Evergy, Inc. ((EVRG)) has held its Q4 earnings call. Read on for the main highlights of the call.
Evergy, Inc.’s recent earnings call for Q4 2024 was marked by a positive sentiment, reflecting strong earnings growth and successful regulatory outcomes. Despite facing challenges from weather impacts and increased operating expenses, the company expressed optimism about its future growth prospects, driven by a robust economic development pipeline and increased capital investments. However, the company acknowledged the need for additional equity issuances to support these investments.
Strong Earnings Growth
Evergy reported adjusted earnings of $3.81 per share for 2024, an increase from $3.54 per share in 2023. This growth was attributed to strong cost management and load growth, showcasing the company’s effective financial strategies.
Capital Investment and Infrastructure Modernization
The company invested $2.3 billion in infrastructure to modernize the grid and replace aging equipment. This investment is part of a broader five-year $17.5 billion capital plan, underscoring Evergy’s commitment to enhancing grid reliability and efficiency.
Regulatory and Legislative Success
Evergy achieved significant regulatory and legislative successes, including the passage of House Bill 2527 in Kansas and a unanimous settlement in the Missouri West rate case. These outcomes support the company’s infrastructure investments and strategic objectives.
Economic Development Wins
The company celebrated major economic development wins, with partnerships involving companies like Google, Panasonic, and Meta. These collaborations are expected to create a demand representing 800 megawatts of load, highlighting the region’s attractiveness for business investments.
Robust Economic Development Pipeline
Evergy’s economic development pipeline expanded from 6 gigawatts to over 11 gigawatts, reflecting the region’s competitiveness and potential for future growth. This pipeline is a key driver of the company’s optimistic outlook.
Dividend Increase
The company announced a 4% increase in its dividend, raising it to an annualized $2.67. This increase aligns with Evergy’s target payout ratio of 60% to 70%, demonstrating its commitment to returning value to shareholders.
Weather Impact on Earnings
Weather conditions, including a cooler summer and mild winter, led to a 5% decrease in cooling degree days and a 4% decrease in heating degree days. This resulted in a $0.13 decline in EPS, highlighting the impact of weather on the company’s financial performance.
Increased Operating Expenses
Operations and maintenance expenses contributed to a $0.05 negative variance for the year. Additionally, higher depreciation and interest expenses led to a $0.17 decrease in EPS, indicating areas of financial pressure for the company.
Need for Additional Equity Issuances
Evergy projected an increase in equity issuances across 2026 to 2029 to $2.8 billion, a $600 million increase over prior forecasts. This increase is necessary to support the company’s capital investment plans and future growth initiatives.
Forward-Looking Guidance
Looking ahead, Evergy provided a robust operational and financial outlook. The company reaffirmed its 2025 adjusted EPS guidance range of $3.92 to $4.12 per share, with a midpoint of $4.02, and maintained a long-term growth target of 4% to 6% through 2029. The capital expenditure forecast from 2025 to 2029 was updated to $17.5 billion, supporting an anticipated average rate base growth of 8.5% annually. Evergy also highlighted a strong economic development pipeline, with potential demand growth fueled by major projects representing an additional 800 megawatts of load, underscoring a weather-normalized demand growth forecast of 2% to 3% through 2029.
In conclusion, Evergy’s Q4 2024 earnings call conveyed a positive sentiment with strong earnings growth and strategic successes in regulatory and economic development arenas. The company’s forward-looking guidance and commitment to infrastructure modernization position it well for future growth, despite challenges from weather impacts and increased operating expenses. Investors can take confidence in Evergy’s strategic direction and growth potential.