EVRG - Earnings call transcript Q2 2022

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2022 Evergy Incorporated Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lori Wright, Vice President, Investor Relations and Treasurer. Please go ahead.

Lori Wright

Michelle. you, Thank and everyone, Evergy's quarter second Good welcome call. morning, to joining Thank us for morning. this you will discussion information. Today's forward-looking include Slide X that and expectations measures. contain results a the differ and disclosure in of to on of our include some additional the non-GAAP from factors materially could information future list cause our SEC financial filings investors.evergy.com. issued releases information with page the are quarter, along our for the of slides main webcast The today's morning, website at available this financial and on supplemental

to Campbell, Evergy's and On and sales quarter today, David. and had discuss Kirk and David Campbell and safety the highlighted the Slide drivers and performance the earnings the have expense. quarter. David available just and net priorities. our call, we contributed Andrews, by in highlights, be operations President trends. we joining will increase in second call now to by higher Officer; weather, our X. adjusted call economic Executive and roadshow I in Thanks Vice share delivered will strong an quarter begin everyone. on adjusted earnings legislative partially of higher of offset that and second turn detail Kirk last the I pleased second I'm us earnings in favorable the that a plan Kirk Other transmission And participated during had us The first with Chief demand and President quarter and quarter and for today. over lower management integrated report was on second we call. Chief David Officer. per latest On maintenance resource focus safety will expense income in discuss increase $X.XX quarter results I'll the $X.XX the of first our Thanks, solid to on other a as our regulatory more planned primarily Lori. driven are more cover that cover Executive XXXX. good margin, our Financial we will morning, in compared safety weather-normalized detail. question-and-answer will year of portion to members over in

this average has this X-year by daily trend, for line notwithstanding decreased XXXX, X X-year their dedication system XXXX generation for to would and customers. reliable to our providing to focus I to all thank improved milestone. like indicating Evergy a the in of relative outlier. the weather, recent on a XX contrast, In power events employees with been XX% extreme continued the more average like measures, with recordable solid reflecting despite X-year XX% the work-related per per the same over compared of trend reducing XX% been so last weather, miles injuries, of our has grid service trend this year, employees nearly over days XX including to through hour investments. beneficial far and Our customer midyear to the our ongoing Compared increased by in positive period XX% outage safe, their affordable highlight first impacts territory, have year. resiliency. months and days, safety increased And number in restricted reliability XX challenging XX to XXXX and sustained also wins so hour our days. clear miles was days would both to gust with wind to the events I

our equivalent hours XXX generation Wolf our a total plant, expanding energy in X,XXX we portfolio wind our usage. nuclear for contracted our With the to production. wind of And over and Creek XXXX, customers' decade. marked of retail production of megawatts million-megawatt know, generation, you recently was in emission-free wind cumulative been have factoring portfolio As our about XX% owned from

reaffirming are from of a in solid in and well update, annual June per Kansas to and we long-term Plan team's for EPS of share rate our execution to guidance resulted Our both X% XXXX. filed as per Integrated adjusted has as highlights growth $X.XX EPS to year, share our consistent XXXX Missouri. start X% to $X.XX XXXX Slide X was annual which target our the Resource

sequencing Our preferred the discussed Day plan next consistent the the plan near-term out the reflects laid tweaks decade resource last of with plan our in in and renewables minor Triennial IRP investments. development to Investor The is last year's updates September. for Kirk plan filing the our during

and solar customers current facing high project shifted chain we shifted XXXX, solar the retirements megawatts. and Lawrence planned due for to prices. natural and edition solar a XXX benefits assumption dynamic Lawrence XXX-megawatt increased we the to capacity the keeping conditions to gas the In wind of the project coal Specifically, the market the supply primarily with to by online XXXX,

XXXX, which Beyond XXXX, slightly basis assumptions the of our net megawatt a on we for our now X,XXX solar plan by preferred upward reduced pressures includes end on projects, pricing. Overall, some offset achieving also coal, retiring while X,XXX additions balancing megawatts emissions renewable transition toward our of both we of and sustainability and goals. responsibly reduction as reliability our and advance affordability megawatts fleet nearly advance

to to on few Missouri recover conference X, Slide the West, will Revised rates working and interveners roughly nonunanimous key filed filed August the rate this the we settlement staff. advancing later Missouri legislative early testimony. early with And go general provide the the and regulatory all resolves case. been our At with a settlement mid-July, hearings million I'll around constructively forward their of summary XX through a will storm milestones rebuttal of testimony a parties Uri securitization direct We to key and the Kansas surrebuttal way in to Missouri. parties June, Commission follow ongoing to all process staff this winter other Missouri, In we developments with file issues the also and case. weeks, In that week, have to on $XXX Earlier resolve Missouri we parties next and In work both filed costs. and pending to month continue effective look constructive testimony. Moving December X. September. true-up in

wrapping expect hearings in up week, this mid-October. financing a are timing, terms In we and commission order of

On reduced or June. the Plant Accounting, PISA, XXX, Bill and deferrals to the in rate by calculation the late only. modifications compounded governor Missouri, and The Senate of revenue requirement law was signed X.X% which modifies legislative to narrow growth In front consider PISA the became annual Service cap a

stakeholders. month, law Missouri consecutive law, eliminate authorizing the the legislation into XXX of year Importantly, was this in generation into Missouri a will In unrecovered second of jurisdictions. tracker will later passing extension extraordinary that signed which HB in a historical of bill effective source customers new XXXX, marks a this of also our lag tax and value the securitization PISA retired costs property plants. our The benefit puts and book

XXXX. Kansas April net year. which customers returned cases, Moving beginning rate Similarly, the to to to $XX approved be Preparations beginning Kansas. X-year in allows at costs. nonunanimous extraordinary Central Uri a pleased storm roughly costs Corporation April Metro purchase also nonfuel I'm will over Kansas recover a power us we Kansas for deferred are Commission will agreement that X-year next Central benefits at and for April fuel to The of $XXX winter in report our June, the stipulation in over underway file million Kansas XXXX. in Kansas period, and of order million Metro period the

the securitization the XXXX September passage true-up becoming year include Missouri milestones both approved relating in in review test and of IRP of Commission Public Resource XX, docket signing Service Commission Integrated the the Kansas Kansas ending the year expect mid-XXXX the Missouri, Other in to legislation the before the next The in important in March Corporation date Plans Sustainability We Transformation with XXXX, IRP well the the of the Plan. XX, accepted Commission and effective completion new June November this and December process. of Triennial Kansas as completed their as Corporation and May. have around In last year. Kansas rates

with the to with delivering to plan. consistent to I the achieve customers to our our that We sustainable and closely are Kirk. the service in to that will constructive interveners strong reliable that business objectives pleased our year, states and power regulators both work Overall, collaboratively call continue we communities have the turn serve. will customers now of working affordable, our stakeholders ongoing execution of and with outcomes and in we advance core progress start achieved regulators the the over and enhance to we the to

Kirkland Andrews

the Slide Thanks, for David. everyone. And X. I'll start good quarter morning, the with results on

by $XXX XXXX, per year-over-year XXXX. $X.XX or EPS second was of compared delivered increase quarter per of the in $XXX to the Evergy For million The or quarter of driven quarter share the earnings adjusted following. $X.XX second share in million second

EPS of in year XX% increase plan. the 'XX, second a experienced in days warmer-than-normal quarter quarter cooling compared Adjusting second EPS original the weather degree this an increase in for XXXX. in weather the however, First, to $X.XX second versus our increase quarter assumed normal $X.XX in drove of saw a

during other the per was infrastructure of expense. COLI $X.XX also to by planned as on TDC a were depreciation we higher next rates; amortization income, O&M driven generation primarily quarter, by $X.XX due share per higher increase contractor weather-normalized Higher lower net finally, an We revenues primarily approximately a increase. had higher $X.XX due XX. quarter expense, with as which investment; due due demand increased lower expense, maintenance interest positive results, or $X.XX which million of partially driven well X% share. proceeds transmission I'll increased combined of saw volumes, drove to transmission and $X.XX to this to increase at you'll which revenues past our year-over-year find and in investments, debt AFUDC higher-than-expected in $X.XX distribution outages turn and drove These We equity. drivers Slide expense to year-to-date lower and of $XX offset saw by interest higher outstanding expense higher

due of and O&M $X.XX approximately lower drove other expense expense per contractor share timing the ongoing items is per had higher these in were XXXX, with order $X.XX When result outages due our months our a drivers driven transmission year, partially expected $X.XX were proceeds expense, reflects which normal offset an depreciation $X.XX smoothing, projected and increased $XXX reflect $X.XX following. or by year-to-date higher $X.XX expense ended in increased and or rate to per full demand for of year-to-date share impact EPS. versus by approximately by million of year-to-date income in planned recognition year. TDC items the $X.XX XXXX, this of higher in Again, we second about to EPS X net incurred the tax driving combined AFUDC left Higher quarter of slide, Year-to-date, share; increase during include of a the right the due the include variance the compared was last tax quarter. to generation weather COLI higher first For due quarter with certain finally, Weather-normalized expense equity; to income $XXX an million same increase the relatively to on $X.XX this infrastructure X%, June year rather, results. to T&D volumes, moving in effective our that year-to-date primarily led the tax $X.XX driven of results year, in combined maintain adjusted increased shift investments, period XXXX. following: tax for to XX, revenues maintenance revenues versus to weather intra-year and during investment; the of not to second and the from -- earnings our

I'll Turning growth trends behind for as detail update to review demand well and as on a bit year-to-date an the the economic weather-normalized XX. more and quarter developments. Slide

demand Year-to-date, increased demand demand and robust previously, retail I weather-normalized gas as by approximately in sectors. For and led driven a quarter, in by the increase oil the approximately X%. mentioned industrial increased particular second X% total by year-over-year chemical weather-normalized

above total the we of moderated demand second working of expect now year, XXXX, in the conditions. a demand the increase levels. is pre-pandemic balance retail Over largely Overall, half year-over-year given post-pandemic weather-normalized more reflected

be of of create kind De vehicle battery the area. to development largest and economic of be The facility U.S., is will electric Kansas facility expected announced Kansas $X located in a the July, EPS XXXX our to one Soto, of approximately and in I'll operational outside time our in investment which are expected our City of jurisdiction new in strong billion will just jobs. manufacturing the Central largest the is Evergy one front, the typical With its on an Kansas, to guidance estimated X,XXX build facility, which is when plans up constructed Panasonic early next On and This line the of we start our new of year. long-term metro plan Slide our customers. wrap reaffirming be with annual fully part adjusted call as to And expectations. We an giving year, finally, up guidance represents on overview $X.XX the our financial XX, year-end on to $X.XX. XXXX to

David on earlier, $X.XX. rate compound year's As adjusted EPS the long-term annual also last noted based our EPS we original from X% guidance target to reaffirming are XXXX of XXXX of of to X% midpoint growth

continue We in growing to payout XX% long-term and to our expect dividend dividend earnings a with the line ratio. XX% target

communities. the time evolving plan and XXXX that, and back infrastructure our transition call advance generation new our is to customer With over investment the competitiveness the through David. of while to Our and on improve resiliency continuing reliability $XX.X billion to hand rate customers focused service, needs X-year regional at meet fleet same I'll capital and enhance

David Campbell

your us now be today, take with your would we Kirk. and happy Thank appreciate you, to We time questions.

Operator

first Our Wolfe comes from Sullivan Michael Instructions] Research. question with [Operator

Michael Sullivan

could wanted compared get to with and on the I the point the if strong benefit. plan. then quarter in also weather normal we a why Maybe strength, just weather start this guidance David, raise given growth, color of in And year? little not the just just at the sales weather normal pretty how the to just terms

David Campbell

loaded. questions. strong a that in the half couple We first pandemic We of year. of first for see good we softer sectors and Michael, was a had are We So that had weather pleased demand reasonably half front-end the recovery normalized growth, obviously expectations the in last in relatively to the some demand in growth of the saw year.

expect in obviously out a a first seen sustained, be that. see little year. yet We're did recessionary Haven't this in of ahead nice course, we would plan but of growth, a that of close With that's half only a look the bit. be to little So that demand but pressures, -- particularly tailwind. bit we'll for

terms in a been overall, year. of the has our Now start it performance to solid

relatively are our an our is typically after quarter July was quarter the approach with robust make Third weather. to the assessment our and start since biggest will largest that we give is updated it's third and quarter. year. we quarter, pleased to view guidance But the But

Michael Sullivan

that talk for maybe sticking points Okay. just to Great. then a there is could you obviously the I about I be rate issue where and There And not if wanted Sibley may see also, then shift your of the of as that And to outstanding way. think are were them go if just settlement. potential one questions to case and you Is couple there. that manageable? something

David Campbell

Yes.

the the end So in which of case Missouri, interesting the we're it's Missouri -- about, and tremendous my a asking case, There's certainly in the in rate process process. general is you're state. rate the towards an first activity wave of

We'll We've end then scheduled also got the at back September. -- filings. true-up will conference see we and of will final in, month, surrebuttal hearings filed early gosh, see scheduled, begin in month first settlement while the the we the So quarter, our this to in testimony.

So that of lot there's will a there. action happen

tracking have closely, know, I gap, when in filing in the you, on some filings particularly revenue filings been you've requirement. seen adjustments Now their staff the

I think relatively are and understood. issues gaps are pretty the the reasonable well

resolving where proceeding, discussions file forward Uri issues earlier constructively this in did our nonunanimous the look to in a winter staff we we securitization storm So to able just week. as engaging we with were settlement,

factors, case. pretty finalize some tax depreciation it's items. some related We'll ROE, So and be looking a typical to items to rate other

lot -- generated old is the or As using active of a we Sibley metaphor. discussion. the do a ink. We an lot it's as guess, will be old a I'm of, I think Sibley ink my But digital expected, that you noted, matter manageable.

X we've before think aside the the has have for. There's been I main in O&M gone related Kirk is that liability recovery components. through of rate past. this we regulatory to One it. actually setting

really to $XX there's the range. a on issue. to discussion that, ongoing on were there roughly, return case. a the it. item, be period there's is million rate returning the an million $XX since onetime Cumulatively, the that's for last on on decision going what component rate is Depending So cases that a time And not it's

discussion issue And like the But Sibley. be that. other that's a there'll performance, a residual and on sense. in [X] rate years So settlement it modest initial around relatively normal consistent one could that retired with impact last is base filed will course It's the We some makes that that ago, have think amount. the assets. in be was

dialogue, those We've in forward we those proceedings can to piece. few as -- it's testimony final be and appreciated we So next discussion discussions all the items be go will the through weeks. think the the over managed. But look advancing the it we and

crescendo you So case that's is the a typically busy it know. be Missouri but the in time, the will as that context,

Michael Sullivan

Great. it And the for and Act company. Inflation thoughts throw what could means Reduction I your just last one initial in, on it if just

David Campbell

We to have So it that transferability expected for of provisions so further think ability equity cost additions make we're simplifies take the should of beneficial also approaches. to the reducing advantage that of simpler, sort continue to and ITCs of going the obviously closely. tax appears renewables to other customers. or our PTCs our and track relating the impact to That a

but So of increases the of those it not only cost lowers the efficiency mechanisms. some

Creek it's reduce there eligible because where the provisions are wind prices in for helpful some the terms piece earnings does beneficial track times reducing as on our particularly regulated further be when and there. for but and move enabler spring an resources, customers a That's not could fall. low assets. of us, So We'll Wolf there's the our balance, we And merchant receive that other It's cost costs nuclear for both for of plant we the think will driver because forward. in in is. customers

may too. recovery -- up well the So end it eligible some for being there,

set provisions. its the think beneficial and it We'll ultimate way monitor that closely we a as -- obviously ultimate So of in it's and passes we hopefully, weaves amendments the the through see. in watch closely Washington that

Operator

Instructions] Evercore. [Operator Durgesh comes with The from next Chopra question

Durgesh Chopra

Just relatively residual amount? case. about the on -- that's amount, base rate So clarification rate David, in Correct? the residual The it's a on $XXX Missouri small, the million. Sibley, quick

David Campbell

residual so number, different for as Yes, who the residual at are number this modest pretty a may base. -- Sibley There you the described. parties time some rate base. a that's but And argue rate

Durgesh Chopra

I And this be but the it. Got then you're below to AMT just -- you because might of right, this XXXX, think the plan? year, $X at pretax through least really -- doesn't billion sort marker, apply the

Kirkland Andrews

I by it of that as our aided minimum we credits of to add correct. That's XX% that tax is forward. on Part move tax. inventory

You're below be correct, threshold. we to that expect

it I with would think So that to if -- beyond would the which something the of decade. that middle be we about our level, very that expected cash taxpayer or beyond we least potentially, year, rise this coincident is

Durgesh Chopra

Okay.

no next potentially could should basically when the front? the the -- over years? from if we half impact we -- see few AMT on this Second no of is decade is So passed something

Kirkland Andrews

that inflection will That's the plans. that we -- on extent be point, correct. as dependent somewhat correct. things in of But directionally being as right generation move our tax time to all around of forward again, renewables you're credits terms progress equal, frame we some in And that also ongoing from

Durgesh Chopra

And one. just Got one it. final

this likely share anything Just extension year or tax chances have these there? Anything happen your credits. given to opportunities? the buyout can like increased more on you Looking of PPA the

Kirkland Andrews

credits, the place. we're takes first And that of say us optimistic the certainly, would side repowering that flexibility tax and of greater the of on Gives I So passed. hopeful equation. extension is all, that that,

announce RFP we may benefit, on a those continuing be on as XXX objectives, We're certainly, hold of by we that be buy-in focused responses advance for a we launched megawatts be a our our one especially but We're to to in with particular and customers. affordability buy-in and may this time, and, followed And that's earnings least to or I'm same of XX that robust counterparties, repowering, continue discussions target it year. continuing with maintaining the our It to the at renewables to toward combined objective. XXX. of that. had a So focus wind our that at we

as news year as some progress well, we've good results balance expecting the that and So we had front have on the we're well. through to of from that as

Operator

with [Operator question Our from next comes Patterson Glenrock. Paul Instructions]

Paul Patterson

So you me? can hear

David Campbell

Yes.

Paul Patterson

Okay. Good.

Sorry.

I on So I to I think, terms guys I what able the wanted at -- production And possible, you're completely comprehended sorry. made could, call of and the to was about, summarize in end, apologize and apologize, but I wasn't sort wondering if seeing you beginning you of if to some just of comments wind production. I wind my

David Campbell

Sure.

a hours we this I So what achieved portfolio start. cumulative generation we million-megawatt the Paul, XXX We -- referred to, across wind that was past surpassed of since milestone quarter. our company

that's X/X obviously, of our in our Wolf total about you from terms significant generation milestone fleet, generation our was total a wind. from To emissions of calibrate So was our in terms half nearly if last total include generation production. of terms for year in And production resources. Creek, of it wind nuclear cumulative our

as generation. every at a -- of total share our higher generation we're than wind virtually X/X other total portfolio and utility of is So

XXX I what passing milestone that hours. that's was cumulative was So million-megawatt citing,

Paul Patterson

Okay. Got it.

projects performance about I just seen guys also misunderstood just -- you think been has sort a due -- or to any sort I seen curtailments -- of significant wind. you sort of wondering, what was recall, not to because you. there have I same-store with a decrease. any were year-over-year? I wondering, issue but your been transmission has speak, neighboring As was neighborhood, and been terms wondering was I or in with curtailments seen constraints? constraints what so in there you been might you on -- production we've have wind around And do have has just different -- of going? what just in your how guys of areas terms any have any you of Have country transmission I experiencing Have any the area you also of the maybe in some you talking production of wind. guys in performing kind also,

David Campbell

it. Got

So it think a well. perform question. wind overall, question, is back stepping of the the different I'll your portfolio But -- to elements to great I complicated, continues

factors obviously in of fuel very So issue capacity across got But and as It's where general, large bulk -- capacity we've high A the the are number factors and sites. there Kansas, a are Kansas, sits, perform clause, but generation XX% vast our that over in as curtailment of impacts is sites in because capacity for an they is the There of occurs. generation any through congestion, is customer and pockets rates. factor the lot Kansas driver it to us some our varies the partially curtailments, Central it there region. earnings majority. not a flows geography continue of where factors, that our are in broader well. The it Western

we very obviously, So and can Power advocate the costs customers. beneficially projects congestion Pool to at Southwest we're reduce for attended attuned that it, and for

price natural the Pool country factor is prices. really higher, across higher prices and because the where with it a the So congestion so Southwest Power are can be gas costs across higher prevailing differentials

and negative higher prices. natural a example, cost is gas effectively of resource, a many and for differential resource been gas between you like a magnified have you natural for If that because no those PTC get resources a generation at them, has renewables the difference cost between a

takes to outstanding. working that in the U.S. are other our the territory lot Southwest we is that the best world. got something But A Pool wind one which the of with to it's corridors address. across seek time. profile of and solutions, wind So We've the takes transmission constituents Power and overall,

it's renewables. But to to us. manage going keep that's issue resource to up, great for the perennial So to a be with and continue transmission has

Operator

[Operator Nick Suisse. from question with Credit Campanella The next Instructions] comes

Nicholas Campanella

and increasing, just so been reserve there's on STP that you're long about guess you curious planning the just far. about I somewhat But I check across general, how stack portfolio, about on I'm your thinking the in overall A I and resource in went that planning if margin of lot some to just but questions have resource you're know there. on answered already discussions wanted capacity think that.

David Campbell

So did margin things year. are reserve effect well that go will recently in their tracking and and closely. XX% increase SPP to from you XX%, next

impact correct to in able But not it our we in to a capacity are to planning. that will a on You is our it's be meet requirements, near-term so going longer-term have that. going be factor

as coal retirements portfolio, making think and can we and factoring that about we'll we transmission So that of sure meet obviously, overall our our in be the it.

we to well. longer-term the continues look different be be so closely SPP Obviously, as will plans relatively winter as it as be accommodate it transition, requirement into margin can the reserve impacts at winter we'll and well. portfolio. think winter you the working that that more as think seasonal margin as obviously, I look we with factors but in in our average -- But margin, is On be factoring important at -- well. seasonable we short balance, very the lower. will will change resource modest, as fleet reserve as example, but reserve the a margins, for have some that renewables, across answer we'll interesting is But reserve our are you with to We'll consider to that factor thing add it to our ongoing plans. going capacity peaks about the consider winter as stakeholders

Nicholas Campanella

perspective? isolation? know just year-to-date in a remind COLI Can and COLI in you And contemplated numbers. your one on I one was us what's the a And All 'XX AFUDC then right. COLI just helpful. from That's small drag. $X.XX is that guidance Great. like what

Kirkland Andrews

to Happy Sure. address that.

generally at day. tax-affected we about said and So the COLI, million impact. this of $XX not overall, after end COLI the both tax. of COLI is I That expect is in a pretax we past, think the

of our expectations, that. that's to function relative COLI, underlying the we than lower we've COLI effectively from by little performance would actually and of that we're just year-to-date half have proceeds very a probably basically So insured $X.XX the that are had expected, year because folks on the

So our year. think short $X.XX about ratable about normally is would what be the year-to-date, expectations of that for I

Operator

At this would like for time, back there to I turn are President no David CEO, Campbell, to and the conference questions. now other remarks. closing

David Campbell

Thank have you. Evergy, concludes call. for morning. all in you the day. your great We appreciate That you a this Thank interest and joining of

Operator

today's you call. concludes This conference for participating. Thank

now may disconnect. You

Evergy (EVRG) 6 Aug 222022 Q2 Earnings call transcript