)Kentucky IRP/CPCN plan includes NGCCs + batteries; PA DSIC cap request; RI ISR and base rate timing KY CPCN filed; PA DSIC cap to 7.5%; RI ISR approvals ~$400M KY CPCN stipulation; PA base rate likely by year-end; RI settlement $155M hold harmless credits in winters 2026–2027 Constructive progress
Resource adequacy/PJMAdvocated PA utility-owned generation/PPAs to address shortfalls House Bill 1272 introduced; utilities to build/own generation Capacity auction concerns; legislative push (HB1272/SB897) to enable utility gen; JV as direct solution Intensifying focus
O&M/Tree trimming timingVegetation spend elevated in late 2024; customer affordability focus Tree trimming timing drove seasonal cost; H2 lower O&M expected Q2 timing of O&M and true‑ups weighed on EPS; H2 O&M lower anticipated Seasonal timing normalizing
Equity/creditPlan needs $2.5B equity through 2028; ATM/hybrids considered; maintain FFO/debt 16%–18% $400–$500M equity in 2025; ATM with forwards ~$350M YTD via ATM; total $400–$500M in 2025; preserve credit metrics Executing as planned
Tariffs/supply chainLimited exposure; domestic sourcing; labor heavy cost base Battery projects manageable; vendor engagement; potential domestic build Not a major theme in Q2 remarksStable/managed

Management Commentary

  • “We anticipate strong earnings growth in the second half of 2025, driven by higher returns on capital investments and lower O&M year over year” — CEO Vincent Sorgi .
  • “We are at the forefront of innovation, integrating cutting-edge technology across all aspects of our business to deliver superior outcomes for our customers and shareowners” — CEO .
  • On JV risk profile: “Regulated-like risk profiles that do not expose the companies to merchant energy and capacity price volatility” — JV release .
  • “Our Pennsylvania subsidiary… can connect data centers as quickly as developers can build them… we now have about 14.5 GW of data center projects in advanced stages” — CEO .
  • CFO on Q2 EPS: decline “primarily due to timing of certain operating costs and true-ups… favorable weather in Q2 2024 and higher interest expense” — CFO Joe Bergstein .

Q&A Highlights

  • Data center generation need: Estimated 7.5 GW over 5–7 years in PPL’s PA territory (total $17–$19B at $2,200–$2,500/kW), to be met by IPPs, JV, and potentially PPL Electric Utilities if legislation passes .
  • JV economics and financing: Target regulated-like returns, likely utility-like capitalization at JV with potential back leverage at Blackstone; avoid merchant risk .
  • Kentucky CPCN stipulation: Life extension of Mill Creek 2 to 2031 replaces Cane Run battery request (without prejudice to refile), supports NGCCs and Ghent 2 SCR; battery seen as fastest dispatchable-like resource if load materializes .
  • Capacity auctions: Concern that higher capacity costs increase bills without new generation; advocating legislative solutions and JV to build new dispatchable resources .
  • Equity plan: ~$400–$500M 2025 via ATM; maintain strong credit metrics and optionality on hybrids .

Estimates Context

  • Q2 2025 EPS: $0.32 vs consensus $0.386; a miss driven by timing of O&M and true‑ups, less favorable weather vs Q2 2024, and higher interest expense — estimates likely to temper near-term EPS trajectory but H2 plan supports ≥ midpoint .*
  • Q2 2025 Revenue: $2.025B vs consensus $1.986B; a modest beat consistent with higher operating revenues YoY .*
  • Q1 2025 context: EPS $0.60 vs consensus $0.540 (beat); revenue $2.504B vs consensus $2.319B (beat), reinforcing H1 seasoning and H2 uplift narrative .*
  • Estimate depth: Q2 2025 EPS had 10 estimates; revenue had 2 estimates, suggesting limited Street granularity on revenue drivers for a T&D-heavy utility.*

Notes: Consensus values marked with * are from S&P Global.

Key Takeaways for Investors

  • Mixed print: modest revenue beat but EPS miss; key drivers (cost timing, weather, interest expense) are transitory, with H2 earnings uplift expected from returns on elevated capex and lower O&M — maintain bias to ≥ midpoint of FY guidance .
  • Structural growth: $20B 2025–2028 capex with ~9.8% annual rate base growth, underpinned by PA/KY data center demand and grid modernization; long-duration runway intact .
  • Strategic optionality: Blackstone JV provides contracted generation pathway without merchant risk; legislative tailwinds in PA could further expand utility/regulatory solutions .
  • Regulatory set-up: Kentucky CPCN stipulation reduces lag (AFUDC, trackers), supports NGCCs/Ghent SCR; PA base rate filing expected by year-end; RI settlement improves affordability with winter credits .
  • Balance sheet discipline: Executing $400–$500M equity for 2025 via ATM while preserving FFO/debt 16%–18%; strong credit profile supports plan execution .
  • Trading lens: Watch for H2 delivery against ≥ midpoint guidance, CPCN approval milestones (KY), progress on ESAs under JV, and PA legislative developments — potential catalysts to multiple expansion and estimate revisions .
  • Risk checks: Capacity auction pass-throughs, interest costs, and regulatory timing remain watch items, but management’s cost-savings cadence and regulated-like JV construct mitigate downside .

Additional data and reconciliations:

  • Reported vs ongoing EPS Q2 2025: GAAP $0.25; ongoing $0.32; special items $0.07/share (IT transformation, RI integration, TSA adjustments, office relocation, etc.) .
  • Operating revenues and income (Q2 2025): Revenue $2.025B; Operating income $406M; Interest expense $199M; Net income $183M .

Notes: Consensus/estimates marked with * are values retrieved from S&P Global.