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01/10 17:29
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Adjusted Earnings Per Share (EPS) $0.82 per share for Q2 2025, compared to $0.90 per share in Q2 2024, a decrease of $0.08. The decrease was primarily due to unfavorable weather conditions, including a 26% decrease in cooling degree days, which negatively impacted EPS by $0.15. However, this was partially offset by pricing and weather-normalized demand growth of 1.4%, contributing $0.08 to EPS, and recovery of and return on regulated investments, which added $0.09 to EPS.
Net Revenue Increase $128 million net revenue increase as part of the Kansas Central rate case settlement. This increase is expected to improve earned return on equity (ROE) as Panasonic ramps up production.
Weather-Normalized Demand Increased by 1.4% year-over-year in Q2 2025, driven by growth in residential and commercial usage. This growth contributed $0.08 to EPS.
Operating and Maintenance (O&M) Costs Higher O&M costs led to a $0.05 negative variance in EPS compared to Q2 2024. However, O&M costs were on plan for Q2 2025 and are expected to come in under budget for the full year.
Depreciation and Interest Expense Higher infrastructure investment resulted in increased depreciation and interest expense, leading to a $0.07 decrease in EPS year-over-year.
Industrial Sales Industrial sales showed a year-over-year increase in June 2025, supported by Panasonic's production ramp-up and Meta's data center operations.
New Natural Gas Plants and Solar Farms: Kansas Corporation Commission approved settlement agreements and predetermination requests to construct new natural gas plants and a solar farm. Missouri Public Service Commission approved settlement agreements for Certificates of Convenience and Necessity for new natural gas plants and two solar farms.
EV Battery Factory: Panasonic's EV battery factory in De Soto, Kansas, is the largest in the world and is ramping up production.
Economic Development Pipeline: Expanding 15+ gigawatt pipeline in Kansas and Missouri, with 4-6 gigawatts of new large customer load opportunities. Actively building projects include Panasonic and Meta facilities, with additional data center projects in final negotiations.
Customer Load Growth: Anticipated demand growth of 2%-3% through 2029, potentially increasing to 4%-5% with new customer projects.
Grid Investments: Continued investments in grid modernization and infrastructure to improve reliability, with favorable SAIDI and SAIFI metrics.
Operational Performance: Strong performance of nuclear, fossil, and renewable energy fleets in the first half of 2025.
Affordability, Reliability, and Sustainability: Focus on balancing affordability, reliability, and sustainability through investments in diverse energy resources and grid modernization.
Regulatory Milestones: Achieved approvals for new generation resources and rate case settlements in Kansas and Missouri, supporting economic development and growth.
Weather Impact: Unfavorable weather conditions led to a $0.09 decrease in earnings per share (EPS) for the quarter, with a 26% decrease in cooling degree days compared to the prior year, impacting demand.
Operational Costs: Higher operations and maintenance (O&M) expenses resulted in a $0.05 negative variance in EPS compared to Q2 2024. Although O&M is expected to come in under budget for the full year, it remains a challenge.
Infrastructure Investment Costs: Increased infrastructure investments led to higher depreciation and interest expenses, causing a $0.07 decrease in EPS.
Regulatory Risks: The company is dependent on regulatory approvals for rate cases and new projects. Delays or unfavorable outcomes in regulatory proceedings, such as the Kansas Central rate case and Missouri large load power service tariff, could impact financial performance.
Economic Development Risks: While the company has a robust pipeline of new large customer projects, delays or cancellations in these projects could impact demand growth and financial forecasts.
Exit from Evergy Ventures: The decision to exit the Evergy Ventures business resulted in a $0.08 loss in the second quarter, with remaining investments valued at $100 million. This could impact short-term financial performance.
Load Growth Uncertainty: While Panasonic and Meta are ramping up operations, any delays or changes in their schedules could impact the anticipated demand growth of 2% to 3% through 2029.
Supply Chain and Construction Risks: The company is advancing multiple large-scale projects, including natural gas plants and solar farms. Delays or cost overruns in these projects could impact timelines and financial outcomes.
Revenue and Earnings Guidance: Evergy reaffirmed its 2025 adjusted EPS guidance range of $3.92 to $4.12, with expectations to achieve the midpoint of $4.02. The company also reaffirmed its long-term adjusted EPS growth target of 4% to 6% through 2029, with expectations to grow in the top half of this range from 2026 to 2029.
Capital Expenditures and Investments: Evergy plans to continue grid modernization investments to replace aging infrastructure and support reliability. The company is also advancing construction of new natural gas plants and solar farms in Kansas and Missouri, aligned with its integrated resource plan (IRP). Future updates on capital plans will be provided during the year-end call in February.
Market Trends and Customer Growth: Evergy anticipates significant demand growth from large new customers, including Panasonic and Meta, with a forecasted demand increase of 2% to 3% through 2029. If additional large customer agreements are finalized, demand growth could rise to 4% to 5% through 2029. The company is actively negotiating with customers representing 4 to 6 gigawatts of peak load.
Regulatory Approvals and Economic Development: Evergy achieved regulatory approvals for new generation projects, including natural gas units and solar farms, in Kansas and Missouri. The company expects these projects to support economic development and enhance affordability by spreading system costs over a broader base. An order on the Kansas Central rate case settlement is anticipated by September 29, 2025.
Sustainability and Renewable Energy: Evergy is committed to an all-of-the-above generation strategy, including solar, natural gas, and storage additions. The company plans to evaluate further renewable projects and update its IRP. It aims to leverage solar tax credits for customer benefit and reduce carbon emissions in line with its sustainability goals.
The selected topic was not discussed during the call.
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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