Evergy, Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, Courtney, and good morning, everyone.

Welcome to Evergy's Second Quarter 2026 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, Chairman and Chief Executive Officer, and Brian Buckler, Executive Vice President and Chief Financial Officer. David will cover second quarter highlights, economic development, our planned resource additions, and our regulatory agenda. Brian will cover our second quarter results, retail sales trends, and our financial outlook. 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 will begin on slide five. This morning, we are pleased to report second quarter adjusted earnings of $0.88 per share compared to $0.82 per share a year ago. Our results were driven primarily by the recovery of regulated investments, load growth, and revenues from our large load customers, partially offset by higher operations and maintenance and depreciation expense. Our solid results through June put us on target for the midpoint of full year 2026 adjusted EPS guidance of $4.14 to $4.34 per share. Brian will cover our results in more detail. Safety is a core value within our organization, and I am also pleased to report that our 2026 safety performance is trending favorably to target. This result reflects the commitment of our employees and the effectiveness of our efforts to drive continuous improvement through training, accountability, and operational discipline.

We are encouraged by our progress. It's imperative that we remain disciplined going forward with the goal of sending every employee home safely every day. I also want to recognize our employees for their relentless efforts to keep the lights on during a very active Q2 storm season. In early June, we experienced back-to-back severe storms that generated straight-line winds of up to 115 miles per hour and multiple tornadoes that caused extensive damage across our service territory, ranging from central and southeastern Kansas through the Kansas City metro area. Despite these challenging conditions, our teams safely restored power to more than 300,000 customers over the course of the week following the storms.

We are proud of the extraordinary efforts of our transmission and distribution teams, contractors, call center representatives, and customer service and communications teams. Their hard work, commitment to safety, and focus on serving our customers throughout the restoration process. Their dedication reflects the very best of our company. In fact, we had a major storm go through part of our territory today, and they're hard at work again this morning restoring power. In terms of reliability, we have demonstrated solid performance through the first half of the year. Our added duration and frequency metrics are tracking well relative to targets, demonstrating the benefits of our continued grid investments and the efforts of our transmission and distribution teams. I'd also like to recognize our generation team for the strong operational performance of the nuclear, fossil, and renewable fleet during the first six months of the year.

In addition to our confidence in hitting our 2026 earnings guidance, our long-term fundamentals as a company continue to strengthen. That starts with the outstanding work that our employees do every day to deliver safe, reliable power. Building off of that foundation, our customer and economic development prospects continue to be exceptionally strong, as I'll speak to momentarily. When we put it all together, we have high confidence in our plan, and we are reaffirming our long-term adjusted EPS growth target of 6%-8% plus through 2030 off of the 2026 midpoint of $4.24. We expect adjusted EPS growth to exceed 8% annually beginning in 2028 and through 2030. Slide six summarizes our data center announcements to date. In aggregate, we have executed ESAs for five data center projects under our LLPS tariffs, securing the strong protections that the tariff requires for current customers.

These five ESAs include steady-state peak load of approximately 2.5 gigawatts. When including the 500 megawatts of steady-state peak load from non-LLPS large customers, such as Panasonic and smaller data centers, the total reaches three gigawatts. We continue to make progress towards agreements on expansion projects and are highly confident that we'll execute at least one more ESA in 2026. We anticipate providing more details on our third quarter call in November. Momentum with our customer pipeline and discussions on new projects is outstanding, and we expect that to continue into 2027. As a reminder, any additional ESAs would represent further upside and/or extension to the remarkable load growth and business expansion created by the three gigawatts of large customer ESAs already signed.

These economic development wins solidify Kansas and Missouri as premier destinations for data center customers and will empower growth, enable investment, and help drive prosperity for our region. Slide seven summarizes the progress we've made in converting our large customer pipeline into signed agreements and provides an update on activity further down the queue. Starting in the top row, the 3 GW include the 5 announced ESAs and large customers that have already commenced operations. This Tier 1 demand enables the transformative growth opportunity for Evergy, supporting our expected 78% annual retail load growth through 2030. This total consists of projects already in operation, progressing towards the steady state of 1.3 GW, as well as 1.7 GW of additional projects that have executed ESAs contractually requiring minimum multi-bill provisions spanning 16-17 years, whether or not the capacity is fully utilized.

Regionally, these will deliver significant benefits, including supporting a leading-edge digital economy, creating jobs, and significantly expanding the local tax base while enabling us to spread systems costs over a broader load profile to main affordability for all customers. In the next category, we highlight approximately 2.0-2.5 GW of expansion opportunities, up from the 1-1.5 GW we disclosed last quarter. These expansion opportunities are at or adjacent to our existing customer sites. Further agreements or, excuse me, future agreements related to these opportunities would require amending load ramps and existing ESAs or new ESAs, and we are working on the transmission and generation solutions to enable them. To be clear, our 5-year financial plan does not incorporate any impact from these potential expansion projects, which would create upside in the near term and well into the 2030s, depending on individual project timing.

Additionally, we are in advanced discussions with multiple new customers in our Tier 2 category, representing approximately 1-2.0 GW. These customers have acquired land or land rights, signed letters of agreement, and we are actively reviewing transmission and generation capacity solutions. The opportunity from these customers is primarily beyond 2030. Taken collectively, the Tier 1 expansions and Tier 2 customer opportunities reflect strong momentum with multiple additional projects that would further extend our exceptional earnings and load growth well into the next decade. The remaining pipeline, totaling well over 10 additional GW, highlights a robust activity and sustained interest in our region. Serving this load will require working in tandem with our customers to identify creative solutions with our customers who stand ready to move forward as capacity opens, allowing us to prioritize the best fit projects as the queue evolves.

Slide eight provides an overview of our expected resource addition that will support this load growth. First, the resource additions reflected in the table are consistent with our February 2026 CapEx plan of $21.6 billion over the next 5 years. Informed by our 2026 IRP preferred plans in Kansas and Missouri, we now expect approximately $1 billion of incremental capital driven by the generation resources needed to serve the customer agreements we have secured. In total, the preferred plan through 2032 include more than 5 GW of new additions, with approximately 3.9 GW of natural gas, nearly 800 MW of solar, and 450 MW of battery storage. This resource mix reflects an all-of-the-above approach that supports reliability, affordability, and long-term customer needs while positioning Evergy to serve significant economic development across Kansas and Missouri.

Of note, additional load beyond the three gigawatts signed to date is expected to require incremental generation resource needs and incremental CapEx as a result. The 2026 IRP planning process involved identifying the most cost-effective plan that reliably serves our customers across uncertain future scenarios. These natural gas additions, combined with solar and battery storage, are planned in a manner that will allow Evergy to take advantage of best-in-class efficiency and technology and support economic development in our service territory, while at the same time helping to advance our strategic objectives of affordability and reliability. Moving to slide nine, I'll provide a brief update on our regulatory priorities in Kansas and Missouri. On the Kansas side, we have filed notice for an upcoming predetermination application, which is planned to include three generation assets, a new natural gas plant, a solar farm, and a battery storage facility.