01—Abstract
Summary
Summary of the 10-K filed February 25, 2022. Cited figures are marked; the original filing is the authoritative source.
Evergy, Inc. (EVRG), together with Evergy Kansas Central, Inc. and Evergy Metro, Inc., filed this combined 2021 annual report on Form 10-K.
Evergy is a public utility holding company headquartered in Kansas City, Missouri, serving about 1,640,800 customers in Kansas and Missouri through regulated electric utilities. For 2021, operating revenues were $5,586.7 milliona and net income attributable to Evergy, Inc. was $879.7 million, or $3.83 diluted EPS, up from $618.3 million and $2.72 in 2020. Adjusted earnings (non-GAAP) were $812.6 million, or $3.54 per share.
Results were aided by $94.5 millionb of non-regulated energy marketing margins tied to the February 2021 winter weather event, which also drove $365.5 million of net fuel and purchased power costs that the company has deferred for future recovery. The company's strategy centers on affordability, reliability and sustainability. Management targets an annual reduction of about $345 million in operating and maintenance expense by 2025 (from 2018 adjusted levels), approximately $10.7 billion of base capital investments through 2026 including about $2.0 billion in renewable generation, and a 70% CO2 reduction by 2030 (from 2005 levels) with net-zero by 2045.
Capital expenditures were $1,972.5 millionc in 2021. Pending Missouri rate cases filed in January 2022 request increases of $43.9 million for Evergy Metro and $27.7 million for Evergy Missouri West, with new rates expected in December 2022. The filing also notes a negative outlook from S&P Global Ratings on Evergy and its utility subsidiaries.
02—Key points
Key Highlights
- 2021 net income attributable to Evergy, Inc. of $879.7 million, or $3.83 diluted EPS, compared with $618.3 million, or $2.72, in 2020; adjusted EPS (non-GAAP) was $3.54 versus $3.10.
- Operating revenues rose to $5,586.7 million from $4,913.4 million, with utility gross margin (non-GAAP) of $3,739.3 million, up $188.1 million, including $94.5 million of energy marketing margins from the February 2021 winter weather event.
- Capital expenditures were $1,972.5 million in 2021, and the company projects $10.7 billion of base capital investments through 2026, including about $2.0 billion in renewable generation.
- Strategy targets roughly $345 million of annual operating and maintenance expense reduction by 2025 versus 2018 adjusted levels, a 70% CO2 reduction by 2030 and net-zero CO2 emissions by 2045.
- Missouri rate cases filed in January 2022 request $43.9 million (Evergy Metro) and $27.7 million (Evergy Missouri West) of added retail revenue, with a 10% return on equity; new rates are expected in December 2022.
- Long-term debt of $9,297.9 million (noncurrent) and notes payable and commercial paper of $1,159.3 million at year-end 2021; common equity was 49% of capitalization, and $1.3 billion of master credit facility availability remained.
- S&P Global Ratings assigned a negative outlook to Evergy and its subsidiaries, while Moody's outlook remained stable; the filing ties this to perceived risk from higher capital expenditures and the ability to earn returns on them.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 25, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.59B$4.91B | +13.7% |
| Operating Expenses | $4.23B$3.77B | +12.3% |
| Operating Income | $1.35B$1.14B | +18.4% |
| Interest Expense | $372.60M$383.90M | −2.9% |
| Net Income | $891.90M$618.30M | +44.3% |
| EPS (Basic) | $3.84$2.72 | +41.2% |
| EPS (Diluted) | $3.83$2.72 | +40.8% |
| Shares Outstanding (Basic) | 229.00M227.20M | +0.8% |
| Shares Outstanding (Diluted) | 229.60M227.50M | +0.9% |
05—Questions
Frequently Asked Questions
What drove the increase in 2021 earnings?
Net income attributable to Evergy, Inc. increased to $879.7 million from $618.3 million, primarily due to $94.5 million of non-regulated energy marketing margins related to the February 2021 winter weather event, higher retail sales from favorable weather and demand, lower operating and maintenance expenses, higher equity AFUDC, higher investment earnings and lower interest expense. These gains were partly offset by higher property taxes, depreciation and income tax expense.
How is Evergy handling the costs of the February 2021 winter weather event?
Evergy incurred net fuel and purchased power costs of $365.5 million, primarily at Evergy Missouri West ($296.4 million) and Evergy Kansas Central ($133.9 million), partly offset by $64.8 million of net wholesale revenues at Evergy Metro. The Evergy Companies deferred substantially all of these amounts to regulatory assets or liabilities, and they expect to recover most of the increased costs from customers, though timing may be delayed or spread out. The amounts remain subject to SPP resettlement and review, which could change them materially.
What are Evergy's main capital investment and emissions goals?
Evergy projects capital expenditures of $1,976.0 million in 2022 and $10.7 billion of base capital investments through 2026, including about $2.0 billion in renewable generation. It targets a 70% reduction in CO2 emissions from 2005 levels by 2030 and net-zero CO2 emissions by 2045. In 2021 it had already reduced CO2 emissions by about half from 2005 levels.
What are the pending regulatory matters investors should watch?
Evergy Metro and Evergy Missouri West filed Missouri rate cases in January 2022 seeking $43.9 million and $27.7 million of increased retail revenue, with an evidentiary hearing expected in September 2022 and new rates effective in December 2022. Kansas KCC decisions on the February 2021 winter weather event deferrals and the KEEIA energy efficiency request are expected in 2022. Evergy Kansas Central also withdrew its LEC Unit 4 predetermination request in February 2022 and plans to refile later in 2022.
What credit and dividend considerations does the filing highlight?
As of February 24, 2022, Moody's rated Evergy's senior unsecured debt Baa2 with a stable outlook, and S&P Global Ratings rated it BBB+ with a negative outlook. The Evergy Board declared a quarterly dividend of $0.5725 per share in February 2022, and Evergy targets a long-term dividend payout ratio of 60% to 70% of earnings. Subsidiary dividend payments are subject to regulatory commitments tied to credit ratings and to capital structure requirements.
06—Continue