Evergy, Inc.

Good day and thank you for standing by. Welcome to the Q2 2024 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Peter Flynn, Director of Investor Relations. Please go ahead.

Thank you, DeeDee, and good morning, everyone. Welcome to Evergy's second quarter 2024 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 2 and 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, Chairman and Chief Executive Officer, and Jeff Lay, Acting Chief Financial Officer and Treasurer. David will cover second quarter highlights and an update on our regulatory and legislative agendas. Jeff will cover our second quarter results, retail sales trends, and our financial outlook for 2024. Other members of management are with us and will be available during the Q&A portion of the call. I will now turn the call over to David.

Thanks, Pete, and good morning, everyone. I'll begin on slide five. This morning, we reported second quarter adjusted earnings of 90 cents per share compared to 81 cents per share a year ago. The increase in adjusted earnings over last year was driven primarily by demand growth, weather, new retail rates, and higher transmission margin, partially offset by higher operations and maintenance costs, DNA, and interest expense. Jeff will discuss these earnings drivers in more detail in his remarks. Now, as you all know, Kirk Andrews resigned from his role as Chief Financial Officer on June 4th. We were excited to appoint Jeff Lay as Acting CFO on June 7th while we conduct an internal and external search. We expect to conclude the search this year. Jeff worked closely with Kirk and me, and he brings an outstanding capability set to the role, which has enabled a smooth transition. We'd like to thank Kirk for his leadership, and we wish him all the best in his next chapter of his career closer to home. In May, we filed our triennial integrated resource plan in Kansas, following a similar filing from Missouri in April. In aggregate, the 2024 preferred plan includes 5,800 megawatts of resource additions through 2033, representing an increase of 1,500 megawatts over the next 10 years when compared to the 2023 preferred plan. Our IRP and its underlying analysis reflect the benefits of a diverse fuel mix. Renewables have low or negative marginal costs and no emissions, but they are intermittent depending on Mother Nature or large-scale storage deployment for reliability. New and existing thermal resources are emitting and have higher marginal costs for fuel and O&M, but they can be dispatched to meet customer demand when they are needed most. The ultimate goal of having a balanced mix is to ensure reliability and affordability for our customers as we advance a responsible fleet transition. This transition will require sustained investment over the coming years and will incorporate the most recent IRP and its higher levels of new generation when we provide an update to our capital plan on the third quarter earnings call. Shifting back to the quarter, since the beginning of April, we experienced 10 severe storm events that produced wind gusts in excess of 50 miles per hour. Wind speeds at this level downed countless trees and tree limbs and caused extensive damage to equipment and structures across our service territory. I'd like to thank our customers for their patience during outages caused by this unusually severe weather, and thank our transmission and distribution teams, contractors, personnel from neighboring utilities and our call center, and customer service employees for their hard work throughout our storm restoration efforts. Our frontline employees are the bedrock of safely delivering affordable and reliable power to our customers and communities. We're extremely proud of their contributions as they worked long shifts through hot and humid conditions. Our team's execution has enabled solid performance in the first half of the year, and we are reaffirming our 2024 adjusted EPS guidance range of $3.73 to $3.93 per share, as well as our target long-term annual adjusted EPS growth target of 4% to 6% from 2023 to 2026. On slide six, we highlight three major economic development wins that we have featured, Google, Panasonic, and Meta. In aggregate, their demand represents approximately 750 megawatts of load, and each will be the largest customer in their respective jurisdiction by a wide margin. The overall economic development pipeline remains robust in both Kansas and Missouri, with projects representing more than six gigawatts of demand actively considering our service territories. As a reminder, our capital investment and load growth forecasts only reflect projects announced to date. Now, many of you will ask us about timing. As a general rule, we will announce specifics on these projects in tandem with customer announcements regarding their plans. Of course, the environment for new economic development projects is competitive. And while we do not expect to win all of these projects in our pipeline, we are excited by the very active dialogue we are having with these potential customers as they consider our region. Our strategic focus on affordability and reliability and regional great competitiveness are important contributors to this pipeline and provide a foundation for the tremendous potential in our region, building on our success with Panasonic, Meta, and Google. As part of the exercise, alongside the economic development rates that are in place in both Kansas and Missouri, we are looking at rate design elements to ensure that there is appropriate and adequate recovery associated with large new loads. Moving to slide seven, based on the announcements of Google's data center, Panasonic's EV battery manufacturing facility, and Meta's data center, along with other announced industrial projects, we expect a solid 2% to 3% weather normalized demand growth through 2028. Moving to slide eight, I'll provide an update on our regulatory and legislative priorities in both Kansas and Missouri. First, I'm pleased to highlight House Bill 2527 in Kansas, which became effective on July 1st of this year. The bill incorporated multiple provisions to establish a competitive framework for electric infrastructure investment, including the use of plant and service accounting, or PISA, and a construction work-in-progress mechanism that applies to new natural gas units. The piece of provisions in HB 2527 served to mitigate regulatory lag between rate cases, very similar to how it works in Missouri, but with a 90% deferral in Kansas. Overall, the passage of HB 2527 signals the support of Kansas legislators, regulators, and stakeholders for infrastructure investment in support of economic development and the importance of a competitive and constructive regulatory framework for infrastructure investment. It is an exciting time in our region as reflected by our significantly higher sales growth forecast relative to recent history. We're also looking forward to our capital structure workshop in Kansas, which we expect to occur in the fourth quarter. This workshop, which was born out of our legislative discussions with Kansas stakeholders earlier in the year, presents an opportunity for constructive dialogue around the importance of a clear and stable framework for regulatory capital structure and authorized return. outside the confines of a litigated proceeding. This framework serves as an important backdrop for providers of capital to invest in Kansas and for Evergy to attract competitively priced capital, much like the constructs that exist in Missouri and other neighboring states. As always, we are committed to advancing the generational economic development opportunity ahead of us in concert with Kansas policymakers and stakeholders. Now pivoting to Missouri, we continue to work our way to our pending rate case at Missouri West. In late June, staff and other interveners filed direct testimony, and earlier this week, all parties filed rebuttal testimony. True-up and sur-rebuttal testimony will be filed on September 10th. In our upcoming filings, we anticipate that our overall revenue request will decrease as a result of lower fuel and power costs, reflecting lower commodity prices and higher market revenue. As a reminder, changes in fuel and power costs are not earnings drivers in the rate case. The expected reduction in fuel costs would be a pass-through benefit to customers in base rates. Any subsequent increases or decreases in these costs after the new base rates are set will be reflected in the fuel clause between rate cases. After true open sewer bubble testimony are filed, a settlement conference will be held on September 23rd, followed by hearings beginning on September 30th and running through early October. Revised rates in Missouri will go into effect by January 1st, 2025. We look forward to working collaboratively with the Missouri Public Service Commission staff and our stakeholders to achieve a constructive outcome for our Missouri West customers. As we've described, we expect our cadence of rate cases going forward to be roughly every other year, so that won't be true for every jurisdiction. Some may be more frequent, others less. I'll conclude my remarks with slide nine, 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 is demonstrated in the comparative EIA data on rate trends across the central United States over the past five years. Kansas and Missouri stand out positively in that comparison. Our strategic plan is designed to sustain this positive trajectory by keeping our long-term rate trajectory at or below the rate of inflation. By prioritizing affordability, we contribute to the robust economic development pipeline ahead of us and lay the groundwork for continued support for the substantial economic potential within our states. Ensuring reliability is also a core element of our strategy and encompasses safety, safety, grid resiliency, and public safety. This also includes a focus on metrics related to customer service, the commercial availability of our generation fleet, safety, and all elements of our operations, including infrastructure investments. With respect to sustainability, almost half the power generated by Evergy comes from emission-free resources. Since 2005, we have reduced carbon emissions by 53% and sulfur dioxide and nitrogen dioxide emissions by 98% and 90%, respectively. Our integrated resource plan includes a balanced mix of resource additions going forward as we manage the responsible transition of our generation portfolio. Evergy is committed to delivering safe, reliable, affordable, and sustainable energy to customers while being a great place to work for diverse workforce and supporting the communities we serve. With that, I will now turn the call over to Jeff.