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PPL Corporation (PPL - Analyst Report) reported second-quarter 2013 pro forma earnings of 49 cents per share, a penny ahead of the Zacks Consensus Estimate. However, quarterly earnings were 2 cents lower than the year-ago figure due to weak performance from the company's Supply and Corporate and Other segments; partially offset by an increase in earnings at the Kentucky Regulated, U.K. Regulated and Pennsylvania Regulated segments.

The company's GAAP earnings were 63 cents versus 46 cents a year-ago. The difference of 14 cents between GAAP and pro forma earnings was due to a gain of 11 cents related to the adjusted energy-related economic activity, a penny gain for the LKE discontinued operations and windfall tax litigation gain of 7 cents; partially offset by 5 cents charge from changes in WPD line loss accrual, foreign currency-related economic hedges and changes in tax accounting method related to repairs.

Revenue

PPL Corporation reported total operating revenues of $3.5 billion, beating the Zacks Consensus Estimate by $0.8 billion and the year-ago level by 35.3%. Improvement in revenues was primarily driven by an increase in utility and unregulated retail electricity and gas sales.

Operational Update

Total operating expenses were $2.7 billion, up 36.2% year over year mainly due to a rise in fuel and depreciation expenses.

PPL Corporation's operating income was $758 million, up 32.5% year over year.

Interest expenses increased 9.3% year over year to $258 million due to a rise in debt level.

Financial Update

As of Jun 30, 2013, PPL Corporation had cash and cash equivalents of $711 million versus $901 million as of Dec 31, 2012.

Long-term debt as of Jun 30, 2013 was $18.9 billion compared with $18.7 billion as of Dec 31, 2012.

Net cash provided by operating activities during the first six months of 2013 was $947 million, flat with the year-ago comparable period.

Guidance

PPL Corporation increased its full-year 2013 pro forma earnings guidance in the range of $2.25 to 2.40 per share from the earlier projection of $2.15 to $2.40 per share.

Other Company Releases

American Electric Power Co. Inc. (AEP - Analyst Report) posted second-quarter pro forma earnings per share of 73 cents, missing the Zacks Consensus Estimate by 4 cents.

Exelon Corporation (EXC - Analyst Report) announced second-quarter operating earnings of 53 cents per share, missing the Zacks Consensus Estimate by a penny.

Entergy Corporation (ETR - Analyst Report) reported second quarter operational earnings of $1.01 per share, beating the Zacks Consensus Estimate by 3 cents.

Our View

PPL Corporation reported positive earnings surprises in 4 out of last 5 quarters primarily backed by stable performance from its regulated segments.

The company's strong financial profile allows it to upgrade electricity transmission and distribution infrastructure to provide uninterrupted service to its customers, which will subsequently improve its future performance.

However, stringent regulations and risks related to delay and cancellation of projects, may to some extent restrict the company’s future performance.

Allentown, Pa.-based PPL Corporation generates and delivers electricity and natural gas to more than 10 million customers in the U.S. and UK. The company currently has a Zacks Rank #3 (Hold).

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