Good day, and welcome to the PPL Corporation First quarter Earnings Conference Call. 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.

Thank you. Good morning, everyone, and thank you for joining the PPL conference call on First Quarter 2021 financial results. We have provided slides for this presentation and our earnings release issued this morning on the Investors 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 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 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 Vince Sorgi, PPL President and CEO; Joe Bergstein, Chief Financial Officer; Greg Dudkin, Chief Operating Officer; and Paul Thompson, the Head of our Kentucky Utility business. With that, I'll now turn the call over to Vince.

Thank you, Andy, and good morning, everyone. We appreciate you joining us for our first quarter earnings call. Moving to the agenda for today's call on Slide 3. I'll begin this morning with a brief overview of first quarter financial performance. I'll share a few operational highlights as well as an update on the two strategic transactions we announced in March. Joe will provide a more detailed overview of first quarter financial results. And as always, we'll leave ample time for your questions. Turning to Slide 4. Today, we announced the first quarter reported net loss of $2.39 per share. This reflects special item net losses of $2.67 per share, primarily related to reporting WPD's discontinued operations this quarter. Adjusting for special items, first quarter earnings from ongoing operations were $0.28 per share compared with $0.27 per share a year ago. These results were in line with our expectations for the quarter. Compared to last year, improved margins were the most significant driver of the increase, primarily due to more favorable weather compared to the mild winter we experienced in 2020. Shifting to a few operational highlights. Now over a year into the pandemic, I'm pleased to report that operationally, all seven of our utilities continue to perform extremely well with no operational issues to report. We continue to operate in a very similar manner to last year with many of our team members continuing to work from home. We continue to stress the importance of social distancing and mask wearing within our facilities and at our work site. With vaccinations in full swing, we are beginning to turn our attention to return-to-office planning and protocols. However, we are not expecting to deviate from our current mode of operations for at least a few more months and perhaps until end of summer for some of our locations. We've been able to operate extremely well during this virtual working environment, as evidenced not only by our strong operational performance, but also our ability to execute two significant strategic transactions simultaneously in a fully virtual manner. Our number one priority has been and will continue to be the safety of our employees and our customers, so we will be very diligent in our return-to-office planning. Moving to an update on the Kentucky rate case proceedings. We reached unanimous settlement agreements subject to Kentucky Public Service Commission approval with all parties in our rate reviews for both LG&E and KU. The agreements cover all matters in the review except for net metering. We have a long track record of working constructively with the parties to our rate reviews to achieve positive outcomes that balance the interest of all our stakeholders, and this time was no exception. The settlement agreements were filed with the KPSC on April 19, and hearings were held last week. We expect KPSC orders on all settled matters by June 30 with new rates effective July 1. I'll review the terms of the settlement agreements in a bit more detail on the next slide. Moving to Pennsylvania. PPL Electric Utilities recently received the 2021 Energy Star Partner of the Year award from the EPA and Department of Energy. This award recognizes outstanding corporate energy management programs and is the EPA's highest level of recognition. It reflects PPL's commitment to protecting the environment and helping customers save energy and money. In April, we also made a number of leadership changes to help further position the company for long-term success, especially as we plan for the integration of Narragansett Electric into the PPL family of regulated utilities. Greg Dudkin was promoted to Chief Operating Officer of PPL from his prior role as President of PPL Electric Utilities. Under Greg's leadership over the past decade, PPL Electric Utilities has been focused squarely on creating the utility of the future. The business has developed one of the nation's most advanced electricity networks has consistently delivered award-winning customer satisfaction and has firmly established itself as an industry leader in reliability. This advanced grid that we've built at PPL Electric Utilities uniquely positions us to partner with the state of Rhode Island in support of their ambitious decarbonization goals of net zero by 2050, and potentially driving toward 100% renewable energy by 2030. We continue to be very excited about the opportunity to bring our experience and expertise to an already very strong utility in Narragansett Electric. Greg will also focus on driving continuous improvement and best practices across our already strong regulated utility operations. Stephanie Raymond is succeeding Greg as the President of PPL Electric Utilities. Stephanie has been a key member of PPL electric utilities leadership team for nearly a decade and has led both the transmission and distribution functions. She has played a central role in spearheading our operational excellence in Pennsylvania, as well as our forward-looking investments to strengthen grid resilience and prepare for increased distributed energy resources. Our Pennsylvania customers are in very good hands with Stephanie now at the helm of PPL Electric Utilities. We also hired Wendy Stark as our new Senior Vice President and General Counsel. Wendy replaces Joanne Raphael, who announced her retirement from the company effective June 1 after an impressive and distinguished 35-year career with our company. We certainly wish Joanne all the best as she transitions to this new phase of her life. Wendy joins PPL from Pepco Holdings, where she served as Senior Vice President, Legal and Regulatory Strategy and General Counsel. Wendy is an excellent addition to our team, and she's already making her presence known as we prepare for the regulatory approval process for the Narragansett acquisition. She brings to PPL significant experience in leading legal teams and extensive background in regulatory matters and a deep knowledge of our industry. I'm very excited about the strong leadership team that we've assembled here at PPL. I believe it's the right team at the right time as we strategically reposition PPL for long-term growth and success. Finally, I'll note that we continue to make good progress on the regulatory approval processes. Related to both the WPD sale and the Narragansett acquisition. In the U.K., we remain on track to close the WPD sale by the end of July. On April 22, National Grid shareholders voted overwhelmingly to approve the transaction. And on May 4, we received the Guernsey approval, leaving just the Financial Conduct Authority approval outstanding in the U.K. While we have no assurance as to the timing of this final approval, the WPD sale could close as early as this month. In the U.S., we've made all the required regulatory filings to secure approval for the Narragansett Electric acquisition. We've requested the Rhode Island Division of Public Utilities and Carriers to decide on our petition by November 1, 2021. While we cannot be assured, the division will decide on our petition in that timeframe, we remain confident in our ability to close on the acquisition by March of next year. The transition teams for both PPL and National Grid have been formed and have actively begun planning to ensure a seamless transition for both employees and Rhode Island customers upon the approval and closing of the transaction. The PPL transition team is being led by Greg Dudkin, with strong executive presence and experienced leaders on the team, who will oversee the eventual integration of Narragansett Electric into PPL. I'll also note that we've had very constructive discussions with public officials in Rhode Island since our announcement. These interactions have only strengthened my belief that PPL is well-positioned to drive real value for Rhode Island customers in their communities and to play a key role in helping the state achieve its ambitious decarbonization goals. Turning to Slide 5 in a bit more detail on the settlement agreements in Kentucky. We believe the agreements, which again require approval of the KPSC, represent constructive outcomes for all stakeholders and that they minimize the near-term rate impact on customers while still providing LG&E and KU the opportunity to recover their costs by providing safe and reliable service. The settlements proposed a combined revenue increase of $217 million for LG&E KU with an allowed base ROE of 9.55%. These revenue increases enable LG&E and KU to continue modernizing the grid, strengthening grid resilience and upgrading LG&E's natural gas system to enhance safety and reliability. They include LG&E and KU's proposed $53 million economic release store credit to help mitigate the impact of the rate adjustments until mid-2022. The stipulation reflects the continuation of the currently approved depreciation rates for Mill Creek Units 1 and 2 and Brown Unit 3 for rate-making purposes, rather than using the depreciation rates proposed in our original applications. We had initially requested the depreciation rates for these units to be updated with their expected retirement over the next decade as they reach the end of their economic useful lives. This adjustment reduces the requested revenue increases by approximately $70 million. In a related provision, the settlement agreements also proposed the establishment of a retired asset recovery rider to provide recovery of and on the remaining net book values of retired generation assets as well as associated inventory and decommissioning costs. The rider would provide recovery over a 10-year period upon retirement, as well as a return on those investments at the utilities' then-weighted average cost of capital. As we announced in January, Mill Creek Unit 1 is expected to retire in 2024. And Mill Creek Unit 2 and E.W. Brown Unit 3 are expected to be retired in 2028 as they reach the end of their economic useful lives. These units represent a combined 1,000 megawatts of coal-fired generating capacity. The settlements also proposed full deployment of advanced metering infrastructure, I'll note that the capital cost of the proposed AMI investment is not included in the revenue requirements in these rate cases. We'll record our investment in the AMI project as infrastructure and accrued AFUDC during the AMI implementation period. And finally, the settlement agreements include commitments that LG&E and KU will not increase base rates for at least four years, subject to certain exceptions. I'll now turn the call over to Joe for a detailed overview of our first quarter financial results. Joe?

Thank you, Vince, and good morning, everyone. I'll cover our first quarter segment results on Slide 6. And with the U.K. now reflected as discontinued operations, we removed the U.K. Regulated segment from our quarterly earnings walk. In connection with this change, we have also updated our ongoing segment presentation for certain items. First, we have adjusted the 2020 corporate and other amount to reflect certain costs previously reflected in the U.K. Regulated segment, which was primarily interest expense. The total amount of these costs was about $0.01 per share for the quarter. In addition, beginning with our 2021 results, corporate level financing costs will no longer be allocated for segment reporting purposes. Those costs were primarily related to the acquisition financing of the Kentucky Regulated segment and will also be reflected in corporate and other moving forward. Now turning to the domestic segment drivers. Our Pennsylvania Regulated segment results were flat compared to a year ago. During the first quarter, we experienced higher distribution adjusted gross margins resulting primarily from higher sales volumes due to favorable weather compared to the prior year, a year in which we experienced a mild winter. Weather in Pennsylvania was essentially flat to our forecast for Q1 2021, with quarterly heating degree days slightly below normal conditions. Adjusted gross margins related to transmission were slightly lower for the first quarter. Returns on additional capital investments were offset by lower peak transmission demand and a reserve recorded as a result of a challenge to the transmission formula rate return on equity. Settlement negotiations related to the challenge are currently proceeding, but there can be no assurance that they will result in a final settlement. Finally, we experienced lower O&M expense of about $0.01 per share in Pennsylvania during the first quarter compared to 2020. Turning to our Kentucky Regulated segment. Results were $0.02 per share higher than our comparable results in Q1 2020. The increase was primarily driven by higher sales volumes, primarily due to favorable weather, and similar to Pennsylvania, weather was flat compared to our forecast. Partially offsetting the increase from higher sales was higher operation and maintenance expense, primarily at our generation plants. Results at Corporate and Other were $0.01 lower compared to a year ago, driven primarily by higher interest expense from the additional debt we issued at the start of the pandemic to ensure we had adequate liquidity to navigate the uncertainty. We expect our interest expense to be reduced significantly after we complete the liability management following the closing of the WPD sale. That concludes my prepared remarks, and I'll turn the call back over to Vince.

Thank you, Joe. In summary, we continue to deliver electricity and natural gas safely and reliably for our customers during the pandemic. We're on pace to close our strategic transactions within the expected time frames while making good progress on the integration and transition planning for Narragansett Electric. And we remain very excited about the opportunity we have in front of us to reposition PPL for future growth and success. With that, operator, let's open the call for Q&A.

Today's first question comes from Julien Dumoulin-Smith with Bank of America.

And congrats on continued progress on the transaction. So first off, if you can, can you talk a little bit more as to how you think about the trajectory of Rhode Island here? I mean, obviously, you've got a clean energy mandate in that state. I know we're still early. I know you filed related documents here recently. But can you speak at least a little bit more to how you're initially thinking about this clean energy mandate? I know last time we spoke about this initially, any updated thoughts? And that reconciles against the, shall we say, historical rate base.

Yes. You mentioned some points, but I believe your question was about our outlook for Rhode Island considering the clean energy mandate. The state has set a goal of achieving net zero emissions by 2050 through an executive order, and the previous governor aimed for 100% renewable energy generation by 2030; however, that's not yet legislation. We are optimistic and confident about the opportunity to collaborate with the state to help upgrade the grid to meet these ambitious objectives. In our discussions with public officials, we've outlined our value proposition and why we believe we are in a unique position to manage these assets at this time. Regarding your earlier point, in Pennsylvania, we have established what we call the grid of the future, which includes automation and preparation for distributed energy resources. This setup allows for a significant increase in behind-the-meter renewable energy while ensuring power quality and grid stability through better control and insights. We have emphasized to stakeholders in Rhode Island that we have already developed a lot of what they will need to reach their goals. Repeating this process is typically more efficient, and we believe there is a remarkable chance not only to support their 2050 ambitions but also to achieve their 2030 goals, based on our experience in Pennsylvania and our confidence in replicating that success. As for your earlier inquiry, we have discussed this in our petition and are transparent in our communications with the commission, the division, and various public officials. We recognize the need to finalize the transaction and collaborate on capital investment plans with both the division and the commission, showcasing our previous achievements through the petition process and public hearings. We are eager to engage with Rhode Island constituents to prove our capabilities, as we view this as a significant opportunity for us and, importantly, for the state of Rhode Island.

Indeed. And if I can follow-up on a question on acquisitions here in brief. Obviously, we've seen a number of transactions across the space, probably higher valuations than perhaps one would have expected a few months ago. Does that put pause at all with respect to your strategy, especially as you think about competing against infrastructure funds, et cetera, here? Just any open commentary you might provide to differentiate your strategy might be helpful, I think.

Yes, I don't have much more to add compared to what we discussed in March regarding the transactions. We are still exploring various options for the best use of the remaining proceeds and will update the market when a decision is made. M&A is one of the options we are considering, and we continue to look for opportunities in that area. Our past transactions with National Grid reflect our disciplined approach, and we will maintain that as we consider strategic acquisitions with the remaining proceeds. We are also looking at further investment opportunities in utilities, including in Rhode Island, Pennsylvania, and Kentucky, particularly in renewables. The Biden administration's infrastructure and clean energy plans will support renewable investments, and we believe we are well-positioned to benefit from that with our distributed energy resource group. Share buybacks could also be a potential use of proceeds, but we will first assess other opportunities. It's crucial for us to remain disciplined in our analysis and collaborate with the Board on these options. We will inform the market once a decision is made, and maintaining our level of discipline is essential, which we have consistently demonstrated.

Our next question today comes from Paul Patterson with Glenrock Associates.

Just to sort of follow-up on Julien's question with respect to Narragansett, is it the case that you guys feel that, I guess, rate base growth will pretty much be on the same trajectory that it has been historically there? Or do you think it might increase or change?

Well, Paul, we certainly don't want to rush into developing our investment plans after making the acquisition. We believe there is potential to invest more capital than before, particularly if the state aims to meet some of the more ambitious targets set for 2030 and 2035. The challenge for us, which we are prepared to tackle, will be collaborating with the Division and the Commission to outline a plan that ensures this investment remains affordable for the state. This would likely require us to improve efficiency on the operational and maintenance side, allowing for investment without significantly increasing customer rates. So, that's the opportunity, Paul. We just need to work out the details with both the Division and the Commission in the state once we finalize the deal.

I understand. That makes a lot of sense. So, moving on to transmission and Joe's comments, could you provide more detail on the lower peak transmission demand? How much was that compared to the reserve you are setting aside due to the challenges with the return on equity? Additionally, regarding that challenge or the related negotiations, has there been any noticeable impact from the FERC's Notice of Proposed Rulemaking on the RTO ladder? I'm curious if that has created any uncertainty or issues in the expected negotiations.

Yes. I will address the last part and then ask Joe to explain the details regarding the profit and loss variance between the two components for transmission. In terms of the negotiations, Paul, I don’t think there’s anything significant concerning the NOPR. We and the intervenors or counterparties have been negotiating in good faith throughout this process. I believe it has been quite constructive, and that continues. As Joe mentioned, we cannot guarantee that these negotiations will lead to a settlement, but I feel confident that both parties are negotiating sincerely. I don't see that the NOPR has significantly influenced those negotiations at this point. Joe, would you like to discuss the breakdown of the transmission variance?

The lower peak transmission demand for the quarter was approximately $0.02 per share. The reserve we recorded totaled around $19 million after tax, with $5 million pertaining to this year and $14 million to 2020. This means that the $5 million accounts for roughly $0.01 for the quarter.

Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for your final remarks.

Great. Thanks again for joining us on our first quarter call, and everybody, have a great day. Thanks so much.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.