Evergy Inc
For the period ended Mar 31, 2024. Filed May 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
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Organization and Basis of Presentation
- ORGANIZATION AND BASIS OF PRESENTATION
Organization
Evergy is a public utility holding company incorporated in 2017 and headquartered in Kansas City, Missouri. Evergy operates primarily through the following wholly-owned direct subsidiaries listed below.
Evergy Kansas Central, Inc. (Evergy Kansas Central) is an integrated, regulated electric utility that provides electricity to customers in the state of Kansas. Evergy Kansas Central hasone active wholly-owned subsidiary with significant operations, Evergy Kansas South, Inc. (Evergy Kansas South).
Evergy Metro, Inc. (Evergy Metro) is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas.
Evergy Missouri West, Inc. (Evergy Missouri West) is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri.
Evergy Transmission Company, LLC (Evergy Transmission Company) owns 13.5% of Transource Energy, LLC (Transource) with the remaining 86.5% owned by AEP Transmission Holding Company, LLC, a subsidiary of American Electric Power Company, Inc. (AEP). Transource is focused on the development of competitive electric transmission projects. Evergy Transmission Company accounts for its investment in Transource under the equity method.
Evergy Kansas Central also owns a 50% interest in Prairie Wind Transmission, LLC (Prairie Wind), which is a joint venture between Evergy Kansas Central and subsidiaries of AEP and Berkshire Hathaway Energy Company. Prairie Wind owns a 108-mile,345 kilovolt (kV) double-circuit transmission line that provides transmission service in the Southwest Power Pool, Inc. (SPP). Evergy Kansas Central accounts for its investment in Prairie Wind under the equity method.
Evergy Kansas Central, Evergy Kansas South, Evergy Metro and Evergy Missouri West conduct business in their respective service territories using the name Evergy. Collectively, the Evergy Companies have approximately 15,800 megawatts (MWs) of owned generating capacity and renewable power purchase agreements and engage in the generation, transmission, distribution and sale of electricity to approximately 1.7 million customers in the states of Kansas and Missouri.
Basis of Presentation
These unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements in the Evergy Companies' combined 2023 Form 10-K.
These unaudited consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary to fairly present the unaudited consolidated financial statements for each of the Evergy Companies for these interim periods. In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Principles of Consolidation
Each of Evergy's, Evergy Kansas Central's and Evergy Metro's unaudited consolidated financial statements includes the accounts of their subsidiaries and the variable interest entities (VIE) of which Evergy and Evergy Kansas Central are the primary beneficiaries. Undivided interests in jointly-owned generation facilities are included on a proportionate basis. Intercompany transactions have been eliminated. The Evergy Companies assess financial performance and allocate resources on a consolidated basis (i.e., operate inone segment).
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consists of highly liquid investments with original maturities of three months or less at acquisition. Evergy has restricted cash included in Other within Other Assets on Evergy's consolidated balance sheets to facilitate servicing of Evergy Missouri West Storm Funding I, LLC's (Evergy Missouri West Storm Funding) debt. See Note 12 for additional information on the VIE. The following table summarizes the cash, cash equivalents and restricted cash included on Evergy's consolidated balance sheets.
| March 312024 | December 312023 | |
|---|---|---|
| Evergy · (millions) | ||
| Current assets | ||
| Cash and cash equivalents | $63.7 | $27.7 |
| Other assets | ||
| Other | 1.7 | — |
| Total cash, cash equivalents and restricted cash | $65.4 | $27.7 |
Fuel Inventory and Supplies
The Evergy Companies record fuel inventory and supplies at average cost. The following table separately states the balances for fuel inventory and supplies.
| March 312024 | December 312023 | |
|---|---|---|
| Evergy · (millions) | ||
| Fuel inventory | $263.8 | $257.3 |
| Supplies | 536.9 | 518.9 |
| Fuel inventory and supplies | $800.7 | $776.2 |
| Evergy Kansas Central | ||
| Fuel inventory | $142.1 | $138.6 |
| Supplies | 280.3 | 273.3 |
| Fuel inventory and supplies | $422.4 | $411.9 |
| Evergy Metro | ||
| Fuel inventory | $84.2 | $81.5 |
| Supplies | 191.8 | 183.1 |
| Fuel inventory and supplies | $276.0 | $264.6 |
Property, Plant and Equipment
The following tables summarize the property, plant and equipment of Evergy, Evergy Kansas Central and Evergy Metro.
| March 31, 2024 | Evergy | Evergy Kansas Central | Evergy Metro |
|---|---|---|---|
| (millions) | |||
| Electric plant in service | $34,923.8 | $17,049.7 | $13,098.8 |
| Electric plant acquisition adjustment | 724.9 | 724.9 | — |
| Accumulated depreciation | (13,493.2) | (6,581.6) | (5,494.3) |
| Plant in service, net | 22,155.5 | 11,193.0 | 7,604.5 |
| Construction work in progress | 1,598.9 | 956.2 | 468.4 |
| Nuclear fuel, net | 190.5 | 94.9 | 95.6 |
| Plant to be retired, net(b) | 0.8 | 0.8 | — |
| Property, plant and equipment, net | $23,945.7 | $12,244.9 | $8,168.5 |
| December 31, 2023 | Evergy | Evergy Kansas Central | Evergy Metro |
| (millions) | |||
| Electric plant in service(a) | $34,558.1 | $16,858.7 | $13,005.5 |
| Electric plant acquisition adjustment | 724.9 | 724.9 | — |
| Accumulated depreciation(a) | (13,301.6) | (6,502.7) | (5,404.9) |
| Plant in service, net(a) | 21,981.4 | 11,080.9 | 7,600.6 |
| Construction work in progress | 1,543.5 | 939.1 | 428.7 |
| Nuclear fuel, net | 203.0 | 101.1 | 101.9 |
| Plant to be retired, net(b) | 0.8 | 0.8 | — |
| Property, plant and equipment, net(a) | $23,728.7 | $12,121.9 | $8,131.2 |
(a) As of March 31, 2024, Evergy and Evergy Kansas Central classified Property, Plant and Equipment of VIE, net as Property, Plant and Equipment, net. To conform with the current period presentation, amounts previously reported as Property, Plant and Equipment of VIE, net as of December 31, 2023, have been reclassified to Property, Plant and Equipment, net.
(b) As of March 31, 2024 and December 31, 2023, represents the planned retirement of Evergy Kansas Central analog meters prior to the end of their remaining useful lives.
Other Income (Expense), Net
The table below shows the detail of other expense for each of the Evergy Companies.
| Three Months Ended March 31 | 2024 | 2023 |
|---|---|---|
| Evergy · (millions) | ||
| Non-service cost component of net benefit cost | $(4.6) | $(14.8) |
| Other | (4.9) | (6.5) |
| Other expense | $(9.5) | $(21.3) |
| Evergy Kansas Central | ||
| Non-service cost component of net benefit cost | $0.5 | $(4.0) |
| Other | (4.2) | (5.9) |
| Other expense | $(3.7) | $(9.9) |
| Evergy Metro | ||
| Non-service cost component of net benefit cost | $(3.0) | $(8.7) |
| Other | (0.6) | (0.3) |
| Other expense | $(3.6) | $(9.0) |
Earnings Per Share
To compute basic earnings per common share (EPS), Evergy divides net income attributable to Evergy, Inc. by the weighted average number of common shares outstanding. Diluted EPS includes the effect of issuable common shares resulting from restricted share units (RSUs), restricted stock, convertible notes and a warrant. Evergy computes the dilutive effects of potential issuances of common shares using the treasury stock method, the contingently issuable share method or the if-converted method, as applicable.
The following table reconciles Evergy's basic and diluted EPS.
| Three Months Ended March 31 | 2024 | 2023 |
|---|---|---|
| Income · (millions, except per share amounts) | ||
| Net income | $125.8 | $145.7 |
| Less: net income attributable to noncontrolling interests | 3.1 | 3.1 |
| Net income attributable to Evergy, Inc. | $122.7 | $142.6 |
| Common Shares Outstanding | ||
| Weighted average number of common shares outstanding - basic | 230.2 | 230.0 |
| Add: effect of dilutive securities | 0.2 | 0.3 |
| Diluted average number of common shares outstanding | 230.4 | 230.3 |
| Basic and Diluted EPS | $0.53 | $0.62 |
Anti-dilutive securities excluded from the computation of diluted EPS for the three months ended March 31, 2024 and 2023 were 3,950,000 common shares issuable pursuant to a warrant. Also, there wasno dilution resulting from Evergy's convertible notes for the three months ended March 31, 2024 and 2023.
Dividends Declared
In May 2024, Evergy's Board of Directors (Evergy Board) declared a quarterly dividend of $0.6425 per share on Evergy's common stock. The common dividend is payable on June 20, 2024, to shareholders of record as of May 20, 2024.
Supplemental Cash Flow Information
| Evergy | ||
|---|---|---|
| Three Months Ended March 31 | 2024 | 2023 |
| Cash paid for (received from): · (millions) | ||
| Interest, net of amount capitalized | $105.3 | $133.0 |
| Income taxes, net of refunds | (0.2) | (0.5) |
| Right-of-use assets obtained in exchange for new operating lease liabilities | 1.9 | 6.2 |
| Right-of-use assets obtained in exchange for new finance lease liabilities | 5.1 | — |
| Non-cash investing transactions: | ||
| Property, plant and equipment additions | 105.1 | 112.1 |
| Evergy Kansas Central | ||
|---|---|---|
| Three Months Ended March 31 | 2024 | 2023 |
| Cash paid for (received from): · (millions) | ||
| Interest, net of amount capitalized | $48.8 | $56.3 |
| Income taxes, net of refunds | (0.2) | (0.2) |
| Right-of-use assets obtained in exchange for new operating lease liabilities | 0.7 | 2.7 |
| Right-of-use assets obtained in exchange for new finance lease liabilities | 1.3 | — |
| Non-cash investing transactions: | ||
| Property, plant and equipment additions | 47.6 | 54.8 |
| Evergy Metro | ||
|---|---|---|
| Three Months Ended March 31 | 2024 | 2023 |
| Cash paid for (received from): · (millions) | ||
| Interest, net of amount capitalized | $21.3 | $31.1 |
| Right-of-use assets obtained in exchange for new operating lease liabilities | 1.0 | 3.5 |
| Right-of-use assets obtained in exchange for new finance lease liabilities | 3.5 | — |
| Non-cash investing transactions: | ||
| Property, plant and equipment additions | 39.9 | 41.0 |
Natural Gas Plant Investment
In April 2024, Evergy Missouri West purchased a joint ownership interest representing approximately 145 MW in Dogwood Energy Center (Dogwood), an operational natural gas combined cycle facility located in Missouri, for approximately $60 million. The purchase was subject to terms and conditions listed in a stipulation and agreement approved by the Public Service Commission of the State of Missouri (MPSC) allowing Evergy Missouri West to recover in rates a return of and return on the original cost, net of accumulated depreciation, of Dogwood. Evergy Missouri West shall also be allowed to recover in rates overtwo years a return of, but not a return on, the amount of the purchase price paid in excess of the original cost, net of accumulated depreciation, of Dogwood. In addition, net revenues generated from Evergy Missouri West's ownership of Dogwood from the date of closing to the date new rates become effective in Evergy Missouri West's current rate case shall not impact rates and shall be retained by Evergy Missouri West and reduce the amount of the purchase price paid in excess of the original cost, net of accumulated depreciation, of Dogwood to be recovered from customers.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.