PPL projects $20B in infrastructure investments and 9.8% annual rate base growth through 2028 as data center demand accelerates

Earnings Call Insights: PPL Corporation (PPL) Q3 2025

MANAGEMENT VIEW

* Vincent Sorgi, President and CEO, reported third quarter GAAP earnings of $0.43 per share, with ongoing operations earnings at $0.48 per share. He stated, "We've narrowed our 2025 ongoing earnings forecast range to $1.78 to $1.84 per share, maintaining our midpoint of $1.81 per share. We remain confident in our ability to achieve at least this midpoint, supported by our continued operational discipline and strategic execution."
* Sorgi highlighted progress on the "utility of the future strategy" and infrastructure upgrades, sharing, "We're on track to complete approximately $4.3 billion in infrastructure improvements this year, critical investments that support reliable, resilient, affordable and cleaner energy networks for our customers now and in the future."
* Sorgi emphasized ongoing O&M savings, saying, "Our continued focus on innovation and technology has us on pace to achieve our annual O&M savings target of at least $150 million compared to our 2021 baseline."
* A major regulatory update in Kentucky included a proposed settlement for LG&E and KU, which features a revised aggregate increase of approximately $235 million in annual revenues, an authorized ROE of 9.9%, and a base rate stay-out through August 2028. Sorgi detailed, "The agreement also features a base rate stay-out provision through August 1, 2028, providing stability for our customers and our business."
* He also announced PPL Electric Utilities' request to increase annual base distribution revenues in Pennsylvania by just over $300 million, with a requested ROE of 11.3%, and discussed the growing data center pipeline in Pennsylvania, which has risen over 40% since the last update to 20.5 gigawatts in advanced stages of planning.
* Joe Bergstein, Executive VP & CFO, stated, "PPL's third quarter GAAP earnings were $0.43 per share compared to $0.29 per share in Q3 2024. We recorded special items of $0.05 per share during the third quarter of 2025, primarily due to IT transformation costs and certain costs related to the integration of Rhode Island Energy. Adjusting for these special items, third quarter earnings from ongoing operations were $0.48 per share, a $0.06 per share increase compared to Q3 2024."
* Bergstein also highlighted, "In August, we entered into forward contracts to sell approximately $1 billion of equity... This brings the total amount of equity executed under the forward agreements to approximately $1.4 billion of the $2.5 billion forecasted equity needs through 2028."

OUTLOOK

* Sorgi reiterated, "We've narrowed our 2025 ongoing earnings forecast range to $1.78 to $1.84 per share, maintaining our midpoint of $1.81 per share. We remain confident in our ability to achieve at least this midpoint."
* PPL projects $20 billion in infrastructure investments from 2025 through 2028, targeting average annual rate base growth of 9.8%.
* The company expects to deliver 6% to 8% annual EPS and dividend growth through at least 2028, with EPS growth expected in the top half of that range.
* Sorgi stated, "We expect to maintain our strong credit profile with an FFO to debt ratio of 16% to 18% and a holding company to total debt ratio below 25%."

FINANCIAL RESULTS

* Third quarter GAAP earnings were $0.43 per share compared to $0.29 per share in Q3 2024. Ongoing operations earnings were $0.48 per share, up $0.06 year-over-year.
* Bergstein explained the increase was due to higher revenues from formula rates and rider recovery mechanisms as well as lower operating costs, partially offset by higher interest expense.
* Segment results showed Kentucky up $0.02 per share, Pennsylvania up $0.02 per share, and Rhode Island up $0.01 per share year-over-year. Corporate and Other increased by $0.01 per share.
* The company executed approximately $1.4 billion of its $2.5 billion forecasted equity needs via forward agreements through 2028.

Q&A

* Shahriar Pourreza, Wells Fargo, asked about the Kentucky CPCN case and the impact of denied tracking mechanisms for Mill Creek 2 and 6. Sorgi responded there is no current earnings impact for Mill Creek 6, and for Mill Creek 2, "We would be incurring about $30 million of additional O&M, about $40 million of additional CapEx from now until 2030. So we would want to see recovery of that."
* Pourreza also questioned Pennsylvania resource adequacy legislation. Sorgi indicated movement will depend on resolving the state budget and REGI issues, but "there's a lot of legislative support in the state to find ways to spur new generation particularly in light of the data center load."
* Jeremy Tonet, JPMorgan, inquired about the Pennsylvania pipeline and JV with Blackstone. Sorgi outlined ramp rates and said, "We feel really good about at least the 20.5 gigawatts in our pipeline, and that would likely continue to grow."
* Paul Zimbardo, Jefferies, asked about growth linearity and Kentucky load. Bergstein said he does not see growth as front-end loaded and is closely monitoring additional load for future capital planning.
* Steven Fleishman, Wolfe Research, asked for details on the 11 gigawatts of publicly announced data centers. Sorgi declined specifics due to confidentiality but mentioned about $800 million of capital for 11.3 gigawatts and $400 million for 5 gigawatts under construction.
* Anthony Crowdell, Mizuho, raised concerns about revenue concentration from data centers. Sorgi replied, "I don't necessarily think that we're feeling concerned about an overconcentration of risk to the data centers because of the protections that we're building into the tariff structures and the ESAs."

SENTIMENT ANALYSIS

* Analysts maintained a probing but generally neutral tone, focusing on regulatory outcomes, load growth, and potential risks from data center concentration. Questions often sought clarity on regulatory proceedings and capital allocation, without expressing overt skepticism.
* Management’s tone was confident and consistent in both prepared remarks and the Q&A, emphasizing operational discipline, strategic execution, and readiness to address regulatory and load challenges. Sorgi stated, "We're very confident that at least 20.5 gigawatts of demand is real, especially given we have an additional 70 gigawatts of demand in the queue."
* Compared to the previous quarter, management maintained a high level of confidence and analysts continued to focus on execution, regulatory clarity, and growth prospects.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2025 was narrowed this quarter, while the midpoint was maintained. The previous quarter focused on achieving at least the midpoint, now reiterated with increased confidence supported by strong Q3 results.
* The data center pipeline in Pennsylvania grew sharply from 14.4 gigawatts to 20.5 gigawatts in advanced stages, reflecting accelerated demand compared to the previous update.
* Regulatory developments advanced with a proposed settlement in Kentucky and a new base rate case in Pennsylvania, while the infrastructure investment target and growth rates remained consistent.
* Management’s confidence and strategic focus on data centers, innovation, and disciplined cost control have remained strong, with no marked shift in tone from the prior quarter.
* Analysts’ focus evolved towards potential overconcentration risks and the mechanics of regulatory recovery processes, but the overall sentiment remained steady.

RISKS AND CONCERNS

* Management noted the need for commission approval of Kentucky’s settlement agreement and regulatory mechanisms for cost recovery, especially for Mill Creek 2 and 6.
* Sorgi addressed possible risks from data center concentration, emphasizing tariff protections and minimum load requirements to limit exposure.
* The company faces the challenge of aligning generation buildout with the surging data center and economic development demand, regulatory approval timelines, and continued cost management.

FINAL TAKEAWAY

PPL’s third quarter update underscores robust earnings growth, expanded infrastructure investment, and a surging data center pipeline in Pennsylvania. Management reinforced its confidence in meeting or exceeding the 2025 earnings midpoint and highlighted strategic regulatory, operational, and technological initiatives designed to support sustained rate base growth and shareholder value through 2028. The company's disciplined approach to regulatory engagement, capital allocation, and customer protections positions it to navigate rapid demand growth while maintaining a focus on affordability, reliability, and resilience.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ppl/earnings/transcripts]

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