Evergy, Inc. (EVRG) Bundle
Understanding Evergy, Inc. (EVRG) Revenue Streams
Understanding Evergy, Inc.’s Revenue Streams
The revenue streams for Evergy, Inc. are primarily derived from the sale of electricity across different customer segments. The breakdown of these revenue sources includes:
- Residential Sales: $730.8 million for the three months ended September 30, 2024, compared to $675.1 million for the same period in 2023.
- Commercial Sales: $615.2 million for the three months ended September 30, 2024, compared to $528.6 million for the same period in 2023.
- Industrial Sales: $188.9 million for the three months ended September 30, 2024, compared to $158.9 million for the same period in 2023.
- Other Retail Revenues: $10.9 million for the three months ended September 30, 2024, compared to $11.6 million for the same period in 2023.
- Wholesale Revenues: $114.7 million for the three months ended September 30, 2024, compared to $148.3 million for the same period in 2023.
- Transmission Revenues: $123.1 million for the three months ended September 30, 2024, compared to $101.9 million for the same period in 2023.
- Other Revenues: $27.8 million for the three months ended September 30, 2024, compared to $44.9 million for the same period in 2023.
Overall, the operating revenues for Evergy, Inc. totaled $1,811.4 million for the three months ended September 30, 2024, representing an increase of $142.1 million compared to $1,669.3 million for the same period in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for Evergy, Inc. demonstrates a significant increase:
- Operating Revenues Q3 2024: $1,811.4 million
- Operating Revenues Q3 2023: $1,669.3 million
- Percentage Increase: 8.5%
Year-to-date operating revenues for the first nine months of 2024 were $5,495.5 million compared to $5,049.9 million for the same period in 2023, marking a growth rate of 8.8%.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to overall revenue for the year-to-date September 30, 2024, is summarized in the table below:
| Segment | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Residential | $1,737.0 | 31.6% |
| Commercial | $1,722.0 | 31.3% |
| Industrial | $490.0 | 8.9% |
| Wholesale | $390.0 | 7.1% |
| Transmission | $350.0 | 6.4% |
| Other | $700.0 | 12.9% |
| Total | $5,389.0 | 100% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- Increase in Residential Revenue: Increased by $55.7 million in Q3 2024 due to higher demand and rate adjustments.
- Commercial Sales Growth: Grew by $86.6 million in Q3 2024, attributed to new commercial contracts and increased consumption.
- Wholesale Revenue Decline: Decreased by $33.6 million in Q3 2024 due to lower market prices and reduced demand from industrial customers.
- Transmission Revenue Increase: Grew by $21.2 million in Q3 2024, reflecting updated transmission costs effective January 2024.
These changes indicate a shift in revenue dynamics, with residential and commercial sectors showing robust growth while wholesale revenues faced challenges.
A Deep Dive into Evergy, Inc. (EVRG) Profitability
A Deep Dive into Evergy, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, Evergy reported a gross margin of $506.2 million, an increase of $144.6 million compared to $522.9 million in the same period of 2023. Year-to-date, the gross margin stood at $1,278.0 million, up $162.5 million from $1,115.5 million in 2023.
Operating Profit: The income from operations for the three months ended September 30, 2024, was $627.5 million, reflecting an increase of $141.6 million from $485.9 million in 2023. Year-to-date, the operating income reached $1,245.8 million, a rise of $144 million compared to $1,101.8 million in 2023.
Net Profit Margin: For the three months ended September 30, 2024, net income attributable to Evergy, Inc. was $465.6 million, compared to $351.6 million in 2023. Year-to-date net income reached $795.3 million, compared to $673.3 million in the previous year.
Trends in Profitability Over Time
The gross profit margin has shown a progressive increase, with gross margins rising from $522.9 million in Q3 2023 to $506.2 million in Q3 2024, indicating improved operational efficiency. Operating income has similarly increased, signifying a robust performance and effective cost management strategies. The net income growth reflects favorable regulatory changes and increased revenues from retail rates.
Comparison of Profitability Ratios with Industry Averages
The operating profit margin for Evergy in Q3 2024 was approximately 38.6%, compared to the industry average of 30%. The net profit margin stood at around 25.5% for the same period, significantly higher than the industry average of 15%.
Analysis of Operational Efficiency
Operating expenses for the three months ended September 30, 2024, were $363.1 million, a decrease from $380.7 million in 2023. This reduction indicates effective cost management strategies being implemented by the company. The depreciation and amortization expenses were recorded at $303.2 million, down from $311.9 million.
Comprehensive Profitability Metrics Table
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Gross Margin (GAAP) | $506.2 million | $522.9 million | $1,278.0 million | $1,115.5 million |
| Operating Income | $627.5 million | $485.9 million | $1,245.8 million | $1,101.8 million |
| Net Income | $465.6 million | $351.6 million | $795.3 million | $673.3 million |
| Operating Margin | 38.6% | 30% | — | — |
| Net Profit Margin | 25.5% | — | — | 15% |
| Operating Expenses | $363.1 million | $380.7 million | — | — |
| Depreciation and Amortization | $303.2 million | $311.9 million | — | — |
Debt vs. Equity: How Evergy, Inc. (EVRG) Finances Its Growth
Debt vs. Equity: How Evergy, Inc. Finances Its Growth
As of September 30, 2024, Evergy, Inc. reported a total long-term debt of $7,231.5 million and a total equity of $10,056.2 million. The company's short-term debt stood at $1,422.8 million, with available borrowing capacity under its master credit facility amounting to $1,074.5 million.
Debt Levels
Evergy's long-term debt includes:
- $300.0 million of 5.40% Mortgage Bonds maturing in 2034 issued in April 2024.
- $300.0 million of 5.65% First Mortgage Bonds maturing in 2034 issued in May 2024.
- $919.6 million of long-term debt issued year to date as of September 30, 2024.
Debt-to-Equity Ratio
The debt-to-equity ratio for Evergy is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Using the figures above:
Debt-to-Equity Ratio = ($7,231.5 million + $1,422.8 million) / $10,056.2 million = 0.83
This ratio is favorable compared to the industry average of approximately 1.0.
Recent Debt Issuances and Credit Ratings
In September 2024, Evergy repaid $800.0 million of 2.45% Senior Notes at maturity. The company maintains a credit rating of Baa2 from Moody's and BBB from S&P, indicating a moderate credit risk but still investment-grade status.
Debt Financing vs. Equity Funding
Evergy balances its financing structure through a mix of debt and equity. The company uses debt primarily to fund capital expenditures and operational needs while leveraging equity for stability and growth. The following table outlines the distribution of debt and equity as of September 30, 2024:
| Type | Amount (Millions) |
|---|---|
| Long-Term Debt | $7,231.5 |
| Short-Term Debt | $1,422.8 |
| Total Debt | $8,654.3 |
| Total Equity | $10,056.2 |
| Debt-to-Equity Ratio | 0.83 |
As of September 30, 2024, the company’s strategy reflects a prudent approach to leveraging debt financing while maintaining a solid equity base, crucial for funding its growth initiatives and managing operational risks effectively.
Assessing Evergy, Inc. (EVRG) Liquidity
Assessing Evergy, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio for Evergy, Inc. is 1.01, calculated from current assets of $1,056.9 million and current liabilities of $1,045.8 million.
Quick Ratio: The quick ratio stands at 0.36, with quick assets (current assets minus inventories) amounting to $607.4 million against current liabilities of $1,045.8 million.
Working Capital Trends
As of September 30, 2024, Evergy's working capital is $11.1 million, indicating a slight decrease from $16.2 million at the end of 2023. This trend reflects fluctuations in both current assets and current liabilities.
Cash Flow Statements Overview
| Cash Flow Type | 2024 (YTD) | 2023 (YTD) |
|---|---|---|
| Operating Activities | $1,588.1 million | $1,551.7 million |
| Investing Activities | ($1,790.3 million) | ($1,791.9 million) |
| Financing Activities | $231.2 million | $256.0 million |
Cash flows from operating activities increased by $36.4 million year-to-date September 30, 2024, primarily due to higher retail electric sales. Cash used in investing activities decreased slightly, while cash from financing activities saw a decline of $24.8 million.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Evergy has $1,074.5 million of available borrowing capacity under its master credit facility, indicating strong liquidity support. The company has also maintained compliance with its total indebtedness to total capitalization ratio of 0.65 as required by its credit facility.
Additionally, Evergy's cash and cash equivalents stood at $12.0 million, up from $9.2 million at the end of 2023, reflecting positive cash management practices.
Is Evergy, Inc. (EVRG) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the following valuation metrics are crucial for assessing whether the company is overvalued or undervalued:
- Price-to-Earnings (P/E) Ratio: 18.2
- Price-to-Book (P/B) Ratio: 1.6
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 10.5
Over the past 12 months, the stock price has exhibited the following trends:
| Period | Stock Price ($) | Change (%) |
|---|---|---|
| September 2023 | 62.50 | N/A |
| December 2023 | 61.00 | -2.4 |
| March 2024 | 65.00 | 6.6 |
| June 2024 | 67.50 | 3.8 |
| September 2024 | 68.00 | 0.7 |
Regarding dividends, the company has the following metrics:
- Dividend Yield: 4.0%
- Payout Ratio: 55%
Analyst consensus on the stock valuation is as follows:
- Buy: 5 Analysts
- Hold: 8 Analysts
- Sell: 2 Analysts
Overall, these metrics provide a comprehensive view of the company's valuation as of 2024.
Key Risks Facing Evergy, Inc. (EVRG)
Key Risks Facing Evergy, Inc.
The financial health of Evergy, Inc. is influenced by various internal and external risk factors that could impact its operations and profitability.
Industry Competition
The energy sector is characterized by fierce competition. Evergy faces challenges from both traditional utility companies and emerging renewable energy providers. This competition can lead to pricing pressures and reduced margins.
Regulatory Changes
Evergy operates in a heavily regulated environment. Changes in regulations can significantly impact operations. For instance, the company recognized a regulatory liability of $96.5 million in the third quarter of 2023 related to customer refunds for previously collected revenues.
Market Conditions
Fluctuations in market conditions, such as changes in fuel prices and demand for electricity, can adversely affect profitability. For example, Evergy's fuel and purchased power costs were $1.169 billion for the year to date September 30, 2024.
Operational Risks
Operational risks include the performance of power generation facilities. For instance, the company experienced an increase in operating and maintenance expenses of $8.8 million year to date September 30, 2024. Additionally, an outage at the Wolf Creek facility in 2024 could impact supply.
Financial Risks
Financial risks stem from debt levels and interest rate fluctuations. As of September 30, 2024, Evergy had a total indebtedness to total capitalization ratio of 0.65 to 1.00, indicating a leveraged position. The company also repaid $800 million of senior notes in September 2024.
Strategic Risks
Strategic risks arise from the company's decisions related to mergers, acquisitions, and capital investments. For instance, in 2023, Evergy acquired Persimmon Creek for $217.9 million, which may lead to integration challenges.
Mitigation Strategies
- Regulatory Compliance: Continuous monitoring of regulatory changes to ensure compliance and minimize liabilities.
- Operational Efficiency: Investments in technology to improve operational efficiency and reduce costs.
- Debt Management: Active management of debt levels and refinancing strategies to mitigate interest rate risks.
| Risk Type | Description | Financial Impact |
|---|---|---|
| Industry Competition | Pressure from traditional and renewable energy providers | Reduced pricing power and margins |
| Regulatory Changes | Changes in laws affecting operations | $96.5 million regulatory liability recognized |
| Market Conditions | Fluctuations in fuel prices and demand | Fuel and purchased power costs of $1.169 billion |
| Operational Risks | Performance issues at power generation facilities | Increase in operating expenses by $8.8 million |
| Financial Risks | High debt levels and interest rate fluctuations | Debt ratio of 0.65 to 1.00 as of September 2024 |
| Strategic Risks | Mergers, acquisitions, and capital investments | Acquisition cost of $217.9 million for Persimmon Creek |
Future Growth Prospects for Evergy, Inc. (EVRG)
Future Growth Prospects for Evergy, Inc.
Analysis of Key Growth Drivers
Evergy has identified several strategic growth drivers, including product innovations, market expansions, and acquisitions. The company is focused on enhancing its renewable energy portfolio, investing in new technologies, and expanding its service areas.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, Evergy's operating revenues are projected to reach $4.59 billion, reflecting a growth of 6.2% compared to 2023's $4.32 billion. The utility gross margin (non-GAAP) for 2024 is expected to be approximately $3.15 billion, a significant increase from $2.91 billion in 2023.
Strategic Initiatives and Partnerships
Evergy's strategic initiatives include the construction of the Kansas Sky solar generation facility, which is projected to provide around 159 MW of renewable energy by summer 2027. Additionally, the acquisition of Persimmon Creek in the second quarter of 2023 is expected to contribute to the company’s renewable energy credits and operational efficiencies.
Competitive Advantages
Evergy's competitive advantages include a strong regulatory framework that supports rate increases, extensive infrastructure investments, and a diversified energy portfolio. The company’s gross margin (GAAP) increased by $144.6 million in Q3 2024 compared to Q3 2023, driven by enhanced retail rates and recovery of extraordinary fuel costs.
| Key Financial Metric | 2024 Estimate | 2023 Actual | Change (%) |
|---|---|---|---|
| Operating Revenues | $4.59 billion | $4.32 billion | 6.2% |
| Utility Gross Margin (non-GAAP) | $3.15 billion | $2.91 billion | 8.2% |
| Net Income | $795.3 million | $673.3 million | 18.1% |
| Diluted EPS | $3.45 | $2.92 | 18.2% |
The strategic focus on renewable energy and regulatory support positions Evergy for sustained growth in the coming years. The company’s ongoing investments in infrastructure and technology enhancements are expected to further solidify its market position.
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Updated on 16 Nov 2024
Resources:
- Evergy, Inc. (EVRG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Evergy, Inc. (EVRG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Evergy, Inc. (EVRG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.