Evergy Q1 2025 Earnings Report

Evergy EPS Results

• Actual EPS: $0.54
• Consensus EPS: $0.66
• Beat/Miss: Missed by -$0.12
• One Year Ago EPS: $0.54

Evergy Revenue Results

• Actual Revenue: $1.37 billion
• Expected Revenue: $1.21 billion
• Beat/Miss: Beat by +$166.50 million
• YoY Revenue Growth: N/A

Evergy Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 9:00AM ET

Evergy (NASDAQ:EVRG), together with its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in the United States. The company generates electricity through coal, landfill gas, uranium, and natural gas and oil sources, as well as solar, wind, other renewable sources. It serves residences, commercial firms, industrials, municipalities, and other electric utilities. The company was incorporated in 2017 and is headquartered in Kansas City, Missouri.

Evergy Q1 2025 Earnings Call Transcript

Key Takeaways

• Evergy reported Q1 adjusted earnings of $0.54 per share, in line with last year, driven by recovery of regulated investments but offset by lower industrial demand and higher expenses, and reaffirmed its 2025 EPS guidance of $3.92-$4.12 and long-term growth target of 4-6% through 2029.
• New legislation in Kansas and Missouri, including PISA, natural gas CWIP and data-center tax incentives, strengthens regulatory frameworks and accelerates infrastructure investment to attract advanced manufacturing and data-center projects.
• Evergy’s economic development pipeline stands at 12.2 GW, with 300 MW actively under construction, 1.3 GW in finalizing agreements expected to ramp in late 2027-2028, and another 2.9 GW in advanced discussions.
• In its 2025 Integrated Resource Plans, Evergy adopted an all-of-the-above generation strategy, adding ~2.1 GW of solar, wind, batteries and gas by 2035, delaying some coal retirements and exploring gas conversions to ensure reliability and affordability.
• Operational metrics remain strong, with system reliability (SADI/SAFE) and generation availability holding up through extreme winter weather, highlighted by a new Southwest Power Pool winter peak of over 48 GW.

Presentation

[Operator]

Good

[Operator]

day and thank you for standing by. Welcome to the Evergy Q1 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

[Operator]

You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Peter Flynn.

[Peter Flynn, Director of Investor Relations at Evergy]

Thank you, Corey, and good morning, everyone. Welcome to Evergy's first quarter twenty twenty five earnings conference call. Our webcast slides and supplemental financial information are available on our Investor Relations website at investors.evergy.com. Today's discussion will include forward looking information. Slide two and the disclosures in our SEC filings contain a list of of the factors that could cause future results to differ materially from our expectations.

[Peter Flynn, Director of Investor Relations at Evergy]

They also include additional information on our non GAAP financial measures. Joining us on today's call are David Campbell, Chairman and Chief Executive Officer, and Brian Buckler, Executive Vice President and Chief Financial Officer. David will cover first quarter highlights, recent legislative outcomes, provide updates on economic development activities, our 2025 integrated resource plan, and regulatory updates. Brian will cover our first quarter results, retail sales trends, and our financial outlook. Other members of management are with us and will be available during the Q and A

[Peter Flynn, Director of Investor Relations at Evergy]

portion of the call. I will now turn the call over to David.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Thanks Pete, and good morning everyone. I'll begin on slide five. This morning we reported first quarter adjusted earnings of $0.54 per share compared to $0.54 per share a year ago relative to last year.

[David Campbell, Chairman, President, Director & CEO at Evergy]

This quarter's results were driven by recovery of regulated investments, partially offset by lower industrial demand and higher interest and depreciation expense. And while absolute retail demand grew 2.7 and heating degree days increased 18%, the volume benefits from the cold weather did not manifest into margin given declining block pricing in the winter months. We also saw weakness in sales due to scaled back activities following two significant heavy snow events, as well as a large industrial customer outage caused by an unplanned maintenance shutdown at their refinery. Fortunately, this customer has returned to normal operations this month. As we look forward to full year 2025, we continue to see strength in our underlying operations to keep us on track to deliver on our earnings expectations.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We are reaffirming our 2025 adjusted EPS guidance range of $3.92 per share to $4.12 per share with a midpoint of $4.02 per share. Brian will go into more detail regarding our financial results as part of his remarks. The long term outlook for our business is as strong as it has been in decades, bolstered by strong demand from large new customers, one of the most robust customer pipelines in the industry, and constructive regulatory frameworks in support of legislation in both Kansas and Missouri. We are reaffirming our long term earnings growth target of 4% to 6% through 2029 based on the 2025 midpoint of $4.2 per share. From 2026 to 2029, we anticipate being in the top half of this guidance range relative to the 2025 baseline, with significant additional tailwinds from potential large new customers and investments to serve them.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Moving to operations, our teams drove solid performance in the first quarter. Our average duration and frequency, as measured by SADI and SAFE, are performing favorably relative to targets. Our generation team achieved strong availability and ran well through extreme weather, including the blizzard in early January and record breaking cold over consecutive days in late February. The latter cold spell drove a new winter peak load record of over 48 gigawatts in the Southwest Power Pool, surpassing the previous record that was set in December of twenty twenty two. These outcomes demonstrate the benefits and need for our continued investment in energy infrastructure, including grid modernization projects grid modernization projects and new dispatchable generation.

[David Campbell, Chairman, President, Director & CEO at Evergy]

I'd like to thank all of our frontline employees for their unwavering dedication and hard work in maintaining the reliability of our system and keeping the lights on for our customers. On the legislative front, constructive bills were passed in both Kansas and Missouri that enhance our strong regulatory frameworks and further enable infrastructure investment to drive growth and prosperity for our region. On slide six, we highlight recent legislation that will empower growth and investment in our region and firmly position Kansas and Missouri as premier destinations for new advanced manufacturing facilities and data centers. These outcomes are the product of broad based alignment between Evergy, the Governor's offices, state legislators, our regulatory commissions, and key stakeholders, as well as our shared commitment to seize on the growth opportunities ahead of us for our customers and communities. Constructive regulatory frameworks that enable timely infrastructure investment to meet the needs of both new and existing customers are critical to our success, and the bills passed this year in both states, as well as last year in Kansas, directly advance these priorities.

[David Campbell, Chairman, President, Director & CEO at Evergy]

The PISA and natural gas CWIP provisions serve to mitigate regulatory lag and support our strong credit profiles we execute on our 17,500,000,000 capital plan. While data center tax incentive packages bolster the business friendly environments that Kansas and Missouri are already known for, which have been instrumental in attracting new customers. All told, these legislative advancements will attract the investment of major industry players and prove that Kansas and Missouri are top destinations for new business and growth. We'd like to thank our many stakeholders for the engagement and participation that made this possible. For our part, Evergy remains committed to investing to provide safe, affordable and reliable electric service to our 1,700,000 existing customers and the new customers we are bringing online.

[David Campbell, Chairman, President, Director & CEO at Evergy]

All of our stakeholders stand to benefit from this unprecedented investment opportunity as large new customers help spread our fixed costs over a broader base. Our communities benefit from job creation, development of ancillary businesses and services, improved economic resiliency with a more diversified industrial base, and a larger tax base. Slide seven describes our pipeline in greater detail. As I just described, we are well positioned to continue to track economic development. Relative to our size, our backlog of growth opportunities is one of the most robust in the country, reflecting the competitiveness and vitality of our region.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Of course, the environment for new economic development projects is competitive, and we do not expect to win all projects in the queue. Since our fourth quarter call, our pipeline has expanded by one gigawatt to 12.2 gigawatts. We have also moved 300 megawatts out of the finalizing agreements category and into the actively building category. This reflects the expansion of a data center project in Missouri, and we expect this load to ramp beginning in 02/1930. This customer has signed agreements and we are actively building on the site.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We are in final stages of negotiation with two large customers for two data center projects representing 1.3 gigawatts of load. One of these customers is evaluating our Kansas service territory and the other, an existing data center customer, is evaluating expansion in Missouri. We are very excited about the prospects of serving these new projects and bringing economic development to our communities. Both customers remain on track to share announcements regarding their plans later this year. Subject to final agreements and project announcements, we expect to begin to see an impact on our demand growth from these customers in 2027 and 2028 and into the next decade.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Brian will cover this demand profile in more detail as part of his remarks. We also remain in advanced discussions with customers whose load would represent approximately three gigawatts. While these customer projects are not as far along as the others in the pipeline that I've described, They have acquired land or land rights, presented a site plan, and in some cases signed letters of agreement to advance the evaluation process. The remaining balance of our pipeline, which grew from six gigawatts to seven gigawatts, reflects initial conversations with potential customers. While all of this load may not be addressable, the continued interest nonetheless demonstrates significant activity and interest in Kansas and Missouri and customers who stand ready if others drop out of the queue.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Moving to slide eight, we provide a consolidated summary of our twenty twenty five integrated resource plan filings, which we submitted in Missouri in March and in Kansas last week. This year's IRP reflects the impacts of updating our long term expected demand growth, including the addition of potential large loads in our finalizing agreements pipeline category, as well as other important inputs such as reserve margin requirements of the Southwest Power Pool have changed, construction cost estimates and commodity price forecasts. Overall, our approach reflects an all of the above strategy for new generation development and adds approximately 2.1 gigawatts of new generation from 2025 through 02/1935 relative to last year's IRP. Earlier this week, we issued an all source request for proposals to solicit bids for projects through 02/1932 to identify and help serve these needs. This process will complement our self developed opportunities.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Our planning process involves identifying the most cost effective and resilient plan that reliably serves our customers across uncertain future scenarios. We believe that the renewable and natural gas additions, as shown in our IRP, are being planned in a manner that will allow Evergy to take advantage of best in class efficiency and support economic development in our service territory, while at the same time helping to minimize the impact on affordability and ensuring that we provide reliable electric service. You'll also note that our preferred plan delays the retirement of certain facilities and factors in potential conversions to natural gas. While there are risks and uncertainties for these plants given their age, limited availability of replacement parts, and potential future investment requirements to maintain reliability, we are committed to a flexible approach that best serves our customers. Evergy has managed our generation fleet to operate efficiently, meet environmental standards, and be available when called upon.

[David Campbell, Chairman, President, Director & CEO at Evergy]

The ultimate goal of our IRP is to ensure reliability and affordability for our customers as we advance a balanced all of the above generation portfolio. This view is reflected in the slide, which includes solar, wind, batteries and natural gas. Moving to slide nine, I'll provide a brief update on our regulatory priorities and activities in Kansas and Missouri. On the Kansas side, we continue to work through our pending Kansas Central Rate Case. The procedural schedule calls for intervenor testimony by June 6, followed by rebuttal testimony on July 3.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Settlement conferences will be held on July, with hearings commencing on July 21. We look forward to working with our regulators and stakeholders over the coming months to achieve a constructive outcome for our Kansas Central customers. As a reminder, Kansas rate cases run on an eight month clock, and we anticipate final resolution in late September. We also have pending requests before the KCC for predetermination on partial ownership of two combined cycle natural gas plants, as well as a new solar farm. We are pleased to reach settlement agreements for these three projects.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We appreciate the dialogue and participation from KCC staff, curb, industrial consumers, and other stakeholders all as part of the process. We anticipate a commission order by July 7. The KCC recently approved a procedural schedule for our request to approve a large load power service tariff that would apply to prospective data center customers. We believe the tariff allows for adequate cost recovery associated with large new loads while being competitive with rates in neighboring states. The procedural schedule calls for an early settlement offer by June 20, settlement discussions on June 23, and a settlement agreement due by July 3.

[David Campbell, Chairman, President, Director & CEO at Evergy]

If an early settlement is not reached, there will be opportunities for additional discussions in the fall ahead of hearings starting on October 8. Pivoting to Missouri, we have pending requests for certificates of convenience and necessity, or CCNs, related to two solar farms, partial ownership and two combined cycle natural gas units, and full ownership of a simple cycle natural gas plant. In April, the Missouri Public Service Commission staff recommended approval of construction for all of these facilities with certain conditions. We believe these projects, which are part of our IRP for Missouri, form a cost effective package of reliable energy solutions for our customers and demonstrate alignment with the Missouri Public Service Commission's interest in securing additional generation resources for our Missouri utilities. For both the solar and gas projects, settlement conferences begin on May 22, followed by hearings for solar on May 27 and natural gas on May 29.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Similar to Kansas, in February we filed a request in Missouri to approve a large load power service tariff. The parties proposed a joint procedural schedule that would call for intervener rebuttal testimony by July 25, a settlement conference on September 23, and hearings from September 29 to October 3. We're also working with Missouri stakeholders to have advanced settlement discussions similar to the Kansas schedule. I'll conclude my remarks with slide 10, which highlights the core tenets of our strategy. Our efforts to enhance affordability have yielded significant progress in improving regional rate competitiveness over the past few years.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Our strategic plan is designed to sustain this momentum by keeping our long term rate trajectory in line with the rate of inflation while still investing in infrastructure to support growth across our region. By prioritizing affordability, we support prosperity within our states and contribute to our robust economic development pipeline. Ensuring reliability is also a core element of our strategy as measured by SADI, safety, grid resiliency, and generation fleet availability. This also includes a focus on metrics relating to customer service, safety in all elements of our operations, and infrastructure investment. And with respect to sustainability, we continue to advance the transition of our generation fleet, as detailed in our 2025 IRP updates.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We look forward to continuing to advance a balanced all of the above mix of resource additions over the coming years to support growth and prosperity in our states. And with that, I will turn the call over to Brian.

[Bryan Buckler, EVP & CFO at Evergy]

Thank you, David. Thank you, Pete, and good morning, everyone. I'll start on slide 12 with a review of our results for the quarter. For the first quarter of twenty twenty five, Evergy delivered adjusted earnings of $125,000,000 or $0.54 per share, compared to $124,700,000 or $0.54 per share in the first quarter of twenty twenty four. As shown on the slide from left to right, the year over year drivers are as follows.

[Bryan Buckler, EVP & CFO at Evergy]

First, the net impact to retail sales volumes, pricing, and weather drove a $01 benefit. While colder winter weather produced an 18% increase in heating degree days, the volume benefits from this weather manifested into a limited margin benefit given the declining block pricing, where rates in the winter decline as customer usage enters higher tiers. Our results also reflect the roll off of the leap year impact in 2024, which benefited the prior year by approximately $03 Further impacting results was a large unplanned customer outage, as I'll speak to you shortly. Next, recovery of and return on regulated investments, driven by new retail rates at Evergy Missouri West and FERC regulated investments contributed $0.13 of EPS. Higher depreciation and interest expense due to increased infrastructure investment drove a $10 decrease in EPS.

[Bryan Buckler, EVP & CFO at Evergy]

And finally, other items negatively impacted results by $04 Turning to slide 13, I'll provide more details on our sales trends. On the left hand side of the screen, you'll see total demand grew 2.7%, while weather normalized demand decreased by three percent. Colder winter weather led to increases in residential and commercial usage, but major snowstorms limited the business activity in January and to some degree in February. On the industrial side, as I briefly alluded to, the year over year decline in demand was driven primarily by a large industrial customer going offline for most of the first quarter due to a temporary unplanned maintenance shutdown. Importantly, in April, this customer began to resume operations and we expect them to be at normal production levels this month.

[Bryan Buckler, EVP & CFO at Evergy]

While the combination of these factors had an outsized impact on weather normalized load in the first quarter, we continue to anticipate healthy growth for the balance of the year. Our forecast is supported by strong underlying increases in customer numbers, which were up 1% compared to last year, as well as the expected ramp of Meta and Panasonic in the second half of the year. As we move to Slide 14, I'd like to discuss year to go considerations supporting our 2025 adjusted EPS guidance. With the unusual items I noted earlier, the first quarter was a slower start to the year than anticipated. We have analyzed the balance of the year drivers and without mitigation, we would be trading approximately $05 below our 2025 adjusted EPS guidance midpoint.

[Bryan Buckler, EVP & CFO at Evergy]

Fortunately, the foundational earnings drivers of the company remain strong, and we anticipate meeting the midpoint of our EPS target with normal weather the rest of the year. There are a few factors that give us confidence in achieving our target. For example, year to date, our operational performance, including O and M cost management, has been strong. As we look to the balance of the year, we remain laser focused on driving cost efficiencies and pulling O and M levers as necessary to achieve our financial targets. Additionally, as I previously described, we anticipate a rebound in weather normalized demand growth in the third and fourth quarters, which we expect to be supplemented by growth in revenue from recovery of our state and FERC regulated investments.

[Bryan Buckler, EVP & CFO at Evergy]

In short, we are committed to executing our plan and achieving our financial goals. Let's now turn to our financing plan on slide 15. Our projected capital investments over the five years through 2029 stand at $17,500,000,000 consistent with our capital plan update we provided on the fourth quarter earnings call. In fact, there is no change in our messaging from the previous quarter with respect to our financing plan through 2029. We anticipate funding our investments prudently, targeting an FFO to debt ratio of approximately 15% throughout the forecast period.

[Bryan Buckler, EVP & CFO at Evergy]

Our strong cash flows from operations will be supplemented by the issuance of debt, equity and equity like instruments. Our forecasted equity issuances across 'twenty six to 2029 remain at $2,800,000,000 And as a reminder, our 2025 guidance does not contemplate new equity issuances this year, and we anticipate roughly $1,200,000,000 of equity issuances in total across 2026 and 2027 combined. As I mentioned during our fourth quarter call, the EPS and financing plan we are sharing with you again today only includes load growth expectations from the first set of large customer additions. We are optimistic that our equity needs will be lower for this $17,500,000,000 capital plan if additional large customers begin to come online by 2028, which as previously discussed is becoming increasingly likely. In short, our customer pipeline has the potential to not only increase Evergy's earnings power, but would also provide a substantial benefit to operating cash flow, allowing us to moderate equity issuance in the future, assuming the $17,500,000,000 capital plan is unchanged.

[Bryan Buckler, EVP & CFO at Evergy]

You may soon see us take steps to begin to address our future equity needs. We would expect any equity issuance activity in 2025 to settle no earlier than 2026. These steps will allow us to be nimble in our approach to accessing the capital markets. Turning to Slide 16, here we profile our demand growth outlook in tandem with the tremendous large customer opportunities in front of us. As a reminder, our 2% to 3% demand growth forecast through 2029 only reflects large customer announcements today.

[Bryan Buckler, EVP & CFO at Evergy]

We expect a combination of Panasonic, Meta and Google's load ramps to contribute approximately 500 megawatts of new load by 2029, with the balance driving growth into the early 2030s. This is incremental to our traditional base retail planning assumption of a half percent to 1%. As David described earlier, load from customers in these finalizing agreements category would be additive to the 2% to 3% demand growth forecasts, reflecting approximately 600 megawatts of incremental demand by 2029. This would potentially drive our total retail sales growth to 4% to 5% through 2029, with further additional upside in those years for the next customer pipeline that we have termed to be in the advanced discussion stage. To step back again and relative to our size, we continue to believe we had one of the most compelling customer growth opportunities in the entire industry that could drive robust growth, not just in our five year forecast, but into the next decade for Evergy and for the communities we serve.

[Bryan Buckler, EVP & CFO at Evergy]

I'll close on slide 17 with a recap of our long term financial expectations. As David stated, Evergy's long term business outlook is as strong as it's been in decades. We are reaffirming both our adjusted EPS guidance range for 2025, as well as our long term adjusted EPS growth target of 4% to 6% through 2029. From the baseline midpoint of $4.2 in 2025, we expect to grow in the top half of our 4% to 6% adjusted EPS target range through 2029, with additional tailwinds to this plan, including potential additional wins from our large customer pipeline. Our employees remain focused on consistent execution of our customer, operational and financial goals as we advance our strategic objectives of ensuring affordability and reliability for our customers and driving a sustainable business model for the long term prosperity of our customers and our communities.

[Bryan Buckler, EVP & CFO at Evergy]

Thank you for joining us today, and we will now open the call up for your questions.

[Operator]

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 1 1 on your telephone and wait for your name to be announced. Our first call comes from the line of Durgesh Chopra of Evercore. Your line is open.

[Durgesh Chopra, Managing Director at Evercore ISI]

Hey, team. Good morning. Thank you for

[David Campbell, Chairman, President, Director & CEO at Evergy]

Good morning, Durgesh.

[Durgesh Chopra, Managing Director at Evercore ISI]

Hey, good morning, Good morning. To start off, quick clarification on the quarter itself. Brian, you mentioned $05 below your expectations, and you mentioned that was a number after some mitigating actions. Maybe just give us what the gross number is and if my understanding of the 5¢ is accurate.

[Bryan Buckler, EVP & CFO at Evergy]

Yeah. Durgesh, just to clarify there, the $3.97 appointed to, which is 5¢ short of the $4.2 that's actually before mitigating items. So that's just our base plan, our base outlook, if you will, for the full year sitting here today before mitigating items. We're already being in active discussions with our entire officer team to mitigate that $05 delta. And we actually fully expect to be at $4.2 for the full year sitting here today.

[Durgesh Chopra, Managing Director at Evercore ISI]

Yeah. Okay. So so just to be clear, the first quarter came in 5¢ below where you would have expected it to be. Is that a fair articulation?

[Bryan Buckler, EVP & CFO at Evergy]

That's that's the that's the way to think about it.

[Durgesh Chopra, Managing Director at Evercore ISI]

Okay. Thanks. Appreciate that. And then just any color you can share on the timing of the 1.3 gigawatts? Nice to see the 300 megawatts moved into the execution mode here, but just any color you can share on the timing of when those contracts may be signed?

[Durgesh Chopra, Managing Director at Evercore ISI]

And doesn't sound like just, again, just asking for confirmation, but doesn't sound like you're seeing any softness of demand from your customers, but just any perspective there given all the Microsoft noise, etcetera.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Yep. Great question. We still have tremendous confidence in the discussions. We're having very active discussions and the pipeline has actually expanded. The folks who stand ready later in the queue if folks drop out, that's as robust as ever.

[David Campbell, Chairman, President, Director & CEO at Evergy]

And we've advanced significant conversations with the folks in the actively building and finalizing agreements categories. A lot of investments have already been made and direct on behalf of those customers that they either paid for directly or backstopped. I anticipate exact timing, I think it's probably linked to when we finalize the large load power service tariff proceedings, which we do expect to wrap up by year end. But the exact timing is a little dependent on whether we get settlements and following the hearings, but it'll likely be right around the end of the third quarter and into the fourth quarter. And I expect the announcements could proceed that, but there's a linkage obviously with finalizing those tariffs.

[David Campbell, Chairman, President, Director & CEO at Evergy]

But back to your overall question, very positive discussions. We haven't disclosed all the names of the counterparties, of course, though some of the names have been public in the past because there have been a couple announcements. And those parties continue to show commitment to the underlying strategy that's reflected and very robust interest in our territory. And we continue to take the steps needed to make sure that we can serve them.

[Durgesh Chopra, Managing Director at Evercore ISI]

Thank you, David. So it's Q3, Q4 after, kind of most likely after you finalize these tariff discussions in both states. Understood. Thank you, and I'll get back in the queue.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Great. Thank you.

[Bryan Buckler, EVP & CFO at Evergy]

Thank you.

[Operator]

Thank you very much. One moment for our next question. Our next question comes from the line of Nathan Richardson of Barclays. Your line is open.

[Nathan Richardson, AVP - Equity Research at Barclays]

Hey, everybody. Can you hear me okay?

[David Campbell, Chairman, President, Director & CEO at Evergy]

We can. Good morning.

[Nathan Richardson, AVP - Equity Research at Barclays]

Good morning. My first question is, so I know you talked a little bit about how increased sales could lead to downward pressure on equity, but I was wondering if you could quantify that at all. If there's a sensitivity every 1% of sales growth is X billion dollars of equity or anything along those lines.

[Bryan Buckler, EVP & CFO at Evergy]

Hey Nathan, good morning. It's Brian. Yeah, thanks for the question. We haven't laid out our exact kind of guidance, if you will, on how much equity issuances could go down with the load growth. But going from the 2% to 3% load expectation that's currently embedded in our five year plan to what we

[Bryan Buckler, EVP & CFO at Evergy]

think is ultimately going to

[Bryan Buckler, EVP & CFO at Evergy]

be more like 4% to 5% as more of these customers sign up and begin operations and as early as late twenty twenty seven. And we think there'll be some pretty robust load growth from them in '28 and 2029. It's really impactful to your FFO. And as you know, an FFO dollar goes a long way to improving your metrics on FFO to debt. So suffice it to say, it could be hundreds of millions of dollars of less equity over that five year period, again, based on the $17,500,000,000 capital plan.

[Nathan Richardson, AVP - Equity Research at Barclays]

That makes sense. Thank you. And then one more question. So I saw that there's some increased guidance on the IRP. And given that there's clearly some pressure higher on load growth, does the IRP currently tie into the 2% to 3% prior guidance or could it absorb some of the incremental megawatts that are popping up in the backlog right now?

[David Campbell, Chairman, President, Director & CEO at Evergy]

It's a good question. In the latest Integrated Resource Plan filings, given how advanced the discussions are and the need to plan ahead, we actually included the customers in the actively building and finalizing agreements categories in the Integrated Resource Plan. And that's one of the drivers of why you see the increased resource needs and also some flexing in the retirement timelines and consideration of conversions to natural gas. And I know that leaves a natural question of, okay, which resources are in our forward financial plan, the $17,500,000,000 capital plan and which are not. So we actually added a page, give full credit to the team in doing that.

[David Campbell, Chairman, President, Director & CEO at Evergy]

So slide 23 in the appendix lays out which resources in our latest integrated resource plan are in the capital plan and which are not yet in the capital plan. And consistent with our overall approach of sticking with the demand growth forecast of 2% to 3%, we do see real opportunities just as Brian described on incremental load, we'll also see the incremental resources we expect to have in the mix to serve these customers. So those will be part and parcel as we give updates as customers make their announcements.

[Nathan Richardson, AVP - Equity Research at Barclays]

Got it. That makes a lot of sense. That's all I had. Thank you, everybody.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Thank you.

[Bryan Buckler, EVP & CFO at Evergy]

Thank you, Nathan.

[Operator]

Thank you very much. One moment for our next question. Our next question comes from the line of Travis Miller at Morningstar. Your line is open.

[Travis Miller, Analyst at Morningstar]

Thank you. Good morning. Good morning. Good morning, Travis. I just wanted to clarify something.

[Travis Miller, Analyst at Morningstar]

So the 300 megawatts that you were talking about that went into construction, I suppose, And then ramping your expectation in 02/1930, is that the typical timeline that you're seeing among either large load customers or even specifically data center customers, that kind of four year type of build and ramp?

[David Campbell, Chairman, President, Director & CEO at Evergy]

I think when you see both the actively building and finalizing agreements category, we try to lay out in both how much of the total megawatts will we see through 'twenty nine and then how much coming online after 'twenty nine. You'll see in both categories, it's 1.1 gigawatts in the actively building category, about 500 megawatts that we expect through 2029. Up to 500 megawatts through 2029 is what we expect in those categories, obviously further along. And finalizing agreements categories, obviously we're in advanced discussions there as well, 600 megawatts by 2029. So I think those are obviously still extremely large customers, but it is reasonably typical to see a ramp for these folks over time.

[David Campbell, Chairman, President, Director & CEO at Evergy]

So I describe the shifting in the category as partly reflects an expansion in when they expect that to come online, but the degree of conviction, the level of discussion, the amount of work underway is why we shifted into the actively building category. But that mix is pretty similar across those two groups as you saw by 'twenty nine versus ramping up after the 'twenty nine time period.

[Bryan Buckler, EVP & CFO at Evergy]

And Travis, I might just add a little bit to that. The slide seven that shows the advanced discussions of 2.9 gigawatts, some of that load or some of that customer peak demand could start impacting our load as early as late twenty seven, certainly by '28, '20 '20 '9. So I just wanted that maybe gives you a feel too that even some of our deeper parts of our pipeline could turn into load growth here in the five year plan.

[Travis Miller, Analyst at Morningstar]

Okay. So kind of staggered across different customers over that time period. Okay. Okay. That makes sense.

[Travis Miller, Analyst at Morningstar]

And then just another clarification. On the residential demands, the weather adjusted demand decline, can you go over that again or explain what happened in that residential category?

[David Campbell, Chairman, President, Director & CEO at Evergy]

It's a good question. I'll ask Brian go into later. I'm a big fan of the weather adjusted analysis, but when weather gets extreme, it can become a little there's a little bit of art in the science, if you will. So you'll see that the overall residential demand was up 8%. Weather adjusted down 3%, so it's a little bit odd in what that split is.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We're not reading if Brian mentioned on the total number of customers went up, So we don't think there's something systematic going on there, but it's something that we'll track. We've had robust growth in the residential side the last couple of years, so I think it's a little bit in the art and science, it's my personal view. That's right. And the phenomenon that we did cite, and this is something that is not true in all jurisdictions, frankly my past history was a little bit different, but the block pricing phenomenon is real. I just cited one of our biggest residential groups is in Missouri Metro, and once you get to the highest levels of usage, rates drop by 45%.

[David Campbell, Chairman, President, Director & CEO at Evergy]

So the declining phenomenon of pricing in the winter is real. It's actually the inverse in the summer doesn't go up by nearly that percentage, but actually goes up a little bit as consume more. So that's the dynamic that happened. Anyone who has kids in the school systems in the greater Kansas City area knows that they had a couple full weeks when they basically didn't have their kids in school, so that had some impact on commercial activity and some knock on industrial. So that's an unusual quarter in the amount of snow impacts on some of the underlying economic activity, and then the concentration residential that was mitigated by the block pricing.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Brian, anything you'd add on that?

[Bryan Buckler, EVP & CFO at Evergy]

No, that's perfect. Well, maybe just briefly, was thinking about this some more yesterday, Travis. And when you look at a rolling twelve months, do you get a better feel for trends, real trends in residential and commercial in particular? Residential is up 1.2% on a weather normalized basis over a rolling twelve month period and commercial is up nearly 1.5% over a rolling twelve month period. So I want you to have that as well.

[Bryan Buckler, EVP & CFO at Evergy]

It's kind of shows the overall economic strength and strength in the growth of residential members actually here in Kansas, Missouri areas.

[Travis Miller, Analyst at Morningstar]

Sure. Okay. Yeah. Figured your 1Q is always obviously a little bit lower than 3Q certainly. Okay.

[Travis Miller, Analyst at Morningstar]

Well, that's very helpful. I appreciate all the details.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Thank you.

[Bryan Buckler, EVP & CFO at Evergy]

Thank you.

[Operator]

Thank you. One moment for our next call. Our next question comes from the line of Julien Dumoulin Smith. Your line is open.

[Tanner James, VP - North America Power, Utilities, and Clean Energy Research at Jefferies]

Hi, this is Tanner on for Julien. Good morning.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Good morning.

[Tanner James, VP - North America Power, Utilities, and Clean Energy Research at Jefferies]

Good morning. You somewhat spoke to this in your response to Nathan's question on the IRP, but drilling in on the coal plant retirement specifically, could you discuss the rationale that went into extending the timing of the retirement, you know, specifically with with with it regarding the the specific dates chosen? You know, clearly, these plants online provide some room to help at least in the near term accommodate and integrate new large customer load, even if it's not directly tied. Kind of depending on how things break over the next few years, is there further flexibility to manage these retirement dates?

[David Campbell, Chairman, President, Director & CEO at Evergy]

That's a great question. You heard me comment on that in my remarks. So there's some risks and uncertainties that are higher with older units like these. Once we get into the 2030s, the majority of our coal fleet will be in its 60s, somewhere around 60 years old, and I think that's a tremendous age for a human being because I'll be in that same category. But for coal plants as you get into that phase, we've made some investments in a number of these, but the units that were identified for retirement are ones that either have potential incremental investment needs for environmental retrofit equipment depending on the status of the EPA rules at the time, or they had some maintenance that hasn't been done in light of their expected timeline.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Lawrence, which is the unit that's four fifty megawatts in total, is our oldest unit. Jeffrey Energy Center Unit two is one that, for example, doesn't have an SCR. So there is some flexibility, but as you get over time, the age of the unit, the availability of replacement parts, because you have to sometimes do dedicated forgings to find spare parts, and the potential incremental investment requirements to maintain reliability and meet standards that could change. There's some flexibility, but we recognize that it's like an older car, there's only so far long that you can take it. So some of this will be responsive to what the rules are that are applicable, of course, on the federal side, but this flexibility we think makes sense.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Lawrence is our oldest unit. You see it's a shorter amount of time than we've deferred in terms of the retirement timeline and even the conversion. But this reflects our best thinking, but we know that there's a little more uncertainty with some of these older units given their age.

[Tanner James, VP - North America Power, Utilities, and Clean Energy Research at Jefferies]

Great. Thanks. And then switching gears, with respect to your ability to pull O and M levers to meet 25 guidance, can you discuss the different buckets you can sort of manage through the end of the year and maybe how to think about the effect that could have in terms of your future optionality available to you in 'twenty six and 'twenty seven, especially as your target EPS CAGR accelerates? Thanks.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Yeah. Well, I think for better or worse, we, like other companies, have a fair bit of experience and you always want to have some flexibility to manage your business and mitigate issues that arise. So the $05 category is something that our team has demonstrated the ability if you've seen our cost management in past years where there's a wide range of levers across the business. So it generally involves discretionary activities, third party spend. We will do what we need to do to make sure we maintain reliability and keep the integrity of our system going.

[David Campbell, Chairman, President, Director & CEO at Evergy]

But there's always some levers that you can pull in managing your business, and it's really across all the different parts of our business. And we've got a fair bit of experience with it. Don't think we're unique in that. I think other companies have that same capability. And it's early in the year, it's a pretty modest amount, still important, so we've got work to do to make sure we get there.

[David Campbell, Chairman, President, Director & CEO at Evergy]

But we're confident in our ability to identify that amount, given that we're sitting here with still eight months left in the year. I don't think it impacts our ability to hit our future targets or the growth that we see in the future. I will make sure that we're still spending what we need to ensure reliability and serve our customers.

[Tanner James, VP - North America Power, Utilities, and Clean Energy Research at Jefferies]

Great. Thank you very much.

[Operator]

Thank you very much.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Thank you.

[Operator]

One moment for our next question. Our next question comes from the line of Paul Cole of Bank of America. Your line is open.

[Paul Cole, Equity Analyst at Bank of America Securities]

Thank you. Good morning. I wanted to go back if I could to the large load tariff disclosures you made around Kansas and Missouri. Can you talk about the spread of parties and interests in these dockets? And how important a constructive outcome is to the conversations that you're having with the data center developers and other large load users?

[David Campbell, Chairman, President, Director & CEO at Evergy]

I think it's a great question. Thank you, Paul. It's obviously a very important discussion. We went the route of filing for a large load power service tariffs because we think having a dialogue that includes the key parties is really important. These are very large new customers.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We think there's a real opportunity here to have a win for the new customers because we have the ability to serve them. We're in a market where we've got competitive rates and the ability to have the transmission generation capacity to serve in the time they need to. At the same time, have a win for our existing customers because we're bringing in large new customers who can really help to spread fixed costs. But they're large enough that we want to have a tariff so that it's a proceeding in which everyone's involved. Very wide participation in these proceedings in both states, as you would expect.

[David Campbell, Chairman, President, Director & CEO at Evergy]

We've had a high level of dialogue with our large customers, as you would expect. It's been constructive throughout. So we've been very transparent in our approach with those customers. They know exactly what we're trying to achieve and they continue to have advanced discussions with us. So they know what we're trying to do, where we're trending.

[David Campbell, Chairman, President, Director & CEO at Evergy]

And we wanted to get ahead of this because we know it's an important element of the process. But they're also solving for availability and can we hit a ramp rate and can we hit a timeline. So we've taken the steps and they've taken the steps to stay on that track while we're having the conversation. So we still have to get through those proceedings, but we're already in constructive dialogue with parties, you'll obviously see the result later this year, but we feel good about how they're trending.

[Paul Cole, Equity Analyst at Bank of America Securities]

Perfect, thank you. And then just a quick follow-up, Brian, to some of the comments you made around equity expectations for this year. Can can am I understanding correctly when I say that you're you're not precluding the option of issuing equity this year, but it would be under a mechanism whereby there'll be no dilution until 2026?

[Bryan Buckler, EVP & CFO at Evergy]

Hey, Paul, good morning. Yes, your understanding is right. Like many of our peers, we may be thoughtful about accessing the market here in 2025. And but anything we do would have a forward component to it that settles in 2026 or 2027. And as we've articulated, we have a sizable equity need beginning in 'twenty six and the out years as our capital investment plan increases.

[Bryan Buckler, EVP & CFO at Evergy]

What's really nice is that we have loan growth that's also accelerating at beginning in 'twenty six in those out years. So the plans we think come together very nicely, but there will be dilution from new equity issuances here in 2025.

[Paul Cole, Equity Analyst at Bank of America Securities]

That's perfect. Thank you for clarifying. Thank you.

[Peter Flynn, Director of Investor Relations at Evergy]

Great. Have a good day. Thank you. You too.

[Operator]

Thank you very much. This concludes the question and answer session. I would now like to turn it back to David Campbell for closing remarks.

[David Campbell, Chairman, President, Director & CEO at Evergy]

Thank you, Corey. Thanks everyone on the call for your interest in Evergy. This concludes our session today. Have a great day.

[Operator]

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Have a wonderful day.

Participants

Executives

• Peter Flynn, Director of Investor Relations
• David Campbell, Chairman, President, Director & CEO
• Bryan Buckler, EVP & CFO

Analysts

• Durgesh Chopra, Managing Director at Evercore ISI
• Nathan Richardson, AVP - Equity Research at Barclays
• Travis Miller, Analyst at Morningstar
• Tanner James, VP - North America Power, Utilities, and Clean Energy Research at Jefferies
• Paul Cole, Equity Analyst at Bank of America Securities