Evergy(US:EVRG)2022-05-04 16:00Part I - Financial Information Presents unaudited consolidated financial statements and management's discussion and analysis for Evergy and its subsidiaries Item 1. Financial Statements Presents unaudited consolidated financial statements for Evergy, Inc., Evergy Kansas Central, and Evergy Metro for Q1 2022 Evergy, Inc. Financial Statements Evergy, Inc. reported net income of $122.5 million in Q1 2022, a decrease from $191.6 million, due to lower operating revenues Evergy, Inc. Consolidated Statement of Comprehensive Income (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (millions) | Q1 2021 (millions) | | :--- | :--- | :--- | | Operating Revenues | $1,223.9 | $1,611.9 | | Income from Operations | $253.1 | $317.7 | | Net Income Attributable to Evergy, Inc. | $122.5 | $191.6 | | Diluted EPS | $0.53 | $0.84 | Evergy, Inc. Consolidated Balance Sheet Highlights (as of March 31, 2022) | Metric | March 31, 2022 (millions) | December 31, 2021 (millions) | | :--- | :--- | :--- | | Total Current Assets | $1,722.0 | $1,710.3 | | Total Assets | $28,739.9 | $28,520.5 | | Total Current Liabilities | $3,391.3 | $3,102.9 | | Total Equity | $9,237.5 | $9,241.7 | Evergy, Inc. Consolidated Statement of Cash Flows (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (millions) | Q1 2021 (millions) | | :--- | :--- | :--- | | Cash Flows from Operating Activities | $265.1 | $(28.6) | | Cash Flows used in Investing Activities | $(531.3) | $(475.2) | | Cash Flows from Financing Activities | $262.2 | $840.9 | Evergy Kansas Central, Inc. Financial Statements Evergy Kansas Central, Inc. reported net income of $72.0 million in Q1 2022, a decrease from $178.1 million, due to lower operating revenues Evergy Kansas Central, Inc. Consolidated Statement of Income (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (millions) | Q1 2021 (millions) | | :--- | :--- | :--- | | Operating Revenues | $613.9 | $901.1 | | Income from Operations | $127.2 | $240.3 | | Net Income Attributable to Evergy Kansas Central, Inc. | $72.0 | $178.1 | Evergy Kansas Central, Inc. Consolidated Balance Sheet Highlights (as of March 31, 2022) | Metric | March 31, 2022 (millions) | December 31, 2021 (millions) | | :--- | :--- | :--- | | Total Assets | $13,183.4 | $13,075.6 | | Total Liabilities | $8,591.8 | $8,534.1 | | Total Equity | $4,591.6 | $4,541.5 | Evergy Metro, Inc. Financial Statements Evergy Metro, Inc. reported net income of $54.6 million in Q1 2022, an increase from $33.5 million, despite decreased operating revenues Evergy Metro, Inc. Consolidated Statement of Comprehensive Income (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (millions) | Q1 2021 (millions) | | :--- | :--- | :--- | | Operating Revenues | $422.5 | $516.2 | | Income from Operations | $95.6 | $71.2 | | Net Income | $54.6 | $33.5 | Evergy Metro, Inc. Consolidated Balance Sheet Highlights (as of March 31, 2022) | Metric | March 31, 2022 (millions) | December 31, 2021 (millions) | | :--- | :--- | :--- | | Total Assets | $9,112.2 | $9,156.8 | | Total Liabilities | $6,036.4 | $6,135.6 | | Total Equity | $3,075.8 | $3,021.2 | Combined Notes to Unaudited Consolidated Financial Statements These notes explain consolidated financial statements, covering organization, accounting policies, and key financial events - The February 2021 winter weather event resulted in total net fuel and purchased power costs of $367.9 million as of March 31, 2022, which have been deferred to a regulatory asset or liability for future recovery or refund9596 - In Q1 2022, Evergy sold an equity investment through a share forward agreement, recognizing a pre-tax loss of $14.2 million101102 - Evergy Missouri West filed a petition in March 2022 to finance its extraordinary costs from the February 2021 winter weather event through the issuance of securitized bonds141 - In March 2022, Evergy Missouri West issued $250.0 million of 3.75% First Mortgage Bonds and repaid $100.0 million of 3.74% Senior Notes at maturity162163 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management's perspective on Evergy's financial results and condition, explaining the impact of non-recurring events on earnings GAAP vs. Non-GAAP EPS (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.53 | $0.84 | | Adjusted EPS (Non-GAAP) | $0.58 | $0.55 | - The primary reason for the decrease in GAAP net income was the non-recurrence of significant non-regulated energy marketing margins recognized in Q1 2021 related to the February 2021 winter weather event236 - Utility gross margin (a non-GAAP measure) decreased by $71.2 million, primarily driven by a $104.9 million decrease in non-regulated energy marketing margins from the 2021 winter event256 - Operating cash flow increased by $293.7 million, mainly because the prior-year period included $363.7 million in cash payments for net fuel and purchased power costs related to the February 2021 winter weather event272 Evergy, Inc. Results of Operations Evergy's consolidated income from operations decreased in Q1 2022, primarily due to lower utility gross margin - Utility gross margin decreased by $71.2 million, primarily due to a $104.9 million decrease in non-regulated energy marketing margins recognized in 2021 related to the February 2021 winter weather event256 - Operating and maintenance expense decreased by $23.3 million, driven by lower credit loss expense and the non-recurrence of 2021 executive transition costs258 - Other expense, net increased by $18.2 million, primarily due to a $14.2 million loss from the sale of an equity investment in an early-stage energy solutions company261 Liquidity and Capital Resources Evergy maintains liquidity through cash from operations, credit facilities, and debt/equity issuances, with significant borrowing capacity - As of March 31, 2022, Evergy had $1.6 billion of available borrowing capacity under its master credit facility265 - In February 2022, Evergy entered into a $500.0 million unsecured Term Loan Facility, which was fully borrowed as of March 31, 2022266 - Cash flows from operating activities increased by $293.7 million compared to Q1 2021, primarily because the prior period included $363.7 million in cash payments for net fuel and purchased power costs during the February 2021 winter weather event272 Evergy Kansas Central, Inc. MD&A Evergy Kansas Central's net income fell sharply in Q1 2022, driven by decreased utility gross margin Evergy Kansas Central, Inc. Results of Operations (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (millions) | Q1 2021 (millions) | | :--- | :--- | :--- | | Operating Revenues | $613.9 | $901.1 | | Income from Operations | $127.2 | $240.3 | | Net Income Attributable to Evergy Kansas Central, Inc. | $72.0 | $178.1 | - Utility gross margin decreased by $109.8 million, primarily due to a $104.9 million decrease in non-regulated energy marketing margins from the 2021 winter weather event283284 Evergy Metro, Inc. MD&A Evergy Metro's net income increased in Q1 2022, driven by increased utility gross margin and lower operating expenses Evergy Metro, Inc. Results of Operations (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (millions) | Q1 2021 (millions) | | :--- | :--- | :--- | | Operating Revenues | $422.5 | $516.2 | | Income from Operations | $95.6 | $71.2 | | Net Income | $54.6 | $33.5 | - Utility gross margin increased by $15.0 million, primarily due to jurisdictional allocation differences in fuel recovery mechanisms in Missouri and Kansas regarding the refund to customers for net wholesale revenues from the February 2021 winter event296 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures since the most recently filed annual report on Form 10-K - There were no material changes from the market risk disclosures included in the Evergy Companies' combined 2021 Form 10-K303 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective with no material changes to internal control - The CEO and CFO of Evergy, Evergy Kansas Central, and Evergy Metro concluded that disclosure controls and procedures were effective at a reasonable assurance level304306309 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls305307310 Part II - Other Information This section covers legal proceedings, risk factors, equity sales, and other corporate information Item 1. Legal Proceedings The Evergy Companies are involved in various lawsuits and regulatory proceedings in the ordinary course of business - For information regarding material lawsuits and proceedings, the report refers to Notes 4 and 9 to the consolidated financial statements311 Item 1A. Risk Factors No material changes to risk factors previously disclosed in the 2021 Form 10-K for Evergy and its subsidiaries - There have been no material changes with regards to the risk factors discussed in the 2021 Form 10-K for each of Evergy, Evergy Kansas Central and Evergy Metro312 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Information on Evergy's purchases of its own equity securities during Q1 2022, totaling 68,544 shares Issuer Purchases of Equity Securities (Q1 2022) | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January | 95 | $66.80 | | February | 6,173 | $60.99 | | March | 62,276 | $60.88 | | Total | 68,544 | $60.90 | Item 5. Other Information Details the results of Evergy's annual shareholder meeting on May 3, 2022, where all Board-recommended proposals were approved - At the annual shareholder meeting on May 3, 2022, all twelve director nominees were elected319320 - Shareholders approved, on an advisory basis, the 2021 compensation of named executive officers319320 - Shareholders approved the Evergy, Inc. Amended and Restated Long-Term Incentive Plan319321 - Shareholders ratified the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2022319324 Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including debt agreements, compensatory plans, CEO/CFO certifications, and XBRL data - Lists various filed exhibits, including the First Mortgage Indenture for Evergy Missouri West, the $500M Term Loan Credit Agreement, and the amended Long-Term Incentive Plan328 - Includes Rule 13a-14(a)/15d-14(a) certifications for the CEO and CFO of Evergy, Inc., Evergy Metro, and Evergy Kansas Central328