Evergy, Inc.

Thank you for standing by and welcome to the Q3 2020 Evergy, Inc. earnings conference call. All lines have been placed on mute to prevent any additional noise until the question and answer session. To ask a question over the phone by that time, you may press the star key followed by the number one on your telephone keypads. I'll now turn the call over to your host, the Vice President, Corporate Planning, Investor Relations and Treasurer, Lori Wright. Ma'am, you may begin.

Thank you, Jesse. Good morning, everyone, and welcome to Evergy's third quarter call. Thank you for joining us this morning. Today's discussion will include forward-looking information. Slide 2 and the disclosure in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations and include additional information on non-GAAP financial measures. The releases issued this morning, along with today's webcast slides and supplemental financial information for the quarter, are available on the main page of our website at investors.evergy.com. On the call today, we have Terry Bassam, Evergy's President and Chief Executive Officer, and Tony Soma, Executive Vice President and Chief Financial Officer. Other members of management are with us and will be available during the question and answer portion of the call. I will now turn the call over to Terry.

Thanks, Lortie, and good morning, everybody. I'll begin my comments on slide five. So today we reported third quarter gap earnings of $1.60 per share compared to $1.56 per share earned in the third quarter of 2019. Adjusted earnings per share were $1.73 in the third quarter of 2020 compared to $1.57 the same period a year ago. Third quarter results were driven by significant cost reductions an increase in weather normalized demand and fewer shares outstanding, partially offset by unfavorable weather. Year-to-date, gap earnings per share were $2.49 and in line with $2.49 in the same period last year. Adjusted EPS were $2.82 this year compared to $2.55 a year ago. Throughout the year, we've managed costs to withstand a number of headwinds, including the impacts of the global pandemic, unfavorable weather, and less than planned COLE proceeds. Our solid execution has resulted in our ability to deliver a great quarter and gives us confidence in the outlook for the year. Reflecting our strong performance, we are narrowing our 2020 adjusted EPS guidance range to 295 to 310 by raising the low end. Additionally, dividends are an important part of our total return story. You can see from our press release the board increased the dividend 6%, which underscores their confidence in our execution of the Sustainability Transformation Plan, or what we refer to as STP. Again, this was a great quarter, and I commend our team for the outstanding execution in these tough times. In addition to the over 3,000 dedicated employees in our frontline operations, power plants, and other areas, we continue to have over 2,000 employees working remotely and will continue to do so into 2021. I'm proud of the resiliency and adaptability our team has displayed in dealing with the challenges brought forth by this pandemic. Before I update you on our STP process, let me touch on the CEO search process. After announcing my retirement in August, our board formed a CEO search committee to find the right leader to execute our STP. The search committee is currently interviewing quality internal and external candidates. And just know that the process is ongoing. and we still expect to have someone named by the end of the year. Now turning to slide six. As we have discussed before, the Strategic Review and Operations Committee and our entire board evaluated our new high-performance SDP against other strategic alternatives available. The results were unequivocally and unanimously clear that our high-performance SDP was the most valuable plan. It enhances value through infrastructure investment, cost reductions, while balancing the interests of customers, shareholders, and communities. Our STP is focused on three core objectives, maximizing long-term value for our shareholders, serving the best interests of our customers, employees, and communities, and continuing to advance our progress as a forward-thinking, sustainable energy company. Consistent with these objectives, our team has already began execution on these priorities set out in the STP. Our operations planning team is a clear line of sight into our incremental 2021 grid modernization plans, which include new projects that will develop a more flexible grid to enhance customer reliability. Our increased focus on substation and grid communication upgrades will overhaul aged equipment with modern technology and controls that will benefit our customers and communities for years to come. We've also invested considerable time and effort into robust stakeholder engagement to ensure our constituents fully understand the STP. Some of this engagement has taken place within the structured IRP process. We've also been working with stakeholders outside of the IRP framework by developing a schedule for STP workshops to educate and gather feedback from our regulatory commissioners and our important stakeholders. Additionally, we have been identifying metrics that we plan to use to track our success executing the STP. There are relevant indicators around cost reductions, including both non-fuel and fuel, as well as tracking infrastructure investments by category that we will periodically update you on throughout the year. We will use these and potentially other metrics as we pursue a highly strategic, value-focused approach to display a transparent track record of execution, accountability, and results. Now looking at slide seven. Part of the vision within the SDP is advocating for enabling energy policies that promote reliable and clean energy within our states. While the legislative sessions won't kick off until after the first of the year, that hasn't slowed us down from engaging with interested parties on potential legislation. Through this dialogue, our confidence has grown in the clear desire across a diverse stakeholder base to enact long-term energy policies that will move Kansas and Missouri forward While there are many solutions to deal with remaining net investment in fossil plants being considered for retirement, securitization is one that can be more economical for customers. As a result, securitization is a topic that has come up in both states and we will be discussed in the 2021 sessions. The robust stakeholder engagement process around our upcoming IRPs is also well underway. While these discussions are not public, the feedback we've been receiving has been constructive. We'll continue to meet with the parties in these dockets over the coming months to discuss modeling scenarios and get feedback on preferred plans. We will file the Missouri IRP by April 1st of next year and the Kansas IRP by July 1st of next year. I'll now move to the regulatory front, beginning with an update on the KCC docket related to concerns about our agreements with Elliott Management. The Commission ordered this docket be closed, affirming that we had met all of our obligations in that docket, and any remaining issues be handled in the KCC's STP docket. The Kansas STP review docket parties met throughout October to discuss scheduled proposals, and we expect a filing soon to propose a jointly developed procedural schedule to the Commission. It's likely the docket will extend into the middle of next year to allow for full stakeholder feedback. Turning to Missouri, in October, the MPSC staff requested the Commission and the Commission granted an extension for their STP report to January 29, 2021. This allows staff more time to study our plan and receive any updates or further develop details that could be meaningful to the report. As a reminder, we don't expect the Commission to take specific action regarding STP in either of those dockets. The main purpose is to gather information on and review our SDP and ensure our continued resolve in meeting previous merger commitments while providing a forum and repository for stakeholder feedback. Lastly, let me touch on our COVID-19 accounting authority order request. In Kansas, the Commission approved our request to track expenses and lost revenue associated with COVID-19. In Missouri, we reached a non-unanimous settlement with the NPSC staff. and many other interveners last month, which request the Commission issue an order that authorizes us to track and defer incremental costs caused by the pandemic. Hearings on the matter are scheduled for mid-November, and we expect a Commission order in January. We realize this has been a hard time for our customers and communities. Last month, we wrapped up our Hometown Economic Recovery Program, which awarded grants totaling $800,000 to non-profit agencies. The goal of this program is to help our communities build back their local economies by retaining and attracting new business, developing workforces, and supporting small businesses. This was all part of our largest today focused charity investment, which we announced in May and committed $2.2 million from our foundation to help agencies, customers, and communities respond to and recover from the COVID-19 pandemic. Let me wrap up on slide eight before handing it over to Tony. Our FTP creates a compelling value proposition for shareholders and is predicated upon a proven track record of achieving cost reductions and executing on infrastructure investment, both of which provide tremendous value to customers while keeping rates affordable. Our capital plan is traditional, straightforward infrastructure investment strategy that is diverse across our service territories without large project risk. Combination of our competitive targeted 6% to 8% EPS CAGR through 2024 and an attractive dividend growth profile offers a compelling value proposition. The STP focuses on not only grid modernization, but also accelerating the transition of our generation portfolio, resulting in greener, more reliable, affordable energy for our customers. and line of sight to continued earnings growth and value creation for Evergy's shareholders. While we already provide carbon-free energy equivalent to around 50% of our retail energy demand, our remaining coal fleet provides a significant opportunity to further decarbonize and enhance our environmental profile. The policy enablers we're pushing, pursuing, would allow us to leverage the remaining plant value of our coal fleet to reduce capital costs, and upon retirement, eliminate fuel and maintenance expense. This will allow us to add modern generation capacity with renewable investment over time. These circumstances, when paired with our prime geographic location, your attractive wind and solar potential, make us uniquely positioned to execute a decarbonization strategy that would create significant cost savings for customers. We have an exciting opportunity in front of us, and that is a true win-win scenario to keep rates competitive while growing a sustainable rate base that will be value-enhancing for our customers, communities, and shareholders. Our execution has produced another strong quarter and great results here today. We're very excited about the momentum of our plan and the long-term prospects to deliver significant value to customers and attractive returns for our shareholders. I'll now turn the call over to Tony.