01—Abstract
Summary
Summary of the 10-Q filed August 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Evergy, Inc. (EVRG) filed its combined Form 10-Q for the quarter ended June 30, 2024, covering Evergy, Inc., Evergy Kansas Central, Inc. and Evergy Metro, Inc. For the three months ended June 30, 2024, Evergy reported operating revenues of $1,447.5 milliona, net income attributable to Evergy, Inc. of $207.0 million, and diluted earnings per share of $0.90, compared with $179.1 million and $0.78 a year earlier.
For the year to date, net income attributable to Evergy, Inc. was $329.7 millionb, or $1.43 per diluted share, versus $321.7 million, or $1.40, in the prior-year period. Management attributed the year-to-date increase mainly to new Evergy Kansas Central retail rates effective in December 2023, higher transmission revenues, lower pension non-service costs and higher retail sales driven by favorable weather. Adjusted EPS (non-GAAP) for the year to date was $1.44.
Balance sheet and financing activity grew over the period. Total assets rose to $31.83 billionc at June 30, 2024 from $30.98 billion at December 31, 2023, and long-term debt, net, increased to $11.95 billion from $11.05 billion. Year-to-date additions to property, plant and equipment were $1,296.1 million, and operating cash flow was $634.8 million, down from $715.2 million a year earlier.
Evergy Metro issued $300.0 milliond of 5.40% mortgage bonds in April 2024, Evergy Missouri West issued $300.0 million of 5.65% first mortgage bonds in May 2024, and Evergy Missouri West Storm Funding issued $331.1 million of 5.10% securitized bonds in February 2024. The company reported $1,527.6 million of available borrowing capacity under its $2.5 billion master credit facility. Regulatory and environmental developments include a pending Evergy Missouri West rate case requesting an increase of approximately $104 million, with an evidentiary hearing scheduled to begin in late September 2024 and new rates expected in January 2025.
Kansas enacted H.B. 2527, which provides a plant-in-service accounting option, and Evergy Kansas Central and Evergy Metro elected it effective July 2024.
The filing also reports that the EPA finalized several rules, including GHG regulations and an expanded CCR regulation, which the company says could have a material cost to comply, and that the company recorded $72.8 million of additional ARO liabilities tied to the CCR expansion. Management stated that it believes existing cash and available borrowing capacity provide sufficient liquidity.
02—Key points
Key Highlights
- Net income attributable to Evergy, Inc. was $207.0 million ($0.90 diluted EPS) for the quarter, up from $179.1 million ($0.78) a year earlier; year to date it was $329.7 million ($1.43), up from $321.7 million ($1.40).
- Operating revenues were $1,447.5 million for the quarter and $2,778.5 million year to date, compared with $1,354.2 million and $2,651.0 million in the prior-year periods.
- Year-to-date operating cash flow was $634.8 million, versus $715.2 million a year earlier, which the company attributed mainly to lower collection of receivables in January 2024.
- Year-to-date additions to property, plant and equipment were $1,296.1 million, and long-term debt, net, increased to $11.95 billion from $11.05 billion at year-end 2023.
- Evergy Missouri West filed a rate case requesting about $104 million in additional retail revenues, with new rates expected in January 2025 if approved.
- Evergy Missouri West purchased a 22% interest in the Dogwood Energy Center for approximately $60 million in April 2024.
- The company recorded $72.8 million of new ARO liabilities in the second quarter of 2024 related to the EPA's expanded CCR regulation, with an offsetting regulatory asset; the filing states that other EPA rules could have a material cost to comply.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 9, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.45B$1.35B | +6.9% |
| Operating Expenses | $1.09B$1.02B | +7.1% |
| Operating Income | $358.10M$336.60M | +6.4% |
| Interest Expense | $143.60M$133.70M | +7.4% |
| Net Income | $210.10M$179.10M | +17.3% |
| EPS (Basic) | $0.90$0.78 | +15.4% |
| EPS (Diluted) | $0.90$0.78 | +15.4% |
| Shares Outstanding (Basic) | 230.30M230.10M | +0.1% |
| Shares Outstanding (Diluted) | 230.50M230.50M | 0.0% |
05—Questions
Frequently Asked Questions
What drove the increase in Evergy's earnings this quarter?
Management attributed the increase in net income attributable to Evergy, Inc. for the three months ended June 30, 2024 to new Evergy Kansas Central retail rates effective in December 2023, higher transmission revenues, lower pension non-service costs, and higher retail sales driven by favorable weather. These were partially offset by higher taxes other than income tax, depreciation, operating and maintenance, and interest expense.
How much liquidity does Evergy have available?
As of June 30, 2024, Evergy had $1,527.6 million of available borrowing capacity under its $2.5 billion master credit facility, which is split among Evergy, Inc. ($199.3 million), Evergy Kansas Central ($153.4 million), Evergy Metro ($584.7 million) and Evergy Missouri West ($590.2 million). Management believes this capacity plus existing cash provides sufficient liquidity for current requirements.
What major debt was issued in 2024?
In February 2024, Evergy Missouri West Storm Funding issued $331.1 million of 5.10% securitized bonds. In April 2024, Evergy Metro issued $300.0 million of 5.40% mortgage bonds maturing in 2034, and in May 2024 Evergy Missouri West issued $300.0 million of 5.65% first mortgage bonds maturing in 2034. Proceeds from the mortgage bonds were used to pay down commercial paper and for general corporate purposes.
What pending regulatory decisions could affect future results?
Evergy Missouri West's 2024 rate case, which requests an increase of approximately $104 million based on a 10.5% return on equity with a 52% equity capital structure, has an evidentiary hearing scheduled to begin in late September 2024, with new rates expected to take effect in January 2025. The filing also notes a pending FERC complaint regarding 2018 and 2019 transmission over-collections, with a decision expected in 2024, and Evergy has recorded a $7.1 million regulatory liability for that matter.
What environmental regulations could raise costs?
The filing describes several EPA actions, including a final GHG regulation and guidelines for fossil-fuel-fired generating units, an expanded CCR regulation, a tightened MATS rule, and a final ozone Interstate Transport Federal Implementation Plan. The company states that the cost to comply with some of these rules could be material, while the cost of the MATS tightening is not expected to be material. The company is still reviewing several of the rules and says it cannot accurately assess their impact in some cases.
06—Continue