Evergy, Inc.

Good day and thank you for standing by. Welcome to the Q2 2023 Evergy, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pete Flynn, Director of Investor Relations. Please go ahead.

Thank you, Gigi, and good morning, everyone. Welcome to Evergy's second quarter 2023 earnings conference call. Our webcast slides and supplemental financial information are available on our investor relations website at investors.evergy.com. Today's discussion will include forward-looking information. Slide two in the disclosures in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations. They also include additional information on our non-GAAP financial measures. Joining us on today's call are David Campbell, President and Chief Executive Officer, and Kirk Andrews, Executive Vice President and Chief Financial Officer. David will cover our second quarter highlights, our integrated resource plan, and regulatory and legislative priorities. Kirk will cover in more detail the second quarter results, retail sales trends, and our financial outlook for the year. 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 David.

Thanks, Pete, and good morning, everyone. I will begin on slide five, and I'm pleased to report that Evergy had a solid second quarter as we delivered adjusted earnings of 81 cents per share compared to 84 cents per share a year ago. The decrease was driven by less favorable weather as well as higher depreciation and amortization interest expense. partially offset by growth in weather normalized sales, transmission margin, and lower O&M expenses. Kirk will discuss these earnings drivers in more detail in his remarks. Our reliability metrics were strong for the year through June as average average duration frequency, otherwise known as SADI and SAFE, were favorable to relative to our target. I'd like to call out the work of our distribution and transmission teams for the improvements in system resiliency that we're seeing. Weather has been less cooperative to start the third quarter, and on July 14th, our service territory experienced a severe storm. The storm produced 80 to 100 mile-per-hour winds, resulting in our most impactful storm in recent history. At the storm's peak, nearly 200,000 Evergy customers were without power as high winds downed countless tree limbs and damage or destroyed nearly 500 power poles. We estimate total O&M costs of $6.5 million for the storm recovery efforts. I'd like to thank the nearly 3,500 Evergy employees, contractors, and personnel from neighboring utilities that assisted in making repairs, working with customers, and restoring power. Our crews worked 16-hour shifts through hot and humid conditions, as well as follow-on storms that disrupted the restoration efforts. And our customer teams also worked overtime to field calls and support our customers. Our frontline workers are the bedrock of safely delivering affordable and reliable power to our customers and communities. We're extremely proud of and grateful for their contributions to these challenging conditions. Our team's consistent execution has resulted in a solid start to the year, and we are reaffirming our 2023 adjusted EPS guidance range of $3.55 to $3.75 per share, as well as our target long-term annual adjusted EPS growth of 68% from 2021 to 2025. Slide six highlights our annual integrated resource plan updates, which were filed on June 15th in both Kansas and Missouri. This year's updates reflect the impacts of the renewable support provided by the Inflation Reduction Act, revised load forecasts, increased Southwest Power Pool capacity margin requirements, potential changes to environmental regulations, and updated commodity price forecasts. As a reminder, in 2022, nearly half of the energy that we generated for our retail customers came from carbon-free resources, reflecting the contributions of our Wolf Creek nuclear plant and the 4,400-megawatt portfolio of renewable resources that we own or contract through long-term power purchase agreements. Over the next 10 years, taking advantage of the ample resource potential of our region, as well as substantial federal subsidies, we plan to add more than 3,000 megawatts of new wind and solar resources. The timing of these additions reflects the outputs of our recent all-resource request for proposal, which was no doubt affected by global supply chain challenges impacting solar, wind, and battery project availability and costs. Tightening capacity conditions in the Southwest Power Pool and higher demand also factored into the annual IRP update. Reflecting higher capacity needs, this year's preferred plan includes the introduction hydrogen-capable combined cycle gas turbines in the latter half of the decade. We now expect to cease all coal operations at Lawrence Units 4 and 5 and convert Lawrence Unit 5 to natural gas in 2028. In aggregate, the 2023 preferred plan includes 4,800 megawatts of new resource addition through 2032, an increase of 1,200 megawatts when compared to the 2022 integrated resource plan update. As our generation fleet evolves, we are focused on achieving a responsible balance between non-carbon-emitting, intermitting resources with low or negative marginal costs and older, firm dispatchable generation with higher marginal costs, all while ensuring reliability and affordability for our customers and communities. We're excited about the potential investment opportunities ahead of us as we continue to transition our portfolio over the coming years. Moving to slide seven, I'll provide an update on our regulatory and legislative priorities. In Kansas, we're awaiting intervener testimony, which is due to be filed by August 29th, and are pending Kansas Central and Kansas Metro rate cases. Activity in September picks up with rebuttal testimony due September 18th and a settlement conference scheduled for September 21st. Should an agreement be reached, we'd be required to file it by September 29th. Otherwise, hearings would run from October 9th to the 13th. We look forward to working with all parties to achieve a constructive outcome and advance regionally competitive rates for our Kansas customers and communities. Shifting to Missouri, the order approving our request to securitize extraordinary costs from Winter Storm URI remains in the state appellate process with oral arguments to be held September 7th. We believe the Missouri Commission's decision in support of securitization is well supported by the record. As a reminder, we will complete the securitization financing after the appeal plays out, but incremental carrying costs incurred prior to approval will ultimately be recovered when we issue the debt. We anticipate resolution later this year. I'll conclude my remarks with slide eight, which highlights the core tenets of our strategy, affordability, reliability, and sustainability. On the affordability front, advancing regional rate competitiveness is one of our primary objectives. Our focus on delivering benefits to our customers since the 2018 merger is reflected and demonstrated in the EIA data on rate trends across states in the Central United States over the past five years. In addition, direct market evidence is provided by ongoing wins in economic development in our territory. We're pleased by our progress in improving regional rate competitiveness and keeping our rate trajectory well below the rate of inflation. Affordability is and will always be an area of focus. Ensuring reliability is also a core element of our strategy, and along with SADIE and This includes a focus on metrics relating to customer service, the commercial availability of our fleet, safety, and all elements of our operations, including infrastructure investment. This summer has brought resiliency and reliability to the forefront, as storm activity in our service territory has been more prevalent than normal, including the July 14 storms, the straight-line winds, and excess of 80 miles an hour. These types of conditions reinforce the importance of our ongoing transmission and distribution investments. And with respect to sustainability, we continue to advance the transition of our generation fleet, as detailed in our 2023 IRP update, and continuing the progress of the last two decades. Since 2005, we significantly and cost-effectively transformed our generation fleet, reducing carbon emissions by nearly half, while reducing sulfur dioxide and NOx emissions by 98% and 88%, respectively. And we look forward to the ongoing portfolio transition. Our mission is to empower a better future, and our vision is to lead the responsible energy transition in our region, always with an eye on affordability and reliability as well as sustainability. With that, I will now turn the call over to Kirk.