Good morning and welcome to the PPL Corporation Third Quarter Earnings Conference. All participants will be in listen-only mode. Should [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. I would now like to turn the conference over to Andy Ludwig, Vice President Investor Relations. Please go ahead.

Thank you. Good morning, everyone and thank you for joining the PPL conference call on third quarter 2021 financial results. We provided slides for this presentation in our earnings release issued this morning on the Investor section of our website. Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement. Our presentation and earnings release, which we'll discuss during today's call, contain forward-looking statements about future operating results and other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward-looking statements. We will also refer to non-GAAP measures, including earnings from ongoing operations and adjusted gross margins on this call. For reconciliations to the comparable GAAP measures, please refer to the appendix. Participating on our call this morning are Vincent Sorgi, PPL President and CEO, Joe Bergstein, Chief Financial Officer, and Greg Dudkin, Chief Operating Officer. With that, I will now turn the call over to Vincent.

Thank you, Andy. And good morning, everyone. We appreciate you joining us for our Third Quarter investor update. Moving to Slide 3 in the agenda for today's call, I'll begin this morning with an update on the progress we continue to make in advancing our strategic repositioning. I'll also share some current initiatives underway to advance PPL 's Clean Energy strategy and provide a brief operational and regulatory update. Joe will then provide a financial update, including a detailed review of Third Quarter financial results. And as always, we'll leave ample time for your questions. Turning to slide 4, We continue to make excellent progress on our key initiatives to strategically reposition PPL for long-term growth and success. In September, we received FERC approval for our planned acquisition of Narragansett Electric. With FERC' s approval, we now have 4 of the 5 approvals necessary to close on the transaction. We continue to make progress on securing the final approval from the Rhode Island Division of Public Utilities and Carriers. In its procedural schedule, the division has established February 25th as the target date for a decision. This would put PPL and National Grid on a path to close on the transaction by March of next year, as originally expected. We've included a slide with the divisions procedural schedule in the appendix of today's presentation. As we pursue the final regulatory approval, we continue working closely with National Grid on planning to ensure a smooth transition for Rhode Island customers and Narragansett employees upon closing. Together, we've collaborated through 30 functional integration teams to plan and execute a safe, effective, and minimally disruptive transition of the Rhode Island operations. These teams have built robust day 1 integration plans to execute on identified business requirements, drafted transition service agreements that will be…

Thanks, Vince. And good morning, everyone. Let's turn to Slide 9. Today, we announce third quarter reported earnings of $0.27 per share. This reflects special items of $0.09 per share primarily related to losses on the early extinguishment of debt associated with the recapitalization of the Balance Sheet, post the sale of WPD. Adjusting for special items, third quarter earnings from ongoing operations were $0.36 per share compared with $0.30 per share a year ago. Our third quarter results bring our year-to-date earnings from ongoing operations to $0.83 per share. Details on our year-to-date earnings are available in the appendix to today's presentation. Now let's move to Slide 10 for a more detailed look at our third quarter segment results. Our Pennsylvania regulated segment recorded $0.16 per share for the third quarter, which was $0.01 per share lower compared to a year ago. The decrease was primarily due to higher operations and maintenance expense, primarily related to higher storm and support costs and a reserve recorded for a reduction to the return on equity in the transmission formula rate. Partially offsetting these items were returns on additional capital investments in transmission. Turning to our Kentucky regulated segment, third quarter results were $0.21 per share, up $0.04 per share increase compared to Q3 2020 results. The increase was primarily driven by higher base retail rates effective July 1 and lower interest expense, primarily due to interest costs that were previously allocated to the Kentucky Regulated segment. Partially offsetting this increase was higher operation and maintenance expense related to support and generation-related cost factors. They were not individually significant. Results at corporate and other were a loss of $0.01 per share, which was $0.03 higher compared to a year ago. The increase was primarily driven by lower interest expense due to less outstanding long-term holding Company debt. And that concludes my prepared remarks, and I'll turn the call back over to Vince.

Thank you, Joe. In summary, as we work to complete our strategic repositioning, I remain incredibly excited about our future. We continue to build momentum throughout 2021 in executing our strategic objectives. And I'm confident we will emerge from our transformation, a leading U.S. energy Company, stronger, more agile, and better positioned to advance the Clean Energy transition to deliver utilities of the future and to drive long-term value for all of our stakeholders. With that operator, let's open the call for questions.

We will not begin the question-and-answer session. [Operator Instructions]. If you are using a speakerphone, please pick up your handset before pressing the keys. [Operators Instructions]. Our first question today comes from Shar Pourreza with Guggenheim Partners.

Hey, guys.

Hey, Shar.

Just a couple of questions here. Vince, how should we think about the allocation of that $1 billion in new CapEx both geographic and shaping over time? And will you be able to guide on Rhode Island CapEx right out of the gate in February and March when the deal closes or there'll need to be a bit more time to get your plan in motion?

I'll have Greg talk about where we're seeing the $1 billion that we've identified today. And again, we continue to review the business plans. And so, as we put on the slide, we think that'll come in at about 1 to 2 billion as we finalized the plans. On the Rhode Island side, Shar, I think you're hitting the nail right on the head. That's an area where I think we'll have a pretty good sense on what the opportunity is, in Rhode Island as we think about the Clean Energy transition on what we've done in Pennsylvania, bringing that grid to Rhode Island to support the renewable ambitions within the state. Of course, there's going to be offshore wind opportunities that we need to get rid -- ready for, as well as significant [Indiscernible] in the state. There's also a lot of transmission opportunity. So there -- I think we'll have a pretty good sense of what needs to be done. The question will be, it will have to work with the state on how quickly they want to get to the new Clean Energy transition; especially keeping -- just keeping rates in check, which of course we do across all of our jurisdictions. So, I think it's probably a little premature to provide too much detail on that right now. But qualitatively, I would say, I think we'll have a pretty good sense of the opportunity when it happens, we'll need to engage with the state. But Greg, do you want to touch on the billion that we've already identified?

Sure, Vince. From a high level that billing is split between Pennsylvania and Kentucky and the focus is on grid modernization, automation, and resiliency, hardening projects, as well as projects to enable more DER and renewables on our grid. I would also add that we anticipate technology-related spend within this period of time. As far as the shaping, I would say, at a high level at this point we're still working through the client on that but it's probably going to be fairly level across the next 5 years.

Got it. That's helpful. And then just lastly, the board has obviously allocated significant amount of the remaining WPD proceeds to buybacks and obviously you're talking about another $1 billion of CapEx from 2 utilities, you got incremental upside from Rhode Island. Could we just get a refresh on how you and the board are thinking through maybe the remaining unallocated portion between more CapEx, your buybacks in light of where the stock trades? And are organic moves still a possibility, Vince? What's the timing for how you and the board may allocate more? Thanks again.

Yes, Shar. Did you say organic or inorganic moves?

Well, I guess, inorganic.

Yeah. I just want to make sure I heard your question properly. So, I would say in general as we think about the capital allocation [Indiscernible] investing in the utilities is our priority and our bias, especially as we try to make sure that we're delivering [Indiscernible] that our customers need as we look at the transition to a Clean Energy future. So being able to fund that in a way that requires little to no equity issuances over the foreseeable future is incredibly important to us which is really how Joe and the team identify the $3.5 billion of debt that we bought down with part of the proceeds and getting the Balance Sheet in that position where we can fund not only this billion, but even incremental capital to your point with Rhode Island and other potential opportunities that we may identify without issuing equity. So that's the first component of that. In terms of the stock buybacks themselves, again, we're looking at that versus other potential opportunities. And you mentioned inorganic. I talked about last quarter; we don't need M&A to hit the growth profile that we've communicated. Of course, we will be opportunistic as we always have been with M&A. But our -- I would say our focus in the M&A area right now, Shar, is to close Rhode Island, get the integration underway, and really ensure that we have a smooth transition there. And then as we talked about before, working with the state on the pace of change for the Clean Energy transition up in Rhode Island and then making sure that we're supporting that with the capital and investment plans. So, our focus, I would say, on M&A right now is squarely on that. But as I always say, you never say never. If there's an opportunity that presents itself that we think would create incremental shareholder value above our organic growth plans, certainly it's something that we would consider as we've done in the past; but it's not the core of our strategy right now.

That's perfect. I appreciate it. It seems like you guys are tightening up that gap between rate base and earnings. So, it's good. Thank you. Appreciate it.

Sure. Thanks.

Our next question comes from Paul Zimbardo with Bank of America.

Good morning.

Good morning.

Thank you for the time, I have a two-part question, just to clarify Slide 5. Should we be adjusting utility CapEx category for effectively 50% equity content or it's a way that you built some Balance Sheet strength? And also, is it also effectively a toggle that for every incremental dollar of utility CapEx that reduces buyback capacity?

Yes. Joe, why don't you tell him about how we're thinking about that.

Yeah. So, Paul, clearly what we announced today was a billion dollars of total buybacks by year-end and at least a billion dollars of incremental capital investments. And we've identified some more potential beyond that, but we need to continue the analysis and work through the business plans. The range that you have, you see on that slide, are really just to provide some context to you on the remaining proceeds in those buckets. And so, as we think about cash and the use of that cash, there's other considerations that we have think about, you know credit, timing of that spend, regulatory mechanisms, broader efficiencies across the largely domestic platform, and all of that will go into our full plan. So, I think once -- we'll be in a better position post the close of Narragansett to discuss the additional details and including how we deploy that remaining proceeds and what falls into each of those pockets.

Okay. I understand. And then you've mentioned the incremental capitals, primarily transmission and distribution. Just wondering if you could frame the Kentucky generation opportunities through 2026 and 2031 from the priority base case you present.

[Indiscernible] so for -- through 2028, I would say, certainly through '24 which is our next projected coal plant retirement. We don't think we require significant, if any, replacement generation for our '24 retirements. So really the reserve margin starts to tighten when we start to get into the 2028 timeframe. And so, as you can see in the -- on Slide 18, which is the IRP megawatts that we're talking about under the base case and then the high case. Over the 15-year period, which is really where again, it's post 28 when you see more significant retirements and then ultimate replacement for the increase in energy that we're projecting, both in the base case and then in the high case. We're thinking in the base case, there's probably around $3 billion up investment opportunity over that 15-year period. Significantly more in the high case, obviously, you're seeing 5600 additional megawatts significantly more renewables in that case, and so the investment opportunity under high case would be -- call it around $10 billion plus or minus, so that's a significant opportunity. As we -- I should clarify, that like the Ford announcement, and some of the other announcements I talked about we're not necessarily in the base case. They don't necessarily get us to the high case. As again, the high case has EV assumptions, and electric heat assumptions, very high gas prices over that sustained period. Obviously, all of that is still to be determined but I would say the positive thing with the Ford and the other announcements I talked about, at least on the major new customer additions were certainly trending towards the high case versus the base case. So, the investment opportunity calls it $3 to $10 billion depending on the cases. Not a significant amount in the next 5 years. You might start to see some in 2026 as we plan for the 2028 retirees. But it's really, I would say, just following that time period is when you'll see more significant investment.

Thank you. That's very helpful. Plus, the FERC comment. Looking forward to seeing you all virtually next week, hopefully in person next year. Thanks again.

Great. Thanks.

Our next question comes from Durgesh Chopra with Evercore ISI.

Hey, Durgesh.

Hey, Vince. Good morning. I just had one question. All of the other stuff has been asked and you answered those. Just previously you've highlighted a potential perspective range of EPS growth trajectory, comparing PPL's forward-looking findings growth rate to peers. Obviously now, you've talked about the additional equity share buybacks, the CapEx plan is higher. Can you share your thoughts there on what my bet trajectory, the range that EPS growth might fall under?

Yes. I would just reiterate, I think, what we've talked about in the past. We've said we expect to have a competitive EPS growth rate off of our '22 midpoint when we come out with that, and as you know, that range is anywhere from 4% to 8%. But I would say most of the ranges within that are even tighter in the 5% to 7% range, and so we would expect to be solidly in that range.

Okay. Thanks. And just really one quick one. After this announcement of the $500 million in additional share buy back and the $1 billion in CapEx, we're left with roughly $1 billion in proceeds that still need to be deployed. Is that accurate?

Yes, so we increased the share repurchases from $500 to a billion. And so, it's about 0.5 billion lefts, right?

Going with a billion dollars of capital, your kind of around a billion dollars [Indiscernible] numbers through cash. But we'll continue to evaluate [Indiscernible] use of those billion dollars and the [Indiscernible] more details when we -- after the close of Narragansett.

Excellent. Thanks Vince and Joe. Appreciate the time.

Sure.

Sure, thanks.

Our next question comes from Paul Patterson with Glenrock Associates.

Hey.

Way and combining that with underground high-voltage transmission. And so, for us, it's not about the size of the investment, it's for -- it's really a way for us to be part of an innovative project that hopefully could cut through some of those issues that we all know plague many transmission projects. And so, we're really trying to --

I hear you on that. In fact, I'm similar familiar with the project and it does sound -- it sounds awesome, frankly, in terms of just what you talked about. It sounds great. There are 2 issues that I want to ask you about, in terms of the project. And that is there are these 2 complaints that they filed at FERC regarding, I think one is the PJM Interconnection. In other words, just what you said, the project sounds fascinating. It's merchant, it's underground, it's the right-of-way, it's everything you are talking about. What they seem to be complaining though about, is that PJM has this system impact study stuff that's delaying stuff, as you know. They're saying it could be up to three years. The other one is this capacity complaint that they've got, about the -- how they're going to be treated an external resource in the [Indiscernible] market. And so, my question I guess is, with respect to those 2, because I assume you guys have done due diligence even though it may not be that bigger of a project. And so, you guys might have -- I would assume you guys have more insight than I do about what you think -- how you think those 2 complaints are going to unfold because it seems like they do have the potential to have a significant impact on the economics of the project or at least at the timing of the project. And I've been following this case. I mean they've had testimony go back and forth and what have you. And I just was wondering if you guys had any insight in terms of how you guys are viewing those complaints regarding those 2 issues: the system impact study, and I think it's facility study, 1, and 2. this external capacity treatment that they're seeking to get.

Greg, I don't know if there's anything specific regarding those issues that you're willing and able to talk to?

Really not too much to talk about. But I guess from a high level, Paul, for us to or for the United States to really get to being much greener and really reducing the carbon footprint, we're going to need a lot more transmission. So, I think these issues brought up on SOO Green project are probably going to be beyond just this project. Those are the types of issues that need to be resolved if we are to really expand the use of renewables and ultimately expand our transmission system.

Okay. Fair enough. I -- this sounds like an exciting project. I thought I'd be able to pick your brain a little bit. I appreciate the time, and congratulations on the ROE settlement. That seems like a pretty good deal you guys negotiated there in the Pennsylvania transmission ROE. That's it for me. Thanks so much.

Okay. Thanks, Paul.

Our next question comes from Ryan Levine with Citi.

Good morning.

Good morning.

What's the average price of the $500 million share buyback to-date that you're able to buy in those shares?

Under 29 bucks?

All right.

Yup.

And then as you're looking out at -- you mentioned that you're moving towards the high case in Kentucky. From what you're seeing, is there a way to kind of quantify the load upside from additional development within your service territory? And are you seeing any early indications of what post COVID load patterns are in your footprint that may inform some of those fees?

Yes. So on -- just in general on the load, I think what we're seeing [Indiscernible] PA we're seeing kind of C&I come back to pretty close to pre - COVID levels. They are a little bit short as you -- we have slides in the deck that show the load and that's really -- things that you're seeing across the country. So, retail and hospitality that those have not fully come back yet. We're seeing the same thing down in Kentucky on that with the commercial. Industrial in Kentucky of course, just a lot of the shutdown issues that we had during COVID, that's all recovered. But with the chip shortages and some of the supply chain issues, we're seeing some of the factories being turned back. So that's why a little bit short on the C&I side. And then on the residential, we're just seeing in Pennsylvania a lot more workers are still working from home and what we're seeing in Kentucky. So, for the most part, Kentucky is back to pre - COVID. Again, it's a little bit positive, but in PA, we're still quite a bit positive. So, we'll -- we're still waiting to see how much of that remains permanent, Ryan, in terms of load, in terms -- with hybrid work schedules and just more flexibility that companies are providing their workforce. So, I guess our expectation would be that residential stays slightly above, but that remains to be seen. And then in terms of the announcements that we talked about, probably a little premature to talk about the low, the exact load impacts on those and when they will cut, and when that will show up. We really in the case of Ford plant, the final designs need to be prepared and released. So, I think while certainly qualitatively this is positive for our jurisdiction in the state in general, and I think it will be it'll actually fuel, additional announcements and opportunities for folks that want to come into the state. Again, we're on top of the E3 energy strategy that the governor announced, I think this all goes very well for economic development opportunities within Kentucky, which I think qualitatively is good for our jurisdictions in our service areas. But putting that into, say, a megawatt of load, I think it's a little premature for that. But as soon as we can do that, we will get that disclosure out.

Appreciate the color. And then last one for me, you mentioned some of the -- you highlighted some of the supply chain issues. They're impacting some of the manufacturers in your service territory. But in terms of kind of implementation of the acceleration of CapEx, are you seeing any limitations from supply chain that could kind of pace there or change the pace of implementation of your -- some of your spending?

Yes. I'll let Greg talk about that.

Yeah, we're starting to see some extended lead times on some select material and equipment, but we've been able across our footprint, to extend the supplier base and mitigate that to some degree. But we're really not experiencing significant delays in current projects, and don't expect an impact on our increased capital plan, going forward.

Appreciate the color.

Thanks, Ryan.

Our next question comes from Steve Fleishman with Wolfe Research.

Hello. Good morning. Hey, thanks. So, couple of questions. First of all, you obviously did not win [Indiscernible] nor do I know if you even bid for it. So just in terms of your thinking on assets, could you maybe -- it's just a good -- the way to maybe talk about why that wasn't something that you were interested in.

Yes, Steve, I don't think it's appropriate to talk about specific M&A opportunities in the market or even hypotheticals for that matter. So, I would just say, on the M&A front, we're focused on Rhode Island and getting that.

Okay.

Not only to complete it but then, the transition to happen in very smooth way and then get off the TSAs and get fully under our ownership. So that's where our focus is.

Okay. Secondly, just going back to that Slide 5 and just to make sure I understand what you're showing here. The additional utility CapEx, that's an asset number, that's not an equity number. Only half of that would be equity roughly. I'm not sure you're actually using all $10.4 billion of cash proceeds when you had the stuff up then or am I -- how do I interpret? Because you're kind of mixing asset with equity?

I'll let Joe talk to that.

I understand the premise of your question, Steve and it's similar to Paul's question earlier. And -- but you need to -- I think you need to factor in the full transition of the Company and the Balance Sheet after the sale of WPD. So, you think about the use of proceeds, you need -- I think you need to consider the financial strength that provides the ability to execute a more robust business plan without any equity needs. A returning capital to share owners with the buyback. Of course, the acquisition of Narragansett. But really at this point, we've not finalized our business plans. So, in the interim, we're trying to provide you some broad buckets of the opportunities that we have until we complete the acquisition of Narragansett and are able to provide you a full forecast. So, I get your question, but we need to get through the full process, and think about Rhode Island in the plan and the full options of opportunities and then we will be able to lay it out for you a little bit [Indiscernible] but we're trying to give you some incremental data here until we can get to that point.

But Steve.

Yeah.

I think to your point and just to solidify what Joe is saying, So, when we look at that $1 to $2 billion and this is kind of to your point, I think. We can fund that range without additional equity going forward, so.

Absolutely.

And that I think that's kind of to you --

Right.

That's kind of to your point. I think.

Kind of. I guess, another way to ask a quest -- that question is, I think you targeted your debt paydown, is this too pretty strong high tripled [Indiscernible] metrics for the amount of debt paydown. So, you've a lot of debt paydown. And then the investment of the additional equity or the additional proceeds, you got kind of feathers in over time. If you use '22 as a base, you're not really putting all this money to work. And it makes it like almost a little bit of not really the base in a way. So, in theory, if you're growing the same as other utilities off that base, you should be growing just because you haven't put a lot of your money to work at or some trunk of your money back to work. I was just trying to think about if you're going to base the growth off '22, it just -- it's not really a new base.

But certainly, we're putting -- we'll put the money to work on the acquisition of Narragansett, the buybacks are [Indiscernible].

The buyback.

And the debt reductions complete. So, it's significantly behind us and so if you think about the opportunity, I don't know if it is different than any other utilities that has a forward capital plan that hasn't deployed the capital yet. So, I do think it is the base. We have transitioned and TSA and other costs that are in there that are a little different. But as far as utilizing the proceeds, I expect that the lion's share of those will be utilized by the time we get to the close of Narragansett, and provide a forecast and a base year and a growth rate.

Okay. Fair enough. Thank you.

Thanks [Indiscernible].

Our next question comes from Anthony Crowdell with Mizuho.

Good afternoon, Vince. Good afternoon, Joe.

Afternoon.

How are you?

Good, Vince. This maybe our year six [Indiscernible] I know it's early though. Just -- if I can follow up on Steve's question, and I apologize going back to Slide 5. If I just think about that slide and the additional CapEx you announce today, a billion dollars in the share buybacks total of billion dollars a year. What's left of the proceeds is $700 million. Am I thinking of that correctly?

Yes. That's correct, yes.

So then do you have the ability to do $2 billion of share buybacks if what's left is $700 million?

I think we do. But again, the intent of this page was to get broad buckets of how we're thinking about the opportunity with the proceeds. And so, I think these all kind of questions get back to the same point. I have to reiterate that we're not through with the business plan yet. So, we're trying to provide some level of detail to you in the interim as we think about this and we work through the plans, putting the -- Vince talked about this. Putting those proceeds, if you will, to the capital, we think is a better use of that capital ultimately to do the work that we need to do on the system and provide the network that customers need and do it in an affordable way. But we're not done and we just need to work through the full of the plan.

Okay. But you're -- I'm not just thinking share buyback even like if you had an incremental utility CapEx up to $2 billion, another $1 billion, so you've got the $2 billion. If you hit that $2 billion, that would be greater than the proceeds, the 10 fours. Is that accurate?

Yes. But again, the balance sheet is set up so that we can fund our CapEx growth without issuing equity. So, the balance sheet is strong enough to fund all that, Anthony.

Got it. And then just -- last question. One of the earlier questions I [Indiscernible] talked about maybe the timing of the incremental CapEx and think it's split evenly between Pennsylvania and Kentucky. Just about total thinking about getting that CapEx into rates. I believe in Kentucky; you did have a [Indiscernible] for a couple of years. Just talk about how do you get that additional CapEx into rates.

Yes. So, the -- I think Greg said it was relatively evenly split across the years, not between PA and Kentucky. I think this initial billion we've identified is actually more weighted to Pennsylvania than it is Kentucky, [Indiscernible].

Great. Thanks so much for taking my question guys and looking forward to seeing [Indiscernible] EI.

Great. Thanks.

Thanks.

This concludes our question-and-answer session. I'd like to turn the call back over to Vince Sorgi for some closing remarks.

Great, just want to thank everyone for joining us on the call and we're looking forward to engaging with everybody next week at EI. So, thanks, everybody.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.