Evergy, Inc. · NASDAQ:EVRG
Evergy — Q3 2020 Earnings Presentation
22 slides from Evergy's earnings presentation, Nov 5, 2020
Slide 1: Third Quarter 2020 Earnings Call
Third Quarter 2020 Earnings Call November 5, 2020 Public
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: Agenda
Agenda Terry Bassham, President & CEO • Third quarter highlights • Regulatory and legislative priorities • Sustainability Transformation Plan progress Tony Somma, EVP & CFO • Third quarter and YTD results • Update on retail sales • 2020 / 2021 outlook Third Quarter 2020 Earnings Presentation 3 Publi
Slide 4: Business Update
Business Update Terry Bassham President & CEO Public
Slide 5: Third Quarter Highlights
2Q20 Results Third Quarter Results Third Quarter Highlights GAAP EPS Adjusted EPS1 • 3Q20 vs 3Q19 drivers + Cost reduction efforts + Lower shares outstanding $1.73 - Unfavorable weather $1.60 $1.56 $1.57 • Raised lower end and narrowed 2020 EPS guidance range - GAAP EPS: $2.58 - $2.73 - Adjusted EPS
Slide 6: Executing the STP
Executing the STP CapEx by Category $ in millions • Remain focused on STP core objectives $1,726 - Maximize long-term value for shareholders $1,586 $132 - Serve best interests of all stakeholders $240 - Continue to advance as forward-thinking, sustainable energy company $1,314 • Clear line-of-sight
Slide 7: Legislative and Regulatory Priorities
Legislative and Regulatory Priorities STP stakeholder engagement • Expect to introduce long-term energy policy bills in KS and MO January 2021 sessions • IRP process is well underway, which includes discussions around modeling scenarios and gathering feedback on preferred plans STP review dockets •
Slide 8: Attractive Investment Outlook
Attractive Investment Outlook STP Targeted Adjusted EPS Growth1 • 2020 adjusted EPS1 guidance: $2.95–$3.10 (lower end raised 6–8% CAGR and range narrowed since last quarter) $4.25 • Targeting EPS CAGR of 6–8% through 2024 $3.87 • STP to invest ~$9B in CapEx from 2020 through 2024 $2.89 • Targeting r
Slide 9: Financial Update
Financial Update Tony Somma EVP & CFO Public
Slide 10: Third Quarter Results
Adjusted EPS1 Third Quarter Results Variance Drivers GAAP EPS: 3Q20 $1.60 vs 3Q19 $1.56; Adjusted EPS1: 3Q20 $1.73 vs. 3Q19 $1.57 O&M $41M lower driven by cost reduction efforts, reduced + Lower O&M headcount, and lower employee + Lower shares outstanding benefit expense + Weather-normalized sales G
Slide 11: Year to Date Results
Year to Date Results Adjusted EPS1 GAAP EPS: YTD20 $2.49 vs YTD19 $2.49; Adjusted EPS1: YTD20 $2.82 Variance Drivers vs. YTD19 $2.55 + Lower O&M + Lower shares outstanding O&M $103M lower driven by cost reduction efforts, reduced - Unfavorable weather headcount, fewer outage costs in 2020 and the Ja
Slide 12: Retail Sales
Residential usage represents ~50% Retail Sales contribution to total retail earnings Strong residential sales offset lower Annual Estimated Annual Retail Sales1 Earnings Contribution commercial and industrial in the third quarter by Customer Type by Customer Type 10% 21% 36% Total Retail Sales – Wea
Slide 13: Earnings Outlook
Earnings Outlook 2020 GAAP EPS Guidance of $2.58 - $2.73; Adjusted EPS1 Guidance of $2.95 - $3.10 Key Driver Considerations: Retail electric sales: • We expect the continued slow, steady recovery in fourth quarter Adjusted O&M expense2: • 8% to 10% reduction from 2019 Adjusted O&M of $1.187B Depreci
Slide 14: 2021 Considerations & Preliminary Drivers
2021 Considerations & Preliminary Drivers Expect to give 2021 earnings guidance with year-end earnings in February 2021 • Sales: expecting an increase in weather-normalized sales; will continue to monitor the lingering impacts of COVID-19 • Adjusted O&M expense: will implement STP identified savings
Slide 15: Appendix
Appendix Public
Slide 16: STP Financial Highlights
STP Financial Highlights Targeted EPS Growth Supported by Rate Base Growth and Cost Reductions Targeted Rate Base Growth $ in billions ~$19.3 Targeted EPS Growth3 5 – 6% CAGR ~ $18.4 $14.4 $4.25 6 - 8% $3.87 CAGR 1 2019A 2024E Targeted Non-Fuel O&M Reductions 2 $2.89 $ in millions ~25% reduction $1,
Slide 17: Pursuing Accelerated, Responsible Decarbonization
Pursuing Accelerated, Responsible Decarbonization STP has the potential to reduce CO2 emissions 85% by 2030 from 2005 levels Paths to Decarbonization • Broad stakeholder engagement in and support for planning CO2 Emission Reductions1 0 process 10 • Constructive policy outcomes which support Pace of
Slide 18: Key STP Regulatory Activities
Key STP Regulatory Activities 2020 2021 JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL KCC: 21-EKME-088-GIE • Aug 27 – KCC Staff requested and KCC ordered the opening of STP evaluation docket • Nov – Parties to docket to propose jointly developed procedural schedule MPSC: EO-2021-0032 • Aug
Slide 19: GAAP to Non-GAAP EPS Reconciliation
GAAP to Non-GAAP EPS Reconciliation1 2020 EPS Guidance2 2020 GAAP EPS $2.58 - $2.73 Voluntary severance expense, pre-tax 0.28 Advisor expense, pre-tax 0.13 Income tax benefit (0.10) Kansas corporate income tax change 0.06 2020 Adjusted EPS (non-GAAP) $2.95 - $3.10 2019 EPS 2019 GAAP EPS $2.79 Rebran
Slide 20: GAAP to Non-GAAP O&M Reconciliation
GAAP to Non-GAAP O&M Reconciliation1 2018 O&M 2019 O&M ($ in millions) ($ in millions) 2018 GAAP O&M $1,116 2019 GAAP O&M $1,219 Great Plains Energy O&M prior to the merger 318 Severance expense and rebranding costs (32) Non-recurring merger-related costs (101) 2019 Adjusted O&M (non-GAAP) $1,187 Pr
Slide 21: GAAP to Non-GAAP O&M Reconciliation
GAAP to Non-GAAP O&M Reconciliation1 YTD YTD ($’s in millions) 3Q 2020 3Q 2019 3Q 2020 3Q 2019 GAAP O&M $304.6 $311.6 $865.5 $907.1 Rebranding costs - (3.6) - (4.7) Voluntary severance costs (28.7) (0.4) (55.3) (15.1) Advisor expenses (9.7) - (26.1) - Adjusted O&M (non-GAAP) $266.2 $307.6 $784.1 $88
Slide 22: 2019/2020 EPS: GAAP to Non-GAAP Reconciliation
2019/2020 EPS: GAAP to Non-GAAP Reconciliation1 (a) Reflects external costs incurred to rebrand the legacy Westar Energy and KCP&L utility brands to Evergy and are included in operating and maintenance expense on the consolidated statements of comprehensive income. (b) Reflects severance costs incur