Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| In turn, ongoing successes will drive economic growth, which benefits all of our customers and helps to cover the fixed cost of our system more efficiently |
| We’re pleased by our progress in improving regional rate competitiveness and keeping our rate trajectory well below the rate of inflation |
| In Kansas alone, we have delivered over $360 million in operating efficiencies and customer bill credits |
| Our full year results reflect strong cost management with savings well beyond what was in our financial plan, which enabled us to offset the negative drag created by higher interest rates and lower than expected industrial load |
| Dogwood is a low cost generation resource with a solid operating history to support our Missouri West customers |
| These efficiency gains reflect the hard work of the entire Evergy team who worked tirelessly throughout the year to advance our plan and our strategic objectives |
| By replacing aging equipment, investing in smart grid technologies will also enable further efficiency gains in serving our customers, which has been a hallmark of Evergy’s strategy since our formation in 2018 |
| Without question, the merger has delivered affordability gains and significant benefits to our customers and the communities we serve |
| We have saved more than $1 billion in operating costs since the merger, enabling Evergy to offset steep inflationary pressures, while at the same time, ramping up investment and reliability and helping to bolster economic development |
| I’d like to commend the outstanding work from our distribution and transmission teams and keeping the lights on for our customers and communities, as the reliability gains reflect improvements to our outage management processes and the impact of our ongoing grid investments |
| Despite some falloff in the fourth quarter which may in part reflect the art form of weather normalization, residential and commercial growth were both solid for the year with 0.8% and 1% positive annual growth, respectively, on a weather-normalized basis |
| Higher transmission margins resulting from our ongoing investments to enhance our transmission infrastructure drove a $0.04 increase and to help offset challenges from higher interest expense, regulatory lag, weather and demand, we accelerated cost management initiatives, which drove a positive $0.41 variance year-over-year |
| The result of this hard work was affordability gains that we delivered to our customers |
| I am proud and honored to lead the Evergy team that made this happen |
| As our capital plan outlines, we continue to invest in grid modernization to ensure reliability and strong customer service, building on the momentum reflected in our significant improvements in SAIDI and SAIFI in 2023 |
| It helps us maintain those all-important credit ratios that I talked about before |
| Very constructive legislative actions taken in Missouri the last couple of years with the extension of pieces, some other changes to piece of the addition of the property tax rider |
| Before we begin, we’d like to extend our deepest sympathies to the family of Lisa Lopez-Galvan and all those who were impacted by the tragic events during the Chief Super Bowl parade, Kansas City and Chiefs Kingdom are grieving, but if there is one thing that I’ve learned during my time here, it’s that both are very strong and very resilient |
| We remain confident in our ability to deliver annual 4% to 6% adjusted EPS growth through 2026 and we are reaffirming that target today |
| Without these elements, our investment proposition loses attractiveness relative to our peer utilities who benefit from more robust capital programs, more attractive realized returns, and more predictable and stable regulatory mechanisms |
| Our focus on affordability and regional rate competitiveness is an important contributor to this large pipeline and provides a foundation for our ongoing support of the tremendous opportunity in our states |
| Net of these items, we retain the benefit of over $100 million in incremental O&M savings achieved last year as we move into 2024 |
| Our demand projections continue to be supported by a strong local label market as Kansas and Kansas City metro area unemployment rates remained below the national average of 3.7% |
| We advanced affordability in 2023 with our Kansas rate case settlement, maintaining the momentum of the past 5 years |
| Last year, we made strong progress on reliability as well as is shown on Page 6 |
| We expect to utilize that surplus as we move forward into 2025 and ‘26, augmented by continued robust generation of operating cash flow because as you know, we’re not a current taxpayer |
| Higher transmission margins are expected to deliver $0.12 in 2024 as we continue to make investments to improve our transmission infrastructure |
| And for Evergy in Kansas to compete, investors require debt and equity returns commensurate with current market conditions and competitive with peers, a clear and stable framework around regulatory capital structure to guide how we capitalize our utilities, an opportunity to earn the returns we are authorized and timely recovery invested capital, both now and in the future |
| Evergy’s cost savings were the major enabler of the improvements in regional rate competitiveness that are shown on Slide 8 |
| Our mission is to empower a better future, and our vision is to lead their responsible energy transition in our region, always with an eye on affordability and reliability along with sustainability |
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| While we plan for normal weather, we know the importance of consistent financial execution we are disappointed by these results |
| Weather-normalized demand declined by 2.4%, primarily driven by lower residential and industrial demand, contributing to a $0.06 decrease in EPS |
| While demand from refining customers began to recover, we saw a contraction in demand from other industrial customers during the fourth quarter |
| As shown on the slide from left to right, the year-over-year decrease in fourth quarter earnings was driven by the following: first, a 14% decrease in heating degree days led to a $0.05 decrease in EPS for the quarter |
| An imbalanced investment proposition challenges our ability to have the infrastructure in place to compete for economic development and by extension, challenges the shared goal of Kansas stakeholders to attract new businesses and their jobs and investment |
| Weather at the end of the year was the driver of the shortfall |
| In contrast, industrial demand was down 3.6% for the year |
| Again, moving from left to right, our full year EPS drivers compared to 2022 include the following: Our 2023 results reflect a 6% year-over-year decrease in cooling degree days and a 13% decrease in heating degree days, which drove a $0.28 decrease in EPS versus 2022 |
| December weather was particularly mild, which led to a 23% reduction in heating degree days in that month alone |
| Through the first three quarters, this decline was driven by lower usage at two of our largest refining customers |
| They are also reflective of important priorities, but it’s fair to say that the prospects in the Missouri legislature this year in general for legislation are more challenged |
| Moving to Slide 5, I’ll open by describing the drivers for our fourth quarter earnings falling below our guidance |
| This dynamic reversed in the fourth quarter |
| We expect a year-over-year increase in O&M of less than $20 million driving a $0.06 of lower EPS, primarily due to one-time items in 2023, driven by changes in capitalization |
| If you look at the earlier years in the categories of kind of traditional T&D grid and other categories, there is a modest decline |
| For both November and December and December in particular, with a 23% decrease in heating degree days relative to last year, weather was warmer than normal, resulting in a variance of $0.06 in these 2 months alone |
| As you know, on the third quarter call, we narrowed our guidance range to $3.55 per share to $3.65 per share from our initial range of $3.55 to $3.75, due primarily to the timing of the Persimmon Creek wind farm shifting back a year |
| 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 |
| As Kirk will describe, weather-adjusted demand was also soft in the fourth quarter relative to expectations, but we were able to offset those impacts leaving milder-than-normal weather as a driver |
| A $0.26 decrease from higher depreciation expense and then higher interest expense of $0.41 and a $0.05 decline in AFUDC drove a $0.46 decrease |
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