Evergy’s Earnings Call: ESA Pipeline and Equity Signals Don’t Match

Date of Call: Aug 6, 2026

Financials Results

• Revenue: Not explicitly quantified; adjusted EPS provided.
• EPS: $0.88 per share, compared to $0.82 per share a year ago.

Guidance:

• Q3 adjusted EPS guidance of 50% to 53% (measured against 2026 midpoint of $4.24).
• Full-year 2026 adjusted EPS guidance range reaffirmed at $4.14 to $4.34.
• Long-term adjusted EPS growth target of 6% to 8% plus through 2030, with growth exceeding 8% annually beginning in 2028.
• Expect at least one additional large load ESA (energy service agreement) signed in 2026.
• Project 7-8% annual retail load growth through 2030.
• Capital investment plan updated to $21.6 billion over five years, with ~$1 billion incremental investment driven by new generation resources.
• FFO to debt projected in range of 14% to 15% from 2026 to 2028.

Business Commentary:

Earnings Growth and Key Drivers:

• Evergy, Inc. reported adjusted earnings of $0.88 per share for Q2 2026, compared to $0.82 per share a year ago.
• The growth was primarily driven by the recovery of regulated investments, load growth, and revenues from large load customers, despite higher operations and maintenance and depreciation expenses.

Load Growth and Economic Development:

• The company's weather normalized demand grew 1.8% in Q2 2026, with commercial and industrial demand contributing significantly.
• This growth was supported by strong load growth from new large customers, including data centers and industrial projects like Panasonic, which are part of significant economic development in Kansas and Missouri.

Capital Investment and Resource Planning:

• Evergy announced a capital investment plan of $21.6 billion over the next five years, with an additional $1 billion expected for generation resources to serve new customer agreements.
• The investment plan includes a mix of natural gas, solar, and battery storage resources, reflecting an all-of-the-above approach to support reliability and economic development.

Regulatory and Rate Filings:

• The company is actively engaging in regulatory processes in Kansas and Missouri, including filings for new generation assets and rate case proceedings.
• These efforts are aimed at securing approvals for new resources and managing rate impacts to ensure affordability for existing customers.

Outlook and Growth Projections:

• Evergy reaffirmed its long-term adjusted EPS growth target of 6% to 8% plus through 2030, with expectations for earnings growth to exceed 8% annually from 2028 onward.
• The optimism is based on the strong pipeline of large customer agreements and the anticipated benefits from new infrastructure investments.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed confidence in hitting 2026 earnings guidance and long-term targets, citing 'solid results,' 'outstanding work,' 'exceptionally strong' economic development prospects, 'high confidence' in pipeline, and 'remarkable load growth.' They also noted 'strong momentum' with customer discussions and reaffirmed growth targets.

Q&A:

• Question from Steve Ambresi (RBC Capital Markets): Can you provide more context on potential Tier 1 ESA signings, generation/resource requirements, capital needs, and where rate-based growth could go?
  Response: Management expects at least one additional ESA in 2026, with momentum continuing into 2027. Incremental load will require additional generation (primarily gas) and meaningful incremental capital investment, driving resource needs and capital requirements. The ESAs are expected to be similar in profile to those already signed.

• Question from Steve Ambresi (RBC Capital Markets): Any thoughts on providing longer-term capital plans or growth rate disclosures (e.g., into the 2030s)?
  Response: Management acknowledges the importance of visibility and plans to provide more specificity on longer-term growth potential as the momentum in the pipeline is capitalized on, with upside expected both near-term and well into the 2030s.

• Question from Andrew Cadavion (Wells Fargo): Could you characterize the customer profile for the pending 2026 ESA? Is it another hyperscaler?
  Response: The customer profile is expected to be consistent with those already signed (e.g., hyperscalers or experienced data center developers). Specific customer identities are confidential, but the mix is likely similar.

• Question from Andrew Cadavion (Wells Fargo): Is the data center moratorium becoming a campaign issue in Kansas affecting commercial discussions?
  Response: Data centers are not a major political issue in current Kansas/Missouri elections. Management is confident the company will continue to advance constructive infrastructure measures with support from leaders in both parties, and customers are focused on siting in receptive communities.

• Question from Paul Patterson (Glenrock Associates): Could you clarify the rate increase impacts and the jurisdiction where rates may be above inflation?
  Response: For the majority of residential customers, rate increases are expected to be in line with or below inflation (currently ~2-3%). Missouri West rates may be above inflation over the next five years due to needed infrastructure investment but are expected to stabilize and remain regionally competitive long-term. The LLPS tariff ensures large customers pay their fair share, benefiting other customers.

• Question from Paul Patterson (Glenrock Associates): What are your thoughts on potential settlement of the Missouri Metro rate case?
  Response: Management aims to work towards a constructive resolution in the Missouri Metro rate case, which follows a standard schedule with a settlement conference in late September.

• Question from Anthony Claudel (Musio): Is the 250 basis point lag between rate-based and earnings growth consistent, or does it fluctuate?
  Response: The ~250 basis point difference between average annual rate-based growth and earnings growth is viewed as a pretty stable relationship over the trajectory, supported by steady load growth and predictable timing of plant online schedules.

• Question from Anthony Claudel (Musio): What positive attributes make Kansas or Missouri more attractive for large load customers?
  Response: Both states are viewed as attractive due to similar constructive fundamentals and LLPS tariff provisions. The choice depends on local community criteria (land, economic development). The service territory overlaps with 'Chiefs Nation,' indicating strong regional interest.

Contradiction Point 1

Growth Rate Disclosures and Timeline

Contradictory statements on providing specific long-term growth disclosures.

Steve Ambresi (RBC Capital Markets) - Steve Ambresi (RBC Capital Markets)

2026Q2: The company acknowledges the need for more specificity and plans to provide it as the pipeline momentum continues. - David Campbell(CEO)

Should the company consider providing more long-term capital and growth rate disclosures (e.g., into the 2030s)? - Stephen D’Ambrisi (RBC Capital Markets)

2026Q2: More specific disclosures will be provided as momentum continues and projects are converted into signed agreements. - David Campbell(CEO)

Contradiction Point 2

Residential Rate Increase Outlook

Contradictory explanations for Missouri West rate increases.

Paul Patterson (Glenrock Associates) - Paul Patterson (Glenrock Associates)

2026Q2: Missouri West rates are currently among the lowest in the nation due to underinvestment. They will see rate increases above inflation over the next 5 years due to needed infrastructure and generation investments. - David Campbell(CEO)

What is the outlook for residential rate increases, including the inflation benchmark and reasons for differences in Missouri West rates? - Paul Patterson (Glenrock Associates)

2026Q2: Missouri West... requires new generation investment to improve reliability and reduce market exposure. - David Campbell(CEO)

Contradiction Point 3

Rate-Based Growth vs. EPS Growth Relationship

Contradiction on whether the ~250 bps lag between rate base and EPS growth is a stable, predictable relationship.

What were Anthony Claudel's comments on Musio's earnings call? - Anthony Claudel (Musio)

2026Q2: The ~250 bps lag is viewed as a pretty steady relationship. - David Campbell(CEO)

Is the 250 bps lag between rate hikes and EPS growth consistent, or is it subject to change due to external factors? - Nicholas Campanella (Barclays)

2026Q1: The momentum suggests the potential to exceed 8% EPS growth in later years, trending toward the math that Nick Campanella suggested. - David Campbell(CEO)

Contradiction Point 4

Equity Issuance Outlook Beyond 2029

Contradiction on whether equity needs are stable or contingent on new opportunities.

Steve Ambresi (RBC Capital Markets) - Steve Ambresi (RBC Capital Markets)

2026Q2: The visibility from signed ESAs already shows a significant load ramp beyond 2030... The company acknowledges the need for more specificity and plans to provide it as the pipeline momentum continues. - David Campbell(CEO)

Should the company provide more long-term capital plan and growth rate disclosures, such as into the 2030s? - Stephen D'Ambrisi (RBC Capital Markets)

2025Q4: The 5-year plan assumes no equity needs in 2030 due to strong projected cash flows from operations. However, this is a dynamic plan. If more capital opportunities (like additional ESAs) arise, the company will reevaluate and likely need incremental equity. - W. Buckler(CFO)

Contradiction Point 5

2026 ESA Pipeline and Impact on Growth

Conflicting statements on the size of the 2026 ESA pipeline and its timing impact.

Steve Ambresi (RBC Capital Markets) - Steve Ambresi (RBC Capital Markets)

2026Q2: The company expects to sign at least one additional ESA in 2026, with momentum continuing into 2027. There is a pipeline of 2–2.5 gigawatts of expansion opportunities at or adjacent to existing sites. - David Campbell(CEO)

What are the potential new ESAs in 2026, including generation and capital requirements, and where could rate-based growth be directed? - Stephen D'Ambrisi (RBC Capital Markets)

2025Q4: The company expects at least 1 more executed ESA in 2026... The pipeline includes 2 gigawatts to 3.5 gigawatts of potential demand from multiple customers in advanced discussions. The impact of these additional ESAs is expected to be larger after 2030, extending and fortifying the growth trajectory into the 2030s. - David Campbell(CEO)