Evergy, Inc. held their Q2 2024 earnings conference call, where they reported an increase in adjusted earnings compared to the previous year. The call was led by Peter Flynn, Director of Investor Relations, with CEO David Campbell and Acting CFO Geoff Ley also present. The call discussed forward-looking information and provided an update on regulatory and legislative agendas. Other members of management were also available for questions. Second quarter highlights included adjusted earnings of $0.90 per share, driven by demand growth, weather, new retail rates, and higher transmission margin. Higher operations and maintenance costs, depreciation and amortization, and interest expenses partially offset these gains.

Geoff will discuss earnings drivers in more detail, and Kirk Andrews resigned as CFO on June 4th. Geoff Ley was appointed as Acting CFO while a search is conducted for a permanent replacement. The company filed their triennial integrated resource plan for Kansas and Missouri, which includes a diverse mix of resources to ensure reliability and affordability for customers. The company will provide an update to their capital plan on the third quarter earnings call. The quarter also saw ten severe west storm events with strong winds.

The strong winds caused by severe weather have caused damage to trees and equipment, leading to outages. The company thanks their customers for their patience and acknowledges the hard work of their employees in restoring power. They have reaffirmed their financial guidance and highlight three major economic development wins. The company's capital investment and load growth forecasts only reflect announced projects, but they are actively pursuing more opportunities. They acknowledge competition in the economic development market but are optimistic about their potential for growth.

The company's focus on affordability, reliability, and regional competitiveness has led to a strong pipeline of projects, including partnerships with companies like Panasonic, Meta, and Google. The company is also working on rate design elements to ensure appropriate recovery for new loads. In terms of regulatory and legislative priorities, the company is pleased with the passage of House Bill 2527 in Kansas, which supports infrastructure investment and economic development. The company is also expecting solid demand growth in the near future and is planning a Capital Structure Workshop in Kansas in the fourth quarter.

The Workshop was created to facilitate discussions on the importance of a clear regulatory framework, capital structure, and authorized return for Evergy to attract investment in Kansas. In Missouri, a rate case is pending and expected to result in lower revenue requests due to lower fuel and power costs. A settlement conference and hearing will take place in September and revised rates will go into effect by January 2025. Evergy looks forward to working with stakeholders to achieve a positive outcome for customers.

The company's strategy focuses on affordability, reliability, and sustainability. They aim to keep their long-term rates at or below the rate of inflation and prioritize customer benefits. They also prioritize safety, grid resiliency, and public safety, as well as reducing carbon emissions. The company is committed to delivering safe, reliable, affordable, and sustainable energy while supporting their workforce and the communities they serve.

Geoff Ley, the Acting CFO of Evergy, expresses his gratitude for the opportunity to serve in his position and thanks his family for their support. He then discusses the company's financial results for the second quarter of 2024, reporting an increase in adjusted earnings compared to the same period in 2023. The increase is attributed to a warmer summer, growth in demand, new retail rates, and investments in transmission infrastructure. However, there was a negative variance due to higher operational and maintenance expenses and increased depreciation and amortization expenses.

The paragraph discusses the second quarter and year-to-date results for Evergy, highlighting the factors that contributed to changes in earnings per share (EPS). These include weather, demand, new retail rates, transmission margin, O&M expenses, depreciation and amortization, interest expense, and other items. The paragraph also mentions a decrease in EPS due to higher interest expense and other factors. A brief update on recent sales trends is also provided.

The paragraph discusses the increase in weather-normalized retail sales in the second quarter, driven by residential and commercial demand. Despite lower demand from industrial customers, there is expected to be a recovery as well as an increase in demand from new customers. The company expects to see a 2-3% growth in demand through 2028 and reaffirms their adjusted EPS guidance and long-term growth target. They also mention their capital investment plan and their ability to fund it without issuing new equity.

The company's $12.5 billion investment plan does not yet include recent changes and will be updated on the third quarter earnings call. They remain focused on operational and financial goals while also pursuing strategic objectives. The upcoming Kansas Workshop will be a collaborative discussion with stakeholders to determine the best approach for attracting capital in the state. It is not a decision-oriented meeting, but rather a workshop to gather information and discuss the competitive landscape.

The company is discussing the impact of their relative utility strengths on their ability to attract capital. They plan to have a dialogue before the rate case to help position Kansas competitively. They expect this to happen in the fourth quarter and will provide advance notice. They will also update their capital plan to reflect the impact of specific projects, such as the Google announcement, on their transmission and distribution system.

The rule of thumb for project discussions varies based on customer size and location. The company is in active discussions with parties representing more than six gigawatts, but other companies have discussed large numbers as well. They are excited about these discussions and will provide specifics when customers are ready to announce. In regards to the datacenter discussion, the company may need to revisit their capital plan if additional projects come to fruition. As for rate tariffs, the process for large loads may involve a formal rate case.

The IRP published in April and May did not incorporate the Google announcement, but it will be incorporated in the capital plan refresh. Any further announcements will result in incremental resource additions. The 6 gigs mentioned includes datacenters and other industries, and tariffs will likely be leveraged from existing structures. The company will consider tailored rates for economic development.

The speaker is discussing the importance of having a fair rate structure in order to attract economic developments and ensure that everyone benefits. They plan to focus on the CapEx plan, rate base growth, and financing plan in the upcoming third quarter call. The questioner also asks about potential EPS guidance and a five-year CAGR, which the speaker says will be discussed in the fourth quarter call.

The speaker is asked if the inability to extend pieces in Missouri's legislature will impact their IRP or rate cases. The speaker responds that their IRP already reflects current mechanisms in place and they plan to build new generation. They hope to find ways to make this process more effective. They also mention the broad support for new natural gas generation and the upcoming legislative session. They believe new generation is important for Missouri to take advantage of growth in the state.

The speaker is looking forward to advancing the dialogue on growing the company's diverse portfolio in order to support the expected growth in Missouri. They confirm that the 2% to 3% weather-normalized sales growth will be back-end loaded, with a ramp up of Panasonic, Meta, and Google's contributions from 2026 to 2028. The speaker also confirms that Google is still on track and has begun site work for their data center. The speaker mentions the possibility of a supplemental IRP in 2025 to account for the potential 6 gigawatts of load.

The speaker addresses a question about the upcoming third quarter call and mentions that they will discuss the financing strategy for the five-year CapEx plan. They will also talk about their financing plans for the period of the CapEx refresh.

David Campbell clarifies that the company's previous comments about no equity being required until 2026 did not specify what would happen after that date. The company's current capital plan of $12.5 billion is expected to not require equity until 2026, but as they update their plan, they will also update their financing expectations for the next five years. Next year, the company expects to revise their rate case for Kansas, following a typical cadence of every other year. Some other utilities have established a more frequent cadence of rate cases, which helps with keeping up with investment levels and providing predictability for customers.

The speaker discusses the balance between workload and progress, mentioning that some jurisdictions have found a cadence of 18-24 months to be effective. They also mention a workshop process that will conclude before the next rate case begins, with the goal of having a dialogue with stakeholders about the importance of economic development and competitiveness. They believe their regulators in Kansas recognize this importance.

Travis Miller asks about the potential for higher growth for the company, given the positive factors such as the Kansas rate case and increased CapEx. David Campbell explains that while there are many positive dynamics, there are also factors such as the timing of investments and financing strategies that need to be taken into account in order to see the full impact on the company's earnings trajectory. The process of turning the ship in a regulated industry takes time, but there are many positive factors that will eventually lead to higher growth.

The company is experiencing strong economic development and infrastructure investment, which is expected to continue as they work through their plan. The demand growth expectation is 2-3% through 2028, with the assumption that it will increase over time due to new large loads. The company is pleased with the growth trends in the first half of the year.

The speaker, David Campbell, responds to a question about the capital structure issue and mentions that it was settled in a rate case last year and was also part of a legislation earlier this year. He explains that the legislation was ultimately removed and a dialogue will be held later this year to discuss the issue outside of a contested case. The objective is to have a discussion about the topic and its impact on competitiveness and attracting capital. The speaker also mentions that return on equity and capital structure will be discussed in the next rate case.

The speaker clarifies that the new projects will carry the incremental cost of supplying them, but there may be some mix of economic developments or subsidies involved. They want to ensure that the rates for these projects reflect the incremental costs, but not all rates will be based solely on incremental costs. They also want to make sure that existing customers are not burdened by the new projects.

The speaker discusses how different jurisdictions are dealing with the issue of excess capacity in the system and the addition of 20 megawatts of incremental load. They suggest that the solution is likely similar across different jurisdictions, which involves finding rate structures that adequately cover the overall cost to the system. The call concludes with closing remarks from David Campbell.

This summary was generated with AI and may contain some inaccuracies.