8-K: Evergy Reports First Quarter 2024 Results, Reaffirms Full-Year Guidance and Declares Dividend

Evergy announced its first quarter 2024 results, reporting a decrease in both GAAP and adjusted earnings per share compared to the same period last year, while reaffirming its full-year earnings guidance and declaring a quarterly dividend.

Summary

• Evergy reported first quarter 2024 GAAP earnings of $122.7 million, or $0.53 per share, down from $142.6 million, or $0.62 per share, in the first quarter of 2023.
• Adjusted earnings for the first quarter of 2024 were $124.7 million, or $0.54 per share, compared to $136.1 million, or $0.59 per share, in the same period last year.
• The decrease in adjusted earnings per share was primarily due to higher operation and maintenance expenses, increased depreciation and amortization, and higher interest expenses, partially offset by new retail rates and transmission margin.
• Mild winter weather negatively impacted retail sales, reducing earnings by an estimated $0.07 per share compared to normal weather conditions.
• Evergy reaffirmed its 2024 GAAP and adjusted EPS guidance range of $3.73 to $3.93.
• The company also reaffirmed its long-term adjusted EPS annual growth target of 4% to 6% through 2026, based off the original $3.65 midpoint of 2023 adjusted EPS guidance.
• A quarterly dividend of $0.6425 per share was declared, payable on June 20, 2024, to shareholders of record as of May 20, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly negative. While the company reaffirmed its guidance and declared a dividend, the decrease in earnings compared to the previous year is a concern. The mild weather impact is a one-off event, but the increase in operating costs is a trend that needs to be monitored.

Positives

• Evergy reaffirmed its 2024 GAAP and adjusted EPS guidance, indicating confidence in their financial outlook.
• The company declared a quarterly dividend of $0.6425 per share, providing a return to shareholders.
• Evergy reaffirmed its long-term adjusted EPS annual growth target of 4% to 6% through 2026, demonstrating a commitment to future growth.
• New retail rates and transmission margin partially offset increased expenses.

Negatives

• First quarter 2024 GAAP and adjusted EPS decreased compared to the same period in 2023.
• Higher operation and maintenance expenses, depreciation and amortization, and interest expenses contributed to the earnings decline.
• Mild winter weather negatively impacted retail sales, reducing earnings by an estimated $0.07 per share.

Risks

• Economic and weather conditions can impact sales, prices, and costs.
• Changes in regulations and legislative actions could affect the company's operations.
• Fluctuations in energy prices and availability in wholesale markets pose a risk.
• The company faces risks related to physical and cybersecurity breaches.
• Geopolitical conflicts can impact the global energy market.
• The company is exposed to risks associated with the ownership and operation of a nuclear facility.
• The company faces workforce risks, including attracting and retaining qualified personnel.
• Actions of activist shareholders or special interest groups could disrupt the company's strategic plan.
• Changing expectations and demands of customers, regulators, investors, and stakeholders could impact the company.
• Strategic initiatives may not create the expected value in a timely manner or at all.

Future Outlook

Evergy reaffirmed its 2024 GAAP and adjusted EPS guidance range of $3.73 to $3.93 and its long-term adjusted EPS annual growth target of 4% to 6% through 2026.

Management Comments

• David Campbell, Evergy chairman, president and chief executive officer, stated that the company remains well-positioned to meet its 2024 and long-term targets.
• David Campbell also mentioned that the company is laser-focused on executing its strategy of delivering affordable, reliable and sustainable electric power to its customers.

Industry Context

The results reflect the challenges faced by utility companies, including weather impacts and rising operational costs. The reaffirmation of guidance suggests confidence in the company's ability to navigate these challenges. The focus on sustainable energy aligns with broader industry trends.

Comparison to Industry Standards

• The decrease in earnings per share is not uncommon in the utility sector, particularly during periods of mild weather which reduces demand.
• Many utility companies are facing increased operating costs due to inflation and supply chain issues, which is reflected in Evergy's results.
• The reaffirmation of guidance is a positive sign, as many companies are revising their outlooks due to economic uncertainty.
• The long-term growth target of 4% to 6% is in line with the expectations for stable, regulated utility companies.
• Companies like NextEra Energy (NEE) and Duke Energy (DUK) also face similar challenges related to weather and operational costs, but their performance varies based on their specific geographic locations and business strategies.

Stakeholder Impact

• Shareholders will receive a quarterly dividend of $0.6425 per share.
• Customers may see the impact of new retail rates.
• Employees are expected to continue working towards the company's strategic goals.
• The company's focus on sustainable energy may impact suppliers and the broader community.

Next Steps

• Evergy management will host a conference call on May 9, 2024, to discuss the results with the investment community.
• The company will continue to execute its strategy of delivering affordable, reliable, and sustainable electric power.
• The company will continue to monitor and manage its operational costs and financial performance.

Key Dates

Keywords

earnings, EPS, dividend, guidance, utilities, energy, financial results, adjusted earnings, GAAP, weather impact