Evergy, Inc. · NASDAQ:EVRG
Evergy — Investor Presentation (November 2019)
37 slides from Evergy's investor presentation, November 2019
Slide 1: Investor Update
Investor Update November 2019
Slide 2: Important Information
Important Information Forward Looking Statements Statements made in this presentation that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, statemen
Slide 3: Recent News
Recent News • On 3rd quarter earnings call affirmed 2019 adjusted EPS1 guidance: $2.80 - $3.00 - Long-term projected EPS CAGR of 5% to 7%2 • Merger savings on track for 2019 annual target of $110M; ahead YTD • Continuing focus on optimizing capital allocation - Share repurchases remain on plan; ~73%
Slide 4: Profile
Profile
Slide 5: Pure Play, Vertically Integrated, Regulated Electric Utilities
Pure Play, Vertically Integrated, Regulated Electric Utilities Evergy Statistics1 ~$15B market cap2 ~$14.2B of rate base3 1.6M electric customers 11,566 MW of owned generation 3,517 MW of renewables4 13,700 miles of transmission 52,200 miles of distribution 1. Statistics as of 12/31/18. 2. Market ca
Slide 6: Clear Focus
Clear Focus Empowering a better future. . . • Providing safe, reliable, and cost effective operations • Being a trusted energy partner to our customers • Collaborative, open and transparent regulatory relationships • Focused on delivering consistent and superior total shareholder return • Allocating
Slide 7: Unique Investment Thesis
Unique Investment Thesis Earnings growth driven by merger savings, cost management, infrastructure investment and share repurchases; not predicated on raising customer prices Stable base rates allow for on-going, constructive dialogue with customers, regulators, policy makers and is good for economi
Slide 8: Diverse Supply and Sales Mix
Diverse Supply and Sales Mix 2018 Combined Retail Sales 2018 Combined Capacity by Customer Type by Fuel Type 22% Coal 25% 37% 40% Nuclear Residential Commercial Gas & Oil 41% Industrial 27% Renewables1 8% 2018 Combined Retail Sales 2018 Combined Rate Base by Jurisdiction by Jurisdiction 11% 20% West
Slide 9: Financial
Financial
Slide 10: Delivering on Strategic Priorities
Delivering on Strategic Priorities Remain focused on rebalancing our capital structure, delivering on EPS targets and enhancing long-term growth profile with incremental infrastructure investment that benefit customers Keep customer bills Preserve flexibility of Deliver competitive low while deliver
Slide 11: Investment Outlook
Investment Outlook Targeted Adjusted EPS Growth1 • 2019 adjusted EPS guidance1: $2.80 - $3.00 $3.80 Annual EPS Growth • Targeting EPS CAGR of 5% to 7% through 2023, using base of 2019 adjusted EPS guidance mid-point of $2.90 Target of 6% - 8%1 - Targeting middle to low end of 2021 range implied by $
Slide 12: Merger Savings
Merger Savings Targeted Net Merger Savings Targeted Gross Merger Savings by Source ($mm)1 20% $1,200 +/- 2% 27% Support Services $160 Generation $145 $150 6% Supply Chain T&D & Other $110 Benchmark Staffing 23% 24% $30 2018E 2019E 2020E 2021E 2022E 1. Excludes Great Plains Energy plant retirements a
Slide 13: Over $6B in Utility Investment 2019 to 2023
Over $6B in Utility Investment 2019 to 2023 Projected CapEx does not include recently announced incremental $150M PISA investment; New five-year CapEx table to be disclosed in February 2020 Projected Capital Expenditures Projected 2019-2023 $1,500 CapEx by Jurisdiction Millions $1,338 $1,278 $1,250
Slide 14: Rate Base Growth
Rate Base Growth Targeted Rate Base Growth Projected Rate Base by Jurisdiction $18 Billions $16.5 $15.7B - $16.5B $16 ~8% growth 2% - 3% $14.2 CAGR $15.7 $14.2B 15% $14 $13.1 11% $12 31% $10 32% FERC $8 Missouri Kansas $6 $4 54% 57% $2 $- 2017 2018 2023 2018 2023 in Rates in Rates Targeted RB in rat
Slide 15: Regulatory and Legislative Priorities
Regulatory and Legislative Priorities
Slide 16: Regulatory Matters
Regulatory Matters Kansas Corporation Commission • Conducted bi-annual KCC merger review in June 2019; merger integration on track • Initiated five-year base rate moratorium upon implementation of new Evergy KS Metro rates on 12/20/2018 Missouri Public Service Commission • Conducted bi-annual MPSC m
Slide 17: Elected Plant In Service Accounting effective January 1, 2019
Elected Plant In Service Accounting effective January 1, 2019 Missouri Senate Bill 564 was signed in to law on June 1, 2018 • Modernizes the regulatory framework in Missouri • Provides rate caps and stability for customers • Reduces regulatory lag through PISA, making Missouri a more attractive juri
Slide 18: State Commissioners
State Commissioners Missouri Public Service Commission (MPSC) Kansas Corporation Commission (KCC) Mr. Ryan A. Silvey (R) Mr. Dwight D. Keen (R) Chair (since September 2018) Chair (since January 2019) Term began: January 2018 Term began: April 2018 Term expires: January 2024 Term expires: March 2022
Slide 19: Constructive Ratemaking
Constructive Ratemaking Westar KCP&L KCP&L GMO Cost Recovery Mechanisms Kansas Kansas Missouri Missouri Fuel Adjustment Clause Rider Pension and OPEB Tracker Missouri Plant in Service Accounting (PISA) Property Tax Surcharge Rider Energy Efficiency Cost Recovery Rider Mis
Slide 20: Sustainability
Sustainability
Slide 21: Targeting 80% Carbon Reduction by 2050, from 2005 levels
Targeting 80% Carbon Reduction by 2050, from 2005 levels Evergy’s large renewable portfolio has driven significant emission reductions CO2 Emission Reduction Targets CO2 Emissions 2005 vs 2050 Projected 0% Today 20% 80% reduction 40% 60% >40% 80% reduction 100% 2005 2020E 2035E 2050E 1 • Since 2005,
Slide 22: Clean Energy Transition
Clean Energy Transition By year-end 2020 we expect to have: Annual EPS Growth • Reduced carbon emissions by over 40%, from 2005 levels Target of 6% - 8%1 • Emission-free sources (renewable and nuclear) providing nearly half of retail customers’ energy needs Annual Dividend Growth Generation Capacity
Slide 23: Environmental, Social and Governance
Environmental, Social and Governance $5.5 MILLION 3,517 IN PHILANTHROPIC SUPPORT IN $107 MILLION $1.2M MEGAWATTS OF RENEWABLE POWER YEARS 2018 SPENT WITH DIVERSE SUPPLIERS 30 ACTIVE SUPPLIER DIVERSITY INITIATIVE EMPLOYEE GIVING PROGRAM 25,000 250 community SEPARATE EMPLOYEE VOLUNTEER HOURS Boards wi
Slide 24: Appendix
Appendix
Slide 25: New Evergy Organizational Chart
New Evergy Organizational Chart Evergy Evergy Kansas Evergy Evergy Metro Central (formerly KCP&L ) Missouri West (formerly Westar) (formerly GMO) Evergy Kansas South (formerly KG&E) 25 Third Quarter 2019 Earnings Presentation
Slide 26: New Evergy Jurisdictions
New Evergy Jurisdictions 26 Third Quarter 2019 Earnings Presentation
Slide 27: Credit Ratings and Debt Profile
Credit Ratings and Debt Profile Current Credit Ratings1 S&P Moody’s Long-Term Debt Maturities 2 Evergy $800 Millions Outlook Stable Stable Corporate Credit Rating A- $700 Senior Unsecured Debt BBB+ Baa2 $600 Evergy Kansas Central / Evergy Kansas South $500 Outlook Stable Stable Senior Secured Debt A
Slide 28: Reconciliation of GAAP to Non-GAAP Information
Reconciliation of GAAP to Non-GAAP Information1 2019 EPS Guidance2 2019 GAAP EPS $2.70 - $2.90 Severance expense 0.05 Rebranding costs 0.06 2019 Adjusted EPS (non-GAAP) $2.80 - $3.00 2019 O&M Guidance ($ in millions) 2019 GAAP O&M ~$1,233 Severance expense $13 Rebranding costs $20 2019 Adjusted O&M
Slide 29: Investment Outlook
Investment Outlook • 2019 GAAP EPS Guidance: $2.70 - $2.90 2019 Adjusted EPS Guidance1: $2.80 - $3.00 Retail electric sales: • Weather normalized growth of 0 to 50 bps Adjusted O&M expense2: • Targeting $1.2B +/- 2% Depreciation expense: • $80M to $90M higher than 2018 pro forma D&A • Refinancing of
Slide 30: Operating and Maintenance Expense Projections
Operating and Maintenance Expense Projections 6% - 10% O&M reduction $1,200 +/- 2% 1 2 1. Estimated impact of reclassification of non-service pension costs to non-operating expense beginning in 2018. 2. Excludes anticipated costs associated with severance expense and rebranding Evergy companies resu
Slide 31: Third Quarter Results
Adjusted EPS1 Third Quarter Results Variance Drivers GAAP EPS: 3Q19 $1.56 vs 3Q18 $1.32 Gross Margin $17M higher, due + Higher gross margin primarily to favorable weather and new retail rates net of the 2018 + Lower O&M across our utilities provision for rate refund for the + Lower shares outstandin
Slide 32: Year to Date Results
Adjusted EPS1 Year to Date Results Variance Drivers GAAP EPS: YTD19 $2.49 vs YTD18 $2.61 Gross Margin $37M lower due + Inclusion of Evergy Metro and Evergy MO West results in 2019 to unfavorable weather, + Merger related costs and customer bill credits incurred in June 2018 partially offset by new r
Slide 33: 2018/2019 EPS: GAAP to Non-GAAP Reconciliation
2018/2019 EPS: GAAP to Non-GAAP Reconciliation Earnings Earnings (Loss) (Loss) per per Earnings Diluted Earnings Diluted (Loss) Share (Loss) Share Three Months Ended September 30 2019 2018 (millions, except per share amounts) Net income attributable to Evergy, Inc. $ 366.8 $ 1.56 $ 355.0 $ 1.32 Pro
Slide 34: 2018/2019 EPS: GAAP to Non-GAAP Reconciliation
2018/2019 EPS: GAAP to Non-GAAP Reconciliation Earnings Earnings (Loss) per (Loss) per Earnings Diluted Earnings Diluted (Loss) Share (Loss) Share Year to Date September 30 2019 2018 (millions, except per share amounts) Net income attributable to Evergy, Inc. $ 606.0 $ 2.49 $ 517.3 $ 2.61 Pro forma
Slide 35: Kansas and Missouri Customer Benefits
Kansas and Missouri Customer Benefits Equitable merger value provided to customers in both states • Separate state regulatory constructs require different methods and timing to deliver similar value to KS and MO customers • Year-end 2017 retail electric customers - KS: 964,200 - MO: 610,900 • Bill c
Slide 36: Earnings Review and Sharing Program in Kansas
Earnings Review and Sharing Program in Kansas ERSP 2019-2022 • Earnings above allowed level shared 50/50 between customers and shareholders - Sharing level set at 9.3% ROE plus $11.47 million to account for recovery of annual bill credits - ERSP defined utility equity ratio cap - 51% - 2019 - 50.5%
Slide 37: Investor Relations Contacts
Investor Relations Contacts NYSE: Evergy (EVRG) Lori Wright Vice President – Corporate Planning, Investor Relations and Treasurer (816) 556-2506 lori.wright@evergy.com Cody VandeVelde Director, Investor Relations (785) 575-8227 cody.vandevelde@evergy.com Kyle Beck Investor Relations Analyst (785) 57