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01/10 17:32
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals. While there's a strong capital investment plan and increased dividend, financial performance is flat, with EPS unchanged and higher expenses impacting earnings. Competitive pressures and dependency on weather are concerns. The Q&A reveals management's optimism about reaching EPS targets, but also highlights uncertainties in equity impacts and load growth. Overall, the positive aspects are balanced by the negatives, suggesting a neutral sentiment.
Adjusted Earnings Per Share (EPS) $0.54 per share, unchanged year-over-year. The results were driven by recovery of regulated investments, offset by lower industrial demand and higher interest and depreciation expenses.
Retail Sales Volumes Total demand grew 2.7%, while weather-normalized demand decreased by 3%. The increase in residential and commercial usage was due to colder winter weather, but major snow storms limited business activity.
Net Impact from Retail Sales Volumes, Pricing, and Weather $0.01 benefit year-over-year. Colder winter weather produced an 18% increase in heating degree days, but limited margin benefit due to declining block pricing.
Recovery of Regulated Investments Contributed $0.13 to EPS, driven by new retail rates at Evergy Missouri West and FERC-regulated investments.
Higher Depreciation and Interest Expense Decreased EPS by $0.10 due to increased infrastructure investment.
Other Items Impact Negatively impacted results by $0.04.
Projected Capital Investments $17.5 billion through 2029, with a target FFO to debt ratio of approximately 15%. No change in financing plan from previous quarter.
Equity Issuances Forecasted at $2.8 billion across 2026 to 2029, with no new equity issuances anticipated in 2025.
Demand Growth Forecast 2% to 3% through 2029, reflecting large customer announcements to date, with potential for total retail sales growth to reach 4% to 5% through 2029.
Customer Pipeline Expansion: Evergy's customer pipeline has expanded by 1 gigawatt to 12.2 gigawatts, with 300 megawatts moving to actively building status, reflecting growth in data center projects.
Legislative Support for Growth: Constructive bills passed in Kansas and Missouri enhance regulatory frameworks, supporting infrastructure investment and attracting new advanced manufacturing facilities and data centers.
Large Customer Load Growth: Evergy anticipates significant demand growth from large customers, including potential data center projects representing 1.3 gigawatts of load, expected to impact demand growth from 2027 onward.
Operational Performance: Evergy reported strong operational performance with favorable outage metrics (SAIDI and SAIFI) and generation availability during extreme weather events.
Integrated Resource Plan (IRP) Update: The 2025 IRP includes plans for 2.1 gigawatts of new generation from 2025 to 2035, focusing on renewable and natural gas additions to ensure reliability and affordability.
Long-term Financial Outlook: Evergy reaffirms its long-term earnings growth target of 4% to 6% through 2029, supported by a strong customer pipeline and regulatory frameworks.
Capital Investment Plan: Evergy's projected capital investments through 2029 stand at $17.5 billion, aimed at enhancing infrastructure and supporting growth.
Regulatory Issues: Evergy is navigating a pending Kansas Central Rate Case with a procedural schedule that includes intervenor testimony and settlement conferences, which could impact financial outcomes.
Supply Chain Challenges: The company faces risks related to the age of certain generation plants, including limited availability of replacement parts and potential future investment requirements to maintain reliability.
Economic Factors: The company reported lower industrial demand due to a significant customer outage caused by an unplanned maintenance shutdown, which affected overall sales.
Competitive Pressures: The environment for new economic development projects is competitive, and Evergy does not expect to win all projects in their pipeline, which could impact growth.
Interest and Depreciation Expenses: Higher interest and depreciation expenses due to increased infrastructure investment negatively impacted earnings per share.
Weather Dependency: The company's performance is affected by weather conditions, as colder winter weather did not translate into margin benefits due to declining block pricing.
Capital Investment Plan: Evergy is executing a $17.5 billion capital plan through 2029, focusing on infrastructure investment to support growth.
Customer Pipeline: Evergy has a robust customer pipeline, with a backlog of growth opportunities expanding to 12.2 gigawatts, including significant data center projects.
Legislative Support: Recent legislation in Kansas and Missouri enhances regulatory frameworks, supporting infrastructure investment and attracting new customers.
Integrated Resource Plan (IRP): The 2025 IRP includes plans for 2.1 gigawatts of new generation from 2025 to 2035, focusing on renewable and natural gas resources.
2025 Adjusted EPS Guidance: Evergy reaffirms its 2025 adjusted EPS guidance range of $3.92 to $4.12 per share, with a midpoint of $4.02.
Long-term EPS Growth Target: Evergy targets long-term adjusted EPS growth of 4% to 6% through 2029, with expectations to be in the top half of this range.
Demand Growth Outlook: Evergy anticipates demand growth of 2% to 3% through 2029, with potential increases from large customer additions.
Equity Issuance: Projected equity issuances of $2.8 billion from 2026 to 2029, with no new equity issuances anticipated in 2025.
Shareholder Return Plan: Evergy has a projected capital investment plan of $17.5 billion through 2029, which is expected to be funded through a combination of strong cash flows from operations, debt issuance, and equity issuances. The company anticipates approximately $2.8 billion in equity issuances across 2026 and 2027, with no new equity issuances planned for 2025. This plan aims to support growth and enhance shareholder returns.
Equity Issuance: Evergy plans to issue approximately $1.2 billion in equity across 2026 and 2027 combined, with any equity issuance activity in 2025 expected to settle no earlier than 2026.
Earnings Growth Target: Evergy reaffirms its long-term adjusted EPS growth target of 4% to 6% through 2029, based on a 2025 midpoint of $4.02 per share.
The earnings call reflects positive sentiment with strong financial metrics and optimistic guidance. The reaffirmation of EPS guidance and growth targets, coupled with significant capital investment plans and customer growth prospects, are positive indicators. The Q&A reveals confidence in demand growth and cash flow improvements from new customer agreements. However, management's avoidance of specifics on growth rate profiles and capital plan details introduces slight uncertainty. Overall, the positive elements outweigh the uncertainties, suggesting a positive stock price movement over the next two weeks.
The earnings call summary and Q&A indicate a positive outlook for Evergy. The company has reaffirmed its strong financial guidance and growth targets, with a robust pipeline of customer projects and legislative support. The Q&A further bolsters this sentiment, as management addresses potential risks confidently and outlines flexible strategies to manage uncertainties. Although there are some uncertainties regarding federal regulatory changes, the overall sentiment remains positive due to strong capital investment plans, legislative support, and optimistic guidance, suggesting a likely positive stock price movement.
The earnings call presents mixed signals. While there's a strong capital investment plan and increased dividend, financial performance is flat, with EPS unchanged and higher expenses impacting earnings. Competitive pressures and dependency on weather are concerns. The Q&A reveals management's optimism about reaching EPS targets, but also highlights uncertainties in equity impacts and load growth. Overall, the positive aspects are balanced by the negatives, suggesting a neutral sentiment.
The earnings call highlights strong financial performance with a 7.6% increase in EPS and a 4% dividend raise, indicating solid shareholder returns. Despite some uncertainties in the Q&A, the optimistic guidance and strategic investments in infrastructure and new generation projects suggest positive future growth. The positive sentiment is reinforced by the substantial capital investment plan and economic development wins with major customers. Although there are some uncertainties in management responses, the overall outlook remains positive, likely resulting in a stock price increase of 2% to 8%.
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