Evergy(EVRG) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2025, adjusted earnings were reported at $2.03 per share, a slight increase from $2.02 per share in Q3 2024, driven by recovery in regulated investments and growth in weather-normalized demand [4][25] - Year-to-date adjusted earnings are $3.41 per share compared to $3.46 per share a year ago, leading to a narrowed 2025 adjusted EPS guidance range of $3.92-$4.02 per share from the previous range of $3.92-$4.12 per share [4][27] - The decrease in the midpoint of guidance is attributed to weather headwinds impacting results by $0.13 per share [4] Business Line Data and Key Metrics Changes - Weather-normalized demand increased by 2% in Q3 2025 compared to the previous year, following a 1.4% increase in Q2 2025, supported by strong residential and commercial usage [26] - The recovery of regulated investments contributed an additional $0.11 to EPS, while higher depreciation and interest expenses led to a $0.07 decrease in EPS [25] Market Data and Key Metrics Changes - The unemployment rates in Missouri, Kansas, and the Kansas City metro area remain below the national average of 4.3%, supporting robust customer demand in the service areas [26] - The economic development pipeline includes opportunities exceeding 15 gigawatts, indicating strong interest from large customers in the Evergy service territory [8][10] Company Strategy and Development Direction - The company is focused on a five-year capital investment plan that includes expected generation investments to meet growing customer demand and regulatory requirements [7][30] - A 4% increase in the quarterly dividend to $2.78 per share reflects the updated growth outlook and aligns with the target payout ratio of 60%-70% [6] - The company aims to maintain affordability while investing in infrastructure to support new large customers, with a proposed large load power service tariff designed to ensure new customers pay a higher rate [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook, citing tailwinds from economic development opportunities and necessary investments [5][28] - The company anticipates a comprehensive financial outlook update in February, including refreshed views on load forecasts and capital investment plans [6][30] - Management highlighted the importance of collaboration with stakeholders to advance regulatory objectives and support economic growth in the region [19][24] Other Important Information - The company has achieved strong operational performance, with generation availability and grid reliability favorable to targets [5] - The ongoing dialogue with large customers indicates a robust interest in the service territory, with many customers actively participating in capacity studies [10][13] Q&A Session Summary Question: What are the priorities for the 2026 Missouri legislative session? - Management noted that there will be a focus on implementing elements of SB4 and anticipates a lighter legislative calendar in 2026 [34] Question: Can you provide insights on the cadence of the upcoming capital plan? - Management indicated that the upcoming capital plan will be laid out by year, with significant investments and load growth helping to mitigate regulatory lag [36] Question: How much competition exists in attracting large loads within the service territory? - Management highlighted strong collaboration between Kansas and Missouri, with legislative truces in place to mitigate competition for economic development [38][39] Question: What is the status of the large load power service tariff discussions? - Management confirmed a unanimous settlement agreement in Kansas and a partial settlement in Missouri, with decisions expected soon [46][47] Question: How will the $2.8 billion equity funding impact the capital investment plan? - Management stated that cash flows from new customers could significantly improve operations, potentially reducing equity funding needs [52][53] Question: How will weather impacts affect future earnings and guidance? - Management acknowledged that weather impacts are within the context of the current year and do not affect the long-term outlook [54][63]