Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Evergy Inc EVRG reported strong Q2 2026 adjusted EPS of $0.88, up from $0.82 year-over-year, driven by regulated investment recovery and load growth.
- The company has secured 5 data center ESAs totaling approximately 2.5 GW of steady-state peak load, with total large customer commitments reaching 3 GW.
- Evergy Inc (EVRG) reaffirmed its long-term adjusted EPS growth target of 6% to 8% plus through 2030, with expectations of exceeding 8% annually from 2028.
- The company's capital investment plan is robust at $21.6 billion over 5 years, with an incremental $1 billion from IRP-driven generation resources, supporting a 12% rate base CAGR.
- Evergy Inc (EVRG) is experiencing strong retail load growth, with weather-normalized demand up 3.3% year-to-date, driven by commercial and industrial usage, and expects 7-8% annual load growth through 2030.
- The company signed the White House's ratepayer protection pledge, demonstrating commitment to affordability, and expects residential rate increases in line with or below inflation for most customers.
Negative Points
- Evergy Inc (EVRG) faced higher operations and maintenance, depreciation, and interest expenses, which partially offset earnings growth in Q2 2026.
- The company experienced a very active Q2 storm season, with severe storms causing extensive damage and requiring restoration efforts for over 300,000 customers.
- Missouri West customers may see rate increases above inflation over the next 5 years due to needed infrastructure investments, particularly new dispatchable baseload generation.
- The company's FFO to debt is projected at 14-15% from 2026 to 2028, which may be considered lower than some peers, reflecting financing needs for capital investments.
- Evergy Inc (EVRG) has significant equity issuance needs, with $700-900 million expected in 2026, which could dilute existing shareholders.
- The company faces regulatory uncertainties, including pending rate cases in Missouri and Kansas, with potential for adverse outcomes or delays.
Q & A Highlights
Q: Can you characterize the customer profile for the pending 2026 ESA, and is it another hyperscaler?
A: David Campbell, Chairman and CEO, indicated that while they won't get ahead of announcing the specific customer, the profile is expected to be consistent with the high-quality mix they have already signed, which includes hyperscalers like Google and Meta, and experienced data center developers like Digital Realty. He noted the Tier 1 expansion and Tier 2 pipeline reflects a similar mix of sophisticated counterparties.
Q: With the incremental capital from the IRP and potential further upside, what are the generation and capital requirements for the additional ESA you expect to sign this year, and where could rate base growth go?
A: David Campbell explained that the 2 to 2.5 gigawatts of expansion opportunities at existing sites are a key focus. He confirmed they expect to sign at least one more ESA in 2026, which will require additional generation resources and meaningful incremental CapEx. While not quantifying the exact amount, he noted that most customers are seeking firm power from Evergy's own resources, and the capital investment would be significant, driving further upside to the current plan.
Q: Can you elaborate on the expected residential rate increases relative to inflation, and clarify the specific situation for the Missouri West jurisdiction?
A: David Campbell clarified that they expect rate increases for the significant majority of residential customers to be in line with or below inflation, which is currently trending in the 2% to 3% range. However, he highlighted that Missouri West, their smallest utility with the lowest rates, will likely see rate increases above inflation over the next five years due to needed infrastructure investment, particularly new dispatchable baseload generation, and higher exposure to market energy prices. He emphasized these rates will remain regionally competitive and stabilize long-term.
Q: Is the 250-basis point delta between rate base growth and EPS growth a stable relationship, and what factors could cause it to fluctuate?
A: David Campbell stated that the 250-basis point difference between the 12% rate base CAGR and the 6% to 8% plus EPS growth target is viewed as a pretty steady relationship. While there are inevitable impacts from the timing of plants coming online, rate case outcomes, and the trajectory of large customer load ramps, the steadily increasing load growth helps offset the lag between investment and earnings recovery, making the relationship stable over the forecast period.
Q: What are the positive attributes that make customers choose Kansas or Missouri, and is there a lean towards one state over the other?
A: David Campbell stated that both states are viewed as very attractive by large customers, with similar LLPS tariffs and constructive regulatory environments. The choice often comes down to specific land prospects and local community receptiveness. He noted that the Kansas City metro area, which straddles the state line, offers a deep concentration of EPC firms and engineering talent, making the entire region competitive. He affirmed that whether on either side of the state line, the growth is expected to be within their service territory.
Q: Is there potential for a settlement in the pending Missouri Metro rate case, and what are your thoughts on the process?
A: David Campbell expressed optimism about reaching a constructive resolution, noting they have successfully settled their last couple of Missouri rate cases. He outlined the procedural schedule, which includes rebuttal testimony, settlement conferences in late September, and hearings in October. He characterized the case as straightforward, driven largely by infrastructure investment, with a unique positive benefit from a data center customer that has already reduced their requested revenue requirement by $25 million.
Q: Is the political noise around data center moratoriums in the Kansas governor's race affecting commercial discussions with potential customers?
A: David Campbell downplayed the issue's prominence in Kansas primaries compared to other states, noting the candidates have been supportive of economic development and infrastructure investment. He emphasized that data center siting is similar to any major project, requiring the right location, infrastructure, and community receptiveness. He confirmed that the noise has not affected their commercial discussions, as they are working with high-quality developers who understand the importance of building in receptive areas.
Q: Given the strong pipeline, are you considering providing a longer-term capital plan or illustrative growth rates beyond 2030 to highlight the duration of the growth profile?
A: David Campbell acknowledged the importance of providing that visibility. He noted that the current ESA ramps show significant load growth beyond 2030, and the expansion and Tier 2 opportunities have ramps well into the 2030s. He stated they plan to provide more specificity on the capital plan and growth outlook as they capitalize on the momentum in their pipeline, with an update expected during the fourth quarter call in February.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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