8-K: Evergy Announces 2023 Results, Issues 2024 Guidance and Updates Capital Plan

Evergy reported a decrease in 2023 earnings compared to 2022, issued 2024 earnings guidance, declared a quarterly dividend, and updated its five-year capital plan.

Summary

• Evergy announced its full year 2023 GAAP earnings of $731.3 million, or $3.17 per share, down from $752.7 million, or $3.27 per share, in 2022.
• The company's full year 2023 adjusted earnings were $815.6 million, or $3.54 per share, compared to $853.8 million, or $3.71 per share, in 2022.
• Fourth quarter 2023 GAAP earnings were $58.0 million, or $0.25 per share, compared to $7.5 million, or $0.03 per share, for the fourth quarter of 2022.
• Fourth quarter 2023 adjusted earnings were $61.1 million, or $0.27 per share, compared to $68.6 million, or $0.30 per share, in the fourth quarter of 2022.
• The company issued 2024 GAAP and adjusted EPS guidance of $3.73 to $3.93.
• Evergy reaffirmed its long-term adjusted EPS annual growth target of 4% to 6% through 2026.
• A quarterly dividend of $0.6425 per share was declared, payable on March 22, 2024, to shareholders of record as of March 11, 2024.
• The company updated its five-year capital investment plan to $12.5 billion through 2028.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the decrease in earnings compared to the previous year, although the company is showing positive progress in reliability and cost management. The guidance is positive but not enough to offset the negative results.

Positives

• Evergy achieved a nearly 10% improvement in reliability in 2023.
• Adjusted O&M expenses were 12% lower relative to 2022.
• The company added the Persimmon Creek wind farm, furthering its responsible energy transition.
• The Kansas rate case settlement delivered significant benefits for customers and enhanced regional rate competitiveness.

Negatives

• Full year 2023 GAAP earnings decreased to $3.17 per share from $3.27 per share in 2022.
• Full year 2023 adjusted earnings decreased to $3.54 per share from $3.71 per share in 2022.
• The company faced challenges from higher interest rates, regulatory lag, and mild weather at the end of the year.

Risks

• The company faces risks related to economic and weather conditions, which can impact sales, prices, and costs.
• Changes in political, legislative, judicial, and regulatory actions could affect the company's operations.
• The company is exposed to risks related to climate change, including severe weather events.
• Fluctuations in wholesale electricity and natural gas prices could impact the company's profitability.
• The company faces risks related to physical and cybersecurity breaches, as well as disruptions to its IT infrastructure.
• The company's ability to attract and retain qualified personnel is a risk factor.
• The company is subject to the inherent risks associated with the ownership and operation of a nuclear facility.

Future Outlook

The company has provided 2024 EPS guidance of $3.73 to $3.93 and reaffirmed its long-term adjusted EPS annual growth target of 4% to 6% through 2026.

Management Comments

• David Campbell, Evergy president and chief executive officer, stated that in 2023, they advanced their strategic objectives of affordability, reliability and sustainability.
• He also noted that financial results reflect challenges from the higher interest rate environment, regulatory lag, and mild weather at the end of the year, partially offset by company-wide efforts to manage costs.
• Management remains focused on operational and financial execution and advancing constructive regulatory policies.

Industry Context

This announcement reflects the challenges faced by utility companies in a higher interest rate environment and the need to balance cost management with investments in infrastructure and renewable energy. The focus on reliability and sustainability aligns with broader industry trends.

Comparison to Industry Standards

• Evergy's performance is being impacted by similar factors affecting other utilities, such as higher interest rates and regulatory delays.
• Companies like NextEra Energy (NEE) and Duke Energy (DUK) are also navigating similar challenges in the current economic environment.
• The 10% reliability improvement is a positive metric, and it would be useful to compare this to industry benchmarks for similar sized utilities.
• The capital investment plan of $12.5 billion is significant and should be compared to the capital expenditure plans of other utilities to assess its relative scale.

Stakeholder Impact

• Shareholders will be impacted by the decrease in earnings and the updated capital plan.
• Customers will benefit from the improved reliability and the Kansas rate case settlement.
• Employees will be impacted by the company's focus on cost management and operational efficiency.
• The company's suppliers and creditors will be impacted by the updated capital investment plan.

Next Steps

• Evergy management will host a conference call on February 29, 2024, to discuss the results.
• The company will continue to execute its five-year capital investment plan.
• The company will focus on operational and financial execution and advancing constructive regulatory policies.

Key Dates

Keywords

Earnings, EPS, Dividend, Capital Investment, Utilities, Energy, Financial Results, Guidance, Rate Case, Reliability