01—Abstract
Summary
Summary of the 10-Q filed May 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Evergy, Inc. reported net income attributable to Evergy of $122.7 milliona, or $0.53 per diluted share, for the three months ended March 31, 2024, down from $142.6 million, or $0.62 per diluted share, a year earlier.
Management attributed the decline mainly to higher depreciation and taxes other than income tax, 2023 mark-to-market gains on forward contracts, and higher transmission and distribution expense, partially offset by new Evergy Kansas Central retail rates effective in December 2023, lower pension non-service costs and lower income tax expense. Adjusted EPS (non-GAAP) was $0.54b versus $0.59. Operating revenues rose to $1,331.0 million from $1,296.8 million, and utility gross margin (non-GAAP) increased $20.5 million to $881.9 million.
Cash flows from operating activities were $317.3 millionc compared with $362.9 million, while additions to property, plant and equipment rose to $618.6 million from $527.7 million. Financing inflows of $303.6 million were supported by the February 2024 issuance of $331.1 million of 5.10% Securitized Bonds by Evergy Missouri West Storm Funding, which recover costs from the February 2021 winter weather event. Long-term debt, net, increased to $11,658.4 million from $11,053.3 million at December 31, 2023.
Evergy's board declared a quarterly dividend of $0.6425d per share in May 2024. Key pending matters include an Evergy Missouri West retail rate request of approximately $104 million, with an evidentiary hearing scheduled to begin in late September 2024 and new rates expected in January 2025. The filing also describes several EPA rules finalized in April 2024, such as those covering mercury and air toxics, greenhouse gases and coal combustion residuals, and states that compliance costs could be material for certain of them.
02—Key points
Key Highlights
- Net income attributable to Evergy, Inc. was $122.7 million ($0.53 diluted EPS) for Q1 2024, versus $142.6 million ($0.62) in Q1 2023; adjusted EPS (non-GAAP) was $0.54 versus $0.59.
- Operating revenues were $1,331.0 million versus $1,296.8 million, and utility gross margin (non-GAAP) was $881.9 million versus $861.4 million.
- Operating and maintenance expense rose $15.2 million, depreciation and amortization rose $12.7 million, and taxes other than income tax rose $11.7 million, with interest expense up to $133.2 million from $123.1 million.
- Additions to property, plant and equipment were $618.6 million in Q1 2024 versus $527.7 million, and cash from operations fell to $317.3 million from $362.9 million.
- Evergy Missouri West requested an approximately $104 million retail revenue increase from the MPSC, reflecting a 10.5% return on equity and a 52% equity capital structure; new rates are expected in January 2025.
- Evergy Missouri West Storm Funding issued $331.1 million of 5.10% Securitized Bonds in February 2024, and Evergy Metro issued $300.0 million of 5.40% Mortgage Bonds in April 2024.
- Evergy Missouri West purchased an approximately 145 MW joint ownership interest in the Dogwood Energy Center for approximately $60 million in April 2024, and the Kansas legislature enacted H.B. 2527, which includes a plant-in-service accounting provision.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 9, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.33B$1.30B | +2.6% |
| Operating Expenses | $1.07B$1.02B | +5.2% |
| Operating Income | $260.20M$279.30M | −6.8% |
| Interest Expense | $133.20M$123.10M | +8.2% |
| Net Income | $125.80M$142.60M | −11.8% |
| EPS (Basic) | $0.53$0.62 | −14.5% |
| EPS (Diluted) | $0.53$0.62 | −14.5% |
| Shares Outstanding (Basic) | 230.20M230.00M | +0.1% |
| Shares Outstanding (Diluted) | 230.40M230.30M | 0.0% |
05—Questions
Frequently Asked Questions
Why did Evergy's earnings decline in the first quarter of 2024?
Net income attributable to Evergy, Inc. decreased to $122.7 million from $142.6 million. The filing cites higher depreciation and taxes other than income tax, 2023 mark-to-market gains on forward contracts for natural gas and electricity, and higher transmission and distribution expense. These were partially offset by new Evergy Kansas Central retail rates effective in December 2023, lower pension non-service costs and lower income tax expense.
What regulatory decisions could affect Evergy's future revenues?
Evergy Missouri West requested an increase of approximately $104 million in retail revenues, with an evidentiary hearing scheduled to begin in late September 2024 and new rates expected to take effect in January 2025. In Kansas, the KCC approved transmission cost adjustments expected to increase Evergy Kansas Central's annual retail revenues by $80.1 million and Evergy Metro's by $7.1 million, effective in May 2024.
How is Evergy funding its capital spending?
Evergy relies primarily on cash from operations, short-term borrowings, long-term debt and equity issuances. As of March 31, 2024, Evergy had $1,406.8 million of available borrowing capacity under its master credit facility. Long-term debt, net, rose to $11,658.4 million from $11,053.3 million at December 31, 2023, reflecting the Securitized Bonds issuance, and the company stated that existing cash and available borrowing capacity provide sufficient liquidity for current capital requirements.
What environmental regulations could materially affect Evergy's operations?
In April 2024, the EPA finalized greenhouse gas regulations and guidelines for fossil fuel-fired electric generating units, updates to effluent limitations guidelines, an expansion of the coal combustion residuals rule, and a tightening of the mercury and air toxics standards. Evergy stated that the cost to comply with the mercury and air toxics rule does not appear to be material, but that costs could be material for several other rules. The EPA's ozone and fine particulate standards also could have material effects on operations.
What dividend did Evergy declare, and what do shareholders receive?
In May 2024, Evergy's Board of Directors declared a quarterly dividend of $0.6425 per share, payable June 20, 2024, to shareholders of record as of May 20, 2024. Cash dividends paid in the first quarter of 2024 were $147.7 million.
06—Continue