01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. 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 integrated, regulated electric utilities in Kansas and Missouri through Evergy Kansas Central, Evergy Metro and Evergy Missouri West, serving approximately 1.7 million customers.
For 2023, net income attributable to Evergy, Inc. was $731.3 milliona, or $3.17 diluted EPS, down from $752.7 million and $3.27 in 2022, mainly due to higher depreciation and interest expense and a $96.5 million deferral of revenues for future refunds of COLI rate credits. Adjusted EPS (non-GAAP) was $3.54 for 2023 versus $3.71 in 2022. Operating revenues were $5,508.2 million, down from $5,859.1 million, while interest expense rose to $525.8 million from $404.0 million.
The company is pursuing a capital plan of approximately $12.5 billionb of base capital investments through 2028, including about $2.9 billion of new generation expected to be primarily renewable, and targets a 70% reduction in owned-generation CO2 emissions by 2030 (from 2005 levels) and net-zero CO2e emissions for scope 1 and 2 by 2045. Key 2023 events included a Kansas Central and Metro rate case settlement approved by the KCC with new rates effective December 2023, the $220.9 million acquisition of the Persimmon Creek wind farm, and a $1.4 billion issuance of 4.50% convertible notes due 2027. Evergy Missouri West filed a 2024 rate case requesting about $104 million, and it agreed to acquire a joint interest in Dogwood Energy Center for about $60 million, subject to MPSC approval.
Financial risks highlighted in the filing include credit rating downgrades by an agency in 2023, with Evergy, Inc.'s and Evergy Metro's senior unsecured ratings lowered, and reliance on rate regulation to recover costs. Evergy reported a dividend of $0.6425c per share declared in February 2024 and targets a long-term payout ratio of 60% to 70% of earnings.
02—Key points
Key Highlights
- Diluted EPS of $3.17 for 2023, down from $3.27 in 2022; net income attributable to Evergy, Inc. of $731.3 million versus $752.7 million
- Adjusted EPS (non-GAAP) of $3.54 for 2023 compared with $3.71 for 2022
- Operating revenues of $5,508.2 million, down from $5,859.1 million, with interest expense rising to $525.8 million from $404.0 million
- Capital plan of approximately $12.5 billion of base capital investments through 2028, including about $2.9 billion of new generation primarily renewable
- Goal of a 70% reduction in owned-generation CO2 emissions by 2030 from 2005 levels and net-zero CO2e emissions for scope 1 and 2 by 2045
- KCC approved a settlement in November 2023 with new Evergy Kansas Central rates effective December 2023, including recovery of the Persimmon Creek wind farm purchased for $220.9 million
- Credit ratings were downgraded in 2023 by one agency, with Evergy's outlooks moved from negative to stable; the $1.4 billion 4.50% convertible notes were issued in December 2023
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $5.51B$5.86B | −6.0% |
| Operating Expenses | $4.23B$4.59B | −8.0% |
| Operating Income | $1.28B$1.27B | +1.2% |
| Interest Expense | $525.80M$404.00M | +30.1% |
| Net Income | $731.30M$752.70M | −2.8% |
| EPS (Basic) | $3.18$3.27 | −2.8% |
| EPS (Diluted) | $3.17$3.27 | −3.1% |
| Shares Outstanding (Basic) | 230.00M229.90M | 0.0% |
| Shares Outstanding (Diluted) | 230.50M230.30M | +0.1% |
05—Questions
Frequently Asked Questions
Why did Evergy's earnings decline in 2023?
Net income attributable to Evergy, Inc. decreased $21.4 million, primarily due to higher depreciation and interest expense, a $96.5 million deferral of revenues for future refunds of COLI rate credits, and lower retail sales driven by unfavorable weather. These were partially offset by lower operating and maintenance expenses, new Evergy Metro and Evergy Missouri West retail rates effective January 2023, and lower income tax expense.
What are Evergy's main capital investment plans?
Evergy is targeting approximately $12.5 billion of base capital investments through 2028, including about $2.9 billion of new generation expected to be primarily renewable and other generation. The 2024 to 2028 capital expenditure forecast totals $2,125.0 million, $2,089.0 million, $2,457.0 million, $2,624.0 million and $3,200.0 million, respectively, for total capital expenditures of about $12.5 billion over that period.
What pending regulatory actions could affect Evergy's future revenues?
In February 2024, Evergy Missouri West requested an increase in retail revenues of about $104 million from the MPSC, based on a 10.5% return on equity with a 52% equity capital structure, with new rates expected in January 2025. Evergy Missouri West also reached a stipulation in February 2024 recommending a CCN for its Dogwood Energy Center purchase, with an MPSC decision and closing expected by the end of the second quarter of 2024.
How much debt did Evergy issue and what were the key financing actions?
In December 2023, Evergy, Inc. issued $1.4 billion of 4.50% Convertible Notes due 2027, which repaid the $500.0 million Term Loan Facility and a portion of commercial paper. Evergy Kansas Central issued $400.0 million of 5.70% FMBs in March 2023 and $300.0 million of 5.90% FMBs in November 2023, and Evergy Missouri West Storm Funding issued $331.1 million of 5.10% securitized bonds in February 2024.
What dividend does Evergy pay and what is its payout policy?
In February 2024, Evergy's Board declared a quarterly dividend of $0.6425 per share, payable March 22, 2024 to shareholders of record as of March 11, 2024. Evergy targets a long-term dividend payout ratio of 60% to 70% of earnings, and dividends declared for 2023 totaled $2.48 per share.
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