Evergy, Inc. is a public utility holding company that operates primarily through its wholly-owned subsidiaries, Evergy Kansas Central, Inc. and Evergy Metro, Inc. The company serves approximately 1.7 million customers across Kansas and Missouri, providing electricity generation, transmission, and distribution services. With a focus on affordability, reliability, and sustainability, Evergy has been at the forefront of the regional energy landscape, enabling economic development and driving a responsible transition to a cleaner energy future.
Historical Overview
Evergy's roots can be traced back to the early 20th century, with the merger of Kansas City Power & Light Company and Westar Energy in 2017 creating the current entity. The company was incorporated in 2017 and is headquartered in Kansas City, Missouri. Evergy was formed through the merger of Great Plains Energy, the parent company of Kansas City Power & Light, and Westar Energy. This $15 billion merger, which received regulatory approvals in 2018, created one of the largest regulated utility companies in the country, with a generation capacity of over 13,000 megawatts.
The integration of the two legacy companies presented some challenges for Evergy in the early years. The company had to combine different corporate cultures, information technology systems, and operational processes. Evergy also faced headwinds from declining electricity sales volumes and increasing costs for environmental compliance and maintenance of aging infrastructure. To address these issues, the company implemented cost-saving initiatives and worked to improve operational efficiency.
Despite the initial integration challenges, Evergy has emerged as a well-positioned regional electric utility. The company has maintained strong financial performance, with consistent profitability and a healthy balance sheet. Evergy has also invested significantly in upgrading and modernizing its electric grid and generation fleet to enhance reliability and sustainability. Through these efforts, Evergy has established itself as a leader in the Midwest utility sector, serving its customers and communities with safe, reliable, and affordable electricity.
Financial Performance and Stability
As of the latest reported quarter (Q3 2024), Evergy's financial position remains strong, with a robust balance sheet and cash flow generation capabilities. The company's GAAP earnings per share (EPS) for the third quarter of 2024 stood at $2.02, a significant increase from the $1.53 reported in the same period of the prior year. This performance was driven by a combination of factors, including new retail rates, increased demand, and continued recovery of the company's FERC-regulated investments.
On a year-to-date basis, Evergy's adjusted EPS (non-GAAP) reached $3.46, up from $3.27 in the same period of 2023. The company's solid financial results have allowed it to maintain a healthy capital structure, with a focus on maintaining investment-grade credit ratings and supporting its long-term growth initiatives.
Evergy has established a 2025 adjusted EPS guidance range of $3.92 to $4.12, representing a midpoint increase of 5% over the 2024 guidance. Looking ahead, the company expects to grow in the top half of its 4% to 6% adjusted EPS target range through 2029, driven by its $16.2 billion five-year capital investment plan and the anticipated load growth from several large-scale economic development projects in its service territory.
For the most recent fiscal year (2023), Evergy reported revenue of $5.51 billion and net income of $731.3 million. The company generated operating cash flow of $1.98 billion and free cash flow of -$353.8 million. In the most recent quarter (Q3 2024), Evergy's revenue reached $1.81 billion, with net income of $465.6 million. The company's operating cash flow for the quarter was $953.3 million, with free cash flow of $427.0 million. Year-over-year revenue growth stood at 8.5%, while net income growth was an impressive 32.4%.
Evergy's liquidity position remains strong, with a debt-to-equity ratio of 0.97, cash and cash equivalents of $34.6 million, and an available credit line of $1.07 billion under a $2.5 billion master credit facility. The company's current ratio is 0.55, and its quick ratio is 0.32, indicating a solid ability to meet short-term obligations.
Operational Highlights and Strategic Initiatives
Evergy's operational performance has been marked by a steadfast commitment to safety, reliability, and customer satisfaction. The company's investment in grid modernization and infrastructure upgrades has led to steady improvements in key metrics, such as system average interruption duration index (SAIDI) and public safety standards.
In recent years, Evergy has taken significant steps to diversify its generation portfolio and advance its sustainability initiatives. The company's Integrated Resource Plans have prioritized a balanced approach, incorporating a mix of highly efficient natural gas plants, renewable energy sources, and emerging technologies to meet the growing energy demands of its customers.
Notably, Evergy announced plans in October 2024 to invest in two new 705 MW combined-cycle natural gas plants in Kansas, which are expected to provide flexible baseload generation and support the region's expanding economy. Additionally, the company is progressing with the development of three utility-scale solar projects totaling 325 MW, further enhancing its emissions-free generation capabilities.
These strategic investments, coupled with Evergy's focus on affordability and regulatory support, have positioned the company to address the evolving energy landscape and support the robust economic development pipeline in its service territories. The company's collaboration with state policymakers and stakeholders has been instrumental in securing favorable regulatory frameworks, such as the passage of House Bill 2527 in Kansas, which provides for timely cost recovery and investment incentives.
Evergy's updated 5-year capital investment plan totals approximately $16.2 billion from 2025 to 2029, representing a $3.7 billion increase compared to their prior 5-year forecast. This plan includes $2.4 billion of incremental generation investment and $1.3 billion of incremental distribution investment. The company expects this capital plan to result in an 8% annualized rate base growth through 2029, supporting its long-term earnings growth targets.
Corporate Structure and Subsidiaries
Evergy operates primarily through several wholly-owned direct subsidiaries:
1. Evergy Kansas Central, Inc. (Evergy Kansas Central) - An integrated, regulated electric utility serving customers in Kansas. Evergy Kansas Central has one active wholly-owned subsidiary with significant operations, Evergy Kansas South, Inc.
2. Evergy Metro, Inc. (Evergy Metro) - An integrated, regulated electric utility providing electricity to customers in Missouri and Kansas.
3. Evergy Missouri West, Inc. (Evergy Missouri West) - An integrated, regulated electric utility serving customers in Missouri.
4. Evergy Transmission Company, LLC (Evergy Transmission Company) - Owns 13.5% of Transource Energy, LLC, with the remaining 86.5% owned by AEP Transmission Holding Company, LLC. Transource focuses on developing competitive electric transmission projects.
Additionally, Evergy Kansas Central owns a 50% interest in Prairie Wind Transmission, LLC, a joint venture that owns a 108-mile, 345 kV double-circuit transmission line providing service in the Southwest Power Pool, Inc.
Collectively, the Evergy Companies have approximately 15.8 gigawatts of owned generating capacity and renewable power purchase agreements, serving about 1.7 million customers in Kansas and Missouri.
Market Position and Industry Trends
Evergy operates primarily in the U.S. states of Kansas and Missouri, focusing on the generation, transmission, distribution, and sale of electricity to residential, commercial, and industrial customers. The company does not have significant operations outside of these two states.
The electric utility industry in the U.S. Midwest has seen a compound annual growth rate (CAGR) of approximately 2-3% for electricity sales over the past 5 years. Evergy's strong position in this market, combined with its strategic investments and focus on economic development, has allowed the company to outpace this industry growth rate.
Risks and Challenges
While Evergy has demonstrated resilience and adaptability in the face of industry dynamics, the company is not without its risks and challenges. The ongoing transition to a cleaner energy future, evolving regulatory environments, and the potential impact of severe weather events and other environmental factors could present operational and financial hurdles.
Evergy's ability to successfully navigate these challenges will be crucial in maintaining its position as a reliable and sustainable energy provider. The company's commitment to risk management, operational excellence, and stakeholder engagement will be critical in mitigating these risks and capitalizing on emerging opportunities.
Conclusion
Evergy's comprehensive approach to powering economic growth and spearheading a responsible energy transition has positioned the company as a leader in the Midwest utility sector. With a strong financial foundation, strategic investments in infrastructure and renewable energy, and a focus on affordability and reliability, Evergy is well-equipped to meet the evolving needs of its customers and contribute to the long-term prosperity of the communities it serves.
As Evergy continues to execute its strategic plan, investors will closely monitor the company's ability to capitalize on the robust economic development pipeline, effectively manage regulatory and operational challenges, and deliver sustainable growth and value creation over the long term. The company's reaffirmed 2024 adjusted EPS guidance range of $3.73 to $3.93 per share, along with its newly established 2025 adjusted EPS guidance range of $3.92 to $4.12 per share, demonstrates confidence in its ability to deliver consistent financial performance and growth. With a long-term growth target of 4% to 6% through 2029 and expectations to perform in the top half of this range, Evergy is positioning itself for continued success in the evolving energy landscape.