01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
Evergy, Inc. (Nasdaq: EVRG) is a public utility holding company headquartered in Kansas City, Missouri, operating through Evergy Kansas Central, Evergy Metro and Evergy Missouri West, which serve about 1,652,200 customers in Kansas and Missouri.
For 2022, operating revenues were $5,859.1 milliona and net income attributable to Evergy, Inc. was $752.7 million, or $3.27 diluted EPS, down from $879.7 million and $3.83 in 2021. Management's adjusted EPS was $3.71 for 2022 versus $3.46 for 2021. The decline was driven mainly by lower non-regulated energy marketing margins tied to the February 2021 winter weather event, a $26.7 million Sibley Unit 3 impairment, the $68.0 million Sibley revenue deferral, a $32.8 million FERC transmission refund, and higher depreciation and interest expense, partly offset by favorable weather and higher retail sales.
The company targets approximately $11.6 billionb of base capital investment through 2027, including about $2.1 billion of new generation, primarily renewable. Its stated goals are a 70% reduction in CO2 emissions from 2005 levels by 2030 and net-zero by 2045, and it reports cutting CO2 emissions by nearly half from 2005 levels as of 2022. Cash flows from operations were $1,801.9 million in 2022, against capital expenditures of $2,166.5 million, and the filing notes a 2023 dividend of $0.6125 per share.
Credit ratings carry a negative outlook at S&P Global for Evergy and its subsidiaries, while Moody's outlooks are stable. Key risks in the filing include regulatory lag and rate outcomes in Kansas and Missouri, a pending Missouri Court of Appeals review of the securitization financing order for February 2021 winter weather costs, environmental rules including coal combustion residual and ozone standards, and Wolf Creek nuclear operations, in which Evergy holds an indirect 94%c interest.
02—Key points
Key Highlights
- 2022 net income attributable to Evergy, Inc. was $752.7 million, or $3.27 per diluted share, versus $879.7 million, or $3.83, in 2021; adjusted EPS (non-GAAP) was $3.71 versus $3.46.
- Operating revenues rose to $5,859.1 million from $5,586.7 million, while income from operations fell to $1,267.2 million from $1,354.9 million.
- Capital expenditures were $2,166.5 million in 2022, with planned base capital investment of about $11.6 billion through 2027, including roughly $2.1 billion for new generation.
- Cash flows from operating activities were $1,801.9 million in 2022, compared with $1,351.7 million in 2021.
- Sibley Station: a $68.0 million reduction to 2022 operating revenues and a $26.7 million impairment on Sibley Unit 3 following the December 2022 MPSC amended final rate order.
- A $32.8 million reduction to operating revenues from a December 2022 FERC order on Evergy Kansas Central's transmission formula rate, with refunds expected through the 2023 TFR.
- Emissions goals: CO2 emissions were reduced by nearly half from 2005 levels in 2022, with targets of 70% reduction by 2030 and net-zero by 2045. S&P Global rates Evergy's outlook as negative, while Moody's outlook is stable.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $5.86B$5.59B | +4.9% |
| Operating Expenses | $4.59B$4.23B | +8.5% |
| Operating Income | $1.27B$1.35B | −6.5% |
| Interest Expense | $404.00M$372.60M | +8.4% |
| Net Income | $752.70M$891.90M | −15.6% |
| EPS (Basic) | $3.27$3.84 | −14.8% |
| EPS (Diluted) | $3.27$3.83 | −14.6% |
| Shares Outstanding (Basic) | 229.90M229.00M | +0.4% |
| Shares Outstanding (Diluted) | 230.30M229.60M | +0.3% |
05—Questions
Frequently Asked Questions
Why did Evergy's 2022 earnings decline compared with 2021?
Net income attributable to Evergy, Inc. fell $127.0 million to $752.7 million. The filing attributes the decline mainly to lower non-regulated energy marketing margins related to the February 2021 winter weather event, a $34.9 million Sibley Unit 3 impairment and other regulatory disallowances, a $25.0 million TFR refund, higher depreciation and higher interest expense. Favorable weather, higher retail sales, lower income tax expense and higher transmission revenue partly offset these effects.
What is Evergy's capital investment plan?
The filing targets approximately $11.6 billion of base capital investment through 2027, including about $2.1 billion for new generation, primarily renewable. Projected total capital expenditures are $2,406.0 million for 2023, $2,006.0 million for 2024, $2,461.0 million for 2025, $2,359.0 million for 2026 and $2,375.0 million for 2027.
What is the status of the February 2021 winter weather securitization?
In November 2022, the MPSC approved a revised financing order allowing Evergy Missouri West to issue securitized bonds to recover its extraordinary fuel and purchased power costs, with a 15-year repayment period. In January 2023, the Office of the Public Counsel appealed the order to the Missouri Court of Appeals, Western District, and a decision is currently expected in the second half of 2023. A final nonappealable financing order is required before the bonds can be issued.
Is Evergy's dividend restricted or at risk?
In February 2023, the Evergy Board declared a quarterly dividend of $0.6125 per share, payable March 22, 2023. Evergy targets a long-term payout ratio of 60% to 70% of earnings. The filing notes that dividends depend on earnings, cash flows, capitalization ratios and covenants, and that some subsidiary dividends are subject to credit rating and equity conditions, such as a requirement that certain utilities not pay dividends if their ratings fall below BBB- or Baa3.
What is the credit rating outlook?
As of February 23, 2023, Moody's rated Evergy's outlook as Stable with Senior Unsecured Debt at Baa2, while S&P Global rated Evergy's outlook as Negative with a corporate credit rating of A- and senior unsecured debt at BBB+. The filing notes that a rating downgrade could increase borrowing costs and limit access to capital.
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